Employee Stock Option Agreement

 

Exhibit 10.3

Employee Stock Option Agreement

This Employee Stock OptionAgreement, dated as of June 12, 2006, between Hertz Global Holdings, Inc.,a Delaware corporation, and the Employee whose name appears on the signature page hereof,is being entered into pursuant to the Hertz Global Holdings, Inc. StockIncentive Plan. The meaning of capitalized terms may be found in Section 7.

The Company and the Employee herebyagree as follows:

Section 1.   Grantof Options

(a)   Confirmationof Grant. The Company hereby evidences and confirms, effective as of thedate hereof, its grant to the Employee of Options to purchase the number ofCommon Shares specified on the signature page hereof. The Options are notintended to be incentive stock options under the Code. This Agreement isentered into pursuant to, and the terms of the Options are subject to, theterms of the Plan. If there is any inconsistency between this Agreement and theterms of the Plan, the terms of the Plan shall govern.

(b)   OptionPrice. Each share covered by an Option shall have the Option Pricespecified on the signature page hereof.

Section 2.   Vestingand Exercisability

(a)   Exceptas otherwise provided in Section 6(a) or Section 2(b) ofthis Agreement, the Options shall become vested in three equal annualinstallments on each of the first through third anniversaries of the GrantDate, subject to the continuous employment of the Employee with the Companyuntil January 1, 2007; provided that if the Employee’s employmentwith the Company is terminated at any time in a Special Termination (i.e., byreason of the Employee’s death or Disability), any Options held by the Employeeshall immediately vest as of the effective date of such Special Termination.

(b)   DiscretionaryAcceleration. The Board, in its sole discretion, may accelerate the vestingor exercisability of all or a portion of the Options, at any time and from timeto time.

(c)   Exercise.Once vested in accordance with the provisions of this Agreement, the Optionsmay be exercised at any



 

 

time and fromtime to time prior to the date such Options terminate pursuant to Section 3.Options may only be exercised with respect to whole Common Shares and must beexercised in accordance with Section 4.

Section 3.   Terminationof Options

(a)   NormalTermination Date. Unless earlier terminated pursuant to Section 3(b) orSection 6, the Options shall terminate on the second anniversary of thedate on which such Options vest (the “Normal Termination Date”), if notexercised prior to such date.

(b)   EarlyTermination. If the Employee’s employment with the Company terminates forany reason (other than a Special Termination) prior to January 1, 2007,any Options held by the Employee shall terminate immediately upon such terminationof employment (determined without regard to any statutory or deemed or expresscontractual notice period). If the Employee’s employment with the Companyterminates for any reason other than for Cause or a Special Termination on orafter January 1, 2007, any Options held by the Employee shall continue tovest in accordance with the terms of Section 2 of this Agreement and shallremain outstanding until the Normal Termination Date. If the Employee’semployment with the Company terminates, at any time, for Cause, all Options(whether or not then vested or exercisable) shall automatically terminateimmediately upon such termination. If the Employee’s employment with theCompany terminates, at any time, by reason of a Special Termination, allunvested Options shall immediately vest upon such Special Termination. Allvested Options held by the Employee following the effective date of a SpecialTermination shall remain exercisable until the Normal Termination Date, and ifnot exercised within such period the Options shall automatically terminate uponthe expiration of such period.

Section 4.   Mannerof Exercise

(a)   General.Subject to such reasonable administrative regulations as the Board may adoptfrom time to time, the Employee may exercise vested Options by giving at least15 business days prior written notice to the Secretary of the Companyspecifying the proposed date on which the Employee desires to exercise a vestedOption (the “Exercise Date”), the number of whole shares with respect towhich the Options are being exercised (the “Exercise

2



 

Shares”)and the aggregate Option Price for such Exercise Shares (the “Exercise Price”);provided that following a Public Offering notice may be given withinsuch lesser period as the Board may permit. On or before any Exercise Date thatoccurs prior to a Public Offering, the Company and the Employee shall enterinto an Employee Stock Subscription Agreement that contains transfer and otherrestrictions on the Exercise Shares, a form of which has been provided to the Employee.Unless otherwise determined by the Board, and subject to such other terms,representations and warranties as may be provided for in the Employee StockSubscription Agreement, (i) on or before the Exercise Date theEmployee shall deliver to the Company full payment for the Exercise Shares inUnited States dollars in cash, or cash equivalents satisfactory to the Company,in an amount equal to the Exercise Price plus any required withholdingtaxes or other similar taxes, charges or fees and (ii) the Companyshall register the issuance of the Exercise Shares on its records (or directsuch issuance to be registered by the Company’s transfer agent). The Companymay require the Employee to furnish or execute such other documents as theCompany shall reasonably deem necessary (i) to evidence suchexercise, (ii) to determine whether registration is then requiredunder the Securities Act or other applicable law or (iii) to complywith or satisfy the requirements of the Securities Act, applicable state or non-U.S.securities laws or any other law.

(b)   Restrictionson Exercise. Notwithstanding any other provision of this Agreement, theOptions may not be exercised in whole or in part, and no certificatesrepresenting Exercise Shares shall be delivered, (i) (A) unlessall requisite approvals and consents of any governmental authority of any kindshall have been secured, (B) unless the purchase of the ExerciseShares shall be exempt from registration under applicable U.S. federal andstate securities laws, and applicable non-U.S. securities laws, or the ExerciseShares shall have been registered under such laws, and (C) unlessall applicable U.S. federal, state and local and non-U.S. tax withholdingrequirements shall have been satisfied or (ii) if such exercisewould result in a violation of the terms or provisions of or a default or anevent of default under, any of the Financing Agreements. The Company shall useits commercially reasonable efforts to obtain any consents or approvalsreferred to in clause (i) (A) of the preceding sentence, but shallotherwise have no obligations to take any steps to prevent or remove anyimpediment to exercise described in such sentence.

3



 

Section 5.   Employee’sRepresentations; Investment Intention. The Employee represents and warrantsthat the Options have been, and any Exercise Shares will be, acquired by theEmployee solely for the Employee’s own account for investment and not with aview to or for sale in connection with any distribution thereof. The Employeerepresents and warrants that the Employee understands that none of the ExerciseShares may be transferred, sold, pledged, hypothecated or otherwise disposed ofunless the provisions of the related EmployeeStock Subscription Agreement shall have been complied with or have expired.

Section 6.   Changein Control

(a)   Vestingand Cancellation. Except as otherwise provided in this Section 6(a),in the event of a Change in Control, all then-outstanding Options (whethervested or unvested) shall be canceled in exchange for a payment having a valueequal to the excess, if any, of (i) the product of the Change in ControlPrice multiplied by the aggregate number of shares covered by all such Optionsimmediately prior to the Change in Control over (ii) the aggregate OptionPrice for all such shares, to be paid as soon as reasonably practicable, but inno event later than 30 days following the Change in Control.

(b)   AlternativeAward. Notwithstanding Section 6(a), no cancellation, termination, orsettlement or other payment shall occur with respect to any Option if the Boardreasonably determines prior to the Change in Control that the Employee shallreceive an Alternative Award meeting the requirements of the Plan.

(c)   Limitationof Benefits. If, whether as a result of accelerated vesting, the grant ofan Alternative Award or otherwise, the Employee would receive any payment,deemed payment or other benefit as a result of the operation of Section 6(a) orSection 6(b) that, together with any other payment, deemed payment orother benefit the Employee may receive under any other plan, program, policy orarrangement, would constitute an “excess parachute payment” under section 280Gof the Code, then, notwithstanding anything in this Section 6 to thecontrary, the payments, deemed payments or other benefits such Employee wouldotherwise receive under Section 6(a) or Section 6(b) shallbe reduced to the extent necessary to eliminate any such excess parachutepayment and such Employee shall have no further rights or claims with respectthereto. If the preceding sentence would result in a reduction of the payments,

4



 

deemed payments or other benefits theEmployee would otherwise receive on an after-tax basis by more than 5%, theCompany will use its commercially reasonable best efforts to seek the approvalof the Company’s shareholders in the manner provided for in section 280G(b)(5) ofthe Code and the regulations thereunder with respect to such reduced paymentsor other benefits (if the Company is eligible to do so), so that such paymentswould not be treated as “parachute payments” for these purposes (and thereforewould cease to be subject to reduction pursuant to this Section 6(c)).

Section 7.   CertainDefinitions. As used in this Agreement, capitalized terms that are notdefined herein have the respective meaning given in the Plan, and the followingadditional terms shall have the following meanings:

“Agreement” means thisEmployee Stock Option Agreement, as amended from time to time in accordancewith the terms hereof.

“Code” means the UnitedStates Internal Revenue Code of 1986, as amended, and any successor thereto.

“Company” means Hertz GlobalHoldings, Inc., provided that for purposes of determining thestatus of Employee’s employment with the “Company,” such term shall include theCompany and its Subsidiaries.

“Employee” means the granteeof the Options, whose name is set forth on the signature page of thisAgreement; provided that for purposes of Section 4 and Section 8,following such person’s death “Employee” shall be deemed to include such person’sbeneficiary or estate and following such Person’s Disability, “Employee” shallbe deemed to include such person’s legal representative.

“Employee Stock SubscriptionAgreement” means a “Stock Subscription Agreement” as defined in the Plan.

“Exercise Date” has themeaning given in Section 4(a).

“Exercise Price” has themeaning given in Section 4(a).

“Exercise Shares” has themeaning given in Section 4(a).

“Grant Date” means the datehereof, which is the date on which the Options are granted to the Employee.

“Normal Termination Date”has the meaning given in Section 3(a).

5



 

“Option” means the rightgranted to the Employee hereunder to purchase one Common Share for a purchaseprice equal to the Option Price subject to the terms of this Agreement and thePlan.

“Option Price” means, withrespect to each Common Share covered by an Option, the purchase price specifiedin Section 1(b) for which the Employee may purchase such Common Shareupon exercise of an Option.

“Plan” means the HertzGlobal Holdings, Inc. Stock Incentive Plan.

“Securities Act” means theUnited States Securities Act of 1933, as amended, or any successor statute, andthe rules and regulations thereunder that are in effect at the time, andany reference to a particular section thereof shall include a reference to thecorresponding section, if any, of such successor statute, and the rules andregulations.

“Special Termination” meansa termination of the Employee’s employment as a result of his or her death orDisability.

Section 8.   Miscellaneous.

(a)   Withholding.The Company or one of its Subsidiaries may require the Employee to remit to theCompany an amount in cash sufficient to satisfy any applicable U.S. federal,state and local and non-U.S. tax withholding or other similar charges or feesthat may arise in connection with the grant, vesting, exercise or purchase ofthe Options.

(b)   Authorizationto Share Personal Data. The Employee authorizes any Affiliate of theCompany that employs the Employee or that otherwise has or lawfully obtainspersonal data relating to the Employee to divulge or transfer such personaldata to the Company or to a third party, in each case in any jurisdiction, ifand to the extent appropriate in connection with this Agreement or theadministration of the Plan.

(c)   NoRights as Stockholder; No Voting Rights. The Employee shall have no rightsas a stockholder of the Company with respect to any Shares covered by theOptions until the exercise of the Options and delivery of the Shares. Noadjustment shall be made for dividends or other rights for which the recorddate is prior to the delivery of the Shares. Any Shares delivered in respect ofthe Options shall be subject to the Employee Stock Subscription Agreement andthe Employee shall have no voting rights with respect

6



 

to such Sharesuntil such time as specified in the Employee Stock Subscription Agreement.

(d)   NoRight to Continued Employment. Nothing in this Agreement shall be deemed toconfer on the Employee any right to continue in the employ of the Company orany Subsidiary, or to interfere with or limit in any way the right of theCompany or any Subsidiary to terminate such employment at any time.

(e)   Non-Transferabilityof Options. The Options may be exercised only by the Employee. The Optionsare not assignable or transferable, in whole or in part, and they may not,directly or indirectly, be offered, transferred, sold, pledged, assigned,alienated, hypothecated or otherwise disposed of or encumbered (including, butnot limited to, by gift, operation of law or otherwise) other than by will orby the laws of descent and distribution to the estate of the Employee upon theEmployee’s death or with the Company’s consent.

(f)   Notices.All notices and other communications required or permitted to be given underthis Agreement shall be in writing and shall be deemed to have been given ifdelivered personally or sent by certified or express mail, return receiptrequested, postage prepaid, or by any recognized international equivalent ofsuch delivery, to the Company or the Employee, as the case may be, at thefollowing addresses or to such other address as the Company or the Employee, asthe case may be, shall specify by notice to the other:

(i)   ifto the Company, to it at:

Hertz Global Holdings, Inc.
c/o The Hertz Corporation
225 Brae Boulevard
Park Ridge, New Jersey  07656
Attention: General Counsel



Fax: (201) 594-3122

(ii)   ifto the Employee, to the Employee at his or her most recent address as shown onthe books and records of the Company or Subsidiary employing the Employee; and

7



 

 

copies of any notice or other communicationgiven under this Agreement shall also be given to:

The Carlyle Group
1001 Pennsylvania Avenue, NW
Suite 220 South
Washington DC 20004-2505
Attention:  Mr. Gregory S. Ledford
Fax:  (202) 347-1818




and

Clayton, Dubilier & Rice, Inc.
375 Park Avenue, 18
th Floor
New York, New York
Attention: David Wasserman
Fax: (212) 407-5252


and

Merrill Lynch Global Private Equity
4 World Financial Center, 23
rd Floor
New York, NY 10080
Attention:  Mr. George A. Bitar &
                  Mr. Robert F. End
Fax:  (212) 449-1119



and

Debevoise & Plimpton LLP
919 Third Avenue
New York, New York 10022
Attention:  John M. Allen
Fax:  (212) 909-6836



All such notices and communications shall bedeemed to have been received on the date of delivery if delivered personally oron the third business day after the mailing thereof.

(g)   BindingEffect; Benefits. This Agreement shall be binding upon and inure to thebenefit of the parties to this Agreement and their respective successors andassigns. Nothing in this

8



 

Agreement,express or implied, is intended or shall be construed to give any person otherthan the parties to this Agreement or their respective successors or assignsany legal or equitable right, remedy or claim under or in respect of anyagreement or any provision contained herein.

(h)   Waiver;Amendment.

(i)   Waiver.Any party hereto or beneficiary hereof may by written notice to the otherparties (A) extend the time for the performance of any of theobligations or other actions of the other parties under this Agreement, (B) waivecompliance with any of the conditions or covenants of the other partiescontained in this Agreement and (C) waive or modify performance ofany of the obligations of the other parties under this Agreement. Except asprovided in the preceding sentence, no action taken pursuant to this Agreement,including, without limitation, any investigation by or on behalf of any partyor beneficiary, shall be deemed to constitute a waiver by the party orbeneficiary taking such action of compliance with any representations,warranties, covenants or agreements contained herein. The waiver by any partyhereto or beneficiary hereof of a breach of any provision of this Agreementshall not operate or be construed as a waiver of any preceding or succeedingbreach and no failure by a party or beneficiary to exercise any right orprivilege hereunder shall be deemed a waiver of such party’s or beneficiary’srights or privileges hereunder or shall be deemed a waiver of such party’s orbeneficiary’s rights to exercise the same at any subsequent time or timeshereunder.

(ii)   Amendment.This Agreement may not be amended, modified or supplemented orally, but only bya written instrument executed by the Employee and the Company.

(i)   Assignability.Neither this Agreement nor any right, remedy, obligation or liability arisinghereunder or by reason hereof shall be assignable by the Company or theEmployee without the prior written consent of the other party.

(j)   ApplicableLaw. This Agreement shall be governed by and construed in accordance withthe law of the State of Delaware regardless of the application of rules ofconflict of law that would apply the laws of any other jurisdiction.

9



 

(k)    Section and Other Headings, etc.The section and other headings contained in this Agreement are for referencepurposes only and shall not affect the meaning or interpretation of thisAgreement.

(l)   Counterparts.This Agreement may be executed in any number of counterparts, each of whichshall be deemed to be an original and all of which together shall constituteone and the same instrument.

10



 

IN WITNESS WHEREOF, the Company andthe Employee have executed this Agreement as of the date first above written.

 

HERTZ GLOBAL HOLDINGS, INC.

 

 

 

 

 

 

 

 

 

 

By:

/s/ Irwin M. Pollack

 

 

Name:

Irwin M. Pollack

 

 

Title:

Senior Vice President,

 

 

 

Employee Relations,

 

 

 

The Hertz Corporation

 

 

 

 

 

 

 

 

 

THE EMPLOYEE:

 

 

 

 

 

 

 

 

 

Craig R. Koch

 

 

 

 

 

 

 

 

 

By:

/s/ Elizabeth E. Corcoran

 

 

as Attorney-in-Fact

 

 

Name:

Elizabeth E. Corcoran

 

 

 

 

 

 

 

 

 

Address of the Employee:

 

 

 

 

 

 

 

 

 

14 Stewart Court

 

Old Tappan, NJ 07675

 

 

 

Total Number of Shares
for the Purchase of Which
Options have been Granted

 

Option Price

 

 

 

50,000 Shares

 

$10.00

 

 

11