EMPLOYMENT AGREEMENT
This Employment Agreement dated as of April 1, 1999 by and between
Cendant Corporation, a Delaware corporation ("Cendant") and Xxxxxx X. Xxxx (the
"Executive").
WHEREAS, Cendant desires to employ the Executive as Executive Vice
President, Strategic Development, and the Executive desires to serve Cendant in
such capacity.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
SECTION I
EMPLOYMENT
Cendant agrees to employ the Executive and the Executive agrees to be
employed by Cendant for the Period of Employment as provided in Section III
below and upon the terms and conditions provided in this Agreement.
SECTION II
POSITION AND RESPONSIBILITIES
During the Period of Employment, the Executive will serve as Executive
Vice President, Strategic Development, and subject to the direction of the Chief
Executive Officer of Cendant (the "CEO"), will perform such duties and exercise
such supervision with regard to the business of Cendant as are associated with
such position, as well as such additional duties as may be prescribed from time
to time by the CEO. The Executive will, during the Period of Employment, devote
substantially all of his time and attention during normal business hours to the
performance of services for Cendant. The Executive will maintain a primary
office and conduct his business in New York, New York, except for normal and
reasonable business travel in connection with his duties hereunder.
SECTION III
PERIOD OF EMPLOYMENT
The period of the Executive's employment under this Agreement (the
"Period of Employment") will begin on the date hereof and end on December 31,
2002, subject to extension or termination as provided in this Agreement.
SECTION IV
COMPENSATION AND BENEFITS
A. Compensation.
For all services rendered by the Executive pursuant to this Agreement during
the Period of Employment, including services as an executive, officer, director
or committee member of Cendant or any subsidiary or affiliate thereof, the
Executive will be compensated as follows:
i. Base Salary.
Cendant will pay the Executive a fixed base salary ("Base Salary") of
not less than $500,000, per annum. Effective as of November 1, 1999, the
Executive will be eligible to receive annual increases as the Board of Directors
of Cendant (the "Board") deems appropriate, in accordance with Cendant's
customary procedures regarding the salaries of senior officers, but with due
consideration given to the published Consumer Price Index applicable to the New
York/New Jersey greater metropolitan area. Base Salary will be payable according
to the customary payroll practices of Cendant, but in no event less frequently
than once each month.
ii. Annual Incentive Awards
The Executive will be eligible for discretionary annual incentive
compensation awards; provided, that the Executive will be eligible to receive an
annual bonus opportunity in respect of each fiscal year of Cendant during the
Period of Employment based upon a target bonus equal to 60% of Base Salary (or
such greater percentage to the extent paid to other Executive Vice Presidents of
Cendant), subject to Cendant's attainment of applicable performance targets
established and certified by the Compensation Committee of the Board (the
"Committee"). The parties acknowledge that it is currently contemplated that
such performance targets will be stated in terms of "earnings before interest
and taxes" of Cendant, however such targets may relate to such other financial
and business criteria of Cendant, or any of their respective subsidiaries or
business units, as determined by the Committee in its sole discretion (each such
annual bonus, an "Incentive Compensation Award").
iii. Long-Term Incentive Awards
The Executive will be eligible for annual stock option awards, subject
to the sole discretion of the Committee; provided, however, that the Executive
shall be granted an option covering no less than 500,000 shares of Cendant
common stock
in connection with Cendant's 1999 annual grant of options to employees and;
further, provided, that such options shall have such other terms and conditions
determined by the Committee in its sole discretion.
iv. Additional Benefits
The Executive will be entitled to participate in all other compensation
and employee benefit plans or programs and receive all benefits and perquisites
for which salaried employees of Cendant generally are eligible under any plan or
program now in effect, or later established by Cendant, on the same basis as
similarly situated senior executives of Cendant with comparable duties and
responsibilities. The Executive will participate to the extent permissible under
the terms and provisions of such plans or programs, and in accordance with the
terms of such plans and program.
SECTION V
BUSINESS EXPENSES
Cendant will reimburse the Executive for all reasonable travel and
other expenses incurred by the Executive in connection with the performance of
his duties and obligations under this Agreement. The Executive will comply with
such limitations and reporting requirements with respect to expenses as may be
established by Cendant from time to time and will promptly provide all
appropriate and requested documentation in connection with such expenses.
SECTION VI
DISABILITY
A. If the Executive becomes Disabled, as defined below, during the Period
of Employment, the Period of Employment may be terminated at the option of the
Executive upon notice of resignation to Cendant, or at the option of Cendant
upon notice of termination to the Executive. Cendant's obligation to make
payments to the Executive under this Agreement will cease as of such date of
termination, except for Base Salary and Incentive Compensation Awards earned but
unpaid as of the date of such termination. In addition, in such event, each of
the Executive's then outstanding options to purchase shares of Cendant common
stock which were granted on or after the date hereof will become immediately and
fully vested and exercisable and, notwithstanding any term or provision of such
option to the contrary, shall remain exercisable until the first to occur of the
third (3rd) anniversary of the date of such termination and the original
expiration date of such option. For purposes of this Agreement, "Disabled" means
the Executive's inability to perform his duties hereunder as a result of serious
physical or mental illness or injury for a period
of no less than 90 days, together with a determination by an independent medical
authority that (i) the Executive is currently unable to perform such duties and
(ii) in all reasonable likelihood such disability will continue for a period in
excess of 180 days. Such medical authority shall be mutually and reasonably
agreed upon by Cendant and the Executive and such opinion shall be binding on
Cendant and the Executive.
SECTION VII
DEATH
In the event of the death of the Executive during the Period of
Employment, the Period of Employment will end and Cendant's obligation to make
payments under this Agreement will cease as of the date of death, except for
Base Salary and Incentive Compensation Awards earned but unpaid through the date
of death, which will be paid to the Executive's surviving spouse, estate or
personal representative, as applicable. In addition, in such event, each of the
Executive's then outstanding options to purchase shares of Cendant common stock
which were granted on or after the date hereof will become immediately and fully
vested and exercisable and, notwithstanding any term or provision of such
options to the contrary, shall remain exercisable (by the Executive's
beneficiary or estate, as provided in any applicable option plan or agreement)
until the first to occur of the third (3rd) anniversary of such date of
termination and the original expiration date of such option.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. Without Cause Termination and Constructive Discharge. If the
Executive's employment terminates due to either a Without Cause Termination or a
Constructive Discharge, as defined below, Cendant will pay the Executive (or his
surviving spouse, estate or personal representative, as applicable) upon such
Without Cause Termination or Constructive Discharge (i) a lump sum amount equal
to the sum of the Executive's then current Base Salary, plus the Executive's
then current target Incentive Compensation Award, multiplied by the greater of
(x) one and (y) the number of full and partial years remaining in the Period of
Employment and (ii) any and all Base Salary and Incentive Compensation Awards
earned but unpaid through the date of such termination. In addition, in the
event of the termination of the Executive's employment due to a Without Cause
Termination or a Constructive Discharge, each of the Executive's then
outstanding options to purchase shares of Cendant common stock which were
granted on or after the date hereof will become immediately and fully vested and
exercisable and, notwithstanding any term or provision of such option to the
contrary, shall remain exercisable until the first to occur of the third (3rd)
anniversary of the date of such termination, and the original expiration date of
such option.
B. Termination for Cause; Resignation. If the Executive's employment
terminates due to a Termination for Cause or a Resignation, Base Salary and any
Incentive Compensation Awards earned but unpaid as of the date of such
termination will be paid to the Executive in a lump sum. Except as provided in
this paragraph, Cendant will have no further obligations to the Executive
hereunder.
C. For purposes of this Agreement, the following terms have the
following meanings:
i. "Termination for Cause" means (i) the Executive's willful failure to
substantially perform his duties as an employee of Cendant or any subsidiary
thereof (other than any such failure resulting from incapacity due to physical
or mental illness), (ii) any act of fraud, misappropriation, dishonesty,
embezzlement or similar conduct against Cendant or any subsidiary, (iii) the
Executive's conviction of a felony or any crime involving moral turpitude (which
conviction, due to the passage of time or otherwise, is not subject to further
appeal) or (iv) the Executive's gross negligence in the performance of his
duties.
ii. "Constructive Discharge" means (i) any material failure of Cendant
to fulfill its obligations under this Agreement (including without limitation
any reduction of the Base Salary, as the same may be increased during the Period
of Employment, or other element of compensation), (ii) a material and adverse
change to the Executive's duties and responsibilities to Cendant (including
without limitation the Executive no longer directly reporting to the CEO) or
(iii) the occurrence of a Change of Control Transaction (as defined below). The
Executive will provide Cendant a written notice which describes the
circumstances being relied on for the termination with respect to this Agreement
within thirty (30) days after the event giving rise to the notice. Cendant will
have thirty (30) days after receipt of such notice to remedy the situation prior
to the termination for Constructive Discharge.
iii. "Without Cause Termination" or "Terminated Without Cause" means
termination of the Executive's employment by Cendant other than due to death,
disability, or Termination for Cause.
iv. "Resignation" means a termination of the Executive's employment by the
Executive, other than in connection with a Constructive Discharge.
v. "Change of Control Transaction" means any transaction or series of
transactions pursuant to or as a result of which (i) during any period of not
more than 24 months, individuals who at the beginning of such period constitute
the Board, and any new director (other than a director designated by a third
party who has entered
into an agreement to effect a transaction described in clause (ii), (iii) or
(iv) of this paragraph (v)) whose election by the Board or nomination for
election by Cendant's stockholders was approved by a vote of at least a majority
of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so
approved (other than approval given in connection with an actual or threatened
proxy or election contest), cease for any reason to constitute at least a
majority of the members of the Board, (ii) beneficial ownership of 50% or more
of the shares of Cendant common stock (or other securities having generally the
right to vote for election of the Board) ("Shares") shall be sold, assigned or
otherwise transferred, directly or indirectly, other than pursuant to a public
offering, to a third party, whether by sale or issuance of Shares or other
securities or otherwise, (iii) Cendant or any subsidiary thereof shall sell,
assign or otherwise transfer, directly or indirectly, assets (including stock or
other securities of subsidiaries) having a fair market or book value or earning
power of 50% or more of the assets or earning power of Cendant and its
subsidiaries (taken as a whole) to any third party, other than Cendant or a
wholly-owned subsidiary thereof or (iv) control of 50% or more of the business
of Cendant shall be sold, assigned or otherwise transferred directly or
indirectly to any third party.
D. Conditions to Payment and Acceleration. All payments due to the
Executive under this Section VIII shall be made as soon as practicable;
provided, however, that such payments, as well as the modification of the terms
of any Cendant options provided under this Section VIII, shall be subject to,
and contingent upon, the execution by the Executive (or his beneficiary or
estate) of a release of claims against Cendant and its affiliates in such form
determined by Cendant in its sole discretion. The payments due to the Executive
under this Section VIII shall be in lieu of any other severance benefits
otherwise payable to the Executive under any severance plan of Cendant or its
affiliates. To the extent any term or condition of any option to purchase
Cendant common stock conflicts with any term or condition of this Agreement
applicable to such option, the term or condition set forth in this Agreement
shall govern.
SECTION IX
OTHER DUTIES OF THE EXECUTIVE
DURING AND AFTER THE PERIOD OF EMPLOYMENT
A. The Executive will, with reasonable notice during or after the
Period of Employment, furnish information as may be in his possession and fully
cooperate with Cendant and its affiliates as may be requested in connection with
any claims or legal action in which Cendant or any of its affiliates is or may
become a party.
B. The Executive recognizes and acknowledges that all information
pertaining to this Agreement or to the affairs; business; results of operations;
accounting methods, practices and procedures; members; acquisition candidates;
financial condition; clients; customers or other relationships of Cendant or any
of its affiliates ("Information") is confidential and is a unique and valuable
asset of Cendant or any of its affiliates. Access to and knowledge of certain of
the Information is essential to the performance of the Executive's duties under
this Agreement. The Executive will not during the Period of Employment or
thereafter, except to the extent reasonably necessary in performance of his
duties under this Agreement, give to any person, firm, association, corporation,
or governmental agency any Information, except as may be required by law. The
Executive will not make use of the Information for his own purposes or for the
benefit of any person or organization other than Cendant or any of its
affiliates. The Executive will also use his best efforts to prevent the
disclosure of this Information by others. All records, memoranda, etc. relating
to the business of Cendant or its affiliates, whether made by the Executive or
otherwise coming into his possession, are confidential and will remain the
property of Cendant or its affiliates.
C. i. During the Period of Employment and for a two (2) year period
thereafter (the "Restricted Period"), irrespective of the cause, manner or time
of any termination, the Executive will not make any statements or perform any
acts intended to or which may have the effect of advancing the interest of any
existing or prospective competitors of Cendant or any of its affiliates or in
any way injuring the interests of Cendant or any of its affiliates. During the
Restricted Period, the Executive, without prior express written approval by the
Board (which will not be unreasonably withheld), will not engage in, or directly
or indirectly (whether for compensation or otherwise) own or hold proprietary
interest in, manage, operate, or control, or join or participate in the
ownership, management, operation or control of, or furnish any capital to or be
connected in any manner with, any party which competes with the business of
Cendant or any of its affiliates, as such business or businesses may be
conducted from time to time, either as a general or limited partner, proprietor,
common or preferred shareholder, officer, director, agent, employee, consultant,
trustee, affiliate, or otherwise. The Executive acknowledges that Cendant's and
its affiliates' businesses are conducted nationally and internationally and
agrees that the provisions in the foregoing sentence will operate throughout the
United States and the world.
ii. During the Restricted Period, the Executive, without express prior
written approval from the Board, will not solicit any members or the
then-current clients of Cendant or any of its affiliates for any existing
business of Cendant or any of its affiliates or discuss with any employee of
Cendant or any of its affiliates in-
formation or operation of any business intended to compete with Cendant or any
of its affiliates.
iii. During the Restricted Period, the Executive will not interfere with the
employees or affairs of Cendant or any of its affiliates or solicit or induce
any person who is an employee of Cendant or any of its affiliates to terminate
any relationship such person may have with Cendant or any of its affiliates, nor
will the Executive during such period directly or indirectly engage, employ or
compensate, or cause or permit any person with which the Executive may be
affiliated, to engage, employ or compensate, any employee of Cendant or any of
its affiliates. The Executive hereby represents and warrants that the Executive
has not entered into any agreement, understanding or arrangement with any
employee of Cendant or any of its affiliates pertaining to any business in which
the Executive has participated or plans to participate, or to the employment,
engagement or compensation of any such employee.
iv. For the purposes of this Agreement, proprietary interest means legal or
equitable ownership, whether through stock holding or otherwise, of an equity
interest in a business, firm or entity or ownership of more than 10% of any
class of equity interest in a publicly-held company and the term "affiliate"
will include without limitation all subsidiaries and licensees of Cendant.
D. The Executive hereby acknowledges that damages at law may be an
insufficient remedy to Cendant if the Executive violates the terms of this
Agreement and that Cendant will be entitled, upon making the requisite showing,
to preliminary and/or permanent injunctive relief in any court of competent
jurisdiction to restrain the breach of or otherwise to specifically enforce any
of the covenants contained in this Section IX without the necessity of showing
any actual damage or that monetary damages would not provide an adequate remedy.
Such right to an injunction will be in addition to, and not in limitation of,
any other rights or remedies Cendant may have. Without limiting the generality
of the foregoing, neither party will oppose any motion the other party may make
for any expedited discovery or hearing in connection with any alleged breach of
this Section IX.
E. The period of time during which the provisions of this Section IX
will be in effect will be extended by the length of time during which the
Executive is in breach of the terms hereof as determined by any court of
competent jurisdiction on Cendant's application for injunctive relief.
F. The Executive agrees that the restrictions contained in this Section
IX are an essential element of the compensation the Executive is granted
hereunder and but for the Executive's agreement to comply with such
restrictions, Cendant would not have entered into this Agreement.
SECTION X
INDEMNIFICATION
Cendant will indemnify the Executive to the fullest extent permitted by
the laws of the state of Cendant's incorporation in effect at that time, or the
certificate of incorporation and by-laws of Cendant, whichever affords the
greater protection to the Executive.
SECTION XI
MITIGATION
The Executive will not be required to mitigate the amount of any
payment provided for hereunder by seeking other employment or otherwise, nor
will the amount of any such payment be reduced by any compensation earned by the
Executive as the result of employment by another employer after the date the
Executive's employment hereunder terminates.
SECTION XII
WITHHOLDING TAXES
The Executive acknowledges and agrees that Cendant may directly or
indirectly withhold from any payments under this Agreement all federal, state,
city or other taxes that will be required pursuant to any law or governmental
regulation.
SECTION XIII
EFFECT OF PRIOR AGREEMENTS
This Agreement will supersede any prior employment agreement between
Cendant and the Executive and any such prior employment agreement will be deemed
terminated without any remaining obligations of either party thereunder.
SECTION XIV
CONSOLIDATION, MERGER OR SALE OF ASSETS
Nothing in this Agreement will preclude Cendant from consolidating or
merging into or with, or transferring all or substantially all of its assets to,
another corporation which assumes this Agreement and all obligations and
undertakings of Cendant hereunder. Upon such a consolidation, merger or sale of
assets the term "Cendant" will mean the other corporation (except with respect
to any determination hereunder as to whether a Change of Control Transaction has
occurred) and this Agreement will continue in full force and effect.
SECTION XV
MODIFICATION
This Agreement may not be modified or amended except in writing signed
by the parties. No term or condition of this Agreement will be deemed to have
been waived except in writing by the party charged with waiver. A waiver will
operate only as to the specific term or condition waived and will not constitute
a waiver for the future or act on anything other than that which is specifically
waived.
SECTION XVI
GOVERNING LAW
This Agreement has been executed and delivered in the State of New York
and its validity, interpretation, performance and enforcement will be governed
by the internal laws of that state.
SECTION XVII
ARBITRATION
A. Any controversy, dispute or claim arising out of or relating to this
Agreement or the breach hereof which cannot be settled by mutual agreement
(other than with respect to the matters covered by Section IX for which Cendant
may, but will not be required to, seek injunctive relief) will be finally
settled by binding arbitration in accordance with the Federal Arbitration Act
(or if not applicable, the applicable state arbitration law) as follows: Any
party who is aggrieved will deliver a notice to the other party setting forth
the specific points in dispute. Any points remaining in dispute twenty (20) days
after the giving of such notice may be submitted to arbitration in New York, New
York, to the American Arbitration Association, before a single arbitrator
appointed in accordance with the arbitration rules of the American Arbitration
Association, modified only as herein expressly provided. After the aforesaid
twenty (20) days, either party, upon ten (10) days notice to the other, may so
submit the points in dispute to arbitration. The arbitrator may enter a default
decision against any party who fails to participate in the arbitration
proceedings.
B. The decision of the arbitrator on the points in dispute will be
final, unappealable and binding, and judgment on the award may be entered in any
court having jurisdiction thereof.
C. Except as otherwise provided in this Agreement, the arbitrator will
be authorized to apportion its fees and expenses and the reasonable attorneys'
fees and expenses of any such party as the arbitrator deems appropriate. In the
absence of any such apportionment, the fees and expenses of the arbitrator will
be borne equally by each party, and each party will bear the fees and expenses
of its own attorney.
D. The parties agree that this Section XVII has been included to
rapidly and inexpensively resolve any disputes between them with respect to this
Agreement, and that this Section XVII will be grounds for dismissal of any court
action commenced by either party with respect to this Agreement, other than
post-arbitration actions seeking to enforce an arbitration award. In the event
that any court determines that this arbitration procedure is not binding, or
otherwise allows any litigation regarding a dispute, claim, or controversy
covered by this Agreement to proceed, the parties hereto hereby waive any and
all right to a trial by jury in or with respect to such litigation.
E. The parties will keep confidential, and will not disclose to any
person, except as may be required by law, the existence of any controversy
hereunder, the referral of any such controversy to arbitration or the status or
resolution thereof.
SECTION XVIII
SURVIVAL
Sections IX, X, XI, XII, and XVII will continue in full force in
accordance with their respective terms notwithstanding any termination of the
Period of Employment.
SECTION XIX
SEPARABILITY
All provisions of this Agreement are intended to be severable. In the
event any provision or restriction contained herein is held to be invalid or
unenforceable in any respect, in whole or in part, such finding will in no way
affect the validity or enforceability of any other provision of this Agreement.
The parties hereto further agree that any such invalid or unenforceable
provision will be deemed modified so that it will be enforced to the greatest
extent permissible under law, and to the extent that any court of competent
jurisdiction determines any restriction herein to be unreasonable in any
respect, such court may limit this Agreement to render it reasonable in the
light of the circumstances in which it was entered into and specifically enforce
this Agreement as limited.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
CENDANT CORPORATION
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By: Xxxxxx X. Xxxxxxxxxxx
Title: Executive Vice President
Human Resources
XXXXXX X. XXXX
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