Contract
Exhibit
10.1
AMENDED
AND RESTATED
Avis
Budget Group, Inc. (the “Company”) and Xxxxxx X. Xxxxxx
(the “Executive”) are
parties to this certain Employment Agreement amended and restated as of January
27, 2010 (this “Agreement”).
WHEREAS, the Company and the
Executive are parties to an Amended and Restated Employment Agreement dated
December 29, 2008 pursuant to which the Executive serves as the Chief Executive
Officer of the Company (the “Prior Agreement”);
and
WHEREAS, the Company and the
Executive desire to amend and restate the Prior Agreement in its entirety as set
forth herein.
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 that this Agreement is amended and restated to read as
follows:
SECTION
I
EFFECTIVENESS
This
Agreement shall be effective as of January 27, 2010 (the “Effective Date”).
SECTION
II
EMPLOYMENT; POSITION AND
RESPONSIBILITIES
The
Company agrees to continue to employ the Executive, and the Executive agrees to
be employed by the Company, for the Period of Employment as provided in Section
III below and upon the terms and conditions provided in this
Agreement. During the Period of Employment, the Executive shall serve
as Chief Executive Officer of the Company and shall report to, and be subject to
the direction of, the Board of Directors of the Company (the “Board”). Beginning
on June 30, 2010, the Executive shall also serve as the President and Chief
Operating Officer of the Company without additional compensation. In
addition, during the Period of Employment, the Executive shall continue to serve
as Chairman, and a member, of the Board; provided, however, that the Executive’s
continued service as a member of the Board shall at all times remain subject to
applicable law and to any and all nomination and election procedures in
accordance with the Company’s by-laws or other organizational
documents. The Executive shall perform such duties and exercise such
supervision with regard to the business of the Company as are associated with
his positions, as well as such additional duties as may be prescribed from time
to time by the Board. Notwithstanding the foregoing, after June 30,
2012, the Company may elect to remove the Executive from, or the Executive may
elect to resign from, the position(s) of Chief Executive Officer (and President
and Chief Operating Officer, if applicable) and transition to serving solely as
the Chairman of the Board with any new Chief Executive Officer appointed in the
Executive’s place to report directly to the Executive in
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connection
with day-to-day management matters, with the Board retaining ultimate
supervisory authority over any individual holding the position of Chief
Executive Officer of the Company. The Executive shall, during the
Period of Employment, devote substantially all of his time and attention during
normal business hours to the performance of services for the Company; provided
that in the event that the Company elects to remove, or the Executive elects to
resign, from the position(s) of Chief Executive Officer (and President and Chief
Operating Officer, if applicable) as set forth in the preceding sentence, then,
the Executive shall be permitted to serve on three boards of directors of for
profit entities (in addition to the Board) without the consent of the
Company. The Executive shall maintain a primary office and conduct
his business in Parsippany, New Jersey (the “Business Office”), 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 (such period is
referred to herein as the “Period of Employment”) shall
begin on the Effective Date and shall end on the fifth anniversary of the
Effective Date (the “Term”), subject to earlier
termination as provided in this Agreement. For the avoidance of
doubt, the expiration of the Term, and the corresponding termination of the
Executive’s employment, at the end of the Term shall in no event constitute a
“Without Cause Termination” or a “Constructive Discharge” (each, as defined in
Section VII(c) below) for any purpose hereunder.
SECTION
IV
COMPENSATION AND
BENEFITS
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 the Company or any subsidiary or affiliate of the Company, the
Executive shall be compensated as follows:
(a) Base
Salary.
(i) Subject
to the provisions of Sections IV(a)(ii) and (iii) hereof, the Company shall
initially pay the Executive a fixed base salary (“Base Salary”) of not less than
$1,000,000, per annum, and thereafter the Executive shall be eligible to receive
annual increases as the Board deems appropriate, in accordance with the
Company’s customary procedures regarding salaries of senior
officers. Base Salary shall be payable according to the customary
payroll practices of the Company, but in no event less frequently than once each
month.
(ii) In the
event that the Executive elects to resign from the position(s) of Chief
Executive Officer (and President and Chief Operating Officer, if applicable) and
transition to serving solely as the Chairman of the Board as contemplated
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under
Section II hereof, the Executive’s Base Salary shall immediately be reduced to
50% of the level of Base Salary being paid immediately prior to such change in
position.
(iii) In the
event that the Company elects to remove the Executive from the position(s) of
Chief Executive Officer (and President and Chief Operating Officer, if
applicable) and transition the Executive to serving solely as the Chairman of
the Board as contemplated under Section II hereof, the Executive’s Base Salary
shall be adjusted as follows:
(1) If such
removal occurs prior to January 27, 2013, the Executive shall be entitled to
receive a Base Salary equal to (A) 100% of the Executive’s Base Salary in effect
immediately prior to such removal for a period of twelve (12) months thereafter,
(B) 75% of such Base Salary for the succeeding twelve (12)-month period, and (C)
50% of such Base Salary for the remaining balance of the Period of Employment;
and
(2) If such
removal occurs on or after January 27, 2013 but prior to January 27, 2014, the
Executive shall be entitled to receive a Base Salary equal to (A) 75% of the
Executive’s Base Salary in effect immediately prior to such removal for a period
of twelve (12) months thereafter, and (B) 50% of such Base Salary for the
remaining balance of the Period of Employment hereunder; and
(3) If such
removal occurs on or after January 27, 2014 but prior to January 27, 2015, the
Executive shall be entitled to receive a Base Salary equal to 50% of the
Executive’s Base Salary in effect immediately prior to such removal for the
remaining balance of the Period of Employment hereunder.
(b) Annual Incentive
Awards. The Executive shall be eligible to earn a target
Annual Bonus for each fiscal year of the Company ending during the Period of
Employment (each, an “Annual
Bonus”) equal to 150% of the Executive’s Base Salary (taking into account
any adjustment required to be made pursuant to Section IV(a) hereof) for such
fiscal year, if the Company achieves the target performance goals established by
the Compensation Committee (the “Committee”) for such fiscal
year. The Committee may establish such metrics whereby the Executive
may earn an Annual Bonus in excess of the target Annual Bonus or an Annual Bonus
less than the target Annual Bonus. To the extent that the Executive’s
Base Salary is subject to adjustment during any fiscal year as provided in
Section IV(a) hereof, the amount of any Annual Bonus that may become payable to
the Executive for such fiscal year shall be determined in accordance with the
following formula:
(i) The Base
Salary applicable prior to such adjustment shall be multiplied by the product of
the applicable bonus percentage (as a percentage of such Base Salary) and a
fraction the numerator of which is the number of days for which the Base Salary
applicable prior to such adjustment was in effect and the denominator of which
is 365; plus
(ii) The Base
Salary applicable on and following such adjustment shall be multiplied by the
product of the applicable bonus percentage (as a
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percentage
of such Base Salary) and a fraction the numerator of which is the number of days
for which the Base Salary applicable on and following such adjustment was in
effect and the denominator of which is 365.
Notwithstanding
the foregoing, to the extent required for any Annual Bonus to comply with the
“performance-based compensation” exception under Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), the maximum amount
that may become payable to the Executive in respect of any Annual Bonus shall be
established by the Committee at the beginning of the fiscal year as required by
Section 162(m) of the Code and the Committee shall be precluded from increasing the amount of compensation
payable under such bonus thereafter for such fiscal year (but the Committee may
have the discretion to decrease the amount of compensation
payable). Nothing herein shall be construed to limit the
authority of the Committee to pay the Executive additional bonus compensation
that is not intended to be “performance-based compensation” under Section 162(m)
of the Code.
Any
Annual Bonus that becomes payable to the Executive pursuant to this Section
shall be paid to the Executive as soon as reasonably practicable following
receipt by the Board of the audited consolidated financial statements of the
Company for the relevant fiscal year, but in no event later than two and a half
(2 1/2) months following the end of the applicable fiscal year in which such
Annual Bonus was earned. The Executive shall be entitled to receive
any Annual Bonus that becomes payable in a lump sum cash payment, or, at his
election, in any form that the Board generally makes available to the Company’s
executive management team; provided that any such election is made by the
Executive in compliance with Section 409A of the Code (“Section 409A”) and the
regulations promulgated thereunder.
(c) Long-Term Incentive
Awards. Upon execution of this Agreement, the Executive shall
be granted a stock option to purchase 160,000 shares of the Company’s common
stock (the “2010
Option”) and a restricted stock unit award for 800,000 shares of the
Company’s common stock (the “0000 XXX”) under the Company’s
2007 Equity and Incentive Plan on such terms and conditions as determined by the
Committee in its sole discretion and set forth in award agreements dated as of
the date hereof. In addition, during the Period of Employment, the
Executive shall be eligible for such other long term incentive awards as
determined by the Committee in its sole discretion after taking into
consideration the 2010 Option and the 0000 XXX. The Executive
understands and acknowledges that the Company does not anticipate granting any
additional equity awards to the Executive during the Period of Employment with
an aggregate grant date value (as determined by the Committee in its discretion)
in excess of $12,000,000, when added to the grant date value of the 2010 Option
and the 2010 RSU.
(d) Additional
Benefits. The Executive shall 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 the Company generally
are eligible under any plan or program now in effect, or later established by
the Company, on a basis no less favorable than as provided to any other
executive of the Company. The Executive shall 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 programs. Without
limiting the generality of the foregoing, the
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Executive
will be provided benefits and perquisites on such terms and conditions as
determined by the Board, which determination will be based in part upon
comparisons to chief executive officers of public companies of comparable size
and industry to the Company; provided, however, that any such perquisites shall
not be amended after the date hereof with respect to the Executive in a manner
materially adverse to the Executive.
(e) Further
Consideration. The Company acknowledges and agrees to provide
the Executive with the following benefits notwithstanding anything herein to the
contrary. Upon the Executive’s termination of employment from the
Company and its subsidiaries for any reason, including, without limitation, due
to or following any Resignation, or termination by the Company with or without
Cause, the Executive and each person who is his covered dependent (including his
then-current spouse) at such time under each applicable benefit plan sponsored
or provided by the Company shall remain eligible to continue to participate in
all of such plans (as they may be modified from time to time) on a basis no less
favorable to all senior executive officers of the Company (the “Post-Employment Plans”) until
the end of the plan year in which the Executive reaches, or would have reached,
age seventy-five (75) (such benefits, the “Post-Employment
Benefits”). For purposes of this Section IV(e),
Post-Employment Plans will include any relevant plan sponsored by the Company
and any third party or governmental plan contributed to by the Company for the
benefit of senior executives of the Company or otherwise made available to
senior executives of the Company. The Executive is currently eligible
to participate in the following Post-Employment Plans: Executive
Physical Exams, Medical Insurance, Dental Insurance, Group Life Insurance (up to
$1 million coverage on the Executive’s life), and Vision Service
Plan. Coverage under such Post-Employment Plans shall be subject to
the Executive and/or such dependents, as applicable, continuing to pay the
applicable employee portion of any premiums, co-payments, deductibles and
similar costs. Solely with respect to the Executive’s dependents,
such coverage shall terminate upon such earlier date if and when they become
ineligible for any such benefits under the terms of such plans and provided
that once the
Executive or his dependents become eligible for Medicare or any other
government-sponsored medical insurance plan, or if the Executive and his
eligible dependents are eligible to participate in any other company’s medical
insurance plan as an employee (or as eligible dependents of an employee) after
the termination of the Executive’s employment, the Executive or his dependents
shall utilize such government plan or other company plan and, to the extent
permitted by applicable law, the Company’s insurance obligations as part of the
Post-Employment Benefits hereunder shall become secondary to such government
plan or other company plan. Notwithstanding the foregoing, the
Company may meet any of its foregoing obligations under the Post-Employment
Plans by paying for, or providing for the payment of, such benefits directly or
through alternative plans or individual policies which are no less favorable in
all material respects (with respect to both coverage and cost to the Executive)
to the Post-Employment Plans. If the Company meets its obligations by
paying for the Post-Employment Plans pursuant to the foregoing sentence, any
reimbursements required to be made by the Company to the Executive shall be made
on or before the last day of the calendar year following the calendar year in
which the expense was incurred and shall not be subject to liquidation or
exchange for another benefit. In addition, in no event shall the
Post-Employment Benefits provided or the amount of the expenses eligible for
reimbursement during one calendar year affect the Post-Employment Benefits
provided or the amount of expenses eligible for reimbursement in any other
calendar year.
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SECTION
V
BUSINESS
EXPENSES
The
Company shall 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 in accordance with the applicable
Company policies as in effect from time to time; provided, however, that such
policies shall not be amended after the date hereof with respect to the
Executive in a manner materially adverse to the Executive. The
Executive shall comply with such limitations and reporting requirements with
respect to expenses as may be established by the Company from time to time and
shall promptly provide all appropriate and requested documentation in connection
with such expenses. Further, the Executive will receive access to
Company aircraft or alternative air transportation, subject to applicable
Company policies as in effect from time to time.
SECTION
VI
DEATH AND
DISABILITY
The
Period of Employment shall end upon the Executive’s death. If the
Executive experiences a Disability (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 the Company, or at the option of the
Company upon notice of termination to the Executive. For purposes of
this Agreement, “Disability” shall have the
meaning set forth in Section 409A. The Company’s obligation to make
payments to the Executive under this Agreement shall cease as of such date of
termination as a result of death or Disability, except for Base Salary and any
Annual Bonus earned but unpaid as of the date of such termination, payable in
accordance with the terms of Section IV hereof, and the obligation to provide
the Post-Employment Benefits in accordance with Section IV(e) hereof (the “Accrued Obligations”), and, in
such event (a) each of the Executive’s then outstanding options to purchase
shares of Company common stock that were granted prior to August 1, 2006 and
options to purchase shares of Wyndham Worldwide Corporation common stock (and
its successors) (the “Pre-Existing Options”) shall
become immediately and fully vested and exercisable (to the extent not already
vested), and shall remain exercisable during the extended post-termination
exercise period set forth in the Employment Agreement by and between Cendant
Corporation (which has been renamed Avis Budget Group, Inc.) and the Executive
effective as of April 14, 2003 (the “2003 Agreement”), (b) each
option to purchase shares of the Company common stock or stock appreciation
right granted on or after August 1, 2006, but prior to the Effective Date, shall
become immediately and fully vested and exercisable (to the extent not already
vested) and, notwithstanding any term or provision relating to such award to the
contrary, shall remain exercisable until the first to occur of the third (3rd)
anniversary of the Executive’s termination of employment and the original
expiration date of such award, (c) the impact of such termination of employment
on the 2010 Option and 0000 XXX shall be governed by the terms and conditions of
the applicable award agreement and the Company’s 2007 Equity and Incentive Plan,
(d) all other long-term equity awards then outstanding shall be subject to the
terms and conditions of the applicable award agreement and
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the
equity plan under which such awards were granted, and (e) the Company shall pay
the Executive (or his surviving spouse, estate or personal representative, as
applicable) a cash amount equal to the Executive’s target Annual Bonus for the
year in which the Executive is terminated multiplied a fraction the numerator of
which is the total number of days during the applicable calendar year during
which the Executive was employed by the Company and the denominator of which is
365, payable at such time as such bonus otherwise would have been paid had the
Executive remained employed with the Company.
SECTION
VII
EFFECT OF TERMINATION OF
EMPLOYMENT
(a) Without Cause Termination
and Constructive Discharge. Subject to the provisions of
Section VII(d), if the Executive’s employment terminates during the Period of
Employment due to either a Without Cause Termination or a Constructive Discharge
(each, as defined below): (i) the Accrued Obligations shall be paid
to the Executive in accordance with the terms hereof, (ii) the Company shall pay
the Executive (or his surviving spouse, estate or personal representative, as
applicable), on the fifty-third (53rd) day
following such termination (or, such later date as contemplated in Section
VII(d) below in the event that the Release Date (as defined in Section VII(d)
below) is extended as set forth in Section VII(d) below), a lump-sum amount
equal to 2.99 multiplied by the sum of (A) the Executive’s then current Base
Salary, plus (B) the Executive’s then current target Annual Bonus; (iii) each of
the Executive’s then outstanding Pre-Existing Options shall become immediately
and fully vested and exercisable (to the extent not already vested) and in
accordance with the terms and conditions applicable to such options set forth in
the 2003 Agreement, and shall remain exercisable for the extended
post-termination exercise period set forth in the 2003 Agreement; (iv) each
option to purchase shares of the Company’s common stock or stock appreciation
right granted under the Prior Agreement shall become immediately and fully
vested and exercisable (to the extent not already vested) and, notwithstanding
any term or provision thereof to the contrary, shall remain exercisable until
the first to occur of the third (3rd) anniversary of the Executive’s termination
of employment and the original expiration date of such option or stock
appreciation right, (v) the impact of such termination of employment on the 2010
Option and 0000 XXX shall be governed by the terms and conditions of the
applicable award agreement and the Company’s 2007 Equity and Incentive Plan; and
(vi) all other long-term equity awards (including, without limitation,
restricted stock units) shall be subject to the terms and conditions of the
applicable award agreement and the equity plan under which such awards were
granted.
(b) Termination for Cause;
Resignation. If the Executive’s employment terminates due to a
Termination for Cause or a Resignation, the Accrued Obligations shall be paid to
the Executive in accordance with the terms hereof. Outstanding stock
options and other equity awards held by the Executive as of the date of
termination shall be treated in accordance with their terms. Except
as provided in this paragraph, the Company shall have no further obligations to
the Executive hereunder.
(c) For
purposes of this Agreement, the following terms have the following
meanings:
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(i) “Termination for Cause” means
termination of the Executive by the Company as a result of (a) the Executive’s
willful failure to substantially perform his duties as an employee of the
Company or any subsidiary (other than any such failure resulting from incapacity
due to physical or mental illness), (b) any act of fraud, embezzlement or
similar conduct against the Company or any subsidiary, (c) 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), (d)
the Executive’s gross negligence in the performance of his duties or (e) the
Executive purposefully makes (or has been found to have made) a false
certification to the Company pertaining to its financial
statements.
(ii) “Constructive Discharge” means
(a) any material failure of the Company to fulfill its obligations under this
Agreement (including without limitation any material reduction of the Base
Salary (except as otherwise expressly contemplated herein), as the same may be
increased during the Period of Employment, or any material reduction in any
other material element of compensation (except as otherwise expressly
contemplated herein)) or any material diminution to the Executive’s duties and
responsibilities relating to service as an executive officer, (b) the Business
Office is relocated to any location that increases the Executive’s one-way
commute by more than 30 miles or the Business Office is relocated to New York
City provided, in each case, that such relocation constitutes a material
negative change to the Executive’s employment relationship, (c) during the
Period of Employment, the Executive is not the Chief Executive Officer and the
most senior executive officer of the Company; or does not report directly to the
Board, (d) the failure of the Executive to be elected to, or serve on, the Board
or to serve as Chairman of the Board, in both cases, for any reason other than
(I) the Executive’s resignation from either such position (excluding any
resignation resulting from a failure to satisfy any applicable majority vote
requirement), (II) the Executive’s unwillingness to serve in either such
position, (III) due to the Executive’s termination by the Company for Cause or
as a result of death or Disability, or (IV) in the case of the failure of the
Executive to serve as Chairman of the Board, if such failure is as a result of
applicable law, rule or regulation requiring the Chairman of the Board and the
Chief Executive Officer to be separate individuals, or (e) failure of a
successor to the Company to assume this Agreement in accordance with Section XIV
below. Notwithstanding the foregoing, a Constructive Discharge shall
not be deemed to occur for any purpose hereunder if, (i) after June 30, 2012,
the Company elects to remove the Executive from the position of Chief Executive
Officer (and President and Chief Operating Officer, if applicable) and
transition the Executive to serve solely as the Chairman of the Board with any
newly appointed Chief Executive Officer reporting directly to the Executive and
the Board in accordance with the terms of this Agreement, or (ii) at any time
while the Executive is serving as the Chief Executive Officer, the Company
elects to remove the Executive from the position of President and/or Chief
Operating Officer, if applicable, and appoint a new executive(s) to hold such
position(s) so long as the Executive consents, in his sole and absolute
discretion, to such removal and appointment. The Executive shall
provide the Company a written notice of his intention to terminate employment
pursuant to a Constructive Discharge within 60 days
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after the
Executive knows or has reason to know of the occurrence of any such event which
notice describes the circumstances being relied on for the termination with
respect to this Agreement, and the Company shall have thirty (30) days after
receipt of such notice to remedy the event prior to the termination for
Constructive Discharge. Upon the remedy of such event within such
thirty (30)-day period, such event shall no longer constitute a basis for
Constructive Discharge and the Executive’s notice of termination pursuant to a
Constructive Discharge shall be rescinded.
(iii) “Without Cause Termination” or
“Terminated Without
Cause” means termination of the Executive’s employment by the Company
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 or other than due to death or
Disability.
(d) Conditions to Payment and
Acceleration; Section 409A.
(i) Notwithstanding
anything contained herein to the contrary, to the extent required in order to
avoid accelerated taxation and/or tax penalties under Section 409A, the
Executive shall not be considered to have terminated employment with the Company
for purposes of this Agreement and no payments shall be due to the Executive
under Section VII of this Agreement until the Executive would be considered to
have incurred a “separation from service” from the Company within the meaning of
Section 409A.
(ii) All
payments due to the Executive under this Section VII shall be subject to, and
contingent upon, the Executive (or his beneficiary or estate) (x) executing a
release of claims against the Company and its affiliates (in such reasonable
form determined by the Company in its sole discretion) within forty-five days
following the Executive's separation from service (or, in the event of a
dispute, upon resolution of the dispute, provided that such extension does not
result in, as applicable, the disputed payments constituting deferred
compensation within the meaning of Section 409A or the imposition of additional
taxes under Section 409A) and (y) failing to revoke such release (the date on
which the release becomes irrevocable, the “Release Date”).
(iii) To the
extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A, amounts that would otherwise be payable and benefits that
would otherwise be provided pursuant to this Agreement during the six-month
period immediately following the Executive’s termination of employment shall
instead be paid on the first business day after the date that is six months
following the Executive’s termination of employment (or upon the Executive’s
death, if earlier).
(iv) The
intent of the Parties is that payments and benefits under this Agreement comply
with Section 409A and, accordingly, to the maximum extent permitted, this
Agreement shall be interpreted and administered to be in compliance
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therewith. Each
amount to be paid or benefit to be provided under this Agreement shall be
construed as a separate identified payment for purposes of Section 409A and any
payments described in this Agreement that are due within the “short term
deferral period” as defined in Section 409A shall not be treated as deferred
compensation unless applicable law requires otherwise.
(v) The
payments due to the Executive under this Section VII shall be in lieu of any
other severance benefits otherwise payable to the Executive under any severance
plan of the Company or its affiliates.
SECTION
VIII
OTHER
DUTIES OF THE EXECUTIVE
DURING AND AFTER THE PERIOD
OF EMPLOYMENT
(a) The
Executive shall, with reasonable notice during or after the Period of
Employment, furnish information as may be in his possession and fully cooperate
with the Company and its affiliates as may be requested in connection with any
claims or legal action in which the Company or any of its affiliates is or may
become a party. After the Period of Employment, the Executive shall
cooperate as reasonably requested with the Company and its affiliates in
connection with any claims or legal actions in which the Company or any of its
affiliates is or may become a party. The Company agrees to reimburse
the Executive for any reasonable out-of-pocket expenses incurred by the
Executive by reason of such cooperation, including any loss of salary, and the
Company shall make reasonable efforts to minimize interruption of the
Executive’s life in connection with his cooperation in such matters as provided
for in this paragraph.
(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 the Company or any of
its affiliates (“Information”) is confidential
and is a unique and valuable asset of the Company 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 shall 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 shall not make use of the Information for his own
purposes or for the benefit of any person or organization other than the Company
or any of its affiliates. The Executive shall also use his best
efforts to prevent the disclosure of this Information by others. All
records, memoranda, etc. relating to the business of the Company or its
affiliates, whether made by the Executive or otherwise coming into his
possession, are confidential and shall remain the property of the Company or its
affiliates.
(c) (i) During
the Period of Employment and during the Restricted Period, the Executive shall
not use his status with the Company or any of its affiliates to obtain loans,
goods or services from another organization on terms that would not be available
to him in
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the
absence of his relationship to the Company or any of its
affiliates. For purposes of this Agreement, the term “Restricted Period” shall mean
a period of two (2) years following the Executive’s termination of employment
for any reason; provided that in the event that the Executive terminates
employment with the Company following completion of the Term as set forth in
Section III hereof, then, for purposes of Section VIII(c)(ii) hereof, the
Restricted Period shall be a period of one (1) year following termination of
employment (such one-year period, the “Post-Term
Period”).
(ii) During
the Restricted Period, the Executive shall not make any statements or perform
any acts intended to have the effect of advancing the interest of any existing
competitors (or any entity the Executive knows to be a prospective competitor)
of the Company or any of its affiliates or in any way injuring the interests of
the Company or any of its affiliates. During the Restricted Period,
the Executive, without prior express written approval by the Board, shall 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 in
any way or manner with the business of the Company 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 (other
than being less than a 5% shareholder in a publicly traded company), officer,
director, agent, employee, consultant, trustee, affiliate, or
otherwise. The Executive acknowledges that the Company’s and its
affiliates’ businesses are conducted nationally and internationally and agrees
that the provisions in the foregoing sentence shall operate throughout the
United States and those countries in the world where the Company then conducts
business or has a plan to conduct business.
(iii) During
the Restricted Period, the Executive, without express prior written approval
from the Board, shall not solicit any members or the then-current clients of the
Company or any of its affiliates for any existing business of the Company or any
of its affiliates or discuss with any employee of the Company or any of its
affiliates information or operation of any business intended to compete with the
Company or any of its affiliates.
(iv) During
the Restricted Period, the Executive shall not interfere with the employees or
affairs of the Company or any of its affiliates or solicit or induce any person
who is an employee of the Company or any of its affiliates to terminate any
relationship such person may have with the Company or any of its affiliates, nor
shall the Executive during such period directly or indirectly engage, employ or
compensate, or cause any person with which the Executive may be affiliated, to
engage, employ or compensate, any employee of the Company 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 the Company 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.
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(v) 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 5% of any class of equity
interest in a publicly-held company and the term “affiliate” shall include
without limitation all subsidiaries and material licensees of the
Company.
(vi) Notwithstanding
the foregoing, during the Post-Term Period, the Executive may commence
employment with, or engage in, or directly or indirectly (whether for
compensation or otherwise) own or hold a proprietary interest in, manage,
operate, or control, or join or participate in the ownership, management,
operation or control of, or furnish capital to an entity engaged in the
automobile rental business so long as (A) such entity does not derive one-third
or more of its revenues from the automobile rental business and does not have
assets used in the automobile rental business that constitute one-third or more
of such entity’s total business assets, and (B) the Executive is not directly
employed by the division, unit or affiliate of such entity that is engaged in
the automobile rental business.
(d) The
Executive hereby acknowledges that damages at law may be an insufficient remedy
to the Company if the Executive violates the terms of this Agreement and that
the Company shall 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 VIII without the necessity of showing any actual
damage or that monetary damages would not provide an adequate
remedy. Such right to an injunction shall be in addition to, and not
in limitation of, any other rights or remedies the Company may
have. Without limiting the generality of the foregoing, neither party
shall oppose any motion the other party may make for any expedited discovery or
hearing in connection with any alleged breach of this Section VIII.
(e) The
period of time during which the provisions of this Section VIII shall be in
effect shall 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 the Company’s application for injunctive relief.
(f) The
Executive agrees that the restrictions contained in this Section VIII are an
essential element of the compensation the Executive is granted hereunder and but
for the Executive’s agreement to comply with such restrictions, the Company
would not have entered into this Agreement.
SECTION
IX
INDEMNIFICATION
The
Company shall indemnify the Executive to the fullest extent permitted by the
laws of the state of the Company’s incorporation in effect at that time, or the
certificate of incorporation and by-laws of the Company, whichever affords the
greater protection to the Executive (including payment of expenses in advance of
final disposition of a proceeding).
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SECTION
X
CERTAIN
TAXES
Notwithstanding any other provision of
this Agreement to the contrary, in the event that any payment that is either
received by the Executive or paid by the Company on the Executive’s behalf or
any property, or any other benefit provided to the Executive under this
Agreement or under any other plan, arrangement or agreement with the Company or
any other person whose payments or benefits are treated as contingent on a
change of ownership or control of the Company (or in the ownership of a
substantial portion of the assets of the Company) or any person affiliated with
the Company or such person (but only if such payment or other benefit is in
connection with the Executive’s employment by the Company) (collectively the
“Company Payments”),
will be subject to the tax (the “Excise Tax”) imposed by
Section 4999 of the Code (and any similar tax that may hereafter be imposed by
any taxing authority), then the Executive will be entitled to receive either
(i) the full amount of the Company Payments, or (ii) a portion of the
Company Payments having a value equal to $1 less than three (3) times the
Executive’s “base amount” (as such term is defined in Section 280G(b)(3)(A)
of the Code), whichever of clauses (i) and (ii), after taking into account
applicable federal, state, and local income taxes and the excise tax imposed by
Section 4999 of the Code, results in the receipt by the Executive on an
after-tax basis, of the greatest portion of the Company Payments. Any
determination required under this Section X shall be made in writing by the
independent public accountant of the Company (the “Accountants”), whose
determination shall be conclusive and binding for all purposes upon the Company
and the Executive. For purposes of making any calculation required by
this Section X, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable,
good-faith interpretations concerning the application of Sections 280G and
4999 of the Code. If there is a reduction of the Company Payments
pursuant to this Section X, such reduction shall occur in the following
order: (A) any cash severance payable by reference to the Executive’s
Base Salary or Annual Bonus, (B) any other cash amount payable to the Executive,
(C) any employee benefit valued as a “parachute payment,” and (D) acceleration
of vesting of any outstanding equity award. For the avoidance of
doubt, in the event that additional Company Payments are made to the Executive
after the application of the cutback in this Section X, which additional Company
Payments result in the cutback no longer being applicable, the Company shall pay
the Executive an additional amount equal to the value of the Company Payments
that were originally cutback. The Company shall determine at the end
of each calendar year whether any such restoration is necessary based on
additional Company Payments (if any) made during such calendar year, and shall
pay such restoration within ninety (90) days of the last day of such calendar
year. In no event whatsoever shall the Executive be entitled to a tax
gross-up or other payment in respect of any excise tax, interest or penalties
that may be imposed on the Company Payments by reason of the application of
Section 280G or Section 4999 of the Code.
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SECTION
XI
MITIGATION
The
Executive shall not be required to mitigate the amount of any payment provided
for hereunder by seeking other employment or otherwise, nor shall 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 the Company may directly or indirectly
withhold from any payments under this Agreement all federal, state, city or
other taxes that shall be required pursuant to any law or governmental
regulation.
SECTION
XIII
EFFECT OF PRIOR
AGREEMENTS
Except as
otherwise specifically set forth herein, this Agreement shall supersede any
prior agreements between the Company and the Executive (including, but not
limited to, the 2003 Agreement (and any amendment and/or restatement thereof)
and the Prior Agreement) hereof, and any such prior agreement shall be deemed
terminated without any remaining obligations of either party
thereunder.
SECTION
XIV
CONSOLIDATION, MERGER OR
SALE OF ASSETS
Nothing
in this Agreement shall preclude the Company from consolidating or merging into
or with, or transferring all or substantially all of its assets to, another
corporation or other entity which assumes this Agreement and all obligations and
undertakings of the Company hereunder. If (i) there is a merger,
consolidation, sale of all or substantially all of the Company’s assets, or
other business combination involving the Company, or (ii) all or substantially
all of the stock of the Company is acquired by another company, the term “the
Company” shall mean the successor to the Company’s business or assets referred
to in (i) above or such company referred to in (ii) above, and this Agreement
shall continue in full force and effect. Notwithstanding the
foregoing, the Company shall require any successor thereto (whether direct or
indirect, by purchase, merger, consolidation, or otherwise), by agreement in
form and substance reasonably satisfactory to the Executive to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
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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 shall be deemed to
have been waived except in writing by the party charged with
waiver. A waiver shall operate only as to the specific term or
condition waived and shall 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 Jersey and its
validity, interpretation, performance and enforcement shall be governed by the
internal laws of that state, without regard to the choice of law principles
thereof.
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 VIII for which the Company may, but
shall not be required to, seek injunctive relief) shall 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 shall 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 shall 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 shall 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 shall be
borne equally by each party, and each party shall bear the fees and expenses of
its own attorney.
15
(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 shall 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 shall keep confidential, and shall 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
VIII, IX, X, XI, XII and XIII shall continue in full force in accordance with
their respective terms notwithstanding any termination of this Agreement or 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 shall 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 shall be deemed modified so that it shall 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.
*****
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IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the Effective Date.
|
/s/ Xxxx X. Xxxxxxxxxx
|
|||
|
By:
Xxxx X. Xxxxxxxxxx
Title: Executive
Vice President and Chief Human Resource Officer
|
|
XXXXXX
X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
|
||||
|
|
||||
Each of
the undersigned subsidiaries of the Company hereby guarantees to the Executive
the prompt and complete payment and performance by the Company when due of the
Company’s obligations to make payments due to the Executive that are delayed in
accordance with Section VII(d)(iii) in consideration for the services the
Executive renders to such subsidiary in his role as Chairman of the Board and
Chief Executive Officer of Avis Budget Group, Inc.; provided that, as to any
subsidiary, this guarantee shall be null and void and have no effect whatsoever
with respect to such subsidiary for any period (including as of the Effective
Date) during which this guarantee conflicts with or constitutes a breach of any
obligation of such subsidiary under any currently applicable agreement or other
obligation applicable to such subsidiary or any applicable law, rule or
regulation (whether currently applicable or applicable at any time in the
future).
IN WITNESS WHEREOF, the
undersigned have executed this Guarantee as of the Effective Date.
AVIS BUDGET CAR RENTAL,
LLC
AVIS BUDGET HOLDINGS, LLC
AVIS BUDGET FINANCE, INC.
AVIS CAR RENTAL GROUP,
LLC
ARACS LLC
AVIS RENT A CAR SYSTEM,
LLC
AVIS ASIA AND PACIFIC,
LIMITED
AVIS CARIBBEAN, LIMITED
AVIS ENTERPRISES, INC.
AVIS GROUP HOLDINGS, LLC
AVIS INTERNATIONAL, LTD.
17
PF
CLAIMS MANAGEMENT, LTD
AB CAR RENTAL SERVICES,
INC.
AVIS OPERATIONS, LLC
BGI LEASING, INC.
RUNABOUT, LLC
WIZARD SERVICES, INC.
|
/s/
Xxxx X. Xxxxxxxxxx
|
|||
|
By:
Xxxx X. Xxxxxxxxxx
Title: Executive
Vice President, Human Resources
|
BUDGET RENT A CAR SYSTEM,
INC.
BUDGET TRUCK RENTAL, LLC
PR HOLDCO, INC.
|
/s/
Xxxxxx Xxxxxxxxx
|
|||
|
By:
Xxxxxx Xxxxxxxxx
Title: Senior
Vice President, Human Resources
|
18
