Exhibit 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of September 3, 1998 by and
between Cendant Corporation, a Delaware corporation ("Cendant") and Richard A.
Smith (the "Executive").
WHEREAS, Cendant desires to employ the Executive as Chairman and
Chief Executive Officer, Cendant Real Estate Division, 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
Chairman and Chief Executive Officer, Cendant Real Estate Division, 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 Board of Directors of Cendant (the
"Board") and/or the CEO. Cendant acknowledges that such position is equivalent
to the position of Vice Chairman of Cendant Corporation for purposes of
compensation, employee benefits, officer perquisites and officer
indemnification. 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 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 (the
"Period of Employment") will begin on the date hereof and end on June 30, 2001,
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 of
Cendant, 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 $650,000, per annum, and thereafter will be eligible to receive
annual increases as 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 for each fiscal year of Cendant during the Period of Employment
based upon a target bonus equal to 100% of Base Salary, 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 its 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.
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 any Incentive Compensation Awards earned
but unpaid as of the date of such termination. In such event (i) each of the
Executive's then outstanding options to purchase shares of Cendant common stock
which was granted on or after the date hereof will become immediately and fully
vested and exercisable and, notwithstanding any term or provision relating to
such option to the contrary, shall remain exercisable until the first to occur
of the fifth (5th) anniversary of the Executive's termination of employment by
reason of his becoming Disabled, and the original expiration date of such option
and (ii) the Executive and each of his depend-
ents then covered under applicable health, medical, life and disability
insurance benefit plans of Cendant at the time of the Executive's termination of
employment shall remain eligible to continue to participate in such plans
(subject to the Executive or such dependents continuing to pay the applicable
employee portion of any premiums, co-payments, deductibles and similar costs)
until the end of the plan year in which the Executive reaches, or would have
reached, age sixty-two (62), or until such dependents would otherwise have
become ineligible for such benefits under the terms of such plans, whichever is
earlier. 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 180 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 an additional 90 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 any Incentive Compensation Awards earned but unpaid as of 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 (i) each of
the Executive's then outstanding options to purchase shares of Cendant common
stock which was granted on or after the date hereof will become immediately and
fully vested and exercisable and, notwithstanding any term or provision relating
to 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 fifth (5th) anniversary of the Executive's
death, and the original expiration date of such option and (ii) each of the
Executive's dependents then covered under applicable health, medical, life and
disability insurance benefit plans of Cendant at the time of the Executive's
death shall remain eligible to continue to participate in such plans (subject to
such dependents continuing to pay the applicable employee portion of any
premiums, co-payments, deductibles and similar costs) until the end of the plan
year in which the Executive would have reached age sixty-two (62), or until such
dependents would otherwise have become ineligible for such benefits under the
terms of such plans, whichever is earlier.
SECTION VIII
EFFECT OF TERMINATION OF EMPLOYMENT
A. WITHOUT CAUSE TERMINATION; CONSTRUCTIVE DISCHARGE NOT IN
CONNECTION WITH A CHANGE OF CONTROL TRANSACTION; AND RESIGNATION AFTER
EXPIRATION OF PERIOD OF EMPLOYMENT. If the Executive's employment terminates due
to either (i) a Without Cause Termination, (ii) a Constructive Discharge or
(iii) a Resignation at any time following the expiration of the Period of
Employment, as extended from time to time (each such term as defined below), and
a Change of Control Transaction (as defined below) has not occurred within the
past twenty-four (24) months, (A) Cendant will pay the Executive (or his
surviving spouse, estate or personal representative, as applicable) a lump sum
amount equal to the Executive's then current Base Salary for the remainder of
the Period of Employment (or, if greater, a period of one year) plus any and all
Base Salary and Incentive Compensation Awards earned but unpaid through the date
of such termination, (B) 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 relating to such options to the contrary,
shall remain exercisable until the first to occur of the fifth (5th) anniversary
of the Executive's termination of employment and the original expiration date of
such option and (C) the Executive and each of his dependents then covered under
applicable health, medical, life and disability insurance benefit plans of
Cendant at the time of the Executive's termination of employment shall remain
eligible to continue to participate in such plans (subject to the Executive or
such dependents continuing to pay the applicable employee portion of any
premiums, co-payments, deductibles and similar costs) until the end of the plan
year in which the Executive reaches, or would have reached, age sixty-two (62),
or until such dependents would otherwise have become ineligible for such
benefits under the terms of such plans, whichever is earlier.
B. WITHOUT CAUSE TERMINATION AND CONSTRUCTIVE DISCHARGE IN
CONNECTION WITH A CHANGE OF CONTROL TRANSACTION. If a Change in Control
Transaction occurs and the Executive's employment terminates due to either a
Without Cause Termination or a Constructive Discharge within twenty-four (24)
months after such Change in Control Transaction (i) Cendant will pay the
Executive upon such termination a lump sum amount equal to the product of (A)
the sum of the Executive's then current Base Salary and the Executive's target
Incentive Compensation Award for the year in which such termination occurs,
multiplied by (B) 300%, (ii) each of the Executive's then outstanding options to
purchase shares of Cendant common stock which was granted on or after the date
hereof will become immediately and fully vested and exercisable and,
notwithstanding any term or provision relating to such options to the contrary,
shall remain exercisable until the first to oc-
cur of the fifth (5th) anniversary of the Executive's termination of employment,
and the original expiration date of such option and (iii) the Executive and each
of his dependents then covered under applicable health, medical, life and
disability insurance benefit plans of Cendant at the time of the Executive's
termination of employment shall remain eligible to continue to participate in
such plans (subject to the Executive or such dependents continuing to pay the
applicable employee portion of any premiums, co-payments, deductibles and
similar costs) until the end of the plan year in which the Executive reaches, or
would have reached, age sixty-two (62), or until such dependents would otherwise
have become ineligible for such benefits under the terms of such plans,
whichever is earlier.
C. 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. Each outstanding stock
options held by the Executive as of the date of termination will be treated in
accordance with its terms. Except as provided in this paragraph, Cendant will
have no further obligations to the Executive hereunder.
D. 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
(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) the Business Office is
relocated to any location which is more than 30 miles from the city limits of
Parsippany, New Jersey or (iii) either (A) the Executive no longer reports
directly to the CEO or (B) Henry R. Silverman is no longer the CEO; PROVIDED,
HOWEVER, that any Constructive Discharge under clause (iii) shall not be deemed
to occur until the date which is six (6) months following the attainment of such
clause (iii). 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, (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 or (v) during any period of time during which the Executive
is employed primarily by the Cendant Real Estate Division (such division,
collectively with each other business unit or division for which the Executive
has direct reporting responsibility to the CEO, the "Division") there is
consummated a transaction (or a series of transactions over a period of no more
than one year) involving the divestiture by Cendant of all or a portion of the
Division and, as a direct result of such transaction, the aggregate revenues for
the Division are decreased by 50% (which decrease shall be measured by comparing
the net revenues for the Division over the four fiscal calendar quarters of
Cendant ending immediately prior to such transaction, against the aggregate
revenues for the Division over the same period after excluding any portion of
such revenues attributable to the portions of the Divi-
sion which are no longer owned by Cendant) and such decrease is solely and
directly attributable to such transaction(s).
E. 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. After the Period of Employment, the Executive will cooperate as
reasonably requested with Cendant and its affiliates in connection with any
claims or legal actions in which Cendant or any of its affiliates is or may
become a party. Cendant agrees to reimburse the Executive for any reasonable
out-of-pocket expenses incurred by Executive by reason of such cooperation,
including any loss of salary, and Cendant will 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 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 use his status with Cendant or any of
its affiliates to obtain loans, goods or services from another organization on
terms that would not be available to him in the absence of his relationship to
Cendant or any of its affiliates.
ii. During the Restricted Period, 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, 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 in any way or manner 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.
iii. 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 information or operation of any business
intended to compete with Cendant or any of its affiliates.
iv. 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.
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" 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 cer-
tificate of incorporation and by-laws of Cendant, whichever affords the greater
protection to the Executive.
SECTION XI
CERTAIN TAXES
Anything in this Agreement or in any other plan, program or
agreement to the contrary notwithstanding and except as set forth below, in the
event that (i) the Executive becomes entitled to any benefits or payments under
Paragraph A of Section VIII hereof and (ii) it shall be determined that any
payment or distribution by Cendant to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise, but determined without regard to any additional
payments required under this Section XI) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section XI, if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Executive such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate, shall
be reduced to the Reduced Amount. All determinations required to be made under
this Section XI, including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by Deloitte & Touche LLP or such
other certified public accounting firm as may be designated by Cendant.
SECTION XII
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
Ex-
ecutive as the result of employment by another employer after the date the
Executive's employment hereunder terminates.
SECTION XIII
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 XIV
EFFECT OF PRIOR AGREEMENTS
This Agreement will supersede any prior employment agreement between
Cendant and the Executive hereof (including, without limitation, that certain
letter agreement between Cendant and the Executive dated as of the date hereof),
and any such prior employment agreement will be deemed terminated without any
remaining obligations of either party thereunder.
SECTION XV
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 and this Agreement
will continue in full force and effect.
SECTION XVI
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 XVII
GOVERNING LAW
This Agreement has been executed and delivered in the State of New
Jersey and its validity, interpretation, performance and enforcement will be
governed by the internal laws of that state.
SECTION XVIII
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 XVIII has been included to
rapidly and inexpensively resolve any disputes between them with respect to this
Agreement, and that this Section XVIII 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 XIX
SURVIVAL
Sections IX, X, XI, XII, XIII and XVIII will continue in full force
in accordance with their respective terms notwithstanding any termination of the
Period of Employment.
SECTION XX
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: Thomas D. Christopoul
Title: Executive Vice President
Human Resources
RICHARD A. SMITH
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