EXHIBIT 10.73
AMENDED AND EXTENDED EMPLOYMENT AGREEMENT
This Amended and Extended Employment Agreement ("Agreement") dated as
of July 1, 2002 (the "Effective Date"), by and between Cendant Corporation, a
Delaware corporation (the "Company"), and Henry R. Silverman (the "Executive").
WHEREAS, the Executive has served as the Chairman of the Board and
Chief Executive Officer and President of the Company or its predecessors and
currently serves as such pursuant to an employment agreement that has been
amended over the years to reflect the growth of the Company and the Executive's
expanded responsibilities and duties (the "Prior Agreement"):
WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the Executive's contribution to the growth and success of the Company has
been substantial and that the size and scope of the Company's operations have
expanded significantly in recent years requiring increased executive management
oversight and additional responsibilities for the Executive; and
WHEREAS, the Board and the Executive desire to further amend and
restate the Executive's employment agreement to extend the term of employment of
the Executive and to provide the Executive with employment arrangements with the
Company in the best interests of the Company and its stockholders and the
Executive is willing to commit himself to serve the Company on the terms and
conditions herein provided, which terms and conditions shall be considered for
all purposes an extension of the Executive's Prior Agreement.
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 to the terms and conditions set forth
below.
1. TERM OF EMPLOYMENT. The employment of the Executive by the Company
pursuant to this Agreement shall begin as of the Effective Date and shall end on
December 31, 2012, subject to earlier termination as provided herein (the
"Expiration Date") (such period from the Effective Date to the Expiration Date,
the "Term").
2. POSITION AND DUTIES. During the Term the Executive shall serve as
Chairman of the Board and Chairman of the Executive Committee and President and
Chief Executive Officer of the Company and shall report solely and directly to
the Board. During the Term, the Executive shall at all times be the senior-most
officer of the Company, with the duties, responsibilities and authority
commensurate with chief executive officers of public entities of similar size,
and in any case consistent with such duties, responsibilities and authority as
have heretofore been his as Chairman and CEO. The Executive shall devote such
time and effort as may be necessary and appropriate from time to time in the
circumstances for the proper discharge of his duties and obligations under the
Agreement.
3. PLACE OF PERFORMANCE. In connection with the Executive's employment,
the Company shall continue to provide him with an office, office furniture and
office staff of his selection in midtown Manhattan of the New York City
metropolitan area at the same level as currently provided for, which office
shall continue to be his base of operations, except to the extent that the
Executive may, at his election, render his services from other locations, and
except for required travel on the Company's business. The Company shall pay all
the
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Executive's reasonable business expenses which relate to the Company at such
Manhattan location.
4. COMPENSATION AND RELATED MATTERS. (a) SALARY. During the Term, the
Company shall pay the Executive an annual base salary at a rate of $3,300,000
per year, such salary to be paid in substantially equal semi-monthly or
bi-weekly installments. Such annual salary shall be increased on each January 1,
commencing January 1, 2003, during the Term (an "Adjustment Date") as follows:
if the "Consumer Price Index" for the calendar month immediately preceding the
applicable Adjustment Date shall exceed the Consumer Price Index for the
corresponding month during the prior year, then such salary (as previously
adjusted) shall be determined by multiplying the amount of such salary (as
previously adjusted) by a fraction, the numerator of which shall be the Consumer
Price Index for the calendar month immediately preceding the applicable
Adjustment Date, and the denominator of which shall be the Consumer Price Index
for the applicable month during the prior year. Each adjustment shall be made as
promptly as practicable after publication of the Consumer Price Index for the
month immediately preceding the applicable Adjustment Date. Immediately after
such publication, the Company shall pay to the Executive such additional amount
as shall be required to bring the aggregate of the semimonthly installments of
the then current annual salary paid to the Executive on and after the applicable
Adjustment Date up to the total dollar amount required by reason of such
adjustment; thereafter, all monthly installments of the adjusted annual salary
for the balance of the 12 months shall be made at the newly adjusted rate. In no
event shall such annual salary (as previously adjusted) be decreased to reflect
a decline in the Consumer Price Index. As used in this Agreement, "Consumer
Price Index" shall mean the Consumer Price Index, Urban Wage Earners and
Clerical Workers, Northeast Urban Size A, published by the Bureau of Labor
Statistics of
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the United States Department of Labor. The applicable number in such Index, for
purposes of this Agreement, shall be the number for "All Items" (which number
for the month of March 2002 was 183.6). In the event a substantial change is
made with respect to the information used to determine the Consumer Price Index,
or in the event another publication is used because the Consumer Price Index is
not published, appropriate adjustment shall be made in the corresponding numbers
for prior periods so that after such adjustment the same result will be produced
as would have resulted had there been no such change in the Consumer Price Index
or had it continued to be published. Notwithstanding the foregoing, the Board
may, during the Term, increase (but not decrease) the Executive's annual base
salary from what would otherwise be payable hereunder.
(b) EXPENSES. During the Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable and customary expenses incurred
by him in performing services hereunder, including first-class travel
accommodations (air and lodging) for business-related travel and living expenses
while away from home on business or at the request of and in the service of the
Company; provided, that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company and
approved by the Board. The Company shall provide the Executive with a car and
driver. So long as the Company is in the car rental or car leasing business, the
Company shall also continue to arrange to provide the Executive, in a manner
consistent with past practice prior to the execution of this Agreement, access
to and the use of "demonstration" and/or other vehicles used for product testing
and evaluation at the Executive's request.
(c) OTHER BENEFITS. The Executive shall be entitled to participate in
or receive benefits under any employee benefit plan, arrangement or perquisite
made available by the
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Company now or in the future to its senior- most management and key management
employees, and nothing paid to the Executive under any plan, arrangement or
perquisite presently in effect or made available in the future shall be deemed
to be in lieu of the salary and other compensation payable to the Executive
pursuant to this Section 4. Any payments or benefits payable to the Executive
hereunder in respect of any year during which the Executive is employed by the
Company for less than the entire such year shall, unless otherwise provided in
the applicable plan or arrangement, be prorated in accordance with the number of
days in such year during which he is so employed. Without limiting the
generality of the foregoing, the compensation, benefits and perquisites provided
pursuant to this paragraph (c) shall (i) in no event be less favorable than such
compensation, benefits and perquisites provided to the Company's Chairman of the
Board of Directors (at such times as the Executive is not serving in such
capacity) or the Chief Executive Officer (at all other times during the term of
employment hereunder), (ii) provide the Executive with a level of benefits and
perquisites no less favorable than those that are made available to chief
executive officers of other comparable public companies, (iii) be no less
favorable than the highest level of compensation, benefits and perquisites
provided to the Executive currently under the Prior Agreement, and (iv) include
(A) use of an automobile driver and car service consistent with current practice
as in effect prior to the execution of this Agreement and (B) priority use and
scheduling of the Company aircraft as provided for in Section 4(h) below.
(d) INDEMNIFICATION. In addition to any indemnification provided by the
Certificate of Incorporation or By-Laws of the Company or otherwise (the
indemnification provisions of which shall not be amended in any way to limit or
reduce the level or nature of indemnification available to the Executive as a
Director or officer of the Company during the
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Term from that in effect immediately prior to the execution of this
Agreement), the Company shall indemnify and provide reasonable advances for
expenses to the Executive, to the fullest extent permitted by the laws of the
State of Delaware, if the Executive is made a party, or threatened to be made a
party, to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that the Executive is or was an officer, director or employee of the Company or
any subsidiary or affiliate thereof, in which capacity the Executive is or was
serving at the Company's request, against expenses (including reasonable
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
incurred by him in connection with such action, suit or proceeding. The Company
shall at no cost to the Executive at all times include the Executive, during the
Term and for so long thereafter as Executive may be subject to any such claim,
as an insured under any directors' and officers' liability insurance policy
maintained by the Company, which policy shall provide such coverage as the Board
may deem appropriate (but in no event less than the coverage as in effect prior
to the execution of this Agreement). Any payments under this provision which are
treated as taxable income to the Executive (in accordance with IRS rules and
regulations) shall be grossed up for tax purposes at the Executive's then
applicable federal, state and local tax rate.
(e) BONUS. (i) In addition to the annual base salary provided for above
in Section 4(a), the Company shall pay to the ----- Executive incentive
compensation in an amount determined as follows (such amount, the "Annual
Formula Bonus"):
(A) FOR FISCAL YEAR 2002 FROM JANUARY 1, 2002 THROUGH TO THE EFFECTIVE
DATE:
The Company shall pay to the Executive an Annual Formula Bonus in an
amount equal to seventy-five basis points (0.75%) of the Company's
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Adjusted EBITDA (as defined below) for Fiscal Year 2002 determined
through to the Effective Date; PROVIDED, HOWEVER, that such bonus
payment shall in no event exceed 150% of the pro rated annual base
salary payable to the Executive through to the Effective Date.
(B) FOR FISCAL YEAR 2002 FROM THE EFFECTIVE DATE THROUGH TO THE END OF
FISCAL YEAR 2002 AND EACH FISCAL YEAR THEREAFTER
The Company shall pay to the Executive an Annual Formula Bonus for any
particular fiscal year (or part thereof) during the Term equal to the
product of (I) sixty basis points (0.60%) multiplied by (II) the
Company's Adjusted Pre-Tax Income (as defined below) for such fiscal
year (or part thereof, and in the case of Fiscal Year 2002 Adjusted
Pre-Tax Income shall be determined from the Effective Date through the
end of Fiscal Year 2002); PROVIDED, HOWEVER, that such bonus payment
shall in no event exceed the product of (x) $100,000 multiplied by (y)
each penny of the Company's Adjusted Diluted Earnings Per Share (as
defined below) for such fiscal year (or part thereof, and in the case
of Fiscal Year 2002 Adjusted Diluted Earnings Per Share shall be
determined from the Effective Date through the end of Fiscal Year
2002).
(ii) The aggregate Annual Formula Bonus due the Executive for
Fiscal Year 2002 shall be the sum of the Fiscal Year 2002
bonus calculations provided for in subclauses (e)(i)(A) and
(e)(i)(B) above.
(iii) For purposes of this Agreement:
"Adjusted EBITDA" shall mean the Company's earnings before
interest, taxes, depreciation and amortization for any
applicable fiscal year as
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reflected on the Company's audited consolidated statements of
income, but (A) adjusted for any extraordinary gains or losses
or items of a non-recurring nature to the extent such may have
otherwise been reflected in the Company's audited financial
statements and any acquisition and integration costs arising
in connection with or otherwise related to acquisitions or
mergers undertaken by the Company and (B) including any
budgeted EBITDA for the applicable fiscal year (or part
thereof) attributable to any business division, unit or
operation that was sold, transferred, spun-off, or otherwise
disposed of during such fiscal year; "Adjusted Pre-Tax Income"
shall mean the Company's income before taxes for any
applicable fiscal year as reflected on the Company's audited
consolidated statements of income, as the same may be adjusted
by the Company's auditors, and further adjusted for any
extraordinary gains or losses or items of a non-recurring
nature to the extent such may have otherwise been reflected in
the Company's audited financial statements and any acquisition
and integration costs arising in connection with or otherwise
related to acquisitions or mergers undertaken by the Company;
and "Adjusted Diluted Earnings Per Share" shall mean the
Company's diluted earnings per share as reflected on the
Company's quarterly and/or annual press releases as the same
may be adjusted by the Company's auditors, and including
adjustments for any extraordinary gains or losses (net of
taxes, per diluted share) or items of a non-recurring nature
(net of taxes, per diluted share) to the extent such may have
otherwise been
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reflected in the Company's audited financial statements and
any acquisition and integration costs (net of taxes, per
diluted share) arising in connection with or otherwise related
to acquisitions or mergers undertaken by the Company to the
extent such may have otherwise been reflected in the Company's
audited financial statements and/or press releases.
(iv) The Annual Formula Bonus, with respect to any fiscal year of
the Company, shall be paid to the Executive no later than
ninety (90) days following the end of such fiscal year, or as
soon as practicable thereafter if the amount of such Annual
Formula Bonus cannot be determined by such date.
Notwithstanding the foregoing, a prorated Annual Formula Bonus
shall not be paid for a partial year if the Executive's
employment is terminated for Cause pursuant to Section
6(a)(iii) or by a voluntary resignation pursuant to Section 6
(b).
(f) OPTIONS AND RESTRICTED STOCK. During the Term, the Board or the
Compensation Committee of the Board may grant options or restricted stock to the
Executive from time to time on a discretionary basis, on such terms and
conditions as the Board or Committee deems appropriate; provided that to the
extent the terms and conditions of this Agreement conflict with or are otherwise
inconsistent with the terms and conditions of any such stock option, restricted
stock or other equity based award plan (including but not limited to the
provisions regarding accelerated vesting of options or lapsing of restrictions
on restricted stock), the terms and conditions of this Agreement shall govern
and prevail.
(g) LIFE INSURANCE BENEFITS. Subject to the terms and conditions of the
Split-Dollar Agreements dated as of August 23, 2000 by and between the Company
and the Executive and the Limited Collateral Assignments related thereto (the
"Insurance Agreements"), the
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Company shall maintain throughout the Term and following the termination or
expiration of the Term for any reason and for the remainder of the Executive's
life, one or more term life insurance policies on the life of the Executive in
the aggregate face amount of $100 million. Any reference to the Executive's
Amended and Restated Employment Agreement set forth in the Insurance Agreements
shall be deemed to mean this Agreement. Nothing contained in this paragraph
shall in any way reduce or alter the Executive's rights under the Insurance
Agreements or reduce or alter the Company's obligations under the Insurance
Agreements, including without limitation the Executive's right to name
beneficiaries of the policies and the Company's obligation to make certain
premium payments in respect of the policies. The Company represents and warrants
that the terms of the Insurance Agreements are in conformance with the
provisions of this Agreement.
(h) USE OF AIRCRAFT. In order to ensure the accessibility and safety of
the Executive during the Term, the Executive shall have priority scheduling on
Company aircraft used for business purposes and Executive shall be entitled to
any other use of Company aircraft in accordance with Company practice. The
Company also shall reimburse Executive for all costs associated with the
Executive's use of aircraft in accordance with the Company's policies, whether
the aircraft is being chartered or is Company-owed. Any payments under this
provision which are to be treated as taxable compensation to the Executive (in
accordance with IRS rules and regulations) shall be grossed up for tax purposes
at the Executive's then applicable federal, state and local tax rate.
(i) REGISTRATION RIGHTS AND RELATED ASSISTANCE. During the Term and for
so long thereafter as the Executive or his estate directly or indirectly own
common stock, stock options or equity-based awards in the Company, (A) the
Company shall file with the Securities
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and Exchange Commission and thereafter maintain the effectiveness of one or more
registration statements registering under the Securities Act of 1933, as amended
(the "1933 Act"), the offer and sale of shares by the Company to Executive
pursuant to stock options or other equity-based awards granted to Executive
under Company plans or otherwise or, if shares are acquired by Executive in a
transaction not involving an offer or sale to Executive but resulting in the
acquired shares being "restricted securities" for purposes of the 1933 Act,
registering the reoffer and resale of such shares by Executive, (B) the
Executive shall have unlimited piggyback registration rights in connection with
any proposed public offering by the Company (subject to any reasonable
allocation requirements and/or restricted selling or blackout periods imposed by
the Company or any applicable regulatory agency), and (C) to the extent the
Executive (or his estate) determines to engage in an exempt sale of any common
stock or other securities of the Company, the Company shall take all reasonable
steps to cooperate with and assist the Executive (or his estate) in connection
with such sale.
5. ADDITIONAL POTENTIAL COMPENSATION. Nothing in this Agreement shall
prohibit the Compensation Committee of the Company's Board of Directors from
awarding additional compensation to the Executive if, in its sole discretion,
the Compensation Committee determines that such a payment is warranted based
upon the Executive's performance.
6. TERMINATION. (a) The Executive's employment pursuant to this
Agreement may be terminated by the Company only under the following
circumstances:
(i) DEATH. The Executive's employment shall terminate upon his
death. If the Executive's employment is terminated pursuant to
this paragraph his estate or legal representative shall
receive his accrued annual base salary through the date his
employment is terminated, an Annual Formula Bonus prorated for
the period
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ending on the date his employment is terminated and any other
earned and accrued, but otherwise unpaid amounts (including,
without limitation, any then unpaid Annual Formula Bonus). In
addition, the Executive's eligible dependants shall be
entitled to continued Health and Welfare Coverage (as defined
below) for the remainder of their lives at the prevailing
contribution rates applicable to Company employees receiving
such Health and Welfare Coverage.
(ii) DISABILITY. If, in the written opinion of a qualified
physician selected by the Company and acceptable to the
Executive (or the Executive's legal representative) the
Executive shall become permanently and totally unable to
perform his duties hereunder due to physical or mental
illness, and has failed, because of such illness, to render,
for at least six (6) consecutive months, services of the
character contemplated by this Agreement, the Company may
terminate the Executive's employment upon 30 days written
notice to the Executive , and in such event, the Executive's
employment with the Company shall terminate effective upon the
30th day after receipt of such notice (provided that the
Executive shall not have returned to full-time performance
prior to such time). If the Executive's employment is
terminated pursuant to this paragraph, he shall receive a lump
sum cash payment within 30 days of the date of termination in
an amount equal to the sum of (A) the Executive's accrued and
unpaid Base Salary through the date of termination and any
earned but unpaid Annual Formula Bonus, (B) an Annual Formula
Bonus for the fiscal year in which such termination occurred,
prorated for the number of whole or partial months worked by
the Executive in such year, but based upon the Company's then
most current
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financial forecast of pre-tax income for such fiscal year
consistent with past practices, and (C) the greater of (I) the
aggregate amount of Base Salary that would have been paid to
the Executive for the remainder of the Term, assuming for
purposes of this Section 6(a)(ii) that the Executive would
have received for the remainder of the Term the highest annual
Base Salary paid (or in the case of Base Salary due during the
year of termination, payable) within five (5) years of the
date of termination (the "Designated Base Salary"), or (II)
the product of the Designated Base Salary multiplied by three
(3); PROVIDED THAT the amount of any Base Salary payable
hereunder shall be reduced by the sum of (x) amounts that have
been paid to the Executive under any Company-sponsored
disability plan providing disability benefits to the Executive
with respect to the disability giving rise to the termination
pursuant to this Section 6(a)(ii) ("Covered Disability
Payment") and (y) the present value, calculated in a manner
reasonably acceptable to the Executive, of any Covered
Disability Payment to be paid to the Executive. In addition,
the Executive and his eligible dependants shall be entitled to
continued Health and Welfare Coverage (as defined below) for
three (3) years after the date of his termination ("3-Year
Benefit Plan Coverage"), after which the Executive (and his
eligible dependants) shall be eligible for the lifetime
benefits provided for under Section 6(vi) of this Agreement.
(iii) CAUSE. The Company may terminate the Executive's employment
for Cause. As used in this Agreement, "Cause" shall mean: (A)
the willful and continued failure by the Executive
substantially to perform his duties hereunder (other than any
such failure resulting from the Executive's incapacity due to
physical or mental
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illness) after written warning from the Board specifying in
reasonable detail the breach(es) complained of; (B) fraud or
willful misconduct that has a material detrimental effect upon
the Company, as finally determined through arbitration or
final judgment of a court of competent jurisdiction (which
arbitration or judgment, due to the passage of time or
otherwise, is not subject to further appeal); or (C)
conviction of a criminal offense constituting a felony (which
conviction, due to the passage of time or otherwise, is not
subject to further appeal). For purposes of the foregoing, no
act or failure to act on the part of the Executive shall be
considered "willful" unless it is done, or omitted to be done,
by the Executive without reasonable belief that Executive's
action or omission was in the best interests of the Company.
Any act or failure to act that is authorized by the Board or
pursuant to the advice of counsel and that is undertaken by
the Executive for the Company shall be conclusively presumed
to be done, or omitted to be done, by the Executive in the
best interests of the Company. The Executive's employment
shall not be deemed to have been terminated for Cause unless
the Company shall have given or delivered to the Executive (I)
reasonable notice setting forth the reasons for the Company's
intention to terminate the Executive's employment for Cause,
(II) an opportunity for the Executive to cure any such breach
during the 30-day period after the Executive's receipt of such
notice, (III) a reasonable opportunity, at any time during the
30-day period after the Executive's receipt of such notice,
for the Executive, together with his counsel, to be heard
before the Board, and (IV) a Notice of Termination (as defined
below) stating that, in the good faith opinion of not less
than 75% of the
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disinterested Board members then in office, the Executive was
guilty of the conduct set forth in clauses (A), (B) or (C) of
the preceding sentence. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (x)
indicates the specific termination provision of this Agreement
relied upon, (y) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated
and (z) specifies the termination date (which date shall be
not less than ninety (90) days after the giving of such
notice). On the termination date specified in a Notice of
Termination duly delivered pursuant to this paragraph, the
Executive's compensation and other benefits set forth in this
Agreement (other than Section 4(d) and other than any
compensation or benefit that shall have been earned or
otherwise accrued but not been paid as of such date) shall
terminate. For purposes of the foregoing, no certification by
the Executive, as may be required by any governmental
authority, of any periodic reports or other documentation
filed by the Company under any applicable law, rule or
regulation shall provide any basis for any alleged "Cause"
hereunder so long as the Executive reasonably relied on the
Company's disclosure and reporting procedures in connection
with Executive's review of the periodic reports or other
documentation underlying his certification and the Executive
believed that his certification was accurate at the time made
(such certification shall be referred to as a "Covered
Certification").
(iv) GOOD REASON. The Executive may terminate his employment for
"Good Reason." As used in this Agreement, "Good Reason" shall
mean: (A) the failure to elect
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and continue the Executive as Chairman of the Board and
Chairman of the Executive Committee or to nominate the
Executive for re-election as a member of the Board; (B) the
assignment to the Executive of duties, authorities,
responsibilities and reporting requirements inconsistent with
his position, or if the scope of any of the Executive's
material duties or responsibilities as Chief Executive Officer
and President of the Company is reduced or expanded to a
significant degree without the Executive's prior consent,
except for any reduction in duties and responsibilities due to
Executive's illness or disability and except in the event the
Board shall determine that the Executive shall no longer serve
the Company in the capacity of President and/or Chief
Executive Officer but permits the Executive to continue to
serve the Company in the capacity of Chairman of the Board of
Directors and Chairman of the Executive Committee; (C) a
reduction in or a substantial delay in the payment of the
Executive's compensation or benefits from those required to be
provided in accordance with the provisions of this Agreement;
(D) a requirement by the Company or the Board, without the
Executive's prior written consent, that the Executive be based
in another location that is more than a 20-mile radius from
the Executive's mid-town Manhattan offices as provided for
under Section 3, other than on travel reasonably required to
carry out the Executive's obligations under this Agreement;
(E) the failure of the Company to indemnify the Executive
(including the prompt advancement of expenses), or to maintain
directors' and officers' liability insurance coverage for the
Executive, in accordance with the provisions of Section 4(d)
hereof; (F) the Company's purported termination of the
Executive's employment for Cause other
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than in accordance with the requirements of this Agreement;
(G) a "Change of Control" as defined below shall have
occurred; (H) the delivery to the Board of a written notice
from the Executive stating that the Executive is unable to
deliver a Covered Certification because either (I) the Company
and/or its representatives have failed to cooperate or
otherwise have prevented the Executive from completing such
review as he deems necessary to deliver a Covered
Certification or (II) the Company and/or its representatives
have failed to address the Executive's reasonable concerns
regarding the adequacy and completeness of the periodic
reports or other documentation, or regarding the Company's
disclosure or reporting procedures, as to which the Covered
Certification relates, PROVIDED THAT in any such case the
Board fails to cure to the Executive's satisfaction any of the
matters addressed in subclauses (I) or (II) in a timely manner
prior to when the Covered Certification would otherwise have
been required to be filed; (I) the failure of any successor
company to the Company to assume this Agreement in accordance
with Section 9 hereof; and (J) any other breach by the Company
of any provision of this Agreement. For purposes of this
Agreement, "Change of Control" shall have the meaning set
forth in the Company's 1993 Stock Option Plan as of the date
hereof with respect to the definitions of a "Change-of-Control
Transaction," subject to any subsequent modifications in such
definitions that are more favorable to the Executive, PROVIDED
THAT in any event "Change of Control" shall include the
approval by the shareholders of the Company of any transaction
or series of transactions under which the Company is merged or
consolidated with any other company, other than a merger or
consolidation (I) which would result in
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the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of
the surviving entity) more than 66 2/3% of the combined voting
power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation and (II) after which no person holds 20% or more
of the combined voting power of the then-outstanding
securities of the Company or such surviving entity.
(v) OTHER. If the Executive's employment is terminated by the
Company, other than as set forth in paragraphs (i), (ii) or
(iii) of this Section 6(a), or if the Executive terminates for
Good Reason, then (A) the Company shall continue to make
available to the Executive and his eligible dependants
continued Health and Welfare Coverage (as defined below) until
the later of the remainder of the Term or the 3-Year Benefit
Plan Coverage period, unless the Executive shall theretofore
deliver a written notice to the Company to the effect that he
elects not to accept such other benefits (and provided that
upon the expiration of this Agreement at the end of the Term,
the Executive (and his eligible dependants) shall be entitled
to the benefits set forth in Section 6(vi) hereof), (B) all
stock options held by the Executive immediately prior to such
termination, to the extent not theretofore fully vested and
exercisable, shall become fully vested and exercisable and all
shares of restricted stock held by the Executive immediately
prior to such termination shall become fully vested and free
of restrictions (PROVIDED THAT the vesting and exercisability
of those stock options granted to the Executive on October 14,
1998 (the "1998 Option Grant") shall continue to be governed
by the
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operative terms of the Prior Agreement applicable to the 1998
Option Grant, and (C) the Company shall pay to the Executive,
on the date of termination, a lump sum cash payment equal to
the sum of (I) the Annual Formula Bonus pro rated through the
date of termination (the "Accrued Bonus") plus (II) the
product of (x) the sum of (1) the Executive's annual base
salary (as in effect immediately prior to such termination)
plus (2) the Annual Formula Bonus, multiplied by (y) the
greater of (1) the number of years (including partial years)
remaining in the Term (determined immediately prior to such
termination) or (2) 2.99. (the amounts payable to the
Executive pursuant to preceding subclauses (I) and (II) shall
be referred to as the "Termination Payment"). For purposes of
determining the Termination Payment, the Annual Formula Bonus
shall be calculated assuming the Executive is employed for the
entire fiscal year in which such termination occurs, but shall
be based upon the Company's then most current financial
forecast of pre-tax income for such fiscal year consistent
with past practices. Notwithstanding anything herein to the
contrary, in the event the Board and the Executive agree that
the Executive shall no longer serve the Company in the
capacity of President and/or Chief Executive Officer, then so
long as the Executive agrees to continue to serve the Company
in the capacity of Chairman of the Board of Directors and
Chairman of the Executive Committee, such change in position
and duties shall not be deemed a termination of the
Executive's employment by the Company within the meaning of
this Section 6(a)(v). Notwithstanding any provision of this
Agreement to the contrary, if the Executive is eligible under
any other plan or arrangement for any additional benefit or
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payment in the event of a change of control of the Company
then the Executive shall be entitled to receive such payment
or benefit in accordance with the terms of such plan or
arrangement.
(vi) CERTAIN POST TERM BENEFITS AND OBLIGATIONS. (A) If the
Executive's employment under this Agreement is terminated by
the Company, other than as set forth in paragraphs (i) or
(iii) of this Section 6(a), or if the Executive terminates his
employment for Good Reason under this Agreement, or upon the
expiration of the Term (in each case, the "Post Term Period"),
then (I) the Company shall provide to the Executive the
Separation Benefits for the remainder of his life and/or the
Separation Benefits Buyout, if applicable, each as defined
below, and (II) for the remainder of his life, the Company
agrees to maintain the Executive as an employee (but not an
officer) of the Company, and the Executive agrees to keep
himself reasonably available to the chief executive officer of
the Company to render such advice and perform such services on
behalf of the Company as may be reasonably requested by such
chief executive officer (provided that the Executive shall not
be required to render such advice or perform such services for
more than ninety (90) days in any calendar year, subject to
the Executive's reasonable availability) (such services, the
"Post Term Services"), in consideration for which the
Executive shall receive monthly payments from the Company in
the amount of $83,000 (which amount shall be adjusted to
reflect all increases in the Consumer Price Index following
the Effective Date and to be adjusted annually following
termination of the Executive's employment to reflect any
increase in the Consumer Price Index from the preceding
calendar year) (the
20
"Post Term Compensation"). The Company's obligations set forth
in this Section 6(a)(vi) are not to be subject to setoff or
reduction, PROVIDED, HOWEVER, that (x) the Company's
obligation to continue to employ the Executive and pay any
future Post Term Compensation not yet then accrued shall
terminate if during the Post Term Period (1) the Executive
should become totally and permanently unable to provide the
Post Term Services, (2) absent a breach of this Agreement by
the Company, the Executive is otherwise unwilling to continue
to perform the Post Term Services, (3) the Executive is
convicted of a criminal offense constituting a felony (which
conviction, due to the passage of time or otherwise, is not
subject to further appeal) or (4) the Executive is found to
have breached the restrictive covenants set forth in this
Agreement, if applicable, (y) the Company's obligation to pay
and/or continue any Separation Benefits (as defined below) not
yet then accrued shall terminate upon the occurrence during
the Post Term Period of any of the events described in
subclauses (2), (3) or (4) in clause (x) above (the "Benefit
Termination Events") and (z) upon the occurrence of the event
described in subclause (1) in clause (x) above, the Company
shall only have an obligation to continue to provide Health
and Welfare Coverage (as defined below) and no other component
of the Separation Benefits (as defined below). (B) For
purposes of this Section 6(a)(vi), the following benefits,
services, facilities and perquisites shall constitute
"Separation Benefits":
(I) all group and/or executive hospitalization, medical
or health programs, dental, vision and disability
insurance coverage (for himself and his eligible
dependents) to the extent provided generally to all
full-time
21
employees of the Company, and/or to the extent
provided additionally to all senior officers of the
Company at no additional cost to the Executive or his
family and/or dependents and on a basis no less
favorable than was provided to him during his
employment (collectively "Health and Welfare
Coverage"), PROVIDED that the Executive executes
appropriate enrollment materials;
(II) office space convenient to the Executive's primary
residence and suitable in respect of the services
which the Executive provides to the Company
hereunder, along with suitable clerical support;
(III) access to Company-owned or leased aircraft or charter
equivalent thereof on terms then applicable to senior
executives of the Company;
(IV) access to one Company-provided car and driver;
(V) appropriate personal security to be provided when
traveling on Company business;
(VI) reimbursement for any properly documented business
expenses incurred on behalf of the Company.
(C) In lieu of providing those Separation Benefits listed
under Section 6(a)(vi)(B)(I) through (V), but not clause (VI),
and including the Post Term Compensation, and provided a
Benefit Termination Event has not occurred, the Company may
elect to substitute one or more cash lump-sum payments to
satisfy in full or in part any or all of such Company
obligations to the Executive as provided for herein with
respect to the Separation Benefits and Post Term Compensation
(the "Separation Benefits Buyout"); PROVIDED the Company has
22
provided thirty days' advance written notice to the Executive
of its election hereunder. In the event of a Separation
Benefits Buyout with respect to the Post Term Compensation,
the Executive shall have no further obligation to provide the
Post Term Services. The amount of any cash lump-sum payment to
be made to the Executive with respect to the Separation
Benefits Buyout shall be determined by reasonable agreement of
the parties hereto, after providing good faith consideration
to the following factors, to the extent applicable: (u) the
historical and forecast cost to the Company for providing the
applicable item; (v) the forecast cost to the Executive for
purchasing a comparable replacement of the applicable item;
(w) any relevant actuarial considerations to the extent such
items are required to be provided for the life of the
Executive; (x) any appropriate adjustments to reflect net
present value and/or inflationary considerations; (y) any
appropriate adjustment to reflect the obligations of the
Executive under Section 8; and (z) any relevant taxation
considerations applicable to the Executive's receipt of a
current lump-sum payment. The Company shall provide the
Executive with all work papers supporting its determination
and calculation of the Separation Benefits Buyout. Any
disputes as to the amount to be paid in accordance with a
Separation Benefits Buyout shall be settled by an independent
third party reasonably acceptable to the parties hereto within
sixty (60) days after submission of any such dispute by the
parties, and shall be final and binding on all parties hereto.
The Separation Benefits Buyout shall be in addition to, and
not in lieu of, any other payments, severance or otherwise,
owed by the Company to the
23
Executive. Any payment made in respect of a Separation
Benefits Buyout shall be subject to the approval of the
Company's Audit Committee. (D) Upon the occurrence of a
Potential Change in Control or Change in Control during the
Post Term Period, the Executive may elect to receive, and the
Company shall be required to immediately pay to the Executive,
the Separation Benefits Buyout as determined pursuant to this
subparagraph (D). In the event the Executive makes the
foregoing election, such election shall be accompanied by a
written determination of a national accounting firm selected
by the Executive setting forth the amount of the Separation
Benefits Payout, after applying the factors and considerations
set forth in subparagraph 6(a)(vi)(C) above, and the
determination of such firm shall be final and binding on the
Company. The Company shall bear all costs and expenses
incurred in connection with the retention of such accounting
firm.
(vii) INTEGRATION. Notwithstanding any other provision of this
Agreement to the contrary, to the extent that the Company is
obligated to provide Health and Welfare Coverage and payments
to the Executive pursuant to Section 6(a)(v)(A) and (C) as a
result of a termination of the Executive's employment with
less than three (3) years remaining in the Term, then the
amount otherwise payable to the Executive pursuant to the
foregoing provisions of this Section 6 shall be reduced so
that the aggregate value of such Health and Welfare Coverage
and payments (other than the portion of the Termination
Payment attributable to the Accrued Bonus) shall not exceed
the sum of the Executive's annual base salary (as in
24
effect immediately prior to such termination) plus the Annual
Formula Bonus determined pursuant to Section 6(a)(v),
multiplied by 2.99.
(b) RESIGNATION. If the Executive voluntarily resigns his employment
under this Agreement during the Term (other than for Good Reason), the
Executive's compensation and other benefits (other than those under Section 4(d)
and other than any compensation or benefit that shall have accrued but not been
paid as of the date of such resignation) set forth in this Agreement shall
thereupon terminate.
(c) RABBI TRUST FUNDED UPON POTENTIAL CHANGE IN CONTROL OR CHANGE IN
CONTROL. In the event of a Potential Change in Control or Change in Control, the
Company shall, not later than 15 days thereafter, have established one or more
rabbi trusts and shall deposit therein cash in an amount sufficient to provide
for full payment of all potential obligations of the Company that would arise
assuming consummation of a Change in Control, or that have arisen in the case of
an actual Change in Control and a subsequent termination of Executive's
employment under Section 6(a)(iv) or Section 6(a)(v). Such rabbi trust(s) shall
be irrevocable and shall provide that the Company may not, directly or
indirectly, use or recover any assets of the trust(s) until such time as all
obligations which potentially could arise hereunder have been settled and paid
in full, subject only to the claims of creditors of the Company in the event of
insolvency or bankruptcy of the Company; PROVIDED, HOWEVER, that if no Change in
Control has occurred within two years after such Potential Change in Control,
such rabbi trust(s) shall at the end of such two-year period become revocable
and may thereafter be revoked by the Company. For purposes of this Agreement, a
"Potential Change in Control" shall be deemed to have occurred if, during the
term of this Agreement: (i) the Company enters into an agreement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any Person
25
(including the Company) publicly announces an intention to take or to consider
taking action which if consummated would constitute a Change in Control; or
(iii) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
7. ADDITIONAL EXCISE TAX PAYMENT. (a) 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 this Agreement in connection with a termination of
employment including any Post Term Compensation, Separation Benefits and/or
Separation Benefits Buyout, and (ii) it shall be determined that any payment or
distribution by the Company 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 Gross-Up Payments
(as defined below) made hereunder, such payments being referred to herein as the
"Payments") would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") 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, are 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.
26
(b) Subject to the provisions of Section 7(c), all determinations
required to be made under this Section 7, 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 the Executive and reasonably acceptable to the Company (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Executive within 15 business days of the receipt of notice from the
Executive, or such earlier time as is requested by the Company. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change-of-Control Transaction, the Executive and
the Audit Committee of the Company shall mutually agree to appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 7, shall be paid by the Company to the Executive within ten days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 7(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount
27
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
28
PROVIDED, HOWEVER, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 7(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and sue for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; PROVIDED, HOWEVER, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
29
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7, the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 7(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 7(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 60 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(e) The provisions of this Section 7 shall be in addition to any rights
to payment available to the Executive under the terms of the Tax Gross-Up
Program and to the extent the provisions of this Section 7 are more favorable to
the Executive than the terms of the Tax Gross-Up Program, the provisions of this
Section 7 shall control. The Company shall not terminate or amend the Tax
Gross-Up Program without the Executive's consent.
8. OTHER COVENANTS BY THE EXECUTIVE. (a) During the Restricted Period
(as defined in Section 8(c)), neither the Executive nor any "Controlled
Affiliate" will, without the prior written consent of the Board, in any way
directly or indirectly hire or attempt to hire any person who, to the
Executive's best knowledge, was employed at any time during the period
commencing six months prior to the termination of the Executive's employment
with the Company, as an officer or executive or professional employee of the
Company or any of its subsidiaries or affiliates. As used in this Agreement,
"Controlled Affiliate" means any company,
30
partnership, firm or other entity as to which the Executive possesses, directly
or indirectly, the power to direct or cause the direction of the management and
policies of such entity, whether through the ownership of voting securities, by
contract or otherwise.
(b) The Executive acknowledges that, through his status as Chairman of
the Board, President and Chief Executive Officer of the Company, he has and will
have possession of important, confidential information and knowledge as to the
Company's business, including, but not limited to, knowledge of marketing and
operating strategies, franchise agreements, financial results and projections,
future plans, the provisions of important contracts entered into by the Company
and possible acquisitions and divestitures. The Executive agrees that such
knowledge and information constitute a vital part of the business of the Company
and are by their nature trade secrets and confidential information
(collectively, "Confidential Information"). The Executive agrees that he shall
not, so long as the Company or any successor remains in existence, divulge,
communicate, furnish or make accessible (whether orally or in writing or in
books, articles or any other medium) to any individual, firm, partnership or
corporation any knowledge and information with respect to Confidential
Information directly or indirectly useful in any aspect of the business of the
Company. As used in the preceding sentence, "Confidential Information" shall not
include any knowledge or information which (i) is or becomes available to others
or the public, other than as a result of breach by the Executive of this Section
8(b), (ii) was available to the Executive on a nonconfidential basis prior to
its disclosure to the Executive through his status as an officer of the Company
or (iii) becomes available to the Executive on a nonconfidential basis from a
third party (other than the Company or its representatives) who is not bound by
any confidentiality obligation to the Company.
31
(c) During the Restricted Period, neither the Executive nor any of his
Controlled Affiliates will render any services, directly or indirectly, as an
employee, officer, consultant or in any other capacity, to any individual, firm,
corporation or partnership engaged in business activities that are competitive
with any business segment activities in which the Company or its subsidiaries or
affiliates are engaged at the time of such termination (such competitive
businesses being herein called the "Company Business"). During the Restricted
Period, the Executive shall not, without the prior written consent of the
Company, hold an equity interest in any firm, partnership or corporation which
competes with the Company Business, except that beneficial ownership by the
Executive (together with any one or more members of his immediate family and
together with any entity under his direct or indirect control) of less than 1%
of the outstanding shares of capital stock of any corporation which may be
engaged in any of the same lines of business as the Company Business which stock
is listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a breach of the covenants in this
Section 8(c). As used in this Agreement, "Restricted Period" shall mean (i) if
the Executive's employment with the Company shall be terminated for Cause or by
the Executive's voluntary resignation (except any such resignation for Good
Reason or arising from a breach of this Agreement by the Company), the period
beginning on the date of such termination and ending on the second anniversary
thereof and (ii) if the Executive's employment with the Company under this
Agreement shall be terminated under any circumstances other than those to which
clause (i) above applies, the period beginning on the date of such termination
and ending on the later of (A) the second anniversary thereof or (B) the "Post
Term Cessation Date" (as defined below). For purposes of the foregoing sentence,
the "Post Term Cessation Date" shall mean the earlier of (I) the date that the
Company ceases
32
making payments of Post Term Compensation or ceases providing Separation
Benefits in breach of this Agreement, or (II) the date that the Executive shall
deliver a written notice to the Company to the effect that he elects not to
accept such Post Term Compensation, unless the parties otherwise agree to a
different expiration date for the Restricted Period in connection with the
determination and payment of the Separation Benefits Buyout. Notwithstanding the
foregoing, in the event the Separation Benefits Buyout is paid to the Executive
covering all of the Executive's lifetime rights with respect to the Post Term
Compensation and the Separation Benefits listed under Section 6(a)(vi)(B)(I)
through (V), the Restricted Period shall terminate as of the Executive's death.
(d) The Executive agrees that the provisions of Sections 8(a), (b) and
(c) may not be adequately enforced by an action for damages and that, in the
event of a breach thereof by the Executive or any such other entity, the Company
shall be entitled to seek injunctive relief in any court of competent
jurisdiction to restrain the breach or threatened breach of such violation or
otherwise to enforce specifically such provisions against such violation.
9. SUCCESSORS: BINDING AGREEMENT. (a) This Agreement is personal to
each of the parties hereto, and neither party may assign nor delegate any of its
rights or obligations hereunder without the prior written consent of the other.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the business
and/or assets of the Company, by agreement in form and substance satisfactory to
the Executive, expressly to 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.
33
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
10. NOTICE. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be given either by hand delivery or (unless otherwise specified) mailed by
United States certified or registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
Henry R. Silverman
9 West 57th Street
New York, New York 10019
If to the Company:
Cendant Corporation
1 Campus Drive
Parsippany, New Jersey 07054
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt. Notice and communications shall be effective
when actually received by the addressee.
11. MISCELLANEOUS. (a) No provisions of this Agreement may be amended,
supplemented, modified, cancelled or discharged unless such amendment,
supplement, modification, cancellation or discharge is agreed to in writing
signed by the Executive and a duly authorized officer of the Company (other than
the Executive); and no provisions hereof may be waived except in writing so
signed by or on behalf of the party granting such waiver. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be
34
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior subsequent time. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State. The obligations
of the Company, the Successor and the Executive under this Agreement, which by
their nature may require either partial or total performance after the
expiration of this Agreement or the termination of the Executive's employment
(including, without limitation, under Sections 4, 6 and 7 hereof) shall survive
such expiration and termination.
(b) The Company represents and warrants to the Executive that: (i) the
Company has all necessary power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; (ii) the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby; and (iii) this Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company enforceable in accordance with its terms.
(c) After a termination of employment for any reason, the Executive
shall not be obligated to mitigate damages by seeking other comparable
employment, and any payments or benefits payable or due to the Executive shall
not be subject to reduction as a result of any compensation received from other
employment or from any other source whatsoever.
(d) The Company shall pay all reasonable attorneys' fees and related
costs incurred by the Executive in connection with the negotiation of this
Agreement.
35
(e) The amounts required to be paid by the Company to the Executive
pursuant to this Agreement shall not be subject to offset.
12. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled conclusively by arbitration,
conducted before a panel of three arbitrators in New York, New York, in
accordance with the rules of the American Arbitration Association then in
effect. One arbitrator shall be selected by the Executive, one by the Company
and the third arbitrator shall be selected by the first two arbitrators;
PROVIDED THAT if the first two arbitrators cannot agree on appointment of the
third, the American Arbitration Association rules shall govern the process for
selection of the third arbitrator. Judgment may be entered on the arbitrators'
award in any court having jurisdiction; PROVIDED, HOWEVER, that the Company
shall be entitled to seek a restraining order or injunction in any court of
competent jurisdiction to prevent any continuation of any violation of the
provisions of Section 8 and the Executive hereby consents that such restraining
order or injunction may be granted without the necessity of the Company's
posting any bond. The expenses of the arbitration shall be borne by the Company;
and the Company shall bear its own legal fees and expenses and pay, at least
monthly, all of the Executive's legal fees and expenses incurred in connection
with such arbitration regardless of the outcome, except that the Executive shall
have to reimburse the Company for his legal fees and expenses if the arbitrators
find that Executive brought an action in bad faith.
14. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and shall
be deemed an extension of the
36
Prior Agreement and shall supersede all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written by any officer, employee or representative of any party hereto, and any
prior agreement of the parties hereto in respect of the subject matter contained
herein (PROVIDED THAT the terms of the Prior Agreement shall survive and govern
solely with respect to the vesting and exercisability of the 1998 Option Grant
as provided for therein).
[signature page to follow]
37
[Amended and Extended Employment Agreement Signature Page]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
CENDANT CORPORATION
By: /s/ James E. Buckman
---------------------------------
Name:
Title: Vice Chairman &
General Counsel
HENRY R. SILVERMAN
/s/ Henry R. Silverman
------------------------------------
38