Exhibit 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement dated as of March 1, 2001, but subject to
and contingent upon the closing of the transactions (the "Transaction")
contemplated by that certain Agreement and Plan of Merger (the "Merger
Agreement"), dated as of November 11, 2000, by and among Cendant Corporation,
PHH Corporation, Avis Acquisition Corp. and Avis Group Holdings, Inc., is hereby
made by and between Cendant Corporation, a Delaware corporation ("Cendant") and
Kevin M. Sheehan (the "Executive").
WHEREAS, Subject to the closing of the Transaction, Cendant desires
to employ the Executive as a full-time employee of Cendant 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
Subject to the closing of the Transaction, 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 a
full-time employee of Cendant and will report directly to, and serve at the
discretion of, the Chief Executive Officer of Cendant Corporation (the "CEO").
The Executive will, during the Period of Employment, serve Cendant in the
capacity of Chief Financial Officer. 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, or as otherwise
reasonably directed by the CEO from time to time. The Executive will maintain a
primary office and conduct his business in New York, New York, except for normal
and reasonable business travel in connection with his duties hereunder.
SECTION III
PERIOD OF EMPLOYMENT
The period of the Executive's employment under this Agreement will
begin on the Closing Date (as defined in the Merger Agreement) and end on the
third anniversary of such date, subject to earlier termination as provided
herein (the "Period of Employment").
SECTION IV
COMPENSATION AND BENEFITS
A. Compensation.
For services rendered by the Executive pursuant to this Agreement during
the Period of Employment, Cendant will pay the Executive base salary for the
Period of Employment at an annual rate equal to five hundred thousand dollars
($500,000.00) (the "Base Salary"). The Executive will be eligible to receive
annual increases in Base Salary in accordance with Cendant's customary
procedures regarding the salaries of senior officers with due consideration
given to the published Consumer Price Index applicable to the New York/New
Jersey greater metropolitan area.
B. 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, depreciation 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"). Notwithstanding the foregoing, subject to the Executive's
continuing employment with Cendant through the date of payment, and such other
terms and condition relating to such bonus program, the Executive's Incentive
Compensation Award in respect of fiscal year 2001 will be paid at no less than
100% of target (i.e., 100% of earned Base Salary).
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C. Employee Benefits.
During the Period of Employment, Cendant will provide the Executive with
employee benefits generally offered to all eligible full-time employees of
Cendant, and with perquisites generally offered to all eligible senior officers
of Cendant (including without limitation the Cendant Corporation Deferred
Compensation Plan and any senior officer travel policies pertaining to first
class air travel and use of corporate-owned planes), subject to the terms of the
applicable employee benefit plans or policies of Cendant.
D. Expenses.
During the Period of Employment, Cendant will reimburse the Executive for
reasonable business expenses incurred and timely submitted in accordance with
any applicable policy of Cendant.
E. Stock Options.
Subject to the approval of the Committee, the Executive will be granted,
as soon as practicable following the Closing Date, options to purchase 1,050,000
shares of Cendant common stock (of the series designated CD Stock). Such options
will vest in three equal tranches on each of the first three anniversaries of
the date of grant, and will have a per share exercise price equal to the fair
market value of such common stock as of the date of grant. Such options will
have such other terms and conditions as the Committee determines in its sole
discretion.
F. Avis Obligation.
The Executive hereby represents and agrees that all financial and monetary
obligations owing to the Executive from Avis and its subsidiaries (including
without limitation any and all bonus and potential bonus entitlements under each
and every bonus, incentive, retention and similar compensation schemes sponsored
by Avis and each of its subsidiaries and affiliates, and under each and every
other actual or purported compensation entitlement pursuant to any agreement or
otherwise) have been paid to the Executive in full, and that the Executive has
no further financial claims against Avis or its subsidiaries (other than accrued
benefits under any tax qualified employee pension plan). The Executive
acknowledges that Cendant entered into this Agreement in reliance of the
accuracy of the foregoing representation.
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SECTION V
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 earned but unpaid Base Salary and any earned but unpaid
Incentive Compensation Awards. For purposes of this Agreement, "Disabled" means
the Executive's inability to perform his duties hereunder as a result of serious
physical or mental illness or injury for a period of no less than 90 days,
together with a determination by an independent medical authority that (i) the
Executive is currently unable to perform such duties and (ii) in all reasonable
likelihood such disability will continue for a period in excess of 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 VI
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
earned but unpaid Base Salary and any earned but unpaid Incentive Compensation
Awards, and except for a pro rata Incentive Compensation Award for the year in
which the death occurs, which will be paid to the Executive's surviving spouse,
estate or personal representative, as applicable.
SECTION VII
EFFECT OF TERMINATION OF EMPLOYMENT
A. Without Cause Termination and Constructive Discharge. If the
Executive's employment is terminated during the Period of Employment by Cendant
due to a Without Cause Termination or by the Executive due to a Constructive
Discharge (each as defined below), Cendant will pay the Executive (or his
surviving spouse, estate or personal representative, as applicable) upon such
Without Cause Termination or Constructive Discharge (i) a lump sum amount equal
to the Executive's then current Base Salary plus then targeted Incentive
Compensation Award, multiplied by 300% and (ii) any and all Base Salary earned
but unpaid through the date of such termination. In addition, upon such event,
each option to purchase
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shares of Cendant common stock granted to the Executive on or after the date
hereof shall, upon such event, become fully vested and exercisable and shall
remain exercisable until the first to occur of the second anniversary of such
termination of employment or the original expiration date of such option. Except
as provided in this paragraph, Cendant will have no further obligations to the
Executive hereunder.
B. Termination for Cause; Resignation. If the Executive's employment
terminates due to a Termination for Cause or a Resignation, Base Salary and any
Incentive Compensation Awards earned but unpaid as of the date of such
termination will be paid to the Executive in a lump sum. Except as provided in
this paragraph, Cendant will have no further obligations to the Executive
hereunder.
C. For purposes of this Agreement, the following terms have the
following meanings:
i. "Termination for Cause" means (i) the Executive's willful failure to
substantially perform his duties as an employee of Cendant or any of its
subsidiaries (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 of its
subsidiaries, (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 hereunder.
ii. "Constructive Discharge" means 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 material element of compensation). The Executive will
provide Cendant a written notice which describes the circumstances being relied
on for such 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.
D. Conditions to Payment and Acceleration. All payments and benefits
due to the Executive under this Section VII shall be made as soon as
practi-
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cable; provided, however, that such payments and benefits 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 VII shall be in lieu of any other severance benefits
otherwise payable to the Executive under any severance plan of Cendant or its
affiliates.
SECTION VIII
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 reasonably requested in
connection with any claims or legal action in which Cendant or any of its
affiliates is or may become a party, and Cendant shall reimburse the Executive
for any expenses incurred by the Executive in connection therewith.
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 an eighteen (18) month
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.
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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" means all
subsidiaries and licensees of the applicable entity.
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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 VIII 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 VIII.
E. The period of time during which the provisions of this Section
VIII 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 VIII are an essential element of the compensation the Executive is
granted hereunder and but for the Executive's agreement to comply with such
restrictions, Cendant would not have entered into this Agreement.
SECTION IX
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 X
EFFECT OF PRIOR AGREEMENTS
This Agreement will supersede and replace each prior employment or
consultant agreement between Cendant (and/or its affiliates) and the Executive,
and any such agreement shall be deemed terminated and of no further force or
effect.
SECTION XI
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
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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 XII
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 XIII
REPRESENTATIONS
Cendant represents and warrants that this Agreement has been
authorized by all necessary corporate action of Cendant and is a valid and
binding agreement of Cendant enforceable against it in accordance with its
terms.
SECTION XIV
INDEMNIFICATION AND MITIGATION
Cendant will indemnify the Executive to the fullest extent permitted
under the Certificate of Incorporation and By-Laws of Cendant. The Executive
will not be required to mitigate the amount of any payment provided for
hereunder by seeking other employment or otherwise, nor will the amount of any
such payment be reduced by any compensation earned by the Executive as the
result of employment by another employer after the date the Executive's
employment hereunder terminates.
SECTION XV
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 XVI
ARBITRATION
A. Any controversy, dispute or claim arising out of or relating to
this Agreement or the breach hereof which cannot be settled by mutual agreement
(other than with respect to the matters covered by Section VIII for which
Cendant
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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 XVI has been included to
rapidly and inexpensively resolve any disputes between them with respect to this
Agreement, and that this Section XVI 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.
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SECTION XVII
SURVIVAL
Sections VII, VIII, IX, X, XIV, XV and XVI will continue in full
force in accordance with their respective terms notwithstanding any termination
of the Period of Employment.
SECTION XVIII
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
/s/ Terence P. Conley
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By: Terence P. Conley
Title: Senior Vice President,
Human Resources
KEVIN M. SHEEHAN
/s/ Kevin M. Sheehan
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