UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
_________________
FORM
8-K
_________________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
Report (Date of Earliest Event Reported): December 31,
2008 (December 30, 2008)
_________________
Avis
Budget Group, Inc.
(Exact
Name of Registrant as Specified in its Charter)
_________________
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Delaware
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1-10308
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06-0918165
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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6
Sylvan Way
Parsippany,
NJ
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07054
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(973)
496-4700
(Registrant's
telephone number, including area code)
N/A
(Former
name or former address if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item
5.02
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Departure
of Directors or Certain Officers; Election of Directors; Appointment
of
Certain Officers; Compensatory Arrangements of Certain
Officers.
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On
December 30, 2008, we amended the agreements we have with our Chief Executive
Officer; our President and Chief Operating Officer, our Chief Financial Officer;
our Executive Vice President, Operations; and our Chief Human Resource
Officer.
The
amendments to each agreement were effectuated principally to cause such
agreements to be in compliance with Section 409A of the Internal Revenue
Code of
1986, as amended and the regulations promulgated thereunder. In
addition, the amendments provide for a pro-rated annual bonus payment on
death
or disability for our Chief Executive Officer; our President and Chief Operating
Officer; and our Chief Financial Officer and extend the term to August 1,
2011
and August 31, 2011 for our Chief Executive Officer and Chief Financial Officer,
respectively.
The
amendments to the agreement with our President and Chief Operating Officer
provide for (1) a new three-year term ending on January 1, 2012; (2) salary
increases in 2010 and 2011; (3) beginning 18 months from the effective date
through the end of the term of the agreement, a transition to the role of
Vice
Chairman, which role is not expected to comprise day to day operating
responsibility; and (4) at the end of the term of the agreement, full vesting
of
time-based equity awards, pro-rata vesting of performance-based equity awards,
and non-cash severance benefits. The amendments to the agreement with
our Chief Financial Officer also provide for salary increases in 2010 and
2011.
A
copy of
each of the amended agreements is attached hereto as an Exhibit and is
incorporated herein by reference. The foregoing description of the amendments
does not purport to be complete and is qualified in its entirety by reference
to
the full text of the amended agreements.
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Item
9.01
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Financial
Statements and Exhibits.
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(d)
Exhibits.
The
following exhibits are filed as part of this report:
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Exhibit
No.
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Description
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10.1
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Employment
Agreement between Avis Budget Group, Inc. and Ronald L.
Nelson.
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10.2
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Employment
Agreement between Avis Budget Group, Inc. and F. Robert
Salerno.
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10.3
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Employment
Agreement between Avis Budget Group, Inc. and David B.
Wyshner.
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10.4
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Agreement
between Avis Budget Group, Inc. and Mark Servodidio.
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10.5
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Agreement
between Avis Budget Group, Inc. and Larry De
Shon.
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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AVIS
BUDGET GROUP, INC.
/s/
Jean M. Sera
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By:
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Jean
M. Sera
Senior
Vice President and Secretary
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Date: December
31, 2008
EXHIBIT
INDEX
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Exhibit
No.
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Description
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10.1
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Employment
Agreement between Avis Budget Group, Inc. and Ronald L.
Nelson.
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10.2
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Employment
Agreement between Avis Budget Group, Inc. and F. Robert
Salerno.
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10.3
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Employment
Agreement between Avis Budget Group, Inc. and David B.
Wyshner.
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10.4
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Agreement
between Avis Budget Group, Inc. and Mark Servodidio.
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10.5
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Agreement
between Avis Budget Group, Inc. and Larry De
Shon.
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Exhibit
10.1
AMENDED
AND RESTATED
EMPLOYMENT
AGREEMENT
Avis
Budget Group, Inc. (the "Company") and Ronald L. Nelson (the
"Executive") are parties to this certain Employment Agreement
amended and restated as of December 29, 2008 (this
"Agreement").
WHEREAS,
Cendant Corporation (which has been renamed Avis Budget Group, Inc.) and the
Executive were parties to a certain Employment Agreement effective as of April
14, 2003 (the "2003 Agreement"); and
WHEREAS,
Cendant Corporation (which has been renamed Avis Budget Group, Inc.) and the
Executive amended the 2003 Agreement in June, 2006, effective August 1, 2006
(the "2006 Agreement"); and
WHEREAS,
the Company and the Executive desire to amend and restate the 2006 Agreement
in
its entirety as set forth herein.
NOW
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereby agree that this Agreement is amended and restated to read as
follows:
SECTION
I
EFFECTIVENESS
This
Agreement shall be effective as of August 1, 2006 (the "Effective
Date").
SECTION
II
EMPLOYMENT;
POSITION AND RESPONSIBILITIES
The
Company agrees to employ the Executive, and the Executive agrees to be employed
by the Company, for the Period of Employment as provided in Section III below
and upon the terms and conditions provided in this Agreement. During
the Period of Employment, the Executive shall serve as Chief Executive Officer
of the Company and shall report to, and be subject to the direction of, the
Board of Directors of the Company (the "Board"). The
Executive shall perform such duties and exercise such supervision with regard
to
1
the
business of the Company as are associated with his position, as well as such
additional duties as may be prescribed from time to time by the
Board. The Executive shall, during the Period of Employment, devote
substantially all of his time and attention during normal business hours to
the
performance of services for the Company. The Executive shall maintain
a primary office and conduct his business in Parsippany, New Jersey (the
"Business Office"), except for normal and reasonable business
travel in connection with his duties hereunder.
In
addition, effective upon the Effective Date, the Executive shall serve as
Chairman, and a member, of the Board; provided, however, that the Executive's
continued service as a member of the Board shall at all times remain subject
to
any and all nomination and election procedures in accordance with the Company's
by-laws.
SECTION
III
PERIOD
OF EMPLOYMENT
The
period of the Executive's employment under this Agreement (the "Period
of Employment") shall begin on the Effective Date and shall end on the
fourth anniversary of the Effective Date (the "Term"), subject
to earlier termination as provided in this Agreement. Effective upon
the expiration of the Term, Executive's employment hereunder shall be deemed
to
be automatically extended, upon the same terms and conditions, for an additional
period of one year (the "Additional Term") commencing upon the
expiration of the Term unless either party shall have given written notice
to
the other, at least six (6) months prior to the expiration of the Term of its
intention not to extend the Period of Employment hereunder; provided that any
such notice of non-extension delivered by the Company to Executive shall be
deemed to constitute a Constructive Discharge (as defined below) of the
Executive.
SECTION
IV
COMPENSATION
AND BENEFITS
For
all
services rendered by the Executive pursuant to this Agreement during the Period
of Employment, including services as an executive officer, director or committee
member of the Company or any subsidiary or affiliate of the Company, the
Executive shall be compensated as follows:
(a) Base
Salary. The Company shall initially pay the Executive a fixed
base salary ("Base Salary") of not less than $1,000,000, per
annum, and thereafter the Executive shall be eligible to receive annual
increases as the Board deems appropriate, in accordance with the Company's
customary procedures regarding salaries of senior officers. Base
Salary shall be payable according to the customary payroll practices of the
Company, but in no event less frequently than once each month.
2
(b) Annual
Incentive Awards. The Executive shall be eligible to earn a
target Annual Bonus for each fiscal year of the Company ending during the Period
of Employment (each, an "Annual Bonus") equal to 150% of the
Executive's Base Salary for such fiscal year, if the Company achieves the target
performance goals established by the Compensation Committee (the
"Committee") for such fiscal year. The
Committee may establish such metrics whereby the Executive may earn an Annual
Bonus in excess of the target Annual Bonus or an Annual Bonus less than the
target Annual Bonus.
Any
Annual Bonus that becomes payable to the Executive pursuant to this Section
shall be paid to the Executive as soon as reasonably practicable following
receipt by the Board of the audited consolidated financial statements of the
Company for the relevant fiscal year, but in no event later than two and a
half
(2 1/2) months following the end of the applicable fiscal year in which such
Annual Bonus was earned. The Executive shall be entitled to receive
any Annual Bonus that becomes payable in a lump sum cash payment, or, at his
election, in any form that the Board generally makes available to the Company's
executive management team; provided that any such election is made by the
Executive in compliance with Section 409A ("Section 409A") of
the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations promulgated thereunder.
(c) Long-Term
Incentive Awards. The parties hereby acknowledge that (i)
pursuant to the 2006 Agreement, the Executive was awarded a long-term incentive
equity award with a grant date value equal to $6 million (the
"Initial Grant") and (ii) the Initial Grant is
subject to such terms and conditions, including relating to vesting conditions,
as determined by the Committee (but subject to accelerated vesting in accordance
with Section VIII below), and is evidenced in a written grant agreement and
granted pursuant to a stock plan of the Company. During the Period of
Employment, the Executive shall be eligible for long term incentive awards
as
determined by the Committee in its discretion.
(d) Additional
Benefits. The Executive shall be entitled to participate in all
other compensation and employee benefit plans or programs and receive all
benefits and perquisites for which salaried employees of the Company generally
are eligible under any plan or program now in effect, or later established
by
the Company, on a basis no less favorable than as provided to any other
executive of the Company. The Executive shall participate to the
extent permissible under the terms and provisions of such plans or programs,
and
in accordance with the terms of such plans and program. Without
limiting the generality of the foregoing, the Executive will be provided
benefits and perquisites on such terms and conditions as determined by the
Board, which determination will be based in part upon comparisons to chief
executive officers of public companies of comparable size and industry to the
Company and by comparison to those benefits the Executive received pursuant
to
the 2003 Agreement.
3
(e) Further
Consideration. The Company acknowledges and agrees to provide the
Executive with the following benefits notwithstanding anything herein to the
contrary. Upon the Executive's termination of employment from the
Company and its subsidiaries for any reason, including, without limitation,
due
to or following any non-renewal of this Agreement, Resignation, or termination
by the Company with or without Cause, the Executive and each person who is
his
covered dependent at such time under each applicable benefit plan sponsored
or
provided by the Company shall remain eligible to continue to participate in
all
of such plans (as they may be modified from time to time with respect to all
senior executive officers), (the "Post-Employment Plans") until
the end of the plan year in which the Executive reaches, or would have reached,
age seventy-five (75) (such benefits, the "Post-Employment
Benefits"). The Executive is currently eligible to
participate in the following Post-Employment Plans: Executive Physical Exams,
Medical Expense Reimbursement Plan (MERP), Medical Insurance, Dental Insurance,
Group Life Insurance (up to $1 million coverage on Executive's life), Vision
Service Plan. Coverage under such Post-Employment Plans shall be
subject to the Executive and/or such dependents, as applicable, continuing
to
pay the applicable employee portion of any premiums, co-payments, deductibles
and similar costs. Solely with respect to the Executive's dependents,
such coverage shall terminate upon such earlier date if and when they become
ineligible for any such benefits under the terms of such plans and provided,
that once the Executive or his dependents become eligible for Medicare or any
other government-sponsored medical insurance plan, or if the Executive is
eligible to participate in any other company's medical insurance plan as an
employee after the termination of his employment, the Executive or his
dependents shall utilize such government plan or other company plan, and the
Company's insurance obligations as part of the Post-Employment Benefits
hereunder shall become secondary to such government plan or other company
plan. Notwithstanding the foregoing, the Company may meet any of its
foregoing obligations under the Post-Employment Plans by paying for, or
providing for the payment of, such benefits directly or through alternative
plans or individual policies which are no less favorable in all material
respects (with respect to both coverage and cost to the Executive) to the
Post-Employment Plans. If the Company meets its obligations by paying
for the Post-Employment Plans pursuant to the foregoing sentence, any
reimbursements required to be made by the Company to the Executive shall be
made
on or before the last day of the calendar year following the calendar year
in
which the expense was incurred. In addition, in no event shall the
Post-Employment Benefits provided or the amount of the expenses eligible for
reimbursement during one calendar year affect the Post-Employment Benefits
provided or the amount of expenses eligible for reimbursement in any other
calendar year.
SECTION
V
BUSINESS
EXPENSES
The
Company shall reimburse the Executive for all reasonable travel and other
expenses incurred by the Executive in connection with the performance of his
duties and obligations under this Agreement. The Executive shall
comply with such limitations and reporting requirements with respect to expenses
as may be established by the Company from time to time and shall promptly
provide all appropriate and requested documentation in connection with such
expenses. Further, the Executive will receive access to Company
aircraft or
4
alternative
air transportation, subject to applicable Company policies.
SECTION
VI
DEATH
AND DISABILITY
The
Period of Employment shall end upon the Executive's death. If the
Executive experiences a Disability (as defined below) during the Period of
Employment, the Period of Employment may be terminated at the option of the
Executive upon notice of resignation to the Company, or at the option of the
Company upon notice of termination to the Executive. For purposes of
this Agreement, "Disability" shall have the meaning set forth
in Section 409A. The Company's obligation to make payments to the
Executive under this Agreement shall cease as of such date of termination,
except for Base Salary and any Annual Bonus earned but unpaid as of the date
of
such termination (the "Accrued Obligations"), and, in such
event (a) each of the Executive's then outstanding options to purchase shares
of
Company common stock that were granted prior to the Effective Date and options
to purchase shares of Wyndham Worldwide Corporation common stock (and its
successors) (the "Pre-Existing Options") shall become
immediately and fully vested and exercisable (to the extent not already vested)
and, shall remain exercisable during the extended post-termination exercise
period set forth in the 2003 Agreement, (b) each option to purchase shares
of
the Company common stock or stock appreciation right granted on or after the
Effective Date shall become immediately and fully vested and exercisable (to
the
extent not already vested) and, notwithstanding any term or provision relating
to such option to the contrary, shall remain exercisable until the first to
occur of the third (3rd ) anniversary of the Executive's termination of
employment and the original expiration date of such option, (c) all other
long-term equity awards (including, without limitation, the Initial Grant)
then
outstanding shall become immediately vested, and (d) the Company shall pay
the
Executive (or his surviving spouse, estate or personal representative, as
applicable) a cash amount equal to the Executive's target Annual Bonus for
the
year in which the Executive is terminated multiplied a fraction the numerator
of
which is the total number of days during the applicable calendar year during
which the Executive was employed by the Company and the denominator of which
is
365.
SECTION
VII
EFFECT
OF TERMINATION OF EMPLOYMENT
(a) Without
Cause Termination and Constructive Discharge. Subject to the
provisions of Section VII(d), if the Executive's employment terminates during
the Period of Employment and, in the event of a Corporate Transaction, prior
to
January 15th of
the year following the year in which the Corporate Transaction occurs, due
to
either a Without Cause Termination or a Constructive Discharge (each as defined
below): (i) the Accrued Obligations shall be paid to the Executive in accordance
with paragraph (d) below, (ii) the Company shall pay the Executive (or his
surviving spouse, estate or personal representative, as applicable), within
five (5) days following the Release Date (as defined in paragraph (d)
below) (or, in the event that the Release Date (as defined in Section VII(d)
below is extended in accordance with the dispute provisions set forth in Section
VII(d) below, upon
5
resolution
of the dispute), an amount equal to 299% multiplied by the sum of (A) the
Executive's then current Base Salary, plus (B) the Executive's then current
target Annual Bonus; (iii) each of the Executive's then outstanding Pre-Existing
Options shall become immediately and fully vested and exercisable (to the extent
not already vested) and in accordance with the terms and conditions applicable
to such options set forth in the 2003 Agreement, and shall remain
exercisable for the extended post-termination exercise period set forth in
the
2003 Agreement; (iv) each option to purchase shares of the Company common
stock or stock appreciation right granted on or after the Effective
Date shall become immediately and fully vested and exercisable (to the
extent not already vested) and, notwithstanding any term or provision thereof
to
the contrary, shall remain exercisable until the first to occur of the third
(3rd ) anniversary of the Executive's termination of employment and the original
expiration date of such option or stock appreciation right, and (v) all other
long-term equity awards (including, without limitation, restricted stock units)
shall become immediately vested.
(b) Termination
for Cause; Resignation. If the Executive's employment terminates
due to a Termination for Cause or a Resignation, the Accrued Obligations shall
be paid to the Executive in accordance with paragraph (d)
below. Outstanding stock options and other equity awards held by the
Executive as of the date of termination shall be treated in accordance with
their terms. Except as provided in this paragraph, the Company shall
have no further obligations to the Executive hereunder.
(c) For
purposes of this Agreement, the following terms have the following
meanings:
(i) "Termination
for Cause" means termination of the Executive by the Company as a
result of (a) the Executive's willful failure to substantially perform his
duties as an employee of the Company or any subsidiary (other than any such
failure resulting from incapacity due to physical or mental illness), (b) any
act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Company or any subsidiary, (c) the Executive's conviction of a
felony or any crime involving moral turpitude (which conviction, due to the
passage of time or otherwise, is not subject to further appeal), (d) the
Executive's gross negligence in the performance of his duties or (e) the
Executive purposefully or negligently makes (or has been found to have made)
a
false certification to the Company pertaining to its financial
statements.
(ii) "Constructive
Discharge" means (a) any material failure of the Company to fulfill its
obligations under this Agreement (including without limitation any material
reduction of the Base Salary, as the same may be increased during the Period
of
Employment, or any material reduction in any other material element of
compensation) or any material diminution to the Executive's duties and
responsibilities relating to service as an executive officer, (b) the Business
Office is relocated to any location that increases the Executive's one-way
commute by more than 30 miles or the Business Office is relocated to New York
City provided, in each case, that such
6
relocation
constitutes a material negative change to the Executive's employment
relationship, (c) during the Period of Employment, the Executive is not the
Chief Executive Officer and the most senior executive officer of the Company;
or
does not report directly to the Board, (d) the Company provides notification
under Section III of this Agreement that it is not extending the Agreement
for
an Additional Term, provided that the Executive is willing and able to extend
the Agreement and to continue providing services under the Agreement,
(e) the Additional Term expires and the Company does not offer to extend
this Agreement, as amended through such expiration date on substantially similar
terms to then-existing terms and conditions, for a period of not less than
2
years and not more than 4 years, provided that the Executive is willing and
able to extend the Agreement and to continue providing services under the
Agreement, (f) the occurrence of a "Corporate Transaction" as defined
below, (g) the Executive is not nominated to be a member of the Board, or
(h) failure of a successor to the Company to assume this Agreement in accordance
with Section XIV below. The Executive shall provide the Company a
written notice of his intention to terminate employment pursuant to a
Constructive Discharge within 60 days after the Executive knows or has reason
to
know of the occurrence of any such event which notice describes the
circumstances being relied on for the termination with respect to this
Agreement. Notwithstanding the above, the Company shall have thirty (30)
days after receipt of such notice to remedy the event prior to the termination
for Constructive Discharge and, upon the timely remedy of such event, such
event
shall no longer constitute a basis for Constructive Discharge and the
Executive's notice of termination pursuant to a Constructive Discharge shall
be
rescinded.
(iii) "Without
Cause Termination" or "Terminated Without
Cause" means termination of the Executive's employment by the Company
other than due to death, Disability, or Termination for Cause.
(iv) "Resignation"
means a termination of the Executive's employment by the Executive, other than
in connection with a Constructive Discharge or other than due to death or
Disability.
(v) "Corporate
Transaction" means either:
(1) any
"person," as such term is used in Sections 13(d) and 14(d) of the Securities
and
Exchange Act, as amended (the "Exchange Act")
(other than (A) the Company, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, and (C) any
corporation owned, directly or indirectly, by the stockholders of the Company
in
substantially the same proportions as their ownership of Company common stock),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
voting securities (excluding any person who becomes such a beneficial owner
in
connection with a transaction immediately following
7
which
the
individuals who comprise the Board immediately prior thereto constitute at
least
a majority of the Board of the entity surviving such transaction or, if the
Company or the entity surviving the transaction is then a subsidiary, the
ultimate parent thereof); or
(2) the
following individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the Effective Date,
constitute the Board and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the
Board
or nomination for election by the Company's stockholders was approved or
recommended by a vote of at least one-half (1/2) of the directors then still
in
office who either were directors on the Effective Date or whose appointment,
election or nomination for election was previously so approved or
recommended.
(d) Conditions
to Payment and Acceleration; Section 409A.
(i) Notwithstanding
anything contained herein to the contrary, to the extent required in order
to
avoid accelerated taxation and/or tax penalties under Section 409A, the
Executive shall not be considered to have terminated employment with the Company
for purposes of this Agreement and no payments shall be due to the Executive
under Section VII of this Agreement until the Executive would be considered
to
have incurred a “separation from service” from the Company within the meaning of
Section 409A.
(ii) All
payments due to the Executive under this Section VII shall be subject to, and
contingent upon, the Executive (or his beneficiary or estate) (x) executing
a
release of claims against the Company and its affiliates (in such reasonable
form determined by the Company in its sole discretion) within forty-five days
following the Executive's separation from service (or, in the event of a
dispute, upon resolution of the dispute, provided that such extension does
not
result in, as applicable, the disputed payments constituting deferred
compensation within the meaning of Section 409A or the imposition of additional
taxes under Section 409A) and (y) failing to revoke such release (the date
on
which the release becomes irrevocable, the "Release
Date").
(iii) To
the
extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A, amounts that would otherwise be payable and benefits that
would otherwise be provided pursuant to this Agreement during the six-month
period immediately following the Executive’s termination of employment
shall instead be paid on the first business day after the date that is six
months following the Executive’s termination of employment (or upon the
Executive’s death, if earlier).
8
(iv) The
intent of the Parties is that payments and benefits under this Agreement comply
with Section 409A and, accordingly, to the maximum extent permitted, this
Agreement shall be interpreted and administered to be in compliance therewith.
Each amount to be paid or benefit to be provided under this Agreement shall
be
construed as a separate identified payment for purposes of Section 409A and
any
payments described in this Agreement that are due within the "short term
deferral period" as defined in Section 409A shall not be treated as deferred
compensation unless applicable law requires otherwise.
(v) The
payments due to the Executive under this Section VII shall be in lieu of any
other severance benefits otherwise payable to the Executive under any severance
plan of the Company or its affiliates.
SECTION
VIII
OTHER
DUTIES OF THE EXECUTIVE
DURING
AND AFTER THE PERIOD OF EMPLOYMENT
(a) The
Executive shall, with reasonable notice during or after the Period of
Employment, furnish information as may be in his possession and fully cooperate
with the Company and its affiliates as may be requested in connection with
any
claims or legal action in which the Company or any of its affiliates is or
may
become a party. After the Period of Employment, the Executive shall
cooperate as reasonably requested with the Company and its affiliates in
connection with any claims or legal actions in which the Company or any of
its affiliates is or may become a party. The Company agrees to
reimburse the Executive for any reasonable out-of-pocket expenses incurred
by
Executive by reason of such cooperation, including any loss of salary, and
the
Company shall make reasonable efforts to minimize interruption of the
Executive's life in connection with his cooperation in such matters as provided
for in this paragraph.
(b) The
Executive recognizes and acknowledges that all information pertaining to this
Agreement or to the affairs; business; results of operations; accounting
methods, practices and procedures; members; acquisition candidates; financial
condition; clients; customers or other relationships of the Company or any
of
its affiliates ("Information") is confidential and is a unique
and valuable asset of the Company or any of its affiliates. Access to
and knowledge of certain of the Information is essential to the performance
of
the Executive's duties under this Agreement. The Executive shall not
during the Period of Employment or thereafter, except to the extent reasonably
necessary in performance of his duties under this Agreement, give to any person,
firm, association, corporation, or governmental agency any Information, except
as may be required by law. The Executive shall not make use of the
Information for his own purposes or for the benefit of any person or
organization other than the Company or any of its affiliates. The
Executive shall also use his best efforts to prevent the disclosure of this
Information by others. All records, memoranda, etc. relating to the
business of the Company or its affiliates, whether made by the Executive or
otherwise coming into his possession, are confidential and shall remain
the property of the Company or its affiliates.
(c) (i) During
the Period of Employment and for a two (2) year period thereafter (the
"Restricted Period"), irrespective of the cause, manner or time
of any termination, the Executive shall not use his status with the Company
or
any of its affiliates to obtain loans, goods or services from another
organization on terms that would not be available to him in the absence of
his
relationship to the Company or any of its affiliates.
9
(ii) During
the Restricted Period, the Executive shall not make any statements or perform
any acts intended to have the effect of advancing the interest of any existing
competitors (or any entity the Executive knows to be a prospective competitor)
of the Company or any of its affiliates or in any way injuring the
interests of the Company or any of its affiliates. During the
Restricted Period, the Executive, without prior express written approval by
the
Board, shall not engage in, or directly or indirectly (whether for compensation
or otherwise) own or hold proprietary interest in, manage, operate, or control,
or join or participate in the ownership, management, operation or control of,
or
furnish any capital to or be connected in any manner with, any party which
competes in any way or manner with the business of the Company or any of its
affiliates, as such business or businesses may be conducted from time to time,
either as a general or limited partner, proprietor, common or preferred
shareholder (other than being less than a 5% shareholder in a publicly
traded company), officer, director, agent, employee, consultant, trustee,
affiliate, or otherwise. The Executive acknowledges that the
Company's and its affiliates' businesses are conducted nationally and
internationally and agrees that the provisions in the foregoing sentence shall
operate throughout the United States and those countries in the world where
the
Company then conducts business or has a plan to conduct business.
(iii) During
the Restricted Period, the Executive, without express prior written approval
from the Board, shall not solicit any members or the then-current clients of
the
Company or any of its affiliates for any existing business of the Company or
any
of its affiliates or discuss with any employee of the Company or any of its
affiliates information or operation of any business intended to compete with
the
Company or any of its affiliates.
(iv) During
the Restricted Period, the Executive shall not interfere with the employees
or
affairs of the Company or any of its affiliates or solicit or induce any person
who is an employee of the Company or any of its affiliates to terminate any
relationship such person may have with the Company or any of its affiliates,
nor
shall the Executive during such period directly or indirectly engage, employ
or
compensate, or cause any person with which the Executive may be affiliated,
to
engage, employ or compensate, any employee of the Company or any of its
affiliates. The Executive hereby represents and warrants that the
Executive has not entered into any agreement, understanding or arrangement
with
any employee of the Company or any of its affiliates pertaining to any business
in which the Executive has participated or plans to participate, or to the
employment, engagement or compensation of any such employee.
10
(v) For
the
purposes of this Agreement, proprietary interest means legal or equitable
ownership, whether through stock holding or otherwise, of an equity interest
in
a business, firm or entity or ownership of more than 5% of any class of equity
interest in a publicly-held company and the term "affiliate" shall include
without limitation all subsidiaries and material licensees of the
Company.
(d) The
Executive hereby acknowledges that damages at law may be an insufficient remedy
to the Company if the Executive violates the terms of this Agreement and that
the Company shall be entitled, upon making the requisite showing, to preliminary
and/or permanent injunctive relief in any court of competent jurisdiction to
restrain the breach of or otherwise to specifically enforce any of the covenants
contained in this Section VIII without the necessity of showing any actual
damage or that monetary damages would not provide an adequate
remedy. Such right to an injunction shall be in addition to, and not
in limitation of, any other rights or remedies the Company may
have. Without limiting the generality of the foregoing, neither party
shall oppose any motion the other party may make for any expedited discovery
or
hearing in connection with any alleged breach of this Section VIII.
(e) The
period of time during which the provisions of this Section VIII shall be in
effect shall be extended by the length of time during which the Executive is
in
breach of the terms hereof as determined by any court of competent jurisdiction
on the Company's application for injunctive relief.
(f) The
Executive agrees that the restrictions contained in this Section VIII are an
essential element of the compensation the Executive is granted hereunder and
but
for the Executive's agreement to comply with such restrictions, the Company
would not have entered into this Agreement.
SECTION
IX
INDEMNIFICATION
The
Company shall indemnify the Executive to the fullest extent permitted by the
laws of the state of the Company's incorporation in effect at that time, or
the
certificate of incorporation and by-laws of the Company, whichever affords
the
greater protection to the Executive (including payment of expenses in advance
of
final disposition of a proceeding).
11
SECTION
X
CERTAIN
TAXES
Anything
in this Agreement or in any other plan, program or agreement to the contrary
notwithstanding and except as set forth below, in the event that (i) the
Executive becomes entitled to any benefits or payments under Section VII hereof
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 additional payments required under this Section
X) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of 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, hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such
that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section X,
if it shall be determined that the Executive is entitled to a Gross-Up Payment,
but that the Payments do not exceed 110% of the greatest amount (the
"Reduced Amount") that could be paid to the Executive such that
the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate,
shall
be reduced to the Reduced Amount, provided, however, that the payments or
benefits to be eliminated in effecting such reduction shall be agreed upon
between the Company and the Executive. All determinations required to
be made under this Section X, 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 Company. In no event will the Gross-Up Payment be made later
than forty-five (45) days following the date on which the Executive remits
the
Excise Tax to the Internal Revenue Service.
SECTION
XI
MITIGATION
The
Executive shall not be required to mitigate the amount of any payment provided
for hereunder by seeking other employment or otherwise, nor shall the amount
of
any such payment be reduced by any compensation earned by the Executive as
the
result of employment by another employer after the date the Executive's
employment hereunder terminates.
12
SECTION
XII
WITHHOLDING
TAXES
The
Executive acknowledges and agrees that the Company may directly or indirectly
withhold from any payments under this Agreement all federal, state, city or
other taxes that shall be required pursuant to any law or governmental
regulation.
SECTION
XIII
EFFECT
OF PRIOR AGREEMENTS
Except
as
otherwise specifically set forth herein, this Agreement shall supersede any
prior agreements between the Company, and the Executive (including but not
limited to the 2003 Agreement and 2006 Agreement) hereof, and any such prior
agreement shall be deemed terminated without any remaining obligations of either
party thereunder.
SECTION
XIV
CONSOLIDATION,
MERGER OR SALE OF ASSETS
Nothing
in this Agreement shall preclude the Company from consolidating or merging
into
or with, or transferring all or substantially all of its assets to, another
corporation or other entity which assumes this Agreement and all obligations
and
undertakings of the Company hereunder. If (i) there is a merger,
consolidation, sale of all or substantially all of the Company's assets, or
other business combination involving the Company, or (ii) all or substantially
all of the stock of the Company is acquired by another company, the term "the
Company" shall mean the successor to the Company's business or assets referred
to in (i) above or such company referred to in (ii) above, and this Agreement
shall continue in full force and effect. Notwithstanding the
foregoing, the Company shall require any successor thereto (whether direct
or
indirect, by purchase, merger, consolidation, or otherwise), by agreement in
form and substance reasonably satisfactory to the Executive to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken
place.
SECTION
XV
MODIFICATION
This
Agreement may not be modified or amended except in writing signed by the
parties. No term or condition of this Agreement shall be deemed to
have been waived
13
except
in
writing by the party charged with waiver. A waiver shall operate only
as to the specific term or condition waived and shall not constitute a waiver
for the future or act on anything other than that which is specifically
waived.
SECTION
XVI
GOVERNING
LAW
This
Agreement has been executed and delivered in the State of New Jersey and its
validity, interpretation, performance and enforcement shall be governed by
the
internal laws of that state.
SECTION
XVII
ARBITRATION
(a) Any
controversy, dispute or claim arising out of or relating to this Agreement
or
the breach hereof which cannot be settled by mutual agreement (other than with
respect to the matters covered by Section VIII for which the Company may, but
shall not be required to, seek injunctive relief) shall be finally settled
by
binding arbitration in accordance with the Federal Arbitration Act (or if not
applicable, the applicable state arbitration law) as follows: Any party who
is
aggrieved shall deliver a notice to the other party setting forth the specific
points in dispute. Any points remaining in dispute twenty (20)
days after the giving of such notice may be submitted to arbitration in New
York, New York, to the American Arbitration Association, before a single
arbitrator appointed in accordance with the arbitration rules of the American
Arbitration Association, modified only as herein expressly
provided. After the aforesaid twenty (20) days, either party, upon
ten (10) days notice to the other, may so submit the points in dispute to
arbitration. The arbitrator may enter a default decision against any
party who fails to participate in the arbitration proceedings.
(b) The
decision of the arbitrator on the points in dispute shall be final, unappealable
and binding, and judgment on the award may be entered in any court having
jurisdiction thereof.
(c) Except
as
otherwise provided in this Agreement, the arbitrator shall be authorized to
apportion its fees and expenses and the reasonable attorneys' fees and expenses
of any such party as the arbitrator deems appropriate. In the absence
of any such apportionment, the fees and expenses of the arbitrator shall be
borne equally by each party, and each party shall bear the fees and expenses
of
its own attorney.
14
(d) The
parties agree that this Section XVII has been included to rapidly and
inexpensively resolve any disputes between them with respect to this Agreement,
and that this Section XVII shall be grounds for dismissal of any court action
commenced by either party with respect to this Agreement, other than
post-arbitration actions seeking to enforce an arbitration award. In
the event that any court determines that this arbitration procedure is not
binding, or otherwise allows any litigation regarding a dispute, claim, or
controversy covered by this Agreement to proceed, the parties hereto hereby
waive any and all right to a trial by jury in or with respect to such
litigation.
(e) The
parties shall keep confidential, and shall not disclose to any person, except
as
may be required by law, the existence of any controversy hereunder, the referral
of any such controversy to arbitration or the status or resolution
thereof.
SECTION
XVIII
SURVIVAL
Sections
VIII, IX, X, XI, XII and XIII shall continue in full force in accordance with
their respective terms notwithstanding any termination of the Period of
Employment.
SECTION
XIX
SEPARABILITY
All
provisions of this Agreement are intended to be severable. In the
event any provision or restriction contained herein is held to be invalid or
unenforceable in any respect, in whole or in part, such finding shall in no
way
affect the validity or enforceability of any other provision of this
Agreement. The parties hereto further agree that any such invalid or
unenforceable provision shall be deemed modified so that it shall be enforced
to
the greatest extent permissible under law, and to the extent that any court
of
competent jurisdiction determines any restriction herein to be unreasonable
in
any respect, such court may limit this Agreement to render it reasonable in
the
light of the circumstances in which it was entered into and specifically enforce
this Agreement as limited.
*****
15
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.
AVIS
BUDGET GROUP, INC.
/s/
Mark Servodidio
By:
Mark
Servodidio
Title: Executive
Vice
President, Human Resources
/s/ Ronald
L. Nelson
Ronald
L.
Nelson
Each
of
the undersigned subsidiaries of the Company hereby guarantees to the Executive
the prompt and complete payment and performance by the Company when due of
the
Company’s obligations to make payments due to the Executive that are delayed in
accordance with Section VII(d)(iii) in consideration for the services the
Executive renders to such subsidiary in his role as Chief Executive Officer
of
Avis Budget Group, Inc.; provided that, as to any subsidiary, this guarantee
shall be null and void and have no effect whatsoever with respect to such
subsidiary for any period (including as of the Effective Date) during which
this
guarantee conflicts with or constitutes a breach of any obligation of such
subsidiary under any currently applicable agreement or other obligation
applicable to such subsidiary or any applicable law, rule or regulation (whether
currently applicable or applicable at any time in the future).
IN
WITNESS WHEREOF, the undersigned have executed this Guarantee as of the
Effective Date.
AVIS
BUDGET CAR RENTAL,
LLC
AVIS
BUDGET HOLDINGS, LLC
AVIS
BUDGET FINANCE, INC.
AVIS
CAR RENTAL GROUP,
LLC
ARACS
LLC
AVIS
RENT A CAR SYSTEM,
LLC
AVIS
ASIA AND PACIFIC,
LIMITED
AVIS
CARIBBEAN, LIMITED
AVIS
ENTERPRISES, INC.
AVIS
GROUP HOLDINGS, LLC
AVIS
INTERNATIONAL, LTD.
PF
CLAIMS MANAGEMENT, LTD
AB
CAR RENTAL SERVICES,
INC.
AVIS
OPERATIONS, LLC
BGI
LEASING, INC.
RUNABOUT,
LLC
WIZARD
SERVICES, INC.
/s/
Mark Servodidio
By:
Mark
Servodidio
Title: Executive
Vice
President, Human Resources
16
BUDGET
RENT A CAR SYSTEM,
INC.
BUDGET
TRUCK RENTAL, LLC
PR
HOLDCO, INC.
/s/ Edward
Pictroski
By:
Edward
Pictroski
Title: Senior
Vice
President, Human Resources
17
Exhibit
10.2
EMPLOYMENT
AGREEMENT
Avis
Budget Group, Inc. (the "Company") and F. Robert Salerno (the
"Executive") are parties to this certain Employment Agreement
effective, as amended and restated, as of December 29, 2008 (as amended and
restated, this "Agreement").
WHEREAS,
Cendant Corporation (which has
been renamed Avis Budget Group, Inc.) and the Executive were parties to a
certain Employment Agreement effective as of August 1, 2003 and amended as
of
May 31, 2006 (the "2006 Agreement"); and
WHEREAS,
the Company and the Executive agree to amend and restate the 2006 Agreement
in
its entirety as set forth herein;
WHEREAS,
the Company desires to continue to employ the Executive as a full-time employee
of the Company and the Executive desires to continue to serve the Company 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 that this Agreement is amended and restated to read as
follows:
SECTION
I
EFFECTIVENESS
This
Agreement shall be effective as of January 1, 2009 (the "Effective
Date").
SECTION
II
EMPLOYMENT;
POSITION AND RESPONSIBILITIES
The
Company agrees to employ the Executive, and the Executive agrees to be employed
by the Company, for the Period of Employment as provided in Section III below
and upon the terms and conditions provided in this Agreement. From the Effective
Date until the date that is eighteen months following the Effective Date (the
"Transition Date"), the Executive shall serve as the President
and Chief Operating Officer of the Company. From the Transition Date through
the
end of the Period of Employment, the Executive shall serve as Vice Chairman
of
the Company in a transitional role without day to day operating responsibility.
During the Period of Employment, the Executive shall report to, and be subject
to the direction of the Chief Executive Officer of the Company (the
"Supervising Officer"). The Executive shall perform
such duties and exercise such supervision with regard to the
1
business
of the Company as are associated with his position, as well as such additional
duties as may be prescribed from time to time by the Supervising Officer. The
Executive shall, during the Period of Employment, devote substantially all
of
his time and attention during normal business hours to the performance of
services for the Company. The Executive shall maintain a primary office and
conduct his business in Parsippany, New Jersey (the "Business
Office"), except for normal and reasonable business travel in
connection with his duties hereunder.
In
addition, during the Period of Employment, the Executive shall continue serve
as
a member of the Company's Board of Directors (the "Board");
provided, however, that the Executive's continued service as a member of the
Board shall at all times remain subject to any and all nomination and election
procedures in accordance with the Company's by-laws.
SECTION
III
PERIOD
OF EMPLOYMENT
The
period of the Executive's employment under this Agreement (the "Period
of Employment") shall begin on the Effective Date and shall end on the
third anniversary of the Effective Date, subject to earlier termination as
provided in this Agreement.
SECTION
IV
COMPENSATION
AND BENEFITS
For
all
services rendered by the Executive pursuant to this Agreement during the Period
of Employment, including services as an executive officer, director or committee
member of the Company or any subsidiary or affiliate of the Company, the
Executive shall be compensated as follows:
|
(a)
|
Base
Salary. The Company shall pay the Executive a fixed base salary
("Base Salary") of not less than: (i) seven hundred
thousand dollars ($700,000), per annum, for the 2009 calendar year;
(ii)
seven hundred fifty thousand dollars ($750,000), per annum, for the
2010
calendar year; and (iii) eight hundred thousand dollars ($800,000),
per
annum, for the 2011 calendar year. Base Salary shall be payable
according to the customary payroll practices of the Company, but
in no
event less frequently than once each
month.
|
|
(b)
|
Annual
Incentive Awards
|
|
(i)
|
The
Executive shall be eligible to earn a target Annual Bonus for each
fiscal
year of the Company ending during the Period of Employment (each,
an
"Annual Bonus") equal to 100% of the Executive's Base
Salary for such fiscal year, if the Company achieves the target
performance goals established by the Compensation Committee (the
"Committee") for such fiscal year. The
Committee may establish such metrics whereby the Executive may earn
an
Annual Bonus in excess of the target Annual Bonus or an Annual Bonus
less
than the target Annual Bonus.
|
2
|
(ii)
|
Any
Annual Bonus that becomes payable to the Executive pursuant to this
Section shall be paid to the Executive as soon as reasonably practicable
following receipt by the Board of the audited consolidated financial
statements of the Company for the relevant fiscal year, but in no
event
later than two and a half (2 ½) months following the end of the applicable
fiscal year in which such Annual Bonus was earned. The Executive
shall be entitled to receive any Annual Bonus that becomes payable
in a
lump sum cash payment, or, at his election, in any form that the
Board
generally makes available to the Company's executive management team;
provided that any such election is made by the Executive in compliance
with Section 409A ("Section 409A") of the Internal
Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated thereunder.
|
|
(c)
|
Long-Term
Incentive Awards. During the Period of Employment, the
Executive shall be eligible for long term incentive awards as determined
by the Committee in its discretion.
|
|
(d)
|
Additional
Benefits. The Executive shall be entitled to participate in all
other compensation and employee benefit plans or programs and receive
all
benefits and perquisites for which salaried employees of the Company
generally are eligible under any plan or program now in effect, or
later
established by the Company, on a basis no less favorable than as
provided
to any other similarly situated executive of the Company. The Executive
shall participate to the extent permissible under the terms and provisions
of such plans or programs, and in accordance with the terms of such
plans
and programs.
|
SECTION
V
BUSINESS
EXPENSES
The
Company shall reimburse the Executive for all reasonable travel and other
expenses incurred by the Executive in connection with the performance of his
duties and obligations under this Agreement. The Executive shall comply with
such limitations and reporting requirements with respect to expenses as may
be
established by the Company from time to time and shall promptly provide all
appropriate and requested documentation in connection with such expenses.
Further, the Executive will receive access to Company aircraft or alternative
air transportation, subject to applicable Company policies.
3
SECTION
VI
DEATH
AND DISABILITY
The
Period of Employment shall end upon the Executive's death. If the Executive
experiences a Disability (as defined below) during the Period of Employment,
the
Period of Employment may be terminated at the option of the Executive upon
notice of resignation to the Company, or at the option of the Company upon
notice of termination to the Executive. For purposes of this Agreement,
"Disability" shall have the meaning set forth in Section 409A. The Company's
obligation to make payments to the Executive under this Agreement shall cease
as
of such date of termination, except for Base Salary and any Annual Bonus earned
but unpaid as of the date of such termination (the "Accrued
Obligations"), and, in such event (a) each of the Executive's then
outstanding options to purchase shares of Company common stock that were granted
prior to July 28, 2006 and options to purchase shares of Wyndham Worldwide
Corporation common stock (and its successors) (the "Pre-Existing
Options") shall become immediately and fully vested and exercisable (to
the extent not already vested) and, shall remain exercisable during the extended
post-termination exercise period set forth in the employment agreement entered
into between Cendant Corporation and the Executive on August 1, 2003 (the
"2003 Agreement"), (b) each option to purchase shares of the
Company common stock or stock appreciation right granted on or after July 28th
2006 shall become immediately and fully vested and exercisable (to the extent
not already vested) and, notwithstanding any term or provision relating to
such
option to the contrary, shall remain exercisable until the first to occur of
the
third (3rd) anniversary of the Executive's termination of employment and the
original expiration date of such option or stock appreciation rights, (c) all
other long-term equity awards then outstanding shall become immediately vested,
and (d) the Company shall pay the Executive (or his surviving spouse, estate
or
personal representative, as applicable) a cash amount equal to the Executive's
target Annual Bonus for the year in which the Executive is terminated multiplied
by a fraction the numerator of which is the total number of days during the
applicable calendar year during which the Executive was employed by the Company
and the denominator of which is 365. Upon the Executive's termination
due to death or Disability, the Executive and each person who is his covered
dependent at such time under the Company sponsored health and dental plan shall
remain eligible to continue to participate in such plans (as they may be
modified from time to time with respect to all senior executive officers) until
the 2nd anniversary of such termination of employment (such benefits, the
"Continuation of Health Benefits"). The Executive also retains
the right to participate in the Avis, Inc. Retiree Health Care Plan per the
1992
Avis Board of Director's resolution.
SECTION
VII
EFFECT
OF TERMINATION OF EMPLOYMENT
|
|
(a)
|
Without
Cause Termination; Constructive Discharge. Subject to the
provisions of Section VII(e), if the Executive's employment terminates
during the Period of Employment, due to either a Without Cause Termination
or a Constructive Discharge (each as defined below): (i) the Accrued
Obligations shall be paid to the Executive in accordance with paragraph
(e) below, (ii) the Company shall pay the Executive (or his surviving
spouse, estate or personal representative, as applicable), within
fifteen
(15) days following the Release Date (as defined in paragraph (e)
below),
an amount equal to 299% multiplied by the sum of (A) the Executive's
then
current Base Salary, plus (B) the Executive's then current target
Annual
Bonus; (iii) each of the Executive's then outstanding Pre-Existing
Options
shall become immediately and fully vested and exercisable (to the
extent
not already vested) in accordance with the terms and conditions applicable
to such options set forth in the 2003 Agreement, and shall remain
exercisable for the extended post-termination exercise period set
forth in
the 2003 Agreement, (iv) each option to purchase shares of the Company
common stock or stock appreciation right granted on or after July
28, 2006
(excluding any Pre-Existing Option to acquire the Company common
stock)
shall become immediately and fully vested and exercisable (to the
extent
not already vested) and, notwithstanding any term or provision thereof
to
the contrary, shall remain exercisable until the first to occur of
the
third (3rd) anniversary of the Executive's termination of employment
and
the original expiration date of such option or stock appreciation
right,
and (v) all other long-term equity awards (including, without limitation,
restricted stock units) shall become immediately vested. Upon
such termination, the Executive shall also be entitled to the Continuation
of Health Benefits and also be entitled to the Avis, Inc. Retiree
Health
Care Plan per the 1992 Avis Board of Director's
resolution.
|
4
|
(b)
|
End
of Period of Employment. If the Executive's employment has not been
earlier terminated in accordance with the provisions of this Agreement,
effective January 1, 2012, the Executive's employment shall terminate
and,
subject to the provisions of Section VII(e), (i) the Accrued Obligations
shall be paid to the Executive in accordance with paragraph (e) below;
(ii) each of the Executive's then outstanding Pre-Existing Options
shall
become immediately and fully vested and exercisable (to the extent
not
already vested) in accordance with the terms and conditions applicable
to
such options set forth in the 2003 Agreement, and shall remain exercisable
for the extended post-termination exercise period set forth in the
2003
Agreement, (iii) each option to purchase shares of the Company common
stock or stock appreciation right granted on or after July 28, 2006
(excluding any Pre-Existing Option to acquire the Company common
stock)
shall become immediately and fully vested and exercisable (to the
extent
not already vested) and, notwithstanding any term or provision thereof
to
the contrary, shall remain exercisable until the first to occur of
the
third (3rd) anniversary of the Executive's termination of employment
and
the original expiration date of such option or stock appreciation
right,
(iv) all other long-term equity awards that vest based on continued
service alone (including, without limitation, restricted stock units)
shall become immediately vested; and (v) with respect to all other
long-term equity awards (including, without limitation, restricted
stock
units) that vest based on the achievement of performance criteria,
a
number of shares subject to such awards shall vest equal to the total
number of shares subject to the award multiplied by a fraction the
numerator of which is the total number of days during the applicable
performance period during which the Executive was employed by the
Company
and the denominator of which is the total number of days in the
performance period. Upon such termination, the Executive shall
also be entitled to the Continuation of Health Benefits and also
be
entitled to the Avis, Inc. Retiree Health Care Plan per the 1992
Avis
Board of Director's resolution.
|
|
(c)
|
Termination
for Cause; Resignation. If the Executive's employment terminates
due to a
Termination for Cause or a Resignation, the Accrued Obligations shall
be
paid to the Executive in accordance with paragraph (e) below. Outstanding
stock options and other equity awards held by the Executive as of
the date
of termination shall be treated in accordance with their terms. Except
as
provided in this paragraph, the Company shall have no further obligations
to the Executive hereunder.
|
|
(d)
|
For
purposes of this Agreement, the following terms have the following
meanings:
|
|
(i)
|
"Termination
for Cause" means termination by the Company of
the Executive as a result of (a) the Executive's willful failure
to
substantially perform his duties as an employee of the Company or
any
subsidiary (other than any such failure resulting from incapacity
due to
physical or mental illness), (b) any act of fraud, misappropriation,
dishonesty, embezzlement or similar conduct against the Company or
any
subsidiary, (c) the Executive's conviction of a felony or any crime
involving moral turpitude (which conviction, due to the passage of
time or
otherwise, is not subject to further appeal), (d) the Executive's
gross
negligence in the performance of his duties or (e) the Executive
purposefully or negligently makes (or has been found to have made)
a false
certification to the Company pertaining to its financial
statements.
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(ii)
|
"Constructive
Discharge" means (a) any material failure of the Company to
fulfill its obligations under this Agreement (including without limitation
any material reduction of the Base Salary, as the same may be increased
during the Period of Employment, or any material reduction in any
other
material element of compensation) or any material diminution to the
Executive's duties and responsibilities relating to service as an
executive officer, including if the Executive was immediately prior
to a
Corporate Transaction an executive officer of a public company, the
Executive ceasing to be an executive officer of a public company,
provided, however, that the change in Executive's position as provided
for
in Section II shall not constitute such a material diminution to the
Executive's duties and responsibilities, (b) prior to the Transition
Date,
the Business Office is relocated to any location that increases the
Executive's one-way commute by more than 30 miles, provided that such
relocation constitutes a material negative change to the Executive's
employment relationship, (c) the Executive is not nominated to be
a member
of the Board, or (d) failure of a successor to the Company to assume
this
Agreement in accordance with Section XIV below. The Executive shall
provide the Company a written notice of his intention to terminate
employment pursuant to a Constructive Discharge within 60 days after
the
Executive knows or has reason to know of the occurrence of any such
event
which notice describes the circumstances being relied on for the
termination with respect to this Agreement. Notwithstanding the above,
the
Company shall have thirty (30) days after receipt of such notice
to remedy
the event prior to the termination for Constructive Discharge and,
upon
the timely remedy of such event, such event shall no longer constitute
a
basis for Constructive Discharge and the Executive's notice of
termination pursuant to a Constructive Discharge shall be
rescinded.
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5
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(iii)
|
"Without
Cause Termination" or "Terminated
Without Cause" means termination of the Executive's employment by
the Company other than due to death, Disability, or Termination for
Cause.
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(iv)
|
"Resignation"
means a termination of the Executive's employment by the Executive,
other
than in connection with a Constructive Discharge or other than due
to
death or Disability.
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(v)
|
"Corporate
Transaction" means either:
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(1)
|
any
"person," as such term is used in Sections 13(d) and 14(d) of the
Securities and Exchange Act, as amended (the "Exchange Act") (other
than
(A) the Company, (B) any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, and (C) any corporation
owned, directly or indirectly, by the stockholders of the Company
in
substantially the same proportions as their ownership of Company
common
stock), is or becomes the "beneficial owner" (as defined in Rule
13d-3
under the Exchange Act), directly or indirectly, of securities of
the
Company representing 50% or more of the combined voting power of
the
Company's then outstanding voting securities (excluding any person
who
becomes such a beneficial owner in connection with a transaction
immediately following which the individuals who comprise the Board
immediately prior thereto constitute at least a majority of the Board
of
the entity surviving such transaction or, if the Company or the entity
surviving the transaction is then a subsidiary, the ultimate parent
thereof); or
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6
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(2)
|
the
following individuals cease for any reason to constitute a majority
of the
number of directors then serving: individuals who, on the Effective
Date,
constitute the Board and any new director (other than a director
whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose appointment
or
election by the Board or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least one-half
(1/2) of the directors then still in office who either were directors
on
the Effective Date or whose appointment, election or nomination for
election was previously so approved or
recommended.
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(e)
|
Conditions
to Payment and Acceleration; Section 409A.
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|
(i)
|
Notwithstanding
anything contained herein to the contrary, to the extent required
in order
to avoid accelerated taxation and/or tax penalties under Section
409A, the
Executive shall not be considered to have terminated employment with
the
Company for purposes of this Agreement and no payments shall be due
to the
Executive under Section VII of this Agreement until the Executive
would be
considered to have incurred a "separation from service" from the
Company
within the meaning of Section 409A.
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|
(ii)
|
All
payments due to the Executive under this Section VII shall be subject
to,
and contingent upon, the Executive (or his beneficiary or estate)
(x)
executing a release of claims against the Company and its affiliates
(in
such reasonable form determined by the Company in its sole discretion)
within forty-five days following the Executive's separation from
service
(or, in the event of a dispute, upon resolution of the dispute, provided
that such extension does not result in, as applicable, the disputed
payments constituting deferred compensation within the meaning of
Section
409A or the imposition of additional taxes under Section 409A) and
(y)
failing to revoke such release (the date on which such release becomes
non-revocable, the "Release
Date").
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|
(iii)
|
To
the extent required in order to avoid accelerated taxation and/or
tax
penalties under Section 409A, amounts that would otherwise be payable
and
benefits that would otherwise be provided pursuant to this Agreement
during the six-month period immediately following the Executive's
termination of employment shall instead be paid on the first business
day
after the date that is six (6) months following the Executive's
termination of employment (or upon the Executive's death, if
earlier).
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7
|
(iv)
|
The
intent of the Parties is that payments and benefits under this Agreement
comply with Section 409A and, accordingly, to the maximum extent
permitted, this Agreement shall be interpreted and administered to
be in
compliance therewith. Each amount to be paid or benefit to be provided
under this Agreement shall be construed as a separate identified
payment
for purposes of Section 409A and any payments described in this Agreement
that are due within the "short term deferral period" as defined in
Section
409A shall not be treated as deferred compensation unless applicable
law
requires otherwise.
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|
(v)
|
The
payments due to the Executive under this Section VII shall be in
lieu of
any other severance benefits otherwise payable to the Executive under
any
severance plan of the Company or its
affiliates.
|
SECTION
VIII
OTHER
DUTIES OF THE EXECUTIVE
DURING
AND AFTER THE PERIOD OF EMPLOYMENT
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|
(a)
|
The
Executive shall, with reasonable notice during or after the Period
of
Employment, furnish information as may be in his possession and fully
cooperate with the Company and its affiliates as may be requested
in
connection with any claims or legal action in which the Company or
any of
its affiliates is or may become a party. After the Period of Employment,
the Executive shall cooperate as reasonably requested with the Company
and
its affiliates in connection with any claims or legal actions in
which the
Company or any of its affiliates is or may become a party. The Company
agrees to reimburse the Executive for any reasonable out-of-pocket
expenses incurred by Executive by reason of such cooperation, including
any loss of salary, and the Company shall make reasonable efforts
to
minimize interruption of the Executive's life in connection with
his
cooperation in such matters as provided for in this
paragraph.
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|
(b)
|
The
Executive recognizes and acknowledges that all information pertaining
to
this Agreement or to the affairs; business; results of operations;
accounting methods, practices and procedures; members; acquisition
candidates; financial condition; clients; customers or other relationships
of the Company or any of its affiliates ("Information")
is confidential and is a unique and valuable asset of the Company
or any
of its affiliates. Access to and knowledge of certain of the Information
is essential to the performance of the Executive's duties under this
Agreement. The Executive shall not during the Period of Employment
or
thereafter, except to the extent reasonably necessary in performance
of
his duties under this Agreement, give to any person, firm, association,
corporation, or governmental agency any Information, except as may
be
required by law. The Executive shall not make use of the Information
for
his own purposes or for the benefit of any person or organization
other
than the Company or any of its affiliates. The Executive shall also
use
his best efforts to prevent the disclosure of this Information by
others.
All records, memoranda, etc. relating to the business of the Company
or
its affiliates, whether made by the Executive or otherwise coming
into his
possession, are confidential and shall remain the property of the
Company
or its affiliates.
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8
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(c)
|
|
(i)
|
During
the Period of Employment and for a period following any termination
of employment that shall end on the two (2) year anniversary of
such termination (the "Restricted Period"), the Executive
shall not use his status with the Company or any of its affiliates
to
obtain loans, goods or services from another organization on terms
that
would not be available to him in the absence of his relationship
to the
Company or any of its affiliates.
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|
(ii)
|
During
the Restricted Period, the Executive shall not make any statements
or
perform any acts intended to have the effect of advancing the interest
of
any existing competitors (or any entity the Executive knows to be
a
prospective competitor) of the Company or any of its affiliates or
in any
way injuring the interests of the Company or any of its affiliates.
During
the Restricted Period, the Executive, without prior express written
approval by the Board, shall not engage in, or directly or indirectly
(whether for compensation or otherwise) own or hold proprietary interest
in, manage, operate, or control, or join or participate in the ownership,
management, operation or control of, or furnish any capital to or
be
connected in any manner with, any party which competes in any way
or
manner with the business of the Company or any of its affiliates,
as such
business or businesses may be conducted from time to time, either
as a
general or limited partner, proprietor, common or preferred
shareholder (other than being less than a 5% shareholder in a
publicly traded company), officer, director, agent, employee, consultant,
trustee, affiliate, or otherwise. The Executive acknowledges that
the
Company's and its affiliates' businesses are conducted nationally
and
internationally and agrees that the provisions in the foregoing sentence
shall operate throughout the United States and those countries in
the
world where the Company then conducts business or has a plan to conduct
business.
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|
(iii)
|
During
the Restricted Period, the Executive, without express prior written
approval from the Board, shall not solicit any members or the then-current
clients of the Company or any of its affiliates for any existing
business
of the Company or any of its affiliates or discuss with any employee
of
the Company or any of its affiliates information or operation of
any
business intended to compete with the Company or any of its
affiliates.
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9
|
(iv)
|
During
the Restricted Period, the Executive shall not interfere with the
employees or affairs of the Company or any of its affiliates or solicit
or
induce any person who is an employee of the Company or any of its
affiliates to terminate any relationship such person may have with
the
Company or any of its affiliates, nor shall the Executive during
such
period directly or indirectly engage, employ or compensate, or cause
any
person with which the Executive may be affiliated, to engage, employ
or
compensate, any employee of the Company or any of its affiliates.
The
Executive hereby represents and warrants that the Executive has not
entered into any agreement, understanding or arrangement with any
employee
of the Company or any of its affiliates pertaining to any business
in
which the Executive has participated or plans to participate, or
to the
employment, engagement or compensation of any such
employee.
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|
(v)
|
For
the purposes of this Agreement, proprietary interest means legal
or
equitable ownership, whether through stock holding or otherwise,
of an
equity interest in a business, firm or entity or ownership of more
than 5%
of any class of equity interest in a publicly-held company and the
term
"affiliate" shall include without limitation all subsidiaries and
material
licensees of the Company.
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|
(d)
|
The
Executive hereby acknowledges that damages at law may be an insufficient
remedy to the Company if the Executive violates the terms of this
Agreement and that the Company shall be entitled, upon making the
requisite showing, to preliminary and/or permanent injunctive relief
in
any court of competent jurisdiction to restrain the breach of or
otherwise
to specifically enforce any of the covenants contained in this Section
VIII without the necessity of showing any actual damage or that monetary
damages would not provide an adequate remedy. Such right to an injunction
shall be in addition to, and not in limitation of, any other rights
or
remedies the Company may have. Without limiting the generality of
the
foregoing, neither party shall oppose any motion the other party
may make
for any expedited discovery or hearing in connection with any alleged
breach of this Section VIII.
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|
(e)
|
The
period of time during which the provisions of this Section VIII shall
be
in effect shall be extended by the length of time during which the
Executive is in breach of the terms hereof as determined by any court
of
competent jurisdiction on the Company's application for injunctive
relief.
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10
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(f)
|
The
Executive agrees that the restrictions contained in this Section
VIII are
an essential element of the compensation the Executive is granted
hereunder and but for the Executive's agreement to comply with such
restrictions, the Company would not have entered into this
Agreement.
|
SECTION
IX
INDEMNIFICATION
The
Company shall indemnify the Executive to the fullest extent permitted by the
laws of the state of the Company's incorporation in effect at that time, or
the
certificate of incorporation and by-laws of the Company, whichever affords
the
greater protection to the Executive (including payment of expenses in advance
of
final disposition of a proceeding).
SECTION
X
CERTAIN
TAXES
Anything
in this Agreement or in any other plan, program or agreement to the contrary
notwithstanding and except as set forth below, in the event that (i) the
Executive becomes entitled to any benefits or payments under Section VII hereof
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 additional payments required under this Section
X) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of 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, hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive
an additional payment (a "Gross-Up Payment") in an amount such
that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments. Notwithstanding the foregoing provisions of this Section X, if it
shall be determined that the Executive is entitled to a Gross-Up Payment, but
that the Payments do not exceed 110% of the greatest amount (the
"Reduced Amount") that could be paid to the Executive such that
the receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate,
shall
be reduced to the Reduced Amount, provided, however, that the payments or
benefits to be eliminated in effecting such reduction shall be agreed upon
between the Company and the Executive. All determinations required to be made
under this Section X, 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
Company. In no event will the Gross-Up Payment be made later than
forty-five (45) days following the date on which the Executive remits the Excise
Tax to the Internal Revenue Service.
11
SECTION
XI
MITIGATION
The
Executive shall not be required to mitigate the amount of any payment provided
for hereunder by seeking other employment or otherwise, nor shall the amount
of
any such payment be reduced by any compensation earned by the Executive as
the
result of employment by another employer after the date the Executive's
employment hereunder terminates.
SECTION
XII
WITHHOLDING
TAXES
The
Executive acknowledges and agrees that the Company may directly or indirectly
withhold from any payments under this Agreement all federal, state, city or
other taxes that shall be required pursuant to any law or governmental
regulation.
SECTION
XIII
EFFECT
OF PRIOR AGREEMENTS
Except
as
otherwise specifically set forth herein, this Agreement shall supersede any
prior agreements between the Company and the Executive (including but not
limited to the 2003 and 2006 Agreements) hereof, and any such prior agreement
shall be deemed terminated without any remaining obligations of either party
thereunder.
SECTION
XIV
CONSOLIDATION,
MERGER OR SALE OF ASSETS
Nothing
in this Agreement shall preclude the Company from consolidating or merging
into
or with, or transferring all or substantially all of its assets to, another
corporation or other entity which assumes this Agreement and all obligations
and
undertakings of the Company hereunder. If (i) there is a merger, consolidation,
sale of all or substantially all of the Company's assets, or other business
combination involving the Company, or (ii) all or substantially all of the
stock
of the Company is acquired by another company, the term "the Company" shall
mean
the successor to the Company's business or assets referred to in (i) above
or
such company referred to in (ii) above, and this Agreement shall continue in
full force and effect. Notwithstanding the foregoing, the Company shall require
any successor thereto (whether direct or indirect, by purchase, merger,
consolidation, or otherwise), by agreement in form and substance reasonably
satisfactory to the Executive to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would
be
required to perform it if no such succession had taken place.
12
SECTION
XV
MODIFICATION
This
Agreement may not be modified or amended except in writing signed by the
parties. No term or condition of this Agreement shall be deemed to have been
waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver for the future or act on anything other than that which
is
specifically waived.
SECTION
XVI
GOVERNING
LAW
This
Agreement has been executed and delivered in the State of New Jersey and its
validity, interpretation, performance and enforcement shall be governed by
the
internal laws of that state.
SECTION
XVII
ARBITRATION
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|
(a)
|
Any
controversy, dispute or claim arising out of or relating to this
Agreement
or the breach hereof which cannot be settled by mutual agreement
(other
than with respect to the matters covered by Section VIII for which
the
Company may, but shall not be required to, seek injunctive relief)
shall
be finally settled by binding arbitration in accordance with the
Federal
Arbitration Act (or if not applicable, the applicable state arbitration
law) as follows: Any party who is aggrieved shall deliver a notice
to the
other party setting forth the specific points in dispute. Any points
remaining in dispute twenty (20) days after the giving of such notice
may
be submitted to arbitration in New York, New York, to the American
Arbitration Association, before a single arbitrator appointed in
accordance with the arbitration rules of the American Arbitration
Association, modified only as herein expressly provided. After the
aforesaid twenty (20) days, either party, upon ten (10) days notice
to the
other, may so submit the points in dispute to arbitration. The arbitrator
may enter a default decision against any party who fails to participate
in
the arbitration proceedings.
|
|
(b)
|
The
decision of the arbitrator on the points in dispute shall be final,
unappealable and binding, and judgment on the award may be entered
in any
court having jurisdiction thereof.
|
13
|
(c)
|
Except
as otherwise provided in this Agreement, the arbitrator shall be
authorized to apportion its fees and expenses and the reasonable
attorneys' fees and expenses of any such party as the arbitrator
deems
appropriate. In the absence of any such apportionment, the fees and
expenses of the arbitrator shall be borne equally by each party,
and each
party shall bear the fees and expenses of its own
attorney.
|
|
(d)
|
The
parties agree that this Section XVII has been included to rapidly
and
inexpensively resolve any disputes between them with respect to this
Agreement, and that this Section XVII shall be grounds for dismissal
of
any court action commenced by either party with respect to this Agreement,
other than post-arbitration actions seeking to enforce an arbitration
award. In the event that any court determines that this arbitration
procedure is not binding, or otherwise allows any litigation regarding
a
dispute, claim, or controversy covered by this Agreement to proceed,
the
parties hereto hereby waive any and all right to a trial by jury
in or
with respect to such litigation.
|
|
(e)
|
The
parties shall keep confidential, and shall not disclose to any person,
except as may be required by law, the existence of any controversy
hereunder, the referral of any such controversy to arbitration or
the
status or resolution thereof.
|
SECTION
XVIII
SURVIVAL
Sections
VIII, IX, X, XI, XII and XIII shall continue in full force in accordance with
their respective terms notwithstanding any termination of the Period of
Employment.
SECTION
XIX
SEPARABILITY
All
provisions of this Agreement are intended to be severable. In the event any
provision or restriction contained herein is held to be invalid or unenforceable
in any respect, in whole or in part, such finding shall in no way affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that any such invalid or unenforceable provision shall
be
deemed modified so that it shall be enforced to the greatest extent permissible
under law, and to the extent that any court of competent jurisdiction determines
any restriction herein to be unreasonable in any respect, such court may limit
this Agreement to render it reasonable in the light of the circumstances in
which it was entered into and specifically enforce this Agreement as
limited.
*****
14
IN
WITNESS WHEREOF, the undersigned
have executed this Agreement as of the Effective Date.
AVIS
BUDGET GROUP, INC.
/s/
Mark Servodidio
By:
Mark
Servodidio
Title: Executive
Vice
President, Human Resources
/s/ F.
Robert Salerno
F.
Robert
Salerno
Each
of
the undersigned subsidiaries of the Company hereby guarantees to the Executive
the prompt and complete payment and performance by the Company when due of
the
Company’s obligations to make payments due to the Executive that are delayed in
accordance with Section VII(e)(iii) in consideration for the services the
Executive renders to such subsidiary in his role as President and Chief
Operating Officer of Avis Budget Group, Inc.; provided that, as to any
subsidiary, this guarantee shall be null and void and have no effect whatsoever
with respect to such subsidiary for any period (including as of the Effective
Date) during which this guarantee conflicts with or constitutes a breach of
any
obligation of such subsidiary under any currently applicable agreement or other
obligation applicable to such subsidiary or any applicable law, rule or
regulation (whether currently applicable or applicable at any time in the
future).
IN
WITNESS WHEREOF, the undersigned have executed this Guarantee as of the
Effective Date.
AVIS
BUDGET CAR RENTAL,
LLC
AVIS
BUDGET HOLDINGS, LLC
AVIS
BUDGET FINANCE, INC.
AVIS
CAR RENTAL GROUP,
LLC
ARACS
LLC
AVIS
RENT A CAR SYSTEM,
LLC
AVIS
ASIA AND PACIFIC,
LIMITED
AVIS
CARIBBEAN, LIMITED
AVIS
ENTERPRISES, INC.
AVIS
GROUP HOLDINGS, LLC
AVIS
INTERNATIONAL, LTD.
PF
CLAIMS MANAGEMENT, LTD
AB
CAR RENTAL SERVICES,
INC.
AVIS
OPERATIONS, LLC
BGI
LEASING, INC.
RUNABOUT,
LLC
WIZARD
SERVICES, INC.
/s/
Mark Servodidio
By:
Mark
Servodidio
Title: Executive
Vice
President, Human Resources
BUDGET
RENT A CAR SYSTEM,
INC.
BUDGET
TRUCK RENTAL, LLC
PR
HOLDCO, INC.
/s/ Edward
Pictroski
By:
Edward
Pictroski
Title: Senior
Vice
President, Human Resources
15
Exhibit
10.3
EMPLOYMENT
AGREEMENT
Avis
Budget Group, Inc. (the "Company") and David B. Wyshner (the
"Executive") are parties to this certain Employment Agreement
amended and restated as of December 29, 2008 (the
"Agreement").
WHEREAS,
the Company desires to continue to employ the Executive as a full-time employee
of the Company and the Executive desires to continue to serve the Company
in
such capacity.
WHEREAS,
the Company and the Executive agree to amend and restate the Agreement,
originally entered into effective August 31, 2006, in its entirety as set
forth
herein.
NOW
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
parties hereby agree that the Agreement is amended and restated to read as
follows:
SECTION
I
EFFECTIVENESS
This
Agreement shall be effective as of August 31, 2006 (the "Effective
Date").
SECTION
II
EMPLOYMENT;
POSITION AND RESPONSIBILITIES
The
Company agrees to employ the Executive, and the Executive agrees to be employed
by the Company, for the Period of Employment as provided in Section III below
and upon the terms and conditions provided in this Agreement. During the
Period
of Employment, the Executive shall serve as the Executive Vice President
and
Chief Financial Officer of the Company. During the Period of Employment,
the
Executive shall report to, and be subject to the direction of, the Chief
Executive Officer of the Company (the "Supervising Officer").
The Executive shall perform such duties and exercise such supervision with
regard to the business of the Company as are associated with his position,
as
well as such additional duties as may be prescribed from time to time by
the
Supervising Officer. The Executive shall, during the Period of Employment,
devote substantially all of his time and attention during normal business
hours
to the performance of services for the Company. The Executive shall maintain
a
primary office and conduct his business in Parsippany, New Jersey (the
"Business Office"), except for normal and reasonable business
travel in connection with his duties hereunder.
SECTION
III
PERIOD
OF EMPLOYMENT
The
period of the Executive's employment under this Agreement (the "Period
of Employment") shall begin on the Effective Date and shall end on the
fourth anniversary of the Effective Date (the "Term"), subject
to earlier termination as provided in this Agreement. Effective upon the
expiration of the Term, Executive's employment hereunder shall be deemed
to be
automatically extended thereafter, upon the same terms and conditions, for
additional periods of one year (the "Additional Terms")
commencing upon the expiration of the Term unless either party shall have
given
written notice to the other, at least six (6) months prior to the expiration
of
the Term (or, if applicable, the Additional Term) of its intention not to
extend
the Period of Employment hereunder; provided that any such notice of
non-extension delivered by the Company to Executive shall be deemed to
constitute a Constructive Discharge (as defined below) of the
Executive.
SECTION
IV
COMPENSATION
AND BENEFITS
For
all
services rendered by the Executive pursuant to this Agreement during the
Period
of Employment, including services as an executive officer, director or committee
member of the Company or any subsidiary or affiliate of the Company, the
Executive shall be compensated as follows:
(a) Base
Salary
The
Company shall pay the Executive a fixed base salary ("Base
Salary") of not less than: (i) five hundred twenty-five thousand
dollars ($525,000), per annum, for the 2009 calendar year; (ii) five hundred
seventy-five thousand dollars ($575,000), per annum, for the 2010 calendar
year;
and (iii) six hundred thousand dollars ($600,000), per annum, for the 2011
calendar year; and thereafter the Executive shall be eligible to receive
annual
increases as the Company deems appropriate, in accordance with the Company's
customary procedures regarding salaries of senior officers. Base
Salary shall be payable according to the customary payroll practices of the
Company, but in no event less frequently than once each month.
(b) Annual
Incentive Awards
The
Executive shall be eligible to earn a target Annual Bonus for each fiscal
year
of the Company ending during the Period of Employment (each, an "Annual
Bonus") equal to 100% of the Executive's Base Salary for such fiscal
year, if the Company achieves the target performance goals established by
the
Compensation Committee (the "Committee") for such fiscal year.
The Committee may establish such metrics whereby the Executive may earn an
Annual Bonus in excess of the target Annual Bonus or an Annual Bonus less
than
the target Annual Bonus.
Any
Annual Bonus that becomes payable to the Executive pursuant to this Section
shall be paid to the Executive as soon as reasonably practicable following
receipt by the Board of the audited consolidated financial statements of
the
Company for the relevant fiscal year, but in no event later than two and
a half
(2 ½) months following the end of the applicable fiscal year in which such
Annual Bonus was earned. The Executive shall be entitled to receive any Annual
Bonus that becomes payable in a lump sum cash payment, or, at his election,
in
any form that the Board generally makes available to the Company's executive
management team; provided that any such election is made by the Executive
in
compliance with Section 409A ("Section 409A") of the Internal
Revenue Code of 1986, as amended (the "Code") and the
regulations promulgated thereunder.
(c) Long-Term
Incentive Awards
During
the Period of Employment, the Executive shall be eligible for long term
incentive awards as determined by the Committee in its discretion.
(d) Additional
Benefits
The
Executive shall be entitled to participate in all other compensation and
employee benefit plans or programs and receive all benefits and perquisites
for
which salaried employees of the Company generally are eligible under any
plan or
program now in effect, or later established by the Company, on a basis no
less
favorable than as provided to any other similarly situated executive of the
Company. The Executive shall participate to the extent permissible under
the
terms and provisions of such plans or programs, and in accordance with the
terms
of such plans and programs.
SECTION
V
BUSINESS
EXPENSES
The
Company shall reimburse the Executive for all reasonable travel and other
expenses incurred by the Executive in connection with the performance of
his
duties and obligations under this Agreement. The Executive shall comply with
such limitations and reporting requirements with respect to expenses as may
be
established by the Company from time to time and shall promptly provide all
appropriate and requested documentation in connection with such expenses.
Further, the Executive will receive access to Company aircraft or alternative
air transportation, subject to applicable Company policies.
SECTION
VI
DEATH
AND DISABILITY
The
Period of Employment shall end upon the Executive's death. If the Executive
experiences a Disability (as defined below) during the Period of Employment,
the
Period of Employment may be terminated at the option of the Executive upon
notice of resignation to the Company, or at the option of the Company upon
notice of termination to the Executive. For purposes of this Agreement,
"Disability" shall have the meaning set forth in Section 409A. The Company's
obligation to make payments to the Executive under this Agreement shall cease
as
of such date of termination, except for Base Salary and any Annual Bonus
earned
but unpaid as of the date of such termination (the "Accrued
Obligations"), and, in such event (a) each of the Executive's then
outstanding options to purchase shares of Company common stock that were
granted
prior to July 28, 2006 and options to purchase shares of Wyndham Worldwide
Corporation common stock (and its successors) (the "Pre-Existing
Options") shall become immediately and fully vested and exercisable (to
the extent not already vested) and, shall remain exercisable during the extended
post-termination exercise period set forth in the agreements evidencing the
terms and conditions of such awards, (b) each option to purchase shares of
the
Company common stock or stock appreciation right granted on or after July
28,
2006, shall become immediately and fully vested and exercisable (to the extent
not already vested) and, notwithstanding any term or provision relating to
such
option to the contrary, shall remain exercisable until the first to occur
of the
third (3rd) anniversary of the Executive's termination of employment and
the
original expiration date of such option or stock appreciation rights, (c)
all
other long-term equity awards then outstanding shall become immediately vested,
and (d) the Company shall pay the Executive (or his surviving spouse, estate
or
personal representative, as applicable) a cash amount equal to the Executive's
target Annual Bonus for the year in which the Executive is terminated multiplied
by a fraction the numerator of which is the total number of days during the
applicable calendar year during which the Executive was employed by the Company
and the denominator of which is 365. Upon the Executive's termination
due to death or Disability, the Executive and each person who is his covered
dependent at such time under the Company sponsored health and dental plan
shall
remain eligible to continue to participate in such plans (as they may be
modified from time to time with respect to all senior executive officers)
until
the 2nd anniversary of such termination of employment (such benefits, the
"Continuation of Health Benefits").
SECTION
VII
EFFECT
OF TERMINATION OF EMPLOYMENT
(a) Without
Cause Termination and Constructive Discharge. Subject to the
provisions of Section VII(d), if the Executive's employment terminates during
the Period of Employment due to either a Without Cause Termination or a
Constructive Discharge (each as defined below): (i) the Accrued Obligations
shall be paid to the Executive in accordance with paragraph (d) below, (ii)
the Company shall pay the Executive (or his surviving spouse, estate or personal
representative, as applicable), on the sixty-first (61st) day
following the
Executive's termination of employment (or, in the event that the Release
Date
(as defined in Section VII(d) below is extended in accordance with the dispute
provisions set forth in Section VII(d) below, upon resolution of the dispute),
an amount equal to 299% multiplied by the sum of (A) the Executive's then
current Base Salary, plus (B) the Executive's then
current
target Annual Bonus; (iii) each of the Executive's then outstanding Pre-Existing
Options shall become immediately and fully vested and exercisable (to the
extent
not already vested) in accordance with the terms and conditions applicable
to
such options set forth in the agreements evidencing the terms and conditions
of
such awards, and shall remain exercisable for the extended post-termination
exercise period set forth in the agreements evidencing the terms and conditions
of such awards; (iv) each option to purchase shares of the Company common
stock
or stock appreciation right granted on or after July 28, 2006 (excluding
any
Pre-Existing Option to acquire the Company common stock) shall become
immediately and fully vested and exercisable (to the extent not already vested)
and, notwithstanding any term or provision thereof to the contrary, shall
remain
exercisable until the first to occur of the third (3rd) anniversary of the
Executive's termination of employment and the original expiration date of
such
option or stock appreciation right; (v) all other long-term equity awards
(including, without limitation, restricted stock units, but excluding the
award
of performance based restricted stock units granted to the Executive on August
1, 2006, which award shall be governed by the terms and conditions governing
such award) shall become immediately vested. Upon such termination, the
Executive shall also be entitled to the Continuation of Health
Benefits.
(b) Termination
for Cause; Resignation. If the Executive's employment terminates due to a
Termination for Cause or a Resignation, the Accrued Obligations shall be
paid to
the Executive in accordance with paragraph (d) below. Outstanding stock options
and other equity awards held by the Executive as of the date of termination
shall be treated in accordance with their terms. Except as provided in this
paragraph, the Company shall have no further obligations to the Executive
hereunder.
(c) For
purposes of this Agreement, the following terms have the following
meanings:
i. "Termination
for Cause" means termination by the Company of the Executive as a
result of (a) the Executive's willful failure to substantially perform his
duties as an employee of the Company or any subsidiary (other than any such
failure resulting from incapacity due to physical or mental illness), (b)
any
act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Company or any subsidiary, (c) the Executive's conviction of
a
felony or any crime involving moral turpitude (which conviction, due to the
passage of time or otherwise, is not subject to further appeal), (d) the
Executive's gross negligence in the performance of his duties or (e) the
Executive purposefully or negligently makes (or has been found to have made)
a
false certification to the Company pertaining to its financial
statements.
ii. "Constructive
Discharge" means (a) any material failure of the Company to fulfill its
obligations under this Agreement (including without limitation any reduction
of
the Base Salary, as the same may be increased during the Period of Employment,
or other element of compensation) or any material diminution to the Executive's
duties and responsibilities relating to service as an executive officer,
including the Executive ceasing to be an executive officer of a public company,
(b) the Business Office is relocated to any location which is
more
than
30 miles from the city limits of Parsippany, New Jersey, (c) during the Period
of Employment, the Executive is not the most senior financial officer of
the
Company, (d) the Company provides notification under Section III of this
Agreement that it is not extending the Agreement for an Additional Term,
(e) the
occurrence of a Corporate Transaction as defined below, or (f) failure of
a
successor to the Company to assume this Agreement in accordance with Section
XIV
below. The Executive shall provide the Company a written notice of
his intention to terminate employment pursuant to a Constructive Discharge
within 60 days after the Executive knows or has reason to know of the occurrence
of any such event which notice describes the circumstances being relied on
for
the termination with respect to this Agreement. With respect to clauses (a)
and
(b) of this paragraph, the Company shall have ten (10) days after receipt
of
such notice to remedy the event prior to the termination for Constructive
Discharge and, upon the timely remedy of such event, such event shall no
longer
constitute a basis for Constructive Discharge and the Executive's notice
of
termination pursuant to a Constructive Discharge shall be
rescinded.
iii. "Without
Cause Termination" or "Terminated Without Cause" means
termination of the Executive's employment by the Company other than due to
death, Disability, or Termination for Cause.
iv. "Resignation"
means a termination of the Executive's employment by the Executive, other
than
in connection with a Constructive Discharge or other than due to death or
Disability.
v. "Corporate
Transaction" means either:
(a) any
"person," as such term is used in Sections 13(d) and 14(d) of the Securities
and
Exchange Act, as amended (the "Exchange Act") (other than (A) the Company,
(B)
any trustee or other fiduciary holding securities under an employee benefit
plan
of the Company, and (C) any corporation owned, directly or indirectly, by
the
stockholders of the Company in substantially the same proportions as their
ownership of Company common stock), is or becomes the "beneficial owner"
(as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined voting
power
of the Company's then outstanding voting securities (excluding any person
who
becomes such a beneficial owner in connection with a transaction immediately
following which the individuals who comprise the Board immediately prior
thereto
constitute at least a majority of the Board of the entity surviving such
transaction or, if the Company or the entity surviving the transaction is
then a
subsidiary, the ultimate parent thereof); or (b) the following individuals
cease
for any reason to constitute a majority of the number of directors then serving:
individuals who, on the Effective Date, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors
of the
Company) whose appointment or election by the Board or nomination for election
by the Company's stockholders was approved or recommended by a vote of at
least
one-half (1/2) of the directors then still in office who either were directors
on the Effective Date or whose appointment, election or nomination for election
was previously so approved or recommended.
(d) Conditions
to Payment and Acceleration; Section 409A.
i. Notwithstanding
anything contained herein to the contrary, to the extent required in order
to
avoid accelerated taxation and/or tax penalties under Section 409A, the
Executive shall not be considered to have terminated employment with the
Company
for purposes of this Agreement and no payments shall be due to the Executive
under Section VII of this Agreement until the Executive would be considered
to
have incurred a “separation from service” from the Company within the meaning of
Section 409A.
ii. All
payments due to the Executive under this Section VII shall be subject to,
and
contingent upon, the Executive (or his beneficiary or estate) (x) executing
a
release of claims against the Company and its affiliates (in such reasonable
form determined by the Company in its sole discretion) within forty-five
days following the Executive's separation from service (or, in the event
of a
dispute, upon resolution of the dispute, provided that such extension does
not
result in, as applicable, the disputed payments constituting deferred
compensation within the meaning of Section 409A or the imposition of additional
taxes under Section 409A) and (y) failing to revoke such release (the date
on
which the release becomes irrevocable, the "Release
Date").
iii. To
the
extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A, amounts that would otherwise be payable and benefits
that
would otherwise be provided pursuant to this Agreement during the six-month
period immediately following the Executive’s termination of employment shall
instead be paid on the first business day after the date that is six months
following the Executive’s termination of employment (or upon the Executive’s
death, if earlier).
iv. The
intent of the Parties is that payments and benefits under this Agreement
comply
with Section 409A and, accordingly, to the maximum extent permitted, this
Agreement shall be interpreted and administered to be in compliance therewith.
Each amount to be paid or benefit to be provided under this Agreement shall
be
construed as a separate identified payment for purposes of Section 409A and
any
payments described in this Agreement that are due within the "short term
deferral period" as defined in Section 409A shall not be treated as deferred
compensation unless applicable law requires otherwise.
v. The
payments due to the Executive under this Section VII shall be in lieu of
any
other severance benefits otherwise payable to the Executive under any severance
plan of the Company or its affiliates.
SECTION
VIII
OTHER
DUTIES OF THE EXECUTIVE
DURING
AND AFTER THE PERIOD OF EMPLOYMENT
(a) The
Executive shall, with reasonable notice during or after the Period of
Employment, furnish information as may be in his possession and fully cooperate
with the Company and its affiliates as may be requested in connection with
any
claims or legal action in which the Company or any of its affiliates is or
may
become a party. After the Period of Employment, the Executive shall cooperate
as
reasonably requested with the Company and its affiliates in connection with
any
claims or legal actions in which the Company or any of its affiliates is or
may become a party. The Company agrees to reimburse the Executive for any
reasonable out-of-pocket expenses incurred by Executive by reason of such
cooperation, including any loss of salary, and the Company shall make reasonable
efforts to minimize interruption of the Executive's life in connection with
his
cooperation in such matters as provided for in this paragraph.
(b) The
Executive recognizes and acknowledges that all information pertaining to
this
Agreement or to the affairs; business; results of operations; accounting
methods, practices and procedures; members; acquisition candidates; financial
condition; clients; customers or other relationships of the Company or any
of
its affiliates ("Information") is confidential and is a unique
and valuable asset of the Company or any of its affiliates. Access to and
knowledge of certain of the Information is essential to the performance of
the
Executive's duties under this Agreement. The Executive shall not during the
Period of Employment or thereafter, except to the extent reasonably necessary
in
performance of his duties under this Agreement, give to any person, firm,
association, corporation, or governmental agency any Information, except
as may
be required by law. The Executive shall not make use of the Information for
his
own purposes or for the benefit of any person or organization other than
the
Company or any of its affiliates. The Executive shall also use his best efforts
to prevent the disclosure of this Information by others. All records, memoranda,
etc. relating to the business of the Company or its affiliates, whether made
by
the Executive or otherwise coming into his possession, are confidential and
shall remain the property of the Company or its affiliates.
(c) (i) During
the Period of Employment and for a two (2) year period following any termination
of employment (the "Restricted Period"), the Executive shall
not use his status with the Company or any of its affiliates to obtain loans,
goods or services from another organization on terms that would not be available
to him in the absence of his relationship to the Company or any of its
affiliates.
(ii) During
the Restricted Period, the Executive shall not make any statements or perform
any acts intended to have the effect of advancing the interest of any existing
competitors (or any entity the Executive knows to be a prospective competitor)
of the Company or any of its affiliates or in any way injuring the interests
of
the Company or any of its affiliates. During the Restricted Period, the
Executive, without prior express written approval by the Board, shall not
engage
in, or directly or indirectly (whether for compensation or otherwise) own
or
hold
proprietary interest in, manage, operate, or control, or join or participate
in
the ownership, management, operation or control of, or furnish any capital
to or
be connected in any manner with, any party which competes in any way or manner
with the business of the Company or any of its affiliates, as such business
or
businesses may be conducted from time to time, either as a general or limited
partner, proprietor, common or preferred shareholder (other than being less
than
a 5% shareholder in a publicly traded company), officer, director, agent,
employee, consultant, trustee, affiliate, or otherwise. The Executive
acknowledges that the Company's and its affiliates' businesses are conducted
nationally and internationally and agrees that the provisions in the foregoing
sentence shall operate throughout the United States and those countries in
the
world where the Company then conducts business or has a plan to conduct
business.
(iii) During
the Restricted Period, the Executive, without express prior written approval
from the Board, shall not solicit any members or the then-current clients
of the
Company or any of its affiliates for any existing business of the Company
or any
of its affiliates or discuss with any employee of the Company or any of its
affiliates information or operation of any business intended to compete with
the
Company or any of its affiliates.
(iv) During
the Restricted Period, the Executive shall not interfere with the employees
or
affairs of the Company or any of its affiliates or solicit or induce any
person
who is an employee of the Company or any of its affiliates to terminate any
relationship such person may have with the Company or any of its affiliates,
nor
shall the Executive during such period directly or indirectly engage, employ
or
compensate, or cause any person with which the Executive may be affiliated,
to
engage, employ or compensate, any employee of the Company or any of its
affiliates. The Executive hereby represents and warrants that the Executive
has
not entered into any agreement, understanding or arrangement with any employee
of the Company or any of its affiliates pertaining to any business in which
the
Executive has participated or plans to participate, or to the employment,
engagement or compensation of any such employee.
(v) For
the
purposes of this Agreement, proprietary interest means legal or equitable
ownership, whether through stock holding or otherwise, of an equity interest
in
a business, firm or entity or ownership of more than 5% of any class of equity
interest in a publicly-held company and the term "affiliate" shall include
without limitation all subsidiaries and material licensees of the
Company.
(d) The
Executive hereby acknowledges that damages at law may be an insufficient
remedy
to the Company if the Executive violates the terms of this Agreement and
that
the Company shall be entitled, upon making the requisite showing, to preliminary
and/or permanent injunctive relief in any court of competent jurisdiction
to
restrain the breach of or otherwise to specifically enforce any of the covenants
contained in this Section VIII without the necessity of showing any actual
damage or that monetary damages would not provide an adequate remedy. Such
right
to an injunction shall be in addition to, and not in limitation of, any other
rights or remedies the Company may have. Without limiting the generality
of
the
foregoing, neither party shall oppose any motion the other party may make
for
any expedited discovery or hearing in connection with any alleged breach
of this
Section VIII.
(e) The
period of time during which the provisions of this Section VIII shall be
in
effect shall be extended by the length of time during which the Executive
is in
breach of the terms hereof as determined by any court of competent jurisdiction
on the Company's application for injunctive relief.
(f) The
Executive agrees that the restrictions contained in this Section VIII are
an
essential element of the compensation the Executive is granted hereunder
and but
for the Executive's agreement to comply with such restrictions, the Company
would not have entered into this Agreement.
SECTION
IX
INDEMNIFICATION
The
Company shall indemnify the Executive to the fullest extent permitted by
the
laws of the state of the Company's incorporation in effect at that time,
or the
certificate of incorporation and by-laws of the Company, whichever affords
the
greater protection to the Executive (including payment of expenses in advance
of
final disposition of a proceeding).
SECTION
X
CERTAIN
TAXES
Anything
in this Agreement or in any other plan, program or agreement to the contrary
notwithstanding and except as set forth below, in the event that (i) the
Executive becomes entitled to any benefits or payments under Section VII
hereof
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 additional payments required under this
Section
X) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest
or penalties are incurred by the Executive with respect to such excise tax
(such
excise tax, together with any such interest and penalties, hereinafter
collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with
respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed
upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section X, if it shall be determined that the Executive
is
entitled to a Gross-Up Payment, but that the Payments do not exceed 110%
of the
greatest amount (the "Reduced Amount") that could be paid to
the
Executive
such that the receipt of Payments would not give rise to any Excise Tax,
then no
Gross-Up Payment shall be made to the Executive and the Payments, in the
aggregate, shall be reduced to the Reduced Amount, provided, however, that
the
payments or benefits to be eliminated in effecting such reduction shall be
agreed upon between the Company and the Executive. All determinations required
to be made under this Section X, 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 Company. In no event will the Gross-Up Payment be made later
than forty-five (45) days following the date on which the Executive remits
the
Excise Tax to the Internal Revenue Service.
SECTION
XI
MITIGATION
The
Executive shall not be required to mitigate the amount of any payment provided
for hereunder by seeking other employment or otherwise, nor shall the amount
of
any such payment be reduced by any compensation earned by the Executive as
the
result of employment by another employer after the date the Executive's
employment hereunder terminates.
SECTION
XII
WITHHOLDING
TAXES
The
Executive acknowledges and agrees that the Company may directly or indirectly
withhold from any payments under this Agreement all federal, state, city
or
other taxes that shall be required pursuant to any law or governmental
regulation.
SECTION
XIII
EFFECT
OF PRIOR AGREEMENTS
Except
as
otherwise specifically set forth herein, this Agreement shall supersede any
prior agreements between the Company and the Executive hereof, and any such
prior agreement shall be deemed terminated without any remaining obligations
of
either party thereunder, provided that this sentence shall not be interpreted
to
terminate the Executive's existing participation in various stock-based
compensation programs.
SECTION
XIV
CONSOLIDATION,
MERGER OR SALE OF ASSETS
Nothing
in this Agreement shall preclude the Company from consolidating or merging
into
or with, or transferring all or substantially all of its assets to, another
corporation or other entity which assumes this Agreement and all obligations
and
undertakings of the Company hereunder. If (i) there is a merger, consolidation,
sale of all or substantially all of the
Company's
assets, or other business combination involving the Company, or (ii) all
or
substantially all of the stock of the Company is acquired by another company,
the term "the Company" shall mean the successor to the Company's business
or
assets referred to in (i) above or such company referred to in (ii) above,
and
this Agreement shall continue in full force and effect. Notwithstanding the
foregoing, the Company shall require any successor thereto (whether direct
or
indirect, by purchase, merger, consolidation, or otherwise), by agreement
in
form and substance reasonably satisfactory to the Executive to expressly
assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken
place.
SECTION
XV
MODIFICATION
This
Agreement may not be modified or amended except in writing signed by the
parties. No term or condition of this Agreement shall be deemed to have been
waived except in writing by the party charged with waiver. A waiver shall
operate only as to the specific term or condition waived and shall not
constitute a waiver for the future or act on anything other than that which
is
specifically waived.
SECTION
XVI
GOVERNING
LAW
This
Agreement has been executed and delivered in the State of New Jersey and
its
validity, interpretation, performance and enforcement shall be governed by
the
internal laws of that state.
SECTION
XVII
ARBITRATION
(a) Any
controversy, dispute or claim arising out of or relating to this Agreement
or
the breach hereof which cannot be settled by mutual agreement (other than
with
respect to the matters covered by Section VIII for which the Company may,
but
shall not be required to, seek injunctive relief) shall be finally settled
by binding arbitration in accordance with the Federal Arbitration Act (or
if not
applicable, the applicable state arbitration law) as follows: Any party who
is
aggrieved shall deliver a notice to the other party setting forth the specific
points in dispute. Any points remaining in dispute twenty (20) days after
the
giving of such notice may be submitted to arbitration in New York, New York,
to
the American Arbitration Association, before a single arbitrator appointed
in
accordance with the arbitration rules of the American Arbitration Association,
modified only as herein expressly provided. After the aforesaid twenty (20)
days, either party, upon ten (10) days notice to the other, may so submit
the
points in dispute to arbitration. The arbitrator may enter a default decision
against any party who fails to participate in the arbitration
proceedings.
(b) The
decision of the arbitrator on the points in dispute shall be final, unappealable
and binding, and judgment on the award may be entered in any court having
jurisdiction thereof.
(c) Except
as
otherwise provided in this Agreement, the arbitrator shall be authorized
to
apportion its fees and expenses and the reasonable attorneys' fees and expenses
of any such party as the arbitrator deems appropriate. In the absence of
any
such apportionment, the fees and expenses of the arbitrator shall be borne
equally by each party, and each party shall bear the fees and expenses of
its
own attorney.
(d) The
parties agree that this Section XVII has been included to rapidly and
inexpensively resolve any disputes between them with respect to this Agreement,
and that this Section XVII shall be grounds for dismissal of any court action
commenced by either party with respect to this Agreement, other than
post-arbitration actions seeking to enforce an arbitration award. In the
event
that any court determines that this arbitration procedure is not binding,
or otherwise allows any litigation regarding a dispute, claim, or controversy
covered by this Agreement to proceed, the parties hereto hereby waive any
and
all right to a trial by jury in or with respect to such litigation.
(e) The
parties shall keep confidential, and shall not disclose to any person, except
as
may be required by law, the existence of any controversy hereunder, the referral
of any such controversy to arbitration or the status or resolution
thereof.
SECTION
XVIII
SURVIVAL
Sections
VIII, IX, X, XI, XII and XIII shall continue in full force in accordance
with
their respective terms notwithstanding any termination of the Period of
Employment.
SECTION
XIX
SEPARABILITY
All
provisions of this Agreement are intended to be severable. In the event any
provision or restriction contained herein is held to be invalid or unenforceable
in any respect, in whole or in part, such finding shall in no way affect
the
validity or enforceability of any other provision of this Agreement. The
parties
hereto further agree that any such invalid or unenforceable provision shall
be
deemed modified so that it shall be enforced to the greatest extent permissible
under law, and to the extent that any court of competent jurisdiction determines
any restriction herein to be unreasonable in any respect, such court may
limit
this Agreement to render it reasonable in the light of the circumstances
in
which it was entered into and specifically enforce this Agreement as
limited.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the
Effective Date.
AVIS
BUDGET GROUP, INC.
/s/
Mark Servodidio
By:
Mark
Servodidio
Title: Executive
Vice
President, Human Resources
/s/
David B. Wyshner
David
B.
Wyshner
Each
of
the undersigned subsidiaries of the Company hereby guarantees to the Executive
the prompt and complete payment and performance by the Company when due of
the
Company’s obligations to make payments due to the Executive that are delayed in
accordance with Section VII(d)(iii) in consideration for the services the
Executive renders to such subsidiary in his role as Executive Vice President
and
Chief Financial Officer of Avis Budget Group, Inc.; provided that, as to
any
subsidiary, this guarantee shall be null and void and have no effect whatsoever
with respect to such subsidiary for any period (including as of the Effective
Date) during which this guarantee conflicts with or constitutes a breach
of any
obligation of such subsidiary under any currently applicable agreement or
other
obligation applicable to such subsidiary or any applicable law, rule or
regulation (whether currently applicable or applicable at any time in the
future).
IN
WITNESS WHEREOF, the undersigned have executed this Guarantee as of the
Effective Date.
AVIS
BUDGET CAR RENTAL,
LLC
AVIS
BUDGET HOLDINGS, LLC
AVIS
BUDGET FINANCE, INC.
AVIS
CAR RENTAL GROUP,
LLC
ARACS
LLC
AVIS
RENT A CAR SYSTEM,
LLC
AVIS
ASIA AND PACIFIC,
LIMITED
AVIS
CARIBBEAN, LIMITED
AVIS
ENTERPRISES, INC.
AVIS
GROUP HOLDINGS, LLC
AVIS
INTERNATIONAL, LTD.
PF
CLAIMS MANAGEMENT, LTD
AB
CAR RENTAL SERVICES,
INC.
AVIS
OPERATIONS, LLC
BGI
LEASING, INC.
RUNABOUT,
LLC
WIZARD
SERVICES, INC.
/s/
Mark Servodidio
By:
Mark
Servodidio
Title: Executive
Vice
President, Human Resources
BUDGET
RENT A CAR SYSTEM,
INC.
BUDGET
TRUCK RENTAL, LLC
PR
HOLDCO, INC.
/s/ Edward
Pictroski
By:
Edward
Pictroski
Title: Senior
Vice
President, Human Resources
Exhibit
10.4
Ronald
L. Nelson
Chairman
& Chief Executive Officer
December
19, 2008
Mr.
Mark
Servodidio
Executive
Vice President, Human Resources
Avis
Budget Group
6
Sylvan
Way
Parsippany,
NJ 07054
Dear
Mark:
We
are
pleased to confirm your continued employment with Avis Budget Car Rental, LLC,
(“ABCR” or the “Company”), a subsidiary of Avis Budget Group, as Executive Vice
President, Human Resources. To comply with the requirements of
Section 409A of the Internal Revenue Code and the regulations thereunder
(“Section 409A”), the Company is hereby amending and restating this letter
agreement as set forth herein.
Your
salary will continue to be paid on a bi-weekly basis at its current
rate. You will be eligible to receive a target bonus equal to the
percentage of your regular base salary during the performance period that is
no
less than your current target bonus percentage, subject to the Company achieving
performance goals as described in the Management Incentive Plan for ABG Senior
Executive Leadership and you remaining employed with the Company through the
payment date. The bonus distribution is typically in the first
quarter of the next year.
Per
ABCR’s standard policy, this letter is not intended, nor should it be
considered, to be an employment contract for a definite or indefinite period
of
time. As you know, employment with ABCR is at will, and either you or ABCR
may
terminate your employment at any time, with or without cause.
If,
however, your employment with ABCR is terminated by ABCR other
than: (i) “for cause” (as defined below); (ii) in connection with
your disability which prevents you or is reasonably expected to prevent you
from
performing services for ABCR for a period of 12 months (your
"disability"); or (iii) death, you will receive (1) a lump-sum
severance payment within 15 days following the Release Date (as defined below)
equal to 200% of the sum of your base salary plus your target incentive (bonus)
and (2) perquisites to include continued access to company car usage, financial
planning and health coverage (Company-subsidized COBRA) for a period of 24
months. For purposes of this agreement ‘company subsidized COBRA’ shall mean
that the Company shall subsidize the total cost of COBRA coverage such that
the
contributions required of you for health plan participation during the 24 month
period shall be substantially equal to the contributions required of active
employed executives of ABG. All other programs and perquisites would be governed
by their respective plan documents; provided, however, that the
provision of such severance pay is subject to, and contingent upon, your
executing within forty-five days following your termination of employment and
failing to revoke a separation agreement with ABCR (the date on which the
release is no longer revocable, the "Release Date"), in such form determined
by
ABCR, which requires Mr. Mark Servodidio
December
19, 2008
Page
Two
you,
in
part, to release all actual and purported claims against ABCR and its affiliates
and which also requires you to agree to: (i) protect and not disclose all
confidential and proprietary information of ABCR; (ii) not compete, directly
or
indirectly, against ABCR for a period of no longer than one year after your
employment separation or for a period of time and within a geographic scope
determined by ABCR to be reasonable to protect ABCR’s business interests; and
(iii) not solicit any ABCR employees, consultants, agents or customers during
and for one year after your employment separation.
In
addition, if you experience an involuntary termination of employment from ABCR
other than "for cause," and other than as a result of your "disability" or
death, you will receive a lump sum cash payment within 15 days following the
Release Date equal to the fair market value as of your termination of employment
of your stock-based awards which would have vested in accordance with their
original vesting schedule by the one-year anniversary of your termination of
employment; provided that, to the extent required to achieve deductibility
under
Section 162(m) of the Internal Revenue Code of awards that vest based on the
achievement of performance criteria, with respect to any awards that vest based
on the achievement of performance criteria, for performance periods beginning
after January 1, 2009, payment in respect of these awards shall not occur unless
and until ACBR determines that all applicable performance goals have been
attained (and you or your beneficiary will receive such payment at the same
time, and on the same basis, as awards granted to other executive officers
who
are subject to the same performance goals vest).
In
addition, if you experience a termination of employment from ABCR due to your
"disability" or death, you or your beneficiary will receive a lump sum cash
payment within 15 days following the Release Date (or, in the event of your
death, within 30 days of your death) equal to the fair market value as of your
termination of employment of all of your stock-based awards.
“Termination
for Cause” shall mean: (i) your willful failure to substantially perform your
duties as an employee of the Company or any subsidiary (other than any such
failure resulting from your incapacity due to physical or mental illness);
(ii)
any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Company or any subsidiary; or (iii) 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).
The
payments and benefits described in this letter are intended to comply with
Section 409A and, accordingly, to the maximum extent permitted, the terms of
this letter shall be interpreted and administered to be in compliance with
Section 409A of the Internal Revenue Code ("Section
409A"). Notwithstanding anything to the contrary contained herein, to
the extent required to avoid accelerated taxation and/or tax penalties under
Section 409A, you will not be considered to have terminated employment with
ACBR
for purposes of the benefits provided in this letter and no payments shall
be
due to you on termination of employment hereunder until you are considered
to
have incurred a "separation from service" from ACBR within the meaning of
Section 409A. Each amount to be paid or benefit to be provided in
this letter shall be construed as a separate identified payment for purposes
of
Section 409A. Any payments described in this Agreement that are paid
pursuant to a "separation pay plan" as described in Treas. Reg.
1.409A-1(b)(9)(iii) or that are due within Mr. Mark Servodidio
December
19, 2008
Page
Three
the
"short term deferral period" as defined in Section 409A shall not be treated
as
deferred compensation unless applicable law requires
otherwise. Notwithstanding anything contained herein, to the extent
required in order to avoid accelerated taxation and/or tax penalties under
Section 409A amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this letter (or any other plan or agreement
of
the Company proving you with payments or benefits upon your separation from
service) during the six-month period immediately following your separation
from
service shall instead be paid or provided on the first business day after the
date that is six months following your separation date (or death, if
earlier).
The
by-laws of the Company provide that officers will be indemnified for their
authorized actions on behalf of our Company to the fullest extent permitted
under applicable law.
This
severance pay as set forth in this letter is in lieu of and supersedes any
other
severance benefits otherwise payable to you under any other agreement or
severance plan of ABCR or its affiliates.
Regards,
/s/
Ronald L. Nelson
Ronald
L.
Nelson
Chairman
& Chief Executive Officer
Understood
and accepted:
/s/
Mark Servodidio
Mark
Servodidio
Date: December
30, 2008
EXHIBIT
10.5
December
19, 2008
Mr.
Larry
De Shon
Executive
Vice President – Operations
Avis
Budget Group
6
Sylvan
Way
Parsippany,
NJ 07054
Dear
Larry:
We
are
pleased to confirm your continued employment with Avis Budget Car Rental, LLC,
(“ABCR” or the “Company”), a subsidiary of Avis Budget Group, as Executive Vice
President – Operations. To comply with the requirements of
Section 409A of the Internal Revenue Code and the regulations thereunder
(“Section 409A”), the Company is hereby amending and restating this letter
agreement as set forth herein.
Your
salary will continue to be paid on a bi-weekly basis at its current
rate. You will be eligible to receive a target bonus equal to the
percentage of your regular base salary during the performance period that is
no
less than your current target bonus percentage, subject to the Company achieving
performance goals as described in the Management Incentive Plan for ABG Senior
Executive Leadership and you remaining employed with the Company through the
payment date. The bonus distribution is typically in the first
quarter of the next year.
Per
ABCR’s standard policy, this letter is not intended, nor should it be
considered, to be an employment contract for a definite or indefinite period
of
time. As you know, employment with ABCR is at will, and either you or ABCR
may
terminate your employment at any time, with or without cause.
If,
however, your employment with ABCR is terminated by ABCR other
than: (i) “for cause” (as defined below); (ii) in connection with
your disability which prevents you or is reasonably expected to prevent you
from
performing services for ABCR for a period of 12 months (your
"disability"); or (iii) death, you will receive (1) a lump-sum
severance payment within 15 days following the Release Date (as defined below)
equal to 200% of the sum of your base salary plus your target incentive (bonus)
and (2) perquisites to include continued access to company car usage, financial
planning and health coverage (Company-subsidized COBRA) for a period of 24
months. For purposes of this agreement ‘company subsidized COBRA’ shall mean
that the Company shall subsidize the total cost of COBRA coverage such that
the
contributions required of you for health plan participation during the 24 month
period shall be substantially equal to the contributions required of active
employed executives of ABG. All other programs and perquisites would be governed
by their respective plan documents; provided, however, that the
provision of such severance pay is subject to, and contingent upon, your
executing within forty-five days following your termination of employment and
failing to revoke a separation agreement with ABCR (the date on which the
release is no longer revocable, the "Release Date"), in such form determined
by
ABCR, which requires Mr. Larry De Shon
December
19, 2008
Page
Two
you,
in
part, to release all actual and purported claims against ABCR and its affiliates
and which also requires you to agree to: (i) protect and not disclose all
confidential and proprietary information of ABCR; (ii) not compete, directly
or
indirectly, against ABCR for a period of no longer than one year after your
employment separation or for a period of time and within a geographic scope
determined by ABCR to be reasonable to protect ABCR’s business interests; and
(iii) not solicit any ABCR employees, consultants, agents or customers during
and for one year after your employment separation.
In
addition, if you experience an involuntary termination of employment from ABCR
other than "for cause," and other than as a result of your "disability" or
death, you will receive a lump sum cash payment within 15 days following the
Release Date equal to the fair market value as of your termination of employment
of your stock-based awards which would have vested in accordance with their
original vesting schedule by the one-year anniversary of your termination of
employment; provided that, to the extent required to achieve deductibility
under
Section 162(m) of the Internal Revenue Code of awards that vest based on the
achievement of performance criteria, with respect to any awards that vest based
on the achievement of performance criteria, for performance periods beginning
after January 1, 2009, payment in respect of these awards shall not occur unless
and until ACBR determines that all applicable performance goals have been
attained (and you or your beneficiary will receive such payment at the same
time, and on the same basis, as awards granted to other executive officers
who
are subject to the same performance goals vest).
In
addition, if you experience a termination of employment from ABCR due to your
"disability" or death, you or your beneficiary will receive a lump sum cash
payment within 15 days following the Release Date (or, in the event of your
death, within 30 days of your death) equal to the fair market value as of your
termination of employment of all of your stock-based awards.
“Termination
for Cause” shall mean: (i) your willful failure to substantially perform your
duties as an employee of the Company or any subsidiary (other than any such
failure resulting from your incapacity due to physical or mental illness);
(ii)
any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct
against the Company or any subsidiary; or (iii) 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).
The
payments and benefits described in this letter are intended to comply with
Section 409A and, accordingly, to the maximum extent permitted, the terms of
this letter shall be interpreted and administered to be in compliance with
Section 409A of the Internal Revenue Code ("Section
409A"). Notwithstanding anything to the contrary contained herein, to
the extent required to avoid accelerated taxation and/or tax penalties under
Section 409A, you will not be considered to have terminated employment with
ACBR
for purposes of the benefits provided in this letter and no payments shall
be
due to you on termination of employment hereunder until you are considered
to
have incurred a "separation from service" from ACBR within the meaning of
Section 409A. Each amount to be paid or benefit to be provided in
this letter shall be construed as a separate identified payment for purposes
of
Section 409A. Any payments described in this Agreement that are paid
pursuant to a "separation pay plan" as described in Treas. Reg.
1.409A-1(b)(9)(iii) or that are due within Mr. Larry De Shon
December
19, 2008
Page
Three
the
"short term deferral period" as defined in Section 409A shall not be treated
as
deferred compensation unless applicable law requires
otherwise. Notwithstanding anything contained herein, to the extent
required in order to avoid accelerated taxation and/or tax penalties under
Section 409A amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this letter (or any other plan or agreement
of
the Company providing you with payments or benefits upon your separation from
service) during the six-month period immediately following your separation
from
service shall instead be paid or provided on the first business day after the
date that is six months following your separation date (or death, if
earlier).
The
by-laws of the Company provide that officers will be indemnified for their
authorized actions on behalf of our Company to the fullest extent permitted
under applicable law.
This
severance pay as set forth in this letter is in lieu of and supersedes any
other
severance benefits otherwise payable to you under any other agreement or
severance plan of ABCR or its affiliates.
Regards,
/s/
Mark J. Servodidio
Mark
J.
Servodidio
Executive
Vice President – Human Resources
Understood
and accepted:
/s/
Larry De Shon
Larry
De
Shon
Date: December
30, 2008