NRT Inc. Contracts
Sample Business Contracts
Program Outsourcing Agreement - NRT Inc. and Cendant Corp.
Services Forms
PROGRAM OUTSOURCING AGREEMENT
This PROGRAM OUTSOURCING AGREEMENT (this "Agreement"), dated as of the 9th day
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of February 1999 by and between NRT INCORPORATED ("NRT"), a Delaware corporation
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having an office at 6 Sylvan Way, Parsippany, New Jersey 07054 and CENDANT
CORPORATION ("Cendant"), a Delaware corporation having an office at 6 Sylvan
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Way, Parsippany, New Jersey 07054.
W I T N E S S E T H:
WHEREAS, Cendant is the parent of the franchisors of several lodging, car
rental and real estate brokerage franchise systems (collectively, the "Franchise
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Systems"), including the CENTURY 21(R), ERA(R) and COLDWELL BANKER(R) real
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estate brokerage systems (the "Existing Real Estate Systems"), the Days Inn(R),
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Howard Johnson(R), Knights Inn(R), Ramada(R), Super 8(R), Travelodge(R),
Villager Lodge(R) and Wingate Inn(R) lodging systems and the Avis(R) car rental
system and in the future may add additional franchise systems, including
additional real estate brokerage franchise systems (the "New Real Estate
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Systems" and together with the Existing Real Estate Systems, the "Real Estate
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Systems"); and
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WHEREAS, Cendant has established, and may continue to establish, (i)
purchasing relationships and programs (including corporate purchasing
relationships) with vendors for the provision of goods and services designed to
be utilized by franchisees of some or all of the Real Estate Systems, and their
employees and/or sales agents ("Purchasing Programs") and (ii) programs through
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which franchisees of some or all of the Real Estate Systems market vendors'
products or services to the franchisees' customers ("Marketing Programs" and
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collectively with the Purchasing Programs, the "Programs"); and
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WHEREAS, NRT (references herein to NRT shall be deemed to refer to NRT and
each of its subsidiaries) is the owner and operator of real estate brokerage
offices which operate as franchised offices of the CENTURY 21(R), ERA(R) or
COLDWELL BANKER(R) real estate brokerage systems pursuant to certain franchise
and membership agreements (the "Franchise Agreements"); and
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WHEREAS, NRT desires to have Cendant, and Cendant desires to, act as NRT's
exclusive purchasing and marketing program outsourcing agent.
NOW THEREFORE, NRT and Cendant have agreed as follows:
1. General. (a) NRT hereby appoints Cendant, and Cendant hereby agrees, to
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act as NRT's exclusive outsourcing agent, throughout the term set forth in
Section 2 below, to negotiate the specific terms of NRT's participation in the
Programs.
(b) Subject to Section 6, NRT shall not enter into, permit to exist or
pursue, directly or through a third party, any purchasing relationships or
programs (including corporate purchasing relationships) for the provision of
products and services designed to be utilized by
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real estate brokers, their employees and/or sales agents ("NRT Purchasing
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Programs") or any programs through which NRT would market vendors' products or
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services to NRT's customers ("NRT Marketing Programs" and together with NRT
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Purchasing Programs, "NRT Programs") but shall refer to Cendant all such
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program opportunities and parties with which NRT would enter into a
relationship.
2. Term. The term of this Agreement shall commence on the date hereof and,
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unless earlier terminated as provided herein, shall terminate upon termination
or expiration of the last of the Franchise Agreements to terminate or expire.
Notwithstanding the foregoing, Sections 7 and 14 hereof shall survive
termination of this Agreement.
3. Existing Programs. The parties acknowledge that Cendant has existing
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Programs for the Real Estate Systems (the "Existing Programs"). Exhibit A,
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attached hereto and made a part hereof, sets forth a list of the vendors with
which there are Existing Programs as of the date hereof. With respect to
Existing Programs, NRT will identify in writing specific Programs the terms of
which NRT wishes Cendant to renegotiate on its behalf. Cendant agrees that it
will, on only one occasion with respect to any such identified Existing Program,
enter into good faith negotiations where appropriate with the applicable
vendor(s) of such identified Existing Programs to improve NRT's terms of
participation to reflect NRT's size and participation level.
4. New Programs. NRT acknowledges that Cendant may from time to time
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establish additional Programs for the Real Estate Systems (the "New Programs").
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With respect to New Programs, (i) Cendant will exercise its best efforts to
negotiate specific participation terms with vendors for NRT which are the most
advantageous (including better pricing than smaller participating brokers) given
NRT's participation and (ii) if available, Cendant will negotiate initial fees
payable to NRT by the vendor of such New Program which reflect NRT's
participation in such New Program. Cendant will provide notice to NRT promptly
upon the establishment of a New Program, and Cendant will provide to NRT a
written description of (i) the product or service covered by such New Program
and (ii) the participation terms of such New Program, including commissions,
fees or other consideration payable to NRT, if any. In the case of any Programs
specific to NRT in which no other franchisees or Cendant operating units
participate, Cendant will provide NRT with a copy of the agreement relating to
each such Program, subject to confidentiality restrictions in each such
agreement.
5. Participation. (a) On the terms of, and subject to the conditions
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contained in, this Agreement, NRT agrees to participate, and to encourage its
sales agents and sales associates to participate, in each of the New Programs
and Existing Programs in accordance with the terms of each such Program. NRT
will make all such Programs pertaining to NRT available to its employees, sales
agents and sales associates and provide training and other information to its
sales agents and sales associates with respect to each Program in accordance
with the terms of such Program. NRT shall use its reasonable best efforts to
ensure that NRT, its office managers, agents and sales associates, to the
fullest extent practicable, purchase the goods and services provided pursuant to
the Purchasing Programs and market the goods and services which are the subject
of the Marketing Programs. In order to so promote the Programs, NRT agrees that
(i) evaluations of its employees shall include a measurement of participation in
the Programs and (ii)
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NRT will, from time to time and at its discretion, subject to applicable law,
develop and implement specific performance incentives for its employees and
sales associates based on levels of participation in the Programs. Cendant
agrees to provide notice to NRT as soon as practicable after Cendant is
reasonably certain that any Program is likely to be terminated and not replaced
immediately upon such termination. With respect to Marketing Programs scheduled
to be terminated and not replaced immediately upon such termination, Cendant
will use its reasonable best efforts to have NRT's participation in such Program
extended for six months beyond the time when such program was otherwise
scheduled to be terminated.
(b) NRT shall not be obligated to participate in a particular Program if such
Program does not afford NRT at least as advantageous terms (taken as a whole) as
any other franchisees of the Real Estate Systems are afforded pursuant to such
Program.
(c) NRT shall not be required to commence participation in any New Program if
NRT is participating in an NRT Program covering a similar good or service as the
New Program, but only for so long as NRT is contractually bound to participate
in such NRT Program; provided, however, upon implementation of a New Program in
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which NRT is required to participate (after making the determination provided
for below), NRT will terminate any NRT Program which conflicts with the New
Program as soon as is permissible under the terms of such NRT Program without
NRT having to pay any cost to terminate such NRT Program, unless NRT is directed
to do so by Cendant and NRT is reimbursed for having to pay such cost. NRT
shall not be required to commence participation in any new Purchasing Program if
it is reasonably determined by Cendant that such Program (taking into account
NRT's expected participation) does not offer competitive pricing and service
relative to NRT's size and compared to any NRT Program covering a similar good
or service; provided that NRT shall commence participation in such Program if,
on any anniversary of the implementation of such Program it is reasonably
determined by Cendant that such Program (taking into account NRT's expected
participation) is then offering competitive pricing and service relative to
NRT's size and compared to any NRT Program covering a similar good or service.
If an NRT Marketing Program exists which covers the same good or service as a
new Marketing Program, NRT shall not be required to commence participation in
such new Marketing Program if it is reasonably determined by Cendant that (A)
such Program (taking into account NRT's expected participation) does not offer
competitive pricing and service relative to NRT's size and compared to any NRT
Program covering a similar good or service or (B) with respect to NRT Barter
Programs (as defined below) to be replaced, such Program is not reasonably
expected to provide the same economic value to NRT as such NRT Barter Program;
provided that NRT shall commence participation in such Program if, on any
anniversary of the implementation of such Program it is reasonably determined by
Cendant that (A) such Program (taking into account NRT's expected participation)
is then offering competitive pricing and service relative to NRT's size and
compared to any NRT Program covering a similar good or service and (B) with
respect to NRT Barter Programs (as defined below) to be replaced, such Program
is reasonably expected to provide the same economic value to NRT as such NRT
Barter Program. Once NRT commences participation in a Program, it shall not
cease participation in such Program pursuant to the two immediately preceding
sentences. NRT shall provide to Cendant in a timely fashion information
regarding the terms and conditions of NRT's purchasing arrangements, in order to
enable the parties to make the determinations described in this Section 5(c).
Cendant agrees to use its reasonable best efforts to
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have the terms of NRT's participation in any New Program reflect NRT's size and
participation level.
(d) Notwithstanding anything else in this Agreement to the contrary, if
NRT owns a title agency business or escrow services business which services any
NRT offices, such offices will not be required to participate in any Marketing
Program relating to the title agency business and the provision of escrow
services, and Section 1(b) hereof will not apply with respect to any NRT
Marketing Program relating to such services. The parties acknowledge that NRT
currently owns, and in the future may own additional, title agency and escrow
services businesses, in each case which may service existing NRT offices and
future NRT offices. NRT agrees that, if NRT elects to sell its title agency or
escrow services businesses, it will so notify Cendant and, at Cendant's
election, will negotiate with Cendant in good faith and on an exclusive basis to
explore the sale of such business to Cendant or the combination of such
businesses with Cendant's related operations. The exclusivity of such
negotiations will last until 3 months from the date of NRT's notice to Cendant.
To the extent Cendant has a Program with a title insurance underwriter or owns a
title insurance underwriter (including Lawyers Title, Stewart Title and First
American Title, which Programs exist on the date hereof), NRT will, with respect
to NRT's title agency business, use such title insurance underwriter in NRT's
title agency business on an exclusive basis, as long as such underwriters
provide service and economic terms comparable to the terms of NRT's then current
arrangements.
(e) No company or business unit acquired by NRT after the date hereof
will be required to participate in a Marketing Program if such company or
business unit actively markets under a binding third party contractual agreement
(but does not manufacture or produce) a comparable product or service, as
reasonably determined by Cendant, to the product or service that is the subject
of the Marketing Program in question, but only until the termination of such
agreement (which will not be extended or renewed and will be terminated by NRT
as soon as permissible under the terms of such agreement), unless (i) Cendant
arranges for such Marketing Program to be provided to such company or business
unit (but not NRT's other companies or business units, which will be subject to
the terms of such Marketing Program already in effect) on competitive economic
and service terms relative to NRT's size and compared to the program in effect
at such acquired company or business unit, as reasonably determined by Cendant,
(ii) the Marketing Program is reasonably expected to replace the cash flow
generated from the marketing agreement to be replaced and (iii) NRT is
compensated for any cost of terminating such marketing agreement in place at
such company or business unit. If such acquired company or business unit is not
so required to participate in any such Marketing Program, such company or
business unit may continue such marketing agreement with respect to the
customers of such company or business unit (but not customers of other NRT
companies or business units) without being in violation of Section 1(b) hereof.
(f) No company or business unit acquired by NRT after the date hereof
will be required to participate in a Marketing Program if such company or
business unit manufactures, produces or installs a product or service similar to
the product or service that is the subject of the Program in question, unless
(i) such Program is reasonably expected to replace the direct or indirect
positive impact on net income, if any, created at such company or business unit
due to the existence of such product or service, as mutually agreed by the
parties and (ii) NRT is
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compensated for any net costs associated with the closing or divesting of the
business unit or company which manufactures or produces such product or service.
If such acquired company or business unit is not so required to participate in
any such Marketing Program, such company or business unit may continue to sell
products or services (but not to customers of other NRT companies or business
units) without being in violation of Section 1(b) hereof.
(g) No company or business unit acquired by NRT after the date hereof
will be required to participate in a Purchasing Program if such company or
business unit is obtaining the product or service that is the subject of the
Program in question under a third party agreement, until the termination of such
agreement (which will not be extended or renewed and will be terminated by NRT
as soon as permissible under the terms of such agreement), unless Cendant
arranges for such product or service to be provided to such company or business
unit under such Purchasing Program on more competitive pricing and service
terms, as mutually agreed by the parties, and NRT is compensated for any cost of
terminating any purchasing agreement in place at such company or business unit.
(h) NRT will not be required to participate in any Program subsequent
to April 29, 2001 until NRT's 18% Series C Cumulative Junior Redeemable
Preferred Stock has been redeemed in accordance with its terms.
6. NRT Programs. Notwithstanding Section 1(b):
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(i) NRT shall be permitted to enter into an NRT Purchasing Program and
will not be required to refer to Cendant such program opportunity if at
such time no Purchasing Program covers such good or service and NRT's
aggregate purchases of such product do not exceed $250,000 per calendar
year.
(ii) NRT shall be permitted to enter into an NRT Purchasing Program
covering a good or service sought by NRT if at such time a Purchasing
Program exists which covers such good or service but pursuant to
Section 5 NRT is not required to participate in such Purchasing
Program.
(iii) NRT shall be permitted to enter into NRT Marketing Programs in
which NRT receives buyer leads, listing leads or barter consideration
and no other consideration (an "NRT Barter Program"), if such NRT
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Marketing Program does not conflict with any Program then in effect.
If Cendant subsequently implements a New Program covering the same or a
similar product or service covered by such NRT Marketing Program, then
NRT will, subject to the last sentence of this Section 6, terminate
such NRT Marketing Program and commence participation in such New
Program.
(iv) NRT shall be permitted to enter into an NRT Program with respect
to a good or service sought to be purchased or marketed by
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NRT, if at such time a Program covering such good or service has
expired or been terminated and Cendant has either not replaced, renewed
or extended such Program.
(v) NRT shall be permitted to enter into an NRT Program with respect to
a good or service sought to be purchased or marketed by NRT, if there
is then no Program covering such good or service, and NRT has notified
Cendant of its desire to have Cendant implement a New Program covering
such good or service and Cendant has (A) not, within 30 days of the
notice from NRT, notified NRT of its decision to pursue such New
Program or (B) not implemented such New Program within 180 days of
Cendant notifying NRT of its decision to pursue such New Program.
(vi) NRT shall be entitled to enter into an NRT Program with respect to
an area which is not covered by a particular Program if such Program
does not cover all geographic areas in which NRT operates.
Notwithstanding anything else herein to the contrary, any NRT Program permitted
to be implemented pursuant to this Agreement must be for a term of no more than
one year, without automatic renewal. Upon implementation of a new NRT Program,
NRT will provide to Cendant notice of the termination date of such NRT Program.
7. Information. With respect to its real estate listings and other
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customer data, NRT will not sell or otherwise provide any of such information to
any third party without the prior written consent of Cendant, which consent may
be withheld in Cendant's sole discretion. In accordance with the Franchise
Agreements, Cendant will be entitled to freely use, sell and otherwise provide
to any third party the customer information provided to Cendant's subsidiaries
under each Franchise Agreement, including after termination of the Franchise
Agreements.
8. Termination of Preferred Alliance Agreement. The Preferred Alliance
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Agreement, dated as of August 11, 1997, between NRT and HFS Incorporated
(predecessor to Cendant), is hereby terminated and shall be of no further force
or effect.
9. Termination. This Agreement constitutes a binding obligation of both
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parties which may not be terminated by either party except either party may
terminate in the event of a material breach of the terms of this Agreement by
the other party, if the breaching party is given written notice of such breach
and the opportunity to cure such breach within sixty days of the date of such
notice.
10. Representations. Each party has full power and authority and has been
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duly authorized, to enter into and perform its obligations under this Agreement,
all necessary approvals of any Board of Directors, shareholders, partners, co-
tenants and lenders having been obtained. The execution, delivery and
performance of this Agreement by each party will not violate, create a default
under or breach of any charter, bylaws, agreement or other contract, license,
permit, indebtedness, certificate, order, decree or security instrument to which
such
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party or any of its principals is a party or is subject. Neither party is the
subject of any current or pending dissolution, receivership, bankruptcy,
reorganization, insolvency, or similar proceeding on the date this Agreement is
executed by such party and was not within the three years preceding such date.
11. No Violations of Law; Customer Complaints; Indemnification. (a) It is the
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intent of the parties that the transaction contemplated by this Agreement is to
be effected in such a way that neither party should be subject to, or engage in
any conduct which would constitute, a violation of any applicable laws,
including but not limited to antitrust laws. Therefore, both parties agree to
cooperate in structuring any contemplated transaction so as to comply with any
legal requirements to avoid such characterization. Notwithstanding anything
herein to the contrary, if NRT establishes to the satisfaction of Cendant that
any Program does not comply with law, then NRT does not have to participate in
such Program until the Program has been modified so as to comply with law.
(b) Cendant shall indemnify and hold NRT and its affiliates, and their
respective officers, directors, employees and agents (collectively, the "NRT
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Indemnified Parties") harmless from and against any liability, cost or expense
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incurred by any NRT Indemnified Party arising solely out of, or arising solely
in connection with, claims brought against NRT resulting from the negligence of
Cendant's employees in connection with the Programs. NRT shall indemnify and
hold Cendant and its affiliates, and their respective officers, directors,
employees and agents (collectively, the "Cendant Indemnified Parties") harmless
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from and against any liability, cost or expense incurred by any Cendant
Indemnified Party arising from actions or omissions of NRT or its employees,
agents or affiliates in connection with the Programs.
12. Relationship of Parties. (a) Each party is an independent contractor.
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Except as provided in this Agreement, neither party is the legal representative
or agent of, or has the power to obligate (or has the right to direct or
supervise the daily affairs of) the other or any other party for any purpose
whatsoever. THE PARTIES EXPRESSLY ACKNOWLEDGE THAT THE RELATIONSHIP INTENDED BY
THEM IS A BUSINESS RELATIONSHIP BASED ENTIRELY ON AND CIRCUMSCRIBED BY THE
EXPRESS PROVISIONS OF THIS AGREEMENT AND THAT, EXCEPT AS PROVIDED IN THIS
AGREEMENT, NO PARTNERSHIP, JOINT VENTURE, AGENCY, FIDUCIARY OR EMPLOYMENT
RELATIONSHIP IS INTENDED OR CREATED BY REASON OF THIS AGREEMENT. NRT
ACKNOWLEDGES THAT CENDANT IS A STOCKHOLDER OF NRT.
(B) NRT ACKNOWLEDGES THAT CENDANT HAS AN INTEREST, FINANCIAL AND OTHERWISE, IN
THE PROGRAMS AND MAY RECEIVE FEES AND/OR COMMISSIONS FOR NRT'S PARTICIPATION IN
PROGRAMS, AND NRT ACKNOWLEDGES THAT IT IS NOT ENTITLED TO ANY ACCOUNTING OF SUCH
FEES, COMMISSSIONS OR INTERESTS AND WAIVES ANY CLAIMS BASED ON OR RELATING TO
THAT INTEREST AND THE COMMISSIONS AND FEES RECEIVED BY CENDANT.
13. Assignment. This Agreement may not be assigned by either party without
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the
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prior written consent of the other party, which consent shall not be
unreasonably withheld, except that an assignment in connection with a merger,
consolidation or sale of substantially all of the assets of a party hereto shall
not require the consent of the other party hereto. In addition, this Agreement
shall be freely assignable by Cendant in connection with the sale of one or more
of Cendant's real estate brands or Cendant's preferred alliance business unit to
any party reasonably capable of performing the outsourcing services hereunder.
Any assignee of this Agreement shall assume, by instrument reasonably acceptable
to the other party to this Agreement, all of the assignor's obligations
hereunder. Subject to the foregoing, this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors in
interest, legal representatives and assigns.
14. Confidentiality. Neither party shall disclose any information regarding
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this Agreement or the transactions contemplated hereby to any third party
without the prior written consent of the other party, except for disclosure to
any attorneys or accountants involved in assisting with the negotiation of the
transaction or unless such disclosure is required by law. Any public
announcement or press release relating or referring to this Agreement shall be
approved in writing by both parties prior to its release.
15. Partial Invalidity. Should any part of this Agreement, for any reason,
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be declared invalid, such decision shall not affect the validity of any
remaining portion of this Agreement.
16. No Waiver. No failure or delay in requiring strict compliance with any
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obligation of this Agreement (or in the exercise of any right or remedy provided
herein) and no custom or practice at variance with the requirements hereof shall
constitute a waiver or modification of any such obligation, requirement, right
or remedy or preclude exercise of any such right or remedy or the right to
require strict compliance with any obligation set forth herein. No waiver of
any particular default or any right or remedy with respect to such default shall
preclude, affect or impair enforcement of any right or remedy provided herein
with respect to any subsequent default. No approval or consent of either party
shall be effective unless in writing and signed by an authorized representative
of such party.
17. Notices. Notices will be effective hereunder when and only when they are
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reduced to writing and delivered, by next day delivery service, with proof of
delivery, or mailed by certified or registered mail, return receipt requested,
to the appropriate party at its address stated below or to such person and at
such address as may be designated by notice hereunder. Notices shall be deemed
given on the date delivered or date of attempted delivery, if service is
refused.
NRT: Cendant:
NRT INCORPORATED CENDANT CORPORATION
6 Sylvan Way 6 Sylvan Way
Parsippany, NJ 07054 Parsippany, NJ 07054
Attention: General Counsel Attention: General Counsel
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18. Miscellaneous. The remedies provided in this Agreement are not
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exclusive. Without limiting the rights of each party hereto to pursue all other
legal and equitable rights available to such party for the other party's failure
to perform its obligations under this Agreement, the parties hereto acknowledge
and agree that the remedy at law for any failure to perform their obligations
hereunder would be inadequate and that each of them, respectively, shall be
entitled to specific performance, injunctive relief or other equitable remedies
in the event of any such failure. This Agreement will be construed in
accordance with the laws of the State of New York, except for New York's
conflict of laws principles. Each party consents to the personal jurisdiction
of the courts of the State of New York and the United States District Court for
the Southern District of New York and further waives objection to venue in any
such court. This Agreement is exclusively for the benefit of the parties hereto
and may not give rise to liability to a third party. The section headings in
this Agreement are for convenience of reference only and will not affect its
interpretation. This Agreement, together with all instruments, exhibits,
attachments and schedules hereto, constitutes the entire agreement (superseding
all prior agreements and understandings, oral or written) of the parties hereto
with respect to the subject matter hereof and shall not be modified or amended
in any respect except in writing executed by all such parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
CENDANT CORPORATION
BY: /s/ Samuel L. Katz
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Name: Samuel L. Katz
Title: Executive Vice President
NRT INCORPORATED
BY: /s/ Steven L. Barnett
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Name: Steven L. Barnett
Title: Senior Vice President, General
Counsel and Secretary
#54725.20
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EXHIBIT A
Existing Programs
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@Backup MBNA
ADT Merrill Training
Airborne Express Merrill/May
All Communications Moore Data
American States Leasing North American Van Lines
Amerigas Oakwood
AOL Online Software
Aon Consulting Pac Bell
Aon E&O Paul W. Davis
Aon Home Warranty Payroll Transfers
AT&T (Business) Petro
AT&T Consumer Pierce Leahy
AT&T Wireless Services Pietrafesa
Avis Plan Member Services
Black & Decker Polaroid
Boise Cascade Primestar
Budget Property I.D.
Cendant Mobility Public Storage
Cendant Mortgage Realnet Direct
Centimark RealSelect
Danka Realtor.com
Dearborn Remind America
First American Title Skytel
First Corp. Leasing Smartalk
Franklin Covey Snapper
Hachette Stewart Title
Herman Miller (Stamford Office Furniture) Top Producer
IPIX Travel Promotions Int'l
Kodak U.S. Inspect
Lawyers Title U.S. Lead
Lexmark Visa
Lucent WINR
Lysias Zee Medical
Zenith
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