<PAGE>


                                  EXHIBIT 10-16

                              EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated December 31, 2001 and effective
as of November 1, 2001 (the "EFFECTIVE DATE"), between ROBERT V. CUDDIHY, JR.
("EXECUTIVE") and NATIONAL AUTO CREDIT, INC., a Delaware corporation
("Employer").

         In consideration of the premises and the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto hereby agree as follows:

1.       EMPLOYMENT OF EXECUTIVE

         Employer hereby agrees to employ Executive, and Executive hereby agrees
to be and remain in the employ of Employer, upon the terms and conditions
hereinafter set forth.

2.       EMPLOYMENT PERIOD; EMPLOYMENT YEAR

         2.1 Employment Period. Subject to earlier termination as provided in
Section 5, the term of Executive's employment under this Agreement shall
commence as of the date hereof and shall continue through October 31, 2004 (the
"INITIAL EMPLOYMENT PERIOD"). Unless either party gives notice of non-renewal at
least ninety (90) days prior to the expiration of the Initial Employment Period
or any extension thereof, the term of this Agreement shall be extended for an
additional one (1) year period beyond the end of the Initial Employment Period,
or the end of any extension thereof, as the case may be (the Initial Employment
Period and any extension thereof is hereafter referred to as the "EMPLOYMENT
PERIOD").

         2.2 Employment Year. Each 12-month period ending on October 31 shall be
hereinafter considered an "EMPLOYMENT YEAR."

3.       DUTIES AND RESPONSIBILITIES; PLACE OF PERFORMANCE

         3.1 Duties and Responsibilities. During the Employment Period,
Executive shall have the titles of Chief Financial Officer ("CFO"), Treasurer
and Chief Accounting Officer ("CAO") of the Employer. Executive shall devote
substantially all of his business time to the Employer. Executive shall perform
such duties as are customarily required of a CFO, as well as those normally
required of a Treasurer and CAO, in the areas of, but not limited to, finance,
securities regulation and compliance (including, but not limited to, preparation
and filing of periodic securities reports required by the U.S. Securities and
Exchange Commission, state "blue sky" regulations, or the rules of national
securities exchanges), budgets and operations, and treasury functions, together
with such other matters as he may be reasonably assigned from time to time by
Employer's Chief Executive Officer or the Employer's Board of Directors (the
"BOARD").

         3.2 Place of Performance. In connection with his employment during the
Employment Period, the Executive shall be based at the Employer's principal
offices located in New York, New York.




<PAGE>



4.       COMPENSATION AND RELATED MATTERS

         4.1 Base Salary. Employer shall pay to Executive a base salary at the
rate of $240,000 per annum, subject to increase at the discretion of the Board
(the initial base salary, including any Board approved increase thereof, the
"BASE SALARY"), payable in advance in monthly increments.

         4.2 Annual Bonus. Executive shall receive a cash bonus of at least
$25,000 during each Employment Year (the "MINIMUM BONUS"). Executive's bonus in
any Employment Year may be increased above the Minimum Bonus if, in the opinion
of the Board, such increase is appropriate to reward Executive's performance for
such year (the Minimum Bonus, together with any increase, being hereinafter
referred to as the "BONUS").

         4.3 Automobile Allowance. Employer shall provide Executive with a
monthly allowance during the Employment Period of $700.00 to cover the costs of
a leased automobile, including maintenance, fuel, and insurance.

         4.4 Other Benefits. During the Employment Period, subject to, and to
the extent Executive is eligible under their respective terms, Executive shall
be entitled to receive such fringe benefits as are, or are from time to time
hereafter generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreements or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, accidental death and dismemberment
insurance, travel accident insurance or other similar plan or program of
Employer. To the degree that Employer's medical insurance does not fully cover
the cost of an annual physical examination for Executive, Employer shall
reimburse Executive for such expense promptly after such expense is incurred,
not to exceed $1,250.00 annually. Executive's Base Salary shall (where
applicable) constitute the compensation on the basis of which the amount of
Executive's benefits under any such plan or program shall be fixed and
determined.

         4.5 Expense Reimbursement. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation of signed, itemized accounts of such
expenditures, all in accordance with Employer's procedures and policies as
adopted and in effect from time to time and applicable to its senior management
employees.

         4.6 Vacations. Executive shall be entitled to twenty (20) days paid
vacation for each Employment Year during the Employment Period, in accordance
with Employer's vacation policy as in effect from time to time, provided,
however, that Executive shall not be entitled to carry forward into the
following Employment Year more than ten (10) days paid vacation. Executive shall
also be entitled to be paid holidays and personal days in accordance with
Employer's practice with respect to same as in effect from time to time.

5.       TERMINATION OF EMPLOYMENT PERIOD

         5.1 Termination Without Cause; Voluntary Termination by Executive.
Employer may, by notice to Executive at any time during the Employment Period,
terminate the Employment Period without Cause (as defined below). Executive may,
by notice to Employer at any time during the Employment Period, voluntarily
resign from the Employer and terminate the Employment Period. A termination
under this section shall be effective immediately, unless otherwise specified in
the notice.




<PAGE>


         5.2 By Employer for Cause. Employer may, at any time during the
Employment Period, by notice to Executive, terminate the Employment Period for
"Cause" (as defined below) effective immediately, except as otherwise provided
below. The notice shall set forth in reasonable detail the basis for such
termination. In the event that it is possible for the Executive to cure or
correct the circumstances set forth in the notice, the termination shall not be
effective until the date that is thirty (30) days following the date on which
such notice is given and the circumstances set forth in the notice shall not
constitute "Cause" if within 30 days of such notice, Executive cures or corrects
such circumstances. Employer shall have "Cause" to terminate the Executive's
employment hereunder upon the Executive's:

         (a) fraud, embezzlement, or any other illegal act committed
intentionally by the Executive in connection with the Executive's duties as an
executive of the Employer or any subsidiary or affiliate of the Employer which
causes or may reasonably be expected to cause substantial economic injury to the
Employer or any subsidiary or affiliate of the Employer,

         (b) conviction of any felony which causes or may reasonably be expected
to cause substantial economic injury to the Employer or any subsidiary or
affiliate of the Employer, or

         (c) willful or grossly negligent commission of any other act or failure
to act which causes or may reasonably be expected (as of the time of such
occurrence) to cause substantial economic injury to or substantial injury to the
reputation of the Employer or any subsidiary or affiliate of the Employer,
including, without limitation, any material violation of the Foreign Corrupt
Practices Act, as described herein below. An act or failure to act on the part
of Executive shall be considered "willful" if done, or omitted to be done, by
Executive in bad faith or without a reasonable belief that the act or omission
was in the best interest of Employer.

         5.3 By Executive for Good Reason. Executive may, at any time during the
Employment Period by notice to Employer, terminate the Employment Period under
this Agreement for "Good Reason" (as defined below), effective immediately. For
the purposes hereof, "Good Reason" means any of the following without
Executive's consent: (A) subject to Section 3 above, a material and adverse
change in the nature and scope of Executive's authority and duties from those
exercised or performed by Executive immediately after the Effective Date or
relocation of the Employer's principal offices outside of New York, New York;
(B) a material breach of this Agreement by Employer (including, but not limited
to, failure to pay any amount due to Executive when due or a diminution of
Executive's duties and responsibilities); provided, however, that the
circumstances set forth in this Section 5.3(A) and (B) will not be Good Reason
if within 30 days of notice by the Executive to the Employer, Employer cures
such circumstances.

         5.4 Disability. During the Employment Period, if, as a result of
physical or mental incapacity or infirmity, Executive shall be unable to perform
his duties under this Agreement for (i) a continuous period of at least 120
days, or (ii) periods aggregating at least 180 days during any period of 12
consecutive months (each a "Disability Period"), and at the end of the
Disability Period there is no reasonable probability that Executive can promptly
resume his duties hereunder, Executive shall be deemed disabled (the
"Disability") and Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after the end of the
Disability Period. The existence of the Disability shall be determined by a
reputable, licensed physician. The parties shall attempt to agree on such a
physician. In the event that the parties are unable to so agree, such physician
shall be selected by an arbitrator provided by the American Arbitration
Association in New York, New York. Executive shall cooperate in all reasonable
respects to enable an examination to be made by such physician.

         5.5 Death. The Employment Period shall end on the date of Executive's
death.




<PAGE>



6.       TERMINATION COMPENSATION

         6.1 Termination by Employer for Cause. If the Employment Period is
terminated by Employer for Cause, Employer will continue to pay Executive's
salary for a period of six (6) months following termination. Employer shall also
continue to provide Executive, for a period of six (6) months, with the employee
benefit set forth in Section 4.3 and continuing coverage under any medical,
dental, short-term and long-term disability and life insurance plans of Employer
which Executive was participating in or receiving at the effective date of
termination. If such benefits cannot be provided under the Employer's programs,
such benefits will be provided on a tax effective basis on an individual basis
to the Executive.

         6.2 Termination by Employer without Cause or for Good Reason by
Executive. If the Employment Period is terminated by Employer without Cause or
by Executive for Good Reason, Employer will continue to pay Executive's salary
for a period of twelve (12) months following termination. Employer shall also
continue to provide Executive, for a period of twelve (12) months, with the
employee benefit set forth in Section 4.3 and continuing coverage under any
medical, dental, short-term and long-term disability and life insurance plans of
Employer which Executive was participating in or receiving at the effective date
of termination. If such benefits cannot be provided under Employer's programs,
such benefits will be provided on a tax effective basis on an individual basis
to Executive.

         6.3 Termination by Reason of Death. If the Employment Period is
terminated by death, pursuant to the provisions of Section 5.5, Employer shall
pay to Executive's estate, within thirty (30) days of the effective date of
termination, Executive's accrued and unpaid Base Salary through the date of
termination plus Executive's Base Salary for an additional sixty (60) days. In
addition, Employer shall provide to Executive's dependants, at Employer's
expense, a minimum of twelve (12) months continuing coverage under any medical,
dental, short-term and long-term disability and life insurance plans of the
Employer in which such dependants had been enrolled through Executive at the
time of Executive's death, to the extent permitted under the plan.

         6.4 Termination by Reason of Disability. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.4, Employer shall
pay to Executive, within thirty (30) days of the effective date of termination,
Executive's accrued and unpaid Base Salary through the date of termination.
Employer shall have no obligation to continue any other benefits provided for in
Section 4 past the date of termination except that Employer shall provide to
Executive's dependants, at Employer's expense, a minimum of twelve (12) months
continuing coverage under any medical, dental, short-term and long-term
disability and life insurance plans of the Employer in which such dependants had
been enrolled through Executive at the time of Executive's disability, to the
extent permitted under the plan.

         6.5 No Other Termination Compensation. Executive shall not, except as
set forth in this Section 6, be entitled to any compensation following
termination of the Employment Period.

         6.6 Mitigation of Damages. In the event of any termination of the
Executive's employment by the Employer, the Executive shall not be required to
seek other employment to mitigate damages, and any income earned by the
Executive from other employment or self-employment shall not be offset against
any obligations of the company to the Executive under this Agreement. The
Employer's obligations hereunder and the Executive's rights to payment shall not
be subject to any right of set-off, counterclaim or other deduction by the
Employer not in the nature of customary withholding, other than in any judicial
proceeding or arbitration.




<PAGE>



7.       PROFESSIONAL LIABILITY INSURANCE; INDEMNIFICATION

         7.1 Insurance. The Employer will provide coverage for Executive under
the Employer's director and officer professional liability insurance policy.

         7.2 Indemnification. Employer shall indemnify the Executive to the
fullest extent permitted by law in effect as of the date hereof, or as hereafter
amended, against all costs, expenses, liabilities and losses (including, without
limitation, attorneys' fees, judgments, fines, penalties, ERISA excise taxes,
penalties and amounts paid in settlement) reasonably incurred by the Executive
in connection with a Proceeding. For the purposes of this section, a
"Proceeding" shall mean any action, suit or proceeding, whether civil, criminal,
administrative or investigative, in which the Executive is made, or is
threatened to be made, a party to, or a witness in, such action, suit or
proceeding by reason of the fact that he is or was an officer, director or
employee of the Employer or is or was serving as an officer, director, member,
employee, trustee or agent of any other entity at the request of the Employer.

         7.3 Notification and Defense of Claim. Promptly after receipt by the
Executive of notice of the commencement of any Proceeding, the Executive will,
if a claim in respect thereof is to be made against the Employer under this
Agreement, notify the Employer in writing of the commencement thereof; but the
omission to so notify the Employer will not relieve the Employer from any
liability that it may have to the Executive otherwise than under this Agreement.
Notwithstanding any other provision of this Agreement, with respect to any such
Proceeding as to which the Executive gives notice to the Employer of the
commencement thereof:

         (a) The Employer will be entitled to participate therein at its own
expense; and

         (b) Except as otherwise provided in this Section 7.3(b) to the extent
that it may wish, the Employer, jointly with any other indemnifying party
similarly notified, shall be entitled to assume the defense thereof, with
counsel satisfactory to the Executive. After notice from the Employer to the
Executive of its election to so assume the defense thereof, the Employer shall
not be liable to the Executive under this Agreement for any legal or other
expenses subsequently incurred by the Executive in connection with the defense
thereof other than reasonable costs of investigation or as otherwise provided
below. The Executive shall have the right to employ the Executive's own counsel
in such Proceeding, but the fees and expenses of such counsel incurred after
notice from the Employer of its assumption of the defense thereof shall be at
the expense of the Executive unless (1) the employment of counsel by the
Executive has been authorized by the Employer, (2) the Executive shall have
reasonably concluded that there may be a conflict of interest between the
Employer and the Executive in the conduct of the defense of such Proceeding
(which conclusion shall be deemed reasonable if, without limitation, such action
shall seek any remedy other than money damages and the Executive would be
personally affected by such remedy or the carrying out thereof), or (3) the
Employer shall not in fact have employed counsel to assume the defense of the
Proceeding, in each of which cases the fees and expenses of counsel shall be at
the expense of the Employer. The Employer shall not be entitled to assume the
defense of any Proceeding brought against the Executive by or on behalf of the
Employer or as to which the Executive shall have reached the conclusion provided
for in clause (2) above.

8.       CONFIDENTIALITY

         Unless otherwise required by law or judicial process, Executive shall
retain in confidence during the Employment Period and after termination of
Executive's employment with Employer pursuant to this Agreement all confidential
information known to the Executive concerning Employer and its businesses. The
obligations of Executive pursuant to this Section 8 shall survive the expiration
or termination of this Agreement.




<PAGE>



9.       NONSOLICITATION.

         During the twelve (12) month period following the termination of
Executive's employment with Employer, Executive shall not, directly or
indirectly, solicit to enter into the employ of any other Entity, or hire, any
of the employees of the Employer (or individuals who were employees of the
Employer within six (6) months of termination of the Non-Compete Period). During
the Non-Compete Period, Executive shall not, directly or indirectly, solicit,
hire or take away or attempt to solicit, hire or take away (i) any customer or
client of the Employer or (ii) any former customer or client (that is, any
customer or client who ceased to do business with the Employer during the one
(1) year immediately preceding such date) of the Employer or encourage any
customer or client of the Employer to terminate its relationship with the
Employer without the Employer's prior written consent. The obligations of
Executive pursuant to this Section 9 shall survive the expiration or termination
of this Agreement.

10.      FOREIGN CORRUPT PRACTICES ACT

         The Executive agrees to comply in all material respects with the
applicable provisions of the U.S. Foreign Corrupt Practices Act of 1977
("FCPA"), as amended, which provides generally that: under no circumstances will
foreign officials, representatives, political parties or holders or public
offices be offered, promised or paid any money, remuneration, things of value,
or provided any other benefit, direct or indirect, in connection with obtaining
or maintaining contracts or others hereunder. When any representative, employee,
agent, or other individual or organization associated with the Executive is
required to perform any obligation related to or in connection with this
Agreement, the substance of this section shall be imposed upon such person and
included in any agreement between the Executive and any such person. Failure by
the Executive to comply in all material respects with the provisions of the FCPA
(other than an inadvertent violation on the basis of advice from counsel to the
Employer that the conduct in question is not a violation) shall constitute a
material breach of this Agreement and shall entitle the Employer to terminate
the Executive's employment for Cause.

11.      SUCCESSORS; BINDING AGREEMENT

         This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by Executive and Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisee, legatee, or other beneficiary or, if there be
no such beneficiary, to Executive's estate.

12.      SURVIVORSHIP

         The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.

13.      MISCELLANEOUS

         13.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent to
the party for or to whom intended, at the address of such party set forth below,
by registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate by
notice given to the other in the manner provided herein.




<PAGE>



         13.2 Taxes. Employer is authorized to withhold (from any compensation
or benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgment of Employer to comply with applicable
laws and regulations.

         13.3 Inventions; Work for Hire. Executive hereby agrees to assign and
does hereby assign all of Executive's right, title and interest in or to any and
all ideas, concepts, know-how, techniques, processes, inventions, discoveries,
developments, works of authorship, innovations and improvements (collectively
"Inventions") conceived or made by Executive, whether alone or in concert with
others whether patentable or subject to potential copyrights or not, except
those that the Executive developed or develops entirely on Executive's own time
without using the equipment, supplies, facilities, or confidential or
proprietary information of the Employer and provided that such Inventions are
unrelated to the business of the Employer. Executive agrees to promptly inform
and disclose all Inventions to the Employer in writing and with respect to those
Inventions that Executive is required to assign to the Employer hereunder to
provide all assistance reasonably requested by the Employer in the preservation
of its interests in the Inventions (such as by executing documents, testifying,
etc.), such assistance to be provided at the Employer's expense but without
additional compensation to the Executive. Executive agrees that any work
prepared by the Executive during the Employment Period which work is subject to
assignment under this paragraph and which is eligible for United States
copyright protection or protection under the Universal Copyright Convention the
Berne Copyright Convention and/or the Buenos Aires Copyright Convention, shall
be a "work made for hire". In the event that any such work is deemed not to be a
"work made for hire". Executive hereby assigns all right, title and interest in
and to the copyright in such work to the Employer, and agrees to provide all
assistance reasonably requested in the establishment, preservation and
enforcement of the Employer's copyright in such work, such assistance to be
provided at the Employer's expense but without any additional compensation to
Executive.

         13.4 Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
reference to the principles of conflicts of laws therein.

         13.5 Dispute Resolution and Arbitration. In the event that any dispute
arises between the Employer and the Executive regarding or relating to this
Agreement and/or any aspect of the Executive's employment relationship with the
Employer, AND IN LIEU OF LITIGATION AND A TRIAL BY JURY, the parties consent to
resolve such dispute through mandatory arbitration under the Commercial Rules of
the American Arbitration Association, before a single arbitrator in New York,
New York. The parties hereby consent to the entry of judgment upon award
rendered by the arbitrator in any court of competent jurisdiction.
Notwithstanding the foregoing, however, should adequate grounds exist for
seeking immediate injunctive or immediate equitable relief, any party may seek
and obtain such relief; provided that, upon obtaining such relief, such
injunctive or equitable action shall be stayed pending the resolution of the
arbitration proceedings called for herein. The parties hereby consent to the
exclusive jurisdiction in the state and Federal courts located in the City of
New York, County of New York and State of New York for purposes of seeking such
injunctive or equitable relief as set forth above. Each side shall bear its own
costs; however any fees assessed by the American Arbitration Association shall
be allocated by the arbitrator in his/her sole discretion.

         13.6 Headings. All descriptive headings in this Agreement are inserted
for convenience only and shall be disregarded in construing or applying any
provision of this Agreement.

         13.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.




<PAGE>



         13.8 Severability. If any provision of this Agreement, or any part
thereof, is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.

         13.9 Entire Agreement and Representation. This Agreement contains the
entire agreement and understanding between Employer and Executive with respect
to the subject matter hereof. No representations or warranties of any kind or
nature relating to Employer or its several businesses, or relating to Employer's
assets, liabilities, operations, future plans or prospects have been made by or
on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.


                EMPLOYER:                   NATIONAL AUTO CREDIT, INC.



                                            By:_________________________________
                                                   James J. McNamara
                                            Title: Chief Executive Officer



                EXECUTIVE:

                                            ____________________________________
                                            Robert V. Cuddihy, Jr.