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EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is being entered into
as of June 25, 1996 (the "Closing Date") by and between Pegasus Systems, Inc.,
a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxxx ("Executive").
RECITALS
A. Executive has served as Chief Information Officer of the
Company since July 1995.
B. Pursuant to a Series A Preferred Stock Purchase Agreement,
dated as of the Closing Date, by and among the Company, and the entities listed
on Exhibit A thereto (the "Purchasers"), the Purchasers are purchasing certain
shares of Series A Preferred Stock, par value $0.01 per share, of the Company
(the "Purchase").
C. The Purchasers have required, as a condition to consummating
the Purchase, that Executive execute and deliver this Agreement.
AGREEMENT
In order to induce the Purchasers to consummate the Purchase, and in
further consideration of the mutual covenants and agreements contained herein,
the parties agree as follows:
1. EMPLOYMENT
1.1 TERM; DUTIES.
(a) TERM. Subject to Section 1.6 below, Executive agrees to serve
as an employee of the Company during the period commencing on the Closing Date
and ending on the date four (4) years from the Closing Date, subject to
automatic one year annual renewals if neither party has provided the other with
a written notice expressing an intent to terminate the Executive's employment
with the Company 60 days prior to the beginning of such renewal period (the
"Employment Term").
(b) DUTIES. During the Employment Term, Executive shall serve as
the Chief Information Officer of the Company and in such capacity shall have
such responsibilities and perform such duties as the Chief Executive Officer or
the Company's Board of Directors may specify from time to time consistent with
such position. Executive agrees to serve the Company faithfully and to the best
of his ability, and to devote substantially all of his working time, attention
and efforts during the Employment Term to the business and affairs of the
Company. Executive shall not serve as a
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director, employee, consultant or advisor to any other corporation (other than
the Company's affiliates) or other business enterprise without the prior written
consent of the Company; provided, however, that Executive may serve in any
capacity with any civic, educational or charitable organization or any trade
association without the approval of the Board, so long as such activities do
not interfere with his duties and obligations under this Agreement. Executive
represents and warrants to the Company that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement.
1.2 COMPENSATION. In consideration for all services to be
performed under this Agreement, Executive shall receive the following
compensation:
(a) SALARY. Executive shall be paid a base salary at a rate
of not less than $14,583 per month, subject to increase annually at the
discretion of the Compensation Committee of the Board of Directors and payable
at such times as other executives of the Company receive their regular salary
payments (the "Base Salary").
(b) BONUS PROGRAM. The Executive will be eligible to
receive annual bonus payments in addition to the Base Salary. Such annual bonus
shall be determined by the Compensation Committee in its discretion based on
achievement of performance objectives established by the Compensation Committee
of the Board of Directors from time to time.
(c) OPTION. The Company shall grant to Executive an option
(the "Option") (or, at Executive's election, a stock purchase right to purchase
shares of Common Stock of the Company (the "Common Stock") for a total of
$112,500 shares of Common Stock) at an exercise price of $2.68 per share.
Subject to Section 1.6(b)(ii) below, such Option will vest 1/4 on the first
anniversary of the Closing Date and 1/48 after each subsequent month of
employment, so that such Option would be fully vested four (4) years after the
Closing Date based on continued employment.
(d) AUTOMOBILE ALLOWANCE. The Company agrees to pay
Executive an automobile allowance of up to $500 per month.
(e) LIFE INSURANCE. To the extent commercially
practicable, the Company shall maintain life insurance with respect to
Executive, in the amount of $1,333,000 with the Company as beneficiary and
$667,000 with Executive's estate as beneficiary.
The Company shall be entitled to withhold from the compensation
payments otherwise required to be made to Executive such amounts as may be
required under applicable tax laws and other applicable legal requirements.
1.3 OTHER BENEFITS. The Company shall provide to Executive, during
the Employment Term, such other benefits (including vacation) as the Company
makes generally available to its other employees and makes generally available
to its executives during the Employment Term, subject to Executive's
satisfaction of the respective eligibility requirements for such benefits.
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1.4 NO OTHER COMPENSATION. Executive acknowledges and agrees that
he shall not be entitled to receive from the Company or any other affiliate of
the Company, including but not limited to, The Hotel Industry Switch Company,
The Hotel Clearing Corporation, the Hotel Clearing Corporation (U.K.) and
TravelWeb, Inc. any salary, bonus or other compensation or benefit of any
nature (whether relating to any period prior to the Closing Date or relating to
any period after the Closing Date) except as expressly provided in Sections 1.2
and 1.3 above. Executive represents and warrants to the Company that he is not
aware of any claims or rights against the Company arising directly or
indirectly from his past employment with the Company, and Executive hereby
releases and discharges the Company and its affiliates from all claims, rights,
causes of action, demands and obligations arising directly or indirectly from
his past employment with the Company.
1.5 EXPENSES. Executive shall be entitled to reimbursement from the
Company for reasonable out-of-pocket business expenses reasonably incurred by
Executive during the Employment Term in the performance of Executive's duties
under this Agreement, in accordance with the Company policies in effect from
time to time; provided, however, that the Company shall not be required to
reimburse Executive for any such expenses unless: (a) Executive presents
vouchers and receipts indicating in reasonable detail the amount and business
purpose of each of such expenses; and (b) Executive otherwise complies with the
Company's reimbursement policies established from time to time and in effect
during the Employment Term.
1.6 TERMINATION.
(a) Executive and the Company acknowledge and agree that either the
Company or Executive shall have the right to terminate Executive's employment
at any time during the Employment Term with or without Cause (as defined in
Section 1.7), by delivering written notice of termination to the other thirty
(30) days prior to the date of termination. Upon any such termination of this
Agreement, Executive's employment with the Company shall terminate and, except
as provided in Section 1.6(b) or 1.6(c) below, as applicable, the Company shall
have no further monetary obligation or other obligation of any nature to
Executive under this Agreement or with respect to his employment or the
termination of his employment (except as expressly required by applicable law).
(b) If (i) the Company terminates this Agreement without Cause (as
defined in Section 1.7 below) during the Employment Term, (ii) Executive
satisfies all of his obligations relating to the termination of his employment
under this Agreement as specified in Sections 2, 3 and 4.1 hereof), and (iii)
Executive executes and delivers to the Company a general release of liability
(satisfactory in form and substance to the Company) in favor of the Company,
then so long as Executive does not breach Section 2, 3 or 4.1 hereof.
(A) The Company shall pay to Executive the Base Salary
referred to in Section 1.2(a) above for a period of twelve (12) months
following the date of termination, payable over such twelve-month period
at such times as executives of the Company receive their regular salary
payments;
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(B) Vesting of the Option shall accelerate so that (i) if
termination of employment occurs prior to the date being three (3) years
and one (1) month after the Closing Date, Executive's Option shall vest
for an additional 28,125 shares of Common Stock (in addition to shares
vested as of the date of termination) or (ii) if termination of
employment occurs on or after the date being three (3) years and one (1)
month after the Closing Date, Executive's Option shall fully vest; and
(C) The Company shall pay to Executive all accrued salary, any
benefits under any plans of the Company in which Executive is a
participant to the full extent of Executive's rights under such plans
and any appropriate out-of-pocket business expense reimbursements.
(c) If this Agreement is terminated other than pursuant to Section
1.6(b), including voluntary termination, termination by the Company with Cause,
or by reason of death or disability, then so long as Executive does not breach
Section 2, 3 or 4.1 hereof, Executive shall be entitled to payment of all
accrued salary, vesting of the Option through the date of determination only,
any further benefits under any plans of the Company in which Executive is a
participant to the full extent of Executive's rights under such plans through
the date of termination only and any appropriate out-of-pocket business expense
reimbursements.
(d) The termination of this Agreement pursuant to this Section 1.6
or otherwise shall not limit or otherwise affect any of Executive's obligations
under Sections 2, 3, and 4.1 hereof, which obligations shall survive any such
termination.
(e) Executive shall be entitled to no benefits, compensation or
other payments or rights upon termination of employment except as expressly set
forth under Section 1.6(b), 1.6(c) or 1.6(d), as applicable; provided, only,
that to the extent the Consolidated Omnibus Budget Reconciliation Act of 1985
(""COBRA'') shall be applicable to the Company, Executive may be eligible
following termination of employment to continue to receive group health plan
benefits pursuant to COBRA by making the appropriate election and payments.
1.7 DEFINITION OF "CAUSE." Executive's employment with the Company
shall be deemed to have been terminated for "Cause" if such employment is
terminated due to:
(a) habitual failure to report to work, which is not cured within
sixty (60) days after written notice from the Board of Directors;
(b) habitual substance abuse, which is not cured within sixty (60)
days after written notice from the Board of Directors;
(c) material breach of Executive's fiduciary duty to the Company or
its affiliates, including without limitation, misappropriation of corporate
assets, self dealing and violation of any noncompetition agreement or any
confidential information and assignment agreement;
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(d) any intentional misconduct, fraud or bad faith on the part of
Executive in the performance of his duties as an employee of the Company;
(e) the conviction of Executive of, or the entry by Executive of a
plea of guilty or no contest to, any felony, any activity constituting unlawful
harassment, or any other malfeasance that could materially impair the
reputation of the Company or Executive; and
(f) the breach by Executive of any material provision in this
Agreement, which is not cured within sixty (60) days after written notice from
the Board of Directors.
1.8 DISABILITY. If, during the term of this Agreement, Executive,
in the reasonable judgment of the Board of Directors, has failed to perform his
duties under this Agreement on account of illness or physical or mental
incapacity, and such illness or incapacity continues for a period of six (6)
months, the Company shall have the right to terminate Executive's employment
hereunder by written notification to Executive.
1.9 DEATH. In the event of Executive's death during the term of
this Agreement, the date of termination shall be deemed to have occurred as of
the last day of the month during which his death occurs.
2. CONFIDENTIAL INFORMATION
The Confidential Information and Invention Assignment Agreement entered
into by the Executive as of the date hereof and attached hereto as Exhibit A is
hereby incorporated by reference.
3. NON-COMPETITION AND NON-SOLICITATION
3.1 NON-COMPETITION. During the period commencing on the Closing
Date and continuing until the date twelve (12) months after the termination of
the Executive's employment with the Company (the "Noncompete Period"), Executive
shall not, directly or indirectly, provide any service (as an employee,
consultant or otherwise), support, product, or technology to any person or
entity residing or located in the states or provinces of North America and the
countries of Europe, if such service, support, product or technology involves or
relates to, in any material respect, the business of the Company as conducted
during the term of Executive's employment (each, a "Restricted Business"). The
Company and Executive agree that these limitations as to time, geographical
area, and scope of activity to be restrained are reasonable and the limitations
are necessary to protect the goodwill or other business interests of the
Company.
3.2 NON-SOLICITATION. Executive further agrees that during the
Noncompete Period, he will not:
(a) directly or indirectly, personally or through others,
encourage, induced, attempt to induce, solicit or attempt to solicit (on
Executive's own behalf or on behalf of any other person or entity) the
employment of (i) any employee of the Company or any of the Company's
affiliates or
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(ii) any person who was within the previous twelve (12) months an employee of
the Company or any of the Company's affiliates;
(b) directly or indirectly, personally or through others, approach,
contact, solicit, advise or do (or attempt to do) business with, or otherwise
interfere with the relationship of the Company or any of the Company's
affiliates with, any person or entity who is, was or is reasonably anticipated
to become a customer or client of the Company or any of Company's affiliates
with respect to any Restricted Business.
3.3 SEPARATE COVENANTS. The covenants contained in Section 3.2(a)
and (b) above shall be each construed as a series of separate covenants, one
for each country, city, state and country of any geographic area where any
business is presently carried on by the Company. Except for geographic
coverage, each such separate covenant shall be identical in terms to the
covenant contained in Section 3.2(a). If, in any judicial proceeding, a court
refuses to enforce any of such separate covenants (or any part thereof), then
such unenforceable covenant (or such part) shall be eliminated from this
Agreement to the extent necessary to permit the remaining separate covenants
(or portions thereof) to be enforced. In the event that the provisions of this
Section 3 are deemed to exceed the time, geographic or scope limitations
permitted by applicable law, then such provisions shall be reformed to the
maximum time, geographic or scope limitations, as the case may be, permitted by
applicable laws.
4. MISCELLANEOUS PROVISIONS.
4.1 SURRENDER OF REWARDS AND PROPERTY. At such time as Executive
no longer serves as an Executive of the Company, Executive shall deliver
promptly to the Company(a) all records, manuals, books, blank forms, documents,
letters, memoranda, notes, notebooks, reports, data, tables, calculations or
copies thereof in his possession or under his control which are the property of
the Company, and (b) all other property and Confidential Information of the
Company in his possession or under his control, including all documents which
contain any Confidential Information of the Company.
4.2 INDEPENDENCE OF OBLIGATIONS. The covenants of Executive set
forth in this Agreement shall be construed as independent of any other
agreement or arrangement between Executive, on the one hand, and the Company,
on the other. The existence of any claim or cause of action by Executive
against the Company shall not constitute a defense to the enforcement of such
covenants against Executive.
4.3 SPECIFIC PERFORMANCE. Executive agrees that in the event of
any breach or threatened breach by Executive of any covenant, obligation or
other provision contained in this Agreement, the Company shall be entitled (in
addition to any other remedy that may be available to it) to (a) a decree or
order of specific performance or mandamus to enforce the observance and
performance of such covenant, obligation or other provision, and (b)
injunction restraining such breach or threatened breach.
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4.4 NON-EXCLUSIVITY. The rights and remedies of the Company
hereunder are not exclusive of or limited by any other rights or remedies which
the Company may have, whether at law, in equity, by contract or otherwise, all
of which shall be cumulative (and not alternative). Without limiting the
generality of the foregoing, the rights and remedies of the Company hereunder,
and the obligations and liabilities of Executive hereunder, are in addition to
their respective rights, remedies, obligations and liabilities under the law of
unfair competition, misappropriation of trade secrets and the like.
4.5 INDEMNIFICATION. Without in any way limiting any of the rights
or remedies otherwise available to the Company, Executive shall hold harmless
and indemnify the Company from and against, and shall compensate and reimburse
the Company from any loss, damage, injury, decline in value, lost opportunity,
liability, exposure, claim, demand, settlement, judgment, award, fine, penalty,
tax, fee (including reasonable attorneys' fees) charge, cost (including costs
of investigation) or expense of any nature (collectively, the "Damages") which
are directly or indirectly suffered or incurred at any time by the Company, or
to which the Company otherwise becomes subject (regardless of whether or not
such Damages relate to a third-party claim) and that arise from or are directly
or indirectly connected with, any breach of any covenant or obligation of
Executive contained herein.
4.6 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt of, if earlier, (a) five
(5) days after deposit with the U.S. Postal Service or other applicable postal
service, if delivered by first class mail, postage prepaid, (b) upon delivery,
if delivered by hand, (c) one business day after the business day of deposit
with Federal Express or similar overnight courier, freight prepaid or (d) one
business day after the business day of facsimile transmission, if delivered by
facsimile transmission with copy by first class mail, postage prepaid, and
shall be addressed (i) if to Executive at his address as set forth herein, and
(ii) if to the Company, at the address of its principal corporate offices
(attention: Secretary), or at such other address as a party may designate by
ten (10) days' advance written notice to the other party pursuant to the
provisions above.
4.7 SEVERABILITY. If any provision of this Agreement or any part
of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall be affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction and (c) such
invalidity of enforceability of such provision or part thereof shall not affect
the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Agreement. Each
provision of this Agreement is separable from every other provision of this
Agreement, and each part of each provision of this Agreement is separable from
every other part of such provision.
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4.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all by, the laws of the State of Texas (without giving
effect to principles of conflicts of laws).
4.9 WAIVER. No failure on the part of either party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of either party in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy. Neither party shall be deemed to have waived
any claim arising out of this Agreement, or any power, right, privilege or
remedy under this Agreement, unless the waiver of such claim, power, right,
privilege or remedy is expressly set forth in a written instrument duly
executed and delivered on behalf of such party; and any such waiver shall not
be applicable or have any effect except in the specific instance in which it
is given.
4.10 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
4.11 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
4.12 FURTHER ASSURANCES. Each party hereto shall execute and/or
cause to be delivered to the other party hereto such instruments and other
documents and shall take such other actions as such other party may reasonably
request to effectuate the intent and purposes of this Agreement.
4.13 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties relating to the subject matter hereof and thereof
and supersedes all prior agreements and understandings between the parties
(including any prior agreements or understandings between Executive and any
subsidiary of the Company) relating to the subject matter hereof and thereof,
including without limitation the right to employment, employment compensation,
severance and other compensation upon termination of employment and rights to
acquire securities of the Company or any subsidiary which Executive may have to
acquire securities of the Company, provided only that this Agreement shall not
affect the Company's rights under the Amended and Restated Stockholders
Agreement of the Company dated June 25, 1996, which shall constitute in full
force and effect.
4.14 AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of the Company and Executive.
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4.15 ASSIGNMENT. This Agreement and all rights and obligations of
Executive hereunder are personal to Executive and may not be transferred or
assigned by Executive at any time. The Company may, assign its rights under
this Agreement to any entity that assumes the Company's obligations hereunder
in connection with any sale or transfer of all or a substantial portion of the
Company's assets to such entity.
4.16 BINDING NATURE. Subject to Section 4.15, this Agreement will
be binding upon and inure to the benefit of the Company and its successors and
assigns and Executive and his representatives, executors, administrators,
estate, heirs, successors and assigns.
4.17 ARBITRATION. Any disputes under this Agreement between the
parties hereto shall be settled by arbitration in Dallas, Texas under the
auspices of, and in accordance with the rules of, the American Arbitration
Association, by an arbitrator who is mutually agreeable to the parties hereto,
or, if the Company and Executive cannot agree on the selection of the
arbitrator, then before three arbitrators, one of which shall be appointed by
Executive, one of which shall be appointed by the Company, and the third of
which shall be chosen by the American Arbitration Association (such arbitrator
or arbitrators hereinafter referred to as the "Arbitrator"). The decision in
such arbitration ???????????? court having jurisdiction thereof. The parties
hereby agree that the Arbitrator ???????????? enter an equitable decree
mandating specific enforcement of the terms of this Agreement. The Company and
Executive shall share equally all expenses of the Arbitrator incurred in any
arbitration hereunder; provided, however, that the Company or Executive, as the
case may be, shall bear all expenses of the Arbitrator and all of the legal
fees and out-of-pocket expenses of the other party if the Arbitrator determines
that the claim or position of such party was without reasonable foundation.
Executive hereby consents to personal jurisdiction of the state and federal
courts located in the State of Texas for any action or proceeding arising from
or relating to this Agreement or relating to any arbitration in which the
parties are participants.
4.18 SURVIVAL. The provisions of Sections 2, 3 and 4 hereof shall
survive termination of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
PEGASUS SYSTEMS, INC.
By: /s/ XXXX X. XXXXX, III
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Name: Xxxx X. Xxxxx, III
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Title: President
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/s/ XXXXXX X. XXXXXXXXX
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Name: Xxxxxx X. Xxxxxxxxx
Address:
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