EXHIBIT 10.14
PREVIEW TRAVEL, INC.
SEVERANCE AGREEMENT
This Severance Agreement (the "Agreement"), dated March __, 1997, is made
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and entered into by and between Xxxxxxx Xxxxx (the "Employee") and Preview
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Travel, Inc., a California corporation (the "Company").
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RECITALS
A. The Board has determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have the continued
dedication and objectivity of the Employee.
B. The Board believes that it is in the best interests of the Company and
its shareholders to provide the Employee with an incentive to continue his or
her employment and to motivate the Employee to maximize the value of the Company
for the benefit of its shareholders.
C. Certain capitalized terms used in the Agreement are defined in Section
5 below.
The parties hereto agree as follows:
1. TERM OF AGREEMENT. This Agreement shall terminate upon the date that
all obligations of the parties hereto with respect to this Agreement have been
satisfied.
2. AT-WILL EMPLOYMENT. The Company and the Employee acknowledge that the
Employee's employment is and shall continue to be at-will, as defined under
applicable law. If the Employee's employment terminates for any reason,
including (without limitation) any termination prior to the Measurement Date (as
defined below in Section 3(a)), the Employee shall not be entitled to any
payments, benefits, damages, awards or compensation other than as provided by
this Agreement, or as may otherwise be available in accordance with the
Company's established employee plans and practices or pursuant to other
agreements with the Company.
3. CONSULTING ARRANGEMENT.
(a) TERMINATION PRIOR TO MEASUREMENT DATE. If the Employee's
employment terminates as a result of Involuntary Termination other than for
Cause at any time prior to February 26, 1998 (the "Measurement Date"), then the
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Employee and the Company shall enter into a consulting arrangement on the
following terms:
(1) CONSULTING ENGAGEMENT.
(a) Effective as of the Termination Date, the Company agrees to
retain the Employee as a consultant to perform such services (the "Consulting
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Services") for the Company as may be reasonably requested from time to time by
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an officer of the Company (the "Consulting Arrangement"). The term of this
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Consulting Arrangement shall commence on the Termination
Date and expire on the earlier of (i) the date the Employee commences work as a
consultant or employment as a salaried employee of another person, company or
entity which is actually or potentially in competition with any business
conducted by the Company, as determined by the Company in its sole discretion,
or (ii) 12 months following the Termination Date. As consideration for the
Employee's services under the Consulting Arrangement, the Company shall pay in
cash to Employee an amount equal to 1/12th of the Employee's Annual Compensation
on the last day of each full month following the Termination Date during which
the Consulting Arrangement is in effect. The Employee's stock options and/or
restricted stock shall continue to vest during the term of the Consulting
Arrangement to the extent provided in the applicable stock option or restricted
stock purchase agreement. Notwithstanding the foregoing, the Consulting
Arrangement may be terminated earlier by either party upon five days written
notice of termination if the other party fails to cure any material breach of
its obligations hereunder within 10 days after receipt of notice specifying such
breach.
(b) Upon the date of this Agreement, the Company shall amend each of
the option agreements pursuant to which Employee was granted options to purchase
the Company's Common Stock to provide that the exercise prices of such options
may be payable through the delivery by Employee of a promissory note in
substantially the form attached hereto as Exhibit A.
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(2) CONTINUED INSURANCE COVERAGE. Subject to the provisions of this
Section 3(a)(2), the Employee shall be entitled to one hundred percent (100%)
Company-paid health, disability, dental and life insurance coverage at the same
level of coverage as was provided to such Employee immediately prior to the
Termination Date (the "Company-Paid Coverage"). If such coverage includes the
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Employee's dependents immediately prior to the Termination Date, such dependents
shall also be covered at Company expense. Company-Paid Coverage shall continue
until the earlier of (i) termination of the Consulting Arrangement or (ii) the
date that the Employee and his or her dependents become covered under another
employer's group health, dental or life insurance plans that provide Employee
and his or her dependents with comparable benefits and levels of coverage. For
purposes of Title X of the Consolidated Budget Reconciliation Act of 1985
("Cobra"), the date of the "qualifying event" for Employee and his or her
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dependents shall be the date upon which the Company-Paid Coverage terminates.
(b) VOLUNTARY RESIGNATION; TERMINATION FOR CAUSE. If the Employee's
employment terminates by reason of the Employee's voluntary resignation (and is
not an Involuntary Termination), or if the Employee is terminated for Cause,
then the Employee shall not be entitled to receive payments for consulting
services or other benefits under Section 3(a) except for those (if any) as may
then be established under the Company's then existing severance and benefits
plans and practices or pursuant to other agreements with the Company.
(c) DISABILITY; DEATH. If the Company terminates the Employee's
employment as a result of the Employee's Disability, or such Employee's
employment is terminated due to the death of the Employee, then the Employee
shall not be entitled to receive payments for consulting services or other
benefits under Section 3(a) except for those (if any) as
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may then be established under the Company's then existing severance and benefits
plans and practices or pursuant to other agreements with the Company.
(d) TERMINATION AFTER MEASUREMENT DATE. In the event the Employee's
employment is terminated for any reason after the Measurement Date, then the
Employee shall not be entitled to receive payments for consulting services or
other benefits under Section 3(a) except for those (if any) as may then be
established under the Company's existing severance and benefits plans and
practices or pursuant to other agreements with the Company.
4. ATTORNEY FEES, COSTS AND EXPENSES. The Company shall promptly
reimburse Employee, on a monthly basis, for the reasonable attorney fees, costs
and expenses incurred by the Employee in connection with any action brought by
Employee to enforce his or her rights hereunder. In the event Employee is not
the prevailing party, determined without regard to whether or not the action
results in a final judgment, Employee shall repay such reimbursements.
5. LIMITATION ON PAYMENTS. In the event that the payments and other
benefits provided for in this Agreement or otherwise payable to the Employee (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
Section 5, would be subject to the excise tax imposed by Section 4999 of the
Code (or any corresponding provisions of state income tax law), then the
Employee's benefits under Section 3(a) shall be either
(a) delivered in full, or
(b) delivered as to such lesser extent which would result in no
portion of such benefits being subject to excise tax under Section 4999 of the
Code,
whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section
4999, results in the receipt by the Employee on an after-tax-basis, of the
greater amount of benefits, notwithstanding that all or some portion of such
benefits may be taxable under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required under this
Section 5 shall be made in writing by the Company's independent public
accountants (the "Accountants"), whose determination shall be conclusive and
binding upon the Employee and the Company for all purposes. For purposes of
making the calculations required by this Section 5, the Accountants may make
reasonable assumptions and approximations concerning applicable taxes and may
rely on reasonable, good faith interpretations concerning the application of
Sections 280G and 4999 of the Code. The Company and the Employee shall furnish
to the Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section. The
Company shall bear all costs the Accountants may reasonably incur in connection
with any calculations contemplated by this Section 5. In the event that
subsection (a) above applies, then Employee shall be responsible for any excise
taxes imposed with respect to such benefits. In the event that subsection (b)
above applies, then each benefit provided hereunder shall be proportionately
reduced to the extent necessary to avoid imposition of such excise taxes.
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6. DEFINITION OF TERMS. The following terms used in this Agreement shall
have the following meanings:
(a) ANNUAL COMPENSATION. If the Employee's employment terminates as a
result of Involuntary Termination other than for Cause at any time prior to the
Measurement Date, "Annual Compensation" shall mean an amount equal to
$16,833.33.
(b) CAUSE. "Cause" shall mean (i) any act of personal dishonesty
taken by the Employee in connection with his or her responsibilities as an
employee and intended to result in substantial personal enrichment of the
Employee, (ii) Employee's committing and being convicted of a felony, (iii) a
willful act by the Employee which constitutes gross misconduct and which is
injurious to the Company or an act of fraud by Employee against the Company, or
(iv) following delivery to the Employee of a written demand for performance from
the Company which describes the basis for the Company's belief that the Employee
has not substantially performed his or her duties, continued violations by the
Employee of the Employee's obligations to the Company which are demonstrably
willful and deliberate on the Employee's part.
(c) DISABILITY. "Disability" shall mean that the Employee has been
unable to perform his or her Company duties as the result of his or her
incapacity due to physical or mental illness, and such inability, at least 26
weeks after its commencement, is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such Agreement as to acceptability not
to be unreasonably withheld). Termination resulting from Disability may only be
effected after at least 30 days' written notice by the Company of its intention
to terminate the Employee's employment. In the event that the Employee resumes
the performance of substantially all of his or her duties hereunder before the
termination of his or her employment becomes effective, the notice of intent to
terminate shall automatically be deemed to have been revoked.
(d) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean (i)
without the Employee's express written consent, the significant reduction of the
Employee's duties, authority or responsibilities, relative to the Employee's
duties, authority or responsibilities as in effect immediately prior to such
reduction, or the assignment to Employee of such reduced duties, authority or
responsibilities; (ii) without the Employee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
prerequisites (including office space and location) available to the Employee
immediately prior to such reduction; (iii) a reduction by the Company in the
[base salary] of the Employee as in effect immediately prior to such reduction;
(iv) a material reduction by the Company in the kind or level of employee
benefits, including bonuses, to which the Employee was entitled immediately
prior to such reduction with the result that the Employee's overall benefits
package is significantly reduced; (v) the relocation of the Employee to a
facility or a location more than thirty (30) miles from the Employee's then
present location, without the Employee's express written consent; (vi) any
purported termination of the Employee by the Company which is not effected for
Disability or for Cause, or any purported termination for which the grounds
relied upon are not valid; (vii) the failure of the Company to obtain the
assumption of this Agreement by any successors contemplated in Section 7(a)
below; or (viii) any act or set of facts or
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circumstances which would, under California case law or statute, constitute a
constructive termination of the Employee.
(e) TERMINATION DATE. "Termination Date" shall mean (i) if this
Agreement is terminated by the Company for Disability, thirty (30) days after
notice of termination is given to the Employee (provided that the Employee shall
not have returned to the performance of the Employee's duties on a full-time
basis during such thirty (30)-day period), (ii) if the Employee's employment is
terminated by the Company for any other reason, the date on which a notice of
termination is given, provided that if within thirty (30) days after the Company
gives the Employee notice of termination, the Employee notifies the Company that
a dispute exists concerning the termination or the benefits due pursuant to this
Agreement, then the Termination Date shall be the date on which such dispute is
finally determined, either by mutual written agreement of the parties, or by a
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected), or
(iii) if the Agreement is terminated by the Employee, the date on which the
Employee delivers the notice of termination to the Company.
7. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this Section
7(a) or which becomes bound by the terms of this Agreement by operation of law.
(b) EMPLOYEE'S SUCCESSORS. The terms of this Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
8. NOTICE.
(a) GENERAL. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or five (5) days after being mailed by U.S. registered
or certified mail, return receipt requested and postage prepaid. In the case of
the Employee, mailed notices shall be addressed to him or her at the home
address which he or she most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed to its corporate
headquarters, and all notices shall be directed to the attention of its
Secretary.
(b) NOTICE OF TERMINATION. Any termination by the Company for Cause
or by the Employee as a result of a voluntary resignation and any Involuntary
Termination shall be
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communicated by a notice of termination to the other party hereto given in
accordance with Section 8(a) of this Agreement. Such notice shall indicate the
specific termination provision in this Agreement relied upon, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and shall specify the termination
date (which shall be not more than 30 days after the giving of such notice). The
failure by the Employee to include in the notice any fact or circumstance which
contributes to a showing of Involuntary Termination shall not waive any right of
the Employee hereunder or preclude the Employee from asserting such fact or
circumstance in enforcing his or her rights hereunder.
9. MISCELLANEOUS PROVISIONS.
(a) NO DUTY TO MITIGATE. The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement, nor shall any
such payment be reduced by any earnings that the Employee may receive from any
other source, subject to the termination provisions of Section 3(a)(1).
(b) WAIVER. No provision of this Agreement shall be modified, waived
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by the Employee and by an authorized officer of the Company
(other than the Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement by the other party
shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.
(c) WHOLE AGREEMENT. This Agreement represents the entire agreement
between the Employee and the Company with respect to the matters set forth
herein. No agreements, representations or understandings (whether oral or
written and whether express or implied) which are not expressly set forth in
this Agreement have been made or entered into by either party with respect to
the subject matter hereof.
(d) CHOICE OF LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California as applied to agreements entered into and performed within California
solely by residents of that state.
(e) SEVERABILITY. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision hereof, which shall remain in full force and effect.
(f) WITHHOLDING. All payments made pursuant to this Agreement will be
subject to withholding of applicable income and employment taxes.
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(g) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the date set forth
above.
COMPANY: PREVIEW TRAVEL, INC.
By: /s/X. Xxxxxxxx
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Title:
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EMPLOYEE: /s/Xxx Xxxxx
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Xxxxxxx Xxxxx
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EXHIBIT A
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PROMISSORY NOTE
$ ______________ San Francisco, California
_______________, 199__
For value received, the undersigned promises to pay Preview Travel, Inc., a
California corporation (the "Company"), at its principal office the principal
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sum of $_________________ with interest from the date hereof at a rate of ___%
per annum, the lowest applicable federal rate necessary to avoid the imputation
of increase under the Internal Revenue Code of 1986, compounded semi-annually,
on the unpaid balance of such principal sum. Such principal and interest shall
be due and payable on _______________, 200__.
Principal and interest are payable in lawful money of the United States of
America. AMOUNTS DUE UNDER THIS NOTE MAY BE PREPAID AT ANY TIME WITHOUT
INTEREST OR PENALTY.
Should suit be commenced to collect any sums due under this Note, such sum
as the Court may deem reasonable shall be added hereto as attorneys' fees. The
makers and endorsers have severally waived presentment for payment, protest,
notice of protest, and notice of non-payment of this Note.
This Note, which is full recourse, is secured by a pledge of ___________
shares of Common Stock of the Company.
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Signature
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Name
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