EXHIBIT 10.21
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into as
of July 1, 1998, by and between XXXXXX XXXX, an individual ("EMPLOYEE"), and
Hospitality Marketing Consultants, Inc., a Delaware corporation ("EMPLOYER").
R E C I T A L S:
A. Employer desires to employ Employee and Employee desires to be
employed by Employer, upon the terms and conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and mutual agreements,
and upon the terms and subject to the conditions contained set forth below, the
parties agree as follows:
SECTION 1 TERM.
Employer agrees to employ Employee, and Employee agrees to serve Employer,
in accordance with the terms of this Agreement, for a term of three (3) years,
commencing on July 1, 1998 and ending on June 30, 2001, unless this Agreement
is earlier terminated in accordance with its provisions.
SECTION 2 SERVICES AND EXCLUSIVITY OF SERVICES.
So long as this Agreement shall continue in effect, Employee shall (i)
devote his full business time, energy and ability exclusively to the business,
affairs and interests of Employer and its subsidiaries and matters related
thereto, (ii) use Employee's best efforts and abilities to faithfully and
diligently promote the business, affairs and interests of Employer and its
subsidiaries, if any, and (iii) shall perform the services contemplated by this
Agreement in accordance with policies established by, and under the direction
of, the Board or Directors of the Employer (the "Board"). Employer and
Employee acknowledge that Employee will be required to perform services outside
of the United States.
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SECTION 3 SPECIFIC POSITION; DUTIES AND RESPONSIBILITIES.
Employer and Employee agree that, subject to the provisions of this
Agreement, Employer will employ Employee and Employee will serve Employer as a
senior officer for the duration of this Agreement. The specific position in
which Employee shall initially serve shall be Senior Vice President. Employee
agrees to observe and comply with the rules and regulations of Employer as
adopted by the Board respecting the performance of Employee's duties and agrees
to carry out and perform orders, directions and policies of Employer and its
Board as they may be, from time to time, stated either orally or in writing.
Employer agrees that the duties which may be assigned to Employee shall be
usual and customary duties of the office(s) or position(s) to which he may from
time to time be appointed or elected and shall not be inconsistent with the
provisions of the charter documents of Employer or applicable law. Employee
shall have such corporate power and authority as shall reasonably be required
to enable the discharge of duties in any office that may be held.
SECTION 4 COMPENSATION.
(a) BASE SALARY. During the term of this Agreement, Employer agrees
to pay Employee a base salary of Two Hundred Fifty Thousand Dollars
($250,000.00) per year, or such other amount as may be determined upon a review
of Employee's performance to be undertaken by the Board at least once annually
for such things a cost of living adjustments, changes in responsibilities and
duties, and Employer's success and performance ("BASE SALARY"). The Base
Salary shall be paid in installments on the same dates the other senior
officers of Employer are paid.
(b) BONUS. Employer agrees to negotiate with Employee an incentive
bonus based upon the performance targets mutually agreed to by the Board and
Employee from time to time but at least annually, in advance of the applicable
year (and as soon as practicable with respect to the year commencing January 1,
1998). In the event such targets are established and the bonus amounts are so
negotiated and agreed, such other terms and conditions shall be set forth in a
letter to be signed by Employer and Employee.
(c) ADDITIONAL BENEFITS. Employee shall also be entitled to all
rights and benefits under the Employer's 1998 Stock Option Plan, as amended,
and any other stock option,
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bonus, incentive, participation or extra compensation plan, pension plan,
profit-sharing plan, life, medical, dental, disability, or insurance plan or
policy or other plan or benefit that Employer or its subsidiaries may provide
for Employee (provided Employee is eligible to participate therein) or other
employees of Employer generally as from time to time in effect during the
term of this Agreement (the "PLANS"). The life, medical and dental plans
shall also cover all dependents of Employee at Employer's sole expense. In
any event, Employer shall provide Employee with (i) term life insurance equal
to five (5) times the Base Salary and (ii) long-term disability insurance
provided for Employer's executive employees generally. Employee shall also
be entitled to fringe benefits in accordance with the plans, practices,
programs and policies as in effect generally with respect to other peer
executives of Employer.
(d) PERQUISITES.
(i) VACATION. Employee shall be entitled to four (4) weeks
of paid vacation each twelve (12)-month period, which shall accrue on a monthly
basis. Vacation time will continue to accrue so long as Employee's total
accrued vacation does not exceed twelve (12) weeks. Should Employee's accrued
vacation time reach twelve (12) weeks, Employee will cease to accrue further
vacation until Employee's accrued vacation time falls below this level. Such
vacation shall be taken at such time or times as shall not unduly disrupt the
orderly conduct of the business of Employer and the duties of Employee.
(ii) VEHICLE ALLOWANCE. During the term of this Agreement,
Employer shall provide Employee an automobile reasonably acceptable to Employee
and Employer shall bear all expenses associated with the automobile including,
without limitation, lease or purchase payments, insurance, taxes and license
fees, gasoline and all maintenance expenses.
(iii) TAX PREPARATION AND ADVICE. During the term of this
Agreement, Employer shall provide Employee an annual allowance for personal tax
preparation and professional advice in the amount of Ten Thousand Dollars
($10,000) payable on April 15 of each year.
(iv) POSTING OUTSIDE OF UNITED STATES. Should Employee be
based at a location outside of the United States, Employer shall reimburse
Employee for all extraordinary expenses associated with maintaining a residence
outside of the United States including, without limitation: the provision of a
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housing allowance sufficient to provide housing to Employee reasonably equal
to the housing which Employee would maintain or has maintained in the United
States; the costs of education for every dependent under the age of eighteen
(18) years residing with Employee; all reasonable costs of moving furniture
and other personal belongings to and from the location outside of the United
States (including, without limitation, the costs of returning to the United
States at the end of the term or upon the earlier termination (with or
without cause) of this Agreement); the cost of two (2) roundtrip, first class
airplane tickets to the United States per year for Employee, Employee's
spouse and dependents under the age of eighteen (18) years; the excess, if
any, of the amount of taxes paid by the Employee to any local, provincial,
state, national or other governmental entity located outside of the United
States, over what the Employee would have paid had the Employee resided in
the United States; and a reasonable "hardship" allowance to be agreed upon by
Employer and Employee. The housing allowance shall include, without
limitation, the costs of renting or purchasing a residence (as agreed upon by
Employer and Employee), utilities, and local taxes, if any.
(v) TAX INDEMNIFICATION. Employer agrees to indemnify and
hold Employee harmless from and against any and all claims, liabilities,
actions, suits, proceedings, demands, assessments, judgments, costs and legal
and other expenses incurred as a result of any claim by any taxing authority
for unpaid federal, foreign, state, province, local or other taxes,
assessments, fees or other governmental charges, or any related penalties,
whether or not reported or disputed, resulting from the prior activities of
Employee with respect to and any predecessor entity of Employer (a "CLAIM" or
the "CLAIMS"). Employee shall promptly give notice to Employer upon receipt of
notice of any Claim and the Employer shall promptly pay or assume the defense
of such Claim as such course of action is reasonably deemed appropriate by the
Employer, using legal counsel reasonably satisfactory to Employee. Employer
shall not be responsible for any settlement of any Claim made without its prior
written consent which shall not be unreasonably withheld. The provisions of
this Section 4(d)(v) shall survive the end of the term or other termination of
this Agreement.
(e) OVERALL QUALIFICATION. Employer reserves the right to modify,
suspend or discontinue any and all practices, policies and programs at any time
(whether before or after termination of employment) without notice to or
recourse by Employee. However, Employer shall not amend the perquisites set
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forth in Section 4(d) to reduce Employee's benefits thereunder during the
term of this Agreement.
SECTION 5 TERMINATION.
The compensation and other benefits provided to Employee pursuant to this
Agreement, and the employment of Employee by Employer, shall be terminated
prior to expiration of the term of this Agreement only as provided in this
Section 5.
(a) DISABILITY. In the event that Employee shall fail, because of
illness, incapacity or injury which is determined to be a total disability
("DISABILITY") by a physician selected by Employer or its insurers and
acceptable to Employee or Employee's legal representative (such agreement as to
acceptability not to be withheld unreasonably), to render for three consecutive
months or for shorter periods aggregating ninety (90) or more business days in
any twelve (12)-month period, the services contemplated by this Agreement,
Employee's employment pursuant to this Agreement may be terminated by sixty
(60) days' prior written notice of termination from Employer to Employee.
Thereafter, Employer shall continue to (i) pay the Base Salary to Employee for
a period of twelve (12) months after the date of termination, subject to
adjustments referenced in the following paragraph, and (ii) to provide medical
insurance as in effect prior to such termination for a period of twelve (12)
months following the date of termination. Thereafter, no further salary shall
be paid or medical insurance be provided. Employee's rights under the Plans
subsequent to termination of employment pursuant to this paragraph shall be
determined under the applicable provisions of the respective Plans unless
otherwise expressly stated in this Agreement. This Agreement in all other
respects will terminate upon the termination of employment pursuant to this
paragraph.
The amount of compensation to be paid to Employee pursuant to
the preceding paragraph shall be adjusted in the event Employee becomes
entitled to and receives disability benefits under any disability payment plan,
including disability insurance, by reducing the amount of Employee's
compensation otherwise payable by Employer pursuant to the preceding paragraph
shall be reduced, on a dollar-for-dollar basis, but not to less than zero, by
the amount of any such disability benefits received by Employee, but only to
the extent such benefits are attributable to payments made by Employer.
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(b) DEATH. In the event of Employee's death during the term of this
Agreement, Employee's Base Salary shall immediately terminate and Employer
shall pay to the estate of Employee the Base Salary accrued to the date of
Employee's death to the extent not theretofore paid. If Employee's death
occurs while receiving payments under Section 5(a), such payments shall cease.
Employee's rights under the Plans subsequent to his death shall be determined
under the applicable provisions of the respective Plans, PROVIDED that,
notwithstanding any provisions to the contrary therein, Employer shall continue
to provide medical insurance to the dependents of Employee for a period of
twelve (12) months following the death of Employee. This Agreement in all
other respects will terminate upon the death of Employee.
(c) FOR CAUSE. Employee's employment hereunder shall be terminable
upon a determination by the Board, acting in good faith based upon actual
knowledge at such time, that Employee (i) is or has been engaging in a willful
or grossly negligent conduct which has resulted in a failure to perform his
duties hereunder or as an employee or officer of Employer, (ii) has committed
an act of dishonesty, gross carelessness, or other misconduct, or (iii) has
committed any act or series of acts which have a direct, substantial and
adverse effect on Employer, its business or reputation.
Notwithstanding the foregoing, Employee shall not be terminated
for cause pursuant to the first paragraph of this Section 5(c) unless and until
Employee has received notice of a proposed termination for cause and Employee
has had an opportunity to be heard by the Board. Employee shall be deemed to
have had such opportunity if given written or telephonic notice by any director
at least ninety-six (96) hours in advance of a meeting.
In the event of Employee's termination pursuant to this Section
5(c), Employee's rights to receive Base Salary shall immediately terminate and
Employer shall pay to Employee his Base Salary accrued to the date of such
termination to the extent not theretofore paid and the bonus which would
otherwise have become payable pursuant to the terms established under Section
4(b) subject to the following provisions. If Employee is terminated with
cause, Employee shall be entitled to receive a payment (the "PARTIAL BONUS
SEVERANCE") equal to a portion of the bonus which would otherwise have become
payable to Employee pursuant to the terms established under Section 4(b) (the
"TOTAL POTENTIAL BONUS") if he had not been terminated. The amount of
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such Partial Bonus Severance shall be equal to (X) the Total Potential Bonus
multiplied by (Y) a fraction, the numerator of which shall be the days
elapsed between the first day of the fiscal year and the date of Employee's
termination, and the denominator of which shall be 365. The Partial Bonus
Severance shall be calculated and paid only after the close of the fiscal
year in which Employee was terminated, and then only at the times and in the
proportions as bonuses are distributed generally by Employer. Employee's
rights under the Plans subsequent to termination shall be determined under
the applicable provisions of the respective Plans. Except as expressly set
forth to the contrary, this Agreement in all other respects will terminate
upon such termination.
(d) WITHOUT CAUSE. Notwithstanding any other provision of this
Section 5, the Board shall have the right to terminate Employee's employment
with Employer without cause at any time upon at least thirty (30) days' prior
written notice to Employee. In addition, it shall be deemed for all purposes
to be a Without Cause Termination ("WITHOUT CAUSE TERMINATION") if Employee
terminates his employment by reason of (i) any action by Employer which results
in a material diminution in Employee's then position (including status, titles
and reporting requirements), authority, duties or responsibilities, but
excluding, for this purpose, an isolated, insubstantial and inadvertent action
not taken in bad faith and which is remedied by Employer promptly after receipt
of written notice from Employee, (ii) any repeated failure of Employer to
comply with any of the provisions of this Agreement and which is not remedied
by Employer in a reasonable period of time after receipt of written notice from
Employee, (iii) a reduction in the Employee's level of compensation (including
Base Salary, fringe benefits and any non-discretionary and objective standard
incentive payment, but not including the bonus referred to in Section 4(b)
unless the performance targets referred to have been met and such bonus is not
paid by the Employer), (iv) Employer requiring Employee to be based at any
office or location more than thirty-five (35) miles from the Employee's current
place of employment, or (v) a "change in control" shall occur. A "change in
control" shall be deemed to occur upon the occurrence of any of the following
events: (i) the acquisition by any person or entity of more than twenty-five
percent (25%) of the combined voting power of the Employer's outstanding
securities; or (ii) Employer stockholder approval of any consolidation or
merger of the Employer with another corporation if, following the consolidation
or merger, stockholders of the
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Employer immediately prior to such consolidation or merger would not
beneficially own securities representing at least sixty percent (60%) of the
combined voting power of the outstanding voting securities of the surviving
or continuing corporation; or (iii) during any period of twenty-four (24)
consecutive months individuals who at the beginning of such period constitute
the Board and qualified replacements cease for any reason to constitute a
majority of the board. A director shall be a "qualified replacement" if the
election or nomination for election by the Employer's stockholders of the
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period; or (iv)
stockholder approval of any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all
of the assets of the Employer other than to an entity (or entities) of which
the Employer or the stockholders of the Employer immediately prior to such
transactions beneficially own securities representing at least sixty percent
(60%) of the combined voting power of the outstanding voting securities. The
following conditions shall thereupon become applicable upon the occurrence of
a Without Cause Termination:
(i) SEVERANCE PAY. Employer shall continue to pay Employee
the Base Salary on a monthly basis for (X) the remainder of the term of this
Agreement as it may be extended from time to time in the event such termination
occurs before the second anniversary of this Agreement or (Y) a period of
twelve (12) months in the event such termination occurs after the second
anniversary of this Agreement.
(ii) MEDICAL INSURANCE CONTINUATION. Employer shall continue
to provide medical insurance as in effect prior to such termination for (X) the
remainder of the term of this Agreement as it may be extended from time to time
in the event such termination occurs before the second anniversary of this
Agreement or (Y) twelve (12) months in the event such termination occurs after
the second anniversary of this Agreement, PROVIDED that Employee's right to
such benefits shall cease immediately upon the commencement of employment with
a new employer.
(iii) BONUS PAYMENT. If a Without Cause Termination occurs,
Employee shall be entitled to receive a payment in lieu of the bonus which
would otherwise have become payable to Employee pursuant to the terms
established under Section 4(b) for the year when the termination occurs and for
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each subsequent year for which Employee is entitled to receive Severance Pay
pursuant to Section 5(d)(i) above which such payment shall be equal to: for
the year of termination without cause, the Total Potential Bonus; and for each
subsequent year, an amount equal to the highest amount paid to Employee
pursuant to Section 4(b) in any prior year (including the year of the Without
Cause Termination).
(iv) OTHER PLANS. Except as set forth above, Employee's
rights under the other Plans subsequent to termination shall be determined
under the provisions of the other Plans. The foregoing to the contrary
notwithstanding, Employee shall upon any such termination be deemed to be one
hundred percent (100%) vested in any options, warrants, stock appreciation
rights, or the like, previously granted to Employee pursuant to any Plan or
otherwise.
(e) VOLUNTARY TERMINATION. At any time during the term of this
Agreement, Employee shall have the right, upon thirty (30) days' prior written
notice to Employer, to terminate his employment with Employer. Upon
termination of Employee's employment pursuant to this Section 5(e), (i)
Employee's right to receive Base Salary shall immediately terminate and
Employer shall pay to Employee his Base Salary accrued to the date of such
termination to the extent not theretofore paid, and (ii) Employee's rights
under the Plans subsequent to such termination shall be determined under the
applicable provisions of the respective Plans. This Agreement in all other
respects will terminate upon such termination.
(f) NO LIMITATION. Employer's exercise of its right to terminate
shall be without prejudice to any other right or remedy to which it or any of
its affiliates may be entitled a law, in equity or under this Agreement.
(g) EXCLUSIVE REMEDY. Employee agrees that the payments expressly
required by this Agreement shall constitute the sole and exclusive obligation
of Employer in respect of Employee's employment with and relationship to
Employer and that the payment thereof shall be the sole and exclusive remedy
for any termination of Employee's employment. Employee covenants not to assert
or pursue any other remedies, at law or in equity, with respect to any
termination of employment.
(h) TAX TREATMENT. The parties intend that the compensation to be
provided pursuant to this Agreement not exceed the limit imposed by Section
280(g) of the Internal
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Revenue Code as it may be amended from time to time. The parties agree to
limit the compensation payable pursuant to this Agreement as necessary from
time to time in order to avoid exceeding such limit.
SECTION 6 BUSINESS EXPENSES.
During the term of this Agreement, to the extent that such expenditures
satisfy the criteria under the Internal Revenue Code for deductibility by
Employer (whether or not fully deductible by Employer) for federal income tax
purposes as ordinary and necessary business expenses. Employer shall reimburse
Employee promptly for reasonable business expenditures, including travel
entertainment, parking, business meetings, and professional dues but not the
costs of (or dues associated with) maintaining club membership, made and
substantiated in accordance with policies, practices and procedures established
from time to time by the Board and incurred in pursuit and furtherance of
Employer's business and good will.
SECTION 7 MISCELLANEOUS.
(a) SUCCESSION; SURVIVAL. This Agreement shall inure to the benefit
of and shall be binding upon Employer, its successors and assigns, but without
the prior written consent of Employee this Agreement may not be assigned other
than in connection with a merger or sale of substantially all the assets of
Employer or a similar transaction in which the successor or assignee assumes
(whether by operation of law or express assumption) all obligations of Employer
hereunder. The obligations and duties of Employee hereunder are personal and
otherwise not assignable. Employee's obligations and representations under
this Agreement will survive the termination of Employee's employment,
regardless of the manner of such termination.
(b) NOTICES. Any notice or other communication provided for in this
Agreement shall be in writing and sent, if to Employer, to its office at:
Hospitality Marketing Consultants, Inc.
00000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
(000)000-0000 (facsimile)
Attention: Chief Financial Officer
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with a copy to: Xxxxxxxxx Xxxxxxx Fields
Claman & Machtinger LLP
1900 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000)000-0000 (facsimile)
Attention: Xxxxxxx Xxxxx, Esq.
or at such other address as Employer may from time to time in writing
designate, and if to Employee at the address set forth below his signature to
this agreement or such other address as Employee may from time to time in
writing designate (or Employee's business address of record in the absence of
such designation). Each such notice or other communication shall be effective
(i) if given by telecommunication, when transmitted to the applicable number so
specified in (or pursuant to) this Section 7 and an appropriate answer back is
received, (ii) if given by mail, three (3) days after such communication is
deposited in the mails with first class postage prepaid, addressed as aforesaid
unless such address is outside the continental United States, in which case it
shall be deemed effective when actually delivered at such address or (iii) if
given by any other means, when actually delivered at such address.
(c) ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement of the parties relating to the subject matter of this
Agreement and it supersedes any prior agreements, undertakings, commitments and
practices relating to Employee's employment by Employer. No amendment or
modification of the terms of this Agreement shall be valid unless made in
writing and signed by Employee and, on behalf of Employer, by an officer
expressly so authorized by the Board.
(d) WAIVER. No failure on the part of any party to exercise or
delay in exercising any right hereunder shall be deemed a waiver thereof or of
any other right, nor shall any single or partial exercise preclude any further
or other exercise of such right or any other right.
(e) CHOICE OF LAW. This Agreement, the legal relations between the
parties and any action, whether contractual or non-contractual, instituted by
any party with respect to matters arising under or growing out of or in
connection with or in respect of this Agreement, the relationship of the
parties or the subject matter of this
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Agreement shall be governed by and construed in accordance with the laws of
the State of California, applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines, to the extent
permitted by law.
(f) ARBITRATION. Any dispute, controversy or claim arising out of
or in respect of this Agreement (or its validity, interpretation or
enforcement), the employment relationship or the subject matter of this
Agreement shall at the request of either party be submitted to and settled by
arbitration conducted in Santa Ana, California in accordance with the Labor
and Employment Arbitration Rules of the American Arbitration Association.
The arbitration shall be governed by the Federal Arbitration Act (9 U.S.C.
Sections 1-16). The arbitration of such issues, include the determination of
any amount of damages suffered, shall be final and binding upon the parties
to the maximum extent permitted by law. The arbitrator in such action shall
not be authorized to change or modify any provision of this Agreement.
Judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction. The arbitrator shall award reasonable expenses
(including reimbursement of the assigned arbitration costs and legal fees) to
the prevailing party upon application.
(g) CONFIDENTIALITY; PROPRIETARY INFORMATION. Employee agrees to
not make use of, divulge or otherwise disclose, directly or indirectly, any
trade secret or other confidential or proprietary information concerning the
business (including but not limited to its products, employees, services,
practices or policies) of Employer or any of its affiliates of which Employee
may learn or be aware as a result of Employee's employment during the term of
this Agreement or prior thereto as stockholder, employee, officer or director
of or consultant to Employer, except to the extent such use or disclosure is
(i) necessary to the performance of this Agreement and in furtherance of
Employer's best interests, (ii) required by applicable law, (iii) lawfully
obtainable from other public sources, or (iv) authorized in writing by
Employer. The provisions of this Section 7(g) shall survive the expiration,
suspension or termination, for any reason, of this Agreement.
(h) SEVERABILITY. If this Agreement shall for any reason be or
become unenforceable in any material respect by any party, this Agreement shall
thereupon terminate and become unenforceable by the other party as well. In
all other respects, if any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall
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nevertheless remain in full force and effect, and if any provision is held
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances, to
the fullest extent permitted by law.
(i) WITHHOLDING; DEDUCTIONS. All compensation payable hereunder,
including salary and other benefits, shall be subject to applicable taxes,
withholding and other required, normal or elected employee deductions.
(j) SECTION HEADINGS. Section and other headings contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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(k) COUNTERPARTS. This Agreement and any amendment hereto may be
executed in one or more counterparts. All of such counterparts shall
constitute one and the same agreement and shall become effective when a copy
signed by each party has been delivered to the other party.
Entered into as of the date set forth above.
"EMPLOYER"
HOSPITALITY MARKETING CONSULTANTS,
INC.
By:_______________________________
Its: _____________________________
"EMPLOYEE"
XXXXXX XXXX
__________________________________
Address:
00 Xxxxxxxx Xxxx
#00-00 Xxxxxxxx Xxxxxx
Xxxxxxxxx 000000
Facsimile (00) 000-0000
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