1
EXHIBIT 10.11
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of the 1st day of June, 1997 by and between 800
Travel Systems, Inc., a Delaware corporation ("Company") with an office at 0000
Xxxx Xxxxxxx, Xxxxx, Xxxxxxx 00000 and Xxxx X. Xxxxxxxx ("Employee") an
individual residing at [address].
WHEREAS, Company desires to employ Employee in the capacity and under the
terms set forth below and Employee desires to be employed by Company in that
capacity and on those terms;
NOW, THEREFORE, it is agreed as follows:
1. Employment; Position; Duties.
(a) Company hereby employs Employee, and Employee hereby accepts employment
by Company, on the terms and conditions set forth in this Agreement. During the
Term of this Agreement (as defined below) Employee shall serve as the President
and Chief Operating Officer of the Company, subject to the direction of the
Board of Directors of the Company (the "Board"), and in connection therewith
shall perform his duties in accordance with the instructions and policies of the
Board. If elected, Employee agrees to serve as a member of the Board.
(b) The duties of Employee shall be those customarily associated with the
offices of President and Chief Operating Officer including the supervision and
direction of the Company's business operations and its senior management
personnel.
(c) During the Term, Employee shall devote his entire working time and
attention to the business and affairs of
2
the Company and shall use his best efforts to promote the business of the
Company. During the term of his employment hereunder, Employee shall have no
interest in or perform any material service for any other business entity
whether or not competitive with Company, except that the aforesaid prohibition
against ownership shall not apply to either inactive investments in public
companies whose stock is traded on a national securities exchange or actively
traded over the counter or passive investments in entities not competitive with
Company.
(d) Employee will report to the Board and will provide the Board with such
written reports relating to the Company's business as it may request.
2. Term. The term of Employee's employment (the "Term") shall be for a
period of approximately three years commencing on the Effective Date (as
hereinafter defined) and ending, notwithstanding the Effective Date, on June 30,
2000. The "Effective Date" means the date on which the currently contemplated
initial public offering of common stock of Company (the IPO) is consummated.
Anything contained herein to the contrary notwithstanding, Employee acknowledges
that this Agreement is being entered into in contemplation of the aforesaid IPO
and that, if such IPO does not become effective, for any reason whatsoever, this
Agreement shall be of no force or effect.
In the event that Employee continues in the full-time employ of Company
after the end of the Term, such continued employment shall be on a year-to-year
basis subject to the terms
-2-
3
and conditions hereof. As used in this Agreement, the "First Contract Year"
means the period commencing on the Effective Date and ending on June 30, 1998;
the "Second Contract Year" means the one-year period immediately following the
First Contract Year; and the "Third Contract Year" means the one-year period
immediately following the Second Contract Year. Each subsequent July 1st
occurring during the period in which Employee is employed by the Company shall
be deemed to commence a new contract year.
3. Compensation; Benefits.
(a) In consideration of the services to be rendered by Employee hereunder,
Company shall pay Employee the following compensation:
(i) in the First Contract Year a base salary at the rate of $89,000
per annum;
(ii) in the Second Contract Year the Employee shall be paid a base
salary equal to $89,000 plus an amount equal to $89,000 times (the
percentage increase in the Consumer Price Index from June 1, 1997 to June
1, 1998 plus 5%). Thus, if the percentage increase in the CPI was 5%,
commencing July 1, 1998, Employee's salary would be $97,900 ($89,000 +
($89,000 x .10));
(iii) in the Third Contract Year the Employee shall be paid a base
salary equal to his salary rate for the Second Contract Year plus an amount
equal to his salary rate for the Second Contract Year times the percentage
increase in the Consumer Price Index from June 1, 1998 to June 1, 1999 plus
5%.
-3-
4
(b) Company shall reimburse Employee promptly upon presentation of receipts
or other satisfactory documentation for all reasonable expenses incurred by him
in the furtherance of and in connection with his employment hereunder.
(c) Company shall provide Employee with such medical and disability
insurance as it makes available to its executives generally on substantially the
same terms and conditions as such insurance is made available to other
executives.
(d) In recognition of Employee's need for a car to perform services
required of him by the Company, the Company shall pay to Employee a car
allowance of $500 per month.
(e) Employee shall be entitled to two (2) weeks vacation in each calendar
year during the Term, such vacation to be taken at times not inconvenient to
Company.
(f) As additional consideration for such service as may be rendered
hereunder the Company has issued to Employee 100,000 shares of its Common Stock.
The Employee agrees not to sell or otherwise transfer 90,000 of such shares
prior to the second anniversary of the Effective Date without the prior written
consent of the Company. Upon request, the Employee shall enter into a "lock-up"
agreement with the underwriter of the IPO confirming his agreement not to
transfer 90,000 of his shares prior to the second anniversary of the Effective
Date without the consent of the underwriter. Employee shall be released from the
transfer restriction contained in this paragraph upon termination of this
Agreement.
-4-
5
(g) Pursuant to the terms of the Company's Stock Option Plan (the "Plan")
the Company shall grant to Employee options to purchase 25,000 shares of the
Company's Common Stock at a price of $5.00 per share. The right to exercise such
options shall vest in equal increments on June 1, 1998, and June 1, 1999. The
terms and conditions of such options to be fully set forth in a Stock Option
Agreement to be issued in accordance with the Plan.
(h) Prior to the second anniversary of the Effective Date the Company shall
register for sale under the Securities Act of 1933 the shares referenced in
subparagraph (f) and the shares underlying the options referenced in
subparagraph (g).
4. Termination.
(a) This Agreement may be terminated by Company for cause (as defined
below) immediately upon written notice thereof to Employee. Upon termination for
cause, Company shall not be obligated to make any further payment to Employee
under this Agreement, but the provisions of paragraph 6 shall survive any such
termination. For the purposes of this Agreement, the phrase "for cause" shall
mean Employee's (i) conviction of the willful violation of any law, rule or
regulation, other than minor violations (which, through lapse of time or
otherwise, is not subject to appeal); (ii) acts with respect to the property of
the Company which constitute larceny, fraud, theft, embezzlement or the
acceptance of a bribe or kick back; (iii) willful misconduct as an employee of
Company; (iv) willful misrepresentation of a material
-5-
6
matter to the Board; or (v) reckless disregard of his responsibilities under
this Agreement.
(b) If as a result of Employee's incapacity due to physical or mental
illness, he shall have been absent from his duties with Company on a continuous
basis for more than ninety days or for more than ninety working days during any
nine month period, Company may upon thirty days prior written notice, terminate
Employee's employment for "disability". Upon any such termination, except as
otherwise required by law, Employee's rights to receive salary or other
compensation or benefits hereunder shall terminate as of the date set forth in
such notice.
(c) This Agreement shall terminate automatically upon Employee's death.
(d) In the event that Employee remains employed by the Company for the full
Term of this Agreement but Company determines that it does not intend to offer
to employ Employee on substantially the same or better terms after the end of
the Term, the Company shall, not less than 45 days prior to the end of the Term,
provide written notice to Employee of such determination. Notwithstanding the
provisions of paragraph 1(c) of this Agreement, after receipt of such a notice,
for the duration of the Term, Employee shall be permitted to devote a reasonable
amount of his working time and attention to making arrangements for his
employment after the Term, however, nothing contained herein shall diminish
Employee's continuing obligation, during the balance of
-6-
7
the Term, to use his best efforts to promote the business of the Company.
5. No Conflicting Agreement. Employee represents and warrants that he is
not subject to any employment agreement, restrictive covenant, agreement or
contract which might limit the performance of his duties and responsibilities
hereunder. Employee further represents and warrants that he has made no
commitment of any kind whatsoever inconsistent with the provisions of this
Agreement and that he is under no disability of any kind which would prevent him
from entering into this Agreement and performing all of his obligations
hereunder.
6. Non-Competition; Confidentiality.
(a) Employee covenants and agrees with Company that he will not, directly
or indirectly:
(i) while he is in Company's employ and at any time after the termination
of his employment hereunder, disclose or use or otherwise exploit for his own
benefit or the benefit of any other person (other than for the benefit of
Company) any Confidential Information (as hereinafter defined) disclosed to
Employee or of which Employee becomes aware by reason of his employment with
Company;
(ii) while he is in Company's employ and through the period ending two
years after the termination of his employment hereunder, solicit or divert or
appropriate to any Competing Business (as hereinafter defined), directly or
indirectly, or attempt to solicit or divert or appropriate to any
-7-
8
such Competing Business, any person or entity who was a customer or client of
Company at any time during the last six months of Employee's employment
hereunder;
(iii) while he is in Company's employ and through the period ending two
years after the termination of his employment hereunder, employ or attempt to
employ or assist anyone else in employing any person who, at any time within the
period commencing six months prior to the date of the termination of Employee's
employment by Company and ending one year after the date of such termination,
was, is or shall be an employee of Company (whether or not such employment is
full time or is pursuant to a written contract with Company); and
(iv) while he is in Company's employ and through the period ending ninety
days after his employment hereunder, as an individual or as agent, employee,
partner, officer, director, owner or independent contractor of any person or
entity, engage in any Competing Business, directly or indirectly.
(b) Employee agrees that upon the termination of his employment (whether
voluntarily or involuntarily) he will not take with him or retain without the
Company's written authorization, and will promptly deliver to Company, originals
and all copies of all papers, files or other documents containing any
Confidential Information and all other property belonging to Company.
(c) For purposes of this Paragraph, the term "Competing Business" means any
business located within the United
-8-
9
States providing services substantially similar to those provided by the Company
from time to time. The term "Confidential Information" means any and all data
and information relating to the business of the Company (whether constituting a
trade secret or not) which is or has been disclosed to Employee or of which
Employee becomes aware as a consequence of or through his relationship with the
Company and which has value to the Company and is not generally known by its
competitors. Confidential Information shall not include any data or information
that has been voluntarily disclosed to the public by Company (except where such
public disclosure has been made by Employee without authorization) or that has
been independently developed and disclosed by others, or that otherwise enters
the public domain through lawful means.
If a court of competent jurisdiction determines that any of the provisions
related to the right of Employee to compete with Company upon termination of his
employment or to use information made know to him during the course of his
employment by Company are not enforceable because of their length or territorial
scope, Company and Employee agree that such court may limit the term or scope of
such provision to such extent as is necessary to render it enforceable and that
such provision, as so revised, shall be enforceable.
(d) Employee acknowledges that irreparable loss and injury would result to
Company upon the breach of any of the covenants contained in this paragraph 6
and that damages arising out of such breach would be difficult to ascertain.
Employee
-9-
10
agrees that, in addition to all other remedies available at law or at equity,
Company may petition and obtain from a court of law or equity both temporary and
permanent injunctive relief to prevent a breach by Employee of any covenant
contained in this Paragraph 6 and that in any action or proceeding brought to
enforce any provision of this Paragraph 6, the prevailing party shall be
entitled to recover from the non-prevailing party the former's reasonable costs
of enforcement, including legal fees.
7. Severance. In the event that any provision (or any portion of any
provision) of this Agreement shall be held to be void or unenforceable, the
remaining provisions of this Agreement (and the balance of any provisions held
void or unenforceable in part only) shall continue in full force and effect,
unless dependent upon an unenforceable or void provision.
8. Resignation. Upon the termination of his employment for any reason
Employee shall be deemed to resign as an officer and director of Company and its
affiliates, if then so acting.
9. Assignment; Successors. This Agreement may not be assigned by Employee,
but may be assigned by Company to any successor in interest to its business.
This Agreement shall inure to the benefit of and shall be binding upon Company,
its successors and assigns, and Employee, his heirs, legal representatives,
executors and assigns.
10. Complete Agreement; Governing Law. This Agreement contains the full and
complete understanding and agreement of the parties and supersedes all prior
agreements and understanding
-10-
11
between the parties with respect to the subject matter hereof. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New Jersey applicable to agreements made and wholly performed within said State,
and may not be modified, amended, terminated or discharged orally.
11. Waiver; Estoppel. No waiver by either party of any breach of any
provision of this Agreement shall be deemed a waiver of any preceding or
succeeding breach of such provision or of a other provision herein contained.
12. Notices. Any notices hereunder shall be in writing and delivered at the
addresses set forth above, or to such other address or addresses as may
hereafter be furnished in writing by one party to the other, by certified mail,
return receipt requested, or by telecopier. All such notices shall be deemed
effective upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
------------------------------
Xxxx X. Xxxxxxxx
800 TRAVEL SYSTEMS, INC.
By:___________________________
-11-
