EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement"), by and
between Travel Services International, Inc., a Delaware corporation ("TSI"), and
Xxxxxx Xxxxxxxx ("Employee"), is hereby entered into as of this 14th day of
October, 1997. This Agreement amends and restates the Employment Agreement
between the parties hereto dated as of July 22, 1997, and was effective as of
the date (the "Effective Date") of the consummation of the initial public
offering of the common stock of TSI (the "IPO").
R E C I T A L S
A. As of the date of this Agreement, TSI is engaged primarily in the business of
providing travel services.
B. Employee is employed hereunder by TSI in a confidential relationship wherein
Employee, in the course of Employee's employment with TSI, has and will continue
to become familiar with and aware of information as to TSI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by TSI, and future plans with respect thereto, all of which has been
and will be established and maintained at great expense to TSI; this information
is a trade secret and constitutes the valuable goodwill of TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and conditions
set forth herein and the performance of each, the parties hereto hereby agree as
follows:
1. EMPLOYMENT AND DUTIES.
(a) TSI hereby employs Employee as Chairman and Chief Executive Officer of
TSI. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a Chairman and Chief Executive Officer of
TSI and will report directly to the Board of Directors of TSI (the "Board").
Employee hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote Employee's
full business time, attention and efforts to promote and further the business of
TSI.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Board.
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 4 hereof.
2. COMPENSATION.
For all services rendered by Employee, TSI shall compensate Employee as
follows:
(a) Base Salary. The base salary payable to Employee shall be $200,000 per
year, payable on a regular basis in accordance with TSI's standard payroll
procedures but not less than monthly. On at least an annual basis, the Board
will review Employee's performance and may make increases to such base salary
if, in its discretion, any such increase is warranted. Such recommended increase
would, in all likelihood, require approval by the Board or a duly constituted
committee thereof. In no event shall Employee's base salary be reduced.
(b) Incentive Bonus Plan. For 1997 and subsequent years, TSI shall develop,
as soon as practicable after the Effective Date, a written Incentive Bonus Plan
setting forth the criteria and performance standards under which Employee and
other officers and key employees will be eligible to receive year-end bonus
awards. TSI contemplates that the maximum bonus for which Employee may be
eligible will be 100% of Employee's base salary.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee shall
be entitled to receive additional benefits and compensation from TSI in such
form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and Employee's
dependent family members under health, hospitalization, disability, dental,
life and other insurance plans that TSI may have in effect from time to
time.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with TSI's expense reporting policy.
(iii) TSI shall provide Employee with other executive perquisites as
may be available to or deemed appropriate for Employee by the Board and
participation in all other TSI-wide employee benefits as available from
time to time.
3. OPTIONS.
At the Effective Date, TSI shall grant to Employee options to acquire
100,000 shares of TSI common stock at the price per share at which such stock is
offered to the public in the IPO. Such options shall vest in installments of
25,000 shares on each of the first, second, third and fourth anniversaries of
the Effective Date.
4. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with TSI,
and for a period of two (2) years immediately following the termination of
Employee's employment under this Agreement, for any reason whatsoever, directly
or indirectly, for himself or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
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(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor or as a sales representative,
in any travel service business in direct competition with TSI or any
subsidiary of TSI, within the United States or within 100 miles of any
other geographic area in which TSI or any of TSI's subsidiaries conducts
business, including any territory serviced by TSI or any of its
subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of TSI (including the subsidiaries thereof) in a managerial
capacity for the purpose or with the intent of enticing such employee away
from or out of the employ of TSI (including the subsidiaries thereof);
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of TSI
(including the respective subsidiaries thereof) within the Territory for
the purpose of soliciting or selling products or services in direct
competition with TSI or any subsidiary of TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by TSI
(including the respective subsidiaries thereof) or for which TSI made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than two percent (2%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to TSI as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to TSI for which it would have no other
adequate remedy, Employee agrees that the foregoing covenant may be enforced by
TSI in the event of breach by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 4 impose a reasonable restraint on Employee in light of the activities
and business of TSI (including TSI's subsidiaries) on the date of the execution
of this Agreement and the current plans of TSI (including TSI's subsidiaries);
but it is also the intent of TSI and Employee that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of TSI (including TSI's subsidiaries) throughout the term of this Agreement,
whether before or after the date of termination of the employment of Employee.
For example, if, during the term of this Agreement, TSI (including TSI's
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with TSI (including TSI's subsidiaries), or
similar activities, or business in locations the operation of which, under
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such circumstances, does not violate clause (i) of this paragraph 4, and in any
event such new business, activities or location are not in violation of this
paragraph 4 or of employee's obligations under this paragraph 4, if any,
Employee shall not be chargeable with a violation of this paragraph 4 if TSI
(including TSI's subsidiaries) shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location, as
applicable.
(d) The covenants in this paragraph 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 4 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against TSI, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by TSI of such covenants. It is specifically agreed that the period
of two (2) years following termination of employment stated at the beginning of
this paragraph 4, during which the agreements and covenants of Employee made in
this paragraph 4 shall be effective, shall be computed by excluding from such
computation any time during which Employee is in violation of any provision of
this paragraph 4.
5. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board to relocate
from Employee's present residence to another geographic location in order to
more efficiently carry out Employee's duties and responsibilities under this
Agreement. In such event, TSI will pay all actual reasonable relocation costs to
move Employee, Employee's immediate family and their personal property and
effects. Such costs may include, but are not limited to, moving expenses,
temporary lodging expenses prior to moving into a new permanent residence; all
closing costs on the purchase of a residence (comparable to Employee's present
residence) in the new location. The general intent of the foregoing is that
Employee shall not personally bear any out-of-pocket cost as a result of the
relocation, with an understanding that Employee will use Employee's best efforts
to incur only those costs which are reasonable and necessary to effect a smooth,
efficient and orderly relocation with minimal disruption to the business affairs
of TSI and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 6(c).
6. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue for
three (3) years, and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein in effect as of the time of renewal. As used herein, the word
"Term" shall mean (i) during the three-year period referred to in the preceding
sentence, such three-year period, and (ii) during any one-year renewal pursuant
to the terms hereof, such one-year period. This Agreement and Employee's
employment may be terminated in any one of the following ways:
(a) Death. The death of Employee shall immediately terminate this Agreement
with no severance compensation due to Employee's estate.
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(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, as reasonably determined by Employee's physician, Employee
shall have been absent from Employee's full-time duties hereunder for four (4)
consecutive months, then thirty (30) days after receiving written notice (which
notice may occur before or after the end of such four (4) month period, but
which shall not be effective earlier than the last day of such four (4) month
period), TSI may terminate Employee's employment hereunder provided Employee is
unable to resume Employee's full-time duties at the conclusion of such notice
period. Also, Employee may terminate Employee's employment hereunder if his or
her health should become impaired to an extent that makes the continued
performance of Employee's duties hereunder hazardous to Employee's physical or
mental health or life, provided that Employee shall have furnished TSI with a
written statement from a qualified doctor to such effect and provided, further,
that, at TSI's request made within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a doctor selected by TSI
who is reasonably acceptable to Employee or Employee's doctor and such doctor
shall have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated by either party as a result of Employee's disability,
Employee shall receive from TSI, in a lump-sum payment due within ten (10) days
of the effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the Term of this Agreement or for
one (1) year, whichever amount is greater.
(c) Good Cause. TSI may terminate the Agreement ten (10) days after
delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or affairs
of TSI which materially and adversely affects the operations or reputation of
TSI; (4) Employee's conviction of a felony crime; or (5) chronic alcohol abuse
or illegal drug abuse by Employee. In the event of a termination for good cause,
as enumerated above, Employee shall have no right to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to TSI. Employee may
only be terminated without cause by TSI during the Term hereof if such
termination is approved by at least two-thirds of the members of the Board.
Should Employee's employment be terminated by TSI without cause during the Term,
Employee shall receive from TSI, in a lump-sum payment due on the effective date
of termination, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater, plus any accrued salary and declared but unpaid
bonus and reimbursement of expenses. Should Employee's employment be terminated
by TSI without cause at any time after the Term, Employee shall receive from
TSI, in a lump-sum payment due on the effective date of termination, the base
salary rate then in effect equivalent to one (1) year of salary, plus any
accrued salary and declared but unpaid bonus and reimbursement of expenses.
Further, any termination without cause by TSI shall operate to shorten the
period set forth in paragraph 4(a) and during which the terms of paragraph 4
apply to one (1) year from the date of termination of employment. If Employee
resigns or otherwise terminates Employee's employment without cause pursuant to
this paragraph 6(d), Employee shall receive no severance compensation.
(e) Change in Control of TSI. In the event of a "Change in Control of TSI"
(as defined below) during the Term, refer to paragraph 13 below.
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Upon termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits and
reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 13 hereof. All other rights and obligations of TSI and Employee under
this Agreement shall cease as of the effective date of termination, except that
TSI's obligations under paragraph 10 hereof and Employee's obligations under
paragraphs 4, 7, 8, 9 and 11 hereof shall survive such termination in accordance
with their terms.
If termination of Employee's employment arises out of TSI's failure to pay
Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other material breach of this Agreement by TSI
(including but not limited to a material reduction in Employee's
responsibilities hereunder), as determined by a court of competent jurisdiction
or pursuant to the provisions of paragraph 17 below, such termination shall be
deemed a termination without cause, and TSI shall pay to Employee severance
compensation pursuant to the applicable provisions of paragraph 6(d) and all
amounts and damages to which Employee may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Employee to enforce Employee's rights hereunder.
Further, none of the provisions of paragraph 4 hereof shall apply in the event
this Agreement is terminated as a result of a breach by TSI.
In the event of any termination of Employee's employment for any reason
provided above, Employee shall be under no obligation to seek other employment
and there shall be no offset against any amounts due to Employee under this
Agreement on account of any remuneration attributable to any subsequent
employment that Employee may obtain. Any amounts due under this paragraph 6 are
in the nature of severance payments, or liquidated damages, or both, and are not
in the nature of a penalty.
7. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of TSI, or its representatives, vendors or customers
which pertain to the business of TSI shall be and remain the property of TSI,
and be subject at all times to its discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials, and other
similar data pertaining to the business, activities or future plans of TSI which
is collected by Employee shall be delivered promptly to TSI without request by
it upon termination of Employee's employment.
8. INVENTIONS.
Employee shall disclose promptly to TSI any and all significant conceptions
and ideas for inventions, improvements and valuable discoveries, whether
patentable or not, which are conceived or made by Employee, solely or jointly
with another, during the period of employment, and which are directly related to
the business or activities of TSI and which Employee conceives as a result of
Employee's employment by TSI. Employee hereby assigns and agrees to assign all
of Employee's interests therein to TSI or its nominee. Whenever requested to do
so by TSI, Employee shall execute any and all applications, assignments or other
instruments that TSI shall deem necessary to apply for and obtain Letters Patent
of the United States or any foreign country or to otherwise protect TSI's
interest therein.
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9. TRADE SECRETS.
Employee agrees that he will not, other than as required by court order,
during or after the Term of this Agreement with TSI, disclose the confidential
terms of TSI's or its subsidiaries' relationships or agreements with its
significant vendors or customers or any other significant and material trade
secret of TSI or its subsidiaries, whether in existence or proposed, to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.
10. INDEMNIFICATION.
In connection with any threatened, pending or completed claim, demand,
liability, action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by TSI against Employee), by reason of
the fact that Employee is or was performing services (including an act, omission
or failure to act) under this Agreement, TSI shall indemnify and hold harmless,
to the maximum extent permitted by law, Employee against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, as actually
and reasonably incurred by Employee in connection therewith. In the event that
both Employee and TSI are made a party to the same third-party action,
complaint, suit or proceeding, TSI agrees to engage competent legal
representation reasonably acceptable to Employee, and Employee agrees to use the
same representation, provided that if counsel selected by TSI shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to TSI for errors or omissions made in
good faith where Employee has not exhibited gross, willful or wanton negligence
or misconduct or performed criminal and fraudulent acts which materially damage
the business of TSI. TSI shall pay, on behalf of Employee upon presentation of
proper invoices, all fees, costs and expenses (including attorneys' fees)
incurred in connection with any matter referenced in this paragraph 10.
11. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to TSI that the execution of this
Agreement by Employee and his employment by TSI and the performance of
Employee's duties hereunder will not violate or be a breach of any agreement
with a former employer, client or any other person or entity. Further, Employee
agrees to indemnify TSI for any claim, including but not limited to attorneys'
fees and expenses of investigation, by any such third party that such third
party may now have or may hereafter come to have against TSI based upon or
arising out of any noncompetition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date of
this Agreement.
12. ASSIGNMENT; BINDING EFFECT.
Employee understands that he has been selected for employment by TSI on the
basis of Employee's personal qualifications, experience and skills. Employee,
therefore, shall not assign all or any portion of Employee's performance under
this Agreement. Subject to the preceding two (2) sentences and the express
provisions of paragraph 13 below, this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns.
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13. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that TSI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of TSI hereunder or that TSI
may undergo another type of Change in Control. In the event such a merger or
consolidation or other Change in Control is initiated prior to the end of the
Term, then the provisions of this paragraph 13 shall be applicable.
(b) In the event of a pending Change in Control wherein TSI and Employee
have not received written notice at least five (5) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of TSI's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform TSI's obligations under this Agreement in the same manner and to the
same extent that TSI is hereby required to perform, then such Change in Control
shall be deemed to be a termination of this Agreement by TSI without cause
during the Term and the applicable portions of paragraph 6(d) will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Employee shall be triple the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to TSI at least five (5) business
days prior to the anticipated closing of the transaction giving rise to the
Change in Control. In such case, the applicable provisions of paragraph 6(d)
will apply as though TSI had terminated the Agreement without cause during the
Term; however, under such circumstances, the amount of the lump-sum severance
payment due to Employee shall be double the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall all apply
for a period of two (2) years from the effective date of termination.
(d) For purposes of applying paragraph 6 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by TSI at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, or group of persons or entities acting
together, other than TSI or an employee benefit plan of TSI, acquires
directly or indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of TSI and immediately after such acquisition such person, entity
or group is, directly or indirectly, the Beneficial Owner of voting
securities representing 33% or more of the total voting power of all of the
then-outstanding voting securities of TSI and has a larger percentage of
voting securities of TSI than any other person, entity or group holding
voting securities of TSI, unless the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board;
or
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(ii) the following individuals no longer constitute a majority of the
members of the Board: (A) the individuals who, as of the closing date of
TSI's initial public offering, constitute the Board (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board
and whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election); and (C) the individuals who are
elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election).
(iii) the stockholders of TSI shall approve a merger, consolidation,
recapitalization or reorganization of TSI, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the
voting securities of the surviving entity outstanding immediately after
such transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of TSI immediately prior to the transaction,
with the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI of
all or a substantial portion of TSI's assets (i.e., 50% or more of the
total assets of TSI).
(f) Employee must be notified in writing by TSI at any time that TSI or any
member of its Board anticipates that a Change in Control may take place.
(g) Employee shall be reimbursed by TSI or its successor, on a grossed up
basis, for any excise taxes that Employee incurs under Section 4999 of the
Internal Revenue Code of 1986, as a result of any Change in Control. Such amount
will be due and payable by TSI or its successor within ten (10) days after
Employee delivers a written request for reimbursement accompanied by a copy of
Employee's tax return(s) showing the excise tax actually incurred by Employee.
14. COMPLETE AGREEMENT.
To the extent that the IPO may not occur, this Agreement is not a promise
of future employment. This Agreement supersedes any other agreements or
understandings, written or oral, between TSI and Employee, and Employee has no
oral representations, understandings or agreements with TSI or any of its
officers, directors or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete and exclusive statement and
expression of the agreement between TSI and Employee and of all the terms of
this Agreement, and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of TSI and Employee, and no term of this
Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
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15. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To TSI: Travel Services International, Inc.
000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
To Employee: Xxxxxx Xxxxxxxx
0000 Xxxxx Xxxxx Xxxx.
Xxxx Xxxxx, Xxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 15.
16. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the other
portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
17. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted before a
panel of three (3) arbitrators in the community where the corporate headquarters
of TSI is located on the Effective Date, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators shall not have
the authority to add to, detract from or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 6(b) and 6(c) hereof, respectively, or that TSI
has otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by TSI.
18. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws of
the State of Delaware without regard to the conflicts of laws principles of such
state.
19. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
--------------------------------
Name:
------------------------------
Title:
-----------------------------
/s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx, Individually
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EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement"), by and
between Travel Services International, Inc., a Delaware corporation ("TSI"), and
Xxxx X. Xxxxx ("Employee"), is hereby entered into as of this 14th day of
October, 1997. This Agreement amends and restates the Employment Agreement
between the parties hereto originally dated as of May 12, 1997, and was
effective as of the date (the "Effective Date") of the consummation of the
initial public offering of the common stock of TSI (the "IPO").
R E C I T A L S
A. As of the date of this Agreement, TSI is engaged primarily in the business of
providing travel services.
B. Employee is employed hereunder by TSI in a confidential relationship wherein
Employee, in the course of Employee's employment with TSI, has and will continue
to become familiar with and aware of information as to TSI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by TSI, and future plans with respect thereto, all of which has been
and will be established and maintained at great expense to TSI; this information
is a trade secret and constitutes the valuable goodwill of TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and conditions
set forth herein and the performance of each, the parties hereto hereby agree as
follows:
1. EMPLOYMENT AND DUTIES.
(a) TSI hereby employs Employee as Senior Vice President and Chief
Financial Officer of TSI. As such, Employee shall have responsibilities, duties
and authority reasonably accorded to and expected of a Senior Vice President and
Chief Financial Officer of TSI and will report directly to the President of TSI.
Employee hereby accepts this employment upon the terms and conditions herein
contained and, subject to paragraph 1(c) hereof, agrees to devote Employee's
full business time, attention and efforts to promote and further the business of
TSI.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Board of Directors of TSI (the "Board").
(c) Employee shall not, during the term of her employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 4 hereof.
2. COMPENSATION.
For all services rendered by Employee, TSI shall compensate Employee as
follows:
(a) Base Salary. The base salary payable to Employee shall be $150,000 per
year, payable on a regular basis in accordance with TSI's standard payroll
procedures but not less than monthly. On at least an annual basis, the Board
will review Employee's performance and may make increases to such base salary
if, in its discretion, any such increase is warranted. Such recommended increase
would, in all likelihood, require approval by the Board or a duly constituted
committee thereof. In no event shall Employee's base salary be reduced.
(b) Incentive Bonus Plan. For 1997 and subsequent years, TSI shall develop,
as soon as practicable after the Effective Date, a written Incentive Bonus Plan
setting forth the criteria and performance standards under which Employee and
other officers and key employees will be eligible to receive year-end bonus
awards. TSI contemplates that the maximum bonus for which Employee may be
eligible will be 50% of Employee's base salary.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee shall
be entitled to receive additional benefits and compensation from TSI in such
form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and Employee's
dependent family members under health, hospitalization, disability, dental,
life and other insurance plans that TSI may have in effect from time to
time. Reimbursement for COBRA payments for coverage for Employee and
Employee's dependent family members in the event that TSI is unable to
provide insurance coverage at the Effective Date.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with TSI's expense reporting policy.
(iii) TSI shall provide Employee with other executive perquisites as
may be available to senior management of TSI and participation in all other
TSI-wide employee benefits as available from time to time, including
vacation benefits in accordance with TSI's established policies.
(iv) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee at TSI's request in connection
with the activities of TSI prior to the IPO.
3. OPTIONS.
At the Effective Date, TSI shall grant to Employee options to acquire
50,000 shares of TSI common stock at the price per share at which such stock is
offered to the public in the IPO. Such options shall vest in installments of
12,500 shares on each of the first, second, third and fourth anniversaries of
the Effective Date.
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4. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with TSI,
and for a period of two (2) years immediately following the termination of
Employee's employment under this Agreement, for any reason whatsoever, directly
or indirectly, for herself or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor or as a sales representative,
in any travel service business in direct competition with TSI or any
subsidiary of TSI, within the United States or within 100 miles of any
other geographic area in which TSI or any of TSI's subsidiaries conducts
business, including any territory serviced by TSI or any of its
subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of TSI (including the subsidiaries thereof) in a managerial
capacity for the purpose or with the intent of enticing such employee away
from or out of the employ of TSI (including the subsidiaries thereof);
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of TSI
(including the respective subsidiaries thereof) within the Territory for
the purpose of soliciting or selling products or services in direct
competition with TSI or any subsidiary of TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by TSI
(including the respective subsidiaries thereof) or for which TSI made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than two percent (2%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to TSI as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to TSI for which it would have no other
adequate remedy, Employee agrees that the foregoing covenant may be enforced by
TSI in the event of breach by her, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 4 impose a reasonable restraint on Employee in light of the activities
and business of TSI (including TSI's subsidiaries) on the date of the execution
of this Agreement and the current plans of TSI (including TSI's subsidiaries);
but it is also the intent of TSI and Employee that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of TSI (including TSI's subsidiaries) throughout the term of this Agreement. For
example, if, during the term of this Agreement, TSI (including TSI's
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
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It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with TSI (including TSI's subsidiaries), or
similar activities, or business in locations the operation of which, under such
circumstances, does not violate clause (i) of this paragraph 4, and in any event
such new business, activities or location are not in violation of this paragraph
4 or of employee's obligations under this paragraph 4, if any, Employee shall
not be chargeable with a violation of this paragraph 4 if TSI (including TSI's
subsidiaries) shall thereafter enter the same, similar or a competitive (i)
business, (ii) course of activities or (iii) location, as applicable.
(d) The covenants in this paragraph 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 4 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against TSI, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by TSI of such covenants. It is specifically agreed that the period
of two (2) years following termination of employment stated at the beginning of
this paragraph 4, during which the agreements and covenants of Employee made in
this paragraph 4 shall be effective, shall be computed by excluding from such
computation any time during which Employee is in violation of any provision of
this paragraph 4.
5. PLACE OF PERFORMANCE.
(a) Employee understands that she may be requested by the Board to relocate
from Employee's present residence to another geographic location in order to
more efficiently carry out Employee's duties and responsibilities under this
Agreement. In such event, TSI will pay all actual reasonable relocation costs to
move Employee, Employee's immediate family and their personal property and
effects. Such costs may include, but are not limited to, moving expenses,
temporary lodging expenses prior to moving into a new permanent residence; all
closing costs on the purchase of a residence (comparable to Employee's present
residence) in the new location. The general intent of the foregoing is that
Employee shall not personally bear any out-of-pocket cost as a result of the
relocation, with an understanding that Employee will use Employee's best efforts
to incur only those costs which are reasonable and necessary to effect a smooth,
efficient and orderly relocation with minimal disruption to the business affairs
of TSI and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 6(c).
6. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue for
three (3) years, and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein in effect as of the time of renewal. As used herein, the word
"Term" shall mean (i) during the three-year period referred to in the preceding
sentence, such three-year period, and
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(ii) during any one year renewal pursuant to the terms hereof, such one-year
period. This Agreement and Employee's employment may be terminated in any one of
the following ways:
(a) Death. The death of Employee shall immediately terminate this Agreement
with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, as reasonably determined by Employee's physician, Employee
shall have been absent from Employee's full-time duties hereunder for four (4)
consecutive months, then thirty (30) days after receiving written notice (which
notice may occur before or after the end of such four (4) month period, but
which shall not be effective earlier than the last day of such four (4) month
period), TSI may terminate Employee's employment hereunder provided Employee is
unable to resume Employee's full-time duties at the conclusion of such notice
period. Also, Employee may terminate Employee's employment hereunder if his or
her health should become impaired to an extent that makes the continued
performance of Employee's duties hereunder hazardous to Employee's physical or
mental health or life, provided that Employee shall have furnished TSI with a
written statement from a qualified doctor to such effect and provided, further,
that, at TSI's request made within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a doctor selected by TSI
who is reasonably acceptable to Employee or Employee's doctor and such doctor
shall have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated by either party as a result of Employee's disability,
Employee shall receive from TSI, in a lump-sum payment due within ten (10) days
of the effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the Term of this Agreement or for
one (1) year, whichever amount is greater.
(c) Good Cause. TSI may terminate the Agreement ten (10) days after
delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or affairs
of TSI which materially and adversely affects the operations or reputation of
TSI; (4) Employee's conviction of a felony crime; or (5) chronic alcohol abuse
or illegal drug abuse by Employee. In the event of a termination for good cause,
as enumerated above, Employee shall have no right to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to TSI. Employee may
only be terminated without cause by TSI during the Term hereof if such
termination is approved by at least two-thirds of the members of the Board.
Should Employee's employment be terminated by TSI without cause during the Term,
Employee shall receive from TSI, in a lump-sum payment due on the effective date
of termination, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater, plus any accrued salary and declared but unpaid
bonus and reimbursement of expenses. Should Employee's employment be terminated
by TSI without cause at any time after the Term, Employee shall receive from
TSI, in a lump-sum payment due on the effective date of termination, the base
salary rate then in effect equivalent to one (1) year of salary, plus any
accrued salary and declared but unpaid bonus and reimbursement of expenses.
Further, any termination without cause by TSI shall operate to shorten the
period set forth in paragraph 4(a) and during which the terms of paragraph 4
apply to one (1) year from the date of termination of employment. If Employee
resigns or otherwise terminates Employee's
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employment without cause pursuant to this paragraph 6(d), Employee shall receive
no severance compensation.
(e) Change in Control of TSI. In the event of a "Change in Control of TSI"
(as defined below) during the Term, refer to paragraph 13 below.
Upon termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits and
reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 13 hereof. All other rights and obligations of TSI and Employee under
this Agreement shall cease as of the effective date of termination, except that
TSI's obligations under paragraphs 10 and 17 hereof and Employee's obligations
under paragraphs 4, 7, 8, 9, 11 and 17 hereof shall survive such termination in
accordance with their terms.
If termination of Employee's employment arises out of TSI's failure to pay
Employee on a timely basis the amounts to which she is entitled under this
Agreement or as a result of any other material breach of this Agreement by TSI
(including but not limited to a material reduction in Employee's
responsibilities hereunder), as determined by a court of competent jurisdiction
or pursuant to the provisions of paragraph 17 below, such termination shall be
deemed a termination without cause, and TSI shall pay to Employee severance
compensation pursuant to the applicable provisions of paragraph 6(d) and all
amounts and damages to which Employee may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Employee to enforce Employee's rights hereunder.
Further, none of the provisions of paragraph 4 hereof shall apply in the event
this Agreement is terminated as a result of a breach by TSI.
In the event of any termination of Employee's employment for any reason
provided above, Employee shall be under no obligation to seek other employment
and there shall be no offset against any amounts due to Employee under this
Agreement on account of any remuneration attributable to any subsequent
employment that Employee may obtain. Any amounts due under this paragraph 6 are
in the nature of severance payments, or liquidated damages, or both, and are not
in the nature of a penalty.
7. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of TSI, or its representatives, vendors or customers
which pertain to the business of TSI shall be and remain the property of TSI,
and be subject at all times to its discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials, and other
similar data pertaining to the business, activities or future plans of TSI which
is collected by Employee shall be delivered promptly to TSI without request by
it upon termination of Employee's employment.
8. INVENTIONS.
Employee shall disclose promptly to TSI any and all significant conceptions
and ideas for inventions, improvements and valuable discoveries, whether
patentable or not, which are conceived or made by Employee, solely or jointly
with another, during the period of employment, and which are directly related to
the business or activities of TSI and which Employee conceives as a result of
Employee's employment by TSI. Employee hereby assigns and agrees to assign all
of Employee's interests therein to
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TSI or its nominee. Whenever requested to do so by TSI, Employee shall execute
any and all applications, assignments or other instruments that TSI shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect TSI's interest therein.
9. TRADE SECRETS.
Employee agrees that she will not, other than as required by court order,
during or after the Term of this Agreement with TSI, disclose the confidential
terms of TSI's or its subsidiaries' relationships or agreements with its
significant vendors or customers or any other significant and material trade
secret of TSI or its subsidiaries, whether in existence or proposed, to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.
10. INDEMNIFICATION.
In connection with any threatened, pending or completed claim, demand,
liability, action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by TSI against Employee), by reason of
the fact that Employee is or was performing services (including an act, omission
or failure to act) under this Agreement, then TSI shall indemnify and hold
harmless, to the maximum extent permitted by law, Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and TSI are made a party to the same third-party
action, complaint, suit or proceeding, TSI agrees to engage competent legal
representation reasonably acceptable to Employee, and Employee agrees to use the
same representation, provided that if counsel selected by TSI shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to TSI for errors or omissions made in
good faith where Employee has not exhibited gross, willful or wanton negligence
or misconduct or performed criminal and fraudulent acts which materially damage
the business of TSI. TSI shall pay, on behalf of Employee upon presentation of
proper invoices, all fees, costs and expenses (including attorneys' fees)
incurred in connection with any matter referenced in this paragraph 10.
11. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to TSI that the execution of this
Agreement by Employee and her employment by TSI and the performance of
Employee's duties hereunder will not violate or be a breach of any agreement
with a former employer, client or any other person or entity. Further, Employee
agrees to indemnify TSI for any claim, including but not limited to attorneys'
fees and expenses of investigation, by any such third party that such third
party may now have or may hereafter come to have against TSI based upon or
arising out of any noncompetition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date of
this Agreement.
12. ASSIGNMENT; BINDING EFFECT.
Employee understands that she has been selected for employment by TSI on
the basis of her personal qualifications, experience and skills. Employee,
therefore, shall not assign all or any portion of Employee's performance under
this Agreement. Subject to the preceding two (2) sentences and the express
provisions of paragraph 13 below, this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns.
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13. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that TSI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of TSI hereunder or that TSI
may undergo another type of Change in Control. In the event such a merger or
consolidation or other Change in Control is initiated prior to the end of the
Term, then the provisions of this paragraph 13 shall be applicable.
(b) In the event of a pending Change in Control wherein TSI and Employee
have not received written notice at least five (5) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of TSI's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform TSI's obligations under this Agreement in the same manner and to the
same extent that TSI is hereby required to perform, then such Change in Control
shall be deemed to be a termination of this Agreement by TSI without cause
during the Term and the applicable portions of paragraph 6(d) will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Employee shall be triple the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to TSI at least five (5) business
days prior to the anticipated closing of the transaction giving rise to the
Change in Control. In such case, the applicable provisions of paragraph 6(d)
will apply as though TSI had terminated the Agreement without cause during the
Term; however, under such circumstances, the amount of the lump-sum severance
payment due to Employee shall be double the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall all apply
for a period of two (2) years from the effective date of termination.
(d) For purposes of applying paragraph 6 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by TSI at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, or group of persons or entities acting
together, other than TSI or an employee benefit plan of TSI, acquires
directly or indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of TSI and immediately after such acquisition such person, entity
or group is, directly or indirectly, the Beneficial Owner of voting
securities representing 33% or more of the total voting power of all of the
then-outstanding voting securities of TSI and has a larger percentage of
voting securities of TSI than any other person, entity or group holding
voting securities of TSI, unless the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board;
or
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(ii) the following individuals no longer constitute a majority of the
members of the Board: (A) the individuals who, as of the closing date of
TSI's initial public offering, constitute the Board (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board
and whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election); and (C) the individuals who are
elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election); or
(iii) the stockholders of TSI shall approve a merger, consolidation,
recapitalization or reorganization of TSI, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the
voting securities of the surviving entity outstanding immediately after
such transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of TSI immediately prior to the transaction,
with the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI of
all or a substantial portion of TSI's assets (i.e., 50% or more of the
total assets of TSI).
(f) Employee must be notified in writing by TSI at any time that TSI or any
member of its Board anticipates that a Change in Control may take place.
(g) Employee shall be reimbursed by TSI or its successor, on a grossed up
basis, for any excise taxes that Employee incurs under Section 4999 of the
Internal Revenue Code of 1986, as a result of any Change in Control. Such amount
will be due and payable by TSI or its successor within ten (10) days after
Employee delivers a written request for reimbursement accompanied by a copy of
Employee's tax return(s) showing the excise tax actually incurred by Employee.
14. COMPLETE AGREEMENT.
To the extent that the IPO may not occur, this Agreement is not a promise
of future employment. This Agreement supersedes any other agreements or
understandings, written or oral, between TSI and Employee, and Employee has no
oral representations, understandings or agreements with TSI or any of its
officers, directors or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete and exclusive statement and
expression of the agreement between TSI and Employee and of all the terms of
this Agreement, and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of TSI and Employee, and no term of this
Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
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15. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To TSI: Travel Services International, Inc.
000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
To Employee: Xxxx X. Xxxxx
0000 Xxxxxx Xxxxx Xxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 15.
16. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the other
portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
17. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted before a
panel of three (3) arbitrators in the community where the corporate headquarters
of TSI is located on the Effective Date, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators shall not have
the authority to add to, detract from or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 6(b) and 6(c) hereof, respectively, or that TSI
has otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by TSI.
18. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws of
the State of Delaware without regard to the conflicts of laws principles of such
state.
19. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.
By:/s/ XXXXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxxxx X. Xxxxxxxx
------------------------------
Title: President
-----------------------------
/s/ Xxxx X. Xxxxx
-----------------------------------
Xxxx X. Xxxxx
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EXECUTION COPY
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and between Travel Services
International, Inc., a Delaware corporation ("TSI"), and Xxxxxxx X. Xxxxxxxx
("Employee"), is hereby entered into as of this 14th day of October, 1997. This
Agreement amends and restates the Employment Agreement between the parties
hereto dated as of June 6, 1997, and was effective as of the date (the
"Effective Date") of the consummation of the initial public offering of the
common stock of TSI (the "IPO").
R E C I T A L S
A. As of the date of this Agreement, TSI is engaged primarily in the business of
providing travel services.
B. Employee is employed hereunder by TSI in a confidential relationship wherein
Employee, in the course of Employee's employment with TSI, has and will continue
to become familiar with and aware of information as to TSI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by TSI, and future plans with respect thereto, all of which has been
and will be established and maintained at great expense to TSI; this information
is a trade secret and constitutes the valuable goodwill of TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and conditions
set forth herein and the performance of each, the parties hereto hereby agree as
follows:
1. EMPLOYMENT AND DUTIES.
(a) TSI hereby employs Employee as President and Chief Operating Officer of
TSI. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a President and Chief Operating Officer
and will report directly to the Chief Executive Officer of TSI. Employee hereby
accepts this employment upon the terms and conditions herein contained and,
subject to paragraph 1(c) hereof, agrees to devote Employee's full business
time, attention and efforts to promote and further the business of TSI.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Board of Directors of TSI (the "Board").
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 4 hereof.
2. COMPENSATION.
For all services rendered by Employee, TSI shall compensate Employee as
follows:
(a) Base Salary. The base salary payable to Employee shall be $150,000 per
year, payable on a regular basis in accordance with TSI's standard payroll
procedures but not less than monthly. On at least an annual basis, the Board
will review Employee's performance and may make increases to such base salary
if, in its discretion, any such increase is warranted. Such recommended increase
would, in all likelihood, require approval by the Board or a duly constituted
committee thereof. In no event shall Employee's base salary be reduced.
(b) Incentive Bonus Plan. For 1997 and subsequent years, TSI shall develop,
as soon as practicable after the Effective Date, a written Incentive Bonus Plan
setting forth the criteria and performance standards under which Employee and
other officers and key employees will be eligible to receive year-end bonus
awards. During the first year of this Agreement, the minimum bonus that Employee
shall receive hereunder shall be $75,000, payable in two equal installments on
the six- and twelve-month anniversaries of the Effective Date. TSI contemplates
that the maximum bonus for which Employee may be eligible will be 100% of
Employee's base salary.
(c) Executive Perquisites, Benefits and Other Compensation. Employee shall
be entitled to receive additional benefits and compensation from TSI in such
form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and Employee's
dependent family members under health, hospitalization, disability, dental,
life and other insurance plans that TSI may have in effect from time to
time.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with TSI's expense reporting policy.
(iii) TSI shall provide Employee with other executive perquisites as
may be available to or deemed appropriate for Employee by the Chief
Executive Officer or the Board and participation in all other TSI-wide
employee benefits as available from time to time.
3. OPTIONS.
At the Effective Date, TSI shall grant to Employee options to acquire
75,000 shares of TSI common stock at the price per share at which such stock is
offered to the public in the IPO. Such options shall vest in installments of
18,750 shares on each of the first, second, third and fourth anniversaries of
the Effective Date.
4. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with TSI,
and for a period of two (2) years immediately following the termination of
Employee's employment under this
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Agreement, for any reason whatsoever, directly or indirectly, for himself or on
behalf of or in conjunction with any other person, persons, company,
partnership, corporation or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any travel service business (except a hospitality
service business) in direct competition with TSI or any subsidiary of TSI,
within the United States or within 100 miles of any other geographic area
in which TSI or any of TSI's subsidiaries conducts business, including any
territory serviced by TSI or any of its subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of TSI (including the subsidiaries thereof) in a managerial
capacity for the purpose or with the intent of enticing such employee away
from or out of the employ of TSI (including the subsidiaries thereof);
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of TSI
(including the respective subsidiaries thereof) within the Territory for
the purpose of soliciting or selling products or services in direct
competition with TSI or any subsidiary of TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by TSI
(including the respective subsidiaries thereof) or for which TSI made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than two percent (2%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to TSI as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to TSI for which it would have no other
adequate remedy, Employee agrees that the foregoing covenant may be enforced by
TSI in the event of breach by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 4 impose a reasonable restraint on Employee in light of the activities
and business of TSI (including TSI's subsidiaries) on the date of the execution
of this Agreement and the current plans of TSI (including TSI's subsidiaries);
but it is also the intent of TSI and Employee that such covenants be construed
and enforced in accordance with the changing activities, business and locations
of TSI (including TSI's subsidiaries) throughout the term of this Agreement,
whether before or after the date of termination of the employment of Employee.
For example, if, during the term of this Agreement, TSI (including TSI's
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
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It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with TSI (including TSI's subsidiaries), or
similar activities, or business in locations the operation of which, under such
circumstances, does not violate clause (i) of this paragraph 4, and in any event
such new business, activities or location are not in violation of this paragraph
4 or of employee's obligations under this paragraph 4, if any, Employee shall
not be chargeable with a violation of this paragraph 4 if TSI (including TSI's
subsidiaries) shall thereafter enter the same, similar or a competitive (i)
business, (ii) course of activities or (iii) location, as applicable.
(d) The covenants in this paragraph 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 4 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against TSI, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by TSI of such covenants. It is specifically agreed that the period
of two (2) years following termination of employment stated at the beginning of
this paragraph 4, during which the agreements and covenants of Employee made in
this paragraph 4 shall be effective, shall be computed by excluding from such
computation any time during which Employee is in violation of any provision of
this paragraph 4.
5. PLACE OF PERFORMANCE.
Employee understands that he may be requested by the Board to relocate from
Employee's present residence to another geographic location in order to more
efficiently carry out Employee's duties and responsibilities under this
Agreement. TSI will pay all actual reasonable relocation costs, not to exceed
$30,000, to move Employee, Employee's immediate family and their personal
property and effects. Such costs may include, but are not limited to, moving
expenses, temporary lodging expenses prior to moving into a new permanent
residence (such expenses not to exceed lodging beyond a period of 180 days), and
all closing costs on the purchase of a residence (comparable to Employee's
present residence) in the new location. Employee will use Employee's best
efforts to incur only those costs which are reasonable and necessary to effect a
smooth, efficient and orderly relocation with minimal disruption to the business
affairs of TSI and the personal life of Employee and Employee's family.
6. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the Effective Date and continue
for three (3) years, and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein in effect as of the time of renewal. As used herein, the word
"Term" shall mean (i) during the three-year period referred to in the preceding
sentence, such three-year period, and (ii) during any one-year renewal pursuant
to the terms hereof, such one-year period. This Agreement and Employee's
employment may be terminated in any one of the following ways:
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(a) Death. The death of Employee shall immediately terminate this Agreement
with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, as reasonably determined by Employee's physician, Employee
shall have been absent from Employee's full-time duties hereunder for four (4)
consecutive months, then thirty (30) days after receiving written notice (which
notice may occur before or after the end of such four (4) month period, but
which shall not be effective earlier than the last day of such four (4) month
period), TSI may terminate Employee's employment hereunder provided Employee is
unable to resume Employee's full-time duties at the conclusion of such notice
period. Also, Employee may terminate Employee's employment hereunder if his
health should become impaired to an extent that makes the continued performance
of Employee's duties hereunder hazardous to Employee's physical or mental health
or life, provided that Employee shall have furnished TSI with a written
statement from a qualified doctor to such effect and provided, further, that, at
TSI's request made within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a doctor selected by TSI
who is reasonably acceptable to Employee or Employee's doctor and such doctor
shall have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated by either party as a result of Employee's disability,
Employee shall receive from TSI, in a lump-sum payment due within ten (10) days
of the effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the Term of this Agreement or for
one (1) year, whichever amount is greater.
(c) Good Cause. TSI may terminate the Agreement ten (10) days after
delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days (after receipt of written notice of need to cure)
of any of Employee's material duties and responsibilities hereunder; (3)
Employee's willful dishonesty, fraud or misconduct with respect to the business
or affairs of TSI which materially and adversely affects the operations or
reputation of TSI; (4) Employee's conviction of a felony crime; or (5) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a termination
for good cause, as enumerated above, Employee shall have no right to any
severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to TSI. Employee may
only be terminated without cause by TSI during the Term hereof if such
termination is approved by at least two-thirds of the members of the Board.
Should Employee's employment be terminated by TSI without cause during the Term,
Employee shall receive from TSI, in a lump-sum payment due on the effective date
of termination, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater, plus any accrued salary and declared but unpaid
bonus and reimbursement of expenses. Should Employee's employment be terminated
by TSI without cause at any time after the Term, Employee shall receive from
TSI, in a lump-sum payment due on the effective date of termination, the base
salary rate then in effect equivalent to one (1) year of salary, plus any
accrued salary and declared but unpaid bonus and reimbursement of expenses.
Further, any termination without cause by TSI shall operate to shorten the
period set forth in paragraph 4(a) and during which the terms of paragraph 4
apply to one (1) year from the date of termination of employment. If Employee
resigns or otherwise terminates Employee's employment without cause pursuant to
this paragraph 6(d), Employee shall receive no severance compensation.
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(e) Change in Control of TSI. In the event of a "Change in Control of TSI"
(as defined below) during the Term, refer to paragraph 13 below.
Upon termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits and
reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 13 hereof. All other rights and obligations of TSI and Employee under
this Agreement shall cease as of the effective date of termination, except that
TSI's obligations under paragraph 10 hereof and Employee's obligations under
paragraphs 4, 7, 8, 9 and 11 hereof shall survive such termination in accordance
with their terms.
If termination of Employee's employment arises out of TSI's failure to pay
Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other material breach of this Agreement by TSI
(including but not limited to a material reduction in Employee's
responsibilities hereunder), as determined by a court of competent jurisdiction
or pursuant to the provisions of paragraph 17 below, such termination shall be
deemed a termination without cause, and TSI shall pay to Employee severance
compensation pursuant to the applicable provisions of paragraph 6(d) and all
amounts and damages to which Employee may be entitled as a result of such
breach, including interest thereon and all reasonable legal fees and expenses
and other costs incurred by Employee to enforce Employee's rights hereunder.
Further, none of the provisions of paragraph 4 hereof shall apply in the event
this Agreement is terminated as a result of a breach by TSI.
In the event of any termination of Employee's employment for any reason
provided above, Employee shall be under no obligation to seek other employment
and there shall be no offset against any amounts due to Employee under this
Agreement on account of any remuneration attributable to any subsequent
employment that Employee may obtain. Any amounts due under this paragraph 6 are
in the nature of severance payments, or liquidated damages, or both, and are not
in the nature of a penalty.
7. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of TSI, or its representatives, vendors or customers
which pertain to the business of TSI shall be and remain the property of TSI,
and be subject at all times to its discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials and other
similar data pertaining to the business, activities or future plans of TSI which
is collected by Employee shall be delivered promptly to TSI without request by
it upon termination of Employee's employment.
8. INVENTIONS.
Employee shall disclose promptly to TSI any and all significant conceptions
and ideas for inventions, improvements and valuable discoveries, whether
patentable or not, which are conceived or made by Employee, solely or jointly
with another, during the period of employment, and which are directly related to
the business or activities of TSI and which Employee conceives as a result of
Employee's employment by TSI. Employee hereby assigns and agrees to assign all
of Employee's interests therein to TSI or its nominee. Whenever requested to do
so by TSI, Employee shall execute any and all applications, assignments or other
instruments that TSI shall deem necessary to apply for and
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obtain Letters Patent of the United States or any foreign country or to
otherwise protect TSI's interest therein.
9. TRADE SECRETS.
Employee agrees that he will not, other than as required by court order,
during or after the Term of this Agreement with TSI, disclose the confidential
terms of TSI's or its subsidiaries' relationships or agreements with its
significant vendors or customers or any other significant and material trade
secret of TSI or its subsidiaries, whether in existence or proposed, to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.
10. INDEMNIFICATION.
In connection with any threatened, pending or completed claim, demand,
liability, action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by TSI against Employee), by reason of
the fact that Employee is or was performing services (including an act, omission
or failure to act) under this Agreement, then TSI shall indemnify and hold
harmless, to the maximum extent permitted by law, Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and TSI are made a party to the same third-party
action, complaint, suit or proceeding, TSI agrees to engage competent legal
representation reasonably acceptable to Employee, and Employee agrees to use the
same representation, provided that if counsel selected by TSI shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to TSI for errors or omissions made in good faith
where Employee has not exhibited gross, willful or wanton negligence or
misconduct or performed criminal and fraudulent acts which materially damage the
business of TSI. TSI shall pay, on behalf of Employee upon presentation of
proper invoices, all fees, costs and expenses (including attorneys' fees)
incurred in connection with any matter referenced in this paragraph 10.
11. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to TSI that the execution of this
Agreement by Employee and his employment by TSI and the performance of
Employee's duties hereunder will not violate or be a breach of any agreement
with a former employer, client or any other person or entity. Further, Employee
agrees to indemnify TSI for any claim, including but not limited to attorneys'
fees and expenses of investigation, by any such third party that such third
party may now have or may hereafter come to have against TSI based upon or
arising out of any noncompetition agreement, invention or secrecy agreement
between Employee and such third party which was in existence as of the date of
this Agreement.
12. ASSIGNMENT; BINDING EFFECT.
Employee understands that he has been selected for employment by TSI on the
basis of Employee's personal qualifications, experience and skills. Employee,
therefore, shall not assign all or any portion of Employee's performance under
this Agreement. Subject to the preceding two (2) sentences and the express
provisions of paragraph 13 below, this Agreement shall be binding upon, inure to
the
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benefit of, and be enforceable by the parties hereto and their respective heirs,
legal representatives, successors and assigns.
13. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that TSI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of TSI hereunder or that TSI
may undergo another type of Change in Control. In the event such a merger or
consolidation or other Change in Control is initiated prior to the end of the
Term, then the provisions of this paragraph 13 shall be applicable.
(b) In the event of a pending Change in Control wherein TSI and Employee
have not received written notice at least five (5) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of TSI's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform TSI's obligations under this Agreement in the same manner and to the
same extent that TSI is hereby required to perform, then such Change in Control
shall be deemed to be a termination of this Agreement by TSI without cause
during the Term and the applicable portions of paragraph 6(d) will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Employee shall be triple the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to TSI at least five (5) business
days prior to the anticipated closing of the transaction giving rise to the
Change in Control. In such case, the applicable provisions of paragraph 6(d)
will apply as though TSI had terminated the Agreement without cause during the
Term; however, under such circumstances, the amount of the lump-sum severance
payment due to Employee shall be double the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall all apply
for a period of two (2) years from the effective date of termination.
(d) For purposes of applying paragraph 6 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by TSI at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, or group of persons or entities acting
together, other than TSI or an employee benefit plan of TSI, acquires
directly or indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of TSI and immediately after such acquisition such person, entity
or group is, directly or indirectly, the Beneficial Owner of voting
securities representing 33% or more of the total voting power of all of the
then-outstanding voting securities of TSI and has a larger percentage of
voting
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securities of TSI than any other person, entity or group holding voting
securities of TSI, unless the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board;
or
(ii) the following individuals no longer constitute a majority of the
members of the Board: (A) the individuals who, as of the closing date of
TSI's initial public offering, constitute the Board (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board
and whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election); and (C) the individuals who are
elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election).
(iii) the stockholders of TSI shall approve a merger, consolidation,
recapitalization or reorganization of TSI, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the
voting securities of the surviving entity outstanding immediately after
such transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of TSI immediately prior to the transaction,
with the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI of
all or a substantial portion of TSI's assets (i.e., 50% or more of the
total assets of TSI).
(f) Employee must be notified in writing by TSI at any time that TSI or any
member of its Board anticipates that a Change in Control may take place.
(g) Employee shall be reimbursed by TSI or its successor, on a grossed up
basis, for any excise taxes that Employee incurs under Section 4999 of the
Internal Revenue Code of 1986, as a result of any Change in Control. Such amount
will be due and payable by TSI or its successor within ten (10) days after
Employee delivers a written request for reimbursement accompanied by a copy of
Employee's tax return(s) showing the excise tax actually incurred by Employee.
14. COMPLETE AGREEMENT.
To the extent the IPO may not occur, this Agreement is not a promise of
future employment. This Agreement supersedes any other agreements or
understandings, written or oral, between TSI and Employee, and Employee has no
oral representations, understandings or agreements with TSI or any of its
officers, directors or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete and exclusive statement and
expression of the agreement between TSI and Employee and of all the terms of
this Agreement, and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly
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authorized officer of TSI and Employee, and no term of this Agreement may be
waived except by a written instrument signed by the party waiving the benefit of
such term.
15. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To TSI: Travel Services International, Inc.
000 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxxx, XX 00000
To Employee: Xxxxxxx X. Xxxxxxxx
00000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit
in the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 15.
16. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the other
portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
17. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted before a
panel of three (3) arbitrators in the community where the corporate headquarters
of TSI is located on the Effective Date, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators shall not have
the authority to add to, detract from, or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 6(b) and 6(c) hereof, respectively, or that TSI
has otherwise materially breached this Agreement. A decision by a majority of
the arbitration panel shall be final and binding. Judgment may be entered on the
arbitrators' award in any court having jurisdiction. The direct expense of any
arbitration proceeding shall be borne by TSI.
18. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws of
the State of Delaware without regard to the conflicts of laws principles of such
state.
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19. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.
By:/s/ XXXXXX X. XXXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxxx
--------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxx
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EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and between Travel Services
International, Inc., a Delaware corporation ("TSI"), and Xxx Xxxxxxxx
("Employee"), is hereby entered into as of this 22nd day of July, 1997, and
shall be effective as of a date (the "Effective Date") to be agreed upon by the
parties hereto as soon as practicable after the consummation of the initial
public offering of the common stock of TSI (the "IPO").
R E C I T A L S
A. As of the date of this Agreement, TSI is engaged primarily in the business of
providing travel services.
B. Employee is employed hereunder by TSI in a confidential relationship wherein
Employee, in the course of Employee's employment with TSI, has and will continue
to become familiar with and aware of information as to TSI's customers, specific
manner of doing business, including the processes, techniques and trade secrets
utilized by TSI, and future plans with respect thereto, all of which has been
and will be established and maintained at great expense to TSI; this information
is a trade secret and constitutes the valuable goodwill of TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and conditions
set forth herein and the performance of each, the parties hereto hereby agree as
follows:
1. EMPLOYMENT AND DUTIES.
(a) TSI hereby employs Employee as a Vice President of Development of TSI.
As such, Employee shall have responsibilities, duties and authority reasonably
accorded to and expected of a Vice President of Development of TSI and will
report directly to the Chief Executive Officer of TSI or such other
representative as he shall designate. Employee acknowledges that TSI is a
start-up company and that Employee's responsibilities may extend beyond the
traditional responsibilities of a Vice President of Development. Employee hereby
accepts this employment upon the terms and conditions herein contained and,
subject to paragraph 1(c) hereof, agrees to devote Employee's full business
time, attention and efforts to promote and further the business of TSI.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Board of Directors of TSI (the "Board").
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 4 hereof.
2. COMPENSATION.
For all services rendered by Employee, TSI shall compensate Employee as
follows:
(a) Base Salary. The base salary payable to Employee shall be $125,000 per
year, payable on a regular basis in accordance with TSI's standard payroll
procedures but not less than monthly. On at least an annual basis, the Board
will review Employee's performance and may make increases to such base salary
if, in its discretion, any such increase is warranted. Such recommended increase
would, in all likelihood, require approval by the Board or a duly constituted
committee thereof. In no event shall Employee's base salary be reduced.
(b) Incentive Bonus Plan. For 1997 and subsequent years, TSI shall develop,
as soon as practicable after the Effective Date, a written Incentive Bonus Plan
setting forth the criteria and performance standards under which Employee and
other officers and key employees will be eligible to receive year-end bonus
awards. During the Term of this Agreement (as defined below), TSI shall pay to
Employee a guaranteed minimum bonus in the amount of 25% of the base salary
(being a total of $31,250 per year) payable annually at the time bonuses are
paid. TSI contemplates that the maximum bonus for which Employee may be eligible
will be 50% of Employee's base salary.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee shall
be entitled to receive additional benefits and compensation from TSI in such
form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and Employee's
dependent family members under health, hospitalization, disability, dental,
life and other insurance plans that TSI may have in effect from time to
time; reimbursement for COBRA payments for coverage and premiums on any gap
insurance for Employee and Employee's dependent family members in the event
that TSI is unable to provide insurance coverage at the Effective Date.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with TSI's expense reporting policy.
(iii) TSI shall provide Employee with other executive perquisites as
may be available to senior management of TSI and participation in all other
TSI-wide employee benefits as available from time to time, including
vacation benefits in accordance with TSI's established policies.
3. OPTIONS.
At the date of the IPO, TSI shall grant to Employee options to acquire
50,000 shares of TSI common stock at the price per share at which such stock is
offered to the public in the IPO, subject to forfeiture if Employee does not
commence employment with TSI. Such options shall vest in installments of 12,500
shares on each of the first, second, third and fourth anniversaries of the
Effective Date. When issued, such options shall contain, among other things, a
provision for full and immediate vesting of all shares covered by the options
(whether already vested or not) in the event of a Change in Control, as
described in Section 13(e) of this Agreement.
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4. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with TSI,
and for a period of two (2) years immediately following the termination of
Employee's employment under this Agreement, for any reason whatsoever, directly
or indirectly, for himself or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of whatever
nature (other than a subsidiary or affiliate of TSI):
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor or as a sales representative,
in any travel service business in direct competition with TSI or any
subsidiary of TSI, within the United States or within 100 miles of any
other geographic area in which TSI or any of TSI's subsidiaries conducts
business, including any territory serviced by TSI or any of its
subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of TSI (including the subsidiaries thereof) in a managerial
capacity for the purpose or with the intent of enticing such employee away
from or out of the employ of TSI (including the subsidiaries thereof);
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of TSI
(including the respective subsidiaries thereof) within the Territory for
the purpose of soliciting or selling products or services in direct
competition with TSI or any subsidiary of TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by TSI
(including the respective subsidiaries thereof) or for which TSI made an
acquisition analysis, for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than two percent (2%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter. Additionally, none of the
above restrictions in Section 4(a) subsections (i) through (iv), shall apply to
Employee's endeavors relating to companies which are either suppliers to the
Company or any of its subsidiaries (such as airlines, cruise lines, hotel
operators, etc.) or customers of the Company or any of its subsidiaries,
inasmuch as suppliers and customers of TSI are not deemed by the Company to be
in direct competition with TSI or its subsidiaries.
(b) Because of the difficulty of measuring economic losses to TSI as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to TSI for which it would have no other
adequate remedy, Employee agrees that the foregoing covenant may be enforced by
TSI in the event of breach by his, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 4 impose a reasonable restraint on Employee in light of the activities
and business of TSI (including TSI's subsidiaries) on the date of the execution
of this Agreement and the current plans of TSI (including TSI's subsidiaries);
but it is also the intent of TSI and Employee that such covenants be construed
and enforced
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in accordance with the changing activities, business and locations of TSI
(including TSI's subsidiaries) throughout the term of this Agreement. For
example, if, during the term of this Agreement, TSI (including TSI's
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with TSI (including TSI's subsidiaries), or
similar activities, or business in locations the operation of which, under such
circumstances, does not violate clause (i) of this paragraph 4, and in any event
such new business, activities or location are not in violation of this paragraph
4 or of employee's obligations under this paragraph 4, if any, Employee shall
not be chargeable with a violation of this paragraph 4 if TSI (including TSI's
subsidiaries) shall thereafter enter the same, similar or a competitive (i)
business, (ii) course of activities or (iii) location, as applicable.
(d) The covenants in this paragraph 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
All of the covenants in this paragraph 4 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any
claim or cause of action of Employee against TSI, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by TSI
of such covenants. It is specifically agreed that the period of two (2) years
following termination of employment stated at the beginning of this paragraph 4,
during which the agreements and covenants of Employee made in this paragraph 4
shall be effective, shall be computed by excluding from such computation any
time during which Employee is in violation of any provision of this paragraph 4.
5. PLACE OF PERFORMANCE.
(a) Employee understands that he shall relocate from Employee's present
residence to another geographic location near TSI's headquarters in Palm Beach
in order to more efficiently carry out Employee's duties and responsibilities
under this Agreement. TSI will, for the initial year of the Term (as defined
below) hereof, pay all actual reasonable relocation costs to move Employee,
Employee's immediate family and their personal property and effects. Such costs
may include, but are not limited to, moving expenses, air fare, temporary
lodging expenses prior to moving into a new permanent residence and other
associated expenses; provided, the maximum total amount to be paid by TSI
hereunder shall be $20,000.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 6(c).
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6. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue for
three (3) years, and, unless terminated sooner as herein provided, shall
continue thereafter on a year-to-year basis on the same terms and conditions
contained herein in effect as of the time of renewal. As used herein, the word
"Term" shall mean (i) during the three year period referred to in the preceding
sentence, such three year period, and (ii) during any one year renewal pursuant
to the terms hereof, such one year period. This Agreement and Employee's
employment may be terminated in any one of the following ways:
(a) Death. The death of Employee shall immediately terminate this Agreement
with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, as reasonably determined by Employee's physician, Employee
shall have been absent from Employee's full-time duties hereunder for four (4)
consecutive months, then thirty (30) days after receiving written notice (which
notice may occur before or after the end of such four (4) month period, but
which shall not be effective earlier than the last day of such four (4) month
period), TSI may terminate Employee's employment hereunder provided Employee is
unable to resume Employee's full-time duties at the conclusion of such notice
period. Also, Employee may terminate Employee's employment hereunder if his
health should become impaired to an extent that makes the continued performance
of Employee's duties hereunder hazardous to Employee's physical or mental health
or life, provided that Employee shall have furnished TSI with a written
statement from a qualified doctor to such effect and provided, further, that, at
TSI's request made within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a doctor selected by TSI
who is reasonably acceptable to Employee or Employee's doctor and such doctor
shall have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated by either party as a result of Employee's disability,
Employee shall receive from TSI, in a lump-sum payment due within ten (10) days
of the effective date of termination, the base salary at the rate then in
effect, plus the guaranteed minimum annual bonus described in Section 2(b)
herein, for whatever time period is remaining under the Term of this Agreement
or for one (1) year, whichever amount is greater.
(c) Good Cause. TSI may terminate the Agreement ten (10) days after
delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
(continuing for ten (10) days after receipt of written notice of need to cure)
of any of Employee's material duties and responsibilities hereunder; (3)
Employee's willful dishonesty, fraud or misconduct with respect to the business
or affairs of TSI which materially and adversely affects the operations or
reputation of TSI; (4) Employee's conviction of a felony crime; or (5) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a termination
for good cause, as enumerated above, Employee shall have no right to any
severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to TSI. Employee may
only be terminated without cause by TSI during the Term hereof if such
termination is approved by at least two-thirds of the members of the Board.
Should Employee's employment be terminated by TSI without cause during the Term,
Employee shall receive from TSI, in a lump-sum payment due on the effective date
of termination, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater, plus any accrued salary, guaranteed minimum annual
bonus per Section 2(b), and declared but unpaid bonus and reimbursement of
expenses. Should Employee's employment be terminated by TSI without cause at any
time after the Term, Employee shall receive from TSI, in a lump-sum payment due
on the effective date of termination, the base salary rate then in effect
equivalent to one (1) year of salary, plus any accrued salary, guaranteed
minimum annual bonus per
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Section 2(b), and declared but unpaid bonus and reimbursement of expenses.
Further, any termination without cause by TSI shall operate to shorten the
period set forth in paragraph 4(a) and during which the terms of paragraph 4
apply to one (1) year from the date of termination of employment. If Employee
resigns or otherwise terminates Employee's employment without cause pursuant to
this paragraph 6(d), Employee shall receive no severance compensation.
(e) Change in Control of TSI. In the event of a "Change in Control of TSI"
(as defined below) during the Term, refer to paragraph 13 below.
Upon termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits and
reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 13 hereof. All other rights and obligations of TSI and Employee under
this Agreement shall cease as of the effective date of termination, except that
TSI's obligations under paragraph 10 hereof and Employee's obligations under
paragraphs 4, 7, 8, 9 and 11 hereof shall survive such termination in accordance
with their terms.
If termination of Employee's employment arises out of TSI's failure to pay
Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other material breach of this Agreement by TSI
(including but not limited to a material reduction in Employee's
responsibilities hereunder), as mutually agreed to by Employee and TSI or as
determined by a court of competent jurisdiction or pursuant to the provisions of
paragraph 17 below, such termination shall be deemed a termination without
cause, and TSI shall pay to Employee severance compensation pursuant to the
applicable provisions of paragraph 6(d) and all amounts and damages to which
Employee may be entitled as a result of such breach, including interest thereon
and all reasonable legal fees and expenses and other costs incurred by Employee
to enforce Employee's rights hereunder. Further, none of the provisions of
paragraph 4 hereof shall apply in the event this Agreement is terminated as a
result of a breach by TSI.
In the event of any termination of Employee's employment for any reason
provided above, Employee shall be under no obligation to seek other employment
and there shall be no offset against any amounts due to Employee under this
Agreement on account of any remuneration attributable to any subsequent
employment that Employee may obtain. Any amounts due under this paragraph 6 are
in the nature of severance payments, or liquidated damages, or both, and are not
in the nature of a penalty.
7. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of TSI, or its representatives, vendors or customers
which pertain to the business of TSI shall be and remain the property of TSI,
and be subject at all times to its discretion and control. Likewise, all
correspondence, reports, records, charts, advertising materials, and other
similar data pertaining to the business, activities or future plans of TSI which
is collected by Employee shall be delivered promptly to TSI without request by
it upon termination of Employee's employment.
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8. INVENTIONS.
Employee shall disclose promptly to TSI any and all significant conceptions
and ideas for inventions, improvements and valuable discoveries, whether
patentable or not, which are conceived or made by Employee, solely or jointly
with another, during the period of employment, and which are directly related to
the business or activities of TSI and which Employee conceives as a result of
Employee's employment by TSI. Employee hereby assigns and agrees to assign all
of Employee's interests therein to TSI or its nominee. Whenever requested to do
so by TSI, Employee shall execute any and all applications, assignments or other
instruments that TSI shall deem necessary to apply for and obtain Letters Patent
of the United States or any foreign country or to otherwise protect TSI's
interest therein.
9. TRADE SECRETS.
Employee agrees that he will not, other than as required by court order,
during or after the Term of this Agreement with TSI, disclose the confidential
terms of TSI's or its subsidiaries' relationships or agreements with its
significant vendors or customers or any other significant and material trade
secret of TSI or its subsidiaries, whether in existence or proposed, to any
person, firm, partnership, corporation or business for any reason or purpose
whatsoever.
10. INDEMNIFICATION.
In connection with any threatened, pending or completed claim, demand,
liability, action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by TSI against Employee), by reason of
the fact that Employee is or was performing services (including an act, omission
or failure to act) under this Agreement, TSI shall indemnify and hold harmless,
to the maximum extent permitted by law, Employee against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement, as actually
and reasonably incurred by Employee in connection therewith. In the event that
both Employee and TSI are made a party to the same third-party action,
complaint, suit or proceeding, TSI agrees to engage competent legal
representation reasonably acceptable to Employee, and Employee agrees to use the
same representation, provided that if counsel selected by TSI shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to TSI for errors or omissions made in good faith
where Employee has not exhibited gross, willful or wanton negligence or
misconduct or performed criminal and fraudulent acts which materially damage the
business of TSI. TSI shall pay, on behalf of Employee upon presentation of
proper invoices, all fees, costs and expenses (including attorneys' fees)
incurred in connection with any matter referenced in this paragraph 10.
11. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to TSI that the execution of this
Agreement by Employee and his employment by TSI and the performance of
Employee's duties hereunder will not violate or be a breach of any agreement
with a former employer, client or any other person or entity. Further, Employee
agrees to indemnify TSI for any claim, including but not limited to attorneys'
fees and expenses of investigation, by any such third party that such third
party may now have or may hereafter come to have against TSI based upon or
arising out of any noncompetition agreement, invention or
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secrecy agreement between Employee and such third party which was in existence
as of the date of this Agreement.
12. ASSIGNMENT; BINDING EFFECT.
Employee understands that he has been selected for employment by TSI on the
basis of Employee's personal qualifications, experience and skills. Employee,
therefore, shall not assign all or any portion of Employee's performance under
this Agreement. Subject to the preceding two (2) sentences and the express
provisions of paragraph 13 below, this Agreement shall be binding upon, inure to
the benefit of and be enforceable by the parties hereto and their respective
heirs, legal representatives, successors and assigns.
13. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that TSI may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of TSI hereunder or that TSI
may undergo another type of Change in Control. In the event such a merger or
consolidation or other Change in Control is initiated prior to the end of the
Term, then the provisions of this paragraph 13 shall be applicable.
(b) In the event of a pending Change in Control wherein TSI and Employee
have not received written notice at least five (5) business days prior to the
anticipated closing date of the transaction giving rise to the Change in Control
from the successor to all or a substantial portion of TSI's business and/or
assets that such successor is willing as of the closing to assume and agree to
perform TSI's obligations under this Agreement in the same manner and to the
same extent that TSI is hereby required to perform, then such Change in Control
shall be deemed to be a termination of this Agreement by TSI without cause
during the Term and the applicable portions of paragraph 6(d) will apply;
however, under such circumstances, the amount of the lump-sum severance payment
due to Employee shall be triple the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to TSI at least five (5) business
days prior to the anticipated closing of the transaction giving rise to the
Change in Control. In such case, the applicable provisions of paragraph 6(d)
will apply as though TSI had terminated the Agreement without cause during the
Term; however, under such circumstances, the amount of the lump-sum severance
payment due to Employee shall be double the amount calculated under the terms of
paragraph 6(d) and the noncompetition provisions of paragraph 4 shall all apply
for a period of two (2) years from the effective date of termination.
(d) For purposes of applying paragraph 6 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements and lump-sum payments due Employee must be paid in
full by TSI at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
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(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, or group of persons or entities acting
together, other than TSI or an employee benefit plan of TSI, acquires
directly or indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of TSI and immediately after such acquisition such person, entity
or group is, directly or indirectly, the Beneficial Owner of voting
securities representing 33% or more of the total voting power of all of the
then-outstanding voting securities of TSI and has a larger percentage of
voting securities of TSI than any other person, entity or group holding
voting securities of TSI, unless the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board;
or
(ii) the following individuals no longer constitute a majority of the
members of the Board: (A) the individuals who, as of the closing date of
TSI's initial public offering, constitute the Board (the "Original
Directors"); (B) the individuals who thereafter are elected to the Board
and whose election, or nomination for election, to the Board was approved
by a vote of at least two-thirds (2/3) of the Original Directors then still
in office (such directors becoming "Additional Original Directors"
immediately following their election); and (C) the individuals who are
elected to the Board and whose election, or nomination for election, to the
Board was approved by a vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in office (such
directors also becoming "Additional Original Directors" immediately
following their election); or
(iii) the stockholders of TSI shall approve a merger, consolidation,
recapitalization or reorganization of TSI, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the
voting securities of the surviving entity outstanding immediately after
such transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of TSI immediately prior to the transaction,
with the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI of
all or a substantial portion of TSI's assets (i.e., 50% or more of the
total assets of TSI).
(f) Employee must be notified in writing by TSI at any time that TSI or any
member of its Board anticipates that a Change in Control may take place.
(g) Employee shall be reimbursed by TSI or its successor, on a grossed up
basis, for any excise taxes that Employee incurs under Section 4999 of the
Internal Revenue Code of 1986, as a result of any Change in Control. Such amount
will be due and payable by TSI or its successor within ten (10) days after
Employee delivers a written request for reimbursement accompanied by a copy of
Employee's tax return(s) showing the excise tax actually incurred by Employee.
14. COMPLETE AGREEMENT.
If the IPO does not occur, this Agreement is not a promise of future
employment. This Agreement supersedes any other agreements or understandings,
written or oral, between TSI and
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Employee, and Employee has no oral representations, understandings or agreements
with TSI or any of its officers, directors or representatives covering the same
subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement and
expression of the agreement between TSI and Employee and of all the terms of
this Agreement, and it cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of TSI and Employee, and no term of this
Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
15. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To TSI: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: Xxx Xxxxxxxx
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 15.
16. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the other
portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
17. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted before a
panel of three (3) arbitrators in the community where the corporate headquarters
of TSI is located on the Effective Date, in accordance with the rules of the
American Arbitration Association then in effect. The arbitrators shall not have
the authority to add to, detract from or modify any provision hereof nor to
award punitive damages to any injured party. The arbitrators shall have the
authority to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 6(b) and 6(c) hereof, respectively, or that TSI
has otherwise materially breached this Agreement. A decision by a majority of
the arbitration
10
panel shall be final and binding. Judgment may be entered on the arbitrators'
award in any court having jurisdiction. The direct expense of any arbitration
proceeding shall be borne by TSI.
18. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws of
the State of Delaware without regard to the conflicts of laws principles of such
state.
19. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.
By: /s/
--------------------------------
Name:
------------------------------
Title:
-----------------------------
/s/ Xxx Xxxxxxxx
------------------------------------
Xxx Xxxxxxxx
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EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel Services
International, Inc., a Delaware corporation ("TSI"), Auto Europe, LLC, a Maine
limited liability company and a wholly-owned subsidiary of TSI (the "Company"),
and Xxxx Xxxxxxx ("Employee"), is hereby entered into as of this 22nd day of
July, 1997, and shall be effective as of the date of the consummation of the
initial public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and conditions
set forth herein and the performance of each, the parties hereto hereby agree as
follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Chief Executive Officer of the
Company. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a President of the Company and will
report directly to the Board of Directors of the Company (the "Board"). Employee
hereby accepts this employment upon the terms and conditions herein contained
and, subject to paragraph 1(c) hereof, agrees to devote Employee's time,
attention and efforts to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Board.
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
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2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be $140,000 per
year, payable on a regular basis in accordance with the Company's standard
payroll procedures but not less than monthly. On at least an annual basis, the
Board will review Employee's performance and may make increases to such base
salary if, in its discretion, any such increase is warranted. Such recommended
increase would, in all likelihood, require approval by the Board or a duly
constituted committee thereof.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee shall
be entitled to receive additional benefits and compensation from the Company in
such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and Employee's
dependent family members under health, hospitalization, disability, dental,
life and other insurance plans that the Company or TSI may have in effect
from time to time, benefits provided to Employee under this clause (i) to
be at least equal to such benefits provided to TSI executives.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with the Company's expense reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee by
the Board and participation in all other Company-wide or TSI-wide employee
benefits as available from time to time.
3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with the
Company, and for a period of two (2) years immediately following the termination
of Employee's employment under this Agreement, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, persons, company, partnership, corporation or business of whatever
nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any travel service business in direct competition with
the Company or TSI or any subsidiary of either the Company or TSI, within
the United States or within 100 miles of any other geographic area in which
the Company or TSI or any of the Company's or TSI's subsidiaries conducts
business, including any territory serviced by the Company or TSI or any of
such subsidiaries (the "Territory");
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(ii) call upon any person who is, at that time, within the Territory,
an employee of the Company or TSI (including the respective subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company or TSI
(including the respective subsidiaries thereof);
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of the Company
or TSI (including the respective subsidiaries thereof) within the Territory
for the purpose of soliciting or selling products or services in direct
competition with the Company or TSI or any subsidiary of the Company or TSI
within the Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by the
Company or TSI (including the respective subsidiaries thereof) or for which
the Company or TSI made an acquisition analysis, for the purpose of
acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than two percent (2%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the Company
and TSI as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company and TSI for
which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and TSI (including TSI's other
subsidiaries) throughout the term of this Agreement, whether before or after the
date of termination of the employment of Employee. For example, if, during the
term of this Agreement, the Company or TSI (including TSI's other subsidiaries)
engages in new and different activities, enters a new business or establishes
new locations for its current activities or business in addition to or other
than the activities or business enumerated under the Recitals above or the
locations currently established therefor, then Employee will be precluded from
soliciting the customers or employees of such new activities or business or from
such new location and from directly competing with such new business within 100
miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with the Company or TSI (including TSI's
other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or TSI (including TSI's other subsidiaries) shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities, or (iii) location, as applicable.
3
(d) The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board or TSI to
relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue for
three (3) years (the "Term"), and, unless terminated sooner as herein provided,
shall continue thereafter on a year-to-year basis on the same terms and
conditions contained herein in effect as of the time of renewal. This Agreement
and Employee's employment may be terminated in any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate this Agreement
with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive
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months, then thirty (30) days after receiving written notice (which notice may
occur before or after the end of such four (4) month period, but which shall not
be effective earlier than the last day of such four (4) month period), the
Company may terminate Employee's employment hereunder provided Employee is
unable to resume Employee's full-time duties at the conclusion of such notice
period. Also, Employee may terminate Employee's employment hereunder if his
health should become impaired to an extent that makes the continued performance
of Employee's duties hereunder hazardous to Employee's physical or mental health
or life, provided that Employee shall have furnished the Company with a written
statement from a qualified doctor to such effect and provided, further, that, at
the Company's request made within thirty (30) days of the date of such written
statement, Employee shall submit to an examination by a doctor selected by the
Company who is reasonably acceptable to Employee or Employee's doctor and such
doctor shall have concurred in the conclusion of Employee's doctor. In the event
this Agreement is terminated as a result of Employee's disability, Employee
shall receive from the Company, in a lump-sum payment due within ten (10) days
of the effective date of termination, the base salary at the rate then in effect
for whatever time period is remaining under the Term of this Agreement or for
one (1) year, whichever amount is greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days after
delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material, and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater, and, in the event that Employee accepts such lump sum payment, the
period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time after the Term, Employee shall be entitled to receive from the Company, in
a lump-sum payment due on the effective date of termination, the base salary
rate then in effect equivalent to one (1) year of salary, and, in the event that
Employee accepts such lump sum payment, the period set forth in paragraph 3(a)
and during which the terms of paragraph 3 apply shall be shortened to one (1)
year from the date of termination of employment. Should Employee be terminated
by the Company without cause at any time during or after the Term, Employee
shall be entitled to waive Employee's right to receive severance compensation
(by a written waiver delivered to the Company on the effective date of
termination), and, in such case, the noncompetition provisions of paragraph 3
shall not apply. If Employee resigns or otherwise terminates Employee's
employment without cause pursuant to this paragraph 5(d), Employee shall receive
no severance compensation. A termination without cause within the meaning of
this paragraph 5(d) shall be deemed to have occurred if any person or entity,
other than TSI or an employee benefit plan of TSI, acquires directly or
indirectly the Beneficial Ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting security of the
Company or TSI and immediately after such acquisition such person or entity is,
directly or
5
indirectly, the Beneficial Owner of voting securities representing 50% or more
of the total voting power of all of the then-outstanding voting securities of
the Company or TSI and the transaction pursuant to which such acquisition is
made is approved by at least two-thirds (2/3) of the Board of Directors of TSI
but is not approved by Employee.
(e) Change in Control of TSI. In the event of a "Change in Control of TSI"
(as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits and
reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 12 hereof. All other rights and obligations of TSI, the Company and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 9 hereof and
Employee's obligations under paragraphs 3, 6, 7, 8 and 10 hereof shall survive
such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's failure
to pay Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other breach of this Agreement by the Company,
as determined by a court of competent jurisdiction or pursuant to the provisions
of paragraph 16 below, the Company shall pay all amounts and damages to which
Employee may be entitled as a result of such breach, including interest thereon
and all reasonable legal fees and expenses and other costs incurred by Employee
to enforce Employee's rights hereunder. Further, none of the provisions of
paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists, and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors,
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials, and other similar data
pertaining to the business, activities or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company or TSI and which Employee conceives as a result of
Employee's employment by the Company. Employee hereby assigns and agrees to
assign all of Employee's interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and all
applications, assignments, or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
6
8. TRADE SECRETS.
Employee agrees that he or she will not, during or after the Term of this
Agreement with the Company, disclose the specific terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative
or investigative (other than an action by the Company or TSI against Employee),
by reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to the Company or TSI for errors or omissions
made in good faith where Employee has not exhibited gross, willful and wanton
negligence and misconduct or performed criminal and fraudulent acts which
materially damage the business of the Company.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the execution
of this Agreement by Employee and his employment by the Company and the
performance of Employee's duties hereunder will not violate or be a breach of
any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify the Company for any claim, including but
not limited to attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
the Company based upon or arising out of any noncompetition agreement,
invention, or secrecy agreement between Employee and such third party which was
in existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that he has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives, successors and assigns.
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity
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and that such entity shall automatically succeed to the rights and obligations
of the Company hereunder or that the Company may undergo another type of Change
in Control. In the event such a merger or consolidation or other Change in
Control is initiated prior to the end of the Term, then the provisions of this
paragraph 12 shall be applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this paragraph 12(c) (by a written
waiver delivered to the Company on the effective date of the termination), in
which case the noncompetition provisions of paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee benefit plan
of TSI, acquires directly or indirectly the Beneficial Ownership (as
defined in Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of the Company or TSI and immediately after
such acquisition such person or entity is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the total
voting power of all of the then-outstanding voting securities of the
Company or TSI, unless the transaction pursuant to which such acquisition
is made is approved by at least two-thirds (2/3) of the Board of Directors
of TSI;
(ii) the following individuals no longer constitute a majority of the
members of the Board of Directors of TSI: (A) the individuals who, as of
the closing date of TSI's initial public offering, constitute the Board of
Directors of TSI (the "Original Directors"); (B) the individuals
8
who thereafter are elected to the Board of Directors of TSI and whose
election, or nomination for election, to the Board of Directors of TSI was
approved by a vote of at least two-thirds (2/3) of the Original Directors
then still in office (such directors becoming "Additional Original
Directors" immediately following their election); and (C) the individuals
who are elected to the Board of Directors of TSI and whose election, or
nomination for election, to the Board of Directors of TSI was approved by a
vote of at least two-thirds (2/3) of the Original Directors and Additional
Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger, consolidation,
recapitalization or reorganization of TSI, a reverse stock split of
outstanding voting securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such transaction which
would result in at least 75% of the total voting power represented by the
voting securities of the surviving entity outstanding immediately after
such transaction being Beneficially Owned by at least 75% of the holders of
outstanding voting securities of TSI immediately prior to the transaction,
with the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI of
all or a substantial portion of TSI's assets (i.e., 50% or more of the
total assets of TSI).
(f) Employee must be notified in writing by the Company at any time that
the Company or any member of its Board anticipates that a Change in Control may
take place.
(g) Employee shall be reimbursed by the Company or its successor for any
excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI and Employee, and Employee has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement and
expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
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To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: Auto Europe, LLC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the other
portions of this Agreement shall be deemed valid and operative and, so far as is
reasonable and possible, effect shall be given to the intent manifested by the
portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define, or limit the extent or intent of the Agreement or of any part hereof.
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted before a
panel of three (3) arbitrators in Washington, D.C., in accordance with the rules
of the American Arbitration Association then in effect. The arbitrators shall
not have the authority to add to, detract from, or modify any provision hereof
nor to award punitive damages to any injured party. The arbitrators shall have
the authority to order back-pay, severance compensation, vesting of options (or
cash compensation in lieu of vesting of options), reimbursement of costs,
including those incurred to enforce this Agreement, and interest thereon in the
event the arbitrators determine that Employee was terminated without disability
or good cause, as defined in paragraphs 5(b) and 5(c) hereof, respectively, or
that the Company has otherwise materially breached this Agreement. A decision by
a majority of the arbitration panel shall be final and binding. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. The direct
expense of any arbitration proceeding shall be borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws of
the State of Delaware.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Auto Europe, LLC
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
------------------------------
/s/ Xxxx Xxxxxxx
--------------------------------------
Xxxx Xxxxxxx, Individually
11
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel Services
International, Inc., a Delaware corporation ("TSI"), Auto Europe, LLC, a Maine
limited liability company and a wholly-owned subsidiary of TSI (the "Company"),
and Xxxx Xxxxx ("Employee"), is hereby entered into as of this 28th day of July,
1997, and shall be effective as of the date of the consummation of the initial
public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants, and conditions
set forth herein and the performance of each, the parties hereto hereby agree as
follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as a Special Marketing Advisor of
the Company. As such, Employee shall have responsibilities, duties, and
authority reasonably accorded to and expected of a Special Marketing Advisor of
the Company and will report directly to the President Employee hereby accepts
this employment upon the terms and conditions herein contained and, subject to
paragraph 1(c) hereof, agrees to devote Employee's time, attention, and efforts
to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all policies
established by the Board of Directors of the Company (the "Board").
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
1
2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be $80,000 per
year, payable on a regular basis in accordance with the Company's standard
payroll procedures but not less than monthly. On at least an annual basis, the
Board will review Employee's performance and may make increases to such base
salary if, in its discretion, any such increase is warranted. Such recommended
increase would, in all likelihood, require approval by the Board or a duly
constituted committee thereof.
(b) Perquisites, Benefits and Other Compensation. Employee shall be
entitled to receive additional benefits and compensation from the Company in
such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and Employee's
dependent family members under health, hospitalization, disability, dental,
life and other insurance plans that the Company or TSI may have in effect
from time to time.
(ii) Reimbursement for all business travel and other out-of-pocket
expenses reasonably incurred by Employee in the performance of Employee's
services pursuant to this Agreement. All reimbursable expenses shall be
appropriately documented in reasonable detail by Employee upon submission
of any request for reimbursement, and in a format and manner consistent
with the Company's expense reporting policy.
(iii) The Company shall provide Employee with other perquisites as may
be available to or deemed appropriate for Employee by the Board and
participation in all other Company-wide or TSI-wide employee benefits as
available from time to time.
3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with the
Company, and for a period of two (2) years immediately following the termination
of Employee's employment under this Agreement, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in conjunction with any
other person, persons, company, partnership, corporation, or business of
whatever nature:
(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any travel service business in direct competition with
the Company or TSI or any subsidiary of either the Company or TSI, within
the United States or within 100 miles of any other geographic area in which
the Company or TSI or any of the Company's or TSI's subsidiaries conducts
business, including any territory serviced by the Company or TSI or any of
such subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the Territory,
an employee of the Company or TSI (including the respective subsidiaries
thereof) in a managerial capacity for the purpose or with the intent of
enticing such employee away from or out of the employ of the Company or TSI
(including the respective subsidiaries thereof);
2
(iii) call upon any person or entity which is, at that time, or which
has been, within one (1) year prior to that time, a customer of the Company
or TSI (including the respective subsidiaries thereof) within the Territory
for the purpose of soliciting or selling products or services in direct
competition with the Company or TSI or any subsidiary of the Company or TSI
within the Territory; or
(iv) call upon any prospective acquisition candidate, on Employee's
own behalf or on behalf of any competitor, which candidate was, to
Employee's actual knowledge after due inquiry, either called upon by the
Company or TSI (including the respective subsidiaries thereof) or for which
the Company or TSI made an acquisition analysis, for the purpose of
acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed to
prohibit Employee from acquiring as an investment not more than two percent (2%)
of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the Company
and TSI as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to the Company and TSI for
which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such covenants be construed and enforced in accordance with the changing
activities, business, and locations of the Company and TSI (including TSI's
other subsidiaries) throughout the term of this Agreement, whether before or
after the date of termination of the employment of Employee. For example, if,
during the term of this Agreement, the Company, or TSI (including TSI's other
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that Employee
shall cease to be employed hereunder, and shall enter into a business or pursue
other activities not in competition with the Company or TSI (including TSI's
other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or TSI (including TSI's other subsidiaries) shall
thereafter enter the same, similar, or a competitive (i) business, (ii) course
of activities, or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time, or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
3
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board or TSI to
relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient, and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue for
three (3) years (the "Term"), and, unless terminated sooner as herein provided,
shall continue thereafter on a year-to-year basis on the same terms and
conditions contained herein in effect as of the time of renewal. This Agreement
and Employee's employment may be terminated in any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate this Agreement
with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume Employee's full-time
duties at the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if his or her health should become impaired to
an extent that
4
makes the continued performance of Employee's duties hereunder hazardous to
Employee's physical or mental health or life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Employee or Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is terminated as a
result of Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days after
delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material, and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud, or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater, and, in the event that Employee accepts such lump sum payment, the
period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time after the Term, Employee shall be entitled to receive from the Company, in
a lump-sum payment due on the effective date of termination, the base salary
rate then in effect equivalent to one (1) year of salary, and, in the event that
Employee accepts such lump sum payment, the period set forth in paragraph 3(a)
and during which the terms of paragraph 3 apply shall be shortened to one (1)
year from the date of termination of employment. Should Employee be terminated
by the Company without cause at any time during or after the Term, Employee
shall be entitled to waive Employee's right to receive severance compensation
(by a written waiver delivered to the Company on the effective date of
termination), and, in such case, the noncompetition provisions of paragraph 3
shall not apply. If Employee resigns or otherwise terminates Employee's
employment without cause pursuant to this paragraph 5(d), Employee shall receive
no severance compensation. A termination without cause within the meaning of
this paragraph 5(d) shall be deemed to have occurred if any person or entity,
other than TSI or an employee benefit plan of TSI, acquires directly or
indirectly the Beneficial Ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting security of the
Company or TSI and immediately after such acquisition such person or entity is,
directly or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding voting
securities of the Company or TSI and the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board of
Directors of TSI but is not approved by Employee.
5
(e) Change in Control of TSI. In the event of a "Change in Control of TSI"
(as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits and
reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 12 hereof. All other rights and obligations of TSI, the Company, and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 9 hereof and
Employee's obligations under paragraphs 3, 6, 7, 8 and 10 hereof shall survive
such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's failure
to pay Employee on a timely basis the amounts to which he is entitled under this
Agreement or as a result of any other breach of this Agreement by the Company,
as determined by a court of competent jurisdiction or pursuant to the provisions
of paragraph 16 below, the Company shall pay all amounts and damages to which
Employee may be entitled as a result of such breach, including interest thereon
and all reasonable legal fees and expenses and other costs incurred by Employee
to enforce Employee's rights hereunder. Further, none of the provisions of
paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists, and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors,
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials, and other similar data
pertaining to the business, activities, or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company or TSI and which Employee conceives as a result of
Employee's employment by the Company. Employee hereby assigns and agrees to
assign all of Employee's interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and all
applications, assignments, or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
6
8. TRADE SECRETS.
Employee agrees that he or she will not, during or after the Term of this
Agreement with the Company, disclose the specific terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation, or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by the Company or TSI against Employee),
by reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement,
as actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit, or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to the Company or TSI for errors or
omissions made in good faith where Employee has not exhibited gross, willful,
and wanton negligence and misconduct or performed criminal and fraudulent acts
which materially damage the business of the Company.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the execution
of this Agreement by Employee and his or her employment by the Company and the
performance of Employee's duties hereunder will not violate or be a breach of
any agreement with a former employer, client, or any other person or entity.
Further, Employee agrees to indemnify the Company for any claim, including but
not limited to attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
the Company based upon or arising out of any noncompetition agreement,
invention, or secrecy agreement between Employee and such third party which was
in existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that he or she has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns.
7
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this paragraph 12(c) (by a written
waiver delivered to the Company on the effective date of the termination), in
which case the noncompetition provisions of paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company or TSI and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company or TSI, unless the transaction
pursuant to which such acquisition is made is approved by at least
two-thirds (2/3) of the Board of Directors of TSI;
8
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI, and Employee, and Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete, and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted, or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
9
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: Auto Europe, LLC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define, or limit the extent or intent of the Agreement or of any part hereof.
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in Washington, D.C., in accordance with
the rules of the American Arbitration Association then in effect. The
arbitrators shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Employee was
terminated without disability or good cause, as defined in paragraphs 5(b) and
5(c) hereof, respectively, or that the Company has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Delaware.
18. COUNTERPARTS
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Auto Europe, LLC
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
-------------------------------
/s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx, Individually
11
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel
Services International, Inc., a Delaware corporation ("TSI"), Cruises, Inc., a
New York corporation and a wholly-owned subsidiary of TSI (the "Company"), and
Xxxxxx Xxxxxxx ("Employee"), is hereby entered into as of this 22nd day of July,
1997, and shall be effective as of the date of the consummation of the initial
public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants, and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Chief Executive Officer of
the Company. As such, Employee shall have responsibilities, duties, and
authority reasonably accorded to and expected of a Chief Executive Officer of
the Company and will report directly to the Board of Directors of the Company
(the "Board"). Employee hereby accepts this employment upon the terms and
conditions herein contained and, subject to paragraph 1(c) hereof, agrees to
devote Employee's time, attention, and efforts to promote and further the
business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Company. During the term of Employee's employment
hereunder, Employee shall be entitled to be a director on the Board.
(c) Employee shall not, during the term of his or her employment
hereunder, be engaged in any other business activity pursued for gain, profit,
or other pecuniary advantage if such activity interferes with Employee's duties
and responsibilities hereunder. The foregoing limitations shall not be construed
as prohibiting Employee from making personal investments in such form or manner
as will neither require
Employee's services in the operation or affairs of the companies or enterprises
in which such investments are made nor violate the terms of paragraph 3 hereof.
(d) Employee shall be entitled to take "familiarization cruises" for
the purpose of researching, becoming familiar with, and writing about cruise
lines, cruise ships and destinations, all as part of Employee's duties under
this Agreement. Time spent on familiarization cruises shall not be counted as
vacation time, and all expenses related thereto (other than expenses for items
of a personal nature) shall be reimbursed by the Company (to the extent not
absorbed by the cruise line) in a manner consistent with the past practices of
the Company.
2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable hereunder to Employee plus the
base salary payable to Xxxxxx Xxxxxxx under that certain Employment Agreement of
even date herewith by and among the Company, TSI and Xxxxxx Xxxxxxx shall equal
$138,000.00 per year for the first three years of the Term, such salary to be
divided between Employee and Xxxxxx Xxxxxxx as shall be designated in writing to
the Company by Employee and Xxxxxx Xxxxxxx (and if no such designation is made
to the Company, such salary shall be divided equally between Employee and Xxxxxx
Xxxxxxx). The base salary payable hereunder to Employee shall be payable on a
regular basis in accordance with the Company's standard payroll procedures but
not less than monthly. The combined base salary payable hereunder for the fourth
and fifth years of the Term shall be subject to renegotiation, but in no event
shall such combined salary be less than $138,000. Employee shall have the right
to terminate Employee's employment hereunder at the end of the third year of the
Term.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental, life, and other insurance plans that the Company or
TSI may have in effect from time to time, benefits provided to Employee
under this clause (i) to be at least equal to such benefits provided to
TSI executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board, including the use of one luxury vehicle consistent with
the Company's past practice (which practice has been to provide a new
2
vehicle under a lease every two years), and participation in all other
Company-wide or TSI-wide employee benefits as available from time to
time. Employee shall be entitled to four weeks of vacation per year.
3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with
the Company, and for a period of two (2) years immediately following the
termination of Employee's employment under this Agreement, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation,
or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any travel service business in direct competition
with the Company or TSI or any subsidiary of either the Company or TSI,
within the United States or within 100 miles of any other geographic
area in which the Company or TSI or any of the Company's or TSI's
subsidiaries conducts business, including any territory serviced by the
Company or TSI or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or TSI (including the respective
subsidiaries thereof) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the employ of
the Company or TSI (including the respective subsidiaries thereof);
(iii) call upon any person or entity which is, at that time,
or which has been, within one (1) year prior to that time, a customer
of the Company or TSI (including the respective subsidiaries thereof)
within the Territory for the purpose of soliciting or selling products
or services in direct competition with the Company or TSI or any
subsidiary of the Company or TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate
was, to Employee's actual knowledge after due inquiry, either called
upon by the Company or TSI (including the respective subsidiaries
thereof) or for which the Company or TSI made an acquisition analysis,
for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company and TSI as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to the Company and
TSI for which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such
3
covenants be construed and enforced in accordance with the changing activities,
business, and locations of the Company and TSI (including TSI's other
subsidiaries) throughout the term of this Agreement, whether before or after the
date of termination of the employment of Employee. For example, if, during the
term of this Agreement, the Company, or TSI (including TSI's other subsidiaries)
engages in new and different activities, enters a new business or establishes
new locations for its current activities or business in addition to or other
than the activities or business enumerated under the Recitals above or the
locations currently established therefor, then Employee will be precluded from
soliciting the customers or employees of such new activities or business or from
such new location and from directly competing with such new business within 100
miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or TSI (including
TSI's other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or TSI (including TSI's other subsidiaries) shall
thereafter enter the same, similar, or a competitive (i) business, (ii) course
of activities, or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time, or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient, and
orderly relocation with minimal
4
disruption to the business affairs of the Company and the personal life of
Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for five (5) years (the "Term"), and, unless terminated sooner as herein
provided, shall continue thereafter on a year-to-year basis on the same terms
and conditions contained herein in effect as of the time of renewal. This
Agreement and Employee's employment may be terminated in any one of the
followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume Employee's full-time
duties at the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if his or her health should become impaired to
an extent that makes the continued performance of Employee's duties hereunder
hazardous to Employee's physical or mental health or life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the Company's
request made within thirty (30) days of the date of such written statement,
Employee shall submit to an examination by a doctor selected by the Company who
is reasonably acceptable to Employee or Employee's doctor and such doctor shall
have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated as a result of Employee's disability, Employee shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
whatever time period is remaining under the Term of this Agreement or for one
(1) year, whichever amount is greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material, and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud, or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
5
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater, and, in the event that Employee accepts such lump sum payment, the
period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time after the Term, Employee shall be entitled to receive from the Company, in
a lump-sum payment due on the effective date of termination, the base salary
rate then in effect equivalent to one (1) year of salary, and, in the event that
Employee accepts such lump sum payment, the period set forth in paragraph 3(a)
and during which the terms of paragraph 3 apply shall be shortened to one (1)
year from the date of termination of employment. Should Employee be terminated
by the Company without cause at any time during or after the Term, Employee
shall be entitled to waive Employee's right to receive severance compensation
(by a written waiver delivered to the Company on the effective date of
termination), and, in such case, the noncompetition provisions of paragraph 3
shall not apply. If Employee resigns or otherwise terminates Employee's
employment without cause pursuant to this paragraph 5(d), Employee shall receive
no severance compensation. A termination without cause within the meaning of
this paragraph 5(d) shall be deemed to have occurred if any person or entity,
other than TSI or an employee benefit plan of TSI, acquires directly or
indirectly the Beneficial Ownership (as defined in Section 13(d) of the
Securities Exchange Act of 1934, as amended) of any voting security of the
Company or TSI and immediately after such acquisition such person or entity is,
directly or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding voting
securities of the Company or TSI and the transaction pursuant to which such
acquisition is made is approved by at least two-thirds (2/3) of the Board of
Directors of TSI but is not approved by Employee.
(e) Change in Control of TSI. In the event of a "Change in Control of
TSI" (as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination, including any
benefits accrued under the Incentive Bonus Plan but not yet paid. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 12 hereof. All other rights and obligations of TSI, the Company, and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 9 hereof and
Employee's obligations under paragraphs 3, 6, 7, 8 and 10 hereof shall survive
such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of the provisions
of paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists, and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors,
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials, and other similar data
pertaining to the business, activities, or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment, and which are
directly related to the business or activities of the Company or TSI and which
Employee conceives as a result of Employee's employment by the Company. Employee
hereby assigns and agrees to assign all of Employee's interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments, or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein.
8. TRADE SECRETS.
Employee agrees that he or she will not, during or after the Term of
this Agreement with the Company, disclose the confidential terms of the
Company's or TSI's relationships or agreements with their respective significant
vendors or customers or any other significant and material trade secret of the
Company or TSI, whether in existence or proposed, to any person, firm,
partnership, corporation, or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by the Company or TSI against Employee),
by reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement,
as actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit, or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to the Company or TSI for errors or
omissions made in good faith where Employee has not exhibited gross, willful,
and wanton negligence and misconduct or performed criminal and fraudulent acts
which materially damage the business of the Company.
7
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and his or her employment by the Company
and the performance of Employee's duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including but not limited to attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any noncompetition
agreement, invention, or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that he or she has been selected for employment by
the Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns.
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this
8
paragraph 12(c) (by a written waiver delivered to the Company on the effective
date of the termination), in which case the noncompetition provisions of
paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee, unless waived,
must be paid in full by the Company at or prior to such closing. Further,
Employee will be given sufficient time and opportunity to elect whether to
exercise all or any of Employee's vested options to purchase TSI Common Stock,
including any options with accelerated vesting under the provisions of TSI's
1997 Long-Term Incentive Plan, such that Employee may convert the options to
shares of TSI Common Stock at or prior to the closing of the transaction giving
rise to the Change in Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company or TSI and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company or TSI, unless the transaction
pursuant to which such acquisition is made is approved by at least
two-thirds (2/3) of the Board of Directors of TSI;
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
9
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI, and Employee, and Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete, and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted, or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: c/o Cruises, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define, or limit the extent or intent of the Agreement or of any part hereof.
10
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in Washington, D.C., in accordance with
the rules of the American Arbitration Association then in effect. The
arbitrators shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Employee was
terminated without disability or good cause, as defined in paragraphs 5(b) and
5(c) hereof, respectively, or that the Company has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Delaware.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Cruises, Inc.
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Name: Xxxxxx X. Xxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxxx
------------------------------
Title: President
------------------------------
/s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx, Individually
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EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel
Services International, Inc., a Delaware corporation ("TSI"), Cruises, Inc., a
New York corporation and a wholly-owned subsidiary of TSI (the "Company"), and
Xxxxxx Xxxxxxx ("Employee"), is hereby entered into as of this 22nd day of July,
1997, and shall be effective as of the date of the consummation of the initial
public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Vice President of the
Company. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a Vice President of the Company and will
report directly to the President of the Company. Employee hereby accepts this
employment upon the terms and conditions herein contained and, subject to
paragraph 1(c) hereof, agrees to devote Employee's time, attention and efforts
to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Board of Directors of the Company (the "Board").
During the term of Employee's employment hereunder, Employee shall be entitled
to be a director on the Board.
(c) Employee shall not, during the term of her employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
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(d) Employee shall be entitled to take "familiarization cruises" for
the purpose of researching, becoming familiar with, and writing about cruise
lines, cruise ships and destinations, all as part of Employee's duties under
this Agreement. Time spent on familiarization cruises shall not be counted as
vacation time, and all expenses related thereto (other than expenses for items
of a personal nature) shall be reimbursed by the Company (to the extent not
absorbed by the cruise line) in a manner consistent with the past practices of
the Company.
2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable hereunder to Employee plus the
base salary payable to Xxxxxx Xxxxxxx under that certain Employment Agreement of
even date herewith by and among the Company, TSI and Xxxxxx Xxxxxxx shall equal
$138,000.00 per year for the first three years of the Term, such salary to be
divided between Employee and Xxxxxx Xxxxxxx as shall be designated in writing to
the Company by Employee and Xxxxxx Xxxxxxx (and if no such designation is made
to the Company, such salary shall be divided equally between Employee and Xxxxxx
Xxxxxxx). The base salary payable hereunder to Employee shall be payable on a
regular basis in accordance with the Company's standard payroll procedures but
not less than monthly. The combined base salary payable hereunder for the fourth
and fifth years of the Term shall be subject to renegotiation, but in no event
shall such combined salary be less than $138,000. Employee shall have the right
to terminate Employee's employment hereunder at the end of the third year of the
Term.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards.
(c) Executive Perquisites, Benefits and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company or
TSI may have in effect from time to time, benefits provided to Employee
under this clause (i) to be at least equal to such benefits provided to
TSI executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board, including the use of one luxury vehicle consistent with
the Company's past practice (which practice has been to provide a new
vehicle under a lease every two years) and participation in all other
Company-wide or TSI-wide employee benefits as available from time to
time. Employee shall be entitled to four weeks of vacation per year.
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3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with
the Company, and for a period of two (2) years immediately following the
termination of Employee's employment under this Agreement, for any reason
whatsoever, directly or indirectly, for herself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any travel service business in direct competition
with the Company or TSI or any subsidiary of either the Company or TSI,
within the United States or within 100 miles of any other geographic
area in which the Company or TSI or any of the Company's or TSI's
subsidiaries conducts business, including any territory serviced by the
Company or TSI or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or TSI (including the respective
subsidiaries thereof) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the employ of
the Company or TSI (including the respective subsidiaries thereof);
(iii) call upon any person or entity which is, at that time,
or which has been, within one (1) year prior to that time, a customer
of the Company or TSI (including the respective subsidiaries thereof)
within the Territory for the purpose of soliciting or selling products
or services in direct competition with the Company or TSI or any
subsidiary of the Company or TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate
was, to Employee's actual knowledge after due inquiry, either called
upon by the Company or TSI (including the respective subsidiaries
thereof) or for which the Company or TSI made an acquisition analysis,
for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company and TSI as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to the Company and
TSI for which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by her, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and TSI (including TSI's other
subsidiaries) throughout the term of this Agreement, whether before or after the
date of termination of the employment of Employee. For example, if, during the
term of
3
this Agreement, the Company, or TSI (including TSI's other subsidiaries) engages
in new and different activities, enters a new business or establishes new
locations for its current activities or business in addition to or other than
the activities or business enumerated under the Recitals above or the locations
currently established therefor, then Employee will be precluded from soliciting
the customers or employees of such new activities or business or from such new
location and from directly competing with such new business within 100 miles of
its then-established operating location(s) through the term of this Agreement.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or TSI (including
TSI's other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or TSI (including TSI's other subsidiaries) shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time, or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that she may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
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(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for five (5) years (the "Term"), and, unless terminated sooner as herein
provided, shall continue thereafter on a year-to-year basis on the same terms
and conditions contained herein in effect as of the time of renewal. This
Agreement and Employee's employment may be terminated in any one of the
followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume Employee's full-time
duties at the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if her health should become impaired to an
extent that makes the continued performance of Employee's duties hereunder
hazardous to Employee's physical or mental health or life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the Company's
request made within thirty (30) days of the date of such written statement,
Employee shall submit to an examination by a doctor selected by the Company who
is reasonably acceptable to Employee or Employee's doctor and such doctor shall
have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated as a result of Employee's disability, Employee shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
whatever time period is remaining under the Term of this Agreement or for one
(1) year, whichever amount is greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater, and, in the event that Employee
5
accepts such lump sum payment, the period set forth in paragraph 3(a) and during
which the terms of paragraph 3 apply shall be shortened to one (1) year from the
date of termination of employment. Should Employee be terminated by the Company
without cause at any time after the Term, Employee shall be entitled to receive
from the Company, in a lump-sum payment due on the effective date of
termination, the base salary rate then in effect equivalent to one (1) year of
salary, and, in the event that Employee accepts such lump sum payment, the
period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time during or after the Term, Employee shall be entitled to waive Employee's
right to receive severance compensation (by a written waiver delivered to the
Company on the effective date of termination), and, in such case, the
noncompetition provisions of paragraph 3 shall not apply. If Employee resigns or
otherwise terminates Employee's employment without cause pursuant to this
paragraph 5(d), Employee shall receive no severance compensation. A termination
without cause within the meaning of this paragraph 5(d) shall be deemed to have
occurred if any person or entity, other than TSI or an employee benefit plan of
TSI, acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of the Company or TSI and immediately after such acquisition such
person or entity is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company or TSI and the transaction
pursuant to which such acquisition is made is approved by at least two-thirds
(2/3) of the Board of Directors of TSI but is not approved by Xxxxxx X. Xxxxxxx.
(e) Change in Control of TSI. In the event of a "Change in Control of
TSI" (as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination, including any
benefits accrued under the Incentive Bonus Plan but not yet paid. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 12 hereof. All other rights and obligations of TSI, the Company, and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 9 hereof and
Employee's obligations under paragraphs 3, 6, 7, 8 and 10 hereof shall survive
such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of the provisions
of paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
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6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists, and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors,
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials, and other similar data
pertaining to the business, activities, or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment, and which are
directly related to the business or activities of the Company or TSI and which
Employee conceives as a result of Employee's employment by the Company. Employee
hereby assigns and agrees to assign all of Employee's interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments, or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein.
8. TRADE SECRETS.
Employee agrees that he or she will not, during or after the Term of
this Agreement with the Company, disclose the confidential terms of the
Company's or TSI's relationships or agreements with their respective significant
vendors or customers or any other significant and material trade secret of the
Company or TSI, whether in existence or proposed, to any person, firm,
partnership, corporation, or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by the Company or TSI against Employee),
by reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement,
as actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit, or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to the Company or TSI for errors or
omissions made in good faith where Employee has not exhibited gross, willful,
and wanton negligence and misconduct or performed criminal and fraudulent acts
which materially damage the business of the Company.
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10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and his or her employment by the Company
and the performance of Employee's duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including but not limited to attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any noncompetition
agreement, invention, or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that he or she has been selected for employment by
the Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns.
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this
8
paragraph 12(c) (by a written waiver delivered to the Company on the effective
date of the termination), in which case the noncompetition provisions of
paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee, unless waived,
must be paid in full by the Company at or prior to such closing. Further,
Employee will be given sufficient time and opportunity to elect whether to
exercise all or any of Employee's vested options to purchase TSI Common Stock,
including any options with accelerated vesting under the provisions of TSI's
1997 Long-Term Incentive Plan, such that Employee may convert the options to
shares of TSI Common Stock at or prior to the closing of the transaction giving
rise to the Change in Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company or TSI and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company or TSI unless the transaction pursuant
to which such acquisition is made is approved by at least two-thirds
(2/3) of the Board of Directors of TSI;
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
9
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI, and Employee, and Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete, and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted, or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: c/o Cruises, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define, or limit the extent or intent of the Agreement or of any part hereof.
10
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in Washington, D.C., in accordance with
the rules of the American Arbitration Association then in effect. The
arbitrators shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Employee was
terminated without disability or good cause, as defined in paragraphs 5(b) and
5(c) hereof, respectively, or that the Company has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Delaware.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Cruises, Inc.
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
------------------------------
Title: President
------------------------------
/s/ Xxxxxx Xxxxxxx
------------------------------------
Xxxxxx Xxxxxxx
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel
Services International, Inc., a Delaware corporation ("TSI"), Cruises, Inc., a
New York corporation and a wholly-owned subsidiary of TSI (the "Company"), and
Xxxxxx Xxxxxxxx ("Employee"), is hereby entered into as of this 22nd day of
July, 1997, and shall be effective as of the date of the consummation of the
initial public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Chief Financial Officer of
the Company. As such, Employee shall have responsibilities, duties and authority
reasonably accorded to and expected of a Chief Financial Officer of the Company
and will report directly to the President of the Company. Employee hereby
accepts this employment upon the terms and conditions herein contained and,
subject to paragraph 1(c) hereof, agrees to devote Employee's time, attention
and efforts to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Board of Directors of the Company (the "Board").
(c) Employee shall not, during the term of her employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be $47,120
per year, payable on a regular basis in accordance with the Company's standard
payroll procedures but not less than monthly. On at least an annual basis, the
Board or the President will review Employee's performance and may make increases
to such base salary if, in its discretion, any such increase is warranted.
(b) Executive Perquisites, Benefits and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(ii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board or the President and participation in all other
Company-wide or TSI-wide employee benefits as available from time to
time.
3. [INTENTIONALLY DELETED]
4. PLACE OF PERFORMANCE.
(a) Employee understands that she may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient, and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
2
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for one (1) year (the "Term"), unless terminated sooner as herein provided. This
Agreement and Employee's employment may be terminated prior to the end of such
Term in any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume Employee's full-time
duties at the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if her health should become impaired to an
extent that makes the continued performance of Employee's duties hereunder
hazardous to Employee's physical or mental health or life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the Company's
request made within thirty (30) days of the date of such written statement,
Employee shall submit to an examination by a doctor selected by the Company who
is reasonably acceptable to Employee or Employee's doctor and such doctor shall
have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated as a result of Employee's disability, Employee shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
whatever time period is remaining under the Term of this Agreement or for one
(1) year, whichever amount is greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material, and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud, or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Should Employee be terminated by the Company without cause during the Term,
Employee shall receive from the Company, in a lump-sum payment due on the
effective date of termination, the base salary at the rate then in effect for
whatever time period is remaining under the Term of this Agreement or for one
(1) year, whichever amount is greater. Any termination without cause by the
Company shall operate to shorten the period set forth in paragraph 3(a) and
during which the terms of paragraph 3 apply to one (1) year from the date of
termination of employment. If Employee resigns or otherwise terminates
Employee's employment without cause pursuant to this paragraph 5(d), Employee
shall receive no severance compensation.
3
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. All other
rights and obligations of TSI, the Company, and Employee under this Agreement
shall cease as of the effective date of termination, except that the Company's
obligations under paragraph 9 hereof and Employee's obligations under paragraphs
3, 6, 7, 8 and 10 hereof shall survive such termination in accordance with their
terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which she is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 15 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of the provisions
of paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data
pertaining to the business, activities or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment, and which are
directly related to the business or activities of the Company or TSI and which
Employee conceives as a result of Employee's employment by the Company. Employee
hereby assigns and agrees to assign all of Employee's interests therein to the
Company or its nominee. Whenever requested to do so by the Company, Employee
shall execute any and all applications, assignments or other instruments that
the Company shall deem necessary to apply for and obtain Letters Patent of the
United States or any foreign country or to otherwise protect the Company's
interest therein.
8. TRADE SECRETS.
Employee agrees that she will not, during or after the Term of this
Agreement with the Company, disclose the confidential terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
4
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by the Company or TSI against Employee), by
reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge her duties under this Agreement,
Employee cannot be held liable to the Company or TSI for errors or omissions
made in good faith where Employee has not exhibited gross, willful and wanton
negligence and misconduct or performed criminal and fraudulent acts which
materially damage the business of the Company.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and her employment by the Company and
the performance of Employee's duties hereunder will not violate or be a breach
of any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify the Company for any claim, including but
not limited to attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
the Company based upon or arising out of any noncompetition agreement, invention
or secrecy agreement between Employee and such third party which was in
existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that she has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2), this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
12. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI and Employee, and Employee has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
5
13. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: Cruises, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 13.
14. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
15. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in Washington, D.C., in accordance with
the rules of the American Arbitration Association then in effect. The
arbitrators shall not have the authority to add to, detract from or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Employee was
terminated without disability or good cause, as defined in paragraphs 5(b) and
5(c) hereof, respectively, or that the Company has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company.
16. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Delaware.
6
17. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Cruises, Inc.
By: /s/ Xxxxxx X. Xxxx
--------------------------------
Name: Xxxxxx X. Xxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
------------------------------
/s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx, Individually
8
EXECUTION COPY
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), by and among TRAVEL
SERVICES INTERNATIONAL, INC., a Delaware corporation ("TSI"), CRUISES ONLY, LLC,
a Delaware limited liability company and a wholly-owned subsidiary of TSI (the
"Company"), and XXXXX XXXXXX ("Employee"), is hereby entered into as of this
22nd day of July, 1997, and shall be effective as of the date of the
consummation of the initial public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Chairman and Chief Executive
Officer of the Company. As such, Employee shall have responsibilities, duties
and authority reasonably accorded to and expected of a Chairman and Chief
Executive Officer of the Company and will report directly to the Board of
Directors of the Company (the "Board"), all in accordance with instructions and
authorizations from the Board. Employee hereby accepts this employment upon the
terms and conditions herein contained and, subject to paragraph 1(c) hereof,
agrees to devote 70% of time, attention and efforts devoted by Employee to work
to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Board.
(c) During the term of his employment hereunder, Employee may spend up
to 30% of the time Employee devotes to work to any other business activity which
he may pursue for gain, profit or other pecuniary advantage, provided that such
activity does not interfere with Employee's duties and responsibilities
hereunder. The foregoing limitations shall not be construed as prohibiting
Employee from making personal investments in such form or manner as will neither
require Employee's services in the
1
operation or affairs of the companies or enterprises in which such investments
are made nor violate the terms of paragraph 3 hereof.
2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable hereunder to Employee shall be
$125,000 per year. The base salary payable hereunder to Employee shall be
payable on a regular basis in accordance with the Company's standard payroll
procedures but not less than monthly. If Xxxx Xxxxxx shall cease to be employed
by the Company, the base salary payable hereunder to Employee shall remain at
$125,000 per year. For any renewal periods following the Term, the salary set
forth above is subject to adjustment as may be agreed by the parties.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards,
subject to Board approval.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company or
TSI may have in effect from time to time, which coverage shall be
sufficient to cover procedures and hospitalizations to Florida Hospital
and treatment by the Florida Heart Group at levels consistent with the
levels received by Employee as President of Cruises Only, Inc. prior to
this date, all such benefits provided to Employee under this clause (i)
to be at least equal to such benefits provided to TSI executives and
subject to the Board's discretion with respect to such plans. Any such
life insurance under these plans shall provide $1 million of coverage
with AD&D for Employee. If this Agreement is terminated and thereafter
Employee remains a member of the Board of Directors of TSI, TSI shall
make available high quality health care and accident insurance for
Employee and his immediate family for so long as Employee is a member
of the Board of Directors of TSI.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board, including (A) membership fees for Employee's American
Express, VISA and Master Charge Platinum Cards, (B) all reasonable
charges in connection with Employee's cellular telephone service
(except that Employee shall be responsible for all personal charges in
connection with such telephone service in excess of $37.50 per month),
(C) upgrades of all computers used by Employee in connection with the
business of the Company, (D) the 5th Floor office currently being used
by Employee in the Company's building as
2
long as Employee is employed by the Company, (E) first class business
travel, provided that Employee uses his best efforts to obtain
discounted prices through TSI, (F) four weeks vacation per year, (G)
contributions to Employee's 401(k) plan at a level equal to the
contributions made for all other employees of the Company and (H) being
listed on TSI's ARC list for purposes of travel and travel discounts,
(I) being an authorized user on the Company's Citrus Club membership,
(J) being eligible to participate in any car allowance program
developed by TSI for its senior executives and (K) participation in all
other Company-wide or TSI-wide employee benefits as available from time
to time.
3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with
the Company, and for a period of two (2) years immediately following the
termination of Employee's employment under this Agreement, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in the same or similar business as the Company prior to
the Effective Date in direct competition with the Company or TSI or any
subsidiary of either the Company or TSI, within the United States of
America (the "Territory"), provided, however, that Employee shall have
the right to be an investor in any entity engaged in the cruise line
business, and provided further, however, that after the termination or
expiration of Employee's employment hereunder, Employee may engage as
an employee of a cruise line business so long as (A) Employee is not
employed to sell cruise reservations for such cruise line business and
(B) any trade services or products (e.g., software programs) developed
in whole or part by Employee while in the employ of such cruise line
business are offered to the Company on a preferential basis;
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or TSI (including the respective
subsidiaries thereof) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the employ of
the Company or TSI (including the respective subsidiaries thereof),
provided that Employee shall be permitted to call upon and hire any
member of his immediate family;
(iii) call upon any person or entity which is, at that time,
or which has been, within one (1) year prior to that time, a customer
of the Company or TSI (including the respective subsidiaries thereof)
within the Territory for the purpose of soliciting or selling products
or services in direct competition with the Company or TSI or any
subsidiary of the Company or TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate
was, to Employee's actual knowledge after due inquiry, either called
upon by the Company or TSI (including the respective subsidiaries
thereof) or for which the Company or TSI made an acquisition analysis,
for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
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(b) Because of the difficulty of measuring economic losses to the
Company and TSI as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to the Company and
TSI for which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such covenants be construed and enforced in accordance with the changing
activities, business and locations of the Company and TSI (including TSI's other
subsidiaries) throughout the term of this Agreement, whether before or after the
date of termination of the employment of Employee. For example, if, during the
term of this Agreement, the Company or TSI (including TSI's other subsidiaries)
engages in new and different activities, enters a new business or establishes
new locations for its current activities or business in addition to or other
than the activities or business enumerated under the Recitals above or the
locations currently established therefor, then Employee will be precluded from
soliciting the customers or employees of such new activities or business or from
such new location and from directly competing with such new business within 100
miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or TSI (including
TSI's other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or TSI (including TSI's other subsidiaries) shall
thereafter enter the same, similar or a competitive (i) business, (ii) course of
activities or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in
4
duties and responsibilities. In such event, if Employee agrees to relocate, the
Company will pay all relocation costs to move Employee, Employee's immediate
family, and their personal property and effects. Such costs may include, by way
of example, but are not limited to, pre-move visits to search for a new
residence, investigate schools or for other purposes; temporary lodging and
living costs prior to moving into a new permanent residence; duplicate home
carrying costs; all closing costs on the sale of Employee's present residence
and on the purchase of a comparable residence in the new location; and added
income taxes that Employee may incur if any relocation costs are not deductible
for tax purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for three (3) years (the "Term"), and, unless terminated sooner as herein
provided, shall continue thereafter on a year-to-year basis on the same terms
and conditions contained herein in effect as of the time of renewal. Either
party may request modification of this Agreement during any term by serving
written notice to the other party not less than sixty (60) days prior to the
expiration of any term; provided that neither party shall be obligated to agree
to any modification hereof, in which case this Agreement (unless terminated as
herein provided) shall continue unmodified. This Agreement and Employee's
employment may be terminated in any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's duties
hereunder for six (6) consecutive months, then thirty (30) days after receiving
written notice (which notice may occur before or after the end of such four (4)
month period, but which shall not be effective earlier than the last day of such
four (4) month period), the Company may terminate Employee's employment
hereunder provided Employee is unable to resume Employee's full-time duties at
the conclusion of such notice period. Also, Employee may terminate Employee's
employment hereunder if his health should become impaired to an extent that
makes the continued performance of Employee's duties hereunder hazardous to
Employee's physical or mental health or life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Employee or Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is terminated as a
result of Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater. Benefits, including insurance benefits, and pro rata bonuses shall
continue to be paid for such period.
5
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary applicable to Employee at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater, and, in the event that Employee accepts such lump
sum payment, the period set forth in paragraph 3(a) and during which the terms
of paragraph 3 apply shall be shortened to one (1) year from the date of
termination of employment. Benefits, including insurance benefits, and pro rata
bonuses shall continue to be paid for such remaining or one-year period,
whichever is greater. Should Employee be terminated by the Company without cause
at any time after the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary rate applicable to Employee then in effect equivalent to one (1)
year of salary, and, in the event that Employee accepts such lump sum payment,
the period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time during or after the Term, Employee shall be entitled to waive Employee's
right to receive severance compensation (by a written waiver delivered to the
Company on the effective date of termination), and, in such case, the
noncompetition provisions of paragraph 3 shall not apply. If Employee resigns or
otherwise terminates Employee's employment without cause pursuant to this
paragraph 5(d), Employee shall receive no severance compensation. A termination
without cause within the meaning of this paragraph 5(d) shall be deemed to have
occurred if any person or entity, other than TSI or an employee benefit plan of
TSI, acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of the Company or TSI and immediately after such acquisition such
person or entity is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company or TSI and the transaction
pursuant to which such acquisition is made is approved by at least two-thirds
(2/3) of the Board of Directors of TSI but is not approved by Employee.
(e) Change in Control of TSI. In the event of a "Change in Control of
TSI" (as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation, benefits and pro rata bonuses subsequent to termination, if any,
will be due and payable to Employee only to the extent and in the manner
expressly provided above or in paragraph 12 hereof. All other rights and
obligations of TSI, the Company and Employee under this
6
Agreement shall cease as of the effective date of termination, except that the
Company's obligations under paragraph 9 hereof and Employee's obligations under
paragraphs 3, 6, 7, 8 and 10 hereof shall survive such termination in accordance
with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of the provisions
of paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI or their representatives, vendors
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data
pertaining to the business, activities or future plans of the Company or TSI
which are collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment. Employee shall
have the opportunity to buy any equipment utilized by Employee at the time of
his termination at its depreciated value.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company or TSI and which Employee conceives as a result of
Employee's employment by the Company. Employee hereby assigns and agrees to
assign all of Employee's interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
8. TRADE SECRETS.
Employee agrees that he will not, during or after the Term of this
Agreement with the Company, disclose the specific terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
7
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by the Company or TSI against Employee), by
reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his duties under this Agreement,
Employee cannot be held liable to the Company or TSI for errors or omissions
made in good faith where Employee has not exhibited gross, willful and wanton
negligence and misconduct or performed criminal and fraudulent acts which
materially damage the business of the Company.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and his employment by the Company and
the performance of Employee's duties hereunder will not violate or be a breach
of any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify the Company for any claim, including but
not limited to attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
the Company based upon or arising out of any noncompetition agreement, invention
or secrecy agreement between Employee and such third party which was in
existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that he has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives and successors. The Company shall
not assign this Agreement without Employee's written consent, which consent may
be withheld by Employee.
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction
8
giving rise to the Change in Control from the successor to all or a substantial
portion of the Company's business and/or assets that such successor is willing
as of the closing to assume and agree to perform the Company's obligations under
this Agreement in the same manner and to the same extent that the Company is
hereby required to perform, then such Change in Control shall be deemed to be a
termination of this Agreement by the Company without cause during the Term and
the applicable portions of paragraph 5(d) will apply; however, under such
circumstances, the amount of the lump-sum severance payment due to Employee
shall be triple the amount calculated under the terms of paragraph 5(d) and the
noncompetition provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this paragraph 12(c) (by a written
waiver delivered to the Company on the effective date of the termination), in
which case the noncompetition provisions of paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee, unless waived,
must be paid in full by the Company at or prior to such closing. Further,
Employee will be given sufficient time and opportunity to elect whether to
exercise all or any of Employee's vested options to purchase TSI Common Stock,
including any options with accelerated vesting under the provisions of TSI's
1997 Long-Term Incentive Plan, such that Employee may convert the options to
shares of TSI Common Stock at or prior to the closing of the transaction giving
rise to the Change in Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company, unless the transaction pursuant to
which such acquisition is made is approved by at least two-thirds (2/3)
of the Board of Directors of TSI;
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional
9
Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI and Employee, and Employee has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, Xxxxxxxx 00000
10
To Employee: Xxxxx Xxxxxx
Cruises Only, LLC
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in the community where the corporate
headquarters of TSI is located, in accordance with the rules of the American
Arbitration Association then in effect. The arbitrators shall not have the
authority to add to, detract from, or modify any provision hereof nor to award
punitive damages to any injured party. The arbitrators shall have the authority
to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 5(b) and 5(c) hereof, respectively, or that the
Company has otherwise materially breached this Agreement. A decision by a
majority of the arbitration panel shall be final and binding. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. The direct
expense of any arbitration proceeding shall be borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Florida.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
------------------------------
CRUISES ONLY, LLC
By: /s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
Chief Executive Officer
/s/ Xxxxx Xxxxxx
---------------------------------
XXXXX XXXXXX, Individually
12
EXECUTION COPY
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), by and among TRAVEL
SERVICES INTERNATIONAL, INC., a Delaware corporation ("TSI"), CRUISES ONLY, LLC,
a Delaware limited liability company and a wholly-owned subsidiary of TSI (the
"Company"), and XXXX XXXXXX ("Employee"), is hereby entered into as of this 22nd
day of July, 1997, and shall be effective as of the date of the consummation of
the initial public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as Vice Chairman and President
of the Company. As such, Employee shall have responsibilities, duties and
authority reasonably accorded to and expected of a Vice Chairman and President
of the Company and will report directly to the Chief Executive Officer of the
Company. Employee hereby accepts this employment upon the terms and conditions
herein contained and, subject to paragraph 1(c) hereof, agrees to devote 70% of
time, attention and efforts devoted by Employee to work to promote and further
the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Board of Directors of the Company (the "Board").
(c) During the term of her employment hereunder, Employee may spend up
to 30% of the time Employee devotes to work to any other business activity which
she may pursue for gain, profit or other pecuniary advantage, provided that such
activity does not interfere with Employee's duties and responsibilities
hereunder. The foregoing limitations shall not be construed as prohibiting
Employee from making personal investments in such form or manner as will neither
require Employee's services in the operation or affairs of the companies or
enterprises in which such investments are made nor violate the terms of
paragraph 3 hereof.
1
2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable hereunder to Employee shall be
$13,000 per year. The base salary payable hereunder to Employee shall be payable
on a regular basis in accordance with the Company's standard payroll procedures
but not less than monthly. If Xxxxx Xxxxxx shall cease to be employed by the
Company, the base salary payable hereunder to Employee shall be increased to
$125,000 per year. For any renewal periods following the Term, the salary set
forth above is subject to adjustment as may be agreed by the parties.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards,
subject to Board approval.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental, life and other insurance plans that the Company or
TSI may have in effect from time to time, which coverage shall be
sufficient to cover procedures and hospitalizations to Florida Hospital
and treatment by the Florida Heart Group at levels consistent with the
levels received by Employee as Vice President of Cruises Only, Inc.
prior to this date, all such benefits provided to Employee under this
clause (i) to be at least equal to such benefits provided to TSI
executives and subject to the Board's discretion with respect to such
plans. Any such life insurance under these plans shall provide $1
million of coverage with AD&D for Employee. If this Agreement is
terminated and thereafter Employee remains a member of the Board of
Directors of TSI, TSI shall make available high quality health care and
accident insurance for Employee and her immediate family for so long as
Employee is a member of the Board of Directors of TSI at TSI's expense.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board, including (A) membership fees for Employee's American
Express, VISA and Master Charge Platinum Cards, (B) all reasonable
charges in connection with Employee's cellular telephone service
(except that Employee and Xxxxx Xxxxxx, collectively, shall be
responsible for all personal charges in connection with such telephone
service in excess of $75 per month), (C) upgrades of all computers used
by Employee in connection with the business of the Company, (D) the 5th
Floor office currently being used by Employee in the Company's building
as long as Employee is employed by the Company, (E) first class
business travel, provided that Employee uses her best efforts to obtain
discounted prices
2
through TSI, (F) four weeks vacation per year, (G) contributions to
Employee's 401(k) plan at a level equal to the contributions made for
all other employees of the Company and (H) being listed on TSI's ARC
list for purposes of travel and travel discounts, (I) being an
authorized user on the Company's Citrus Club membership, (J) being
eligible to participate in any car allowance program developed by TSI
for its senior executives and (K) participation in all other
Company-wide or TSI-wide employee benefits as available from time to
time.
3. NON-COMPETITION.
(a) Provided that TSI shall have complied with and performed all of its
obligations under the Agreement and Plan of Organization, dated as of May 9,
1997, among the Company, TSI and the Stockholders named therein and that the
Company shall have received payment in full of the consideration described in
Section 3 thereof, Employee shall not, during the period of Employee's
employment with the Company, and for a period of two (2) years immediately
following the termination of Employee's employment under this Agreement, for any
reason whatsoever, directly or indirectly, for herself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in the same or similar business of the Company on the
Effective Date in direct competition with TSI or any of the
subsidiaries thereof, in the United States of America (the
"Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of TSI (including the subsidiaries thereof) in a
sales representative or managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of TSI
(including the subsidiaries thereof), provided that Employee shall be
permitted to call upon and hire any member of her immediate family;
(iii) call upon any person or entity which is at that time, or
which has been, within one (1) year prior to the Effective Date, a
customer of TSI (including the subsidiaries thereof) within the
Territory for the purpose of soliciting or selling products or services
in direct competition with TSI or any subsidiary of TSI within the
Territory in the same or similar business of the Company on the
Effective Date; or
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor in the travel
services business, which candidate, to the actual knowledge of Employee
after due inquiry, was called upon by TSI (including the subsidiaries
thereof) or for which, to the actual knowledge of Employee after due
inquiry, TSI (or any subsidiary thereof) made an acquisition analysis,
for the purpose of acquiring such entity.
(v) disclose customers, whether in existence or proposed, of
the Company to any person, firm, partnership, corporation or business
for any reason or purpose whatsoever except to the extent that the
Company has in the past disclosed such information to the types of
persons to whom disclosure is then presently contemplated for valid
business reasons.
3
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to TSI as a
result of a breach of the foregoing covenant, and because of the immediate and
irreparable damage that could be caused to TSI for which it would have no other
adequate remedy, Employee agrees that the foregoing covenant may be enforced by
TSI in the event of breach by Employee, by injunctions and restraining orders.
(c) It is agreed by the parties hereto that the foregoing covenants in
this paragraph 3 impose a reasonable restraint on Employee in light of the
activities and business of TSI (including the subsidiaries thereof) on the date
of the execution of this Agreement and the current plans of TSI.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall thereby be reformed.
(e) It is specifically agreed that the period of two (2) years stated
at the beginning of this paragraph 3, during which the agreements and covenants
of Employee made in this paragraph 3 shall be effective, shall be computed by
excluding from such computation any time during which Employee is in violation
of any provision of this paragraph 3. The covenants contained in this paragraph
3 shall have no effect if the transactions contemplated by the Agreement and
Plan of Organization referenced above are not consummated nor may such covenants
be enforced by any party to this Agreement that is in breach of its obligations
hereunder.
(f) The parties hereto hereby agree that the covenants in this
paragraph 3 are a material and substantial part of this Agreement.
4. PLACE OF PERFORMANCE.
(a) Employee understands that she may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
4
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for three (3) years (the "Term"), and, unless terminated sooner as herein
provided, shall continue thereafter on a year-to-year basis on the same terms
and conditions contained herein in effect as of the time of renewal. Either
party may request modification of this Agreement during any term by serving
written notice to the other party not less than sixty (60) days prior to the
expiration of any term; provided that neither party shall be obligated to agree
to any modification hereof, in which case this Agreement (unless terminated as
herein provided) shall continue unmodified. This Agreement and Employee's
employment may be terminated in any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's duties
hereunder for six (6) consecutive months, then thirty (30) days after receiving
written notice (which notice may occur before or after the end of such four (4)
month period, but which shall not be effective earlier than the last day of such
four (4) month period), the Company may terminate Employee's employment
hereunder provided Employee is unable to resume Employee's full-time duties at
the conclusion of such notice period. Also, Employee may terminate Employee's
employment hereunder if her health should become impaired to an extent that
makes the continued performance of Employee's duties hereunder hazardous to
Employee's physical or mental health or life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Employee or Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is terminated as a
result of Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater. Benefits, including insurance benefits, and pro rata bonuses shall
continue to be paid for such period.
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
5
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary applicable to Employee at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for one (1) year,
whichever amount is greater, and, in the event that Employee accepts such lump
sum payment, the period set forth in paragraph 3(a) and during which the terms
of paragraph 3 apply shall be shortened to one (1) year from the date of
termination of employment. Benefits, including insurance benefits, and pro rata
bonuses shall continue to be paid for such remaining or one-year period,
whichever is greater. Should Employee be terminated by the Company without cause
at any time after the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary rate applicable to Employee then in effect equivalent to one (1)
year of salary, and, in the event that Employee accepts such lump sum payment,
the period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time during or after the Term, Employee shall be entitled to waive Employee's
right to receive severance compensation (by a written waiver delivered to the
Company on the effective date of termination), and, in such case, the
noncompetition provisions of paragraph 3 shall not apply. If Employee resigns or
otherwise terminates Employee's employment without cause pursuant to this
paragraph 5(d), Employee shall receive no severance compensation. A termination
without cause within the meaning of this paragraph 5(d) shall be deemed to have
occurred if any person or entity, other than TSI or an employee benefit plan of
TSI, acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of the Company or TSI and immediately after such acquisition such
person or entity is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company or TSI and the transaction
pursuant to which such acquisition is made is approved by at least two-thirds
(2/3) of the Board of Directors of TSI but is not approved by Employee.
(e) Change in Control of TSI. In the event of a "Change in Control of
TSI" (as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation, benefits and pro rata bonuses subsequent to termination, if any,
will be due and payable to Employee only to the extent and in the manner
expressly provided above or in paragraph 12 hereof. All other rights and
obligations of TSI, the Company and Employee under this Agreement shall cease as
of the effective date of termination, except that the Company's obligations
under paragraph 9 hereof and Employee's obligations under paragraphs 3, 6, 7, 8
and 10 hereof shall survive such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which she is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of
6
the provisions of paragraph 3 hereof shall apply in the event this Agreement is
terminated as a result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI or their representatives, vendors
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials and other similar data
pertaining to the business, activities or future plans of the Company or TSI
which are collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment. Employee shall
have the opportunity to buy any equipment utilized by Employee at the time of
her termination at its depreciated value.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company or TSI and which Employee conceives as a result of
Employee's employment by the Company. Employee hereby assigns and agrees to
assign all of Employee's interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and all
applications, assignments or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
8. TRADE SECRETS.
Employee agrees that she will not, during or after the Term of this
Agreement with the Company, disclose the specific terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by the Company or TSI against Employee), by
reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement, as
actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge her duties under this Agreement,
Employee cannot be held liable to the Company or TSI for errors or omissions
7
made in good faith where Employee has not exhibited gross, willful and wanton
negligence and misconduct or performed criminal and fraudulent acts which
materially damage the business of the Company.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and her employment by the Company and
the performance of Employee's duties hereunder will not violate or be a breach
of any agreement with a former employer, client or any other person or entity.
Further, Employee agrees to indemnify the Company for any claim, including but
not limited to attorneys' fees and expenses of investigation, by any such third
party that such third party may now have or may hereafter come to have against
the Company based upon or arising out of any noncompetition agreement, invention
or secrecy agreement between Employee and such third party which was in
existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that she has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives and successors. The Company shall
not assign this Agreement without Employee's written consent, which consent may
be withheld by Employee.
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall
8
be double the amount calculated under the terms of paragraph 5(d) and the
noncompetition provisions of paragraph 3 shall all apply for a period of two (2)
years from the effective date of termination. Employee shall have the right to
waive Employee's right to receive the severance compensation payable under this
paragraph 12(c) (by a written waiver delivered to the Company on the effective
date of the termination), in which case the noncompetition provisions of
paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee, unless waived,
must be paid in full by the Company at or prior to such closing. Further,
Employee will be given sufficient time and opportunity to elect whether to
exercise all or any of Employee's vested options to purchase TSI Common Stock,
including any options with accelerated vesting under the provisions of TSI's
1997 Long-Term Incentive Plan, such that Employee may convert the options to
shares of TSI Common Stock at or prior to the closing of the transaction giving
rise to the Change in Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company, unless the transaction pursuant to
which such acquisition is made is approved by at least two-thirds (2/3)
of the Board of Directors of TSI;
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
9
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI and Employee, and Employee has no oral representations,
understandings or agreements with the Company or any of its officers, directors
or representatives covering the same subject matter as this Agreement.
This written Agreement is the final, complete and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, Xxxxxxxx 00000
To Employee: Xxxx Xxxxxx
Cruises Only, LLC
0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
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15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define or limit the extent or intent of the Agreement or of any part hereof.
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in the community where the corporate
headquarters of TSI is located, in accordance with the rules of the American
Arbitration Association then in effect. The arbitrators shall not have the
authority to add to, detract from, or modify any provision hereof nor to award
punitive damages to any injured party. The arbitrators shall have the authority
to order back-pay, severance compensation, vesting of options (or cash
compensation in lieu of vesting of options), reimbursement of costs, including
those incurred to enforce this Agreement, and interest thereon in the event the
arbitrators determine that Employee was terminated without disability or good
cause, as defined in paragraphs 5(b) and 5(c) hereof, respectively, or that the
Company has otherwise materially breached this Agreement. A decision by a
majority of the arbitration panel shall be final and binding. Judgment may be
entered on the arbitrators' award in any court having jurisdiction. The direct
expense of any arbitration proceeding shall be borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Florida.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TRAVEL SERVICES INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
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CRUISES ONLY, LLC
By: /s/ Xxxxx Xxxxxx
--------------------------------
XXXXX XXXXXX
CHIEF EXECUTIVE OFFICER
By: /s/ Xxxx Xxxxxx
--------------------------------
XXXX XXXXXX, INDIVIDUALLY
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EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel
Services International, Inc., a Delaware corporation ("TSI"), D-FW Tours, Inc.,
a Texas corporation and a wholly-owned subsidiary of TSI (the "Company"), and
Xxxx Xxxxxxxx ("Employee"), is hereby entered into as of this 22nd day of July,
1997, and shall be effective as of the date of the consummation of the initial
public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants, and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as President of the Company. As
such, Employee shall have responsibilities, duties, and authority reasonably
accorded to and expected of a President of the Company and will report directly
to the Board of Directors of the Company (the "Board"). Employee hereby accepts
this employment upon the terms and conditions herein contained and, subject to
paragraph 1(c) hereof, agrees to devote Employee's time, attention, and efforts
to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Company.
(c) Employee shall not, during the term of his employment hereunder, be
engaged in any other business activity pursued for gain, profit, or other
pecuniary advantage if such activity interferes with Employee's duties and
responsibilities hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or manner as
will neither require Employee's services in the operation or affairs of the
companies or enterprises in which such investments are made nor violate the
terms of paragraph 3 hereof.
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2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be $100,000
per year, payable on a regular basis in accordance with the Company's standard
payroll procedures but not less than monthly.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental, life, and other insurance plans that the Company or
TSI may have in effect from time to time, benefits provided to Employee
under this clause (i) to be at least equal to such benefits provided to
TSI executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board and participation in all other Company-wide or TSI-wide
employee benefits as available from time to time.
3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with
the Company, and for a period of two (2) years immediately following the
termination of Employee's employment under this Agreement, for any reason
whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation,
or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer, or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any travel service business in direct competition
with the Company or TSI or any subsidiary of either the Company or TSI,
within the United States or within 100 miles of any other geographic
area in which the Company or TSI or any of the Company's or TSI's
subsidiaries conducts business, including any territory serviced by the
Company or TSI or any of such subsidiaries (the "Territory");
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or TSI (including the respective
subsidiaries thereof) in a managerial capacity for the
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purpose or with the intent of enticing such employee away from or out of the
employ of the Company or TSI (including the respective subsidiaries thereof);
(iii) call upon any person or entity which is, at that time,
or which has been, within one (1) year prior to that time, a customer
of the Company or TSI (including the respective subsidiaries thereof)
within the Territory for the purpose of soliciting or selling products
or services in direct competition with the Company or TSI or any
subsidiary of the Company or TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate
was, to Employee's actual knowledge after due inquiry, either called
upon by the Company or TSI (including the respective subsidiaries
thereof) or for which the Company or TSI made an acquisition analysis,
for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company and TSI as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to the Company and
TSI for which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such covenants be construed and enforced in accordance with the changing
activities, business, and locations of the Company and TSI (including TSI's
other subsidiaries) throughout the term of this Agreement, whether before or
after the date of termination of the employment of Employee. For example, if,
during the term of this Agreement, the Company, or TSI (including TSI's other
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or TSI (including
TSI's other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the Company or TSI (including TSI's other subsidiaries) shall
thereafter enter the same, similar, or a competitive (i) business, (ii) course
of activities, or (iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any
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court of competent jurisdiction shall determine that the scope, time, or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall be reformed in accordance
therewith.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that he may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient, and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c).
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for three (3) years (the "Term"), and, unless terminated sooner as herein
provided, shall continue thereafter on a year-to-year basis on the same terms
and conditions contained herein in effect as of the time of renewal. This
Agreement and Employee's employment may be terminated in any one of the
followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4)
month period, but which shall not be effective earlier than the last
day of such four (4)
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month period), the Company may terminate Employee's employment hereunder
provided Employee is unable to resume Employee's full-time duties at the
conclusion of such notice period. Also, Employee may terminate Employee's
employment hereunder if his or her health should become impaired to an extent
that makes the continued performance of Employee's duties hereunder hazardous to
Employee's physical or mental health or life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that, at the Company's request made within thirty
(30) days of the date of such written statement, Employee shall submit to an
examination by a doctor selected by the Company who is reasonably acceptable to
Employee or Employee's doctor and such doctor shall have concurred in the
conclusion of Employee's doctor. In the event this Agreement is terminated as a
result of Employee's disability, Employee shall receive from the Company, in a
lump-sum payment due within ten (10) days of the effective date of termination,
the base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material, and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud, or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater, and, in the event Employee accepts such lump sum payment, the period
set forth in paragraph 3(a) and during which the terms of paragraph 3 apply
shall be shortened to one (1) year from the date of termination of employment.
Should Employee be terminated by the Company without cause at any time after the
Term, Employee shall be entitled to receive from the Company, in a lump-sum
payment due on the effective date of termination, the base salary rate then in
effect equivalent to one (1) year of salary, and, in the event that Employee
accepts such a lump sum payment, the period set forth in paragraph 3(a) and
during which the terms of paragraph 3 apply shall be shortened to one (1) year
from the date of termination of employment. Should Employee be terminated by the
Company without cause at any time during or after the Term, Employee shall be
entitled to waive Employee's right to receive severance compensation (by a
written waiver delivered to the Company on the effective date of termination),
and, in such case, the non-competition provisions of paragraph 3 shall not
apply. If Employee resigns or otherwise terminates Employee's employment without
cause pursuant to this paragraph 5(d), Employee shall receive no severance
compensation. A termination without cause within the meaning of this paragraph
5(d) shall be deemed to have occurred if any person or entity, other than TSI or
an employee benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act of 1934,
as amended) of any voting security of the Company or TSI and immediately after
such acquisition such person or entity is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the total
voting power of
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all of the then-outstanding voting securities of the Company or TSI and the
transaction pursuant to which such acquisition is made is approved by at least
two-thirds (2/3) of the Board of Directors of TSI but is not approved by
Employee.
(e) Change in Control of TSI. In the event of a "Change in Control of
TSI" (as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 12 hereof. All other rights and obligations of TSI, the Company, and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 9 hereof and
Employee's obligations under paragraphs 3, 6, 7, 8 and 10 hereof shall survive
such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which he is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of the provisions
of paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists, and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors,
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials, and other similar data
pertaining to the business, activities, or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company or TSI and which Employee conceives as a result of
Employee's employment by the Company. Employee hereby assigns and agrees to
assign all of Employee's interests therein to the Company or its nominee.
Whenever requested to do so by the Company, Employee shall execute any and all
applications, assignments, or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
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8. TRADE SECRETS.
Employee agrees that he or she will not, during or after the Term of
this Agreement with the Company, disclose the specific terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation, or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative (other than an action by the Company or TSI against Employee),
by reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement,
as actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit, or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to the Company or TSI for errors or
omissions made in good faith where Employee has not exhibited gross, willful,
and wanton negligence and misconduct or performed criminal and fraudulent acts
which materially damage the business of the Company.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and his or her employment by the Company
and the performance of Employee's duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including but not limited to attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any noncompetition
agreement, invention, or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that he or she has been selected for employment by
the Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns.
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12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this paragraph 12(c) (by a written
waiver delivered to the Company on the effective date of the termination), in
which case the noncompetition provisions of paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee must be paid in
full by the Company at or prior to such closing. Further, Employee will be given
sufficient time and opportunity to elect whether to exercise all or any of
Employee's vested options to purchase TSI Common Stock, including any options
with accelerated vesting under the provisions of TSI's 1997 Long-Term Incentive
Plan, such that Employee may convert the options to shares of TSI Common Stock
at or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company or TSI and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company or TSI, unless the transaction
pursuant to which such acquisition is made is approved by at least
two-thirds (2/3) of the Board of Directors of TSI;
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(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI, and Employee, and Employee has no oral representations,
understandings, or agreements with the Company or any of its officers,
directors, or representatives covering the same subject matter as this
Agreement.
This written Agreement is the final, complete, and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted, or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
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14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: D-FW Tours, Inc.
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define, or limit the extent or intent of the Agreement or of any part hereof.
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in Washington, D.C., in accordance with
the rules of the American Arbitration Association then in effect. The
arbitrators shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Employee was
terminated without disability or good cause, as defined in paragraphs 5(b) and
5(c) hereof, respectively, or that the Company has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by the Company.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Texas.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
D-FW Tours, Inc.
By: /s/ Xxxx Xxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
--------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
------------------------------
/s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx, Individually
EXECUTION COPY
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Travel
Services International, Inc., a Delaware corporation ("TSI"), Travel 800, LLC, a
Delaware limited liability corporation and a wholly-owned subsidiary of TSI (the
"Company"), and Xxxxx Xxxxxx ("Employee"), is hereby entered into as of this
22nd day of July, 1997, and shall be effective as of the date of the
consummation of the initial public offering of the common stock of TSI.
R E C I T A L S
A. As of the date of this Agreement, the Company is engaged primarily in the
business of providing travel services.
B. Employee is employed hereunder by the Company in a confidential relationship
wherein Employee, in the course of Employee's employment with the Company, has
and will continue to become familiar with and aware of information as to the
Company's and TSI's customers, specific manner of doing business, including the
processes, techniques and trade secrets utilized by the Company and TSI, and
future plans with respect thereto, all of which has been and will be established
and maintained at great expense to the Company and TSI; this information is a
trade secret and constitutes the valuable good will of the Company and TSI.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants, and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) The Company hereby employs Employee as President of the Company. As
such, Employee shall have responsibilities, duties, and authority reasonably
accorded to and expected of a President of the Company and will report directly
to the Board of Directors of the Company (the "Board"). Employee hereby accepts
this employment upon the terms and conditions herein contained and, subject to
paragraph 1(c) hereof, agrees to devote Employee's time, attention and efforts
to promote and further the business of the Company.
(b) Employee shall faithfully adhere to, execute and fulfill all
policies established by the Board.
(c) Employee shall not, during the term of her employment hereunder, be
engaged in any other business activity pursued for gain, profit or other
pecuniary advantage if such activity materially interferes with Employee's
duties and responsibilities hereunder. The foregoing limitations shall not be
construed as prohibiting Employee from making personal investments in such form
or manner as will neither require Employee's services in the operation or
affairs of the companies or enterprises in which such investments are made nor
violate the terms of paragraph 3 hereof.
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2. COMPENSATION.
For all services rendered by Employee, the Company shall compensate
Employee as follows:
(a) Base Salary. The base salary payable to Employee shall be $150,000
per year, payable on a regular basis in accordance with the Company's standard
payroll procedures but not less than monthly.
(b) Incentive Bonus Plan. For 1997 and subsequent years, it is the
Company's intent to develop a written Incentive Bonus Plan (which may be TSI's
Incentive Bonus Plan) setting forth the criteria under which Employee and other
officers and key employees will be eligible to receive year-end bonus awards.
(c) Executive Perquisites, Benefits, and Other Compensation. Employee
shall be entitled to receive additional benefits and compensation from the
Company in such form and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee and
Employee's dependent family members under health, hospitalization,
disability, dental, life, and other insurance plans that the Company or
TSI may have in effect from time to time, benefits provided to Employee
under this clause (i) to be at least equal to such benefits provided to
TSI executives.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement. All
reimbursable expenses shall be appropriately documented in reasonable
detail by Employee upon submission of any request for reimbursement,
and in a format and manner consistent with the Company's expense
reporting policy.
(iii) The Company shall provide Employee with other executive
perquisites as may be available to or deemed appropriate for Employee
by the Board and participation in all other Company-wide or TSI-wide
employee benefits as available from time to time.
3. NON-COMPETITION.
(a) Employee will not, during the period of Employee's employment with
the Company, and for a period of two (2) years immediately following the
termination of Employee's employment under this Agreement, for any reason
whatsoever, directly or indirectly, for herself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation,
or business of whatever nature:
(i) engage, as an officer, director, shareholder, owner,
partner, joint venturer or in a managerial capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any travel service business in direct competition
with the Company or TSI or any subsidiary of either the Company or TSI,
within the United States or within 100 miles of any other geographic
area in which the Company or TSI or any of the Company's or TSI's
subsidiaries conducts business, including any territory serviced by the
Company or TSI or any of such subsidiaries (the "Territory"); provided,
however, that Employee shall not be considered in breach of this
provision with respect to the marketing, sale and promotion of the
Agent software program through 800-Ideas, Inc., a Nevada corporation,
of which Employee is the sole officer, director and shareholder, so
long as Employee herself does not engage in such activities to the
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extent that it would materially interfere with Employee's duties and
responsibilities under this Agreement;
(ii) call upon any person who is, at that time, within the
Territory, an employee of the Company or TSI (including the respective
subsidiaries thereof) in a managerial capacity for the purpose or with
the intent of enticing such employee away from or out of the employ of
the Company or TSI (including the respective subsidiaries thereof);
(iii) call upon any person or entity which is, at that time,
or which has been, within one (1) year prior to that time, a customer
of the Company or TSI (including the respective subsidiaries thereof)
within the Territory for the purpose of soliciting or selling products
or services in direct competition with the Company or TSI or any
subsidiary of the Company or TSI within the Territory; or
(iv) call upon any prospective acquisition candidate, on
Employee's own behalf or on behalf of any competitor, which candidate
was, to Employee's actual knowledge after due inquiry, either called
upon by the Company or TSI (including the respective subsidiaries
thereof) or for which the Company or TSI made an acquisition analysis,
for the purpose of acquiring such entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%) of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to the
Company and TSI as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to the Company and
TSI for which they would have no other adequate remedy, Employee agrees that the
foregoing covenant may be enforced by TSI or the Company in the event of breach
by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants in this
paragraph 3 impose a reasonable restraint on Employee in light of the activities
and business of the Company or TSI (including TSI's other subsidiaries) on the
date of the execution of this Agreement and the current plans of TSI (including
TSI's other subsidiaries); but it is also the intent of the Company and Employee
that such covenants be construed and enforced in accordance with the changing
activities, business, and locations of the Company and TSI (including TSI's
other subsidiaries) throughout the term of this Agreement, whether before or
after the date of termination of the employment of Employee. For example, if,
during the term of this Agreement, the Company, or TSI (including TSI's other
subsidiaries) engages in new and different activities, enters a new business or
establishes new locations for its current activities or business in addition to
or other than the activities or business enumerated under the Recitals above or
the locations currently established therefor, then Employee will be precluded
from soliciting the customers or employees of such new activities or business or
from such new location and from directly competing with such new business within
100 miles of its then-established operating location(s) through the term of this
Agreement.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities not in competition with the Company or TSI (including
TSI's other subsidiaries), or similar activities, or business in locations the
operation of which, under such circumstances, does not violate clause (i) of
this paragraph 3, and in any event such new business, activities or location are
not in violation of this paragraph 3 or of employee's obligations under this
paragraph 3, if any, Employee shall not be chargeable with a violation of this
paragraph 3 if the
3
Company or TSI (including TSI's other subsidiaries) shall thereafter enter the
same, similar, or a competitive (i) business, (ii) course of activities, or
(iii) location, as applicable.
(d) The covenants in this paragraph 3 are severable and separate, and
the unenforceability of any specific covenant shall not affect the provisions of
any other covenant. Moreover, in the event any court of competent jurisdiction
shall determine that the scope, time, or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and the
Agreement shall be reformed in accordance therewith.
(e) All of the covenants in this paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Employee against the Company or
TSI, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by TSI or the Company of such covenants. It is
specifically agreed that the period of two (2) years following termination of
employment stated at the beginning of this paragraph 3, during which the
agreements and covenants of Employee made in this paragraph 3 shall be
effective, shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this paragraph 3.
4. PLACE OF PERFORMANCE.
(a) Employee understands that she may be requested by the Board or TSI
to relocate from Employee's present residence to another geographic location in
order to more efficiently carry out Employee's duties and responsibilities under
this Agreement or as part of a promotion or other increase in duties and
responsibilities. In such event, if Employee agrees to relocate, the Company
will pay all relocation costs to move Employee, Employee's immediate family, and
their personal property and effects. Such costs may include, by way of example,
but are not limited to, pre-move visits to search for a new residence,
investigate schools or for other purposes; temporary lodging and living costs
prior to moving into a new permanent residence; duplicate home carrying costs;
all closing costs on the sale of Employee's present residence and on the
purchase of a comparable residence in the new location; and added income taxes
that Employee may incur if any relocation costs are not deductible for tax
purposes. The general intent of the foregoing is that Employee shall not
personally bear any out-of-pocket cost as a result of the relocation, with an
understanding that Employee will use Employee's best efforts to incur only those
costs which are reasonable and necessary to effect a smooth, efficient, and
orderly relocation with minimal disruption to the business affairs of the
Company and the personal life of Employee and Employee's family.
(b) Notwithstanding the above, if Employee is requested by the Board to
relocate and Employee refuses, such refusal shall not constitute "cause" for
termination of this Agreement under the terms of paragraph 5(c), and in such
circumstance Employee shall continue to be employed hereunder.
5. TERM; TERMINATION; RIGHTS ON TERMINATION.
The term of this Agreement shall begin on the date hereof and continue
for five (5) years (the "Term"), and, unless terminated sooner as herein
provided, shall continue thereafter on a year-to-year basis on the same terms
and conditions contained herein in effect as of the time of renewal. This
Agreement and Employee's employment may be terminated in any one of the
followings ways:
(a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee's estate.
4
(b) Disability. If, as a result of incapacity due to physical or mental
illness or injury, Employee shall have been absent from Employee's full-time
duties hereunder for four (4) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
four (4) month period, but which shall not be effective earlier than the last
day of such four (4) month period), the Company may terminate Employee's
employment hereunder provided Employee is unable to resume Employee's full-time
duties at the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if his or her health should become impaired to
an extent that makes the continued performance of Employee's duties hereunder
hazardous to Employee's physical or mental health or life, provided that
Employee shall have furnished the Company with a written statement from a
qualified doctor to such effect and provided, further, that, at the Company's
request made within thirty (30) days of the date of such written statement,
Employee shall submit to an examination by a doctor selected by the Company who
is reasonably acceptable to Employee or Employee's doctor and such doctor shall
have concurred in the conclusion of Employee's doctor. In the event this
Agreement is terminated as a result of Employee's disability, Employee shall
receive from the Company, in a lump-sum payment due within ten (10) days of the
effective date of termination, the base salary at the rate then in effect for
whatever time period is remaining under the Term of this Agreement or for one
(1) year, whichever amount is greater.
(c) Good Cause. The Company may terminate the Agreement ten (10) days
after delivery of written notice to Employee for good cause, which shall be: (1)
Employee's willful, material, and irreparable breach of this Agreement; (2)
Employee's gross negligence in the performance or intentional nonperformance
continuing for ten (10) days after receipt of written notice of need to cure) of
any of Employee's material duties and responsibilities hereunder; (3) Employee's
willful dishonesty, fraud, or misconduct with respect to the business or affairs
of the Company or TSI which materially and adversely affects the operations or
reputation of the Company or TSI; (4) Employee's conviction of a felony crime;
or (5) chronic alcohol abuse or illegal drug abuse by Employee. In the event of
a termination for good cause, as enumerated above, Employee shall have no right
to any severance compensation.
(d) Without Cause. At any time after the commencement of employment,
Employee may, without cause, terminate this Agreement and Employee's employment,
effective thirty (30) days after written notice is provided to the Company.
Employee may only be terminated without cause by the Company during the Term
hereof if such termination is approved by at least two-thirds of the members of
the Board of Directors of TSI. Should Employee be terminated by the Company
without cause during the Term, Employee shall be entitled to receive from the
Company, in a lump-sum payment due on the effective date of termination, the
base salary at the rate then in effect for whatever time period is remaining
under the Term of this Agreement or for one (1) year, whichever amount is
greater, and, in the event that Employee accepts such lump sum payment, the
period set forth in paragraph 3(a) and during which the terms of paragraph 3
apply shall be shortened to one (1) year from the date of termination of
employment. Should Employee be terminated by the Company without cause at any
time after the Term, Employee shall be entitled to receive from the Company, in
a lump-sum payment due on the effective date of termination, the base salary
rate then in effect equivalent to one (1) year of salary, and, in the event that
Employee accepts such lump sum payment, the period set forth in paragraph 3(a)
and during which the terms of paragraph 3 apply shall be shortened to one (1)
year from the date of termination of employment. Should Employee be terminated
by the Company without cause at any time during or after the Term, Employee
shall be entitled to waive Employee's right to receive severance compensation
(by a written waiver delivered to the Company on the effective date of
termination), and, in such case, the noncompetition provisions of paragraph 3
shall not apply. If Employee resigns or otherwise terminates Employee's
employment without cause pursuant to this paragraph 5(d), Employee shall receive
no severance compensation. A termination
5
without cause within the meaning of this paragraph 5(d) shall be deemed to have
occurred if any person or entity, other than TSI or an employee benefit plan of
TSI, acquires directly or indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as amended) of any voting
security of the Company or TSI and immediately after such acquisition such
person or entity is, directly or indirectly, the Beneficial Owner of voting
securities representing 50% or more of the total voting power of all of the
then-outstanding voting securities of the Company or TSI and the transaction
pursuant to which such acquisition is made is approved by at least two-thirds
(2/3) of the Board of Directors of TSI but is not approved by Employee.
(e) Change in Control of TSI. In the event of a "Change in Control of
TSI" (as defined below) during the Term, refer to paragraph 12 below.
Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Employee only to the extent and in the manner expressly provided above or in
paragraph 12 hereof. All other rights and obligations of TSI, the Company, and
Employee under this Agreement shall cease as of the effective date of
termination, except that the Company's obligations under paragraph 9 hereof and
Employee's obligations under paragraphs 3, 6, 7, 8 and 10 hereof shall survive
such termination in accordance with their terms.
If termination of Employee's employment arises out of the Company's
failure to pay Employee on a timely basis the amounts to which she is entitled
under this Agreement or as a result of any other breach of this Agreement by the
Company, as determined by a court of competent jurisdiction or pursuant to the
provisions of paragraph 16 below, the Company shall pay all amounts and damages
to which Employee may be entitled as a result of such breach, including interest
thereon and all reasonable legal fees and expenses and other costs incurred by
Employee to enforce Employee's rights hereunder. Further, none of the provisions
of paragraph 3 hereof shall apply in the event this Agreement is terminated as a
result of a breach by the Company.
6. RETURN OF COMPANY PROPERTY.
All records, designs, patents, business plans, financial statements,
manuals, memoranda, lists, and other property delivered to or compiled by
Employee by or on behalf of the Company, TSI, or their representatives, vendors,
or customers which pertain to the business of the Company or TSI shall be and
remain the property of the Company or TSI, as the case may be, and be subject at
all times to their discretion and control. Likewise, all correspondence,
reports, records, charts, advertising materials, and other similar data
pertaining to the business, activities, or future plans of the Company or TSI
which is collected by Employee shall be delivered promptly to the Company
without request by it upon termination of Employee's employment.
7. INVENTIONS.
Employee shall disclose promptly to TSI and the Company any and all
significant conceptions and ideas for inventions, improvements, and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and which are directly related to the business or
activities of the Company or TSI and which Employee conceives as a result of
Employee's employment by the Company except for inventions or improvements in
connection with the Agent Program software (which is owned by 800-Ideas,
6
Inc. and licensed to the Company). Employee hereby assigns and agrees to assign
all of Employee's interests therein to the Company or its nominee. Whenever
requested to do so by the Company, Employee shall execute any and all
applications, assignments, or other instruments that the Company shall deem
necessary to apply for and obtain Letters Patent of the United States or any
foreign country or to otherwise protect the Company's interest therein.
8. TRADE SECRETS.
Employee agrees that she will not, during or after the Term of this
Agreement with the Company, disclose the specific terms of the Company's or
TSI's relationships or agreements with their respective significant vendors or
customers or any other significant and material trade secret of the Company or
TSI, whether in existence or proposed, to any person, firm, partnership,
corporation, or business for any reason or purpose whatsoever.
9. INDEMNIFICATION.
In the event Employee is made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by the Company or TSI against Employee), by
reason of the fact that Employee is or was performing services under this
Agreement, then the Company shall indemnify Employee against all expenses
(including attorneys' fees), judgments, fines, and amounts paid in settlement,
as actually and reasonably incurred by Employee in connection therewith. In the
event that both Employee and the Company are made a party to the same
third-party action, complaint, suit, or proceeding, the Company or TSI agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by TSI shall have a conflict
of interest that prevents such counsel from representing Employee, Employee may
engage separate counsel and the Company or TSI shall pay all attorneys' fees of
such separate counsel. Further, while Employee is expected at all times to use
Employee's best efforts to faithfully discharge his or her duties under this
Agreement, Employee cannot be held liable to the Company or TSI for errors or
omissions made in good faith where Employee has not exhibited gross, willful,
and wanton negligence and misconduct or performed criminal and fraudulent acts
which materially damage the business of the Company. In the event that the
Company breaches its agreement to indemnify Employee under this paragraph 9, the
noncompetition provisions of paragraph 3 shall thereafter not apply to Employee.
10. NO PRIOR AGREEMENTS.
Employee hereby represents and warrants to the Company that the
execution of this Agreement by Employee and his or her employment by the Company
and the performance of Employee's duties hereunder will not violate or be a
breach of any agreement with a former employer, client, or any other person or
entity. Further, Employee agrees to indemnify the Company for any claim,
including but not limited to attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against the Company based upon or arising out of any noncompetition
agreement, invention, or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.
7
11. ASSIGNMENT; BINDING EFFECT.
Employee understands that she has been selected for employment by the
Company on the basis of Employee's personal qualifications, experience, and
skills. Employee, therefore, shall not assign all or any portion of Employee's
performance under this Agreement. Subject to the preceding two (2) sentences and
the express provisions of paragraph 12 below, this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the parties hereto and
their respective heirs, legal representatives, successors, and assigns.
12. CHANGE IN CONTROL.
(a) Unless Employee elects to terminate this Agreement pursuant to (c)
below, Employee understands and acknowledges that the Company may be merged or
consolidated with or into another entity and that such entity shall
automatically succeed to the rights and obligations of the Company hereunder or
that the Company may undergo another type of Change in Control. In the event
such a merger or consolidation or other Change in Control is initiated prior to
the end of the Term, then the provisions of this paragraph 12 shall be
applicable.
(b) In the event of a pending Change in Control wherein the Company and
Employee have not received written notice at least five (5) business days prior
to the anticipated closing date of the transaction giving rise to the Change in
Control from the successor to all or a substantial portion of the Company's
business and/or assets that such successor is willing as of the closing to
assume and agree to perform the Company's obligations under this Agreement in
the same manner and to the same extent that the Company is hereby required to
perform, then such Change in Control shall be deemed to be a termination of this
Agreement by the Company without cause during the Term and the applicable
portions of paragraph 5(d) will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Employee shall be triple the
amount calculated under the terms of paragraph 5(d) and the noncompetition
provisions of paragraph 3 shall not apply.
(c) In any Change in Control situation, Employee may elect to terminate
this Agreement by providing written notice to the Company at least five (5)
business days prior to the anticipated closing of the transaction giving rise to
the Change in Control. In such case, the applicable provisions of paragraph 5(d)
will apply as though the Company had terminated the Agreement without cause
during the Term; however, under such circumstances, the amount of the lump-sum
severance payment due to Employee shall be double the amount calculated under
the terms of paragraph 5(d) and the noncompetition provisions of paragraph 3
shall all apply for a period of two (2) years from the effective date of
termination. Employee shall have the right to waive Employee's right to receive
the severance compensation payable under this paragraph 12(c) (by a written
waiver delivered to the Company on the effective date of the termination), in
which case the noncompetition provisions of paragraph 3 shall not apply.
(d) For purposes of applying paragraph 5 hereof under the circumstances
described in (b) and (c) above, the effective date of termination will be the
closing date of the transaction giving rise to the Change in Control and all
compensation, reimbursements, and lump-sum payments due Employee, unless waived,
must be paid in full by the Company at or prior to such closing. Further,
Employee will be given sufficient time and opportunity to elect whether to
exercise all or any of Employee's vested options to purchase TSI Common Stock,
including any options with accelerated vesting under the provisions of TSI's
1997 Long-Term Incentive Plan, such that Employee may convert the options to
shares of TSI Common Stock at or prior to the closing of the transaction giving
rise to the Change in Control, if Employee so desires.
8
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than TSI or an employee
benefit plan of TSI, acquires directly or indirectly the Beneficial
Ownership (as defined in Section 13(d) of the Securities Exchange Act
of 1934, as amended) of any voting security of the Company or TSI and
immediately after such acquisition such person or entity is, directly
or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all of the then-outstanding
voting securities of the Company or TSI, unless the transaction
pursuant to which such acquisition is made is approved by at least
two-thirds (2/3) of the Board of Directors of TSI;
(ii) the following individuals no longer constitute a majority
of the members of the Board of Directors of TSI: (A) the individuals
who, as of the closing date of TSI's initial public offering,
constitute the Board of Directors of TSI (the "Original Directors");
(B) the individuals who thereafter are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors then still in office (such directors
becoming "Additional Original Directors" immediately following their
election); and (C) the individuals who are elected to the Board of
Directors of TSI and whose election, or nomination for election, to the
Board of Directors of TSI was approved by a vote of at least two-thirds
(2/3) of the Original Directors and Additional Original Directors then
still in office (such directors also becoming "Additional Original
Directors" immediately following their election).
(iii) the stockholders of TSI shall approve a merger,
consolidation, recapitalization, or reorganization of TSI, a reverse
stock split of outstanding voting securities, or consummation of any
such transaction if stockholder approval is not obtained, other than
any such transaction which would result in at least 75% of the total
voting power represented by the voting securities of the surviving
entity outstanding immediately after such transaction being
Beneficially Owned by at least 75% of the holders of outstanding voting
securities of TSI immediately prior to the transaction, with the voting
power of each such continuing holder relative to other such continuing
holders not substantially altered in the transaction; or
(iv) the stockholders of TSI shall approve a plan of complete
liquidation of TSI or an agreement for the sale or disposition by TSI
of all or a substantial portion of TSI's assets (i.e., 50% or more of
the total assets of TSI).
(f) Employee must be notified in writing by the Company at any time
that the Company or any member of its Board anticipates that a Change in Control
may take place.
(g) Employee shall be reimbursed by the Company or its successor for
any excise taxes that Employee incurs under Section 4999 of the Internal Revenue
Code of 1986, as a result of any Change in Control. Such amount will be due and
payable by the Company or its successor within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of Employee's
tax return(s) showing the excise tax actually incurred by Employee.
13. COMPLETE AGREEMENT.
This Agreement is not a promise of future employment. This Agreement
supersedes any other agreements or understandings, written or oral, among the
Company, TSI, and Employee, and Employee has
9
no oral representations, understandings, or agreements with the Company or any
of its officers, directors, or representatives covering the same subject matter
as this Agreement.
This written Agreement is the final, complete, and exclusive statement
and expression of the agreement between the Company and Employee and of all the
terms of this Agreement, and it cannot be varied, contradicted, or supplemented
by evidence of any prior or contemporaneous oral or written agreements. This
written Agreement may not be later modified except by a written instrument
signed by a duly authorized officer of the Company and Employee, and no term of
this Agreement may be waived except by a written instrument signed by the party
waiving the benefit of such term.
14. NOTICE.
Whenever any notice is required hereunder, it shall be given in writing
addressed as follows:
To the Company: Travel Services International, Inc.
c/o Alpine Consolidated, LLC
0000 Xxxxxxxxx Xxxx, X00
Xxxxxxxx, XX 00000
To Employee: 00000 Xx Xxxxxxx Xxxx
Xx Xxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this paragraph 14.
15. SEVERABILITY; HEADINGS.
If any portion of this Agreement is held invalid or inoperative, the
other portions of this Agreement shall be deemed valid and operative and, so far
as is reasonable and possible, effect shall be given to the intent manifested by
the portion held invalid or inoperative. The paragraph headings herein are for
reference purposes only and are not intended in any way to describe, interpret,
define, or limit the extent or intent of the Agreement or of any part hereof.
16. ARBITRATION.
Any unresolved dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration, conducted
before a panel of three (3) arbitrators in Washington, D.C., in accordance with
the rules of the American Arbitration Association then in effect. The
arbitrators shall not have the authority to add to, detract from, or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs, including those incurred to enforce this Agreement, and
interest thereon in the event the arbitrators determine that Employee was
terminated without disability or good cause, as defined in paragraphs 5(b) and
5(c) hereof, respectively, or that the Comp any has otherwise materially
breached this Agreement. A decision by a majority of the arbitration panel shall
be final and binding. Judgment may be entered on the arbitrators' award in any
court having jurisdiction. The direct expense of any arbitration proceeding
shall be borne by the Company. The substantially prevailing party in any
proceeding hereunder shall be entitled to recover
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from the losing party reasonable attorneys' fees for services rendered to the
prevailing party in such proceeding.
17. GOVERNING LAW.
This Agreement shall in all respects be construed according to the laws
of the State of Delaware.
18. COUNTERPARTS.
This Agreement may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Travel 800, LLC
By:/s/ Xxxxx Xxxxxx
---------------------------------
Name: Xxxxx Xxxxxx
-------------------------------
Title: President
------------------------------
Travel Services International, Inc.,
a Delaware corporation
By:/s/ Xxxx Xxxxxxxxx
---------------------------------
Name: Xxxx Xxxxxxxxx
-------------------------------
Title: President
------------------------------
Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx, Individually
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