Exhibit (c)(14)
EMPLOYMENT AGREEMENT
AGREEMENT, dated this 19th day of November, 1997, by and between
Xxxxxxx Xxxxxx Inc. (the "Company") and Xxxxx X. Xxxxxx ("Executive").
WITNESSETH:
WHEREAS, the Company is engaged in the business of providing income
tax return preparation and related services (the "Business");
WHEREAS, Executive has been employed by the Company in the
capacities of President and Chief Executive Officer;
WHEREAS, the Company and Executive entered into an Employment
Agreement dated May 29, 1997 (the "Prior Agreement");
WHEREAS, the Company is entering into an Agreement and Plan of
Merger dated November 19, 1997, by and among HFS Incorporated ("HFS"), HJ
Acquisition Corp. ("Acquisition"), and the Company (the "Merger Agreement")
pursuant to which, among other things, Acquisition will be merged into the
Company (the "Merger"); and
WHEREAS, HFS has entered into an Agreement and Plan of Merger dated
May 27, 1997 between CUC International Inc. ("CUC") and HFS (the "CUC Merger
Agreement"), pursuant to which HFS shall be merged into CUC (the "CUC
Merger"). The surviving corporation of the CUC Merger shall be referred to
hereinafter as "Cendant." In the event that the CUC Merger is not
consummated prior to the Effective Time of the Merger, references herein to
Cendant shall be read as HFS.
WHEREAS, pursuant to and simultaneous with the Merger, the Company
and Executive wish to supersede the Prior Agreement with this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive agree as
follows:
1. Employment: The Company hereby agrees to employ Executive, and
Executive hereby agrees to serve, subject to the provisions of this
Agreement, as an employee of the Company. Executive agrees to devote all of
his business time, attention and energies to the performance of the duties
assigned to him hereunder, and to perform such duties faithfully, diligently
and to the best of his abilities and subject to such laws, rules, regulations
and policies from time to time applicable to the Company's employees. Except
as otherwise provided herein, Executive is permitted to pursue outside
interests, including, but not limited to, membership in trade associations,
industry boards, and on the boards of directors of other companies, provided
that such outside interests do not interfere with the performance of his
duties and obligations hereunder, and provided that Executive receives the
express written consent of the Board of Directors of the Company. Executive
agrees to refrain from engaging in any activity that does, will or could
reasonably be deemed to conflict with the best interests of the Company.
Without limiting the generality of the foregoing, Executive shall perform the
duties associated with the positions of President and Chief Executive
Officer, and such other duties and responsibilities as are from time to time
assigned to Executive by the Board of Directors of the Company consistent
with such positions.
2. Term: This Agreement shall commence on the Effective Time of the
Merger, and shall expire on the first anniversary thereof, unless sooner
terminated in accordance with Section 9 hereof (the "Term"). In the event
the Merger is not consummated, this Agreement shall be of no further force
and effect.
3. Compensation:
(a) Salary: Executive's salary shall be at the annual rate of
Three Hundred Thousand Dollars ($300,000) (the "Annual Salary"), payable in
accordance with the Company's regular payroll practices. All applicable
withholding taxes shall be deducted from such payments.
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(b) Incentive Bonus: Executive shall be eligible to receive a
bonus of up to fifty percent (50%) of the Annual Salary (the "Annual Bonus"),
provided that Cendant achieves it EBITDA (as defined below) target for 1998,
which target shall be determined solely by Cendant. EBITDA shall mean
Cendant's earnings before interest, taxes, depreciation and amortization,
adjusted for any extraordinary gains or losses, as reflected in the Cendant
audited Consolidated Statements of Income. The Annual Bonus shall be
increased incrementally in the following amounts if the Company exceeds its
corresponding unit EBITDA target, which target shall be determined solely by
Cendant:
Company Target Additional Annual Bonus
10% above EBITDA 25% of Annual Salary
25% above EBITDA 50% of Annual Salary.
The Annual Bonus shall be paid to Executive no later than February 28, 1999,
or as soon as practicable thereafter if the amount of the Annual Bonus cannot
be determined by such date. Notwithstanding the foregoing, Executive shall
not be eligible to receive an Annual Bonus if his employment is terminated
prior to the expiration of the Term pursuant to Sections 9(a)(i), (ii) or
(iii).
(c) Bonus for 1997: The Company understands that, pursuant to
the Prior Agreement, Executive was to be paid an annual bonus on June 18,
1998 with respect to the Company's 1998 fiscal year. Therefore, as soon as
practicable following the Effective Time of the Merger (as defined in the
Merger Agreement), the Company shall pay Executive an amount equal to the
annual bonus Executive would have received under the Prior Agreement,
prorated from June 19, 1997 to the Effective Time of the Merger.
(d) Use of Automobile: During the Term of this Agreement, the
Company shall make available to Executive for Executive's exclusive use, an
automobile that is equivalent to a Buick Riviera or Park Avenue, and shall
pay the costs of operating, maintaining and insuring such automobile.
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4. Stock Options: As soon as practicable following the Effective
Time of the Merger, Cendant shall grant to Executive, pursuant to an
agreement substantially in the form of Exhibit A hereto, a nonqualified
option to acquire 300,000 shares of Cendant common stock (or, if the
Effective Time of the Merger occurs prior to the Effective Time of the CUC
Merger (as defined in the CUC Merger Agreement), HFS shall grant to Executive
a nonqualified option to acquire 124,838 shares of HFS common stock) with a
per share exercise price equal to the fair market value of a share of Cendant
(or, if applicable, HFS) common stock on the date on which the Effective Time
of the Merger occurs.
5. Benefits: Executive shall be eligible to participate in such
benefit plans as are, or from time-to-time hereafter may be, provided by the
Company. All benefits shall be provided to Executive in accordance with the
terms and conditions of such benefit plans and programs as are maintained by
the Company, as such plans are amended from time to time.
6. Vacation: Executive shall be entitled to paid vacation of two
(2) weeks annually.
7. Reimbursement of Expenses: The Company will reimburse Executive
for reasonable and necessary business expenses of Executive for travel, meals
and similar items incurred in connection with the performance of Executive's
duties, and which are consistent with such guidelines as the Board of
Directors of the Company may from time to time establish. All payments for
reimbursement of such expenses shall be made to the Executive only upon the
presentation to the Company of appropriate vouchers or receipts.
8. Confidentiality, Non-Competition, etc.:
(a) Executive acknowledges that: (i) the Business is intensely
competitive and that Executive's employment by the Company will require that
Executive have access to and knowledge of confidential information of the
Company, including, but not limited to, the identity of the Company's
customers, the identity of the representatives of customers with whom the
Company has dealt, the kinds of services provided by the Company to customers
and offered to be performed for potential
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customers, the manner in which such services are performed or offered to be
performed, the service needs of actual or prospective customers, pricing
information, information concerning the creation, acquisition or disposition
of products and services, computer software applications and other programs,
personnel information and other trade secrets (the "Confidential
Information"); (ii) the direct and indirect disclosure of any such
Confidential Information to existing or potential competitors of the Company
would place the Company at a competitive disadvantage and would do damage,
monetary or otherwise, to the Company's business; and (iii) the engaging by
Executive in any of the activities prohibited by this Section 8 may
constitute improper appropriation and/or use of such Confidential
Information. Executive expressly acknowledges the trade secret status of the
Confidential Information and that the Confidential Information constitutes a
protectible business interest of the Company. Accordingly, the Company and
Executive agree as follows:
(b) For purposes of this Section 8, the Company shall be
construed to include the Company and its parents and subsidiaries engaged in
the Business, including any divisions managed by Executive.
(c) During Executive's employment with the Company, and at all
times after the termination of Executive's employment by expiration of the
Term or otherwise, Executive shall not, directly or indirectly, whether
individually, as a director, stockholder, owner, partner, employee, principal
or agent of any business, or in any other capacity, make known, disclose,
furnish, make available or utilize any of the Confidential Information, other
than in the proper performance of the duties contemplated herein, or as
expressly permitted herein, or as required by a court of competent
jurisdiction or other administrative or legislative body; provided that,
prior to disclosing any of the Confidential Information as required by a
court or other administrative or legislative body, Executive shall promptly
notify the Company so that the Company may seek a protective order or other
appropriate remedy. Executive agrees to return all Confidential Information,
including all photocopies, extracts and summaries thereof, and any such
information stored electronically on tapes, computer disks or in any other
manner to the Company at any time
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upon request by the Company and upon the termination of his employment for
any reason.
(d) During Executive's employment with the Company, Executive
shall not engage in "Competition" with the Company. For purposes of this
Agreement, Competition by Executive shall mean Executive's engaging in, or
otherwise directly or indirectly being employed by or acting as a consultant
or lender to, or being a director, officer, employee, principal, agent,
stockholder, member, owner or partner of, or permitting his name to be used
in connection with the activities of any other business or organization
anywhere in the United States which competes, directly or indirectly, with
the Business of the Company.
(e) For a period of two (2) years following the termination of
Executive's employment, whether upon expiration of the Term or otherwise,
Executive shall not engage in Competition, as defined above, with the Company
in any locality or region of the United States in which the Company had
operations at the time of, or within six (6) months prior to, Executive's
termination, or in which, during the six (6) month period prior to
Executive's termination, the Company had made substantial plans with the
intention of establishing operations in such locality or region; provided
that, it shall not be a violation of this sub-paragraph for Executive to
become the registered or beneficial owner of up to five percent (5%) of any
class of the capital stock of a competing corporation registered under the
Securities Exchange Act of 1934, as amended, provided that Executive does not
actively participate in the business of such corporation until such time as
this covenant expires.
(f) For a period of two (2) years after he ceases to be
employed hereunder by the Company, whether upon expiration of the Term or
otherwise, Executive agrees that he will not, directly or indirectly, for his
benefit or for the benefit of any other person, firm or entity, do any of the
following:
(i) solicit from any customer doing business with the
Company as of Executive's termination, business of the same
or of a similar nature to the business of the Company with
such customer;
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(ii) solicit from any known potential customer of the
Company business of the same or of a similar nature to that
which has been the subject of a known written or oral bid,
offer or proposal by the Company, or of substantial
preparation with a view to making such a bid, proposal or offer,
within six (6) months prior to Executive's termination;
(iii) solicit the employment or services of, or hire, any
person who was known to be employed by the Company upon
termination of Executive's employment, or within six (6) months
prior thereto; or
(iv) otherwise knowingly interfere with the business or
accounts of the Company.
(g) Executive acknowledges that the services to be rendered by
him to the Company are of a special and unique character, which gives this
Agreement a peculiar value to the Company, the loss of which may not be
reasonably or adequately compensated for by damages in an action at law, and
that a material breach or threatened breach by him of any of the provisions
contained in this Section 8 will cause the Company irreparable injury.
Executive therefore agrees that the Company shall be entitled, in addition to
any other right or remedy, to a temporary, preliminary and permanent
injunction, without the necessity of proving the inadequacy of monetary
damages or the posting of any bond or security, enjoining or restraining
Executive from any such violation or threatened violations.
(h) Executive further acknowledges and agrees that due to the
uniqueness of his services and confidential nature of the information he will
possess, the covenants set forth herein are reasonable and necessary for the
protection of the business and goodwill of the Company.
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9. Termination:
(a) The employment of Executive hereunder shall terminate on
the first to occur of the following:
(i) the date of Executive's death, adjudicated
incompetency or adjudicated bankruptcy;
(ii) the date on which Executive shall have experienced a
Disability (as defined below), and the Board of Directors of the
Company gives Executive notice of termination on account of
Disability;
(iii) the date on which Executive shall have engaged in
conduct which constitutes Cause (as defined below), and the Board
of Directors of the Company gives Executive notice of termination
for Cause;
(iv) expiration of the Term; or
(v) the date on which the Board of Directors of the
Company shall give Executive notice of termination for any
reason other than the reasons set forth in (i) through (iv)
above.
(b) For purposes of this Agreement, "Disability" shall mean an
illness, injury or other incapacitating condition as a result of which
Executive is unable to perform the services required to be performed under
this Agreement for (i) ninety (90) consecutive days during the Term, or (ii)
a period or periods aggregating more than one hundred and twenty (120) days
in any six (6) consecutive months. In any such event, the Board of Directors
of the Company, in its sole discretion, may terminate this Agreement by
giving notice to Executive of termination for Disability. Executive agrees
to submit to such medical examinations as may be necessary to determine
whether a Disability exists, pursuant to such reasonable requests made by the
Board of Directors of the Company from time to time.
(c) For purposes of this Agreement, "Cause" shall mean the
occurrence of any of the following, as reasonably determined by the Board of
Directors of the Company:
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(i) Executive's willful and continued failure to
substantially perform his duties with the Company;
(ii) Executive's conviction of, or guilty plea or
confession to, a felony or crime of moral turpitude;
(iii) the willful or negligent engaging by Executive in
conduct which is demonstrably and materially injurious to the Company,
monetarily or otherwise; or
(iv) Executive's breach of any material term of this
Agreement.
10. Compensation in Event of Termination; Survival: Upon
termination of Executive's employment for any reason, this Agreement shall
terminate and the Company shall have no further obligation to Executive
except as set forth in this Section 10; provided that, the provisions set
forth in Sections 8 and 12 hereof shall remain in full force and effect after
the termination of Executive's employment.
(a) In the event Executive's employment is terminated pursuant
to Sections 9(a)(i), (ii), or (iii) prior to the expiration of the Term,
Executive or his estate, conservator or designated beneficiary, as the case
may be, shall be entitled to payment of any earned but unpaid Annual Salary
and payment for unused vacation days, through the date of termination.
Following any such termination, neither Executive nor his estate, conservator
or designated beneficiary shall be entitled to receive any salary or other
payment provided for hereunder with respect to any period after such
termination, except as Executive may otherwise be entitled pursuant to any
employee benefit plan.
(b) In the event Executive's employment is terminated pursuant
to Section 9(a)(iv) upon expiration of the Term, Executive shall be entitled
to receive, as his sole and exclusive remedy, (i) any earned but unpaid
Annual Salary, and payment for unused vacation days through the date of
termination, (ii) and the Annual Bonus, if any, pursuant to Section 3(b)
hereof.
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(c) In the event Executive's employment is terminated pursuant
to Section 9(a)(v) prior to the expiration of the Term, Executive shall be
entitled to receive, as his sole and exclusive remedy, (i) severance pay in
an amount equal to one (1) year's Annual Salary, paid in installments at such
times as Executive would normally receive payroll checks as though employed
through the severance payment period, and (ii) an amount, if any, equal to
the Annual Bonus Executive would have received hereunder pursuant to Section
3(b) hereof, prorated from the Effective Time of the Merger to the date of
such termination of employment.
11. Successors and Assigns; Binding Agreement: This Agreement shall
be binding upon, and inure to the benefit of, the Company and its successors
and assigns and upon any person acquiring, whether by merger, consolidation,
purchase of assets or otherwise, all or substantially all of the Company's
assets and business.
12. Return of Company Property: Executive agrees that following the
termination of his employment for any reason, he shall return all property of
the Company, its subsidiaries, affiliates and any divisions thereof he may
have managed which is then in or thereafter comes into his possession,
including, but not limited to, documents, contracts, agreements, plans,
photographs, books, notes, electronically stored data and all copies of the
foregoing as well as any automobile or other materials or equipment supplied
by the Company to Executive.
13. Entire Agreement: This Agreement sets forth the entire
agreement between the parties with respect to its subject matter and merges
and supersedes all prior discussions, agreements and understandings of every
kind and nature between them, including, but not limited to, the Prior
Agreement, and neither party shall be bound by any term or condition with
respect to the subject matter of this Agreement other than as expressly set
forth or provided for herein. This Agreement may not be changed or modified
except by an agreement in writing, signed by the parties hereto.
14. Each Party the Drafter: This Agreement and the provisions
contained in it shall not be construed or interpreted for or against any
party to this Agreement
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because that party drafted or caused that party's legal representative to draft
any of its provisions.
15. Waiver: The failure of either party to this Agreement to
enforce any of its terms, provisions or covenants shall not be construed as a
waiver of the same or of the right of such party to enforce the same. Waiver
by either party hereto of any breach or default by the other party of any
term or provision of this Agreement shall not operate as a waiver of any
other breach or default.
16. Severability: In the event that any one or more of the
provisions of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder of
the Agreement shall not in any way be affected or impaired thereby.
Moreover, if any one or more of the provisions contained in this Agreement
shall be held to be excessively broad as to duration, activity or subject,
such provisions shall be construed by limiting and reducing them so as to be
enforceable to the maximum extent allowed by applicable law.
17. Governing Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia, without
regard to its conflict of law rules.
18. Descriptive Headings: The paragraph headings and recitals
contained herein are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.
19. Counterparts: This Agreement may be executed in one or more
counterparts, which, together, shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the date first written above.
The Company EXECUTIVE
By: /s/ Xxxxxxx X. Xxxxxx, Xx. /s/ Xxxxx X. Xxxxxx
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Director
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