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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
Amended and Restated Employment Agreement dated as of May 26, 1998,
between Xxxxx X'Xxxx ("Employee") and Global Discount Travel Services LLC (the
"Company").
WHEREAS, Employee executed an employment agreement effective May 26,
1998 (the "Original Agreement"), setting forth the terms of Employee's
employment with the Company; and
WHEREAS, the parties hereto wish to amend and restate the Original
Agreement to clarify certain terms thereof.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. Employment. Upon the terms and conditions hereinafter set forth, the
Company hereby employs Employee and Employee hereby accepts employment as Chief
Operating Officer of the Company.
2. Salary.
(a) The Company will pay Employee a base salary of $175,000
per year ("Base Salary"), payable on a bi-weekly basis effective May 1, 1998.
(b) The Company will pay an incentive compensation of 3% of
Employee's annual base salary, capped at 100% of Employee's annual base salary,
for every million dollars of net income before taxes, excluding interest income,
starting with the fiscal year of 1998. Incentive payment shall be calculated as
of December 31, 1998 and each December 31st thereafter, provided Employee
remains employed through the respective December 31st. Incentive payments will
be made in the calendar year following the year for which they are calculated.
Incentive payments will be made for each year in equal quarterly increments
starting March 31, 1999 and each quarter thereafter, if applicable.
3. Stock Options.
(a) Employee is granted an option to purchase a membership
interest in the Company entitling Employee to a four tenths of one percent
(0.4%) interest in the profits and distributions of the Company for a total cash
price of $800,000. Such option shall vest on May 26, 2004, provided that
Employee remains employed with the Company through such date, and such option
may be exercised by Employee for a period of ninety (90) days following such
vesting date. In the event of Employee's termination of employment for any
reason (including, without limitation,
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involuntary termination by the Company, resignation by the Employee or death)
prior to an IPO (as defined below) and prior to May 26, 2004, such option to
purchase a membership interest in the Company shall terminate and be of no
further effect.
(b) If the Company (or an entity which owns substantially all
of the assets of or membership interests in the Company) completes an initial
public offering (the "IPO") of common stock ("Common Stock") during Employee's
employment with the Company, any outstanding option to purchase a membership
interest in the Company shall be converted into and be deemed to constitute a
non-qualified stock option to purchase 157,733 shares of Common Stock for a cash
exercise price of $5.0719 per share (with the number of shares and exercise
price being subject to equitable adjustment in the event of a stock split, stock
dividend, recapitalization or other similar change in capitalization affecting
the Common Stock). Employee and the Company acknowledge and agree that the
foregoing number of shares of Common Stock subject to such option and exercise
price are calculated based upon an assumed capitalization of 39,433,263 shares
of Common Stock outstanding upon completion of the IPO, which includes shares
issuable upon exercise of the underwriters' over-allotment option and options
issued to employees as of the IPO date.
(c) Stock options to purchase shares of Common Stock shall
vest in equal semi-annual installments over a period of four years, with the
first installment vesting on the six-month anniversary of the IPO date. Vested
stock options may be exercised starting on the six-month anniversary of the IPO
and ending five years from the date of the IPO.
(d) If, following an IPO, the Company (i) ceases operation,
(ii) consummates a "going private" transaction, (iii) is sold to a private
company or (iv) is sold to a public company, any unvested options to purchase
Common Stock shall become vested immediately prior to the effective date of any
such transaction. Upon any such transaction, Employee shall receive upon
exercise of outstanding options to purchase Common Stock such consideration per
share as shareholders of Common Stock are entitled to receive pursuant to such
transaction unless, in the case of a sale to a public company, provisions are
made in the transaction for the assumption of the outstanding options or the
substitution of the outstanding options for options of a publicly-traded
successor corporation or a publicly-traded parent thereof (with appropriate
adjustments as to the number and kind of shares and exercise price as to prevent
dilution or enlargement of rights).
(e) Stock options to purchase shares of Common Stock may be
purchased through the use of a broker-dealer sale and remittance procedure
pursuant to which Employee (i) shall provide written instructions to a
Company-designated brokerage firm to effect the immediate sale of some or all of
the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares and (ii) shall provide written
directives to the Company to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale transaction.
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4. Termination.
(a) In the event that Employee's employment is terminated
other than (i) by reason of Employee's resignation or death or (ii) by the
Company for "Cause", (A) Employee shall continue to receive Employee's annual
base salary through April 30, 2001, and any unpaid quarterly incentive payments
due based on what was already earned in the calendar year prior to Employee's
termination, (B) Employee's unvested stock options to purchase Common Stock
shall become immediately vested, and (C) all vested stock options to purchase
Common Stock shall be exercisable for 12 months after termination of employment.
For purposes of the foregoing, a buyer's failure immediately following a
transaction described in Section 3(d) above to offer Employee a position
comparable to the position held by Employee immediately prior to such
transaction shall be deemed to be a termination by the Company other than for
Cause and, in addition to the acceleration of vesting of Employee's outstanding
options to purchase Common Stock pursuant to Section 3(d), Employee shall be
entitled to receive the payments provided for in clause (A) of this paragraph.
For purposes of this Agreement, "Cause" is defined as (1) Employee's willful
misconduct, (2) gross neglect of Employee's obligation to the business of the
Company, (3) Employee's conviction of a crime involving moral turpitude or
dishonesty or (4) Employee's disability that prevents him from performing the
essential functions of Employee's job for in excess of six (6) months.
(b) In the event that Employee dies, (i) Employee shall be
entitled only to Employee's annual base salary for the period of time Employee
worked during the applicable year and quarterly incentive payments made prior to
the date Employee dies, (ii) Employee's vested stock options to purchase Common
Stock shall be exercisable for 12 months after death and (iii) all unvested
stock options to purchase Common Stock shall expire on the date of death.
(c) In the event that Employee resigns, (i) Employee shall be
entitled only to Employee's annual base salary for the period of time Employee
worked during the applicable year and quarterly incentive payments made prior to
the date Employee notifies the Company of Employee's resignation, (ii) at any
time before the first anniversary of the IPO, Employee agrees to forfeit all
vested stock options and unvested stock options to purchase Common Stock and
(iii) at any time after the first anniversary of the IPO, (A) Employee's
unvested stock options to purchase Common Stock shall expire on the date
Employee notifies the Company of Employee's resignation and (B) Employee's
vested stock options to purchase Common Stock shall expire three months after
the date Employee notifies the Company of Employee's resignation.
(d) In the event that Employee is terminated by the Company
for Cause, (i) Employee shall be entitled only to Employee's annual base salary
for the period of time Employee worked during the applicable year and quarterly
incentive payments made prior to the date that Employee is terminated for Cause,
(ii) at any time before the first anniversary of the IPO, Employee agrees to
forfeit all vested stock options and unvested stock options to purchase Common
Stock and (iii) at any time after the first anniversary of the IPO, (A)
Employee's unvested stock options to purchase Common Stock shall expire on the
date of termination and (B) Employee's vested stock options to purchase Common
Stock shall expire three months after the date of termination.
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5. Non-Compete; Non-Disclosure; Non-Solicitation; Inventions.
(a) For a period of six months (the "Restricted Period") from
the date on which your employment with the Company terminates for any reason
("Termination"), Employee will not, anywhere, directly or indirectly, own,
manage, operate, control, be employed by, participate in, provide consulting
services to, or be connected in any manner with the ownership, management,
operation or control of any entity (collectively, "Involved") which is engaged
in the Internet travel business, except that Employee may own, for investment
purposes only, up to 1% of the capital stock or indebtedness of any company
whose capital stock is publicly traded. An entity shall not be considered
substantially engaged in the Internet travel business if less than 5% of its
gross sales are derived from Internet travel revenues. However, even if the
entity does have less than 5% of its gross sales derived from Internet travel
revenues, Employee shall not be directly Involved in the development or growth
of such entity's Internet travel business during the applicable period. In the
event that Termination was due to the resignation by Employee, Employee further
agrees that Employer shall have the option (the "Extension Option") to extend
the Restricted Period for an additional six month period (the "Additional
Restricted Period"). In the event that Employer elects to exercise the Extension
Option, Employer shall pay to Employee during the period commencing on the first
day of the Additional Restricted Period and ending on the last day of the
Additional Restricted Period, on a monthly basis, an amount equal to one-twelve
(1/12th) of Employee's Base Salary.
(b) For a period of 12 months from Termination, Employee
agrees not to contact or solicit any person known by Employee to be an employee
of the Company or any of its affiliates or to have been employed by the Company
or any of its affiliates within the prior 90 days for the purpose of inducing
such employees to leave such employ.
(c) During the term of this Agreement and at all times
thereafter, Employee shall hold in a fiduciary capacity for the benefit of the
Company and its affiliates all secret or confidential information, knowledge or
data relating directly to the business of the Company or its affiliates, and
their respective businesses, including but not limited to trade secrets, (i)
obtained by Employee during Employee's employment by the Company and (ii) not
otherwise in the public knowledge. Employee shall not, without prior written
consent of the Company, except to the extent compelled pursuant to the order of
a court or other body having jurisdiction over such matter or based upon the
advice of counsel communicate or divulge any such information, knowledge or data
to anyone other than the Company and those designated by the Company; provided,
however, that Employee will assist the Company, at the Company's expense, in
obtaining a protective order, other appropriate remedy or other reliable
assurance that confidential treatment will be accorded such information
disclosed pursuant to the terms of this Agreement.
(d) All processes, technologies and inventions (collectively,
"Inventions"), including new contributions, improvements, ideas, discoveries,
trademarks and trade names, conceived, developed, invented, made or found by
Employee, alone or with others, during the period
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of Employee's employment by the Company, whether or not patentable and whether
or not conceived, developed, invented, made or found on the Company's time or
with the use of the Company's facilities or materials, shall be the property of
the Company and shall be promptly and fully disclosed by Employee to the
Company. Employee shall perform all necessary acts (including, without
limitation, executing and delivering any confirmatory assignments, documents or
instruments requested by the Company) to vest title to any such Invention in the
Company and to enable the Company, at its expense, to secure and maintain
domestic and/or foreign patents or any other rights for such Inventions.
(e) Employee is scheduled to receive bonuses and stock options
under this agreement which will benefit Employee based upon the performance of
the Company's business. Employee represents to the Company that the enforcement
of the restrictions contained in this section would not be unduly burdensome to
Employee. Employee agrees that the remedy at law for any breach by Employee of
the provisions of this section may be inadequate and that the Company shall be
entitled to injunctive relief. This section constitutes an independent and
separable covenant that shall be enforceable notwithstanding any right or remedy
that the Company may have under any other provision of this Agreement or
otherwise.
6. Miscellaneous.
(a) This agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all
previous written, and all previous or contemporaneous oral, negotiations,
understandings, arrangements, and agreements.
(b) The headings in this Agreement are for convenience of
reference only and are not part of the substance of this Agreement.
(c) This Agreement and all of the provisions hereof shall
inure to the benefit of and be binding upon the legal representatives, heirs,
distributees, successors (whether by merger, operation of law or otherwise) and
assigns of the parties hereto; provided, however, that Employee may not delegate
any of Employee's duties hereunder, and may not assign any of Employee's rights
hereunder, without the prior written consent of the Company.
(d) This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.
(e) If any section, paragraph, term or provision of this
Agreement shall be held or determined to be unenforceable, the balance of this
Agreement shall nevertheless continue in full force and effect unaffected by
such holding or determination. In addition, in any such event, the parties agree
that it is their intention and agreement that any such section, paragraph, term
or provision which is held or determined to be unenforceable, as written, shall
nonetheless be in force and binding to the fullest extent permitted by law as
though such section, paragraph, term or
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provision had been written in such a manner and to such an extent as to be
enforceable under the circumstances.
(f) This Agreement will be interpreted and the rights of the
parties determined in accordance with the laws of the United States applicable
thereto and the internal laws of the State of New York applicable to an
agreement executed, delivered and performed therein without giving effect to the
choice-of-law rules thereof or any other principle that could require the
application of the substantive law of any other jurisdiction.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
GLOBAL DISCOUNT TRAVEL SERVICES LLC
By: Global Partner, Inc., Manager
By: ________________________________
Xxxx Xxxxxx
Vice President
_____________________________
Xxxxx X'Xxxx
SS# _________________
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