Exhibit 10.26
[TRAVELCITY LOGO]
April 18, 2000
Xxxxxx X. Xxxxxxxxx
Executive Vice President Administration,
General Counsel and Corporate Secretary
Xxxxxxxxxxx.xxx
0000 Xxxxxxxxxx Xxxx.
Ft. Worth, TX 76155
Dear Xxxx:
This letter agreement ("Agreement") will confirm our mutual understanding with
respect to your current employment by Travelocity Holdings, Inc. ("Travelocity
Holdings" or the "Company").
1. TITLE AND RESPONSIBILITIES
Effective as of March 7, 2000, the date of the closing of the merger between
Preview Travel, Inc. and Xxxxxxxxxxx.xxx, you were elected to the positions of
Executive Vice President Administration, General Counsel and Corporate Secretary
of Travelocity Holdings, Xxxxxxxxxxx.xxx Inc., and Xxxxxxxxxxx.xxx LP
(collectively, "Travelocity"). You will perform all functions consistent with
these positions, as determined by the Travelocity Board of Directors and me, and
shall report directly to me.
2. TERM OF EMPLOYMENT
Either you or the Company may terminate your employment at any time for any
reason, with or without cause, by giving the other party not less than seven
days and not more than fourteen days written notice of such termination.
3. COMPENSATION AND BENEFITS
a. SALARY
Your initial base salary will be $18,333.33 per month. Your salary will be
reviewed annually by the Compensation/Nominating Committee of the Board (the
Compensation Committee).
b. ANNUAL BONUS
You will also be eligible to participate in Travelocity Holdings' annual bonus
plan, which will pay awards based on the Company meeting pre-determined
financial objectives. Your 2000 target incentive award will be 40% of your 2000
earnings from Travelocity. Your
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April 18, 2O00
Page 2
individual award will depend upon both actual Company performance and your
individual performance. The Compensation Committee, of course, must officially
approve the plan document for Travelocity Holdings.
c. STOCK
You will be eligible to participate in The Travelocity Holdings, Inc. Long-Term
Incentive Plan ("LTIP"). LTIP awards, when made, are in the form of annual
grants of stock options.
d. BENEFITS
You will also be eligible to participate in the Company's 4Olk, life and health
insurance programs, and the Employee Stock Purchase Plan. The details and
limitations of these and all benefit and compensation plans are subject to the
Company's policies and plans and may change from time to time in the Company's
sole discretion.
e. SERP
The Company is currently evaluating your participation in the Sabre Inc.
Supplemental Executive Retirement Plan. If it is not practical to establish a
SERP for you at Travelocity, the Company will at its election provide you with
either a cash payment, an additional grant of stock or other form of
compensation that provides you with a benefit equivalent to the net present
value of your Sabre SERP participation.
f. CONTINUATION OF OTHER PERQUISITES
The Company will continue the following other perquisites for you until March 7,
2001: 1) golf membership at the Four Seasons Resort and Club, including
reimbursement of your monthly membership dues and locker fees; 2) reimbursement
of up to $5000 annually for financial planning, tax preparation and estate
planning/will preparation; and 3) monthly car allowance of $750. After March 7,
2001, the company will either purchase for your use a golf membership at the
Four Seasons or make some other mutually agreeable arrangement for you to
continue your membership there; however, the Company will no longer reimburse
you for your monthly club dues or fees.
4. TRAVEL PRIVILEGES
Subject to the terms of an agreement between Sabre Holdings Corporation
("Sabre") and American Airlines, Inc. that expires on June 30, 2008, you will
continue to be eligible at your current pass classification for personal flight
privileges for you, your spouse and dependent children on American Airlines and
American Eagle. Certain space available flight privileges will also continue to
be available for non-dependent children, other relatives, and friends on these
airlines. Please note that Sabre's agreement with American
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April 18, 2000
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provides that if Sabre's economic interest in the Company should fall below 50%,
flight privileges for Travelocity employees would cease.
5. TERMINATION WITHOUT CAUSE FOLLOWING A CHANGE IN CONTROL OR CHANGE IN EQUITY
STRUCTURE
The Compensation Committee recently authorized the Company to enter into an
executive termination benefits agreement with you, containing the following
provisions:
In the event the Company were to involuntarily terminate your employment without
Cause within a two-year period following a Change in Control of Xxxxxxxxxxx.xxx,
the Company would: (a) pay to you severance in an amount equal to the sum of one
year base pay plus one year target bonus; (b) accelerate the vesting of all your
unvested Xxxxxxxxxxx.xxx options to the date of termination; (c) convert any
unvested Sabre options or performance shares to Xxxxxxxxxxx.xxx options or
deferred stock in an equivalent value, and accelerate the vesting of such
options or stock to the date of termination; (d) continue your benefits for a
period of one year; and (e) provide you with a period of ninety days following
termination to exercise your vested options.
In the event the Company were to involuntarily terminate your employment without
Cause within a two-year period following a Change in Equity Structure, the
Company would: (a) pay to you severance in an amount equal to the sum of six
months' base pay plus six months target bonus: (b) accelerate the vesting of all
your unvested Xxxxxxxxxxx.xxx options; (c) continue your benefits for a period
of six months; and (d) provide you with a period of ninety days following
termination to exercise your vested options.
If the value of the payments and benefits (including option acceleration) owed
to you following your involuntary termination and a Change in Control or Change
in Equity Structure would exceed three times the "base amount" as defined in
Internal Revenue Code Section 280G, you would have the right to choose whether
to accept payments and benefits limited to 2.99 times the base amount or accept
the full payments and benefits. If you were to accept the full payment and
benefits, the Company would not pay any excise taxes or penalties owed by the
executive.
"Cause" and "Change in Control" shall have the definitions set forth in the most
recent LTIP.
"Change in Equity Structure" shall mean any transaction or series of
transactions by which Sabre or the Company (a) acquires all or substantially all
of the outstanding common stock of Xxxxxxxxxxx.xxx (except in connection with a
transaction also resulting in a Change in Control), or (b) converts into or
exchanges the common stock of Xxxxxxxxxxx.xxx for any security of Sabre,
including but not limited to a "tracking stock."
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April 18, 2000
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"Involuntary termination" shall mean (a) any termination by the Company without
Cause: (b) a material reduction by the Company, without your written consent, in
your base salary and bonus compensation in effect immediately prior to such
reduction; (c) any permanent relocation of you by the Company, without your
written consent, to a facility or location more than 25 miles from your present
work location, unless in conjunction with a relocation of the Company's
headquarters to San Francisco or the surrounding metropolitan area; and (d) a
significant reduction by the Company, without your written consent, of any of
your duties, titles, authority, reporting relationship or responsibilities,
relative to the duties, titles, authority, reporting relationship and
responsibilities in effect immediately prior to such reduction.
6. TRANSITION AND COOPERATION.
Upon termination of your employment with the Company for whatever reason, you
agree to execute any and all documents and to take any and all actions that the
Company may reasonable request to effect the transition of your duties and
responsibilities. You further agree to make yourself available with respect to,
and to cooperate in conjunction with, any litigation or investigation involving
the Company.
7. OTHER RESPONSIBILITIES
As consideration for the benefits and promises set forth in this Agreement, you
agree as follows:
For a period of two years following your employment, you will not directly or
indirectly solicit, induce or encourage (or assist any third party in
soliciting, inducing, or encouraging) and employee of the Company or its
Affiliates (whether or not now existing) to terminate employment without the
prior written consent of the Board or affiliate Board, as appropriate.
You will not in any way disparage, bring discredit to, or otherwise harm (i) the
Company, (ii) its Affiliates, or (iii) the employees, officers, and directors of
each.
"Affiliate" shall have the definition set forth in the most recent LTIP.
8. NON COMPETITION
You acknowledge the confidentiality of the information concerning, and the trade
secrets of, the Company and/or its Affiliates that has come or will come into
your possession or knowledge in connection with your employment by the Company.
By way of example, this information may include current and prospective
confidential know-how, inventions, customer lists, marketing plans, and
information on acquisitions, mergers and joint ventures. You agree to hold such
information and trade secrets in strict confidence.
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April 18, 2000
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In consideration of the confidential information provided by Company, and all
other benefits under this Agreement, you agree that for a period of one year
following your employment that you will not become an employee of, independent
contractor of, consultant to, or perform any services for, any Travelocity
Direct Competitor. For purposes of this letter, Travelocity Direct Competitor
shall mean any entity that offers travel services via the Internet directly to
individual consumers and that obtains, or is reasonably expected to obtain, at
least $100 million in annual revenues from such services, including but not
limited to, Expedia Inc., Xxxxxxxxx.xxx, and the joint website announced by
United Air Lines, Delta Airlines, Continental Airlines, and Northwest Airlines.
9. MISCELLANEOUS
The laws of the State of Texas will govern this Agreement. You and the Company
agree that this Agreement represents the entire understanding with respect to
its subject matter. Only a writing that has been signed by both you and the
Company may modify this Agreement. You agree that any and all previous
Employment Agreements and Executive Termination Benefits Agreements are
cancelled as of the date this Agreement takes effect.
Please sign and return one of the originals of this Agreement to indicate your
agreement with the above arrangements.
Sincerely,
/s/Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
President and CEO
Accept: /s/ Xxxxxx X. Xxxxxxxxx Date: 5/1/00
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