EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is made and entered into as of
July 1, 1998, by and between , an individual ("EMPLOYEE"), and
Hospitality Marketing Concepts Inc., a Delaware corporation ("EMPLOYER").
R E C I T A L S:
A. Employer desires to employ Employee and Employee desires to be
employed by Employer, upon the terms and conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and mutual agreements, and
upon the terms and subject to the conditions contained set forth below, the
parties agree as follows:
SECTION 1 TERM.
Employer agrees to employ Employee, and Employee agrees to serve Employer,
in accordance with the terms of this Agreement, for a term of three (3) years,
commencing on July 1, 1998 and ending on June 30, 2001, unless this Agreement is
earlier terminated in accordance with its provisions.
SECTION 2 SERVICES AND EXCLUSIVITY OF SERVICES.
So long as this Agreement shall continue in effect, Employee shall (i)
devote his full business time, energy and ability exclusively to the business,
affairs and interests of Employer and its subsidiaries and matters related
thereto, (ii) use Employee's best efforts and abilities to faithfully and
diligently promote the business, affairs and interests of Employer and its
subsidiaries, if any, and (iii) shall perform the services contemplated by this
Agreement in accordance with policies established by, and under the direction
of, the Board or Directors of the Employer (the "Board"). Employer and Employee
acknowledge that Employee will be required to perform services outside of the
United States.
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SECTION 3 SPECIFIC POSITION; DUTIES AND RESPONSIBILITIES.
Employer and Employee agree that, subject to the provisions of this
Agreement, Employer will employ Employee and Employee will serve Employer as a
senior officer for the duration of this Agreement. The specific position in
which Employee shall initially serve shall be ______________________________
___________________________. Employee agrees to observe and comply with the
rules and regulations of Employer as adopted by the Board respecting the
performance of Employee's duties and agrees to carry out and perform orders,
directions and policies of Employer and its Board as they may be, from time to
time, stated either orally or in writing. Employer agrees that the duties which
may be assigned to Employee shall be usual and customary duties of the office(s)
or position(s) to which he may from time to time be appointed or elected and
shall not be inconsistent with the provisions of the charter documents of
Employer or applicable law. Employee shall have such corporate power and
authority as shall reasonably be required to enable the discharge of duties in
any office that may be held.
SECTION 4 COMPENSATION.
(a) BASE SALARY. During the term of this Agreement, Employer
agrees to pay Employee a base salary of _____________ Thousand Dollars
($______) per year, or such other amount as may be determined upon a review
of Employee's performance to be undertaken by the Board at least once
annually for such things a cost of living adjustments, changes in
responsibilities and duties, and Employer's success and performance ("BASE
SALARY"). The Base Salary shall be paid in installments on the same dates
the other senior officers of Employer are paid.
(b) BONUS. Employer agrees to negotiate with Employee an incentive
bonus based upon the performance targets mutually agreed to by the Board and
Employee from time to time but at least annually, in advance of the
applicable year (and as soon as practicable with respect to the year
commencing January 1, 1998). In the event such targets are established and
the bonus amounts are so negotiated and agreed, such other terms and
conditions shall be set forth in a letter to be signed by Employer and
Employee.
(c) ADDITIONAL BENEFITS. Employee shall also be entitled to all
rights and benefits under the Employer's 1998 Stock Option Plan, as amended,
and any other stock option,
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bonus, incentive, participation or extra compensation plan, pension plan,
profit-sharing plan, life, medical, dental, disability, or insurance plan or
policy or other plan or benefit that Employer or its subsidiaries may provide
for Employee (provided Employee is eligible to participate therein) or other
employees of Employer generally as from time to time in effect during the
term of this Agreement (the "PLANS"). The life, medical and dental plans
shall also cover all dependents of Employee at Employer's sole expense. In
any event, Employer shall provide Employee with (i) term life insurance equal
to five (5) times the Base Salary and (ii) long-term disability insurance
provided for Employer's executive employees generally. Employee shall also be
entitled to fringe benefits in accordance with the plans, practices, programs
and policies as in effect generally with respect to other peer executives of
Employer.
(d) PERQUISITES.
(i) VACATION. Employee shall be entitled to four (4) weeks of
paid vacation each twelve (12)-month period, which shall accrue on a monthly
basis. Vacation time will continue to accrue so long as Employee's total
accrued vacation does not exceed twelve (12) weeks. Should Employee's
accrued vacation time reach twelve (12) weeks, Employee will cease to accrue
further vacation until Employee's accrued vacation time falls below this
level. Such vacation shall be taken at such time or times as shall not
unduly disrupt the orderly conduct of the business of Employer and the duties
of Employee.
(ii) VEHICLE ALLOWANCE. During the term of this Agreement,
Employer shall provide Employee an automobile reasonably acceptable to
Employee and Employer shall bear all expenses associated with the automobile
including, without limitation, lease or purchase payments, insurance, taxes
and license fees, gasoline and all maintenance expenses.
(iii) TAX PREPARATION AND ADVICE. During the term of this
Agreement, Employer shall provide Employee an annual allowance for personal
tax preparation and professional advice in the amount of Ten Thousand Dollars
($10,000) payable on April 15 of each year.
(iv) POSTING OUTSIDE OF UNITED STATES. Should Employee be
based at a location outside of the United States, Employer shall reimburse
Employee for all extraordinary expenses associated with maintaining a
residence outside of the United States including, without limitation: the
provision of a
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housing allowance sufficient to provide housing to Employee reasonably equal
to the housing which Employee would maintain or has maintained in the United
States; the costs of education for every dependent under the age of eighteen
(18) years residing with Employee; all reasonable costs of moving furniture
and other personal belongings to and from the location outside of the United
States (including, without limitation, the costs of returning to the United
States at the end of the term or upon the earlier termination (with or
without cause) of this Agreement); the cost of two (2) roundtrip, first class
airplane tickets to the United States per year for Employee, Employee's
spouse and dependents under the age of eighteen (18) years; the excess, if
any, of the amount of taxes paid by the Employee to any local, provincial,
state, national or other governmental entity located outside of the United
States, over what the Employee would have paid had the Employee resided in
the United States; and a reasonable "hardship" allowance to be agreed upon by
Employer and Employee. The housing allowance shall include, without
limitation, the costs of renting or purchasing a residence (as agreed upon by
Employer and Employee), utilities, and local taxes, if any.
(e) OVERALL QUALIFICATION. Employer reserves the right to modify,
suspend or discontinue any and all practices, policies and programs at any
time (whether before or after termination of employment) without notice to or
recourse by Employee. However, Employer shall not amend the perquisites set
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forth in Section 4(d) to reduce Employee's benefits thereunder during the term
of this Agreement.
SECTION 5 TERMINATION.
The compensation and other benefits provided to Employee pursuant to
this Agreement, and the employment of Employee by Employer, shall be
terminated prior to expiration of the term of this Agreement only as provided
in this Section 5.
(a) DISABILITY. In the event that Employee shall fail, because of
illness, incapacity or injury which is determined to be a total disability
("DISABILITY") by a physician selected by Employer or its insurers and
acceptable to Employee or Employee's legal representative (such agreement as
to acceptability not to be withheld unreasonably), to render for three
consecutive months or for shorter periods aggregating ninety (90) or more
business days in any twelve (12)-month period, the services contemplated by
this Agreement, Employee's employment pursuant to this Agreement may be
terminated by sixty (60) days' prior written notice of termination from
Employer to Employee. Thereafter, Employer shall continue to (i) pay the Base
Salary to Employee for a period of twelve (12) months after the date of
termination, subject to adjustments referenced in the following paragraph,
and (ii) to provide medical insurance as in effect prior to such termination
for a period of twelve (12) months following the date of termination.
Thereafter, no further salary shall be paid or medical insurance be provided.
Employee's rights under the Plans subsequent to termination of employment
pursuant to this paragraph shall be determined under the applicable
provisions of the respective Plans unless otherwise expressly stated in this
Agreement. This Agreement in all other respects will terminate upon the
termination of employment pursuant to this paragraph.
The amount of compensation to be paid to Employee pursuant to the
preceding paragraph shall be adjusted in the event Employee becomes entitled to
and receives disability benefits under any disability payment plan, including
disability insurance, by reducing the amount of Employee's compensation
otherwise payable by Employer pursuant to the preceding paragraph shall be
reduced, on a dollar-for-dollar basis, but not to less than zero, by the amount
of any such disability benefits received by Employee, but only to the extent
such benefits are attributable to payments made by Employer.
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(b) DEATH. In the event of Employee's death during the term of
this Agreement, Employee's Base Salary shall immediately terminate and
Employer shall pay to the estate of Employee the Base Salary accrued to the
date of Employee's death to the extent not theretofore paid. If Employee's
death occurs while receiving payments under Section 5(a), such payments shall
cease. Employee's rights under the Plans subsequent to his death shall be
determined under the applicable provisions of the respective Plans, PROVIDED
that, notwithstanding any provisions to the contrary therein, Employer shall
continue to provide medical insurance to the dependents of Employee for a
period of twelve (12) months following the death of Employee. This Agreement
in all other respects will terminate upon the death of Employee.
(c) FOR CAUSE. Employee's employment hereunder shall be
terminable upon a determination by the Board, acting in good faith based upon
actual knowledge at such time, that Employee (i) is or has been engaging in a
willful or grossly negligent conduct which has resulted in a failure to
perform his duties hereunder or as an employee or officer of Employer, (ii)
has committed an act of dishonesty, gross carelessness, or other misconduct,
or (iii) has committed any act or series of acts which have a direct,
substantial and adverse effect on Employer, its business or reputation.
Notwithstanding the foregoing, Employee shall not be terminated
for cause pursuant to the first paragraph of this Section 5(c) unless and
until Employee has received notice of a proposed termination for cause and
Employee has had an opportunity to be heard by the Board. Employee shall be
deemed to have had such opportunity if given written or telephonic notice by
any director at least ninety-six (96) hours in advance of a meeting.
In the event of Employee's termination pursuant to this
Section 5(c), Employee's rights to receive Base Salary shall immediately
terminate and Employer shall pay to Employee his Base Salary accrued to the
date of such termination to the extent not theretofore paid and the bonus
which would otherwise have become payable pursuant to the terms established
under Section 4(b) subject to the following provisions. If Employee is
terminated with cause, Employee shall be entitled to receive a payment (the
"PARTIAL BONUS SEVERANCE") equal to a portion of the bonus which would
otherwise have become payable to Employee pursuant to the terms established
under Section 4(b) (the "TOTAL POTENTIAL BONUS") if he had not been
terminated. The amount of
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such Partial Bonus Severance shall be equal to (X) the Total Potential Bonus
multiplied by (Y) a fraction, the numerator of which shall be the days
elapsed between the first day of the fiscal year and the date of Employee's
termination, and the denominator of which shall be 365. The Partial Bonus
Severance shall be calculated and paid only after the close of the fiscal
year in which Employee was terminated, and then only at the times and in the
proportions as bonuses are distributed generally by Employer. Employee's
rights under the Plans subsequent to termination shall be determined under
the applicable provisions of the respective Plans. Except as expressly set
forth to the contrary, this Agreement in all other respects will terminate
upon such termination.
(d) WITHOUT CAUSE. Notwithstanding any other provision of this
Section 5, the Board shall have the right to terminate Employee's employment
with Employer without cause at any time upon at least thirty (30) days' prior
written notice to Employee ("WITHOUT CAUSE TERMINATION"). In addition, it
shall be deemed for all purposes to be a Without Cause Termination if
Employee terminates his employment by reason of (i) any action by Employer
which results in a material diminution in Employee's then position (including
status, titles and reporting requirements), authority, duties or
responsibilities, but excluding, for this purpose, an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by
Employer promptly after receipt of written notice from Employee, (ii) any
repeated failure of Employer to comply with any of the provisions of this
Agreement and which is not remedied by Employer in a reasonable period of
time after receipt of written notice from Employee, (iii) a reduction in the
Employee's level of compensation (including Base Salary, fringe benefits and
any non-discretionary and objective standard incentive payment, but not
including the bonus referred to in Section 4(b) unless the performance
targets referred to have been met and such bonus is not paid by the
Employer), (iv) Employer requiring Employee to be based at any office or
location more than thirty-five (35) miles from the Employee's current place
of employment, or (v) a "change in control" shall occur. A "change in
control" shall be deemed to occur upon the occurrence of any of the following
events: (i) the acquisition by any person or entity of more than twenty-five
percent (25%) of the combined voting power of the Employer's outstanding
securities; or (ii) Employer stockholder approval of any consolidation or
merger of the Employer with another corporation if, following the
consolidation or merger, stockholders of the
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Employer immediately prior to such consolidation or merger would not
beneficially own securities representing at least sixty percent (60%) of the
combined voting power of the outstanding voting securities of the surviving
or continuing corporation; or (iii) during any period of twenty-four (24)
consecutive months individuals who at the beginning of such period constitute
the Board and qualified replacements cease for any reason to constitute a
majority of the board. A director shall be a "qualified replacement" if the
election or nomination for election by the Employer's stockholders of the
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period; or (iv)
stockholder approval of any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all
of the assets of the Employer other than to an entity (or entities) of which
the Employer or the stockholders of the Employer immediately prior to such
transactions beneficially own securities representing at least sixty percent
(60%) of the combined voting power of the outstanding voting securities. The
following conditions shall thereupon become applicable upon the occurrence of
a Without Cause Termination:
(i) SEVERANCE PAY. Employer shall continue to pay Employee
the Base Salary on a monthly basis for (X) the remainder of the term of this
Agreement as it may be extended from time to time in the event such
termination occurs before the second anniversary of this Agreement or (Y) a
period of twelve (12) months in the event such termination occurs after the
second anniversary of this Agreement.
(ii) MEDICAL INSURANCE CONTINUATION. Employer shall continue
to provide medical insurance as in effect prior to such termination for (X)
the remainder of the term of this Agreement as it may be extended from time
to time in the event such termination occurs before the second anniversary of
this Agreement or (Y) twelve (12) months in the event such termination occurs
after the second anniversary of this Agreement, PROVIDED that Employee's
right to such benefits shall cease immediately upon the commencement of
employment with a new employer.
(iii) BONUS PAYMENT. If a Without Cause Termination occurs,
Employee shall be entitled to receive a payment in lieu of the bonus which
would otherwise have become payable to Employee pursuant to the terms
established under Section 4(b) for the year when the termination occurs and
for
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each subsequent year for which Employee is entitled to receive Severance Pay
pursuant to Section 5(d)(i) above which such payment shall be equal to: for
the year of termination without cause, the Total Potential Bonus; and for
each subsequent year, an amount equal to the highest amount paid to Employee
pursuant to Section 4(b) in any prior year (including the year of the Without
Cause Termination).
(iv) OTHER PLANS. Except as set forth above, Employee's
rights under the other Plans subsequent to termination shall be determined
under the provisions of the other Plans. The foregoing to the contrary
notwithstanding, Employee shall upon any such termination be deemed to be one
hundred percent (100%) vested in any options, warrants, stock appreciation
rights, or the like, previously granted to Employee pursuant to any Plan or
otherwise.
(e) VOLUNTARY TERMINATION. At any time during the term of this
Agreement, Employee shall have the right, upon thirty (30) days' prior
written notice to Employer, to terminate his employment with Employer. Upon
termination of Employee's employment pursuant to this Section 5(e), (i)
Employee's right to receive Base Salary shall immediately terminate and
Employer shall pay to Employee his Base Salary accrued to the date of such
termination to the extent not theretofore paid, and (ii) Employee's rights
under the Plans subsequent to such termination shall be determined under the
applicable provisions of the respective Plans. This Agreement in all other
respects will terminate upon such termination.
(f) NO LIMITATION. Employer's exercise of its right to terminate
shall be without prejudice to any other right or remedy to which it or any of
its affiliates may be entitled a law, in equity or under this Agreement.
(g) EXCLUSIVE REMEDY. Employee agrees that the payments expressly
required by this Agreement shall constitute the sole and exclusive obligation
of Employer in respect of Employee's employment with and relationship to
Employer and that the payment thereof shall be the sole and exclusive remedy
for any termination of Employee's employment. Employee covenants not to
assert or pursue any other remedies, at law or in equity, with respect to any
termination of employment.
(h) TAX TREATMENT. The parties intend that the compensation to be
provided pursuant to this Agreement not exceed the limit imposed by Section
280(g) of the Internal
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Revenue Code as it may be amended from time to time. The parties agree to
limit the compensation payable pursuant to this Agreement as necessary from
time to time in order to avoid exceeding such limit.
SECTION 6 BUSINESS EXPENSES.
During the term of this Agreement, to the extent that such expenditures
satisfy the criteria under the Internal Revenue Code for deductibility by
Employer (whether or not fully deductible by Employer) for federal income tax
purposes as ordinary and necessary business expenses. Employer shall
reimburse Employee promptly for reasonable business expenditures, including
travel entertainment, parking, business meetings, and professional dues but
not the costs of (or dues associated with) maintaining club membership, made
and substantiated in accordance with policies, practices and procedures
established from time to time by the Board and incurred in pursuit and
furtherance of Employer's business and good will.
SECTION 7 MISCELLANEOUS.
(a) SUCCESSION; SURVIVAL. This Agreement shall inure to the
benefit of and shall be binding upon Employer, its successors and assigns,
but without the prior written consent of Employee this Agreement may not be
assigned other than in connection with a merger or sale of substantially all
the assets of Employer or a similar transaction in which the successor or
assignee assumes (whether by operation of law or express assumption) all
obligations of Employer hereunder. The obligations and duties of Employee
hereunder are personal and otherwise not assignable. Employee's obligations
and representations under this Agreement will survive the termination of
Employee's employment, regardless of the manner of such termination.
(b) NOTICES. Any notice or other communication provided for in
this Agreement shall be in writing and sent, if to Employer, to its office at:
Hospitality Marketing Concepts Inc.
00000 Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
(000)000-0000 (facsimile)
Attention: Chief Financial Officer
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with a copy to: Xxxxxxxxx Xxxxxxx Fields
Claman & Machtinger LLP
1900 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
(000)000-0000 (facsimile)
Attention: Xxxxxxx Xxxxx, Esq.
or at such other address as Employer may from time to time in writing
designate, and if to Employee at the address set forth below his signature to
this agreement or such other address as Employee may from time to time in
writing designate (or Employee's business address of record in the absence of
such designation). Each such notice or other communication shall be
effective (i) if given by telecommunication, when transmitted to the
applicable number so specified in (or pursuant to) this Section 7 and an
appropriate answer back is received, (ii) if given by mail, three (3) days
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid unless such address is outside the
continental United States, in which case it shall be deemed effective when
actually delivered at such address or (iii) if given by any other means, when
actually delivered at such address.
(c) ENTIRE AGREEMENT; AMENDMENTS. This Agreement contains the
entire agreement of the parties relating to the subject matter of this
Agreement and it supersedes any prior agreements, undertakings, commitments
and practices relating to Employee's employment by Employer. No amendment or
modification of the terms of this Agreement shall be valid unless made in
writing and signed by Employee and, on behalf of Employer, by an officer
expressly so authorized by the Board.
(d) WAIVER. No failure on the part of any party to exercise or
delay in exercising any right hereunder shall be deemed a waiver thereof or
of any other right, nor shall any single or partial exercise preclude any
further or other exercise of such right or any other right.
(e) CHOICE OF LAW. This Agreement, the legal relations between
the parties and any action, whether contractual or non-contractual,
instituted by any party with respect to matters arising under or growing out
of or in connection with or in respect of this Agreement, the relationship of
the parties or the subject matter of this
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Agreement shall be governed by and construed in accordance with the laws of
the State of California, applicable to contracts made and performed in such
State and without regard to conflicts of law doctrines, to the extent
permitted by law.
(f) ARBITRATION. Any dispute, controversy or claim arising out of
or in respect of this Agreement (or its validity, interpretation or
enforcement), the employment relationship or the subject matter of this
Agreement shall at the request of either party be submitted to and settled by
arbitration conducted in Santa Ana, California in accordance with the Labor
and Employment Arbitration Rules of the American Arbitration Association.
The arbitration shall be governed by the Federal Arbitration Act (9 U.S.C.
Sections 1-16). The arbitration of such issues, include the determination of
any amount of damages suffered, shall be final and binding upon the parties
to the maximum extent permitted by law. The arbitrator in such action shall
not be authorized to change or modify any provision of this Agreement.
Judgment upon the award rendered by the arbitrator may be entered by any
court having jurisdiction. The arbitrator shall award reasonable expenses
(including reimbursement of the assigned arbitration costs and legal fees) to
the prevailing party upon application.
(g) CONFIDENTIALITY; PROPRIETARY INFORMATION. Employee agrees to
not make use of, divulge or otherwise disclose, directly or indirectly, any
trade secret or other confidential or proprietary information concerning the
business (including but not limited to its products, employees, services,
practices or policies) of Employer or any of its affiliates of which Employee
may learn or be aware as a result of Employee's employment during the term of
this Agreement or prior thereto as stockholder, employee, officer or director
of or consultant to Employer, except to the extent such use or disclosure is
(i) necessary to the performance of this Agreement and in furtherance of
Employer's best interests, (ii) required by applicable law, (iii) lawfully
obtainable from other public sources, or (iv) authorized in writing by
Employer. The provisions of this Section 7(g) shall survive the expiration,
suspension or termination, for any reason, of this Agreement.
(h) SEVERABILITY. If this Agreement shall for any reason be or
become unenforceable in any material respect by any party, this Agreement
shall thereupon terminate and become unenforceable by the other party as
well. In all other respects, if any provision of this Agreement is held
invalid or unenforceable, the remainder of this Agreement shall
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nevertheless remain in full force and effect, and if any provision is held
invalid or unenforceable with respect to particular circumstances, it shall
nevertheless remain in full force and effect in all other circumstances, to
the fullest extent permitted by law.
(i) WITHHOLDING; DEDUCTIONS. All compensation payable hereunder,
including salary and other benefits, shall be subject to applicable taxes,
withholding and other required, normal or elected employee deductions.
(j) SECTION HEADINGS. Section and other headings contained in
this Agreement are for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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(k) COUNTERPARTS. This Agreement and any amendment hereto may be
executed in one or more counterparts. All of such counterparts shall
constitute one and the same agreement and shall become effective when a copy
signed by each party has been delivered to the other party.
Entered into as of the date set forth above.
"EMPLOYER"
HOSPITALITY MARKETING CONCEPTS INC.
By:_______________________________
Its: _____________________________
"EMPLOYEE"
_______________________
__________________________________
Address: _________________________
_________________________
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