EXHIBIT 10.23
NETSELECT, INC.
EMPLOYMENT AGREEMENT
This Agreement (the "AGREEMENT") is made effective as of February 19, 1999
between NetSelect, Inc., a Delaware corporation ("COMPANY"), and Xxxxxxx Xxxxxxx
("EXECUTIVE").
WHEREAS, the Company desires to secure the services of Executive as
President and Chief Operating Officer and Executive desires to perform such
services for the Company, on the terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements set forth below, it is mutually agreed as follows:
1. Effective Date, Term and Duties. The term of employment of Executive
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by the Company hereunder shall commence on February 19, 1999 (the
"COMMENCEMENT DATE") and shall continue thereafter on the same terms
and conditions (such term being hereinafter referred to as the
"EMPLOYMENT PERIOD") until terminated pursuant to Section 4. Subject
to Section 4 of this Agreement, Executive's employment with the
Company is on an "at will" basis, and either Executive or the Company
may terminate Executive's employment with the Company at any time, for
any or no reason. Executive shall have such duties as the Chief
Executive Officer of the Company may from time to time prescribe
consistent with his position as President and Chief Operating Officer
(the "SERVICES"). Executive shall provide the Services on a part-time
basis from the Commencement Date through March 31, 1999 or earlier.
No later than April 1, 1999, Executive shall devote his full time,
attention, energies and best efforts to the business. Notwithstanding
the foregoing, the Executive may (i) with the written permission of
the Board of Directors serve on corporate boards, (ii) serve on civic
or charitable boards or committees, (iii) manage personal investments
and (iv) deliver lectures and teach at educational institutions, so
long as such activities in clauses (i) through (iii) do not
significantly interfere with the performance of Executive's duties and
responsibilities hereunder. It is the intent of the Company and
Executive that this Agreement not conflict with any Agreement
Executive has with WORLDSPAN, L.P. Executive shall take such steps as
are necessary to properly terminate Executive's obligations to
WORLDSPAN, L.P. prior to the commencement of full-time Services to
Company under this Agreement. The Company recognizes that until the
Executive commences full-time Services under this Agreement,
Executive's obligations to it hereunder are subordinate to Executive's
obligations to WORLDSPAN, L.P. After Executive commences to provide
full-time Services to the Company, the Company recognizes and consents
to Executive's devotion of reasonable amounts of time and attention to
facilitate a WORLDSPAN, L.P. transition to new leadership.
2. Compensation. The Company shall pay and Executive shall accept as
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full consideration for the Services compensation consisting of the
following:
2.1 Base Salary. $200,000.00 per year base salary, payable in bi-
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monthly installments in accordance with the Company's normal payroll
practices, less such deductions or withholdings required by law.
2.2 Bonus. Executive will be eligible to earn an annual target bonus
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in the amount of one hundred twenty five percent (125%) of Executive's
base salary based on the achievement of certain business and financial
objectives that Executive and the Company's Chief Executive Officer
will mutually determine in good faith. The objectives for Executive's
first year will be determined within 60 days of the execution of this
Agreement; objectives for future years will be determined within 60
days after the beginning of each fiscal year of the Company. Such
bonus shall be paid annually in accordance with the Company's Annual
Incentive Program. For Executive's first year of employment, a bonus
of $250,000 will be guaranteed.
2.3 Stock Options. Executive shall be entitled to a stock option
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grant of 150,000 shares of NetSelect Common Stock under the Company's
1999 Equity Incentive Plan to be awarded by the Compensation Committee
of the Company's Board of Directors within thirty (30) days after the
date hereof (the "OPTION"). Such Option shall be an incentive stock
option (within the meaning of Section 422 of the Internal Revenue Code
of 1986) to the maximum extent allowed by applicable law. Such Option
shall be granted at the fair market value on the date of grant as
determined by the Board of Directors and shall have a ten-year term,
unless earlier terminated as set forth in the stock option agreement.
Subject to Section 4 of this Agreement, the Option shall vest as to
twenty-five percent (25%) of the shares on the first anniversary of
the Commencement Date and as to 2.0833% of the shares each month
thereafter for the remaining three years until such Option is vested
with respect to 100% of the shares, unless earlier terminated or
vested as set forth in the stock option agreement.
2.4 Supplemental Bonuses. If the sum of (i) Executive's base salary,
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(ii) Executive's bonus pursuant to Section 2.2 of this Agreement and
(iii) the Spread (as defined below) on the portion of Executive's
Option which has vested as of February 19, 2000 in accordance with the
schedule set forth in Section 2.3 of this Agreement (items (i), (ii)
and (iii) collectively, the "FIRST YEAR COMPENSATION PACKAGE") is less
than $900,000 at all times during the period beginning on February 19,
2000 and ending April 15, 2000 (the "FIRST MEASUREMENT PERIOD"), the
Company shall pay Executive at the end of the First Measurement Period
a cash bonus equal to the difference between the highest value of the
First Year Compensation Package during the First Measurement Period
and $900,000 (the "FIRST SUPPLEMENTAL BONUS"), provided Executive is
employed by the Company on the last day of the First Measurement
Period. Notwithstanding the foregoing, if at any time during the
period beginning on April 15, 2000 and ending December 31, 2000 (the
"ADJUSTMENT PERIOD"), (i) the value of Executive's First Year
Compensation Package exceeds its highest value during the First
Measurement Period and (ii) Executive has not sold the stock subject
to the portion of his Option which had vested as of February 19, 2000,
then an amount equal to the difference between (i) the highest value
of the First Year Compensation Package during the Adjustment Period
and (ii) the highest value of the First Year Compensation Package
during the First Measurement period shall be deducted from Executive's
bonus for fiscal year 2001, provided that such deduction shall in no
event exceed the amount of the First Supplemental Bonus. For purposes
of this Section 2.4, the term "SPREAD" shall mean the
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difference between the exercise price of Executive's Option and the
fair market value (as defined in the 1999 Equity Incentive Plan) of
the Company's Common Stock on the date of determination.
If the sum of (i) Executive's salary, (ii) Executive's bonus
pursuant to Section 2.2 of this Agreement and (iii) the Spread on the
portion of Executive's Option which has vested after February 19, 2000
in accordance with the Schedule set forth in Section 2.3 of this
Agreement (items (i), (ii) and (iii) collectively, the "SECOND YEAR
COMPENSATION PACKAGE") is less than $900,000 at all times during the
period beginning February 19, 2000 and ending February 18, 2001 (the
"SECOND MEASUREMENT PERIOD"), the Company shall pay Executive on or
before April 15, 2001 a cash bonus equal to the difference between
$900,000 and the highest value of the Second Year Compensation Package
during the Second Measurement Period (the "SECOND SUPPLEMENTAL
BONUS"), provided Executive is employed by the Company on the date the
Second Supplemental Bonus is paid.
2.5 Benefits and Expenses. Executive will receive the Company's
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customary employee benefits package for similarly situated executives
of the Company, including full participation in current and future
group health insurance plans. Executive shall be entitled to vacation
in accordance with the policies as periodically established by the
Board of Directors for similarly situated executives of the Company,
which shall in no event be less than three weeks per Anniversary Year.
For purposes of this Agreement, Anniversary Year shall mean the period
from February 19 through February 18. The Company shall reimburse the
Executive for all reasonable travel and other business expenses
incurred by him in connection with the performance of the Executive's
duties under this Agreement during the Employment Period.
3. Relocation. Executive will be entitled to receive reimbursement for
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all reasonable moving expenses to southern California. Expenses shall
include but not be limited to: reimbursement of normal costs
associated with the sale of primary residence; movement of household
goods; reasonable travel to/from Los Angeles and Atlanta; and,
temporary lodging for a period not to exceed 60 days. In the event
that Executive's Atlanta residence has not been sold within 90 days
from the effective date of this Agreement, the Company shall, at the
discretion of the Company, either (i) reimburse Executive for all
mortgage payments on the Atlanta residence due after such 90-day
period until the Atlanta residence is sold, or (ii) request that
Executive reduce the sale price on the Atlanta residence and reimburse
Executive for the difference between the original sale price and the
reduced price as soon as practicable after the Atlanta residence is
sold, provided, however, that the Company and Executive shall agree on
the original sale price. Reimbursement will be made promptly after
submission of bonafide receipted expenses for approval by the CEO.
4. Benefits Upon Termination of Employment Period. Executive's
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employment by the Company shall terminate immediately upon Executive's
receipt of written notice by the Company, upon the Company's receipt
of written notice by Executive, or upon Executive's death or permanent
disability. The Company shall provide Executive with termination
benefits upon termination of employment by the Company, as follows:
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4.1 Termination Within First Year of Employment Period. If
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Executive's employment is terminated by the Company prior to the first
anniversary of the Commencement Date, for any reason other than for
"Cause" (as defined below), the vesting of Executive's Option shall
accelerate and become exercisable as to 37,500 shares. In addition,
Executive shall receive his guaranteed bonus for the first year of
employment payable in cash in one lump sum.
4.2 Other Termination. If, at any time, Executive's employment is
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terminated by the Company for any reason other than for "Cause" (as
defined below) and the Spread on the portion of Executive's Option
which has vested pursuant to the schedule set forth in Section 2.3 of
this Agreement as of the date of termination (the "FINAL COMPENSATION
PACKAGE") regardless of whether such Option has been exercised, is
less than $500,000 on the date of termination, the Company shall pay
Executive a cash bonus equal to the difference between $500,000 and
the value of Executive's Final Compensation Package on the date of
termination.
4.3 Definitions. For purposes of this Agreement, "CAUSE" means (a)
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conviction of the Executive for (i) any crime constituting a felony in
the jurisdiction in which committed, (ii) any crime involving moral
turpitude (whether or not a felony), or (iii) any other criminal act
against the Company involving dishonesty or willful misconduct
intended to injure the Company (whether or not a felony) or (b)
willful malfeasance or gross misconduct by the Executive which damages
the Company; provided, however, that the Company shall not be deemed
to have Cause pursuant to clause (b) unless the Company gives the
Executive written notice that the specified conduct or event has
occurred and the Executive fails to cure the conduct or event within
thirty (30) days after receipt of such notice. Termination of the
Executive for Cause shall be communicated by a Notice of Termination.
For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean
delivery to the Executive of a copy of a resolution duly adopted by
the affirmative vote of not less than a majority of the entire
membership of the Company's Board of Directors at a meeting of the
Board called and held for the purpose (after reasonable notice to the
Executive and reasonable opportunity for the Executive, together with
the Executive's counsel, to be heard before the Board prior to such
vote), of finding that in the good faith opinion of the Board the
Executive was guilty of conduct constituting Cause and specifying the
particulars thereof in detail, including, with respect to the conduct
or event described in clause (a) or (c), that the Executive failed to
cure such conduct or event during the thirty-day period following the
date on which the Company gave written notice of the conduct or event
referred to in clause (a) or (c). For purposes of this Agreement, no
such purported termination of the Executive's employment shall be
effective without such Notice of Termination.
5. Cooperation with the Company After Termination of the Employment
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Following termination of the Employment Period by Executive, subject
to Executive's employment duties with a subsequent employer, Executive
shall fully cooperate with the Company in all matters relating to the
winding up of his pending work on behalf of the Company and the
orderly transfer of any such pending work to other employees of the
Company as may be designated by the Company.
6. Change in Control. In the event of a Change in Control (as defined
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below), the vesting of Executive's Option shall accelerate such that
25% of the shares which are unvested at
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the time of such Change in Control shall become vested and exercisable
immediately prior to the consummation of such Change in Control.
For purposes of this Agreement, "CHANGE IN CONTROL" means the
occurrence of any one of the following events: a merger,
reorganization, sale, lease or exchange of all or substantially all of
the assets of the Company. For purposes of this Section 6, "merger"
shall mean any consolidation of the Company with, or merger of the
Company with or into, another corporation; other than a consolidation
or merger in which the Company is the surviving corporation. The
Company shall be the "surviving corporation" in any merger if the
Company, or its stockholders immediately before the transaction, shall
own (immediately after the transaction) equity securities, other than
warrants, options or similar rights to subscribe to or purchase equity
securities, of the surviving or acquiring corporation, or its parent
corporation, possessing more than fifty (50%) percent of the voting
power of the surviving or acquiring corporation or its parent
corporation; and in making the determination of ownership by the
stockholders of a corporation, immediately after the transaction, of
equity securities pursuant to the preceding clause, equity securities
which they owned immediately before the transaction as shareholders of
another party to the transaction shall be disregarded. For the
purposes of this Section 6, voting power of a corporation shall be
calculated by assuming the conversion of all then outstanding
convertible equity securities (including those convertible at some
future date), but not assuming the exercise of any warrants, options
or other rights to subscribe to or purchase voting shares.
7. Confidentiality/Non-Solicitation. Executive acknowledges that as an
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employee of the Company, Executive will have access to certain Company
confidential information and Executive may, during the course of
Executive's employment, develop certain information that will be the
property of the Company. To protect the interest of the Company,
Executive agrees to sign the Company's standard Confidentiality
Agreement as a condition of Executive's employment. In addition, the
Executive agrees with the Company that during his employment with the
Company and for a period expiring two (2) years after the date of
termination of such employment, he will not solicit any of the
Company's then-current employees to terminate their employment with
the Company or to become employed by any firm, company or other
business enterprise with which the Executive may then be connected.
8. Indemnification. In the event that the Company hires Xxxx Xxxxxxx, a
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former employee of WORLDSPAN, L.P., the Company shall indemnify
Executive against any cost or expense (including attorney's fees) or
liability arising out of any violation or alleged violation of the
non-solicitation clause in Executive's employment agreement with
WORLDSPAN, L.P. with respect to the hiring of Xxxx Xxxxxxx.
9. Taxes
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9.1 Taxes. Any amounts payable to the Executive hereunder shall be
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paid to the Executive subject to all applicable taxes required to be
withheld by the Company pursuant to federal, state or local law. The
Executive or his beneficiary, if applicable, shall be solely
responsible for all taxes imposed on the Executive or his beneficiary
by
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reason of his receipt of any amounts of compensation or benefits
payable to the Executive hereunder.
9.2 Excise Tax Payments. In the event that the severance and other
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benefits provided to Executive (i) constitute "parachute payments"
within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended and (ii) but for this Section 8.2, such severance and
benefits would be subject to the excise tax imposed by Section 4999 of
the Code, then Executive's benefits shall be payable either:
(a) in full, or
(b) as to such lesser amount which would result in no portion of
such severance and other benefits being subject to excise
tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by
Section 4999, results in the receipt by Executive on an after-tax
basis, of the greatest amount of severance benefits under this
Agreement. Unless the Company and Executive otherwise agree in
writing, any determination required under this Section 8.2 shall be
made in writing by independent public accountants agreed to by the
Company and Executive (the "ACCOUNTANTS"), whose determination shall
be conclusive and binding upon Executive and the Company for all
purposes. For purposes of making the calculations required by this
Section 8.2, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable,
good faith interpretations concerning the application of Sections 280G
and 4999 of the Code. The Company and Executive shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this Section
8.2. The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Section
8.2.
10. General.
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10.1 Arbitration. Any controversy or claim arising out of or
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relating to this Agreement or the breach of this Agreement that cannot
be resolved by the Executive and the Company shall, at the instance of
either the Executive or the Company, be submitted to arbitration in
California in accordance with California law and the procedures of the
American Arbitration Association. The determination of the
arbitrator(s) shall be conclusive and binding on the Company and the
Executive and judgment may be entered on the arbitrator(s)' award in
any court having jurisdiction.
10.2 Severability. If for any reason a court of competent
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jurisdiction or arbitrator finds any provision of this Agreement to be
unenforceable, the provision shall be deemed amended as necessary to
conform to applicable laws or regulations, or if it cannot be so
amended without materially altering the intention of the parties, the
remainder of the Agreement shall continue in full force and effect as
if the offending provision were not contained herein.
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10.3 Notices. All notices and other communications required or
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permitted to be given under this Agreement shall be in writing and
shall be considered effective upon personal service or upon depositing
such notice in the U.S. Mail, postage prepaid, return receipt
requested and addressed to the Chairman of the Board of the Company as
its principal corporate address, and to Executive at his most recent
address shown on the Company's corporate records, or at any other
address which he may specify in any appropriate notice to the Company.
10.4 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original and all of
which taken together constitutes one and the same instrument and in
making proof hereof it shall not be necessary to produce or account
for more than one such counterpart.
10.5 Entire Agreement. The parties hereto acknowledge that each has
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read this Agreement, understands it, and agrees to be bound by its
terms. The parties further agree that this Agreement and the
referenced stock option agreement constitute the complete and
exclusive statement of the agreement between the parties and
supersedes all proposals (oral or written), understandings,
representations, conditions, covenants, and all other communications
between the parties relating to the subject matter hereof.
10.6 Governing Law. This Agreement shall be governed by the law of
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the State of California.
10.7 Assignment and Successors. The Company shall have the right to
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assign its rights and obligations under this Agreement to an entity
which acquires substantially all of the assets of the Company. The
rights and obligation of the Company under this Agreement shall inure
to the benefit and shall be binding upon the successors and assigns of
the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
set forth below.
NETSELECT, INC. EXECUTIVE
By:
Name: /s/ Xxxxxx X. Xxxxx /s/ Xxxxxxx Xxxxxxx
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Xxxxxx X. Xxxxx Xxxxxxx Xxxxxxx
_______________________________
Title: Chairman and Chief Executive Officer Date
___________________________________________
Date
By:
Name: /s/ Xxxxxxxxx Xxxxx Xxxxxx
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Xxxxxxxxx Xxxxx Xxxxxx
Title: Vice President of HR and Administration
___________________________________________
Date
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