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EXHIBIT 10.12
EMPLOYMENT AGREEMENT
AGREEMENT entered into as of the 1st day of September, 1997 by
and between 800 Travel Systems, Inc., a Delaware corporation ("Company") with
an office at 0000 Xxxx Xxxxxxx, Xxxxx, Xxxxxxx 00000 and Xxxxxxx X. Xxxxxxx
("Employee") an individual residing at [address].
WHEREAS, Company desires to employ Employee in the capacity
and under the terms set forth below and Employee desires to be employed by
Company in that capacity and on those terms;
NOW, THEREFORE, it is agreed as follows:
1. Employment; Position; Duties.
(a) Company hereby employs Employee, and Employee
hereby accepts employment by Company, on the terms and conditions set forth in
this Agreement. Employee shall initially serve as the Chief Financial Officer
of Company, subject to the direction of the Chief Operating Officer of the
Company. Employee has been advised that the Company may elect to engage
another individual to serve as the Chief Financial Officer of the Company, in
which event Employee shall serve as a Vice President-Controller of the Company.
If elected, Employee agrees to serve as a member of the Board of Directors of
the Company (the "Board").
(b) The duties of Employee initially shall be
those customarily associated with the offices of Chief Financial Officer
including having control over the financial accounts of the Company, subject to
the policies of the Company as determined by the Board. If the Company shall
engage a new Chief Financial Officer, the duties of Employee shall be
commensurate with the office of a Vice President-Controller.
(c) During the Term, Employee shall devote his
entire working time and attention to the business and affairs of the Company
and shall use his best efforts to promote the business of the Company. During
the term of his employment hereunder, Employee shall have no interest in or
perform any material service for any other business entity whether or not
competitive with Company, except that the aforesaid prohibition against
ownership shall not apply to either inactive investments in public companies
whose stock is traded on a national securities exchange or actively traded over
the counter or passive investments in entities not competitive with Company.
(d) Employee will report to the Chief Operating
Officer and will provide him with such written reports relating to the
Company's business as he may request.
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2. Term. The term of Employee's employment (the "Term")
shall be for a period of approximately three years commencing on the Effective
Date (as hereinafter defined) and ending, notwithstanding the Effective Date,
on September 30, 2000. The "Effective Date" means the date on which the
currently contemplated initial public offering of common stock of Company (the
IPO) is consummated. Anything contained herein to the contrary
notwithstanding, Employee acknowledges that this Agreement is being entered
into in contemplation of the aforesaid IPO and that, if such IPO does not
become effective, for any reason whatsoever, this Agreement shall be of no
force or effect.
In the event that Employee continues in the full-time
employ of Company after the end of the Term, such continued employment shall be
on a year-to-year basis subject to the terms and conditions hereof. As used in
this Agreement, the "First Contract Year" means the period commencing on the
Effective Date and ending on September 30, 1998; the "Second Contract Year"
means the one-year period immediately following the First Contract Year; and
the "Third Contract Year" means the one-year period immediately following the
Second Contract Year. Each subsequent October 1st occurring during the period
in which Employee is employed by the Company shall be deemed to commence a new
contract year.
3. Compensation; Benefits.
(a) In consideration of the services to be
rendered by Employee hereunder, Company shall pay Employee the following
compensation:
(i) in the First Contract Year a base
salary at the rate of $77,000 per annum;
(ii) in the Second Contract Year the
Employee shall be paid a base salary equal to $77,000 plus an amount equal to
$77,000 times (the percentage increase in the Consumer Price Index from August
1, 1997 to August 1, 1998 plus 5%). Thus, if the percentage increase in the
CPI was 5%, commencing October 1, 1998, Employee's salary would be $84,700
($77,000 + ($77,000 x .10));
(iii) in the Third Contract Year the Employee
shall be paid a base salary equal to his salary rate for the Second Contract
Year plus an amount equal to his salary rate for the Second Contract Year times
the percentage increase in the Consumer Price Index from August 1, 1998 to
August 1, 1999 plus 5%.
(b) Company shall reimburse Employee promptly
upon presentation of receipts or other satisfactory documentation for all
reasonable expenses incurred by him in the furtherance of and in connection
with his employment hereunder.
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(c) Company shall provide Employee with such
medical and disability insurance as it makes available to its executives
generally on substantially the same terms and conditions as such insurance is
made available to other executives.
(d) In recognition of Employee's need for a car
to perform services required of him by the Company, the Company shall pay to
Employee a car allowance of $350 per month.
(e) Employee shall be entitled to two (2) weeks
vacation in each calendar year during the Term, such vacation to be taken at
times not inconvenient to Company.
(f) As additional consideration for Employee's
execution and delivery of this Agreement, the Company has issued to Employee
100,000 shares of its Common Stock. The Employee agrees not to sell or
otherwise transfer 90,000 of such shares prior to the second anniversary of the
Effective Date without the prior written consent of the Company. Upon request,
the Employee shall enter into a "lock-up" agreement with the underwriter of the
IPO confirming his agreement not to transfer 90,000 of his shares prior to the
second anniversary of the Effective Date without the consent of the
underwriter. Employee shall be released from the transfer restriction
contained in this paragraph upon termination of this Agreement.
(g) Pursuant to the term of the Company's Stock
Option Plan (the "Plan") the Company shall grant to Employee options to
purchase 12,500 shares of the Company's Common Stock at a price of $5.00 per
share. The right to exercise such options shall vest in equal increments on
September 1, 1998, and September 1, 1999. The terms and conditions of such
options to be fully set forth in a Stock Option Agreement to be issued in
accordance with the Plan.
(h) Prior to the second anniversary of the
Effective Date the Company shall register for sale under the Securities Act of
1933, as amended, the shares referenced in subparagraph (f) and the shares
underlying the options referenced in subparagraph (g).
4. Termination.
(a) This Agreement may be terminated by Company
for cause (as defined below) immediately upon written notice thereof to
Employee. Upon termination for cause, Company shall not be obligated to make
any further payment to Employee under this Agreement, but the provisions of
paragraph 6 shall survive any such termination. For the purposes of this
Agreement, the phrase "for cause" shall mean Employee's (i) conviction of the
willful violation of any law, rule or regulation, other than minor violations
(which, through lapse of time or otherwise, is not subject to appeal); (ii)
acts with respect to the property of the
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Company which constitute larceny, fraud, theft, embezzlement or the acceptance
of a bribe or kick back; (iii) willful misconduct as an employee of Company;
(iv) willful misrepresentation of a material matter to the Board; or (v)
reckless disregard of his responsibilities under this Agreement.
(b) If as a result of Employee's incapacity due
to physical or mental illness, he shall have been absent from his duties with
Company on a continuous basis for more than ninety days or for more than ninety
working days during any nine month period, Company may upon thirty days prior
written notice, terminate Employee's employment for "disability". Upon any
such termination, except as otherwise required by law, Employee's rights to
receive salary or other compensation or benefits hereunder shall terminate as
of the date set forth in such notice.
(c) This Agreement shall terminate automatically
upon Employee's death.
(d) In the event that Employee remains employed
by the Company for the full Term of this Agreement but Company determines that
it does not intend to offer to employ Employee on substantially the same or
better terms after the end of the Term, the Company shall, not less than 45
days prior to the end of the Term, provide written notice to Employee of such
determination. Notwithstanding the provisions of paragraph 1(c) of this
Agreement, after receipt of such a notice, for the duration of the Term,
Employee shall be permitted to devote a reasonable amount of his working time
and attention to making arrangements for his employment after the Term,
however, nothing contained herein shall diminish Employee's continuing
obligation, during the balance of the Term, to use his best efforts to promote
the business of the Company.
5. No Conflicting Agreement. Employee represents and
warrants that he is not subject to any employment agreement, restrictive
covenant, agreement or contract which might limit the performance of his duties
and responsibilities hereunder. Employee further represents and warrants that
he has made no commitment of any kind whatsoever inconsistent with the
provisions of this Agreement and that he is under no disability of any kind
which would prevent him from entering into this Agreement and performing all of
his obligations hereunder.
6. Non-Competition; Confidentiality.
(a) Employee covenants and agrees with Company that
he will not, directly or indirectly:
(i) while he is in Company's employ and
at any time after the termination of his employment hereunder, disclose or use
or otherwise exploit for his own benefit or the benefit of any
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other person (other than for the benefit of Company) any Confidential
Information (as hereinafter defined) disclosed to Employee or of which Employee
becomes aware by reason of his employment with Company;
(ii) while he is in Company's employ and
through the period ending two years after the termination of his employment
hereunder, solicit or divert or appropriate to any Competing Business (as
hereinafter defined), directly or indirectly, or attempt to solicit or divert
or appropriate to any such Competing Business, any person or entity who was a
customer or client of Company at any time during the last six months of
Employee's employment hereunder;
(iii) while he is in Company's employ and
through the period ending two years after the termination of his employment
hereunder, employ or attempt to employ or assist anyone else in employing any
person who, at any time within the period commencing six months prior to the
date of the termination of Employee's employment by Company and ending one year
after the date of such termination, was, is or shall be an employee of Company
(whether or not such employment is full time or is pursuant to a written
contract with Company); and
(iv) while he is in Company's employ and
through the period ending ninety days after his employment hereunder, as an
individual or as agent, employee, partner, officer, director, owner or
independent contractor of any person or entity, engage in any Competing
Business, directly or indirectly.
(b) Employee agrees that upon the termination of
his employment (whether voluntarily or involuntarily) he will not take with him
or retain without the Company's written authorization, and will promptly
deliver to Company, originals and all copies of all papers, files or other
documents containing any Confidential Information and all other property
belonging to Company.
(c) For purposes of this Paragraph, the term
"Competing Business" means any business located within the United States
providing services substantially similar to those provided by the Company from
time to time. The term "Confidential Information" means any and all data and
information relating to the business of the Company (whether constituting a
trade secret or not) which is or has been disclosed to Employee or of which
Employee becomes aware as a consequence of or through his relationship with the
Company and which has value to the Company and is not generally known by its
competitors. Confidential Information shall not include any data or
information that has been voluntarily disclosed to the public by Company
(except where such public disclosure has been made by Employee without
authorization)
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or that has been independently developed and disclosed by others, or that
otherwise enters the public domain through lawful means.
If a court of competent jurisdiction determines that
any of the provisions related to the right of Employee to compete with Company
upon termination of his employment or to use information made know to him
during the course of his employment by Company are not enforceable because of
their length or territorial scope, Company and Employee agree that such court
may limit the term or scope of such provision to such extent as is necessary to
render it enforceable and that such provision, as so revised, shall be
enforceable.
(d) Employee acknowledges that irreparable loss
and injury would result to Company upon the breach of any of the covenants
contained in this paragraph 6 and that damages arising out of such breach would
be difficult to ascertain. Employee agrees that, in addition to all other
remedies available at law or at equity, Company may petition and obtain from a
court of law or equity both temporary and permanent injunctive relief to
prevent a breach by Employee of any covenant contained in this Paragraph 6 and
that in any action or proceeding brought to enforce any provision of this
Paragraph 6, the prevailing party shall be entitled to recover from the
non-prevailing party the former's reasonable costs of enforcement, including
legal fees.
7. Severance. In the event that any provision (or any
portion of any provision) of this Agreement shall be held to be void or
unenforceable, the remaining provisions of this Agreement (and the balance of
any provisions held void or unenforceable in part only) shall continue in full
force and effect, unless dependent upon an unenforceable or void provision.
8. Resignation. Upon the termination of his employment
for any reason Employee shall be deemed to resign as an officer and director of
Company and its affiliates, if then so acting.
9. Assignment; Successors. This Agreement may not be
assigned by Employee, but may be assigned by Company to any successor in
interest to its business. This Agreement shall inure to the benefit of and
shall be binding upon Company, its successors and assigns, and Employee, his
heirs, legal representatives, executors and assigns.
10. Complete Agreement; Governing Law. This Agreement
contains the full and complete understanding and agreement of the parties and
supersedes all prior agreements and understanding between the parties with
respect to the subject matter hereof. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
agreements made and wholly performed within said State, and may not be
modified, amended, terminated or discharged orally.
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11. Waiver; Estoppel. No waiver by either party of any
breach of any provision of this Agreement shall be deemed a waiver of any
preceding or succeeding breach of such provision or of a other provision herein
contained.
12. Notices. Any notices hereunder shall be in
writing and delivered at the addresses set forth above, or to such other
address or addresses as may hereafter be furnished in writing by one party to
the other, by certified mail, return receipt requested, or by telecopier. All
such notices shall be deemed effective upon receipt.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
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Xxxxxxx X. Xxxxxxx
800 TRAVEL SYSTEMS, INC.
By:
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