Employment Agreement - Orbitz Inc., Orbitz LLC and Jeffrey Katz
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, effective as of the 4th day of July
2003, ("Effective Date") is between and among Orbitz, Inc., a Delaware
corporation and Orbitz, LLC, a Delaware limited liability company, (together,
the "Company"), and Jeffrey Katz, the undersigned executive (the "Executive")
and replaces the Executive's previous Employment Agreement, dated July 6, 2000,
in its entirety.
RECITAL
The Company desires to continue to retain the services of Executive, and
Executive desires to continue to be employed by the Company, on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing recital and the
respective undertakings of the Company and Executive set forth below, the
Company and Executive agree as follows:
1. EMPLOYMENT.
(a) DUTIES. The Company agrees to continue to employ the Executive as
President and Chief Executive Officer, and the Executive agrees to perform such
reasonable responsibilities and duties as may be required of him by the Company
consistent with that position. Executive's term of employment with the Company
shall be renewed effective the Effective Date ("Employment Renewal Date").
Executive shall report directly to the Board of Managers of Orbitz, LLC (the
"Board of Managers") and the Board of Directors of Orbitz, Inc. (either the
"Board" or the "Board of Directors"), as applicable.
(b) TERM OF EMPLOYMENT. Executive's employment with the Company
pursuant to this Agreement shall be renewed on the Employment Renewal Date and
shall continue for a period of four (4) years (the "Employment Term") unless
terminated earlier by either party. This Agreement (and the Employment Term)
thereafter shall automatically be extended for an additional successive
four-year period as of the fourth anniversary of the Employment Renewal Date and
as of the last day of each successive four-year period of time thereafter that
this Agreement is in effect (each of which shall be the "Employment Term");
provided, however, that if, prior to the date which is six months before the
last day of any such Employment Term, either party shall give written notice to
the other that no such automatic extension shall occur, then Executive's
employment shall terminate on the last day of the Employment Term during which
such notice is given (subject to earlier termination as described in Section
3(g)). Such termination by either party shall be governed by Section 3 hereof.
(c) BOARD MEMBERSHIP. During the Employment Term, and subject to
the last sentence of this Section 1(c), the Company agrees to use its best
efforts to cause the Executive to be nominated (and re-nominated) as a member
of the Board of Directors of Orbitz, Inc. and to cause the Board of Directors
to appoint Executive as Chairman of the Board during the
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Employment Term and, subject to continued election as a Board member of Orbitz,
Inc. by the Company's stockholders, Executive shall remain Chairman of the Board
during the period of his employment with the Company. It is understood and
agreed that the position of Chairman of the Board and Chief Executive Officer
will only be separated if, in the judgment of the Board of Directors, the then
best and pervasive corporate governance practices at other publicly held
companies make such action advisable, and the Chairman of the Board is a
non-executive (i.e., non-employee) position.
(d) OBLIGATIONS. During the Executive's employment with the Company,
Executive shall devote his full business efforts and time to the Company.
Executive agrees not to actively engage in any other employment, occupation or
consulting activity for any direct or indirect remuneration without the prior
approval of the Board during his employment with the Company; provided, however,
that Executive may serve in any capacity with any civic, educational or
charitable organization, upon which Executive currently serves, without the
approval of the Board.
2. COMPENSATION AND BENEFITS.
(a) BASE COMPENSATION. The Company shall pay the Executive as
compensation for his services an annual base salary of $500,000. Such salary
shall be subject to applicable tax withholding and shall be paid periodically in
accordance with normal Company payroll practices. The annual compensation
specified in this Section 2(a), together with any increases in such compensation
that the Board may, in its sole discretion, approve from time to time, is
referred to in this Agreement as "Base Compensation."
(b) BONUS. Executive shall be eligible for an annual target bonus
based upon 100% of his Base Compensation (the "Target Bonus"), with a maximum
bonus payout of 200% of Executive's Base Compensation, earned upon attainment of
performance goals as determined by the Board after consultation with Executive.
Executive's bonus shall be paid within ninety (90) days of the end of the
Company's fiscal year subject to Executive being employed at the end of such
fiscal year.
(c) EXECUTIVE BENEFITS. Executive shall be eligible to participate
in each Executive benefit plan, arrangement, fringe benefit or perquisite,
which is currently available or which becomes available, with the adoption or
maintenance of such plans or arrangements to be in the discretion of the
Company, on terms which are at least as favorable as that enjoyed by any
other officer of the Company subject in each case to the generally applicable
terms and conditions of the plan or arrangement in question and to the
determination of any committee administering such plan or arrangement.
Notwithstanding the foregoing, the Company shall provide tax and financial
planning services for the Executive. Executive shall also receive an Airline
Industry Executive Travel Card for use while he is employed by the Company
for as long as one or more of American Airlines, Inc. Continental Airlines,
Inc., Delta Air Lines, Inc., Northwest Airlines, Inc. and UAL Loyalty
Services, Inc. (United Airlines) (collectively the "Airlines") own a majority
of the outstanding capital stock of Orbitz, Inc.
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(d) STOCK GRANT.
(i) GRANT UPON RENEWAL OF CONTRACT. Executive shall, on the
Employment Renewal Date, receive a grant of 200,000 shares of the
Restricted Stock of Orbitz, Inc., (pursuant to and as defined in the
Amended and Restated Orbitz, Inc. 2002 Stock Plan (the "2002 Stock Plan")
(the "Stock Grant") in the form attached as Exhibit A. This Stock Grant
shall vest as follows:
(A) One-fourth (1/4) of the shares of said Restricted Stock
shall vest upon the earlier of (i) the closing of the initial public
offering of the Common Stock of Orbitz, Inc. (the "IPO") and (ii) the
first anniversary of the date of the Stock Grant;
(B) One-fourth (1/4) of the shares of said Restricted Stock
shall vest upon the earlier of (i) the date the Average Market Price
exceeds 1.15 times the IPO initial offering price per share to the
public (the "IPO Price") and (ii) the second anniversary of the date
of the Stock Grant;
(C) One-fourth (1/4) of the shares of said Restricted Stock
shall vest upon the earlier of (i) the date when the Average Market
Price exceeds 1.25 times the IPO Price and (ii) the third anniversary
of the date of the Stock Grant; and,
(D) One-fourth (1/4) of the shares of said Restricted Stock
shall vest upon the earlier of (i) the date the Average Market Price
exceeds 1.50 times the IPO Price and (ii) the fourth anniversary of
the date of the Stock Grant;
(ii) For each of the vesting events above that relate to the
Average Market Price, but not the vesting events that relate to passage of
time, no accelerated vesting shall occur unless the fully diluted market
valuation of Orbitz, Inc., at the IPO Price, (i.e., the product of (A) the
sum of the total number of shares of the Common Stock of Orbitz, Inc.
outstanding immediately prior to the IPO (including restricted stock) PLUS
the number of shares of Common Stock of Orbitz, Inc. subject to outstanding
stock options held by employees (plus any warrants to purchase Common Stock
of Orbitz, Inc. held by any person) immediately prior to the IPO TIMES (B)
the IPO Price) is at least $1.25 billion (the "Minimum Initial Market
Valuation"). The "Average Market Price" on any day is the average closing
price of a share of the Common Stock of Orbitz, Inc. on the principal stock
exchange (or NASDAQ market) on which the shares are traded for the 20
consecutive trading days ending on such measurement date, subject to
adjustment, together with adjustment of the IPO Price, for events that
result in an adjustment to awards and in the manner provided in the 2002
Stock Plan.
(e) BONUS STOCK GRANT. If the Average Market Price exceeds 2 times
the IPO Price (subject to the Minimum Initial Market Valuation) on any day on
or before July 6, 2006, then a bonus award of 100,000 shares of Restricted
Stock (the "Bonus Stock Grant") will be granted to Executive on the first
date the Average Market Price exceeds 2 times the IPO Price.
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The Bonus Stock Grant will vest monthly at the rate of 16 and 2/3% of the grant
shares beginning on the last day of each month over the 6 month period following
the date of the grant.
(f) PREVIOUS STOCK GRANT. Executive previously received 250,000 shares
of the Common Stock of Orbitz, Inc. (the "Prior Stock Grant"). The Prior Stock
Grant shall have fully vested on or before the Employment Renewal date. Any one
of the following events shall constitute the "Trigger Day," as Executive (or his
legal representative in the event of Executive's death or disability) shall
elect: (i) any of the first four anniversary dates of the Employment Renewal
Date, provided Executive is then still employed by Orbitz (beginning with the
first anniversary, July 6, 2004, and ending with the day before the last
anniversary, July 5, 2007); (ii) 30 days after the closing of the IPO, provided
Executive is still employed by Orbitz on the date of the IPO; or (iii)
resignation by Executive or termination of Executive's employment by the
Company, for any reason, or Executive's death. In no event will the Trigger Day
be later than July 5, 2007. On the elected Trigger Day, if the Average Market
Price, as defined in Section 2(d)(ii) above (or if the Common Stock of Orbitz,
Inc. is not then publicly traded, then if the Fair Market Value per share of the
Common Stock of Orbitz, Inc. as has been most recently determined by the Board
for purposes of the 2002 Stock Plan) is less than $10, then the Company shall
pay Executive an amount in cash equal to the product of (i) $10 minus such
Average Market Price (or minus the Fair Market Value per share, as applicable)
times (ii) 250,000. The foregoing price and number of shares shall be subject to
adjustment for events that result in an adjustment to awards and in the manner
provided in the 2002 Stock Plan. The Executive must elect whether he will
receive such payment within thirty (30) days after the applicable Trigger Day
after which the right to receive such payment with respect to such Trigger Day
shall expire (and Executive's right to elect the final Trigger Day shall expire
on August 4, 2007 if he was employed by the Company on July 5, 2007). For the
avoidance of doubt, this Section 2(f) shall control over any inconsistency with
the restricted stock agreement for the Prior Stock Grant.
(g) TAX ELECTION. With regard to the Stock Grant and the Bonus Stock
Grant (if granted), the choice whether or not to make an election pursuant to
Section 83(b) of the U.S. Internal Revenue Code of 1986, as amended from time to
time (the "Code") shall rest with the Executive. The Company shall cooperate
with Executive with respect to Executive's filing of the Section 83(b) election.
(h) EXPENSE REIMBURSEMENT. The Company shall reimburse Executive for
all reasonable expenses incurred on behalf of the Company in accordance with the
Company's policies and procedures for such reimbursements, as they may exist
from time to time.
(i) CHICAGO RESIDENCE. For so long as (i) Executive remains employed
by the Company, and (ii) Executive's immediate family resides outside of
Illinois, the Company shall lease an apartment in the Chicago, Illinois
metropolitan area for use by Executive, which lease payment shall not exceed
$3,000 per month.
3. SEVERANCE PAYMENTS.
(a) PAYMENTS UPON TERMINATION. If the Executive's employment
terminates as
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a result of an Involuntary Termination and the Executive signs a Release of
Claims, then the Company shall pay to Executive two times the sum of (i)
Executive's Base Compensation and (ii) the Target Bonus. Such amount shall be
paid in equal semi-monthly installments on the 15th and the last day of each
calendar month, commencing on the date of Executive's termination of employment
and terminating on the second anniversary of such termination date (the
"Severance Period"). Notwithstanding the foregoing, in the event Executive
breaches Section 7 of this Agreement, as of the date the Company's notice is
given to Executive of Executive's breach of Section 7, all payments under this
Section 3 (except for any payments under Section 3(e) other than unpaid pro rata
bonus, if applicable) shall cease, and the Severance Period shall end.
(b) HEALTH BENEFITS. If Executive receives severance pursuant to
Section 3(a), then the Company shall reimburse the Executive for the same level
of health coverage and benefits as in effect for the Executive on the day
immediately preceding the day of the Executive's termination of employment;
provided, however, that (i) the Executive constitutes a qualified beneficiary,
as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as
amended; and (ii) Executive elects continuation coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"),
within the time period prescribed pursuant to COBRA. The Company shall continue
to reimburse Executive for continuation coverage until the earlier of (i) the
end of the Severance Period, or (ii) the date upon which Executive obtains
substantially equivalent coverage from other sources.
(c) STOCK OPTIONS. In the event Executive is entitled to severance
benefits pursuant to Section 3(a), Executive shall vest in and be entitled to
exercise all his then outstanding stock options as to the same number of shares
which would have become vested and exercisable if the Executive had remained
employed with the Company an additional six months (in addition to the portion
of such Options which were vested and exercisable as of the date of
termination). In all other respects, Executive's stock options shall remain
subject to the Orbitz, Inc. 2000 Stock Plan (the "2000 Stock Plan") and the 2002
Stock Plan, as applicable.
(d) STOCK GRANT. In the event Executive is entitled to severance
benefits pursuant to Section 3(a), then Executive shall vest in full in the
Stock Grant and the Bonus Stock Grant (if previously granted).
(e) MISCELLANEOUS. In addition, upon a termination of Executive's
employment, (i) the Company shall pay the Executive: (A) any unpaid Base
Compensation due for periods prior to the date of Executive's termination,
(B) any earned and unpaid bonus for the fiscal year prior to the fiscal year
of Executive's termination, and (C) in the case of an Involuntary Termination
or the termination of Executive's employment due to death or disability, a
pro rata portion of Executive's actual bonus earned for the portion of the
fiscal year in which such termination occurs through the date of termination,
if and when such bonuses are payable to other senior executives of the
Company ("pro rata bonus"); provided, no such pro rata bonus shall be payable
to Executive upon a termination by the Company for Cause; (ii) the Company
shall pay the Executive all of the Executive's accrued and unused vacation
through the date of Executive's termination; and (iii) following submission
of proper expense reports by the Executive, the Company shall reimburse the
Executive for all expenses reasonably and necessarily incurred by the
Executive in connection with the business of the Company prior to
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termination. Any payments described above, other than any pro rata bonus payable
as provided for above for the year of termination, shall be made promptly upon
termination and within the period of time mandated by applicable law.
(f) TERMINATION FOR CAUSE. If the Executive's employment is terminated
by the Company for Cause, the Executive shall not be entitled to receive
severance payments or other benefits under this Section 3, except for his unpaid
accrued Base Compensation and accrued and unused vacation. Executive's stock
options, the Stock Grant, the Bonus Stock Grant (if previously granted), and any
other Restricted Stock shall only be vested to the extent they were vested on
the date of such termination.
(g) VOLUNTARY RESIGNATION. If the Executive's employment terminates by
reason of Executive's voluntary resignation (including a resignation and notice
by the Executive of non-renewal of the Employment Term pursuant to Section 1(b)
above) which is not treated as an Involuntary Termination, the Executive shall
not be entitled to receive severance payments or other benefits under this
Section 3 except those specified under Section 3(e). The Company, at its
election, may treat such resignation as effective immediately upon receipt.
Executive's stock options, the Stock Grant, the Bonus Stock Grant (if previously
granted), and any other Restricted Stock awards granted pursuant to the 2002
Stock Plan or the 2000 Stock Plan shall only be vested to the extent they were
vested on the date of such termination.
(h) DEATH OR DISABILITY. If the Executive's employment terminates as a
result of his death or Disability, neither the Executive nor, in the case of
death, Executive's beneficiary or estate, shall be entitled to any compensation,
severance payments, or any other benefits under this Section except as required
by law and as specified under Section 3(e). Executive's stock options, the Stock
Grant and the Bonus Stock Grant (if previously granted) and any other Restricted
Stock shall only be vested to the extent they were vested on the date of such
termination. Any life insurance or disability benefits otherwise payable, shall
be paid consistent with the Company's then-established policies or applicable
life insurance or disability insurance contract. In the case of Executive's
death, Executive's beneficiary or estate shall be entitled to exercise
Executive's stock options, the Stock Grant and the Bonus Stock Grant (if
previously granted) and any other Restricted Stock to the extent they are then
vested and exercisable in accordance with the terms of the respective Restricted
Stock Agreements or stock option agreements.
(i) MITIGATION. Executive shall not be required to mitigate damages or
the amount of any payment provided for under Sections 3 or 4 of this Agreement
by seeking other employment or otherwise. Except as otherwise specifically
provided herein, the receipt of any benefit provided for under Sections 3 or 4
of this Agreement shall not be reduced by any benefit received by Executive as a
result of employment by another employer or by retirement after termination of
Executive's employment with the Company.
4. CHANGE OF CONTROL PROVISION.
If upon a Change of Control Executive is not offered the position
of Chairman and Chief Executive Officer of the combined corporation (or other
business organization)
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resulting from such Change of Control, then Executive shall be entitled to the
following (i) the Stock Grant and the Bonus Stock Grant (if previously granted)
and any other Restricted Stock owned by the Executive, shall be fully vested as
of the date of such Change of Control, (ii) Executive's stock options (to the
extent outstanding as of the Change of Control) shall become fully vested as of
the date of such Change of Control and each of the foregoing shall be
exercisable for such period of time as provided for in the respective Restricted
Stock agreements or stock option agreements.
5. OTHER AGREEMENTS AND NOTICES.
(a) CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT.
Executive reaffirms his obligations set forth in the Company's standard
Confidential Information and Invention Assignment Agreement which Executive
previously executed. However, to the extent there is any conflict with the
provisions of this Employment Agreement, Executive agrees that this Employment
Agreement shall supersede the conflicting provisions of the Confidential
Information and Invention Assignment Agreement.
(b) INDEMNITY AGREEMENT. As soon as practicable after the Employment
Renewal Date, the Company and Executive shall execute an Officer and Director
Indemnity Agreement. Until such time, Executive shall be indemnified to the
maximum extent provided under the articles of incorporation of Orbitz, Inc.,
articles of organization of Orbitz, LLC, the by-laws of the Company and
applicable law, and shall be covered for directors and officers liability
insurance to the same extent as senior officers and directors of the Company,
which rights shall survive a termination of this Agreement.
(c) ILLINOIS EMPLOYEE PATENT ACT NOTICE. Executive acknowledges and
will execute the Illinois Employee Patent Act Notice, which shall be in the form
attached hereto as Exhibit C, on or before the date of his Execution of this
Employment Agreement.
6. DEFINITIONS. As used herein, the terms have the following meanings:
(a) CAUSE. "Cause" means the Executive's termination only upon: (i)
the Executive's willful failure to substantially perform his material duties
(other than as a failure resulting from the Executive's complete or partial
incapacity due to physical or mental illness or impairment) for a period of
ninety (90) days after a written demand for substantial performance is
delivered to the Executive by the Board that specifically identifies the
manner in which the Board believes that the Executive has not substantially
performed his duties, (ii) a material and willful violation of a federal or
state law or regulation applicable to the business of the Company, or (iii) a
willful act by the Executive that constitutes gross misconduct and that is
injurious to the Company. No act, or failure to act, by the Executive shall
be considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best
interests. The Company may not terminate the Executive's employment for Cause
unless: (x) a determination that Cause exists is made and approved by the
Company's Board of Directors (excluding Executive), (y) the Executive is
given at least 72 hours prior
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written notice of the Board meeting called to make such determination, and (z)
the Executive is given the opportunity to address such meeting prior to a vote
of the Board
(b) CHANGE OF CONTROL.
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%)
or more of the total voting power represented by the Company's then
outstanding voting securities; or
(ii) A change in the composition of the Board occurring within a
two-year period, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall mean
directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the Incumbent Directors at
the time of such election or nomination (but shall not include an
individual whose election or nomination is in connection with an actual or
threatened proxy contest relating to the election of directors to the
Company); or
(iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least fifty percent (50%) of the total voting power represented
by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; provided,
however, any person who acquired securities of the Company prior to the
occurrence of a merger or consolidation in contemplation of such
transaction, and who after such transaction possesses direct or indirect
beneficial ownership of at least ten percent (10%) of the securities of the
Company or the surviving entity immediately following such transaction
shall not be included in the group of shareholders of the Company
immediately prior to such transaction; or
(iv) The consummation of the sale, lease or other disposition by
the Company of all or substantially all the Company's assets.
(c) CONSTRUCTIVE TERMINATION. "Constructive Termination" means the
Executive terminates his employment with the Company as a result of one or
more of the following events (unless, in the case of (ii) below, such
event(s) applies generally to all officers of the Company): (i) a reduction
in the Executive's Base Compensation; (ii) without the Executive's express
written consent, a material reduction by the Company in the kind or level of
Executive benefits to which the Executive is entitled immediately prior to
such reduction with the result that the Executive's overall benefit package
is significantly reduced; (iii) without the Executive's express written
consent, the Company fails to retain the Executive as its President and Chief
Executive Officer; (iv) the Company substantially reduces Executive's
authority or
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responsibility as President and Chief Executive Officer; (v) Executive is
removed or is not re-elected as a member of the Board of Directors of Orbitz,
Inc.; (vi) a successor fails to assume the obligations of the Company under this
Agreement; and (vii) notice by the Company to Executive of the non-renewal of
the Employment Term pursuant to Section 1(b) above.
(d) DISABILITY. "Disability" means a mental or physical impairment
which prevents Executive from performing the responsibilities and duties of his
position to the satisfaction of the Board for a period of at least ninety (90)
days.
(e) INVOLUNTARY TERMINATION. "Involuntary Termination" shall mean: (i)
termination by the Company of Executive's employment with the Company for any
reason other than Cause, death, or Disability or (ii) a Constructive
Termination.
(f) RELEASE OF CLAIMS. "Release of Claims" shall mean a waiver by
Executive, substantially in the form attached hereto as Exhibit B, of all
employment related obligations of and claims and causes of actions against the
Company, except for any of the Company's obligations under this Agreement,
especially Sections 3 and 4.
(g) UNDEFINED TERMS. Terms not defined herein shall have the meanings
given to such terms in the 2002 Stock Plan, as in effect on the date hereof.
7. COVENANTS NOT TO SOLICIT AND NOT TO COMPETE.
(a) For a period beginning on the Effective Date and ending on the
longer of (i) twelve (12) months following the date upon which Executive's
employment with the Company terminates, or (ii) the end of the Severance Period,
the Executive, directly or indirectly, whether as owner, sole proprietor,
partner, shareholder, director, member, consultant, agent, founder, co-venturer
or otherwise, shall: (i) not engage, participate or invest in any business
activity anywhere in the world which develops, manufactures or markets products
or performs services which are competitive with the products or services of the
Company at the time of the Executive's termination, or products or services
which the Company has under development or for which are the subject of active
planning at the time of the Executive's termination; provided, however, that the
Executive, may own as a passive investor, publicly-traded securities of any
corporation which competes with the business of the Company so long as such
securities do not, in the aggregate, constitute more than 3% of any class of
outstanding securities of such corporations; (ii) refrain from hiring or
attempting to employ, recruiting or otherwise soliciting, inducing or
influencing any person to leave employment with the Company or its resellers or
distributors and (iii) refrain from directly or indirectly soliciting
competitive business from any of the Company's customers and users, resellers or
distributors on behalf of any business which competes the Company.
(b) The Executive understands that the restrictions set forth in
this Section 7 are intended to protect the Company's interest in its
"proprietary information" (as defined in the Proprietary Information
Agreement attached hereto as Exhibit B) and establish customer
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relationships in good will, and agrees that such restrictions are reasonable and
appropriate for this purpose.
(c) The Executive agrees that it would be difficult to measure any
damages caused by the Company which might result from any breach by the
Executive of the promises set forth in this Section 7, and that in any event
money damages would be an inadequate remedy for any such breach. Accordingly,
the Executive agrees that if the Executive breaches, or proposes to breach, any
portion of this Section 7, the Company shall be entitled, in addition all other
remedies that it may have, to injunction or other appropriate equitable relief
to restrain any such breach without showing or proving any actual damage to the
Company. In addition, if Executive breaches the promises set forth in this
Section 7, upon or after a termination of employment pursuant to Section 3(a),
the Company shall (i) cease all payments pursuant to Section 3(a), (ii)
terminate all benefits pursuant to Section 3(b) and (iii) all outstanding
options shall terminate.
8. PRIOR AGREEMENTS. Executive represents that Executive has not entered
into any agreements, understandings, or arrangements with any person or entity
which would be breached by Executive as a result of, or that would in any way
preclude or prohibit Executive from entering into this Agreement with the
Company or performing any of the duties and responsibilities provided for in
this Agreement.
9. NOTICES. Any notice, report or other communication required or permitted
to be given hereunder shall be in writing and shall be deemed given (i) on the
date of delivery, if delivered personally or by facsimile, (ii) one (1) day
after being sent by Federal Express or a similar commercial overnight service or
(iii) three (3) days after mailing, if mailed by first-class mail, postage
prepaid, to the following addresses:
If to the Executive, at the address set forth below the Executive's
signature at the end hereof.
If to the Company:
Orbitz
200 South Wacker Drive, Suite 1900
Chicago, IL 60606
ATTN: Vice-President, Human Resources
or to such other address as any party hereto may designate by notice
given as herein provided.
10. GOVERNING LAW. This Employment Agreement shall be governed by and
construed and enforced in accordance with the internal substantive laws, and not
the choice of law rules of, Delaware.
11. AMENDMENTS. This Employment Agreement shall not be changed or modified
in whole or in part except by an instrument in writing signed by each party
hereto.
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12. SEVERABILITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision hereof, which shall remain in full force and effect.
13. SUCCESSORS.
(a) COMPANY'S SUCCESSORS. Any successor to the Company (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation
or otherwise) to all or substantially all of the Company's business and/or
assets shall assume the obligations under this Agreement and agree expressly to
perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any successor to the Company's business and/or assets
which executes and delivers the assumption agreement described in this
subsection (a) or which becomes bound by the terms of this Agreement by
operation of law.
(b) EXECUTIVE'S SUCCESSORS. The terms of this Agreement and all rights
of the Executive hereunder shall inure to the benefit of, and be enforceable by,
the Executive's personal or legal representatives, executors, administrators,
successor, heirs, distributees, devisees or legatees.
14. ENTIRE AGREEMENT. This Agreement, the 2000 Stock Plan, the 2002 Stock
Plan, the stock option agreements and Restricted Stock agreements for
Executive's outstanding stock options and Restricted Stock, the Restricted Stock
agreements for the Stock Grant and the Bonus Stock Grant, the Confidential
Information and Invention Assignment Agreement, and any other documents prepared
pursuant to this Employment Agreement represent the entire agreement and
understanding between the Company and Executive concerning Executive's
employment relationship with the Company, and supersede and replace all prior
agreements or understandings relating to the subject matter hereof, including,
without limitation, Executive's prior employment agreement dated July 6, 2000,
and no agreements, representations or understandings (whether oral or written or
whether express or implied) which are not expressly set forth in this Agreement
have been made or entered into by either party with respect to the relevant
matter hereof. In the event of a conflict between the terms of this Agreement
and any document incorporated herein, the terms of this Agreement shall prevail.
In the case of conflict between the terms of this Employment Agreement or the
foregoing agreements (the "Terms") and the provisions of any plan, policy, or
practice of the Company as is in effect from time to time (the "Provisions"),
Executive's rights or the Company's obligations shall be controlled by this
Employment Agreement.
15. ARBITRATION AND EQUITABLE RELIEF.
(a) Except as provided in Section 15(d) below, the Company and
Executive agree that any dispute or controversy arising out of, relating to, or
in connection with this Employment Agreement, the 2000 Stock Plan, the 2002
Stock Plan, Executive's stock option agreements and Restricted Stock agreements,
the Confidential Information and Invention Assignment Agreement or the
interpretation, validity, construction, performance, breach, or
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<Page>
termination thereof shall be settled by arbitration to be held in accordance
with the National Rules for the Resolution of Employment Disputes then in effect
of the American Arbitration Association (the "Rules"). The arbitrator may grant
injunctions or other relief in such dispute or controversy. The decision of the
arbitrator shall be final, conclusive and binding on the parties to the
arbitration. Judgment may be entered on the arbitrator's decision in any court
having jurisdiction.
(b) The arbitrator[s] shall apply Delaware law to the merits of any
dispute or claim, without reference to rules of conflict of law. Executive
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in California for any action or proceeding arising from or
relating to this Agreement or relating to any arbitration in which the parties
are participants.
(c) The Company and Executive shall each pay one-half of the costs and
expenses of such arbitration, and shall separately pay its counsel fees and
expenses unless otherwise required by law or determined by the arbitrator.
(d) The parties may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this arbitration agreement
and without abridgment of the powers of the arbitrator.
(e) EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES, EXCEPT AS PROVIDED IN SECTION 15(d), TO SUBMIT ANY FUTURE CLAIMS ARISING
OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, THE 2000 STOCK PLAN,
THE 2002 STOCK PLAN, EXECUTIVE'S STOCK OPTION AGREEMENTS AND RESTRICTED STOCK
AGREEMENTS, CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT OR THE
INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH, OR TERMINATION
THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A
WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL
DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EXECUTIVE RELATIONSHIP,
INCLUDING BUT NOT LIMITED TO, THE FOLLOWING CLAIMS:
(i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF EMPLOYMENT;
BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF
GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR
INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL
MISREPRESENTATION; NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR
PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION.
(ii) ANY AND ALL CLAIMS FOR VIOLATION OF ANY FEDERAL STATE OR
MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED
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TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF
1991, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR
EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 201, ET SEQ.;
(iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND
REGULATIONS RELATING TO EMPLOYMENT OR EMPLOYMENT DISCRIMINATION.
16. RIGHT TO ADVICE OF COUNSEL. Executive acknowledges that he has had the
opportunity to discuss this matter with and obtain the advice of legal counsel,
has had sufficient time to, and has carefully read and fully understands all the
provisions of this Agreement and the tax consequences thereof, and is knowingly
and voluntarily entering into this Agreement. The Company shall pay Executive's
legal fees and reasonable costs incurred in connection with the review and
negotiation of this Amended and Restated Employment Agreement; provided that,
such payments shall not exceed a total of $25,000, including all fees and
expenses.
17. WITHHOLDING. The Company shall be entitled to withhold, or cause to be
withheld, from payment any amount of withholding taxes required by law with
respect to payments made to Executive in connection with his employment
hereunder.
18. COUNTERPARTS. This Employment Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
19. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
[End of Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement.
ORBITZ, INC.
By: /s/ JOHN J. PARK
------------------------------------
ORBITZ, LLC.
By: /s/ JOHN J. PARK
-----------------------------------
EXECUTIVE:
Jeffrey Katz
/s/ J.G. KATZ
----------------------------------
(Signature)
----------------------------------
----------------------------------
Address
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EXHIBIT A
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (this "Agreement") dated as of July 6,
2003, is between Orbitz, Inc., a Delaware corporation ("Company") having an
address at 200 S. Wacker Drive, Suite 1900, Chicago, IL 60657 and Jeffrey G.
Katz ("Employee") having an address set forth on the signature page hereof,
relating to the award of shares of Company's Class C common stock ("Stock") to
Employee pursuant to the Restricted Stock Awards provisions of Company's 2002
Stock Plan (as such may be amended from time to time, the "Plan"). Capitalized
terms used in this Agreement without definition shall have the meaning ascribed
to such terms in the Plan.
1. ISSUANCE OF RESTRICTED SHARES. Company hereby awards to Employee 200,000
shares of Stock (the "Restricted Shares") as provided for in Section 2(d) of the
Employment Agreement.
2. LAPSE OF RESTRICTIONS. Restricted Shares shall cease to be subject to
the restrictions described herein, (shares no longer subject to such
restrictions being referred to herein as "Unrestricted Shares") as of the date
set forth below according to the percentage set forth opposite such date, unless
vesting occurs earlier, as provided for in Section 2(d) of the Employment
Agreement:
<Table>
<Caption>
DATE CUMULATIVE PERCENTAGE UNRESTRICTED
<S> <C> <C>
July 6, 2004 25%
July 6, 2005 50%
July 6, 2006 75%
July 6, 2007 100%
</Table>
For purposes of this Agreement, the term "vesting" shall have the effect of
converting Restricted Shares into Unrestricted Shares.
In the event that Employee ceases to be a Service Provider before all of
the shares of Stock granted hereunder cease to be Restricted Shares, Employee
shall, upon the date of such termination forfeit or the restrictions shall lapse
as to that number of shares of Stock which constitute the Restricted Shares as
provided under Employee's Amended and Restated Employment Agreement dated as of
July 6, 2003 ("Employment Agreement"). Upon such forfeiture the Company shall
become the legal and beneficial owner of the Restricted Shares being forfeited
and all rights and interests therein or relating thereto, and the Company shall
have the right to retain and transfer to its own name the number of Restricted
Shares being forfeited by Employee. Upon a lapse of restrictions under this
Section 2, the shares shall become Unrestricted Shares.
3. RESTRICTION ON TRANSFER. Restricted Shares (and any interest therein)
may never be directly or indirectly transferred, pledged, hypothecated, or
otherwise disposed of while they remain Restricted Shares. Prior to the closing
of an initial public offering with respect to shares of Stock ("IPO") registered
under the Securities Act of 1933, as amended (the "Securities Act"), neither
Unrestricted Shares nor any interest therein my be transferred, pledged,
hypothecated, or otherwise disposed of. Following the consummation of an IPO,
any Unrestricted Shares shall be freely transferable subject only to the
restrictions set forth in Sections 6 and 8 hereof.
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4. REPURCHASE. In the event that Employee ceases to be a Service Provider
for any or no reason (including death or disability) at any time prior to the
consummation of an IPO, any then Unrestricted Shares shall be subject to a right
(but not an obligation) of repurchase by Company. Company's right of repurchase
with respect to Unrestricted Shares shall be exercisable, during the sixty (60)
day period immediately following the Termination Date, by delivery of written
notice to Employee (which notice shall set forth a date, within thirty (30) days
of the date of the notice, on which the repurchase is to be effected). Company's
right of repurchase with respect to Unrestricted Shares shall lapse upon the
consummation of an IPO or upon expiration of the above referenced sixty (60) day
period. If Company exercises its right of repurchase with respect to
Unrestricted Shares it shall pay Employee, at closing, an amount equal to the
Fair Market Value (as of the Termination Date) per share or, in the event that
Employee's employment with the Company is terminated by the Company for "Cause"
(as defined in Employee's Employment Agreement), the par value per share. At the
closing of any repurchase, Employee shall deliver to Company stock certificates
duly endorsed for transfer, or accompanied by duly executed stock powers,
representing all of the Stock being sold, free and clear of all claims, liens,
or encumbrances from any third parties together with such other documentation as
Company's legal counsel may reasonably require.
5. ESCROW. The Company may, in its discretion, reflect ownership of
Restricted Shares (and Unrestricted Shares) through the issuance of stock
certificates, or in book-entry form, without stock certificates, on its books
and records. If the Company elects to issue certificates, such certificates for
Restricted Shares shall be deposited in escrow, together with stock powers duly
executed in blank by Employee, with the corporate secretary of Company to be
held in accordance with the provisions hereof. Restricted Shares shall be: (i)
released to Company upon forfeiture as described in Section 2 above; (ii)
release for transfer and assignment to Company upon Company's exercise of its
right of repurchase described in Section 4 above; or (ii) released to Employee,
upon Employee's request, to the extent the shares of Stock are no longer
Restricted Shares.
6. ADDITIONAL RESTRICTIONS ON TRANSFER OF STOCK. The certificates
representing shares of Stock granted hereunder will bear a legend which states,
and Employee agrees to, the following:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
ACT. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF A
REGISTRATION STATEMENT WHICH IS EFFECTIVE UNDER THOSE ACTS AS TO SUCH
SECURITIES OR AN OPINION, IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION AND GIVEN BY COUNSEL SATISFACTORY TO THE CORPORATION, TO
THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE
OPTIONS, ADDITIONAL RESTRICTIONS ON TRANSFER AND OTHER AGREEMENTS SET
FORTH IN A RESTRICTED STOCK AGREEMENT (THE "AGREEMENT") BETWEEN
ORBITZ, INC., A DELAWARE CORPORATION, AND __________________ DATED AS
OF _____________, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE CORPORATION. ANY TRANSFER OR PLEDGE IN
CONFLICT WITH, OR IN DEROGATION OF THE AGREEMENT IS VOID AND OF NO
LEGAL FORCE, EFFECT, OR VALIDITY WHATSOEVER."
7. SECTION 83(B) ELECTION. Employee acknowledges that he may, within the
thirty (30) day period after the date hereof, in his sole discretion make an
election with the Internal Revenue Service under Section 83(b) of the Code. If
Employee makes such election, he will promptly file a copy with the Company.
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8. EMPLOYEE'S INVESTMENT REPRESENTATIONS. Employee represents that he; (a)
understands that Employee's shares of Stock have not been registered under the
Securities Act, are offered pursuant to an exemption thereunder, and have not
been approved or disapproved by the Securities and Exchange Commission or by any
other federal or state agency; (b) is acquiring shares of Stock for his own
account for investment, not on behalf or for the benefit of any other person,
trust, estate, or business organization and has no intention of distributing
such shares of Stock to others in violation of the Securities Act; (c) has no
contract or arrangement with any person to sell or transfer to them of
Employee's shares of Stock; (d) is aware of no existing circumstances which will
compel him to obtain money by the sale of any shares of Stock, and has no reason
to anticipate any change in such circumstances, financial or otherwise, or to
anticipate any occasion or event which would cause him to assign, transfer,
sell, or distribute or necessitate or require him to assign, transfer, sell, or
distribute Employee's shares of Stock; (e) understands that the shares of Stock
are illiquid, subject to resale restrictions imposed by the securities laws of
various states and may not be sold without compliance with such laws and he may
be required to hold the shares of Stock indefinitely; and (f) resides in the
State of Illinois.
9. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois, without regard
to its conflict of laws rules.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
ORBITZ, INC., A DELAWARE CORPORATION
By: /s/: JANE M. DENMAN
----------------------------------
Jane Denman, VP of Human Resources
EMPLOYEE:
/s/: JEFFREY G. KATZ
----------------------------------
Name:
------------------------------
Address:
---------------------
------------------------------
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EXHIBIT B
RELEASE AND WAIVER OF CLAIMS
THIS RELEASE is made as of this ___ day of __________, ____, by Jeffrey
Katz ("Executive") for the benefit of Orbitz, Inc. and Orbitz, LLC
(collectively, the "Company").
WHEREAS, Executive and the Company entered into that certain Amended and
Restated Employment Agreement, dated July 4, 2003 ("Agreement");
WHEREAS, Executive's employment with the Company as Chief Executive Officer
has terminated; and
WHEREAS, in connection with the termination of Executive's employment,
under the Agreement, Executive is entitled to certain payments and other
benefits.
NOW, THEREFORE, in consideration of the payments and other benefits due
Executive under the Agreement:
1. Executive, intending to be legally bound, does hereby REMISE, RELEASE
AND FOREVER DISCHARGE the Company, its affiliates, subsidiaries, parents,
joint ventures, and its and their officers, directors, shareholders,
employees, predecessors, and partners, and its and their respective
successors and assigns, heirs, executors, and administrators (collectively,
"Releasees") from all causes of action, suits, debts, claims and demands
whatsoever in law or in equity, which Executive ever had, now has, or
hereafter may have, or which his heirs, executors, or administrators may
have, by reason of any matter, cause or thing whatsoever, from the beginning
of his initial dealings with the Company to the date of this Release, and
particularly, but without limitation of the foregoing general terms, any
claims arising from or relating in any way to his employment relationship
with Company, the terms and conditions of that employment relationship, and
the termination of that employment relationship, including, but not limited
to, any claims arising under the Age Discrimination in Employment Act
("ADEA") and the Older Workers Benefit Protection Act ("OWBPA"), as amended,
29 U.S.C. Section 621 et seq., Title VII of The Civil Rights Act of 1964, as
amended, 42 U.S.C. Section 2000e et seq., the Americans with Disabilities
Act, 42 U.S.C. Section 12101 et seq., the Family and Medical Leave Act of
1993 ("FMLA"), 29 U.S.C. Section 2601 et seq., the Employee Retirement Income
Security Act of 1974 ("ERISA"), 29 U.S.C. Section 1001 et seq., and any other
claims under any federal, state or local common law, statutory, or regulatory
provision, now or hereafter recognized, and any claims for attorneys' fees
and costs, but not including such claims to payments, benefits and other
rights provided Executive under the Agreement. This Release is effective
without regard to the legal nature of the claims raised and without regard to
whether any such claims are based upon tort, equity, implied or express
contract or discrimination of any sort.
2. Executive further agrees and recognizes that he has permanently and
irrevocably severed his employment relationship with the Company, that he shall
not seek employment with the Company or any affiliated entity at any time in the
future, and that the Company has no obligation to employ him in the future.
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3. The parties agree and acknowledge that the Agreement, and the settlement
and termination of any asserted or unasserted claims against the Releasees
pursuant to the Agreement, are not and shall not be construed to be an admission
of any violation of any federal, state or local statute or regulation, or of any
duty owed by any of the Releasees to Executive.
4. Executive certifies and acknowledges as follows:
(a) That he has read the terms of this Release, and that he
understands its terms and effects, including the fact that he has agreed to
RELEASE AND FOREVER DISCHARGE all Releasees from any legal action or other
liability of any type related in any way to the matters released pursuant to
this Release other than as provided in the Agreement and in this Release;
(b) That he has signed this Release voluntarily and knowingly in
exchange for the consideration described herein, which he acknowledges is
adequate and satisfactory to him and which he acknowledges is in addition to any
other benefits to which he is otherwise entitled;
(c) That he has been and is hereby advised in writing to consult with
an attorney prior to signing this Release;
(d) That he does not waive rights or claims that may arise after the
date this Release is executed;
(e) That he has been informed that he has the right to consider this
Release and Waiver of Claims for a period of 21 days from receipt, and he has
signed on the date indicated below after concluding that this Release and Waiver
of Claims is satisfactory to him; and
(f) That neither the Company, nor any of its representatives,
employees, or attorneys, has made any representations to him concerning the
terms or effects of this Release and Waiver of Claims other than those contained
herein.
5. Executive also understands that he has the right to revoke this Release
and Waiver of Claims within 7 days after execution, and that this Release and
Waiver of Claims will not become effective or enforceable until the revocation
period has expired, by giving written notice to the following:
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
execute the foregoing Release and Waiver of Claims:
------------------------------
Jeffrey Katz
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EXHIBIT C
NOTICE TO EXECUTIVE
This is to notify you that pursuant to the Employee Patent Act (765
Illinois Compiled Statutes, Act 1060), the provisions of your Employment
Agreement regarding the assignment of your rights in discoveries and inventions
to Orbitz, Inc. or Orbitz, LLC, DOES NOT APPLY to an invention for which no
equipment, supplies, facilities or trade secret information of Orbitz, Inc. or
Orbitz, LLC was used and which was developed entirely on your own time, unless
(a) the invention relates (i) to the business of Orbitz, Inc. or Orbitz, LLC or
(ii) to Orbitz, Inc.'s or Orbitz, LLC's actual or demonstrably anticipated
research or development, or (b) the invention results from or is the product of
any work performed by you for Orbitz, Inc. or Orbitz, LLC in the scope of your
efforts on behalf of Orbitz, Inc. or Orbitz, LLC.
Acknowledged:
/s/ J.G. KATZ
--------------------------------------
Name: J.G. Katz
--------------------------------
Date: July 10, 2003
--------------------------------
20