Employment Agreement - priceline.com Inc. and Richard Braddock
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of August 15, 1998 by
and between priceline.com Incorporated, a Delaware corporation ("PriceLine") and
Mr. Richard Braddock, a resident of the State of Connecticut (the "Employee").
WHEREAS, PriceLine desires that the Employee serve, and the Employee
desires to serve, as the Chairman and Chief Executive Officer of PriceLine under
the terms and conditions of this Agreement; and
NOW, THEREFORE, intending to be legally bound hereby, the parties agree as
follows:
1. Employment.
(a) PriceLine hereby agrees to employ the Employee, and the Employee
hereby agrees to serve, as the Chairman and Chief Executive Officer of PriceLine
upon the terms and subject to the conditions set forth herein.
(b) During the Term (as defined herein), the Employee shall serve as
the Chairman and Chief Executive Officer of PriceLine and shall have such
responsibilities, duties and authority consistent with such position as may from
time to time be determined by the Board of Directors of PriceLine.
(c) During the Term, the Employee shall diligently and faith fully
serve PriceLine and shall devote a majority of his working time and efforts to
the business and affairs of PriceLine at a location in the greater New York
metro politan area. PriceLine agrees that the Employee may retain his current
position and responsibilities as non-executive chairman of True North
Communications, Inc. ("True North").
2. Term. Subject to Section 4 hereof, the term of the employ ment by
PriceLine of the Employee pursuant to this Agreement (the "Term") is for a
period commencing on the date of this Agreement and terminating on the third
anniversary thereof.
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3. Compensation.
(a) Base Salary. In partial consideration of the Employee's ser
vices to be rendered pursuant hereto and the Employee's agreement to the cove
nants and restrictions set forth in Section 6 hereof, PriceLine shall pay to the
Employee, effective as of the date hereof, an annual base salary of $300,000
(the "Base Salary"), such salary to be payable to the Employee in semi-monthly
installments in accordance with PriceLine's customary payroll practices. In the
event that PriceLine becomes a public company during the Term, PriceLine agrees
that its Compensation Committee shall review the Employee's Base Salary and make
any upward adjustments thereto that such Committee shall deem appropriate.
(b) Cash Bonus. The Employee shall be eligible to participate in any
cash bonus program introduced by PriceLine at a level commensurate with the
Employee's position and responsibility.
(c) PriceLine Option.
(i) PriceLine previously granted to the Employee an option
(the "Option") to purchase 5,000,000 shares of PriceLine common stock
("PriceLine Shares"), which represent approximately 4.7% of outstanding common
stock of PriceLine on a fully diluted basis, pursuant to the terms of an Option
Agreement between PriceLine and Employee dated July 23, 1998 (the "Option
Agreement"), a copy of which is attached hereto as Exhibit A.
(ii) The Option is not intended to qualify as an incentive
stock option within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
(iii) As set forth in the Option Agreement and subject to
Sections 3(iv) and 4(a)-(e) hereof, the Option shall be exercisable at an
aggregate exercise price of $5,000,000, or a per security exercise price of
$1.00 per PriceLine Share (the "Exercise Price").
(iv) The Option shall vest as to (A) 3,000,000 of the
PriceLine Shares underlying the Option on the earlier to occur of (x) PriceLine
having a public market capitalization of $750 million for five consecutive
trading days (for purposes of the foregoing, "public market capitalization"
shall be defined as the closing price of PriceLine common stock multiplied by
the number of fully diluted shares of outstanding PriceLine common stock as
determined in accordance
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with generally accepted accounting principles (GAAP)), (y) PriceLine having
pre-tax operating income of $30 million over a twelve month period occurring
over four consecutive fiscal quarters, or (z) the ninth anniversary of the date
of this Agreement; (B) 2,000,000 of the PriceLine Shares underlying the Option
on the earlier to occur of (x) a PriceLine initial public offering, (y) the sale
by PriceLine of at least $50 million of equity at a pre-money valuation of $450
million or greater, or (z) the ninth anniversary of the date of this Agreement.
(v) In the event that, following the date of this Agreement,
PriceLine effects an extraordinary dividend or other extraordinary distribu
tion, recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, spin-off, combination, repurchase or share exchange, or
other similar corporate transaction or event that affects the common stock of
PriceLine, such that an adjustment is appropriate to prevent dilution or
enlargement of the rights of the Employee with respect to the Option, PriceLine
shall make such equitable changes or adjustments as are deemed necessary or
appropriate, to any or all of (A) the number and kind of equity securities for
which the Option is exercisable and (B) the Exercise Price.
(vi) Except as otherwise specifically provided for in this
Agreement, the Option shall be governed by the terms of the Omnibus PriceLine
Option Plan and the Option Agreement.
(d) Benefits; Business Expenses/Car Allowance.
(i) During the Term, PriceLine shall provide the Employee with
health, welfare and insurance benefits to the extent and on the same terms as it
provides such benefits to its executive officers.
(ii) The Employee also shall be entitled to participate in and
receive any fringe benefits or perquisites which may become available to
PriceLine's executive officers.
(iii) The Employee shall be reimbursed for all reasonable
direct, out-of-pocket business expenses incurred by him in connection with his
employment (including, without limitation, expenses for travel and entertainment
incurred in conducting or promoting business for PriceLine and home office and
secretarial expenses) upon timely submission by the Employee of receipts and
other documentation as required by the Code and in accordance with the normal
expense reimbursement policies of PriceLine. In addition, PriceLine will reim-
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burse the Employee for a pro rata portion of his expenses relating to his
personal car and driver as determined in good faith by the Employee.
4. Termination.
(a) Death. The employment by PriceLine of the Employee pursuant to
this Agreement shall be terminated upon the death of the Employee. In the event
that this Agreement is terminated pursuant to this Section 4(a), (i) the
Employee's spouse or heirs shall be entitled to (A) the Base Salary and benefits
to be paid or provided to the Employee under this Agreement through the Date of
Termination (as defined herein) and, in the event PriceLine introduces a cash
bonus program, a pro rata bonus under such plan; and (B) the Base Salary and
benefits to be paid or provided to the Employee under this Agreement for the
period commencing on the day after the Date of Termination and ending on the
later of (x) the six (6) month anniversary of the Date of Termination or (y) the
first anniversary of the date of this Agreement; and (ii) the Employee's
executor, administrator or other person entitled by law to his rights under the
Option shall be entitled to exercise the Option in accordance with the schedule
and terms set forth in Section 3 hereof (with the performance criteria for
vesting set forth in Section 3(c)(iv) to be met, if at all, prior to the third
anniversary of the date of this Agreement) and Options shall be exercisable at
any time prior to the later of (A) one year after the Date of Termination and
(B) ninety days after the third anniversary of the date of this Agreement,
provided that such Options are vested at the time of such exercise. In the event
that this Agreement is terminated pursuant to this Section 4(a), and to the
extent the Option is either not vested pursuant to Section 3(c)(iv) hereof or
exercisable pursuant to this Section 4(a), the Option shall cease and be of no
further force or effect.
(b) Disability. The employment by PriceLine of the Employee pursuant
to this Agreement may be terminated by written notice to the Employee at the
option of PriceLine, in the event that the Employee has been unable to per form
his duties and responsibilities by reason of physical or mental illness or acci
dent for any six (6) consecutive month period. In the event that this Agreement
is terminated by PriceLine pursuant to this Section 4(b), the Employee shall be
entitled to (i) the Base Salary and benefits to be paid or provided to the
Employee under this Agreement through the Date of Termination and, in the event
PriceLine introduces a cash bonus program, a pro rata bonus under such plan;
(ii) the Base Salary and benefits to be paid or provided to the Employee under
this Agreement for the period commencing on the day after the Date of
Termination and ending on the later of (A) the six (6) month anniversary of the
Date of
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Termination or (B) the first anniversary date of this Agreement; and (iii)
exercise the Option in accordance with the schedule and terms set forth in
Section 3 hereof (with the performance criteria for vesting set forth in Section
3(c)(iv) to be met, if at all, prior to the third anniversary of the date of
this Agreement) and Options shall be exercisable at any time prior to the later
of (A) one year after the Date of Termination and (B) ninety days after the
third anniversary of the date of this Agreement, provided that such Options are
vested at the time of such exercise. In the event that this Agreement is
terminated pursuant to this Section 4(b), and to the extent the Option is either
not vested pursuant to Section 3(c)(iv) hereof or exercisable pursuant to this
Section 4(b), the Option shall cease and be of no further force or effect.
(c) By PriceLine for Cause. This Agreement may be terminat ed by
PriceLine for "Cause," which, for the purpose of this Agreement shall mean: (i)
the commission by the Employee of fraud or dishonesty, or other act of
intentional wrongdoing causing harm to PriceLine; (ii) the conviction of the
Employee of a felony; (iii) any act of gross negligence or malfeasance by the
Employee causing material harm to PriceLine; or (iv) any material breach by the
Employee of this Agreement, including, without limitation, a breach of Section 1
or 6 hereof or the Confidentiality Agreement (as defined herein). In order to
terminate this Agreement for Cause, PriceLine shall provide written notice to
the Employee ("Notice of Termination") which shall specify the allegations that
PriceLine believes to constitute Cause, and the Employee shall have thirty (30)
days from receipt of such Notice of Termination to cure such Cause, if curable,
provided that 4(c)(i) and 4(c)(i)(ii) above shall be deemed to be incurable. In
the event the employment by PriceLine of the Employee is terminated pursuant to
this Section 4(c), the Employee shall be entitled to the Base Salary and
benefits to be paid or provided to the Employee under this Agreement through the
Date of Termination; and the Option, whether or not then vested, may not be
exercised at any time on or after the Date of Termination, and the Option shall
cease and be of no further force or effect.
(d) By PriceLine Without Cause. The employment by PriceLine of the
Employee pursuant to this Agreement may be terminated by PriceLine at any time
without Cause by delivery of a Notice of Termination to the Employee. In the
event that the employment by PriceLine of the Employee pursuant to this
Agreement is terminated by PriceLine pursuant to this Section 4(d), the Employee
shall be entitled to (i) the Base Salary and benefits to be paid or provided to
the Employee under this Agreement through the Date of Termina tion and, in the
event PriceLine introduces a cash bonus program, a pro rata
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bonus under such plan; (ii) the Base Salary and benefits to be paid to the Em
ployee under this Agreement for the period commencing on the day after the Date
of Termination and ending on the later of (x) the first anniversary of the Date
of Termination or (y) the end of the Term of this Agreement, payable in monthly
installments; and (iii) exercise the Option in accordance with the schedule and
terms set forth in Section 3 (with the performance criteria for vesting set
forth in Section 3(c)(iv) to be met, if at all, prior to the third anniversary
of the date of this Agreement) and Options shall be exercisable at any time
prior to ninety days after the third anniversary of the date of this Agreement,
provided that such Options are vested at the time of such exercise. In the event
that this Agreement is terminated pursuant to this Section 4(d), and to the
extent the Option is either not vested pursuant to Section 3(c)(iv) hereof or
exercisable pursuant to this Section 4(d), the Option shall cease and be of no
further force or effect.
(e) By the Employee. The employment of the Employee by PriceLine
pursuant to this Agreement may be terminated by the Employee at any time by
delivery of a written notice of resignation to PriceLine ("Notice of
Resignation"). In the event the employment by PriceLine of the Employee pursu
ant to this Agreement is terminated by the Employee pursuant to this Section
4(e), the Employee shall be entitled to (i) the Base Salary and benefits to be
paid or pro vided to the Employee under this Agreement through the Date of
Termination; and (ii) exercise the Option, as to the number and type of
securities for which the Option then would be exercisable, at any time prior to
ninety (90) days after the Date of Termination. In the event that this Agreement
is terminated pursuant to this Section 4(e), and to the extent the Option is
either not vested pursuant to Section 3(c)(iv) hereof or exercisable pursuant to
this Section 4(e), the Option shall cease and be of no further force or effect.
(f) Date of Termination. The Employee's Date of Termination shall be
(i) if the Employee's employment by PriceLine is terminated pursuant to Section
4(a) hereof, the date of his death, (ii) if the Employee's employment by
PriceLine is terminated pursuant to Section 4(b) hereof, the last day the
Employee worked, (iii) if the Employee's employment by PriceLine is terminated
pursuant to Section 4(c) or 4(d) hereof, the date on which a Notice of
Termination is given and (iv) if the Employee's employment by PriceLine is
terminated pursuant to Section 4(e) hereof, the date on which a Notice of
Resignation is given.
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5. Representations.
(a) PriceLine represents and warrants that (i) this Agreement has
been authorized by all necessary corporate action of PriceLine and is a valid
and binding agreement of PriceLine enforceable against it in accordance with its
terms and (ii) all PriceLine Founders Shares and PriceLine Shares which may be
issued pursuant to this Agreement shall be, when issued in accordance with the
terms of this Agreement, duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive rights in respect thereto.
(b) The Employee represents and warrants that he is not a party to
any agreement or instrument which would prevent him from entering into or
performing his duties in any way under this Agreement and that this Agreement is
a valid and binding agreement of the Employee enforceable against him in accor
dance with its terms.
6. Confidentiality; Non-Competition. As a condition to PriceLine's
willingness to enter into this Agreement and in partial consideration of the
grant of the PriceLine Founders Shares and the Option, the Employee agrees to
the covenants and restrictions set forth in this Section 6.
(a) The Employee agrees that, during the Term and for a period of
two (2) years thereafter, he shall not, directly or indirectly, induce or
solicit (or authorize or assist in the taking of any such actions by any third
party) any em ployee or consultant of PriceLine or any of its affiliates to
leave his or her business association with such entity.
(b) The Employee acknowledges and agrees that, during the course of
the provision of the Employee's services to PriceLine, the Employee may be
exposed to confidential, proprietary or sensitive data and information con
cerning the business and affairs of PriceLine, and that all such data and
informa tion constitutes a protectable business interest of PriceLine. In
furtherance of such business interest, the Employee is contemporaneously
herewith executing and delivering to PriceLine the standard consultant
confidentiality agreement for PriceLine (the "Confidentiality Agreement").
(c) The Employee agrees that he will not at any time during the Term
and, (i) for a period of one (1) year following the Date of Termination, di
rectly or indirectly, own any interest in, operate, join, control or participate
as a director, stockholder, owner, partner, principal, officer or agent of,
enter into the
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employment of, act as a consultant to, or perform any services for, any entity
that is engaged anywhere in the United States of America in a business
substantially similar to PriceLine whereby customers are directed to make an
offer to purchase goods and services and such demand is provided to potential
sellers. Notwith standing anything herein to the contrary, this Section 6 shall
not prevent the Employee from acquiring securities representing not more than
one percent (1%) of the outstanding voting securities of any publicly held
corporation. It is the desire and intent of the parties that the provisions of
this Section 6(c) shall be enforced to the fullest extent permitted under
applicable law. If all or part of this Section 6(c) is held invalid, illegal or
incapable of being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect.
If any part of this Section 6(c) is ultimately determined to be excessively
broad as to duration, scope, activity or subject, such part will be construed by
limiting and reducing it so as to be enforceable to the maximum extent
compatible with applicable law.
(d) The Employee acknowledges and agrees that each of the covenants
set forth in this Section 6 and in the Confidentiality Agreement are reasonable
and necessary for the protection of PriceLine's business interests, that
irreparable injury will result to PriceLine if the Employee breaches any of the
terms of said covenants, and that in the event of the Employee's actual or
threat ened breach of any such covenants, PriceLine will have no adequate remedy
at law. The Employee accordingly agrees that in the event of any actual or
threat ened breach by the Employee of any of said covenants, PriceLine shall be
entitled to immediate injunctive and other equitable relief without bond and
without the necessity of showing actual monetary damages. Notwithstanding the
provisions of Section 13 hereof, such equitable relief may be sought in any
court of competent jurisdiction. Nothing contained herein shall be construed as
prohibiting PriceLine from pursuing any other remedies available to it for such
breach or threatened breach, including the recovery of any damages which it is
able to prove.
(e) The provisions of this Section 6 shall survive the expiration or
termination of this Agreement, and any of the arrangements contained herein, and
shall be binding upon the Employee's corporate or personal successors and as
signs.
7. Successors; Binding Agreement. This Agreement is a personal
contract and the rights and interests of the Employee hereunder may not be sold,
transferred, assigned, pledged, encumbered or hypothecated by him, except as
otherwise expressly permitted by the provisions of this Agreement. This
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Agreement shall inure to the benefit of the parties hereto and their respective
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
8. Entire Agreement. This Agreement, the Option Agreement and the
Confidentiality Agreement contain all of the understandings between the parties
hereto pertaining to the matters referred to herein, and supersedes any other
undertakings and agreements, whether oral or in writing, previously entered into
by them with respect thereto. The Employee represents that, in executing this
Agreement, he does not rely and has not relied upon any representation or state
ment not set forth herein made by PriceLine with regard to the subject matter or
effect of this Agreement or otherwise.
9. Amendment, Modification and Waiver. No provision of this
Agreement may be amended, modified or waived unless such amendment, modifi
cation or waiver is agreed to in writing, signed by the Employee and a duly
autho rized officer of PriceLine. No waiver by any party hereto of any breach by
another party hereto of any condition or provision of this Agreement to be per
formed by such other party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same time, any prior time or any subsequent time.
10. Notices. Any notices, requests, demands, waivers or other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed given when delivered personally, sent by courier or
facsimile or registered or certified mail, postage prepaid, return receipt
requested, by reputable overnight courier (receipt of which is confirmed)
addressed to the party concerned at the address indicated below or to such other
address as such party may subsequently give notice hereunder in writing:
To the Employee at:
Mr. Richard Braddock
10 Gracie Square
New York, New York 10028
Telecopier: (212) 879-4010
To PriceLine at:
priceline.com Incorporated
Five High Ridge Park
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Stamford, Connecticut 06905-1325
Telecopier: (203) 614-3234
Attention: Mr. Jay Walker
All such notices, requests, demands, waivers and communications shall be deemed
to have been given on the date on which so hand-delivered, on the third business
day following the date on which so mailed, on the next business day following
the date on which delivered to such overnight courier and on the date of such
facsimile transmission and confirmation, except for a notice of change of person
or address, which shall be effective only upon receipt thereof.
11. Severability. If for any reason any provision of this Agree ment
shall be held invalid, such invalidity shall not affect any other provision of
this Agreement not so held invalid, and all other such provisions shall to the
full extent consistent with law continue in full force and effect. If any such
provision shall be held invalid in part, such invalidity shall in no way affect
the rest of such provision which, together with all other provisions of this
Agreement, shall likewise to the full extent consistent with law continue in
full force and effect.
12. Survivorship. The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
13. Governing Law; Jurisdiction; Arbitration.
(a) This Agreement will be governed by and construed in accordance
with the laws of the State of Connecticut, without regard to its conflicts of
laws principles.
(b) The parties hereto hereby irrevocably:
(i) agree that any suit, action or other legal proceeding
arising out of this Agreement, or any of the transactions contemplated hereby,
may be brought in the courts of record of the State of Connecticut or the courts
of the United States located in the State of Connecticut;
(ii) consent to the jurisdiction of each such court in any
such suit, action or proceeding;
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(iii) waive any objection to the laying of venue of any such
suit, action or proceeding in any of such courts; and
(iv) agree that Connecticut is the most convenient forum for
litigation of any such suit, action or proceeding.
(c) If any dispute arising under this Agreement is not settled
promptly in the ordinary course of business, the parties shall seek to resolve
any such dispute between them, first, by negotiating promptly with each other in
good faith. If the parties are unable to resolve the dispute between them within
twenty (20) business days (or such period as the parties shall otherwise agree)
through these negotiations, then any such disputes shall be settled by binding
arbitration in accordance with this Agreement and the following procedures:
(i) Any arbitration shall be conducted in accordance with the
Commercial Rules of the American Arbitration Association (the "AAA") then in
effect.
(ii) Either party shall serve upon the other parties a written
demand that the dispute be arbitrated, specifying in reasonable detail the
nature of the dispute to be submitted to arbitration.
(iii) Within thirty (30) days after service of a demand for
arbitration, the parties shall attempt to agree upon a single arbitrator.
(iv) In the event the parties cannot agree upon a single
arbitrator, any party may request the AAA to appoint an arbitrator in accordance
with its rules; except that if the parties fail to agree upon an arbitrator from
the persons named by the AAA or if for any reason the appointment cannot be made
from the lists submitted by the AAA, then the Employee and PriceLine shall each
appoint an arbitrator within seven (7) days thereafter and the third arbitrator
shall be appointed by the AAA.
(v) The arbitration proceeding shall be held in Stamford,
Connecticut.
(vi) The arbitrators shall have no power or authority to add
to or detract from the agreements of the parties.
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(vii) The expenses of arbitration shall be borne equally by
the Employee and PriceLine unless the arbitrators determine that one of the
parties has not proceeded in good faith with respect to the matters submitted
for arbi tration, in which case, such party shall bear fully the expenses of
arbitration.
(viii) Judgment may be entered on any arbitration award in any
court of competent jurisdiction.
14. Headings. All descriptive headings of sections and para graphs
in this Agreement are intended solely for convenience, and no provision of this
Agreement is to be construed by reference to the heading of any section or
paragraph.
15. Specific Performance. Each party hereto acknowledges that money
damages would be both incalculable and an insufficient remedy for any breach of
this Agreement by such party and that any such breach would cause the other
parties irreparable harm. Accordingly, each party hereto also agrees that, in
the event of any breach or threatened breach of the provisions of this Agreement
by such party, the other parties shall be entitled to equitable relief without
the requirement of posting a bond or other security, including in the form of
injunc tions and orders for specific performance, in addition to all other
remedies available to such other parties at law or in equity.
16. Counterparts. This Agreement may be executed in counter parts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
EMPLOYEE
/s/ Richard Braddock
-------------------------------
Richard Braddock
priceline.com Incorporated
By: /s/ Paul E. Francis
---------------------------
Name: Paul E. Francis
Title: Chief Financial Officer
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