REVISED July 26, 2007 Jim Shaughnessy 500 W.Madison Chicago, IL Dear Jim: As a member of the Orbitz Worldwide, Inc. (“Orbitz”) Senior Leadership Team and a key part of the successful initial public offering of Orbitz (collectively, with its...
Exhibit 10.32
Letter Agreement
Action Required
Action Required
REVISED
July 26, 2007
Xxx Xxxxxxxxxxx
000 X.Xxxxxxx
Xxxxxxx, XX
000 X.Xxxxxxx
Xxxxxxx, XX
Dear Xxx:
As a member of the Orbitz Worldwide, Inc. (“Orbitz”) Senior Leadership Team and a key part of the
successful initial public offering of Orbitz (collectively, with its subsidiaries, “the Company”),
I am pleased to provide you with this letter agreement (“agreement”) that that outlines certain
terms and conditions of your employment with the Company.
In order to be eligible to receive benefits provided to you herein, you must sign and return an
original of this agreement to my attention by no later than August 16, 2007. Please note that
this letter does not take effect until executed by both parties.
This agreement supersedes the offer letter dated May 23rd, 2007 and any and all prior
agreements, written or oral, between you and the Company relating to the subject matter herein, all
of which are null and void upon your execution of this agreement. This agreement contains the
entire agreement between you and the Company concerning the subjects contained in this agreement,
with the exception of any documents concerning equity, confidentiality, non-competition,
non-solicitation and other post-employment restrictive covenants. By signing below, you agree to
comply with the attached addendum to this agreement concerning non-competition, non-solicitation,
confidentiality and other obligations, including those following your employment with the Company.
Your annual salary will be $375,000.00, with a bi-weekly pay rate of $14,423.07. You are eligible
to participate in the Orbitz Global Bonus Plan (“the Plan”) provided that you meet our performance
measures or such other criteria as the Company determines in its sole discretion and subject to the
terms of the Plan. The Plan currently provides for a target payment of 75% of your eligible
earnings (“target bonus”) based on achievement of company financial objectives, business unit
performance and individual performance. Bonus payment is subject to the approval of the Orbitz
Board of Directors and/or Compensation Committee.
As set forth in your May 23, 2007 offer letter, you are also eligible for the Company’s Relocation
Policy, Plan A (“Plan A”), subject to its terms and conditions. With the understanding that you do
not plan to relocate to Chicago in the first six months, Orbitz Worldwide will provide you with a
monthly lump sum payment of $5,700, less applicable taxes, and use of barter card for your air
travel to and from your home in Connecticut, and if barter airfare is not available we will
increase that to $7,300 each month (less
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applicable taxes) to cover the cost of an apartment in Chicago and the approximate cost of travel
home to Connecticut for weekends. After this six month period, we will revisit this issue and
either renew this temporary living arrangement for six more months or begin the relocation process
under Plan A.
In the event both that (1) your employment is terminated by the Company (other than for Cause, as
defined below) at any time following the effective date of this letter or you resign due to a
Constructive Termination (as defined below) within one (1) year following a Change in Control (as
defined below) and (2) you execute (and do not revoke) a separation and general release agreement
(waiving all legal claims against the Company) and, to the extent permissible under applicable law,
a restrictive covenant agreement under which you will agree not to compete against the Company,
and not to solicit the Company’s employees and customers, in each case for a period of twelve (12)
months following your termination of employment, each in such standard form as provided by the
Company, you will be eligible to receive the following benefits (in lieu of any severance or
separation benefits under any and all other severance plans, policies and agreements of the
Company):
| • | a lump sum severance payment equal to one year of your then current annual rate of base salary; | ||
| • | a lump sum severance payment equal to your then current annual target bonus; | ||
| • | a lump sum severance payment equal to your target bonus for the year in which your employment terminates, pro-rated based upon the number of days you were employed with the Company during the year of termination and for which you have not otherwise received or been eligible for a bonus, and in lieu of any other bonus for the year of termination, except as set forth in this agreement; | ||
| • | continuation of your health plan coverage through the end of the month in which your last date of employment occurs. Thereafter, you will be eligible to continue health plan coverage pursuant to the terms of the Consolidated Omnibus Budget Reconciliation Act (“COBRA”). If you elect to continue health plan coverage pursuant to COBRA, the Company will subsidize your COBRA payments for the first twelve (12) months so that you will pay the same monthly premiums as active employees for the same coverage; provided, however, that if you are eligible for another group health plan coverage prior to the end of this period, the Company shall not be responsible for any further payments; provided, further, however, that the Company may, in its sole discretion, provide you with a lump sum payment in lieu of providing a COBRA subsidy. Thereafter, you will be responsible for the full payment of any COBRA premiums through the remainder of your eligibility; and | ||
| • | outplacement benefits pursuant to Company policy. |
All amounts discussed herein are subject to applicable withholding taxes. If the Company
determines at the time of the your termination of employment that it is necessary or appropriate
for any of the payments specified above to be delayed in order to avoid additional tax, interest
and/or penalties under Section 409A of the Internal
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Revenue Code (“Section 409A”), then the payments, as applicable, shall be made on the earliest
practicable date or dates permitted under Section 409A without the imposition of any additional
tax, interest and/or penalties.
Per Company policy, this letter is not intended as, nor should it be considered, an employment
contract for a definite or indefinite period of time. As you know, employment with the Company is
at will, and either you or the Company may terminate employment at any time, with or without cause.
Your signature below will indicate your understanding and acceptance of these terms.
Sincerely,
/s/ Xxxxxxxxx Xxxxxxxxx
Understood and Agreed:
/s/ Xxxxx X. Xxxxxxxxxxx
|
14-August-2007 | |||||
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ADDENDUM TO LETTER AGREEMENT:
1. Definitions
(a) For purposes of the agreement, “Cause” shall mean (A) your failure substantially to
perform your duties to the Company (other than as a result of total or partial incapacity due to
disability) for a period of 10 days following receipt of written notice from any Company by you of
such failure; provided that it is understood that this clause (A) shall not apply if a Company
terminates your employment because of dissatisfaction with actions taken by you in the good faith
performance of your duties to the Company; (B) theft or embezzlement of property of the Company or
dishonesty in the performance of your duties to the Company; (C) an act or acts on your part
constituting (x) a felony under the laws of the United States or any state thereof or (y) a crime
involving moral turpitude; (D) your willful malfeasance or willful misconduct in connection with
your duties or any act or omission that is materially injurious to the financial condition or
business reputation of the Company or its affiliates; or (E) your breach of the provisions of any
agreed-upon non-compete, non-solicitation or confidentiality agreements agreed to with the Company.
(b) For purposes of this agreement, “Change in Control” shall be as defined in the Orbitz
Worldwide, Inc. 2007 Equity and Incentive Plan.
(c) For purposes of the agreement, “Constructive Termination” shall be deemed to have occurred
upon (A) any material reduction in your base salary or target bonus (excluding any change in value
of equity incentives or a reduction affecting substantially all similarly situated executives); (B)
the failure of the Company to pay compensation or benefits when due; (C) the primary business
office for you being relocated by more than 50 miles; or (D) a material and sustained diminution to
your duties and responsibilities as of the date of the IPO; provided that any of the events
described in clauses (A)-(D) of this definition shall constitute a Constructive Termination only if
the Company fails to cure such event within 30 days after receipt by the Company’s Board of
Directors from you of written notice of the event which constitutes a Constructive Termination;
provided, further, that a “Constructive Termination” shall cease to exist for an
event on the 60th day following the later of its occurrence or your knowledge of such
occurrence, unless you have given the Company written notice of such occurrence prior to the
60th day.
2. Restrictive Covenants
(a) Non-Competition
(i) From the date hereof while employed by the Company and for a twelve (12) month period
following the date you cease to be employed by the Company (the “Restricted Period”), irrespective
of the cause, manner or time of any termination, you shall not use your status with any Company to
obtain loans, goods or services from another organization on terms that would not be available to
you in the absence of your relationship to the Company.
(ii) During the Restricted Period, you shall not make any statements or perform any acts
intended to or which may have the effect of advancing the interest of
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any Competitors of the Company or in any way injuring the interests of the Company and the
Company shall not make or authorize any person to make any statement that would in any way injure
the personal or business reputation or interests of you; provided however, that, nothing herein
shall preclude the Company or you from giving truthful testimony under oath in response to a
subpoena or other lawful process or truthful answers in response to questions from a government
investigation; provided, further, however, that nothing herein shall prohibit the Company from
disclosing the fact of any termination of your employment or the circumstances for such a
termination. For purposes of this agreement, the term “Competitor” means any enterprise or
business that is engaged in, or has plans to engage in, at any time during the Restricted Period,
any activity that competes with the businesses conducted during or at the termination of your
employment, or then proposed to be conducted, by the Company in a manner that is or would be
material in relation to the businesses of the Company or the prospects for the businesses of the
Company (in each case, within 100 miles of any geographical area where the Company manufactures,
produces, sells, leases, rents, licenses or otherwise provides its products or services). During
the Restricted Period, you, without prior express written approval by the Orbitz Board of
Directors, shall not (A) engage in, or directly or indirectly (whether for compensation or
otherwise) manage, operate, or control, or join or participate in the management, operation or
control of a Competitor, in any capacity (whether as an employee, officer, director, partner,
consultant, agent, advisor, or otherwise) or (B) develop, expand or promote, or assist in the
development, expansion or promotion of, any division of an enterprise or the business intended to
become a Competitor at any time after the end of the Restricted Period or (C) own or hold a
Proprietary Interest in, or directly furnish any capital to, any Competitor of the Company. You
acknowledge that the Company’s businesses are conducted nationally and internationally and agree
that the provisions in the foregoing sentence shall operate throughout the United States and the
world (subject to the definition of “Competitor”).
(iii) During the Restricted Period, you, without express prior written approval from the
Orbitz Board of Directors, shall not solicit any members or the then current clients of the Company
for any existing business of the Company or discuss with any employee of the Company information or
operations of any business intended to compete with the Company.
(iv) During the Restricted Period, you shall not interfere with the employees or affairs of
the Company or solicit or induce any person who is an employee of the Company to terminate any
relationship such person may have with the Company, nor shall you during such period directly or
indirectly engage, employ or compensate, or cause or permit any Person with which you may be
affiliated, to engage, employ or compensate, any employee of the Company.
(v) For the purposes of this Agreement, “Proprietary Interest” means any legal, equitable or
other ownership, whether through stock holding or otherwise, of an interest in a business, firm or
entity; provided, that ownership of less than 5% of any class of equity interest in a publicly held
company shall not be deemed a Proprietary Interest.
(vi) The period of time during which the provisions of this section shall be in effect shall
be extended by the length of time during which you are in breach of the terms hereof as determined
by any court of competent jurisdiction on the Company’s application for injunctive relief.
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(vii) You agree that the restrictions contained in this section are an essential element of
the compensation you are granted hereunder and but for your agreement to comply with such
restrictions, the Company would not have entered into this agreement.
(viii) It is expressly understood and agreed that although you and the Company consider the
restrictions contained in this section to be reasonable, if a final judicial determination is made
by a court of competent jurisdiction that the time or territory or any other restriction contained
in this agreement is an unenforceable restriction against you, the provisions of this agreement
shall not be rendered void but shall be deemed amended to apply as to such maximum time and
territory and to such maximum extent as such court may judicially determine or indicate to be
enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction
contained in this agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the other restrictions
contained herein.
(b) Confidentiality
(i) You will not at any time (whether during or after your employment with the Company) (x)
retain or use for the benefit, purposes or account of you or any other Person; or (y) disclose,
divulge, reveal, communicate, share, transfer or provide access to any Person outside the Company
(other than its professional advisers who are bound by confidentiality obligations), any
non-public, proprietary or confidential information (including without limitation trade secrets,
know-how, research and development, software, databases, inventions, processes, formulae,
technology, designs and other intellectual property, information concerning finances, investments,
profits, pricing, costs, products, services, vendors, customers, clients, partners, investors,
personnel, compensation, recruiting, training, advertising, sales, marketing, promotions,
government and regulatory activities and approvals) concerning the past, current or future
business, activities and operations of the Company and/or any third party that has disclosed or
provided any of same to the Company on a confidential basis (“Confidential Information”) without
the prior written authorization of the Orbitz Board of Directors.
(ii) “Confidential Information” shall not include any information that is (i) generally known
to the industry or the public other than as a result of your breach of this covenant or any breach
of other confidentiality obligations by third parties; (ii) made legitimately available to you by a
third party without breach of any confidentiality obligation; or (iii) required by law to be
disclosed; provided that you shall give prompt written notice to the Company of such
requirement, disclose no more information than is so required, and cooperate, at the Company’s
cost, with any attempts by the Company to obtain a protective order or similar treatment.
(iii) Except as required by law, you will not disclose to anyone, other than your immediate
family and legal or financial advisors, the existence or contents of this agreement (unless this
agreement shall be publicly available as a result of a regulatory filing made by the Company);
provided that you may disclose to any prospective future employer the provisions of this
section of the agreement provided they agree to maintain the confidentiality of such terms.
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(iv) Upon termination of your employment with the Company for any reason, you shall (x) cease
and not thereafter commence use of any Confidential Information or intellectual property (including
without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo,
domain name or other source indicator) owned or used by the Company; (y) immediately destroy,
delete, or return to the Company, at the Company’s option, all originals and copies in any form or
medium (including memoranda, books, papers, plans, computer files, letters and other data) in your
possession or control (including any of the foregoing stored or located in your office, home,
laptop or other computer, whether or not Company property) that contain Confidential Information or
otherwise relate to the business of the Company, except that you may retain only those portions of
any personal notes, notebooks and diaries that do not contain any Confidential Information; and (z)
notify and fully cooperate with the Company regarding the delivery or destruction of any other
Confidential Information of which you are or becomes aware.
(c) Intellectual Property
(i) If you have created, invented, designed, developed, contributed to or improved any works
of authorship, inventions, intellectual property, materials, documents or other work product
(including without limitation, research, reports, software, databases, systems, applications,
presentations, textual works, content, or audiovisual materials) (“Works”), either alone or with
third parties, prior to your employment by the Company, that are relevant to or implicated by such
employment (“Prior Works”), you hereby grant the Company a perpetual, non-exclusive, royalty-free,
worldwide, assignable, sublicensable license under all rights and intellectual property rights
(including rights under patent, industrial property, copyright, trademark, trade secret, unfair
competition and related laws) therein for all purposes in connection with the Company’s current and
future business.
(ii) If you create, invent, design, develop, contribute to or improve any Works, either alone
or with third parties, at any time during your employment by the Company and within the scope of
such employment and/or with the use of any the Company resources (“Company Works”), you shall
promptly and fully disclose same to the Company and hereby irrevocably assign, transfer and convey,
to the maximum extent permitted by applicable law, all rights and intellectual property rights
therein (including rights under patent, industrial property, copyright, trademark, trade secret,
unfair competition and related laws) to the Company to the extent ownership of any such rights does
not vest originally in the Company.
(iii) You agree to keep and maintain adequate and current written records (in the form of
notes, sketches, drawings, and any other form or media requested by the Company) of all Company
Works. The records will be available to and remain the sole property and intellectual property of
the Company at all times.
(iv) You shall take all requested actions and execute all requested documents (including any
licenses or assignments required by a government contract) at the Company’s expense (but without
further remuneration) to assist the Company in validating, maintaining, protecting, enforcing,
perfecting, recording, patenting or registering any of the Company’s rights in the Prior Works and
Company Works. If the Company is unable for any other reason to secure your signature on any
document for this purpose, then you hereby irrevocably designate and appoint the Company and its
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duly authorized officers and agents as your agent and attorney in fact, to act for and in your
behalf and stead to execute any documents and to do all other lawfully permitted acts in connection
with the foregoing.
(v) You shall not improperly use for the benefit of, bring to any premises of, divulge,
disclose, communicate, reveal, transfer or provide access to, or share with the Company any
confidential, proprietary or non-public information or intellectual property relating to a former
employer or other third party without the prior written permission of such third party. You hereby
indemnify, hold harmless and agree to defend the Company and its officers, directors, partners,
employees, agents and representatives from any breach of the foregoing covenant. You shall comply
with all relevant policies and guidelines of the Company, including regarding the protection of
confidential information and intellectual property and potential conflicts of interest. You
acknowledge that the Company may amend any such policies and guidelines from time to time, and that
you remain at all times bound by their most current version.
(d) Specific Performance
You acknowledge and agree that the Company’s remedies at law for a breach or threatened breach
of any of the provisions of this section would be inadequate and the Company would suffer
irreparable damages as a result of such breach or threatened breach. In recognition of this fact,
you agree that, in the event of such a breach or threatened breach, in addition to any remedies at
law, the Company, without posting any bond, shall be entitled to cease making any payments or
providing any benefit otherwise required by this agreement and obtain equitable relief in the form
of specific performance, temporary restraining order, temporary or permanent injunction or any
other equitable remedy which may then be available. Without limiting the generality of the
foregoing, neither party shall oppose any motion the other party may make for any expedited
discovery or hearing in connection with any alleged breach of this section 2.
(e) Cooperation with Litigation
You agree to cooperate with and make yourself readily available to Orbitz and its Board of
Directors (or its designee), as the Company may reasonably request, to assist it in any matter
regarding Orbitz and/or its affiliates, subsidiaries, and their predecessors, including giving
truthful testimony in any litigation or potential litigation involving Orbitz and/or its
affiliates, subsidiaries, and their predecessors, over which you have knowledge or information.
The Company will reimburse you for any and all reasonable expenses reasonably incurred in
connection with such cooperation by you.
(f) Survival
The provisions of this section 2 shall survive the termination of your employment for any
reason.
3. Miscellaneous
(a) Governing Law This agreement shall be governed by and construed in accordance
with the laws of the State of Illinois, without regard to conflicts of laws principles thereof.
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(b) Amendments This agreement may not be altered, modified, or amended except by
written instrument signed by the parties hereto.
(c) No Waiver The failure of a party to insist upon strict adherence to any term of
this agreement on any occasion shall not be considered a waiver of such party’s rights or deprive
such party of the right thereafter to insist upon strict adherence to that term or any other term
of this agreement.
(d) Severability In the event that any one or more of the provisions of this
agreement shall be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this agreement shall not be affected
thereby.
(e) Assignment This agreement, and all of your rights and duties hereunder, shall not
be assignable or delegable by you. Any purported assignment or delegation by you in violation of
the foregoing shall be null and void ab initio and of no force and effect. This agreement may be
assigned by the Company to a person or entity which is an affiliate or a successor in interest to
substantially all of the business operations of the Company. Upon such assignment, the rights and
obligations of the Company hereunder shall become the rights and obligations of such affiliate or
successor person or entity.
(f) Set Off; No Mitigation The Company’s obligation to pay you the amounts provided
and to make the arrangements provided hereunder shall be subject to set-off, counterclaim or
recoupment of amounts owed by you to the Company. You shall not be required to mitigate the amount
of any payment provided for pursuant to this agreement by seeking other employment, taking into
account the post-employment restrictive covenants set forth above.
(g) Restrictions on Practice of Law Nothing in this addendum, including without
limitation the post-employment restrictions contained in paragraph 2, shall apply to the extent
inconsistent with any applicable rule of professional conduct or ethics, whether based upon the
American Bar Association Model Rules of Professional Conduct or other rules, e.g. it shall not
prohibit you from serving as an attorney for or being employed by a Competitor of the Company to
the extent doing so is consistent with (1) the applicable rules of professional conduct or ethics
concerning such representation and (2) any obligations to the Company under applicable law.
