EXECUTIVE SEPARATION AND RELEASE OF CLAIMS AGREEMENT
EXHIBIT 10.1
This Executive Separation and Release of Claims Agreement (“Agreement”) is between ▇▇▇▇ ▇▇▇▇▇
(“Executive”) and Expedia, Inc. ( the “Company”). Because the parties to this Agreement wish to set
forth clearly the terms and conditions of Executive’s departure from his employment, they agree as
follows:
1. Termination. Effective as of September 15, 2007 (the “Termination Date”), Executive’s employment
as Executive Vice President, Chief Technology Officer is or will be terminated and Executive has or
will have resigned from all positions he occupied as an officer or director of the Company or any
subsidiary or affiliate of the Company.
2. Consideration. Unless Executive revokes as described below, the Company shall provide the
following consideration for this Agreement:
(a) Initial severance pay. The Company shall pay Executive initial severance pay equal to
eight (8) weeks of compensation at Executive’s base salary rate at the time of execution of this
Agreement, less all lawful or required deductions (“Initial Severance Pay”). Initial Severance Pay
shall be paid in a lump sum on the next regularly scheduled payroll day after the later of the
expiration of the Revocation Period described below (the “Effective Date”) or the Termination Date.
Executive agrees that the Initial Severance Pay is something of value and a benefit to which
Executive is not otherwise entitled. The lump sum payment described in this Section 2(a) shall be
treated as a separate payment from the additional severance payments described in Section 2(b) for
purposes of Section 409A of the Internal Revenue Code of 1986, as amended, including any
regulations and other guidance issued thereunder (“Section 409A”), and particularly including the
short-term deferral exception to Section 409A described in Treasury Regulation
Section 1.409A-1(b)(4).
(b) Severance pay subject to mitigation. To assist Executive in transitioning to new
employment, and as a benefit to which Executive agrees he is not otherwise entitled, the Company
shall pay Executive additional severance pay as described in this Section 2(b). On the Company’s
regular payroll dates, starting from the later of the Effective Date or the Termination Date for
twenty-two (22) bi-weekly pay periods (the “Payment Period"), the Company will pay Executive
ratably based on Executive’s annual base salary at the time of termination of $350,000, less all
lawful or required deductions (“Severance Pay”). This Severance Pay will be offset, as described
herein, by any compensation for services earned during the Payment Period. Beginning on the
Termination Date and continuing through the Payment Period, Executive agrees to use reasonable best
efforts to seek other employment and to take other reasonable actions to mitigate the amounts
payable under this Section 2(b). If Executive obtains other employment or earns compensation
during the Payment Period, such earnings shall be offset against the Severance Pay described in
this Section 2(b). Executive agrees to refund any Severance Pay already provided, to the extent
necessary to offset compensation earned during the Severance Period. This offset requirement does
not apply to Initial Severance Pay under Section 2(a). For purposes of this Section 2(b),
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Executive agrees to promptly inform the Company regarding his employment status (and any
changes thereto) and the amount of any compensation he earns during the Payment Period. Each of
the individual severance payments made pursuant to this Section 2(b) shall be treated as a separate
payment, rather than as a part of a single payment, for purposes of Section 409A, including the
short-term deferral exception to Section 409A described in Treasury Regulation
Section 1.409A-1(b)(4).
(c) COBRA. To the extent Executive is eligible for, and timely (and properly) elects, COBRA
continuation coverage under the Company’s group medical and dental plans, the Company shall
reimburse Executive (on a tax grossed-up basis to the extent such reimbursements are subject to
income and payroll taxes) for the premiums he pays for such coverage for whichever of the following
periods is shorter: (1) the period beginning on the Termination Date and ending twelve (12) months
thereafter; or (2) the period beginning on the Termination Date and ending on the date Executive
becomes eligible for coverage under another employer’s group medical or dental plan. Because the
Company’s obligation to pay Executive’s COBRA premiums is conditioned on Executive not being
eligible for coverage under another employer’s group medical or dental plan, Executive agrees to
notify the Company within ten days of becoming eligible for any such coverage. Executive also
agrees to refund to the Company any amounts paid by the Company under this Section 2(c) for COBRA
continuation coverage with respect to periods following the date on which Executive becomes
eligible for coverage under another employer’s group medical or dental plan.
3. Equity.
(a) During Executive’s employment at the Company, he has been granted various restricted stock
units pursuant to restricted stock unit agreements (collectively, the “Restricted Stock Unit
Agreements”) under the Expedia, Inc. (Delaware) 2005 Stock and Annual Incentive Plan and the USA
Interactive Amended and Restated 2000 Stock and Annual Incentive Plan.
(b) Executive is entitled to retain the common stock issued or to be issued pursuant to the
restricted stock units described in Section 3(a) that are vested as of the Termination Date under
the terms of the applicable Restricted Stock Unit Agreements. In addition, to the extent provided
in Exhibit A attached hereto, the restricted stock units described above which are not vested as of
the Termination Date under the terms of the applicable Restricted Stock Unit Agreements will
nevertheless become vested as of the later of the Effective Date or the Termination Date and will
be settled in accordance with the terms of the applicable Restricted Stock Unit Agreements as if
such vesting were provided thereby.
(c) As provided in the applicable Restricted Stock Unit Agreements, Executive hereby forfeits
the restricted stock units granted to him pursuant to the applicable Restricted Stock Unit
Agreements, in each case, that are unvested as of the Termination Date (determined after taking
into account Section 3(b). Executive agrees
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that, upon this forfeiture (and subject to Section 3(b) ), Executive has no rights to or
interests in any stock under the Restricted Stock Unit Agreements, or other rights to acquire
equity of the Company or any of its affiliates.
(d) Except as expressly provided otherwise in this Section 3, all terms of the Restricted
Stock Unit Agreements shall remain in full force and effect in accordance with the terms and
conditions therein and unchanged and are hereby confirmed in all respects.
4. Deductions. The Company shall have the right to deduct from any payments to which Executive may
be entitled under this Agreement any applicable taxes that the Company is required by law to
withhold. The Company shall also have the right to deduct any personal account balances (including
but not limited to travel advances) or other outstanding amounts due by Executive to the Company
from the payments to which Executive may be entitled under this Agreement; provided, however, that
the amount deducted for such balances or amounts from any such payment shall not exceed the amount
of such payment, less any applicable tax withholdings.
5. Termination of Benefits. Executive shall cease to be eligible for coverage and benefits under
the Company’s employee benefit plans, programs and polices as of the Termination Date, except to
the extent specifically provided otherwise in this Agreement or by the terms of such plans,
programs and policies; provided, however, that in no event shall Executive be eligible for a bonus
under any bonus plan, program or policy maintained by the Company, even if such bonus would
otherwise be based on periods ending on or before the Termination Date. Notwithstanding the
foregoing, nothing in this Agreement is intended to affect Executive’s right to his vested benefit,
if any, under the Company’s Section 401(k) plan.
6. Section 409A. This Agreement (and the payments hereunder) are intended to qualify for the
short-term deferral exception to Section 409A described in Treasury Regulation
Section 1.409A-1(b)(4) to the maximum extent possible, and to the extent they do not so qualify,
they are intended to qualify for the involuntary separation pay plan exception to Section 409A
described in Treasury Regulation Section 1.409A-1(b)(9)(iii) to the maximum extent possible. To
the extent Section 409A is applicable to this Agreement, this Agreement is intended to comply with
Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this
Agreement shall be interpreted, operated and administered by the Company in a manner consistent
with such intentions and to avoid the pre-distribution inclusion in income of amounts deferred
under this Agreement and the imposition of any additional tax or interest with respect thereto.
Without limiting the generality of the foregoing, to the extent required in order to comply with
Section 409A, amounts that would otherwise be payable under this Agreement during the six-month
period immediately following the Termination Date shall instead be paid on the first business day
after the date that is six months following the later of the Termination Date or Executive’s
“separation from service” within the meaning of Section 409A.
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7. Complete Release.
(a) Release of known and unknown claims. In return for the consideration given to Executive by
the Company as described in this Agreement, Executive independently releases all rights and claims
he has or claims to have, against the Company, known and unknown, on his own behalf and on behalf
of Executive’s heirs, executors, administrators, trustees, legal representatives and assigns
(collectively, the “Releasors”) under applicable local, state, federal and foreign law. This
release specifically includes, but is not limited to, all rights and claims in connection with
Executive’s employment, application for employment, or termination of employment by the Company and
any acts or omissions by the Company with respect to that employment, application or termination of
employment, including but not limited to, claims for wages, benefits, defamation, libel and slander
claims, discrimination of any kind, retaliation of any kind, constructive discharge, violation of
public policy, negligence, intentional or negligent infliction of emotional distress, any claims
under the Civil Rights Acts of 1964 and 1991, the Washington State Law Against Discrimination, the
Employment Retirement Income Security Act (“ERISA”), any claims under the federal Age
Discrimination in Employment Act (“ADEA”), any claims of worker’s compensation, and waives any
right or claim for reinstatement, and any other possible claims, whether arising under statute,
contract, or common law, and attorneys’ fees or costs with respect to or derivative of such
employment with the Company or the termination thereof or otherwise. This release covers all of
Executive’s rights against the Company as well as its affiliates, including without limitation,
Expedia, Inc. (Delaware), and its and their respective divisions, branches, predecessors,
successors, assigns, directors, officers, employees, agents, partners, members, stockholders,
representatives and attorneys, in their individual and representative capacities (collectively, the
“Releasees”).
(b) Older Workers Benefits Protection Act. A special federal law applies to the release of a
claim for age discrimination. For Executive to relinquish a claim for age discrimination, certain
requirements must be met. By signing this Agreement, Executive acknowledges and agrees that the
following requirements have been met:
| (i) | The Agreement is written in language which is readily understandable. | ||
| (ii) | Executive understands that he is relinquishing any claim for age discrimination which he might assert as of the date of the Agreement. | ||
| (iii) | Executive is informed that he should consult an attorney regarding the Agreement if that is his wish, and has been given an ample opportunity to do so. | ||
| (iv) | This Agreement will not be effective until seven (7) days after Executive signs it (“Revocation Period”); Executive may revoke it at any time during the Revocation Period. | ||
| (iv) | Executive has been allowed at least twenty-one (21) days to consider the |
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| Agreement before he signs and returns it to assure he has ample time to consider it, although he may do so in less time. |
(c) Notwithstanding anything to the contrary set forth in this Section 7 neither Executive nor
the Company release, waive or discharge the other from (i) any claims to seek to enforce this
Agreement or (ii) any claims for indemnification or contribution with respect to any liability (A)
incurred by Executive as a director or officer of the Company or (B) of the Company as a result of
any willful misconduct or material breach of fiduciary duties by Executive.
(d) Executive hereby represent that he has not filed or commenced any proceeding against the
Releasees, and hereby covenants and agrees not to file or commence any proceeding against the
Releasees with respect to his employment with the Company or the termination thereof, or otherwise,
arising on or prior to the date of execution of this Agreement. Executive also agrees that if he
breaches these representations or covenants, then he authorizes the Releasees to, and each shall
have the right to, cause any such proceeding to be dismissed on the grounds that Executive has
completely released and waived such proceeding. Nothing hereunder shall limit Executive from
filing a lawsuit for the sole purpose of enforcing his rights under this Agreement. If any
government agency independently brings any claim or conducts an investigation against the Company,
nothing in this Agreement prevents Executive from cooperating truthfully as a fact witness in such
proceedings, but by this Agreement, Executive waives and agrees to relinquish any damages or other
individual relief that may be awarded to Executive as a result of any such proceedings.
8. Covenant Not to Compete. A restricted period (“Restricted Period”) shall exist during your
continued employment hereunder and for a twenty-four (24) month period starting on the Termination
Date. During this Restricted Period, Executive shall not, directly or indirectly, engage in or
become associated with a Competitive Activity. For purposes of this Agreement: (i) a “Competitive
Activity” means, any business or other endeavor, in any jurisdiction, of a kind being conducted as
of the Termination Date by the Company or any of its subsidiaries or affiliates (or demonstrably
anticipated by the Company or its subsidiaries or affiliates), including, without limitation, those
that are engaged in the provision of any travel related services (including, without limitation,
corporate travel services) in any jurisdiction (such affiliates including, without limitation,
Expedia Corporate Travel, ▇▇▇▇▇▇.▇▇▇, Hotwire and Trip Advisor); and (ii) Executive shall be
considered to have become “associated with a Competitive Activity” if Executive become directly or
indirectly involved as an owner, principal, employee, officer, director, independent contractor,
representative, stockholder, financial backer, agent, partner, advisor, lender, or in any other
individual or representative capacity with any individual, partnership, corporation or other
organization that is engaged in a Competitive Activity. Notwithstanding the foregoing, Executive
may make and retain investments during the Restricted Period, for investment purposes only, in less
than five percent (5%) of the outstanding capital stock of any publicly-traded corporation engaged
in a Competitive Activity if stock of such corporation is either listed on a national stock
exchange or on the NASDAQ National Market System if Executive is not otherwise affiliated with such
corporation.
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9. Non-Solicitation for Employment or Services. Executive acknowledges that he possesses
confidential information about other employees, consultants, agents and contractors of the Company
and its subsidiaries or affiliates relating to their education, experience, skills, abilities,
compensation and benefits, and interpersonal relationships with suppliers to and customers of the
Company and its subsidiaries or affiliates. He recognizes that the information he possesses about
these other employees, consultants, agents and contractors is not generally known, is of
substantial value to the Company and its subsidiaries or affiliates in developing their respective
businesses and in securing and retaining customers, and was acquired by you because of your
business position with the Company. He agrees (i) that during the Restricted Period, he shall not,
without the prior written consent of the Company, directly or indirectly, hire, recruit or solicit
the employment or services of (whether as an employee, officer, director, agent, consultant or
independent contractor), or encourage to change such person’s relationship with the Company or any
of its subsidiaries or affiliates, any employee, officer, director, agent, consultant or
independent contractor of the Company or any of its subsidiaries or affiliates, provided,
however, that a general solicitation of the public for employment shall not constitute a
solicitation hereunder so long as such general solicitation is not designed to target, or does not
have the effect of targeting, any employee, officer, director, agent, consultant or independent
contractor of the Company or any of its subsidiaries or affiliates; and (ii) that Executive will
not convey any information (whether confidential or otherwise) or trade secrets about any
employees, officers, directors, agents, consultants and independent contractors of the Company or
any of its subsidiaries or affiliates to any other person.
10. Non-Solicitation of Trade Relationships. During the Restricted Period, Executive shall not,
without the prior written consent of the Company, directly or indirectly, solicit, attempt to do
business with, or do business with any customers of, suppliers (including providers of travel
inventory) to, business partners of or business affiliates of the Company or any of its
subsidiaries or affiliates (such customers, suppliers, partners and affiliates, collectively,
“Trade Relationships”) on behalf of any entity engaged in a Competitive Activity, or encourage
(regardless of who initiates the contact) any Trade Relationship to use the services of any
competitor of the Company or its subsidiaries or affiliates, or encourage any Trade Relationship to
change its relationship with the Company or its subsidiaries or affiliates.
11. Confidential Information. Executive acknowledges that, during the course of his employment with
the Company, he may have developed Confidential Information (as defined below) for the Company, and
may have learned of Confidential Information developed or owned by the Company or its affiliates or
entrusted to the Company or its affiliates by others. Executive hereby agrees that he will not,
directly or indirectly, use any Confidential Information or disclose it to any other person or
entity, except as otherwise required by law. “Confidential Information” means any and all
information relating to the Company which is not generally known by the public or others with whom
the Company does (or as of the Termination Date plans to) compete or do business, as well as
comparable information relating to any of the Company’s affiliates. Confidential
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Information includes, but is not limited to, information relating to the terms of this Agreement,
as well as the Company’s business, technology, practices, products, marketing, sales, services,
finances, strategic opportunities, internal strategies, legal affairs (including pending
litigation), the terms of business relationships not yet publicly known, intellectual property and
the filing or pendency of patent applications. Confidential Information also includes, but is not
limited to, comparable information that the Company may receive or has received belonging to
customers, suppliers, consultants and others who do business with the Company, or any of the
Company’s affiliates. “Confidential Information” does not include any information that is: (i)
shown to have been developed independently by Executive prior to his employment with the Company;
or (ii) required by a judicial tribunal or similar governmental body to be disclosed under law
(provided that Executive has first promptly notified the Company of such disclosure requirement and
has cooperated fully with the Company (at the Company’s expense) in exhausting all appeals
objecting to such requirement). Executive recognizes that any violation of his obligations
described in this Agreement may result, in the Company’s sole discretion and to the maximum extent
permitted by law, in forfeiture by Executive of any or all payments and other benefits under this
Agreement. Executive also agrees that, in addition to and without limiting the availability of any
other legal or equitable remedies the Company may have against him, the Company shall be entitled
to an injunction restraining him from further violation of such sections.
12. Non-disparagement. In accordance with normal ethical and professional standards, prior to and
following the Termination Date, Executive agrees to refrain from taking actions or making
statements, written or oral, which denigrate, disparage or defame the goodwill or reputation of the
Company and its affiliates, divisions, branches, predecessors, successors, assigns, trustees,
officers, security holders, partners, agents and former and current employees and directors or
which are intended to, or may be reasonably expected to, adversely affect the morale of the
employees of any of the Company or its affiliates. Executive further agrees not to make any
negative statements to third parties relating to his employment or any aspect of the business of
the Company and its affiliates and not to make any statements to third parties about the
circumstances of the termination of his employment, or the Company and its affiliates, divisions,
branches, predecessors, successors, assigns, trustees, officers, security holders, partners, agents
and former and current employees and directors and employees, except as may be required by a court
or governmental body. Executive may however discuss the circumstances of the termination of his
employment with the Company with your attorneys, tax advisors, and immediate family.
13. Company Property. On or before the Termination Date, Executive agrees to return to the Company
any and all records, files, notes, memoranda, reports, work product and similar items, and any
manuals, drawings, sketches, plans, tape recordings, computer programs, disks, cassettes and other
physical representations of any information, relating to the Company, or any of its affiliates,
whether or not constituting confidential information, and he will return to the Company any other
property, including but not limited to a laptop computer, belonging to the Company, no later than
the Termination Date.
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14. Reasonable Cooperation. Executive agrees to make himself reasonably available to the Company
to respond to requests by the Company for documents and information concerning matters involving
facts or events relating to the Company or any affiliate or subsidiary thereof (including, without
limitation, predecessors thereof) that may be within his knowledge, and further agrees to provide
truthful information to the Company an affiliate or subsidiary thereof or any of their
representatives as reasonably requested with respect to pending and future litigations,
arbitrations, other dispute resolutions, investigations or requests for information. Executive
also agrees to make himself reasonably available to assist the Company and its affiliates in
connection with any administrative, civil or criminal matter or proceeding brought by or brought
against any of them, in which and to the extent the Company, an affiliate of subsidiary thereof or
any of their representatives reasonably deem your cooperation necessary. Executive shall be
reimbursed for his reasonable out-of-pocket expenses incurred as a result of such cooperation.
15. Choice of Law, Jurisdiction and Venue. This Agreement and all matters or issues related hereto
shall be governed by the laws of the State of Washington applicable to contracts entered into and
performed therein. Whenever possible, each provision of this Agreement shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement. The Company hereby consents to, and you hereby
submit your person to, the jurisdiction of all state courts of the State of Washington sitting in
King County, and the United States District Court for the Western District of Washington, for the
purposes of the enforcement of this Agreement.
16. Miscellaneous.
(a) This Agreement is personal in its nature and the parties shall not, without the prior
written consent of the other, assign or transfer this Agreement or any rights or obligations
hereunder; provided, however, the provisions hereof shall inure to the benefit of,
and be binding upon, each successor of the Company or any of its affiliates, whether by merger,
consolidation or transfer of all or substantially all of its assets.
(b) This Agreement, and the stock plan agreements referenced in Section 3, contain the entire
understanding of the parties hereto relating to the subject matter herein contained and supersede
all prior agreements or understandings between the parties hereto with respect thereto. This
Agreement can be changed only by a writing signed by all parties hereto. No waiver shall be
effective against any party unless in writing and signed by the party against whom such waiver
shall be enforced.
(c) All notices and other communications hereunder shall be deemed to be sufficient if in
writing and delivered in person or by a nationally recognized courier
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service, addressed, if to Executive, to the Executive’s most recent home address on file with
the Company, and if to the Company, to:
(d) In case any provision or provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect by any court or administrative body
with competent jurisdiction, such invalidity, illegality or unenforceability shall not affect the
remaining provisions hereof, which shall remain in full force and effect. Any provision(s) so
determined to be invalid, illegal or unenforceable shall be reformed so that they are valid, legal
and enforceable to the fullest extent permitted by law or, if such reformation is impossible, then
this Agreement shall be construed as if such invalid, illegal or unenforceable provision(s) had
never been contained herein; provided that, upon a finding by a court of competent jurisdiction
that this Agreement is illegal and/or unenforceable, you shall be required to repay to the Company
the payments set forth herein.
(e) This Agreement may be executed via facsimile and in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument, binding on the parties.
| EXPEDIA, INC. | EXECUTIVE | |||||||
By: Name: |
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
|
/s/ ▇▇▇▇ ▇▇▇▇▇
|
||||||
Title:
|
Executive VP and General Counsel | |||||||
| Date: 8/30/07 | Date: 8/25/07 | |||||||
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EXHIBIT A
ACCELERATED VESTING OF CERTAIN RESTRICTED STOCK UNITS
| Number of RSUs | Number of RSUs | |||||||||
| Normal Vesting | Subject to | not Subject to | ||||||||
| Date per RSU | Accelerated | Accelerated | ||||||||
| Grant Date | Agreement | Vesting | Vesting | |||||||
May 9, 2005 |
May 9, 2008 | 0 | 5,071 | |||||||
| May 9, 2009 | 0 | 5,069 | ||||||||
| May 9, 2010 | 0 | 5,070 | ||||||||
Feb 28, 2006 |
Feb 28, 2008 | 3,075 | ||||||||
| Feb 28, 2009 | 0 | 3,075 | ||||||||
| Feb 28, 2010 | 0 | 3,075 | ||||||||
| Feb 28, 2011 | 0 | 3,076 | ||||||||
Feb 27, 2007 |
Feb 27, 2008 | 3,684 | ||||||||
| Feb 27, 2009 | 0 | 3,685 | ||||||||
| Feb 27, 2010 | 0 | 3,685 | ||||||||
| Feb 27, 2011 | 0 | 3,685 | ||||||||
| Feb 27, 2012 | 0 | 3,685 | ||||||||
Total |
6,759 | 39,176 | ||||||||
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