Employment Agreement between SkyAuction.com, Inc. and Gerald L. Rydberg (Chief Technology Officer)

Summary

SkyAuction.com, Inc. and Gerald L. Rydberg entered into an agreement for Mr. Rydberg to serve as Chief Technology Officer. The agreement outlines his responsibilities, compensation (including stock options and benefits), and reimbursement of business expenses. The term of employment is from April 30, 2000, to April 30, 2003, with provisions for automatic extension unless notice is given. The contract details what happens if employment ends early, including severance and vesting of stock options. Both parties have specific rights and obligations regarding termination, benefits, and tax reporting.

EX-10.6 8 0008.txt EMPLOYMENT AGREEMENT [SkyAuction.com, Inc. Letterhead] PERSONAL AND CONFIDENTIAL As of ________, 2000 Mr. Gerald L. Rydberg [Address] [Address] Dear Gerald: This is to confirm our mutual understanding with respect to your employment by SkyAuction.com, Inc. (the "Company"), as follows: 1. Employment; Authority. The Company hereby agrees to employ you, and you hereby agree to be employed by the Company, on the terms and conditions set forth in this letter. You will serve the Company as its Chief Technology Officer with all the responsibility and authority customarily associated with such position. You also agree to perform such duties and services, and to have such other responsibilities, as the Company's Board of Directors may, from time to time, assign to you consistent with your position. You hereby represent and warrant to the Company that you are not now under any contractual obligation to any third party that is inconsistent with the terms of this letter or that would prevent, limit or impair in any way your performance of your duties under this letter. 2. Compensation. As full compensation for all services provided and duties performed by you during your employment by the Company under the terms of this letter, you will be entitled to receive: a. Options. You shall be issued options to acquire 13,000 shares of the Company's common stock (the "Common Stock"), par value $.01 per share (the "Options"). The Options shall have an exercise price of $71.84 per share. The Options shall vest and become exercisable according to the following schedule: (i) 40% of the Options shall vest and become exercisable on the date of the Company's initial public offering of it's Common Stock (the "Initial Public Offering") and (ii) 30% of the Options shall vest and become exercisable on each of the first two anniversaries of the date of the Initial Public Offering. Notwithstanding anything herein, if you are employed by the Company as its Chief Technology Officer on and through September 30, 2001, all Options which have not vested prior to such date shall vest immediately, provided, however, that the Options shall become exercisable only according to the above schedule. The Options are subject to the provisions of the Company's 2000 Omnibus stock option plan. b. Benefits. During your employment hereunder, you shall be entitled to all benefits generally available to the Company's senior executives and for which you may qualify, inclusive of hospitalization and major medical insurance, health and disability insurance, any supplemental retirement plans or benefits and any perquisites that are generally made available to executives of the Company, provided, however, that no Benefits shall require Mr. Gerald L. Rydberg as of April 30, 2000 page 2 the Company to make any payment or contribution to or on behalf of you. All benefits and perquisites to which you are entitled pursuant to this paragraph are sometimes referred to herein as your "Benefits". c. Certain Changes. While the Company retains the right to change, eliminate, discontinue or substitute any plan, program or benefit, or any provision thereof, the Company agrees with you that upon any such change, elimination, discontinuation or substitution there will be a replacement plan, program or benefit under the terms of which you will have no less of an opportunity to receive an equal or greater benefit than as currently provided; provided, however, that no such change, elimination, discontinuation or substitution will (x) reduce your number of Options or (y) eliminate or reduce any of the Benefits that you are otherwise entitled to receive (but have not yet received) on the date that any such change, elimination, discontinuation or substitution becomes effective. d. Tax Reporting. All compensation received by you pursuant to this letter (whether specified in this Section 2 or not) are subject to all applicable tax withholding by the Company. In addition, you acknowledge and agree that all payments to be made to you as Options or otherwise under this letter shall, to the extent required by law, be reported for all tax purposes as compensation for services rendered, and you shall not state or claim any different position in any tax return or report (or any audit thereof). 3. Expenses. During your employment hereunder, the Company will reimburse you for your travel and other expenses incident to your providing services and performing duties under this letter, in conformity with the Company's regular policies from time to time in effect regarding reimbursement of expenses, with the proviso that such reimbursement will only be made upon presentation of expense vouchers in such detail as may from time to time be necessary for the Company to comply with all applicable tax and accounting requirements. 4. Term. a. The term of your employment under this letter commenced on April 30, 2000 and shall continue until April 30, 2003 or such other date as may be determined in accordance with Section 4.b. below (the "scheduled term"), unless earlier terminated by reason of death, Disability (as defined below), termination by you after the occurrence of a Change in Opportunity (as defined below) or otherwise or termination by the Company (with or without Cause (as defined below))(in each case, and subject to any provisions in this Section 4 or in Section 5, upon no less than 30 days' prior written notice). b. At any time no more than six months and no less than three months prior to the termination of the then current scheduled term (as such may have been extended) you or the Company may notify each other, in writing, of a lack of intention to extend the term of your employment by the Company under this letter beyond the then current scheduled term, in which case your employment by the Company under this letter shall end upon the expiration of the scheduled term. In the absence of such notice, at the end of the then Mr. Gerald L. Rydberg as of April 30, 2000 page 3 current scheduled term, the scheduled term under this letter will be automatically extended by twelve months. 5. Consequences of Termination. a. Death or Disability. Anything herein to the contrary notwithstanding, if your employment under this letter is terminated early (i.e., before expiration of the scheduled term) by reason of your death or your Disability (as defined below), you (or your estate, as the case may be) shall be entitled to receive your Options and all other amounts owing to you in respect of your services under this letter through the date of such termination (including any Benefits that by their terms continue thereafter), but the Company shall have no further liability or obligation whatsoever to you hereunder. b. Termination without Cause. If your employment under this letter is terminated early (i.e., before expiration of the scheduled term) by the Company without Cause or by you voluntarily within 90 days after the occurrence of a Change in Opportunity (as defined below), you shall be entitled, in lieu of any other or further compensation of any kind from the Company (other than your vested rights in any retirement, life insurance, disability insurance or other pension or benefit plan of the Company), to receive severance (your "Severance") consisting of: (1) Your Benefits (to the extent permitted by applicable law and the terms of any applicable plans, in each case as if you continued as an active employee or, if the Company is not able to provide any such Benefit to you, the economic equivalent thereof) until the expiration of the scheduled term; and (2) You shall retain all Options, all of which shall be or shall become vested as of the date of termination of your employment. Such Options may be exercised by you according to the schedule in Section 2(a). In the event that the termination of your employment pursuant to this Section 5.b. is initiated by the Company, your employment shall not be deemed to have been terminated pursuant to this Section 5.b. unless there shall have been delivered to you a copy of a notice of termination from the Company (no less than 30 days prior to the effective date of such termination, or, in the event of non-extension of the scheduled term as provided in Section 4.b. as described therein) providing, in reasonable detail, a description of the reasons therefor, and unless you have had an opportunity, together with your counsel, to be heard before the Company's Board of Directors. c. Termination with Cause. If your employment under this letter is terminated by the Company with Cause, the Company shall (without limiting any right or remedy to which it may be entitled) be obligated to continue to provide you Benefits until the effective date of such termination, but shall have no further liability or obligation whatsoever to you hereunder; provided, however, that nothing in this provision shall be interpreted so as to limit any Benefits to which you or your dependents or estate are entitled according to the specific Mr. Gerald L. Rydberg as of April 30, 2000 page 4 terms of any applicable employee benefit plan, program or practice after such termination of your employment. d. Termination by You. Subject to the provisions of Section 2(a) herein, if your employment under this letter is terminated early by you (other than voluntarily within 90 days after the occurrence of a Change in Opportunity (as defined below) in accordance with Section 5.b. of this letter), the Company shall (without limiting any right or remedy to which it may be entitled) be obligated to continue to provide you Benefits until the effective date of such termination, but shall have no further liability or obligation whatsoever to you hereunder; provided, that nothing in this provision shall be interpreted so as to limit any Benefits to which you or your dependents or estate are entitled according to the specific terms of any applicable employee benefit plan, program or practice after such termination of your employment. 6. Certain Definitions. For purposes of this letter, the following definitions shall apply: "Cause" means: (i) willful and repeated failure or refusal to perform your duties; (ii) embezzlement or similar criminal misappropriation of Company funds; (iii) conviction of a crime constituting a felony that will have a material adverse effect on the Company; or (iv) a material breach of any term of this letter; provided, in each case, that your employment shall not be deemed to have been terminated for Cause unless (x) you shall have been provided a notice from the Company's Board of Directors no less than 30 days prior to the effective date of such termination stating that any event that had occurred or, in the event of clause (iii) above, that will occur, constitutes Cause and that the Board of Directors intends to terminate your employment for Cause pursuant to Section 5.c hereof and describing in reasonable detail, the reasons therefor, and (y) you have had both an opportunity to cure such Cause and, together with your counsel, to be heard before the Company's Board of Directors during such 30-day period. "Change in Opportunity" means, without your express written consent, any of the following: (i) the assignment to you of any duties materially inconsistent with your position, authority, duties or responsibilities as contemplated hereby, or any other action by the Company that results in a material diminution of such position, authority, duties or responsibilities; (ii) the Company's requirement that you move your personal residence or perform your principal executive functions outside of Manhattan; (iii) the Company's requirement that you report to an executive other than the Chairman or the Company's Board of Directors; or Mr. Gerald L. Rydberg as of April 30, 2000 page 5 (iv) the failure of the Company to provide you with a total compensation package substantially equivalent to that set forth in this letter or any other material breach by the Company of the terms herein; provided, in each case, that you shall not be deemed to have terminated your employment for "Change of Opportunity" unless there shall have been delivered to the Company a copy of a notice of termination from you (no less than 30 days prior to the effective date of such termination) providing, in reasonable detail, a description of the reasons therefor, and unless the Company shall have had an opportunity to cure any events causing such Change of Opportunity. "Disability" means your inability to perform your duties in any material manner by reason of physical or mental disability for a period of six consecutive months, or for a period of more than nine months in the aggregate in any twelve-month period. 7. Non Competition; Non Solicitation. You agree that, without the prior express written consent of the Company's Board of Directors, you shall not, during your employment hereunder, and for a period of 12 months after such termination, or if you voluntarily terminate your employment hereunder (other than termination pursuant to Section 6.b. herein) or if your employment hereunder is terminated by the Company for Cause, for 24 months after such termination: (i) directly or indirectly, employ or hire as a consultant or solicit for employment or consulting, any officer or other employee of the Company; or (ii) enter into or accept an employment position or any other situation or arrangement with an organization or person or establish an entity that markets or sells distressed and excess airline, hotel and other travel services. 8. Confidentiality. You acknowledge that you now have and will have access to and become acquainted with proprietary and confidential information regarding the Company and its customers that constitute valuable assets of the Company and that is not available to the public. Accordingly, you agree that you will not during the term of this letter or at any time thereafter, directly or indirectly, (i) use or disclose such information, except as is necessary and appropriate in connection with the rendering by you of services to the Company under this letter, or (ii) make, or cause to be made, any statement or publication about or concerning the Company or its shareholders (or any fiduciary or beneficiary of any shareholder that is a trust or an estate) which you reasonably believe not to be in the best interests of, or necessary for the proper conduct of the businesses of, the Company or its shareholders (or any fiduciary or beneficiary of any shareholder that is a trust or an estate), other than statements or publications that are consistent with your supervision of the corporate communication function of the Company as it relates to your duties or that you reasonably believe to be necessary to protect and enforce your rights under this letter. Nothing herein is intended to limit or affect any responsibility you may have under any generally applicable policy, practice or procedure of the Company. 9. No Disclosure. The financial arrangements contemplated hereby are sensitive and highly confidential, and, so long as you remain employed by the Company, you will not use, disclose or make any public announcement regarding such financial arrangements Mr. Gerald L. Rydberg as of April 30, 2000 page 6 without the prior written consent of the Company (by its Board of Directors or its chairman), except: (i) as may be required by applicable law; (ii) disclosure in connection with your own personal tax or financial affairs; or (iii) as may be required in order to enforce any term or provision hereof. 10. Injunctive Relief. You acknowledge and agree that if any provision of Section 7, 8 or 9 hereof is violated, the Company will immediately and irreparably be harmed, will not have an adequate remedy at law and will be entitled to immediate relief enjoining such violation or threatened violation (including without limitation temporary and permanent injunctions and/or a decree for specific performance) in any court or judicial body having jurisdiction over such claim, without the necessity of showing any actual damage or posting any bond or furnishing any other security, and without having to pursue any arbitration as provided below. 11. Arbitration; Legal Fees. Any dispute that may arise between you and the Company in connection with your employment hereunder, including, without limitation, the terms or interpretation of this letter as they relate to the existence of Cause, Change in Opportunity and the terms concerning termination of employment upon such events, either during or following termination of your employment hereunder shall be submitted to arbitration before three arbitrators in the City of New York under the then applicable rules of the American Arbitration Association. Judgment on any award rendered may be entered in any court of the forum having jurisdiction. If the arbitrators find that the Company has breached the substantive terms of this letter and the Company in doing so acted capriciously, maliciously, or in bad faith, then the Company shall pay for all of your costs and expenses, including reasonable attorney's fees, arising from such proceeding. 12. Miscellaneous. a. Notice. All notices and other communications provided for hereunder shall be in writing (including by telex or facsimile transmission) and mailed or sent or delivered at the addresses specified below. All such notices and communications shall be given by hand, telex or facsimile transmission; provided that, in the event that telex and facsimile transmission facilities are not operational, such notices and communications may be given by mail, but the sender shall use reasonable efforts to confirm facsimile transmission facilities shall become operational. All such notices and communications shall be effective when delivered by hand, or, in the case of mail, upon the earlier of receipt and confirmation by telex or facsimile transmission as provided below, or, in the case of facsimile transmission, when sent as addressed as set forth herein and confirmation of delivery is received, or, in the case of telex, when the telex is sent and the appropriate answer back is received. The address for you is set forth in the beginning of this letter. The address for the Company is as follows: SkyAuction.com, Inc. 501 Madison Ave. 14th Floor New York, NY 10022 Telecopy No.: (212) 486-9751 Mr. Gerald L. Rydberg as of April 30, 2000 page 7 Attention: Chairman with copies to: Proskauer Rose LLP 1585 Broadway New York, New York 10036-8299 Telecopy No.: (212) 969-2900 Attention: Jeffrey A. Horwitz, Esq. Each party to this letter may, from time to time, change its notice address or copy address or add or substitute a copy party and a copy address, by giving notice to the other party in the manner provided in this paragraph. b. Entire Agreement. This letter (inclusive of any annex hereto) contains the entire understanding and agreement of the parties with respect to the subject matter hereof, and all prior negotiations, proposals and agreements (whether written or oral) between them (or their respective affiliates) relating to the subject matter hereof have, to the extent relating to such subject matter, been superseded hereby. No agreements or representations (whether oral or otherwise, express or implied) that are not expressly set forth in, but that relate to the subject matter of, this letter have been made by either party. c. Amendment; Waiver. Neither this letter nor any provision hereof may be amended or modified except in a writing signed by the party against which enforcement of such amendment or modification is sought. No failure or delay of any party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce any such right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each party under this letter are, unless otherwise specifically provided herein, cumulative and not exclusive of any rights or remedies that such party may otherwise have. No waiver by either party of any provision of this letter nor any consent by either party to any departure by the other party from any provision of this letter shall in any event be effective unless the same shall be in writing (by the party against which enforcement of such waiver or consent is sought), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice or similar communication by one party to the other shall entitle such other party to any other or further notice or similar communication in similar or other circumstances, except as specifically provided herein. d. Severability. If any one or more of the provisions of this letter shall be invalid, illegal or unenforceable in any respect, it shall be ineffective only to the extent of such invalidity, illegality or unenforceability, and shall not in any way affect or impair the validity, legality and enforceability of the balance of such provision or any other provision contained herein. Each party shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provision(s) (or such portion thereof) with such valid, legal and enforce- Mr. Gerald L. Rydberg as of April 30, 2000 page 8 able provision(s), the economic effect of which on the respective parties is as close as possible to that of the invalid, illegal or unenforceable provision(s). e. Successors and Assigns. This letter shall be binding upon and inure to the benefit of the respective successors and permitted assigns of the parties hereto; provided, that no party may, without the prior written consent of the other, assign, transfer or delegate this letter or any of such party's rights or obligations hereunder (whether directly or indirectly, by operation of law or otherwise) to any other person, firm or entity. f. Rights of Third Parties. Anything in this letter to the contrary notwithstanding, no person, firm or entity shall be entitled to the benefit of, or to enforce, any provision hereof other than the parties hereto (and their heirs, permitted successors and assigns). g. Survival. The respective rights and obligations of you and the Company as provided herein shall survive the termination or expiration hereof to the extent necessary to the intended preservation of such rights and obligations. h. Governing Law. This letter shall be construed and interpreted according to the laws of the State of New York, without reference to such State's principles governing conflicts of laws. i. Headings. The headings used herein are for convenience of reference only, are not part of this letter and are not intended to affect the construction, or to be taken into account in the interpretation, of this letter. j. Counterparts; Effect. This letter may be signed in counterparts with the same effect as if the signatures were all upon the same instrument; provided, that no party shall be bound hereto unless and until all parties have executed and delivered this letter (or a counterpart). Mr. Gerald L. Rydberg as of April 30, 2000 page 9 Please confirm your agreement with the foregoing by signing and returning to us at least two copies of this letter. Sincerely, SKYAUCTION.COM, INC. By: /s/ Michael N. Hering -------------------------- Michael N. Hering President & CEO AGREED TO AND ACCEPTED: /s/ Gerald L. Rydberg - ------------------------ Gerald L. Rydberg