EMPLOYMENT AGREEMENT
AGREEMENT by and between Golden Books Publishing Company,
Inc. (the "Company"), and Xxxxxxx X. Xxxxxxx (the "Executive"), effective as
of July 28, 1997 (the "Effective Date").
1. Employment Term.
The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to continue within the employ of the Company,
commencing on the Effective Date and continuing through and including December
31, 2000, unless terminated earlier in accordance with Section 4 below (the
"Employment Term").
2. Title, Reporting and Duties.
(a) As of the Effective Date and for the remainder
of the Employment Term, the Executive shall serve as the
Company's Executive Vice President, Director of Sales and
Retail Marketing, Golden Books Children's Publishing Group,
with such duties, responsibilities and authorities as shall
be consistent therewith in the reasonable judgment of the
Company. The Executive shall report to the President of
Golden Books Children's Publishing Group. The Executive
shall be based in New York, New York.
(b) During the Employment Term, and excluding any
periods of vacation, holiday and sick leave to which the
Executive is entitled, the Executive agrees to devote full
time during normal business hours to the business and
affairs of the Company and to use the Executive's best
efforts to perform faithfully and efficiently such
responsibilities.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Term, the
Executive shall receive a minimum annual base salary
("Annual Base Salary") of $212,000. The Annual Base Salary
shall be paid in equal biweekly installments. The Company
and the Executive agree to meet on an annual basis, at a
date mutually convenient to both on or around the
anniversary of this Agreement, to review Executive's Annual
Base Salary; provided that this agreement to meet shall
create no additional obligation or duty on the part of
either party hereto with respect to Executive's Annual Base
Salary.
(b) Annual Bonus. In addition to the Annual Base
Salary, the Executive shall be awarded, for each fiscal year
during the Employment Term, an annual bonus (the "Annual
Bonus") pursuant to the Company's annual incentive plans
(the "Annual Plans", which term includes, as of the date
hereof, the Company's Executive Officer Bonus Plan). The
Executive shall have a target Annual Bonus of 100% of his
Annual Base Salary earned in such year (the "Target Bonus"),
subject in each case to attainment of the performance goals
set forth in the Annual Plans (provided that the Executive's
target Annual Bonus for 1997 shall be computed pro rata
based on his actual salary earned during the year).
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Each such Annual Bonus shall be paid no later than the end
of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless
the Executive shall elect to defer the receipt of such
Annual Bonus. Notwithstanding the above, it is the intent of
the parties hereto that the Annual Plans meet all applicable
requirements for the exemption of the payments thereunder
from the limitations of Section 162(m) of the Internal
Revenue Code of 1986, as amended, including the requirement
that the Annual Plans be approved by the shareholders of the
Company prior to the payment of any bonuses thereunder. The
Board may award the Executive bonuses other than pursuant to
the Annual Plans in its discretion.
(c) Stock Options. The Executive will be granted,
as of the Effective date hereof, a stock option (the
"Option") to purchase 25,000 shares of the common stock
("Stock") of Golden Books Family Entertainment, Inc. The
parties agree that the Company's Board of Directors and the
Compensation Committee shall take all action necessary to
effectuate such Option grant. The exercise price with
respect to each share of Stock subject to the Option will be
the last transaction price of the Stock on the NASDAQ market
on the Effective Date. The Option will become exercisable as
to one-third of the shares of Stock subject thereto on the
first anniversary of the date of grant, as to an additional
one-third of such shares on the second anniversary of the
date of grant and as to an additional one-third of such
shares on the third anniversary of the date of grant. The
Option will have a term of seven years (the "Option Term").
Upon the termination of Executive's employment:
(1) by reason of death, the Executive's
estate may exercise the Option (to the extent
exercisable at the time of death) until the
earliest of one year following the Executive's
death or the end of the Option Term, following
which time the Option shall terminate and be no
longer exercisable;
(2) by the Company for "cause" (except the
Executive's disability) or by the Executive
voluntarily without "good reason" (as each such
term is defined in Section 4 below), the Option
shall terminate and no longer be exercisable on the
date the Executive is advised by the Board that he
is being terminated for cause, or the effective
date of the Executive's voluntary termination
without good reason, as applicable; or
(3) by the Company without Cause or by the
Executive with good reason, or because of the
Executive's disability, the entire Option shall
become fully and immediately exercisable and the
Executive may exercise the Option until the
earliest of one year following the Executive's
termination or the end of the Option Term,
following which time the Option shall terminate and
be no longer exercisable.
The Executive shall be entitled to
participate in other Company stock option grants or
other equity plans or programs, if any, in which
comparable executives of the Company are eligible
to participate generally as may be determined by
the Compensation Committee, including, without
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limitation, the Exchange Option Program pursuant to
the Executive Officer Bonus Plan.
Other than as stated above, the Option
will be governed by the terms and conditions of the
Company's Stock Option Plan and the standard Stock
Option Agreement thereunder to be executed by the
Executive and the Company.
(d) Incentive, Savings and Retirement Plans. During
the Employment Term, the Executive shall be eligible to
participate in all incentive, savings and retirement plans,
practices, policies and programs, if any, that are
applicable generally to other comparable executives of the
Company and its affiliated companies. The Company intends to
establish incentive, savings and retirement plans that are
comparable in level of benefits to such plans as generally
exist in the Company's industry. It is acknowledged that the
Executive's participation in these plans shall be consistent
with an executive of his stature in the Company and in the
Company's industry.
(e) Welfare Benefit Plans. During the Employment
Term, the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in and
shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation,
medical, prescription, dental, disability, salary
continuance, employee term life, group life, accidental
death and travel accident insurance plans and programs, if
any) that are applicable generally to other comparable
executives of the Company and its affiliated companies
(including, without limitation, the Company's 1997 Executive
Benefit Program). The Company intends to establish new
welfare benefit plans that are comparable in level of
benefits to such plans as generally exist in the Company's
industry. It is acknowledged that the Executive's level of
participation in these plans shall be consistent with an
executive of his stature in the Company and in the Company's
industry.
(f) Expenses. During the Employment Term, the
Company shall pay or promptly reimburse the Executive for
all reasonable business expenses upon presentation of
receipts therefor in accordance with the normal practices of
the Company.
(g) Fringe Benefits. During the Employment Term,
the Executive shall be entitled to fringe benefits
appropriate to an executive of Executive's stature in the
Company's industry. The Company shall pay the Executive's
reasonable legal fees for preparation and review of this
Employment Agreement, and shall reimburse the Executive, up
to $7,500.00 per year, for personal tax and legal counsel in
connection with the Company stock option plan. Furthermore,
the Company shall pay the Executive an annual car and
parking allowance of $15,000.00 per year, such amount to be
paid with Executive's salary.
(h) Vacation and Holidays. During the Employment
Term, the Executive shall be entitled to four weeks of paid
vacation per year and all other paid holidays, sick and
personal days given to employees of the Company.
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4. Termination of Employment.
(a) Cause. The Company may terminate the
Executive's employment during the Employment Period for
Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the conviction of, or pleading guilty to, a felony or
crime involving moral turpitude, or (ii) the Executive's
failure to perform, in any material respect, his obligations
under this Agreement unless said failure is remedied by the
Executive to the Company's satisfaction within twenty (20)
days after notice by the Company, which specifically
identifies the manner in which the Board or Chief Executive
Officer believes that the Executive has not performed the
Executive's duties (provided that upon such notice, the
Executive shall be given an opportunity to meet with the
President of Golden Books Publishing Group or other senior
management of the Company to discuss the substance thereof);
or (iii) a disability that prohibits the Executive from
substantially meeting his responsibilities as a senior
executive of the Company on a full-time basis for 90 out of
120 consecutive business days.
(b) Good Reason. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean in each case,
without the Executive's prior written consent:
(i) the assignment to the Executive of any
duties materially inconsistent with the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 2 of
this Agreement, or any other action by the Company
which results in a diminution in such position,
authority, duties or responsibilities, excluding
for this purpose any action not taken in bad faith
and which is remedied by the Company to the
Executive's satisfaction within twenty (20) days
after receipt of written notice thereof given by
the Executive;
(ii) any failure by the Company, in any
material respect, to comply with any of the
compensation and benefits provisions of Section 3
of this Agreement, other than failure not occurring
in bad faith and which is remedied by the Company
to the Executive's satisfaction within twenty (20)
days after receipt of written notice thereof given
by the Executive;
(iii) the Company's requiring the
Executive to be based at any office or location
outside a twenty-five mile radius of New York, New
York;
(iv) any failure by the Company to comply
with and satisfy any covenant or agreement
contained in this Agreement, excluding for this
purpose any failure or omission not occurring in
bad faith or any action not taken in bad faith and
which is remedied by the Company to the Executive's
satisfaction within twenty (20) days after receipt
of written notice thereof given by the Executive.
(c) Death. The Executive's employment shall
terminate automatically upon the Executive's death during
the Employment Period.
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(d) Notice of Termination. Any termination by the
Company for Cause, or by the Executive for Good Reason,
shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 11(b) of this
Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied
upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after
the giving of such notice). The failure by the Executive or
the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive
or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(e) Date of Termination. "Date of Termination"
means (i) if the Executive's employment is terminated by the
Company for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or any later
date specified therein, as the case may be (although such
Date of Termination shall retroactively cease to apply if
the circumstances providing the basis of termination for
Cause or Good Reason are cured in accordance with Section
4(a) or 4(b) of this Agreement, respectively), (ii) if the
Executive's employment is terminated by the Company other
than for Cause, the Date of Termination shall be the date on
which the Company notifies the Executive of such termination
and (iii) if the Executive's employment is terminated by
reason of death, the Date of Termination shall be the date
of death of the Executive.
5. Obligations of the Company Upon Termination.
(a) Good Reason; Other Than for Cause. If, during
the Employment Term, the Company shall terminate the
Executive's employment other than for Cause or the Executive
shall terminate employment for Good Reason:
(i) The Executive shall (a) continue to
receive his Annual Base Salary for the balance of
the term of this Agreement (the "Continuation
Period") and (b) receive a payment, no later than
30 days following the Date of Termination, equal to
any compensation previously deferred by the
Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in
each case to the extent not theretofore paid.
Further, during the Continuation Period the Company
shall continue to provide the Executive with
medical and life insurance benefits at the level
such benefits would have been provided to him had
his employment not been terminated, subject to the
Executive's making any required contributions to
the cost thereof at a rate no less favorable than
that applicable to active employees of the Company.
If within the Continuation Period the Executive
obtains other employment, (i) the Company's
obligation to pay the Executive's salary will be
reduced by 100% of the new compensation earned over
the balance of that period, and
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(ii) the Company's obligation to provide the
Executive with medical and life insurance benefits
shall be suspended during the period that the
Executive is eligible to obtain such benefits from
his new employer. Nothing in this paragraph 5 shall
be deemed a waiver by Executive of any rights he
has or may have under COBRA or ERISA. The Executive
agrees to promptly report to the Company any such
other employment and the compensation earned by him
thereunder during the Continuation Period. In the
event of the Executive's death, the Company shall
continue to pay his estate his salary at the time
of death, through the anniversary of the Effective
Date next following the date of death;
(ii) on the Date of Termination, all of
the Executive's stock options, restricted stock and
other stock-based compensation shall become
exercisable or vested pursuant to Section 3(c)(3)
herein;
(iii) the Company shall provide to the
Executive six (6) months of executive outplacement
service, which service shall be mutually agreed
upon by the parties, to assist the Executive in
securing employment; and
(iv) The Executive shall have the right to
approve, such approval not be unreasonably
withheld, any written announcement, if any, of the
termination of the Executive's employment with the
Company.
(b) Death. If the Executive's employment is
terminated by reason of the Executive's death during the
Employment Period, this Agreement shall terminate without
further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued
Obligations, the right to exercise the Executive's Stock
Option under Section 3(c)(1) herein, and the timely payment
or provision of Other Benefits. Accrued Obligations shall be
paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date
of Termination.
(c) Cause; Other Than for Good Reason. If, during
the Employment Term, the Executive's employment shall be
terminated by the Company for Cause or by the Executive
without Good Reason, this Agreement shall terminate without
further obligations to the Executive other than the payment
of Accrued Obligations, and the payment or provision of
Other Benefits. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date
of Termination. Upon a termination of the Executive's
employment for Cause by the Company or by the Executive
without Good Reason, the Executive shall forfeit all stock
options that are not vested on the Date of Termination. If
the Executive's employment is terminated for Cause, nothing
in this Agreement shall prevent the Company from pursuing
any other available remedies against the Executive.
6. Non-Exclusivity of Rights.
Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy or
practice provided by the Company or any of its affiliated companies and for
which the Executive may qualify nor shall anything herein limit or
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otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of or any contract or agreement
with the Company or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly modified by
this Agreement.
7. Full Settlement.
The Company's obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company may have against the Executive or others.
8. Confidential Information; Non-Solicitation.
(a) The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company
or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Executive
or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment
with the Company, the Executive shall not, without the prior
written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 8
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
(b) For a period of one year following the
termination of the Executive's employment for any reason,
the Executive shall not, directly or indirectly, employ or
seek to employ any person who is at the Date of Termination,
or was at any time within the six-month period preceding the
Date of Termination, an employee of the Company or any of
its subsidiaries or affiliates or otherwise cause or induce
any employee of the Company or any of its subsidiaries or
affiliates to terminate such employee's employment with the
Company or such subsidiary or affiliate for the employment
of another company.
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9. Successors.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not
be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's
executors, successors and legal representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and
assigns.
(c) The Agreement shall not be assignable in the
event of insolvency by the Company.
10. Pre-Termination Meeting.
(a) On or before June 1, 2000, the Company and the
Executive agree to meet to discuss each others intentions
with respect to Executive's employment with the Company
after the termination of this Agreement; provided, however,
that this paragraph shall create no duty or obligation on
behalf of either the Company or the Executive with respect
to such discussion.
11. Miscellaneous.
(a) This Agreement shall be governed by and
construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of
laws. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to
the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
If to the Executive:
Xx. Xxxxxxx X. Xxxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Company:
Golden Books Family Entertainment, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
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or to such other address as either party shall have
furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually
received by the addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts
payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
(e) The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or
any other provision of this Agreement or the failure to
assert any right the Executive or the Company may have
hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant
to Section 4 (b) of this Agreement, shall not be deemed to
be a waiver of such provision or right or any other
provision or right of this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.
GOLDEN BOOKS PUBLISHING COMPANY, INC.
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
