VERTRO, INC. EMPLOYMENT AGREEMENT
Exhibit
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THIS
EMPLOYMENT AGREEMENT is made this 1st day of June, 2010, (this “Agreement”)
between Vertro, Inc. (“Vertro” or the “Company”), a Delaware corporation, and
Xxxxx Xxxxxxxxx (“Employee”).
Recitals
The
Company wishes to employ Employee and Employee wishes to be employed by the
Company on the terms and conditions set forth in this Agreement.
Statement
of Agreement
In
consideration of the foregoing, and of Employee’s employment, the parties agree
as follows:
1. Employment. Employee’s
employment with Vertro shall be upon the terms and conditions hereinafter set
forth to become effective upon execution of this Agreement (the “Effective
Time”).
2. Duties.
(a) Employee’s
first day of employment shall be June 2, 2010 (the “Start
Date”). Employee is being hired as the Chief Financial Officer of the
Company, reporting to the Chief Executive Officer, and he shall perform such
other or additional duties and responsibilities consistent with Employee’s
title(s), status, and position as the Chief Executive Officer or Board of
Directors of Vertro (“Board of Directors,” in each case to mean either the Board
of Directors as a whole or the Audit Committee of the Board of Directors in
accordance with the delegation policies of the Board of Directors) may, from
time to time, prescribe.
(b) So
long as he is employed under this Agreement, Employee agrees to devote his full
working time and efforts exclusively on behalf of the Company and to
competently, diligently and effectively discharge all duties of Employee
hereunder. Employee further agrees to comply fully with all
reasonable generally applicable policies of the Company as are from time to time
in effect. Notwithstanding the aforesaid during the first thirty (30)
days of employment Employee may devote some time to outside business in order to
transition existing private consulting work, provided that it does not
negatively impact performance of his duties hereunder.
3. Compensation.
(a) As
compensation for all services rendered to the Company pursuant to this
Agreement, in whatever capacity rendered, the Company will pay to Employee
during the term hereof a base salary at the rate of $200,000 per year (the
“Basic Salary”), payable in accordance with the usual payroll practices of the
Company. The Basic Salary may be increased or decreased, from time to
time, by the Company, provided, however, the Company may only decrease the Basic
Salary when there is a general reduction in base salary given to other
comparable officers of the Company (excluding any officers whose base salary may
not be decreased because of contractual restrictions) and the reduction is by a
percentage that is consistent with the reduction given to other
officers.
(b) Employee
will be entitled to receive incentive bonus compensation pursuant to the terms
of plans adopted by the Board of Directors from time to time. For
fiscal 2010, Employee’s target incentive bonus shall be 50% of Basic Salary
(“Target Bonus”) and shall be subject to the terms and conditions established by
the Board of Directors for employees of the Company. For fiscal 2010
Employee’s incentive bonus compensation shall be pro-rated for the amount of
time employed by the Company in the year 2010. Employee acknowledges
that the Board of Directors has not established an incentive compensation plan
for 2010 and there is no guarantee that the Company will put one in
place.
(c) On
the date of this Agreement and pursuant to the Company’s 2006 Stock Award and
Incentive Plan (the “Plan”), the Company will grant to Employee restricted stock
units to acquire an aggregate of 125,000 shares of the Company’s Common Stock,
which shall vest based on the criteria set forth in award agreements under the
Plan, which generally shall provide that (i) 80% of the restricted stock units
shall be service based and vest 25% per year from the date of service; and (ii)
20% of the restricted stock units shall be performance based and vest based upon
the closing price of the shares of the Company’s common stock exceeding $1.00
per share for a predetermined amount of time. This award covers the
year 2010 and no other award for the year 2010 will be made.
4. Business
Expenses. The Company shall promptly pay directly, or
reimburse Employee for, all business expenses to the extent such expenses are
paid or incurred by Employee during the term of employment in accordance with
Company policy in effect from time to time and to the extent such expenses are
reasonable and necessary to the conduct by Employee of the Company’s business
and properly substantiated. Reasonable and necessary continuing
professional education training seminars and membership fees related to Employee
maintaining his professional license as a certified public accountant shall be
paid by the Company or reimbursed to Employee as a business
expense.
5. Benefits. During
the term of this Agreement and Employee’s employment hereunder, the Company
shall provide to Employee such insurance, vacation, sick leave and other like
benefits as are provided to other officers of the Company from time to time,
provided, however, at a minimum Employee shall be entitled to a minimum of 20
vacation days per year. Employee will use his reasonable
best efforts to schedule vacation periods to minimize disruption of the
Company’s business.
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6. Term;
Termination. The term of Employee’s employment hereunder is
that of employment at will and either party may terminate such employment at any
time, with or without cause, by written notice of such to the other
party. Such notice shall be by personal delivery or by certified
mail, return receipt requested, and addressed to the last known address of the
party to whom given and if mailed shall be deemed effective as of the date of
mailing.
Notwithstanding
the foregoing, in the event of a Change of Control of the Company (as defined
below), the Employee shall no longer be an at-will employee of the Company and
the following provisions shall apply:
(a) The
Company shall employ the Employee, and the Employee accepts such employment, for
an initial term commencing on the date of the Change of Control and ending on
the first anniversary of the date of Change of Control. Thereafter,
this Agreement shall be extended automatically for additional twelve-month
periods, unless terminated as described herein. Employee’s employment
may be terminated at any time as provided in this Section 6. For
purposes of this Section 6, “Termination Date” shall mean the date on which
Employee has incurred a “separation from service” as defined under Section 409A
of the Internal Revenue Code of 1986, as amended (“Code Section
409A”).
(b)
The Company may terminate Employee’s employment without Cause (as defined below)
upon giving 30 days’ advance written notice to Employee. If
Employee’s employment is terminated without Cause under this Section 6(b), the
Employee shall be entitled to receive (A) the earned but unpaid portion of
Employee’s Basic Salary through the Termination Date; (B) any other amounts or
benefits owing to Employee under the then applicable employee benefit,
incentive, or equity plans and programs of the Company, which shall be paid or
treated in accordance with the terms of such plans and programs; and (C) an
amount equal to 50% of Employee’s annual Basic Salary at the time of termination
and the cash value of health, dental, vision, and life insurance benefits that
would be paid on behalf of the Employee by the Company if Employee were still
employed during the six month period following the Termination Date, paid over a
six (6) month period, in equal monthly installments payable on the last business
day of each month, beginning on the Termination Date; provided, however, that if
the Company determines that Employee is a “specified employee” as defined under
Code Section 409A and that any of the installments payable are considered a
“deferral of compensation” under Code Section 409A, then such installments
instead will be paid on the first business day that is six months and one day
after the Termination Date, or if earlier, the date of Employee’s
death.
Collectively,
the benefits described in (A), (B), and (C) above are hereinafter referred to as
the “Severance Benefits.”
As a condition precedent to receiving
any benefits and/or payments after the date of termination that are not
otherwise statutorily required, Employee shall provide the Company with a
written general release that releases the Company and its affiliates from both
known and unknown claims and in which Employee agrees not to disparage the
Company or its affiliates and in which the Employee acknowledges his obligations
under his Non-Competition, Confidentiality and Non-Solicitation Agreement with
the Company. Such agreement shall be in form and substance reasonably
acceptable to the Company and shall only cover the subject matters outlined in
the previous sentence.
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(c) The
Company may terminate Employee’s employment upon a determination by the Company
that “Cause” exists for Employee’s termination and the Company serves written
notice of such termination upon Employee. As used in this Agreement,
the term Cause shall refer only to any one or more of the following
grounds:
(i) commission
of a material and substantive act of theft, including, but not limited to,
misappropriation of funds or any property of the Company;
(ii) intentional
engagement in activities or conduct materially injurious to the best interests
or reputation of the Company, including, but not limited to,
knowing participation in any activity intended by Employee to result
in misreporting the financial affairs of the Company;
(iii) refusal
to perform assigned duties and responsibilities (so long as the Company does not
assign any duties or responsibilities that would give the Employee Good Reason
to terminate employment as described in Section 6(e)) after receipt by Employee
of written notice and 30 days to cure;
(iv) gross
insubordination by Employee;
(v) the
violation of any of the material terms and conditions of this Agreement or any
written agreement or agreements Employee may from time to time have with the
Company (following 30 days’ written notice from the Company specifying the
violation and Employee’s failure to cure such violation within such 30 day
period);
(vi) Employee’s
substantial dependence, as reasonably determined by the Chief Executive Officer
or the Board of Directors of the Company, on alcohol or any narcotic drug or
other controlled or illegal substance that materially and substantially prevents
Employee from performing his duties hereunder; or
(vii) the
conviction of Employee of a crime that is a felony, a misdemeanor involving an
act of moral turpitude, or a misdemeanor committed in connection with Employee’s
employment by the Company;
(e) The
Employee may terminate employment for Good Reason (as defined below) upon giving
30 days advance written notice to the Company and allowing the Company to 30
days after receipt of such notice to cure any Good Reason
condition. If Employee’s employment is terminated with Good Reason
under this Section 6(e), the Employee shall be entitled to receive the Severance
Benefits. The Severance Benefits shall be payable on the last
business day of each month, beginning on the Termination Date; provided,
however, that if the Company determines that Employee is a “specified employee”
as defined under Code Section 409A and that any of the installments payable are
considered a “deferral of compensation” under Code Section 409A, then such
installments instead will be paid on the first business day that is six months
and one day after the Termination Date, or if earlier, the date of Employee’s
death.
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As used
in this Agreement, the term “Good Reason” means any one or more of the following
grounds:
(i) if there
is a reduction in Employee’s Basic Salary in effect at the time of a Change of
Control; or
(ii) a breach
by the Company of any material term or provision of this Agreement.
(f) The
Employee may terminate employment for any reason (other than Good Reason) upon
giving 30 days’ advance written notice to the Company. If Employee’s
employment is so terminated under this Section 6(f), the Company will pay
Employee the earned but unpaid portion of Employee’s Basic Salary through the
Termination Date and any other amounts or benefits owing to Employee under the
then applicable employee benefit, incentive or equity plans and programs of the
Company, which shall be paid or treated in accordance with Section 3 hereof and
otherwise in accordance with the terms of such plans and programs under and
consistent with plans adopted by the Company prior to the Termination
Date.
(g) As
used in this Agreement, the term “Change in Control” as a capitalized means the
occurrence of any one of the following events after the date
hereof:
(i)
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any
person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing thirty-five percent (35%) or more,
excluding in the calculation of beneficial ownership securities acquired
directly from the Company, of the combined voting power of the Company’s
then outstanding voting securities;
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(ii)
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any
Person is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing more than fifty percent (50%) of
the combined voting power of the Company’s then outstanding voting
securities;
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(iii)
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the
following individuals cease for any reason to constitute a majority of the
number of directors of the Company then serving: individuals who, on the
date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company’s stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended;
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(iv)
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there
is a consummated merger or consolidation of the Company with any other
corporation, other than (A) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving or parent entity)
more than fifty percent (50%) of the combined voting power of the voting
securities of the Company or such surviving or parent entity’s equity
outstanding immediately after such merger or consolidation or (B) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person, directly or indirectly,
acquired twenty-five percent (25%) or more of the combined voting power of
the Company’s then outstanding securities (with any securities acquired by
such Person directly from the Company or its subsidiaries or affiliates
not being counted as part of such Person’s beneficially owned securities);
or
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(v)
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the
stockholders of the Company approve a plan of complete liquidation of the
Company and there remains no material contingency to implementation of
such plan or there is consummated an agreement for the sale or disposition
by the Company of all or substantially all of the Company’s assets (or any
transaction having a similar effect), other than a sale or disposition by
the Company of all or substantially all of the Company’s assets to an
entity, at least fifty percent (50%) of the combined voting power of the
voting securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such
sale.
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7. Indemnity.
(a) The
Company agrees during and after termination of his employment to indemnify the
Employee and hold him harmless to the fullest extent permitted or authorized
under the Certificate of Incorporation and the By-laws of the Company, against,
and in respect to, any and all actions, suits, proceedings, claims, demands,
judgments, costs, expenses (including reasonable attorney’s fees), losses, and
amounts paid in settlement and damages resulting from the Employee’s good faith
performance of Employee’s duties and obligations with the
Company. The Company agrees to maintain liability insurance coverage
in commercially reasonable amounts (including, but not limited to, Directors’
and Officers’ insurance) covering Employee as an insured.
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(b) Employee
agrees that Employee will reimburse the Company for all customary and reasonable
expenses paid by the Company in defending any civil or criminal action, suit, or
proceeding against Employee (not reimbursed under the Company’s insurance
coverage (including , but not limited to, Directors’ and Officers’ insurance) in
the event and only to the extent that it shall be ultimately determined that
Employee is not entitled to be indemnified by the Company for such expenses
under the provisions of Delaware law (or the laws of the Company’s state of
incorporation at the time), federal securities laws, the Company’s By-laws, or
this Agreement. Employee further understands and agrees that Company
may exercise a right of offset against any monies owed by the Company to
Employee if it is ultimately determined that the Employee is not entitled to be
indemnified by the Company as provided for herein and Employee fails to repay
such amounts advanced within thirty (30) days of such
determination.
8. Forfeiture. Employee
acknowledges that any bonus, incentive based or equity compensation granted
hereunder shall be subject to the provisions of Section 304 of the
Xxxxxxxx-Xxxxx Act.
9. Assignment. This
Agreement is personal to Employee and Employee may not assign or delegate any of
his rights or obligations hereunder. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto, their heirs, executors, administrators, successors, and
assigns.
10. Waiver. Neither
any failure nor any delay by any party in exercising any right, power or
privilege under this Agreement or any of the documents referred to in this
Agreement will operate as a waiver of such right, power, or privilege, and no
single or partial exercise of any such right, power, or privilege will preclude
any other or further exercise of such right, power, or privilege or the exercise
of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this
Agreement or any of the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in a written document signed by the other party,
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given, and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of that party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents referred
to in this Agreement.
11. Notices. Any and
all notices required or permitted to be given under this Agreement will be
sufficient and deemed effective three (3) days following deposit in the United
States mail if furnished in writing and sent by certified mail to Employee
at:
Xxxxx Xxxxxxxxx
0000
Xxxxxxxx Xxxx
Xxxxxxxxxxx,
XX 00000
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and to
the Company at:
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Chief Executive
Officer
or such
subsequent addresses as one party may designate in writing to the other
parties.
12. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of State of New York, without reference to its choice
of law rules. Employer and Employee also agree and hereby
submit to the exclusive personal jurisdiction and venue of the courts of New
York State and the Federal Court for the Southern District of New York, sitting
in New York, New York with respect to all matters arising from or relating to
this Agreement.
13. Amendment. This
Agreement may be amended in any and every respect only by agreement in writing
executed by both parties hereto.
14. Section
Headings. Section headings contained in this Agreement are for
convenience only and shall not be considered in construing any provision
hereof.
15. Entire
Agreement. With the exception of the Confidentiality,
Assignment and Noncompetition Agreement, of even date herewith, and any stock
option agreements or other equity compensation agreements between Employee and
the Company, this Agreement terminates, cancels and supersedes all previous
employment or other agreements relating to the employment of Employee with the
Company or any predecessor, written or oral, and this Agreement contains the
entire understanding of the parties with respect to the subject matter of this
Agreement. This Agreement was fully reviewed and negotiated on behalf
of each party and shall not be construed against the interest of either party as
the drafter of this Agreement. EMPLOYEE ACKNOWLEDGES THAT, BEFORE
SIGNING THIS AGREEMENT, HE HAS READ THE ENTIRE AGREEMENT AND HAS THIS DAY
RECEIVED A COPY HEREOF.
16. Severability. The
invalidity or unenforceability of any one or more provisions of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Agreement or parts thereof.
17. Survival. Sections
7 and 8 of this Agreement and this Section 17 shall survive any termination or
expiration of this Agreement.
18. 409A Savings
Clause. It is intended that this Agreement shall comply with
the provisions of Code Section 409A, and payments, rights, and benefits may only
be made, satisfied, or provided under this Agreement upon an event and in a
manner permitted by Code Section 409A of the Code, to the extent applicable, so
as not to subject Employee to the payment of taxes and interest under Code
Section 409A. In furtherance of this intent, this Agreement shall be
interpreted, operated, and administered in a manner consistent with these
intentions, and to the extent that any regulations or other guidance issued
under Code Section 409A would result in Employee being subject to payment of
additional income taxes or interest under Code Section 409A, the parties agree,
to the extent possible, to amend this Agreement and to maintain to the maximum
extent practicable the original intent of this Agreement while avoiding the
application of such taxes or interest under Code Section 409A. Any
payments that qualify for an exception under Code Section 409A shall be paid
under the applicable exception. For purposes of the limitations on
non-qualified deferred compensation under Code Section 409A, each payment of
compensation under this Agreement shall be treated as a separate payment of
compensation. In no event may Employee directly or indirectly
designate the calendar year of any payment under this Agreement.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.
EMPLOYEE: | |||
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/s/ Xxxxx Xxxxxxxxx | ||
Xxxxx Xxxxxxxxx | |||
Vertro, INC. | |||
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By:
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/s/ Xxxxx X. Xxxxxx | |
Xxxxx X. Xxxxxx | |||
Its: | Chief Executive Officer |
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