Exhibit 10.29
EMPLOYMENT AGREEMENT effective as of May 1, 2002 (the "Effective Date") by
and between X.X. Xxxxxxxxx Corporation, a Delaware corporation (the "COMPANY"),
and Xxxxx X. Xxxxxxx (the "EXECUTIVE").
WHEREAS, Executive is presently serving as President and Chief Operating
Officer of the Company pursuant to an Employment Agreement dated September 28,
1998 ("Prior Agreement");
WHEREAS, the Board of Directors of the Company has appointed Executive as
Chief Executive Officer effective immediately following the 2002 Annual Meeting
of Stockholders;
WHEREAS, Executive desires to continue his employment with the Company
upon the terms and conditions hereinafter set forth in this agreement (this
"AGREEMENT");
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the validity and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Term of Employment. Subject to the provisions of Section 8 of this
Agreement, Executive shall be employed by the Company for a period (the
"EMPLOYMENT TERM") commencing on the date hereof (the "COMMENCEMENT DATE") and
ending on April 30, 2003. On May 1, 2003 and each succeeding anniversary
thereof, the Employment Term shall automatically be extended for one additional
year unless, not later than ninety days prior to such anniversary, the Company
or the Executive shall have given notice of its or his intention not to extend
the Employment Term. Any such non-renewal of this Agreement by the Company shall
be treated as a termination of Executive's employment without Cause, as
hereinafter defined. This Agreement shall replace and supercede the Prior
Agreement, which shall be of no further force or effect after the date hereof.
2. Position. (a) Executive shall serve as Chief Executive Officer of the
Company. In such position, Executive shall have such duties and authority
commensurate with such position and, to the extent not inconsistent with the
foregoing, as shall be determined from time to time by the Board of Directors of
the Company (the "BOARD"). Executive shall be employed as the senior most
officer of the Company and shall report directly to the Board.
(b) During the Employment Term, Executive will devote substantially all of
his business time and best efforts to the performance of his duties hereunder
and will not engage in any other business, profession or occupation for
compensation or otherwise which would conflict with the rendition of such
services either directly or indirectly, without the prior written consent of the
Board; provided that nothing herein shall be deemed to preclude Executive from
serving
on business, civic or charitable boards or committees, as long as such
activities do not materially interfere with the performance of Executive's
duties hereunder.
3. Base Salary. Company shall pay Executive an annual base salary (the
"BASE SALARY") at the initial annual rate of $475,000 payable in equal
bi-monthly installments or otherwise in accordance with the payroll and
personnel practices of the Company in effect from time to time. Base Salary
shall be reviewed annually by the Board or a committee thereof to which the
Board may from time to time have delegated such authority (the "COMMITTEE") for
possible increase (but not decrease) in the sole discretion of the Board or the
Committee, as the case may be.
4. Bonus. With respect to each fiscal year all or part of which is
contained in the Employment Term, Executive shall be eligible to participate in
the Company's Annual Incentive Program under the 2001 Stock Award and Incentive
Plan or any successor program or plan thereto or thereunder, with a target bonus
opportunity of 70% of Base Salary and a maximum bonus opportunity not less than
that for which he is eligible on the Effective Date (the "BONUS").
5. Additional Compensation. As further compensation, Executive will be
eligible for participation in all other bonuses, long-term incentive
compensation and stock options and other equity participation arrangements made
available generally to senior executives of the Company, on terms and conditions
no less favorable than those offered to other senior executives of the Company,
and at no less attractive a level in the aggregate as that for which he is
eligible on the Effective Date.
6. Employee Benefits. During the Employment Term, Executive shall be
eligible for employee benefits (including perquisites, fringe benefits,
vacation, pension and profit sharing plan participation and life, health,
accident and disability insurance) made available generally to senior executives
of the Company, on terms and conditions no less favorable than those offered to
other senior executives of the Company, and at no less attractive a level in the
aggregate as that for which he is eligible on the Effective Date.
7. Business Expenses. Reasonable travel, entertainment and other
business expenses incurred by Executive in the performance of his duties
hereunder shall be reimbursed by the Company in accordance with Company
policies in effect from time to time.
8. Termination of Employment. Each of Executive and the Company may
terminate the employment of Executive hereunder at any time in accordance with
this Section 8. Executive's entitlements hereunder in the event of any such
termination shall be as set forth in this Section 8. The provisions of this
Section 8 (and any related provision of Section 10) shall survive any
non-renewal of this Agreement by the Company pursuant to Section 1. With respect
to any termination of employment (voluntary or otherwise), any and all (i)
accrued but unused vacation and (ii) earned but unpaid bonus (with respect to
any full performance period) will be paid at the same time as other payments
provided for herein.
2
(a) For Cause by the Company. If Executive's employment is terminated by
the Company for Cause, he shall be entitled to receive his Base Salary through
the Date of Termination, as hereinafter defined. All other benefits due
Executive following Executive's termination of employment pursuant to this
Section 8(a) shall be determined in accordance with the then-existing plans,
policies and practices of the Company.
(b) Death or Disability. Executive's employment hereunder shall terminate
upon his death and may be terminated by the Company upon his Disability during
the Employment Term. Upon termination of Executive's employment hereunder upon
the Executive's Disability or death, Executive or his estate (as the case may
be) shall be entitled to receive Base Salary through the Date of Termination,
plus a pro-rata portion of target Bonus, based on the number of whole or partial
months from the beginning of the bonus period to the Date of Termination. In
addition, if Executive's employment is terminated as a result of Disability,
Executive shall continue to be eligible to participate in all health, medical
and dental benefit plans of the Company, until age 65 in accordance with the
terms, conditions and elections, if any, applicable to or in effect with respect
to Executive at the Date of Termination.
(c) Termination Not Following a Change in Control. If, during the
Employment Term and prior to a Change in Control or more than two years after a
Change in Control, Executive's employment is terminated by the Company without
Cause, or by Executive under subclauses (i), (ii) or (iii) of the definition of
Good Reason, Executive shall be entitled to the following:
(i) Base Salary through the Date of Termination at the rate in
effect at the time of Notice of Termination, as defined in Section 8(g)
herein, is given, or if higher, at the rate in effect immediately prior to
the event or circumstance leading to the termination of employment, plus a
pro rata (number of days employed during calendar year divided by 360)
portion of target Bonus, plus all other amounts to which Executive is
entitled under any then-existing compensation or benefit plan of the
Company.
(ii) In lieu of any further salary payments to Executive for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay, not later than the fifth business day following the Date of
Termination, a severance payment (the "SEVERANCE PAYMENT") equal to two
times the sum of (A) Base Salary at the rate in effect on the date Notice
of Termination is given, or if higher, at the rate in effect immediately
prior to the event or circumstance leading to the termination of
employment, plus (B) target Bonus at the rate in effect on the date of the
Notice of Termination is given, or if higher, at the rate in effect
immediately prior to the event or circumstance leading to the termination
of employment without Cause, paid in lump sum without reduction for time
value of money.
(iii) Continued eligibility to participate in all health, medical
and dental benefit plans of the Company for which Executive was eligible
immediately prior to the time of the Notice of Termination, or comparable
coverage, for two years, or, if sooner, until comparable health insurance
coverage is available to Executive in connection with subsequent
employment or self-employment. The coverage for which Executive shall
continue to be eligible under this Section shall be made available at no
greater cost or tax
3
cost to Executive than that applicable to Executive at the time of
termination of employment.
(iv) Term life insurance equivalent in coverage, and at no greater
cost or tax cost to Executive, to that elected by Executive at the time of
the Notice of Termination, until the last day of the second calendar year
beginning after termination of employment, or, if sooner, until comparable
life insurance coverage is available to Executive in connection with
subsequent employment or self-employment.
(d) Termination Within Two Years Following a Change in Control. If, during
the Employment Term and within two years following a Change in Control,
Executive's employment is terminated by the Company without Cause, or by the
Executive for Good Reason, as hereinafter defined, Executive shall be entitled
to the payments and benefits set forth in Section 8(c), except that for purposes
of this Section 8(d), references in such Section to "two times" or " two years"
shall be changed to "three times" and "three years." In addition, Executive
shall be entitled to receive, for the three years following termination of
employment or, if sooner, until subsequently employed or self-employed, (i) all
perquisites and similar benefits he was receiving immediately prior to the time
of Notice of Termination, (ii) reimbursement of expenses relating to financial
planning services, up to a maximum amount per year equal to the average of such
amounts paid to Executive for the two calendar years preceding the Date of
Termination and (iii) reimbursement of expenses relating to outplacement
services, subject to a maximum reimbursement under this clause (iii) of $25,000.
For purposes of this Agreement, termination of employment after the commencement
of negotiations with a potential acquiror or business combination partner but
prior to an actual Change of Control shall be deemed to be a termination of
employment within two years following a Change in Control if such negotiations
subsequently result in a transaction with such acquiror or business combination
partner which constitutes a Change in Control.
(e) Retirement. If during the Employment Term, Executive retires at normal
retirement age under the Company's qualified pension plan or any successor plan,
Executive shall be entitled to the payments and benefits specified in Section
8(b) as if his employment had terminated as a result of Disability.
(f) Voluntary Termination of Employment. If during the Employment Term,
Executive terminates his employment under circumstances other than those
specified elsewhere in this Section 8, Executive shall be entitled to the
payments and benefits specified in Section 8(a).
(g) Notice and Date of Termination. (i) Any purported termination of
employment by the Company or by Executive shall be communicated by written
Notice of Termination to the other party hereto in accordance with Section 17(i)
hereof. For purposes of this Agreement, a "NOTICE OF TERMINATION" shall mean a
notice which shall indicate (by reference to specific Section and sub-section
numbers and letters, for example, Section 8(d)) the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of
employment under the provision so indicated. If the event or circumstance on
which the proposed termination of employment is
4
based is susceptible of cure, the Notice of Termination shall not be deemed
effective until Executive or the Company, as the case may be, has had at least
30 days to effect such cure, and unless such event or circumstance persists at
the end of such cure period.
(ii) "DATE OF TERMINATION" shall mean (A) if employment is
terminated for Disability, thirty (30) days after Notice of Termination is
given (provided that Executive shall not have returned to the full-time
performance of his duties during such thirty (30) day period), (B) if
employment is terminated by reason of death, the date of death, and (C) if
employment is terminated for any other reason, subject to the
effectiveness of notice and "cure" provisions of clause (i) above, the
date specified in the Notice of Termination (which, in the case of a
termination of employment by the Company for Cause shall not be less than
ten (10) days after the date such Notice of Termination is given);
provided that if within thirty (30) days after any Notice of Termination
is given the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for appeal
therefrom having expired and no appeal having been perfected); provided
further that the Date of Termination shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving
such notice pursues the resolution of such dispute with reasonable
diligence; and provided, further that in the event Executive gives Notice
of Termination for Good Reason based upon any matter referred to in clause
(ii) of the definition of Good Reason, and it is thereafter determined
that said grounds do not constitute Good Reason, then so long as Executive
reasonably believed in good faith that he had grounds for termination of
employment for Good Reason, the Company may not terminate Executive's
employment for Cause based upon such matters.
(h) Any provision of this Agreement to the contrary notwithstanding,
Executive shall be obligated to execute a general release of claims in favor of
the Company, substantially in the form attached hereto as Exhibit A, as a
condition to receiving benefits and payments under Sections 8(c) or (d) of this
Agreement.
(i) Notwithstanding anything to the contrary set forth herein, the
following provisions of this Agreement shall survive any termination of
Executive's employment hereunder and/or termination of this Agreement: Sections
8, 10, 11, 12, 13, 14, 15, 16 and 17(f) and (g).
9. Definitions. (a) "CAUSE" shall mean (i) Executive's willful and
continued failure substantially to perform the duties of his position (other
than as a result of total or partial incapacity due to physical or mental
illness or as a result of a termination by Executive for Good Reason, as
hereinafter defined), (ii) any willful act or omission by the Executive
constituting dishonesty, fraud or other malfeasance, which in any such case is
demonstrably (and, in the case of other malfeasance, materially) injurious to
the financial condition or business reputation of the Company or any of its
affiliates, or (iii) the Executive's conviction of a felony under the laws of
5
the United States or any state thereof or any other jurisdiction in which the
Company or any of its subsidiaries conducts business which materially impairs
the value of Executive's services to the Company or any of its subsidiaries. For
purposes of this definition, no act or failure to act shall be deemed "willful"
unless effected by Executive not in good faith and without a reasonable belief
that such action or failure to act was in or not opposed to the best interests
of the Company.
(b) "CHANGE IN CONTROL" shall mean the occurrence of any of the following
events:
(i) Any "person," as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")
(other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned
directly or indirectly by the shareholders of the Company in substantially
the same proportions as their ownership of stock of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding securities;
(ii) During any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new director
(other than a director designated by a person (as defined above) who has
entered into an agreement with the Company to effect a transaction
described in subsections (i), (iii) or (iv) of this definition) whose
election by the Board or nomination for election by the Company's
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously
so approved, cease for any reason to constitute at least a majority
thereof;
(iii) The shareholders of the Company have approved a merger or
consolidation of the Company with any other company and all other required
governmental approvals of such merger or consolidation have been obtained,
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 entity) more than 60% of the combined
voting power of the voting securities of the Company or such surviving
entity 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 (as defined above)
becomes the beneficial owner (as defined above) of more than 20% of the
combined voting power of the Company's then outstanding securities; or
(iv) The shareholders of the Company have approved a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, and all other required governmental approvals of such transaction
have been obtained.
6
(c) "DISABILITY" shall mean the Executive's inability, as a result of
physical or mental incapacity, to perform the duties of his position for a
period of six (6) consecutive months or for an aggregate of six (6) months in
any twelve (12) consecutive month period. Any question as to the existence of
the Disability of Executive as to which Executive and the Company cannot agree
shall be determined in writing by a qualified independent physician mutually
acceptable to Executive and the Company. If Executive and the Company cannot
agree as to a qualified independent physician, each shall appoint such a
physician and those two physicians shall select a third who shall make such
determination in writing. The determination of Disability made in writing to the
Company and Executive shall be final and conclusive for all purposes of the
Agreement.
(d) "GOOD REASON" means:
(i) Removal from, or failure to be reappointed or reelected to,
Executive's position as specified in Section 2 (other than as a result of
a promotion); or
(ii) Material diminution in Executive's title, position, duties or
responsibilities, re-assignment of Executive's reporting relationship to
anyone other than the Board of Directors, or the assignment to Executive
of duties that are inconsistent, in a material respect, with the scope of
duties and responsibilities associated with Executive's position as
specified in Section 2; or
(iii) Reduction in Base Salary or target or maximum Bonus
opportunity, reduction in level of participation in long term incentive,
stock option and other equity award, benefit and other plans for executive
officers; or
(iv) Relocation of the executive's principal workplace without his
consent to a location outside the New York metropolitan area; or
(v) Other material breach of this Agreement by the Company.
10. Certain Payments. (a) If any of the payments or benefits
received or to be received by Executive in connection with a Change in
Control or Executive's termination of employment, whether or not pursuant
to this Agreement (such payments or benefits, excluding the Gross-Up
Payment, as hereinafter defined, shall hereinafter be referred to as the
"TOTAL PAYMENTS") will be subject to an excise tax as provided for in
Section 4999 of the Internal Revenue Code (the "CODE") (the "EXCISE TAX"),
the Company shall pay to Executive an additional amount no later than the
due date for Executive's tax return with respect to such Excise Tax (the
"GROSS-UP PAYMENT") such that the net amount retained by the Executive,
after deduction of any Excise Tax on the Total Payments and any federal,
state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Total Payments; provided, however,
that if the Total Payments are less than 360% of the Executive's Base
Amount, as defined in
7
Section 280G(b)(3) of the Code, the Executive shall not be entitled to the
Gross-Up Payment, and the Total Payments shall be reduced as provided for
in Section 10(d) below.
(b) For purposes of determining whether any of the Total Payments will be
subject to the Excise Tax and the amount of such Excise Tax, (i) all of the
Total Payments shall be treated as "parachute payments" (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of tax counsel ("TAX
COUNSEL") reasonably acceptable to Executive and selected by the accounting firm
acting as the "Auditor", as defined below, such payments or benefits (in whole
or in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, (ii) all "Excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax unless, in the opinion of Tax Counsel, such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered (within the meaning of Section 280G(b)(4)(B) of the Code) in excess of
the Base Amount allocable to such reasonable compensation, or are otherwise not
subject to the Excise Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income tax at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive's residence or, if higher, in the state and locality of
Executive's principal place of employment, on the date of termination (or if
there is no date of termination, then the date on which the Gross-Up Payment is
calculated for purposes of this Section 10), net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.
(c) In the event that the Excise Tax is finally determined to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment,
Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction (including that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and local income and
employment taxes imposed on the Gross-Up Payment being repaid by the Executive
to the extent that such repayment results in a reduction in Excise Tax and/or a
federal, state or local income or employment tax deduction). In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
in calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by the Executive
with respect to such excess) at the time that the amount of such excess is
finally determined. The Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments.
(d) If the Total Payments would constitute an excess parachute payment,
but are less than 360% of the Base Amount, such payments shall be reduced to the
largest amount that may be paid to the Executive without the imposition of the
Excise Tax or the disallowance as
8
deductions to the Company under Section 280G of the Code of any such payments.
Unless Executive shall have given prior written notice to the Company specifying
a different order, the Company shall reduce or eliminate the payments or
benefits by first reducing or eliminating the portion of the payments or
benefits that are not payable in cash and then by reducing or eliminating cash
payments, in each case, in reverse chronological order, starting with payments
or benefits that are to be paid farthest in time from the applicable
determination of the Auditor (as defined below). Any written notice given by
Executive pursuant to the preceding sentence shall take precedence over the
provisions of any plan, agreement or arrangement governing Executive's
entitlement and rights to such payments or benefits.
(e) All determinations under this Section 10 shall be made by a nationally
recognized accounting firm selected by the Executive (the "AUDITOR"), and the
Company shall pay all costs and expenses of the Auditor. The Company shall
cooperate in good faith in making such determinations and in providing the
necessary information for this purpose.
11. Indemnification. The Company will indemnify Executive (and his legal
representative or other successors) to the fullest extent permitted (including a
payment of expenses in advance of final disposition of a proceeding) by
applicable law, as in effect at the time of the subject act or omission, or by
the Certificate of Incorporation and By-Laws of the Company, as in effect at
such time or on the Commencement Date, or by the terms of any indemnification
agreement between the Company and Executive, whichever affords or afforded
greatest protection to Executive, and Executive shall be entitled to the
protection of any insurance policies the Company may elect to maintain generally
for the benefit of its directors and officers (and to the extent the Company
maintains such an insurance policy or policies, Executive shall be covered by
such policy or policies, in accordance with its or their terms to the maximum
extent of the coverage available for any Company officer or director), against
all costs, charges and expenses whatsoever incurred or sustained by him or his
legal representatives (including but not limited to any judgment entered by a
court of law) at the time such costs, charges and expenses are incurred or
sustained, in connection with any action, suit or proceeding to which Executive
(or his legal representatives or other successors) may be made a party by reason
of his having accepted employment with the Company or by reason of his being or
having been a director, officer or employee of the Company, or any subsidiary of
the Company, or his serving or having served any other enterprise as a director,
officer or employee at the request of the Company. Executive's rights under this
Section 11 shall continue without time limit for so long as he may be subject to
any such liability, whether or not the Employment Term may have ended.
12. Non-Competition. Executive acknowledges and recognizes the highly
competitive nature of the businesses of the Company and its affiliates and
accordingly agrees that
(a) during the Employment Term:
(i) Executive will not directly or indirectly engage in any business
which is in competition with any line of business then conducted by the
Company or its affiliates (including without limitation by performing or
soliciting the performance of services for
9
any person who is a customer or client of the Company or any of its
affiliates) whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as a holder of less
than 1% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor, agent, sales representative or other
participant, in any location in which the Company or any of its affiliates
then conducts any such competing line of business; and
(ii) Executive will not directly or indirectly induce any employee
of the Company or any of its affiliates to engage in any activity in which
Executive is prohibited to engage by this Section, or to terminate his or
her employment with the Company or any of its affiliates, and will not
directly or indirectly employ or offer employment to any person who was
employed by the Company or any of its affiliates unless such person shall
have ceased to be employed by the Company or any of its affiliates for a
period of at least 12 months; and
(iii) Executive will not directly or indirectly solicit customers or
suppliers of the Company or its affiliates or induce any such person to
materially reduce or terminate its relationship with the Company.
(b) for one year following the Employment Term:
(i) Executive will not directly or indirectly engage in any local
directional advertising or marketing (whether in print, electronic,
wireless or other format) business or provide pre-press publishing or
utilize digital and intranet technologies to repurpose print directory
information for electronic, wireless or related distribution, in each case
which is in competition with the business then conducted by the Company or
its affiliates, whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as a holder of less
than 5% of the outstanding capital stock of a publicly traded
corporation), consultant, advisor, agent, sales representative or other
participant, in any location in which the Company or any of its affiliates
then conducts any such competing line of business; and
(ii) Executive will not directly or indirectly induce any employee
of the Company or any of its affiliates to engage in any activity in which
Executive is prohibited to engage by this Section, or to terminate his or
her employment with the Company or any of its affiliates, and will not
directly or indirectly employ or offer employment to any person who was
employed by the Company or any of its affiliates unless such person shall
have ceased to be employed by the Company or any of its affiliates for a
period of at least 12 months; and
(iii) Executive will not directly or indirectly solicit customers or
suppliers of the Company or its affiliates or induce any such person to
materially reduce or terminate its relationship with the Company.
10
For purposes of this Agreement, "directional advertising or marketing" shall
mean advertising or marketing primarily (1) designed for purposes of directing
consumers who are seeking a product or service to providers of that product or
service in order to satisfy such consumer's previously recognized need or desire
for such product or service and (2) generally delivered by non-intrusive means;
and shall be distinguished from "creative advertising or marketing," which is
primarily (1) designed to stimulate (as opposed to direct) demand for products
or services in consumers who did not previously recognize such need or desire
for such products or services and (2) generally delivered by intrusive means.
It is expressly understood and agreed that although Executive and the Company
consider the restrictions contained in this Section 12 to be reasonable, if a
final judicial determination is made by a court of competent jurisdiction that
the time or territory or any other restriction contained in this Agreement is an
unenforceable restriction against Executive, the provisions of this Agreement
shall not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable. Alternatively, if any court
of competent jurisdiction finds that any restriction contained in this Agreement
is unenforceable, and such restriction cannot be amended so as to make it
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
13. Confidentiality; Nondisparagement. (a) Executive will not at any time
(whether during or after his employment with the Company) disclose or use for
his own benefit or purposes or the benefit or purposes of any other person,
firm, partnership, joint venture, association, corporation or other business
organization, entity or enterprise other than the Company and any of its
subsidiaries or affiliates, any trade secrets, information, data, or other
confidential information relating to customers, development programs, costs,
marketing, trading, investment, sales activities, promotion, credit and
financial data, manufacturing processes, financing methods, plans, employees,
organizational structure or the business and affairs of the Company generally,
or of any subsidiary or affiliate of the Company, provided that the foregoing
shall not apply to information which is not unique to the Company or which is
generally known to the industry or the public other than as a result of
Executive's breach of this covenant. Executive agrees that upon termination of
his employment with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or therefrom, in any way relating to the business
of the Company and its affiliates, except that he may retain personal notes,
notebooks, rolodexes and diaries. Executive further agrees that he will not
retain or use for his account at any time any trade names, trademark or other
proprietary business designation used or owned in connection with the business
of the Company or its affiliates.
(b) Executive will not knowingly disparage the reputation of the Company
in a manner that causes or is reasonably likely to cause material harm to its
business; provided, however, that Executive may (i) express his own opinions
about the Company to other senior executives of the Company or to the Board and
(ii) comply with applicable legal process without being deemed to have violated
this provision.
11
14. Material Inducement; Specific Performance. Executive acknowledges and
agrees that the covenants entered into by Executive in Sections 12 and 13(a) are
essential elements of the parties' agreement as expressed herein, are a material
inducement for the Company to enter into this Agreement and the breach thereof
would be a material breach of this Agreement. Executive further acknowledges and
agrees that the Company's remedies at law for a breach or threatened breach of
any of the provisions of Sections 12 or Section 13(a) would be inadequate and,
in recognition of this fact, Executive agrees that, in the event of such a
breach or threatened breach, in addition to any remedies at law, the Company,
without posting any bond, shall be entitled to obtain equitable relief in the
form of specific performance, temporary restraining order, temporary or
permanent injunction or any other equitable remedy which may then be available.
15. Litigation Support. Executive agrees that he will assist and cooperate
with the Company, at the Company's sole cost and expense and, in the case of
post-termination, in a manner so as to not unreasonably interfere with any other
employment obligations of Executive, in connection with the defense or
prosecution of any claim that may be made against or by the Company or its
affiliates, or in connection with any ongoing or future investigation or dispute
or claim of any kind involving the Company or its affiliates, including any
proceeding before any arbitral, administrative, judicial, legislative, or other
body or agency, including testifying in any proceeding, to the extent such
claims, investigations or proceedings relate to services performed or required
to be performed by Executive, pertinent knowledge possessed by Executive, or any
act or omission by Executive. Executive further agrees to perform all acts and
to execute and deliver any documents that may be reasonably necessary to carry
out the provisions of this Section, at the Company's sole cost and expense and,
in the case of post-termination, in a manner so as to not unreasonably interfere
with any other employment obligations of Executive. If Executive determines in
good faith that separate counsel is necessary in connection with its compliance
with this Section 15, then the Company shall pay all reasonable fees and
expenses of such counsel retained by Executive in connection herewith. Following
Executive's termination of employment, this covenant shall expire and be of no
further force or effect upon the later to occur of (a) one year following such
termination of employment and (b) in the event of termination of employment
under Sections 8(c) or (d), the maximum number of years following such
termination specified in the applicable sub-section during which Executive is
eligible to continue to participate in the Company's benefit plans.
16. Legal Fees. The Company will pay or reimburse Executive, as incurred,
all legal fees and costs incurred by Executive in enforcing his rights under the
Agreement, if Executive's position substantially prevails. Following a Change in
Control, the Company will pay or reimburse Executive, as incurred, for all such
fees and costs unless Executive's claim was frivolous or was brought or pursued
by Executive in bad faith.
17. Miscellaneous. (a) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the
Company. There are no
12
restrictions, agreements, promises, warranties, covenants or undertakings
between the parties with respect to the subject matter herein other than those
expressly set forth herein and in the incentive compensation and other employee
benefit plans and arrangements of the Company referenced herein. This Agreement
may not be altered, modified, or amended except by written instrument signed by
the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(d) Severability. In the event that any one or more of the provisions of
this Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not be affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive and
shall be assignable by the Company only with the consent of Executive except as
set forth in Section 17(h); provided that no such assignment by the Company
shall relieve the Company of any liability hereunder, whether accrued before or
after such assignment.
(f) No Mitigation. Executive shall not be required to mitigate the amount
of any payment provided for in this Agreement by seeking other employment or
otherwise, and no such employment, if obtained, or compensation or benefits
payable in connection therewith, shall reduce any amounts or benefits to which
Executive is entitled hereunder except as provided for in Sections 8(c) and (d).
(g) Arbitration. Any dispute between the parties to this Agreement arising
from or relating to the terms of this Agreement (other than as specified under
Section 14 with respect to Sections 12 and 13(a) hereof) or the employment of
Executive by the Company shall be submitted to arbitration in New York, New York
under the auspices of the American Arbitration Association.
13
(h) Successors; Binding Agreement
(i) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if
no such succession had taken place. Such assumption and agreement shall be
obtained prior to the effectiveness of any such succession. As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
Prior to a Change in Control, the term "Company" shall also mean any
affiliate of the Company to which Executive may be transferred and the
Company shall cause such successor employer to be considered the "Company"
bound by the terms of this Agreement and this Agreement shall be amended
to so provide. Following a Change in Control the term "Company" shall not
mean any affiliate of the Company to which Executive may be transferred
unless Executive shall have previously approved of such transfer in
writing, in which case the Company shall cause such successor employer to
be considered the "Company" bound by the terms of this Agreement and this
Agreement shall be amended to so provide.
(ii) This Agreement shall inure to the benefit of and be binding
upon personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive
should die while any amount would still be payable to Executive hereunder
if Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the devisee, legatee or other designee of Executive or, if
there is no such designee, to the estate of Executive.
(i) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
Executive at the address appearing from time to time in the personnel records of
the Company and to the Company at the address of its corporate headquarters,
directed to the attention of the Board with a copy to the Secretary of the
Company, or in either case to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
(j) Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
(k) Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
14
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
Xxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxxx
-----------------------------------
X.X. XXXXXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxx
-------------------------------
Name: Xxxxxx X. Xxxx
Title: V.P & General Counsel
15
