(PAGE NUMBERS REFER TO PAPER DOCUMENT ONLY)
EXHIBIT 10.63
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT, dated March 10, 2003, between CONSUMER PROGRAMS
INCORPORATED, a Missouri corporation (the "Corporation"), and
XXXXXXX XXXXXX (the "Executive").
WHEREAS, the Corporation desires to employ the Executive in
the capacity of Executive Vice President/Chief Information Officer,
and the Executive will be one of the key executives of the Corporation;
WHEREAS, there is much competition for the type of business
performed by the Corporation in the locales in which the Corporation
operates, and the Corporation and Executive acknowledge that the
Corporation is active in the product markets in which it competes;
WHEREAS, Executive, during his employment, will be entrusted with
confidential information; and
WHEREAS, Executive and the Corporation recognize and acknowledge
that, to ensure the continued growth and stability of the Corporation,
it is necessary to obtain an agreement from Executive not to compete
with the Corporation and not to disclose confidential information of
the Corporation.
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the parties hereto
hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Affiliated Companies" shall mean any corporation (or
other business entity) controlling, controlled by or under common
control with the Corporation.
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(b) "Beneficiary" shall mean the person designated in writing
by the Executive as his beneficiary under this Agreement, or in the
absence of such designation, his estate.
(c) "Cause" shall mean:
(1) prior to a Change of Control, (i) conduct or activity
of the Executive materially detrimental to the Corporation's reputation
or business (including financial) operations; (ii) gross or habitual
neglect or breach of duty or misconduct of the Executive in discharging
the duties of his position; or (iii) prolonged absence by the Executive
from his duties (other than on account of illness or disability) without
the consent of the Corporation.
(2) after a Change of Control, (i) an act or acts of
dishonesty on the Executive's part which are intended to result in
his substantial personal enrichment at the expense of the Corporation;
(ii) any material violation by the Executive of his obligations and
covenants pursuant to this Agreement which is demonstrably willful and
deliberate on the Executive's part and which results in material injury
to the Corporation; or (iii) the conviction of Executive of a felony or
of a crime involving moral turpitude.
(d) A "Change of Control" shall mean a change in control of
a nature that would be required to be reported in response to Item 1(a)
of the Current Report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended ("Exchange Act") or would have been required to be so reported
but for the fact that such event had been "previously reported" as that
term is defined in Rule 12b-2 of Regulation 12B of the Exchange Act
unless the transactions that give rise to the change in control are
approved or ratified by a majority of the members of the Incumbent
Board of CPI Corp. who are not employees of the Corporation; provided
that, without limitation,
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notwithstanding anything herein to the contrary, such a change in
control shall be deemed to have occurred if (a) any Person is or
becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of CPI Corp.
representing 40% or more of the combined voting power of CPI Corp.'s
then outstanding securities ordinarily (apart from rights accruing
under special circumstances) having the right to vote at elections
of directors ("Voting Securities"), (b) individuals who constitute
the Board of CPI Corp. on the date hereof (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the date
hereof whose election, or nomination for election by CPI Corp.'s
shareholders, was approved by a vote of at least three-quarters of
the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of CPI Corp. in which
such person is named as a nominee for director, without objection
to such nomination) shall be, for purposes of this clause (b),
considered as though such person were a member of the Incumbent Board,
or (c) approval by the stockholders of CPI Corp. of a reorganization,
merger or consolidation, in each case, with respect to which persons
who were the stockholders of CPI Corp. immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own, directly or indirectly, more than 50% of the combined
voting power entitled to vote generally in the election of directors
of the reorganized, merged or consolidated company's then outstanding
voting securities, or a liquidation or dissolution of CPI Corp. or of
the sale of all or substantially all of the assets of CPI Corp. For
purposes of this Agreement, the term "Person" shall mean and include
any individual, corporation, partnership, group, association or other
"person," as such term is used in Section 14(d) of the Exchange Act,
other than CPI Corp., the Corporation or an Affiliated Company or any
employee benefit plan(s) sponsored or maintained by the Corporation
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or any Affiliated Company.
(e) "Code" shall mean the Internal Revenue Code of 1986,
as may be amended from time to time.
(f) "Continuing Directors" shall have the meaning set
forth in Paragraph 3(G) of Article Ten of CPI Corp.'s Certificate
of Incorporation.
(g) "Fiscal Year" shall mean the Fiscal Year of the
Corporation.
(h) "Permanent Disability" shall mean the inability of
Executive to perform the services contemplated by Section 4 hereof
for a period of at least one hundred eighty (180) consecutive calendar
days or for thirty-five (35) weeks (whether or not consecutive) in any
twelve (12) month period on account of any sickness, injury or other
infirmity or disability.
(i) "Retirement" shall mean the Executive's voluntary or
involuntary termination of employment with the Corporation except
for termination on account of (A) Cause as defined in Subsection 6(b)
hereof, (B) death or (C) Permanent Disability before attaining age
sixty-five (65).
(j) "Term of Employment" shall have the meaning set forth
in Section 3 hereof.
(k) "Vesting Percentage" shall mean the percentage of
Supplemental Retirement Benefits, death benefits, and disability
benefits in which Executive has a nonforfeitable interest (except
in the event of termination for Cause) based upon the number of Years
of Service Executive has completed, determined as follows:
Completed Years of Service Vesting Percentage
-------------------------- ------------------
0 0%
1 10%
4
2 20%
3 30%
4 40%
5 50%
6 60%
7 70%
8 80%
9 90%
10 100%
Notwithstanding anything herein to the contrary, if Executive's
employment with the Corporation terminates following a Change of
Control, unless such termination is for Cause, for purposes of
Subsections 5(g), 5(h), and 5(i) of this Agreement Executive shall be
deemed to have completed ten (10) Years of Service and his Vesting
Percentage shall be deemed to be 100%.
(l) "Year of Service" shall mean any Fiscal Year during which
the Executive has worked for the Corporation at least one thousand
(1,000) hours, including Fiscal Years prior to the effective date of
this Agreement.
2. EMPLOYMENT. The Corporation hereby employs and engages the
services of the Executive as one of its key executives in the position
of Executive Vice President/Chief Information Officer, for the Term of
Employment set forth in Section 3. The Executive agrees to serve the
Corporation for the Term of Employment as provided herein.
3. TERM OF EMPLOYMENT. The Executive's Term of Employment shall
be a period commencing on the date hereof and ending one (1) year
thereafter; provided, however, that upon the expiration of the aforesaid
period (the "Expiration Date") the Term of Employment shall continue
unless Executive or the Corporation notifies the other in writing of
termination of this Agreement. Notwithstanding anything herein to the
contrary, the Term of Employment shall terminate upon Executive's death
or Permanent Disability as set forth in subsection 6(a) hereof or upon
the Corporation's termination of Executive's employment for Cause
pursuant to subsection
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6(b) hereof. The Term of Employment shall also terminate upon the
Executive's attainment of age 65, unless the Board of Directors of
CPI Corp. requests that the Executive extend his service to the
Corporation after age 65. No such extension shall exceed one year,
provided that the Term may thereafter be renewed from year to year by
request of the Board of Directors.
4. POSITION AND DUTIES.
(a) Prior to a Change of Control, during the Term of
Employment, the Executive shall serve the Corporation in such capacity
as the Corporation may determine. After a Change of Control, during the
Term of Employment, the Executive's position, authority and
responsibilities, the type of work he is asked to perform, and the
status and stature of the people with whom he is asked to work, shall
be comparable to that existing with respect to the Executive as of the
date immediately prior to the Change of Control, and after a Change of
Control the Executive's services shall be performed at the location
where the Executive was employed as of the date immediately prior to
the Change of Control, or at such other location as may be mutually
agreed between the Corporation and the Executive.
(b) The Executive agrees to devote his full business time
during normal business hours to the business and affairs of the
Corporation (except as otherwise provided herein), to use his best
efforts to promote the interests of the Corporation and its Affiliated
Companies and to perform faithfully and efficiently the responsibilities
assigned to him in accordance with the terms of this Agreement to the
extent necessary to discharge such responsibilities, except for (i)
service on corporate, civic or charitable boards or committees not
significantly interfering with the performance of such responsibilities
and (ii) periods of vacation and sick leave to which he is entitled.
It is expressly understood and agreed that the Executive's continuing
service on any boards and committees with which he shall be connected,
as a member
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or otherwise, as of the date hereof, or any such service approved by
the Corporation during the Term of Employment, shall not be deemed to
interfere with the performance of the Executive's services to the
Corporation pursuant to this subparagraph 4(b).
5. COMPENSATION AND OTHER CONDITIONS OF EMPLOYMENT.
(a) BASE SALARY. During the Term of Employment, the Executive
shall receive an annual base salary (the "Base Salary"), in equal
installments payable bi-weekly or at such other intervals as salary is
normally paid by the Corporation to its employees, at an annual rate
established by the Corporation and any Affiliated Companies as of the
date hereof. Executive's Base Salary for Fiscal Year 2003 is set forth
on Exhibit A, attached hereto and incorporated herein. The Base Salary
shall be reviewed at least once each year and may be increased at any
time and from time to time by action of the Board of Directors of CPI
Corp., any committee thereof or any individual having authority to take
such action, in accordance with the Corporation's regular practices.
Any increase in the Base Salary shall not serve to limit or reduce any
other obligation of the Corporation hereunder, and after such increase
the Base Salary shall not be reduced from such increased level.
(b) BONUS. After a Change of Control, in addition to the
Base Salary, the Executive shall be awarded for each Fiscal Year during
the Term of Employment an annual bonus (the "Annual Bonus") (pursuant to
any bonus plan or program of the Corporation, any incentive plan or
program of the Corporation, or otherwise) in cash at least equal to
the highest bonus paid or payable to the Executive in respect of any of
the three Fiscal Years immediately prior to the date of the Change of
Control. Prior to a Change of Control, the amount of the Executive's
Annual Bonus shall be determined in accordance with the Corporation's
regular practice. Executive's Annual Bonus Plan for the Corporation's
Fiscal Year 2003 is set forth on
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Exhibit B, attached hereto and incorporated herein.
(c) OTHER COMPENSATION PLANS. After a Change of Control,
in addition to the Base Salary and Annual Bonus payable as hereinabove
provided, during the Term of Employment, the Executive shall be entitled
to participate in all other compensation plans and programs, including,
without limitation, savings plans, stock option plans, and retirement
plans of the Corporation and its Affiliated Companies (collectively, the
"Savings Plans"), on a basis at least equivalent to that provided by the
Corporation and its Affiliated Companies to the Executive under such
programs immediately prior to the date of the Change of Control. Prior
to a Change of Control, the Executive's entitlement to participate in
the Savings Plans shall be determined in accordance with the
Corporation's regular practice. Prior to a Change of Control, nothing
herein shall be construed to prevent the Corporation from amending or
altering any such plans in accordance with the terms thereof.
(d) BENEFIT PLANS. After a Change of Control, during the
Term of Employment, the Executive, his spouse, or his dependents, as
the case may be, shall be entitled to receive all amounts which he,
his spouse or his dependents are or would have been entitled to receive
as benefits under all other benefit plans of the Corporation and its
Affiliated Companies, including, without limitation, medical, dental,
disability, group life, accidental death and travel accident insurance
plans and programs (collectively, the "Benefit Plans") on a basis at
least as favorable to the Executive as on the date immediately prior to
the date of the Change of Control. Prior to a Change of Control, the
Executive's and such other persons' entitlement to participate in the
Benefit Plans shall be determined in accordance with the Corporation's
regular practice.
(e) EXPENSES. During the Term of Employment, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive
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in accordance with the regular policies and procedures of the Corporation.
(f) OFFICE AND SUPPORT STAFF. After a Change of Control the Executive
shall be entitled to an office or offices of a size and with furnishings
and other appointments, and to secretarial and other assistance, at least
equal to those provided to the Executive as of the date immediately prior
to the date of the Change of Control.
(g) DEATH BENEFITS. In the event of Executive's death after
completion of at least ten (10) Years of Service, unless (1) Executive's
employment with the Corporation was terminated for Cause or
(2) Executive (or his Beneficiary) is entitled to receive Supplemental
Retirement Benefits pursuant to subsection 5(i), the Corporation shall
pay to Executive's Beneficiary an annual death benefit equal to forty
percent (40%) (but not to exceed $150,000) of the highest annual Base
Salary paid to Executive from and after fiscal year 2002 (as defined in
subsection 5(a) hereof), payable in equal monthly installments,
commencing with the month following the month of Executive's death
and ending with the two-hundred fortieth (240th) month following
the month of Executive's death. In the event that Executive dies
before age 65 but has not completed at least ten (10) Years of Service
with the Corporation, death benefits shall be reduced to an amount
equal to the benefits determined under the preceding sentence
multiplied by the Vesting Percentage applicable to Executive.
(h) DISABILITY BENEFITS. In the event of Executive's
Permanent Disability prior to attaining age 65 and prior to
termination of employment with the Corporation, unless Executive's
employment with the Corporation was terminated for Cause, the
Corporation shall pay Executive annual disability benefits equal
to forty percent (40%) (but not to exceed $150,000) of the highest
annual Base Salary paid to Executive from and after fiscal year 2003,
payable in equal monthly installments, commencing with the month
following the month in
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which Executive terminated employment as a result of Permanent
Disability and ending on the earlier of (i) the month in which
Executive reaches age 65 or (ii) the month of his death. In the
event that at the time of Permanent Disability Executive has not
completed at least ten (10) Years of Service, the disability benefits
shall be reduced to an amount equal to the benefits determined under
the preceding sentence multiplied by the Vesting Percentage applicable
to Executive. Disability benefits pursuant to this subsection (h)
shall be reduced by any amounts paid to Executive under the
Corporation's long-term disability insurance policy, but shall not
be reduced for any payments received by Executive from Social Security
or from any disability insurance coverage individually owned by
Executive.
(i) SUPPLEMENTAL RETIREMENT BENEFITS.
(1) In the event of Executive's Retirement after
completion of at least ten (10) Years of Service, unless Executive's
employment with the Corporation was terminated for Cause, the Corporation
shall pay Executive retirement benefits for twenty (20) years in an
annual amount equal to forty percent (40%) (but not to exceed $150,000)
of the highest annual Base Salary paid to Executive from and after
fiscal year 2001 ("Supplemental Retirement Benefits"). In the event of
Executive's Retirement before completion of ten (10) Years of Service,
Corporation shall pay Executive retirement benefits on the same terms
as set forth in the preceding sentence except that retirement benefits
shall be reduced to an amount equal to Supplemental Retirement Benefits
multiplied by the Vesting Percentage.
(2) Supplemental Retirement Benefits shall be payable
in two hundred forty (240) equal monthly installments commencing with
the month following the later of (i) the month of Executive's
Retirement or (ii) the month during which Executive reaches age
sixty-five (65). If Executive dies prior to the end of the two
hundred forty (240) month period during
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which Supplemental Retirement Benefits are payable, Supplemental
Retirement Benefits shall be payable during the remainder of such
240-month period to his Beneficiary.
(3) Notwithstanding anything herein to the contrary,
in the event of Executive's termination of employment with the
Corporation prior to attaining age 65 as a result of Permanent
Disability, if Executive attains age 65 and his employment with
the Corporation was not terminated for Cause, the Corporation shall
pay to Executive the Supplemental Retirement Benefits set forth in
this Subsection 5(i) in accordance with Executive's Vesting
Percentage, commencing as of the month following the month in which
Executive attains age 65; provided, however, that any Supplemental
Retirement Benefits paid pursuant to this sentence shall be reduced
by any amounts paid to Executive under the Corporation's long-term
disability insurance policy (but shall not be reduced for any
payments received by Executive from Social Security or from any
disability insurance coverage individually owned by Executive) for
the same period.
(j) SURVIVABILITY OF DEATH AND SUPPLEMENTAL RETIREMENT
BENEFITS. In the event of Executive's Retirement or death,
Executive's entitlement to death benefits pursuant to Subsection
5(g) hereof and Supplemental Retirement Benefits pursuant to
Subsection 5(i) hereof shall survive the Term of Employment and
Executive or his Beneficiary shall be entitled to such death
benefits and Supplemental Retirement Benefits based on the same
terms and conditions as would have been applicable had his death
or Retirement, as the case may be, occurred during the Term of
Employment.
(k) OTHER BENEFITS. Executive shall be entitled to received
the benefits set forth on Exhibit C, attached hereto and incorporated
herein.
6. TERMINATION OF EMPLOYMENT
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(a) DEATH OR PERMANENT DISABILITY; Age 65. Except for
the obligations of the Corporation set forth in this Subsection 6(a),
this Agreement shall terminate automatically upon the Executive's death,
Permanent Disability or attainment of age 65. In the event of such
termination, the Corporation shall pay to the Executive's Beneficiary
or, in the event of Permanent Disability or attainment of age 65, the
Executive or his or her legal representative, all benefits and Base
Salary accrued through the date of termination, including, without
limitation, amounts payable under Subsections 5(c) and (d) plus any
benefits to which Executive may be entitled pursuant to Subsection
5(g), Subsection 5(h) or Subsection 5(i) hereof.
(b) CAUSE. The Corporation may terminate the Executive's
employment for Cause. If the Executive's employment is terminated
for Cause, the Corporation shall pay the Executive his full accrued
Base Salary through the effective date of the termination of his
employment (which shall be no earlier than the date of receipt of
notice thereof) at the rate in effect at the time of such
termination, and the Corporation shall have no further obligations
to the Executive under this Agreement.
(c) PAYMENTS FOR INVOLUNTARY TERMINATION WITHOUT CAUSE.
(1) If, prior to a Change of Control, the Corporation
terminates Executive's employment (other than for Cause pursuant to
subsection 6(b) hereof), the Corporation shall pay Executive following
such involuntary termination his full accrued Base Salary through the
date of termination of employment plus an amount equal to (i) one
hundred percent (100%) of Executive's Base Salary, payable in
twenty-six equal bi-weekly installments. The payment pursuant to
this Subsection 6(c)(1) shall be in full discharge of any claims,
actions, demands or damages of every nature and description which
Executive might have or might assert against the Corporation or any
Affiliated Company in connection with or arising from the
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termination of Executive's employment or the termination of this
Agreement.
(2) If, following a Change of Control, the Corporation
terminates Executive's employment (other than for Cause pursuant to
Subsection 6(b) hereof), the Corporation shall, at the time of such
involuntary termination, make a lump sum cash payment to Executive
equal to 200% of his Base Salary for the Fiscal Year of termination.
In addition to the payment pursuant to this Subsection 6(c)(2),
Executive shall be entitled to all remedies available under this
Agreement or at law in respect of any damages suffered by Executive
as a result of an involuntary termination of employment without
Cause.
7. GROSS-UP FOR PARACHUTE TAX.
(a) GENERAL. In the event that following a Change of
Control Executive becomes entitled to any payments (whether pursuant
to this Employment Agreement or any other plan, arrangement or
agreement) from the Corporation in the nature of compensation
("Parachute Payments") that in the opinion of a certified public
accounting firm (selected in the manner set forth in Subsection
7(b)) or that under the provisions of a notice of assessment from
the Internal Revenue Service causes imposition of the tax under
Section 4999 of the Code or any similar tax that may hereafter be
imposed (the "Excise Tax"), the Corporation shall pay Executive,
at the time specified in Subsection 7(d), the Gross-Up Payment
(as determined in accordance with Subsection 7(c)).
(b) SELECTION OF C.P.A. Within fifteen (15) days after
any termination of Executive's employment following a Change of
Control, the majority of the Continuing Directors as of the date
immediately prior to the Change of Control shall select a
certified public accounting firm (the "C.P.A.") to determine the
amount, if any, of the Excise Tax and the amount, if any, of the
Gross-Up Payments.
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(c) AMOUNT OF GROSS-UP PAYMENTS.
(1) The Gross-Up Payments shall be in an amount such
that the net amount retained by Executive with respect to the
Parachute Payments and Gross-Up Payments, after deduction of any
Excise Tax to which the Parachute Payments may be subject and any
federal, state, and local income taxes and Excise Tax upon the
Gross-Up Payments, shall be equal to the gross amount of the
Parachute Payments.
(2) For purposes of determining the amount of the
Gross-Up Payments, Executive shall be deemed to pay federal income
taxes at the applicable rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made and state
and local income taxes at the applicable rate of taxation for the
calendar year in which the Gross-Up Payment is to be made.
(3) In the event that the Excise Tax is subsequently
determined to exceed the amount taken into account at the time the
Gross-Up Payment is made pursuant to Subsection 7(d)(1) hereof
(including any excess attributable to any Parachute Payments the
existence or amount of which could not be accurately determined at
the time of the Gross-Up Payment), the Corporation shall make an
additional Gross-Up Payment in respect of such excess (plus any
interest and addition to tax payable with respect to such excess)
within fifteen (15) days after the amount of such excess is
determined by the C.P.A. or by the Internal Revenue Service
(the "IRS") in a notice of assessment.
(d) TIMING OF GROSS-UP PAYMENTS. Gross-Up Payments other
than Gross-Up Payments pursuant to Subsection 7(c)(3) shall be paid
not later than forty-five (45) days following payment of any
Parachute Payments to which the Gross-Up Payments are attributable;
provided, however, that if the amount of such Gross-Up Payment or
portion thereof cannot be
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finally determined on or before such day, the Corporation shall
pay to Executive on such day an estimate, as determined in good
faith by the Corporation, of the minimum amount of such payments
and shall pay the remainder of such payments (together with interest
at the applicable federal rate provided in Section l274(d) of the
Code) as soon as the amount thereof can be determined by the C.P.A.,
but in no event later than forty-five (45) days after payment of
such Parachute Payments.
(e) CORPORATION'S RIGHT TO DESIGNATE TAX REPRESENTATIVE;
Assignment of Refund Proceeds. If the IRS proposes an assessment
of the Excise Tax against Executive or proposes an additional
assessment of Excise Tax in excess of the amount previously reported
by Executive:
(1) Executive shall within five (5) days after receipt
from the IRS of notice of the proposed Excise Tax assessment notify
the Corporation in writing and furnish the Corporation with copies
of all correspondence from the IRS relating to the proposed Excise
Tax assessment.
(2) The Corporation shall be authorized to designate an
attorney and/or accountant (the "Tax Representative") to serve as
Executive's exclusive representative with respect to all proceedings
with the IRS relating to the proposed Excise Tax assessment, including
but not limited to negotiating a settlement or compromise of the
proposed Excise Tax assessment, filing a claim for refund with respect
thereto, and seeking judicial review of any disallowance of a claim
for refund. Executive hereby agrees to execute an appropriate power
of attorney authorizing the Tax Representative to represent Executive
with respect to the Excise Taxes. Executive further agrees to take
any other appropriate actions reasonably requested by the Tax
Representative in connection therewith; provided, however, that the
Corporation shall
15
reimburse Executive for any expenses incurred by Executive as a
result of compliance with such requests.
(3) If the Tax Representative files a claim for
refund of Excise Taxes with respect to which the Corporation has
made a Gross-Up Payment and such refund claim is allowed by the IRS
or by the final judgment of a court of competent jurisdiction,
Executive shall endorse the refund check payable to the Corporation
and shall send the refund check to the Corporation not later than
five (5) days after receipt from the IRS.
(4) If the Corporation designates a Tax Representative,
the Corporation shall pay all of his professional fees and expenses
and hold Executive harmless from any claims in connection therewith.
The Tax Representative shall keep Executive timely informed of all
significant developments in the Excise Tax matter and shall send to
Executive copies of all correspondence relating thereto.
(5) Notwithstanding anything herein to the contrary,
if the Corporation is in material breach of any of its obligations
pursuant to this Agreement, the Corporation's rights pursuant to
this Subsection 7(e) shall be extinguished and Executive shall have
the right to revoke any power of attorney executed pursuant to this
Subsection 7(e).
8. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not
be obligated to mitigate any damages by seeking other employment or
otherwise, and no amount payable hereunder and no benefit or service
credit for benefits shall be reduced in the event that the Executive
shall accept alternative employment.
9. BENEFITS PAYABLE ONLY FROM CORPORATE ASSETS.
(a) NO TRUST. Nothing contained in this Agreement, and no
action taken pursuant to its provisions by either party hereto shall
create, or be construed to create, a trust of
16
any kind, or a fiduciary relationship between the Corporation and the
Executive or his Beneficiary.
(b) EXECUTIVE'S STATUS AS UNSEDURED GENERAL CREDITOR. The
payment of any benefits hereunder to the Executive or his Beneficiary
shall be made from assets which shall continue, for all purposes, to
be a part of the general assets of the Corporation; no person shall
have or acquire any interest in such assets by virtue of the provisions
of this Agreement. To the extent that the Executive or his Beneficiary
acquires a right to receive payments from the Corporation under the
provisions hereof, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
(c) Recovery of Cost of Providing Benefits. In the event
that, in its discretion, the Corporation purchases an insurance policy
insuring the life of the Executive to enable the Corporation to recover,
in whole or in part, the cost of providing any benefits hereunder,
neither the Executive nor his Beneficiary under this Agreement shall
have or acquire any rights whatsoever therein. The Corporation shall
be the sole owner and beneficiary of any such policy and, as such,
shall possess and may exercise all incidents of ownership therein.
10. DETERMINATION OF BENEFITS AND CLAIMS PROCEDURE. The
Corporation shall make all determinations as to rights to benefits
under this Agreement. Subject to and in compliance with the
specific procedures contained in the applicable regulations promulgated
under the Employee Retirement Income Security Act of 1974, as
amended: (i) any decision by the Corporation denying a claim for
benefits under this Agreement by the Executive or his Beneficiary
shall be stated in writing by the Corporation and delivered or
mailed to the claimant; (ii) each such notice shall set forth the
specific reasons for the denial, written to the best of the
Corporation's ability in a manner that may be understood without
legal or actuarial counsel; and (iii) the Corporation
17
shall afford a reasonable opportunity to the claimant whose claim
for benefits has been denied for a review of the decision denying
such claim.
11. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in
any benefit, bonus, incentive or other plan or program provided by the
Corporation or any Affiliated Companies and for which the Executive may
qualify, nor shall anything herein limit or otherwise affect such rights
as the Executive may have under any other agreements with the Corporation
or any Affiliated Companies. Amounts which are vested benefits or which
the Executive is otherwise entitled to receive under any plan or program
of the Corporation or any Affiliated Companies shall be payable in
accordance with the terms of such plan or program.
12. FULL SETTLEMENT. After a Change of Control, the Corporation's
obligation to make the payments provided for herein and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Corporation may have against
the Executive or others. Unless it is finally determined by a court of
competent jurisdiction after all available appeals that the Corporation
has validly terminated the Executive's employment for Cause, the
Corporation agrees to pay, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as
a result of any contest (regardless of the outcome thereof) by the
Corporation or others of the validity or enforceability of, or
liability under, any provision of this Agreement or any guarantee
of performance thereof, plus, in each case, interest compounded
quarterly, on the total unpaid amount determined to be payable
hereunder, such interest to be calculated on the basis of the prime
commercial lending rate announced by US Bank, N.A. in effect from
time to time, for the period commencing on the date of such contest
18
and ending on the date on which the Corporation shall pay such
amount.
13. COVENANTS.
(a) NON-COMPETITION.
(1) Executive recognizes that during the course
of Executive's employment with the Corporation, Executive has been
and will be instructed about and become acquainted with confidential
information of the Corporation, including, without limitation,
customer lists, methods of sales, the existence and contents and
terms of this Agreement, methods of sales procurement, sales
procurement techniques, sales procedures and equipment/supply
information, equipment and supply acquisition procedures and
processes and sources, customer evaluation procedures, customer
maintenance and supply maintenance procedures and corresponding
information relating to persons, firms and corporations which are
or may become customers of the Corporation and, further, companies
from which the Corporation obtains various products and supplies
for sale, resale and distribution to customers of the Corporation.
This confidential information further includes, but is not limited
to, customer identity, supplier identity and terms, purchase terms,
sales techniques, purchase conditions and rates, customer needs,
billing procedures and processes, contacts and customer information.
Further, Executive agrees and acknowledges that the development and
assemblage and maintenance of the customer base of the Corporation
has taken extraordinary time, money, resources, training, and effort
by the Corporation and its employees.
(2) Executive agrees that he will not during the Term
of Employment and for a period of two (2) years following cessation
of his employment by the Corporation ("Restricted Period"), for any
cause or reason, directly or indirectly:
(A) engage in any business in competition with
the Corporation
19
and its Affiliates or supply and sell to present customers, former
customers and prospects of the Corporation and its Affiliates; or
(B) own, manage, operate, control, advise,
be employed by, consult, or materially participate in, or be
materially involved in any manner with the ownership, management,
operation or control of, individually or through any other entity
or device, any business that competes with the business then conducted
by the Corporation or any Affiliate; provided, however, that mere
ownership as an investor of not more than five percent (5%) of the
securities of a corporation or other business enterprise shall not
in and of itself be deemed to violate this Section 13(a)(2)(B).
(b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(1) Executive will not, except as authorized by the
Corporation in writing, during or at any time after the termination
of Executive's employment with the Corporation, directly or indirectly,
use for himself or others, or disclose, communicate, divulge, furnish
to, or convey to any other person, firm, or corporation, any secret
or confidential information, knowledge or data of the Corporation or
that of third parties obtained by Executive during the period of his
employment with the Corporation. Such information, knowledge or data
includes, without limitation, the following:
(A) Secret or confidential matters of a technical
nature such as, but not limited to, methods, know-how, formulations,
compositions, processes, discoveries, machines, inventions, computer
programs, and similar items or research projects involving such items,
(B) Secret or confidential matters of a business
nature such as, but not limited to, marketing policies or strategies,
information about costs, price lists,
20
purchasing and purchasing policies, profits, market, sales or lists of
customers, customer history information, and
(C) Secret or confidential matters pertaining to
future developments such as, but not limited to, research and
development or future marketing or merchandising.
(2) Executive, upon termination of his employment with
the Corporation, or at any other time upon the Corporation's request,
shall deliver promptly to the Corporation all manuals, letters, notes,
notebooks, reports, formulations, computer programs and similar items,
memoranda, lists of customers, customer history information and all
other materials and copies thereof relating in any way to the
Corporation's business and in any way obtained by Executive during
the term of employment with the Corporation which are in his
possession or under his control; and Executive will not make or
retain any copies of any of the foregoing and will so represent to
the Corporation upon termination of his employment.
(c) INDUCEMENT.
(1) Executive agrees that during the Term of Employment
and during the Restricted Period, Executive shall not use any
confidential information for the purposes of inducing or attempting
to induce any present, former, or prospective customer of the
Corporation or its Affiliates to become a customer of Executive or
any person, firm, or corporation, or business association with which
Executive is affiliated in any capacity with respect to the markets
supplied by the Corporation or its Affiliates.
(2) Executive agrees that during the Term of Employment
and during the Restricted Period, Executive shall not directly or
indirectly solicit for employment or employ any of the Corporation's
employees to work for Executive or any business association with
21
which/whom Executive is affiliated, or to work for any other company
in the markets supplied by the Corporation or its Affiliates.
(d) INTEREST OF PARTIES. Executive agrees that the duration
of the limitations set forth in this Section 13 are reasonable under
the circumstances, considering Executive's position with the Corporation
and other relevant factors, and that this will not constitute a serious
handicap to Executive in securing future employment.
(e) DISCLOSURE TO CORPORATION. Executive shall promptly
communicate and disclose to the Corporation all information,
observations and data obtained by Executive in the course of Executive's
employment. All written materials, records and documents made by
Executive or coming into Executive's possession during the Term of
Employment concerning any inventions, products, processes or equipment,
manufactured, used, developed, investigated or considered by the
Corporation or any Affiliated Companies shall be the property of the
Corporation, and upon termination of the Term of Employment, or upon
request of the Corporation during the Term of Employment, Executive
shall promptly deliver the same to the Corporation. Executive agrees
to render to the Corporation such reports of the activities of the
business undertaken by Executive or conducted under Executive's
direction during the Term of Employment as the Corporation may
reasonably request.
(f) INVENTIONS.
(1) Executive shall promptly communicate and disclose
in writing to the Corporation all those inventions and developments
whether patentable or not, as well as patents and patent applications
(hereinafter collectively called "Inventions"), made, conceived,
developed or purchased by Executive, or under which Executive acquires
the right to grant licenses or to become licensed, alone or jointly
with others, during the Term of Employment,
22
which have arisen or may arise out of Executive's employment, or
relate to any matters pertaining to, applicable to, or useful in
connection with, the business or affairs of the Corporation or
any Affiliated Companies. All of Executive's right, title and
interest in, to and under all such inventions, licenses and rights
to grant licenses shall be the sole property of the Corporation.
Any such inventions disclosed to anyone by Executive within one (1)
year after the termination of the Term of Employment for any cause
whatsoever shall be deemed to have been made or conceived by
Executive during the Term of Employment.
(2) As to all such inventions, Executive shall, upon
request of the Corporation, during the Term of Employment or thereafter:
(A) Execute all documents which the Corporation
shall deem necessary or proper to enable it to establish title to such
inventions, or other rights, and to enable it to file and prosecute
applications for letters patent of the United States and any foreign
country; and
(B) Do all things (including the giving of evidence
in suits and other proceedings) which the Corporation shall deem
necessary or proper to obtain, maintain or to assert patents for any
and all such inventions or to assert its rights in any inventions not
patented.
All expenses incident to any action required by the Corporation
or taken on its behalf pursuant to the provisions of this paragraph
shall be borne by the Corporation including without limitation a
reasonable payment for Executive's time and expenses involved in case
he or she is not then in its employ.
(g) LITIGATION. Executive agrees that during the Term of
Employment or thereafter, Executive shall do all things, including
the giving of evidence in suits and other
23
proceedings, which the Corporation shall deem necessary or proper
to obtain, maintain or assert rights accruing to the Corporation
during the Term of Employment and in connection with which Executive
has knowledge, information or expertise. All reasonable expenses
incurred by Executive during the Term of Employment or thereafter
in fulfilling the duties set forth in this Section, shall be
reimbursed by the Corporation to the full extent legally appropriate
including, without limitation, a reasonable payment for Executive's
time in the event this Agreement has terminated prior to the time
Executive renders such assistance, advice and counsel.
14. EQUITY. The parties hereto agree that the services to be
rendered by Executive are special, unique and of an extraordinary
character. In the event of the breach by Executive of any of the
provisions of this Agreement, the Corporation, in addition and as a
supplement to such other rights and remedies as may exist in its
favor, may apply to any court of law or equity having jurisdiction
to enforce the specific performance of this Agreement, and/or may
apply for injunctive relief against any act which would violate any
of the provisions of this Agreement.
15. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the subject
matter hereof.
16. NO ASSIGNMENT.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Corporation shall not be assignable
by the Executive other 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 legal representatives and
Beneficiary.
(b) This Agreement shall inure to the benefit of and be
binding upon the
24
Corporation and its successors. The Corporation shall require
any successor to all or substantially all of the business and/or
assets of the Corporation, whether direct or indirect, by purchase,
merger, consolidation, acquisition of stock, or otherwise, by an
agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the
same manner and to the same extent as the Corporation would be
required to perform if no such succession had taken place.
17. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, and this
Agreement shall be construed in all respects as if such invalid or
unenforceable provision or clause were omitted.
18. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, 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 other than by
a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) In the event that litigation is required to enforce
any provision of this Agreement, subject to the provisions of Section
12 hereof, the prevailing party shall be entitled to reasonable
attorneys fees.
(c) 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:
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Xxxxxxx Xxxxxx
IF TO THE CORPORATION:
Consumer Programs Incorporated
0000 Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx, Chief Executive Officer
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.
(d) This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter hereof.
(e) The Corporation 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
in duplicate, all as of the day and year first above written.
CONSUMER PROGRAMS INCORPORATED
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Xxxxxxx Xxxxxx
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