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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 9th day of July, 1998, by
and between PC Flowers & Gifts, Inc., a Delaware corporation, the principal
executive office of which is located at 000 Xxxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 (the "Corporation"), and Xxxxxxx X. Xxxxx, an individual
residing at 000 Xxxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Executive").
WITNESSETH THAT:
WHEREAS, the execution and delivery of this Agreement is a condition to
the employment of the Executive by the Corporation and the purchase by Fingerhut
Companies, Inc. ("Fingerhut") of securities of the Corporation and is entered
into as an inducement to Fingerhut to make such purchase; and
WHEREAS, the Corporation desires to employ the Executive in the capacity
hereinafter stated, and the Executive desires to enter into the employ of the
Corporation in such capacity for the period and on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth below, it is hereby covenanted and agreed by the Corporation and the
Executive as follows:
1. Employment Period. The Corporation hereby agrees to employ the
Executive as its chief executive officer and president and the Executive, in
such capacities, agrees to provide services to the Corporation for the period
beginning on the date first above written (the "Commencement Date") and ending
on the third anniversary of the Commencement Date (the "Employment Period").
2. Performance of Duties. The Executive agrees that during the Employment
Period, while he is employed by the Corporation, he shall devote during normal
business hours his undivided attention, business energies and talents to
fulfilling the duties of chief executive officer and president of the
Corporation and shall be in charge of and responsible for the general and
supervisory duties normally and customarily attendant to such office, and shall
render such other lawful services, and exercise such powers, that are from time
to time requested of him, assigned to him or vested in him by the Board of
Directors of the Corporation (the "Board") and that are commensurate with his
position as chief executive officer and president. The Executive shall not have
more than a five percent (5%) ownership interest in any enterprise other than
the Corporation if such ownership interest would have an adverse effect upon the
ability of the Executive to perform his duties hereunder.
3. Compensation. Subject to the terms and conditions of this Agreement,
during the Employment Period, the Executive shall be compensated by the
Corporation for his services as follows:
(a) The Executive shall receive, for each 12-consecutive month
period beginning on the Commencement Date and each anniversary thereof, a
rate of salary that is $175,000 for the first 12-month period and $200,000
for the second and third 12-month
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periods (such rate, as is in effect from time to time, "Base Salary").
This Agreement shall be extended automatically for a period of 12 months
at the end of the third 12-month period and each 12-month period
thereafter at a rate of $200,000 unless the Corporation or the Executive
gives notice of termination not less than 60 days prior to the end of each
such period, in which event employment will terminate at the end of such
period.
(b) The Corporation shall reimburse the Executive for all reasonable
business, promotional, travel and entertainment expenses ("Reimbursable
Expenses") incurred or paid by him during the Employment Period in the
performance of his services under this Agreement, provided that the
Executive furnishes to the Corporation appropriate documentation required
by the Internal Revenue Code in a timely fashion in connection with such
expenses and shall furnish such other documentation and accounting as the
Corporation may from time to time reasonably request.
(c) The Corporation shall pay to the Executive, not later than the
date on which the Corporation shall have filed its tax returns for the
periods ended December 31, 1997 and the date hereof (the "Taxable
Periods"), an amount sufficient to make the Executive whole, on an
after-tax basis (after giving effect to the Federal income deduction
resulting from the payment of Connecticut income tax), for any net
increase in the Executive's Federal and Connecticut income tax (as
determined by applying the maximum applicable marginal tax rates, and
after giving effect to the net tax benefit derived by the Executive from
any net loss derived by the Corporation in either of the Taxable Periods)
resulting form the pass-through to the Executive of his share of the
Corporation's items of income and loss for the Taxable Periods.
4. Benefits. The Executive shall be entitled to such benefits as are
provided to all employees of the Corporation and such other benefits as are
approved by the Board of Directors of the Corporation, including the benefits
set forth in Exhibit A ("Benefits"). As such time as the Corporation becomes a
subsidiary of Fingerhut the Executive shall be entitled to participate in the
benefit plans available generally to senior executives of subsidiaries of
Fingerhut which shall be at least as favorable, in the aggregate, to the
Executive as the Benefits.
5. Compensation Due Upon Termination. The Executive's right to
compensation for periods after the date his employment with the Corporation
terminates shall be determined in accordance with the following:
(a) Voluntary Resignation. The Corporation shall have no obligation
to make payments to the Executive in accordance with the provisions of
paragraph 3 for periods after the date on which the Executive's employment
with the Corporation terminates due to the Executive's voluntary
resignation, except for the payment of Base Salary in effect at the time
and accrued through the date of such resignation and Reimbursable Expenses
incurred through such date. For purposes of this paragraph 5, the
Executive's termination of employment with the Corporation shall not be on
account of his voluntary resignation, and shall be deemed to be discharged
by the Corporation without cause, if he resigns following the occurrence
of one of the following events: the assignment to Executive of duties
inconsistent with the Executive's positions, duties, responsibilities,
titles or offices
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as described in paragraph 2 above; the relocation of the Executive's
principal place of business to a state other than Connecticut; a material
breach of any of the provisions of paragraph 3; or any material reduction
by the Corporation of the Executive's duties or responsibilities
(including the appointment, without the Executive's consent, of an
executive officer senior to him); provided that, in each case, the
Corporation has not cured such breach within 10 days after having received
written notice thereof from the Executive.
(b) Discharge for Cause. The Corporation shall have no obligation to
make payments to the Executive in accordance with the provisions of
paragraph 3 for periods after the Executive's employment with the
Corporation is terminated on account of the Executive's discharge for
cause except for benefits in effect at such time, Base Salary in effect at
such time and accrued through the date of such termination and
Reimbursable Expenses incurred through such date. The Executive shall be
considered discharged for "cause" if he is discharged by the Corporation
on account of the occurrence of one or more of the following events:
(i) the Executive becomes habitually addicted to drugs or
alcohol;
(ii) the Executive discloses confidential information in
violation of paragraph 6 except for any such disclosure which
individually or in the aggregate with other such events could not
have a material adverse effect on the Corporation;
(iii) the Executive is convicted of a felony (other than a
felony resulting from a traffic violation);
(iv) the Executive willfully fails to follow a material,
direct lawful order from the Board that is within the reasonable
scope of the Executive's duties under this Agreement and (A) the
Executive has been given a period of thirty (30) days after the
Executive's receipt of written notice form the Board providing a
detailed description of the order that has been breached to cure
such breach, and (B) if the Breach is capable of cure, the Executive
has not cured such breach within such 30-day period; or
(v) the Executive commits an act of material fraud against the
Corporation or violates a duty of loyalty to the Corporation as
interpreted under Section 141 of the Delaware General Corporation
Law.
(c) Disability. The Corporation shall have no obligation to make
payments to the Executive in accordance with the provisions of paragraph 3
for periods after the date the Executive's employment with the Corporation
terminates on account of disability except for Base Salary in effect at
such time earned and accrued through the date of such disability and
Reimbursable Expenses incurred through such date. For purposes of this
subparagraph 5(c), the determination of whether the Executive is disabled
shall be determined in accordance with the Corporation's long term
disability plan if in existence, or by the Board, in its reasonable
discretion.
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(d) Death. The Corporation shall have no obligation to make payments
to the Executive in accordance with the provisions of paragraph 3 for
periods after the date of the Executive's death except for Base Salary in
effect at such time earned and accrued through the date of death, payable
to the Executive's beneficiary, as the Executive shall have indicated in
writing to the Corporation (or if no such beneficiary has been designated,
to the Executive's estate) and Reimbursable Expenses incurred through such
date.
(e) Termination Notice. Any termination by the Corporation shall be
communicated by written notice to the Executive setting forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment.
(f) The final date for which payments are due under this paragraph 5
is the "Employment Termination Date."
6. Confidential Information. Except as may be required by the lawful order
of a court or agency of competent jurisdiction, the Executive agrees to keep
secret and confidential until the second anniversary of the Employment
Termination Date (the "Confidentiality Period") all material nonpublic
information concerning the Corporation and its affiliates which was acquired by
or disclosed to the Executive during the course of his employment by the
Corporation, any of its affiliates and predecessors, including proprietary
information relating to customers (including, without limitation, credit
history, repayment history, financial information and financial statements),
costs, and operations, financial data and plans, whether past, current or
planned and not to disclose the same, either directly or indirectly, to any
other person, firm or business entity, or to xxx it in any way except for such
information that is customarily disclosed in the normal course of business or
with the intention of benefiting the Corporation; provided, however, that the
provisions of this paragraph 6 shall not apply to information which is in the
public domain or that was disclosed to the Executive by independent third
parties who were not bound by an obligation of confidentiality; and provided
further, that the Corporation recognizes that the Executive shall, during the
course of his employment with the Corporation, acquire certain general
information regarding the financial condition, and purchasing trends of the
Corporation's customers and agrees that the provisions of this paragraph 6 shall
not apply to the use of such general information provided the use thereof does
not violate applicable Federal or state laws or the provisions of paragraph 7
hereof.
7. Non-Competition. Provided the Corporation has met all of its material
payment obligations to the Executive hereunder, the Executive agrees that for
the period commencing on the Commencement Date and ending on the Non-Competition
Termination Date, as hereafter defined (the "Non-Competition Period"), the
Executive will not directly or indirectly, alone or as a partner, officer,
director, employee, consultant, agent, independent contractor, member or
stockholder of any person, engage in any business activity relating to selling
and/or marketing flowers and items commonly associated with gift-giving
occasions throughout the world; provided, however, that the record or beneficial
ownership by the Executive of Common Stock of the Corporation or of five percent
(5%) or less of the outstanding publicly traded capital stock of any such Person
does not constitute engaging in such business activity. The Executive further
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agrees that, during the Non-Competition Period, the Executive shall not in any
capacity, either separately, jointly or in association with others, directly or
indirectly do any of the following: (a) recruit, solicit, induce or otherwise
influence any of the Corporation's or any subsidiary's employees, consultants,
agents, suppliers, customers or prospects to discontinue, reduce or modify such
relationship with the corporation or any subsidiary; (b) employ or seek to
employ any Person or agent who is then employed or retained by the Corporation
or any subsidiary (or who was so employed or retained at any time within the six
months prior to the date the Executive employs or seeks to employ such person);
and (c) solicit, induce, or influence any proprietor, partner, stockholder,
lender, director, officer, employee, joint venturer, investor, lessor, supplier,
customer or any other Person which has a business relationship with the
Corporation or any subsidiary, at any time during the Non-Competition Period, to
discontinue or reduce or modify the extent of such relationship with the
Corporation or any subsidiary. As used herein, "Non-Competition Termination
Date" means the later to occur of (i) June 30, 2000 or (ii) one year following
the Employment Termination Date; provided, however, if a Qualified Public
Offering (as defined in the Stockholders Agreement) occurs prior to the
occurrence of the events identified in clause (i) or clause (ii), then the
Non-Competition Termination Date shall be the later to occur of (i) June 30,
2001, or (ii) one year following the occurrence of the Qualified Public
Offering.
8. Technology Ownership. Executive hereby assigns to the Corporation all
inventions, discoveries, designs, trade secrets, formulae, processes, methods,
techniques, mask works, improvements, developments, concepts, computer programs,
databases and works which Executive may make or acquire during the term of his
employment hereunder, whether or not during working hours and whether made
solely or jointly with others, that (1) are related to the past, present or
probable future business of the Corporation at the time they are made or
acquired, or (2) are made using the equipment, supplies, facilities, or
proprietary information of the Corporation, as well as all patents, patent
applications, copyrights, copyright registrations and all other intellectual
property rights which cover, protect or are embodied in any of the foregoing,
except for U.S. patent application Serial No. 08/785, 321 and Patent Cooperation
Xxxxxx Xxxxxxxxxxx Xx. XX00XX00/00000, the rights to which shall be retained by
the Executive pursuant to the terms of the Technology License Agreement entered
into by the parties as of the date hereof.
9. Executive Offices. The Corporation shall maintain executive offices for
the Executive as the Executive's principal place of business in Fairfield
County, Connecticut.
10. Successors. This Agreement shall be binding on, and inure to the
benefit of, the Corporation and its successors and assigns and any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Corporation's assets and business.
11. Nonalienation. The interests of the Executive under this Agreement are
not subject to the claims of his creditors, other than the Corporation, and may
not otherwise be voluntarily or involuntarily assigned, alienated or encumbered
except to the Executive's beneficiary or estate upon his death.
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12. Remedies. The Executive acknowledges that the Corporation and
Fingerhut would be irreparably injured by a violation of paragraphs 6, 7 or 8
and agrees that the Corporation and Fingerhut shall be entitled to an injunction
restraining the Executive from any actual or threatened breach of paragraph 6, 7
or 8 or to any other appropriate equitable remedy without bond or other security
being required. Each of the parties to this Agreement will be entitled to
enforce its rights under this Agreement, to recover damages and costs (including
reasonable attorney's fees and expenses) caused by any breach of any provision
of this Agreement and to exercise all other rights existing in its favor.
13. Arbitration. Should the parties fail to settle any dispute or
controversy arising out of or in relation to this Agreement, then such dispute
or controversy shall be determined by arbitration in accordance with the rules
of the American Arbitration Association (the "AAA"). Such dispute or controversy
shall be settled by a panel of three arbitrators pursuant to an arbitration
proceeding conducted in New York, New York. Either party may initiate an
arbitration proceeding provided hereunder by giving written notice thereof to
the other party in which the nature of the dispute or controversy is described
in reasonable detail and one arbitrator is appointed. Within thirty (30) days
following receipt of such notice, the other party shall appoint an arbitrator,
the two arbitrators so appointed shall appoint a third arbitrator and such third
arbitrator shall be the presiding arbitrator during the course of such
arbitration proceedings. Any arbitrator appointed by the Corporation shall be
appointed only with the written approval of Fingerhut. If a party fails to
appoint an arbitrator, or the first two arbitrators appointed shall fail to
appoint a third arbitrator, as provided above, then such arbitrator shall be
appointed by the AAA in New York, New York. The three arbitrators so appointed
shall constitute the panel of arbitrators for such arbitration and shall conduct
such arbitration in accordance with the Arbitration Articles of the Rules of
Conciliation and Arbitration of the AAA. Any determination of such panel shall
be in writing and by majority vote. All fees and expenses of the AAA, the
arbitrators and all other fees and expenses of any arbitration hereunder
(including travel and lodging expenses, and the fees and expenses of experts and
counsel) shall be borne entirely by whichever of the parties is set forth in the
written determination of the arbitrators as the non-prevailing party. The award
rendered by the arbitrators shall be final and binding upon the parties to the
arbitration. Judgment upon any award rendered by arbitration may be entered in
any court having jurisdiction thereof.
14. Waiver of Breach. The waiver by either the Corporation or the
Executive of a breach of any provision of this Agreement shall not operate as or
be deemed a waiver of any subsequent breach by either the Corporation or the
Executive. No waiver shall be effective unless approved in writing by Fingerhut.
15. Notices. All notices, requests, other communications and distributions
to any party hereunder shall be in writing (including prepaid overnight courier,
telex, facsimile transmission or similar writing) and shall be given to such
party at its address or telecopy number set forth below or at such other address
or telecopy number as such party may hereafter specify for the purpose by notice
to the other parties.:
(a) If to the Executive addressed as follows:
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Xxxxxxx X. Xxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
(b) If to the Corporation:
PC Flowers & Gifts, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
With a copy to:
Fingerhut Companies, Inc.
0000 Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
or to such other address as from time to time is provided to the other
parties.
16. Amendment. This Agreement may be amended or canceled by mutual
agreement of the parties in writing with the written approval of Fingerhut, but
without the consent of any other person and no person, other than the parties
hereto, Fingerhut and the Executive's estate upon his death, shall have any
rights under or interest in this Agreement or the subject matter hereof.
17. Applicable Law. The provisions of this Agreement shall be construed in
accordance with the internal laws of Connecticut.
18. Termination. All of the provisions of this Agreement shall terminate
after the expiration of the Employment Period, except that paragraph 5 shall
only terminate after the obligations thereunder have been satisfied in full,
paragraph 6 shall only terminate upon the expiration of the Confidentiality
Period, paragraphs 7 shall terminate upon the expiration of the Non-Competition
Period and paragraph 8 shall not terminate.
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IN WITNESS WHEREOF, the Executive and the Corporation have executed this
Employment Agreement as of the day and year first above written.
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Xxxxxxx X. Xxxxx
PC FLOWERS & GIFTS, INC.
By:
---------------------------
Approved:
FINGERHUT COMPANIES, INC.
By:
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Exhibit A
to Employment Agreement
between Xxxxxxx X. Xxxxx
and PC Flowers & Gifts, Inc.
1. During the Employment Period, the Executive shall have full use and
enjoyment of an automobile allowance under the terms and conditions of the
Corporation's standard auto allowance policy for senior executives as
established by its Board of Directors.
2. The Executive shall be entitled to three weeks' paid vacation during
each full year during the Employment Period, subject to the Corporation's
vacation policy for senior executives as established by its Board of Directors.
3. The Executive shall be eligible to receive during the Employment Period
all benefits, perquisites and emoluments for which senior executives (at the
Executive's rank) are eligible under every such plan or program to the extent
permissible under the general terms and provisions of such plans or programs and
in accordance with the provisions hereof, as such plans are established by the
Corporation's Board of Directors.
4. During the Employment Period, the Corporation shall provide the
Executive with term life insurance pursuant to a plan with the terms and
conditions established by the Corporation's Board of Directors.
5. During the Employment Period, the Executive shall participate in the
Corporation's group health, dental and disability programs under the general
terms and provisions of such programs established by the Corporation's Board of
Directors.
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