American List Corporation
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
March 18, 1997
Xx. Xxxxxx Xxxxxx
00 Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
As you are aware, AMERICAN LIST CORPORATION (the "Company") has
entered into an Agreement and Plan of Merger dated as of March 18, 1997 with
XXXXXX COMMUNICATIONS, INC. ("SNC") and its wholly owned subsidiary XXXXXX Z
ACQUISITION, INC. ("Acquisition"), pursuant to which Acquisition will be merged
with and into the Company and the surviving corporation of such merger (the
"Merger") shall be the Company, which shall be a wholly owned subsidiary of SNC.
Effective upon consummation of the Merger, the Company desires to continue to
employ you, and you agree to continue to be employed by the Company, on the
terms and conditions set forth in this letter.
1. The Company will employ you to serve as its President
effective beginning on the consummation of the Merger (the "Effective Date") and
ending on the second anniversary of the Effective Date, and thereafter to
perform such consulting and advisory services as may be requested from time to
time pursuant to this letter agreement during the period beginning on the second
anniversary of the Effective Date and ending on the fifth anniversary of the
Effective Date (the period from the Effective Date until such fifth anniversary
being the "Term"), subject to the terms and conditions of this letter agreement.
As President, you will be the highest ranking executive officer of the Company
and will be responsible for running the day-to-day operations of the Company.
You will report to the Board of Directors of the Company (the "Board") and to
either the Chief Executive Officer of SNC or such other senior executive officer
of SNC as may be designated by the Chief Executive Officer. Effective on the
Effective Date, any employment agreement between you and the Company will
terminate and be of no further force or effect with no further payment
obligation by the Company thereunder. During the Term, you will render business
services solely in
1
the performance of your duties as President of the Company, and will use your
best efforts to promote the interests and welfare of the Company and SNC. During
the Term, your office and the Company's principal place of business will
continue to be located on Long Island, New York unless you otherwise consent.
You shall be entitled to sick leave and holidays in accordance with the policy
of the Company as to its executive employees. The Company shall reimburse you
for all reasonable out-of-pocket costs incurred or paid by you in connection
with, or related to, the performance of his duties, responsibilities or services
under this Agreement, upon presentation by you of documentation, expense
statements, vouchers, and/or such other supporting information as the Company
may reasonably request.
2. (a) The Company will pay you a salary at the rate of $100,000
per year for each year of the Term with payments made in installments in
accordance with the Company's regular practice for compensating executive
personnel. In addition, as an inducement to enter into this employment
agreement, the Company will pay you on the Effective Date the sum of $2,000,000.
All such payments shall be subject to applicable tax withholding requirements.
You shall also be entitled to those insurance, retirement and other benefits
generally provided to the Company's other executive personnel. In particular,
you will be entitled to four weeks of vacation per year.
(b) On the Effective Date, as an inducement
to enter into this employment agreement and in consideration of your services
hereunder and including your obligations pursuant to Sections 5 and 6 hereof,
SNC will grant to you options to acquire 250,000 shares of SNC's common stock
under the SNC 1996 Stock Incentive Plan (the "Plan") at an exercise price equal
to the closing sale price of SNC's common stock on the New York Stock Exchange
on the trading day immediately prior to the Effective Date. Pursuant to such
options, you will be eligible, subject to the Plan, to acquire 100,000 shares on
the date that is six months following the Effective Date; with respect to the
remaining 150,000 shares, you will be eligible, subject to the Plan, to acquire
one-fifth of such shares on the first anniversary of the Effective Date and an
additional one-fifth of such shares on each of the four subsequent anniversaries
of the Effective Date, such that on the fifth anniversary of the Effective Date
you will be eligible to acquire all such shares (to the extent not previously
exercised). If your employment is terminated for any reason other than death,
then that portion of the option granted to you under this Section 2(b) which is
vested at the time of such termination
2
may be exercised by you within 90 days of such termination, and any vested
portion which is not timely exercised shall be forfeited by you and your estate.
Except as provided in the next sentence, any options which have not vested as of
the date of termination of your employment with the Company for any reason,
including death or disability, shall terminate and be forfeited by you. If your
termination is involuntary and is not a termination for "cause" as defined
below, all of your remaining unvested options shall vest and become exercisable
as of the date of your termination.
(c) Subject to earlier termination as provided in the Plan or
this letter agreement, all options granted pursuant to Section 2(b) shall expire
on the tenth anniversary of the Effective Date.
(d) In addition to the options to be granted to you as described
herein, on or promptly following the Closing Date SNC shall grant options to
purchase up to 100,000 shares of its common stock under the SNC 1996 Stock
Incentive Plan to employees of the Company and in the amounts identified by you,
subject to the reasonable approval of the Board. In the event the Company
terminates its Profit Sharing Plan or Pension Plan (the "Company Plans"), at
your request the Company shall provide additional compensation to its employees
participating therein (other than yourself, Xxxxxx Xxxxx, Xxx Xxxxxx and Xxxxxxx
Xxxxxx) in an amount as requested by you and subject to Board review, but not
exceeding the difference between the pre-tax compensation attributable to the
Plans and the pre-tax compensation attributable to any successor or replacement
plans or benefits furnished in lieu thereof. In addition, the Company shall
review with you, subject to your approval not to be unreasonably withheld, any
successor or replacement health plan to the Oxford plan provided in accordance
with the first sentence of Section 4.16 of the Merger Agreement.
3. The Company may terminate your employment under this letter
agreement in the event of your death, permanent disability, or discharge for
"cause" (as hereinafter defined). For purposes of this letter agreement, "cause"
means (a) your continued and deliberate failure to perform your assigned duties,
in a manner substantially consistent with the manner prescribed by the Board or
the Chief Executive Officer of SNC in accordance herewith (other than any such
failure resulting from your incapacity due to physical or mental illness), which
failure continues for ten days following your receipt of written notice from the
Board or the Chief Executive Officer of SNC
3
specifying the manner in which you are in default of your duties, (b) your
engagement in serious misconduct that is materially and demonstrably injurious
to the Company or SNC or the reputation of either, (c) your conviction of
commission of a felony involving a crime of moral turpitude whether or not such
felony was committed in connection with the business of SNC or the Company, or
(d) the circumstances described below relating to death and disability, in which
case such provisions shall become applicable.
The Company may also terminate your employment under this letter
agreement at any time without reason or cause. Unless otherwise provided in this
letter agreement, the Company shall pay your base salary and benefits through
the date of termination. In addition, if your termination is involuntary and is
not for "cause", you shall be entitled to receive your salary provided herein
and continuation of your health insurance benefits through the fifth anniversary
of the Effective Date.
You will be given reasonable (and, in any event in the case of a
termination pursuant to clause (a) of Section 3 above, at least five business
days') prior written notice of any intention by the Company to terminate you for
"cause" and an opportunity to respond to the Company's reasons for such proposed
action. Any termination by the Company shall only be taken by action of the
Board.
4. If, prior to the expiration or termination of the Term, you
are unable to perform your duties by reason of disability or impairment of
health for at least six consecutive calendar months, the Company may terminate
your employment under this letter agreement by giving 60 days written notice to
you to that effect, but only if at the time such notice is given such disability
or impairment is still continuing. Following the expiration of such 60 day
period, the Term shall terminate with the payment of your salary for the month
in which notice is given. If there is a dispute between us as to whether you are
disabled or the duration of any disability, either of us may request that you be
examined by a medical doctor selected by our mutual agreement, and the written
medical opinion of such doctor shall be conclusive and binding upon each of us
as to whether you have become disabled and the date when such disability arose.
The cost of any such medical examination shall be borne by the Company.
If you should die prior to the expiration of the Term, the
Company will pay to your estate your salary through the end of the month in
which your death occurred,
4
at which time the Term shall terminate without further notice. Nothing in this
letter agreement shall impair or otherwise affect any rights and interests you
may have under any compensation plan or arrangement of the Company which may be
adopted by the Board.
5. Except as provided specifically in this Section 5, you agree
that for a period commencing on the Effective Date and running through the third
anniversary of termination or expiration of your employment (the "Non-
competition Term"), you will not, except as otherwise provided in this letter
agreement, engage or participate, directly or indirectly, as principal, agent,
employee, employer, consultant, stockholder, partner or in any other capacity
whatsoever, in the conduct or management of, or own any stock or any other
equity investment in or debt of, any business which is competitive with any
business then conducted by the Company or SNC. For the purposes of this letter
agreement, a business shall be considered to be competitive with the business of
the Company or SNC only if such business is engaged in providing services or
products (a) similar to any service or product currently provided by the Company
or SNC or provided by the Company or SNC during the Term, (b) similar to any
service or product which evolves from or results form enhancements in the
ordinary course during the Non-competition Term to the services or products
provided by the Company or SNC as of the Effective Date or by the Company or SNC
during the Term, (c) similar to any future service or product of the Company of
SNC as to which you materially and substantially participated in, and (d) to
customers and clients of the type served by the Company or SNC during the
Non-competition Term.
During the Non-competition Term, you will not, for your benefit
or for the benefit of any person or entity other than the Company or SNC,
solicit, or assist any person or entity other than the Company or SNC to
solicit, any officer, director, executive or employee of the Company or SNC to
leave his or her employment.
You acknowledge that the markets served by the Company and SNC
are national in scope and are not dependent on the geographic location of
executive personnel or the businesses by which there are employed, the length of
the Non-competition Term is linked to the Term, and that the above covenants are
manifestly reasonable on their face, and we expressly agree that such
restrictions have been designed to be reasonable and no greater than is required
for the protection of the Company.
5
Nothing in this letter agreement shall be deemed to prohibit you
from owning equity or debt investments in any corporation, partnership or other
entity which is competitive with the Company, provided that such investments (a)
are passive investments and constitute five percent or less of the outstanding
equity securities of such entity the equity securities of which are traded on a
national securities exchange or other public market, or (b) are approved by the
Board.
You agree that the Company's remedies at law for breach or threat
of breach by you of the provisions in this Section 5 or Section 6 below will be
inadequate, and that the Company shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and to enforce specifically
such provisions, in addition to any other remedy to which the Company may be
entitled at law or equity.
6. Without the prior written consent of the Company, you agree
not to use or disclose, for your own benefit or for the benefit of any person or
entity other than the Company or SNC, any of the Company's or SNC's trade
secrets or other confidential information. The term "trade secrets or other
confidential information" includes, by way of example, business secrets or
methods, business policies, manuals of instructions, computer programs
(including documentation of such programs), research, lists, names of customers,
personnel information, proprietary information about costs, profits, markets,
sales, pricing information, or supplier lists or other information of a similar
nature to the extent not available to the public, and plans for future
development, whether or not patented, copyrighted or otherwise protected under
applicable law. After termination or expiration of this letter agreement, you
shall not use or disclose the Company's or SNC's trade secrets or other
confidential information unless such information becomes a part of the public
domain other than through a breach of this letter agreement or is disclosed to
you by a third party who is entitled to receive and disclose such information.
7. All notices, consents and other communications required or
permitted to be given under this letter agreement shall be in writing and
delivered by hand delivery, by overnight courier or by facsimile (and if by
facsimile, with a copy to follow within one business day by hand delivery or
overnight courier), expense prepaid, if to you at the address of the then
principal office of the Company, and if to the Company or SNC, to the Chief
6
Executive Officer of SNC, Two Democracy Center, 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxx 00000, facsimile 000- 000-0000. Any notice so given shall be deemed
received when delivered by hand or overnight courier or when the sender's
facsimile machine indicates receipt by the recipient's facsimile machine. A
change of address to which notices are to be sent may be given in the manner for
providing notice.
8. Should any provision of this letter agreement be determined to
be unenforceable or prohibited by any applicable law, such provision shall be
ineffective to the extent, and only to the extent, of such unenforceability or
prohibition without invalidating the balance of such provision or any other
provision of this letter agreement, any such unenforceability or prohibition in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9. You may not assign your rights and obligations under this
letter agreement. The Company's rights and obligations under this letter
agreement are not assignable except as incident to a change of control
transaction. In the event of any such assignment by the Company, all rights and
obligations of the Company under this letter agreement shall inure to the
benefit of the assignee or the successor to the Company.
10. This letter agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without regard to
its conflict of laws principles. This letter agreement sets forth our entire
agreement and understanding concerning the subject matter hereof, and supersedes
all prior agreements (including, without limitation, the Employment Agreement,
dated August 15, 1983, as amended, between you and the Company), arrangements
and understandings between us with respect to such matters.
7
[SIGNATURE PAGE TO EMPLOYMENT AGREEMENT WITH X. XXXXXX]
To indicate that the foregoing meets with your approval and
accurately reflects our mutual understanding with respect to the matters set
forth herein, please sign and return the enclosed duplicate copy of this letter
agreement.
Very truly yours,
AMERICAN LIST CORPORATION
By: /s/ Xxxxxx Xxxxxx
------------------------
Name: Xxxxxx Xxxxxx
Title: President and Chief
Executive Officer
XXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice Chairman &
Chief Operating Officer
Xxxxxx to and accepted as of March 18, 1997 by:
/s/ Xxxxxx Xxxxxx
-----------------
XXXXXX XXXXXX
8
C:\DATA\WP\74807\0003\209\LTR3207K.080
