EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), dated as of January 22, 1997, by
and between Cognitive Communications, LLC, a Delaware limited liability company
("CCL"), and Xxxxxxx Xxxxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, Employee is currently serving as an executive officer
of Cognitive Communications, Inc., a Connecticut corporation (the "Company"),
and owns 50% of the outstanding common stock of the Company;
WHEREAS, the Company, Employee and Xxxxx Xxxxxx, the owner of
50% of the outstanding common stock of the Company, have entered into a Purchase
Agreement (the "Purchase Agreement") with CCL, dated as of the date hereof,
pursuant to which CCL will purchase the operating assets and assume the
operating liabilities of the Company;
WHEREAS, Employee possesses an intimate knowledge of the
business and affairs of the Company, its policies, methods of operation,
personnel, customers and suppliers;
WHEREAS, the execution of this Agreement is a condition
precedent to the consummation of the transactions contemplated by the Purchase
Agreement; and
WHEREAS, CCL desires to employ Employee, and Employee desires
to accept such employment, upon the terms and subject to the conditions set
forth in this Agreement.
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto agree
as follows:
1. Employment. CCL hereby employs Employee, and Employee hereby accepts
employment with CCL, for the Term (as hereinafter defined), in the position and
with the duties and responsibilities set forth in Section 3 below, and upon the
other terms and subject to the conditions hereinafter set forth.
2. Term. Unless (i) sooner terminated as provided in Section 6 hereof or
(ii) extended as provided for in that certain Put Agreement between CCL and
Employee and entered into in connection with the Purchase Agreement (the "Put
Agreement"), Employee's employment hereunder shall be for a term commencing on
the date hereof and ending on July 31, 2002. The actual term of employment
hereunder, giving effect to any early termination, or extension, of employment
under Section 6 hereof, or the Put Agreement, respectively, is referred to
herein as the "Term."
3. Position, Duties, Responsibilities and Services.
3.1 Position, Duties and Responsibilities. During the Term, Employee
shall serve as an Executive Vice President of CCL and shall be responsible for
the duties attendant to such office as specified in the Limited Liability
Company Operating Agreement of CCL, and such additional managerial duties and
responsibilities with CCL or its subsidiaries or divisions as may be assigned by
the Chief Executive Officer of International Post Limited, an indirect parent of
CCL ("IPL"), or by such other executive corporate officer of IPL who is not the
chief executive officer or chief operating officer of another subsidiary or
division of IPL as such CEO may designate (the "IPL Officer"). Employee shall
also report directly to the IPL Officer. During the Term, CCL's operations shall
be located within New York City.
In addition, Employee shall abide by the policies of IPL relating to
the Powers Reserved/Delegated and to Corporate Conduct (Conflict of Interest) as
such policies are from time to time in effect. Copies of the policies currently
in effect are annexed as exhibits hereto.
3.2 Services to be Provided. During the Term, Employee shall (i)
devote all of his working time, attention and energies to the affairs of CCL and
its subsidiaries and divisions, (ii) use his best efforts to promote its and
their best interests, (iii) faithfully and diligently perform his duties and
responsibilities hereunder, and (iv) comply with and be bound by the operational
policies, procedures and practices of CCL from time to time in effect during the
Term; provided, however, that nothing in this Agreement shall preclude Employee
from (x) engaging in charitable and community affairs or (y) giving attention to
his passive personal investments or (z) performing administrative functions
related to the winding down of the remaining business of the Company including
such research in the area of employee communications as may be approved in
writing by IPL after the date hereof, so long as such activities do not
interfere with the regular performance of his duties and responsibilities under
this Agreement.
3.3 Exclusive Agreement. Employee hereby represents and warrants to
CCL that (i) his execution of this Agreement and the performance of his duties
and responsibilities hereunder does not and will not violate or result in the
breach of, or in any manner be prohibited or restricted by, the terms of any
agreement, arrangement or understanding (whether written or oral), order or
decree to which he is a party or by which he is bound and (ii) he is not a party
to any agreement or arrangement, whether written or oral, which would prevent
Employee from rendering services to CCL during the Term or which would create
any conflict with or involve any business relationship with customers, suppliers
or competitors of CCL, IPL or their respective affiliates, subsidiaries or
divisions.
4. Compensation.
4.1 Base Salary. For all services rendered by Employee hereunder and
all covenants and conditions undertaken by him pursuant to this Agreement, CCL
shall pay Employee an annual base salary (the "Base Salary") during the Term at
the rate of one hundred fifty thousand dollars ($150,000), payable at such
intervals as the executive officers of IPL are
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paid, but in any event at least on a semi-monthly basis. If the first or last
month of the Term is not a full calendar month, then any calculation of Base
Salary for such period shall be prorated for the number of days employed in such
month.
4.2 Incentive Compensation.
(a) Employee shall receive a certain percentage of CCL's earnings
before interest, taxes, depreciation and amortization and certain incentive
stock options as provided for in that certain Incentive Compensation Agreement,
a copy of which is attached hereto.
(b) During the Term, Employee shall be entitled to participate in all
equity related incentive programs that CCL makes generally available to officers
and employees of CCL, subject to the terms and conditions of such programs.
(c) Employee hereby acknowledges that, notwithstanding anything
contained herein to the contrary, IPL shall in no way be obligated to cause
Employee to participate in any stock option or other equity related incentive
programs that IPL makes generally available to officers and employees of IPL and
its other subsidiaries, affiliates or divisions.
4.3 Withholding. CCL shall withhold from any payments due to Employee
under this Agreement all Federal, state and local taxes, FICA and other amounts
required to be withheld pursuant to any applicable law.
5. Employee Benefits.
5.1 Benefit Programs. During the Term, Employee shall be entitled to
participate in such group life, health, accident, disability and hospitalization
insurance plans, pension plans and retirement plans that IPL makes generally
available to officers and employees of IPL and its subsidiaries.
5.2 Vacation. During each twelve month period of the Term, Employee
shall be entitled to four (4) weeks of vacation to be taken at times determined
by Employee which do not unreasonably interfere with the performance of his
duties hereunder; provided, however, that, other than up to one (1) week of
vacation not taken during a year which may be taken during the first quarter of
the following year, any such vacation time not taken during any year shall be
forfeited. Employee shall also be entitled to all paid holidays given by IPL to
its officers and employees.
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5.3 Automobile. During the Term, CCL shall lease and provide the
Employee with an appropriate automobile, as determined by the CCL Board, and
shall pay all expenses relating to the insurance, maintenance and operation
thereof.
5.4 Insurance. Employee agrees that CCL may request Employee to apply
for and take out term life, health, accident, and/or other insurance covering
Employee, either independently or together with others, in an aggregate amount
determined by the CCL Board. CCL shall pay all premiums for such insurance and
shall determine the beneficiary of, and own all rights in, any such insurance
policies and proceeds thereof, and Employee shall not have any right, title or
interest therein or any obligation to pay any of the premiums therefor. If
requested, Employee shall submit to medical examinations and shall otherwise
cooperate in all respects to procure such insurance.
As soon as practical after the date hereof, CCL shall obtain
"directors and officers liability insurance" on behalf and for the benefit of
the Employee on substantially the same terms and subject to substantially the
same conditions as provided to directors and officers of other subsidiaries of
IPL.
5.5 Expenses. During the Term, Employee is authorized to incur
reasonable expenses in the performance of his duties hereunder, and, upon
presentation of a detailed itemization account thereof, CCL shall pay or
reimburse Employee for such reasonable expenses so incurred by Employee.
6. Termination of Employment.
6.1 Death; Disability. Employee's employment hereunder shall terminate
upon his death, or, at the election of CCL by written notice to Employee, if, as
a result of the occurrence of mental or physical disability during the Term,
Employee has been unable to perform his duties hereunder for a period of three
(3) consecutive months or ninety (90) days in any consecutive three hundred
sixty-five (365) day period, as determined in good faith by the CCL Board. In
the event of a termination of Employee's employment for death or disability, CCL
shall pay Employee (or his legal representatives, as the case may be): (i) his
unpaid Base Salary through the date of termination, (ii) the value of his
accrued and unpaid vacation days as of the date of termination (calculated based
on Employee's Base Salary computed on a 365-day year), and (iii) all amounts due
under Section 5.5 hereof. In addition, Employee shall be entitled to any amounts
due under the programs referred to in Section 5.1 hereof, as and to the extent
set forth in such programs.
6.2 Termination for Cause.
(a) In addition to any other remedies available to it at law or in
equity, CCL shall have the right, upon written notice to Employee, to terminate
Employee's employment under this Agreement if Employee: (i) breaches in any
material respect any provision
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of this Agreement and such breach is not remedied within thirty (30) days after
written notice thereof from the CCL Board setting forth in reasonable detail the
matters constituting such breach; (ii) fails or refuses to perform in any
material respect such duties as may be assigned to him from time to time by the
IPL Officer or the CCL Board; (iii) has been convicted of a felony; or (iv) has
committed any act of fraud, misappropriation of funds or embezzlement in
connection with his employment hereunder or has willfully disclosed any
Confidential Information (as defined below) (termination pursuant to the
provisions of any of clauses (i) through (iv) above is referred to herein as
termination for "Cause").
(b) In the event Employee is terminated for Cause, CCL shall pay
Employee (i) his unpaid Base Salary through the date of termination, (ii) the
value of his accrued and unpaid vacation days as of the date of termination
(calculated based on Employee's Base Salary computed on a 365-day year), and
(iii) all amounts due under Section 5.5 hereof. In addition, Employee shall be
entitled to any amounts due under the programs referred to in Section 5.1
hereof, as and to the extent set forth in such programs.
(c) In the event Employee is terminated for Cause other than pursuant
to clause (ii) of subparagraph (a) above, Employee hereby agrees to resign as a
manager of CCL, effective as of the date of such termination, and from any other
positions he holds with CCL.
6.3 Termination Other than for Cause, Death or Disability.
Notwithstanding any provision to the contrary herein, CCL may at any time upon
written notice to Employee, in its sole and absolute discretion and for any or
no reason, terminate the employment of Employee hereunder without Cause. If this
Agreement is terminated (i) by CCL, other than as a result of the death or
disability of Employee or for Cause, or (ii) as a result of a Constructive
Termination (as defined below), CCL shall pay Employee (A) his unpaid Base
Salary through the end of the Term (payable as provided in Section 4.1 hereof),
(B) the value of his accrued and unpaid vacation days as of the date of
termination (calculated based on Employee's Base Salary computed on a 365-day
year), and (C) all amounts due under Section 5.5 hereof. In addition, Employee
shall be entitled to any amounts due under the programs referred to in Section
5.1 hereof, as and to the extent set forth in such programs. For purposes of
this Agreement, "Constructive Termination" shall be deemed to have occurred upon
any material breach by CCL of the provisions of this Agreement which breach
shall continue for at least thirty (30) days after written notice is provided by
Employee to CCL setting forth in reasonable detail the matters constituting such
breach.
7. Inventions; Confidential Information; Non-Competition.
7.1 Inventions. All processes, technologies, improvements,
discoveries, trademarks, trade names, and inventions (collectively,
"Inventions") conceived, developed, invented, made or found by Employee, alone
or with others, during his employment with CCL or within six (6) months after
the termination of his employment, whether or not conceived,
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developed, invented, made or found during Employee's employment with CCL or with
the use of the facilities or materials of CCL and which relate to the consulting
business in the area of communications and content strategy for, or research
relating to the implementation of, or the design and production of, intranets,
extranets or internets or any other business conducted by CCL or any of its
subsidiaries or divisions (the "CCL Companies"), whether or not patentable,
shall be the property of CCL and shall be promptly and fully disclosed by
Employee to CCL. Employee shall perform all necessary acts (including, without
limitation, executing and delivering any assignments, documents or instruments
requested by CCL) to vest title to any such Inventions in CCL and to entitle
CCL, at its expense, to secure and maintain domestic and/or foreign patents or
any other rights for such Inventions.
7.2 Confidential Information.
(a) Employee shall not, at any time during the Term and thereafter,
directly or indirectly, disclose or furnish to any other person, firm,
partnership, corporation or any other entity, except in the course of the proper
performance of his duties hereunder (including, without limitation, during
marketing and new business presentations, seminars and workshops authorized by
CCL), any Confidential Information (as defined below) pertaining to the business
of the CCL Companies, unless required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority over the
business of the CCL Companies, or by any administrative body or legislative body
(including a committee thereof) with jurisdiction to order Employee to divulge,
disclose or make accessible such information; provided, however, that Employee
shall provide CCL with notice of the requirement of such disclosure promptly
after Employee is notified thereof and prior to his disclosure thereof so as to
enable CCL to challenge the order compelling such disclosure. In the event that
Employee's employment is terminated hereunder for any reason, Employee shall
promptly return to CCL all Confidential Information and all other documents,
drawings, work papers, lists, memoranda, notes, records and other data
(including copies thereof) constituting or pertaining to any of the Confidential
Information.
(b) For purposes of this Agreement, "Confidential Information" shall
mean non-public information concerning any financial data, statistical data,
strategic business plans, product development (or other proprietary product
data), customer and supplier lists, customer and supplier information,
information relating to practices, processes, techniques, procedures, methods,
trade secrets, marketing plans and other non-public, proprietary and
confidential information of any of the CCL Companies, that, in any case, (i) is
not otherwise generally available to the public, (ii) is not generally known in
any industry in which any of the CCL Companies is or was involved, and (iii) has
not been disclosed by the CCL Companies to others not subject to confidentiality
agreements.
7.3 Non-Competition. Subject to the provisions of Section 3.2,
Employee agrees that during the Non-Competition Period (as hereinafter defined),
he will not in any manner, directly or indirectly, except as specifically
contemplated by the terms of his
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employment or expressly set forth in this Agreement, (i) be employed by, engaged
in or participate in the ownership, management, operation or control of, or act
in any advisory or other capacity for, any entity which now or at any time
during the Non-Competition Period engages in any business activity competitive,
directly or indirectly, with the business of CCL or any of its subsidiaries or
divisions within any greater metropolitan area in which CCL or any of its
subsidiaries or divisions are currently engaged in business or, at the
termination of Employee's employment, within which there was a bona fide
intention on the part of CCL or any of its subsidiaries or divisions to engage
in business in the future, except that Employee may be retained in an "in-house"
or similar position relating to the area of communications and content strategy
for, or research relating to the implementation of, or the design and production
of, intranets, extranets or internets by an entity which is not engaged in the
business of providing services in such area to other unaffiliated entities, (ii)
solicit or divert from CCL or any of its subsidiaries or divisions any business
or any customer, or divert from CCL or any of its subsidiaries or divisions any
supplier thereto, in each case which customer or supplier was a customer or
supplier of CCL or any of its subsidiaries or divisions during the eighteen (18)
months immediately preceding such date of solicitation or diversion, or assist
any person, firm or corporation in doing so or attempting to do so, or (iii) on
his own behalf or on behalf of any person or entity, directly or indirectly,
hire or solicit the employment or other retention of any employee or consultant
who was employed or retained by CCL or any of its subsidiaries or divisions at
any time during the twelve (12) months immediately preceding such date of hiring
or solicitation; provided, however, that, notwithstanding the foregoing, nothing
herein shall preclude Employee from making solely passive investments in any
class or series of equity securities of any entity which is publicly traded so
long as Employee shall not own or control, directly or indirectly, either as
principal, manager, partner, investor, lender or in any other capacity, equity
securities which constitute five percent (5%) or more of the voting rights or
equity ownership of such entity. For purposes of this Section 7.3, a "bona fide
intention" to engage in business in a certain geographical area shall be deemed
not to have existed at the time of termination of Employee's employment if (i)
within three (3) months after the termination of Employee's employment, CCL or
any of its subsidiaries or divisions shall not have entered into a letter of
intent or made a public announcement of intention to engage in business in such
geographical area or (ii) within one (1) year after the termination of
Employee's employment, CCL or any of its subsidiaries or divisions shall not
have consummated an agreement to engage, or otherwise actually engaged, in
business in such geographical area. The provisions of this Section 7.3 shall
extend for the Term and survive the Term for eighteen (18) months after the end
of the Term; provided, however, that in the case of a termination of employment
pursuant to the provisions of Section 6.1, the provisions of this Section 7.3
shall extend until eighteen (18) months after the last payment of Base Salary is
made pursuant to Section 6.1(i); provided further, however, that in the case of
a termination of employment pursuant to the provisions of Sections 6.3, the
provisions of this Section 7.3 shall extend until the last payment of Base
Salary is made pursuant to Section 6.3(A) (the period described in this sentence
is referred to herein as the "Non-Competition Period").
7.4 Breach of Provisions. Employee and CCL hereby agree that the
covenants contained in this Section 7 are reasonable and necessary covenants for
the protection of
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CCL and its business under the circumstances, and further agree that if, in the
opinion of any court of competent jurisdiction such covenants are not reasonable
in any respect, such court shall have the right, power and authority to excise
or modify such provision or provisions of these covenants that such court deems
unreasonable and to enforce the remainder of these covenants as so amended.
Employee agrees that any breach or threatened breach of the covenants contained
in this Section 7 would irreparably injure CCL and that there is no adequate
remedy at law for any such breach or threatened breach. Accordingly, Employee
agrees that CCL, in addition to pursuing any other remedies it may have in law
or in equity, may obtain injunctive relief in any court, foreign or domestic,
having the capacity to grant such relief, to restrain any such breach or
threatened breach by Employee and to enforce the provisions of this Section 7.
8. Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the date of
service if personally served, (ii) on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid, or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers (or at
such other address or facsimile number for a party as shall be specified by like
notice):
If to CCL, to: International Post Limited
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Fax No.: (000) 000-0000
with a copy to: Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to Employee, to the address set forth beside his signature on the signature
page to this Agreement.
9. Entire Agreement. This Agreement, the Purchase Agreement and the
agreements referenced herein and therein set forth the entire understanding and
agreement of the parties with respect to their subject matter and supersede any
and all prior understandings, negotiations or agreements among the parties
hereto, both written and oral, with respect to such subject matter.
10. Authority. The parties each represent and warrant that such party has
the power, authority and right to enter into this Agreement and to carry out and
perform the terms, covenants and conditions hereof.
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11. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of CCL and its successors and assigns (including purchasers
of substantially all of CCL's assets) and Employee. Except as otherwise
expressly set forth in this Agreement, the rights and obligations of Employee
under this Agreement shall not be assignable or otherwise transferable.
12. Amendment or Modification; Waiver. This Agreement may be amended or
modified only by written agreement executed by all parties hereto. Any of the
parties hereto may extend the time for the performance of any of the obligations
or other acts of any other party hereto, waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or waive compliance with any of the covenants, agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed by the party granting such waiver. Such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or future failure.
13. No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
14. Governing Law; Consent to Jurisdiction. This Agreement shall be
construed in accordance with, and governed by, the internal laws of the State of
New York as applied to contracts made and to be performed entirely within the
State of New York. Any legal action, suit or proceeding arising out of or
relating to this Agreement may be instituted in any state or federal court
located within the County of New York, State of New York, and each party hereto
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. Each party hereto further
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding.
15. Headings. Section headings contained in this Agreement are included for
convenience only and shall not affect the interpretation of any provisions of
this Agreement.
16. Counterparts. This Agreement may be executed in one or more counter
parts, each of which shall be deemed to be an original, but all of which, when
taken together, shall constitute one and the same agreement.
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17. Severability. Subject to Section 7.4 hereof, in the event that any one
or more of the provisions contained in this Agreement shall for any reason be
held to be invalid, illegal or unenforceable in any respect, in whole or in
part, the validity of the remaining provisions shall not be affected and the
remaining portion of any provision held to be invalid, illegal or unenforceable
shall in no way be affected, prejudiced or disturbed thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
COGNITIVE COMMUNICATIONS, LLC
By:
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Xxxxxxx X. Xxxxxx
Vice President and Chief Financial Officer
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Xxxxxxx Xxxxxxx
Address: 0 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Phone No.: (000) 000-0000
Fax No.:
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