EXHIBIT 10.10
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT, dated as of November 10, 1997, by and between
T/SF COMMUNICATIONS CORPORATION, a Delaware corporation ("Employer"), and Xxxxxx
X. Xxxx ("Executive"):
Background
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Employer wishes to retain Executive and Executive wishes to be
employed by Employer on the terms and conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
ARTICLE I
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TERM OF AGREEMENT AND EMPLOYMENT
Section 1.01 Commencing on the date of this Agreement and for a
period ending on November 10, 2002, subject to earlier termination as provided
in Article VI hereof, Employer hereby employs Executive and Executive hereby
accepts employment with Employer as the Chief Financial Officer of Employer and
each of Employer's subsidiaries (the "Businesses"). Subject to the direction
and ultimate authority of the President and Chief Executive Officer of Employer,
Executive shall be responsible for (i) helping the President and Chief Executive
Officer of Employer to grow EBITDA consistently and aggressively, (ii) ensuring
that all of Employer's financial and management information reporting is
accurate, timely and meets the requirements of Federal and state laws,
Employer's shareholders and management, and (iii) developing and implementing
the agreed information systems for Employer and its subsidiaries; and shall have
such duties as are compatible with the position of Chief Financial Officer.
Employer and Employer's subsidiaries are collectively referred to below as the
"Related Entities."
Section 1.02 The term of this Agreement shall continue from year to
year after November 10, 2002, unless terminated by written notice, given by
either party to the other, on or before the date which is one year prior to the
expiration date of the term hereof or prior to the expiration of any extended
term.
ARTICLE II
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DUTIES AND OBLIGATIONS OF EXECUTIVE
Section 2.01 At all times during the performance of this Agreement,
Executive shall adhere to each Related Entity's policies, rules and regulations
governing the conduct of its employees, now in effect, or as subsequently
adopted or amended.
Section 2.02 Executive shall devote substantially all of his business
time, ability and attention to the operations of the Businesses during the term
of this Agreement and shall not, whether directly or indirectly, render any
services to any other person or organization, whether for
compensation or otherwise, except with Employer's prior written consent.
ARTICLE III
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COMPENSATION
Section 3.01 As full compensation for his services hereunder
(including the services to T/SF Communications Corporation and to Employer's
subsidiaries), Employer shall pay Executive an annual salary of One Hundred
Seventy Five Thousand Dollars ($175,000), payable in equal semi-monthly
installments (the "Base Salary"). On each December 31, the Base Salary shall be
increased by an amount equal to the percentage increase during the previous
calendar year in the Consumer Price Index, All Items, in the New York, New York
metropolitan area.
Section 3.02 In addition to the Base Salary, for 1998 and each
subsequent calendar year during the term of this Agreement, Employer shall pay
Executive a bonus (the "Bonus") in an amount equal to 2% of his Base Salary as
of the beginning of that year for each 1% (rounded to the nearest whole
percentage) by which EBITDA for that year exceeds the EBITDA Budget for that
year, provided that the maximum Bonus the Executive shall be entitled to receive
with respect to any year shall be 50% of his Base Salary as of the end of that
year. As used in this Agreement, (a) the term "EBITDA" means the consolidated
earnings of the Related Entities before interest, taxes, depreciation and
amortization, excluding extraordinary or unusual nonrecurring items of income
and expense, determined in accordance with generally accepted accounting
principles by Employer's independent accountants and (b) the term "Annual EBITDA
Budget" means the aggregate amount (on a consolidated basis) of budgeted
earnings of the Related Entities, before interest, taxes, depreciation and
amortization, excluding extraordinary or unusual nonrecurring items of income
and expense, based upon the budget for each calendar year determined not later
than 30 days prior to the commencement of each year by the respective boards of
the Related Entities (as those budgets may be modified from time to time as
contemplated by this paragraph). If in any year any of the Related Entities
acquires or disposes of any material business, the EBITDA for that year shall be
adjusted to reflect the increase or decrease, as the case may be, in annual
income and expense reasonably attributable to the acquired or disposed of
business as determined by the board of that entity. The Bonus for any year
shall be paid not later than 30 days after delivery of Employer's audited
financial statements for that year.
Section 3.03 Contemporaneously with the execution of this Agreement,
Employer and Executive are executing an agreement in the form attached as
Exhibit A pursuant to which Executive is being granted 15,000 Equity
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Appreciation Units under Employer's Chief Financial Officer and General Counsel
Equity Appreciation Plan.
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ARTICLE IV
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BENEFITS
Section 4.01 Executive shall be entitled to participate in all
benefit plans generally available to employees of Employer and, subject to
Section 6, to receive vacation, sick leave and leaves of absence in accordance
with general employee policies.
ARTICLE V
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BUSINESS EXPENSES
Section 5.01 Employer shall reimburse Executive, in accordance with
Employer's policies, for all reasonable out-of-pocket business expenses incurred
by Executive in the performance of his duties hereunder. Executive shall
furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction.
Section 5.02 Employer pay Executive up to $75,000 (plus a gross-up
for any taxes paid by Executive with respect to such relocation) for customary
and necessary expenses to (i) move his family, household goods and other
personal property from Chicago to the New York City metropolitan area, (ii) pre-
move house hunting trips and (iii) real estate expenses related to selling
Employee's Chicago house and purchasing a house in the New York City
metropolitan area. Such relocation costs shall be advanced to Executive in the
form of a promissory note in the form attached as Exhibit B hereto. Executive
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shall furnish to Employer documentary evidence of each such expense in the form
required to comply with Employer's policies and all applicable federal and state
tax statutes and regulations issued thereunder for the substantiation of such
expense as a tax deduction. Executive shall have completed his relocation by no
later than September 1, 1998.
ARTICLE VI
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TERMINATION OF EMPLOYMENT
Section 6.01 Termination with Cause. Employer may terminate
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Executive's employment at any time for Cause by giving written notice of such
termination to Executive. For purposes of this Agreement, cause shall mean:
(a) The conviction of Executive of a felony;
(b) Fraud, embezzlement or other misappropriation by Executive of
funds or property of Employer or any of its affiliates;
(c) A breach of any of Executive's fiduciary duties as an employee of
Employer;
(d) Any gross misconduct of Executive which is injurious in any
material respect to Employer or any of its affiliates; or
(e) Executive's failure to perform in any material respect his
obligations under this Agreement.
If Employer terminates Executive's employment for Cause under this
Section 6.01, Executive shall cease receiving his Base Salary as of the date of
such termination, shall not be entitled to any severance pay, and shall
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cease as of the date of such termination to participate in the benefit plans
generally available to employees of Employer in which Executive is then
participating. Employer will assure that Executive receives all benefits
required by law, e.g., COBRA, but Executive will receive no other benefit
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hereunder.
Section 6.02 Termination Resulting from Death or Disability. If, as
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the result of any physical or mental disability, Executive shall fail or be
unable to perform in a satisfactory manner a material portion of his duties and
obligations hereunder for a period of 180 consecutive days or for a total of 180
days in any twelve (12) month period, Employer may, upon thirty (30) days prior
written notice to Executive, terminate Executive's employment hereunder. Any
dispute as to a disability shall be resolved by a medical doctor selected
jointly by Employer and Executive, or, failing agreement, by the President of
the American Medical Association.
The death of Executive shall terminate this Agreement and his
employment hereunder, effective at the time of death.
In the event of termination resulting from disability or death,
Executive or his estate, as the case may be, shall receive Executive's Base
Salary through the date of termination and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated.
Executive's participation in the benefits plans generally available to employees
of Employer shall cease as of the date of such termination, with the exception
of a disability insurance plan, if any.
Section 6.03 Termination upon a Change of Control. This Agreement and
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Executive's employment hereunder shall be terminated automatically effective
upon a Change of Control. In the event of termination resulting from a Change
of Control, Executive shall receive Executive's Base Salary through the date of
termination and a pro-rated portion (based on the number of days in the year in
which Executive was employed) of the Bonus, if any, calculated for the portion
of such calendar year through the last day of the month preceding the month in
which Executive's employment terminated. Executive's participation in the
benefits plans generally available to employees of Employer shall cease as of
the date of such termination. "Change-in-Control" means a sale of a common
equity interest of 50% or more in Employer to persons who are not affiliates of
VS&A Communications Partners II, L.P. ("VS&A"), or a merger of Employer with, or
a sale of all or substantially all of the assets of the Employer and its
subsidiaries to, any other entity in which VS&A does not in the aggregate own at
least 50% of the equity interests; provided, however, that a Change-in-Control
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shall not be deemed to have occurred if, following a sale of common equity
interests of Employer pursuant to a public offering, VS&A and its affiliates
continue to have a controlling interest in Employer, even though such interest
may constitute less than 50% of the equity interests of Employer.
Section 6.04 Termination for Other Reasons. Employer may terminate
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this Agreement and Executive's employment for any reason at any time by giving
written notice of such termination to Executive. If Executive's employment is
terminated by Employer pursuant to this provision (i.e., other than for Cause,
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death or disability), Executive shall cease receiving his Base Salary and to
participate in Employer's benefit plans as of the date of such termination. If,
however, Employer shall promptly receive from Executive a release of Employer
and its affiliates, in form and substance satisfactory to Employer, from any and
all claims which Executive may have in respect of such termination or under this
Agreement, (a) Employer shall pay Executive severance pay in an amount equal to
Executive's Base Salary (calculated at the rate of Executive's annual salary at
the time of such termination) through the earlier of (i) the then current term
of this Agreement and (ii) two (2)
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years after the date of such termination (the "Severance Period") and a pro-
rated portion (based on the number of days in the year in which Executive was
employed) of the Bonus, if any, calculated for the portion of such calendar year
through the last day of the month preceding the month in which Executive's
employment terminated, and (b) Employer shall maintain in full force and effect
Executive's continued participation in the benefit plans generally available to
employees of Employer in which Executive was participating immediately prior to
such termination until the earlier of (i) one (1) year after the date of such
termination and (ii) Executive's commencement of full-time employment with a new
employer. At the end of the period of participation in such benefit plans,
Employer will assure that Executive receives all additional benefits required by
law, e.g., COBRA. The payment of the severance pay referred to in clause (a)
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above shall be made as follows: (i) the amount calculated based upon Executive's
Base Salary shall be payable during the Severance Period in accordance with the
same schedule of payments provided for Executive's Base Salary pursuant to
Section 3.01 and (ii) the amount calculated based upon the pro-rated bonus shall
be payable in accordance with Section 3.02.
Section 6.05 Breach of Agreement by Employer. In the event that (i)
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Employer shall breach in any material respect any of its obligations under this
Agreement, (ii) there is a material diminution of Employee's duties as set forth
in this Agreement or (iii) there shall be a relocation of the primary business
offices of Employer outside of the New York City metropolitan area., upon
receipt from Executive of a release of Employer and its affiliates, in form and
substance satisfactory to Employer, from any and all claims which Executive may
have in respect of such termination or under this Agreement, (a) Employer shall
pay Executive severance pay in an amount equal to Executive's Base Salary
(calculated at the rate of Executive's annual salary at the time of such
termination) through the Severance Period and a pro-rated portion (based on the
number of days in the year in which Executive was employed) of the Bonus, if
any, calculated for the portion of such calendar year through the last day of
the month preceding the month in which Executive's employment terminated, and
(b) Employer shall maintain in full force and effect Executive's continued
participation in the benefit plans generally available to employees of Employer
in which Executive was participating immediately prior to such termination until
the earlier of (i) one (1) year after the date of such termination and (ii)
Executive's commencement of full-time employment with a new employer. At the
end of the period of participation in such benefit plans, Employer will assure
that Executive receives all additional benefits required by law, e.g., COBRA.
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The payment of the severance pay referred to in clause (a) above shall be made
as follows: (i) the amount calculated based upon Executive's Base Salary shall
be payable during the Severance Period in accordance with the same schedule of
payments provided for Executive's Base Salary pursuant to Section 3.01 and (ii)
the amount calculated based upon the pro-rated bonus shall be payable in
accordance with Section 3.02.
Section 6.06 Mitigation. Executive agrees to use his best efforts to
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mitigate any severance pay hereunder by seeking other suitable employment or
consultancy arrangements. If during the Severance Period the Executive accepts
other employment or consultancy, the portion of the severance pay awarded to the
Executive hereunder that is based upon Executive's Base Salary shall be reduced
by the amount of any compensation payable as a result of such other employment
or consultancy.
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ARTICLE VII
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NON-COMPETITION, CONFIDENTIALITY
AND NON-SOLICITATION COVENANTS
Section 7.01 Executive acknowledges that Executive's employment
hereunder will provide Executive with access on a continual basis to
confidential and proprietary information concerning each of the Businesses,
which is not readily available to the public; and that Employer would not enter
into this Agreement but for the covenants (the "Restrictive Covenants")
contained in this Article VII. Accordingly, Executive agrees that:
(a) During the term of employment hereunder and, for a period of one
(1) year thereafter (the "Restricted Period"), Executive shall not, directly or
indirectly, (i) engage in any of the Businesses for his own account; or (ii)
render any services which constitute engaging in any of the Businesses in any
capacity to any person (other than with the consent or at the direction of
Employer); nor shall Executive own an equity interest in any person which is
engaged in any of the Businesses, provided, however, that Executive may own,
directly or indirectly, solely as a passive investment, securities of any person
which are traded on any national securities exchange or NASDAQ, if Executive is
not a controlling person of, or a member of a group which controls, such person,
and does not, directly or indirectly, own five percent (5%) or more of any class
of securities of such person.
(b) Executive shall forever maintain in strictest confidence all
information relating to each of the Businesses and to each of the Related
Entities, which is known or becomes known to Executive, including, without
limitation, trade secrets, know-how, financial statements and data, contracts
(whether oral or written), customer and advertiser lists, rate schedules,
pricing policies, marketing plans and strategies, and business acquisition plans
(collectively, the "Confidential Information"), and shall not, except in
connection with the business affairs of Employer and its affiliates, disclose
any Confidential Information to any person, other than with the express written
consent of Employer. Confidential Information shall not include information
which Executive can demonstrate (A) has become generally available to the public
other than as a result of a disclosure by Executive, (B) was available to
Executive on a non-confidential basis prior to its disclosure to Executive by
Employer, or (C) has become available to Executive on a non-confidential basis
from a source other than Employer, provided that such source is not known by
Executive after reasonable inquiry to be bound by a confidentiality agreement
with Employer or otherwise prohibited from transmitting the information to
Executive by a legally binding obligation.
Notwithstanding anything in this Agreement to the contrary, in the
event that a request or demand is made upon Executive, by written interrogatory,
request for information or documents, subpoena, court order, civil investigative
demand or other legal process, to disclose any Confidential Information, which
disclosure is not otherwise permitted hereunder, Executive will provide Employee
with prompt notice of any such request or demand so that Employer may seek an
appropriate protective order or waive compliance with the provisions of this
Agreement. Executive will not oppose action by, and will cooperate with,
Employer in any effort to obtain an appropriate protective order.
All memoranda, notes, lists, records and other documents (and all
copies thereof) constituting Confidential Information heretofore or hereafter
made or compiled by Executive or made available to Executive concerning any of
the Businesses shall be the property of the respective Related Entities, shall
be kept confidential in accordance with the provisions of this Section 7.01(b),
and shall be delivered to the respective Related Entities promptly upon
termination of this Agreement or at any earlier or later time upon the request
of Employer.
(c) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any current employee, officer or director of
any of the Related Entities to leave the employment of his employer, or hire any
current or former employee, officer or director of, any of the Related Entities.
(d) During the Restricted Period, Executive shall not, directly or
indirectly, solicit or encourage any person who is a customer or advertiser of
any of the Related Entities, or the affiliates or associates thereof, to
discontinue
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such person's business relationship with any of the Related Entities.
Section 7.02 Executive acknowledges and agrees that (i) Executive has
had an opportunity to seek advice of counsel in connection with this Agreement;
(ii) the Restrictive Covenants are reasonable in scope and in all other
respects; (iii) any violation of the Restrictive Covenants will result in
irreparable injury to the Related Entities; (iv) money damages would be an
inadequate remedy at law for the Related Entities in the event of a breach of
any of the Restrictive Covenants by Executive; and (v) specific performance in
the form of injunctive relief would be an adequate remedy for the Related
Entities.
Employer and Executive hereby submit to the jurisdiction of the Courts
of the State of New York to enforce the Restrictive Covenants and agree that if
Executive breaches or threatens to breach a Restrictive Covenant, Employer (or
any of the other Related Entities) shall be entitled, in addition to all other
remedies, to an injunction restraining any such breach, without any bond or
other security being required and without the necessity of showing actual
damages.
ARTICLE VIII
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ARBITRATION
Section 8.01 Except as otherwise set forth in Section 7.02 above,
Employer and Executive each waives any right each may have to a civil lawsuit
and trial by jury in connection with any dispute between them arising out of,
concerning or connected with this Agreement and each agrees that, upon the
written request of the other party, any such dispute shall be submitted to
arbitration. Arbitration shall take place in the City of New York, or such other
place as the parties may agree, and shall be governed by the rules of the
American Arbitration Association.
Section 8.02 Employer and Executive shall select one (1) arbitrator
to hear and determine the dispute from a list of five (5) candidates provided by
the American Arbitration Association.
Section 8.03 The arbitrator's award shall be final and binding on the
parties and the arbitrator may invoke any remedy available in equity or at law,
including, without limitation, injunctions and restraining orders. The parties
agree to the jurisdiction of the Courts of the State of New York for
confirmation and enforcement of the arbitrator's award.
ARTICLE IX
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GENERAL PROVISIONS
Section 9.01 In the event of arbitration or an action at law or in
equity to enforce or interpret the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees and costs. The arbitrator's fees
and costs incurred shall be borne by the losing party.
Section 9.02 This Agreement supersedes any and all other agreements,
whether oral or in writing, between the parties hereto with respect to the
subject matter hereof. Each party acknowledges that no representations,
inducements, promises or agreements, whether oral or in writing, have been made
by any party, or on behalf of any party, which are not embodied herein. No
agreement, promise or statement not contained in this Agreement shall be valid
and binding,
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unless agreed to in writing and signed by the parties sought to be bound
thereby.
Section 9.03 Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, faxed, or sent
by courier service (with next day delivery requested) or the U.S. Postal Service
by express mail (with next day delivery requested). Any such notice or
communication shall be deemed given and effective, in the case of personal
delivery, upon receipt by the other party, in the case of faxed, upon
transmission of the fax, in the case of a courier service or the U.S. Postal
Service, upon the next business day, after dispatch of the notice or
communication. Any such notice or communication shall be addressed as follows:
If to Employer:
T/SF Communications Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
With a copy to:
VS&A Communications Partners II, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: President
If to Executive:
Xxxxxx X. Xxxx
0000 Xxxxxxx Xxxx Xxxx, #0X
Xxxxxxx, XX 00000
Any person named above may designate another address or fax number by giving
notice in accordance with this Section to the other persons named above.
Section 9.04 This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to principles
of conflicts of law.
Section 9.05 No breach of any provision hereof may be waived unless
in writing. Waiver of any breach of any provision hereof shall not be deemed a
waiver of any other breach of the same or any other provision hereof. This
Agreement may be amended only by a written agreement, executed by the parties
hereto.
Section 9.06 In the event any one or more of the provisions contained
in this Agreement shall be held by an arbitrator or court of competent
jurisdiction to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby and the parties will attempt to agree upon a
valid and enforceable provision which shall be a reasonable substitute for such
invalid and unenforceable provision in light of the tenor of this Agreement,
and, upon so agreeing, shall incorporate such substitute provision in this
Agreement.
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Section 9.07 This Agreement may be executed in any number of
counterparts and each such duplicate counterpart shall constitute an original,
any one of which may be introduced in evidence or used for any other purpose
without the production of its duplicate counterpart. Moreover, notwithstanding
that any of the parties did not execute the same counterpart, each counterpart
shall be deemed for all purposes to be an original, and all such counterparts
shall constitute one and the same instrument, binding on all the parties hereto.
Section 9.08 Both parties hereto acknowledge that they have had the advice of
counsel before entering into this Agreement, have fully read the Agreement and
understand the meaning and import of all the terms hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
T/SF COMMUNICATIONS CORPORATION
By:_______________________________
__________________________________
Xxxxxx X. Xxxx
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