EMPLOYMENT AGREEMENT
Exhibit 10.1
This Employment Agreement (this “Agreement”) is entered into as of July 1, 2007, between Xxxxx
Xxxxxxx (the “Executive”) and Florists’ Transworld Delivery, Inc. (“FTD”).
WHEREAS, the parties desire to modify certain terms of the Executive’s employment with FTD and
replace and supercede the Letter Agreement with this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below and in
the Confidentiality and Non-Competition Agreement, FTD and the Executive hereby agree as follows:
1. Duties. The Executive shall serve as Executive Vice President and Chief Financial
Officer of FTD or in a substantially similar position with any entity that acquires FTD or all or
substantially all of FTD’s assets through June 30, 2008 (which term shall automatically renew for
successive one year terms unless FTD provides written notice of termination to the Executive prior
to the end of the initial term or any renewal term). The Executive shall perform the duties
assigned by FTD from time to time. The Executive shall devote the Executive’s entire business time
to the affairs of FTD to the performance of the Executive’s duties under this Agreement and to the
promotion of FTD’s interests.
2. Compensation. As full compensation for the performance by the Executive of the
Executive’s duties under this Agreement, FTD shall compensate the Executive as follows:
(a) Base Salary. During the term of this Agreement, FTD shall pay to the Executive a
base salary set annually by the Board of Directors of FTD or FTD, Inc. or the Compensation
Committee thereof (collectively, the “Board”), such base salary to initially be $325,000 per year,
payable in the periodic installments ordinarily paid by FTD to employees of FTD at comparable
levels to the Executive. The Executive shall be entitled to such merit increases in base salary as
the Board may determine, in its discretion.
(b) Performance Bonus. The Executive shall be entitled to participate in a
performance bonus as set by the Board based upon performance criteria to be set by the Board.
(c) Equity Incentive Awards. In the event a Change of Control (as hereinafter
defined) occurs during the Executive’s employment, notwithstanding any provision of this Agreement
or any other agreement governing any equity incentive awards granted to the Executive, any
outstanding stock options or restricted stock awards granted to the Executive by FTD, Inc., FTD or
any subsidiary of either company shall vest in full and become immediately exercisable, and any
restrictions relating thereto shall lapse, upon the occurrence of such Change of Control.
(d) Paid Vacation. The Executive shall be entitled to four weeks of paid vacation per
year in accordance with FTD’s policies with respect to vacations then in effect.
(e) Benefits. During the term of Executive’s employment hereunder, the Executive
shall be entitled to the additional employment-related benefits (the “Benefits”) that are made
available from time to time to employees of FTD at comparable levels to the Executive.
(f) Expense Reimbursement. FTD shall reimburse the Executive, in accordance with the
practice from time to time in effect for other similarly-situated employees of FTD, for all
reasonable and necessary travel expenses and other disbursements incurred by the Executive, for or
on behalf of FTD, in the performance of the Executive’s duties under this Agreement.
3. Termination Following a Change of Control.
(a) Involuntary Termination. If the Executive’s employment hereunder is terminated
(other than by the Executive (except as provided under clause (b) below)) or is not renewed
pursuant to Section 1 during a Change of Control Severance Period (as hereinafter defined), the
Executive shall be entitled to the benefits provided under Section 4(a) hereof; provided,
however, that the Executive shall not be entitled to such benefits upon the occurrence of
one or more of the following events:
(i) the Executive’s death;
(ii) if the Executive becomes permanently disabled within the meaning of, and begins
actually to receive disability benefits pursuant to, the long-term disability plan in effect
for, or applicable to, the Executive immediately prior to the Change of Control; or
(iii) any event described in Section 4(c) hereof under the definition of “Cause”.
(b) Constructive Termination. The Executive may terminate the Executive’s employment
hereunder during the Change of Control Severance Period upon the occurrence of one or more of the
following events (regardless of whether any other reason, other than Cause, for such termination
exists or has occurred, including without limitation other employment), in which case the Executive
shall be entitled to the benefits provided under Section 4(a) hereof:
(i) failure to elect or reelect or otherwise to maintain the Executive in the office or
the position, or a substantially equivalent office or position, which the Executive held
immediately prior to the Change of Control;
(ii) (A) a material adverse change in the nature or scope of the authorities, powers,
functions, responsibilities or duties attached to the position that the Executive held
immediately prior to the Change of Control; (B) a reduction in the Executive’s base salary
from the rates in effect immediately prior to the Change of Control or a material
modification in the scope of the Executive’s right to participate in any bonus program
offered to similarly-situated employees; or (C) the termination or denial of the Executive’s
rights to Benefits at least as great in the aggregate as are payable thereunder immediately
prior to the Change of Control or a reduction in the scope or value thereof other than a
general reduction applicable to all similarly-situated employees;
(iii) a change in circumstances following the Change of Control, including, without
limitation, a change in the scope of the business or other activities for
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which the Executive was responsible immediately prior to the Change of Control, which
has rendered the Executive unable to carry out any material portion of the authorities,
powers, functions, responsibilities or duties attached to the position held by the Executive
immediately prior to the Change of Control, which situation is not remedied within 30
calendar days after written notice of such change given by the Executive;
(iv) the liquidation, dissolution, merger, consolidation or reorganization of FTD or
transfer of all or substantially all of its business and/or assets, unless the successor or
successors (by liquidation, merger, consolidation, reorganization, transfer or otherwise) to
which all or substantially all of its business and/or assets have been transferred (directly
or by operation of law) shall have assumed all duties and obligations of FTD under this
Agreement; or
(v) the Executive is required to have his principal location of work changed to any
location that is in excess of 50 miles from the Executive’s principal location of work
immediately prior to the Change of Control.
For purposes of this Agreement:
(i) “Change of Control” shall mean:
(A) the acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a
“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 50% of the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors (“Voting Stock”) of FTD,
Inc. or FTD, respectively; provided, however, that for purposes of this subsection (A), the
following acquisitions shall not constitute a Change of Control: (1) any acquisition
directly from FTD, Inc. or FTD, (2) any acquisition by FTD, Inc., FTD, any subsidiary of
FTD, Inc. or FTD or any employee benefit plan (or related trust) sponsored or maintained by
FTD, Inc. or FTD or any such subsidiary or (3) any acquisition by Xxxxxxx Xxxxx & Partners
or any of their respective affiliates;
(B) a change in a majority of the members of the Board occurs (1) within one year
following the public announcement of an actual or threatened election contest (within the
meaning of Rule 14a-11 under the Exchange Act) or the filing of a Schedule 13D or other
public announcement indicating a Person intends to effect a change in control of FTD, Inc.
or FTD or (2) as a result of a majority of the members of the Board having been proposed,
designated or nominated by a Person (other than FTD, Inc. or FTD through the Board or duly
authorized committees thereof or through the exercise of contractual rights);
(C) consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of FTD, Inc. or FTD (a “Business
Combination”), in each case, unless, following such Business Combination, (1) more than 50%
of the Voting Stock of the entity resulting from such Business Combination is held in the
aggregate by (x) the holders of securities entitled to vote generally in the election
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of directors of FTD, Inc. or FTD immediately prior to such transaction, (y) any
employee benefit plan (or related trust) sponsored or maintained by FTD, Inc. or FTD or such
entity or any subsidiary of any of them or (z) Xxxxxxx Xxxxx & Partners or any of their
respective affiliates and (2) at least half of the members of the board of directors of the
entity resulting from such Business Combination were members of the Board at the time of the
execution of the initial agreement, or the action of the Board providing for such Business
Combination; or
(D) approval by the stockholders of FTD, Inc. or FTD of a complete liquidation or
dissolution of FTD, Inc. or FTD; and
(ii) “Change of Control Severance Period” shall mean the period of time commencing on the date
of a Change of Control and continuing until the earliest of (A) the second anniversary of such
Change of Control, (B) the Executive’s death, or (C) the Executive’s retirement.
4. Severance Compensation.
(a) Severance Following a Change of Control. If the Executive is entitled to receive
benefits pursuant to the terms of Section 3(a) or Section 3(b):
(i) The Executive, within five business days after the Executive’s demand therefor,
shall be entitled to a lump sum payment in an amount equal to (A) base salary for two years
(at the highest rate in effect for any period during the three-year period prior to the date
of termination), plus (B) two times the Executive’s target performance bonus as set by the
Board for the fiscal year in which the Change of Control or the date of termination occurs,
whichever is higher, plus (C) any pro rata performance bonus to which the Executive may be
entitled pursuant to this Agreement for the fiscal year in which the Change of Control or
the date of termination occurs, whichever is higher; and
(ii) For two years following the date of termination (the “Continuation Period”), the
Executive will be provided, at no cost to the Executive, with (A) health benefits
substantially similar to those which the Executive was receiving or entitled to receive
immediately prior to the date of termination; provided, however, that any
such benefits otherwise receivable by the Executive pursuant to this clause (a)(ii)(A) will
be reduced to the extent comparable benefits are actually received by the Executive from
another employer during the Continuation Period, and any such benefits actually received by
the Executive shall be reported by the Executive to FTD, (B) life insurance and disability
insurance or coverage at least equivalent to that the Executive was receiving or entitled to
receive immediately prior to the date of termination and (C) reasonable and customary
executive outplacement services in an amount not to exceed $20,000.
(iii) Other Severance Payments. FTD shall have the right to terminate the
Executive’s employment at any time during the term of this Agreement by giving the Executive
written notice of the effective date of the termination. If (i) this Agreement is not
renewed pursuant to Section 1 or (ii) the Executive’s employment is terminated (A) without
Cause by FTD (other than during the Change of Control Severance Period) or (B)
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by the Executive following the Executive’s assignment to a position that represents a
material diminution in the Executive’s operating responsibilities (other than during the
Change of Control Severance Period) (it being understood that a change in the Executive’s
title shall not by itself entitle the Executive to terminate the Executive’s employment and
receive the right to severance payments under this paragraph), the Executive will be paid
(1) continuing base salary for one year (at the highest rate in effect for any period during
the three-year period prior to the date of termination) from the effective date of any such
non-renewal or termination of employment plus (2) any pro rata performance bonus to which
the Executive may be entitled pursuant to this Agreement for the fiscal year in which the
termination occurs, ; provided, however, that in no event shall the
Executive be entitled to any payment under this Section 4(b) if the Executive is in breach
of the Confidentiality and Non-Competition Agreement. For one year following the date of
termination (the “Continuation Period”), the Executive will be provided, at no cost to the
Executive, with (A) health benefits substantially similar to those which the Executive was
receiving or entitled to receive immediately prior to the date of termination;
provided, however, that any such benefits otherwise receivable by the
Executive pursuant to this clause will be reduced to the extent comparable benefits are
actually received by the Executive from another employer during the Continuation Period, and
any such benefits actually received by the Executive shall be reported by the Executive to
FTD, and (B) life insurance and disability insurance or coverage at least equivalent to that
the Executive was receiving or entitled to receive immediately prior to the date of
termination.
(b) Cause. For purposes of this Agreement, “Cause” means any of the following events
that FTD or the Board has determined, in good faith, has occurred: (i) the Executive’s continual or
deliberate neglect of the performance of the Executive’s material duties; (ii) the Executive’s
failure to devote substantially all of the Executive’s working time to the business of FTD and its
subsidiaries or affiliated companies; (iii) the Executive’s engaging willfully in misconduct in
connection with the performance of any of the Executive’s duties, including, without limitation,
the misappropriation of funds or securing or attempting to secure personally any profit in
connection with any transaction entered into on behalf of FTD or its subsidiaries or affiliated
companies; (iv) the Executive’s willful breach of any confidentiality or nondisclosure agreements
with FTD (including this Agreement) or the Executive’s violation, in any material respect, of any
code or standard of behavior generally applicable to employees or executive employees of FTD; (v)
the Executive’s active disloyalty to FTD, including, without limitation, willfully aiding a
competitor or improperly disclosing confidential information; or (vi) the Executive’s engaging in
conduct that may reasonably result in material injury to the reputation of FTD, including
conviction or entry of a plea of nolo contendre for a felony or any crime involving fraud or
embezzlement under federal, state or local laws.
5. Confidential Information and Non-Competition. The Executive and FTD previously
entered into the Confidentiality and Non-Competition Agreement, which provides for (a)
non-disclosure of confidential information, (b) non-competition and (c) non-solicitation of
customers, suppliers and employees. The Executive hereby acknowledges that such agreement shall
continue in full force and effect in accordance with the terms thereof from and after the date
hereof and that such continuing force and effect is a material inducement to FTD’s entering into
this Agreement. Any severance payment made in accordance with the terms of this Agreement
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shall be deemed to constitute consideration for both the Executive’s termination of employment
and the Executive’s agreement regarding non-competition set forth herein and in the Confidentiality
and Non-Competition Agreement.
6. Limitation on Payments and Benefits. Notwithstanding any other provision of this
Agreement to the contrary, in the event that it shall be determined (as hereafter provided) that
any payment or distribution by FTD or any of its affiliates to the Executive or for the Executive’s
benefit, whether paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy, plan, program or
arrangement, including without limitation any stock option, performance share, performance unit,
stock appreciation right or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing, would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) (or any successor
provision thereto), by reason of being considered “contingent on a change in ownership or control”
of FTD within the meaning of Section 280G of the Code (or any successor provision thereto), or to
any similar tax imposed by state or local law, or any interest or penalties with respect to such
taxes, then such payments and benefits to be paid or provided shall be reduced to an amount (but
not below zero) that would result in the maximum possible net after tax receipts to the Executive
from all such payments or distributions (determined by reference to the present value determined in
accordance with Section 280G(d)(4) of the Code (or any successor provision thereto) of all such
payments net of all such taxes, or any interest or penalties with respect to such taxes, determined
by applying the highest marginal rate under Section 1 of the Code (or any successor provision
thereto) that applied to the Executive’s taxable income for the immediately preceding taxable year)
(the “Reduced Amount”). The fact that the Executive’s payments or benefits may be reduced by
reason of the limitations contained in this paragraph will not of itself limit or otherwise affect
any of the Executive’s other rights other than pursuant to this Agreement. If it is determined
that the Executive should receive a Reduced Amount, FTD will provide the Executive notice to that
effect and a copy of the detailed calculation thereof. The Executive will then be entitled to
designate the payments or benefits to be so reduced in order to give effect to this paragraph. In
the event that the Executive fails to make such designation within ten business days of
notification of the reduction in payments or benefits is required pursuant to this paragraph, FTD
may effect such reduction in any manner it deems appropriate.
7. Miscellaneous. This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Illinois, without giving effect to the conflicts
of laws principles thereof. The Executive and FTD consent to jurisdiction and venue in any federal
or state court in the City of Chicago. This Agreement and the Confidentiality and Non-Competition
Agreement state the entire agreement and understanding regarding the Executive’s employment with
FTD. This Agreement supercedes and replaces in its entirety the Letter Agreement. This Agreement
may be amended only by a written document signed by both the Executive and FTD. No delay or
failure to exercise any right under this Agreement waives such rights under the Agreement. If any
provision of this Agreement is partially or completely invalid or unenforceable, then that
provision shall only be ineffective to such extent of its invalidity or unenforceability, and the
validity or enforceability of any other provision of this Agreement shall not be affected. Any
controversy relating to this Agreement shall be settled by arbitration in Chicago, Illinois in
accordance with the Commercial Arbitration Rules of the American
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Arbitration Association, except as otherwise provided in the Confidentiality and
Non-Competition Agreement. In the event of any inconsistency between this Agreement and any
personnel policy or manual of FTD with respect to any matter, this Agreement shall govern the
matter.
(Signature page follows)
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands as of the date first set
forth above.
| FLORISTS’ TRANSWORLD DELIVERY, INC. | ||||
| /s/ XXXXXXX X. XXXXXX | ||||
| By: Xxxxxxx X. Xxxxxx | ||||
| Its: President and Chief Executive Officer | ||||
| /s/ XXXXX X. XXXXXXX | ||||
| Xxxxx Xxxxxxx |
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