EXHIBIT 10.1
ADVO, INC.
EMPLOYMENT AGREEMENT
To S. XXXXX XXXXXXX:
This Agreement establishes the terms of your employment with ADVO, Inc., a
Delaware corporation (the "COMPANY") and is contingent upon approval of this
Agreement by the Company's Board of Directors (the "BOARD") and upon your
satisfying the Company's normal requirements for employability.
EMPLOYMENT AND DUTIES You and the Company agree to your employment as
Chief Executive Officer ("CEO") on the terms
contained below. In such position, you will report
directly to the Board. You agree to perform
whatever duties the Board may assign you from time
to time that are reasonably consistent with
services performed by the chief executive officers
of similar companies. You will also, without
further compensation, serve in such other offices
at the Company or its subsidiaries to which you
are elected or appointed. During your employment,
you agree to devote your full business time,
attention, and energies to performing those duties
(except as the Board otherwise agrees from time to
time). You agree to comply with the
noncompetition, secrecy, and other provisions of
Exhibit A to this Agreement and with the Company's
Stock Ownership Guidelines.
BOARD MEMBERSHIP The Board will appoint you to a seat on the Board.
TERM OF EMPLOYMENT Your employment under this Agreement begins as of
October 15, 2004 (the "EFFECTIVE DATE"). Unless
sooner terminated or later extended under this
Agreement, your employment ends at 6:00 p.m.
Eastern Time on the third anniversary of the
Effective Date (the "INITIAL TERM"). Unless, at
least 90 days before the Initial Term (including
any extensions) would otherwise expire (an
"EXPIRATION DATE"), either you or the Company has
notified the other of an intent to terminate this
Agreement as of the then upcoming Expiration Date,
the Term will automatically extend for one year at
a time beginning on each succeeding anniversary of
the Effective Date following such Expiration Date.
The period running from the Effective Date to the
end of your employment under this Agreement is the
"TERM."
Termination or expiration of this Agreement ends
your employment but does not end your obligation
to comply with
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Exhibit A or the Company's obligation, if any, to
make payments under the Payments on Termination
and Severance provisions as specified below. If
the Company continues to employ you after the Term
(such as after a notice of nonrenewal), you will
continue to be an at-will employee, but with the
notice periods for termination by the Company
reduced to 30 days and with no Severance, as
provided under EXPIRATION below.
COMPENSATION
Salary The Company will pay you a monthly salary
beginning on the Effective Date at the rate of not
less than $64,583.33 in accordance with the
Company's generally applicable payroll practices,
which is equivalent on an annualized basis to
$775,000 (the "SALARY"). The Board will review
your Salary annually (beginning in January 2006)
for increases but will not reduce your Salary
during the Term.
Signing Bonus You will receive a lump sum payment of $250,000
as soon as practicable after the Effective Date.
You agree that you will repay this amount if,
before May 1, 2005, you resign without Good Reason
or are terminated for Cause.
Equity You will be eligible for such option, restricted
Incentives stock, and other equity based incentives in
connection with your initial employment and in the
future as the Compensation and Nomination
Committee (the "COMMITTEE") determines. The
Committee has approved an initial grant (the
"INITIAL GRANT") to you, effective on November 1,
2004, of (i) an option for 100,000 shares of the
Company's common stock vesting in four equal
annual installments beginning on November 1, 2005
and (ii) a restricted stock grant for 60,000
shares of common stock, of which 10,000 shares
will vest on November 1, 2005, 2006, and 2007, and
the remaining 30,000 shares will vest on November
1, 2007. The initial grants are under and subject
to the Company's 1998 Incentive Compensation Plan
(the "1998 PLAN"), require continued employment
for grant and vesting (except as specified below),
and expire in accordance with the terms of the
1998 Plan. If either you or the Company provides
notice of nonextension of this Agreement as of an
upcoming Expiration Date (other than on a
termination for Cause) before the final tranche of
the options and restricted stock in your Initial
Grant has vested and your employment ends
accordingly, that tranche will continue to vest as
though you had remained employed through the
vesting dates for those options and that stock,
and you will be treated for purposes of the 1998
Plan as if your employment ended on that later
date; provided, however, that
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if the Severance provision would vest your options
and restricted stock under the Initial Grant more
rapidly, the Severance provision will govern.
Bonus The Board or the Committee will establish annual
bonus targets under which you will be eligible for
a target annual bonus equal to 100% of your
Salary, determined in a manner consistent with the
Company's bonus programs applicable to senior
executives.
Relocation You agree to relocate to the Windsor, Connecticut
area by March 31, 2005 or such later date to which
the Board agrees. The Company will cover you under
and subject to the terms of its Relocation Policy
(Grade Levels M through Q).
Employee Benefits While the Company employs you under this
Agreement, the Company will provide you with the
same benefits as the Company makes generally
available from time to time to the Company's
senior executives, as those benefits are amended
or terminated from time to time. Your
participation in the Company's benefit plans will
be subject to the terms of the applicable plan
documents and the Company's generally applied
policies, and the Company in its sole discretion
may from time to time adopt, modify, interpret, or
discontinue such plans or policies.
Car Allowance You will receive a monthly car allowance of $600,
which you acknowledge is taxable to you.
Air Travel The Company will make its corporate aircraft
available to you for personal use to a maximum
annual value of such use during this Agreement of
$150,000 (prorated from the Effective Date for
2004), with that balance to be reduced using the
applicable tax rules for valuation of personal air
travel. You acknowledge that the use of the plane
will, in some instances, be taxable to you.
Vacation The Company will provide you with annual vacation,
accruing at a rate of 2.08 days per month, and
subject to the Company's normal policies regarding
vacation.
PLACE OF EMPLOYMENT Your principal place of employment will be at the
corporate offices at Windsor, Connecticut or such
other offices as the Company may establish from
time to time as its executive offices and to which
it assigns you. You understand and agree that your
employment will require travel from time to time.
EXPENSES The Company will reimburse you for reasonable and
necessary travel and other business-related
expenses you incur in performing
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your duties for the Company under this Agreement.
You must itemize and substantiate all requests for
reimbursements. You must submit requests for
reimbursement in accordance with the policies and
practices of the Company.
NO OTHER EMPLOYMENT While the Company employs you, you agree that you
will not, without the Board's prior written
consent, directly or indirectly, provide services
for which you receive compensation to any other
person or organization, nor will you otherwise
engage in activities that would conflict or
interfere with your faithful performance of your
duties as an employee of the Company. (This
prohibition excludes any work performed at the
Company's direction.) You may be involved in
charitable and professional activities and, with
the Board's consent, serve on for profit boards
and advisory committees, provided that this
permission does not override your other
obligations under this Agreement and Exhibit A.
You may manage your personal investments, as long
as the management takes only minimal amounts of
time, is consistent with the provisions of the NO
CONFLICTS OF INTEREST Section and the NO
COMPETITION Section in Exhibit A, and is otherwise
consistent with the policies and practices of the
Company.
You represent to the Company that you are not
subject to any agreement, commitment, or policy of
any third party or current or former employer that
would prevent you from entering into or performing
your duties under this Agreement, and you agree
that you will not enter into any agreement or
commitment or agree to any policy that would
prevent or hinder your performance of duties and
obligations under this Agreement, including
Exhibit A.
NO CONFLICTS OF INTEREST You confirm that you have fully disclosed to the
Company, to the best of your knowledge, all
circumstances under which you, your spouse, your
immediate relatives, and other persons who reside
in your household have or may have a conflict of
interest with the Company. You further agree to
fully disclose to the Company any such
circumstances that might arise during your
employment upon your becoming aware of such
circumstances. You agree to comply fully with the
Company's policy and practices relating to
conflicts of interest and its Code of Business
Ethics and Conduct.
TERMINATION The Company may terminate your employment or you
may resign at any time in accordance with this
section.
For Cause The Company may terminate your employment for
"CAUSE" if you:
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(i) fail to comply with any of the material
terms of this Agreement, including Exhibit
A, or neglect or refuse to attend to the
material duties you have been assigned;
(ii) commit an act of fraud, material
dishonesty, intentional misappropriation, or
gross negligence with respect to the Company
or otherwise act with willful disregard for
the Company's best interests, or engage in
conduct likely to result in any of the
foregoing; or
(iii) commit, are convicted of or plead
guilty or no contest to a felony (or to a
felony charge reduced to misdemeanor), or,
with respect to your employment, to any
misdemeanor (other than a traffic violation)
or, with respect to your employment,
knowingly violate any federal or state
securities or tax laws.
Your termination for Cause will be effective
immediately upon the Company's mailing or written
transmission of notice of such termination. Before
terminating your employment for Cause under
clauses (i) - (ii) above, the Company will specify
in writing to you the nature of the act, omission,
refusal, or failure that it deems to constitute
Cause and, if the Board reasonably considers the
situation to be correctable, give you 30 days
after you receive such notice to correct the
situation (and thus avoid termination for Cause),
unless the Company agrees to extend the time for
correction. You agree that the Board will have the
discretion to determine Cause and whether your
correction is sufficient.
Without Cause Subject to the provisions below under Payments on
Termination and Severance, the Company may
terminate your employment without Cause.
Disability If you become "disabled" (as defined below), the
Company may terminate your employment. You are
"DISABLED" if you are unable, for more than 90
consecutive days or for shorter periods
aggregating six months during the Term, despite
whatever reasonable accommodations the law
requires, to render services to the Company
because of physical or mental disability,
incapacity, or illness.
Good Reason You may resign for Good Reason. "GOOD REASON" for
this purpose means that, without your consent, the
Company has materially breached this Agreement
(and your actions or omissions did not primarily
cause or materially contribute to the breach) or
the Board assigns you duties materially
inconsistent with, or
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substantially diminishes, your status or
responsibilities as CEO without your consent. GOOD
REASON excludes the results of any action the
Company takes to comply with the directions of a
governmental entity (such as placing you on
administrative leave) and also excludes, for the
first 90 days following a Change in Control (as
defined in Exhibit C), any diminution in your
position as a result of a Change in Control
(during which 90 day period you agree to assist
with any transition). You agree that this
employment relationship does not contemplate any
grounds for constructive termination other than as
Good Reason provides.
You must give written notice to the Company of
your intention to resign for Good Reason within 30
days after the occurrence of the event that you
assert entitles you to resign for Good Reason or
you will waive your rights as to that reason. In
the notice, you must state the condition that you
consider provides you with Good Reason and you
must give the Company an opportunity to cure the
condition within 30 days after your notice (with
the 30 day period shortened to 10 days if the
failure relates to a nonpayment of Salary and such
nonpayment is not cured within five days after you
provide written notice of such nonpayment to the
Company). If the Company fails to cure the
condition, your resignation will be effective on
the 45th day (or the 20th day for nonpayment of
Salary) after your notice (unless the Board has
previously waived such notice period in writing or
agreed to a shorter notice period).
You will not be treated as resigning for Good
Reason if the Company already had Cause to
terminate your employment as of the date of your
notice of resignation.
Without Good You may resign without Good Reason upon 60 days'
Reason prior written notice to the Company (unless the
Board has, in writing, previously waived such
notice or authorized a shorter notice period).
Your notice to the Company of nonextension of the
Term will be a resignation.
Death If you die during the Term, the Term will end as
of the date of your death.
Payments on Upon any termination of your employment under
Termination this Agreement, the Company will pay you any
unpaid portion of your Salary pro-rated through
the last day of the Term (and, in the Committee's
discretion, part or all of any annual bonuses
already determined by such date but not yet paid),
reimburse any substantiated but unreimbursed
business expenses, pay any accrued and unused
vacation time (to the extent consistent with the
Company's policies
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and applicable laws), and provide such other
benefits as applicable laws or the terms of the
benefits require. Except to the extent the law
requires otherwise or as provided in the Severance
paragraph, neither you nor your beneficiary or
estate will have any rights or claims under this
Agreement or otherwise to receive severance or any
other compensation, or to participate in any other
plan, arrangement, or benefit, after such
termination or resignation.
Because you will hold a senior executive position
at a public company, you agree that if the Board
determines it had Cause to terminate your
employment within 90 days after your termination
without Cause or resignation for Good Reason, the
Company may instead treat the termination or
resignation as termination for Cause, and you
agree to repay any payments the Company made since
the date of termination of employment that the
Company would not have paid on a termination for
Cause and to forfeit any incentive compensation
that would have been forfeited, provided that this
provision does not require any restitution with
respect to medical benefits you or your family has
received.
Severance In addition to the foregoing payments, if, before
the next scheduled Expiration Date and except as
EXPIRATION provides, the Company terminates your
employment without Cause or you resign for Good
Reason, the Company will
pay you severance equal to your Salary, as
then in effect, for 24 months on the same
schedule as though you had remained employed
during such period, even though you are no
longer employed (the "SEVERANCE PERIOD"),
in lieu of any bonus for the year of
termination, pay you an additional year's
Salary, ratably over the Severance Period,
fully vest the options and restricted stock
in your Initial Grant and allow those
options to be exercised (subject to any
overriding provisions in the plans under
which they are granted) during the Severance
Period, and
pay any premiums for your continued coverage
under post-employment health coverage for
the shorter of the Severance Period or the
period for which you are eligible for and do
elect continuation coverage from the Company
under COBRA.
If the payments under Severance are in connection
with a termination without Cause or resignation
for Good Reason within
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six months following a Change in Control, the
Company will make any cash payments in a single
lump sum payment within 30 days after completion
of the determination under PARACHUTE PAYMENTS
below.
You are not required to mitigate amounts payable
under the Severance paragraph by seeking other
employment or otherwise, nor must you pay over to
the Company amounts earned under subsequent
employment; however, you agree to return any
Severance payments if you fail to comply with
Exhibit A.
You agree that the Company's payment of Severance
is conditioned on your providing a customary
general release of all claims relating to your
employment, compensation, and termination and such
other matters as the Company requests on
termination.
EXPIRATION Expiration of this Agreement, whether because of
notice of non-renewal or otherwise, does not
constitute termination without Cause nor provide
you with Good Reason and does not entitle you to
Severance.
ASSIGNMENT The Company may assign or otherwise transfer this
Agreement and any and all of its rights, duties,
obligations, or interests under it
to any of its affiliates or subsidiaries or
to any business entity that at any time by
merger, consolidation, or otherwise acquires
substantially all of the Company's stock or
assets or to which the Company transfers
substantially all of its assets.
Upon such assignment or transfer, any such
business entity will be treated as substituted for
the Company for all purposes. You agree that such
assignment or transfer does not by itself entitle
you to Severance. This Agreement binds and
benefits the Company, its successors or assigns,
and your heirs and the personal representatives of
your estate. Without the Board's prior written
consent, you may not assign or delegate this
Agreement or any rights, duties, obligations, or
interests under it.
You specifically agree that the assignment will,
unless the Company provides otherwise, include the
restrictive covenants of Exhibit A, including the
noncompetition and nonsolicitation provisions.
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SEVERABILITY If the final determination of an arbitrator or a
court of competent jurisdiction declares, after
the expiration of the time within which judicial
review (if permitted) of such determination may be
perfected, that any term or provision of this
Agreement (including any provision of Exhibit A)
is invalid or unenforceable, the remaining terms
and provisions will be unimpaired, and the invalid
or unenforceable term or provision will be deemed
replaced by a term or provision that is valid and
enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term
or provision.
AMENDMENT; WAIVER Neither you nor the Company may modify, amend, or
waive the terms of this Agreement other than by a
written instrument signed by you and by another
executive officer of the Company duly authorized
by the Board. Either party's waiver of the other
party's compliance with any provision of this
Agreement is not a waiver of any other provision
of this Agreement or of any subsequent breach by
such party of a provision of this Agreement.
WITHHOLDING The Company will reduce its compensatory payments
to you for withholding and FICA taxes and any
other withholdings and contributions required by
law.
GOVERNING LAW The laws of the State of Connecticut (other than
its conflict of laws provisions) govern this
Agreement.
NOTICES Notices must be given in writing by personal
delivery or by overnight delivery. You should send
or deliver your notices to the Company's corporate
headquarters, addressed to the Chair of the
Committee. The Company will send or deliver any
notice given to you at your address as reflected
on the Company's personnel records. You and the
Company may change the address for notice by like
notice to the other. You and the Company agree
that notice is received on the date it is
personally delivered or the date of guaranteed
delivery by the overnight service.
PARACHUTE PAYMENTS The Company will make the payments under this
Agreement without regard to whether the
deductibility of such payments (or any other
payments or benefits) would be limited or
precluded by Section 280G of the Internal Revenue
Code of 1986 (the "CODE") and without regard to
whether such payments would subject you to the
federal excise tax levied on certain "excess
parachute payments" under Section 4999 of the
Code; provided, however, that if the Total
After-Tax Payments (as defined below) would be
increased by the reduction or elimination of any
payment and/or other benefit (including the
vesting of your options) under this
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Agreement, then the amounts payable under this
Agreement will be reduced or eliminated as
follows: (i) first, by reducing or eliminating any
cash payments or other benefits (other than the
vesting of any options or stock) and (ii) second,
by reducing or eliminating the vesting of your
options and stock that occurs as a result of such
Change of Control, to the extent necessary to
maximize the Total After-Tax Payments. The
Company's independent, certified public accounting
firm will determine whether and to what extent
payments or vesting under this Agreement are
required to be reduced in accordance with the
preceding sentence. If there is an underpayment or
overpayment under this Agreement (as determined
after the application of this paragraph), the
amount of such underpayment or overpayment will be
immediately paid to you or refunded by you, as the
case may be, with interest at the applicable
federal rate provided for in Section 7872(f)(2) of
the Code. For purposes of this Agreement, "TOTAL
AFTER-TAX PAYMENTS" means the total of all
"parachute payments" (as that term is defined in
Section 280G(b)(2) of the Code) made to you or for
your benefit (whether made under the Agreement or
otherwise), after reduction for all applicable
federal taxes (including, without limitation, the
tax described in Section 4999 of the Code).
SUPERSEDING EFFECT This Agreement supersedes any prior oral or
written agreements between you and the Company.
This Agreement supersedes all prior or
contemporaneous negotiations, commitments,
agreements, and writings with respect to the
subject matter of this Agreement. All such other
negotiations, commitments, agreements, and
writings will have no further force or effect; and
the parties to any such other negotiation,
commitment, agreement, or writing will have no
further rights or obligations thereunder.
SIGNATURES ON THE PAGE FOLLOWING
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If you accept the terms of this Agreement, please sign in the space indicated
below. We understand that you have consulted with counsel to help you understand
your obligations under this Agreement, and we encourage you to consult with any
other advisers you think appropriate.
ADVO, INC.
By: /s/ XXXXXX X. XXXXXXXXX
--------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Senior Vice President, Human Resources
I accept and agree to the terms of employment set
forth in this Agreement:
/s/ S. XXXXX XXXXXXX
--------------------------------
S. XXXXX XXXXXXX
Dated: October 11, 2004
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Exhibit A
NONCOMPETITION, NONSOLICITATION, AND OTHER RESTRICTIVE COVENANTS
You agree to the provisions of this Exhibit A in consideration of your
employment by the Company and salary and benefits under this Agreement. You
acknowledge that you will perform services for the Company in a position that
will allow you access to various trade secrets and confidential information
belonging to the Company and its affiliates. You agree that the Company has a
legitimate business interest in preserving its confidential information and
business secrets from unauthorized disclosure, and in protecting its goodwill.
While the Company (or its successor or transferee) employs you and to the end of
the Restricted Period (as defined below), you agree as follows:
NO COMPETITION You will not, directly or indirectly, be employed
by, lend money to, or engage in any Competing
Business within the Market Area (each as defined
below). That prohibition includes, but is not
limited to, acting, either singly or jointly or as
agent for, or as an employee of or consultant to,
any one or more persons, firms, entities, or
corporations directly or indirectly (as a
director, independent contractor, representative,
consultant, member, or otherwise) that constitutes
such a Competing Business. You also will not
invest or hold equity or options in any Competing
Business, provided that you may own up to 1% of
the outstanding capital stock of any corporation
that is actively publicly traded without violating
this NO COMPETITION covenant, so long as you have
no involvement beyond passive investing in such
business and you comply with the second sentence
of this paragraph. You further agree not to use,
incorporate, or otherwise create any business
organization or domain name using, any name
confusingly similar to "ADVO, INC." or any other
name under which the Company does business.
If, during the Restricted Period, you are offered
and want to accept employment with an existing
business or you start or join a new business that
engages in activities similar to the Company's,
you will inform the Board in writing of the
identity of the business, your proposed duties
with an existing business or the proposed business
plan of your new business, and the proposed
starting date of your employment or that new
business. You will also inform any existing
business of the terms of this Exhibit A. The
Company will analyze the proposed employment or
the creation of your new business and make a good
faith determination as to whether it would
threaten the Company's legitimate competitive
interests. If the Company determines that the
proposed employment or the creation of your new
business would not pose an unacceptable
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threat to its interests, the Company will notify
you that it does not object to the employment or
the creation of your new business.
You acknowledge that, during the portion of the
Restricted Period that follows your employment,
you may engage in any business activity or gainful
employment of any type and in any place except as
described above. You acknowledge that you will be
reasonably able to earn a livelihood without
violating the terms of this Agreement.
You understand and agree that the rights and
obligations set forth in this NO COMPETITION
Section will continue and will survive through the
Restricted Period.
Definitions
Competing Competing Business means any service or product of
Business any person or organization other than the
Company and its successors, assigns, or
subsidiaries (collectively, the "COMPANY GROUP")
that competes with any service or product of the
Company Group provided by any member of the
Company Group during your employment or upon which
or with which you have worked for the Company or
the Company Group or about which you acquire
knowledge while working for the Company or the
Company Group.
Market Area The Market Area consists of the United States of
America. You agree that the Company provides goods
and services both at its facilities and at the
locations of its customers or clients and that, by
the nature of its business, it operates throughout
the Market Area.
Restricted For purposes of this Agreement, the RESTRICTED
Period PERIOD begins on the Effective Date and ends on
the first anniversary of the date your employment
with the Company Group ends for any reason (or, if
later, the end of the Severance Period, if any).
NO INTERFERENCE; During the Restricted Period, you agree that you
NO SOLICITATION will not, directly or indirectly, whether for
yourself or for any other individual or entity
(other than the Company or its affiliates or
subsidiaries),
solicit for any Competing Business any
person or entity who is, or was, within the
12 months preceding the end of your
employment with the Company, a customer,
customer representative (such as an agency),
a prospect (with respect to which any member
of the Company Group has incurred
substantial costs or with which you have
been involved), or a client of the Company
Group within the Market Area,
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with the 12 month period reduced to six
months for prospects with which you have not
been involved;
hire away or endeavor to entice away from
the Company Group any employee (other than
your personal assistant) or any other person
or entity whom the Company Group engages to
perform services or supply products and
including, but not limited to, any
independent contractors, consultants,
engineers, or sales representatives or any
contractor, subcontractor, supplier, or
vendor; or
hire any person (other than your personal
assistant) whom the Company Group employs or
employed within the 12 months preceding the
date as of which you attempt to hire the
person.
SECRECY
Preserving Your employment with the Company under (and, if
Company applicable, before) this Agreement will give you
Confidences access to Confidential Information (as defined
below). You acknowledge and agree that using,
disclosing, or publishing any Confidential
Information in an unauthorized or improper manner
could cause the Company or Company Group to incur
substantial loss and damages that could not be
readily calculated and for which no remedy at law
would be adequate. Accordingly, you agree with the
Company that you will not at any time, except in
performing your employment duties to the Company
or the Company Group under this Agreement (or with
the Board's prior written consent), directly or
indirectly, use, disclose, or publish, or
knowingly or negligently permit others not so
authorized to use, disclose, or publish any
Confidential Information that you may learn or
become aware of, or may have learned or become
aware of, because of your prior or continuing
employment, ownership, or association with the
Company or the Company Group or any of their
predecessors, or use any such information in a
manner detrimental to the interests of the Company
or the Company Group.
Preserving You agree not to use in working for the Company
Others' Group and not to disclose to the Company Group any
Confidences trade secrets or other information you do not have
the right to use or disclose and that the Company
Group is not free to use without liability of any
kind. You agree to inform the Company promptly in
writing of any patents, copyrights, trademarks, or
other proprietary rights known to you that the
Company or the Company Group might violate because
of information you provide.
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Confidential "CONFIDENTIAL INFORMATION" includes, without
Information limitation, any matters protected under the
Uniform Trade Secrets Act and any information that
the Company or the Company Group has not
previously disclosed to the public or to the trade
with respect to the Company's or the Company
Group's present or future business, including its
operations, services, products, research,
inventions, invention disclosures, discoveries,
drawings, designs, plans, processes, models,
technical information, facilities, methods,
systems, trade secrets, copyrights, software,
source code, object code, patent applications,
procedures, manuals, specifications, any other
intellectual property, confidential reports, price
lists, pricing formulas, customer lists, consumer
targeting techniques, financial information
(including the revenues, costs, or profits
associated with any of the Company's or the
Company Group's products or services), business
plans, lease structure, projections, prospects,
opportunities or strategies, acquisitions or
mergers, advertising or promotions, personnel
matters, legal matters, any other confidential and
proprietary information, and any other information
not generally known outside the Company or the
Company Group that may be of value to the Company
or the Company Group, but excludes any information
already properly in the public domain or hereafter
acquired from a source other than you in a manner
that did not involve a breach of the disclosing
party's obligations, or that you prove through
documentation you knew other than through your
association with the Company. "Confidential
Information" also includes, without limitation,
confidential and proprietary information and trade
secrets that third parties entrust to the Company
or the Company Group in confidence.
You understand and agree that the rights and
obligations set forth in this SECRECY Section will
continue indefinitely and will survive termination
of this Agreement and your employment with the
Company or the Company Group.
EXCLUSIVE PROPERTY You confirm that all Confidential Information is
and must remain the exclusive property of the
Company or the relevant member of the Company
Group. Any office equipment (including computers)
you receive from the Company Group in the course
of your employment and all business records,
business papers, and business documents you keep
or create, whether on digital media or otherwise,
in the course of your employment by the Company
relating to the Company or any member of the
Company Group must be and remain the property of
the Company or the relevant member of the Company
Group. Upon the termination of this Agreement with
the Company or upon the Company's request at
Page 15
any time, you must promptly deliver to the Company
or to the relevant member of the Company Group any
such office equipment (including computers) and
any Confidential Information or other materials
(written or otherwise) not available to the public
or made available to the public in a manner you
know or reasonably should recognize the Company
did not authorize, and any copies, excerpts,
summaries, compilations, records, or documents you
made or that came into your possession during your
employment. You agree that you will not, without
the Company's consent, retain copies, excerpts,
summaries, or compilations of the foregoing
information and materials. You understand and
agree that the rights and obligations set forth in
this EXCLUSIVE PROPERTY Section will continue
indefinitely and will survive termination of this
Agreement and your employment with the Company
Group.
COPYRIGHTS, You agree that all records (in whatever media),
DISCOVERIES, including written works, documents, papers,
INVENTIONS, AND notebooks, drawings, designs,technical
PATENTS information, source code, object code, processes,
methods or other copyrightable or otherwise
protected works you conceive, create, author,
prepare derivative works from, make, invent, or
discover that relate to or result from any work
you perform or performed for the Company or the
Company Group or that arise from the use or
assistance of the Company Group's facilities,
materials, personnel, or Confidential Information
in the course of your employment (whether or not
during usual working hours), whether conceived,
created, authored, discovered, made, or invented
individually or jointly with others, will be and
remain the absolute property of the Company (or
another appropriate member of the Company Group,
as specified by the Company), as will all the
worldwide patent, copyright, trademark, service
xxxx, trade secret, or other intellectual property
rights in all such works. (All references in this
section to the Company include the members of the
Company Group, unless the Company determines
otherwise.) You irrevocably and unconditionally
waive all rights, wherever in the world
enforceable, that vest in you (whether before, on,
or after the date of this Agreement) in connection
with your authorship of any such copyrightable
works in the course of your employment with the
Company Group or any predecessor. Without
limitation, you waive the right to be identified
as the author, inventor, creator, or facilitator
(whether solely or jointly) of any such
copyrightable works and the right not to have any
such works subjected to derogatory treatment. You
recognize any such works are "works for hire" for
which the Company Group retains all rights, title,
and interest to any underlying intellectual
property rights, including copyright protections.
Page 16
You will promptly disclose, and hereby grant, and
assign all rights, title, and interest in
ownership to the Company (or other member of the
Company Group, as specified by the Company) for
its or their sole use and benefit any and all
intellectual property, including all ideas,
processes, inventions (whether patentable or not),
invention disclosures, discoveries, improvements,
technical information, trademarks, service marks,
and copyrightable works (whether patentable or
not) that you develop, acquire, conceive, reduce
to practice, author, or prepare derivative works
from (whether or not during usual working hours)
while the Company or the Company Group employs
you. You will promptly disclose and hereby grant
and assign ownership to the Company of all
intellectual property, including utility and
design patents, copyrights, and trademarks, or
service marks, including any associated
registrations, applications, renewals, extensions,
continuations, continuations-in-part, requests for
continued examination, divisions, or reissues
thereof or any foreign equivalents thereof (such
intellectual property and related rights being
referred to collectively as "PROTECTED
INTERESTS"), that may at any time be filed or
granted for or upon any such intellectual
property. In connection therewith:
You will, without charge but at the
Company's expense, promptly execute and
deliver such applications, assignments,
descriptions, and other instruments as the
Company may consider reasonably necessary or
proper to vest title to any Protected
Interests in the Company and to enable it to
obtain and maintain the entire worldwide
right and title thereto; and
You will provide to the Company at its
expense all such assistance as the Company
may reasonably require in the prosecution of
applications for such Protected Interests,
in the prosecution or defense of
interferences that may be declared involving
any such Protected Interests, and in any
litigation in which the Company or the
Company Group may be involved relating to
any such Protected Interests. The Company
will reimburse you for reasonable
out-of-pocket expenses you incur and pay you
reasonable compensation for your time if the
Company Group no longer employs you.
You and the Company agree that Exhibit C lists and
briefly describes works, inventions, discoveries,
proprietary information, patents and patent
applications, and copyrighted or copyrightable
Page 17
works (including contemplated works) that the
Company will not contest are owned (or will be
owned) by you or any entity to which you have
assigned them. You agree that you have no
ownership interest in any other such works or
related patents or copyrights that relate in any
way to the business of the Company or the Company
Group.
To the extent, if any, that you own rights to
works, inventions, discoveries, proprietary
information, and copyrighted or copyrightable
works, or other forms of intellectual property
that have been or become incorporated in the work
product you create for the Company Group, you
agree that the Company (and/or, as the Company
specifies, other members of the Company Group)
will have an unrestricted, non-exclusive,
royalty-free, perpetual, transferable license in
such intellectual property, including the rights
to make, use, sell, offer for sale, and sublicense
(through multiple tiers), reproduce, prepare
derivative works from, distribute copies of,
publicly perform, or publicly display such works
and property in whatever form, and you hereby
grant such license to the Company (and the Company
Group).
This COPYRIGHTS, DISCOVERIES, INVENTIONS AND
PATENTS section does not apply to an invention
that you developed entirely on your own time
without using the Company Group's equipment,
supplies, facility, or trade secret information
except for those inventions that (i) relate to the
Company Group's business, or actual or
demonstrably anticipated research or development,
or (ii) result from any work performed by you for
the Company Group.
MAXIMUM LIMITS You agree that the time, territory, and scope of
this Exhibit A are reasonable and necessary for
protection of the Company's legitimate business
interests. If any of the provisions of Exhibit A
are ever deemed to exceed the time, geographic
area, or activity limitations the law permits, you
and the Company agree to reduce the limitations to
the maximum permissible limitation, and you and
the Company authorize a court or arbitrator having
jurisdiction to reform the provisions to the
maximum time, geographic area, and activity
limitations the law permits; provided, however,
that such reductions apply only with respect to
the operation of such provision in the particular
jurisdiction with respect to which such
adjudication is made.
NO IMPROPER You will neither pay nor knowingly or negligently
PAYMENTS permit payment of any remuneration to or on behalf
of any governmental official other than payments
required or permitted by applicable law. You
Page 18
will comply fully with the Foreign Corrupt
Practices Act of 1977, as amended. You will not,
directly or indirectly,
make or knowingly or negligently permit any
contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other
payment to any person or entity, private or
public, regardless of what form, whether in
money, property, or services
to obtain favorable treatment for
business secured,
to pay for favorable treatment for
business secured,
to obtain special concessions or for
special concessions already obtained,
or
in violation of any legal requirement,
or
establish or maintain any fund or asset
related to the Company that is not recorded
in the Company's books and records, or
take any action that would violate (or would
be part of a series of actions that would
violate) any U.S. law relating to
international trade or commerce, including
those laws relating to trading with the
enemy, export control, and boycotts of
Israel or Israeli products.
INJUNCTIVE RELIEF Without limiting the remedies available to the
Company, you acknowledge
that a breach of any of the covenants in
this Exhibit A will result in material
irreparable injury to the Company and
Company Group for which there is no adequate
remedy at law, and
that it will not be possible to measure
damages for such injuries precisely.
You agree that, if there is a breach or threatened
breach, the Company or any member of the Company
Group may be entitled to obtain a temporary
restraining order and/or a preliminary or
permanent injunction restraining you from engaging
in activities prohibited by any provisions of this
Exhibit A or such other relief as may be required
to specifically enforce any of the covenants in
this Exhibit A. The Company or any member of the
Company
Page 19
Group will, in addition to the remedies provided
in this Agreement, be entitled to avail itself of
all such other remedies as may now or hereafter
exist at law or in equity for compensation and for
the specific enforcement of the covenants
contained in this Agreement. Resort to any remedy
provided for in this Section or provided for by
law will not prevent the concurrent or subsequent
employment of any other appropriate remedy or
remedies, or preclude the Company's or the Company
Group's recovery of monetary damages and
compensation. You also agree that the Restricted
Period or such longer period during which the
covenants hereunder by their terms survive will
extend for all periods for which a court with
personal jurisdiction over you finds that you
violated the covenants contained in this Exhibit
A.
Page 20
Exhibit B
CHANGE IN CONTROL
A Change in Control for this purpose means the occurrence of any one or
more of the following events:
(i) sale of all or substantially all of the assets of the
Company to one or more individuals, entities, or groups acting
together;
(ii) complete or substantially complete dissolution or
liquidation of the Company;
(iii) a person, entity, or group acting together acquires or
attains ownership of more than 30% of the undiluted total
voting power of the Company's then-outstanding securities
eligible to vote to elect members of the Board ("COMPANY
VOTING SECURITIES");
(iv) completion of a merger, consolidation, or reorganization
of the Company with or into any other entity unless the
holders of the Company Voting Securities outstanding
immediately before such completion, together with any trustee
or other fiduciary holding securities under a Company benefit
plan, hold securities that represent immediately after such
merger or consolidation at least 50% of the combined voting
power of the then outstanding voting securities of either the
Company or the other surviving entity or its ultimate parent;
(v) the individuals who constitute the Board immediately
before a proxy contest cease to constitute at least a majority
of the Board (excluding any Board seat that is vacant or
otherwise unoccupied) immediately following the proxy contest;
(vi) during any two year period, the individuals who
constitute the Board at the beginning of the period (the
"INCUMBENT DIRECTORS") cease for any reason to constitute at
least a majority of the Board (excluding any Board seat that
is vacant or otherwise unoccupied), provided that any
individuals that two-thirds of Incumbent Directors approve for
service on the Board are treated as Incumbent Directors; or
(vii) any other event occurs that the Board determines, in its
discretion, would materially alter the structure of the
Company's ownership.
The Board or the Committee will have the same authority to determine
the existence of a Change in Control under this definition as each
has under the Company's 1998 Incentive Compensation Plan.
Page 21
Exhibit C
PRIOR WORKS, INVENTIONS, DISCOVERIES, ETC.
None
Page 22
