Exhibit 10(u)
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 21st day of August, 2000, by and between ADVO,
Inc., a Delaware corporation (the "Company"), and Xxxx Xxxxxxx (the "Employee").
RECITALS
A. The Employee has valuable knowledge, experience, and abilities which
the Company requires for the conduct of its business, and the Company desires to
employ the Employee as an officer of the Company and to obtain the benefit of
Employee's knowledge, experience and abilities.
B. The Employee is willing to serve as an officer of and be employed by
the Company.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties agree as follows:
1. Position and Responsibilities.
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1.1 As of the date of this Agreement, the Company shall employ and
the Employee shall serve the Company in an executive capacity as President and
Chief Operating Officer of the Company, reporting to the Chief Executive
Officer.
1.2 During the Employment Period (as defined below), the Employee
shall serve the Company in the capacities described above, devoting her full
time and best efforts to the business and affairs of the Company and the
promotion of its interests, and performing all duties and services on behalf of
the Company necessary to carry out the function of the offices as determined
from time to time.
2. Employment Period.
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2.1 The "Employment Period" shall be the period from August 21, 2000
through August 21, 2003, unless sooner terminated pursuant to Section 2.3 or
terminated by the Employee Severance Agreement (hereinafter "Severance
Agreement").
2.2 This Agreement will automatically renew every two (2) years, on
the anniversary of the date set forth above, unless the Company gives the
Employee six (6) months' notice prior to a renewal date that it does not intend
to renew the Agreement.
2.3 Notwithstanding the provisions of Sections 2.1 and 2.2, the
Company shall have the right in its sole discretion, on written notice to the
Employee, to terminate the Employee's employment with or without cause, such
termination to be effective as of the date on which notice is given or as of
such later date otherwise specified in the notice. In the event of the death of
the Employee prior to any other termination of her employment or of the
Employment Period (i) her employment and the Employment Period shall terminate
on the date of her death, and (ii) except as expressly provided in Section 3.3
and 6.1 hereof, the Company shall not have any obligation to pay salary or
provide any benefits under this Agreement to the heirs, estate, executors,
administrators or legal representative of the Employee in respect of any period
after the death of the Employee.
3. Compensation.
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3.1 The Company shall pay to the Employee for services to be Rendered
by the Employee a salary at the rate of Four Hundred and Fifty Thousand
($450,000) dollars per annum, payable in equal installments no less frequently
than twice monthly. Such salary will be reviewed at least annually, starting in
December, 2001, and may be increased by the Board of Directors of the Company in
its sole discretion. In
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addition the Board of Directors of the Company may award an annual bonus to the
Employee based on a target bonus of 50 percent of her base salary (the "Target
Bonus") in accordance with the Corporate Bonus Plan or plans which the Company
then currently has in effect, starting with Fiscal Year 2001.
3.2 The Employee shall receive a sign-on bonus within ten days of the
signing of this Agreement of $112,500, to be grossed up to cover taxes.
3.3 The Employee shall be entitled to participate in, and receive
benefits from, any insurance, medical, disability, or savings plans, stock
options, or other employee benefit of the Company which may be in effect at any
time during the course of her employment by the Company, pursuant to the terms
of the plans, and which shall be generally available to senior executives of the
Company. Participation in stock grant plans other than those grants covered in
paragraph 7 shall start in December 2001. She shall have a vacation entitlement
of five weeks per calendar year, starting in 2001, and a pro-rated vacation
entitlement for 2000.
4. Other Activities During and After the Employment Period.
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4.1 During the Employment Period the Employee shall not undertake,
continue, or otherwise engage in any employment, occupation, or business
enterprise other than as provided in Section 1 of this Agreement except that
subject to compliance with the provisions of this Agreement, the Employee may
engage in reasonable activities with respect to personal investments of the
Employee, outside board memberships or any outside activity previously approved
by the Board of Directors of the Company.
4.2 The Employee shall not at any time during or after the Employment
Period (regardless of the reason for the termination thereof), directly or
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indirectly divulge, furnish, use, publish, or make accessible to any person or
entity any Confidential Information (as defined below) except as properly
required in the conduct of the Company's business. Any records of Confidential
Information prepared by the Employee or which come into the Employee's
possession during the Employment Period are and remain the property of the
Company, and upon termination of the Employee's employment all such records and
copies thereof shall be either left with or returned to the Company.
4.3 The term "Confidential Information" shall mean information
disclosed to the Employee or known, learned, created, or observed by her as a
consequence of or through her employment by the Company which is confidential,
secret, or otherwise not generally known in the relevant trade or industry, and
pertains directly or indirectly to the business activities, products, services,
or processes of the Company, any subsidiary of the Company or any of their
clients, customers or suppliers, including but not limited to information
concerning mailing lists, advertising, sales promotion, publicity, sales data,
research, copy, other printed matter, tear sheets, artwork, photographs, films,
reproductions, layouts, finances, accounting methods, processes, trade secrets,
business plans, postal strategy, client lists and records, potential client
lists, and client billing.
5. Post-Employment Activities.
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5.1 During the Employee's service with the Company, and the period of
one year commencing with the Employee's last compensation payment from the
Company, regardless of the reason for such termination, the Employee shall not
directly or indirectly engage in any business (whether as a lender, guarantor or
otherwise),
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represent or otherwise render assistance to any person or entity who or which
competes or intends to compete, or who or which is affiliated (by reason of
common control, ownership, or otherwise) with any other person or entity who or
which competes or intends to compete, directly or indirectly with the business
then conducted by the Company with respect to advertising, whether
electronically, through hand delivery or through mailing services; provided,
however, that the foregoing shall not prevent the Employee from investing in
securities if such class of securities in which the investment is so made is
listed on a national securities exchange or is issued by a company registered
under Section 12(g) of the Securities Exchange Act of 1934, so long as such
investment holdings do not, in the aggregate, constitute more than 1 percent of
the voting stock of any company's securities.
5.2 The Employee will not, during the period of one year after the
receipt of her last compensation payment from the Company, regardless of the
reason for her termination, hire or offer to hire or entice away, or in any
other manner persuade, either in the Employee's individual capacity or an agent
for another, any officers, employees, or agents of the Company or any subsidiary
to discontinue their relationship with the Company or any subsidiary, nor divert
or attempt to divert from the Company or any subsidiary any business whatsoever
by influencing or attempting to influence any customer or supplier of the
Company or any subsidiary.
5.3 The Employee acknowledges that she has been employed for her
special talents and thus her leaving the employ of the Company could seriously
hamper the business of the Company. The Employee agrees that the Company shall
be entitled to injunctive relief, in addition to all remedies permitted by law,
to enforce the provisions of
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this Section 5. The Employee further acknowledges that her training, experience,
and technical skills are of such breadth that they can be employed to advantage
in other areas which are not competitive with the present business of the
Company and consequently the foregoing obligations will not unreasonably impair
her ability to engage in business activity after the termination of her present
employment.
6. Severance Pay.
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6.1 Except as otherwise provided in the Severance Agreement, in the
event that the Company terminates the Employment Period prior to August 21,
2003, or any extension thereof, for any reason other than for Cause (as
hereinafter defined), or the Employee terminates her employment as a result of
any of the following reasons (i) without the Employee's consent, the Company
assigns to the Employee duties inconsistent with this present position that
materially diminish the scope of the Employee's duties or change her reporting
relationship; (ii) the Company reduces the Employee's salary, or reduces the
Employee's bonus, by a proportion substantially greater than the average
proportionate reduction in salary or bonus awarded to the Company's other
executives officers other than by operation of the Corporate Staff Bonus Plan
(or any applicable successor plan); (iii) this Agreement or a successor
Agreement is not renewed pursuant to Section 2.2 (notification of which shall
constitute the start of the period for which the payment of benefits hereunder
will be made (including Severance Pay), the remaining term of this Agreement
notwithstanding); or (iv) the Company breaches any of its material obligations
under this Agreement, then pursuant to the terms of the Company's policy III-20-
6, the Company shall continue to pay salary continuation to the Employee at her
then-current level, and shall continue to
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allow the Employee to participate in all plans and benefit programs in which the
Employee shall have been participating, pursuant to Section 3.3, except stock
options and grant plans, vacation accrual, and any car allowances, when the
Employee's inactive pay status begins, for one (1) year after the Employee's
inactive pay status begins. The Employee shall be entitled to a target bonus, to
be paid at the regular time for Company bonus payments. The Employee shall have
the option of taking the amount due to hereunder this provision in a lump sum,
less required withholding, within ten days of the termination, which will have
the effect of terminating her entitlement to continued participation in the
company's benefit plans. Any balance of the year's compensation due the Employee
if she should find other full-time employment in this year will be paid in a
lump sum at that time. However, the Company shall not in any case have the
obligation to pay such salary or allow such participation in the event of any
material breach by the Employee of her obligations under this Agreement. The
company shall not be relieved of its obligations to pay salary pursuant to this
Section 6.1 by reason of the death of the Employee.
6.2 For purposes of this Agreement, the term "Cause" shall mean" (i)
failure by the Employee to comply with any of the material terms of this
Agreement; (ii) willful engagement by the employee, in her capacity as an
executive officer of the Company or any subsidiary, in gross misconduct
injurious to the Company or any subsidiary; (iii) neglect or refusal by the
Employee to attend to the material duties assigned to her by the Board of
Directors of the Company; (iv) intentional misappropriation of property of the
Company or any subsidiary; (v) the commission by the Employee of an act of fraud
or embezzlement; (vi) conviction of the Employee for a
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crime (excluding minor traffic offenses); or (vii) the failure of the Employee
because of illness or other incapacity to render any services or perform any
duties required pursuant to Section 1 hereof for any period of one hundred sixty
(160) consecutive days during the Employment Period or for shorter periods
aggregating more than six months during the Employment Period; provided,
however, if the Employee should leave the Company under the circumstances
described in (vii), she will be entitled to such benefits as provided in the
then-current Long-and-Short-term disability plans.
7. Restricted Shares and Stock Options.
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7.1 Upon the commencement of the Employee's Employment Period, the
Employee shall be entitled to receive the following stock grants:
(a) 20,000 restricted shares of the Company's common stock,
which shall be subject to the terms of the 1998 Incentive Compensation
Plan. The stock shall vest one-third on each of the first, second and
third anniversaries of this grant if the Employee is still on the
payroll of the Company on those dates.
(b) Options to purchase 70,000 shares of the Company's common
stock under the Company's 1998 Incentive Compensation Plan, subject to
the terms of that plan. Said options shall vest one-quarter each on
each of the first, second, third and fourth anniversaries of this
grant if the Employee is still on the payroll of the Company on those
dates.
7.2 After the Employee goes on inactive pay status, all stock options
and restricted stock then held by the Employee shall continue to vest as long as
the Employee remains on wage continuation, as described in paragraph 6.1 above,
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notwithstanding any provision in any relevant plan to the contrary.
7.3 In the event of Change of Control of the Company, as described in
the Severance Agreement, the Employee shall immediately become fully vested in
her Restricted Shares and Stock Options pursuant to the terms of the relevant
plan document.
8. Other Considerations.
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(a) Employee shall receive a car allowance commensurate with
that received by other officers in the Company at her level. That
amount is currently at $600 per month.
(b) Employee shall be entitled to the standard relocation
compensation and home buyout reimbursement.
9. Assignment. This Agreement shall inure to the benefit of and be
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binding upon the Company, its successors and assigns, and upon the Employee and
her heirs, estate, executors, administrators, and legal representatives. This
Agreement shall not be assignable by the Employee.
10. No Third Party Beneficiaries. This Agreement does not create, and
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shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement, except (i) with respect to salary or other payments or
benefits required to be paid after the death of the Employee pursuant to Section
6.1 hereof and (ii) the Severance Agreement.
11. Arbitration. Any controversy or claim arising out of or relating
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to this Agreement, or the breach, termination or validity thereof, except a
breach by the Employee of Section 5, shall be settled by arbitration in
accordance with the American
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Arbitration Association's Employment Dispute Resolution Rules, in Hartford,
Connecticut.
12. Headings. The headings of the sections are inserted for
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convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
13. Interpretation. In case any one or more of the provisions
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contained in this Agreement shall, for any reason, be held to be invalid,
illegal, or unenforceable in any respect, such invalid, illegal, or
unenforceable provision shall be treated as if it had never been contained
herein. If, moreover, any one or more of the provisions contained in this
Agreement shall for any reason be held to be excessively broad as to duration,
geographical scope, activity, or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it shall the appear.
14. Notices. All notices under this Agreement shall be in writing and
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shall be deemed to have been given at the time when mailed by registered or
certified mail, addressed to the address below stated of the party to which
notice is given, or to such changed address as such party may have fixed by
notice:
To the Company: ADVO, Inc.
Xxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attn: General Counsel
To the Employee: Xx. Xxxx Xxxxxxx
22 Xxxxxxxxx
Xxxx, XX 00000
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provided, however, that any notice of change of address shall be effective only
upon receipt.
15. Waivers. If either party should waive any breach of any provision
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of this Agreement, she or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of the
Agreement.
16. Complete Agreement; Amendments. The foregoing is the entire
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Agreement of the parties with respect to the subject matter hereof and may not
be amended, supplemented, cancelled, or discharged except by written instrument
executed by both parties hereto.
17. Governing Law. This Agreement is to be governed by and construed
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in accordance with the laws of the State of Connecticut, without giving effect
to principles or conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
ADVO, INC.
By /s/ XXXX X. XXXXXX
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Xxxx X. Xxxxxx
Chief Executive Officer
/s/ XXXX XXXXXXX
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Xxxx Xxxxxxx
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