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EXHIBIT 10.3
AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT (the "Agreement"), dated effective as
of February 23, 1998, by and between The Peoples Publishing Group, Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx, an individual
resident of the State of New York ("Executive"), amends and supersedes in its
entirety, that certain Employment Agreement dated February 23, 1990 by and
between the Company and the Executive (the "1990 Agreement").
WITNESSETH:
WHEREAS, Executive and the Company entered into the 1990 Agreement and
now desire to amend in its entirety the 1990 Agreement with the terms of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, the Company and Executive agree as follows:
1. Employment. The Company hereby employs Executive, and Executive
accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this Agreement. The
1990 Agreement is hereby terminated and the terms of this Agreement shall govern
the employment of Executive, all matters initially covered by the 1990 Agreement
and all matters contemplated by this Agreement.
2. Term. Unless terminated at an earlier date in accordance with
Section 8, the initial term of Executive's employment hereunder shall be for a
period of one year, commencing on February 23, 1998. Thereafter, the term of
this Agreement shall be automatically extended for a two-year period, and
successive one-year periods thereafter unless either party objects to such
extension by written notice to the other party at least 60 days prior to the end
of the initial term or any extension term. Notwithstanding the foregoing, the
terms of Sections 5, 7, 9, 10 and 11 shall survive the termination of this
Agreement.
3. Position and Duties.
3.01 Service with Company. During the term of this Agreement,
Executive shall perform such reasonable employment duties as the Chief Executive
Officer ("CEO") or Board of Directors of the Company shall assign to her from
time to time.
3.02 Performance of Duties. Executive shall serve the Company
faithfully and to the best of her ability, and devote her full time, attention
and efforts to the business and affairs of the Company during normal business
hours (and outside normal business hours as reasonably required) during the term
of this Agreement. Executive hereby confirms that she is under no contractual
commitments inconsistent with her obligations set forth in this Agreement, and
that
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during the term of this Agreement she shall not render or perform services for
any other corporation, firm, entity or person; provided, however, that Executive
may serve as a member of the board of directors of a corporation or other
organization upon the approval of the Company, which approval shall not be
unreasonably withheld.
4. Compensation.
4.01 Base Salary. As compensation in full for all services to
be rendered by Executive under this Agreement during the initial term of this
Agreement, the Company shall pay to Executive a base salary of $95,000 in the
first year of this Agreement, which salary shall be paid in accordance with the
Company's normal payroll procedures and policies. The compensation payable to
Executive for each year following the expiration of the initial year of this
Agreement shall be mutually agreed upon by the Company and Executive prior to
the commencement of each such year.
4.02 Stock Option. Concurrent with execution of this
Agreement, Executive shall be granted an incentive stock option award of up to
45,000 shares of the Company's common stock, par value of $.01 per share, with
restrictions on vesting of ownership and other matters more particularly
described in the Incentive Stock Option Agreement attached as Exhibit A.
4.03 Incentive Compensation. In addition to the base salary
and restricted stock described in Section 4.01 and 4.02, Executive shall be
eligible to participate in any corporate performance based incentive
compensation plans which are established by the Board of Directors of the
Company.
4.04 Participation in Benefit Plans. Executive shall also be
entitled to participate in all employee benefit plans or programs (including
vacation time of not less than five weeks annually) established by the Company's
Board of Directors from time to time to the extent that her position, title,
tenure, salary, age, health and other qualifications make her eligible to
participate. Executive's participation in any such plan or program shall be
subject to the provisions, rules and regulations applicable thereto. Without
limiting the generality of the foregoing, Executive shall be provided with
medical, disability, and life insurance coverage to the extent it is available
at a reasonable cost from reputable insurers.
4.05 Expenses. The Company shall pay or reimburse Executive
for all reasonable and necessary out-of-pocket expenses incurred by her in the
performance of her duties under this Agreement, subject to the presentment of
appropriate vouchers in accordance with the Company's normal policies for
expense verification.
5. Confidential Information. Except as permitted or directed by
the Company's Board of Directors, during the term of this Agreement and for a
period of one year thereafter Executive shall not divulge, furnish or make
accessible to anyone or use in any way (other than in the ordinary course of the
business of the Company) any confidential or secret knowledge or information of
the
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Company which Executive has acquired or become acquainted with or shall acquire
or become acquainted with prior to the termination of the period of her
employment by the Company (including employment by the Company or any affiliated
companies), whether developed by herself or by others, concerning any trade
secrets, confidential or secret designs, processes, formulae, plans, devices or
material (whether or not patented or patentable) directly or indirectly useful
in any aspect of the business of the Company, any confidential customer lists or
printer or supplier lists of the Company, any author or freelance employee lists
of the Company, any confidential or secret development or research work of the
Company, or any other confidential or secret aspects of the business of the
Company. Executive acknowledges that the above-described knowledge or
information constitutes a unique and valuable asset of the Company acquired at
great time and expense by the Company and its predecessors, and that any
disclosures or other use of such knowledge or information other than for the
sole benefit of the Company would be wrongful and would cause irreparable harm
to the Company. The foregoing obligations of confidentiality, however, shall not
apply to any knowledge or information which is now published or which
subsequently becomes generally publicly known, other than as a direct or
indirect result of the breach of this Agreement by Executive.
6. Ventures. If, during the term of this Agreement, Executive is
engaged in or associated with the planning or implementing of any project,
program or venture involving the Company and a third party or parties, all
rights in the project, program or venture, to the extent that such rights may be
claimed by Executive or the Company, shall belong to the Company. Except as
approved by the Company's Board of Directors, Executive shall not be entitled to
any interest in such project, program or venture or to any commission, finder's
fee or other compensation in connection therewith other than the salary to be
paid to Executive as provided in this Agreement.
7. Non-Competition.
(a) During the term of Executive's employment by the Company
and for one year following termination, she shall not, directly or indirectly,
engage in competition with the Company in any manner or capacity (e.g., as an
adviser, principal, agent, partner, officer, director, stockholder, employee,
member of any association, or otherwise) in any phase of the business which the
Company is conducting during the term of this Agreement, including the design,
development, manufacture, distribution, marketing, leasing or selling of
accessories, devices, or systems related to the products or services being sold
by the Company.
(b) The obligations of Executive under section 7(a) shall
apply to any geographic area in which the Company
(i) has engaged in business during the term of
this Agreement through production,
promotional, sales or marketing activity, or
otherwise, or
(ii) has otherwise established its goodwill,
business reputation, or any customer
relations.
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(c) For a period of one year following the termination of
Executive's employment hereunder, except a termination without cause, Executive
will not, on behalf of herself or on behalf of any other person, firm or
corporation, call on any of the customers of the Company, or any of its
affiliates, for the purpose of soliciting or providing to any said customers any
products competitive to the Company's products, nor will she in any way divert
or take away any customer of the Company or its affiliates.
(d) During the term of this Agreement, Executive shall not,
directly or indirectly, assist or encourage any other person in carrying out,
directly or indirectly, any activity that would be prohibited by the above
provisions of this Section 7 if such activity were carried out by Executive,
either directly or indirectly; and in particular Executive shall not, directly
or indirectly, induce any employee of the Company to carry out, directly or
indirectly, any such activity.
(e) For a period of one year following the termination of
Executive's employment hereunder, except a termination without cause, Executive
will not, directly or indirectly, employ, solicit for employment, or advise or
recommend to any other person, firm or corporation that they employ or solicit
for employment any employee of the Company.
(f) During the term of this noncompetition covenant which
follows the termination of Executive's employment by the Company, the Company
shall pay to Executive, as consideration for such covenant, an amount equal to
60% of Executive's annual base salary at the time of termination of employment,
which amount shall be payable to Executive on a monthly basis; provided,
however, that the Company may, upon 30 days written notice to Executive,
terminate its obligation to make such payments to Executive and, in such event,
this noncompetition covenant shall terminate as of the end of such 30-day
period.
(g) Ownership by Executive, as a passive investment, of less
than 1% of the outstanding shares of capital stock of any corporation listed on
a national securities exchange or publicly traded in the over-the-counter market
shall not constitute a breach of this Section 7.
8. Termination.
8.01 Grounds for Termination. This Agreement shall terminate
prior to the expiration of the initial term set forth in Section 2 or of any
extension thereof in the event that at any time during such initial term or any
extension thereof:
(a) Executive shall die (in which case the Company will pay to
Executive's estate a benefit equal to 50% of Executive's annual base
salary in effect at such time), or
(b) Executive shall become disabled in accordance with
Section 8.02, or
(c) Executive has breached the provisions of Sections 5 or 7
of this Agreement in any material respect,
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(d) Executive is terminated for "cause," which means (i)
Executive's violation of a specific written direction from CEO and the
Board of Directors of the Company or (ii) Executive's failure or
refusal to perform duties in accordance with this Agreement; provided,
however, no termination shall be for cause under subsection (ii) unless
Executive shall have first received written notice from the CEO and the
Board of Directors of the Company advising Executive of the act or
omission that constitutes cause and such act or omission continues
after Executive's receipt of such notice for at least a period of time
that would have allowed Executive to correct such act or omission.
Notwithstanding any termination of this Agreement, Executive, in consideration
of her employment hereunder to the date of such termination, shall remain bound
by the provisions of this Agreement which specifically relate to periods,
activities or obligations upon or subsequent to the termination of Executive's
employment; provided, however, that Executive shall not remain bound if the
Company terminates Executive's employment without cause.
8.02 "Disability" Defined. The Board of Directors may
determine that Executive has become disabled, for the purpose of this Agreement,
in the event that Executive shall fail, because of illness or incapacity, to
render services of the character contemplated by this Agreement for a period of
three consecutive months and on the date of determination continues to be so
disabled. The existence or nonexistence of grounds for termination of this
Agreement for any reason under Section 8.01(b) shall be determined in good faith
by the Board of Directors after notice in writing given to Executive at least 30
days prior to such determination. During such 30-day period, Executive shall be
permitted to make a presentation to the Board of Directors for its
consideration.
8.03 Surrender of Records and Property. Upon termination of
her employment with the Company, Executive shall deliver promptly to the Company
all records, manuals, books, blank forms, documents, letters, manuscripts,
publishing proposals from authors or employees, memoranda, notes, notebooks,
reports, data, tables, calculations or copies thereof, which are the property of
the Company or which relate in any way to the business, products, practices or
techniques of the Company, and all other property, trade secrets and
confidential information of the Company, including, but not limited to, all
documents which in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in her possession or
under her control.
9. Repurchase Rights Upon Termination of Employment.
(a) In the event that Executive unilaterally leaves the
employment of the Company (or any affiliated company) prior to February 23,
2001, or in the event that Executive's employment with the Company is
terminated, the Company (or any affiliated company) shall have the irrevocable
right and option to purchase from Executive, or Executive's successors or
assigns, that number of shares of the Company's capital stock (or the capital
stock of any affiliated company into which the Company's capital stock is
converted) then owned by Executive or such successors or assigns; provided,
however, that the repurchase right under this Section 9, shall not apply to the
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90,000 shares of the Company's Common Stock, and the 80,640 shares of the
Company's 1990 Preferred Stock currently owned by Executive; and, provided,
further, that the Company's right hereunder shall be subordinate to any right
which Xxxxx X. Xxxxxxx ("Peoples") has to purchase shares of the common stock of
the Company from Executive ("Peoples' Right to Repurchase") and any right of
first refusal ("Peoples' Rights of First Refusal") pursuant to that certain
Shareholder Agreement, dated February 23, 1990, between Executive and Peoples.
(b) The Company shall exercise the option described in Section
9(a), if at all, by delivery to Executive, her successors, heirs or assigns of a
written notice of exercise within 60 days after the date of termination of
employment. The purchase price for any shares of the Company's capital stock
repurchased by the Company pursuant to the exercise of such option shall be the
fair market value of such shares. If Executive, her successors, heirs or assigns
and the Board of Directors are unable to agree upon the fair market value of
such shares within 30 days after the exercise of such option by the Company, the
fair market value shall be determined by submitting the matter to appraisal, as
hereinafter provided. In the event of an appraisal, Executive, her successors,
heirs or assigns, as the case may be, and the Company shall each name a
qualified appraiser within 10 days after the expiration of said 30-day period. A
"qualified appraiser" shall mean an investment banker or independent accountant
experienced in the valuation of the equity interests of closely-held publishing
or other businesses similar to the Company. The two appointed appraisers shall,
within 30 days thereafter, each make a separate determination of the fair market
value of the Executive's shares, and each appraiser shall certify the same in
writing. If one of the parties fails to select an appraiser within the time
provided, the appraiser appointed by the other party shall make the appraisal
which shall be the fair market value. Otherwise, the value shall be the average
of the two appraisals certified by the two appraisers; provided, however, that
if the difference between the values determined in the two appraisals is greater
than 20% of the larger appraised value, then the two appraisers shall within
thirty days of submission of their certified appraisals designate a third
qualified appraiser who shall make his or her independent appraisal within 30
days thereafter, and the fair market value for the purposes hereof shall then be
the average of the two appraisals which are closest in value to one another. If
the two appraisers do not select a third appraiser within the time period
provided, one or both of the parties shall apply to the then senior judge of the
Hennepin County (Minnesota) District Court for the selection of a third
appraiser, whose selection shall be binding upon the parties in all respects.
Each party shall bear the cots of the appraiser selected by it. The services of
such third appraiser shall be paid for one-half by Executive, her successors or
assigns, as the case may be, and one-half by the Company. The purchase price
shall be payable at the option of the Executive, her successors or assigns
either in cash within 30 days of the date of exercise of the option or the date
of the determination of the amount of the purchase price, or in five equal
annual installments of principal and interest (at the prime rate in effect from
time to time as announced by U.S. Bank National Association or its successor)
with the first installment due and payable at the closing.
10. Purchase of Executive's Shares by Company. In the event that
Executive's employment hereunder is terminated for any reason, Executive may for
a period of 30 days after such termination deliver written notice to the Company
that she desires to sell her shares of capital
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stock to the Company, which sale shall be subject to Peoples' Right to
Repurchase and Right of First Refusal. The Company agrees that it shall purchase
all such capital stock as set forth in such notice at the fair market value
thereof as determined pursuant to the procedure set forth in Section 9. The
closing of such purchase will occur within 30 days of receipt of such notice by
the Company. The purchase price shall be payable at the option of the Company
either in cash within 30 days of the date of exercise of the option or the date
of determination of the amount of purchase price, or in five equal annual
installments of principal and interest (at the prime rate in effect from time to
time as announced by US Bancorp or its successor) with the first installment due
and payable at the closing.
11. Restriction on Transfer of Shares; Right of First Refusal;
Legend.
(a) Executive shall not voluntarily or involuntarily sell,
transfer, exchange or otherwise dispose of any of the shares of Company stock
that she may now own or hereafter acquire unless she shall first offer to sell
such shares to the Company in accordance with the terms of this Section 11.
Notwithstanding the foregoing, Executive may sell shares of common stock to
Peoples in accordance with Peoples' Right to Repurchase and Right of First
Refusal.
(b) If Executive wishes to transfer or otherwise dispose of
any shares of the Company she owns or if any of such shares are subject to
involuntary transfer pursuant to court order or other legal proceedings, she
shall deliver a written notice to the Company, which notice shall specify the
person to whom the shares are to be transferred or disposed of, the purchase
price or other consideration to be received by Executive for such shares and the
terms upon which such purchase price or other consideration is to be paid. If
the transfer or other disposition is for no consideration or is involuntary,
such written notice shall explain the circumstances of the transfer or
disposition. The delivery of such written notice to the Company shall constitute
an irrevocable offer by Executive to sell the shares to the Company upon the
same terms and conditions as are specified in the notice or, if such transfer or
other disposition is for no consideration or is involuntary, at the fair market
value of such shares, as determined pursuant to the procedures set forth in
Section 9. The Company may accept such offer by delivering a written acceptance
to Executive within 30 days after receipt of the written notice from Executive.
If the Company elects to accept such offer, the purchase of such shares shall be
closed within 30 days (i) upon the same terms as are specified in Executive's
written notice, (ii) by a cash purchase if the transfer is for no consideration
or is involuntary, or (iii) upon such other terms as are mutually acceptable to
the parties. If the Company elects not to exercise such offer or if the Company
allows such offer to expire without being accepted, Executive shall be permitted
to transfer or encumber such shares on the terms specified in the written notice
to the Company to the person identified therein. If such transaction is not
consummated within 90 days, such shares shall again be subject to the
restrictions and the purchase option described in this Section 11.
(c) Each certificate representing the shares of the Company's
capital stock that Executive may now own or hereafter acquire shall be endorsed
with the following legend:
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"The transferability of this certificate and the shares of
stock represented hereby is subject to the restrictions, terms
and conditions contained in the Amended Employment Agreement,
dated February 23, 1998 entered into between the registered
owner of such shares and The Peoples Publishing Group, Inc. A
copy of such Agreement is on file in the office of the
Secretary of The Peoples Publishing Group, Inc."
12. Termination of Certain Rights. The terms of Sections 9, 10 and
11, notwithstanding any provisions hereof to the contrary, shall terminate and
shall be of no further force and effect at the earliest to occur of: (a) a
Public Offering (as defined in that certain Restated Stock Purchase Agreement,
dated February 23, 1990 entered by the Company with a group of investors); (b)
the date when (i) any person other than Cherry Tree Ventures III who was not, on
February 23, 1990, the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of in excess of 80% of the Company's voting capital stock, has become the
beneficial owner (as so defined), directly or indirectly, of in excess of 80% of
the Company's voting capital stock; or (ii) the holders of the Company's capital
stock approve (A) any consolidation or merger (except with Concourse Corporation
("Concourse")) in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company's capital stock would be
converted into cash or the right to receive cash, securities, or the right to
receive securities, or other property, (B) any sale, lease, exchange or other
transfer of all or substantially all of the assets, or (C) any plan of
liquidation or dissolution; or (c) February 23, 2001. The Company is currently
negotiating the merger of the Company into Concourse whereby the shareholders of
the Company would become the shareholders of Concourse. Such a merger would not
terminate this Agreement and Sections 9, 10, and 11 would survive such a merger
and be applicable to the Concourse shares received by Executive as a result of
the merger.
13. Miscellaneous.
13.01 Governing Law. This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of New
Jersey.
13.02 Prior Agreements. This Agreement contains the entire
agreement of the Parties relating to the subject matter hereof and supersedes
all prior agreements and understandings with respect to such subject matter, and
the parties hereto have made no agreements, representations or warranties
relating to the subject matter of this Agreement which are not set forth herein.
13.03 Withholding Taxes. The Company may withhold from any
benefits payable under this Agreement all federal, state, city or other taxes as
shall be required pursuant to any law or governmental regulation or ruling.
13.04 Amendments. No amendment or modification of this
Agreement shall be deemed effective unless made in writing signed by the parties
hereto.
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13.05 Assignment. This Agreement shall not be assignable, in
whole or in part, by either party without the written consent of the other
party.
13.06 No Waiver. No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement, except by a statement in writing signed by the
party against whom enforcement of the waiver or estoppel is sought. Any written
waiver shall not be deemed a continuing waiver unless specifically stated, shall
operate only as to the specific term or condition waive and shall not constitute
a waiver of such term of condition for the future or as to any act other than
that specifically waived.
13.07 Injunctive Relief. Executive agrees that it would be
difficult to compensate the Company fully for damages for any violation of the
provisions of this Agreement ,including without limitation the provisions of
Sections 5, 7, and 8.03. Accordingly, Executive specifically agrees that the
Company shall be entitled to temporary and permanent injunctive relief to
enforce the provisions of this Agreement. This provision with respect to
injunctive relief shall not, however, diminish the right of the Company to claim
and recover damages in addition to injunctive relief.
13.08 Severability. To the extent any provision of this
Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected and shall continue in full force and effect. In furtherance and not
in limitation of the foregoing, should the duration or geographical extent of,
or business activities covered by, any provision of this Agreement be in excess
of that which is valid and enforceable under applicable law, then such provision
shall be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. Executive acknowledges the uncertainty of
the law in this respect and expressly stipulates that this Agreement be given
the construction which renders its provisions valid and enforceable to the
maximum extent (not exceeding its express terms) possible under applicable law.
THE PEOPLES PUBLISHING GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Its: President
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/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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