AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as of May 1,
1996, by and between FRANKLIN ELECTRONIC PUBLISHERS, INC. ("Franklin"), a
Pennsylvania corporation with its office at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx, Xxx
Xxxxxx 00000, and XXXXXX X. XXXXX ("Employee"), an individual residing at 00
Xxxxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000.
BACKGROUND
----------
Franklin wishes to assure itself of the continued services of Employee
for the period provided in this Employment Agreement, and Employee is willing to
serve in the employ of Franklin for said period, subject to and upon the terms
hereinafter provided.
TERMS OF EMPLOYMENT
-------------------
The parties agree as follows:
1. Employment.
----------
X. Xxxxxxxx hereby employs Employee as its Chief Executive Officer
for the period (the "Employment Period") commencing on April 1, 1996 and ending
on March 31, 2001, unless sooner terminated in accordance with this Employment
Agreement. Employee hereby accepts such employment, agrees to be responsible for
the overall management and supervision of all of the operations and activities
of Franklin and its subsidiaries, agrees to perform such other services of a
senior executive nature concomitant with his positions and offices as shall from
time to time be assigned to him by or pursuant to authorization of the Board of
Directors of Franklin and agrees, subject to paragraph B of this section 1,
diligently and competently to devote all of his business time, efforts, skill
and attention to such services.
X. Xxxxxxxx acknowledges that Employee has and may in the future
acquire other business interests and that, subject to the restrictions set forth
in section 10 hereof, Employee may devote a portion of his business time and
attention to such interests. In addition, Franklin acknowledges that Employee
may devote a portion of his business time
and attention to activities having a charitable, educational or other public
interest, purpose. Employee agrees that the portion of his business time and
attention devoted to such interests and activities will not exceed 20% of his
business time and attention.
C. As Chief Executive Officer of Franklin, Employee shall report to
and be responsible to only the Board of Directors of Franklin.
D. During the Employment Period, Employee shall be nominated by the
Board of Directors of Franklin for election as a director at each meeting of its
stockholders at which the class of directors to which Employee is assigned is to
be elected and, so long as Employee shall be a director of Franklin, Employee
shall be elected to and shall serve on such committees of the Board of Directors
of Franklin as Employee shall so determine and on such other committees thereof
as the Board of Directors of Franklin shall determine; provided, however, that
-------- -------
Employee shall not be elected to and shall not serve on the Audit Committee
and/or the Compensation and Stock Option Committee of the Board of Directors of
Franklin.
E. If Franklin shall so request, Employee shall become and shall,
during such portion of the Employment Period as Franklin shall request, act as a
director and/or officer of any subsidiaries of Franklin without any compensation
other than that provided for in section 2 hereof.
X. Xxxxxxxx will provide Employee during the Employment Period with
an office, an executive secretary reasonably acceptable to him and other support
reasonably appropriate to his duties hereunder. Employee shall not be required
to be absent from his office on business more than thirty (30) working days in
any year or more than ten (10) consecutive working days at any one time.
G. Employee shall be entitled to five (5) weeks vacation in each
year during the Employment Period.
2. Compensation.
-------------
X. Xxxxxxxx shall pay to Employee, and Employee shall accept from
Franklin, for his services hereunder, a base salary ("Salary"), payable in
accordance with Franklin's executive payroll policy as in effect from time to
time, for each of the one year periods
2
beginning on April 1, 1996, of no less than $550,000 per annum.
X. Xxxxxxxx shall pay to Employee, as additional compensation for
Employee's services hereunder, an amount ("Bonus") equal to two percent (2%) of
Franklin's "Net Income Before Taxes" with respect to each fiscal year which
shall end during the Employment Period. For the purposes hereof, Franklin's "Net
Income Before Taxes" with respect to a fiscal year shall mean the consolidated
net income of Franklin and its subsidaries before income, franchise and similar
taxes of any jurisdiction, whether federal, state, municipal or foreign, for
such fiscal year as included in the financial statements examined and reported
upon by Franklin's independent certified public accountants and determined in
accordance with generally accepted accounting principles applied on a basis
consistent with prior years; provided, however, that (a) all acquisitions of
-------- -------
subsidaries or divisions during such fiscal year shall be accounted for on a so-
called "purchase" basis regardless of the accounting method used in Franklin's
financial statements,(b) any income (or loss) due to a change in the accounting
treatment of an item shall not be taken into account in arriving at "Net Income
Before Taxes" if in the sole discretion of the Compensation and Stock Option
Committee to the Board of Directors of Franklin it so determines, and (c)
sales, use and similar taxes shall not be considered as franchise taxes. In
connection with each fiscal year of Franklin for which Employee was employed by
Franklin on the last day of such fiscal year, Franklin shall pay Bonus to
Employee, or on his earlier death, to his estate, within ninety (90) days after
the end of such fiscal year notwithstanding any termination of the employment of
Employee subsequent to the end of such fiscal year for any reason.
X. Xxxxxxxx shall make available to Employee, to the extent he satisfies
the eligibility requirements thereof and to the extent permitted by law, any
fringe benefit program in which senior corporate officers are eligible to
participate. Fringe benefit programs include, but are not limited to, pension,
stock purchase, savings, life insurance, health insurance, hospitalization and
other plans and policies authorized now or in the future. Notwithstanding the
foregoing, Employee shall not participate in any profit sharing or bonus plan,
except for any so-called 401K Plan that may be provided by the Company and
except as otherwise provided in this Employment Agreement.
3
D. In addition to any other benefits provided to Employee hereunder,
Franklin shall provide Employee with the following:
(i) a current model of a luxury automobile (such as a Mercedes Benz,
or a similar vehicle) and all related insurance, operating and maintenance
expenses;
(ii) all reasonable club dues for clubs and other similar
organizations which he uses for business purposes;
(iii) an annual physical examination;
(iv) reasonable consultations with financial and tax advisors or
counselors;
(v) reimbursement for reasonable legal fees in connection with the
execution of this Employment Agreement; and
(vi) such other benefits and perquisites as are currently being
provided to Employee by Franklin.
X. Xxxxxxxx shall reimburse Employee for all reasonable out-of-pocket
expenses incurred by him in connection with the performance of his duties
hereunder upon the presentation of appropriate documentation therefor in
accordance with Franklin's regular procedures.
F. During the Employment Period, Franklin shall cause to be maintained for
the benefit of Employee insurance coverage having an aggregate of $1 million
face amount on the life of Employee, exclusive of any coverage provided under
any group program instituted by Franklin or any of its subsidiaries. Such
insurance policy or policies shall be purchased from a life insurance company
which shall be acceptable to Employee, which insurance company shall have
received such a Best rating of A+ for its most recent rating period prior to the
date of Franklin's purchase of such insurance policy or policies. Such insurance
policy or policies shall be in the form of guaranteed renewable term life
insurance requiring annual premium payments fixed for a term of not more than
five years, as determined by Franklin in its sole and absolute discretion.
Employee shall be the owner of such policy or policies and shall have the right
to designate and change beneficiaries, which right shall be unrestricted except
as provided by law.
G. On February 1, 1997 and on each February 1 thereafter through and
including the February 1 occurring in the calendar year following the calendar
year in which the
4
Employment Period shall terminate, Franklin shall pay to Employee, in addition
to all other compensation payable to him hereunder, an additional amount equal
to the product of (i) the amount reported as income by Franklin on Employee's
Form W-2 for the preceding calendar year which is attributable to Franklin's
purchase of the life insurance policy or policies pursuant to the provisions of
paragraph F of this section 2, (ii) the combined effective federal, state and
local tax rate of Employee for such preceding calendar year, and (iii) a
fraction the numerator of which shall be one and the denominator of which shall
be one minus the combined effective federal, state and local tax rate of
Employee for such preceding calendar year.
3. Supplemental Executive Retirement Plan.
--------------------------------------
A. If Employee's employment by Franklin shall terminate other than by
reason of his death, then, Franklin shall pay to Employee, as additional
compensation for his services to Franklin, on the first day of the calendar
month following the calendar month in which his employment by Franklin shall
terminate and on the first day of each calendar month thereafter, through and
including the calendar month in which his death shall occur, an amount ("Monthly
Payment") equal to the product of $52.08 and the number of full months of
Employee's employment by Franklin which for purposes hereof commenced as of May
1, 1984. For these purposes, employment does not include months, if any, during
which Employee receives from Franklin Continuation Pay, as defined in section 6
hereof, or any consulting fees under section 4 hereof; provided, however, that
-------- -------
for purposes of calculation of the Monthly Payment, in the case in which
Franklin is merged or acquired and Termination Pay is paid to Employee under
paragraph C of section 7 hereof, or in the case in which Employee is terminated
without cause and Termination Pay is paid to Employee under paragraph B of
section 7 hereof, the number of full months of Employee's employment by Franklin
shall be increased by the number of months in the remaining term of the
Employment Period that are included in the calculation of such Termination Pay,
but in no case shall Employee's employment be so increased by more than
twenty-four months.
B. If Employee has become entitled under the provisions of paragraph A
of this
5
section 3 to payments, then, in the event of Employee's death, Franklin shall
pay to Employee's beneficiaries named in a writing provided to Franklin, or, if
none, to his surviving spouse, or, if none, to his surviving children, per
capita, or, if none, to his estate ("Beneficiaries"), as additional compensation
for Employee's services to Franklin, on the first day of the calender month
following the calendar month in which his death shall occur, and on the first
day of each calendar month thereafter, the Monthly Payment.
C. If Employee's employment by Franklin shall terminate by reason of
Employee's death, then Franklin shall pay to Beneficiaries, as additional
compensation for Employee's services to Franklin, on the first day of the
calendar month following the calendar month in which his death shall occur, and
on the first day of each calendar month thereafter, the Monthly Payment.
D. Nothwithstanding the provisions of paragraphs B and C of this
section 3, no Monthly Payment under said paragraphs B or C of this section 3
shall be made by Franklin after the later to occur of the date of Employee's
death or the date on which one hundred and twenty (120) Monthly Payments have
been made pursuant to paragraphs A, B, and/or C of this section 3 to Employee
and/or Beneficiaries,
E. During the period for which Monthly Payments are paid by Franklin
to Employee under this section 3, Franklin shall provide to Employee and/or
beneficiaries without charge all family health care benefits then generally
being provided to its executives.
F. The sole interest of Employee (or, in the event of his death,
Beneficiaries) under this section 3 shall be to secure the payments provided for
hereunder as and when the same shall become due and payable in accordance with
the terms hereof, and neither Employee nor any persons claiming under or through
him shall have any right, title or interest in or to any of the assets of
Franklin. All amounts payable hereunder shall be paid solely from the general
assets of Franklin and Franklin shall not maintain any separate fund or account
to provide any payments hereunder. Nothing contained in this Employment
Agreement shall be construed to prohibit or to restrict Franklin from paying
both the Monthly Payment and any other payment hereunder, including, but not
limited to, consulting fees, Continuation Pay, or the Bonus, to Employee or
Beneficiaries in connection with any given month during the Employment Period or
thereafter.
4. Consulting Period.
-----------------
Upon expiration of the Employment Period for any reason other than
death, disability or for cause, Franklin agrees to retain Employee as a
consultant to Franklin for a sixty (60) month period (the "Consulting Period"),
during which Franklin shall pay to Employee $2,000 per month and provide to
Employee all fringe benefits, including, but not limited to, all health care
benefits, that were provided to Employee under this Employment Agreement except
those set forth in subparagraphs (i) through (v) of paragraph D of section 2
hereof. Employee hereby accepts such retention, subject to Employee's right to
terminate immediately the Consulting Period at any time on written notice to
Franklin. Franklin agrees that any employee stock options theretofore granted
to Employee which have not expired on the date that the Consulting Period begins
shall remain exercisable through the earlier to occur of the normal expiration
date of such options or the end of the Consulting Period.
5. Notice of Breach.
----------------
Franklin and Employee agree that, prior to the termination of the
employment of Employee hereunder by reason of the material and continued breach
of his obligations under this Employment Agreement, or the material and
continued misconduct or gross negligence with respect to his obligations
hereunder, or in the case of a claim by Employee of diminution of authority
under paragraph C of section 7 hereof, the injured party will give the other
party written notice specifying such breach or misconduct or gross negligence or
diminution and permitting the party to cure such breach or misconduct or gross
negligence or diminution within a period of thirty (30) days after receipt of
such notice.
6. Disability or Death.
-------------------
(a) If Employee shall be unable substantially to perform the duties
required of him pursuant to his office and the provisions of this Employment
Agreement due to any injury, illness or disease, as determined by an independent
physician mutually acceptable
7
to Franklin and Employee, and such inability shall continue for a period of six
(6) consecutive months, either party shall have the right to terminate
Employee's employment pursuant to this Employment Agreement on thirty (30) days
written notice. On any such termination, Franklin shall (i) continue to pay to
Employee the Salary during the remaining term of the Employment Period and a
monthly payment related to Bonus (which monthly payment shall be calculated as
one-twelfth of the average of the two Bonus payments accrued for the benefit of
or paid to Employee for Franklin's two fiscal years preceding the date of such
termination ("the Monthly Bonus")) (hereinafter such Salary and the Monthly
Bonus shall be collectively referred to as the "Continuation Pay"); provided,
--------
however, that any amounts payable under any disability insurance policy or
-------
policies maintained by Franklin shall be credited toward such Continuation Pay;
and (ii) pay to Employee, within ninety (90) days of the end of the fiscal year
of Franklin in which such termination occurs, a payment related to Bonus equal
to two percent (2%) of Franklin's "Net Income Before Taxes" for such fiscal year
multiplied by the fraction whose numerator is the number of full or partial
months in such fiscal year prior to the date of such termination and whose
denominator is twelve(12) (which payment related to Bonus shall be referred to
herein as the "Partial Year Bonus Payment").
(b) Upon the termination of the employment of Employee hereunder due
to his death prior to the end of the Employment Period, Franklin shall pay
Continuation Pay to the estate of Employee during the remaining term of the
Employment Period and, within ninety (90) days of the end of the fiscal year of
Franklin in which such death occurs, the Partial Year Bonus Payment.
7. Termination.
-----------
X. Xxxxxxxx shall have just and legal cause to terminate the
employment of Employee under this Employment Agreement only upon a good faith
determination by a majority vote of the members of the Board of Directors of
Franklin that the termination of such employment is necessary and in the best
interests of Franklin by reason of:
(i) the conviction of Employee of a felony under state or
federal law, or the equivalent under foreign law;
8
(ii) the material and continued breach by Employee of his
obligations under this Employment Agreement, after compliance with the notice
provisions of section 5 hereof; or
(iii) the material and continued misconduct or gross negligence
of Employee with respect to his obligations under this Employment Agreement,
after compliance with the notice provisions of section 5 hereof.
Notwithstanding the foregoing, no termination of Employee's
employment under this Employment Agreement shall diminish or affect in any way
Employee's rights to the payments provided for in section 2 and section 3 hereof
which have accrued or are accruable to and including the date of such
termination, except that no Bonus (or Partial Year Bonus Payment) shall be
payable in connection with any fiscal year during which the employment of
Employee is terminated by Franklin under this paragraph A of this section 7.
B Franklin shall have the right to terminate the employment of Employee
under this Employment Agreement in its sole and absolute discretion and without
cause, in which case Franklin shall pay to Employee, with no mitigation duty in
Employee and no offset with regard to any amounts that the Employee may
otherwise earn thereafter, (i) the Salary for the number of months in the
remaining term of the Employment Period and a payment related to Bonus, which
payment, for purposes of this section 7, shall be calculated as the product of
the Monthly Bonus and the number of months in the remaining term of the
Employment Period on the date of such termination (hereinafter such Salary
component and such Bonus component are collectively referred to as the
"Termination Pay"); provided, however, that the number of months remaining in
-------- -------
the term of the Employment Period shall be limited to twenty-four (24) months
for purposes of this paragraph B of this section 7: and (ii) within ninety (90)
days of the end of the fiscal year of Franklin in which such termination occurs,
the Partial Year Bonus Payment. Franklin shall pay the Termination Pay to
Employee in a lump sum payment within thirty (30) days of such termination
except in the case in which Franklin's pro forma current ratio (defined as the
ratio of its then current assets to current liabilities after giving effect to
the lump sum
9
payment by reducing current assets by such amount) is less than 1:1, in which
case the Termination Pay shall be paid on a monthly basis to Employee with
monthly payments calculated by dividing the Termination Pay by the number of
full months remaining in the Employment Period on the date of such Termination,
but not in excess of twenty-four (24) months; provided, however, that should
-------- -------
Franklin's pro forma current ratio at any time thereafter equal or exceed 1:1,
Franklin shall immediately pay the remainder of the Termination Pay to Employee
in a lump sum.
C. Employee shall have the right to terminate his employment under this
Employment Agreement, after compliance with the notice provisions of section 5
hereof, on the condition that Employee suffers a diminution in his authority in
connection with his employment hereunder (which diminution in authority shall be
deemed to occur, without Franklin's ability to cure, should Franklin be acquired
by or merged into any other entity), in which case Franklin shall pay to
Employee, with no mitigation duty in Employee and no offset with regard to any
amounts that Employee may otherwise earn thereafter, (i) an amount equal to the
Termination Pay, payable in a lump sum within thirty (30) days of such
termination; provided, however, that in no case shall the Termination Pay be
-------- -------
based on a remaining term of the Employment Period of less than one year, and
(ii) within ninety (90) days of the end of the fiscal year of Franklin
in which such termination occurs, the Partial Year Bonus Payment.
D. In the case of any termination under the provisions of paragraphs B or
C of this section 7, all unexercised employee stock options granted to Employee
by Franklin shall immediately become exercisable in full and shall remain
exercisable until the earlier to occur of (i) the expiration of six (6) months
after such termination or (ii) the date specified in the applicable option
agreement or option certificate.
E. (i) In the event that, as a result of any of the payments or other
consideration provided for in paragraphs B and C of this section 7 or otherwise,
a tax (an "Excise Tax") shall be imposed upon or threatened to be imposed upon
Employee by virtue of the application of section 4999(a) of the Internal Revenue
code of 1986 as now in effect or as the same may at any time or from time to
time be amended (the "Code") or any similar provisions of state or local tax
law, Franklin shall indemnify and hold Employee harmless
10
from and against any and all such taxes (including additions to tax, penalties
and interest and additional Excise Taxes, whether applicable to payments made
pursuant to paragraph B or C of this section 7 or otherwise) incurred by, or
imposed upon, Employee and all expenses arising therefrom. Each indemnity
payment to be made by Franklin hereunder shall be increased by the amount of all
federal, state and local tax liabilities (including additions to tax, penalties
and interest and Excise Taxes) incurred by, or imposed upon, Employee so that
(a) the effect of receiving all such payments will be such that Employee shall
be held harmless on an after-tax basis from the amount of all Excise Taxes
imposed upon payments made pursuant to paragraph B or C of this section 7 or
otherwise and all taxes, penalties and interest and Excise Taxes with respect to
payments under this paragraph E under the laws of all federal, state and local
taxing authorities and (b) Employee shall not incur any out-of-pocket cost or
expenses of any kind or nature on account of the Excise Tax and the receipt of
the indemnity payments to be made by Franklin.
(ii) Each indemnity payment to be made pursuant to this paragraph E
shall be payable within fifteen (15) business days of delivery by Employee of a
written request (a "Request") for such payment to Franklin (which Request may be
made prior to the time Employee is required to file a tax return showing a
liability for an Excise Tax or other tax). A request shall set forth the amount
of the indemnity payment due to Employee and the manner in which such amount was
calculated and Employee shall thereafter submit such other evidence of the
indemnity to which Employee is entitled as Franklin shall reasonably request.
All such information shall, if Franklin shall so request, be set forth in a
statement signed by a prominent accounting firm or a partner thereof and
Franklin shall pay all fees and expenses of such accounting firm incurred in the
preparation thereof.
(iii) Employee agrees to notify Franklin (a) within fifteen (15)
business days of being informed by a representative of the Internal Revenue
Service (the "Service") or any state or local taxing authority that the Service
or such authority intends to assert that an Excise Tax is or may be payable, (b)
within fifteen (15) business days of Employee's receipt of a Revenue Agent's
report (or similar document) notifying him that
11
an Excise Tax may be imposed and (c) within fifteen (15) business days of
Employee's receipt of a Notice of Deficiency under Section 6212 of the Code or
similar provision under state or local law which is based in whole or in part
upon an Excise Tax and/or a payment made to Employee hereunder.
(iv) After receiving any of the aforementioned notices, and subject to
Employee's right to control any and all administrative and judicial proceedings
with respect to, or arising out of, the examination of Employee's tax returns,
except as such proceedings relate to an Excise Tax, Franklin shall have the
right (a) to examine all records, files and other information and documentation
in Employee's possession or under his control, (b) to be present and to
participate, to the extent desired, in all administrative and judicial
proceedings with respect to an Excise Tax, including the right to appear and act
for Employee at such proceedings in resisting any contentions made by the
Service or a state or local taxing authority with respect to an Excise Tax and
to file any and all written responses in connection therewith, (c) to forego any
and all administrative appeals, proceedings, hearings and conferences with the
Service or a state or local taxing authority with respect to an Excise Tax, (d)
to compromise or settle any tax examination, audit, contest or litigation in
respect to an Excise Tax on Employee's behalf, and (e) to pay any tax increase
on Employee's behalf and to control all administrative and judicial proceedings
with respect to a claim for refund from the Service or a state or local taxing
authority with respect to such tax increase.
(v) Franklin shall be solely responsible for all reasonable legal and
accounting or other expenses (whether of Employee's representative or of
Franklin's representative) incurred in connection with any such administrative
or judicial proceedings insofar as they relate to an Excise Tax or other tax
increases resulting therefrom and Employee agrees to execute and file, or cause
to be executed and filed, such instruments and documents, including, without
limitation, waivers, consents and Powers of Attorneys, as Franklin shall
reasonably deem necessary or desirable in order to enable it to exercise the
rights granted to it hereunder.
(vi) Franklin's liability shall not be affected by Employee's failure
to give any notice provided for hereunder unless such failure materially
prejudices its ability to
12
defend itself as provided for hereunder. Employee may not compromise or settle
a claim which is indemnified against hereunder without Franklin's consent,
unless Employee can establish by a preponderance of the evidence that Franklin's
decision was not made in the good faith belief that a materially more favorable
result could be obtained by continuing to defend against the claim (or prosecute
a claim for refund).
8. Confidentiality.
---------------
Employee agrees, during and after the Employment Period, to keep
secret and confidential all information heretofore or hereafter acquired by him
concerning Franklin's business and affairs and/or the business and affairs of
any of its subsidiaries, and further agrees that he will at no time during the
Employment Period or thereafter disclose any such information to any person,
firm or corporation, other than to Franklin's directors, officers, employees,
auditors and legal advisors, or use the same in any manner other than in
connection with Franklin's business and affairs or the business and affairs of
any subsidiaries, except (i) as may be required by law, (ii) in connection with
Employee's enforcement of his rights under this Employment Agreement, (iii) as
to such information as may already have become publicly known other than through
Employee in violation of this section 8, and (iv) with Franklin's consent.
9. Inventions.
----------
Employee agrees for no additional consideration to assign to Franklin,
immediately upon making or acquiring them, and whether or not conceived or
developed during Employee's working hours, any and all inventions, processes,
patent rights, letters patent, copyrights, trademarks, trade names, other
intangibles and applications therefore, in the United States and all other
countries, and any and all rights and interests in, to and under the same which
he may legally transfer, now possessed by him or acquired by him prior to or
during the Employment Period or during the Consulting Period, relating in any
way to the business and activities of, or the equipment, devices, processes and
formula connected with, Franklin's business (including businesses and products
in the development or research stage) or any other business conducted by
Franklin and any
13
subsidiaries and agrees that, upon request, Employee will promptly make all
disclosures, execute all instruments and papers and perform all acts reasonably
necessary or desired by Franklin to vest and confirm in it, its successors,
assigns and nominees, fully and completely, all rights created or contemplated
by this section 9 and which may be necessary to enable Franklin, its successors,
assigns and nominees to secure and enjoy the full benefits and advantages
thereof, it being understood that all such rights are the sole property of
Franklin.
10. Noncompete.
----------
A. Employee agrees that, to the extent permitted by law, he shall not,
during the Employment Period and for a period of three (3) years commencing on
the latter of the date of termination of the Employment Period or the end of the
Consulting Period (the "Noncompete Period"), directly or indirectly, own,
manage, operate, join or control, or participate in the ownership, management,
operation or control of, or be an officer, director or employee of, or a
consultant to, or authorize the use of his name by, or be connected in any
manner with, any business, firm or corporation, in any town, city, county or
state of the United States of America or of any country in the world, which at
the time or at any time during the Noncompete Period manufactures, sells, leases
or distributes products competitive with any products of Franklin or any
subsidiaries, including any products in the research and development stage at
Franklin, on the date of the termination of such employment; provided, however,
-------- -------
that the Noncompete Period shall be reduced by one month for each month of the
Consulting Period, but in no case shall the Noncompete Period be reduced by more
than twelve (12) months.
B. In the event that any court finds that the territory set forth
in paragraph A of this section 10 is too broad in which to enforce this
covenant, the territory will be limited to the United States of America.
C. In the event that any court finds that the territory set forth
in paragraph B of this section 10 is too broad in which to enforce this
covenant, the territory will be limited to the portion of the United States of
America east of the Mississippi River.
D. In the event that any court finds that the territory set forth
in paragraph
14
C of this section 10 is too broad in which to enforce this covenant, the
territory will be limited to the State of New Jersey.
E. The provisions of this section 10 shall not apply to
investments by Employee in shares of stock traded on a national securities
exchange or on the national over- the-counter market which shall constitute less
than three percent (3%) of the outstanding shares of such stock.
11. Equitable Relief.
----------------
Employee acknowledges and agrees that, because of the unique and
extraordinary nature of his services, any breach or threatened breach of the
provisions of sections 8, 9, or 10 hereof will cause irreparable injury and
incalculable harm to Franklin and that Franklin shall, accordingly, be entitled
to injunctive or other equitable relief. The foregoing, however, shall not be
deemed to waive or to limit in any respect any other right or remedy which
Franklin may have with respect to such breach.
12. Indemnification.
---------------
Franklin will indemnify Employee (and his legal representatives
or other successors) to the fullest extent permitted by the laws of the
Commonwealth of Pennsylvania and Franklin's existing certificate of
incorporation and by-laws, as the same any be amended from time to time, and
Employee shall be entitled to the protection of any insurance policies of self-
insurance reserves Franklin may elect to maintain generally for the benefit of
its directors and officers, against all costs, charges and expenses whatsoever
incurred or sustained by him or his legal representatives in connection with any
action, suit or proceeding to which he (or his legal representatives or other
successors) may be made a party by reason of his being or having been a director
or officer of Franklin and any subsidiaries; provided, however, that Employee
-------- -------
shall not be entitled to indemnification hereunder in the event of his fraud or
the reckless disregard of his duties hereunder.
15
13. Jurisdiction and Venue.
----------------------
The parties hereby irrevocably consent to the personal jurisdiction of
and the propriety of venue in the courts of the State of New Jersey and of any
federal court located in such state in connection with any action or proceeding
arising out of or relating to this Employment Agreement, any document or
instrument delivered pursuant to, in connection with, or simultaneously with
this Employment Agreement, or a breach of this Employment Agreement or any such
document or instrument.
14. Notices.
-------
All notices hereunder shall be in writing and shall be sent by
registered or certified mail, return receipt requested, if intended for
Franklin, shall be addressed to it, attention of its General Counsel, at the
address above, and if intended for Employee, shall be addressed to him at the
address above, or at such other address of which Franklin or Employee shall have
given notice to the other in the manner herein provided.
15. Entire Agreement.
----------------
The Employment Agreement constitutes the entire understanding between
the parties with respect to the matters referred to herein and no waiver or
modification to the terms hereof shall be valid unless in writing signed by the
party to be charged and only to the extent therein set forth. All prior and
contemporaneous agreements and understandings between the parties with respect
to the subject matter of this Employment Agreement are superseded by this
Employment.
16. Severability.
------------
If any provision in this Employment Agreement is invalid, illegal or
unenforceable, the balance of this Employment Agreement shall remain in effect,
and if any provision is inapplicable to any person or circumstance, it shall
nevertheless remain applicable to all other persons and circumstances.
17. Non-Assignability.
-----------------
This Employment Agreement shall be binding upon and inure to the
benefit of the parties hereto, their respective heirs, administrators,
executors, personal representatives, successors and assigns; provided, however,
-------- -------
that this Employment Agreement may not be
16
assigned by any of the parties hereto other than by and among Franklin and any
subsidiaries and/or affiliates.
18. Law.
----
This Employment Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey.
19. Withholding.
------------
All payments hereunder shall be subject to withholding and to such
other deductions as shall at the time of such payment be required pursuant to
any income tax or other law, whether of the United States or any other
jurisdiction, and, in the case of payments to the executors or administrators of
the Employee's estate, the delivery to Franklin of all necessary tax waivers and
other documents.
IN WITNESS WHEREOF, the parties hereto have executed this
Employment Agreement as of the dates below.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
BY:_________________________________________________
Xxxxxxx X. Xxxxxx,
Senior Vice President
Date: June 6, 1996
________________________________________________
Xxxxxx X. Xxxxx
Date: June 6, 1996
17
