THE KNOT LOGO]
[THE
KNOT
LOGO]
August
7,
2008
Xx.
Xxxxxx Xxxxxxxx
Dear
Xxxxxx:
It
gives
me great pleasure to confirm the terms by which The Knot, Inc. will continue
your employment under the new title Senior
Vice President, General Counsel and Secretary,
reporting to the Chief Executive Officer. Upon your designation by the Board
of
Directors, you will serve as an executive officer of The Knot.
The
terms
of this agreement will be effective upon approval of the Compensation Committee
of the Board of Directors. This agreement supersedes the terms contained
in your
offer of employment dated April 26, 2007.
Compensation
Terms
Base
Salary
Your
annualized salary rate is $235,000 (“Base Salary”), which will be paid
semi-monthly, on the 15th and on the last workday of the month. With respect
to
your Base Salary for 2009 and thereafter, the Compensation Committee shall
review your performance and Base Salary annually for potential increases.
Your
Base Salary will be subject to withholding of income, social security and
employment taxes in accordance with The Knot’s normal practices.
Incentive
Bonus
For
2008,
you will be eligible to receive a cash bonus at the discretion of the Chief
Executive Officer. With respect to 2009 and thereafter, you will be eligible
to
earn an annual cash incentive bonus expressed as a percentage of Base Salary.
Each year, your target and maximum bonus opportunities will be set by the
Compensation Committee. The amount of your actual bonus will be determined
according to your achievement of certain performance criteria established
by the
Compensation Committee. The incentive bonus will be conditioned upon the
other
terms and conditions of the incentive compensation program for executive
officers, as may be in effect from time to time, and is payable within thirty
(30) days following the completion of The Knot’s annual audit and approval by
the Compensation Committee. The incentive bonus is not guaranteed and is
completely discretionary; you may receive an incentive bonus in one year
but not
the next.
Restricted
Stock Grant
You
will
receive a restricted stock grant of 25,000 shares, which will vest over a
four-year term, with the first 25% of the grant vesting on the first anniversary
of the grant date, and the balance of the grant vesting in equal annual
installments thereafter. The restricted stock grant will be made as soon
as
possible following the effective date of this agreement, and will be subject
to
the standard terms and conditions of The Knot’s 1999 Stock Incentive Plan and a
restricted stock agreement between you and The Knot. Your restricted stock
agreement will provide that
if
The
Knot
is acquired by merger, asset sale or sale of more than 50% of its voting
securities by the stockholders (in each case in accordance with the definition
of “change in control” under the Stock Incentive Plan), in addition to those
shares of restricted stock that have previously vested before such change
in
control in accordance with the regular vesting schedule, an amount of shares
of
restricted stock shall vest upon such event equal to the greater of (1) the
shares of restricted stock that would otherwise have vested during the one
year
period following the change in control, and (2) 50% of the shares of restricted
stock that are not vested on the date of the change in control.
Xx.
Xxxxxx Xxxxxxxx
August
7,
2008
Page
2
Other
Compensation
You
will
be eligible to participate in future incentive compensation programs for
executive officers, if and when such programs are established by the
Compensation Committee of the Board of Directors, at a level commensurate
with
your position at the time awards are granted and on the same general terms
and
conditions as apply to the other executive officers of The Knot. Without
limiting the foregoing, your participation in future equity grant programs
made
available to executive officers will not be reduced as compared to other
executive officers because of your restricted stock grant made pursuant to
this
agreement. In addition, in no event will the terms of equity awards granted
to
you (including your restricted stock grant made pursuant to this agreement)
with
respect to accelerated vesting upon a “change in control” be less favorable than
the terms made available to any other executive officer, and The Knot will
cause
any award to be modified if and as necessary to carry out this
provision.
Severance
If
your
employment is involuntarily terminated without cause by The Knot or a successor
entity, or if you resign for “Good Reason,” you shall receive a lump-sum payment
equal to your annualized Base Salary, at your rate of pay in effect immediately
prior to such termination or resignation, and for 12 months after such
termination or resignation receive all benefits (other than vesting of any
equity award) that were associated with your employment immediately prior
to
such termination or resignation (to the extent and at such levels that these
benefits remain available to employees of The Knot generally during such
12-month period). The Knot shall pay the lump-sum payment in connection with
an
involuntary termination without cause upon such termination, and the lump-sum
payment in connection with a Good Reason resignation within 10 business days
of
the end of the Cure Period, as defined below.
An
involuntary termination “without cause” shall mean a termination of employment
other than for death, disability, termination for Cause or any resignation
by
you other than a resignation for Good Reason. “Cause” shall mean (1) your
willful failure to perform the principal elements of your duties to The Knot
or
any of its subsidiaries, which failure is not cured within 20 days following
written notice to you specifying the conduct to be cured, (2) your conviction
of, or plea of nolo contendere to, a felony (regardless of the nature of
the
felony) or any other crime involving dishonesty, fraud, or moral turpitude,
(3)
your gross negligence or willful misconduct (including but not limited to
acts
of fraud, criminal activity or professional misconduct) in connection with
the
performance of your duties and responsibilities to The Knot or any of its
subsidiaries, (4) your failure to substantially comply with the rules and
policies of The Knot or any of its subsidiaries governing employee conduct
or
with the lawful directives of the Board of Directors of The Knot, or (5)
your
breach of any non-disclosure, non-solicitation, non-competition or other
restrictive covenant obligations to The Knot or any of its subsidiaries.
“Good
Reason” shall mean (1) any reduction of your Base Salary, (2) the relocation of
your principal place of business outside of New York City, or (3) the material
diminution of your responsibilities or authority, any reduction of your title
or
any change in the reporting structure set forth in the first paragraph hereof,
provided, however, that no Good Reason shall exist if you have not given
written
notice to The Knot within ninety (90) days of the initial existence of the
Good
Reason condition(s) and until The Knot has had thirty (30) days to cure such
event (the “Cure Period”) after the date on which you give The Knot written
notice specifying such event in specific detail before such event permits
you to
terminate your employment for Good Reason.
Xx.
Xxxxxx Xxxxxxxx
August
7,
2008
Page
3
Benefits
and Other Terms
Benefits
and Expenses
You
will
continue to participate in The Knot benefits program as in effect on the
date
hereof. You will be eligible for 15 vacation days per year. A full description
of your benefits is contained in official plan documents that are available
to
you. Please be advised that The Knot reserves the right to amend, change
and
terminate its policies, programs and employee benefit plans at any time during
your employment.
At-Will
Employment
Please
understand that your employment will be “at will,” meaning that either you or
The Knot may terminate the relationship at any time, with or without cause
or
notice. Please also note that The Knot reserves the right to revise, supplement,
or rescind any of its policies, practices, and procedures (including those
described in the Employee Handbook) as it deems appropriate in its sole and
absolute discretion.
Compliance
With Section 409A of the Internal Revenue Code
The
intent of the parties is that payments and benefits under this agreement
comply
with Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”),
and the regulations and guidance promulgated thereunder (collectively, “Section
409A”), and, accordingly, to the maximum extent permitted, this agreement shall
be interpreted to be in compliance therewith. If you notify The Knot (with
specificity as to the reason therefor) that you believe that any provision
of
this agreement (or of any award of compensation, including equity compensation
or benefits) would cause you to incur any additional tax or interest under
Section 409A and The Knot concurs with such belief or The Knot (without any
obligation whatsoever to do so) independently makes such determination, The
Knot
shall, after consulting with you, reform such provision to try to comply
with
Section 409A through good faith modifications to the minimum extent reasonably
appropriate to conform with Section 409A. To the extent that any provision
hereof is modified in order to comply with Section 409A, such modification
shall
be made in good faith and shall, to the maximum extent reasonably possible,
maintain the original intent and economic benefit to you and The Knot of
the
applicable provision without violating the provisions of Section
409A.
A
termination of employment shall not be deemed to have occurred for purposes
of
any provision of this agreement providing for the payment of any amounts
or
benefits upon or following a termination of employment unless such termination
is also a “separation from service” within the meaning of Section 409A and, for
purposes of any such provision of this agreement, references to a “termination,”
“termination of employment” or like terms shall mean “separation from service.”
If you are deemed on the date of termination to be a “specified employee” within
the meaning of that term under Section 409A(a)(2)(B) of the Code, then with
regard to any payment or the provision of any benefit that is specified as
subject to this Section or that is otherwise considered deferred compensation
under Section 409A payable on account of a “separation from service,” such
payment or benefit shall be made or provided at the date which is the earlier
of
(A) the expiration of the six (6)-month period measured from the date of
such
“separation from service” and (B) the date of your death (the “Delay Period”).
Upon the expiration of the Delay Period, all payments and benefits delayed
pursuant to this Section (whether they would have otherwise been payable
in a
single sum or in installments in the absence of such delay) shall be paid
or
reimbursed to you in a lump sum, and any remaining payments and benefits
due
under this agreement shall be paid or provided in accordance with the normal
payment dates specified for them herein. For purposes of this agreement,
the
term “Separation Pay Limit” shall mean two (2) times the lesser of (A) your
annualized compensation based on your annual rate of pay for your taxable
year
preceding the taxable year in which you have a “separation from service,” and
(B) the maximum amount that may be taken into account under a tax qualified
plan
pursuant to Section 401(a)(17) of the Code for the year in which you incur
a
“separation from service.”
Xx.
Xxxxxx Xxxxxxxx
August
7,
2008
Page
4
All
expenses or other reimbursements under this agreement shall be made on or
prior
to the last day of the taxable year following the taxable year in which such
expenses were incurred by you (provided that if any such reimbursements
constitute taxable income to you, such reimbursements shall be paid no later
than March 15th of the calendar year following the calendar year in which
the
expenses to be reimbursed were incurred), and no such reimbursement or expenses
eligible for reimbursement in any taxable year shall in any way affect the
expenses eligible for reimbursement in any other taxable year.
In
the
event that it is determined that any payment or distribution of any type
to or
for your benefit, whether paid or payable or distributed or distributable,
pursuant to the terms of this agreement would be subject to the additional
tax
and interest imposed by Section 409A, or any interest or penalties with respect
to such additional tax (such additional tax, together with any such interest
or
penalties, are collectively referred to as the “409A Tax”), then you shall be
entitled to receive an additional payment (a “409A Tax Restoration Payment”) in
an amount that shall fund the payment by you of any 409A Tax as well as all
income taxes imposed on the 409A Tax Restoration Payment, any 409A Tax imposed
on the 409A Tax Restoration Payment and any interest or penalties imposed
with
respect to taxes on the 409A Tax Restoration Payment or any 409A
Tax.
* * * * *
Xx.
Xxxxxx Xxxxxxxx
August
7,
2008
Page
5
Please
indicate your acceptance of these terms by returning the original signed
and
dated version of this agreement to my attention.
Sincerely,
/s/
XXXXX
XXX
Xxxxx
Xxx
Chief
Executive Officer
By
signing, dating and returning this agreement, you accept our terms of
employment.
|
/s/
XXXXXX XXXXXXXX
|
8/7/08
|
|
Xxxxxx
Xxxxxxxx
|
Date
|
