Exhibit 10.13
May 17, 2000
Xx. Xxxxxxxxx X. Xxxxxxx
XXX.XXX INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Dear Xxxx:
This letter agreement (this "Agreement") sets forth the terms of
your employment with XXX.XXX INC. ("XXX.XXX").
DUTIES. You shall serve as an officer of XXX.XXX or in a
substantially similar position with any entity that acquires XXX.XXX or all
or substantially all of XXX.XXX's assets (other than Florists' Transworld
Delivery, Inc. or IOS BRANDS Corporation or any of their other direct or
indirect subsidiaries) through May 17, 2003 and shall perform the duties
assigned by XXX.XXX from time to time. You shall devote your entire business
time to the affairs of XXX.XXX, to the performance of your duties under this
Agreement and to the promotion of XXX.XXX's interests.
COMPENSATION. As full compensation for the performance by you of
your duties under this Agreement, XXX.XXX shall compensate you as follows:
(a) SALARY. During the term of this Agreement, XXX.XXX shall pay
to you a salary of $210,000 per year, payable in the periodic installments
ordinarily paid by XXX.XXX to employees of XXX.XXX at comparable levels
to you. You shall be entitled to such merit increases in base salary as the
Board of Directors may determine, in its discretion.
(b) PERFORMANCE BONUS. You shall be entitled to participate in a
performance bonus as set by the Board of Directors based upon performance
criteria to be set by the Board. If your employment with XXX.XXX is
terminated for any reason other than "cause" (as defined below under
"Severance") following a Change in Control (as defined in XXX.XXX's 1999
Equity Incentive Plan), you shall be entitled to received a pro rata bonus
for the applicable fiscal year if you are entitled to one based upon the
performance criteria set by the Board.
(c) RESTRICTED STOCK AWARD. You have been awarded XXX.XXX stock
pursuant to a restricted share agreement in the form of EXHIBIT A.
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May 17, 2000
Page 2
(d) PAID VACATION. You shall be entitled to four weeks of paid
vacation per year in accordance with XXX.XXX's policies with respect to
vacations then in effect.
(e) BENEFITS. You shall be entitled to the additional
employment-related benefits that are made available from time to time to
employees of XXX.XXX at comparable levels to you.
(f) EXPENSE REIMBURSEMENT. XXX.XXX shall reimburse you, in
accordance with the practice from time to time in effect for other employees
of XXX.XXX, for all reasonable and necessary travel expenses and other
disbursements incurred by you, for or on behalf of XXX.XXX, in the
performance of your duties under this Agreement. In addition, upon
presentation of itemized vouchers, XXX.XXX shall reimburse you for (i) travel
expenses from your home in the Cleveland, Ohio area to XXX.XXX's principal
executive offices and related lodging expenses in the area of XXX.XXX's
principal executive offices (the "Remote Living Arrangement") and (ii) any
taxes payable by you as a result of the Remote Living Arrangement. XXX.XXX
may terminate the Remote Living Arrangement upon 90 days' prior written
notice to you. If XXX.XXX requests that you relocate to the area in which
XXX.XXX's principal executive offices are located in connection with such
termination of the Remote Living Arrangement, you shall be entitled to be
reimbursed by XXX.XXX for reasonable relocation expenses if you agree to
relocate.
SEVERANCE. XXX.XXX shall have the right to terminate your employment
by giving you written notice of the effective date of the termination. If
your employment is terminated (i) without "cause" by XXX.XXX or (ii) by you
following (A) your assignment to a position that represents a material
diminution in your operating responsibilities (it being understood that a
change in your title shall not by itself entitle you to terminate your
employment and receive the right to severance payments under this paragraph)
or (B) a termination of the Remote Living Arrangement by XXX.XXX (it being
understood that you shall not be entitled to terminate your employment and
receive the right to severance payments under this paragraph if XXX.XXX
requests that you relocate to the area in which XXX.XXX's principal executive
offices are located in connection with such termination of the Remote Living
Arrangement and you agree to relocate), XXX.XXX will pay you continued salary
for one year from the effective date of any such termination of employment
and any pro rata bonus to which you may be entitled pursuant to this
Agreement. XXX.XXX's severance obligations are subject to your best efforts
to mitigate. XXX.XXX shall have no further obligation hereunder.
For purposes of this Agreement, "cause" means any of the following
events that XXX.XXX or the XXX.XXX Board of Directors has determined, in good
faith, has occurred: (i) your continual or deliberate neglect of the
performance of your material duties; (ii) your failure to devote
substantially all of your working time to the business of XXX.XXX and its
subsidiaries or affiliated companies; (iii) your engaging willfully in
misconduct in connection with the performance of any of your duties,
including, without limitation, the misappropriation of funds or securing or
attempting to secure personally any profit in connection with any transaction
entered into on behalf of XXX.XXX or its subsidiaries or affiliated
companies; (iv) your willful breach of any confidentiality or nondisclosure
agreements with XXX.XXX (including this
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May 17, 2000
Page 3
Agreement) or your violation, in any material respect, of any code or
standard of behavior generally applicable to employees or executive employees
of XXX.XXX; (v) your active disloyalty to XXX.XXX, including, without
limitation, willfully aiding a competitor or improperly disclosing
confidential information; or (vi) your engaging in conduct that may
reasonably result in material injury to the reputation of XXX.XXX, including
conviction or entry of a plea of nolo contendre for a felony or any crime
involving fraud under Federal, state or local laws, embezzlement, bankruptcy,
insolvency or general assignment for the benefit of creditors.
CONFIDENTIAL INFORMATION AND NON-COMPETITION. You agree to enter
into a separate agreement with XXX.XXX (attached hereto as Exhibit B) that
provides for (i) non-disclosure of confidential information, (ii)
non-competition and (iii) non-solicitation of customers, suppliers and
employees. This Agreement shall not be effective until you have executed and
delivered such agreement to the Company.
LIMITATION ON PAYMENTS AND BENEFITS. Notwithstanding any other
provision of this Agreement to the contrary, in the event that it shall be
determined (as hereafter provided) that any payment or distribution by
XXX.XXX or any of its affiliates to you or for your benefit, whether paid or
payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without limitation any stock
option, performance share, performance unit, stock appreciation right or
similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing, would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code") (or any successor provision thereto), by reason of being
considered "contingent on a change in ownership or control" of XXX.XXX within
the meaning of Section 280G of the Code (or any successor provision thereto),
or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such taxes, then such payments and benefits to be
paid or provided shall be reduced to an amount (but not below zero) that
would result in the maximum possible net after tax receipts to you from all
such payments or distributions (determined by reference to the present value
determined in accordance with Section 280G(d)(4) of the Code (or any
successor provision thereto) of all such payments net of all such taxes, or
any interest or penalties with respect to such taxes, determined by applying
the highest marginal rate under Section 1 of the Code (or any successor
provision thereto) that applied to your taxable income for the immediately
preceding taxable year) (the "Reduced Amount"). The fact that your payments
or benefits may be reduced by reason of the limitations contained in this
paragraph will not of itself limit or otherwise affect any of your other
rights other than pursuant to this Agreement. If it is determined that you
should receive a Reduced Amount, XXX.XXX will provide you notice to that
effect and a copy of the detailed calculation thereof. You will then be
entitled to designate the payments or benefits to be so reduced in order to
give effect to this paragraph. In the event that you fail to make such
designation within ten business days of notification of the reduction in
payments or benefits is required pursuant to this paragraph, XXX.XXX may
effect such reduction in any manner it deems appropriate.
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May 17, 2000
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MISCELLANEOUS. This Agreement shall be governed by the internal
laws of the State of Illinois, excluding the conflicts-of-law principles
thereof. You and XXX.XXX consent to jurisdiction and venue in any federal or
state court in the City of Chicago. This Agreement and the accompanying
EXHIBITS A and B state our entire agreement and understanding regarding your
employment with XXX.XXX. This agreement may be amended only by a written
document signed by both you and XXX.XXX. No delay or failure to exercise any
right under this Agreement waives such rights under the Agreement. If any
provision of this Agreement is partially or completely invalid or
unenforceable, then that provision shall only be ineffective to such extent
of its invalidity or unenforceability, and the validity or enforceability of
any other provision of this Agreement shall not be affected. Any controversy
relating to this Agreement shall be settled by arbitration in Chicago,
Illinois in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, except as otherwise provided in the Confidentiality
and Non-Competition agreement attached hereto as EXHIBIT B. In the event of
any inconsistency between this Agreement and any personnel policy or manual
of XXX.XXX with respect to any matter, this Agreement shall govern the matter.
Sincerely,
/s/ XXXXXXX XXXXX
Xxxxxxx Xxxxx
Chairman of the Board
Accepted as of this
17th day of May, 2000
/s/ XXXXXXXXX X. XXXXXXX
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Xxxxxxxxx X. Xxxxxxx
