EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT (this “Employment Agreement”), dated as of June 30, 2008, by and
between XxxXxxxxx.xxx, Inc., a Delaware corporation (the “Company” or
“XxxXxxxxx.xxx”), and Xxxx Xxxxxx (“Xxxxxx”).
WHEREAS,
the Company desires that Xxxxxx enter into this Employment Agreement, and Xxxxxx
desires to enter into this Employment Agreement, on the terms and conditions
set
forth herein;
WHEREAS,
the Company and Xx. Xxxxxx entered into an Employment Agreement dated July
5,
2006 which is set to expire on June 30, 2008
WHEREAS,
both the Company and Xx. Xxxxxx agree that this Employment Agreement shall
supersede all previous agreements between the parties including the Employment
Agreement dated July 5, 2006.
NOW
THEREFORE, the parties hereto agree as follows:
Section
1. Duties;
Term.
The
Company agrees to employ Xxxxxx, and Xxxxxx agrees to be so employed, in the
position of Chief Financial Officer and Xxxxxx agrees to perform such duties,
functions and responsibilities as are generally incident to such position,
reporting to and subject to the direction of the Chief Executive Officer, for
a
period commencing on June 30, 2008 (the “Commencement Date”) and ending on June
30, 2009, unless sooner terminated in accordance with Section 4 hereof and
shall
be renewed automatically for an additional one-year period unless the Company
or
Xxxxxx gives notice to the other party hereto not less than ninety (90) days
prior to June 30, 2009 of its or his election not to renew the Employment
Agreement, in which event the Employment Agreement shall terminate on such
date.
The period of employment under this Employment Agreement, as renewed or earlier
terminated pursuant to Section 4 below, shall be referred to in this Employment
Agreement as the “Term”. Xxxxxx agrees to perform faithfully the duties assigned
to him pursuant to this Employment Agreement to the best of his abilities and
to
devote all of his business time and attention to the Company’s business. Xxxxxx
shall be subject to all laws, rules, regulations and policies as are from time
to time applicable to employees of the Company including XxxXxxxxx.xxx’s Policy
on Investments, and will be required to comply fully with the provisions of
all
written supervisory procedures and other relevant securities and disciplinary
policies relevant to his position with the Company.
Section
2. Compensation.
(a)
Annual
Salary.
As
compensation for his services hereunder, during the Term the Company shall
pay
to Xxxxxx a salary of Two Hundred and Seventy-six Thousand Dollars ($276,000)
per annum, payable in accordance with the Company’s standard payroll policies,
and less all applicable federal, state and local withholding taxes (the “Annual
Salary”). The Annual Salary shall be reviewed at least annually during the Term,
and may be increased in the sole discretion of the Company’s Chief Executive
Officer and the Compensation Committee of the Company’s Board of Directors (the
“Board”), taking into consideration both the Company’s and Xxxxxx’x performance
during the preceding year.
(b)
Bonus.
Except
as set forth in Section 4 hereof, in addition to the Annual Salary, Xxxxxx
shall
be entitled to receive additional bonus compensation under the Company's 2007
Performance Incentive Plan (the "Plan"), payable at year end or shortly
thereafter, which may be cash and/or equity compensation, for his employment
during each calendar year of the Term (the "Annual Bonus"). Xxxxxx'x Annual
Bonus will be calculated in accordance with the formulas specified in the
Agreement for Grant of Cash Performance Award Under 2007 Performance Incentive
Plan which is attached hereto as Exhibit
A and incorporated herein by reference.
Each
calendar year of the Term the Company will issue a new Agreement for Grant
of
Performance Based Award as determined by the Compensation Committee of the
Board
of Directors.
(c)
In
addition to the Annual Salary, the Annual Bonus and the stock options, Xxxxxx
may, in the discretion of the Compensation Committee of the Company’s Board of
Directors, be granted awards under the Plan on an annual or other basis as
compensation for the performance of his services hereunder.
Section
3. Benefits;
Expense Reimbursement.
During
the Term, Xxxxxx shall be eligible to participate in any group insurance,
accident, sickness and hospitalization insurance, and any other employee benefit
plans of the Company in effect during the Term and available to the Company’s
executive officers, and Xxxxxx shall have the right to reimbursement, upon
proper accounting, of reasonable expenses and disbursements incurred by him
in
the course of his duties hereunder. In addition, during each year of the Term,
Xxxxxx shall be entitled to three (3) weeks of paid vacation.
2
Section
4. Employment
Termination.
(a)
At
any time during the Term, and except as otherwise provided in Sections 4(b)
and
4(c) hereof, the Company shall only have the right to terminate this Employment
Agreement and Xxxxxx’x employment with the Company hereunder, upon written
notice to Xxxxxx, in the event Xxxxxx engages in conduct which constitutes
“Cause.” For purposes of this Employment Agreement, Cause shall mean (i)
Xxxxxx’x willful misconduct or gross negligence in the performance of his
obligations under this Employment Agreement, (ii) dishonesty or misappropriation
by Xxxxxx relating to the Company or any of its funds, properties, or other
assets, (iii) inexcusable repeated or prolonged absence from work by Xxxxxx
(other than as a result of, or in connection with, a disability), (iv) any
unauthorized disclosure by Xxxxxx of confidential or proprietary information
of
the Company, which is reasonably likely to result in material harm to the
Company, (v) a conviction of Xxxxxx (including entry of a guilty or nolo
contendere plea) involving fraud, dishonesty, moral turpitude, or involving
a
violation of federal or state securities laws, or (vi) the failure by Xxxxxx
to
perform faithfully his duties hereunder or other breach by Xxxxxx of this
Employment Agreement and such failure or breach is not cured, to the extent
cure
is possible, by Xxxxxx within thirty (30) days after receipt of written notice
thereof from the Company to Xxxxxx. If this Employment Agreement and Xxxxxx’x
employment with the Company hereunder is terminated for Cause, or if Xxxxxx
voluntarily resigns from the Company without Good Reason, during the Term,
the
Company shall pay Xxxxxx an amount equal to all earned but unpaid portions
of
the Annual Salary and unused vacation days through the date of termination,
and
following any such termination, Xxxxxx shall not be entitled to receive any
other compensation or benefits from the Company hereunder.
(b)
This
Employment Agreement and Xxxxxx’x employment with the Company hereunder may also
be terminated by the Company without Cause, or by Xxxxxx upon the occurrence
of
an event constituting Good Reason. For purposes of this Employment Agreement,
“Good Reason” shall mean (i) the failure of the Company to cure a material
adverse change made by it in Xxxxxx’x functions, duties, or responsibilities in
his positions with the Company as provided in this Employment Agreement, or
(ii)
a reduction in the Annual Salary during the Term, or (iii) the failure of the
Company to cure any other material breach of this Employment Agreement, or
(iv)
in connection with the occurrence of a Change of Control, there is a significant
reduction of Xxxxxx’x authority, duties or responsibilities relative to his
authority, duties or responsibilities in effect immediately prior to such
reduction; provided,
however,
that
the
foregoing provision shall not include a reduction in duties or responsibilities
solely by virtue of the Company being acquired and made part of a larger entity
(as, for example, if Xxxxxx is not appointed as Chief Financial Officer of
the
acquiring corporation, but continues to have a substantially similar level
of
responsibility over the affairs of the Company following such Change of
Control), or (v) Xxxxxx’x relocation by the Company or a successor thereto to a
location more than fifty (50) miles from either the Company’s current
headquarters or Xxxxxx’x home address, provided that,
in the
case of (i), (ii), or (iii) above, the Company has failed to cure the event
constituting Good Reason within thirty (30) days following written notice
thereof from Xxxxxx.
3
In
the
event that Xxxxxx’x employment is terminated by the Company without Cause, or by
Xxxxxx with Good Reason, then the Company shall pay or provide to Xxxxxx, as
his
sole and exclusive remedy hereunder, upon delivery by Xxxxxx to the Company
of a
customary release, (A) an amount equal to all earned but unpaid portions of
the
Annual Salary and unused vacation days through the date of termination, (B)
group life, disability, sickness, hospitalization and accident insurance
benefits equivalent to those to which Xxxxxx would have been entitled if he
had
continued working for the Company for an additional twelve (12) month period,
and (C) the Annual Salary to the same extent to which Xxxxxx would have been
entitled if he had continued working for the Company for an additional two
year
(2) period.
The
benefits continuation and salary payments provided for above shall be contingent
upon Xxxxxx’x continued compliance with Sections 5 and 6 hereof,. Additionally,
the benefits continuation provided for in (B) above shall terminate upon
Xxxxxx’x becoming eligible for corresponding benefits in connection with new
employment. Except as set forth above, Xxxxxx shall not be entitled to receive
any other compensation or benefits from the Company hereunder.
(c)
This
Employment Agreement and Xxxxxx’x employment with the Company hereunder shall
terminate immediately and automatically upon (i) the death or Disability (as
defined below) of Xxxxxx, (ii) the liquidation or dissolution of the Company
or
other shutdown of the business then conducted by the Company, or (iii) the
expiration of the Term. For purposes of this Employment Agreement, “Disability”
shall mean physical or mental incapacity of a nature which prevents Xxxxxx,
in
the good faith judgment of the Company’s Board of Directors, from performing his
duties under this Employment Agreement for a period of 90 consecutive days
or
150 days during any year with each year under this Employment Agreement
commencing on each anniversary of the date hereof. If this Employment Agreement
and Xxxxxx’x employment with the Company hereunder is terminated on account of
(i) or (ii) above, then the Company shall pay Xxxxxx, or his estate, conservator
or designated beneficiary, as the case may be, an amount equal to (A) all earned
but unpaid portions of the Annual Salary and unused vacation days through the
date of termination, and following any such termination, neither Xxxxxx, nor
his
estate, conservator or designated beneficiary, as the case may be, shall be
entitled to receive any other compensation or benefits from the Company
hereunder.
(d)
Upon
the termination of this Employment Agreement pursuant to Section 4 hereof,
the
Company shall have no further obligations under this Employment Agreement;
provided,
however,
that
Sections 5 through 18 hereof shall survive and remain in full force and
effect.
Section
5. Non-Competition.
Except
in
the event of a termination of Xxxxxx’x employment hereunder by the Company
without Cause or by Xxxxxx for Good Reason:
4
(a)
Xxxxxx hereby agrees that, during the period from the Commencement Date through
the end of the first nine (9) months after the cessation of Xxxxxx’x employment
with the Company, he will not engage in “Competition” with the Company. For
purposes of this Employment Agreement, Competition by Xxxxxx shall mean Xxxxxx’x
engaging in, or otherwise directly or indirectly being employed by or acting
as
a consultant or lender to, or being a director, officer, employee, principal,
agent, stockholder, member, owner or partner of, or permitting his name to
be
used in connection with the activities of any other business or organization
anywhere in the United States which engages in the business of providing
original editorial financial news content over the Internet; provided,
however,
that,
notwithstanding the foregoing, it shall not be a violation of this Section
5(a)
for Xxxxxx to become the registered or beneficial owner of up to three percent
(3%) of any class of the capital stock of a competing corporation registered
under the Securities Exchange Act of 1934, as amended, provided that Xxxxxx
does
not otherwise participate in the business of such corporation.
(b)
Xxxxxx hereby agrees that, during the period from the Commencement Date through
the end of the first twelve (12) months after the cessation of Xxxxxx’x
employment with the Company, he will not solicit for employment or hire, in
any
business enterprise or activity, any person who was employed by the Company
during the Term.
Section
6. Confidentiality;
Intellectual Property.
(a)
Except as otherwise provided in this Employment Agreement, at all times during
and after the Term, Xxxxxx shall keep secret and retain in strictest confidence,
any and all confidential information relating to the Company, and shall use
such
confidential information only in furtherance of the performance by him of his
duties to the Company and not for personal benefit or the benefit of any
interest adverse to the Company’s interests. For purposes of this Employment
Agreement, “confidential information” shall mean any information, including,
without limitation, plans, specifications, models, samples, data, customer
lists
and customer information, computer programs and documentation, and other
technical and/or business information, in whatever form, tangible or intangible,
that can be communicated by whatever means available at such time, that relates
to the Company’s current business or future business contemplated during the
Term, or that relates to the products or services offered or at any time
contemplated to be offered by the Company, or the development thereof, and
any
information received from others that the Company is obligated to treat as
confidential or proprietary (provided that
such
confidential information shall not include any information that (a) has become
generally available to the public other than as a result of a disclosure by
Xxxxxx, or (b) was available to or became known to Xxxxxx prior to the
disclosure of such information on a non-confidential basis without breach of
any
duty of confidentiality from any party to the Company), and shall not disclose
such confidential information to any Person other than the Company, except
as
may be required by law or court or administrative order (in which event Xxxxxx
shall so notify the Company as promptly as practicable). Upon termination of
the
Term for any reason, Xxxxxx shall return to the Company all copies,
reproductions and summaries of confidential information in his possession and
erase the same from all media in his possession, and, if the Company so
requests, shall certify in writing that he has done so. All confidential
information is and shall remain the property of the Company as applicable (or,
in the case of information that the Company received from a third party which
it
is obligated to treat as confidential, then the property of such third
party).
5
(b)
All
Intellectual Property (as hereinafter defined) and Technology (as hereinafter
defined) created, developed, obtained or conceived of by Xxxxxx during the
Term,
and all business opportunities presented to Xxxxxx during the Term, shall be
owned by and belong exclusively to the Company, provided that they reasonably
relate to any of the business of the Company on the date of such creation,
development, obtaining or conception, and Xxxxxx shall (i) promptly disclose
any
such Intellectual Property, Technology or business opportunity to the Company,
and (ii) execute and deliver to the Company, without additional compensation,
such instruments as the Company may require from time to time to evidence its
ownership of any such Intellectual Property, Technology or business opportunity.
For purposes of this Employment Agreement, (x) the term “Intellectual Property”
means and includes any and all trademarks, trade names, service marks, service
names, patents, copyrights, and applications therefor, and (y) the term
“Technology” means and includes any and all trade secrets, proprietary
information, invention, discoveries, know-how, formulae, processes and
procedures.
Section
7. Covenants
Reasonable.
The
parties acknowledge that the restrictions contained in Sections 5 and 6 hereof
are a reasonable and necessary protection of the immediate interests of the
Company, and any violation of these restrictions would cause substantial injury
to the Company and that the Company would not have entered into this Employment
Agreement, without receiving the additional consideration offered by Xxxxxx
in
binding himself to any of these restrictions. In the event of a breach or
threatened breach by Xxxxxx of any of these restrictions, the Company shall
be
entitled to apply to any court of competent jurisdiction for an injunction
restraining Xxxxxx from such breach or threatened breach; provided however,
that
the right to apply for an injunction shall not be construed as prohibiting
the
Company from pursuing any other available remedies for such breach or threatened
breach.
Section
8. No
Third Party Beneficiary.
This
Employment Agreement is not intended and shall not be construed to confer any
rights or remedies hereunder upon any Person, other than the parties hereto
or
their permitted assigns. “Person” shall mean an individual, corporation,
partnership, limited liability company, limited liability partnership,
association, trust or other unincorporated organization or entity.
6
Section
9. Notices.
Unless
otherwise provided herein, any notice, exercise of rights or other communication
required or permitted to be given hereunder shall be in writing and shall be
given by overnight delivery service such as Federal Express, telecopy (or like
transmission) or personal delivery against receipt, or mailed by registered
or
certified mail (return receipt requested), to the party to whom it is given
at
such party’s address set forth below such party’s name on the signature page or
such other address as such party may hereafter specify by notice to the other
party hereto. Any notice or other communication shall be deemed to have been
given as of the date so personally delivered or transmitted by telecopy or
like
transmission or on the next business day when sent by overnight delivery
service.
Section
10. Representations.
The
Company hereby represents and warrants that the execution and delivery of this
Employment Agreement and the performance by the Company of its obligations
hereunder have been duly authorized by all necessary corporate action of the
Company.
Section
11. Amendment.
This
Employment Agreement may be amended only by a written agreement signed by the
parties hereto.
Section
12.
Assignment and Delegation; Binding
Effect.
Neither
party may assign any of its rights or delegate any performance under this
Employment Agreement without the prior written consent of the other, provided,
however, that the Company may assign this Employment Agreement without Xxxxxx’x
prior written consent (i) in connection with any merger, consolidation, any
sale
of all or substantially all of the Company’s assets or any other transaction in
which more than fifty percent (50%) of the Company’s voting securities are
transferred; or (ii) to any subsidiary, affiliate, joint venture, partnership
or
limited liability company in which the Company has a majority interest. Any
purported assignment of rights or delegation of performance in violation of
this
Section is void. None of Xxxxxx’x rights under this Employment Agreement shall
be subject to any encumbrances or the claims of Xxxxxx’x creditors.
This
Employment Agreement shall bind and benefit the Company and any successor
organization which shall succeed to the Company by merger or consolidation
or
operation of law, or by acquisition of all or substantially all of the assets
of
the Company (provided that a successor by way of acquisition of assets shall
have undertaken in writing to assume the obligations of the Company
hereunder).
7
Section
13. Governing
Law.
This
Employment Agreement shall be governed by and construed in accordance with
the
internal laws of the State of New York applicable to contracts to be performed
wholly within the state and without regard to its conflict of laws
provisions.
Section
14. Severability.
If
any
provision of this Employment Agreement, including those contained in Sections
5
and 6 hereof, shall for any reason be held invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions hereof
shall not be affected or impaired thereby. Moreover, if any one or more of
the
provisions of this Employment Agreement, including those contained in Sections
5
and 6 hereof, shall be held to be excessively broad as to duration, activity
or
subject, such provisions shall be construed by limiting and reducing them so
as
to be enforceable to the maximum extent allowable by applicable law. To the
extent permitted by applicable law, each party hereto waives any provision
of
law that renders any provision of this Employment Agreement invalid, illegal
or
unenforceable in any way.
Section
15. Execution
in Counterparts.
This
Employment Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original and all of which shall constitute one and
the
same instrument.
Section
16. Entire
Agreement.
This
Employment Agreement, together with the Option Agreement, sets forth the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter hereof and
thereof.
Section
17. Titles
and Headings.
Titles
and headings to Sections herein are for purposes of reference only, and shall
in
no way limit, define or otherwise affect the meaning or interpretation of any
of
the provisions of this Employment Agreement.
Section
18. Conflicts
of Interest.
Xxxxxx
specifically covenants, warrants and represents to the Company that he has
the
full, complete and entire right and authority to enter into this Employment
Agreement, that he has no agreement, duty, commitment or responsibility of
any
kind or nature whatsoever with any corporation, partnership, firm, company,
joint venture or other entity or other Person which would conflict in any manner
whatsoever with any of his duties, obligations or responsibilities to the
Company pursuant to this Employment Agreement, that he is not in possession
of
any document or other tangible property of any other Person of a confidential
or
proprietary nature which would conflict in any manner whatsoever with any of
his
duties, obligations or responsibilities to the Company pursuant to his
Employment Agreement, and that he is fully ready, willing and able to perform
each and all of his duties, obligations and responsibilities to the Company
pursuant to this Employment Agreement.
8
Section
19. Consent
to Jurisdiction.
Xxxxxx
hereby irrevocably submits to the jurisdiction of any New York State or Federal
court sitting in the City of New York in any action or proceeding to enforce
the
provisions of this Employment Agreement, and waives the defense of inconvenient
forum to the maintenance of any such action or proceeding.
Section
20. Section
409A.
(a)
Notwithstanding any provision of this Employment Agreement to the contrary,
if
Xxxxxx is a “specified employee” as defined under Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended or any regulations or Treasury
guidance promulgated thereunder, Xxxxxx shall not be entitled to any payments
upon a termination of his employment until the earlier of (i) the date which
is
six months after his termination of employment for any reason other than
death
or (ii) the date of his death. The provisions of this Section 20(a) shall
only
apply if required to comply with Section 409A.
(b)
If
any provision of this Employment Agreement (or of any award of compensation,
including equity compensation or benefits) would cause Xxxxxx to incur any
additional tax or interest under Section 409A, the parties agree to negotiate
in
good faith to reform such provision in such manner as to maintain, to the
maximum extent practicable, the original intent and economic terms of the
applicable provision without violating the provisions of Section 409A.
[END
OF
TEXT]
9
IN
WITNESS WHEREOF, the undersigned have executed this Employment Agreement
as of
the date first written above.
|
/s/
Xxxx Xxxxxx
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Xxxx.
Xxxxxx
|
|||
|
000
Xxxxxxx Xxxxxx
|
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|
Xxxxxxxx,
XX 00000
|
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|
XXXXXXXXX.XXX,
INC.
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|
By:
|
/s/
Xxx Xxxxxx
|
||
|
Xxxxxx
X. Xxxxxx, Xx.
|
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|
Chief
Executive Officer
|
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|
Address:
|
00
Xxxx Xxxxxx
|
||
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00xx
Xxxxx
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|
Xxx
Xxxx, XX 00000
|
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Telephone
No.: (000) 000-0000
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|
Fax
No.: (000) 000-0000
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10
EXHIBIT
A
XXXXXXXXX.XXX,
INC.
AGREEMENT
FOR GRANT
OF
CASH
PERFORMANCE AWARD
UNDER
2007
PERFORMANCE INCENTIVE PLAN
May
15, 2007
Xxxx
Xxxxxx
000
Xxxx
Xxxxxx Xxxxx, 0X
Xxxxxxxx,
XX 00000
Dear
Xxxx:
This
letter (the “Letter”)
sets
forth the terms and conditions of the grant of a cash performance award (the
“Award”)
made
to you by XxxXxxxxx.xxx, Inc. (the “Company”)
under
the Company’s 2007 Performance Incentive Plan (the “Plan”).
Your
Award is subject to stockholder approval of the Plan at the Company’s 2007
Annual Meeting of Stockholders.
Your
Award is subject to the terms and conditions set forth in the Plan, any rules
and regulations adopted by the Board of Directors of the Company or the
committee of the Board which administer the Plan (collectively, the
“Committee”),
and
this Letter.
Any
capitalized term used in this Letter and not defined shall have the meaning
set
forth in the Plan.
In
general, the amount of your potential bonus is expressed as a Target
Bonus, which
is
the amount of your Award that you will earn if the Performance Objectives
specified in this Letter are achieved at the 100% level. The amount payable
under your Award may be more or less than your Target Bonus, depending on
the
level of performance achieved. The Committee’s determination of the level of
achievement of the performance measures shall be final and binding on
you.
Target
Bonus.
Your
award consists of a short term incentive (“STI”)
and a
long term incentive (“LTI”).
Your
Target Bonus for the STI is 65% of your $265,000 current annual base salary,
or
$172,250. Your Target Bonus for the LTI is 65% of your current annual base
salary, or $172,250.
Performance
Period.
The
Performance
Period
for this
Award is January 1, 2007 through December 31, 2007.
11
Performance
Objectives and Payout Scale - STI.
Your
Short Term Incentive will be based on the objectives set forth in Schedule
A
hereto.
The
Target level of performance for each of these performance objectives is the
amount set forth in the Company’s budget for 2007 as approved by the Board. The
amount of your Award will be determined separately for each of these performance
measures. Failure to attain one measure will not affect your ability to earn
a
bonus with respect to the other measure.
The
amount payable for the Short-Term Incentive will be calculated in accordance
with the sliding payout scale set forth in Schedule
A
hereto.
Payment
of Short-Term Incentive
Your
Short Term Incentive will
be
paid in a lump sum in cash within 60 calendar days after the end of calendar
year 2007, provided that you are continuously employed by the Company through
December 31, 2007.
Performance
Objectives - LTI.
Your
Long
Term Incentive will vest on December 31, 2007 and will be calculated based
on
the Company’s Enterprise Multiple for 2007, as described below.
The
Long
Term Incentive opportunity is earned based upon the Company’s Enterprise
Multiple (as defined below) as compared to the Peer Group in the plan year,
on a
sliding scale calculated between a range centered on the 2006 Benchmark (as
defined below).
1. Definitions
Enterprise
Multiple:
The
formula for calculating Enterprise Multiple is as follows:
a. Enterprise
Value
____________________________
Adjusted
EBITDA (as defined) TTM
Enterprise
Value:
Enterprise Value is calculated as follows:
Market
Capitalization + Total Debt - Cash & Cash Equivalents
EBITDA:
Earnings
before Interest, Taxes, Depreciation and Amortization
EBITDA
is
adjusted by excluding all of the following events that occur during the
performance period: (i) asset write-downs, (ii) litigation or claim judgments
or
settlements, (iii) the effect of changes in tax laws, accounting principles,
or
other laws or provisions affecting reported results, (iv) any reorganization
and
restructuring programs, (v) extraordinary nonrecurring items as described
in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to stockholders for the applicable year, (vi) the impact
of adjustments to a deferred tax asset valuation allowance, (vii) acquisitions
or divestitures, and (viii) foreign exchange gains and losses. If any company
in
the Peer Group is acquired or delisted during the year, that company will
be
excluded from the Peer Group for the full year in calculating the amount
of your
Long Term compensation Incentive.
12
To
ensure
consistency with the application of this provision, EBITDA will be calculated
as
Operating Income, before Depreciation and Amortization, as reported from
Thomson
Financial, and then adjusted as outlined above.
For
purposes of calculating the Enterprise Multiple, the previous four reported
quarters will be used to calculate a trailing 12 months EBITDA.
Peer
Group:
The Peer
Group used for calculating the Long Term Incentive is set forth on Schedule
B
hereto:
2006
Benchmark:
The
2006 Benchmark is set forth on Schedule B hereto.
Calculation
of the 2007 Long Term Incentive Award
At
the
end of 2007, the average of the Enterprise Multiple as calculated on the
last
trading day of each calendar quarter in 2007 will be calculated for the Company
and each member of the Peer Group. The Company’s performance relative to the
Peer Group median Enterprise Multiple will then be compared against the 2006
Benchmark, and the Long Term Compensation award for each participant will
be
calculated on a sliding scale as set forth on Schedule
B:
Payment
of Long Term Incentive
Your
Long
Term Incentive award will be converted into a number of phantom shares of
the
Company’s common stock (“2007 Phantom
Shares”)
by
dividing the amount of the award earned by the closing price of the Common
Stock
on December 31, 2007 (the last day of the performance period). Your 2007
Phantom
Shares will be credited to a bookkeeping phantom stock account maintained
by the
Company. When dividends are paid on the Company’s common stock, the Phantom
Shares will be credited with dividend equivalents, which will be converted
into
additional 2007 Phantom Shares based on the closing price of the common stock
on
the dividend payment date.
On
December 31, 2008, provided that you are employed by the Company on such
date,
one-third of your 2007 Phantom Shares will vest. These phantom shares will
be
valued based on the closing price of the Company’s common stock on December 31,
2008, and payment of their value will be made in cash within 60 days thereafter.
On
December 31, 2009, provided that you are employed by the Company on such
date,
one-half of your remaining 2007 Phantom Shares will vest. These phantom shares
will be valued based on the closing price of the Company’s common stock on
December 31, 2009, and payment of their value will be made in cash within
60
days thereafter.
On
December 31, 2010, provided that you are employed by the Company on such
date,
all of your remaining 2007 Phantom Shares will vest. These Phantom Shares
will
be valued based on the closing price of the Company’s common stock on December
31, 2010, and payment of their value will be made in cash within 60 days
thereafter.
13
Termination
of Employment
In
the
event of your termination of employment before December 31, 2007, you will
not
be entitled to any portion of your STI or LTI. In the event of your termination
of employment after December 31, 2007, you will be entitled to your STI and
to
those portions of your LTI which have vested before your termination of
employment. If your termination of employment after December 31, 2007 is
as a
result of your death, all unvested 2007 Phantom Shares credited to your account
will vest and be paid out at or as soon as practicable after your death,
based
on the value of the common stock on the last day of the calendar quarter
immediately preceding the date of death. In the event of your death, all
payments due under this Award will be made to your duly designated beneficiary
or your estate.
Change
of Control
In
the
event of a Change of Control (as defined in the Plan) during 2007, your STI
and
LTI for the current performance period will be paid out within 30 days of
the
Change of Control at the target award level, pro rated for the portion of
the
performance period completed prior to the Change of Control. If a Change
of
Control occurs after December 31, 2007, (1) all vested amounts of your STI
and
LTI will be paid out as provided above and (2) all unvested 2007 Phantom
Shares
credited to your account will vest and be paid out at or as soon as practicable
after the effective time of such Change of Control, based on the value of
the
common stock at the effective time of the Change of Control (or, if the Change
of Control is not a permissible payment event under Section 409A of the Code,
at
the earliest permitted payment date based on the value of the common stock
on
the last day of the calendar quarter immediately preceding the date of permitted
payment).
Income
Tax Withholding
You
will
be required to pay, pursuant to such arrangements as the Company may establish
from time to time, any applicable federal, state and local withholding tax
liability at the time that the value of the STI and any portion of the LTI
Award
become includable in your income.
No
Guarantee of Continuation of Employment
This
Award does not constitute an assurance of continued employment for any period
or
in any way interfere with the Company’s right to terminate your employment or to
change the terms and conditions of your employment.
Administration
The
Committee has the sole power to interpret the Plan and this Letter and to
act
upon all matters relating to this Award. Any decision, determination,
interpretation, or other action taken pursuant to the provisions of the Plan
and
this Letter by the Committee shall be final, binding, and
conclusive.
14
Amendment
The
Committee may from time to time amend the terms of this Award in accordance
with
the terms of the Plan in effect at the time of such amendment, but no amendment
that results in a materially adverse impact to the value of your Award can
be
made without your written consent.
The
Plan
is of unlimited duration, but may be amended, terminated or discontinued
by the
Board of Directors of the Company at any time. However, no amendment,
termination or discontinuance of the Plan that results in a materially adverse
impact to the value of your Award will be made without your written consent.
An
amendment of the Plan or of this Award that accelerates the time of payment
of
your Award shall not be deemed to result in a materially adverse impact to
the
value of your Award.
Notwithstanding
the foregoing provisions of this Section 12, the Committee expressly reserves
the right to amend
the
terms of the Plan and this Award without your consent to the extent it
determines that such amendment is necessary or desirable for compliance with
Section 409A of the Code.
Miscellaneous
This
Award may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution, and any attempted sale, transfer, pledge, assignment,
participation, or other alienation or hypothecation in violation of the
foregoing shall be null and void.
Amounts
payable pursuant to this Award will be paid solely from the general assets
of
the Company, and your rights hereunder will be no greater than those of an
unsecured general creditor of the Company.
This
Letter and the applicable provisions of the Plan constitute the entire
agreement, and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to this Award.
______________________
15
This
Letter contains the formal terms and conditions of your Award and accordingly
should be retained in your files for future reference. The Company may require
you to provide evidence of your acknowledgment of this Letter using such
means
of notification as may be communicated to you by the Company or its service
provider.
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Very
truly yours,
XXXXXXXXX.XXX,
INC.
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| By: |
/s/ Xxxxxx
X.
Xxxxxx
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Xxxxxx
X. Xxxxxx, Xx.
Chief
Executive Officer
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AGREED
TO AND ACCEPTED:
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/s/
Xxxx Xxxxxx
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Xxxx
Xxxxxx
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