January 8, 2001
Xx. Xxx Xxxxxxxxxxx
0000 Xxxxx Xxxx
Xxxxxxx, Xxxxxx 00000
Dear Xxx:
This letter agreement (this "Agreement") sets forth the terms of your
employment with XXX.XXX INC. ("XXX.XXX").
1. 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 January 8, 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.
2. 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 $200,000 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) STOCK OPTION AWARD. You have been awarded options to purchase XXX.XXX
Class A common stock pursuant to a stock option agreement in the form of EXHIBIT
A.
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January 8, 2001
Page 2
(d) PAID VACATION. You shall be entitled to four weeks of paid vacation
during calendar year 2001 and each year thereafter 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 reasonable relocation expenses, not to exceed $50,000,
relating to your relocation to the area in which XXX.XXX's principal executive
offices are located.
3. 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 without "cause" by XXX.XXX, 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
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.
4. 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.
Xx. Xxx Xxxxxxxxxxx
January 8, 2001
Page 3
5. 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.
6. 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
Xx. Xxx Xxxxxxxxxxx
January 8, 2001
Page 4
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
8th day of January, 2001
/s/ Xxx Xxxxxxxxxxx
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Xxx Xxxxxxxxxxx
