June 14, 2001
Exhibit 10.12
June 14, 2001
Xx.
Xxxxxx X. Xxxxx
XXX.XXX INC.
0000 Xxxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxx 00000
Dear Xxxxxx:
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 June 14, 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 $140,000 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) 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.
(d) 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.
(e) 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.
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.
Confidential Information and Non-Competition. You agree to enter into a separate agreement with XXX.XXX (attached hereto as Exhibit A) 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.
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 Exhibit A 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 A. 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 X. XXXXX | |||
Xxxxxxx X. Xxxxx | |||
Chairman of the Board | |||
Accepted as of this | |||
14th day of June, 2001 | |||
/s/ XXXXXX X. XXXXX | |||
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Xxxxxx X. Xxxxx | |||