AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EXHIBIT 10.2
Execution Copy
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT is made as of the 31st day of
December, 2008, by and between X.X. Xxxxxxxxx Corporation, a Delaware corporation (the “COMPANY”),
and Xxxxxx X. Blondy (“EXECUTIVE”).
WITNESSETH :
WHEREAS, Executive is presently serving as Executive Vice President and Chief Financial
Officer of the Company pursuant to an Amended and Restated Employment Agreement dated October 3,
2005 (“PRIOR AGREEMENT”);
WHEREAS, both the Executive and the Company wish to continue the employment relationship on
the terms and conditions set forth in this Amended and Restated Employment Agreement (this
“AGREEMENT”), which is being executed to evidence compliance with Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and the regulations thereunder (collectively,
“Section 409A”);
WHEREAS, the Compensation and Benefits Committee of the Board of Directors of the Company has
authorized the Company to enter into this Amended and Restated Employment Agreement; and
NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the validity and sufficiency of which is hereby
acknowledged, the parties agree that, as of the date hereof, the Prior Agreement is amended and
restated as follows:
1. Term of Employment. Subject to the provisions of Section 8 of this Agreement,
Executive shall be employed by the Company for a period (the “EMPLOYMENT TERM”) commencing on the
date hereof (the “COMMENCEMENT DATE” and the “EFFECTIVE DATE”) and ending on the first anniversary
of the date hereof. On the first anniversary and each succeeding anniversary thereof, the
Employment Term shall automatically be extended for one additional year unless, not later than
ninety days prior to such anniversary, the Company or the Executive shall have given notice of its
or his intention not to extend the Employment Term. Any such non-renewal of this Agreement by the
Company shall be treated as a termination of Executive’s employment without Cause, as hereinafter
defined. This Agreement, in amending and restating the Prior Agreement, shall replace and supercede
the Prior Agreement as of the Effective Date.
2. Position. (a) Executive shall serve as Executive Vice President and Chief Financial
Officer of the Company. In such position, Executive shall have such duties and authority
commensurate with such position and, to the extent not inconsistent with the foregoing, as shall be
determined from time to time by the Chief Executive Officer of the Company and/or the Board.
Executive shall be employed as the senior most financial officer of the Company and shall report
directly to the Chief Executive Officer.
(b) During the Employment Term, except as otherwise agreed in writing between the
parties, Executive will devote substantially all of his business time and best efforts to
the performance of his duties hereunder and will not engage in any other business,
profession or occupation for compensation or otherwise which would conflict with the
rendition of such services either directly or indirectly, without the prior written consent
of the Board; provided that nothing herein shall be deemed to preclude Executive from
serving on business, civic or charitable boards or committees, as long as such activities do
not materially interfere with the performance of Executive’s duties hereunder.
3. Base Salary. Company shall pay Executive an annual base salary (the “BASE SALARY”)
at the initial annual rate of $500,000 payable in equal bi-monthly installments or otherwise in
accordance with the payroll and personnel practices of the Company in effect from time to time.
Base Salary shall be reviewed annually by the Board or a committee thereof to which the Board may
from time to time have delegated such authority (the “COMMITTEE”) for possible increase (but not
decrease) in the sole discretion of the Board or the Committee, as the case may be.
4. Bonus. With respect to each fiscal year all or part of which is contained in the
Employment Term, Executive shall be eligible to participate in the Company’s Annual Incentive
Program under the 2005 Stock Award and Incentive Plan or any successor program or plan thereto or
thereunder, with a target bonus opportunity of 75% of Base Salary (not less than 55% of which shall
be paid in cash without Executive’s consent) and a maximum bonus opportunity not less than that
for which Executive was eligible on January 1, 2008 (the “BONUS”). Any Bonus paid to Executive
shall be less applicable withholdings and shall be distributed pursuant to policies as determined
by the Company, but in no event later than March 15 of the year following the year in which such
Bonus was earned.
5. Additional Compensation. As further compensation, Executive will be eligible for
participation in all other bonuses, long-term incentive compensation and stock options and other
equity participation arrangements made available generally to senior executives of the Company, on
terms and conditions no less favorable than those offered to other senior executives of the
Company, and at no less attractive a level in the aggregate as that for which he is eligible on the
Effective Date.
6. Employee Benefits. During the Employment Term, Executive shall be eligible for
employee benefits (including perquisites, fringe benefits, vacation, pension and profit sharing
plan participation and life, health, accident and disability insurance) made available generally to
senior executives of the Company, on terms and conditions no less favorable than those offered to
other senior executives of the Company, and at no less attractive a level in the aggregate as that
for which he is eligible on the Effective Date. Notwithstanding the immediately preceding
sentence, Executive acknowledges that, effective December 31, 2008, as part of the unified employee
retirement savings strategy, the Company will freeze the X.X. Xxxxxxxxx Corporation Retirement Plan
and the X.X. Xxxxxxxxx Pension Benefit Equalization Plan. As of the date, all pension plan benefit
accruals for participants in these defined benefit plans (including Executive)
will cease, although plan balances will remain intact and interest credits will continue going
forward in accordance with the plans, as will service credit for vesting and retirement
eligibility.
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7. Business Expenses. Reasonable travel, entertainment and other business expenses
incurred by Executive in the performance of his duties hereunder shall be reimbursed by the Company
in accordance with Company policies in effect from time to time, provided, however, that all such
reimbursements shall be made by March 15 of the year following the year in which the expenses were
incurred.
8. Termination of Employment. Each of Executive and the Company may terminate the
employment of Executive hereunder at any time in accordance with this Section 8. Executive’s
entitlements hereunder in the event of any such termination shall be as set forth in this Section
8. The provisions of this Section 8 (and any related provision of Section 10) shall survive any
non-renewal of this Agreement by the Company pursuant to Section 1. With respect to any termination
of employment (voluntary or otherwise), any and all (i) accrued but unused vacation shall be paid
in the regular payroll check following the Date of Termination, and (ii) earned but unpaid bonus
(with respect to any full performance period) will be paid at the same time such bonuses are
generally distributed to current employees, but no later than March 15 of the year following the
year in which the bonus was earned.
(a) For Cause by the Company. If Executive’s employment is terminated by the
Company for Cause (as defined in Section 9(a) herein), he shall be entitled to receive his
Base Salary through the Date of Termination (as defined in Section 8(g)(ii) herein). All
other benefits due Executive following Executive’s termination of employment pursuant to
this Section 8(a) shall be determined in accordance with the then-existing plans, policies
and practices of the Company.
(b) Death or Disability. Executive’s employment hereunder shall terminate upon
his death and may be terminated by the Company upon his Disability (as defined in Section
9(c) herein) during the Employment Term. Upon termination of Executive’s employment
hereunder upon the Executive’s Disability or death, Executive or his estate (as the case may
be) shall be entitled to receive Base Salary through the Date of Termination, plus a
pro-rata portion of the target Bonus, based on the number of whole or partial months from
the beginning of the bonus period to the Date of Termination. Such pro-rata Bonus shall be
payable in a lump sum (less applicable withholdings) when such awards are generally
distributed to current employees for the current fiscal year, but no later than March 15 of
the year following the year in which the Bonus was earned. In addition, if Executive’s
employment is terminated as a result of a Disability, Executive shall be entitled to be
reimbursed for the additional costs to Executive, including any additional tax costs
associated with such reimbursements, of continuing health, medical and dental benefits under
COBRA at a level equivalent (e.g., family coverage versus employee only) to those benefits
in which he participated prior to the Termination Date for a period of twenty nine (29)
months from the Termination Date (“COBRA Benefit Continuation Period”) or, if COBRA is not
available or is not adequate, the actual costs associated with any other coverage that may
be necessary to obtain such equivalent coverage; provided that such costs are consistent
with the costs generally available on a competitive basis for such coverage. Following the
end of the 29-month COBRA Benefit
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Continuation Period, and continuing until Executive reaches the age of 65 or is no
longer subject to a Disability, whichever date is earlier, Executive shall also be entitled
to be reimbursed for the additional actual costs, including any additional tax costs
associated with such reimbursements, of obtaining such equivalent health, medical and dental
insurance coverage through an insurance policy or policies he purchases on his own; provided
that such costs are consistent with the costs generally available on a competitive basis for
such coverage. Executive shall bear full responsibility for applying for COBRA coverage and
for obtaining coverage under any other insurance policy subject to reimbursement under this
Section 8(b), and nothing herein shall constitute a guarantee of COBRA continuation coverage
or benefits or a guarantee of eligibility for health or dental insurance coverage.
Reimbursements under this Section 8(b) shall be made on a monthly basis but no later than
the last day of the calendar year following the year in which the expenses were incurred.
Under no circumstances will Executive be entitled to a cash payment in lieu of
reimbursements for the actual costs of premiums for health or dental coverage hereunder.
The amount of expenses eligible for reimbursement during any calendar year shall not be
affected by the amount of expenses eligible for reimbursement in any other calendar year.
(c) Termination Not Following a Change in Control. If, during the Employment
Term and prior to a Change in Control (as defined in Section 9(b) herein) or more than two
years after a Change in Control, Executive’s employment is terminated by the Company without
Cause, or by Executive under subclauses (i), (ii) or (iii) of the definition of Good Reason
(as defined in Section 9(d) herein), Executive shall be entitled to the following:
(i) Base Salary through the Date of Termination at the rate in effect at the
time of Notice of Termination, as defined in Section 8(g)(i) herein, is given, or if
higher, at the rate in effect immediately prior to the event or circumstance leading
to the termination of employment, plus a pro-rata (based on number of days employed
during calendar year divided by 360) portion of the target Bonus, plus all other
amounts to which Executive is entitled under any then-existing compensation or
benefit plan of the Company. Such pro-rata Bonus shall be payable in lump sum (less
applicable withholdings) when such awards are generally distributed to current
employees for the current fiscal year, but no later than March 15 of the year
following the year in which the Bonus was earned.
(ii) In lieu of any further salary payments to Executive for periods subsequent
to the Date of Termination, the Company shall pay as severance pay a severance
payment (the “SEVERANCE PAYMENT”) equal to two times the sum of (A) Base Salary at
the rate in effect on the date Notice of Termination is given, or if higher, at the
rate in effect immediately prior to the event or circumstance leading to the
termination of employment, plus (B) target Bonus at the rate in effect on the date
of the Notice of Termination is given, or if higher, at the rate in effect
immediately prior to the event or circumstance leading to the termination of
employment without Cause. The Severance Payment shall be paid in lump-sum, without
reduction for time value of money, within seven (7) calendar days following the
effective date of the General Release executed by Executive under
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Section 8(h) of this Agreement, but in no event later than seventy four (74)
days after the Date of Termination.
(iii) Reimbursement for the additional costs to Executive, including any
additional tax costs associated with such reimbursements, of obtaining health,
medical and dental insurance and long term disability insurance benefits equivalent
(e.g., for health, medical and dental, family coverage versus employee only) to the
plans in which he participated prior to the Date of Termination for a period of two
(2) years, or, if sooner, until comparable insurance coverage is available to
Executive in connection with subsequent employment or self-employment, as follows:
(aa) the Company shall reimburse Executive for the additional costs in continuing
group health, medical and dental benefits under COBRA for a period of eighteen (18)
months from the Termination Date (“COBRA Benefit Continuation Period”) or, if COBRA
is not available or is not adequate, the actual costs associated with any other
coverage that may be necessary to obtain such equivalent coverage, provided that
such costs are consistent with the costs generally available on a competitive basis
for such coverage; (bb) for the period immediately following the end of the
18-month COBRA Benefit Continuation Period (the “Post-COBRA Period”), and continuing
until the end of the two (2) year period, Executive shall also be entitled to be
reimbursed for the additional actual costs of obtaining equivalent health, medical
and dental insurance coverage through an insurance policy or policies he purchases
on his own, provided that such costs are consistent with the costs generally
available on a competitive basis for such coverage; and (cc) for the two (2) year
period following the Date of Termination, the Company shall reimburse Executive for
the actual costs incurred by Executive in obtaining an individual long term
disability insurance policy equivalent in coverage to that elected by Executive at
the time of the Notice of Termination, provided that such costs are consistent with
the costs generally available on a competitive basis for such coverage.
Executive shall bear full responsibility for applying for COBRA coverage and
for obtaining coverage under any other insurance policy subject to reimbursement
under this Section 8(c)(iii), and nothing herein shall constitute a guarantee of
COBRA continuation coverage or benefits or a guarantee of eligibility for health,
dental or long term disability insurance coverage. Reimbursements under this
Section 8(c)(iii) shall be made on a monthly basis but in no event later than the
last day of the calendar year following the year in which the expenses were
incurred. Under no circumstances will Executive be entitled to a cash payment or
other benefit in lieu of reimbursements for the actual costs of premiums for health,
dental or long term disability coverage hereunder. The amount of expenses eligible
for reimbursement during any calendar year shall not be affected by the amount of
expenses eligible for reimbursement in any other calendar year. Executive shall
provide the Company with notice of any subsequent employment or self-employment
under which equivalent health, dental or disability insurance becomes available
within thirty (30) days of commencement.
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(iv) Reimbursement for the actual costs incurred by Executive, including any
additional tax costs associated with such reimbursements, in obtaining term life
insurance coverage equivalent in coverage to that elected by Executive at the time
of the Notice of Termination, following the Date of Termination and continuing
until the last day of the second calendar year beginning after the Date of
Termination, or, if sooner, until comparable life insurance coverage is available
to Executive in connection with subsequent employment or self-employment.
Executive shall bear full responsibility for applying for life insurance coverage
subject to reimbursement under this Section 8(c)(iv), and nothing herein shall
constitute a guarantee of eligibility for life insurance coverage. Reimbursements
under this Section 8(c)(iv) shall be made on a monthly basis but in no event later
than the last day of the calendar year following the year in which the expenses
were incurred. Under no circumstances will Executive be entitled to a cash payment
or other benefit in lieu of reimbursements for the actual costs of premiums for
term life insurance coverage hereunder. The amount of expenses eligible for
reimbursement during any calendar year shall not be affected by the amount of
expenses eligible for reimbursement in any other calendar year. Executive shall
provide the Company with notice of any subsequent employment or self-employment
under which equivalent life insurance coverage becomes available within thirty (30)
days of commencement such employment.
(d) Termination Within Two Years Following a Change in Control. If, during the
Employment Term and within two years following a Change in Control, Executive’s employment
is terminated by the Company without Cause, or by the Executive for Good Reason, as
hereinafter defined, Executive shall be entitled to the payments and benefits set forth in
Section 8(c), except that for purposes of this Section 8(d), references in such Section to
“two times” or “two years” shall be changed to “three times” and “three years.” In
addition, Executive shall be entitled to receive the following: (i) for the three years
following termination of employment or, if sooner, until subsequently employed or
self-employed, reimbursements, including any additional tax costs associated with such
reimbursements, for Executive’s expenses (aa) for dues for continuing the health club and
country club memberships, if any, provided to him by the Company prior to the Date of
Termination, (bb) relating to financial planning services, up to a maximum amount per year
equal to the average of such amounts paid to Executive for the two (2) calendar years
preceding the Date of Termination, and (cc) actual expenses in replacing any other
perquisites and similar benefits Executive was receiving immediately prior to the
Termination Date, up to a maximum amount per year equal to one hundred and twenty percent
(120%) of such amounts paid to Executive during the two (2) calendar years preceding the
Date of Termination; and (ii) during the two year period following the Date of Termination
reimbursement of expenses relating to outplacement services, subject to a maximum total
reimbursement of $25,000. In connection with reimbursements under Section 8(d)(i)(aa) and
(bb), under no circumstances will Executive be entitled to a cash payment or other benefit
in lieu of such reimbursements and the amount of expenses eligible for reimbursement during
any calendar year shall not be affected by the amount
of expenses eligible for reimbursement in any other calendar year.
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For purposes of this Agreement, termination of employment after the commencement of
negotiations with a potential acquiror or business combination partner but prior to an
actual Change of Control shall be deemed to be a termination of employment within two years
following a Change in Control if such negotiations subsequently result in a transaction with
such acquiror or business combination partner which constitutes a Change in Control
(“Look-Back CIC”). Executive shall be entitled to such additional benefits as the result of
a Look-Back CIC under this Section 8(b) only if the Change in Control transaction occurs
within two (2) years following the Date of Termination. Any additional payments due to
Executive as the result of the Look-Back CIC shall be payable to Executive in a lump sum
(less applicable withholdings) within ten (10) calendar days following the effective date of
the General Release under Section 8(h), but in no event later than seventy four (74) days
following such Change in Control.
(e) Retirement. If during the Employment Term, Executive retires at normal
retirement age under the Company’s qualified pension plan or any successor plan, Executive
shall be entitled to the payments and benefits specified in Section 8(b) as if his
employment had terminated as a result of Disability.
(f) Voluntary Termination of Employment. If during the Employment Term,
Executive terminates his employment under circumstances other than those specified elsewhere
in this Section 8, Executive shall be entitled to the payments and benefits specified in
Section 8(a).
(g) Notice and Date of Termination. (i) Any purported termination of employment
by the Company or by Executive shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 17(i) hereof. For purposes of this Agreement,
a “NOTICE OF TERMINATION” shall mean a notice which shall indicate (by reference to specific
Section and sub-section numbers and letters, for example, Section 8(d)) the specific
termination provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of employment under
the provision so indicated. If the event or circumstance on which the proposed termination
of employment is based is susceptible of cure, the Notice of Termination shall not be deemed
effective until Executive or the Company, as the case may be, has had at least 30 days to
effect such cure, and unless such event or circumstance persists at the end of such cure
period. In the event Executive wishes to terminate his employment for Good Reason, as
defined in Section 9(d), Executive must provide a Notice of Termination to the Company
describing the condition giving rise to Good Reason within ninety (90) days following the
occurrence of the condition giving rise to Good Reason. Executive may only exercise his
rights to terminate for Good Reason thereafter if the Company does not cure such condition
within thirty (30) days following the receipt of such written notice from Executive, and
Executive resigns from the Company within two (2) years following the initial existence of
such condition.
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(ii) “DATE OF TERMINATION” shall mean (A) if employment is terminated for
Disability, thirty (30) days after Notice of Termination is given (provided that
Executive shall not have returned to the full-time performance of his duties during
such thirty (30) day period), (B) if employment is terminated by reason of death,
the date of death, and (C) if employment is terminated for any other reason, subject
to the effectiveness of notice and “cure” provisions of clause (i) above, the date
specified in the Notice of Termination (which, in the case of a termination of
employment by the Company for Cause shall not be less than ten (10) days after the
date such Notice of Termination is given); provided that if within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of competent
jurisdiction (which is not appealable or the time for appeal therefrom having
expired and no appeal having been perfected); provided further that the Date of
Termination shall be extended by a notice of dispute only if such notice is given in
good faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence; and provided, further that in the event Executive gives
Notice of Termination for Good Reason based upon any matter referred to in clause
(ii) of the definition of Good Reason, and it is thereafter determined that said
grounds do not constitute Good Reason, then so long as Executive reasonably believed
in good faith that he had grounds for termination of employment for Good Reason, the
Company may not terminate Executive’s employment for Cause based upon such matters.
(h) Release of Claims. Any provision of this Agreement to the contrary
notwithstanding, Executive shall be obligated to execute and not revoke a valid general
release of claims (“General Release”) from time-to-time in favor of the Company in
connection with certain payments made or benefits provided under Section 8 of this
Agreement, as a condition to receiving such payments and benefits under this Agreement.
Executive’s General Release shall be substantially in the form attached as Exhibit A, as
adjusted, as appropriate, for changes in applicable law or regulation. The Company will
provide Executive with a final General Release applicable to the severance pay and benefits
to be provided under Section 8 (c) or (d) within thirty (30) days of the Date of
Termination, except in the case of additional severance pay or benefits that later may
become due under the Look-Back provisions of Section 8(d), such General Release shall be
provided to Executive within thirty (30) calendar days of the applicable Change of Control.
The General Release shall be executed and returned by Executive to the Company within the
time described in such General Release, but in not event later than forty five (45) days
following receipt, but not before the Date of Termination. No General Release from Executive
shall be deemed to be effective until the 7-day revocation period has expired.
(i) Notwithstanding anything to the contrary set forth herein, the following provisions
of this Agreement shall survive any termination of Executive’s employment hereunder and/or
termination of this Agreement: Sections 8, 9, 10, 11, 12, 13, 14, 15, 16, 17(f) and (g), 18
and 19.
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9. Definitions.
(a) “CAUSE” shall mean (i) Executive’s willful and continued failure substantially to
perform the duties of his position (other than as a result of total or partial incapacity
due to physical or mental illness or as a result of a termination by Executive for Good
Reason, as hereinafter defined), (ii) any willful act or omission by Executive constituting
dishonesty, fraud or other malfeasance, which in any such case is demonstrably (and, in the
case of other malfeasance, materially) injurious to the financial condition or business
reputation of the Company or any of its affiliates, or (iii) Executive’s conviction of a
felony under the laws of the United States or any state thereof or any other jurisdiction in
which the Company or any of its subsidiaries conducts business which materially impairs the
value of Executive’s services to the Company or any of its subsidiaries. For purposes of
this definition, no act or failure to act shall be deemed “willful” unless effected by
Executive not in good faith and without a reasonable belief that such action or failure to
act was in or not opposed to the best interests of the Company.
(b) “CHANGE IN CONTROL” shall mean the occurrence of any of the following events:
(i) any “person,” as such term is used in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “EXCHANGE ACT”) (other than the
Company, any trustee or other fiduciary holding securities under an employee benefit
plan of the Company, or any company owned directly or indirectly by the shareholders
of the Company in substantially the same proportions as their ownership of stock of
the Company), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company’s then outstanding
securities;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director (other than a
director designated by a person (as defined above) who has entered into an agreement
with the Company to effect a transaction described in subsections (i), (iii) or (iv)
of this definition) whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(iii) the consummation of a merger or consolidation of the Company with any
other company, other than (A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 60% of the
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combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no person (as defined above) becomes the beneficial owner (as
defined above) of more than 20% of the combined voting power of the Company’s then
outstanding securities; or
(iv) the shareholders of the Company have approved a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all of the Company’s assets, and all other required
governmental approvals of such transaction have been obtained.
Notwithstanding the foregoing, to the extent that the term “Change in Control” is being used to
trigger the timing of a distribution of deferred compensation subject to the provisions of Section
409A (as opposed to triggering the vesting of benefits or the amount of severance benefits
payable), no Change in Control shall be deemed to have occurred for purpose of triggering the
distribution of such deferred compensation if it is not a “change in the ownership or effective
control of the corporation,” or “in the ownership of a substantial portion of the assets of the
corporation,” within the meaning of Code Section 409A and applicable Treasury Regulations.
(c) “DISABILITY” shall mean the Executive’s inability, as a result of physical or
mental incapacity, to perform the duties of his position for a period of six (6) consecutive
months or for an aggregate of six (6) months in any twelve (12) consecutive month period.
Any question as to the existence of the Disability of Executive as to which Executive and
the Company cannot agree shall be determined in writing by a qualified independent physician
mutually acceptable to Executive and the Company. If Executive and the Company cannot agree
as to a qualified independent physician, each shall appoint such a physician and those two
physicians shall select a third who shall make such determination in writing. The
determination of Disability made in writing to the Company and Executive shall be final and
conclusive for all purposes of the Agreement; provided, however, that notwithstanding any
other provision of this Agreement, for purposes of the continuation of benefits under
Section 8(b), then the definition of Disability used herein shall be consistent with the
definition of permanent disability under Internal Revenue Code Code §409A (a)(2)(c).
(d) “GOOD REASON” means:
(i) removal from, or failure to be reappointed or reelected to, Executive’s
position as specified in Section 2 (other than as a result of a promotion); or
(ii) material diminution in Executive’s title, position, duties or
responsibilities, re-assignment of Executive’s reporting relationship to anyone
other than the Chief Executive Officer, or the assignment to Executive of duties
that are inconsistent, in a material respect, with the scope of duties and
responsibilities associated with Executive’s position as specified in Section 2; or
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(iii) material reduction in Base Salary or target or maximum Bonus opportunity,
material reduction in target opportunity under long term incentive, stock option and
other equity award, or material reduction in participation level in benefit and
other plans for executive officers (for purposes of this Section 9(d)(iii) “material
reduction” shall mean a reduction of five percent (5%) or more of the relevant
compensation or benefits); provided, however, that nothwithstanding the definition
of “material reduction” for purposes of this Section 9(d)(iii), nothing herein shall
deprive Executive of any right or remedy, if any, that he otherwise would have
available for breach of contract as the result of a reduction in compensation or
benefits, to which Executive did not consent, which otherwise did not constitute a
material reduction; or
(iv) material relocation of Executive’s principal workplace without his consent
(for purposes of this Section 9(d)(iv) “material relocation” shall mean a relocation
of Executive’s principal workplace by a distance that exceeds fifty (50) miles); or
(v) other material breach of this Agreement by the Company.
10. Certain Payments.
(a) If any payment or benefits received or to be received by Executive in connection
with or contingent on a change in ownership or control, within the meaning defined in
Section 280G of the Internal Revenue Code (the “CODE”) (or any successor provision thereto),
whether or not in connection with Executive’s termination of employment, and whether or not
pursuant to this Agreement (such payments or benefits, excluding the Gross-Up Payment, as
hereinafter defined, shall hereinafter be referred to as the “TOTAL PAYMENTS”) will be
subject to an excise tax as provided for in Section 4999 of the Code (the “EXCISE TAX”), the
Company shall pay to Executive an additional amount no later than the due date for
Executive’s tax return with respect to such Excise Tax (the “GROSS-UP PAYMENT”) such that
the net amount retained by Executive, after deduction of any Excise Tax on the Total
Payments and any federal, state and local income and employment taxes and Excise Tax upon
the Gross-Up Payment, shall be equal to the Total Payments; provided, however, that if the
Total Payments are less than 360% of the Executive’s Base Amount, as defined in Section
280G(b)(3) of the Code, the Executive shall not be entitled to the Gross-Up Payment, and the
Total Payments shall be reduced as provided for in Section 10(d) below.
(b) For purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be
treated as “parachute payments” (within the meaning of Section 280G(b)(2) of the Code)
unless, in the opinion of tax counsel (“TAX COUNSEL”) reasonably acceptable to Executive and
selected by the accounting firm acting as the “Auditor”, as defined below, such payments or
benefits (in whole or in part) do not constitute parachute payments, including by reason of
Section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning
of Section 280G(b)(1) of the Code shall be treated as subject to the Excise Tax unless, in
the opinion of Tax
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Counsel, such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of Section 280G(b)(4)(B) of
the Code) in excess of the Base Amount allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by the Auditor in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code. For purposes of determining the
amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at
the highest marginal rate of federal income taxation in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate
of taxation in the state and locality of Executive’s residence or, if higher, in the state
and locality of Executive’s principal place of employment, on the date of termination (or if
there is no date of termination, then the date on which the Gross-Up Payment is calculated
for purposes of this Section 10), net of the maximum reduction in federal income taxes which
could be obtained from deduction of such state and local taxes.
(c) In the event that the Excise Tax is finally determined to be less than the amount
taken into account hereunder in calculating the Gross-Up Payment, Executive shall repay to
the Company, at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction (including
that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and
local income and employment taxes imposed on the Gross-Up Payment being repaid by Executive
to the extent that such repayment results in a reduction in Excise Tax and/or a federal,
state or local income or employment tax deduction). In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross-Up Payment), the Company shall make an additional
Gross-Up Payment in respect of such excess (plus any interest, penalties or additions
payable by Executive with respect to such excess) at the time that the amount of such excess
is finally determined. Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning the existence
or amount of liability for Excise Tax with respect to the Total Payments.
(d) If the Total Payments would constitute an “excess parachute payment”, but are less
than 360% of the Base Amount, such payments shall be reduced to the largest amount that may
be paid to the Executive without the imposition of the Excise Tax or the disallowance as
deductions to the Company under Section 280G of the Code of any such payments. Unless
Executive shall have given prior written notice to the Company specifying a different order,
the Company shall reduce or eliminate the payments or benefits by first reducing or
eliminating the portion of the payments or benefits that are not payable in cash and then by
reducing or eliminating cash payments, in each case, in reverse chronological order,
starting with payments or benefits that are to be paid farthest in time from the applicable
determination of the Auditor (as defined below). Any written notice given by Executive
pursuant to the preceding sentence shall take precedence over the provisions of any plan,
agreement or arrangement governing Executive’s entitlement and rights to such payments or
benefits.
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(e) All determinations under this Section 10 shall be made by a nationally recognized
accounting firm selected by Executive (the “AUDITOR”), and the Company shall pay all costs
and expenses of the Auditor. The Company shall cooperate in good faith in making such
determinations and in providing the necessary information for this purpose.
11. Indemnification. The Company will indemnify Executive (and his legal
representative or other successors) to the fullest extent permitted (including a payment of
expenses in advance of final disposition of a proceeding) by applicable law, as in effect at the
time of the subject act or omission, or by the Certificate of Incorporation and By-Laws of the
Company, as in effect at such time or on the Commencement Date, or by the terms of any
indemnification agreement between the Company and Executive, whichever affords or afforded greatest
protection to Executive, and Executive shall be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit of its directors and officers
(and to the extent the Company maintains such an insurance policy or policies, Executive shall be
covered by such policy or policies, in accordance with its or their terms to the maximum extent of
the coverage available for any Company officer or director), against all costs, charges and
expenses whatsoever incurred or sustained by him or his legal representatives (including but not
limited to any judgment entered by a court of law) at the time such costs, charges and expenses are
incurred or sustained, in connection with any action, suit or proceeding to which Executive (or his
legal representatives or other successors) may be made a party by reason of his having accepted
employment with the Company or by reason of his being or having been a director, officer or
employee of the Company, or any subsidiary of the Company, or his serving or having served any
other enterprise as a director, officer or employee at the request of the Company. Executive’s
rights under this Section 11 shall continue without time limit for so long as he may be subject to
any such liability, whether or not the Employment Term may have ended.
12. Non-Competition. Executive acknowledges and recognizes the highly competitive
nature of the businesses of the Company and its affiliates and accordingly agrees that
(a) during the Employment Term:
(i) Executive will not directly or indirectly engage in any business which is
in competition with any line of business then conducted by the Company or its
affiliates (including without limitation by performing or soliciting the performance
of services for any person who is a customer or client of the Company or any of its
affiliates) whether such engagement is as an officer, director, proprietor,
employee, partner, investor (other than as a holder of less than 1% of the
outstanding capital stock of a publicly traded corporation), consultant, advisor,
agent, sales representative or other participant, in any location in which the
Company or any of its affiliates then conducts any such competing line of business;
and
(ii) Executive will not directly or indirectly induce any employee of the
Company or any of its affiliates to engage in any activity in which Executive
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is prohibited to engage by this Section, or to terminate his or her employment
with the Company or any of its affiliates, and will not directly or indirectly
employ or offer employment to any person who was employed by the Company or any of
its affiliates unless such person shall have ceased to be employed by the Company or
any of its affiliates for a period of at least 12 months; and
(iii) Executive will not directly or indirectly solicit customers or suppliers
of the Company or its affiliates or induce any such person to materially reduce or
terminate its relationship with the Company.
(b) for one year following the Employment Term:
(i) Executive will not directly or indirectly engage in any local directional
advertising or marketing (whether in print, electronic, wireless or other format)
business or provide pre-press publishing or utilize digital and intranet
technologies to repurpose print directory information for electronic, wireless or
related distribution, in each case which is in competition with the business then
conducted by the Company or its affiliates, whether such engagement is as an
officer, director, proprietor, employee, partner, investor (other than as a holder
of less than 5% of the outstanding capital stock of a publicly traded corporation),
consultant, advisor, agent, sales representative or other participant, in any
location in which the Company or any of its affiliates then conducts any such
competing line of business; and
(ii) Executive will not directly or indirectly induce any employee of the
Company or any of its affiliates to engage in any activity in which Executive is
prohibited to engage by this Section, or to terminate his or her employment with the
Company or any of its affiliates, and will not directly or indirectly employ or
offer employment to any person who was employed by the Company or any of its
affiliates unless such person shall have ceased to be employed by the Company or any
of its affiliates for a period of at least 12 months; and
(iii) Executive will not directly or indirectly solicit customers or suppliers
of the Company or its affiliates or induce any such person to materially reduce or
terminate its relationship with the Company.
For purposes of this Agreement, “directional advertising or marketing” shall mean
advertising or marketing primarily (1) designed for purposes of directing consumers who are
seeking a product or service to providers of that product or service in order to satisfy
such consumer’s previously recognized need or desire for such product or service and (2)
generally delivered by non-intrusive means; and shall be distinguished from “creative
advertising or marketing,” which is primarily (1) designed to stimulate (as opposed to
direct) demand for products or services in consumers who did not previously recognize such
need or desire for such products or services and (2) generally delivered by intrusive means.
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It is expressly understood and agreed that although Executive and the Company consider
the restrictions contained in this Section 12 to be reasonable, if a final judicial
determination is made by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is an unenforceable restriction against
Executive, the provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum extent as such
court may judicially determine or indicate to be enforceable. Alternatively, if any court of
competent jurisdiction finds that any restriction contained in this Agreement is
unenforceable, and such restriction cannot be amended so as to make it enforceable, such
finding shall not affect the enforceability of any of the other restrictions contained
herein.
13. Confidentiality; Nondisparagement.
(a) Executive will not at any time (whether during or after his employment with the
Company) disclose or use for his own benefit or purposes or the benefit or purposes of any
other person, firm, partnership, joint venture, association, corporation or other business
organization, entity or enterprise other than the Company and any of its subsidiaries or
affiliates, any trade secrets, information, data, or other confidential information relating
to customers, development programs, costs, marketing, trading, investment, sales activities,
promotion, credit and financial data, manufacturing processes, financing methods, plans,
employees, organizational structure or the business and affairs of the Company generally, or
of any subsidiary or affiliate of the Company, provided that the foregoing shall not apply
to information which is not unique to the Company or which is generally known to the
industry or the public other than as a result of Executive’s breach of this covenant.
Executive agrees that upon termination of his employment with the Company for any reason, he
will return to the Company immediately all memoranda, books, papers, plans, information,
letters and other data, and all copies thereof or therefrom, in any way relating to the
business of the Company and its affiliates, except that he may retain personal notes,
notebooks, rolodexes and diaries. Executive further agrees that he will not retain or use
for his account at any time any trade names, trademark or other proprietary business
designation used or owned in connection with the business of the Company or its affiliates.
(b) Executive will not knowingly disparage the reputation of the Company in a manner
that causes or is reasonably likely to cause material harm to its business; provided,
however, that Executive may (i) express his own opinions about the Company to other senior
executives of the Company or to the Board and (ii) comply with applicable legal process
without being deemed to have violated this provision.
14. Material Inducement; Specific Performance. Executive acknowledges and agrees that
the covenants entered into by Executive in Sections 12 and 13(a) are essential elements of the
parties’ agreement as expressed herein, are a material inducement for the Company to enter into
this Agreement and the breach thereof would be a material breach of this Agreement. Executive
further acknowledges and agrees that the Company’s remedies at law for a breach or threatened
breach of any of the provisions of Section 12 or Section 13(a) would be inadequate and, in
recognition of this fact, Executive agrees that, in the event of such a breach or threatened
15
breach, in addition to any remedies at law, the Company, without posting any bond, shall be
entitled to obtain equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may then be available.
15. Litigation Support. Executive agrees that he will assist and cooperate with the
Company, at the Company’s sole cost and expense and, in the case of post-termination, in a manner
so as to not unreasonably interfere with any other employment obligations of Executive, in
connection with the defense or prosecution of any claim that may be made against or by the Company
or its affiliates, or in connection with any ongoing or future investigation or dispute or claim of
any kind involving the Company or its affiliates, including any proceeding before any arbitral,
administrative, judicial, legislative, or other body or agency, including testifying in any
proceeding, to the extent such claims, investigations or proceedings relate to services performed
or required to be performed by Executive, pertinent knowledge possessed by Executive, or any act or
omission by Executive. Executive further agrees to perform all acts and to execute and deliver any
documents that may be reasonably necessary to carry out the provisions of this Section, at the
Company’s sole cost and expense and, in the case of post-termination, in a manner so as to not
unreasonably interfere with any other employment obligations of Executive. If Executive determines
in good faith that separate counsel is necessary in connection with its compliance with this
Section 15 as a result of a bona fide claim filed against Executive or the Company, then the
Company shall pay all reasonable fees and expenses of such counsel retained by Executive in
connection herewith. Following Executive’s termination of employment, this covenant shall expire
and be of no further force or effect upon the later to occur of (a) one year following such
termination of employment and (b) in the event of termination of employment under Sections 8(c) or
(d), the maximum number of years following such termination specified in the applicable sub-section
during which Executive is eligible to receive reimbursements in connection with the continuation of
benefits.
16. Legal Fees. The Company will pay or reimburse Executive, as incurred, all legal
fees and costs incurred by Executive in enforcing his rights under the Agreement, if Executive’s
position substantially prevails. Following a Change in Control, the Company will pay or reimburse
Executive, as incurred, for all such fees and costs unless Executive’s claim was frivolous or was
brought or pursued by Executive in bad faith.
17. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its conflict of laws
rules.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the employment of Executive by the Company and
supercedes any and all prior and/or contemporaneous agreements, either oral or written,
other than the agreements evidencing any grants of stock options, stock appreciation rights
and other equity-based awards, between the parties thereto, with respect to the subject
matter hereof. There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject
16
matter herein other than those expressly set forth herein and in the incentive
compensation and other employee benefit plans and arrangements of the Company referenced
herein. This Agreement may not be altered, modified, or amended except by written instrument
signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence to any
term of this Agreement on any occasion shall not be considered a waiver of such party’s
rights or deprive such party of the right thereafter to insist upon strict adherence to that
term or any other term of this Agreement.
(d) Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Agreement shall not be
affected thereby.
(e) Assignment. This Agreement shall not be assignable by Executive and shall
be assignable by the Company only with the consent of Executive except as set forth in
Section 17(h); provided that no such assignment by the Company shall relieve the Company of
any liability hereunder, whether accrued before or after such assignment.
(f) No Mitigation. Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or otherwise, and no
such employment, if obtained, or compensation or benefits payable in connection therewith,
shall reduce any amounts or benefits to which Executive is entitled hereunder except as
provided for in Sections 8(c) and (d).
(g) Arbitration. Any dispute between the parties to this Agreement arising from
or relating to the terms of this Agreement (other than as specified under Section 14 with
respect to Sections 12 and 13(a) hereof) or the employment of Executive by the Company shall
be submitted to arbitration in Raleigh, North Carolina under the auspices of the American
Arbitration Association.
(h) Successors; Binding Agreement.
(i) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Such assumption and
agreement shall be obtained prior to the effectiveness of any such succession. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and
any successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise. Prior to a Change in
Control, the term “Company” shall also mean any affiliate of the Company to which
Executive may be transferred and the Company shall cause such successor employer to
be considered the “Company” bound by the terms of this Agreement and this Agreement
shall be amended to so
17
provide. Following a Change in Control the term “Company” shall not mean any
affiliate of the Company to which Executive may be transferred unless Executive
shall have previously approved of such transfer in writing, in which case the
Company shall cause such successor employer to be considered the “Company” bound by
the terms of this Agreement and this Agreement shall be amended to so provide.
(ii) This Agreement shall inure to the benefit of and be binding upon personal
or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If Executive should die while any amount would
still be payable to Executive hereunder if Executive had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the devisee, legatee or other designee of Executive or,
if there is no such designee, to the estate of Executive.
(i) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail, return receipt
requested, postage prepaid, addressed to Executive at the address appearing from time to
time in the personnel records of the Company and to the Company at the address of its
corporate headquarters, directed to the attention of the Board with a copy to the Secretary
of the Company, or in either case to such other address as either party may have furnished
to the other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.
(j) Withholding Taxes. The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.
(k) Counterparts. This Agreement may be signed in counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
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18. Section 409A Savings Clause. (a) Parties’ Intent. To the extent any of
the payments or benefits required under this Agreement are, or in the opinion of counsel to the
Company or Executive, could be interpreted in the future to create, a nonqualified deferred
compensation plan that does not meet the requirements of Section 409A(a)(2), (3) and (4) of the
Internal Revenue Code (the “Code”) and all regulations, guidance, or other interpretative authority
thereunder (the “Section 409A Requirements”), the Company and Executive hereby agree to execute any
and all amendments to this Agreement or otherwise reform this Agreement as deemed necessary by
either of such counsel, and prepared by counsel to the Company, to either cause such payments or
benefits not to be a nonqualified deferred compensation plan or to meet the Section 409A
Requirements. In amending or reforming this Agreement for Code Section 409A purposes, the Company
shall maintain, to the maximum extent practicable, the original intent and economic benefit of this
Agreement without subjecting Executive to additional tax or interest; provided further, however,
the Company shall not be obligated to pay any additional material amount to Executive as a result
of such amendment.
(b) Delayed Distribution to Key Employees. If the Company determines, in accordance
with Sections 409A and 416(i) of the Code and the regulations promulgated thereunder, in the
Company’s sole discretion, that Executive is a Key Employee of the Company on the date his
employment with the Company terminates and that a delay in severance pay and benefits provided
under this Agreement is necessary for compliance with Section 409A(a)(2)(B)(i), then any severance
payments and any continuation of benefits or reimbursement of benefit costs provided under this
Agreement, and not otherwise exempt from Section 409A (for example as a “short term payment” or as
“involuntary severance”), shall be delayed until the earlier of (i) the first day of the seventh
(7th) calendar month commencing after Executive’s termination of employment, or (ii)
Executive’s death, consistent with and to the extent necessary to meet the requirements of Code
Section 409A (the “409A Delay Period”). In such event, any such severance payments and the cost of
any such continuation of benefits provided under this Agreement that would otherwise be due and
payable to Executive during the 409A Delay Period shall be paid to Executive in a lump sum cash
amount on the first day of the seventh (7th) month coinciding with or following the end
of the 409A Delay Period. Any amounts delayed by reason of the prior sentence shall be credited
with interest from the scheduled payment date through the date of actual payment at the Wall Street
Journal Prime rate in effect as of the end of the applicable 409A Delay Period. For purposes of
this Agreement, “Key Employee” shall mean an employee who, on an Identification Date
(“Identification Date” shall mean each December 31) is a key employee as defined in Section 416(i)
of the Code without regard to paragraph (5) of that section. If Executive is identified as a Key
Employee on an Identification Date, then Employee shall be considered a Key Employee for purposes
of this Agreement during the period beginning on the first April 1 following the Identification
Date and ending on the following March 31.
(c) Separation from Service. 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 following or upon a termination of employment unless such termination also constitutes
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,”
“separation from service” or like terms shall mean Separation from Service. An event will not be
considered a termination of Executive’s employment if it is
19
reasonably anticipated that Executive will continue to provide services for the Company or any
entity treated as a single employer with the Company for purposes of Section 409A (as an employee,
independent contractor, consultant, or otherwise) after the event, unless it is reasonably
anticipated that the level of such services after the event will be no more than 20 percent of the
average level of Executive’s services performed over the 36-month period preceding the event.
(d) Separate Payments. Each payment required under this Agreement shall be considered
a separate payment for purposes of determining the applicability of or exemption from Section 409A.
19. Effective Date. This Agreement is effective as of the date hereof (the “EFFECTIVE
DATE”). Until the Effective Date, the Prior Agreement shall remain in full force and effect in
accordance with its terms without regard to this Agreement.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and
year first above written.
| Xxxxxx X. Blondy | ||||||
| /s/ Xxxxxx X. Blondy | ||||||
| X.X. XXXXXXXXX CORPORATION | ||||||
| By: Name: |
/s/ Xxxxxxxx Xxxx
|
|||||
| Title: | Senior Vice President/Human Resources | |||||
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