EMPLOYMENT AGREEMENT
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AGREEMENT made this 29th day of May, 1996, by and between ADVO, Inc., a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxxxx (the "Employee").
RECITAL
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The Company desires to continue to employ the Employee to perform the
functions as a senior executive officer of the Company and to obtain the benefit
of the Employee's knowledge, experience and abilities, and the Employee is
willing to serve as an officer of and be employed by the Company.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto hereby agree as follows:
1. Position and Responsibilities.
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1.1 During the Employment Period (as hereinafter defined), the Company
shall employ the Employee and the Employee shall serve the Company in a Senior
Executive Capacity in a role defined by the Company's Board of Directors, which
shall initially be as Chairman and Chief Executive Officer of the Company.
"Senior Executive Capacity" shall mean the offices of Chairman and/or Chief
Executive Officer, or internal consultant. The role of 'internal consultant'
shall mean the provision of advice, counsel and assistance on a senior level to
the Company on a reasonable basis, as requested by the Company. The Employee
shall devote his full business time and best efforts to the business and affairs
of the Company and the promotion of its interests and performing all duties and
services on behalf of the Company necessary to carry out the function of such
offices as determined from time to time by the Board of Directors of the
Company. During
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the Employment Period, and without additional compensation, the Employee shall
serve in such other office or offices (including as a director) of the Company
and its subsidiaries to which he may be elected or appointed from time to time.
The Employee shall continue as a director of the Company throughout the
Employment Period.
2. Employment Period.
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2.1 The Employment Period shall be the period commencing as of May 29,
1996 and continuing until November 14, 2001.
2.2 Notwithstanding the provisions of Section 2.1 hereof, the Company
shall have the right in its sole discretion, on written notice to the Employee,
to terminate the Employee's employment with or without Cause (as hereinafter
defined), such termination to be effective as of the date on which notice is
given or as of such later date otherwise specified in the notice. In the event
of the death of the Employee prior to any other termination of his employment
hereunder or the Employment Period (i) his employment hereunder and the
Employment Period shall terminate on the date of his death (ii) except as
expressly provided in Section 5.1 hereof and the Employee's Executive Severance
Agreement (hereinafter "Severance Agreement"), the Company shall not have any
obligation to pay any salary or provide any benefits under this Agreement to the
heirs, estate, executors, administrators or legal representative of the Employee
in respect of any period after the death of the Employee.
3. Compensation.
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3.1 The Corporation shall pay to the Employee for the services to be
rendered by the Employee hereunder a base salary at the rate of Five Hundred
Thousand ($500,000) Dollars per annum, as such base salary may be increased
pursuant hereto, payable in equal
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installments no less frequently than every two weeks. Such salary will be
reviewed at least annually after the end of the fiscal year, and may be
increased, but not decreased, by the Board of Directors of the Company (or the
Compensation Committee thereof as appropriate) in its sole discretion, to be
effective in the first pay period of the ensuing January. In addition, the
Employee shall be entitled to participate during the Employment Period in the
Corporate Management Incentive Plan (the "Bonus Plan") which the Company has
adopted. The Employee's target bonus under that or any successor plan shall be
75% of his base salary (the "Target Bonus").
3.2 The Employee shall be entitled to participate in, and receive benefits
from, any insurance, medical, disability, stock purchase or any other employee
benefit plan of the Company which may be in effect at any time during the course
of his employment by the Company and which shall be generally available to
senior executives of the Company.
3.3 The Company shall reimburse the Employee for all reasonable and
necessary business expenses incurred by him in the course of performing his
duties and services described in Section 1 hereof against the presentation by
the Employee of appropriate vouchers therefor or other evidence as may be
reasonably requested by the Company.
3.4 As long as the Employee's physical presence in the Hartford area is
required, the Employee shall receive a housing allowance of $3,191.28 per month
as long as he remains employed with the Company, which amount shall increase
annually effective January 1 of each year by the same percentage as the United
States City Average Consumer Price Index for all Urban Consumers for All Items
increased in the previous year.
4. Other Activities During and After the Employment Period.
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4.1 During the Employment Period the Employee shall not undertake,
continue
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or otherwise engage in any employment, occupation or business enterprise other
than as provided in Section 1 of this Agreement except that subject to
compliance with the provisions of this Agreement, the Employee may engage in
reasonable activities with respect to personal investments of the Employee and
may continue to serve on the Boards of Directors of a maximum of four outside
companies. The maximum may be changed only with the approval of the Board.
4.2 The Employee shall not at any time during or after the Employment
Period (regardless of the reason for the termination thereof), directly or
indirectly divulge, furnish, use, publish or make accessible to any person or
entity any Confidential Information (as hereinafter defined) except as properly
required in the conduct of the Company's business. Any records of Confidential
Information prepared by the Employee or which come into the Employee's
possession are and remain the property of the Company and upon termination shall
be either left with or returned to the Company. The term "Confidential
Information" shall mean information disclosed to the Employee or known, learned,
created or observed by him as a consequence of or through his employment by the
Company or any subsidiary of the Company which is confidential, secret or
otherwise not generally known in the relevant trade or industry, and pertains
directly or indirectly to the business activities, products, services or
processes of the Company, any subsidiary of the Company or any of their clients,
customers or suppliers, including but not limited to information concerning
mailing lists, advertising, sales promotion, publicity, sales data, research,
copy, other printed matter, tear sheets, artwork, photographs, films,
reproductions, layout, finances, accounting, methods, processes, trade secrets,
business plans, client lists and records, potential client lists, and client
billing.
4.3 During the Employment Period, and the period of one year thereafter,
the
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Employee shall not directly or indirectly engage in any business (whether as a
consultant, officer, director, owner, employee, agent, partner or other
participant) with or for, be financially interested in (whether as a lender,
guarantor or otherwise), represent or otherwise render assistance to: (i) any
person or entity who or which competes or intends to compete, or who or which is
affiliated (by reason of common control, ownership or otherwise) with any other
person or entity who or which competes or intends to compete, directly or
indirectly with the business then conducted by the Company; or (ii) any entity
that has a name similar to the name of the Company or any subsidiary or name
under which the Company or any subsidiary shall have conducted business;
provided, however, that the foregoing shall not be deemed to prevent the
Employee from investing in securities if such class of securities in which the
investment is so made is listed on a national securities exchange or is issued
by a company registered under Section 12(g) of the Securities Exchange Act of
1934 or subject to the obligations of Section 15(d) of that Act, so long as such
investment holdings do not, in the aggregate, constitute more than 1% of the
voting stock of any company's securities.
4.4 The Employee will not, during the Employment Period and one year
thereafter, hire or offer to hire or entice away or in any other manner persuade
or attempt to persuade, either in the Employee's individual capacity or as agent
for another, any officers, employees, or agents of the Company or any subsidiary
to discontinue their relationship with the Company or any subsidiary, nor divert
or attempt to divert from the company or any subsidiary any business whatsoever
by influencing or attempting to influence any customer or supplier of the
Company or any subsidiary.
4.5 The Employee acknowledges that he has been employed for his special
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talents and that his leaving the employ of the Company would seriously hamper
the business of the Company. The Employee agrees that the Company shall be
entitled to injunctive relief, in addition to all remedies permitted by law, to
enforce the provisions of this Section 4. The Employee further acknowledges
that his training, experience and technical skills are of such breadth that they
can be employed to advantage in other areas which are not competitive with the
present business of the Company and consequently the foregoing obligation will
not unreasonably impair his ability to engage in business activity after the
termination of his present employment.
5. Severance Pay.
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5.1 In the event that (a) the Company terminates the Employment Period
for any reason other than for Cause (as hereinafter defined), or (b) the
Employee terminates his employment as a result of any of the following reasons
(a "Section 5.1 Termination"): (i) the Company assigned to the Employee duties
that are not in a Senior Executive Capacity (the Employee acknowledges that the
Company's Board of Directors may, during the Employment Period, change or reduce
his current job content and scope without invoking this provision); (ii) the
Company reduces the Employee's bonus by a proportion greater than the average
proportionate reduction in bonus awarded to the Company's other executive
officers other than by operation of the Bonus Plan, or fails to increase the
Employee's salary by the average being awarded to the other comparable
executives; or (iii) the Company breaches any of its material obligations under
this Agreement, then for the duration of the Employment Period, the Company
shall continue to pay an amount of severance (the "Severance Compensation") to
the Employee at the rate and in the manner provided in Section 3.1 hereof,
including an amount equal to the Target Bonus, and shall continue to allow the
Employee to participate in the insurance, medical
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and disability plans (to the extent permitted by such plans) in which the
Employee shall have been participating at the date of termination. As long as
the Severance Compensation is being paid, the Employee's granted, but unvested
stock rights, shall continue to vest on their regularly scheduled dates. If at
the time of a Section 5.1 Termination there are more than two years left in the
Employment Period, for the period in excess of the two years the Severance
Compensation will not include any Target Bonus. The obligation of the Company
to pay such Severance Compensation and allow such participation in such plans
shall be the only obligations of the Company to the Employee in the event of a
termination pursuant to clauses (a) or (b) above. Notwithstanding the foregoing,
the Company shall not in any case have any obligation to pay such Severance
Compensation or allow such participation in the event of any material breach by
the Employee of his obligations under this Agreement or in the event the
Employee is eligible to receive compensation pursuant to Section 6 hereof. The
Company shall not be relieved of its obligation to pay Severance Compensation
pursuant to this Section 5.1 by the reason of the death of the Employee during
the period in which Severance Compensation is being paid.
5.2 For purposes of this Agreement, the term "Cause" shall mean: (i)
failure by the Employee to comply with any of the material terms of this
Agreement; (ii) willful engagement by the Employee in his capacity as an
executive officer of the Company or any subsidiary, in gross misconduct
injurious to the Company or any subsidiary; (iii) neglect or refusal by the
Employee to attend to the material duties assigned to him by the Board of
Directors of the Company; (iv) intentional misappropriation of property of the
Company or any subsidiary to the Employee's own use; (v) the commission by the
Employee of an act of fraud or embezzlement; (vi) conviction of the Employee for
a crime (excluding minor traffic offenses); or (vii) the failure of the Employee
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because of illness or other incapacity to render any services or perform any
duties required pursuant to Section 1 hereof for any period of ninety (90)
consecutive days during the Employment Period or for shorter periods aggregating
more than six (6) months during the Employment Period ("Disability"); provided,
however, if the Employee should leave the Company under the circumstances
described in (vii), he will be entitled to such benefits as provided in the
then-current long- and short-term disability plans.
6. Change of Control.
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6.1 The terms of the Severance Agreement shall govern the Company's
treatment of the Employee if there should be a change of Control (as defined
therein), except for the provision of paragraph 6.2, below.
6.2 If the Employee's termination following a Change of Control should
entitle him to severance compensation as described in the Severance Agreement,
the multiple for determining that compensation (as given in paragraph 3(a)(i) of
the Severance Agreement) shall be the number of years and fraction thereof
remaining in this Agreement, if that number is greater than two (2) years.
7. Restricted Shares and Options. In the event of Change of Control of
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the Company, the Employee shall immediately become fully vested in his
Restricted Shares and Stock Options pursuant to the term of those plans.
8. Assignments. This Agreement shall inure to the benefit of and be
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binding upon the Company, its successors and assigns, and upon the Employee and
his heirs, estate, executors, administrators and legal representatives. No
rights or obligations under this Agreement shall be assignable by the Employee,
except those which survive his death or disability which may be
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assigned upon that occurrence.
9. No Third Party Beneficiaries. This Agreement does not create, and
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shall not be construed as creating, any rights enforceable by any person to a
party to this Agreement, except with respect to salary or other payments or
benefits required to be paid after the death of the Employee pursuant to Section
5.1 and the Severance Agreement.
10. Headings. The headings of the sections hereof are inserted for
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convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
11. Interpretation. In case any one or more of the provisions contained
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in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held to be excessively broad
as to duration, geographical scope, activity or subject, it shall be construed
by limiting and reducing it, so as to be enforceable to the extent compatible
with the applicable law as it shall then appear.
12. Notices. All notices under this Agreement shall be in writing and
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shall be deemed to have been given at the time when mailed by registered or
certified mail, addressed to the address below stated of the party to which
notice is given, or to such changed address as such party may have fixed by
notice:
To the Company: ADVO, Inc.
Xxx Xxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: General Counsel
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To the Employee: Xx. Xxxxxx Xxxxxxxxxx
000 Xxxxxx Xxxx Xxxx
Xxx Xxxxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
13. Waivers. If either party should waive any breach of any provision of
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this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
14. Complete Agreement; Amendments; Counterparts. The foregoing is the
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entire agreement of the parties with respect to the subject matter hereof and
may not be amended, supplemented, canceled or discharged except by written
instrument executed by both parties hereto. This Agreement specifically
supersedes and replaces the agreement between the parties dated November 14,
1991. This Agreement may be executed in counterparts, each of which shall be an
original copy and which together shall constitute one and the same instrument.
15. Governing Law. This Agreement is to be governed by and construed in
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accordance with the laws of the State of Connecticut, without giving effect to
principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ADVO, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
By: /s/ Xxxxxx Xxxxxxxxxx
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Xxxxxx Xxxxxxxxxx
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