CONSULTING AGREEMENT
This Agreement ("Agreement") made effective as of the 15th day of September,
2008 ("Effective Date") by and between Xxx Xxxxxx ("Consultant"), with offices
at 0000 Xxxxxxxx Xxxxxx, Xxxx 00, Xxxxxxxxxx, Xxxx 00000 and 0-000-Xxxxxxx.xxx,
Inc. with offices located at Xxx Xxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx, Xxx
Xxxx 00000 ("Company").
Whereas, the Company wishes to retain Consultant as the Interim President,
Consumer Floral brand to provide consulting services as an independent
contractor in that capacity subject to the terms and conditions set forth
herein, and Consultant is willing to so serve as an independent contractor in
such capacity; and
Whereas, in consideration of their mutual promises and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties agree as follows:
1. Consultant Services. Company hereby engages Consultant to perform services
for Company as the Interim President, Consumer Floral Brand ("Consultant
Services").
2. Term. This Agreement will become effective as of the Effective Date and
shall continue until the Company or Consultant terminates this Agreement at
any time, for any reason or for no reason at all, upon ten (10) days prior
written notice. Upon termination or expiration of this Agreement,
Consultant shall immediately return all Company materials and Work Product
to Company.
3. Consulting Fees. Company will compensate Consultant for her performance of
the Consultant Services at the rate of $15,384.62 on a biweekly basis,
payable biweekly in arrears. Consultant will also be eligible to receive an
additional annual performance consulting fee with an annual target amount
equal to $200,000 (the "Target"), based on satisfactory attainment of the
Consumer Floral business unit's (75% of Target) and the Company's financial
performance (25% of Target) for the Company's Fiscal Year 2009, which shall
be prorated for the number of full months during the fiscal year during
which her Consultant Services are performed hereunder. Exhibit A contains
the performance measures for both the business unit and the Company's
respective financial performance. The amount of any such additional annual
performance consulting fee will be calculated by the Company and paid
within two and one half months after the end of the applicable fiscal year,
however, in order for any amount of such performance consulting fee to be
paid to Consultant for any fiscal year, this Agreement must be in effect at
the time of such payment. In addition, the Company will reimburse
Consultant for all out-of-pocket expenses incurred by Consultant in
performing her services hereunder upon presentation of same by Consultant
from time to time along with proper documentation evidencing such
expenditures, including information and materials as the Company may
reasonably require.
4. Independent Contractor. It is understood and agreed that the relationship
of the Parties created under this Agreement is that of independent
contractor, and no employee, partnership, joint venture, agency or other
relationship is intended or created hereby. Each of the parties hereto have
consulted with their own counsel in connection with the structuring and
effect of such relationship. Consultant shall not represent to any third
party that she has the authority to contractually bind Company, nor execute
any agreements on behalf of Company. Consultant shall be solely responsible
for paying any and all federal, state and local income tax on any payments
received by Company, and shall be solely responsible for withholding and
paying any and all self-employment taxes. Consultant shall complete and
sign IRS Form W-9 and provide Company with her Tax Identification Number
(TIN). Consultant shall receive an IRS Form 1099 at or about year end.
Consultant acknowledges and agrees that she shall not be entitled to any
Company benefits of whatever nature, including without limitation, health
and dental insurance coverage, disability insurance coverage, life
insurance coverage or pension and/or profit sharing plan benefits.
Notwithstanding the foregoing, Consultant will be eligible for stock
options or restricted stock grants subject to the approval of the
Compensation Committee of the Board of Directors pursuant to the terms of
the Company's 2003 Long Term Incentive and Share Award Plan (the "Plan").
Consultant represents she has and shall maintain all applicable worker's
compensation insurance coverage required by law or is otherwise exempt from
such requirement.
5. Work Product. Consultant agrees that all of the results, proceeds and
deliverables of Consultant's Services and work on or for Company and its
affiliates, shall be owned exclusively by Company, including the copyright
and other intellectual property rights thereto. Consultant agrees that all
work performed under this Agreement, and the results thereto ("Work
Product") shall be deemed as "work for hire," of which Company shall be
deemed the author to the extent such works qualify as such in accordance
with applicable law. In the event, for any reason, that any such results or
proceeds are not qualified as "work for hire", Consultant irrevocably
assigns to Company all of its right, title, and interest in such Work
Product to Company.
6. Confidentiality. It is expected that, pursuant to discussions to date and
in the course of performing the Consultant Services, Company will provide
access to or disclose to Consultant certain information ("Information"),
which is considered by Company to be proprietary or confidential
information All such Information shall remain the sole property of Company,
and its confidentiality shall be maintained and protected by Consultant and
Consultant shall not use or disclose such information, except as required
to perform the Consultant Services. Consultant shall execute the
Confidentiality and Non-Compete Agreement attached hereto as Exhibit B,
simultaneously with the execution of this Agreement.
7. Representation and Warranties. Consultant represents and warrants that: (i)
this Agreement constitutes a legal, valid and binding obligation of
Consultant; (ii) the execution and the performance by Consultant will not
(a) violate any rule, law, regulation, order, writ, judgment, injunction
decree, presently in effect having applicability to Consultant as currently
interpreted and enforced; (b) with or without the giving of notice or the
passage or time or both, result in a breach under any material agreements
to which Consultant is a party or by which Consultant is bound; (iii)
Consultant is highly skilled and experienced in the performance of the
Consultant Services and Company is relying upon such; and (iv) the Work
Product produced and delivered hereunder will be of original development by
Consultant and will not directly or indirectly infringe upon any patent,
copyright, trade secret, intellectual property, or other property right of
any third party, and Consultant will indemnify and hold Company harmless
from and against any loss, cost, liability or expense (including reasonable
legal fees) arising out of any breach or claimed breach of this warranty;
and (v) Consultant has not and will not enter into agreements or
commitments that are inconsistent with or conflict with the rights granted
to Company in this Agreement.
8. Compliance with Rules and Regulations. Consultant shall comply with any
laws, rules and regulations of governmental authorities having
jurisdiction. This shall include, but not be limited to, workers
compensation insurance, disability insurance, and payment of any and all
federal, state and local taxes applicable to the income derived from, and
paid to, Consultant for the services rendered. Consultant shall maintain
and preserve for a period of three (3) years, such records relating to the
Consultant Services to be performed by Consultant under this Agreement.
Consultant shall defend and hold Company harmless from and against any
loss, cost, liability or expense (including reasonable legal fees) or
determination by any federal, state, or local government or their agencies
including, without limitation, the Internal Revenue Service, Worker's
Compensation, Department of Labor, New York State Department of Taxation
and Finance that seeks to levy any tax or other financial obligation on
Company based on, or in any way relating to, Consultant's status as an
"employee" or "deemed employer" of Consultant rather than an independent
contractor.
9. Limitation of Liability. EXCEPT FOR CLAIMS UNDER SECTIONS 6, 7 AND 8 OF
THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY
FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT, OR PUNITIVE DAMAGES
(INCLUDING BUT NOT LIMITED TO LOST PROFITS AND LOST OPPORTUNITIES),
REGARDLESS OF WHETHER SUCH LIABILITY IS BASED ON BREACH OF CONTRACT, TORT,
STRICT LIABILITY, BREACH OF WARRANTIES, FAILURE OF ESSENTIAL PURPOSE, LOSS
OF GOODWILL OR OTHERWISE AND EVEN IF ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES.
10. Consultant Indemnification. Company agrees that if Consultant is made a
party, or is threatened to be made a party, to any action, suit or
proceeding, whether civil, criminal, administrative or investigative (each,
a "Proceeding"), by reason of the fact that she is or was a consultant to
Company under this Agreement, Consultant shall be indemnified and held
harmless by Company to the fullest extent permitted or authorized by
applicable law and its organizational documents, against all cost, expense,
liability and loss (including, without limitation, advancement of
attorneys' and other fees and expenses) reasonably incurred or suffered by
Consultant in connection therewith, and such indemnification shall continue
as to Consultant even after termination of this Agreement and shall inure
to the benefit of Consultant's heirs, executors and administrators.
11. Notice. Any notice to be given hereunder shall be delivered via overnight
courier, or mailed by registered or certified mail, to the address of the
receiving Party indicated above, or at such other address as may hereafter
be furnished in writing by either Party hereto to the other. Consultant
shall also send a copy of any notice sent to Company's General Counsel,
Xxxxxx X. Xxxxxxxxx, Esq., 0-000-Xxxxxxx.xxx, Xxx Xxx Xxxxxxx Xxxx, Xxxxx
000, Xxxxx Xxxxx, Xxx Xxxx 00000.
12. Non-Competition and Non-Solicitation. In view of role that Consultant is
assuming and the services to be rendered hereunder, Consultant shall
execute, simultaneously with the execution of this Agreement the
Confidentiality and Non-Compete Agreement attached hereto as Exhibit B.
13. Personal Services/Assignment. This is a personal services agreement.
Consultant agrees, represents and warrants to Company that only Consultant
will personally perform the Consulting Services. Company may assign this
Agreement to any of its affiliates. Consultant shall not subcontract any of
its responsibilities to any third party.
14. Waiver; Invalidity. No failure or delay by either Party to exercise, and no
course of dealing with respect to, any right of any such Party regarding an
obligation of the other Party to this Agreement, shall operate as a waiver.
15. Choice of Law/Venue. This Agreement shall be governed by, interpreted, and
enforced in accordance with the laws of the State of New York, without
application of the principles of conflict of laws thereof. Any claim
directly or indirectly arising out of or relating to this Agreement, or any
breach thereof, shall be resolved by the Supreme Court of the State of New
York, County of Nassau or the United States District Court in and for the
Eastern District of New York. The parties hereby consent that venue for
purposes of any action brought in connection with or arising out of this
Agreement shall be placed in such courts, and the parties hereby submit to
the exclusive jurisdiction of said courts.
16. Survival & Security/Policy Compliance. Sections 4 through and including 12,
14, and 15 of this Agreement are deemed to survive its termination or
expiration. During the term of this Agreement, Consultant shall fully
comply with all of Company's security rules and regulations and comply with
all Company policies and procedures, as amended from time-to-time,
including but not limited to, Company's Policy on the Prevention of Xxxxxxx
Xxxxxxx, attached hereto as Exhibit C. Consultant acknowledges receiving,
reading, understanding and agreeing to the terms of the aforementioned
Policy.
17. Entire Agreement. This Agreement, including any exhibits hereto, sets forth
the entire agreement and understanding between the Parties, and supersedes
any prior discussions, agreements or understandings, whether oral or
written, and no Party will be bound by any representation, warranty,
covenant, term or condition other than as expressly set forth in this
Agreement. This Agreement may only be amended by a written instrument
executed by both Parties.
IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals.
0-000-XXXXXXX.XXX, INC.
/s/ Xxx Xxxxxx
---------------------------------
Name (Print)
Title
Date
CONSULTANT
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Name (Print)
Title
Date
EXHIBIT A
Performance Measures
Corporate Performance (Financial)
|X| Profitability (Weighted 100%): This measurement is determined by assessing
the growth of EBITDA in accordance with 0-000-Xxxxxxx.Xxx's annual budget.
Division Performance (Financial)
|X| Profitability (Weighted 75%): This measurement is determined by assessing
the growth of EBITDA in accordance with the annual budget for the Division.
|X| Revenue Growth (Weighted 25%): This measurement is determined by achieving
or exceeding the revenue growth in line with the annual budget for the
Division.
Division and Corporate Award Adjustment Factors
------------------------------------- ----------------------------------
Achieved Performance Multiply Incentive
(% of Budget) Target* By:
------------------------------------- ----------------------------------
135% 200% (max)
...................................... ..................................
125% 150%
...................................... ..................................
110% 125%
...................................... ..................................
100% 100%
...................................... ..................................
85% 75%
...................................... ..................................
70% 50%
...................................... ..................................
Below 70% 0%
------------------------------------- ----------------------------------
EXHIBIT B
CONFIDENTIALITY & NON-COMPETE AGREEMENT
This Agreement is made and entered into by and between Xxx Xxxxxx,
("CONSULTANT"), with offices at 0000 Xxxxxxxx Xxxxxx, Xxxx 00, Xxxxxxxxxx, Xxxx
00000, and 0-000-XXXXXXX.XXX, INC. ("Company"), a corporation organized and
existing under laws of the State of Delaware and having its principal place of
business at Xxx Xxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx, Xxx Xxxx 00000.
WHEREAS, CONSULTANT desires to be engaged by the Company.
NOW, THEREFORE, in consideration of the retaining of CONSULTANT by the
Company, and other good and valuable consideration, the parties agree as
follows:
1. CONFIDENTIALITY
1.1 Acknowledgment of Proprietary Interest. As a result of the position which
CONSULTANT will occupy pursuant to the Consulting Agreement by and between
the parties hereto and dated effective as of September 15, 2008 (the
"Consulting Agreement"), CONSULTANT will be entrusted with and have access
to Confidential Information. CONSULTANT recognizes the proprietary interest
of Company in any Confidential Information of Company and its direct and
indirect subsidiaries (collectively the "Group"). As used herein, the term
"Confidential Information" means all information relating to the Group and
any of the Group's customers, operations, products, sales, finances, trade
secrets, and business, including without limitation any information
encompassed in any reports, investigations, customer and recipient lists
(whether or not written) and customer and recipient information, business
plans and business relationships, information on suppliers, vendors and
fulfilling florists, experiments, research or developmental work,
experimental work, work in progress, drawings, designs, plans, proposals,
codes, marketing and sales programs, financial projections, financial data
including sales and pricing information and all other financial data, cost
summaries, pricing formula and trademarks, service marks, and all concepts
or ideas, materials or information, owned possessed or controlled or
related to the business of the Group, regardless of whether same may be
possessed or developed by CONSULTANT in the course of her engagement or
otherwise. Confidential Information also includes, without limitation, all
information CONSULTANT receives from third parties in the course of
CONSULTANT'S engagement which is provided to CONSULTANT in connection with
CONSULTANT'S duties for the Company and the Group. CONSULTANT acknowledges
and agrees that any and all Confidential Information of the Group learned
by CONSULTANT during the course of her engagement by Company or otherwise,
whether developed by CONSULTANT alone or in conjunction with others or
otherwise, shall be and is the sole property of Company.
1.2 Covenant Not to Divulge Confidential Information. CONSULTANT acknowledges
and agrees that Company is entitled to prevent the disclosure of
Confidential Information of Company and the Group. As a portion of the
consideration for the engagement of CONSULTANT and for the compensation
being paid to CONSULTANT by Company, CONSULTANT agrees at all times during
the term of CONSULTANT'S engagement by Company and thereafter to hold in
strictest confidence, and not to disclose or allow to be disclosed to any
person, firm or corporation, other than to persons engaged by a member of
the Group to further the business of the Company or Group, and not to use
or allow to be used, except in the pursuit of the business of the Company
or the Group, the Confidential Information of the Group, including without
limitation, Confidential Information developed by CONSULTANT, without the
prior written consent of Company.
1.3 Return of Materials at Termination. In the event of any cessation of
CONSULTANT'S engagement, CONSULTANT will promptly deliver to Company all
materials, property, documents, data and other information belonging to
Company or the group or pertaining to Confidential Information. CONSULTANT
shall not take or retain any materials, property, documents or other
information, or any reproduction or excerpt thereof, belonging to the
Company or the Group or containing or pertaining to any Confidential
Information.
2. NON-COMPETITION/NON-SOLICITATION
2.1 As a material inducement to the Company to enter into the Consulting
Agreement and to retain the CONSULTANT, CONSULTANT agrees that CONSULTANT
shall not, during the term of CONSULTANT's engagement with the Company and
thereafter for a period equal to the shorter of (x) the time that
CONSULTANT's Consulting Agreement is in effect and (y) one (1) year
following the cessation of such engagement with the Company, whether
voluntary or involuntary, with or without cause, do any of the following,
directly or indirectly, within the United States (which CONSULTANT
expressly acknowledges is the most narrowly defined geographic territory
within which CONSULTANT performed services for the Company), without the
prior written consent of the Company:
(a) Engage or participate, in any manner, in a Competitive Business.
As used herein, the term "Competitive Business" means (i) any
floral or gardening business marketing or selling its products or
services through, retail, mass marketing, franchise, wholesale,
catalog, supermarket, wholesale club, internet, and telemarketing
channels, and (ii) without limiting in any way the terms of
2.1(a) (i), those entities listed on Schedule "A" attached hereto
and made a part hereof.
(b) Become associated with (as owner, stockholder, lender, partner,
coventurer, director, officer, CONSULTANT, agent, consultant or
otherwise) any person, firm, corporation, association or other
entity engaged in any Competitive Business or become interested
in (as owner, stockholder, lender, partner, coventurer, director,
officer, employee, agent, consultant or otherwise) any portion of
the business of any person, firm, corporation, association, or
other affiliate where such portion of such business is a
Competitive Business. Notwithstanding the foregoing, CONSULTANT
may hold not more than five (5%) percent of the outstanding
securities of any class of any publicly-traded company that is so
engaged;
(c) In the event CONSULTANT obtains employment with, or enters into a
consulting arrangement with, any marketing, public relations, or
advertising agency or employment in the marketing, public
relations, or advertising departments of a company, or enters
into a consulting arrangement with such a company, CONSULTANT
shall not, directly or indirectly, render services for such
agency or company or for any client of such agency or company; if
such services relate to any business which is a Competitive
Business;
2.2 As a material inducement to the Company to enter into the Consulting
Agreement and to retain the CONSULTANT, CONSULTANT agrees that CONSULTANT
shall not, during the term of CONSULTANT's engagement by the Company and
for a period of two (2) years following cessation of such engagement, do
any of the following, directly or indirectly, without the prior written
consent of the Company:
a) Influence or attempt to influence any person to either (i)
terminate or modify her/her employment with the Company or Group,
(ii) solicit for employment any person employed by the Company or
the Group, or (iii) employ, or otherwise retain the services of
any person employed by the Company or Group;
b) Influence or attempt to influence a supplier or customer,
including, without limitation, any individual or corporate
customer of the Company or Group any other person or entity with
whom the Company or Group shall have dealt, to terminate or
modify any written or oral agreement or course of dealing with
the Company or Group; or
c) Influence or attempt to influence a supplier or customer,
including, without limitation, any individual or corporate
customer of the Company or Group, any recipient of Company's or
Group's products, or any other person or entity with whom the
Company or Group shall have dealt, for the purpose of offering or
selling any products or services which are identical,
substantially similar or comparable to the services or products
offered by the Company or Group.
2.3 CONSULTANT acknowledges and agrees that: (i) this Section 2 is necessary
for the protection of the legitimate business of the Company; (ii) the
restrictive covenants set forth in this Section 2 are reasonable and valid
in geographical and temporal scope and in all other respects; and (iii)
CONSULTANT has received adequate consideration for the execution, delivery
and performance of this Agreement.
3. COOPERATION
CONSULTANT agrees that in the event of any disagreement, dispute, claim,
proceeding, or legal suit between the Company or a member of the Group, and
their respective employees and former employees, and any third party, or any
investigation conducted by, for, or against the Company or the Group, CONSULTANT
agrees to make herself available at the Company's, or its agents and
representatives request, to fully cooperate for the purpose of giving
interviews, statements, depositions, hearing or trial testimony and to provide
truthful and accurate testimony concerning events or matters as to which
CONSULTANT has personal knowledge and information. Company agrees to reimburse
CONSULTANT for her reasonable and actual out-of pocket expenses directly
incurred and occasioned by such cooperation. No compensation shall be paid to
CONSULTANT for the providing of such cooperation, or for the substance of any
such knowledge or information.
4. REMEDIES
CONSULTANT agrees that a violation of any term, provision, covenant or
condition of this Agreement will result in irreparable injury and damage to the
Company that cannot be adequately compensated in money damages and that the
Company will have no adequate remedy at law therefore. In such event, the
Company and CONSULTANT agree that, in addition to any other legal and equitable
remedies which the Company may have, including without limitation an award of
money damages, the Company shall be entitled to temporary, preliminary and
permanent restraining orders, decrees or injunctions to protect the Company
against such violation and without the necessity of posting any bond or
undertaking. However, nothing in this Agreement shall be construed to limit the
Company's remedies for or defenses to any action, suit or controversy arising
out of this Agreement or otherwise. The Company shall recover its reasonable
attorney's fees incurred by the Company to investigate, analyze, negotiate,
litigate or otherwise pursue enforcement of or compliance with this Agreement
and any remedies available hereunder.
5. GOVERNING LAW AND FORUM
The Agreement shall be interpreted, construed, governed and enforced
according to the laws of the State of New York. With respect to any suit,
action, or proceeding relating to this Agreement, each party irrevocably submits
to the jurisdiction of the Supreme Court of the State of New York, County of
Nassau and the United States District Court, in and for the Eastern District of
New York. CONSULTANT waives any objection to the laying of venue in such courts,
and any claim that such courts represent an inconvenient forum, or that such
courts does not have jurisdiction over the parties hereto or claims arising
hereunder.
6. AMENDMENTS
No amendment or modification of the terms or conditions of the Agreement
shall be valid unless in writing and signed by the parties hereto, except as
provided in paragraph 11 herein.
7. SUCCESSORS AND ASSIGNS
The Company shall have the right to assign its rights and obligations under
the Agreement without the consent of CONSULTANT. CONSULTANT shall not be
entitled to assign any of CONSULTANT'S rights or obligations under this
Agreement.
8. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter of this Agreement.
9. NOTICE
Any notice, statement, report, request or demand required or permitted to
be given by this Agreement shall be effective only if in writing, delivered
personally or mailed by certified mail, return receipt requested, to the parties
at the addresses set forth above or such other places that any party may
designate by written notice to the other.
10. TOLLING
In the event that CONSULTANT violates any of the provisions of this
Agreement, the obligations contained in those provisions shall run from the date
on which CONSULTANT ceases to be in violation of any such provision.
11. SEVERABILITY
If a court of competent jurisdiction finally determines that any of the
provisions of this Agreement, or any part thereof, are invalid or unenforceable
for any reason, such court shall modify such provision, or any part thereof,
and, in its modified form, this Agreement shall then be valid and enforceable
and the remainder of the provisions of this Agreement shall not thereby be
affected and shall be given full force and effect, without regard to invalid or
unenforceable parts.
BALANCE OF PAGE INTENTIONALLY LEFT BLANK
IN WITNESS WHEREOF, the parties have executed this Agreement effective as
of the 15th day of September, 2008.
CONSULTANT
/s/ Xxx Xxxxxx
---------------------------
Xxx Xxxxxx
0-000-XXXXXXX.XXX, INC.
/s/Xxxxxx X. Xxxxxxxxx
---------------------------
Xxxxxx X. Xxxxxxxxx
SCHEDULE "A"
"Competitive Business"
0000Xxxxxxx.xxx
---------------
o XXX.xxx, Inc.
o Xxxxxxxxxx.xxx, Inc.
o Hallmark Cards, Inc.
o All Wire Service entities, including, without limitation: FTD and
Teleflora, and each of their direct-to-consumer affiliates
o Xxxxxx.xxx
o Xxxxxx Xxxxxxx Living Omnimedia, Inc.
o Red Envelope, Inc.
o Xxxxx and Xxxxx
o Vermont Teddy Bear
o Calyx & Corolla
o Home Depot Flowers
o Target Flowers
o Walmart Flowers
TPF / C&Co.
-----------
o Xxxx & Xxxxxx
o Delightful Deliveries
o Godiva
o Xxx. Xxxxxx
Plow & Hearth, Problem Solvers, Wind & Weather
----------------------------------------------
o Frontgate
o Grandin Road
x Xxxxx and Xxxxxx
WTN
---
o Xxxx.xxx
o Xxxxxxxxxxxx.xxx
o Bacchus
o Bounty Hunter
FMCB
----
o Xxxxxxx Xxxxxx Candies, Inc.
o See's Candies, Inc.
The above entities also include any of their parent companies and all direct and
indirect subsidiaries of the listed companies and their respective parent
companies.
Exhibit C
Xxxxxxx Xxxxxxx Policy
POLICY ON THE PREVENTION OF XXXXXXX XXXXXXX
FOR
0-000-XXXXXXX.XXX, Inc.
In the normal course of business, officers, directors and employees of
0-000-XXXXXXX.XXX, Inc. and its subsidiaries (collectively,"0-000-XXXXXXX.XXX")
may come into possession of significant, sensitive information about
0-000-XXXXXXX.XXX. This information is considered the property of
0-000-XXXXXXX.XXX; you have been entrusted with it. In particular, you may not
seek to profit from it by buying or selling securities yourself, or passing on
the information to others to enable them to profit. The purpose of this policy
statement is both to inform you of your legal responsibilities and to make clear
to you that the misuse of sensitive information is contrary to company policy
and will be dealt with severely. Persons violating 0-000-XXXXXXX.XXX policy on
xxxxxxx xxxxxxx shall be subject to immediate dismissal and possible criminal
prosecution.
Xxxxxxx xxxxxxx is a crime, penalized by fines of up to $1,000,000 and 10
years in jail for individuals. In addition, the SEC may seek the imposition of a
civil penalty of up to three times the profits made or losses avoided from the
trading. Insider traders must also disgorge any profits made, and are often
subjected to an injunction against future violations. Finally, insider traders
may be subjected to civil liability in private lawsuits.
Employers and other controlling persons (including supervisory personnel)
are also at risk under federal law. Controlling persons may, among other things,
face penalties of the greater of $1,000,000 or three times the profits made or
losses avoided by the trader if they recklessly fail to take preventive steps to
control xxxxxxx xxxxxxx.
Thus, it is important both to you and 0-000-XXXXXXX.XXX that xxxxxxx
xxxxxxx violations not occur. You should be aware that stock market surveillance
techniques are becoming more and more sophisticated, and the chance that federal
or other regulatory authorities will detect and prosecute even small-level
trading is significant. The risk is simply not worth taking.
This memorandum describes 0-000-XXXXXXX.XXX's Xxxxxxx Xxxxxxx Policy to
ensure that all 0-000-XXXXXXX.XXX directors (meaning a member of the Board of
Directors), officers, employees and 0-000-XXXXXXX.XXX itself comply with laws
prohibiting trading in 0-000-XXXXXXX.XXX stock by persons with material,
non-public information. This memorandum supersedes all previous communications,
if any, on the same subject.
If you have any questions about the scope or application of this policy
then please contact Xxxxxx X. Xxxxxxxxx, General Counsel (phone: (000) 000-0000,
e-mail: xxxxxxxxxx@0000xxxxxxx.xxx).
SUMMARY OF POLICY
The following Policy applies to all 0-000-XXXXXXX.XXX directors, officers
and employees worldwide:
If you are in possession of material, non-public information relating to
0-000-XXXXXXX.XXX, it is 0-000-XXXXXXX.XXX's policy that neither you, nor your
spouse or your dependents, nor any other person living in your household, may
buy or sell securities of 0-000-XXXXXXX.XXX or engage in any other action to
take advantage of, or pass on to others, that information. This policy also
applies to trading in the securities of any other company, including
0-000-XXXXXXX.XXX's customers or suppliers, if you are in possession of
material, non-public information about that company which you obtained in the
course of your employment with 0-000-XXXXXXX.XXX. This policy, however, does not
apply to and does not prohibit trading pursuant to a plan meeting the
requirements of Rule 10b5-1 under the Securities Exchange Act of 1934, as
amended, that has been approved by 0-000-XXXXXXX.XXX.
Transactions that may be necessary or justifiable for independent reasons,
including emergency expenditures and transactions planned before you learned the
material, non-public information, are not exceptions. Even the appearance of an
improper transaction must be avoided to prevent any potential prosecution of
0-000-XXXXXXX.XXX or the individual trader.
In addition to your obligation to refrain from trading while in possession
of material, non-public information, you are also prohibited from "tipping"
others. The concept of unlawful tipping includes passing on information to
friends or family members, whether or not under circumstances that suggests that
you were trying to help them make a profit or avoid a loss. In addition to being
considered a form of xxxxxxx xxxxxxx, tipping is a serious breach of corporate
confidentiality. For this reason, you should be careful to avoid discussing
sensitive information in any place (for instance, at lunch, on public
transportation, at social gatherings, on-line, in elevators) where others may
hear such information.
The rules regarding xxxxxxx xxxxxxx - particularly the prohibition against
"tipping" others to information not available to the general public - cover all
forms and channels of communication, including those conducted via the
Internet's World Wide Web. Information communicated via e-mail, internal and
external, is sometimes confidential and "material" in nature and thus subject to
xxxxxxx xxxxxxx rules. You are cautioned that the various Internet "chat rooms"
and message boards dedicated to the stock market are largely unsecured and
unregulated and should not be used to communicate any Company information
whether confidential or not.
It is the policy of 0-000-XXXXXXX.XXX that no director, officer or employee
shall initiate or respond to messages posted in such forums that pertain to
0-000-XXXXXXX.XXX or companies that 0-000-XXXXXXX.XXX does or may do business
with about which you may learn something in the course of your employment. Such
forums often contain rumors and misinformation that you may, as a loyal
employee, feel compelled to correct. However, doing so, even with innocent and
laudable intention, could be considered "tipping" and thereby in violation of
xxxxxxx xxxxxxx rules. Should you come across information posted in an
electronic forum that you believe to be false and potentially damaging to
0-000-XXXXXXX.XXX, please do not respond directly yourself. Instead, kindly
contact Xxxxxx X. Xxxxxxxxx or Xxxxxx Xxxxxxx, Vice President of Investor
Relations (phone: (000) 000-0000, e-mail: xxxxxxxx@0000xxxxxxx.xxx).
If material, non-public information is inadvertently disclosed, no matter
what the circumstances, by any director, officer or employee of
0-000-XXXXXXX.XXX, the person making or discovering that disclosure should
immediately report the disclosure to Xxxxxx X. Xxxxxxxxx
DEFINITIONS AND DETAILS
1. "Material" information is information that a reasonable investor would
consider important in a decision to buy, sell or hold 0-000-XXXXXXX.XXX
securities. Chances are, if you learn something that leads you to want to buy or
sell stock, that information will be considered material. It is important to
keep in mind that material information can be any kind of information:
information that something is likely to happen, or even just that it may happen,
can be considered material. In short, any information which could reasonably
affect the price of or influence a person's decision to buy or sell
0-000-XXXXXXX.XXX's stock is "material." If you are in doubt as to the
materiality of non-public information, you should presume that the information
is material until you speak with Xxxxxx X. Xxxxxxxxx.
Examples of material information include:
- quarterly or annual financial results
- unanticipated changes in the level of sales, orders or expenses
- contract negotiations with a potentially significant new customer
- major new products
- serious product defects or recalls
- stock splits or dividend information
- major financings
- significant personnel changes
- significant operational changes
- significant acquisitions or dispositions of assets
- significant litigation
- merger negotiations
2. "Non-public" information is any information that is not reasonably
accessible to the investing public. Keep in mind that once 0-000-XXXXXXX.XXX
releases information through public channels (for instance, a press release) it
is deemed to take a few additional days for it to be broadly disseminated. For
example, a speech to an audience, a TV or radio appearance or an article in a
trade magazine does not qualify as full disclosure. Therefore, "non-public"
information made available in any such manner will continue to be considered
"non-public" until more broadly disseminated. Generally considered "non-public"
for the first two business days after the day of release to the public.
3. All 0-000-XXXXXXX.XXX directors, officers and other specifically
identified employees are considered insiders ("Insiders"). Employees
specifically notified by the Company are considered Insiders for purposes of
this policy. An Insider is permitted to trade stock only during certain
specified periods (the "trading window") and only if the Insider is not in
possession of material, non-public information. The trading window opens (i.e.,
trading is permissible) on the third business day after the day on which
0-000-XXXXXXX.XXX releases information to the financial community about the
prior quarter results. The trading window closes (i.e., trading is prohibited)
fifteen days prior to the last day of the fiscal quarter in which the window had
been opened. In addition, the Company may "shut the window" at any time.
4. Other 0-000-XXXXXXX.XXX employees, regardless of title, who acquire
material, non-public information are also insiders ("Temporary Insiders").
Temporary Insiders must abide by the "trading windows" applicable to Insiders
(see paragraph 3 above). It is a Temporary Insiders' responsibility to know when
a trading window is in effect.
5. All trades (purchases or sales) by any Insider or Temporary Insider, the
spouse and dependants of an Insider or Temporary Insider, or any other person
living in the household of an Insider or Temporary Insider must be cleared with
Xxxxxx X. Xxxxxxxxx Esq., or counsel designated by him for such purpose, before
the trade is initiated. This will help ensure that you do not create the
appearance of improperly trading in 0-000-XXXXXXX.XXX stock.
6. Insiders and Temporary Insiders who wish to exercise their outstanding
stock options under the company's stock option plan must abide by the following
guidelines:
- If the option is being exercised with a cash payment or with
shares of 0-000-XXXXXXX.XXX common stock, without the
concurrent sale of the purchased shares, then the exercise
may occur at any time.
- If the option is being exercised in connection with a
same-day sale program, the exercise and sale must occur
during the quarterly window period specified for open-market
transactions and otherwise comply with this Policy.
7. Even when the trading window is open, all directors, officers and
employees must abstain from trading stock while in possession of material,
non-public information. 0-000-XXXXXXX.XXX's directors, officers and employees
who acquire material, non-public information may not buy or sell
0-000-XXXXXXX.XXX stock, including stock obtained by option exercises, from the
time they obtain such information until the third business day following a press
release of the information by 0-000-XXXXXXX.XXX.
8. All directors, officers and employees are prohibited from revealing
material, non-public information to third parties who may engage in trading
activities, and from making buy or sell recommendations to third parties based
upon such information. If you are in possession of material, non-public
information, your family members and close friends may also be deemed to be in
possession of such information, regardless of whether they have actual knowledge
of the information. (That is, it would be difficult to prove they did not have
actual knowledge.) Consequently, they could also be liable for violations of the
xxxxxxx xxxxxxx laws if they trade during a time in which you are prohibited
from trading, regardless of whether they actually knew the material, non-public
information at that time.
9. In order to avoid placing employees in a position in which they are
prevented from trading, and for other good business reasons, material non-public
information should be limited to those who need to know such information in
order to perform their jobs. If, however, 0-000-XXXXXXX.XXX management becomes
aware that material non-public information may have been widely disseminated
within 0-000-XXXXXXX.XXX, then management will impose a ban on trading for all
employees.
10. In order to avoid disclosure of material information to parties outside
of 0-000-XXXXXXX.XXX, all inquiries regarding 0-000-XXXXXXX.XXX's financial
performance, operating results, projections or other requests for financial
information should be referred to the Company's Vice President of Investor
Relations. This includes requests by analysts or others to corroborate or
comment upon their financial projections for 0-000-XXXXXXX.XXX.
11. Any director, officer or employee who knowingly trades
0-000-XXXXXXX.XXX stock while in the possession of material, non-public
information or who provides such information to others will be subject to
significant disciplinary action, including dismissal. No exceptions will be made
to this Policy, even where the transaction is very small or where the individual
planned to make the transaction before learning the information. If you know or
suspect that a 0-000-XXXXXXX.XXX employee has violated this Policy, we encourage
you to call Xxxxxx X. Xxxxxxxxx, Esq. You are free to do so on an anonymous
basis.
ADDITIONAL PROHIBITED TRANSACTIONS
1. 0-000-XXXXXXX.XXX believes it is improper and inappropriate for
0-000-XXXXXXX.XXX personnel to engage in short sales of 0-000-XXXXXXX.XXX's
stock. Therefore, it is 0-000-XXXXXXX.XXX's policy that directors, officers and
employees of 0-000-XXXXXXX.XXX may not engage in short sales of
0-000-XXXXXXX.XXX stock under any circumstances. For purposes of this Policy,
"short sale" means any transaction in which you may benefit from a decline in
0-000-XXXXXXX.XXX's stock price. Similarly, it is 0-000-XXXXXXX.XXX's policy
that directors, officers and employees of 0-000-XXXXXXX.XXX may not trade in
options of 0-000-XXXXXXX.XXX stock, irrespective of the nature of the options,
e.g., puts or calls.
2. If you are a Board of Directors member or an executive officer, as
determined by the Board of Directors, you are bound by Rule 16(b), which
prohibits profiting from the purchase and sale of stock during the same six
month period. Finally, you must report any changes in your stock ownership
position, including stock granted under an option plan, by filing a Form 4 with
the SEC, in most cases, not later than the second business day after the
transaction giving rise to the change in your ownership position is executed.
If you have any questions about the scope or application of this Policy,
please contact Xxxxxx X. Xxxxxxxxx.
