EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), dated as of January 22, 1997,
by and between Cognitive Communications, LLC, a Delaware limited liability
company ("CCL"), and Xxxxx Xxxxxx ("Employee").
W I T N E S S E T H :
WHEREAS, Employee is currently serving as an executive
officer of Cognitive Communications, Inc., a Connecticut corporation (the
"Company"), and owns 50% of the outstanding common stock of the Company;
WHEREAS, the Company, Employee and Xxxxxxx Xxxxxxx, the owner of
50% of the outstanding common stock of the Company, have entered into a Purchase
Agreement (the "Purchase Agreement") with CCL, dated as of the date hereof,
pursuant to which CCL will purchase the operating assets and assume the
operating liabilities of the Company;
WHEREAS, Employee possesses an intimate knowledge of the business
and affairs of the Company, its policies, methods of operation, personnel,
customers and suppliers;
WHEREAS, the execution of this Agreement is a condition precedent
to the consummation of the transactions contemplated by the Purchase Agreement;
and
WHEREAS, CCL desires to employ Employee, and Employee desires to
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto agree
as follows:
1. Employment. CCL hereby employs Employee, and Employee hereby
accepts employment with CCL, for the Term (as hereinafter defined), in the
position and with the duties and responsibilities set forth in Section 3 below,
and upon the other terms and subject to the conditions hereinafter set forth.
2. Term. Unless (i) sooner terminated as provided in Section 6
hereof or (ii) extended as provided for in that certain Put Agreement between
CCL and Employee and entered into in connection with the Purchase Agreement (the
"Put Agreement"), Employee's employment hereunder shall be for a term commencing
on the date hereof and ending on July 31, 2002. The actual term of employment
hereunder, giving effect to any early termination, or extension, of employment
under Section 6 hereof, or the Put Agreement, respectively, is referred to
herein as the "Term."
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3. Position, Duties, Responsibilities and Services.
3.1 Position, Duties and Responsibilities. During the
Term, Employee shall serve as the President of CCL and shall be responsible for
the duties attendant to such office as specified in the Limited Liability
Company Operating Agreement of CCL, and such additional managerial duties and
responsibilities with CCL or its subsidiaries or divisions as may be assigned by
the Chief Executive Officer of International Post Limited, an indirect parent of
CCL ("IPL"), or by such other executive corporate officer of IPL who is not the
chief executive officer or chief operating officer of another subsidiary or
division of IPL as such CEO may designate (the "IPL Officer"). Employee shall
also report directly to the IPL Officer. During the Term, CCL's operations shall
be located within New York City.
In addition, Employee shall abide by the policies of IPL
relating to the Powers Reserved/Delegated and to Corporate Conduct (Conflict of
Interest) as such policies are from time to time in effect. Copies of the
policies currently in effect are annexed as exhibits hereto.
3.2 Services to be Provided. During the Term, Employee
shall (i) devote all of her working time, attention and energies to the affairs
of CCL and its subsidiaries and divisions, (ii) use her best efforts to promote
its and their best interests, (iii) faithfully and diligently perform her duties
and responsibilities hereunder, and (iv) comply with and be bound by the
operational policies, procedures and practices of CCL from time to time in
effect during the Term; provided, however, that nothing in this Agreement shall
preclude Employee from (x) engaging in charitable and community affairs or (y)
giving attention to her passive personal investments or (z) performing
administrative functions related to the winding down of the remaining business
of the Company including such research in the area of employee communications as
may be approved in writing by IPL after the date hereof, so long as such
activities do not interfere with the regular performance of her duties and
responsibilities under this Agreement.
3.3 Exclusive Agreement. Employee hereby represents and
warrants to CCL that (i) her execution of this Agreement and the performance of
her duties and responsibilities hereunder does not and will not violate or
result in the breach of, or in any manner be prohibited or restricted by, the
terms of any agreement, arrangement or understanding (whether written or oral),
order or decree to which she is a party or by which she is bound and (ii) she is
not a party to any agreement or arrangement, whether written or oral, which
would prevent Employee from rendering services to CCL during the Term or which
would create any conflict with or involve any business relationship with
customers, suppliers or competitors of CCL, IPL or their respective affiliates,
subsidiaries or divisions.
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4. Compensation.
4.1 Base Salary. For all services rendered by Employee
hereunder and all covenants and conditions undertaken by her pursuant to this
Agreement, CCL shall pay Employee an annual base salary (the "Base Salary")
during the Term at the rate of one hundred fifty thousand dollars ($150,000),
payable at such intervals as the executive officers of IPL are paid, but in any
event at least on a semi-monthly basis. If the first or last month of the Term
is not a full calendar month, then any calculation of Base Salary for such
period shall be prorated for the number of days employed in such month.
4.2 Incentive Compensation.
(a) Employee shall receive a certain percentage of
CCL's earnings before interest, taxes, depreciation and amortization and certain
incentive stock options as provided for in that certain Incentive Compensation
Agreement, a copy of which is attached hereto.
(b) During the Term, Employee shall be entitled to
participate in all equity related incentive programs that CCL makes generally
available to officers and employees of CCL, subject to the terms and conditions
of such programs.
(c) Employee hereby acknowledges that,
notwithstanding anything contained herein to the contrary, IPL shall in no way
be obligated to cause Employee to participate in any stock option or other
equity related incentive programs that IPL makes generally available to officers
and employees of IPL and its other subsidiaries, affiliates or divisions.
4.3 Withholding. CCL shall withhold from any payments due to
Employee under this Agreement all Federal, state and local taxes, FICA and other
amounts required to be withheld pursuant to any applicable law.
5. Employee Benefits.
5.1 Benefit Programs. During the Term, Employee shall be
entitled to participate in such group life, health, accident, disability and
hospitalization insurance plans, pension plans and retirement plans that IPL
makes generally available to officers and employees of IPL and its subsidiaries.
5.2 Vacation. During each twelve month period of the Term,
Employee shall be entitled to four (4) weeks of vacation to be taken at times
determined by Employee which do not unreasonably interfere with the performance
of her duties hereunder; provided, however, that, other than up to one (1) week
of vacation not taken during a year which may be taken during the first quarter
of the following year, any such vacation time not taken
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during any year shall be forfeited. Employee shall also be entitled to all paid
holidays given by IPL to its officers and employees.
5.3 Automobile. During the Term, CCL shall lease and provide
the Employee with an appropriate automobile, as determined by the CCL Board, and
shall pay all expenses relating to the insurance, maintenance and operation
thereof.
5.4 Insurance. Employee agrees that CCL may request Employee
to apply for and take out term life, health, accident, and/or other insurance
covering Employee, either independently or together with others, in an aggregate
amount determined by the CCL Board. CCL shall pay all premiums for such
insurance and shall determine the beneficiary of, and own all rights in, any
such insurance policies and proceeds thereof, and Employee shall not have any
right, title or interest therein or any obligation to pay any of the premiums
therefor. If requested, Employee shall submit to medical examinations and shall
otherwise cooperate in all respects to procure such insurance.
As soon as practical after the date hereof, CCL shall
obtain "directors and officers liability insurance" on behalf and for the
benefit of the Employee on substantially the same terms and subject to
substantially the same conditions as provided to directors and officers of other
subsidiaries of IPL.
5.5 Expenses. During the Term, Employee is authorized to
incur reasonable expenses in the performance of her duties hereunder, and, upon
presentation of a detailed itemization account thereof, CCL shall pay or
reimburse Employee for such reasonable expenses so incurred by Employee.
6. Termination of Employment.
6.1 Death; Disability. Employee's employment hereunder shall
terminate upon her death, or, at the election of CCL by written notice to
Employee, if, as a result of the occurrence of mental or physical disability
during the Term, Employee has been unable to perform her duties hereunder for a
period of three (3) consecutive months or ninety (90) days in any consecutive
three hundred sixty-five (365) day period, as determined in good faith by the
CCL Board. In the event of a termination of Employee's employment for death or
disability, CCL shall pay Employee (or her legal representatives, as the case
may be): (i) her unpaid Base Salary through the date of termination, (ii) the
value of her accrued and unpaid vacation days as of the date of termination
(calculated based on Employee's Base Salary computed on a 365-day year), and
(iii) all amounts due under Section 5.5 hereof. In addition, Employee shall be
entitled to any amounts due under the programs referred to in Section 5.1
hereof, as and to the extent set forth in such programs.
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6.2 Termination for Cause.
(a) In addition to any other remedies available to
it at law or in equity, CCL shall have the right, upon written notice to
Employee, to terminate Employee's employment under this Agreement if Employee:
(i) breaches in any material respect any provision of this Agreement and such
breach is not remedied within thirty (30) days after written notice thereof from
the CCL Board setting forth in reasonable detail the matters constituting such
breach; (ii) fails or refuses to perform in any material respect such duties as
may be assigned to her from time to time by the IPL Officer or the CCL Board;
(iii) has been convicted of a felony; or (iv) has committed any act of fraud,
misappropriation of funds or embezzlement in connection with her employment
hereunder or has willfully disclosed any Confidential Information (as defined
below) (termination pursuant to the provisions of any of clauses (i) through
(iv) above is referred to herein as termination for "Cause").
(b) In the event Employee is terminated for Cause,
CCL shall pay Employee (i) her unpaid Base Salary through the date of
termination, (ii) the value of her accrued and unpaid vacation days as of the
date of termination (calculated based on Employee's Base Salary computed on a
365-day year), and (iii) all amounts due under Section 5.5 hereof. In addition,
Employee shall be entitled to any amounts due under the programs referred to in
Section 5.1 hereof, as and to the extent set forth in such programs.
(c) In the event Employee is terminated for Cause
other than pursuant to clause (ii) of subparagraph (a) above, Employee hereby
agrees to resign as a manager of CCL, effective as of the date of such
termination, and from any other positions she holds with CCL.
6.3 Termination Other than for Cause, Death or Disability.
Notwithstanding any provision to the contrary herein, CCL may at any time upon
written notice to Employee, in its sole and absolute discretion and for any or
no reason, terminate the employment of Employee hereunder without Cause. If this
Agreement is terminated (i) by CCL, other than as a result of the death or
disability of Employee or for Cause, or (ii) as a result of a Constructive
Termination (as defined below), CCL shall pay Employee (A) her unpaid Base
Salary through the end of the Term (payable as provided in Section 4.1 hereof),
(B) the value of her accrued and unpaid vacation days as of the date of
termination (calculated based on Employee's Base Salary computed on a 365-day
year), and (C) all amounts due under Section 5.5 hereof. In addition, Employee
shall be entitled to any amounts due under the programs referred to in Section
5.1 hereof, as and to the extent set forth in such programs. For purposes of
this Agreement, "Constructive Termination" shall be deemed to have occurred upon
any material breach by CCL of the provisions of this Agreement which breach
shall continue for at least thirty (30) days after written notice is provided by
Employee to CCL setting forth in reasonable detail the matters constituting such
breach.
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7. Inventions; Confidential Information; Non-Competition.
7.1 Inventions. All processes, technologies, improvements,
discoveries, trademarks, trade names, and inventions (collectively,
"Inventions") conceived, developed, invented, made or found by Employee, alone
or with others, during her employment with CCL or within six (6) months after
the termination of her employment, whether or not conceived, developed,
invented, made or found during Employee's employment with CCL or with the use of
the facilities or materials of CCL and which relate to the consulting business
in the area of communications and content strategy for, or research relating to
the implementation of, or the design and production of, intranets, extranets or
internets or any other business conducted by CCL or any of its subsidiaries or
divisions (the "CCL Companies"), whether or not patentable, shall be the
property of CCL and shall be promptly and fully disclosed by Employee to CCL.
Employee shall perform all necessary acts (including, without limitation,
executing and delivering any assignments, documents or instruments requested by
CCL) to vest title to any such Inventions in CCL and to entitle CCL, at its
expense, to secure and maintain domestic and/or foreign patents or any other
rights for such Inventions.
7.2 Confidential Information.
(a) Employee shall not, at any time during the
Term and thereafter, directly or indirectly, disclose or furnish to any other
person, firm, partnership, corporation or any other entity, except in the course
of the proper performance of her duties hereunder (including, without
limitation, during marketing and new business presentations, seminars and
workshops authorized by CCL), any Confidential Information (as defined below)
pertaining to the business of the CCL Companies, unless required to do so by a
court of competent jurisdiction, by any governmental agency having supervisory
authority over the business of the CCL Companies, or by any administrative body
or legislative body (including a committee thereof) with jurisdiction to order
Employee to divulge, disclose or make accessible such information; provided,
however, that Employee shall provide CCL with notice of the requirement of such
disclosure promptly after Employee is notified thereof and prior to her
disclosure thereof so as to enable CCL to challenge the order compelling such
disclosure. In the event that Employee's employment is terminated hereunder for
any reason, Employee shall promptly return to CCL all Confidential Information
and all other documents, drawings, work papers, lists, memoranda, notes, records
and other data (including copies thereof) constituting or pertaining to any of
the Confidential Information.
(b) For purposes of this Agreement, "Confidential
Information" shall mean non-public information concerning any financial data,
statistical data, strategic business plans, product development (or other
proprietary product data), customer and supplier lists, customer and supplier
information, information relating to practices, processes, techniques,
procedures, methods, trade secrets, marketing plans and other non-public,
proprietary and confidential information of any of the CCL Companies, that, in
any case, (i) is not otherwise generally available to the public, (ii) is not
generally known in any industry in which any of the
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CCL Companies is or was involved, and (iii) has not been disclosed by the CCL
Companies to others not subject to confidentiality agreements.
7.3 Non-Competition. Subject to the provisions of Section
3.2, Employee agrees that during the Non-Competition Period (as hereinafter
defined), she will not in any manner, directly or indirectly, except as
specifically contemplated by the terms of her employment or expressly set forth
in this Agreement, (i) be employed by, engaged in or participate in the
ownership, management, operation or control of, or act in any advisory or other
capacity for, any entity which now or at any time during the Non-Competition
Period engages in any business activity competitive, directly or indirectly,
with the business of CCL or any of its subsidiaries or divisions within any
greater metropolitan area in which CCL or any of its subsidiaries or divisions
are currently engaged in business or, at the termination of Employee's
employment, within which there was a bona fide intention on the part of CCL or
any of its subsidiaries or divisions to engage in business in the future, except
that Employee may be retained in an "in-house" or similar position relating to
the area of communications and content strategy for, or research relating to the
implementation of, or the design and production of, intranets, extranets or
internets by an entity which is not engaged in the business of providing
services in such area to other unaffiliated entities, (ii) solicit or divert
from CCL or any of its subsidiaries or divisions any business or any customer,
or divert from CCL or any of its subsidiaries or divisions any supplier thereto,
in each case which customer or supplier was a customer or supplier of CCL or any
of its subsidiaries or divisions during the eighteen (18) months immediately
preceding such date of solicitation or diversion, or assist any person, firm or
corporation in doing so or attempting to do so, or (iii) on her own behalf or on
behalf of any person or entity, directly or indirectly, hire or solicit the
employment or other retention of any employee or consultant who was employed or
retained by CCL or any of its subsidiaries or divisions at any time during the
twelve (12) months immediately preceding such date of hiring or solicitation;
provided, however, that, notwithstanding the foregoing, nothing herein shall
preclude Employee from making solely passive investments in any class or series
of equity securities of any entity which is publicly traded so long as Employee
shall not own or control, directly or indirectly, either as principal, manager,
partner, investor, lender or in any other capacity, equity securities which
constitute five percent (5%) or more of the voting rights or equity ownership of
such entity. For purposes of this Section 7.3, a "bona fide intention" to engage
in business in a certain geographical area shall be deemed not to have existed
at the time of termination of Employee's employment if (i) within three (3)
months after the termination of Employee's employment, CCL or any of its
subsidiaries or divisions shall not have entered into a letter of intent or made
a public announcement of intention to engage in business in such geographical
area or (ii) within one (1) year after the termination of Employee's employment,
CCL or any of its subsidiaries or divisions shall not have consummated an
agreement to engage, or otherwise actually engaged, in business in such
geographical area. The provisions of this Section 7.3 shall extend for the Term
and survive the Term for eighteen (18) months after the end of the Term;
provided, however, that in the case of a termination of employment pursuant to
the provisions of Section 6.1, the provisions of this Section 7.3 shall extend
until eighteen (18) months after the last payment of Base Salary is made
pursuant to Section 6.1(i); provided further, however, that in the case of a
termination of
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employment pursuant to the provisions of Sections 6.3, the provisions of this
Section 7.3 shall extend until the last payment of Base Salary is made pursuant
to Section 6.3(A) (the period described in this sentence is referred to herein
as the "Non-Competition Period").
7.4 Breach of Provisions. Employee and CCL hereby agree that
the covenants contained in this Section 7 are reasonable and necessary covenants
for the protection of CCL and its business under the circumstances, and further
agree that if, in the opinion of any court of competent jurisdiction such
covenants are not reasonable in any respect, such court shall have the right,
power and authority to excise or modify such provision or provisions of these
covenants that such court deems unreasonable and to enforce the remainder of
these covenants as so amended. Employee agrees that any breach or threatened
breach of the covenants contained in this Section 7 would irreparably injure CCL
and that there is no adequate remedy at law for any such breach or threatened
breach. Accordingly, Employee agrees that CCL, in addition to pursuing any other
remedies it may have in law or in equity, may obtain injunctive relief in any
court, foreign or domestic, having the capacity to grant such relief, to
restrain any such breach or threatened breach by Employee and to enforce the
provisions of this Section 7.
8. Notices. Any notice, demand, request, waiver, or other
communication under this Agreement shall be in writing (including facsimile or
similar writing) and shall be deemed to have been duly given (i) on the date of
service if personally served, (ii) on the third day after mailing if mailed to
the party to whom notice is to be given, by first class mail, registered, return
receipt requested, postage prepaid, or (iii) on the date sent if sent by
facsimile, to the parties at the following addresses or facsimile numbers (or at
such other address or facsimile number for a party as shall be specified by like
notice):
If to CCL, to: International Post Limited
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Fax No.: (000) 000-0000
with a copy to: Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to Employee, to the address set forth beside her signature on the signature
page to this Agreement.
9. Entire Agreement. This Agreement, the Purchase Agreement and
the agreements referenced herein and therein set forth the entire understanding
and agreement of the parties with respect to their subject matter and supersede
any and all prior understandings,
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negotiations or agreements among the parties hereto, both written and oral, with
respect to such subject matter.
10. Authority. The parties each represent and warrant that such
party has the power, authority and right to enter into this Agreement and to
carry out and perform the terms, covenants and conditions hereof.
11. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of CCL and its successors and assigns (including
purchasers of substantially all of CCL's assets) and Employee. Except as
otherwise expressly set forth in this Agreement, the rights and obligations of
Employee under this Agreement shall not be assignable or otherwise transferable.
12. Amendment or Modification; Waiver. This Agreement may be
amended or modified only by written agreement executed by all parties hereto.
Any of the parties hereto may extend the time for the performance of any of the
obligations or other acts of any other party hereto, waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto, or waive compliance with any of the covenants, agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed by the party granting such waiver. Such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or future failure.
13. No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any person other than the parties hereto and their
respective successors and permitted assigns.
14. Governing Law; Consent to Jurisdiction. This Agreement shall
be construed in accordance with, and governed by, the internal laws of the State
of New York as applied to contracts made and to be performed entirely within the
State of New York. Any legal action, suit or proceeding arising out of or
relating to this Agreement may be instituted in any state or federal court
located within the County of New York, State of New York, and each party hereto
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court in an inconvenient forum, that the venue of the
action, suit or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court. Each party hereto further
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding.
15. Headings. Section headings contained in this Agreement are
included for convenience only and shall not affect the interpretation of any
provisions of this Agreement.
16. Counterparts. This Agreement may be executed in one or more
counter parts, each of which shall be deemed to be an original, but all of
which, when taken together, shall constitute one and the same agreement.
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17. Severability. Subject to Section 7.4 hereof, in the event
that any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, in whole
or in part, the validity of the remaining provisions shall not be affected and
the remaining portion of any provision held to be invalid, illegal or
unenforceable shall in no way be affected, prejudiced or disturbed thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first set forth above.
COGNITIVE COMMUNICATIONS, LLC
BY:
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Xxxxxxx X. Xxxxxx
Vice President and
Chief Financial Officer
--------------------------
Xxxxx Xxxxxx
Address: 0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
Phone No.: (000) 000-0000
Fax No.: (000) 000-0000
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