(PAGE NUMBERS REFER TO PAPER DOCUMENT ONLY)
EXHIBIT 10.59
EMPLOYMENT AGREEMENT
AGREEMENT, dated November 15, 2002, between CONSUMER PROGRAMS
INCORPORATED, a Missouri corporation (the "Corporation"), and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (the "Executive").
WHEREAS, the Corporation desires to employ the Executive in the
capacity of Executive Vice President of Studio Development and
Operations, Portrait Studio Division, and the Executive will be one
of the key executives of the Corporation;
WHEREAS, there is much competition for the type of business
performed by the Corporation in the locales in which the
Corporation operates, and the Corporation and Executive acknowledge
that the Corporation is active in the product markets in which it
competes;
WHEREAS, Executive, during his employment, will be entrusted
with confidential information; and
WHEREAS, Executive and the Corporation recognize and acknowledge
that, to ensure the continued growth and stability of the
Corporation, it is necessary to obtain an agreement from Executive
not to compete with the Corporation and not to disclose
confidential information of the Corporation.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and other good and valuable consideration, the
parties hereto hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
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(a) "Affiliated Companies" shall mean any corporation (or
other business entity) controlling, controlled by or under common
control with the Corporation.
(b) "Beneficiary" shall mean the person designated in
writing by the Executive as his beneficiary under this Agreement,
or in the absence of such designation, his estate.
(c) "Cause" shall mean:
(1) prior to a Change of Control, (i) conduct or
activity of the Executive materially detrimental to the Corporation's
reputation or business (including financial) operations; (ii) gross
or habitual neglect or breach of duty or misconduct of the Executive
in discharging the duties of his position; or (iii) prolonged absence
by the Executive from his duties (other than on account of illness
or disability) without the consent of the Corporation.
(2) after a Change of Control, (i) an act or acts of
dishonesty on the Executive's part which are intended to result in his
substantial personal enrichment at the expense of the Corporation;
(ii) any material violation by the Executive of his obligations and
covenants pursuant to this Agreement which is demonstrably willful
and deliberate on the Executive's part and which results in
material injury to the Corporation; or (iii) the conviction of
Executive of a felony or of a crime involving moral turpitude.
(d) A "Change of Control" shall mean a change in control
of a nature that would be required to be reported in response to
Item 1(a) of the Current Report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange A
ct of 1934, as amended ("Exchange Act") or would have been required
to be so reported but for the fact that such event had been
"previously reported" as that term is defined in Rule 12b-2 of
Regulation 12B of the Exchange Act unless the transactions that give
rise to the change in
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control are approved or ratified by a majority of the
members of the Incumbent Board of CPI Corp. who are not employees
of the Corporation; provided that, without limitation,
notwithstanding anything herein to the contrary, such a change in
control shall be deemed to have occurred if (a) any Person is or
becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of CPI Corp.
representing 40% or more of the combined voting power of CPI
Corp.'s then outstanding securities ordinarily (apart from rights
accruing under special circumstances) having the right to vote at
elections of directors ("Voting Securities"), (b) individuals who
constitute the Board of CPI Corp. on the date hereof (the
"Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for
election by CPI Corp.'s shareholders, was approved by a vote of at
least three-quarters of the directors comprising the Incumbent
Board (either by a specific vote or by approval of the proxy
statement of CPI Corp. in which such person is named as a nominee
for director, without objection to such nomination) shall be, for
purposes of this clause (b), considered as though such person were
a member of the Incumbent Board, or (c) approval by the
stockholders of CPI Corp. of a reorganization, merger or
consolidation, in each case, with respect to which persons who were
the stockholders of CPI Corp. immediately prior to such
reorganization, merger or consolidation do not, immediately
thereafter, own, directly or indirectly, more than 50% of the
combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then
outstanding voting securities, or a liquidation or dissolution of
CPI Corp. or of the sale of all or substantially all of the assets
of CPI Corp. For purposes of this Agreement, the term "Person"
shall mean and include any individual,
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corporation, partnership, group, association or other "person," as
such term is used in Section 14(d) of the Exchange Act, other than
CPI Corp., theCorporation or an Affiliated Company or any employee
benefit plan(s) sponsored or maintained by the Corporation or any
Affiliated Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
may be amended from time to time.
(f) "Continuing Directors" shall have the meaning set forth
in Paragraph 3(G) of Article Ten of CPI Corp.'s Certificate of
Incorporation.
(g) "Fiscal Year" shall mean the Fiscal Year of the
Corporation.
(h) "Permanent Disability" shall mean the inability of
Executive to perform the services contemplated by Section 4 hereof
for a period of at least one hundred eighty (180) consecutive calendar
days or for thirty-five (35) weeks (whether or not consecutive) in any
twelve (12) month period on account of any sickness, injury or other
infirmity or disability.
(i) "Retirement" shall mean the Executive's voluntary or
involuntary termination of employment with the Corporation except for
termination on account of (A) Cause as defined in Subsection 6(b)
hereof, (B) death or (C) Permanent Disability before attaining age
sixty-five (65).
(j) "Term of Employment" shall have the meaning set forth in
Section 3 hereof.
2. EMPLOYMENT. The Corporation hereby employs and engages the
services of the Executive as one of its key executives in the
position of Executive Vice President of Studio Development and
Operations, Portrait Studio Division, for the Term of Employment
set forth in
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Section 3. The Executive agrees to serve the
Corporation for the Term of Employment as provided herein.
3. TERM OF EMPLOYMENT. The Executive's Term of Employment
shall be a period commencing on the date hereof and ending one (1)
year thereafter; provided, however, that upon the expiration of the
aforesaid period (the "Expiration Date") the Term of Employment
shall continue unless Executive or the Corporation notifies the
other in writing of termination of this Agreement. Notwithstanding
anything herein to the contrary, the Term of Employment shall
terminate upon Executive's death or Permanent Disability as set
forth in subsection 6(a) hereof or upon the Corporation's
termination of Executive's employment for Cause pursuant to
subsection 6(b) hereof. The Term of Employment shall also
terminate upon the Executive's attainment of age 65, unless the
Board of Directors of CPI Corp. requests that the Executive extend
his service to the Corporation after age 65. No such extension
shall exceed one year, provided that the Term may thereafter be
renewed from year to year by request of the Board of Directors.
4. POSITION AND DUTIES.
(a) Prior to a Change of Control, during the Term of
Employment, the Executive shall serve the Corporation in such capacity
as the Corporation may determine. After a Change of Control, during
the Term of Employment, the Executive's position, authority and
responsibilities, the type of work he is asked to perform, and the
status and stature of the people with whom he is asked to work,
shall be comparable to that existing with respect to the Executive
as of the date immediately prior to the Change of Control, and
after a Change of Control the Executive's services shall be
performed at the location where the Executive was employed as of
the date immediately prior to the Change of Control, or at such
other location as
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may be mutually agreed between the Corporation and the Executive.
(b) The Executive agrees to devote his full business time
during normal business hours to the business and affairs of the
Corporation (except as otherwise provided herein), to use his best
efforts to promote the interests of the Corporation and its
Affiliated Companies and to perform faithfully and efficiently the
responsibilities assigned to him in accordance with the terms of
this Agreement to the extent necessary to discharge such
responsibilities, except for (i) service on corporate, civic or
charitable boards or committees not significantly interfering with
the performance of such responsibilities and (ii) periods of
vacation and sick leave to which he is entitled. It is expressly
understood and agreed that the Executive's continuing service on
any boards and committees with which he shall be connected, as a
member or otherwise, as of the date hereof, or any such service
approved by the Corporation during the Term of Employment, shall
not be deemed to interfere with the performance of the Executive's
services to the Corporation pursuant to this subparagraph 4(b).
5. COMPENSATION AND OTHER CONDITIONS OF EMPLOYMENT.
(a) BASE SALARY. During the Term of Employment, the
Executive shall receive an annual base salary (the "Base Salary"),
in equal installments payable bi-weekly or at such other intervals
as salary is normally paid by the Corporation to its employees, at
an annual rate established by the Corporation and any Affiliated
Companies as of the date hereof. Executive's Base Salary for
Fiscal Year 2002 is set forth on Exhibit A, attached hereto and
incorporated herein. The Base Salary shall be reviewed at least once
each year and may be increased at any time and from time to time by
action of the Board of Directors of CPI Corp., any committee thereof
or any individual having authority to take such action, in accordance
with
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the Corporation's regular practices. Any increase in the Base
Salary shall not serve to limit or reduce any other obligation of
the Corporation hereunder, and after such increase the Base Salary
shall not be reduced from such increased level.
(b) BONUS. After a Change of Control, in addition to the
Base Salary, the Executive shall be awarded for each Fiscal Year during
the Term of Employment an annual bonus (the "Annual Bonus") (pursuant
to any bonus plan or program of the Corporation, any incentive plan or
program of the Corporation, or otherwise) in cash at least equal to the
highest bonus paid or payable to the Executive in respect of any of the
Fiscal Years during the three Fiscal Years immediately prior to the date
of the Change of Control. Prior to a Change of Control, the amount of
the Executive's Annual Bonus shall be determined in accordance with the
Corporation's regular practice. Executive's Annual Bonus Plan for the
Corporation's Fiscal Year 2002 is set forth on Exhibit B, attached
hereto and incorporated herein.
(c) OTHER COMPENSATION PLANS. After a Change of Control,
in addition to the Base Salary and Annual Bonus payable as hereinabove
provided, during the Term of Employment, the Executive shall be
entitled to participate in all other compensation plans and
programs, including, without limitation, savings plans, stock
option plans, and retirement plans of the Corporation and its
Affiliated Companies (collectively, the "Savings Plans"), on a
basis at least equivalent to that provided by the Corporation and
its Affiliated Companies to the Executive under such programs
immediately prior to the date of the Change of Control. Prior to
a Change of Control, the Executive's entitlement to participate in
the Savings Plans shall be determined in accordance with the
Corporation's regular practice. Prior to a Change of Control,
nothing herein shall be construed to prevent the Corporation from
amending or altering any such
7
plans in accordance with the terms thereof.
(d) BENEFIT PLANS. After a Change of Control, during
the Term of Employment, the Executive, his spouse, or his dependents,
as the case may be, shall be entitled to receive all amounts which he,
his spouse or his dependents are or would have been entitled to receive
as benefits under all other benefit plans of the Corporation and its
Affiliated Companies, including, without limitation, medical,
dental, disability, group life, accidental death and travel
accident insurance plans and programs (collectively, the "Benefit
Plans") on a basis at least as favorable to the Executive as on the
date immediately prior to the date of the Change of Control. Prior
to a Change of Control, the Executive's and such other persons'
entitlement to participate in the Benefit Plans shall be determined
in accordance with the Corporation's regular practice.
(e) EXPENSES. During the Term of Employment, the Executive
shall be entitled to receive prompt reimbursement for all reasonable
expenses incurred by the Executive in accordance with the regular
policies and procedures of the Corporation.
(f) OFFICE AND SUPPORT STAFF. After a Change of Control
the Executive shall be entitled to an office or offices of a size and
with furnishings and other appointments, and to secretarial and
other assistance, at least equal to those provided to the Executive
as of the date immediately prior to the date of the Change of
Control.
(g) DEATH BENEFITS. In the event of Executive's death
after completion of at least ten (10) Years of Service, unless (1)
Executive's employment with the Corporation was terminated for
Cause or (2) Executive (or his Beneficiary) is entitled to receive
Supplemental Retirement Benefits pursuant to subsection 5(i), the
Corporation shall pay to Executive's Beneficiary an annual death
benefit equal to forty percent (40%) (but not to exceed
8
$150,000) of the highest annual Base Salary paid to Executive from
and after fiscal year 2002 (as defined in subsection 5(a) hereof),
payable in equal monthly installments, commencing with the month
following the month of Executive's death and ending with the
two-hundred fortieth (240th) month following the month of Executive's
death. In the event that Executive dies before age 65 but has not
completed at least ten (10) Years of Service with the Corporation,
death benefits shall be reduced to an amount equal to the benefits
determined under the preceding sentence multiplied by the Vesting
Percentage applicable to Executive.
(h) DISABILITY BENEFITS. In the event of Executive's
Permanent Disability prior to attaining age 65 and prior to termination
of employment with the Corporation, unless Executive's employment with
the Corporation was terminated for Cause, the Corporation shall pay
Executive annual disability benefits equal to forty percent (40%)
(but not to exceed $150,000) of the highest annual Base Salary paid
to Executive from and after fiscal year 2002, payable in equal monthly
installments, commencing with the month following the month in which
Executive terminated employment as a result of Permanent Disability
and ending on the earlier of (i) the month in which Executive reaches
age 65 or (ii) the month of his death. In the event that at the time
of Permanent Disability Executive has not completed at least ten (10)
Years of Service, the disability benefits shall be reduced to an amount
equal to the benefits determined under the preceding sentence multiplied
by the Vesting Percentage applicable to Executive. Disability benefits
pursuant to this subsection (h) shall be reduced by any amounts paid to
Executive under the Corporation's long-term disability insurance
policy, but shall not be reduced for any payments received by
Executive from Social Security or from any disability insurance
coverage individually owned by Executive.
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(i) SUPPLEMENTAL RETIREMENT BENEFITS.
(1) In the event of Executive's Retirement after
completion of at least ten (10) Years of Service, unless Executive's
employment with the Corporation was terminated for Cause, the Corporation
shall pay Executive retirement benefits for twenty (20) years in an annual
amount equal to forty percent (40%) (but not to exceed $150,000) of the
highest annual Base Salary paid to Executive from and after fiscal year
2001 ("Supplemental Retirement Benefits"). In the event of Executive's
Retirement before completion of ten (10) Years of Service, Corporation
shall pay Executive retirement benefits on the same terms as set forth
in the preceding sentence except that retirement benefits shall be reduced
to an amount equal to Supplemental Retirement Benefits multiplied by the
Vesting Percentage.
(2) Supplemental Retirement Benefits shall be payable in
two hundred forty (240) equal monthly installments commencing with the month
following the later of (i) the month of Executive's Retirement or (ii) the
month during which Executive reaches age sixty-five (65). If Executive dies
prior to the end of the two hundred forty (240) month period during which
Supplemental Retirement Benefits are payable, Supplemental Retirement
Benefits shall be payable during the remainder of such 240-month period to
her Beneficiary.
(3) Notwithstanding anything herein to the contrary, in the
event of Executive's termination of employment with the Corporation prior
to attaining age 65 as a result of Permanent Disability, if Executive attains
age 65 and his employment with the Corporation was not terminated for Cause,
the Corporation shall pay to Executive the Supplemental Retirement Benefits
set forth in this Subsection 5(i) in accordance with Executive's Vesting
10
Percentage, commencing as of the month following the month in which Executive
attains age 65; provided, however, that any Supplemental Retirement Benefits
paid pursuant to this sentence shall be reduced by any amounts paid to
Executive under the Corporation's long-term disability insurance policy
(but shall not be reduced for any payments received by Executive from
Social Security or from any disability insurance coverage individually
owned by Executive) for the same period.
(j) SURVIVABILITY OF DEATH AND SUPPLEMENTAL RETIREMENT
BENEFITS. In the event of Executive's Retirement or death,
Executive's entitlement to death benefits pursuant to Subsection
5(g) hereof and Supplemental Retirement Benefits pursuant to
Subsection 5(i) hereof shall survive the Term of Employment and
Executive or his Beneficiary shall be entitled to such death
benefits and Supplemental Retirement Benefits based on the same
terms and conditions as would have been applicable had his death or
Retirement, as the case may be, occurred during the Term of
Employment.
(k) OTHER BENEFITS. Executive shall also be entitled to the
benefits described in Exhibit C, attached hereto and incorporated herein.
6. TERMINATION OF EMPLOYMENT.
(a) DEATH OR PERMANENT DISABILITY: AGE 65. Except for the
obligations of the Corporation set forth in this Subsection 6(a), this
Agreement shall terminate automatically upon the Executive's death,
Permanent Disability or attainment of age 65. In the event of such
termination, the Corporation shall pay to the Executive's Beneficiary or,
in the event of Permanent Disability or attainment of age 65, the Executive
or his or her legal representative, all benefits and Base Salary accrued
through the date of termination, including, without limitation,
11
amounts payable under Subsections 5(c) and (d) plus any benefits to which
Executive may be entitled pursuant to Subsection 5(g), Subsection 5(h) or
Subsection 5(i) hereof.
(b) CAUSE. The Corporation may terminate the Executive's
employment for Cause. If the Executive's employment is terminated for
Cause, the Corporation shall pay the Executive his full accrued Base
Salary through the effective date of the termination of his or her
employment (which shall be no earlier than the date of receipt of
notice thereof) at the rate in effect at the time of such
termination, and the Corporation shall have no further obligations
to the Executive under this Agreement.
(c) PAYMENTS FOR INVOLUNTARY TERMINATION WITHOUT CAUSE.
(1) If prior to a Change of Control, the Corporation
terminates Executive's employment (other than for Cause pursuant to
subsection 6(b) hereof), the Corporation shall pay Executive following
such involuntary termination his full accrued Base Salary through the
date of termination of employment plus an amount equal to (i) one
hundred percent (100%) of Executive's Base Salary, payable in
twenty-six equal bi-weekly installments. The payment pursuant to
this Subsection 6(c)(1) shall be in full discharge of any claims,
actions, demands or damages of every nature and description which
Executive might have or might assert against the Corporation or any
Affiliated Company in connection with or arising from the
termination of Executive's employment or the termination of this
Agreement.
(2) If following a Change of Control, the Corporation
terminates Executive's employment (other than for Cause pursuant to
Subsection 6(b) hereof), the Corporation shall, at the time of such
involuntary termination, make a lump sum cash payment to Executive
equal to 200% of his Base Salary for the Fiscal Year of
termination. In addition to the
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payment pursuant to this Subsection 6(c)(2), Executive shall be entitled
to all remedies available under this Agreement or at law in respect of
any damages suffered by Executive as a result of an involuntary
termination of employment without Cause.
7. GROSS-UP FOR PARACHUTE TAX.
(a) GENERAL. In the event that following a Change of Control
Executive becomes entitled to any payments (whether pursuant to this
Employment Agreement or any other plan, arrangement or agreement) from
the Corporation in the nature of compensation ("Parachute Payments")
that in the opinion of a certified public accounting firm (selected in
the manner set forth in Subsection 7(b)) or that under the provisions
of a notice of assessment from the Internal Revenue Service causes
imposition of the tax under Section 4999 of the Code or any similar
tax that may hereafter be imposed (the "Excise Tax"), the Corporation
shall pay Executive, at the time specified in Subsection 7(d), the
Gross-Up Payment (as determined in accordance with Subsection 7(c)).
(b) SELECTION OF C.P.A. Within fifteen (15) days after any
termination of Executive's employment following a Change of Control, the
majority of the Continuing Directors as of the date immediately prior to
the Change of Control shall select a certified public accounting firm
(the "C.P.A.") to determine the amount, if any, of the Excise Tax and
the amount, if any, of the Gross-Up Payments.
(c) AMOUNT OF GROSS-UP PAYMENTS.
(1) The Gross-Up Payments shall be in an amount such
that the net amount retained by Executive with respect to the
Parachute Payments and Gross-Up Payments, after deduction of any
Excise Tax to which the Parachute Payments may be subject and any
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federal, state, and local income taxes and Excise Tax upon the
Gross-Up Payments, shall be equal to the gross amount of the
Parachute Payments.
(2) For purposes of determining the amount of the
Gross-Up Payments, Executive shall be deemed to pay federal income
taxes at the applicable rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made and state
and local income taxes at the applicable rate of taxation for the
calendar year in which the Gross-Up Payment is to be made.
(3) In the event that the Excise Tax is subsequently
determined to exceed the amount taken into account at the time the
Gross-Up Payment is made pursuant to Subsection 7(d)(1) hereof
(including any excess attributable to any Parachute Payments the
existence or amount of which could not be accurately determined at
the time of the Gross-Up Payment), the Corporation shall make an
additional Gross-Up Payment in respect of such excess (plus any
interest and addition to tax payable with respect to such excess)
within fifteen (15) days after the amount of such excess is
determined by the C.P.A. or by the Internal Revenue Service (the
"IRS") in a notice of assessment.
(d) TIMING OF GROSS-UP PAYMENTS. Gross-Up Payments other
than Gross-Up Payments pursuant to Subsection 7(c)(3) shall be paid
not later than forty-five (45) days following payment of any Parachute
Payments to which the Gross-Up Payments are attributable; provided,
however, that if the amount of such Gross-Up Payment or portion
thereof cannot be finally determined on or before such day, the
Corporation shall pay to Executive on such day an estimate, as
determined in good faith by the Corporation, of the minimum amount
of such payments and shall pay the remainder of such payments
(together with interest at the applicable
14
federal rate provided in Section l274(d) of the Code) as soon as the
amount thereof can be determined by the C.P.A., but in no event later
than forty-five (45) days after payment of such Parachute Payments.
(e) CORPORATION'S RIGHT TO DESIGNATE TAX REPRESENTATIVE;
Assignment of Refund Proceeds. If the IRS proposes an assessment of
the Excise Tax against Executive or proposes an additional assessment
of Excise Tax in excess of the amount previously reported by
Executive:
(1) Executive shall within five (5) days after receipt
from the IRS of notice of the proposed Excise Tax assessment notify the
Corporation in writing and furnish the Corporation with copies of
all correspondence from the IRS relating to the proposed Excise Tax
assessment.
(2) The Corporation shall be authorized to designate an
attorney and/or accountant (the "Tax Representative") to serve as
Executive's exclusive representative with respect to all
proceedings with the IRS relating to the proposed Excise Tax
assessment, including but not limited to negotiating a settlement
or compromise of the proposed Excise Tax assessment, filing a claim
for refund with respect thereto, and seeking judicial review of any
disallowance of a claim for refund. Executive hereby agrees to
execute an appropriate power of attorney authorizing the Tax
Representative to represent Executive with respect to the Excise
Taxes. Executive further agrees to take any other appropriate
actions reasonably requested by the Tax Representative in
connection therewith; provided, however, that the Corporation shall
reimburse Executive for any expenses incurred by Executive as a
result of compliance with such requests.
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(3) If the Tax Representative files a claim for refund
of Excise Taxes with respect to which the Corporation has made a
Gross-Up Payment and such refund claim is allowed by the IRS or by the
final judgment of a court of competent jurisdiction, Executive shall
endorse the refund check payable to the Corporation and shall send
the refund check to the Corporation not later than five (5) days
after receipt from the IRS.
(4) If the Corporation designates a Tax Representative,
the Corporation shall pay all of his professional fees and expenses and
hold Executive harmless from any claims in connection therewith. The Tax
Representative shall keep Executive timely informed of all significant
developments in the Excise Tax matter and shall send to Executive copies
of all correspondence relating thereto.
(5) Notwithstanding anything herein to the contrary, if
the Corporation is in material breach of any of its obligations
pursuant to this Agreement, the Corporation's rights pursuant to
this Subsection 7(e) shall be extinguished and Executive shall have
the right to revoke any power of attorney executed pursuant to this
Subsection 7(e).
8. NO OBLIGATION TO MITIGATE DAMAGES. The Executive shall not
be obligated to mitigate any damages by seeking other employment or
otherwise, and no amount payable hereunder and no benefit or
service credit for benefits shall be reduced in the event that the
Executive shall accept alternative employment.
9. BENEFITS PAYABLE ONLY FROM CORPORATE ASSETS.
(a) NO TRUST. Nothing contained in this Agreement, and no
action taken pursuant to its provisions by either party hereto shall
create, or be construed to create, a trust of any kind, or a
fiduciary relationship between the Corporation and the Executive or
his
16
Beneficiary.
(b) EXECUTIVE'S STATUS AS UNSECURED GENERAL CREDITOR. The
payment of any benefits hereunder to the Executive or his Beneficiary
shall be made from assets which shall continue, for all purposes, to
be a part of the general assets of the Corporation; no person shall
have or acquire any interest in such assets by virtue of the
provisions of this Agreement. To the extent that the Executive or
his Beneficiary acquires a right to receive payments from the
Corporation under the provisions hereof, such right shall be no
greater than the right of any unsecured general creditor of the
Corporation.
(c) RECOVERY OF COST OF PROVIDING BENEFITS. In the event
that, in its discretion, the Corporation purchases an insurance policy
insuring the life of the Executive to enable the Corporation to
recover, in whole or in part, the cost of providing any benefits
hereunder, neither the Executive nor his Beneficiary under this
Agreement shall have or acquire any rights whatsoever therein. The
Corporation shall be the sole owner and beneficiary of any such
policy and, as such, shall possess and may exercise all incidents
of ownership therein.
10. DETERMINATION OF BENEFITS AND CLAIMS PROCEDURE. The
Corporation shall make all determinations as to rights to benefits
under this Agreement. Subject to and in compliance with the specific
procedures contained in the applicable regulations promulgated under
the Employee Retirement Income Security Act of 1974, as amended:
(i) any decision by the Corporation denying a claim for benefits under
this Agreement by the Executive or his Beneficiary shall be stated in
writing by the Corporation and delivered or mailed to the claimant;
(ii) each such notice shall set forth the specific reasons for the
denial, written to the best of the Corporation's ability in a manner
that may be understood without legal or actuarial counsel; and
(iii) the Corporation
17
shall afford a reasonable opportunity to the claimant whose claim for
benefits has been denied for a review of the decision denying such
claim.
11. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation
in any benefit, bonus, incentive or other plan or program provided
by the Corporation or any Affiliated Companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other
agreements with the Corporation or any Affiliated Companies.
Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan or program of the
Corporation or any Affiliated Companies shall be payable in
accordance with the terms of such plan or program.
12. FULL SETTLEMENT. After a Change of Control, the Corporation's
obligation to make the payments provided for herein and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off, counterclaim,
recoupment, defense or other right which the Corporation may have against
the Executive or others. Unless it is finally determined by a court of
competent jurisdiction after all available appeals that the Corporation
has validly terminated the Executive's employment for Cause, the Corporation
agrees to pay, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Corporation or others
of the validity or enforceability of, or liability under, any
provision of this Agreement or any guarantee of performance
thereof, plus, in each case, interest compounded quarterly, on the
total unpaid amount determined to be payable hereunder, such
interest to be calculated on the basis of the prime commercial
lending rate announced by US
18
Bank, N.A. in effect from time to time, for the period commencing on
the date of such contest and ending on the date on which the Corporation
shall pay such amount.
13. COVENANTS.
(a) NON-COMPETITION.
(1) Executive recognizes that during the course of
Executive's employment with the Corporation, Executive has been and
will be instructed about and become acquainted with confidential
information of the Corporation, including, without limitation,
customer lists, methods of sales, the existence and contents and
terms of this Agreement, methods of sales procurement, sales
procurement techniques, sales procedures and equipment/supply
information, equipment and supply acquisition procedures and
processes and sources, customer evaluation procedures, customer
maintenance and supply maintenance procedures and corresponding
information relating to persons, firms and corporations which are
or may become customers of the Corporation and, further, companies
from which the Corporation obtains various products and supplies
for sale, resale and distribution to customers of the Corporation.
This confidential information further includes, but is not limited
to, customer identity, supplier identity and terms, purchase terms,
sales techniques, purchase conditions and rates, customer needs,
billing procedures and processes, contacts and customer
information. Further, Executive agrees and acknowledges that the
development and assemblage and maintenance of the customer base of
the Corporation has taken extraordinary time, money, resources,
training, and effort by the Corporation and its employees.
(2) Executive agrees that he will not during the
Term of Employment and for a period of two (2) years following
cessation of his employment by the Corporation
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("Restricted Period"), for any cause or reason, directly or indirectly:
(A) engage in any business in competition with the
Corporation and its Affiliates or supply and sell to present customers,
former customers and prospects of the Corporation and its Affiliates; or
(B) own, manage, operate, control, advise, be
employed by, consult, or materially participate in, or be materially
involved in any manner with the ownership, management, operation or
control of, individually or through any other entity or device, any
business that competes with the business then conducted by the
Corporation or any Affiliate; provided, however, that mere ownership
as an investor of not more than five percent (5%) of the securities
of a corporation or other business enterprise shall not in and of itself
be deemed to violate this Section 13(a)(2)(B).
(b) NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
(1) Executive will not, except as authorized by the
Corporation in writing, during or at any time after the termination of
Executive's employment with the Corporation, directly or indirectly,
use for himself or others, or disclose, communicate, divulge, furnish to,
or convey to any other person, firm, or corporation, any secret or
confidential information, knowledge or data of the Corporation or
that of third parties obtained by Executive during the period of
his employment with the Corporation. Such information, knowledge
or data includes, without limitation, the following:
(A) Secret or confidential matters of a technical
nature such as, but not limited to, methods, know-how, formulations,
compositions, processes, discoveries, machines, inventions, computer
programs, and similar items or research projects involving such
20
items,
(B) Secret or confidential matters of a business
nature such as, but not limited to, marketing policies or strategies,
information about costs, price lists, purchasing and purchasing policies,
profits, market, sales or lists of customers, customer history information,
and
(C) Secret or confidential matters pertaining to
future developments such as, but not limited to, research and development
or future marketing or merchandising.
(2) Executive, upon termination of his employment with
the Corporation, or at any other time upon the Corporation's request, shall
deliver promptly to the Corporation all manuals, letters, notes, notebooks,
reports, formulations, computer programs and similar items, memoranda,
lists of customers, customer history information and all other materials a
nd copies thereof relating in any way to the Corporation's business and in
any way obtained by Executive during the term of employment with the
Corporation which are in his possession or under his control; and
Executive will not make or retain any copies of any of the foregoing and
will so represent to the Corporation upon termination of his employment.
(c) INDUCEMENT.
(1) Executive agrees that during the Term of Employment and
during the Restricted Period, Executive shall not use any confidential
information for the purposes of inducing or attempting to induce any
present, former, or prospective customer of the Corporation or its
Affiliates to become a customer of Executive or any person, firm, or
corporation, or business association with which Executive is affiliated
in any capacity with respect to the
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markets supplied by the Corporation or its Affiliates.
(2) Executive agrees that during the Term of Employment
and during the Restricted Period, Executive shall not directly or indirectly
solicit for employment or employ any of the Corporation's employees to work
for Executive or any business association with which/whom Executive is
affiliated, or to work for any other company in the markets supplied by
the Corporation or its Affiliates.
(d) INTEREST OF PARTIES. Executive agrees that the duration of
the limitations set forth in this Section 13 are reasonable under the
circumstances, considering Executive's position with the Corporation and
other relevant factors, and that this will not constitute a serious handicap
to Executive in securing future employment.
(e) DISCLOSURE TO CORPORATION. Executive shall promptly
communicate and disclose to the Corporation all information, observations
and data obtained by Executive in the course of Executive's employment.
All written materials, records and documents made by Executive or coming
into Executive's possession during the Term of Employment concerning any
inventions, products, processes or equipment, manufactured, used, developed,
investigated or considered by the Corporation or any Affiliated Companies
shall be the property of the Corporation, and upon termination of the
Term of Employment, or upon request of the Corporation during the
Term of Employment, Executive shall promptly deliver the same to the
Corporation. Executive agrees to render to the Corporation such reports
of the activities of the business undertaken by Executive or conducted
under Executive's direction during the Term of Employment as the
Corporation may reasonably request.
(f) INVENTIONS.
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(1) Executive shall promptly communicate and disclose in
writing to the Corporation all those inventions and developments whether
patentable or not, as well as patents and patent applications
(hereinafter collectively called "Inventions"), made, conceived,
developed or purchased by Executive, or under which Executive
acquires the right to grant licenses or to become licensed, alone
or jointly with others, during the Term of Employment, which have
arisen or may arise out of Executive's employment, or relate to any
matters pertaining to, applicable to, or useful in connection with,
the business or affairs of the Corporation or any Affiliated
Companies. All of Executive's right, title and interest in, to and
under all such inventions, licenses and rights to grant licenses
shall be the sole property of the Corporation. Any such inventions
disclosed to anyone by Executive within one (1) year after the
termination of the Term of Employment for any cause whatsoever
shall be deemed to have been made or conceived by Executive during
the Term of Employment.
(2) As to all such inventions, Executive shall, upon
request of the Corporation, during the Term of Employment or thereafter:
(A) Execute all documents which the Corporation shall
deem necessary or proper to enable it to establish title to such inventions,
or other rights, and to enable it to file and prosecute applications for
letters patent of the United States and any foreign country; and
(B) Do all things (including the giving of evidence
in suits and other proceedings) which the Corporation shall deem necessary
or proper to obtain, maintain or to assert patents for any and all such
inventions or to assert its rights in any inventions not patented.
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All expenses incident to any action required by the Corporation or
taken on its behalf pursuant to the provisions of this paragraph
shall be borne by the Corporation including without limitation a
reasonable payment for Executive's time and expenses involved in
case he or she is not then in its employ.
(g) LITIGATION. Executive agrees that during the
Term of Employment or thereafter, Executive shall do all things,
including the giving of evidence in suits and other proceedings, which
the Corporation shall deem necessary or proper to obtain, maintain or
assert rights accruing to the Corporation during the Term of Employment
and in connection with which Executive has knowledge, information or
expertise. All reasonable expenses incurred by Executive during the
Term of Employment or thereafter in fulfilling the duties set forth
in this Section, shall be reimbursed by the Corporation to the full
extent legally appropriate including, without limitation, a reasonable
payment for Executive's time in the event this Agreement has terminated
prior to the time Executive renders such
assistance, advice and counsel.
14. EQUITY. The parties hereto agree that the services to be
rendered by Executive are special, unique and of an extraordinary
character. In the event of the breach by Executive of any of the
provisions of this Agreement, the Corporation, in addition and as
a supplement to such other rights and remedies as may exist in its
favor, may apply to any court of law or equity having jurisdiction
to enforce the specific performance of this Agreement, and/or may
apply for injunctive relief against any act which would violate any
of the provisions of this Agreement.
15. EFFECT ON PRIOR AGREEMENT. This Agreement shall supersede
and replace any and all prior employment agreements entered into
between Executive and the Corporation or any Affiliated Company,
including but not limited to that certain Employment Agreement
dated April
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1, 2002. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof.
16. NO ASSIGNMENT.
(a) This Agreement is personal to the Executive and without
the prior written consent of the Corporation shall not be assignable by
the Executive other than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives and Beneficiary.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors. The Corporation shall require
any successor to all or substantially all of the business and/or assets
of the Corporation, whether direct or indirect, by purchase, merger,
consolidation, acquisition of stock, or otherwise, by an agreement in
form and substance satisfactory to the Executive, expressly to assume
and agree to perform this Agreement in the same manner and to the same
extent as the Corporation would be required to perform if no such
succession had taken place.
17. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, and this
Agreement shall be construed in all respects as if such invalid or
unenforceable provision or clause were omitted.
18. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri, without reference
to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or
effect.
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This Agreement may not be amended or modified other than
by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) In the event that litigation is required to enforce any
provision of this Agreement, subject to the provisions of Section
12 hereof, the prevailing party shall be entitled to reasonable
attorneys fees.
(c) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
IF TO THE EXECUTIVE:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
IF TO THE CORPORATION:
Consumer Programs Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(d) This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof.
(e) The Corporation 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
in duplicate, all as of the day and year first above written.
CONSUMER PROGRAMS INCORPORATED
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
and Chief Executive Officer
EXECUTIVE
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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