EXHIBIT 10.10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of August 28, 1998 (the
"Effective Date"), by and between FREEDOM OF INFORMATION, INC., a Delaware
corporation with its headquarters currently located in Pittsburgh, Pennsylvania
(the "Employer"), and Samuel P. Gerace, Jr. (the "Executive").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Executive is a founder of the Company; and
WHEREAS, reference is made to that certain Stock Purchase and Shareholders
Agreement (the "Stock Purchase Agreement"), dated as of August 28, 1998, by and
among the Company, the Executive, Thomas A. Gerace and the other parties thereto
pursuant to which among other things (a) the Company will sell shares of Series
A Convertible Participating Preferred Stock, par value $.01 per share, to
certain Investors and (b) the Executive will redeem 1,002,202 shares of Common
Stock for $1,002,202; and
WHEREAS, the parties hereto desire to assure that the Executive's
employment with the Company continue, and the Executive's knowledge and
experience continue to be available, after the effective date of the Stock
Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto agree as follows:
1. Employment. The Employer agrees to employ the Executive and the
----------
Executive agrees to be employed by the Employer on the terms and conditions set
forth in this Agreement.
2. Capacity. The Executive shall serve the Employer as Executive Vice
--------
President. The Executive shall also serve the Employer in such other or
additional executive offices as the Executive may be requested to serve by the
Board of Directors of the Employer (the "Board of Directors") or the Chief
Executive Officer. In such capacity or capacities, the Executive shall perform
such services and duties in connection with the business, affairs and operations
of the Employer as may be assigned or delegated to the Executive from time to
time by or under the authority of the Board of Directors or the Chief Executive
Officer.
3. Term. Subject to the provisions of Section 6, the term of employment
----
pursuant to this Agreement (the "Term") shall be two (2) years from the
Effective Date and shall be renewed automatically for periods of one (1) year
commencing at the second anniversary of the Effective Date and on each
subsequent anniversary thereafter, if agreed by the Executive and the Employer.
4. Compensation and Benefits. The regular compensation and benefits
-------------------------
payable to the Executive under this Agreement shall be as follows:
(a) Salary and Bonus. For all services rendered by the Executive
----------------
under this Agreement, the Employer shall pay the Executive a salary (the
"Salary") at the annual rate of One Hundred and Ten Thousand Dollars
($110,000), subject to increase from time to time in the discretion of the
Board of Directors or the Compensation Committee of the Board of Directors
(the "Compensation Committee"). The Salary shall be payable in periodic
installments in accordance with the Employer's usual practice for its
senior executives. Beginning on January 1, 1999, the Executive shall be
eligible for a merit bonus in the amount of $25,000 or such other greater
or lesser amount as may be determined by the Board of Directors or the
Compensation Committee of the Board of Directors. In determining the
amount of such bonus, the Board of Directors shall consider, among other
things, the Executive's performance during the relevant year.
(b) Regular Benefits. The Executive shall also be entitled to
----------------
participate in any employee benefit plans, medical insurance plans, life
insurance plans, disability income plans, retirement plans, vacation plans,
expense reimbursement plans and other benefit plans which the Employer may
from time to time have in effect for all or most of its senior executives.
Such participation shall be subject to the terms of the applicable plan
documents, generally applicable policies of the Employer, applicable law
and the discretion of the Board of Directors, the Compensation Committee or
any administrative or other committee provided for in or contemplated by
any such plan. Nothing contained in this Agreement shall be construed to
create any obligation on the part of the Employer to establish any such
plan or to maintain the effectiveness of any such plan which may be in
effect from time to time.
(c) Reimbursement of Relocation Expense. The Employer shall reimburse
-----------------------------------
the Executive for all reasonable and customary actual out-of-pocket
expenses relating to temporary living and the relocation of the Executive
and the Executive's family to the Boston area.
(d) Vacation. The Executive shall initially be entitled to three
--------
weeks of vacation per annum plus one additional vacation day in each year
of employment with the Company after the date hereof (not to exceed an
aggregate of 4 weeks per annum), such vacation to be taken at such times as
is determined by Executive.
(e) Taxation of Payments and Benefits. The Employer shall undertake
---------------------------------
to make deductions, withholdings and tax reports with respect to payments
and benefits under this Agreement to the extent that it reasonably and in
good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this Agreement shall be in
amounts net of any such deductions or withholdings. Nothing in this
Agreement shall be construed to require the Employer to make any payments
to compensate the Executive for any adverse tax effect associated with any
payments or benefits or for any deduction or withholding from any payment
or benefit.
2
(f) Exclusivity of Compensation. The Executive shall not be entitled
---------------------------
to any payments or benefits other than those provided under this Agreement.
5. Extent of Service. During the Executive's employment under this
-----------------
Agreement, the Executive shall, subject to the direction and supervision of the
Board of Directors or the Chief Executive Officer, devote the Executive's full
business time, business judgment, skill and knowledge to the advancement of the
Employer's interests and to the discharge of the Executive's duties and
responsibilities under this Agreement. The Executive shall not engage in any
other business activity, except as may be approved by the Board of Directors;
provided that nothing in this Agreement shall be construed as preventing the
Executive from:
(a) investing the Executive's assets in any company or other entity in
a manner not prohibited by Section 7(d) and in such form or manner as shall
not require any material activities on the Executive's part in connection
with the operations or affairs of the companies or other entities in which
such investments are made; or
(b) engaging in religious, charitable or other community or non-profit
activities that do not impair the Executive's ability to fulfill the
Executive's duties and responsibilities under this Agreement; or
(c) investing in and participating in the management of The Gerace
Family Limited Partnership in a manner not prohibited by Section 7(d).
6. Termination and Termination Benefits. Notwithstanding the provisions
------------------------------------
of Section 3, the Executive's employment under this Agreement shall terminate
under the following circumstances set forth in this Section 6.
(a) Termination by the Employer for Cause. The Executive's employment
-------------------------------------
under this Agreement may be terminated for cause without further liability
on the part of the Employer effective 30 days following a vote of the Board
of Directors and written notice to the Executive. Only the following shall
constitute "cause" for such termination:
(i) intentional and material dishonest statements or acts of the
Executive with respect to the Employer or any subsidiary of the
Employer;
(ii) the conviction of the Executive for (A) a felony or (B) any
misdemeanor involving fraud;
(iii) gross neglect of Executive's duties and responsibilities
hereunder confirmed after written notice thereof given to the
Executive by the Board of Directors, willful misconduct of the
Executive with respect to the Employer or any subsidiary of the
Employer; or
3
(iv) material breach by the Executive of any of the Executive's
obligations under this Agreement.
(b) Termination by the Executive. The Executive's employment under
----------------------------
this Agreement may be terminated by the Executive by written notice to the
Board of Directors at least thirty (30) days prior to such termination.
(c) Termination by the Employer Without Cause. Subject to the payment
-----------------------------------------
of Termination Benefits pursuant to Section 6(d), the Executive's
employment under this Agreement may be terminated by the Employer without
cause upon thirty (30) days written notice to the Executive by a vote of
the Board of Directors.
(d) Constructive Termination. The Executive, upon giving thirty (30)
------------------------
days' written notice to the Company, may terminate his employment with Good
Reason. For purposes of this Agreement, the term "Good Reason" shall mean
the occurrence of any of the events or conditions described in (i) or (ii)
hereof that occur without the Executive's express written consent and thus,
constitute a constructive termination:
(i) a material adverse change in the Executive's status, title,
position, scope of authority or responsibilities (including reporting
responsibilities) or working conditions; the assignment to the
Executive of any duties or responsibilities which, are materially
inconsistent with such status, title, position, authorities or
responsibilities; or any removal of the Executive from or failure to
reappoint or reelect him to any of such positions, except in
connection with the prior termination of his employment by the Company
for Cause pursuant to this Agreement, as a result of his death or
disability or by the Executive other than for Good Reason;
(ii) any material breach by the Company of any provision of this
Agreement, including without implication of limitation a reduction by
the Company in the Executive's compensation or a material adverse
change in the level of benefits as set forth in Section 4 hereof.
(e) Certain Termination Benefits. Unless otherwise specifically
----------------------------
provided in this Agreement or otherwise required by law, all compensation
and benefits payable to the Executive under this Agreement shall terminate
on the date of termination of the Executive's employment under this
Agreement. Notwithstanding the foregoing, in the event of termination of
the Executive's employment with the Employer pursuant to Sections 6(c) and
(d) above, the Employer shall provide to the Executive the following
termination benefits ("Termination Benefits"):
(i) continuation of the Executive's Salary at the rate then in
effect pursuant to Section 4(a); and
4
(ii) continuation of group health plan benefits to the extent
authorized by and consistent with 29 U.S.C. (S) 1161 et seq. (commonly
known as "COBRA"), with the cost of the regular premium for such
benefits shared in the same relative proportion by the Employer and
the Executive as in effect on the date of termination.
The Termination Benefits set forth in (i) and (ii) above shall continue
effective until the later of (A) the expiration of the Tenn or (B) three
(3) months after the date of termination; The Employer's liability for
Salary continuation pursuant to Section 6(e)(i) shall be reduced by the
amount of any severance pay paid to the Executive pursuant to any severance
pay plan or stay bonus plan of the Employer. Notwithstanding the
foregoing, nothing in this Section 6(e) shall be construed to affect the
Executive's right to receive COBRA continuation entirely at the Executive's
own cost to the extent that the Executive may continue to be entitled to
COBRA continuation after the Executive's right to cost sharing under
Section 6(e)(ii) ceases.
(f) Disability. If the Executive shall be disabled so as to be unable
----------
to perform the essential functions of the Executive's then existing
position or positions under this Agreement with or without reasonable
accommodation for 180 consecutive days, the Chief Executive Officer or the
Board of Directors may remove the Executive from any responsibilities
and/or reassign the Executive to another position with the Employer for the
remainder of the Term or during the period of such disability.
Notwithstanding any such removal or reassignment, the Executive shall
continue to receive the Executive's full Salary (less any disability pay or
sick pay benefits to which the Executive may be entitled under the
Employer's policies) and benefits under Section 4 of this Agreement (except
to the extent that the Executive may be ineligible for one or more such
benefits under applicable plan terms) for a period of time equal to the
greater of (i) six (6) months; or (ii) the remainder of the Term. If any
question shall arise as to whether during any period the Executive is
disabled so as to be unable to perform the essential functions of the
Executive's then existing position or positions with or without reasonable
accommodation, the Executive may, and at the request of the Employer shall,
submit to the Employer a certification in reasonable detail by a physician
selected by the Employer to whom the Executive or the Executive's guardian
has no reasonable objection as to whether the Executive is so disabled or
how long such disability is expected to continue, and such certification
shall for the purposes of this Agreement be conclusive of the issue. The
Executive shall cooperate with any reasonable request of the physician in
connection with such certification. If such question shall arise and the
Executive shall fail to submit such certification, the Employer's
determination of such issue shall be binding on the Executive. Nothing in
this Section 6(e) shall be construed to waive the Executive's rights, if
any, under existing law including, without limitation, the Family and
Medical Leave Act of 1993, 29 U.S. C. (S)2601 et seq. and the Americans
with Disabilities Act, 42 U.S.C. (S) 12101 et seq.
5
7. Noncompetition and Nonsolicitation; Cooperation.
------------------------------------------------
(a) Noncompetition and Nonsolicitation. For eighteen (18) months
----------------------------------
after the termination of Executive's employment pursuant to Section 6(a) or
Section 6(b) or provided the Employer pays or has paid the Termination
Benefit to the Executive if the Executive's employment is terminated
pursuant to Sections 6(c), 6(d) or 6(f), the Executive (i) will not,
directly or indirectly, whether as owner, partner, shareholder, consultant,
agent, employee, co-venturer or otherwise, engage, participate, assist or
invest in any Competing Business (as hereinafter defined); (ii) will
refrain from directly or indirectly, recruiting or otherwise soliciting,
inducing or influencing any person to leave employment with the Employer
(other than terminations of employment of subordinate employees undertaken
in the course of the Executive's employment with the Employer); and (iii)
will refrain from soliciting or encouraging any customer or supplier to
terminate or otherwise modify adversely its business relationship with the
Employer. The Executive understands that the restrictions set forth in
this Section 7(d) are intended to protect the Employer's interest in its
Confidential Information and established employee, customer and supplier
relationships and goodwill, and agrees that such restrictions are
reasonable and appropriate for this purpose. For purposes of this
Agreement, the term "Competing Business" shall mean a business which is
competitive with any business which the Employer or any of its subsidiaries
is conducting or proposing to conduct at the time of Employee's
termination. Notwithstanding the foregoing, the Executive may own up to
one percent (1 %) of the outstanding stock of a publicly held corporation
which constitutes or is affiliated with a Competing Business.
(b) Litigation and Regulatory Cooperation. During and after the
-------------------------------------
Executive's employment, the Executive shall cooperate fully with the
Employer in the defense or prosecution of any claims or actions now in
existence or which may be brought in the future against or on behalf of the
Employer which relate to events or occurrences that transpired while the
Executive was employed by the Employer. The Executive's full cooperation in
connection with such claims or actions shall include, but not be limited
to, being available to meet with counsel to prepare for discovery or trial
and to act as a witness on behalf of the Employer at mutually convenient
times. During and after the Executive's employment, the Executive also
shall cooperate fully with the Employer in connection with any
investigation or review of any federal, state or local regulatory authority
as any such investigation or review relates to events or occurrences that
transpired while the Executive was employed by the Employer. The Employer
shall reimburse the Executive for all reasonable out-of-pocket expenses
incurred in connection with the Executive's performance of obligations
pursuant to this Section 7(b).
(c) Injunction. The Executive agrees that it would be difficult to
----------
measure any damages caused to the Employer which might result from any
breach by the Executive of the promises set forth in this Section 7, and
that in any event money
6
damages would be an inadequate remedy for any such breach. Accordingly,
subject to Section 8 of this Agreement, the Executive agrees that if the
Executive breaches, or proposes to breach, any portion of this Agreement,
the Employer shall be entitled, *in addition to all other remedies that it
may have, to an injunction or other appropriate equitable relief to
restrain any such breach without showing or proving any actual damage to
the Employer.
8. Consent to Jurisdiction. To the extent that any court action is
-----------------------
permitted consistent with or to enforce Section 8 of this Agreement, the parties
hereby consent to the jurisdiction of the Superior Court of the Commonwealth of
Pennsylvania and the United States District Court for the District of
Pennsylvania. Accordingly, with respect to any such court action, the Executive
(a) submits to the personal jurisdiction of such courts; (b) consents to service
of process; and (c) waives any other requirement (whether imposed by statute,
rule of court, or otherwise) with respect to personal jurisdiction or service of
process.
9. Integration. This Agreement constitutes the entire agreement between
-----------
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.
10. Assignment; Successors and Assigns, etc. Neither the Employer nor the
---------------------------------------
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided that the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer successors and permitted assigns of the Employee. This
Agreement shall enure to the benefit of the executors, administrators and heirs
of the Executive.
11. Enforceability. If any portion or provision of this Agreement
--------------
(including, without limitation, any portion or provision of any Section of this
Agreement) shall to any extent be declared illegal or unenforceable by a court
of competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as to
which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
12. Waiver. No waiver of any provision hereof shall be effective unless
------
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
7
13. Notices. Any notices, requests, demands and other communications
-------
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by a nationally recognized overnight courier service or by
registered or certified mail, postage prepaid, return receipt requested, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the
Chief Executive Officer, and shall be effective on the date of delivery in
person or by courier or three (3) days after the date mailed.
14. Amendment. This Agreement may be amended or modified only by a
---------
written instrument signed by the Executive and by a duly authorized
representative of the Employer.
15. Governing Law. This is a Pennsylvania contract and shall be construed
-------------
under and be governed in all respects by the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflict of laws principles of such
Commonwealth. With respect to any disputes concerning federal law, such
disputes shall be determined in accordance with the law as it would be
interpreted and applied by the United States Court of Appeals for the Third
circuit.
16. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which when so executed and delivered shall be taken to be
an original; but such counterparts shall together constitute one and the same
document.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Employer, by its duly authorized officer, and by the Executive, as of the
Effective Date.
FREEDOM OF INFORMATION, INC.
By: Thomas A. Gerace
----------------
Name: Thomas A. Gerace
Title: President
EXECUTIVE
/s/ Samuel P. Gerace, Jr.
-------------------------
Samuel P. Gerace, Jr.
8