|
Exhibit
10.1
EXECUTION COPY
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT
AGREEMENT by and among AFFINION GROUP HOLDINGS, INC., a
Delaware corporation (the “ Company ”),
AFFINION GROUP, INC. , a Delaware corporation and
wholly-owned subsidiary of the Company (“ Affinion
”) and NATHANIEL J. LIPMAN (“ Executive
”) (collectively the “ Parties ”) is made
as of November 9, 2007 (the “ Effective Date
”).
WHEREAS , on
October 17, 2005, Executive entered into an employment
agreement with Affinion (the “ Prior Employment
Agreement ”);
WHEREAS , the Parties
desire to continue to employ Executive pursuant to the terms,
provisions and conditions set forth in this employment agreement
(the “ Agreement ”), which Agreement shall
supersede the Prior Employment Agreement effective as of the
Effective Date;
WHEREAS , Executive
desires to accept and continue his employment on the terms
hereinafter set forth in this Agreement.
NOW THEREFORE , in
consideration of the premises and of the mutual covenants,
understandings, representations, warranties, undertakings and
promises hereinafter set forth, intending to be legally bound
thereby, the Parties agree as follows:
Section 1. Employment
Period .
Subject to earlier
termination in accordance with Section 3 of this Agreement,
Executive shall be employed by the Company and Affinion
(collectively, the “ Companies ”) for a period
commencing on the Effective Date and ending on October 17,
2010 (the “ Employment Period ”);
provided , however , that the Employment Period shall
automatically be renewed for successive one (1) year periods
thereafter unless either the Company or Executive gives at least
ninety (90) days’ written notice of its intention not to
renew the Employment Period. Upon Executive’s termination of
employment with the Company for any reason, Executive shall
immediately resign all positions with the Companies or any of their
respective subsidiaries or affiliates, including any position as a
member of the Company’s Board of Directors (the “
Board ”) and as a member of the Board of Directors of
Affinion (the “ Affinion Board ”).
Section 2. Terms of
Employment .
(a) Position . During
the term of Executive’s employment, Executive shall serve as
President and Chief Executive Officer of the Company. In addition,
as of the Effective Date, Executive is a member and Chairman of the
Board of Directors and the Affinion Board. During the Employment
Period, the Company will nominate Executive for election by
stockholders as a member of the Board and will use commercially
reasonable efforts to cause the Executive to be so elected. In
performing his duties hereunder, Executive shall report directly to
the Board. If reasonably requested by the Board, Executive hereby
agrees to serve (without additional compensation) as an officer and
director of any member of the “Affinion Group” (as
defined in Section 5(a) below).
1
(b) Duties . During
the Employment Period, Executive shall be primarily responsible for
the Company’s management and affairs as directed by the
Board, and have such other, responsibilities, duties and authority
that are customary for his position, subject at all times to the
control of the Board, and shall perform such services as
customarily are provided by an executive of a corporation with his
position and such other services consistent with his position, as
shall be assigned to him from time to time by the Board. Executive
agrees to devote all of his business time to the business and
affairs of the Company and to use Executive’s commercially
reasonable efforts to perform faithfully, effectively and
efficiently his responsibilities and obligations hereunder.
Notwithstanding the foregoing, nothing herein shall prohibit
Executive from (i) serving on civic or charitable boards or
committees and (ii) managing personal investments, so long as
such activities do not materially interfere with the performance of
Executive’s responsibilities hereunder.
(c) Compensation
.
(i) Base Salary .
During the Employment Period, Executive shall receive an initial
annual base salary in an amount equal to $585,000.00, less all
applicable withholdings, which shall be paid in accordance with the
customary payroll practices of the Company (as in effect from time
to time, the “ Annual Base Salary ”). The Annual
Base Salary shall be subject to annual review and increases, and
the Annual Base Salary shall not be reduced without
Executive’s consent, unless the reduction is related to a
broader compensation reduction that is not limited to Executive and
does not exceed 10% of his Annual Base Salary.
(ii) Bonuses . During
the Employment Period, the Company shall establish a bonus plan for
each fiscal year of the Company (each, the “ Plan
”) pursuant to which Executive will be eligible to receive an
annual bonus (the “ Bonus ”). The Compensation
Committee of the Board will administer the Plan and at such time as
the Company becomes subject to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “ Code ”)
establish in advance performance objectives for each year in
accordance with Section 162(m) of the Code. In the event that
the Company achieves the target established in the Plan based on
actual performance, Executive shall be eligible to receive a Bonus
in an amount equal to 125% (which amount shall increase to 150% as
of the beginning of the fiscal year 2008) of Executive’s
Annual Base Salary (“ Target Bonus ”). Subject
to Section 4, Executive will be entitled to receive the Bonus
only upon the Company’s achievement of the specified
performance objectives and if Executive is employed on the last day
of the applicable fiscal year. The Bonus shall become payable in
the following fiscal year on or before March 15 provided that
the Compensation Committee certifies that the Company has achieved
the applicable performance objectives and determines the amount of
the bonus that shall be paid to each executive entitled to receive
a bonus for the applicable fiscal year.
(iii) Benefits .
During the Employment Period, Executive shall be eligible to
participate in all retirement, compensation and employee benefit
plans, practices, policies and programs provided by the Companies
to the extent applicable generally to other senior executives of
the Companies (except severance plans, policies, practices, or
programs) subject to the eligibility criteria set forth therein, as
such may be amended or terminated from time to time.
2
(iv) Expenses . During
the term of Executive’s employment, Executive shall be
entitled to receive reimbursement for all reasonable business
expenses incurred by Executive in performance of his duties
hereunder provided that Executive provides all necessary
documentation in accordance with the Companies’
policies.
Section 3.
Termination of Employment .
(a) Death or
Disability . Executive’s employment shall terminate
automatically upon Executive’s death. If Executive becomes
subject to a “Disability” (as defined below) during the
Employment Period, the Company may give Executive written notice in
accordance with Sections 3(f) and 10(h) of its intention to
terminate Executive’s employment. For purposes of this
Agreement, “ Disability ” means
(i) Executive’s inability to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment that can be expected to result in death or can
be expected to last for a continuous period of not less than 12
months, or (ii) Executive is, by reason of any medically
determinable physical of mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits
for a period of not less than three months under an accident or
health plan covering employees of the Companies.
(b) Cause .
Executive’s employment may be terminated at any time by the
Company for “Cause” (as defined below). For purposes of
this Agreement, “ Cause ” shall mean
Executive’s (i) conviction of a felony or a crime of
moral turpitude; (ii) conduct that constitutes fraud or
embezzlement; (iii) willful misconduct or willful gross
neglect; (iv) continued willful failure to substantially
perform his duties as President and Chief Executive Officer; or
(v) a material breach by Executive of this Agreement;
provided that in the event of a termination pursuant to
clause (iv) or (v), to the extent such failure to perform
duties or material breach is subject to cure, the Company shall
have notified Executive in writing describing such failure to
perform duties or material breach and Executive shall have failed
to cure such failure to perform or breach within 30 days after his
receipt of such written notice.
(c) Termination Without
Cause . The Company may terminate Executive’s employment
hereunder without Cause at any time.
(d) Good Reason .
Executive’s employment may be terminated at any time by
Executive for Good Reason upon 60 days’ prior written notice
following the occurrence of the event giving rise to the
termination for Good Reason. For purposes of this Agreement,
“ Good Reason ” means voluntary resignation
after any of the following actions taken by the Companies without
Executive’s consent: (i) failure of the Company to use
its commercially reasonable efforts to cause Executive to continue
to be elected as a member of the Board; (ii) any material
failure of the Companies to fulfill their obligations under this
Agreement, (iii) a material and adverse change to, or a
material reduction of, Executive’s duties and
responsibilities to the Companies, (iv) a reduction in
Executive’s Annual Base Salary or Target Bonus (excluding any
diminution related to a broader compensation reduction that is not
limited to Executive specifically and that is not more than 10% in
the aggregate or any diminution to which Executive consented)
or
3
(v) the relocation of
Executive’s primary office to a location more than 35 miles
from the prior location; provided that any such event shall
not constitute Good Reason unless and until Executive shall have
provided the Companies with notice thereof no later than 60 days
following the occurrence of such event and the Companies shall have
failed to remedy such event within 30 days of receipt of such
notice.
(e) Voluntary
Termination . Executive’s employment may be terminated at
any time by Executive without Good Reason upon 90 days’ prior
written notice.
(f) Termination as a
Result of Non-Renewal of the Employment Period by the Company .
The expiration of the Employment Period, and the termination of
Executive’s employment upon the date of such expiration, on
account of the Company giving notice to Executive of its desire not
to extend the Employment Period in accordance with Section 1,
shall be treated for purposes of this Agreement as a termination
without Cause pursuant to Section 4(a).
(g) Notice of
Termination . Any termination by the Company for Cause or
without Cause, or by Executive for Good Reason or without Good
Reason, shall be communicated by Notice of Termination to the other
party hereto given in accordance with Section 10(h). For
purposes of this Agreement, a “ Notice of Termination
” means a written notice that (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Executive’s employment under the provision so indicated and
(iii) if the “Date of Termination” (as defined
below) is other than the date of receipt of such notice, specifies
the termination date. The failure by Executive, or the Company to
set forth in the Notice of Termination any fact or circumstance
that contributes to a showing of Good Reason or Cause shall not
waive any right of Executive, or the Company hereunder or preclude
Executive, or the Company from asserting such fact or circumstance
in enforcing Executive’s, or the Company’s rights
hereunder.
(h) Date of
Termination . “ Date of Termination ” means
(i) if Executive’s employment is terminated by the
Company for Cause, without Cause or by reason of Disability, or by
Executive for Good Reason or without Good Reason, the date of
receipt of the Notice of Termination (in the case of a termination
with or without Good Reason, provided such Date of
Termination is in accordance with Section 3(d) or
Section 3(e)) or any later date specified therein pursuant to
Section 3(g), as the case may be, (ii) if
Executive’s employment is terminated by reason of death, the
date of death, and (iii) the expiration of the Employment
Period, and the termination of Executive’s employment upon
the date of such expiration, on account of the Company giving
notice to Executive of its desire not to extend the Employment
Period in accordance with Section 3(f).
Section 4.
Obligations of the Company upon Termination .
(a) With Good Reason;
Without Cause . If during the Employment Period, the Company
shall terminate Executive’s employment without Cause or
Executive shall terminate his employment for Good Reason, then the
Company will provide Executive with the following payments and/or
benefits:
4
(i) The Company shall pay to
Executive as soon as reasonably practicable but no later than the
15 th
day of the third month
following the end of the calendar year that contains the Date of
Termination in a lump sum to the extent not previously paid,
(A) the Annual Base Salary through the Date of Termination,
and (B) the Bonus earned for any fiscal year ended prior to
the year in which the Date of Termination occurs, provided that
Executive was employed on the last day of such fiscal year (“
Accrued Obligations ”); and
(ii) After the Date of
Termination, the Company will pay Executive, in eight quarterly
installments commencing as of the Date of Termination, an amount
equal to two times the sum of Executive’s Annual Base Salary
and Target Bonus, such installment to be paid ratably on the last
day of the quarter (the “ Severance Payments
”).
(b) Death or
Disability . If Executive’s employment shall be
terminated by reason of the Executive’s death or Disability,
then the Company will provide Executive with the following
severance payments and/or benefits: the Company shall pay Executive
or his legal representatives (i) the Accrued Obligations;
(ii) a lump sum equal to one times Executive’s Annual
Base Salary; and (iii) the continuation of death or Disability
benefits thereafter in accordance with the terms of such plans of
the Companies then in effect.
Thereafter, the Companies
shall have no further obligation to Executive or his legal
representatives.
(c) Cause; Other than for
Good Reason . If Executive’s employment shall be
terminated by the Company for Cause or by Executive without Good
Reason, then the Companies shall have no further obligations to
Executive other than for payment of the Accrued Obligations and any
indemnification rights he may have pursuant to
Section 9.
(d) Separation Agreement
and General Release . The Company’s obligations to make
payments under Sections 4(a) and 4(b) are conditioned on
Executive’s or his legal representative’s executing a
separation agreement and general release of claims against the
Companies and their respective affiliates (and their respective
officers and directors) in a form substantially similar to that
attached hereto as Exhibit A , subject to changes as maybe
warranted to be made to such release to preserve the intent thereof
for changes in applicable laws; provided , that, if
Executive should fail to execute (or revokes) such release within
60 days following the Date of Termination, the Company shall not
have any obligation to provide the payments contemplated under this
Section 4.
(e) Notwithstanding the
foregoing, if all or any portion of the payments and/or benefits
due under Section 4(a) or Section 4(b) are determined to
be “nonqualified deferred compensation” subject to
Section 409A of the Code, and the Company determines that
Executive is a “specified employee” as defined in
Section 409A(a)(2)(B)(i) of the Code and the final regulations
promulgated thereunder (the “ Treasury Regulations
”) and other guidance issued thereunder, then such payments
and/or benefits (or portion thereof) shall commence no earlier than
the first day of the seventh month following Executive’s
termination of employment (with the first such payment being a lump
sum equal to the aggregate payments and/or benefits Executive would
have received during such six-month period if no such payment delay
had been imposed). For purposes of this Section 4(e),
“termination of employment” shall mean
Executive’s “separation from service”, as defined
in Section 1.409A-1(h) of the Treasury Regulations, including
the default presumptions thereunder.
5
Section 5.
Restrictive Covenants .
(a) Non-Solicitation .
During the Employment Period and ending on the third anniversary of
the Executive’s termination of employment with the Company
for any reason, Executive shall not directly or indirectly through
another person or entity (i) induce or attempt to induce any
employee of the Companies and their respective affiliates
(collectively, the “ Affinion Group ”) to leave
the employ of the Affinion Group, or in any way interfere with the
relationship between the Affinion Group, on the one hand, and any
employee thereof, on the other hand, (ii) hire any person who
was an employee of the Affinion Group or (iii) induce or
attempt to induce any customer, supplier, licensee or other
business relation of the Affinion Group to cease doing business
with the Affinion Group, or in any way interfere with the
relationship between any such customer, supplier, licensee or
business relation, on the one hand, and the Affinion Group, on the
other hand.
(b) Non-Competition .
Executive acknowledges that, in the course of his employment with
the Affinion Group, Executive has become familiar, or will become
familiar, with the Affinion Group’s “Confidential
Information” and that such Executive’s services have
been and will be of special, unique and extraordinary value to the
Affinion Group. Therefore, Executive agrees that, during the
Employment Period and ending on the second anniversary of
Executive’s termination of employment with the Company for
any reason (the “ Non-Compete Period ”),
Executive
| 
