Exhibit
10.34


 


EMPLOYMENT
AGREEMENT


 


This Employment Agreement (this “Agreement”) is
entered into as of May 20, 2003, between Daniel Smith (the “Executive”)
and Florists’ Transworld Delivery, Inc. (“FTD”).


 


WHEREAS, the parties hereto previously entered into a
letter agreement dated as of November 12, 2002 (the “Letter Agreement”),
setting forth the terms of the Executive’s employment with FTD, and, in
connection therewith, a Confidentiality and Non-Competition Agreement dated as
of November 12, 2002 (the “Confidentiality and Non-Competition
Agreement”); and


 


WHEREAS, the parties desire to modify certain terms of
the Executive’s employment with FTD and replace and supercede the Letter
Agreement with this Agreement;


 


NOW, THEREFORE, in consideration of the mutual
promises and covenants set forth below and in the Confidentiality and
Non-Competition Agreement, FTD and the Executive hereby agree as follows:


 


1.                                                                                       Duties.  The Executive shall serve as Executive Vice
President, FTD.COM or in a substantially similar position with any entity that
acquires FTD or all or substantially all of FTD’s assets through May 31,
2004 (which term shall automatically renew for successive one year terms unless
FTD provides written notice of termination to the Executive prior to the end of
the initial term or any renewal term). 
The Executive shall perform the duties assigned by FTD from time to
time.  The Executive shall devote the
Executive’s entire business time to the affairs of FTD to the performance of
the Executive’s duties under this Agreement and to the promotion of FTD’s
interests.


 


2.                                                                                       Compensation.  As full compensation for the performance by
the Executive of the Executive’s duties under this Agreement, FTD shall
compensate the Executive as follows:


 


(a)                                                                                  Base
Salary.  During the term of this
Agreement, FTD shall pay to the Executive a base salary set annually by the
Board of Directors of FTD or FTD, Inc. or the Compensation Committee thereof
(collectively, the “Board”), such base salary to initially be $175,000 per
year, payable in the periodic installments ordinarily paid by FTD to employees
of FTD at comparable levels to the Executive. 
The Executive shall be entitled to such merit increases in base salary
as the Board may determine, in its discretion.


 


(b)                                                                                 Performance
Bonus.  The Executive shall be
entitled to participate in a performance bonus as set by the Board based upon
performance criteria to be set by the Board.


 


(c)                                                                                  Equity
Incentive Awards.  In the event a
Change of Control (as hereinafter defined) occurs during the Executive’s
employment, notwithstanding any provision of this Agreement or any other
agreement governing any equity incentive awards granted to the Executive, any
outstanding stock options or restricted stock awards granted to the Executive
by FTD, Inc., FTD or any subsidiary of either company shall vest in full and
become immediately


 

















 


exercisable, and any
restrictions relating thereto shall lapse, upon the occurrence of such Change
of Control.


 


(d)                                                                                 Paid
Vacation.  The Executive shall be
entitled to four weeks of paid vacation per year in accordance with FTD’s
policies with respect to vacations then in effect.


 


(e)                                                                                  Benefits.  During the term of Executive’s employment
hereunder, the Executive shall be entitled to the additional employment-related
benefits (the “Benefits”) that are made available from time to time to
employees of FTD at comparable levels to the Executive.


 


(f)                                                                                    Expense
Reimbursement.  FTD shall reimburse
the Executive, in accordance with the practice from time to time in effect for
other similarly-situated employees of FTD, for all reasonable and necessary
travel expenses and other disbursements incurred by the Executive, for or on
behalf of FTD, in the performance of the Executive’s duties under this
Agreement.


 


3.                                                             Termination
Following a Change of Control.


 


(a)                                                                                  Involuntary
Termination.  If the Executive’s
employment hereunder is terminated (other than by the Executive (except as
provided under clause (b) below)) or is not renewed pursuant to Section 1
during a Change of Control Severance Period (as hereinafter defined), the
Executive shall be entitled to the benefits provided under Section 4(a)
hereof; provided, however, that the Executive shall not be
entitled to such benefits upon the occurrence of one or more of the following
events:


 


(i)                                     the
Executive’s death;


 


(ii)                                  if
the Executive becomes permanently disabled within the meaning of, and begins
actually to receive disability benefits pursuant to, the long-term disability
plan in effect for, or applicable to, the Executive immediately prior to the
Change of Control; or


 


(iii)                               any
event described in Section 4(c) hereof under the definition of “Cause”.


 


(b)                                                                                 Constructive
Termination.  The Executive may
terminate the Executive’s employment hereunder during the Change of Control
Severance Period upon the occurrence of one or more of the following events
(regardless of whether any other reason, other than Cause, for such termination
exists or has occurred, including without limitation other employment), in
which case the Executive shall be entitled to the benefits provided under
Section 4(a) hereof:


 


(i)                                     failure
to elect or reelect or otherwise to maintain the Executive in the office or the
position, or a substantially equivalent office or


 


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position, which the
Executive held immediately prior to the Change of Control;


 


(ii)                                  (A)
a material adverse change in the nature or scope of the authorities, powers,
functions, responsibilities or duties attached to the position that the
Executive held immediately prior to the Change of Control; (B) a reduction in
the Executive’s base salary from the rates in effect immediately prior to the
Change of Control or a material modification in the scope of the Executive’s
right to participate in any bonus program offered to similarly-situated
employees; or (C) the termination or denial of the Executive’s rights to
Benefits at least as great in the aggregate as are payable thereunder
immediately prior to the Change of Control or a reduction in the scope or value
thereof other than a general reduction applicable to all similarly-situated
employees;


 


(iii)                               a
change in circumstances following the Change of Control, including, without
limitation, a change in the scope of the business or other activities for which
the Executive was responsible immediately prior to the Change of Control, which
has rendered the Executive unable to carry out any material portion of the
authorities, powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change of Control,
which situation is not remedied within 30 calendar days after written notice of
such change given by the Executive;


 


(iv)                              the
liquidation, dissolution, merger, consolidation or reorganization of FTD or
transfer of all or substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger, consolidation, reorganization,
transfer or otherwise) to which all or substantially all of its business and/or
assets have been transferred (directly or by operation of law) shall have
assumed all duties and obligations of FTD under this Agreement; or


 


(v)                                 the
Executive is required to have his principal location of work changed to any
location that is in excess of 50 miles from the Executive’s principal location
of work immediately prior to the Change of Control.


 


For purposes of this Agreement:


 


(i)                                     “Change
of Control” shall mean:


 


(A)                              the
acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
“Exchange Act”)) (a


 


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“Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of more than 50% of the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors (“Voting
Stock”) of FTD, Inc. or FTD, respectively; provided, however, that for purposes
of this subsection (A), the following acquisitions shall not constitute a
Change of Control:  (1) any acquisition
directly from FTD, Inc. or FTD, (2) any acquisition by FTD, Inc., FTD, any
subsidiary of FTD, Inc. or FTD or any employee benefit plan (or related trust)
sponsored or maintained by FTD, Inc. or FTD or any such subsidiary or (3) any
acquisition by any of Perry Acquisition Partners, L.P., Bain Capital, Inc.,
Fleet Private Equity Co. Inc. or any of their respective affiliates;


 


(B)                                a
change in a majority of the members of the Board occurs (1) within one year
following the public announcement of an actual or threatened election contest
(within the meaning of Rule 14a-11 under the Exchange Act) or the filing of a
Schedule 13D or other public announcement indicating a Person intends to
effect a change in control of FTD, Inc. or FTD or (2) as a result of a majority
of the members of the Board having been proposed, designated or nominated by a
Person (other than FTD, Inc. or FTD through the Board or duly authorized
committees thereof or through the exercise of contractual rights);


 


(C)                                consummation
of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of FTD, Inc. or FTD (a “Business
Combination”), in each case, unless, following such Business Combination, (1)
more than 50% of the Voting Stock of the entity resulting from such Business
Combination is held in the aggregate by (x) the holders of securities entitled
to vote generally in the election of directors of FTD, Inc. or FTD immediately
prior to such transaction, (y) any employee benefit plan (or related trust)
sponsored or maintained by FTD, Inc. or FTD or such entity or any subsidiary of
any of them or (z) any of Perry Acquisition Partners, L.P., Bain Capital, Inc.,
Fleet Private Equity Co. Inc. or any of their respective affiliates and (2) at
least half of the members of the board of directors of the entity resulting
from such Business Combination were members of the Board at the time of the
execution of the initial agreement, or the action of the Board providing for
such Business Combination; or


 


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(D)                               approval
by the stockholders of FTD, Inc. or FTD of a complete liquidation or
dissolution of FTD, Inc. or FTD; and


 


(ii)                                  “Change
of Control Severance Period” shall mean the period of time commencing on the
date of a Change of Control and continuing until the earliest of (A) the
second anniversary of such Change of Control, (B) the Executive’s death, or (C)
the Executive’s retirement.


 


4.                                                                                       Severance
Compensation.


 


(a)                                                                                  Severance
Following a Change of Control.  If
the Executive is entitled to receive benefits pursuant to the terms of
Section 3(a) or Section 3(b):


 


(i)                                     The Executive, within five business days after
the Executive’s demand therefor, shall be entitled to a lump sum payment in an
amount equal to (A) base salary for two years (at the highest rate in effect
for any period during the three-year period prior to the date of termination),
plus (B) two times the Executive’s target performance bonus as set by the Board
for the fiscal year in which the Change of Control or the date of termination
occurs, whichever is higher, plus (C) any pro rata performance bonus to which
the Executive may be entitled pursuant to this Agreement for the fiscal year in
which the Change of Control or the date of termination occurs, whichever is
higher; and


 


(ii)                                  For
two years following the date of termination (the “Continuation Period”), the
Executive will be provided, at no cost to the Executive, with (A) health
benefits substantially similar to those which the Executive was receiving or
entitled to receive immediately prior to the date of termination; provided,
however, that any such benefits otherwise receivable by the Executive
pursuant to this clause (a)(ii)(A) will be reduced to the extent comparable
benefits are actually received by the Executive from another employer during
the Continuation Period, and any such benefits actually received by the
Executive shall be reported by the Executive to FTD, (B) life insurance and
disability insurance or coverage at least equivalent to that the Executive was
receiving or entitled to receive immediately prior to the date of termination
and (C) reasonable and customary executive outplacement services in an amount
not to exceed $20,000.


 


(b)                                                                                 Other
Severance Payments.  FTD shall have
the right to terminate the Executive’s employment at any time during the term
of this Agreement by giving the Executive written notice of the effective date
of the termination.  If (i) this
Agreement is not renewed pursuant to Section 1 or (ii) the Executive’s
employment is terminated (A) without Cause by FTD (other than during the Change
of Control Severance Period) or (B) by the Executive following the


 


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Executive’s assignment to
a position that represents a material diminution in the Executive’s operating
responsibilities (other than during the Change of Control Severance Period) (it
being understood that a change in the Executive’s title shall not by itself
entitle the Executive to terminate the Executive’s employment and receive the
right to severance payments under this paragraph), the Executive will be paid
(1) continuing salary for one year from the effective date of any such
non-renewal or termination of employment and (2) any pro rata performance bonus
to which the Executive may be entitled pursuant to this Agreement; provided,
however, that in no event shall the Executive be entitled to any payment
under this Section 4(b) if the Executive is in breach of the
Confidentiality and Non-Competition Agreement.


 


(c)                                                                                  Cause.  For purposes of this Agreement, “Cause”
means any of the following events that FTD or the Board has determined, in good
faith, has occurred: (i) the Executive’s continual or deliberate neglect of the
performance of the Executive’s material duties; (ii) the Executive’s failure to
devote substantially all of the Executive’s working time to the business of FTD
and its subsidiaries or affiliated companies; (iii) the Executive’s engaging willfully
in misconduct in connection with the performance of any of the Executive’s
duties, including, without limitation, the misappropriation of funds or
securing or attempting to secure personally any profit in connection with any
transaction entered into on behalf of FTD or its subsidiaries or affiliated
companies; (iv) the Executive’s willful breach of any confidentiality or
nondisclosure agreements with FTD (including this Agreement) or the Executive’s
violation, in any material respect, of any code or standard of behavior
generally applicable to employees or executive employees of FTD; (v) the
Executive’s active disloyalty to FTD, including, without limitation, willfully
aiding a competitor or improperly disclosing confidential information; or (vi)
the Executive’s engaging in conduct that may reasonably result in material
injury to the reputation of FTD, including conviction or entry of a plea of
nolo contendre for a felony or any crime involving fraud or embezzlement under
federal, state or local laws.


 


5.                                                                                       Confidential
Information and Non-Competition. 
The Executive and FTD previously entered into the Confidentiality and
Non-Competition Agreement, which provides for (a) non-disclosure of
confidential information, (b) non-competition and (c) non-solicitation
of customers, suppliers and employees. 
The Executive hereby acknowledges that such agreement shall continue in
full force and effect in accordance with the terms thereof from and after the
date hereof and that such continuing force and effect is a material inducement
to FTD’s entering into this Agreement.  Any
severance payment made in accordance with the terms of this Agreement shall be
deemed to constitute consideration for both the Executive’s termination of
employment and the Executive’s agreement regarding non-competition set forth
herein and in the Confidentiality and Non-Competition Agreement.


 


6.                                                                                       Limitation
on Payments and Benefits. 
Notwithstanding any other provision of this Agreement to the contrary,
in the event that it shall be determined (as hereafter provided) that any
payment or distribution by FTD or any of its affiliates to the Executive


 


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or for the Executive’s
benefit, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without limitation
any stock option, performance share, performance unit, stock appreciation right
or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing, would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”) (or any successor provision thereto), by reason of
being considered “contingent on a change in ownership or control” of FTD within
the meaning of Section 280G of the Code (or any successor provision
thereto), or to any similar tax imposed by state or local law, or any interest
or penalties with respect to such taxes, then such payments and benefits to be
paid or provided shall be reduced to an amount (but not below zero) that would
result in the maximum possible net after tax receipts to the Executive from all
such payments or distributions (determined by reference to the present value
determined in accordance with Section 280G(d)(4) of the Code (or any
successor provision thereto) of all such payments net of all such taxes, or any
interest or penalties with respect to such taxes, determined by applying the
highest marginal rate under Section 1 of the Code (or any successor
provision thereto) that applied to the Executive’s taxable income for the
immediately preceding taxable year) (the “Reduced Amount”).  The fact that the Executive’s payments or
benefits may be reduced by reason of the limitations contained in this
paragraph will not of itself limit or otherwise affect any of the Executive’s
other rights other than pursuant to this Agreement.  If it is determined that the Executive should receive a Reduced
Amount, FTD will provide the Executive notice to that effect and a copy of the
detailed calculation thereof.  The
Executive will then be entitled to designate the payments or benefits to be so
reduced in order to give effect to this paragraph.  In the event that the Executive fails to make such designation
within ten business days of notification of the reduction in payments or
benefits is required pursuant to this paragraph, FTD may effect such reduction
in any manner it deems appropriate.


 


7.                                                                                       Miscellaneous.  This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Illinois, without giving effect to the conflicts of laws principles thereof.  The Executive and FTD consent to
jurisdiction and venue in any federal or state court in the City of
Chicago.  This Agreement and the
Confidentiality and Non-Competition Agreement state the entire agreement and
understanding regarding the Executive’s employment with FTD.  This Agreement supercedes and replaces in
its entirety the Letter Agreement.  This
Agreement may be amended only by a written document signed by both the
Executive and FTD.  No delay or failure
to exercise any right under this Agreement waives such rights under the Agreement.  If any provision of this Agreement is
partially or completely invalid or unenforceable, then that provision shall
only be ineffective to such extent of its invalidity or unenforceability, and
the validity or enforceability of any other provision of this Agreement shall
not be affected.  Any controversy
relating to this Agreement shall be settled by arbitration in Chicago, Illinois
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, except as otherwise provided in the Confidentiality and
Non-Competition Agreement.  In the event
of any inconsistency between this Agreement and any personnel policy or manual
of FTD with respect to any matter, this Agreement shall govern the matter.


 


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(Signature page follows)


 


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IN WITNESS WHEREOF, the undersigned have hereunto set
their hands as of the date first set forth above.


 


 


	
   

  	
  FLORISTS’ TRANSWORLD DELIVERY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /S/ ROBERT L. NORTON

  
	
   

  	
   

  
	
   

  	
  Its: CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /S/ DANIEL SMITH

  	
   

  
	
   

  	
  Daniel Smith

  
				



 


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