Exhibit 99.5(a)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of February 16, 1998, by and between
USI, Inc., a Delaware corporation, with its principal office at 000 Xxxx Xxxxxx
Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, which immediately after the Mergers
contemplated below will be renamed U.S. Industries, Inc. ("USI") and Xxxxxx X.
Xxxxxx, residing at 00 Xxxxx Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000 ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is currently employed as Chairman and Chief
Executive Officer of Xxxx Industries, Inc. (the "Company");
WHEREAS, Executive and the Company have previously executed an
Employment Agreement dated January 22, 1996 (the "Prior Employment Agreement")
and an Agreement Relating to Employment dated October 17, 1994 (the "Prior
Change in Control Agreement"); and
WHEREAS, pursuant to a contemplated Agreement and Plan of Merger among
current U.S. Industries, Inc., USI, the Company, Blue Merger Corp. and Zoro
Merger Corp., dated as of February 16, 1998 (the "Merger Agreement"), as of the
consummation of the Mergers (as defined in the Merger Agreement), the Company
will become a wholly-owned subsidiary of USI.
WHEREAS, effective as of the consummation of the Mergers (the
"Effective Date"), USI will employ Executive as the Chief Executive Officer of
the USI Plumbing and Bath Products Company, a group of all of the subsidiaries
and divisions of USI in the plumbing and bath products business (the "USI
Plumbing Products Company") and cause the Company to employ Executive as its
Chairman and Chief Executive Officer; and
WHEREAS, USI and Executive desire to enter into an agreement (the
"Agreement") to embody the terms of Executive's prospective employment on and
after the Effective Date.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. TERM OF EMPLOYMENT. Except for earlier termination as provided
in Section 7 hereof, Executive's employment under this Agreement shall be for a
three-year term commencing on the Effective Date (the "Employment Term").
Notwithstanding the foregoing, if prior to August 31, 1998 the Mergers do not
occur, this Agreement shall, other than this sentence, be null and void and be
of no force or effect.
2. POSITIONS. (a) Executive shall serve as Chief Executive Officer
of the USI Plumbing Products Company and, while the Company is a subsidiary of
USI, as Chairman and Chief Executive Officer of the Company. It is the
intention of the parties that during the Employment Term, Executive shall also
serve on the Board of Directors of
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USI without additional compensation and USI shall, during the Employment Term
nominate Executive as a director of USI.
(b) Executive shall report to the Board of Directors of the Company
(the "Board") and the Chief Operating Officer of USI, and shall have such duties
and authority, consistent with his position as the senior executive officer of
the USI Plumbing Products Company, as shall be assigned to him from time to time
by the Board or the Chief Executive Officer or Chief Operating Officer of USI.
(c) During the Employment Term, Executive shall devote substantially
all of his business time and efforts to the performance of his duties hereunder;
provided, however, that Executive shall be allowed, to the extent that such
activities do not materially interfere with the performance of his duties and
responsibilities hereunder, to manage his personal financial and legal affairs
and to serve on corporate, civic, or charitable boards or committees.
Notwithstanding the foregoing, the Executive shall not serve on any corporate
board of directors if such service would be inconsistent with his fiduciary
responsibilities to USI and the Company and in no event shall Executive serve on
any such board unless approved by the Chief Executive Officer of USI. Service
on the corporate boards set forth on Exhibit A hereto is hereby approved.
(d) Upon request of the Board or the Chief Executive Officer or Chief
Operating Officer of USI, the Executive shall also serve as an executive officer
or director of affiliates of USI and shall comply with the policy of the USI
board of directors with
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regard to retention or forfeiture of director's fees. Any compensation paid to
the Executive as an employee by any such affiliate shall reduce the obligations
hereunder.
3. BASE SALARY. During the Employment Term, the Executive shall be
paid a base salary at the annual rate of not less than $460,000. Base salary
shall be payable in accordance with the usual payroll practices of the paying
entity. Executive's Base Salary shall be subject to annual review by USI or its
designee and may be increased, but not decreased, from time to time, except
that, prior to a Change in Control, it may be decreased proportionately in
connection with an across the board decrease applying to substantially all
senior executives of the Company and USI. The base salary as determined as
aforesaid from time to time shall constitute "Base Salary" for purposes of this
Agreement.
4. INCENTIVE COMPENSATION. (a) ANNUAL BONUS. For each fiscal year
or portion thereof during the Employment Term, Executive shall be eligible to
participate in an annual bonus plan of the Company or USI, as determined by USI,
that provides an annualized cash bonus opportunity with a target bonus potential
equal to at least sixty-percent (60%) of Base Salary. In addition, USI will
cause the Company to take such actions as may be necessary in respect of the
Xxxx, Inc. Executive Incentive Plan and the Xxxx Long-Term Incentive Plan as may
be necessary to provide that for the purposes of determining Executive's awards
thereunder that are to be determined with reference to Xxxx'x performance for
its fiscal year ending March 31, 1998, the effects of all transaction costs and
non-recurring charges associated with or taken in contemplation of the Mergers
shall be disregarded. In the event the Effective Date is later than April 1,
1998, USI will
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cause the Company to pay to the Executive a pro rata portion of the annual
target bonus under the Xxxx Industries, Inc. Executive Incentive Plan for the
fiscal year beginning on April 1, 1998, such pro rata portion to be based on the
number of days from April 1, 1998 to the Effective Date, divided by 365. Any
amounts payable under the prior Xxxx plans in accordance with this paragraph (a)
that have not been paid prior to the Effective Date shall be paid to the
Executive as soon as practicable after the Effective Date.
(b) EQUITY. After the Effective Date, USI shall cause the
Compensation Committee of its board of directors to grant Executive, on or prior
to the thirtieth (30) day after the Effective Date, in a manner that satisfies
the requirements for exemption under Rule 16b-3 of the Securities Exchange Act
of 1934, a number of restricted shares of common stock of USI equal to
$2,000,000 divided by the closing price of common stock of USI on the New York
Stock Exchange on the Effective Date of the Mergers or, if not traded on the New
York Stock Exchange on such date, on the first day thereafter that such common
stock is traded on the New York Stock Exchange (the "Restricted Stock"). Except
as otherwise specifically provided in this Agreement, the grant shall provide
that the
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Restricted Stock shall become nonforfeitable ("vest") with respect to such
shares on the third anniversary of the date of grant provided that Executive is
employed by USI on such vesting date. In addition, the grant shall provide that
the Restricted Stock shall fully vest (i) on a Change in Control, as defined in
Section 10 hereof of (ii) upon Executive's death or Disability (as defined in
Section 7(b) hereof), (iii) if Executive terminates his employment for Good
Reason (as defined in Section 7(c) hereof), or (iv) if Executive's employment
is terminated by USI other than for Cause.
(c) OTHER COMPENSATION. USI may upon recommendation of the
compensation committee of its board, award to the Executive such other bonuses
and compensation as it deems appropriate and reasonable.
(d) SPECIAL PAYMENT. In lieu of any payments due pursuant to the
Prior Change in Control Agreement (other than as provided as surviving in
Section 15(b) hereof), USI shall cause the Company to pay to Executive the sum
of $3,036,000 in a cash lump sum within ten (10) days after the Effective Date.
Except as provided in Section 15(b) hereof, USI and the Company shall have no
further obligations under the Prior Change in Control Agreement.
5. EMPLOYEE BENEFITS AND VACATION. (a) During the Employment Term,
Executive shall be entitled to participate in all pension, retirement, savings,
welfare and other pension and welfare employee benefit plans and arrangements
and fringe benefits and perquisites generally maintained by the Company from
time to time for the benefit of senior executives of the Company at a comparable
level, in accordance with their
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respective terms as in effect from time to time (other than any special
arrangement entered into by contract with an executive), subject to (c) and (d)
below. Notwithstanding the foregoing, during the Employment Term Executive
shall be entitled to employee benefits that are at least comparable, taken in
the aggregate, as those generally provided to senior management of USI, as
determined in good faith by senior management of USI. Without limiting the
foregoing, the Executive shall continue to have the same arrangements with
regard to providing, maintaining and operating an automobile as provided to
Executive immediately prior to the Effective Date. To the extent permitted
under applicable law, fringes and perquisites provided to Executive or the items
under Section 6 below shall not be treated as compensation to Executive. To the
extent Executive incurs tax on receipt of any of the aforementioned benefits
that he would not have incurred under his current arrangement with the Company
as modified by the benefits provided pursuant to this Agreement, except as a
result of a change in applicable tax law or to the extent of increases in
benefits over his current arrangement, as modified herein, the Company shall
make an additional payment to Executive in the amount necessary so that he will
have no additional cost for receiving such items or any additional payment.
(b) During the Employment Term, Executive shall be entitled to
vacation each year in accordance with the Company's policies in effect from time
to time, but in no event less than four (4) weeks paid vacation per calendar
year. The Executive shall also be entitled to such periods of sick leave as is
customarily provided by the Company for its senior executive employees.
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(c) Upon the Executive's retirement or other termination of
employment for any reason, the Executive will be entitled to receive a minimum
annual retirement benefit in the amount of $250,000, reduced by 0.5% for each
month that the Executive's commencement of benefits precedes the month in which
the Executive would attain age 65. The minimum retirement benefit provided by
this paragraph will be fully vested and nonforfeitable at all times. The
obligations under the first sentence of this paragraph (c) will be offset by the
aggregate benefits payable to the Executive under the Xxxx Industries Retirement
Plan, the Supplemental Executive Retirement Plan of Xxxx Industries, Inc. (the
"SERP"), and any qualified or nonqualified defined benefit retirement plans of
USI, the Company or any of their affiliates in which the Executive participates
during the Employment Term. The benefit under this paragraph will be payable in
monthly installments, beginning on the first day of the month coinciding with or
immediately following the date on which the Executive begins receiving benefits
under the Xxxx Industries Retirement Plan (or any successor plan) and continuing
on the first day of each subsequent month during the life of the Executive,
without actuarial reduction for the survivor benefit provided in the next
sentence hereof. In the event of the death of the Executive, the Executive's
surviving spouse will be entitled to receive 60% of the Executive's benefit for
the lifetime of such surviving spouse; such benefit to be paid to the surviving
spouse as of the first day of the month following the Executive's death. If the
Executive dies after his retirement and if Executive's spouse at the time of his
death is more than five (5) years younger than his spouse at the time of his
retirement, the aforesaid 60% benefit shall be actuarially adjusted to reflect
the age of his then spouse as compared to the
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age of his spouse at the time of his death. The Executive waives his right
under the SERP and the Xxxx Industries, Inc. Supplemental Pension Plan to
receive an immediate lump sum distribution of his accrued benefit as a result of
the Merger, and agrees that his accrued benefit will continue to be payable
under each such plan as if the Merger did not constitute a "change in control"
as defined in each plan, except that the Executive's present and future accrued
benefit under each plan will be fully vested and nonforfeitable at all times.
(d) Executive shall be entitled to retiree medical benefits upon
retirement, on a substantially similar basis, and subject to substantially
similar terms, conditions and limitations as the retiree medical benefits
provided to senior executives of USI immediately prior to the date Executive's
employment terminates (or, if the senior executives of USI are not then eligible
to receive upon retirement retiree medical benefits, those provided to senior
executives of USI at the time the right of such senior executives to receive
retiree medical benefits ceased), excluding any service requirements, but
subject to changes in law and provided that such retiree medical benefits shall
be coordinated appropriately with Medicare and other similar government programs
as reasonably determined by USI. In the event of Executive's death at any time,
Executive's surviving spouse shall be entitled to continued retiree medical
benefit coverage if, and only to the extent, that such benefits are generally
part of the retiree medical plan for senior executives of USI at the time of
Executive's retirement. To the extent Executive incurs tax on receipt of any of
the benefits under this Section 5(d) that he would not have incurred if he
received his retiree medical benefits under the same arrangement that was being
used at the time of such retirement
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generally for senior executives of USI, the Company shall make additional
payments to Executive, as required, in the amount necessary so that he will have
no additional costs for receiving such items or any additional payment.
6. BUSINESS EXPENSES. The Executive shall be reimbursed for the
travel, entertainment and other business expenses incurred by Executive in the
performance of his duties hereunder, in accordance with applicable policies as
in effect from time to time.
TERMINATION. The employment of Executive under this Agreement
shall terminate upon the occurrence of any of the following events:
(i) the death of Executive;
(ii) the termination of Executive's employment by USI due to
Executive's Disability pursuant to Section 7(b) hereof;
(iii) the termination of Executive's employment by Executive for
Good Reason pursuant to Section 7(c) hereof;
(iv) the termination of Executive's employment by USI without
Cause;
(v) the termination of employment by Executive without Good Reason
upon sixty (60) days prior written notice;
(vi) the termination of employment by Executive with or without
Good Reason during the period running from the date of a Change in Control to
twenty-four (24)
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months after the date of such Change in Control (the "Change in Control
Protection Period"), provided that the foregoing commencement date of such right
to terminate employment pursuant to this Section 7(a)(vi) shall be delayed until
six (6) months after the Change in Control if simultaneous with the Change in
Control USI or the person or entity triggering the Change in Control delivers to
Executive an irrevocable direct pay letter of credit with regard to the amounts
under Section 8(c)(A)(i) and (ii) and satisfying the requirements of Section
7(g) hereof (and further provided that the foregoing shall in no way affect full
vesting of Restricted Stock, as well as other restricted stock and options, if
any, upon a Change in Control);
(vii) the termination of Executive's employment by USI for Cause
pursuant to Section 7(e);
(b) DISABILITY. If, by reason of the same or related physical or
mental reasons, Executive is unable to carry out his material duties pursuant to
this Agreement for more than six (6) months in any twelve (12) consecutive month
period, USI may terminate Executive's employment for Disability upon thirty (30)
days prior written notice, by a Notice of Disability Termination, at any time
thereafter during such twelve (12) month period in which Executive is unable to
carry out his duties as a result of the same or related physical or mental
illness. Such termination shall not be effective if Executive returns to the
full time performance of his material duties within such thirty (30) day notice
period.
(c) TERMINATION FOR GOOD REASON. A Termination for Good Reason
means a termination by Executive by written notice given within ninety (90) days
after the
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occurrence of the Good Reason event. For purposes of this Agreement, "Good
Reason" shall mean the occurrence or failure to cause the occurrence, as the
case may be, without Executive's express written consent, of any of the
following circumstances, unless such circumstances are fully corrected prior to
the date of termination specified in the Notice of Termination for Good Reason
(as defined in Section 7(d) hereof): (i) Any material diminution of Executive's
positions, duties or responsibilities hereunder as of the Effective Date (except
in each case in connection with the termination of Executive's employment for
Cause or Disability or as a result of Executive's death, or temporarily as a
result of Executive's illness or other absence and provided that a reduction in
the size or number of the units reporting to Executive as a result of
dispositions, shall not be a material diminution), or the assignment to
Executive of duties or responsibilities that are inconsistent with Executive's
position as the Chief Executive Officer of the USI Plumbing Products Company;
(ii) Removal of, or the nonreelection of, the Executive from his position as the
Chief Executive Officer of the USI Plumbing Products Company; (iii) A relocation
of the USI Plumbing Products Company's principal United States executive offices
to a location more than twenty-five (25) miles from Addison, Texas or a
relocation of Executive away from such principal United States executive office;
(iv) After a Change in Control, a failure (A) to continue any bonus plan,
program or arrangement in which Executive is entitled to participate on or after
the Effective Date (the "Bonus Plans"), provided that any such Bonus Plans may
be modified from time to time but shall be deemed terminated if (x) any such
plan does not remain substantially in the form in effect prior to such
modification and (y) if plans providing Executive with substantially similar
benefits are not substituted
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therefor ("Substitute Plans"), or (B) to continue Executive as a participant in
the Bonus Plans and Substitute Plans on at least the same basis as to potential
amount of the bonus and substantially the same level of criteria for
achievability thereof as Executive participated in immediately prior to any
change in such plans or awards, in accordance with the Bonus Plans and the
Substitute Plans; (v) Any material breach by USI of any provision of this
Agreement, including without limitation Section 12 hereof; (vi) While an
employee of USI or an entity that is a Subsidiary of USI, either failure to be
nominated as a director of USI or, if a director, removal from such position;
(vii) Failure of any successor to assume in a writing delivered to Executive
upon the assignee becoming such, the obligations of USI hereunder; or (ix) A
failure of the Compensation Committee of the board of USI to grant the Executive
awards of Restricted Stock in accordance with Section 4(c) hereof.
(d) NOTICE OF TERMINATION FOR GOOD REASON. A Notice of
Termination for Good Reason shall mean a notice that shall indicate the specific
termination provision in Section 7(c) relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
Termination for Good Reason. The failure by Executive to set forth in the
Notice of Termination for Good Reason any facts or circumstances which
contribute to the showing of Good Reason shall not waive any right of Executive
hereunder or preclude Executive from asserting such fact or circumstance in
enforcing his rights hereunder. The Notice of Termination for Good Reason shall
provide for a date of termination not less than ten (10) nor more than sixty
(60) days after the date such Notice of Termination for Good Reason is given,
provided that in the case of the events set forth in Section 7(c)(ii) or (iii)
the date may be two (2) days after the giving of such notice.
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(e) CAUSE. Subject to the notification provisions of Section 7(f)
below, Executive's employment hereunder may be terminated by USI for Cause. For
purposes of this Agreement, the term "Cause" shall be limited to (i) willful
misconduct by Executive with regard to USI or the Company or either of their
businesses which has a material adverse effect on USI or the Company; (ii) the
refusal of Executive to follow the proper written direction of the Board, the
board of USI or the Chief Executive Officer or the Chief Operating Officer of
USI, provided that the foregoing refusal shall not be "Cause" if Executive in
good faith believes that such direction is illegal, unethical or immoral and
promptly so notifies the entity or person giving the direction; (iii) Executive
being convicted of a felony (other than a felony involving a motor vehicle) and
either (x) exhausting all appeals without a reversal of the conviction or (y)
commencing a term of incarceration in a house of detention; (iv) the breach by
Executive of any fiduciary duty owed by Executive to USI or the Company which
has a material adverse effect on USI or the Company; or (v) Executive's material
fraud with regard to USI or the Company.
(f) NOTICE OF TERMINATION FOR CAUSE. A Notice of Termination for
Cause shall mean a notice that shall indicate the specific termination provision
in Section 7(e) relied upon and shall set forth in reasonable detail the facts
and circumstances which provide for a basis for Termination for Cause. Further,
a Notification for Cause shall be required to include a copy of a resolution
duly adopted by at least two-thirds of the entire membership of the board of USI
at a meeting of the board of USI which was called for the purpose of considering
such termination and which Executive and his representative had the right to
attend and address the board, finding that, in the good faith opinion of the
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board, Executive engaged in conduct set forth in the definition of Cause herein
and specifying the particulars thereof in reasonable detail. The date of
termination for a Termination for Cause shall be the date indicated in the
Notice of Termination. Any purported Termination for Cause which is held by a
court not to have been based on the grounds set forth in this Agreement or not
to have followed the procedures set forth in this Agreement shall be deemed a
Termination by USI without Cause.
(g) The irrevocable direct pay letter of credit required to be
delivered pursuant to Section 7(a)(vi) hereof shall be in amount equal to the
amount Executive would be entitled to under Section 8(c)(A)(i) and (ii) hereof
if he was terminated without Cause upon the Change in Control (the "Occurrence")
and have an expiration date of no less than two (2) years after the Occurrence.
The Executive shall be entitled to draw on the letter of credit upon
presentation to the issuing bank of a demand for payment signed by Executive
that states that (i) (A) a Good Reason event has occurred and Executive would be
entitled to payment under Section 8(c) of this Agreement if he elected to
terminate employment for Good Reason or (B) six (6) months has expired since the
Occurrence or (C) Executive is entitled to payment under Section 8(c) of the
Agreement and (ii) assuming the event set forth in (i) entitled him to payment
under Section 8(c) of this Agreement, the amount USI would be indebted to him at
the time of presentation under Section 8(c)(A)(i) and (ii) if he then was
eligible to receive payments under Section 8(c). There shall be no other
requirements (including no requirement that Executive first makes demand upon
USI or that Executive actually terminates employment) with regard to payment of
the letter of credit. To the extent the letter of credit is not adequate to
cover the amount owed to
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Executive by USI under the Agreement, is not submitted by Executive or is not
paid by the issuing bank, USI shall remain liable to Executive for the remainder
owed Executive pursuant to the terms of this Agreement. To the extent any
amount is paid under the letter of credit it shall be a credit against any
amounts USI then or thereafter would owe to Executive under Section 8(c) of the
Agreement. The letter of credit shall be issued by a national money center bank
with a rating of at least A by Standard and Poors. USI shall bear the cost of
the letter of credit.
8. CONSEQUENCES OF TERMINATION OF EMPLOYMENT. (a) DEATH. If
Executive's employment is terminated during the Employment Term by reason of
Executive's death, the employment period under this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement except for: (i) any compensation earned but not yet paid, including
and without limitation, any declared but unpaid bonus, any amount of Base Salary
or deferred compensation accrued or earned but unpaid, any accrued vacation pay
payable pursuant to the Company's policies and any unreimbursed business
expenses payable pursuant to Section 6 which amounts shall be promptly paid in a
lump sum to Executive's estate; (ii) the product of (x) the target annual bonus
for the fiscal year of Executive's death, multiplied by (y) a fraction, the
numerator of which is the number of days of the current fiscal year during which
Executive was employed by USI, and the denominator of which is 365, which bonus
shall be paid when bonuses for such period are paid to the other executives;
(iii) full accelerated vesting under all outstanding equity-based and long-term
incentive plans (with options remaining outstanding as provided under the
applicable stock option plan and a pro rata
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payment under any long term incentive plans based on actual coverage under such
plans at the time payments normally would be made under such plans); (iv) the
survivor benefit to which the Executive's surviving spouse is entitled pursuant
to Section 5(c) and survivor health coverage under Section 5(d); (v) subject to
Section 9 hereof, any other amounts or benefits owing to Executive under the
then applicable employee benefit plans or policies of the Company, which shall
be paid in accordance with such plans or policies; (vi) payment on a monthly
basis of twelve (12) months of Base Salary, which shall be paid to Executive's
spouse, or if she shall predecease him, then to Executive's children (or their
guardian if one is appointed) in equal shares; and (vii) payment of the spouse's
and dependent's COBRA coverage premiums to the extent, and so long as, they
remain eligible for COBRA coverage, but in no event more than three (3) years.
Section 12 hereof shall also continue to apply.
(b) DISABILITY. If Executive's employment is terminated by reason
of Executive's Disability, Executive shall be entitled to receive the payments
and benefits to which his representatives would be entitled in the event of a
termination of employment by reason of his death, and to the extent additional,
the supplemental retirement and retiree medical benefits to which the Executive
is entitled pursuant to Sections 5(c) and 5(d), provided that the payment of
Base Salary shall be reduced by the projected amount he would receive under any
long-term disability policy or program maintained by the Company during the
twelve (12) month period during which Base Salary is being paid. Section 12
hereof shall also continue to apply.
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(c) TERMINATION BY EXECUTIVE FOR GOOD REASON OR FOR ANY REASON
DURING THE CHANGE IN CONTROL PROTECTION PERIOD OR TERMINATION BY USI WITHOUT
CAUSE . If (i) outside of the Change in Control Protection Period, Executive
terminates his employment hereunder for Good Reason during the Employment Term,
(ii) if a Change in Control occurs and during the Change in Control Protection
Period Executive terminates his employment for any reason, or (iii) if
Executive's employment with USI is terminated by USI without Cause, Executive
shall be entitled to receive (A) in a lump sum within five (5) days after such
termination (1) three times Base Salary, (2) three times the highest annual
bonus paid or payable to Executive hereunder for any of the previous three
completed fiscal years commencing subsequent to the Effective Date, provided
that, for purposes of any terminations prior to the close of the first full
fiscal year commencing after the Effective Date, his highest annual bonus shall
be deemed to be $460,000; (3) any unreimbursed business expenses payable
pursuant to Section 6, and (4) any Base Salary, bonus, vacation pay or other
deferred compensation accrued or earned but not yet paid at the date of
termination; (B) accelerated full vesting under all outstanding equity-based and
long-term incentive plans with options remaining outstanding as provided under
the applicable stock option plan and a pro rata payment under any long term
incentive plans based on actual coverage under such plans payment being made at
the time payments would normally be made under such plans; (C) the supplemental
retirement and retiree medical benefits to which the Executive is entitled
pursuant to Sections 5(c) and 5(d); (D) subject to Section 9 hereof, any other
amounts or benefits due Executive under the then applicable employee benefit
plans in which he then participates as shall be determined and paid in
accordance
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with such plans, policies and practices; (E) three years of additional service
and compensation credit (at his then compensation level) for pension purposes
under any defined benefit type qualified or nonqualified pension plan or
arrangement in which he then participates, which payments shall be made through
and in accordance with the terms of the nonqualified defined benefit pension
arrangement if any then exists, or, if not, in an actuarially equivalent lump
sum (using the actuarial factors then applying in the defined benefit plan
covering Executive); (F) three (3) years of the maximum employer contribution
(assuming Executive deferred the maximum amount and continued to earn his then
current salary) under any type of qualified or nonqualified 401(k) plan (payable
at the end of each such year); and (G) payment of the premiums for Executive and
his dependents' health coverage for three (3) years under the health plans under
which Executive participated at the time of his termination or materially
similar benefits. Payments under (G) above may at the discretion of USI be made
by continuing participation of Executive in the plan as a terminee, by paying
the applicable COBRA premium for Executive and his dependents, or by covering
Executive and his dependents under substitute arrangements, provided that, to
the extent Executive incurs tax that he would not have incurred as an active
employee as a result of the aforementioned coverage or the benefits provided
thereunder, he shall receive an additional payment in the amount necessary so
that he will have no additional cost for receiving such items or any additional
payment. Section 12 hereof shall also continue to apply.
(d) TERMINATION WITH CAUSE OR VOLUNTARY RESIGNATION WITHOUT GOOD
REASON. If Executive's employment hereunder is terminated (i) by USI for Cause
or (ii) by
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Executive without Good Reason outside of the Change in Control Protection
Period, the Executive shall be entitled to receive only his Base Salary through
the date of termination, any earned but unpaid bonus, and any unreimbursed
business expenses payable pursuant to Section 6, and the supplemental retirement
and retiree medical benefits to which the Executive is entitled pursuant to
Sections 5(c) and 5(d) (except that Executive shall not be entitled to such
retiree medical benefits if Executive's employment is terminated by USI for
Cause). Subject to Section 4 hereof, all other benefits (including without
limitation restricted stock and options) due Executive following such
termination of employment shall be determined in accordance with the plans,
policies and practices applicable to Executive.
9. NO MITIGATION; NO SET-OFF. In the event of any termination of
employment under Section 8, Executive shall be under no obligation to seek other
employment and there shall be no offset against any amounts due Executive under
this Agreement on account of any remuneration attributable to any subsequent
employment that Executive may obtain. Any amounts due under Section 8 are in
the nature of severance payments, or liquidated damages, or both, and are not in
the nature of a penalty. Such amounts are inclusive, and in lieu of, any
amounts payable under any other salary continuation or cash severance
arrangement of USI or the Company and to the extent paid or provided under any
other such arrangement shall be offset from the amount due hereunder.
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10. CHANGE IN CONTROL. (a) For purposes of this Agreement, the
term "Change in Control of the Company" shall mean the sale of all or
substantially all of the assets of the USI Plumbing Products Company in the
aggregate, whether pursuant to a single transaction or pursuant to a series of
transactions and whether through an asset sale or stock sale, other than (x) to
a Parent or a Subsidiary of USI or (y) in connection with a sale of all or
substantially all of the then operating company stock or assets of USI. For
purposes of this Section 10(a), Parent and Subsidiary shall have the meaning set
forth in Section 424 of the Internal Revenue Code (the "Code").
(b) For purposes of this Agreement, the term "Change in Control of
USI" shall mean (i) any "person" as such term is used in Sections 13(d) and
14(d) of the Act (other than USI, any trustee or other fiduciary holding
securities under any employee benefit plan of USI, or any company owned,
directly or indirectly, by the stockholders of USI in substantially the same
proportions as their ownership of Common Stock of USI), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of USI representing twenty-five (25%) or more of the
combined voting power of USI's then outstanding securities; (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors, and any new director (other than a director
designated by a person who has entered into an agreement with USI to effect a
transaction described in clause (i), (iii), or (iv) of this paragraph) whose
election by the Board of Directors of USI or nomination for election by USI's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of the two-year
period or whose election
21
or nomination for election was previously so approved, cease for any reason to
constitute at least a majority of the Board of Directors; (iii) the stockholders
of USI approve a merger or consolidation of USI with any other corporation,
other than a merger or consolidation which would result in the voting securities
of USI outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of USI or such surviving entity outstanding immediately
after such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of USI (or similar
transaction) in which no person acquires more than twenty-five (25%) of the
combined voting power of USI's then outstanding securities shall not constitute
a Change in Control of USI; or (iv) the stockholders of USI approve a plan of
complete liquidation of USI or an agreement for the sale or disposition by USI
of all or substantially all of USI's assets other than the sale of all or
substantially all of the assets of USI to a person or persons who beneficially
own, directly or indirectly, at least fifty percent (50%) or more of the
combined voting power of the outstanding voting securities of USI at the time of
the sale.
(c) A "Change in Control" shall mean either a "Change in Control
of the Company" or a "Change in Control of USI."
11. CONFIDENTIAL INFORMATION, NON-COMPETITION AND NON-SOLICITATION
OF THE COMPANY. (a) Executive acknowledges that as a result of his employment
by USI and the Company, Executive will obtain secret and confidential
information as to USI and
22
the Company and their affiliates and USI, the Company and their affiliates will
suffer substantial damage, which would be difficult to ascertain, if Executive
should use such confidential information and that because of the nature of the
information that will be known to Executive it is necessary for USI, the Company
and their affiliates to be protected by the prohibition against Competition as
set forth herein, as well as the Confidentiality restrictions set forth herein.
(ii) Executive acknowledges that the retention of nonclerical
employees employed by USI, the Company and their affiliates in which USI, the
Company or their affiliates have invested training and on which they depend for
the operation of their business is important to the businesses of USI the
Company and their affiliates, that Executive will obtain unique information as
to such employees as an executive USI and of the Company and will develop a
unique relationship with such persons as a result of being an executive of USI
and the Company and, therefore, it is necessary for USI, the Company and their
affiliates to be protected from Executive's Solicitation of such employees as
set forth below.
(iii) Executive acknowledges that the provisions of this Agreement
are reasonable and necessary for the protection of the business of USI, the
Company and their affiliates and that part of the compensation paid under this
Agreement and the agreement to pay severance in certain instances is in
consideration for the agreements in this Section 11.
23
(b) Competition shall mean: (i) participating, directly or
indirectly, as an individual proprietor, partners, stockholder, officer,
employee, director, joint venturer, investor, lender, consultant or in any
capacity whatsoever (within the United States of America, or in any country
where USI, the Company or their affiliates do business) in a business in
competition with any business conducted by the USI Plumbing Products Company,
provided, however, that such participation shall not include (i) the mere
ownership of not more than one percent (1%) of the total outstanding stock of a
publicly held company; or (ii) any activity engaged in with the prior written
approval of the Board.
(c) Solicitation shall mean: recruiting, soliciting or inducing,
of any nonclerical employee or employees of USI, the Company or their affiliates
to terminate their employment with, or otherwise cease their relationship with
USI, the Company or their affiliates or hiring or assisting another person or
entity to hire any nonclerical employee of USI, the Company or their affiliate
or any person who within six (6) months before had been a nonclerical employee
of USI, the Company or their affiliates.
(d) If any restriction set forth with regard to Competition or
Solicitation is found by any court of competent jurisdiction, or an arbitrator,
to be unenforceable because it extends for too long a period of time or over too
great a range of activities or in too broad a geographic area, it shall be
interpreted to extend over the maximum period of time, range of activities or
geographic area as to which it may be enforceable. If any provision of this
Section 11 shall be declared to be invalid or unenforceable, in whole or in
part, as a result of the foregoing, as a result of public policy or for any
other reason, such
24
invalidity shall not affect the remaining provisions of this Section which shall
remain in full force and effect.
(e) During and after the Employment Term, Executive shall hold in
a fiduciary capacity for the benefit of USI, the Company and their affiliates
all secret or confidential information, knowledge or data relating to USI, the
Company and their affiliates, and their respective businesses, including any
confidential information as to customers of USI the Company and their
affiliates, (i) obtained by Executive during his employment by USI, the Company
and their affiliates and (ii) not otherwise public knowledge or known within the
applicable industry. Executive shall not, without prior written consent of USI
or the Company or their affiliates, as applicable, unless compelled pursuant to
the order of a court or other governmental or legal body having jurisdiction
over such matter, communicate or divulge any such information, knowledge or data
to anyone other than USI, the Company, their affiliates, and those designated by
it. In the event Executive is compelled by order of a court or other
governmental or legal body to communicate or divulge any such information,
knowledge or data to anyone other than the foregoing, he shall promptly notify
USI of any such order and he shall cooperate fully with USI in protecting such
information to the extent possible under applicable law.
(f) Upon termination of his employment with USI, the Company and
their affiliates, or at any time as USI or the Company may request, Executive
will promptly deliver to USI or the Company, as requested, all documents
(whether prepared by USI, the Company, an affiliate, Executive or a third party)
relating to USI, the Company, an affiliate
25
or any of their businesses or property which he may possess or have under his
direction or control.
(g) During the Employment Term and for eighteen (18) months
thereafter Executive will not enter into Competition with USI, the Company or
their affiliates. Furthermore, in the event of any termination of Executive's
employment for any reason whatsoever, whether by the Company or by the Executive
and whether or not for Cause, Good Reason or expiration of the Employment Term,
the Executive for three (3) years thereafter will not engage in Solicitation.
(h) In the event of a breach or potential breach of this Section
11, Executive acknowledges that USI, the Company and their affiliates will be
caused irreparable injury and that money damages may not be an adequate remedy
and agree that USI, the Company and their affiliates shall be entitled to
injunctive relief (in addition to its other remedies at law) to have the
provisions of this Section 11 enforced.
12. INDEMNIFICATION. (a) USI agrees that if Executive is made a
party to or threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director or officer of the Company, USI
and/or any other affiliate of the Company or USI, or is or was serving at the
request of any of such companies as a director, officer, member, employee,
fiduciary or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including, without limitation, service with respect
to employee benefit plans, whether or not the basis of such Proceeding is
alleged action in an official capacity
26
as a director, officer, member, employee, fiduciary or agent while serving as a
director, officer, member, employee, fiduciary or agent, he shall be indemnified
and held harmless by the applicable company to the fullest extent authorized by
Delaware law (or if other than USI, the law applicable to such company), as the
same exists or may hereafter be amended, against all Expenses incurred or
suffered by Executive in connection therewith, and such indemnification shall
continue as to Executive even if Executive has ceased to be an officer,
director, member, fiduciary or agent, or is no longer employed by such company,
and shall inure to the benefit of his heirs, executors and administrators.
(b) As used in this Agreement, the term "Expenses" shall include,
without limitation, damages, losses, judgments, liabilities, fines, penalties,
excise taxes, settlements and costs, attorneys' fees, accountants' fees, and
disbursements and costs of attachment or similar bonds, investigations, and any
expenses of establishing a right to indemnification under this Agreement.
(c) Expenses incurred by Executive in connection with any
Proceeding shall be paid by the applicable company in advance upon request of
Executive and the giving by the Executive of any undertakings required by
applicable law.
(d) Executive shall give the applicable company notice of any
claim made against him for which indemnity will or could be sought under this
Agreement. In addition, Executive shall give the applicable company such
information and cooperation as it may reasonably require and as shall be within
Executive's power and at such times and places as are reasonably convenient for
Executive.
27
(e) With respect to any Proceeding as to which Executive notifies
the applicable company of the commencement thereof:
(i) The applicable company will be entitled to participate therein
at its own expense; and
(ii) Except as otherwise provided below, to the extent that it may
wish, the applicable company jointly with any other indemnifying party similarly
notified will be entitled to assume the defense thereof, with counsel reasonably
satisfactory to Executive. Executive also shall have the right to employ his
own counsel in such action, suit or proceeding and the fees and expenses of such
counsel shall be at the expense of the applicable company.
(f) The applicable company shall not be liable to indemnify
Executive under this Agreement for any amounts paid in settlement of any action
or claim effected without its written consent. The applicable company shall not
settle any action or claim in any manner which would impose any penalty or
limitation on Executive without Executive's written consent. Neither the
applicable company nor Executive will unreasonably withhold or delay their
consent to any proposed settlement.
(g) The right to indemnification and the payment of expenses
incurred in defending a Proceeding in advance of its final disposition conferred
in this Section 12 shall not be exclusive of any other right which Executive may
have or hereafter may acquire
28
under any statute, provision of the certificate of incorporation or by-laws of
the any company, agreements, vote of stockholders or disinterested directors or
otherwise.
(h) USI shall obtain Officer and Director liability insurance
policies covering Executive in the same aggregate amount and under the same
terms as are maintained for USI's senior officers and directors, and shall
maintain at all times during the Employment Term coverage under such policies in
the aggregate with regard to all officers and directors, including Executive, of
an amount not less than $20 million. USI shall maintain for a six (6) year
period commencing on the date the Executive ceases to be an employee or director
of USI or its affiliates, Officer and Director liability insurance coverage for
events occurring during the period the Executive was an employee or director of
the Company, USI or any affiliate of either in the same aggregate amount and
under the same terms as are maintained for USI's active officers and directors.
The phrase "in the same aggregate amount and under the same terms" shall include
the same level of self-insurance by USI as shall be maintained for active
officers and directors of the Company.
13. SPECIAL TAX PROVISION. (a) Anything in this Agreement to the
contrary notwithstanding, in the event that any amount or benefit paid, payable,
or to be paid, or distributed, distributable, or to be distributed to or with
respect to Executive by the Company or USI (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Company or
USI, any person whose actions result in a change of ownership covered by
Internal Revenue Code (the "Code") Section 280G(b)(2) or any person affiliated
with the Company, USI or such person) as a result, after the
29
Effective Date, of a change in ownership of the Company or a direct or indirect
parent thereof covered by Code Section 280G(b)(2) (collectively, the "Covered
Payments") is or becomes subject to the excise tax imposed by or under Section
4999 of the Code (or any similar tax that may hereafter be imposed), and/or any
interest or penalties with respect to such excise tax (such excise tax, together
with such interest and penalties, is hereinafter collectively referred to as the
"Excise Tax"), USI shall pay to Executive an additional amount (the "Tax
Reimbursement Payment") such that after payment by Executive of all taxes
(including, without limitation, any interest or penalties and any Excise Tax
imposed on or attributable to the Tax Reimbursement Payment itself), Executive
retains an amount of the Tax Reimbursement Payment equal to the sum of (i) the
amount of the Excise Tax imposed upon the Covered Payments, and (ii) without
duplication, an amount equal to the product of (A) any deductions disallowed for
federal, state or local income tax purposes because of the inclusion of the Tax
Reimbursement Payment in Executive's adjusted gross income, and (B) the highest
applicable marginal rate of federal, state or local income taxation,
respectively, for the calendar year in which the Tax Reimbursement Payment is
made or is to be made. The intent of this Section 13 is that (a) the Executive,
after paying his federal, state and local income tax, will be in the same
position as if he was not subject to the Excise Tax under Section 4999 of the
Code and did not receive the extra payments pursuant to this Section 13 and (b)
that Executive should never be "out-of-pocket" with respect to any tax or other
amount subject to this Section 13, whether payable to any taxing authority or
repayable to USI, and this Section 13 shall be interpreted accordingly.
30
(b) Except as otherwise provided in Section 13(a), for purposes of
determining whether any of the Covered Payments will be subject to the Excise
Tax and the amount of such Excise Tax,
(i) such Covered Payments will be treated as "parachute payments"
(within the meaning of Section 280G(b)(2) of the Code) and such payments in
excess of the Code Section 280G(b)(3) "base amount" shall be treated as subject
to the Excise Tax, unless, and except to the extent that, the Company's
independent certified public accountants appointed prior to the change in
ownership covered by Code Section 280G(b)(2) or legal counsel (reasonably
acceptable to Executive) appointed by such public accountants (or, if the public
accountants decline such appointment and decline appointing such legal counsel,
such independent certified public accountants as promptly mutually agreed on in
good faith by USI and the Executive) (the "Accountant"), deliver a written
opinion to Executive, reasonably satisfactory to Executive's legal counsel, that
Executive has a reasonable basis to claim that the Covered Payments (in whole or
in part) (A) do not constitute "parachute payments", (B) represent reasonable
compensation for services actually rendered (within the meaning of Section
280G(b)(4) of the Code) in excess of the "base amount" allocable to such
reasonable compensation, or (C) such "parachute payments" are otherwise not
subject to such Excise Tax (with appropriate legal authority, detailed analysis
and explanation provided therein by the Accountants); and
31
(ii) the value of any Covered Payments which are non-cash benefits
or deferred payments or benefits shall be determined by the Accountant in
accordance with the principles of Section 280G of the Code.
(c) For purposes of determining the amount of the Tax
Reimbursement Payment, Executive shall be deemed:
(i) to pay federal, state and/or local income taxes at the highest
applicable marginal rate of income taxation for the calendar year in which the
Tax Reimbursement Payment is made or is to be made, and
(ii) to have otherwise allowable deductions for federal, state and
local income tax purposes at least equal to those disallowed due to the
inclusion of the Tax Reimbursement Payment in Executive's adjusted gross income.
(d)(i) (A) In the event that prior to the time Executive has filed
any of his tax returns for the calendar year in which the change in ownership
event covered by Code Section 280G(b)(2) occurred, the Accountant determines,
for any reason whatever, the correct amount of the Tax Reimbursement Payment to
be less than the amount determined at the time the Tax Reimbursement Payment was
made, Executive shall repay to USI, at the time that the amount of such
reduction in Tax Reimbursement Payment is determined by the Accountant, the
portion of the prior Tax Reimbursement Payment attributable to such reduction
(including the portion of the Tax Reimbursement Payment attributable to the
Excise Tax and federal, state and local income tax imposed on the portion of the
Tax Reimbursement Payment being repaid by Executive, using the assumptions and
32
methodology utilized to calculate the Tax Reimbursement Payment (unless
manifestly erroneous)), plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code.
(B) In the event that the determination set forth in (A) above is
made by the Accountant after the filing by Executive of any of his tax returns
for the calendar year in which the change in ownership event covered by Code
Section 280G(b)(2) occurred but prior to one (1) year after the occurrence of
such change in ownership, Executive shall file at the request of USI an amended
tax return in accordance with the Accountant's determination, but no portion of
the Tax Reimbursement Payment shall be required to be refunded to USI until
actual refund or credit of such portion has been made to Executive, and interest
payable to USI shall not exceed the interest received or credited to Executive
by such tax authority for the period it held such portion (less any tax
Executive must pay on such interest and which he is unable to deduct as a result
of payment of the refund).
(C) In the event Executive receives a refund pursuant to (B) above
and repays such amount to USI, Executive shall thereafter file for refunds or
credits by reason of the repayments to USI.
(D) Executive and USI shall mutually agree upon the course of
action, if any, to be pursued (which shall be at the expense of USI) if
Executive's claim for refund or credit is denied.
33
(ii) In the event that the Excise Tax is later determined by the
Accountants or the Internal Revenue Service to exceed the amount taken into
account hereunder at the time the Tax Reimbursement Payment is made (including
by reason of any payment the existence or amount of which cannot be determined
at the time of the Tax Reimbursement Payment), USI shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any interest or penalties
payable with respect to such excess) once the amount of such excess is finally
determined.
(iii) In the event of any controversy with the Internal Revenue
Service (or other taxing authority) under this Section 13, subject to subpart
(i)(D) above, the Executive shall permit USI to control issues related to this
Section 13 (at its expense), provided that such issues do not potentially
materially adversely affect Executive but Executive shall control any other
issues. In the event the issues are interrelated, Executive and USI shall in
good faith cooperate so as not to jeopardize resolution of either issue, but if
the parties cannot agree Executive shall make the final determination with
regard to the issues. In the event of any conference with any taxing authority
as to the Excise Tax or associated income taxes, Executive shall permit the
representative of USI to accompany him and Executive and his representative
shall cooperate with USI and its representative.
(iv) With regard to any initial filing for a refund or any other
action required pursuant to this Section 13 (other than by mutual agreement) or,
if not required, agreed to by USI and Executive, Executive shall cooperate fully
with USI, provided that the
34
foregoing shall not apply to actions that are provided herein to be at the sole
discretion of Executive.
(e) The Tax Reimbursement Payment, or any portion thereof, payable
by USI shall be paid not later than the fifth (5th) day following the
determination by the Accountant, and any payment made after such fifth (5th) day
shall bear interest at the rate provided in Code Section 1274(b)(2)(B). USI
shall use its best efforts to cause the Accountant to promptly deliver the
initial determination required hereunder and, if not delivered, within ninety
(90) days after the change in ownership event covered by Section 280G(b)(2) of
the Code, USI shall pay the Executive the Tax Reimbursement Payment set forth in
an opinion from counsel recognized as knowledgeable in the relevant areas
selected by Executive, and reasonably acceptable to USI, within five (5) days
after delivery of such opinion. The amount of such payment shall be subject to
later adjustment in accordance with the determination of the Accountant as
provided herein.
(f) USI shall be responsible for all charges of the Accountant and
if (e) is applicable the reasonable charges for the opinion given by Executive's
counsel.
(g) USI and Executive shall mutually agree on and promulgate
further guidelines in accordance with this Section 13 to the extent, if any,
necessary to effect the reversal of excessive or shortfall Tax Reimbursement
Payments. The foregoing shall not in any way be inconsistent with Section
13(d)(i)(D) hereof.
35
14. LEGAL AND OTHER FEES AND EXPENSES. In the event that a claim
for payment or benefits under this Agreement is disputed, USI shall pay all
reasonable attorney, accountant and other professional fees and reasonable
expenses incurred by Executive in pursuing such claim, unless the claim by
Executive is found to be frivolous by any court or arbitrator.
15. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without reference
to principles of conflict of laws.
(b) ENTIRE AGREEMENT/AMENDMENTS. This Agreement and the
instruments contemplated herein, contain the entire understanding of the parties
with respect to the employment of Executive by USI and the Company and
supersedes any policy of USI or the Company with regard to severance payments
and any prior agreements between the Company or USI and Executive with regard to
employment or severance including without limitation, the Prior Employment
Agreement and, except as provided below, the Prior Change in Control Agreement.
There are no restrictions, agreements, promises, warranties, covenants or
undertakings between the parties with respect to the subject matter herein other
than those expressly set forth herein and therein. This Agreement may not be
altered, modified, or amended except by written instrument signed by the parties
hereto. Notwithstanding the foregoing, Executive's rights under Section
4(iv)(C), (E) and, except for
36
the reference to paragraph (B), (D) of the Prior Change in Control Agreement
shall survive with regard to the payments made pursuant to Section 4(d) hereof.
(c) NO WAIVER. The failure of a party to insist upon strict
adherence to any term of this Agreement on any occasion shall not be considered
a waiver of such party's rights or deprive such party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
Any such waiver must be in writing and signed by Executive or an authorized
officer of USI, as the case may be.
(d) ASSIGNMENT. This Agreement shall not be assignable by
Executive. This Agreement shall be assignable by USI only to either an entity
which is owned in whole or in part by USI or by any successor to USI or an
acquiror of all or substantially all of the assets of the USI Plumbing Products
Company, provided such entity or acquiror promptly assumes all of the
obligations hereunder of USI in a writing delivered to the Executive and
otherwise complies with the provisions hereof with regard to such assumption.
Upon such assignment and assumption, all obligations of USI herein, shall be the
obligations of the assignee entity or acquiror, as the case may be, but USI
shall remain secondarily liable for the obligations hereunder. Executive
acknowledges that he is aware that USI contemplates assigning this Agreement to
the Company on or promptly after the Effective Date. If Executive becomes
employed by another entity owned in whole or in part by USI, or remains employed
by USI but is administratively assigned to another entity owned in whole or in
part by USI, reference herein to the Company shall mean, where applicable, such
other entity.
37
(e) SUCCESSORS; BINDING AGREEMENT. This Agreement shall inure to
the benefit of and be binding upon the personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees legatees
and permitted assignees of the parties hereto.
(f) COMMUNICATIONS. For the purpose of this Agreement, notices
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when faxed or delivered, or (ii)
two business days after being mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the initial page of this Agreement, provided that all
notices to USI shall be directed to the attention of the Chairman of USI with a
copy to the Senior Vice President and General Counsel of USI, or to such other
address as any party may have furnished to the other in writing in accordance
herewith. Notice of change of address shall be effective only upon receipt.
(g) WITHHOLDING TAXES. USI and the Company may withhold from any
and all amounts payable under this Agreement such Federal, state and local taxes
as may be required to be withheld pursuant to any applicable law or regulation.
(h) SURVIVORSHIP. The respective rights and obligations of the
parties hereunder shall survive any termination of Executive's employment to the
extent necessary to the agreed preservation of such rights and obligations.
38
(i) COUNTERPARTS. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
(j) HEADINGS. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
USI, Inc.
By: /s/ XXXXX X. XXXXXX
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
/s/ XXXXXX X. XXXXXX
---------------------------------
Xxxxxx X. Xxxxxx
39
