1
EXHIBIT 10(h)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of April 19, 2000, by and between
Xxxxxxx Company (the "Company") and Xxxxx X. Xxxxxxx (the "Executive");
WITNESSETH THAT:
WHEREAS, the Company and Executive desire to enter into this Agreement
pertaining to the employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Executive and the Company hereby agree as follows:
1. Performance of Services. The Executive's employment with the Company
shall be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby agrees to employ
the Executive as its President and Chief Executive Officer during the
Agreement Term (as defined below) and the Executive hereby agrees to remain
in the employ of the Company during the Agreement Term. The Executive shall
be appointed as a member of the Board of Directors of the Company (the
"Board") at the first regularly-scheduled Board meeting coincident with or
next following the Executive's commencement of employment with the Company,
and during the Agreement Term, while the Executive is employed by the
Company, the Board shall use its best efforts to cause the Executive to
continue as a member of such Board.
(b) During the Agreement Term, while the Executive is employed by the Company,
the Executive shall devote his full time (reasonable sick leave and
vacations excepted) and best efforts, energies and talents to serving as
its President and Chief Executive Officer.
(c) The Executive agrees that he shall perform his duties faithfully and
efficiently subject to the direction of the Board. The Executive's duties
shall include providing services for both the Company and its Affiliates
(as defined below), as determined by the Board (as used herein, Company
shall mean and include the Company and all of its Affiliates); provided,
that the Executive shall not, without his consent, be assigned tasks that
would be inconsistent with those of President and Chief Executive Officer.
The Executive will have such authority, power, responsibilities and duties
as are inherent to his position (and the undertakings applicable to his
position) and necessary to carry out his responsibilities and the duties
required of him hereunder.
(d) Notwithstanding the foregoing provisions of this paragraph 1, during the
Agreement Term the Executive may devote reasonable time to activities other
than those required under this Agreement, including activities involving
professional, charitable, educational,
2
religious and similar types of organizations, speaking engagements,
membership on the boards of directors of other profit or not-for-profit
organizations, and similar activities, to the extent that such other
activities do not, in the judgment of the Board, inhibit or prohibit the
performance of the Executive's duties under this Agreement or conflict in
any material way with the Company's business.
(e) Subject to the terms of this Agreement, the Executive shall not be required
to perform services under this Agreement during any period that he is
Disabled (as defined in paragraph 3(b)).
(f) The "Agreement Term" shall be the period beginning on May 1, 2000 and
ending on June 30, 2005. Thereafter, the Agreement shall automatically be
extended for additional 12-month periods, unless either party to this
Agreement provides notice of non-renewal to the other party at least 90
days before the last day of the Agreement Term. The term "Agreement Term"
shall also include any renewal period under the foregoing provisions of
this paragraph 1(f).
(g) Notwithstanding the foregoing provisions of this Agreement, this Agreement
and commencement of the Executive's employment hereunder shall be
contingent on the background investigative report ordered by the Company
being received and approved by the Chairman of the Compensation Committee
of the Board (the "Compensation Committee"). The General Counsel of the
Company shall notify the Executive in writing when the Chairman has
approved such report.
(h) For purposes of this Agreement, the term "Affiliate" shall mean any
corporation, partnership, joint venture or other entity in which at least a
fifty percent interest in such entity is owned, directly or indirectly, by
the Company (or a successor to the Company).
2. Compensation and Benefits. Subject to the terms of this Agreement,
during the Agreement Term while the Executive is employed by the Company, the
Company shall compensate him for his services as follows:
(a) Base Salary. The Executive shall receive for the 14-month period beginning
on May 1, 2000 base salary at an annual rate of $440,000, payable in
substantially equal monthly or more frequent installments (the "Salary").
For the fiscal year beginning July 1, 2001 and thereafter, the Executive's
Salary shall be reviewed by the Board no less frequently than annually to
determine whether an increase in the amount of Salary is appropriate.
(b) Annual Bonus. The Executive shall be eligible to participate in the
Management Incentive Bonus Plan (the "MIB") administered by the
Compensation Committee, or any successor annual bonus plan or arrangement
generally made available to the executive officers of the Company. The MIB
shall provide the Executive with a target bonus opportunity of not less
than 100% of annual Salary for each fiscal year of the Company (July 1 to
June 30); provided, that the Executive shall be guaranteed a minimum bonus
under the MIB for the fiscal years ending June 30, 2000 and June 30, 2001
of $36,667
2
3
and $220,000, respectively. Any bonus payable under this paragraph 2(b)
shall be paid in accordance with the terms of the MIB.
(c) Transition Bonus. The Executive shall receive a transition bonus
payable in accordance with the following:
(i) Restricted Stock Award. On a date to be determined by the
Compensation Committee but in no event later than June 30, 2000, the
Executive shall be awarded shares of common stock of the Company
subject to the restrictions described below ("Restricted Stock"), the
number of shares of which shall be determined by dividing $240,000 by
the fair market value of a share of common stock on such date. "Fair
market value" shall mean the average of the highest and lowest price
at which the common stock is traded on such award date, as reported
on the NASDAQ National Market. Such Restricted Stock award shall be
subject to the terms and conditions of the restricted stock agreement
set forth in Exhibit A. Except as otherwise specifically provided in
this Agreement or the restricted stock agreement, such shares of
Restricted Stock shall be forfeited if the Executive's Date of
Termination occurs prior to the end of the Restricted Period. The
"Restricted Period" shall end with respect to all of the shares
awarded under this paragraph 2(c)(i) on June 30, 2003.
(ii) Cash Award. The Executive shall be entitled to a lump sum cash
payment of $160,000, which shall be paid as soon as practicable
following the Executive's commencement of employment.
(d) Contingent Restricted Stock Award. On a date to be determined by the
Compensation Committee but in no event later than June 30, 2000, the
Executive shall also be awarded 50,000 shares of Restricted Stock (referred
to as "Contingent Restricted Stock"). Such Contingent Restricted Stock
award shall be subject to the terms and conditions of the restricted stock
award agreement set forth in Exhibit B. Except as otherwise specifically
provided in this Agreement or the restricted stock agreement, the shares of
Contingent Restricted Stock shall be permanently forfeited if the
Executive's Date of Termination occurs prior to June 30, 2001 (the
"Contingent Vesting Date"). If the Executive is employed by the Company on
the Contingent Vesting Date, the Company shall review the number of shares
of Common Stock that the Executive has purchased in open market
transactions and shall contingently vest the Executive in one share of the
Contingent Restricted Stock for each two shares of Company common stock so
purchased by the Executive and held by him on the Contingent Vesting Date.
Any shares of Contingent Restricted Stock that are not contingently vested
on the Contingent Vesting Date in accordance with foregoing provisions of
this paragraph 2(c)(ii) shall be permanently forfeited on such date. Except
as otherwise specifically provided in this Agreement or the restricted
stock agreement, (A) the Contingent Restricted Stock still held after June
30, 2001, if any, shall become fully vested and nonforfeitable on June 30,
2003, and (B) the Contingent Restricted Stock shall be permanently
forfeited if the Executive's Date of Termination occurs prior to such date.
3
4
(e) Stock Options. The Executive shall be granted an option to purchase 750,000
shares of common stock of the Company ("Common Stock") under the Xxxxxxx
Company Employee Incentive Stock Option Plan (the "Option Plan") as of a
date to be determined by the Compensation Committee but in no event later
than June 30, 2000 (the "Grant Date"). The shares subject to such option
shall have an exercise price equal to the fair market value (as defined in
the Option Plan) of a share of Common Stock on the Grant Date and shall
become exercisable with respect to 187,500 of the shares granted on each of
the second, third, fourth and fifth anniversaries of the Grant Date. Such
option shall be subject to the terms and conditions of the option agreement
set forth in Exhibit C. The Option Plan as in effect on the date of this
Agreement is attached hereto as Exhibit D.
The Executive shall also be eligible for annual stock option grants under
the Option Plan in amounts determined by the Compensation Committee;
provided, however, for the fiscal years ended June 30, 2001 and June 30,
2002, each such annual option grant shall not be less than 125,000 shares.
Such annual option grants shall vest with respect to 25% of the shares
awarded on each of the second through fifth anniversaries of the grant
date; provided, however, if the Executive remains employed until the end of
the Agreement Term, all unvested outstanding options shall become fully
vested. Such options shall be nonqualified stock options and, except as
specifically provided in this Agreement, such annual option awards shall be
subject to the terms and conditions of the Option Plan and the applicable
provisions of the option agreement attached to this Agreement as Exhibit C.
(f) Temporary Housing and Moving Expenses. Through August 31, 2000 or, if
earlier, the date the Executive relocates his primary residence to
Michigan, the Executive shall be entitled to reimbursement for temporary
housing expenses, air travel and other out-of-pocket travel expenses in
connection with commuting from his residence in the Santa Barbara,
California area to his temporary residence in western Michigan, including
reimbursement of expenses relating to family travel for purposes of
locating permanent housing in Michigan. Expenses related to the Executive's
relocation of his primary residence to Michigan shall be fully reimbursed,
subject to the terms of the Company's relocation policy for executives. The
Company's relocation policy is attached to this Agreement as Exhibit E. All
reimbursements under this paragraph 2(f) shall be subject to the
Executive's presenting supporting documentation of such expenses as may be
reasonably required by the Company.
(g) Other Benefits. The Executive shall be eligible to participate in any and
all plans maintained by the Company from time to time to provide benefits
for its senior executives, and for its salaried employees generally,
including, without limitation, any pension, profit sharing or other
retirement plan, any life, accident, medical, hospital or similar group
insurance program and any other fringe benefit plan, subject to the normal
terms and conditions of such plans.
(h) Perquisites. The Executive shall be entitled to the perquisites
historically provided by the Company to its Chief Executive Officer,
excluding country club dues and car allowance.
4
5
(i) Deferred Compensation. The Company agrees that it will cooperate with the
Executive in the establishment of a deferred compensation plan with terms
that are mutually agreeable to both parties to defer until a future date
payment of such portion of the Executive's annual compensation as he may
elect to defer.
3. Termination. The Executive's employment with the Company during the
Agreement Term may be terminated under the following circumstances.
(a) Death. The Executive's employment hereunder shall terminate upon his death.
(b) Disability. If the Executive becomes Disabled, the Company may terminate
his employment with the Company. For purposes of this Agreement, the
Executive shall be deemed to be "Disabled" if (i) he is eligible for
disability benefits under the Company's long term disability plan, or (ii)
he has a physical or mental disability which renders him incapable, after
reasonable accommodation, of performing substantially all of his duties
hereunder for a period of 180 days (which need not be consecutive) in any
12-month period. In the event of a dispute as to whether the Executive is
Disabled, the Company may, at its expense, refer him to a licensed
practicing physician of the Company's choice and the Executive agrees to
submit to such tests and examination as such physician shall deem
appropriate. The determination of such physician shall be final and binding
on the Company and Executive.
(c) Cause. The Company may terminate the Executive's employment hereunder
immediately and at any time for Cause by written notice to the Executive
detailing the basis for the Cause termination. For purposes of this
Agreement, "Cause" means in the reasonable judgment of the Board (i) gross
negligence or willful and continued failure by the Executive to
substantially perform his duties as an employee of the Company (other than
any such failure resulting from incapacity due to physical or mental
illness), (ii) willful misconduct by the Executive which is demonstrably
and materially injurious to the Company, monetarily or otherwise, (iii) the
engaging by the Executive in egregious misconduct involving serious moral
turpitude to the extent that his creditability and reputation no longer
conforms to the standard of senior executives of the Company, or (iv) the
commission by the Executive of a material act of dishonesty or breach of
trust resulting or intending to result in personal benefit or enrichment to
the Executive at the expense of the Company. For purposes of this
provision, no act or failure to act shall be deemed "willful" unless done
or omitted to be done not in good faith and without reasonable belief that
such action or omission was in the best interest of the Company.
(d) Good Reason. The Executive may terminate his employment hereunder for Good
Reason, provided that he gives the Company notice of such Good Reason
within a reasonable period (but, except as provided below, in no event more
than 30 days) after he has knowledge of the events giving rise to the Good
Reason and the Company fails to correct such events within a reasonable
period (but in no event more than 30 days) after receiving such notice from
the Executive. "Good Reason" means, without the Executive's consent, (i)
assigning duties to the Executive that are inconsistent in any substantial
respect with the position, authority, or responsibilities associated with
the
5
6
office of President and Chief Executive Officer, (ii) the failure by the
Company to pay the Executive any portion of his current compensation within
ten (10) business days of the date such compensation is due, (iii) the
failure by the Company to continue any incentive compensation plan in which
the Executive participates which is material to his compensation, unless an
equitable substitute plan or alternative plan is made available to the
Executive; and (iv) the failure by the Company to obtain a satisfactory
agreement from any successor to the business of the Company to assume and
agree to perform this Agreement. In the case of clause (iv) next above,
notice of termination for Good Reason shall be given, if at all, within 30
days following the occurrence of the event giving rise to the right to
terminate for Good Reason.
(e) Termination by Executive. The Executive may terminate his employment
hereunder at any time for any reason by giving the Company prior written
notice not less than 30 days prior to such termination. Any termination
pursuant to this paragraph 3(e) shall preclude a later claim that such
termination was for Good Reason.
(f) Mutual Agreement. This Agreement may be terminated at any time by mutual
written agreement of the parties.
(g) Termination by the Company without Cause. The Company may terminate the
Executive's employment hereunder at any time for any reason by giving the
Executive written notice of such termination; provided, however,
termination by the Company shall be deemed to have occurred under this
paragraph 3(g) only if such termination by the Company is not pursuant to
paragraph 3(b), 3(c) or 3(f).
(h) Date of Termination. "Date of Termination" means the last day that the
Executive is employed by the Company under the terms of this Agreement,
provided that his employment is terminated in accordance with one of the
foregoing provisions of this paragraph 3.
4. Rights Upon Termination. The Executive's right to payments and benefits
under this Agreement for periods after his Date of Termination shall be
determined in accordance with the following provisions of this paragraph 4:
(a) If the Executive's Date of Termination occurs during the Agreement Term for
any reason, the Company shall pay to the Executive:
(i) The Executive's Salary for the period ending on the Date of
Termination.
(ii) Payment for unused vacation days, as determined in accordance with
Company policy as in effect from time to time.
(iii) Any other payments or benefits to be provided to the Executive by the
Company pursuant to any employee benefit plans or arrangements
adopted by the Company, to the extent such payments and benefits are
earned and vested as of the Date of
6
7
Termination, or are required by law to be offered for periods
following the Executive's Date of Termination.
The amounts payable under clauses (i) and (ii) above shall be paid in a
lump sum as soon as practicable following such Date of Termination. Any
amounts payable under clause (iii) above shall be paid in accordance with
the terms of the applicable plan or arrangement.
(b) Notwithstanding the terms of the MIB plan, if the Executive's Date of
Termination occurs under paragraph 3(a) (relating to death) or paragraph
3(b) (relating to being Disabled), then in addition to the amounts payable
in accordance with paragraph 4(a), the Executive will be entitled to:
(i) a pro rata bonus payment for the year in which such Date of
Termination occurs, which shall be an amount equal to the product of:
(A) the bonus the Executive would have received for the fiscal year
which includes his Date of Termination if he had remained
employed by the Company until the end of such year,
Multiplied by
(B) a fraction, the numerator of which is the number of days in the
fiscal year preceding the Executive's Date of Termination and
the denominator of which is 365.
Such pro rata bonus shall be payable in a lump sum payment on the
next installment date on which bonus payments are made to
participants in the MIB plan following the end of the fiscal year to
which such bonus relates.
(ii) Vesting in outstanding stock options and restricted stock in
accordance with the applicable agreement.
(c) If the Executive's Date of Termination occurs under paragraph 3(d)
(relating to termination by the Executive for Good Reason) or paragraph
3(g) (relating to non-Cause termination by the Company), then in addition
to the amounts payable under paragraph 4(a), the Executive shall be
entitled to:
(i) An amount equal to 12 months of Salary, at the rate in effect as of
his Date of Termination.
(ii) A pro rata bonus payment for the year in which the Date of
Termination occurs, determined using the method described in
paragraph 4(b).
(iii) Vesting in outstanding stock options and restricted stock in
accordance with the applicable agreement.
7
8
The amount payable under clause (i) above shall be paid in a lump sum cash
payment as soon as practicable following the Executive's Date of
Termination, but in no event later than 30 days thereafter.
(d) In the event of a Change in Control of the Company (within the meaning of
the Option Plan), all outstanding options held by the Executive shall
become immediately vested and exercisable pursuant to the terms of the
Option Plan and the restrictions on restricted stock awards shall lapse
pursuant to the applicable restricted stock agreement.
(e) Exercise of the Executive's options for periods following the Executive's
Date of Termination shall be determined in accordance with the applicable
option agreement.
(f) Notwithstanding any provision of this Agreement to the contrary, in the
event that the Executive's Date of Termination occurs for the reasons set
forth in paragraph 3(c) (relating to termination for Cause), or the Board
reasonably determines that the Executive has violated the terms of the
Noncompetition and Nondisclosure Agreement described in paragraph 6, all
outstanding options (vested and unvested), Restricted Stock and Contingent
Restricted Stock held by the Executive shall be immediately forfeited and
all payments and benefits under this Agreement, except those described in
paragraph 4(a), shall cease and be permanently forfeited.
5. Mitigation and Set Off. The Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise. The Company shall not be entitled to set off against
the amounts payable to the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive had he sought such other
employment.
6. Confidentiality and Noncompetition. The Executive acknowledges and
agrees that simultaneous with the execution of this Agreement, he will be
required to execute the Company's standard Noncompetition and Nondisclosure
Agreement in the form attached to this Agreement as Exhibit F. The Executive
further acknowledges that as a condition of receiving any option grants or
restricted stock awards, including those described in paragraphs 2(c) and (d),
he will be required to execute a new standard Noncompetition and Nondisclosure
Agreement substantially in the form attached to this Agreement as Exhibit F,
which shall supercede and replace any prior Noncompetition and Nondisclosure
Agreement as of the date it is executed.
7. Nonalienation. The interests of the Executive under this Agreement are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by the Executor's
creditors or beneficiaries.
8. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business.
8
9
9. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice):
to the Company:
Xxxxxxx Company
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn.: General Counsel
To the Executive:
Xxxxx X. Xxxxxxx
0000 Xxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
10. Severability. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
11. Waiver of Breach. No waiver of any party hereto of a breach of any
provision of this Agreement by any other party will operate or be construed as a
waiver of any subsequent breach by such other party. The failure of any party
hereto to take any action by reason of such breach will not deprive such party
of the right to take action at any time while such breach continues.
12. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
13. Survival of Agreement. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive's employment with the Company.
14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior and contemporaneous agreements, if any, between the parties relating to
the subject matter hereof.
9
10
15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Michigan without
regard to principals of conflict of laws.
16. Acknowledgement by Executive. The Executive represents to the Company
that he is knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that he has read this Agreement and that he
understands its terms. The Executive acknowledges that, prior to assenting to
the terms of this Agreement, he has been given a reasonable time to review it,
to consult with counsel of his choice, and to negotiate at arm's-length with the
Company as to the contents. The Executive and the Company agree that the
language used in this Agreement is the language chosen by the parties to express
their mutual intent, and that no rule of strict construction is to be applied
against any party hereto.
IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
as of the date above first written.
EXECUTIVE XXXXXXX COMPANY
____________________________ By________________________________
Its_______________________________
10
11
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT entered into as of this _________ day of __________, 2000
(the "Award Date") by and between Xxxxxxx Company, a Delaware corporation (the
"Company"), and Xxxxx X. Xxxxxxx (the "Executive")
WITNESSETH THAT:
WHEREAS, the Executive and Company have entered into an employment
agreement dated April 19, 2000 (the "Employment Agreement"); and
WHEREAS, pursuant to such Employment Agreement, the Company, by action of
the Compensation Committee of the Board of Directors, has agreed to award the
Executive shares of common stock of the Company, $.10 par value ("Common
Stock"), subject to the restrictions described in the Employment Agreement and
the following provisions of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant. Subject to the terms of this Agreement, the Executive is hereby
awarded _____________ shares of Common Stock ("Restricted Stock"), which
number of shares represents $240,000 divided by the fair market value
(within the meaning of the Employment Agreement) of a share of Common Stock
on the Award Date, rounded to the next highest whole share. Except as
otherwise specifically provided in this Agreement, the defined terms in
this Agreement shall have the meaning ascribed to such terms under the
Employment Agreement.
2. Vesting. Except as provided in paragraph 3 below, the Restricted Stock
awarded hereunder shall be permanently forfeited if the Executive's Date of
Termination occurs prior to the end of the Restricted Period. The
"Restricted Period" shall end with respect all of the shares of Restricted
Stock awarded hereunder on June 30, 2003.
3. Accelerated Vesting. Notwithstanding paragraph 2 above, if the Executive's
Date of Termination occurs because of death, Disability, involuntary
termination by the Company without Cause or voluntary termination by the
Executive for Good Reason, or in the event of a Change in Control of the
Company, the Restricted Period shall end with respect to all of the shares
of Restricted Stock awarded hereunder.
4. Terms and Conditions of Restricted Stock. The Restricted Stock granted
under this Agreement shall be subject to the following additional terms and
conditions:
(i) Shares of Restricted Stock may not be sold, assigned, pledged or
otherwise encumbered prior to the end of the Restricted Period
applicable to the shares.
(ii) Except as otherwise provided in this Agreement, the Executive shall
have all of the rights of a stockholder, including, but not limited
to, the right to vote such shares and the right to receive dividends
paid on such shares.
11
12
(iii) Each certificate issued with respect to the Restricted Stock granted
under paragraph 1 shall be registered in the name of the Executive
and shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions, including
forfeiture, of an agreement entered into between the registered owner
and Xxxxxxx Company. A copy of such agreement is on file in the
office of the Secretary of Xxxxxxx Company, 000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000."
(iv) The Company may require a written statement that the Executive is
acquiring the shares of Restricted Stock for investment and not for
the purpose or with the intention of distributing the shares, except
for a sale to a purchaser who makes the same representation in
writing, and that the holder of the shares of Restricted Stock,
either before or after the end of the Restricted Period, will not
dispose of them in violation of the registration requirements of the
Securities Act of 1933 or any other applicable law.
5. Adjustment to Shares. In the event of any stock dividend, stock split,
recapitalization or other change affecting the Common Stock as a class
without receipt of consideration, then any new, substituted or additional
securities or other property (including money paid other than as a regular
cash dividend), which is by reason of any such transaction distributed to
the Executive with respect to the shares of Restricted Stock, shall be
immediately subject to a similar Restricted Period. Appropriate adjustments
to reflect the distribution of such securities or property shall also be
made to the number of shares of Restricted Stock.
6. Withholding. This award is subject to the withholding of all applicable
taxes. The Company may withhold, or permit the Executive to remit to the
Company, any Federal, state or local taxes applicable to the grant, vesting
or other event giving rise to tax liability with respect to this award. The
Executive may elect to surrender previously acquired Common Stock or to
have the Company withhold Common Stock relating to this award in an amount
sufficient to satisfy all or a portion of such tax liability.
7. Compliance with Applicable Law. Notwithstanding any other provision of this
Agreement, the Company shall have no obligation to issue any shares of
Restricted Stock or Common Stock under this Agreement if such issuance
would violate any applicable law or any applicable regulation or
requirement of any securities exchange or similar entity.
8. Successors and Assigns. This Agreement shall be binding upon any or all
successors and assigns of the Company.
12
13
9. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Michigan
without regard to principals of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
XXXXXXX COMPANY
By________________________________
Its_______________________________
ATTEST:
--------------------------------
EXECUTIVE
----------------------------------
14
CONTINGENT RESTRICTED STOCK AGREEMENT
THIS AGREEMENT entered into as of this _________ day of _______________,
2000 (the "Award Date") by and between Xxxxxxx Company, a Delaware corporation
(the "Company"), and Xxxxx X. Xxxxxxx (the "Executive")
WITNESSETH THAT:
WHEREAS, the Executive and Company have entered into an employment
agreement dated April 19, 2000 (the "Employment Agreement"); and
WHEREAS, pursuant to such Employment Agreement, the Company, by action of
the Compensation Committee of the Board of Directors, has agreed to award the
Executive shares of common stock of the Company, $.10 par value ("Common
Stock"), subject to the restrictions described in the Employment Agreement and
the following provisions of this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant. Subject to the terms of this Agreement, the Executive is hereby
awarded 50,000 shares of Common Stock ("Contingent Restricted Stock") as
of the Award Date. Except as otherwise specifically provided in this
Agreement, the defined terms in this Agreement shall have the meaning
ascribed to such terms under the Employment Agreement.
2. Vesting. Except as provided in paragraph 3 below, the Contingent
Restricted Stock awarded hereunder shall be permanently forfeited if the
Executive's Date of Termination occurs prior to June 30, 2001 (the
"Contingent Vesting Date"). If the Executive remains employed until the
Contingent Vesting Date, then on such date the Executive shall
contingently vest in one share of Contingent Restricted Stock for each two
shares of Common Stock that the Executive has acquired in open market
transactions and that are held by him on the Contingent Vesting Date. Any
shares of Contingent Restricted Stock that do not contingently vest on the
Contingent Vesting Date shall be permanently forfeited. Except as
otherwise specifically provided in this Agreement, the Contingent
Restricted Stock still held after June 30, 2001, if any, shall become
fully vested and nonforfeitable on June 30, 2003 and, except as otherwise
provided in paragraph 3 below, shall be permanently forfeited if the
Executive's Date of Termination occurs prior to such date.
3. Accelerated Vesting. Notwithstanding paragraph 2 above, if the Executive's
Date of Termination occurs prior to the Contingent Vesting Date because of
death, Disability, involuntary termination of employment by the Company
without Cause or voluntary termination by the Executive for Good Reason,
or in the event of a Change in Control of the Company prior to the
Contingent Vesting Date, then on such Date of Termination or Change in
Control, as applicable, the Executive shall vest and have a nonforfeitable
interest in one share of Contingent Restricted Stock for each two shares
of Common Stock that the Executive has acquired in open market
transactions and that are held by him on such Date of Termination or date
of a Change in Control and, if such Date of
14
15
Termination or Change in Control occurs after the Contingent Vesting Date,
the Executive shall have a fully vested and nonforfeitable interest in all
of the Contingent Restricted Stock that has not been permanently forfeited
prior to such Date of Termination or Change in Control.
4. Terms and Conditions of Contingent Restricted Stock. The Contingent
Restricted Stock granted under this Agreement shall be subject to the
following additional terms and conditions:
(i) The shares of Contingent Restricted Stock may not be sold, assigned,
pledged or otherwise encumbered prior to the date on which the
Executive vests in and acquires a nonforfeitable interest in such
shares.
(ii) Except as otherwise provided in this Agreement, the Executive shall
have all of the rights of a stockholder, including, but not limited
to, the right to vote such shares and the right to receive regular
cash dividends paid on such shares.
(iii) Each certificate issued with respect to the Contingent Restricted
Stock granted under paragraph 1 shall be registered in the name of
the Executive and shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions,
including forfeiture, of an agreement entered into between the
registered owner and Xxxxxxx Company. A copy of such agreement is on
file in the office of the Secretary of Xxxxxxx Company, 000 Xxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000."
(iv) The Company may require a written statement that the Executive is
acquiring the shares of Contingent Restricted Stock for investment
and not for the purpose or with the intention of distributing the
shares, except for a sale to a purchaser who makes the same
representation in writing, and that the holder of the shares of
Contingent Restricted Stock, either before or after the end of the
vesting period, will not dispose of them in violation of the
registration requirements of the Securities Act of 1933 or any other
applicable law.
5. Adjustment to Shares. In the event of any stock dividend, stock split,
recapitalization or other change affecting the Common Stock as a class
without receipt of consideration, then any new, substituted or additional
securities or other property (including money paid other than as a regular
cash dividend), which is by reason of any such transaction distributed to
the Executive with respect to the shares of Contingent Restricted Stock,
shall be immediately subject to a similar restrictions. Appropriate
adjustments to reflect the distribution of such securities or property
shall also be made to the number of shares of Contingent Restricted Stock
and the number of shares of Common Stock that must be acquired by the
Executive to vest in such Contingent Restricted Stock.
15
16
6. Withholding. This award is subject to the withholding of all applicable
taxes. The Company may withhold, or permit the Executive to remit to the
Company, any Federal, state or local taxes applicable to the grant,
vesting or other event giving rise to tax liability with respect to this
award. The Executive may elect to surrender previously acquired Common
Stock or to have the Company withhold Common Stock relating to this award
in an amount sufficient to satisfy all or a portion of such tax liability.
7. Compliance with Applicable Law. Notwithstanding any other provision of
this Agreement, the Company shall have no obligation to issue any shares
of Contingent Restricted Stock or Common Stock under this Agreement if
such issuance would violate any applicable law or any applicable
regulation or requirement of any securities exchange or similar entity.
8. Successors and Assigns. This Agreement shall be binding upon any or all
successors and assigns of the Company.
9. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Michigan
without regard to principals of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the day and year first above written.
XXXXXXX COMPANY
By
-------------------------------
Its
-------------------------------
ATTEST:
--------------------------------
EXECUTIVE
-------------------------------
16
17
NONCOMPETITION AND NONDISCLOSURE AGREEMENT
THIS NONCOMPETITION AND NONDISCLOSURE AGREEMENT ("Agreement") entered into
on ________________, 2000 by and between XXXXXXX COMPANY, a Michigan
corporation, for and in behalf of itself and each of its subsidiary and
affiliated companies (collectively referred to as "Perrigo" or the "company"),
and Xxxxx X. Xxxxxxx (referred to as "Employee").
WITNESSETH:
WHEREAS Xxxxxxx'x special competence in its various fields of endeavor is
the secret of its growth, and provides the source of both career opportunities
and security for employees throughout the company. Such growth depends to a
significant degree on Xxxxxxx'x confidential, proprietary information. This is
information that is not generally known to others and includes more and better
information than our competitors have about research, development, production,
marketing and management in the manufacture, preparation, handling, treatment,
storage, sale, distribution, shipment and use of products for the Store and
Value Brand Product (as herein defined) ("Company Business"). To obtain such
information and use it successfully, Perrigo spends considerable sums of money
in product development, the development of marketing methods, training its
employees, and service to its customers; and
WHEREAS Employee is a key employee of Perrigo. In connection with
providing such employment services, Employee has obtained or will obtain access
to sensitive information regarding the Company's Business and its customers. The
parties agree that improper disclosure or use of that information will cause
serious and irreparable harm to the company; and
WHEREAS Perrigo has established the Xxxxxxx Company Employee Incentive
Stock Option Plan (the "Incentive Stock Option Plan") as an incentive to certain
key employees of Perrigo to remain in the employ of the company and to encourage
stock ownership in the company; and
WHEREAS on the date hereof Perrigo has issued to Employee under the
Incentive Stock Option Plan an option to purchase a specified number of shares
of the Common Stock of Perrigo on the condition that Employee enter into this
Agreement.
NOW, THEREFORE, in consideration for the issuance of stock pursuant to the
Incentive Stock Option Plan and for other good and valuable consideration, the
receipt of which is acknowledged, the parties agree as follows:
2
18
1. Restriction on Competing Activities During Term of Employment. During
the term of Employee's employment with Perrigo, Employee will not, directly or
indirectly, alone or as a partner, officer, director, owner, employee, or
consultant of any business or other entity, be engaged in any business or other
enterprise that competes, directly or indirectly, with the Company Business
without the express written consent of the Board of Directors of Perrigo.
2. Restriction on Post-Employment Activities. If Employee's employment
with Perrigo is terminated, either voluntarily by him or by Perrigo, within a
period of five (5) years from the date of this Agreement, then, for a period of
two (2) years thereafter, Employee shall not, directly or indirectly, alone or
as a partner, director, officer, owner, employee or consultant of any business
or other entity, compete in any way with the Company Business. In addition to
its plain meaning and understanding, "compete in any way with the Company
Business" shall also specifically include engaging in any way in the production,
distribution or sale of any products to the Store and Value Brand Products that
are similar to or competitive with those now or hereafter produced, distributed
or sold by Perrigo. As used in this Agreement, "Store and Value Brand Products"
means those products that are supplied by a manufacturer or marketer through
channels of distribution (including but not limited to, wholesalers,
distributors and retailers) that bear either (i) a label or brand name that is
used exclusively by the wholesaler, distributor or retailer, or (ii) a label or
brand name that is not regularly advertised by national broadcast, print, direct
mail or other media for the purpose of establishing brand name recognition of
the manufacturer, marketer and/or distributor with the general public.
Employee also agrees that during this two-year period, he will not,
directly or indirectly, either for himself or any other person, solicit or
induce, or attempt to solicit or induce, any individual who is an employee,
independent contractor, supplier, or customer of Perrigo to terminate his, her,
or its business relationship with the company or in any way interfere with or
disrupt the company's relationship with any of its employees, independent
contractors, suppliers, or customers.
3. Nondisclosure. Employee will not during or at any time after the
termination of employment with Perrigo use, divulge, or convey to others any
secret or confidential information, knowledge or data of Perrigo or that of
third parties obtained by Employee during the period of employment with Perrigo.
Such secret or confidential information, knowledge or data includes, but is not
limited to, secret or confidential matters:
(a) of a technical nature such as, but not limited to, methods,
know-how, formulas, compositions, processes, discoveries, machines,
inventions, computer programs and similar items or research projects,
3
19
(b) of a business nature such as, but not limited to, information
about costs, purchasing, profits, marketing, sales or lists of customers,
and
(c) pertaining to future developments such as, but not limited to,
research and development or future marketing or merchandising.
4. Return of Company Property. Upon termination of employment with
Perrigo, or at any other time at Xxxxxxx'x request, Employee agrees:
(a) To deliver promptly to Perrigo all manuals, letters, notes,
papers, books, reports, sketches, computer data or disks, files and
programs, price lists, customer files, memoranda, contracts and
agreements, business and marketing plans, product formulations,
manufacturing processes, procedures and methods (including equipment
specifications and drawings), vendor lists, vendor files, customer lists,
stored or recorded documents, and all other materials and copies thereof
relating in any way to the Company's Business and in any way obtained by
Employee during the period of employment with Perrigo which are in
Employee's possession or under his control. Employee further agrees that
he will not make or retain any copies of any of the foregoing and will so
represent to Perrigo upon termination of employment.
(b) To confirm to Perrigo that all of Xxxxxxx'x computer records,
files and programs have first been turned over to Perrigo and then deleted
or erased from all computer equipment owned, leased or used by Employee.
(c) To return to Perrigo all personal property provided for
Employee's use during his employment with Perrigo including, but not
limited to, automobiles, computers and related equipment, telephones,
credit cards, security cards and identifications, keys and tools.
5. Remedies. Employee acknowledges and agrees that monetary damages for
his breach of any provision of this Agreement would be an inadequate remedy and
that the company would not have an adequate remedy at law for such breach.
Accordingly, Employee agrees that, in addition to all other rights and remedies
available to the company to enforce its rights pursuant to this Agreement, the
company shall, without the necessity of proving irreparable harm or of posting a
bond, be entitled to such equitable relief from any court with proper
jurisdiction, including, but not limited to, an injunction, a temporary
restraining order, or an order for specific performance, as may be necessary to
enforce or prevent a violation (whether anticipatory, continuing, or future) of
any provision of this Agreement. If Employee breaches
4
20
any provision of this Agreement, he shall pay all expenses, including court
costs and actual attorney fees, incurred by the company in enforcing such
provision.
6. Enforceability. The unenforceability of any provision or portion of any
provision of this Agreement shall not affect the enforceability of the remaining
provisions or the remainder of any provision of this Agreement. If at any time a
court determines that any restrictive covenant contained in this Agreement is
unreasonable, the parties agree that the maximum restriction permitted by law
shall be substituted for the stated restriction and that such substitution shall
govern this Agreement as if originally part of this Agreement.
7. Binding Effect. This Agreement and the rights and obligations of
Perrigo hereunder shall inure to the benefit of and be binding upon Perrigo and
its successors and assigns.
8. Entire Agreement Modifications. This Agreement contains the entire
agreement between the parties with respect to its subject matter and supersedes
all other agreements, whether oral or written, between the parties regarding
such subject matter. This Agreement may be modified or terminated only through a
written instrument signed by each of the parties.
9. Waiver. The waiver by either party of the enforcement or the breach of
any provision of this Agreement shall not operate or be construed as a
subsequent or continuing waiver of the enforcement or the breach of any
provision. The failure by either party to insist upon strict compliance of any
provision of this Agreement shall not be deemed a waiver of such provision. No
waiver shall be valid unless in writing and signed by the party giving the
waiver.
10. Governing Law. This Agreement shall be enforced, governed, and
construed by the laws of the state of Michigan, regardless of the fact that
either of the parties may be or becomes a resident of another state.
The parties have executed this Agreement as of the date first appearing
above.
XXXXXXX COMPANY
By
---------------------------------------
Chairman of the Compensation Committee
5
21
XXXXX X. XXXXXXX
-------------------------------------
6
