Exhibit 10.33
EMPLOYMENT AGREEMENT dated as of January 1, 2000 between XXXXX
XXXXXX, INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXXXXX
("Xxxxxxx").
Xxxxxxx is currently Chairman of the Board, Chief Executive Officer
and President of the Company. The Company recognizes that Xxxxxxx has made
substantial contributions to the success of the Company over a long period of
time and desires to assure the Company of Xxxxxxx'x continued service. Xxxxxxx
desires to continue to perform services for the Company.
In consideration of the agreements hereinafter set forth, the
Company and Xxxxxxx agree as follows:
1. EMPLOYMENT
1.1 Capacity; Duties. The Company hereby employs Xxxxxxx as the
Company's Chairman of the Board, President and Chief Executive Officer. Xxxxxxx
shall have general supervision over the business and affairs of the Company and
its subsidiaries, shall report and be responsible only to, and subject to the
supervision of, the Board of Directors of the Company, and shall have powers and
authority superior to those of any other officer or employee of the Company or
any of its subsidiaries. The Board of Directors may with Xxxxxxx'x consent,
which consent may be withheld in his reasonable discretion, confer the title of
President upon another person without any diminution in the compensation or
benefits payable to Xxxxxxx hereunder. Subject to Section 6(b) hereof, Xxxxxxx
may serve on the board of directors of any other corporation, may be involved in
civic or charitable activities and may manage his personal investments, so long
as such service does not interfere with his duties to the Company or its
subsidiaries. Xxxxxxx accepts the employment described herein and agrees to
devote his full business time and effort thereto, and to perform those duties
normally attributable to the positions for which he is employed hereunder.
Xxxxxxx shall not be required to perform duties hereunder that would require him
to relocate his residence.
1.2 Employment Period. Subject to the succeeding sentence hereof,
Xxxxxxx'x employment shall be for the period (the "Employment Period")
commencing on January 1, 2000, and ending on the earlier of (i) December 31,
2002, or (ii) the date on which Xxxxxxx'x employment is terminated earlier
pursuant to Section 4 hereof.
The Employment Period may be extended by the Company from time to time for
successive one-year periods by giving Xxxxxxx notice (an "Extension Notice")
thereof at least six months but not more than twelve months prior to the date
that the then applicable Employment Period is to expire. Notwithstanding the
preceding sentence the Employment Period shall not be extended if Xxxxxxx,
within 90 days after any Extension Notice is given, advises the Company that he
chooses not to extend the Employment Period. The date on which the Employment
Period is scheduled to expire pursuant to whichever shall be the later of clause
(i) above or the second sentence hereof is hereinafter referred to as the
"Employment Expiration Date."
2. COMPENSATION
2.1 Base Salary. During the Employment Period, as compensation for
Xxxxxxx'x employment hereunder, Xxxxxxx shall receive a base salary at the rate
of $585,000 per annum, commencing on January 1, 2000, payable in accordance with
the Company's normal payroll practices for its senior executive officers from
time to time in effect. The base salary shall be increased in such amounts and
at such times, not less frequently than annually, within the sole discretion of
the Board of Directors or the Compensation Committee of the Board of Directors
(the "Compensation Committee"). (The base salary, including such increases, is
hereinafter referred to as the "Base Salary.") Once increased, the Base Salary
may not be decreased.
2.2 Incentive Compensation. During the Employment Period, Xxxxxxx
shall be eligible to receive, in addition to his Base Salary, incentive
compensation (the "Incentive Compensation") as follows: With respect to each
year during the Employment Period, the Board of Directors or the Compensation
Committee shall, after consultation with Xxxxxxx, establish a maximum annual
Incentive Compensation opportunity for Xxxxxxx, to be expressed as a percentage
of the Base Salary for such year, and performance criteria consistent with such
performance-based criteria as are applicable to other Company senior management.
All Incentive Compensation shall be payable within five business days of the
determination of such Incentive Compensation.
2.3 Additional Compensation. Nothing contained herein shall limit or
otherwise restrict the Board of Directors of the Company from granting to
Xxxxxxx at any time and from time to time such additional compensation as may be
recommended from time to time by the Compensation Committee.
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2.4 Expenses. The Company shall promptly reimburse Xxxxxxx for all
expenses reasonably incurred by him in the performance of his duties under this
Agreement in accordance with the Company's general policies and practices for
senior executive officers in effect from time to time.
3. BENEFITS
3.1 Benefits. During the Employment Period, Xxxxxxx shall be
entitled to participate in all benefit, welfare and perquisite plans, policies
and programs, in accordance with the terms thereof, as are generally provided
from time to time by the Company for its senior management employees and for
which Xxxxxxx is eligible. Unless the Employment Period shall have been
terminated for Cause (as defined in Section 4.3 hereof) or Xxxxxxx terminates
his employment pursuant to Section 4.1(c) (ii), during the period commencing
immediately after the Employment Period and continuing (x) as to Xxxxxxx, for
the life of Xxxxxxx, (y) as to Xxxxxxx'x spouse, for the life of his spouse and
(z) as to his children, until the earlier to occur of (A) such child attaining
the age of 28 or (B) such child completes his graduate studies (collectively,
his "Family") the Company shall continue the participation of Xxxxxxx and his
Family in all health and medical benefit plans, policies and programs in effect
from time to time with respect to the senior executive officers of the Company
and their families generally (at the same levels and at the same cost, if any,
as provided to the senior executive officers of the Company generally).
Notwithstanding the foregoing, if Xxxxxxx'x or his Family's continued
participation thereunder is not possible under the general terms and provisions
thereof, the Company shall provide such benefits at such levels to Xxxxxxx
and/or his Family either by obtaining other insurance or by self-insuring such
amounts, net of any reimbursement any of them shall receive with respect to
health and medical costs from insurance other than pursuant to this Section 3.1;
provided, however, that prior to receiving benefits hereunder from the Company,
Xxxxxxx and/or his Family shall first endeavor to obtain reimbursement with
respect to health and medical costs from other insurance Xxxxxxx and/or his
Family may own, if any, provided that such reimbursement can be obtained without
unreasonable effort or expense on the part of Xxxxxxx or his Family.
3.2 Vacation. During each calendar year during the Employment
Period, Xxxxxxx shall be entitled to four (4) weeks of vacation and such other
number of personal days generally afforded to senior executives of the Company.
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3.3 Automobile. During the Employment Period and, if Xxxxxxx'x
employment hereunder has been terminated by him pursuant to Section 4.1(c)(iii)
hereof, for a period of three years thereafter, or if Xxxxxxx'x employment
hereunder has not been terminated by the Company for Cause (as defined in
Section 4.3 hereof) or by Xxxxxxx pursuant to Section 4.1(c)(ii) hereof,
for a period of two years thereafter, the Company shall provide for Xxxxxxx'x
use a new automobile of similar make and model to the automobile he currently
drives or its substantial equivalent, and all ancillary equipment similar to
that as he currently uses with his automobile, and shall pay the costs of fuel,
maintenance, repairs and insurance. The Company shall provide Xxxxxxx (at
Xxxxxxx'x option) with the use of a new automobile every three years and shall
continue to provide such ancillary equipment and pay all such costs during the
Employment Period and, if applicable, the two-year period referred to above.
3.4 Conversion of Benefits. During the Employment Period, Xxxxxxx
shall be entitled to the same conversion privileges (including but not limited
to cash conversions) with regard to the Company's benefit plans, policies and
programs in which Xxxxxxx is entitled to participate under Section 3.1 hereof as
may be generally offered from time to time by the Company to its senior
executive officers.
3.5 Gross-up. To the extent that Xxxxxxx incurs any tax obligations
as a result of the provisions of Section 3.3 hereof, the Company shall pay to
Xxxxxxx or the applicable taxing authority on Xxxxxxx'x behalf, no later than 30
days prior to the time the tax is due, an amount equal to the sum of such taxes
and all taxes payable on account of payments made to Xxxxxxx under this Section
3.5.
4. TERMINATION
4.1 Termination of Employment. Xxxxxxx'x employment (and the
Employment Period) shall terminate prior to the Employment Expiration Date upon
the occurrence of any of the following events:
(a) upon Xxxxxxx'x death or Xxxxxxx'x Disability (pursuant to
Section 4.2 hereof); or
(b) (i) by the Company for Cause; or (ii) by action of the Board of
Directors without Cause upon ninety (90) days' prior written notice to Xxxxxxx;
or
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(c) by Xxxxxxx (i) following a material breach by the Company of
this Agreement, which breach is not cured within 30 days after notice from
Xxxxxxx thereof, (ii) upon 180 days prior written notice to the Company, or
(iii) upon 30 days prior written notice to the Company given at any time within
one year following a Change in Control, as hereinafter defined. A "Change in
Control" shall be deemed to occur upon any of the following: (A) acquisition by
any one "person" (as such term is defined in ss.3(a)(9) of the Securities and
Exchange Act of 1934, as amended, and used in ss.13(d) and 14(d) thereof,
including "group" as defined in ss.13(d) thereof) of 33% or more of the
Company's voting shares without the prior express approval of the Company's
Board of Directors; (B) acquisition by any one "person" (as referred to in the
preceding sentence) of more than 50% of the Company's voting shares; (C)
directors elected to the Board over any 24 month period not nominated by the
Company's Executive Committee represent 30% or more of the total number of
directors constituting the Board at the beginning of the period, (or such
nomination results from an actual or threatened proxy contest); (D) any merger,
consolidation or other corporate combination upon the completion of which the
Company's shares do not represent more than 50% of the combined voting power of
the resulting entity; and (E) upon the sale of all or substantially all of the
consolidated assets of the Company, other than a distribution to shareholders.
4.2 Disability. If, by reason of physical or mental disability,
Xxxxxxx is unable to carry out the material duties he has agreed to carry out
under this Agreement (i) for more than 180 days in any twelve-month period or
(ii) as certified by a physician ("Disability"), the Employment Period shall
terminate hereunder. Xxxxxxx shall submit to an examination by a physician for
purposes of the preceding sentence upon the request of the Board of Directors.
During any period of Disability prior to such termination, Xxxxxxx shall
continue to receive all compensation and other benefits provided herein as if he
had not been disabled at the time, in the amounts and in the manner provided
herein, provided that the Company shall be entitled to a credit against such
amounts with regard to the amount, if any, paid to Xxxxxxx for such period under
any disability plan of the Company.
4.3 Cause. For purposes of this Agreement, the term "Cause" shall be
limited to (i) action by Xxxxxxx involving willful malfeasance having a material
adverse effect on the Company, (ii) Xxxxxxx being convicted of a felony
involving theft, fraud or moral turpitude (other than resulting from a traffic
violation or like event), or (iii) any other action by Xxxxxxx constituting a
material breach of this Agreement which is not cured within 30 days after notice
from the Company thereof.
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5. CONSEQUENCES OF TERMINATION
5.1 Death. If Xxxxxxx'x employment hereunder is terminated by reason
of Xxxxxxx'x death, the Company shall have no further obligation to Xxxxxxx
under this Agreement except that Xxxxxxx'x heirs or estate shall be paid those
obligations accrued hereunder to the date of his death, consisting only of (a)
Xxxxxxx'x unpaid Base Salary to the extent unpaid through the date of
termination, (b) any deferred compensation earned but not yet paid (together
with any accrued earnings thereon), (c) the product of (i) the annual Incentive
Compensation paid or payable to Xxxxxxx for the last full fiscal year of the
Company ending prior to the date of termination multiplied by (ii) a fraction,
the numerator of which is the number of days in the current fiscal year during
which Xxxxxxx was employed by the Company, and the denominator of which is 365,
(d) any accrued and unpaid vacation pay, and (e) to the extent permitted under
this Agreement, any other amounts or benefits owing to Xxxxxxx or his
beneficiaries under the then applicable benefit plans, policies and programs of
the Company. (All amounts determined pursuant to the provisions of in clauses
(a) through (e) above are hereinafter referred to as "Accrued Obligations".)
Unless otherwise previously directed by Xxxxxxx (or, in the case of any benefit
plan qualified under Section 401(a) of the Internal Revenue Code, as amended
(the "Code") (any such plan hereinafter referred to as a "Qualified Plan"), as
may be required by such Qualified Plan), all Accrued Obligations shall be paid
to Xxxxxxx'x estate or designated beneficiaries, as the case may be, in a lump
sum (to the extent such obligations are able to be paid, under the terms of the
plan for which such obligation arose, in a lump sum) in cash within 30 days
after the date of Xxxxxxx'x death, and, otherwise, in accordance with the terms
of the applicable plan or applicable law. Nothing in this Section 5.1 shall be
deemed to limit or expand in any way the right of Xxxxxxx'x family to receive
the applicable benefits referred to in Section 3.1 hereof.
5.2 [Intentionally Omitted]
5.3 Company Termination for Cause or Resignation Other Than for
Material Breach. If Xxxxxxx'x employment hereunder is terminated by the Company
for Cause or by Xxxxxxx pursuant to Section 4.1(c)(ii) above, the Company shall
have no further obligation to Xxxxxxx under this Agreement, except that, unless
otherwise directed by Xxxxxxx (or in the case of any Qualified Plan, as may be
required by such plan) Xxxxxxx shall be paid all Accrued Obligations to the date
of termination (other than the obligation specified in clause (c) of Section 5.1
hereof), in a lump sum (to the extent such obligations are able to be paid,
under the terms of the plan for which such
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obligation arose, in a lump sum) in cash within 30 days after the date of
termination, and, otherwise, in accordance with the terms of the applicable plan
or applicable law.
5.4 Company Termination Without Cause or Due to Disability;
Resignation Following Material Breach; Non-Renewal. If Xxxxxxx'x employment
hereunder is terminated pursuant to Section 4.2 hereof or by the Company without
Cause or by Xxxxxxx pursuant to Section 4.1(c)(i) above or the Company at any
time chooses not to extend or not to continue to extend the Employment Period,
the Company shall have no further obligation to Xxxxxxx under this Agreement
except that:
(a) Unless otherwise directed by Xxxxxxx (or, in the case of any
Qualified Plan, as may be required by such plan), Xxxxxxx shall be paid all
Accrued Obligations to the date of termination in a lump sum (to the extent such
obligations are able to be paid, under the terms of the plan for which such
obligation arose, in a lump sum) in cash within thirty (30) business days after
the date of termination, and, otherwise, in accordance with the terms of the
applicable plan or applicable law.
(b) Unless otherwise directed by Xxxxxxx, Xxxxxxx shall be paid, as
severance pay, within thirty (30) business days after the date of termination:
(i) in a lump sum in cash an amount equal to 200% of Xxxxxxx'x
then annual Base Salary plus in a lump sum in cash an amount equal to 200%
of Xxxxxxx'x average annual Incentive Compensation paid or payable with
respect to the immediately preceding three fiscal years of the Company
ending prior to the date of termination; and
(ii) with respect to each pension plan, as such term is
defined in ERISA Section 3(2)(A), of the Company (or its subsidiaries) in
which Xxxxxxx participated or had a benefit under at the date of
termination, a cash payment equal to the value (to be determined as
indicated below) of the excess of (A) the fully vested value of the
benefit to him under such plan, assuming additional credit for service for
all purposes under such plan for the period from the date of termination
through the Employment Expiration Date (the "Remaining Term"),
continuation of Xxxxxxx'x Base Salary for the Remaining Term, and that
there are no earnings on plan funds in defined contribution type plans for
any period after the date of termination, over (B) Xxxxxxx'x vested
accrued benefits pursuant to the provisions of each respective plan on the
date
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of termination. (For purposes of this Section 5.4(b)(ii), the value of the
excess shall be calculated using a discount rate equal to the applicable
Federal Rate (as defined in Code Section 1274) in effect on the date of
termination of employment and no other actuarial assumptions).
(c) To the extent permitted or not prohibited by any pension plan,
as such term is defined in ERISA Section 3(2)(A), of the Company (or its
subsidiaries) in which Xxxxxxx is permitted to participate hereunder or by
applicable law, after the date of termination, the Company shall make
immediately available to Xxxxxxx, in a lump sum (to the extent such obligation
is able to be paid in a lump sum under the terms of the plan for which such
obligation arose), all vested amounts under any such plan.
(d) Nothing in this Section 5.4 shall be deemed to limit or expand
in any way Xxxxxxx'x or his Family's rights to receive the applicable benefits
referred to in Section 3.1 hereof.
(e) With respect to an amount due to the Executive pursuant to
Section 5.4(b)(i) hereof, the Company shall be entitled to a credit against such
amount with regard to the amount, if any, payable to Xxxxxxx for such period
under any disability plan of the Company.
5.5 Termination Following a Change in Control. If Xxxxxxx'x
employment is terminated by Xxxxxxx pursuant to Section 4.1(c)(iii) above, the
Company shall have no further obligation to Xxxxxxx under this Agreement except
that:
(a) Unless otherwise directed by Xxxxxxx (or, in the case of any
Qualified Plan, as may be required by such plan), Xxxxxxx shall be paid all
Accrued Obligations to the date of termination in a lump sum (to the extent such
obligations are able to be paid, under the terms of the plan for which such
obligation arose, in a lump sum) in cash within thirty (30) business days after
the date of termination, and, otherwise, in accordance with the terms of the
applicable plan or applicable law.
(b) Unless otherwise directed by Xxxxxxx, Xxxxxxx shall be paid, as
severance pay, within thirty (30) business days after the date of termination:
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(i) in a lump sum in cash an amount equal to 300% of Xxxxxxx'x
then annual Base Salary plus, in a lump sum in cash an amount equal to
300% of the maximum Incentive Compensation target for which Xxxxxxx was
eligible with respect to the year in which such termination occurs; and
(ii) with respect to each pension plan, as such term is
defined in ERISA Section 3(2)(A), of the Company (or its subsidiaries) in
which Xxxxxxx participated or had a benefit under at the date of
termination, a cash payment equal to the value (to be determined as
indicated below) of the excess of (A) the fully vested value of the
benefit to him under such plan, assuming additional credit for service for
all purposes under such plan for the period from the date of termination
through the Employment Expiration Date (the "Remaining Term"),
continuation of Xxxxxxx'x Base Salary for the Remaining Term, and that
there are no earnings on plan funds in defined contribution type plans for
any period after the date of termination, over (B) Xxxxxxx'x vested
accrued benefits pursuant to the provisions of each respective plan on the
date of termination. (For purposes of this Section 5.5(b)(ii), the value
of the excess shall be calculated using a discount rate equal to the
applicable Federal Rate (as defined in Code Section 1274) in effect on the
date of termination of employment and no other actuarial assumptions).
(c) To the extent permitted or not prohibited by any pension plan,
as such term is defined in ERISA Section 3(2)(A), of the Company (or its
subsidiaries) in which Xxxxxxx is permitted to participate hereunder or by
applicable law, after the date of termination, the Company shall make
immediately available to Xxxxxxx, in a lump sum (to the extent such obligation
is able to be paid in a lump sum under the terms of the plan for which such
obligation arose), all vested amounts under any such plan.
(d) Nothing in this Section 5.5 shall be deemed to limit or expand
in any way Xxxxxxx'x or his Family's rights to receive the applicable benefits
referred to in Section 3.1 hereof.
(e) In the event that Xxxxxxx shall become entitled to the payments
and/or benefits provided by this Section 5.5 or any other amounts (whether
pursuant to the terms of this Agreement, including Section 5.4 hereof, or any
other plan, arrangement or agreement with the Company) (collectively the
"Company Payments") and such Company Payments will be subject to the tax (the
"Excise Tax") imposed by
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Section 4999 of the Code (or any similar tax that may hereafter be imposed), the
Company shall pay to Xxxxxxx at the time specified below, an additional amount
(the "Gross-up Payment") such that the net amount retained by Xxxxxxx, after
deduction of any Excise Tax on the Company Payments and any federal, state and
local income tax and Excise Tax upon the Gross-up Payment provided for by this
Section 5.5(e), but before deduction for any federal, state or local income tax
on the Company Payments, shall be equal to the Company Payments.
(f) For purposes of determining whether any of the Company Payments
and Gross-up Payments (collectively the "Total Payments") will be subject to the
Excise Tax and the amount of such Excise Tax, (i) the Total Payments shall be
treated as "parachute payments" within the meaning of section 280G(b)(2) of the
Code, and all "parachute payments" in excess of the "base amount" (as defined
under Code Section 280G(b)(3) of the Code) shall be treated as subject to the
Excise Tax, unless and except to the extent that, in the opinion of the
Company's independent certified public accountants appointed prior to any change
in ownership (as defined under Code Section 280G(b)(2)) or tax counsel selected
by such accountants (the "Accountants") such Total Payments (in whole or in
part) either do not constitute "parachute payments," represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the "base amount" or are otherwise not
subject to the Excise Tax, and (ii) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Accountants in accordance
with the principles of Section 280(G) of the Code.
(g) For purposes of determining the amount of the Gross-up Payment,
Xxxxxxx shall be deemed to pay federal income taxes at the highest marginal rate
of federal income taxation in the calendar year in which the Gross-up Payment is
to be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Xxxxxxx'x residence for the calendar year
in which the Company Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes if paid in such year, after taking into account the limitation on
the deductibility of itemized deductions, including such state and local taxes,
under Section 68 of the Code. In the event that the Excise Tax is subsequently
determined by the Accountants to be less than the amount taken into account
thereunder at the time the Gross-up Payment is made, Xxxxxxx shall repay to the
Company, at the time that the amount of such reduction in Excise Tax is finally
determined, the portion of the prior Gross-up Payment attributable to such
reduction (plus the portion of the Gross-up Payment attributable to the Excise
Tax and federal
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and state and local income tax imposed on the portion of the Gross-up Payment
being repaid by the Executive if such repayment results in a reduction in Excise
Tax or a federal and state and local income tax deduction), plus interest on the
amount of such repayment at the rate provided in Section 1274 (b)(2)(B) of the
Code. Notwithstanding the foregoing, in the event any portion of the Gross-up
Payment to be refunded to the Company has been paid to any federal, state or
local tax authority, repayment thereof (and related amounts) shall not be
required until actual refund or credit of such portion has been made to Xxxxxxx
and, interest payable to the Company shall not exceed the interest received or
credited to Xxxxxxx by such tax authority for the period it held such portion.
Xxxxxxx and the Company shall mutually agree upon the course of action to be
pursued (and the method of allocating the expenses thereof) if Xxxxxxx'x good
faith claim for refund or credit is denied.
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 Gross-up Payment is made (including by reason
of any payment the existence or amount of which cannot be determined at the time
of the Gross-up Payment), the Company shall make an additional Gross-up Payment
in respect of such excess (plus any interest or penalties payable with respect
to such excess) at the time that the amount of such excess is finally
determined.
(h) The Gross-up Payment or portion thereof provided for in Section
5.5(f) hereof shall be paid not later than the thirtieth day following an event
occurring which subjects the Executive to the Excise Tax; provided, however,
that if the amount of such Gross-up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay to Xxxxxxx on such day
an estimate, as determined in good faith by the Accountants, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Code Section 1274(b)(2)(B) of the Code),
subject to further payments pursuant to Section 5.5(f) hereof, as soon as the
amount thereof can reasonably be determined, but in no event later than the
ninetieth day after the occurrence of the event subjecting the Executive to the
Excise Tax. In the event that the amount of the estimated payments exceeds the
amount subsequently determined to have been due, such excess shall constitute a
loan by the Company to Xxxxxxx, payable on the fifth day after demand by the
Company (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code).
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5.6 Office Support. For two years following termination of Xxxxxxx'x
employment by the Company without Cause or by Xxxxxxx pursuant to Section
4.1(c)((i) above, or due to the Company choosing not to extend the Employment
Period, and for three years following termination of Xxxxxxx'x employment by
Xxxxxxx pursuant to Section 4.1(c)(iii) above, the Company shall, at its cost,
provide Xxxxxxx an office comparable to that used by him prior to termination
and related office support, including making available the services of his
executive assistant.
5.7 Vesting of Options, Etc. Notwithstanding anything to the
contrary in any other agreement between the Company and Xxxxxxx, upon the
occurrence of a Change in Control any and all options held by Xxxxxxx (or his
assignees) to purchase Company capital stock, to the extent not theretofore
vested, shall be fully vested and, with respect to any and all shares of stock
theretofore issued to Xxxxxxx bearing restrictions on transfer imposed by the
Company, such restrictions shall thereupon lapse.
6. CONFIDENTIAL INFORMATION, NON-COMPETITION, ETC.
(a) (i) Both during and after the Employment Period, Xxxxxxx shall
hold in a fiduciary capacity for the benefit of the Company and shall not,
without the prior written consent of the Company, communicate or divulge
(other than in the regular course of the Company's business), to anyone
other than the Company, its subsidiaries and those designated by it, any
confidential or proprietary information, knowledge or data relating to the
Company or any of its subsidiaries, or to any of their respective
businesses, obtained by Xxxxxxx before or during the Employment Period
except to the extent (A) disclosure is made during the Employment Period
by Xxxxxxx in the course of his duties hereunder and Xxxxxxx reasonably
determines in good faith that it is in the best interest of the Company to
do so, (B) Xxxxxxx is compelled pursuant to an order of a court or other
body having jurisdiction over such matter to do so (in which case the
Company shall be given prompt written notice of such intention to divulge
not less than five days prior to such disclosure or such shorter period as
the circumstances may reasonably require) or (C) such information,
knowledge or data is or becomes public knowledge or is or becomes
generally known within the Company's industry other than through improper
disclosure by Xxxxxxx.
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(ii) Xxxxxxx acknowledges and agrees that the whole interest
in any invention, improvement, confidential information, copyright,
design, plan, drawing or data, including all worldwide rights to
copyrights or any other intellectual property rights (collectively, the
"Rights") arising out of or resulting from Xxxxxxx'x performance of his
duties during the Employment Period shall be the sole and exclusive
property of the Company. Xxxxxxx undertakes (at the expense of the
Company) to execute any document or do any reasonably necessary act to
enable the Company to obtain or to assist the Company in obtaining any
Rights. Xxxxxxx hereby irrevocably appoints the Company to be his
attorney-in-fact to execute in his name and on his behalf any instrument
required and take any actions reasonably necessary for the purpose of
giving to the Company the full benefit of the provisions of this
subsection; provided, however, that the Company shall notify Xxxxxxx prior
to executing any such instruments or taking any such actions.
(b) Xxxxxxx will not (other than on behalf of the Company) directly
or indirectly during the Employment Period and for one (1) year thereafter if
Xxxxxxx'x termination is due to a termination by the Company without Cause, by
Xxxxxxx pursuant to Section 4.1(c)(i) or (iii) or because of Xxxxxxx'x
Disability (which term may be extended for an additional year at the Company's
option; provided, however, that upon making such election which shall be made no
less than 180 days prior to the expiration of such term, the Company shall pay
Xxxxxxx 100% of his Base Salary at the rate being paid on the date of such
termination), or until the later of (A) the second anniversary of the expiration
of the Employment Period and (B) the Employment Expiration Date if such
termination is due to a termination by the Company for Cause or by Xxxxxxx
pursuant to Section 4.1(c)(ii), as an individual proprietor, partner,
stockholder, officer, employee, director, joint venturer, investor, lender, or
in any other capacity whatsoever (other than as the holder of not more than one
(1) percent of the total outstanding stock of a publicly held company other than
Schein Pharmaceutical, Inc., (x) engage in any activity competitive with a
material segment of the business of the Company, or (y) recruit, solicit or
induce any employee or employees of the Company (other than his personal
administrative assistant) to terminate their employment with, or otherwise cease
their relationship with, the Company.
(c) If any restriction set forth in Section 6(b) hereof is found by
any court of competent jurisdiction or 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
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geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
(d) The restrictions contained in Sections 6(a) and (b) hereof are
necessary for the protection of the business and goodwill of the Company and are
considered by Xxxxxxx to be reasonable to such purpose. Xxxxxxx acknowledges and
agrees that money damages would not adequately compensate the Company for any
breach of Sections 6(a) or 6(b) hereof and will cause the Company substantial
and irreparable damage and therefore, in the event of any such breach, in
addition to such other remedies which may be available, the Company shall have
the right to seek specific performance and injunctive relief.
7. NO MITIGATION; NO SET-OFF
The Company agrees that if Xxxxxxx'x employment with the Company is
terminated prior to the Employment Expiration Date for any reason whatsoever,
Xxxxxxx is not required to seek other employment or to attempt in any way to
reduce any amounts payable to Xxxxxxx by the Company pursuant to this Agreement.
Further, the amount of any payment provided for in this Agreement shall not be
reduced by any compensation earned by Xxxxxxx as the result of employment by
another employer or otherwise; and the amount of any benefit (other than the
health and medical benefits provided for in Section 3.1 hereof) provided for in
this Agreement shall not be reduced by any benefit provided to Xxxxxxx as the
result of employment by another employer or otherwise. The Company's obligations
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, or other similar right which the Company may have against Xxxxxxx.
8. LEGAL FEES
If Xxxxxxx seeks to collect or negotiates and reaches a settlement
for any part or all of the payments provided for hereunder (or otherwise
successfully enforces the terms of this Agreement) by or through a lawyer, the
Company shall advance all reasonable costs of such collection or enforcement,
including reasonable legal fees and disbursements and other fees and expenses
which Xxxxxxx may incur, promptly after submission of documentation reasonably
acceptable to the Company in respect of such costs and expenses. All amounts
paid by the Company shall promptly be refunded to the Company if and when a
court of competent jurisdiction finds that the Company is
14
entitled to have such sums refunded or if a settlement is reached which is
insubstantial compared to the damages that were requested. The Company shall pay
or reimburse Xxxxxxx for all reasonable legal fees (not in excess of $7,500)
incurred by him in connection with the negotiation and execution of this
Agreement.
9. SUCCESSORS; BINDING AGREEMENT
(a) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to expressly assume
and agree in writing to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
transaction had taken place, provided that Xxxxxxx need only be one of the
senior executive officers with the authority, powers and responsibilities set
forth in Section 1.1 hereof with respect to the subsidiary or subdivision which
operates the business of the Company as it exists on the date of such business
combination. Failure of the Company to obtain such express assumption and
agreement at or prior to the effectiveness of any such transaction shall be a
breach of this Agreement and shall entitle Xxxxxxx to compensation and benefits
from the Company in the same amount and on the same terms to which Xxxxxxx would
be entitled hereunder if the Company terminated his employment without Cause,
except that for purposes of implementing the foregoing, the date on which any
such transaction becomes effective shall be deemed the date of termination. As
used in this Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
(b) The Company may not assign this Agreement except in connection
with, and to the acquiror of, all or substantially all of the business or assets
of the Company, provided such acquiror expressly assumes and agrees in writing
to perform this Agreement as provided in Section 9(a) hereof.
(c) This Agreement shall inure to the benefit of and be enforceable
by Xxxxxxx and his personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees; provided, however, that
this Agreement may not be assigned by Xxxxxxx.
(d) The parties agree that Xxxxxxx'x family members are the intended
third party beneficiaries of the provisions of Section 3.1 and Article 5 (only
to the
15
extent that the events described therein would cause Xxxxxxx'x family members to
be entitled to the benefit of rights granted to them under Section 3.1) to the
extent that benefits are expressly granted to them in such sections, with the
right to enforce such provisions as fully as if they were parties to this
Agreement.
10. MISCELLANEOUS
(a) Any notices or other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly made,
given or received when hand-delivered, one (1) business day after being
transmitted by telecopier (confirmed by mail) or sent by overnight courier
against receipt, or five (5) days after being mailed by registered or certified
mail, postage prepaid, return receipt requested, to the party to whom such
communication is given at the address set forth below, which address may be
changed by notice given in accordance with this Section:
If to the Company:
Xxxxx Xxxxxx, Inc.
000 Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporate Secretary
If to Xxxxxxx:
Xxxxxxx X. Xxxxxxx
000X Xxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
(b) If any provision of this Agreement shall be held by court of
competent jurisdiction to be illegal, invalid or any unenforceable, such
provision shall be construed and enforced as if it had been more narrowly drawn
so as not to be illegal, invalid or unenforceable and such illegality,
invalidity or unenforceability shall have no effect upon and shall not impair
the enforceability of any other provision of this Agreement.
(c) No provision of this Agreement may be modified, waived or
discharged except by a waiver, modification or discharge in writing signed by
Xxxxxxx
16
and such officer as may be designated by the Board of Directors. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
in compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the time or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
(d) This Agreement represents the entire agreement of the parties
and shall supersede any and all previous contracts, arrangements or
understandings between the Company and Xxxxxxx with respect to the subject
matter hereof.
(e) This Agreement shall be construed, interpreted, and governed in
accordance with the laws of the State of New York, without reference to rules
relating to conflicts of law.
(f) The section headings herein are for the purpose of convenience
only and are not intended to define or limit the contents of any section.
(g) The parties may sign this Agreement in counterparts, all of
which shall be considered one and the same instrument.
[END OF TEXT-- SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have set their hands as of
the day and year first above written.
XXXXX XXXXXX, INC.
By:
---------------------------------
Authorized Officer
/S/ XXXXXXX X. XXXXXXX
------------------------------------
XXXXXXX X. XXXXXXX
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