EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of April 22, 1999, between
Xxxxxxx-Xxxxx Group, Inc., a Delaware corporation ("RCGI"), Xxxxxxx-Xxxxx, Inc.,
a Delaware corporation and wholly-owned subsidiary of RCGI (the "Company"), and
Xxxxxxx X. Xxxxxxx, Xx. ("Xxxxxxx").
Background
RCGI and the Company wish to retain the services of Xxxxxxx to assist in
the management of the Company and its subsidiaries.
Terms
In consideration of the premises and of the mutual covenants herein
contained, the parties agree as follows:
1. Position. During the term of Xxxxxxx' employment with RCGI and the
Company hereunder, Xxxxxxx shall serve as the Chairman of the Board and Chief
Executive Officer of each of RCGI and the Company and may also serve as an
officer of the Company's subsidiaries.
Xxxxxxx shall diligently devote Xxxxxxx' entire business skill, time and
effort to Xxxxxxx' employment hereunder; provided, however, that Xxxxxxx shall
be entitled annually to vacation and sick leave pursuant to policies adopted by
the Company from time to time for executive officers of the Company.
Notwithstanding the foregoing, and provided that such activities do not
interfere with the fulfillment of Xxxxxxx' obligations hereunder, Xxxxxxx may
(a) serve as a director or trustee of any charitable or non-profit entity and of
not more than two for profit business corporations so long as such entities are
not, directly or indirectly in competition with RCGI or any entity directly or
indirectly controlling, controlled by or under common control with RCGI and its
direct and indirect subsidiaries (an "Affiliate"); (b) deliver lectures, fulfill
speaking engagements and teach at educational institutions; and (c) acquire
solely as an investment any securities of any entity so long as (i) Xxxxxxx
remains a passive investor in such entity and (ii) such entity is not, directly
or indirectly, in competition with RCGI and its direct or indirect subsidiaries
or any Affiliate.
2. Term of Employment. Xxxxxxx' term of employment under this Agreement
shall begin on the date hereof and shall continue for a period of sixty (60)
months (the "Employment Term") (the termination date being hereafter referred to
as the "Normal Termination Date") and shall continue for successive additional
12 month periods thereafter (each continued term, the "Extended Employment
Term") unless written notice to the contrary is given by either Xxxxxxx or RCGI
to the other at least one hundred eighty (180) days prior to the then current
termination date, unless sooner terminated as hereinafter provided.
3. Compensation. As compensation for the services contemplated hereby,
Xxxxxxx shall receive from the Company during the Employment Term and each
Extended
Employment Term a base salary equal to $500,000 per annum to be paid in
accordance with the Company's normal payroll policies for its officers. Such
salary rate shall be subject to annual merit increase reviews by the Board of
Directors of RCGI (such salary as adjusted from time to time being the "Base
Salary"). The Base Salary (including any increases thereto) shall not be
decreased during the Employment Term or any Extended Employment Term.
4. Other Payment; Bonus. (a) In addition to the compensation provided to
Xxxxxxx in Section 3 hereof, Xxxxxxx shall be entitled to participate, during
the Employment Term and each Extended Employment Term, in an annual performance
bonus plan to be established by the Company and based on individual criteria
and/or executive incentive programs to be determined from time to time by the
Board of Directors of RCGI (it being understood that Xxxxxxx' performance
criteria and allocations under any such plan shall be as determined by the Board
of Directors) (the "Performance Bonus").
b) The Company shall maintain a term life insurance policy for Xxxxxxx,
which policy shall name such beneficiaries as Xxxxxxx shall designate and
provide for a death benefit of $25,000,000, provided, that the Company shall not
be required to pay premiums in excess of $50,000 per year.
5. Xxxxxxx Benefits. (a) Xxxxxxx shall be entitled to participate, during
the Employment Term and each Extended Employment Term, in all medical benefit
plans, hospitalization plans, group life insurance, long term disability or
other Xxxxxxx welfare benefit plans (collectively, the "Group Insurance Plans")
and any pension plans (including any supplemental executive retirement plans)
that may be provided by the Company or its subsidiaries to senior executive
officers from time to time during the Employment Term or Extended Employment
Term, as the case may be.
6. Expenses. The Company shall pay or reimburse Xxxxxxx for any expenses
reasonably incurred by Xxxxxxx in furtherance of Xxxxxxx' duties hereunder,
including, but not limited to, reasonable expenses for traveling, meals and
hotel accommodations, and business related entertainment upon submission by
Xxxxxxx of appropriate documentation thereof, all so prepared in compliance with
such policies and procedures relating thereto as the Company may from time to
time adopt.
7. Termination.
a) Termination by Company for Cause or Without Cause. The Board of
Directors of RCGI may terminate this Agreement and (except as provided below)
all of RCGI's and the Company's obligations hereunder, either for "Cause" or
"Without Cause." Such termination shall be effected by notice thereof delivered
by RCGI to Xxxxxxx, and shall be effective as of the date of such notice. In the
event that Xxxxxxx is terminated by RCGI for Cause, Xxxxxxx shall be entitled to
receive all Base Salary earned and accrued to the date of termination, but all
other rights of Xxxxxxx hereunder shall terminate as of the effective date of
Xxxxxxx' termination, except as otherwise provided by law.
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b) Xxxxxxx shall be entitled to participate in equity incentive programs
established by the Company, including the 1999 Restricted Stock Plan, provided
that any allocations to Xxxxxxx and the terms of any grants thereunder shall be
as determined by the Board of Directors.
In the event that Xxxxxxx is terminated by RCGI Without Cause or
Xxxxxxx resigns with Good Reason, and for so long as Xxxxxxx complies with the
provisions of Sections 8 and 9, Xxxxxxx shall be entitled (i) to receive all
payments due as Base Salary during the remainder of the Employment Term or the
then current Extended Employment Term (as applicable), as and when the same
would have otherwise been payable had Xxxxxxx not been terminated, (such term,
the "Continuation Period"), (ii) to receive any Performance Bonus for the year
in which Xxxxxxx is terminated or resigns which shall be payable at the time
such bonus would have otherwise been payable had Xxxxxxx not been terminated or
resigned, and (iii) to continue to participate at the Company's expense in the
Group Insurance Plans during the Continuation Period.
As used herein, (i) "Cause" means (A) the willful and continued
failure by Xxxxxxx to perform Xxxxxxx' duties hereunder (in the good faith
determination of the Board of Directors) (other than any such failure resulting
from the termination of Xxxxxxx' employment for death, Total Disability (as
hereinafter defined) or Good Reason), after written notice of such failure has
been given by the Board of Directors of RCGI, and which failure has not been
corrected within the 30-day period after written notice has been given; (B) the
willful commission by Xxxxxxx of acts that, in the good faith determination of
the Board of Directors of RCGI, are dishonest and demonstrably and materially
injurious to the Company, monetarily or otherwise; (C) Xxxxxxx' conviction of a
felony; (D) the failure by Xxxxxxx to perform Xxxxxxx' duties hereunder (other
than any such failure resulting from the termination of Xxxxxxx' employment for
death, Total Disability (as hereinafter defined) at a satisfactory level as
determined by a majority of the members of the Board of Directors of RCGI in
good faith, which failure has not been corrected within the 90-day period after
written notice has been given; or (E) a breach of any of the covenants set forth
in Sections 8 and 9 of this Agreement; (ii) "Without Cause" means any
termination of Xxxxxxx other than (i) by RCGI for Cause, (ii) by reason of
Xxxxxxx' resignation, and (iii) by Total Disability or death, except that
"Without Cause" shall include resignation by Xxxxxxx for Good Reason; and (iii)
"Good Reason" means (A) the failure of the Company to pay Xxxxxxx the
compensation or of RCGI or the Company to provide other material benefits as
specified in Sections 3, 4, 5 and 6 of this Agreement during the Employment Term
or the Extended Employment Term, as the case may be or (B) assignment of duties
inconsistent with Xxxxxxx' position as defined in Section 1, or a material
reduction in his duties or authority (in each case, which situation has not been
cured to Xxxxxxx' reasonable satisfaction within 30 days after notice thereof is
given to the Board of Directors of RCGI).
c) Resignation of Xxxxxxx. In the event that Xxxxxxx resigns (except in
the case of resignation due to Total Disability or for Good Reason) during the
Employment Term or any Extended Employment Term, Xxxxxxx shall be entitled to
receive all Base Salary earned and accrued to the date of resignation, but all
other rights of Xxxxxxx hereunder shall terminate as of the date of Xxxxxxx'
resignation, except as otherwise provided by law.
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d) Xxxxxxx' Total Disability. In the event that Xxxxxxx is terminated by
RCGI or Xxxxxxx resigns due to Xxxxxxx' Total Disability, Xxxxxxx shall be
entitled to receive (i) all Base Salary earned and accrued to the date of
termination or resignation and (ii) any Performance Bonus for the year in which
Xxxxxxx is terminated or resigns due to Xxxxxxx Total Disability which shall be
payable at the time such bonus would otherwise have been payable had Xxxxxxx not
been so terminated or resigned, but all other rights of Xxxxxxx hereunder shall
terminate as of the date of Xxxxxxx' termination or resignation, except as
otherwise provided by law.
As used herein, "Total Disability" shall mean any physical or mental
ailment or incapacity as determined in good faith by the Board of Directors of
RCGI which prevents the Xxxxxxx from performing the duties incident to the
Xxxxxxx' employment hereunder at the level expected of such Xxxxxxx by the Board
of Directors of RCGI, which has continued for a period of either (i) ninety (90)
consecutive days in any 12-month period or (ii) one hundred eighty (180) total
days in any 12-month period, and which is expected to be of permanent duration.
Xxxxxxx shall permit a licensed and board certified physician designated by RCGI
and reasonably acceptable to Xxxxxxx to examine Xxxxxxx from time to time prior
to Xxxxxxx' being determined to be Totally Disabled, to enable the Board of
Directors of RCGI to determine whether Xxxxxxx has suffered a Total Disability
hereunder. Notwithstanding the foregoing, the Board of Directors of RCGI may, in
its sole discretion, determine that Xxxxxxx has suffered a Total Disability
prior to the 90th consecutive day referred to in clause (i) above and terminate
Xxxxxxx by reason of Total Disability, at which time Xxxxxxx would be considered
for purposes of this Agreement and this Section 7(c) to have been terminated due
to Total Disability, provided, however, that if Xxxxxxx submits to the Board of
Directors of RCGI the written opinion of a licensed and board certified
physician that Xxxxxxx did not have a Total Disability at any time following his
termination pursuant to this provision and on or prior to the 90th consecutive
day referred to in clause (i) above, then Xxxxxxx shall be considered to have
been terminated Without Cause for purposes of this Agreement.
e) Death. In the event that Xxxxxxx dies during the Employment Term,
Xxxxxxx' estate shall be entitled to receive all Base Salary earned and accrued
to the date of death, but all other rights of Xxxxxxx hereunder shall terminate,
except as otherwise provided by law.
8. Protection of Confidential Information.
a) Covenant. Xxxxxxx acknowledges that Xxxxxxx' employment by the
Company will, throughout the term of this Agreement, bring him into close
contact with many confidential affairs of the Company and its Affiliates,
including information concerning the Company's finances and operating results,
its markets, key personnel, operational methods and other business affairs and
methods, technical data, computer software and other proprietary intellectual
property, other information not readily available to the public, and plans for
future developments relating thereto. Xxxxxxx further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing,
Xxxxxxx covenants and agrees that Xxxxxxx shall, and shall cause his
representatives and agents to, keep confidential and not disclose to any other
person (other than his legal and financial advisors and accountants) or use for
their own benefit or the benefit of any other person, any information regarding
the business and affairs of RCGI, the Company or any of their subsidiaries.
Xxxxxxx' obligations hereunder shall not apply to information which:
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(i) is or becomes generally available to the public without breach of the
commitment provided for in this Section 8; (ii) was otherwise available to
Xxxxxxx on a non-confidential basis; or (iii) is required to be disclosed by
law, order or regulation of a court or tribunal or government or disclosures
necessary to implement the provisions of this Agreement; provided, however,
that, in the case of clause (iii) above, Xxxxxxx shall provide RCGI and the
Company as much advance notice of the possibility of such disclosure as
practical so RCGI and the Company may attempt to stop such disclosure or obtain
a protective order concerning such disclosure.
b) Specific Remedy. If Xxxxxxx commits a breach of any of the provisions
of Section 8(a), RCGI, the Company and its Affiliates shall have the right and
remedy to have such provisions specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
Affiliates and that money damages will not provide an adequate remedy to the
Company and its Affiliates.
9. Covenant Not to Compete and Non-Interference.
a) Covenant. In consideration of the benefits of this Agreement to
Xxxxxxx and in order to induce RCGI and the Company to enter into this
Agreement, Xxxxxxx hereby covenants and agrees that from and after the Closing
and until the date that is two (2) years after the cessation of Xxxxxxx'
employment by RCGI and the Company, Xxxxxxx shall not, and shall cause any
employee or Affiliate not to, directly or indirectly, as a partner, stockholder,
director, consultant, joint venturer, investor or in any other capacity, engage
in, or own, manage, operate or control, or participate in the ownership,
management, operation or control of, any business or entity which engages
anywhere in the United States of America in a substantially similar business or
line of businesses as those conducted by the Company or any of its direct or
indirect subsidiaries at the time of the termination of the Employment Term or
Extended Employment Term, as the case may be (a "Competing Business"); provided,
however, that nothing herein shall prohibit Xxxxxxx from (i) owning not more
than 2.0% of any class of securities of a publicly traded entity in a Competing
Business, (ii) acquiring and following such acquisition, actively engaging in,
any business enterprise partially engaged in a Competing Business, so long as
not more than 20% of the fair market value of such business, as determined in
good faith by Xxxxxxx and certified to RCGI and the Company by Xxxxxxx, is
attributable to such Competing Business, or (iii) acquiring, and following such
acquisition, actively engaging in, any business enterprise partially engaged in
a Competing Business, provided that if more than 20% of the fair market value of
such business, as determined in good faith by Xxxxxxx and certified to RCGI and
the Company by Xxxxxxx, is attributable to such Competing Business, then such
business shall divest itself of the subsidiary, division, group, franchise or
segment which engages in such Competing Business as soon as practicable after
the date of such acquisition, and provided, further, that with respect to any
purchase intended to be accounted for as a pooling of interests under GAAP or
treated for federal income tax purposes as a tax-free reorganization, no such
divestiture shall be required until, in the reasonable opinion of the acquiror,
such divestiture would no longer endanger the accounting of such acquisition as
a pooling of interests under GAAP or the treatment for federal income tax
purposes of such acquisition as a tax-free reorganization.
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b) From the date hereof until the later of two (2) years after the
cessation of Xxxxxxx' employment by RCGI and the Company, Xxxxxxx shall not,
without prior written approval of RCGI, directly or indirectly, solicit for
employment any current officer, senior manager, general manager, sales or
technical employee of RCGI or Company or any of their subsidiaries; provided,
however, that the foregoing shall not prevent Xxxxxxx, or any of his Affiliates
from hiring any such person (i) who contacts Xxxxxxx or his Affiliates on his or
her own initiative without solicitation from any of Xxxxxxx or his Affiliates,
(ii) in connection with general employment advertisements published in
magazines, journals, newspapers and other publications that are not targeted at
RCGI or the Company or any of their employees or (iii) who has been discharged
by RCGI or the Company prior to any such solicitation.
c) Xxxxxxx acknowledges that given the nature of the business of RCGI
and the Company the covenants contained in this Section 9 contain reasonable
limitations as to time, geographic area and scope of activity to be restrained,
and do not impose a greater restraint than is necessary to protect and preserve
for the benefit of RCGI the goodwill of the Company and to protect the
legitimate business interests of the Company. If, however, this Section 9 is
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too long a period of time or over too large a geographic
area or by reason of its being too extensive in any other respect or for any
other reason it will be interpreted to extend only over the longest period of
time for which it may be enforceable and/or over the largest geographic area as
to which it may be enforceable and/or to the maximum extent in all other aspects
as to which it may be enforceable, all as determined by such court and in such
action.
d) Specific Remedy. Xxxxxxx agrees that RCGI's and the Company's
remedies at law for any breach or threat of breach by Xxxxxxx of the provisions
of this Section 9 will be inadequate, and that RCGI and the Company shall be
entitled to an injunction or injunctions to prevent breaches of the provisions
of this Section 9 and to enforce specifically the terms and provisions hereof,
in addition to any other remedy to which RCGI and the Company may be entitled at
law or equity. In the event of litigation regarding this Section 9, the
prevailing party in such litigation shall, in addition to any other remedies
that prevailing party may obtain in such litigation, be entitled to recover from
the other party all reasonable legal fees and out-of-pocket expenses incurred by
such party in enforcing or defending its rights hereunder.
10. Independence, Severability and Non-Exclusivity. Each of the rights and
remedies enumerated in Sections 8(b) and 9(d) shall be independent of the others
and shall be severally enforceable and all of such rights and remedies shall be
in addition to and not in lieu of any other rights and remedies available to the
Company or its Affiliates under the law or in equity. If any of the provisions
contained in Sections 8 or 9 or if any of the rights or remedies enumerated in
Sections 8 or 9 is hereafter construed to be invalid or unenforceable, the same
shall not affect the remainder of the covenant or covenants, or rights or
remedies, which shall be given full effect without regard to the invalid
portions. If the courts of any one or more jurisdictions shall hold all or any
part of such provisions wholly unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties that such determination
shall not bar or in any way affect RCGI's, the Company's or their Affiliates'
right to relief in the court of any other jurisdiction as to failures to observe
such provisions in such other jurisdictions, the above provisions as they relate
to each jurisdiction, being, for this purpose, severable into diverse and
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independent provisions. If any of the provisions contained in Sections 8 or 9 is
held to be unenforceable because of the duration of such provision or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of such provision and in
its reduced form such provision shall then be enforceable.
11. Assignment of Xxxxxxx Benefits; Successors and Assigns. Absent the
prior written consent of RCGI, and subject to the laws of descent and
distribution, Xxxxxxx shall have no right to exchange, convert, encumber or
dispose of the rights of Xxxxxxx to receive benefits and payments under this
Agreement, which payments, benefits and rights thereto are non-assignable and
non-transferable. This Agreement shall inure to the benefit of and shall be
binding upon RCGI, the Company and Xxxxxxx and, subject to the preceding
sentence, their respective heirs, executors, personal representatives,
successors and assigns. Nothing in this Section 11, however, shall prevent
Xxxxxxx from making assignments or transfers for purposes of personal estate
planning.
12. Notices. All notices hereunder shall be given in writing by personal
delivery or by registered or certified mail addressed to RCGI at its principal
place of business and to Xxxxxxx at Xxxxxxx' residence address as then listed in
the Company's records.
13. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or any breach thereof, shall be settled by arbitration in
accordance with the rules of the American Arbitration Association and judgment
upon such award rendered by the arbitrators(s) may be entered in any court
having jurisdiction thereof. The arbitration shall be held in New York, New York
unless another location shall be mutually agreed to by the parties at the time
of arbitration.
14. General.
a) Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the state of New York without giving
effect to conflicts of laws principles thereof which might refer such
interpretations to the laws of a different state or jurisdiction.
b) Captions. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
c) Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties.
d) No Other Representations. No representation, promise or inducement
has been made by any party hereto that is not embodied in this Agreement, and no
party shall be bound by or liable for any alleged representation, promise or
inducement not so set forth.
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e) Amendments; Waivers. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument executed by all of the parties
hereto, or in the case of a waiver, by the party waiving compliance. The failure
of any party at any time or times to require performance of any provision hereof
shall in no manner affect the right of such party at a later time to enforce the
same. No waiver by any party of the breach of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the date first set forth above.
XXXXXXX-XXXXX GROUP, INC.
By: /s/ Xxxx X. Xxxxxx
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Name:
Title:
XXXXXXX-XXXXX, INC.
By: /s/ Xxxx X. Xxxxxx
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Name:
Title:
XXXXXXX X. XXXXXXX, XX.
/s/ Xxxxxxx X. Xxxxxxx, Xx.
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