Exhibit 10.42
Xxxxxxx Technology Company, Inc.
00 Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Tel: 000 000-0000
Fax: 000 000-0000
June 6, 2001
Xx. Xxxx X. Xxxxx, Xx.
0 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Dear Xx. Xxxxx:
This Agreement sets forth the terms of your employment with Xxxxxxx
Technology Company, Inc., a Delaware corporation (the "Company"), and it is
effective as of March 21, 2001.
1. DUTIES. During the term of your employment hereunder, you shall be
employed as the President and the Chief Operating Officer of the Company, and
you shall direct and manage the business, affairs, and property of the Company
subject to the direction of the Chairman and Chief Executive Officer of the
Company.
2. COMPENSATION. As compensation for your services during the term of
your employment hereunder:
A. Salary. You shall be paid a salary at the annual rate of three
hundred fifty thousand dollars ($350,000) (the "base salary"), payable in
appropriate installments to conform with regular payroll dates for salaried
personnel of the Company.
B. Reviews and Adjustments. Your base salary will be reviewed by
the Board of Directors of the Company (the "Board of Directors") in November,
2001. On or about March 21, 2002 and each succeeding March 21 during the term of
your employment hereunder, your
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performance shall be reviewed by the Chairman and the Board of Directors, your
attainment of mutually agreed-upon objectives shall be evaluated, and the base
salary payable to you for the twelve (12) months beginning on such March 21 may
be adjusted upward (but not downward) by the Board of Directors.
C. Incentive Compensation. During the term of your employment
hereunder, and at such other times subsequent thereto as are otherwise set forth
herein, you shall be paid annually, no later than ninety (90) days after the end
of each fiscal year, beginning with the fiscal year ending June 30, 2001,
incentive compensation which shall be determined under the Company's Executive
and Key Person Cash Incentive Program.
D. Deferred Compensation. You shall be paid, at such times as are
set forth in this Agreement, deferred compensation based upon an amount equal to
forty percent (40%) of your Final Average Pay (the "Deferred Compensation"). For
purposes of this Agreement, the term "Final Average Pay" shall mean an amount
equal to (i) the total of (a) the sum of the base salary paid to you with
respect to each of the two (2) fiscal years ending immediately preceding the
fiscal year in which you become entitled to the Deferred Compensation, plus (b)
the base salary payable to you at the time that you become entitled to the
Deferred Compensation (annualized to twelve (12) months), (ii) divided by three
(3). Forty (40%) percent of your Final Average Pay, when calculated, shall then
be restated to a monthly amount by dividing such amount by twelve (12) (the
"Monthly Amount"), and the Monthly Amount shall be paid monthly, to you or your
estate, as the case may be, beginning on the day set forth in this Agreement,
for a period of one hundred eighty (180) months or the period ending with the
month of your death, whichever is longer. In this regard, if you die after the
date on which you first become entitled to payment of the Deferred Compensation,
whether or
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not the first payment of the Monthly Amount has been made, and prior
to the payment of the Monthly Amount for one hundred eighty (180) months, the
Monthly Amount shall be paid monthly for the balance of such one hundred eighty
(180) month period to the beneficiary or beneficiaries designated by you in
writing to the Company, or, if none are designated, to your estate. Deferred
Compensation will vest, in each case assuming you are then employed by the
Company, as follows: As of March 21, 2002, it shall be vested to the extent of
twenty percent (20%); as of March 21, 2003, it shall be vested to the extent of
forty percent (40%); as of March 21, 2004, it shall be vested to the extent of
sixty percent (60%); as of March 21, 2005, it shall be vested to the extent of
eighty percent (80%); and as of March 21, 2006, it shall be vested to the extent
of one hundred percent (100%) so that as of the latter date the full amount of
the Deferred Compensation shall be due and payable in the instances as set forth
elsewhere in this Agreement.
3. CLASS B STOCK.
A. In order to facilitate your purchase of up to three hundred
thousand (300,000) shares of the Company's Class B Common Stock, par value $.01
per share (the "Class B Stock"), the Company will loan to you up to six hundred
seventy-five thousand dollars ($675,000.00) (the "Loan(s)"). The Loan(s) will be
made pursuant to a Loan and Pledge Agreement(s) to be dated effective as of the
date(s) of the Loan(s) and will be evidenced by a demand promissory note(s)
dated effective as of the date(s) of the Loan(s) (the "Note(s)"). The Note(s)
will bear interest, payable annually, at a rate equal to five percent (5%). If
your employment under this Agreement terminates for any reason other than death
or for "cause" as the term "cause" is defined in Xxxxxxxxx 0X hereof, the
Company will not demand payment of the outstanding principal of and accrued
interest on the Note(s) for a period of six (6) months after such termination,
or for a period of twelve (12) months
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after such termination in the case of your death. Notwithstanding anything to
the contrary contained in this Paragraph 3A, at any time that you sell any of
the shares of Class B Stock while any amount of the Note(s) remains unpaid, you
shall, within five (5) days of receipt of the funds from such sale, pay to the
Company, in repayment of part or all, as the case may be, of the Loan(s), an
amount equal to two dollars and twenty-five cents ($2.25) times the number of
shares of the Class B Stock so sold, but not in excess of the unpaid balance of
the Loan(s), plus interest, as set forth in this Paragraph 3A, on the amount so
repaid to the extent that such interest accrued to the date of such repayment.
B. Except as provided in Xxxxxxxxx 0X hereof, upon your death the
Company shall be required to redeem from the personal representative of your
estate (the "Personal Representative") the aggregate of (a) all shares of Class
B Stock that are owned by you at the time of your death, plus (b) the aggregate
of all shares of Class B Stock that are acquired by the Personal Representative
after your death pursuant to (1) your exercise prior to your death of any
options to purchase shares of Class B Stock (the "B Options"), plus (2) the
Personal Representative's timely exercise of any B Options owned by you at the
time of your death (the aggregate of such shares of Class B Stock being referred
to herein as the "Date of Death Class B Shares").
C. Notwithstanding anything to the contrary contained in
Paragraph 3B hereof, the number of the Date of Death Class B Shares required to
be redeemed from the Personal Representative shall be limited to the quotient
determined by dividing (a) the aggregate of (1) the unpaid balance of the
Loan(s), plus (2) the accrued interest on the Loan(s), as such unpaid balance
and accrued interest exist at the date of your death (together the "Loan Amount
Due"), by (b) the aggregate of (1) the mean average (the "Average") of the
closing price of a single share of Class A Stock on the American Stock Exchange
on each of the ten (10) trading days immediately preceding
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the date of your death, plus (2) an amount equal to ten percent (10%) of the
Average (such limited number being referred to herein as the "Maximum
Required-To-Be-Redeemed Class B Shares").
D. To the extent that the number of the Date of Death Class B
Shares exceeds the number of the Maximum Required To-Be-Redeemed Class B Shares
(such excess being referred to herein as the "Excess Number of Class B Shares"),
the Personal Representative shall be entitled to either (a) sell to any buyer or
buyers such number of the Excess Number of Class B Shares that the Personal
Representative chooses to sell, (b) convert, pursuant to Article FOURTH (3) of
the Company's Restated Certificate of Incorporation, on or prior to such date
that is ten (10) months after the date of your death, such number of the Excess
Number of Class B Shares that the Personal Representative chooses to convert
(the "Converted Number of Shares") into such number of Class A Shares that
equals the Converted Number of Shares; i.e., a one-to-one conversion, or (c) any
combination of the foregoing items (a) and (b). The Class A Shares to be
delivered by the Company to the Personal Representative on any such conversion
shall be issued pursuant to an exemption from registration under the Securities
Act of 1933, as amended, without a restrictive legend, and shall be delivered to
the Personal Representative at least forty-two (42) days prior to the date that
the Company redeems from the Personal Representative the Maximum
Required-To-Be-Redeemed Class B Shares; provided, however, that the Company
shall redeem from the Personal Representative the Maximum
Required-To-Be-Redeemed Class B Shares not more than fifty (50) days after such
date of any such delivery of Class A Shares.
E. In the event that, at the time of your death, you own any
unexercised B Options, and the Personal Representative fails to timely exercise
all of such unexercised B Options as set forth in Paragraph 3B(ii)(b)(2) hereof,
then the Personal Representative shall be treated as having
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relinquished, and turned over, to the Company, on the day immediately succeeding
the end of the timely-exercise period, all unexercised B Options, and such
unexercised B Options shall become null and void, and completely unexerciseable.
F. The Company's redemption from your Personal Representative of
the Maximum Required-To-Be-Redeemed Class B Shares is intended by you and the
Company to qualify as a "distribution in part or full payment in exchange for
stock" within the meaning of Section 302(a) of the Internal Revenue Code of
1986, as amended (the "Code"), as a redemption described in either Section
302(b)(2) of the Code or Section 302(b)(3) of the Code, and the Company shall
consult, and cooperate, with the Personal Representative's tax advisor, to
facilitate such exchange treatment under Section 302(a) of the Code; provided,
however, that doing so does not result in any unreimbursed cost or expense to
the Company.
4. LIFE INSURANCE.
A. The $1,000,000 Policy. During the term of your employment
hereunder, the Company shall, subject to your insurability, pay the premiums on
a contract or contracts of life insurance on your life in the amount of one
million dollars ($1,000,000), which contract or contracts will be owned by you,
your spouse, or such other party as you may designate.
B. The $2,000,000 Policy.
(i) During the term of your employment hereunder, the
Company shall, subject to your insurability, pay the premiums on a contract or
contracts of life insurance on your life in the amount of two million dollars
($2,000,000), which contract or contracts will be owned by the Company, and
pursuant to which the Company will be the sole beneficiary.
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(ii) The Company shall reserve, from the proceeds of the
contract referred to in Paragraph 4B(i) hereof (the "Proceeds"), the redemption
price of the Maximum Required-To-Be-Redeemed Class B Shares (the "Redemption
Price"), and the Redemption Price shall be paid to the Personal Representative
in money by certified check or official bank check payable to the order of the
Personal Representative.
(iii) The Personal Representative shall use the Redemption
Price to pay all of the Loan Amount Due, or such part of the Loan Amount Due
that equals the Redemption Price.
5. REIMBURSEMENT OF EXPENSES. In addition to the compensation provided
for herein, the Company shall reimburse to you, or pay directly, all reasonable
expenses incurred by you in connection with the business of the Company, and its
subsidiaries and affiliates, including but not limited to business-class travel
if overseas, reasonable accommodations, and entertainment, subject to
documentation in accordance with the Company's policy. In this connection, it is
understood that certain business of the Company will require the presence of
your spouse, and this Paragraph 5 applies as well to such expenses relating to
her.
6. EXTENT OF SERVICES.
A. In General. During the term of your employment hereunder you
shall devote your best and full-time efforts to the business and affairs of the
Company.
B. Limitation on Other Services. During the term of your
employment hereunder, you shall not undertake employment with, or participate
in, the conduct of the business affairs of any other person, corporation, or
entity, except at the direction or with the written approval of the Board of
Directors.
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C. Personal Investments. Nothing herein shall preclude you from
having, making, or managing personal investments which do not involve your
active participation in the affairs of the entities in which you so invest, but,
unless approved in writing by the Board of Directors, during the term of your
employment hereunder, you shall not have more than a one percent (1%) ownership
interest in any entity which is directly competitive with any business conducted
by the Company at that time. The phrase "conducted by the Company" as used in
this Xxxxxxxxx 0X and in Paragraph 13 hereof shall mean the business conducted
by the Company or by any corporation or other entity in which the Company owns
stock possessing fifty percent (50%) or more of the stock (either voting or
non-voting) in such corporation or fifty percent (50%) or more of the equity
interests (either voting or non-voting) in such other entity (a "Subsidiary").
7. LOCATION. Your duties hereunder shall be performed for the Company
worldwide, with particular emphasis in the Company's office in Shelton, CT.
8. VACATION; OTHER BENEFITS.
A. Vacation. During the term of your employment hereunder, you
shall be entitled to a vacation or vacations, with pay, totalling four (4) weeks
in each fiscal year. You may accumulate up to twelve (12) weeks vacation, but
not more than three (3) weeks from any single prior year. Any such accumulated
vacation may be used in any subsequent year or years in addition to the four (4)
weeks of vacation to which you are entitled for each such year.
B. The Company's Benefit Plans. During the term of your
employment hereunder, you shall be eligible for inclusion, to the extent
permitted by law, as a full-time employee of the Company or any Subsidiary, in
any and all (i) pension, profit sharing, savings, and other retirement plans and
programs as in effect at the time, (ii) life and health (medical, dental,
hospitalization,
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short-term and long-term disability) insurance plans and programs as in effect
at the time, (iii) stock option and stock purchase plans and programs as in
effect at the time, (iv) accidental death and dismemberment protection plans and
programs as in effect at the time, (v) travel accident insurance plans and
programs as in effect at the time, and (vi) other plans and programs at the time
sponsored by the Company or any Subsidiary for employees or executives generally
as in effect at the time, including any and all plans and programs that
supplement any or all of the foregoing types of plans or programs (except for
any annual bonus plan, other than the incentive compensation payable under
Xxxxxxxxx 0X hereof, for employees in general).
C. Automobile, Club, and Professional Services. During the term
of your employment hereunder, (i) the Company shall provide an automobile for
your use pursuant to the Company's written policy on Company autos as in effect
at that time, (ii) the Company shall pay dues, not in excess of five thousand
dollars ($5,000), for your membership at a social club of your choice, and (iii)
the Company shall reimburse to you, or pay directly, upon submission by you to
the Company of statements for services, the amounts payable by you to any person
or persons of your choice that you retain to advise you with regard to
financial, investment, and tax matters; provided, however, that such
reimbursement or payment shall not exceed ten thousand dollars ($10,000) per
fiscal year beginning with the fiscal year ending June 30, 2001.
D. Post-Termination Benefits. In addition to any other payments
and benefits provided in this Agreement, effective with the termination of your
employment by the Company without cause, you shall be entitled to (i) continued
medical and dental benefits for a period of two (2) years from the effective
date of your termination or until you secure other employment,
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whichever occurs first, and (ii) reimbursement of reasonable expenses incurred
by you in connection with job search services.
9. TERMINATION OF EMPLOYMENT.
A. Termination by the Company Without Cause. The Company may,
without cause, terminate your employment hereunder at any time upon ten (10) or
more days' written notice to you. In the event your employment is terminated
under this Paragraph 9A, the Company shall pay to you the following:
(i) A single lump sum payment, no later than the last day of
your employment, of:
(a) Any accrued but unpaid salary set forth in Paragraph
2A hereof (as adjusted by Paragraph 2B hereof), including salary in respect of
any accrued and accumulated vacation, due to you at the date of such
termination;
(b) Any amounts owing, but not yet paid, pursuant to
Paragraph 5 hereof; and
(c) An amount equal to your then current annual base
salary as defined in Paragraph 2A hereof (as adjusted by Paragraph 2B hereof);
or if you are the Chief Executive Officer of the Company when your employment is
terminated, an amount equal to the product of two and nine-tenths (2.9) times
your "base salary" under Paragraph 2A hereof (as adjusted by Paragraph 2B
hereof);
(ii) A single lump sum payment of any accrued but unpaid
incentive compensation set forth in Paragraph 2C hereof due to you at the date
of such termination for the
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fiscal year ending immediately prior to the date of such termination, which
shall be paid no later than ninety (90) days after the end of such fiscal year;
(iii) A single lump sum payment of any incentive compensation set
forth in Paragraph 2C hereof earned in the fiscal year of the termination of
your employment, which incentive compensation shall be determined on the basis
of the Company's operations through June 30 of such fiscal year, shall be
pro-rated through the last day of your employment, and shall be paid no later
than ninety (90) days after the end of such fiscal year; and
(iv) If and to the extent vested, the Deferred Compensation as
set forth in Paragraph 2D hereof, with payment of the Monthly Amount beginning
on the first day of the month immediately succeeding the last day of your
employment.
The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 12 and Paragraph 13 hereof.
B. Termination by Mutual Consent. You may terminate your
employment hereunder at any time with the written consent of the Company. In the
event your employment is terminated under this Paragraph 9B, the Company shall
pay to you the following:
(i) A single lump sum payment, no later than the last day of
your employment, of:
(a) Any accrued but unpaid salary set forth in Paragraph
2A hereof (as adjusted by Paragraph 2B hereof), including salary in respect of
any accrued and accumulated vacation, due to you at the date of such
termination;
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(b) Any amounts owing, but not yet paid, pursuant to
Paragraph 5 hereof; and
(c) If you are the Chief Executive Officer of the Company
at the time your employment is terminated, an amount equal to your annual "base
salary" under Paragraph 2A hereof (as adjusted by Paragraph 2B hereof);
(ii) A single lump sum payment of any accrued but unpaid
incentive compensation set forth in Paragraph 2C hereof due to you at the date
of such termination for the fiscal year ending immediately prior to the date of
such termination, which shall be paid no later than ninety (90) days after the
end of such fiscal year;
(iii) A single lump sum payment of any incentive compensation set
forth in Paragraph 2C hereof earned in the fiscal year of the termination of
your employment, which incentive compensation shall be determined on the basis
of the Company's operations through June 30 of such fiscal year, shall be
pro-rated through the last day of your employment, and shall be paid no later
than ninety (90) days after the end of such fiscal year; and
(iv) If and to the extent vested, the Deferred Compensation as
set forth in Paragraph 2D hereof, with payment of the Monthly Amount beginning
on the first day of the month immediately succeeding the last day of your
employment.
The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
C. Termination by the Company With Cause. The Company may for
cause terminate your employment hereunder at any time by written notice to you.
For purposes of this
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Agreement, the term "cause" shall mean (1) a failure by you to remedy either (a)
a continuing neglect in the performance of your duties under this Agreement, or
(b) any action taken by you that seriously prejudices the interests of the
Company, in either event within ten (10) days of the Company's written notice to
you of such neglect or action, or (2) your conviction of a felony. In the event
of the termination of your employment hereunder for cause, the Company shall pay
to you the following:
(i) A single lump sum payment, no later than ten (10) days after
the last day of your employment, of
(a) Any accrued but unpaid salary set forth in Paragraph 2A
hereof (as adjusted by Paragraph 2B hereof), including salary in respect of any
accrued and accumulated vacation, due to you at the date of such termination;
and
(b) Any amounts owing, but not yet paid, pursuant to
Paragraph 5 hereof;
(ii) A single lump sum payment of any accrued but unpaid
incentive compensation set forth in Paragraph 2C hereof due to you at the date
of such termination for the fiscal year ending immediately prior to the date of
such termination, which shall be paid no later than ninety (90) days after the
end of such fiscal year; and
(iii) If and to the extent vested, the Deferred Compensation as
set forth in Paragraph 2D hereof, with payment of the Monthly Amount beginning
on the first day of the month immediately succeeding the last day of your
employment. You shall forfeit the incentive compensation set forth in Xxxxxxxxx
0X hereof for the fiscal year in which such termination occurs.
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The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 12 and Paragraph 13 hereof.
D. Events. If any of the following described events occurs during
the term of your employment hereunder, you may terminate your employment
hereunder by written notice to the Company either prior to, or not more than six
(6) months after, the happening of such event. In such event, your employment
hereunder will be terminated effective as of the later of ten (10) days after
the notice or ten (10) days after the event, and the Company shall make to you
the same payments that the Company would have been obligated to make to you
under Paragraph 9A hereof if the Company had terminated your employment
hereunder effective on such date. The events, the occurrence of which shall
permit you to terminate your employment hereunder under this Paragraph 9D, are
as follows:
(i) The removal of you or the election of any other person as
the President or the Chief Operating Officer of the Company; provided, however,
that you shall not have approved such removal or such election, in your capacity
as a director, by voting for such removal or such election.
(ii) Any merger or consolidation by the Company with or into
any other entity or any sale by the Company of substantially all of its assets;
provided, however, that you shall not have approved such transaction, in your
capacity as a director, by voting for it.
(iii) Any change of a majority of the directors of the Company
occurring within any thirteen (13) month period, or the acquisition by a single
person or entity or a related group of persons or entities, of shares of any
class or classes of voting stock of the Company
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representing twenty-five percent (25%) or more of the total votes entitled to be
cast by all of the then outstanding shares of all classes of voting stock of the
Company; provided, however, that you shall not have approved such change in
directors or acquisition, in your capacity as a shareholder or director, by
voting for any of such new directors or for such acquisition, and that there
shall be excluded from any such calculation of percentage of ownership all stock
held by any officer of the Company on the effective date of this Agreement.
(iv) The adoption by the Company of any plan of liquidation
providing for the distribution of all or substantially all of its assets;
provided, however, that you shall not have approved the adoption of such plan,
in your capacity as a director, by voting for it.
(v) The failure by the Company to observe or comply in any
material respect with any of the provisions of this Agreement, including a
material diminution in your duties, or the assignment to you of duties that are
materially inconsistent with your duties or that materially impair your ability
to function as the President or the Chief Operating Officer of the Company if
such failure has not been cured within thirty (30) days after written notice
thereof has been given by you to the Company.
E. Disability or Death. If you should suffer a Permanent
Disability, the Company may terminate your employment hereunder upon ten (10) or
more days' prior written notice to you. For purposes of this Agreement, a
"Permanent Disability" shall be deemed to have occurred only when you are
qualified for benefits under the Company's or a Subsidiary's Long Term
Disability Insurance Policy. In the event of the termination of your employment
hereunder by reason of Permanent Disability or death at any time, the Company
shall pay:
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(i) In the case of Permanent Disability only, to you, in
conformity with regular payroll dates for salaried personnel of the Company, an
amount equal to fifty percent (50%) of the base salary you were receiving at the
date of such termination under Paragraph 2A hereof (as adjusted by Paragraph 2B
hereof), payable through March 21, 2006, at which time monthly payments of the
Deferred Compensation set forth in Paragraph 2D hereof shall begin; provided,
however, that the amount payable under this Paragraph 9E(i) (but not the
Deferred Compensation payments) shall be reduced to the extent of any payments
made to you through any Company-sponsored group disability plan;
(ii) To you or your legal representative, or any
beneficiary or beneficiaries designated by you in writing to the Company, a
single lump sum payment of:
(a) No later than ten (10) days after the last day of
your employment, any accrued but unpaid salary set forth in Paragraph 2A hereof
(as adjusted by Paragraph 2B hereof), including salary in respect of any accrued
and accumulated vacation, due to you at the date of such termination;
(b) No later than ten (10) days after the last day of
your employment, any amounts owing, but not yet paid, pursuant to Paragraph 5
hereof;
(c) A single lump sum payment of any accrued but
unpaid incentive compensation as set forth in Paragraph 2C hereof due to you at
the date of such termination for the fiscal year ending immediately prior to the
date of such termination, which shall be paid no later than ninety (90) days
after the end of such fiscal year; and
(d) Any incentive compensation set forth in Paragraph
2C hereof earned in the fiscal year in which the termination of your employment
occurs, which incentive
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compensation shall be determined on the basis of the Company's operations
through June 30 of such fiscal year, and shall be pro-rated through the last day
of your employment, and shall be paid no later than ninety (90) days after the
end of such fiscal year; and
(iii) In the case of death only, to your legal
representative, or any beneficiary or beneficiaries designated by you in
writing, the vested portion of the Deferred Compensation set forth in Paragraph
2D hereof, with payment of the Monthly Amount beginning on the first day of the
month immediately succeeding the last day of your employment.
The Company shall have no further obligation to you under this Agreement
and you shall have no further obligation to the Company under this Agreement
except as provided in Paragraph 12 and Paragraph 13 hereof.
F. No Excess Parachute Payments. Notwithstanding anything to the
contrary contained in this Agreement, if the Company obtains a written opinion
of its tax counsel ("Tax Counsel") to the effect that there exists a material
possibility that any payment to which you would (but for the application of this
Paragraph 9F) be entitled under this Agreement, would (but for such application)
be treated as an "excess parachute payment" (as defined in Section 280G(b) of
the Code and the Treasury Regulations promulgated thereunder):
(i) Unless you and the Company agree to an alternative
amendment of this Agreement that satisfies the requirements of Paragraph 9F(ii)
hereof, this Agreement shall be amended by reducing the payments to which you
are entitled hereunder, in the order specified in the last sentence of this
Xxxxxxxxx 0X, to the extent necessary so that, in the opinion of Tax Counsel,
there does not exist a material possibility that any payment to which you are
entitled under this Agreement (as so amended) will be treated as an excess
parachute payment; or
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(ii) If you and the Company agree to amend this Agreement
by modifying the amount and/or timing of the payments to which you are entitled
hereunder in a manner other than that specified in Paragraph 9F(i) hereof, and
if, in the opinion of Tax Counsel, there does not exist a material possibility
that any payment to which you are entitled under this Agreement (as so amended)
will be treated as an excess parachute payment, this Agreement shall be so
amended. An amendment to this Agreement pursuant to Paragraph 9F(i) hereof shall
reduce, first, the Deferred Compensation (and, concomitantly, the Monthly
Amount), second (if applicable), the amount payable under Paragraph 9A(i)(c)
hereof by virtue of your election under Paragraph 9D hereof to treat an event
described therein as constituting the termination of your employment, and third,
on a pro-rata basis, all other amounts (other than amounts payable pursuant to
Paragraph 5 hereof, which shall in any event be paid in full) to which you are
entitled hereunder.
G. Retirement. If not previously terminated under any of the previously
outlined provisions, your employment hereunder shall terminate when you retire
from full-time employment with the Company, which shall occur no earlier than
March 21, 2006, at which time the Company shall pay to you the following:
(i) A single lump sum payment, no later than the last day of your
employment, of:
(a) Any accrued but unpaid salary set forth in Paragraph 2A
hereof (as adjusted by Paragraph 2B hereof), including salary in respect of any
accrued and accumulated vacation, due to you at the date of such termination;
and
(b) Any amounts owing, but not yet paid, pursuant to Paragraph 5
hereof;
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(ii) A single lump sum payment of any accrued but unpaid incentive
compensation as set forth in Paragraph 2C hereof due to you at the date of such
termination for the fiscal year ending immediately prior to the date of such
termination, which shall be paid no later than ninety (90) days after the end of
such fiscal year;
(iii) A single lump sum payment of any incentive compensation set
forth in Paragraph 2C hereof earned in the fiscal year of the termination of
your employment, which incentive compensation shall be determined on the basis
of the Company's operations through June 30 of such fiscal year, and shall be
pro-rated through the last day of your employment, and shall be paid no later
than ninety (90) days after the end of such fiscal year; and
(iv) The Deferred Compensation as set forth in Paragraph 2D hereof,
with payment of the Monthly Amount beginning on the first day of the month
immediately succeeding the last day of your employment.
The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
10. SOURCE OF PAYMENTS. All payments provided for hereunder shall be
paid from the general funds of the Company. The Company may, but shall not be
required to, make any investment or investments whatsoever, including the
purchase of a life insurance contract or contracts on your life, to provide it
with funds to satisfy its obligations hereunder; provided, however, that neither
you nor your beneficiary or beneficiaries, nor any other person, shall have any
right, title, or interest whatsoever in or to any such investment or contracts.
If the Company shall elect to purchase a life insurance contract or contracts on
your life to provide the Company with
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funds to satisfy its obligations hereunder, the Company shall at all times be
the sole and complete owner and beneficiary of such contract or contracts, and
shall have the unrestricted right to use all amounts and to exercise all options
and privileges thereunder without the knowledge or consent of you, your
beneficiary or beneficiaries, or any other person, it being expressly agreed
that neither you, any such beneficiary or beneficiaries, nor any other person
shall have any right, title, or interest whatsoever in or to any such contract
or contracts. Notwithstanding anything to the contrary contained in this
Paragraph 10, if the Company purchases any such contract or contracts, you shall
have the right, upon the termination of your employment by the Company to
purchase as soon after such termination as possible any one or more of such
contracts for an amount equal to the cash surrender value thereof; provided,
however, that you notify the Company in writing of your intention to make any
such purchase no later than thirty (30) days subsequent to such termination.
11. ENFORCEMENT OF RIGHTS. Nothing in this Agreement, and no action
taken pursuant to its terms, shall create or be construed to create a trust or
escrow account of any kind, or a fiduciary relationship between the Company and
you, your beneficiary or beneficiaries, or any other person. You, your
beneficiary or beneficiaries, and any other person or persons claiming a right
to any payments or interests hereunder shall rely solely on the unsecured
promise of the Company, and nothing herein shall be construed to give you, your
beneficiary or beneficiaries, or any other person or persons, any right, title,
interest, or claim in or to any specific asset, fund, reserve, account, or
property of any kind whatsoever owned by the Company or in which it may have any
right, title, or interest now or in the future, but you or your beneficiary or
beneficiaries shall have the right to enforce a claim for benefits hereunder
against the Company in the same manner as any unsecured creditor.
Notwithstanding anything to the contrary set forth in this Paragraph 11, the
Company
20
agrees to consider the feasibility of paying to a so-called "rabbi trust," as
described in the Internal Revenue Service's Revenue Procedure 92-64, the amounts
necessary for the Company to fund the Deferred Compensation set forth in
Paragraph 2D hereof.
12. INVENTIONS AND CONFIDENTIAL INFORMATION. So long as you shall be
employed by the Company, you agree promptly to make known to the Company the
existence of any and all creations, inventions, discoveries, and improvements
made or conceived by you, either solely or jointly with others, during the term
of this Agreement and for three (3) years thereafter, and to assign to the
Company the full exclusive right to any and all such creations, inventions,
discoveries, and improvements relating to any subject matter with which the
Company is now or shall become concerned, or relating to any other subject
matter if made with the use of the Company's time, materials, or facilities. To
the fullest extent permitted by law, any of the foregoing inventions shall be
considered as "work-made-for-hire" and the Company shall be the owner thereof.
You further agree, without charge to the Company but at its expense, if
requested to do so by the Company, to execute, acknowledge, and deliver all
papers, including applications or assignments for patents, trademarks, and
copyrights, and papers relating thereto, as may be considered by the Company to
be necessary or desirable to obtain or assign to the Company any and all
patents, trademarks, or copyrights for any and all such creations, inventions,
discoveries, and improvements in any and all countries, and to vest title
thereto in the Company in all such creations, inventions, discoveries, and
improvements as indicated above conceived during your employment by the Company,
and for three (3) years thereafter. You further agree that you will not disclose
to any third person any trade secrets or proprietary information of the Company,
or use any trade secrets or proprietary information of the Company in any
manner, except in the pursuit of your duties as an employee of the Company, and
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that you will return to the Company all materials (whether originals or copies)
containing any such trade secrets or proprietary information (in whatever
medium) on termination of your employment by the Company. The obligations set
forth in this Paragraph 12 shall survive the termination of your employment
hereunder. This Paragraph 12 replaces the agreement executed by you on March 23,
2001, which prior agreement is now null and void.
13. RESTRICTIVE COVENANT. For a period of three (3) years after the
termination of your employment by the Company, you shall not, in any
geographical location at which there is at that time business conducted by the
Company which was conducted by the Company at the date of such termination,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with, the ownership, management,
operation, or control of any business similar to or competitive with such
business conducted by the Company without the written consent of the Company;
provided, however, that you may have an ownership interest of up to one percent
(1%) in any entity, notwithstanding that such entity is directly competitive
with any business conducted by the Company at the date of such termination.
14. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or the breach or asserted breach thereof, shall be settled by
arbitration to be held in New York, New York in accordance with the rules then
obtaining of the American Arbitration Association, and the judgment upon the
award rendered may be entered in any court having jurisdiction thereof. The
arbitrator shall determine which party shall bear the costs of such arbitration,
including attorneys' fees.
15. NON-ASSIGNABILITY. Your rights and benefits hereunder are personal
to you, and shall not be alienated, voluntarily or involuntarily, assigned or
transferred.
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16. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, and their respective assigns, successors, executors, administrators, and
heirs. In the event the Company becomes a party to any merger, consolidation, or
reorganization, this Agreement shall remain in full force and effect as an
obligation of the Company or its successors in interest. None of the payments
provided for by this Agreement shall be subject to seizure for payment of any
debts or judgments against you or your beneficiary or beneficiaries, nor shall
you or any such beneficiary or beneficiaries have any right to transfer or
encumber any right or benefit hereunder; provided, however, that the
undistributed portion of the Deferred Compensation shall at all times be subject
to set-off by the Company for debts owed by you to the Company.
17. ENTIRE AGREEMENT. This Agreement contains the entire agreement
relating to your employment by the Company. It may not be changed orally, and
may be changed only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, deletion, or
revocation is sought.
18. NOTICES. All notices and communications hereunder shall be in
writing, sent by certified or registered mail, return receipt requested, postage
prepaid; by facsimile transmission, time and date of receipt noted thereon; or
by hand-delivery properly receipted. The actual date of receipt as shown by the
receipt therefor shall determine the time at which notice was given. All
payments required hereunder by the Company to you shall be sent postage prepaid,
or, at your election, shall be transferred to you electronically to such bank as
you designate in writing to the Company, including designation of the applicable
electronic address. The foregoing items (other than any electronic transfer to
you) shall be addressed as follows (or to such other address as the Company and
you may designate in writing from time to time):
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To the Company: To you:
Xxxxxxx Technology Company, Inc. Xxxx X. Xxxxx, Xx.
00 Xxxxxxxx Xxxxx 0 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000 Xxxxxxx, XX 00000
Facsimile: 000 000-0000 Facsimile: 000 000-0000
19. NEW YORK LAW TO GOVERN. This Agreement shall be governed by, and
construed and enforced according to, the domestic laws of the State of New York
without giving effect to the principles of conflict of laws thereof.
Very truly yours,
XXXXXXX TECHNOLOGY COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx
Chairman and Chief Executive
Officer
AGREED TO AND ACCEPTED:
/s/ Xxxx X. Xxxxx, Xx.
------------------------------
Xxxx X. Xxxxx, Xx.
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