EMPLOYMENT AGREEMENT
Exhibit
10.2
This EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of April 3, 2011
between XxXXXXX, INC., a Delaware corporation (the “Company”) and Xxxxxx X. Xxxxxxxxxx (the
“Executive”) (each of the foregoing individually a “Party” and collectively the
“Parties”).
WHEREAS, concurrently with the execution of this Agreement, the Company, Xxxxxxxx
Incorporated,, a corporation organized and existing under the laws of Delaware (“Parent”),
and DLBMS, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Parent
(“Merger Subsidiary”) have entered into an Agreement and Plan of Merger (the “Merger
Agreement”), pursuant to which the Company will become a wholly-owned subsidiary of Parent (the
“Merger”);
WHEREAS, the Executive is currently employed as the Vice President, Chief Financial Officer
and Secretary of the Company;
WHEREAS, in order to induce Parent to enter into the Merger Agreement and consummate the
Merger, the Executive is willing to enter into this Agreement;
WHEREAS, Parent would not have entered into the Merger Agreement nor consummated the
transactions contemplated thereby without the Executive’s agreement to enter into this Agreement
with the Company;
NOW, THEREFORE, in consideration of the Merger and the covenants, promises and representations
set forth herein, and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto, intending to be legally bound, hereby agree as
follows:
1. Effectiveness. Except as provided in the last sentence of this section, this
Agreement shall constitute a binding agreement between the parties only upon the Effective Time (as
defined in the Merger Agreement). Unless and until the Merger is consummated, this Agreement shall
be of no effect and shall not confer any rights or obligations upon the Executive, the Company or
Parent. Effective upon the Effective Time this Agreement shall replace and supersede that certain
Executive Severance Agreement, dated January 11, 2005, between the Executive and the Company (the
“Severance Agreement”), which Severance Agreement shall, as of the Effective Time, be null and void
and of no further force or effect. Anything herein to the contrary notwithstanding, effective
immediately no Change of Control shall be deemed to exist or to have occurred under the Severance
Agreement as a result of the Company’s Board of Directors approving, adopting or agreeing to
recommend the Merger Agreement or the Company entering into the Merger Agreement.
2. Term. Subject to the provisions for earlier termination hereinafter provided, the
Executive’s employment hereunder shall be for a term (the “Term”) commencing on the Closing
Date (as defined in the Merger Agreement) and ending on the first anniversary of the Closing Date.
3. Employment. Subject to the terms set forth herein, during the Term, the Executive
will devote his full business time and use his best efforts to advance the business and welfare of
the Company and its Affiliates (including, following the Effective Time, Parent and its
subsidiaries), and will not engage in any other employment or business activities or any other
activities for any direct or indirect remuneration that would be harmful or detrimental to the
business and affairs of the Company or Parent, or that would materially interfere with his duties
hereunder. During the Term it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the performance of the Executive’s
assigned responsibilities. To the extent that any such activities have been conducted by the
Executive prior to the Effective Time, the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the Effective Time shall not
hereafter be deemed to interfere with the performance of the Executive’s responsibilities to the
Company.
4. Position. During the Term, the Executive shall serve as the Vice President of
Finance of the Company, and shall report directly to the Chief Financial Officer of Parent (the
“Reporting Officer”). During the Term, the Executive shall render such other services for
the Company and its Affiliates as the Reporting Officer may from time to time reasonably request
and as shall be consistent with the Executive’s position and responsibilities.
5. Compensation.
(a) Base Salary. During the Term, the Executive shall receive a base salary (the
“Base Salary”) at a rate of $327,500 per annum, which shall be paid in accordance with the
customary payroll practices of the Company.
(b) Bonus. Subject to the Executive’s continued employment with the Company through
the end of the Term, in addition to the Base Salary, the Executive shall earn a cash bonus of
$123,000 (the “Bonus”). The Bonus shall be payable no later than thirty (30) days
following the end of the Term.
(c) Participation in Benefit Plans. During the Term, the Executive shall be entitled
to participate in the Company’s 401(k) plan, deferred compensation plans, and in the medical,
dental, vision, life, disability and accident insurance programs maintained by the Company that
were available to the Executive on the date of this Agreement, in each case, in accordance with the
terms thereof as in effect on this Agreement. In addition, during the Term, the Executive shall be
entitled to receive perquisites to which the Executive was entitled as of the date of this
Agreement, consisting of an automobile allowance or company car, payment of or reimbursement for
the cost of club membership and financial planning assistance, to the extent made available to the
Executive by the Company on the date of this Agreement. Notwithstanding anything herein to the
contrary, the Company and/or Parent may reduce the benefit and perquisite plans and programs made
available to the Executive to the extent such a reduction applies to all salaried employees who are
exempt from the wage and hour provisions of the Fair Labor Standards Act.
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6. Termination of Employment. The Executive’s employment with the Company may be
terminated by either Party at any time and for any or no reason. Notwithstanding any other
provision of this Agreement, the provisions of this Section 6 shall exclusively govern the
Executive’s rights to compensation and benefits upon termination of employment with the Company and
its Affiliates.
(a) Notice of Termination. Any termination of the Executive’s employment by the
Company or by the Executive under this Section 6 (other than as a result of the Executive’s death)
shall be communicated by a written notice (a “Notice of Termination”) to the other Party
specifying a date of termination (the “Date of Termination”) which, shall be no more than
ninety (90) days following the date of such notice; provided, however, that during the period
beginning on the date of the Notice of Termination and ending on the Date of Termination, the
Company may, in its sole discretion, place the Executive on paid leave of absence during which he
shall continue to be deemed to be an employee of the Company for all purposes under this Agreement,
but only be involved in Company matters to the extent requested by the Company.
(b) Accrued Rights. Upon a termination of the Executive’s employment for any reason,
the Executive (or the Executive’s estate) shall be entitled to receive the sum of the Executive’s
Base Salary through the Date of Termination not theretofore paid; any expenses owed to the
Executive under the Company’s expense reimbursement policy; and any amount arising from the
Executive’s participation in, or benefits under, any employee benefit plans, programs or
arrangements (including without limitation, any disability or life insurance benefit plans,
programs or arrangements), which amounts shall be payable in accordance with the terms and
conditions of such employee benefit plans, programs or arrangements (collectively, the “Accrued
Rights”).
(c) Termination by the Company without Cause or by the Executive for Good Reason.
(i) If the Executive’s employment is terminated during the Term (x) by the Executive
for Good
Reason during the first three (3) months of the Term, (y) by the Company without Cause (and not by
reason of termination by the Company for Cause or by reason of the Executive’s death or Disability)
during the first three (3) months of the Term, or (z) by either the Executive or the Company for
any reason at any time after the first three (3) months of the Term, then, in addition to the
Accrued Rights, the Company shall pay to the Executive a lump sum cash severance payment equal to
the Base Salary and Bonus, to the extent not previously paid, that would have been payable to the
Executive had the Executive remained employed by the Company through the end of the Term, plus all
perquisites stated in Section 5(c). The lump sum payment described in the preceding sentence shall
be paid to the Executive within thirty (30) days following the Date of Termination; provided that
the Executive has executed (within twenty-one (21) days following the Date of Termination a waiver
and general release of claims agreement in the form attached to this Agreement as Exhibit A and
that such general release of claims has become effective and irrevocable pursuant to its terms. In
the event the thirty (30) day period includes two consecutive taxable years, the payment shall be
made in the second taxable year. Such general release of claims shall not require the Executive to
waive any rights under the terms of the Agreement or any other benefit plan.
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(ii) Upon a termination of employment described in this Section 6(c), the Executive shall
also
be entitled to receive, to the extent not previously paid, a lump sum cash payment equal $991,000,
reduced by any amount paid on or prior to the Closing Date under or in respect of performance units
outstanding as of the date hereof (the “LTIP Amount”) under the Company’s 2004 Long Term
Incentive Plan (the “LTIP”), payable to the Executive within thirty (30) days following the
Date of Termination, payment of which shall be deemed to satisfy all obligations of the Company
and/or Parent to the Executive under the LTIP and any award agreement entered into there under.
(iii) Upon a termination of employment described in Section 6(c)(i), the Executive shall
also
be entitled to receive the benefits described in Section 5(c) that would have been received by the
Executive had the Executive remained employed by the Company through the end of the Term.
(iv) For the avoidance of doubt, following the Executive’s termination of employment as
described in Section 6(c)(i), the Executive shall have no further rights to any compensation or any
other benefits from the Company or Parent, except as set forth in this Section 6(c) or pursuant to
the terms of any benefit plans or programs.
(v) For purposes of this Section 6(c), the Executive’s employment with the Company
shall have
terminated only when the Executive incurs a separation from service from the Company within the
meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code and Treasury and Internal Revenue
Service guidance under such Code Section (“Section 409A”). For purposes of Section
6(c)(iii), (i) the amount of expenses eligible for reimbursement or in-kind benefits provided
during a calendar year shall not affect the expenses eligible for reimbursement or in-kind benefits
to be provided in any other calendar year, (ii) the reimbursement of an eligible expense must be
made on or before the last day of the calendar year following the calendar year in which the
expense is incurred, and (iii) the right to reimbursement of expenses or to in-kind benefits is not
subject to liquidation or exchange of another benefit.
(d) Termination by the Company for Cause; Resignation without Good Reason; death;
Disability. If, during the first three (3) months of the Term, the Executive’s employment is
terminated (i) by the Company for Cause, (ii) upon the Executive’s death, (iii) upon the
Executive’s Disability, or (iv) upon the Executive’s resignation without Good Reason, the Executive
shall only be entitled to receive (a) the Accrued Rights, (b) the LTIP Amount to the extent not
previously paid (payment of which shall be deemed to satisfy all obligations of the Company and/or
Parent to the Executive under the LTIP and any award agreement entered into thereunder), and (c)
any benefits due under any benefit plans or programs, and the Executive shall have no further
rights to any compensation or any other benefits from the Company or Parent except as set forth in
this Section 6(d).
(e) Expiration of the Term. If the Executive’s employment terminates on or after the
expiration of the Term for any reason, the Executive shall not be entitled to any additional
compensation other than the Accrued Rights.
(f) No Mitigation. The Company’s obligation to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be affected by
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any set-off, counterclaim, recoupment, defense or other claim, right or action which the
Company may have against the Executive. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment.
(g) Return of Property. Upon termination of the Executive’s employment with the
Company and its Affiliates, whether voluntary or involuntary, the Executive shall immediately
deliver to the Company (i) all physical, computerized, electronic or other types of records,
documents, proposals, notes, lists, files and any and all other materials, including computerized
and electronic information, that refers, relates or otherwise pertains to the Company or any
Affiliate (or business dealings thereof) that are in the Executive’s possession, subject to the
Executive’s control or held by the Executive for others; and (ii) all property or equipment that
the Executive has been issued by the Company or any Affiliate during the course of his employment
or property or equipment thereof that the Executive otherwise possesses, including any computers,
cellular phones, pagers and other devices. The Executive acknowledges that he is not authorized to
retain any physical, computerized, electronic or other types of copies of any such physical,
computerized, electronic or other types of records, documents, proposals, notes, lists, files or
materials, and is not authorized to retain any other property or equipment of the Company or any
Affiliate. The Executive further agrees that the Executive will immediately forward to the Company
(and thereafter destroy any electronic copies thereof) any business information relating to the
Company or any Affiliate that has been or is inadvertently directed to the Executive following the
Executive’s last day of the Executive’s employment. The provisions of this Section 6(g) are in
addition to any other written obligations on the subjects covered herein that the Executive may
have with the Company and its Affiliates, and are not meant to and do not excuse such obligations.
Upon the termination of his service with the Company, the Executive shall, upon the Company’s
request, promptly execute and deliver to the Company a certificate (in form and substance
satisfactory to the Company) to the effect that the Executive has complied with the provisions of
this Section 6(g).
(h) Resignation of Offices. Promptly following the termination of the Executive’s
employment with the Company for any reason other than his death, the Executive shall promptly
deliver to the Company reasonably satisfactory written evidence of the Executive’s resignation from
all positions that the Executive may then hold as an employee, officer or director of the Company
or any Affiliate. The Company shall be entitled to withhold payment of any amounts otherwise due
pursuant to this Section 6 until the Executive has complied with the provisions of this Section
6(h).
(i) Ongoing Assistance. Following the termination of the Executive’s employment with
the Company and its Affiliates, the Executive agrees to make himself reasonably available, subject
to the Executive’s other personal and professional commitments and obligations, to provide
information and other assistance as reasonably requested by the Company (and, at the reasonable
expense of the Company), with respect to pending, threatened or potential claims about which the
Executive has personal knowledge as a result of the Executive’s supervision or other involvement
within such claims or matters performed in connection with the Executive’s employment. In all
events, the Company shall reimburse the
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Executive or pay on the Executive’s behalf, all direct expenses incurred (including any
travel) in connection with the Executive’s fulfillment of the obligations set forth in this Section
6(i).
7. Amendment of LTIP. The Executive hereby agrees and consents to the Second
Amendment to the LTIP previously adopted by the Company. The Company and the Executive
further agree that notwithstanding anything herein or in the LTIP to the contrary, to the
extent payable, the LTIP Amount will in all events be paid to the Executive no later than
March 15 of the year following the year in which the Closing Date occurs. In addition, the
Executive hereby agrees that for all purposes under the LTIP, the term “Good Reason” shall
not have the meaning set forth in Section 10.1 of the LTIP, but instead shall mean the
occurrence of any one or more of the following:
(i) the requirement that the Executive be based at a location which is at least
seventy-five (75) miles further from his primary residence at the time such requirement is
imposed than is such residence from the Company’s office as of Effective Time, except for
required travel related to the business of the Company to the extent substantially
consistent with the Executive’s business obligations;
(ii) a reduction in the Base Salary; and
(iii) the Executive’s involuntary termination of employment with the Company for a
reason other than Cause or other termination of employment as described in Section 6(c).
8. Section 409A. It is the intent of the Company that nothing in this Agreement shall
violate the provisions of Section 409A and that all provisions of the Agreement be interpreted in
accordance therewith. Accordingly, notwithstanding anything contained to the contrary in the
Agreement, no amount shall be payable to the Executive pursuant to the Agreement before such
payment fully complies with Section 409A, and, to the extent that any regulations or guidance
issued under Section 409A after the date of the Agreement would result in the Executive being
subject to payment of interest or tax penalty under Section 409A, the Company shall amend the
Agreement to the extent necessary to bring the Agreement into compliance with Section 409A.
9. Specified Employee. If the Executive is a “specified employee” as defined in
Section 409A, no benefit or payment that is subject to Section 409A (after taking into account all
applicable exceptions to Section 409A, including but not limited to the exceptions for short-term
deferrals, for reimbursements and certain other separation payments) shall be made under this
Agreement on account of the Executive’s separation from service until the later of the date
prescribed for payment in this Agreement or the first day of the seventh month that begins after
the date of the Executive’s separation from service.
10. Severability. If any portion or provision of this Agreement shall to any extent
be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion
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and provision of this Agreement shall be valid and enforceable to the fullest extent permitted
by law.
11. Governing Law and Jurisdiction. This Agreement shall be construed and enforced
under and be governed in all respects by the laws of Missouri, without regard to the conflict of
laws principles thereof. The Company and the Executive hereby consent and submit to the personal
jurisdiction and venue of any state or federal court located in the State of Missouri for
resolution of any and all claims, causes of action or disputes arising out of or related to this
Agreement.
12. Assignment. Neither the Company nor the Executive may make any assignment of this
Agreement or any interest herein, by operation of law or otherwise, without the prior written
consent of the other; provided, however, that the Company may assign its rights and obligations
under this Agreement without the consent of the Executive to Parent or any of its Affiliates. This
Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their
respective successors, executors, administrators, heirs and permitted assigns.
13. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of either party to require the performance of
any term or obligation of this Agreement, or the waiver by either party of any breach of this
Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.
14. Notices. Any and all notices, requests, demands and other communications provided
for by this Agreement shall be in writing and shall be effective when delivered in person,
consigned to a reputable national courier service or deposited in the United States mail, postage
prepaid, registered or certified, and addressed to the Executive at his last known address on the
books of the Company or, in the case of the Company, to Parent at its principal place of business,
attention of the Chief Executive Officer of Parent or to such other address as any Party may
specify by notice to the other actually received.
15. Entire Agreement. This Agreement, together with the LTIP, any confidentiality,
assignment of inventions, non-competition or other similar agreement between the Company and the
Executive, constitutes the entire agreement among the Parties hereto pertaining to the subject
matter hereof and supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions, whether oral or written, of the Parties with respect to such subject matter,
including, without limitation, the Severance Agreement. For the avoidance of doubt, any
confidentiality, assignment of inventions, non-competition or other similar agreement between the
Company and the Executive shall remain in full force and effect following the executive of this
Agreement and the consummation of the Merger.
16. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by an expressly authorized representative of the Company.
17. Headings. The headings and captions in this Agreement are for convenience only,
and in no way define or describe the scope or content of any provision of this Agreement.
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18. Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be an original and all of which together shall constitute one and the same instrument.
19. Third Party Beneficiary. Parent shall be a third party beneficiary of this
Agreement.
20. Costs and Attorney Fees. In the event of a dispute regarding the terms of this
Agreement or each party’s obligations herein, the prevailing party in any such dispute shall be
entitled to recover all costs incurred to enforce the terms of this Agreement, including all
reasonable attorney’s fees.
21. Definitions. Words or phrases that are initially capitalized or are within
quotation marks shall have the meanings provided in this Section 21 and as provided elsewhere
herein. Solely for purposes of this Agreement, the following definitions apply:
(a) “Affiliates” means, (i) with respect to the Company or Parent, all persons and
entities directly or indirectly controlling, controlled by or under common control with the Company
or Parent, as applicable, where control may be by management authority, contract or equity
interest, and (ii) with respect to Executive, all entities directly or indirectly controlled by or
under common control with Executive, where control may be by management authority, contract or
equity interest.
(b) “Cause” means:
(i) The willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for such performance is
delivered to the Executive by the Board which specifically identifies the manner in which the Board
believes that the Executive has not substantially performed the Executive’s duties and the
Executive has been provided a reasonable period of time, but no less than fifteen (15) days, to
cure said deficiency identified by the Board, or
(ii) The willful engaging by the Executive in (A) illegal conduct (other than minor
traffic
offenses), or (B) conduct which is in breach of the Executive’s fiduciary duty to the Company and
which is demonstrably injurious to the Company, its reputation or its business prospects.
For purposes of this provision, no act or failure to act on the part of the Executive shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer of the Company or
based upon the advice of counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best interests of the Company. The
cessation of employment of the Executive shall not be deemed to be for Cause unless and until there
shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative
vote of not less than three-quarters of the entire membership of the Board at a
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meeting of the Board called and held for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity to be heard before the Board), finding that, in
the good-faith opinion of the Board, the Executive is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.
(c) “Disability” means the absence of the Executive from the Executive’s duties with
the Company on a full-time basis for one hundred eighty (180) consecutive business days as a result
of incapacity due to mental or physical illness which is determined to be total, and permanent by a
physician selected by the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative (such agreement as to acceptability not to be withheld
unreasonably).
(d) “Good Reason” means:
(i) any failure by the Company to comply with any of the provisions of this Agreement, other
than an isolated failure not occurring in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive and other than a failure to comply with
Section 5(c) solely by reason of a reduction in 401(k) plan and insurance benefits that applies to
all salaried employees who are exempt from the wage and hour provisions of the Fair Labor Standards
Act;
(ii) the Company’s requiring the Executive to be based at any office or location other
than
the Executive’s principal business location as of immediately prior to the Effective Time; or
(iii) any purported termination by the Company of the Executive’s employment otherwise
than as
expressly permitted by this Agreement.
[Remainder of page is intentionally blank.]
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IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have hereunto
set their hands under seal, as of the date first above written.
| EXECUTIVE: |
||||
| /s/ Xxxxxx X. Xxxxxxxxxx | ||||
| Xxxxxx X. Xxxxxxxxxx | ||||
| XxXXXXX, INC., a Delaware corporation: | ||||
| By: | /s/ Xxxxx X. XxXxxxx | |||
| Name: | Xxxxx X. XxXxxxx | |||
| Title: | Chief Executive Officer and President | |||
SIGNATURE PAGE TO EMPLOYMENT AGREEMENT
