1
XXXXXXXX CORPORATION
EMPLOYMENT AGREEMENT
--------------------
This agreement ("Agreement") has been entered into this
2nd day of April, 1997, by and between Xxxxxxxx Corporation, a
Missouri corporation ("Company"), and Xxxx X. Xxxxxx, an individual
("Executive").
RECITALS
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its
stockholders to reinforce and encourage the continued attention and
dedication of the Executive to the Company as a member of the
Company's management and to assure that the Company will have the
continued dedication of the Executive, notwithstanding the
possibility or occurrence of a Triggering Transaction (as defined
below) with respect to the Company or the Operating Line of
Business (as defined below). The Board desires to provide for the
continued employment of the Executive on terms competitive with
those of other corporations, and the Executive is willing to
rededicate himself and continue to serve the Company.
Additionally, the Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a potential or pending
Triggering Transaction and to encourage the Executive's full
attention and dedication to the Company currently and in the event
of any potential or pending Triggering Transaction, and to provide
the Executive with compensation and benefits arrangements upon any
breach of this Agreement by the Company or upon a termination of
employment either immediately prior to or after a Triggering
Transaction which ensure that the compensation and benefits
expectations of the Executive will be satisfied. Therefore, in
order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall have
the meanings specified below, unless the context plainly requires
a different meaning.
1.1(a) "ACCRUED COMPENSATION" has the meaning
set forth in Section 4.5 of this Agreement.
1.1(b) "ACCRUED OBLIGATIONS" has the meaning set
forth in Section 4.1(a) of this Agreement.
1.1(c) "ANNUAL BASE SALARY" has the meaning set
forth in Section 2.4(a) of this Agreement.
1.1(d) "BOARD" means the Board of Directors of
the Company.
1.1(e) "CAUSE" has the meaning set forth in
Section 3.3 of this Agreement.
2
1.1(f) "CHANGE IN CONTROL" means:
(i) The acquisition by any individual,
entity or group, or a Person (within the
meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act) of ownership of 30%
or more of either (a) the then
outstanding shares of common stock of the
Company (the "Outstanding Company Common
Stock") or (b) the combined voting power
of the then outstanding voting securities
of the Company entitled to vote generally
in the election of directors (the
"Outstanding Company Voting Securities");
or
(ii) Individuals who, as the date
hereof, constitute the Board (the
"Incumbent Board") cease for any reason
to constitute at least a majority of the
Board; provided, however, that any
-----------------
individual becoming a director subsequent
to the date hereof whose election, or
nomination for election by the Company's
stockholders, was approved by a vote of
at least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were
a member of the Incumbent Board, but
excluding, as a member of the Incumbent
Board, any such individual whose initial
assumption of office occurs as a result
of either an actual or threatened
election contest (as such terms are used
in Rule l4a-11 of Regulation l4A
promulgated under the Exchange Act) or
other actual or threatened solicitation
of proxies or consents by or on behalf of
a Person other than the Board; or
(iii) Approval by the stockholders of
the Company of a reorganization, merger
or consolidation, in each case, unless,
following such reorganization, merger or
consolidation, (a) more than 50% of,
respectively, the then outstanding shares
of common stock of the corporation
resulting from such reorganization,
merger or consolidation and the combined
voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the
election of directors is then
beneficially owned, directly or
indirectly, by all or substantially all
of the individuals and entities who were
the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially
the same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities, as
the case may be, (b) no Person
beneficially owns, directly or
indirectly, 30% or more of, respectively,
the then outstanding shares of common
stock of the corporation resulting from
such reorganization, merger or
consolidation or the combined voting
power of the then outstanding voting
securities of such corporation, entitled
to vote generally in the election of
directors and (c) at least a majority of
the members of the board of directors of
the corporation resulting from such
reorganization, merger or consolidation
were members of the Incumbent Board at
the time of the execution of the initial
agreement providing for such
reorganization, merger or consolidation;
or
-2-
3
(iv) Approval by the stockholders of the
Company of (a) a complete liquidation or
dissolution of the Company or (b) the
sale or other disposition of all or
substantially all of the assets of the
Company, other than to a corporation,
with respect to which following such sale
or other disposition, (1) more than 50%
of, respectively, the then outstanding
shares of common stock of such
corporation and the combined voting power
of the then outstanding voting securities
of such corporation entitled to vote
generally in the election of directors is
then beneficially owned, directly or
indirectly, by all or substantially all
of the individuals and entities who were
the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such sale or other
disposition in substantially the same
proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company
Common Stock and Outstanding Company
Voting Securities, as the case may be,
(2) no Person beneficially owns, directly
or indirectly, 30% or more of,
respectively, the then outstanding shares
of common stock of such corporation and
the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in
the election of directors and (3) at
least a majority of the members of the
board of directors of such corporation
were members of the Incumbent Board at
the time of the execution of the initial
agreement or action of the Board
providing for such sale or other
disposition of assets of the Company.
1.1(g) "COMPANY" has the meaning set forth in
the first paragraph of this Agreement and, with
regard to successors, in Section 6.2 of this
Agreement.
1.1(h) "CODE" shall mean the Internal Revenue
Code of 1986, as amended.
1.1(i) "CURRENT TARGET BONUS" has the meaning
set forth in Section 4.1(a) of this Agreement.
1.1(j) "DATE OF TERMINATION" has the meaning set
forth in Section 3.6 of this Agreement.
1.1(k) "DISABILITY" has the meaning set forth in
Section 3.2 of this Agreement.
1.1(l) "DISABILITY EFFECTIVE DATE" has the
meaning set forth in Section 3.2 of this Agreement.
1.1(m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the
stock of the Operating Line of Business
that is or becomes a separate
corporation, limited liability
corporation, partnership or other
business entity, the sale, exchange,
transfer, distribution or other
disposition of the ownership, either
beneficially or of record or both, by the
Company of more than 50% of either (a)
the then outstanding shares of common
stock (or the equivalent equity
interests) of the Operating Line of
Business, or (b) the combined voting
power of the then outstanding voting
-3-
4
securities of the Operating Line of
Business entitled to vote generally in
the election of the Board or the
equivalent governing body of the
Operating Line of Business;
(ii) when used with reference to the
merger or consolidation of the Operating
Line of Business that is or becomes a
separate corporation, limited liability
corporation, partnership or other
business entity, any such transaction
that results in the Company owning,
either beneficially or of record or both,
less that 50% of either (a) the then
outstanding shares of common stock (or
the equivalent equity interests) of the
Operating Line of Business, or (b) the
combined voting power of the then
outstanding voting securities of the
Operating Line of Business entitled to
vote generally in the election of the
Board or the equivalent governing body of
the Operating Line of Business; or
(iii) when used with reference to the
assets of the Operating Line of Business,
the sale, exchange, transfer,
liquidation, distribution or other
disposition of assets of the Operating
Line of Business (a) having a fair market
value (as determined by the Incumbent
Board) aggregating more than 50% of the
aggregate fair market value of all of the
assets of the Operating Line of Business
as of the Triggering Transaction Date,
(b) accounting for more than 50% of the
aggregate book value (net of depreciation
and amortization) of all of the assets of
the Operating Line of Business, as would
be shown on a balance sheet for the
Operating Line of Business, prepared in
accordance with generally accepted
accounting principles then in effect, as
of the Triggering Transaction Date, or
(c) accounting for more than 50% of the
net income of the Operating Line of
Business, as would be shown on an income
statement, prepared in accordance with
generally accepted accounting principles
then in effect, for the 12 months ending
on the last day of the month immediately
preceding the month in which the
Triggering Transaction Date occurs.
1.1(n) "EFFECTIVE DATE" means the date of this
Agreement.
1.1(o) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on the
later of (i) a date two years after the Effective
Date ("Ending Date") or (ii) the same date as the
Ending Date of any succeeding fiscal year during
which notice is given by either party (as described
in Section 1.1(aa) of this Agreement) of such
party's intent not to renew this Agreement.
1.1(p) "EXCHANGE ACT" means the Securities
Exchange Act of 1934, as amended.
1.1(q) "EXCISE TAX" has the meaning set forth in
Section 4.2(f) of this Agreement.
1.1(r) "GOOD REASON" has the meaning set forth
in Section 3.4 of this Agreement.
1.1(s) "GROSS-UP PAYMENT" has the meaning set
forth in Section 4.2(f) of this Agreement.
-4-
5
1.1(t) "INCENTIVE BONUS" has the meaning set
forth in Section 2.4(b) of this Agreement.
1.1(u) "INCUMBENT BOARD" has the meaning set
forth in Section 1.1(f)(ii) of this Agreement.
1.1(v) "NOTICE OF TERMINATION" has the meaning
set forth in Section 3.5 of this Agreement.
1.1(w) "OPERATING LINE OF BUSINESS" means the
following line of business of the Company, whether
operated as a division or as a separate subsidiary:
textile and laundry services, which provide
textiles and laundry service, principally to health
care institutions, and, to a more limited extent,
to hotels, casinos, motels and restaurants in or
near major metropolitan areas of the United States.
1.1(x) "OTHER BENEFITS" has the meaning set
forth in Section 4.1(c) of this Agreement.
1.1(y) "OUTSTANDING COMPANY COMMON STOCK" has
the meaning set forth in Section 1.1(f)(i) of this
Agreement.
1.1(z) "OUTSTANDING COMPANY VOTING SECURITIES"
has the meaning set forth in Section 1.1(f)(i) of
this Agreement.
1.1(aa) "PAYMENT" has the meaning set forth in
Section 4.2(f) of this Agreement.
1.1(bb) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the Exchange
Act.
1.1(cc) "TERM" means the period that begins on
the Effective Date and ends on the earlier of: (i)
the Date of Termination as defined in Section 3.6
of this Agreement, or (ii) the close of business on
the later of the Ending Date of the initial term or
any renewal term as set forth in Section 2.1 of
this Agreement.
1.1(dd) "TRIGGERING TRANSACTION" means (i) a
Change in Control of the Company or (ii) a
Disposition of a Major Part of the Operating Line
of Business.
1.1(ee) "TRIGGERING TRANSACTION DATE" shall mean
the date of the Triggering Transaction.
1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine
gender, words in the singular include the plural, and words in the
plural include the singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the
interpretation of the text. Accordingly, as used in this
Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article or Section of the Agreement.
-5-
6
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Missouri,
without reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in
accordance with the terms and provisions of this Agreement. This
Agreement will automatically renew for annual one-year periods
unless either party gives the other written notice, within the
Ending Date of the initial term or any succeeding term, of such
party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the
Executive shall serve as President of the Operating Line
of Business, subject to the reasonable direction of the
Board and the Chief Executive Officer. The Executive
shall have such authority and shall perform such duties
as are substantially similar to the authority and duties
assigned to him on the Effective Date, subject to the
control exercised by the President of the Operating Line
of Business and the Board and the Chief Executive Officer
from time to time.
2.2(b) Throughout the Term of this Agreement (but
excluding any periods of vacation and sick leave to which
the Executive is entitled), the Executive shall devote
reasonable attention and time during normal business
hours to the business and affairs of the Company and
shall use his reasonable best efforts to perform
faithfully and efficiently such responsibilities as are
assigned to him under or in accordance with this
Agreement; provided that, it shall not be a violation of
this paragraph for the Executive to (i) serve on
corporate, civic or charitable boards or committees,
(ii) deliver lectures or fulfill speaking engagements or
(iii) manage personal investments, so long as such
activities do not significantly interfere with the
performance of the Executive's responsibilities as an
employee of the Company in accordance with this Agreement
or violate the Company's conflict of interest policy as
in effect immediately prior to the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed at the
location where the Executive was employed immediately prior to the
Effective Date, or any office of the Company or any of its
subsidiaries to which Executive shall be transferred.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first
calendar year within the Term of this Agreement, the
Executive shall receive an annual base salary ("Annual
Base Salary") of One hundred sixty thousand dollars
($160,000), which shall be paid in equal or substantially
equal semi-monthly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and shall be increased
at the discretion of the Board or the Chief Executive
Officer but shall not be reduced.
2.4(b) INCENTIVE BONUSES. In addition to Annual
Base Salary, the Executive shall be awarded the
opportunity to earn an incentive bonus on an annual basis
("Incentive
-6-
7
Bonus") under any incentive compensation plan which
are generally available to other similarly situated
executives of the Company. During the Term of this
Agreement, the annual target Incentive Bonus which the
Executive will have the opportunity to earn shall be
reviewed at least annually and be increased at the
discretion of the Board or the Chief Executive Officer.
2.4(c) WELFARE BENEFIT PLANS. Throughout the
Term of this Agreement (and thereafter), the Executive
and/or the Executive's family, as the case may be, shall
be eligible for participation in and shall receive all
benefits under welfare benefit plans, practices, policies
and programs provided by the Company (including, without
limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental
death and travel accident insurance plans and programs)
to the extent generally available to other similarly
situated executives of the Company.
2.4(d) EXPENSES. Throughout the Term of this
Agreement, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the policies,
practices and procedures generally applicable to other
similarly situated executives of the Company.
2.4(e) OFFICE AND SUPPORT STAFF. Throughout the
Term of this Agreement, the Executive shall be entitled
to an office or offices of a size and with furnishings
and other appointments, and to personal secretarial and
other assistance, at least equal to those generally
provided to other similarly situated executives of the
Company.
2.4(f) VACATION. Throughout the Term of this
Agreement, the Executive shall be entitled to paid
vacation in accordance with the plans, policies, programs
and practices generally provided with respect to other
similarly situated executives of the Company.
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), the Company may give to the Executive written notice
in accordance with Section 7.2 of its intention to terminate the
Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the thirty (30) days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean that the Executive has been
unable to perform the services required of the Executive hereunder
on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental
condition. "Disability" shall be deemed to exist when certified by
a physician selected by the Company and acceptable to the Executive
or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably). The Executive will
submit to such medical or psychiatric examinations and tests as
such physician deems necessary to make any such Disability
determination.
-7-
8
3.3 TERMINATION FOR CAUSE. The Company may terminate
the Executive's employment during the Employment Period for
"Cause," which shall mean termination based upon: (i) the
Executive's willful and continued failure to substantially perform
his duties with the Company (other than as a result of incapacity
due to physical or mental condition), after a written demand for
substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which the
Executive has not substantially performed his duties; (ii) the
Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty or breach of trust; or (iii)
the Executive's material breach of any provision of this Agreement.
For purposes of this Section, no act, or failure to act on the
Executive's part, shall be considered "willful" unless done, or
omitted to be done, without good faith and without reasonable
belief that the act or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until (i) he
receives a Notice of Termination from the Company, (ii) he is given
the opportunity, with counsel, to be heard before the Board, and
(iii) the Board finds, in its good faith opinion, the Executive was
guilty of the conduct set forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean:
3.4(a) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities,
excluding for this purpose any action not taken in bad
faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
3.4(b) (i) the failure by the Company to continue
in effect any benefit or compensation plan, stock
ownership plan, life insurance plan, health and accident
plan or disability plan to which the Executive is
entitled as specified in Section 2.4, (ii) the taking of
any action by the Company which would adversely affect
the Executive's participation in, or materially reduce
the Executive's benefits under, any plans described in
Section 2.4, or (iii) the failure by the Company to
provide the Executive with paid vacation to which the
Executive is entitled as described in Section 2.4(f);
3.4(c) a material breach by the Company of any
provision of this Agreement;
3.4(d) any purported termination by the Company
of the Executive's employment otherwise than as expressly
permitted by this Agreement; or
3.4(e) within a period ending at the close of
business on the date two (2) years after the Triggering
Transaction Date of any Change in Control, if the Company
has failed to comply with and satisfy Section 6.2 on or
after such Triggering Transaction Date.
For purposes of this Section, any good faith
determination of "Good Reason" made by the Executive
shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other
party, given in accordance with Section 7.2. For purposes of this
Agreement, a "Notice of Termination" means
-8-
9
a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii)
if the Date of Termination (as defined in Section 3.6 hereof) is
other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than fifteen (15)
days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of the Executive or the Company hereunder
or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights
hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the Date of Termination
shall be the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be,
or (iii) if the Executive's employment is terminated by the Company
other than for Cause, death or Disability, the Date of Termination
shall be the date of receipt of the Notice of Termination; provided
that if within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the
parties, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE NOT IN CONNECTION WITH
A TRIGGERING TRANSACTION. If, prior to a Triggering Transaction
during the Employment Period (except in the event that one of the
following terminations of employment occurs within the six-month
period prior to the earlier of (a) a Triggering Transaction or (b)
the execution of a definitive agreement or contract that eventually
results in a Triggering Transaction, which shall result in the
payment of severance benefits set forth in Section 4.2 of this
Agreement), the Company shall terminate the Executive's employment
without Cause, the Executive shall be entitled to the payment of
the benefits provided below as of the Date of Termination:
4.1(a) Accrued Obligations. Within thirty (30)
-------------------
days after the Date of Termination, the Company shall pay
to the Executive the sum of (1) the Executive's Annual
Base Salary through the Date of Termination to the extent
not previously paid, and (2) any accrued vacation pay; in
each case to the extent not previously paid (the "Accrued
Obligations").
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will
be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of
which is the number of days during the fiscal year for
which the Incentive Bonus is paid prior to the Date of
Termination and the denominator of which is 365. For
purposes of this Agreement, the term "Current Target
Bonus" means the Incentive Bonus that would have been
paid to the Executive for the fiscal year in which the
termination of employment occurred, if the Executive's
employment had not been so terminated and the Executive
had earned 100% of the Incentive Bonus that he could have
earned for such year.
-9-
10
4.1(b) Severance Payment. If the Date of
-----------------
Termination occurs within two years after the date
hereof, within thirty (30) days after the Date of
Termination, the Company shall pay to the Executive as
severance pay in a lump sum, in cash, an amount equal to
(i) one-twelfth the Executive's then-current Annual Base
Salary times (ii) twenty-four (24).
4.1(c) Other Benefits. To the extent not
--------------
previously paid or provided, the Company shall timely pay
or provide to the Executive and/or the Executive's family
any other amounts or benefits required to be paid or
provided for which the Executive and/or the Executive's
family is eligible to receive pursuant to this Agreement
and under any plan, program, policy or practice or
contract or agreement of the Company as those provided
generally to other peer executives and their families
("Other Benefits").
4.2 BENEFITS UPON TERMINATION IN CONNECTION WITH A
TRIGGERING TRANSACTION. If (a) a Triggering Transaction occurs
during the Employment Period and within two years after the
Triggering Transaction Date (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall
terminate employment with the Company for Good Reason, or,
--
alternatively, (b) if one of the above-described terminations of
employment occurs within the six-month period prior to the earlier
of (i) a Triggering Transaction or (ii) the execution of a
definitive agreement or contract that eventually results in a
Triggering Transaction, then the Executive shall become entitled to
the payment of the benefits as provided below as of either (y) the
Date of Termination, in the case where the sequence of the
requisite events is as set forth in subsection (a) above or (z) the
Triggering Transaction Date, in the case where the sequence of the
requisite events occurred as set forth in subsection (b) above (the
relevant date for purposes of entitlement to the benefits as set
forth in this Section 4.2 is hereinafter referred to as the
"Entitlement Date"):
4.2(a) Accrued Obligations. Within thirty (30)
-------------------
days after the Entitlement Date, the Company shall pay to
the Executive the Accrued Obligations.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will
be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of
which is the number of days during the fiscal year for
which the Incentive Bonus is paid prior to the Date of
Termination and the denominator of which is 365.
4.2(b) Severance Amount. Within thirty (30) days
----------------
after the Entitlement Date, the Company shall pay to the
Executive as severance pay in a lump sum in cash, an
amount equal to two times an amount equal to his then-
current Annual Base Salary and Current Target Bonus. In
the event such severance amount is payable pursuant to
this Section on account of a Triggering Transaction, and
the Executive is entitled to a benefit under Article IV
of the Xxxxxxxx Corporation Management Retention and
Incentive Plan (the "Management Retention Plan") on
account of a Change in Control (as defined in the
Management Retention Plan), the Executive shall be
entitled to the larger of the amounts computed pursuant
to this Section and the amounts computed pursuant to the
Management Retention Plan without regard to this Section.
Such benefit shall be in lieu of any other benefit
payable pursuant to the Management Retention Plan.
4.2(c) Stock Options. To the extent not
-------------
otherwise provided for under the terms of the Company's
stock option plans or the Executive's stock option
agreements, all stock
-10-
11
options held by the Executive that have not expired in
accordance with their respective terms shall vest and
become fully exercisable as of the Entitlement Date.
4.2(d) Stock Bonus and Incentive Plan Shares. To
-------------------------------------
the extent not otherwise provided for under the terms of
the Company's Stock Bonus and Incentive Plan, all
"Matching Shares" (as defined in such plan) held by or
for the benefit of the Executive that are unvested and
restricted at the Date of Termination shall vest and
become unrestricted as of the Entitlement Date and all
"Elected Shares" (as defined in such plan) held by or for
the benefit of the Executive that are restricted at the
Date of Termination shall become unrestricted as of the
Entitlement Date.
4.2(e) Retirement Agreement. The benefit payable
--------------------
to the Executive under the Retirement Agreement by and
between the Executive and the Company dated August 25,
1987 (the "Retirement Agreement") shall be determined on
the basis of years of service with the Company the
Executive would have completed if he had continued to be
employed by the Company until attained age 65; provided
such additional imputed service shall not exceed five (5)
years. Payments shall be made in accordance with the
terms of the Retirement Agreement.
4.2(f) Other Benefits. To the extent not
--------------
previously paid or provided, the Company shall timely pay
or provide to the Executive and/or the Executive's family
any Other Benefits required to be paid or provided for
which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under
any plan, program, policy or practice or contract or
agreement of the Company as those provided generally to
other peer executives and their families.
Any provision in any plan or program of the Company
in which Executive is a participant that precludes
Executive from competing with the Company, or denies
Executive entitlement to a benefit in the event Executive
does compete with the Company, shall be null and void.
4.2(g) Excess Parachute Payment. Anything in
------------------------
this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or
distribution by the Company to or for the benefit of
Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise but determined without regard to any additional
payments required under this Section (a "Payment") would
be subject to the excise tax imposed by Code Section 4999
(or any successor provision) or any interest or penalties
are incurred by the Executive with respect to such excise
tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled
to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed
with respect to such taxes), including, without
limitation, any income taxes (and any interest or
penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment on an after-tax basis
equal to the Excise Tax imposed upon the Payment.
The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of
the Gross-Up
-11-
12
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim by the
Internal Revenue Service and the notification shall
apprise the Company of the nature of the claim and the
date on which such claim is required to be paid. The
Executive shall not pay such claim prior to the
expiration of a 30-day period following the date on which
the Executive has given such notification to the Company
(or such shorter period ending on the date that any
payment of taxes with respect to such claim is required).
If the Company notifies the Executive in writing prior
to the expiration of such period that it desires to
contest such claim, the Executive shall cooperate with
the Company in so contesting; provided, however, that the
-----------------
Company shall bear and pay all costs and expenses
(including additional interest and penalties) incurred in
connection with such contest, on an after-tax basis to
the Executive.
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period
(either prior or subsequent to a Triggering Transaction), this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for (i) payment of Accrued Obligations (as defined in Section
4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination) and (ii) the timely payment
or provision of Other Benefits (as defined in Section 4.1(c)),
including death benefits pursuant to the terms of any plan, policy,
or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period (either prior or subsequent to a Triggering
Transaction), this Agreement shall terminate without further
obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to
the Executive in a lump sum in cash within thirty (30) days of the
Date of Termination) and (ii) the timely payment or provision of
Other Benefits (as defined in Section 4.1(c)) including Disability
benefits pursuant to the terms of any plan, policy or arrangement
of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the
Employment Period (either prior or subsequent to a Triggering
Transaction), this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the Company
during the Employment Period (excluding a termination for Good
Reason), this Agreement shall terminate without further obligations
to the Executive, other than for the payment of Accrued
Compensation (as defined in this Section) and the timely payment or
provision of Other Benefits (as defined in Section 4.1(c)). In such
case, all Accrued Compensation shall be paid to the Executive in a
lump sum in cash within thirty (30) days of the Date of
Termination.
For the purpose of this Section, the term "Accrued
Compensation" means the sum of (i) the Executive's Annual Base
Salary through the Date of Termination to the extent not previously
paid, (ii) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), and (iii)
any accrued vacation pay in each case to the extent not previously
paid.
4.6 NON-EXCLUSIVITY OF RIGHTS; SUPERSESSION OF CERTAIN
BENEFITS. Except as provided in this Section 4.6, nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any plan, program, policy or practice
provided by the Company and for which the
-12-
13
Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or
agreement with the Company, except for the elimination of penalties
for competing as provided in Section 4.2(f). Amounts which are
vested benefits of which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of, or any
contract or agreement with, the Company at or subsequent to the Date
of Termination, shall be payable in accordance with such plan,
policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
4.7 FULL SETTLEMENT. 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 any set-
off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
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. The Company agrees to pay
promptly as incurred, to the full extent permitted by law, all
legal fees and expenses which the Executive may reasonably incur as
a result of any contest (regardless of the outcome thereof) by the
Company, the Executive or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any
contest by the Executive regarding the amount of any payment
pursuant to this Agreement), plus in each case interest on any
delayed payment at the applicable Federal rate provided for in Code
Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of
any termination of the Executive's employment by the Company,
whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason
existed, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the
Executive of the existence of Good Reason was not made in good
faith, the Company shall pay all amounts, and provide all benefits,
to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be
required to pay or provide pursuant to Section 4.1 or 4.2 as though
such termination were by the Company without Cause or by the
Executive with Good Reason; provided, however, that the Company
-----------------
shall not be required to pay any disputed amounts pursuant to this
Section except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period
beginning on the date the Term of this Agreement expires
and ending one (1) year thereafter, the Executive shall
not, without prior written approval of the Board, become
an officer, employee, agent, partner or director of any
business enterprise in substantial direct competition (as
defined in Section 5.1(b)) with the Company; provided
that, if the Executive is terminated by the Company
without Cause or if the Executive terminates his
employment for Good Reason, then he will not be subject
to the restrictions of this Section.
-13-
14
5.1(b) For purposes of Section 5.1, a business
enterprise with which the Executive becomes associated as
an officer, employee, agent, partner or director shall be
considered in substantial direct competition, if such
entity competes with the Operating Line of Business and
is within the Company's market area as of the date that
the Employment Period expires.
5.1(c) The above constraint shall not prevent the
Executive from making passive investments, not to exceed
five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the
Company, the rights (but not the obligations) shall not be
assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require
any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to
terminate the Agreement at his option on or after the Triggering
Transaction Date for Good Reason. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 OTHER AGREEMENTS. The Board may, from time to time
in the future, provide other incentive programs and bonus
arrangements to the Executive with respect to the occurrence of a
Triggering Event that will be in addition to the benefits required
to be paid in the designated circumstances in connection with the
occurrence of a Triggering Transaction. Such additional incentive
programs and/or bonus arrangements will affect or abrogate the
benefits to be paid under this Agreement only in the manner and to
the extent explicitly agreed to by the Executive in any such
subsequent program or arrangement.
-14-
15
7.2 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses
as set forth below; provided that all notices to the Company shall
be directed to the attention of the Chairman of the Board, or to
such other address as one party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
Notice to Executive:
-------------------
Xxxx X. Xxxxxx
0000 X.X. 00xx Xxxxxx
Xxxx Xxxxx, XX 00000
Notice to Company:
-----------------
Xxxxxxxx Corporation
000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000-0000
7.3 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
7.4 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
7.5 WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any
other provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
-15-
16
IN WITNESS WHEREOF, the Executive and, the Company,
pursuant to the authorization from its Board, have caused this
Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxx X. Xxxxxx
---------------------------------------
Xxxx X. Xxxxxx
XXXXXXXX CORPORATION
By /s/ X. X. Xxxxx
-------------------------------------
Name: X. X. Xxxxx
----------------------------------
Title: Chairman and President
---------------------------------
-16-
