EMPLOYMENT AGREEMENT
AGREEMENT entered into as of May 7, 1996, between THE
XXXXXX-XXXXX CORPORATION (the "Company"), a New York
corporation, and XX. XXXX X. XXXXXX ("Executive"), presently
residing at 00 Xxxx Xxxxxx Xxxxxx, 0X, Xxxxxxxxx, XX 00000.
WHEREAS, the Company desires to employ Executive on the
terms and conditions set forth herein; and
WHEREAS, the Executive desires to render services to the
Company on the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. Scope.
(a) The Company agrees to employ Executive, and Executive
agrees to serve as Senior Vice President of the
Corporation and Chief Technology Officer. In such
capacities, Executive shall report to the Chairman,
President and Chief Executive Officer of the Company,
and will have corporate-wide responsibilities for
strategic planning, mergers and acquisitions, business
development, technology review and oversight, as well
as integrating new business initiatives into the
Company.
(b) Executive shall devote his full business time,
attention and best efforts to the affairs of the
Company and its subsidiaries during the Term;
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provided, however, that nothing in this Agreement
shall preclude Executive from engaging, so long as, in
the reasonable determination of the Board, such
activities do not interfere with his duties and
responsibilities hereunder, in religious, charitable
and community affairs, from managing any passive
investment made by him in publicly traded equity
securities or other property (provided that no such
investment may exceed 1% of the equity of any entity,
without the prior approval of the Board) or from
serving, subject to the prior approval of the Board,
as a member of boards of directors or as a trustee of
any other corporation, association or entity. The
Executive is encouraged to maintain significant
outside contacts to include lectures, advisory boards,
and consultantships in order to promote the visibility
of the Company in health care as long as such
activities do not interfere with the Executive's
performance of his Company responsibilities.
2. Term of Employment.
(a) Executive's term of employment (the "Term") under this
Agreement shall commence (the "Commencement Date") as
of the date hereof, and terminate (the "Termination
Date") on the termination of Executive's employment.
Any termination of employment by Executive (other than
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for death, Permanent Disability or Good Reason) may
only be made upon 90 days prior written notice to the
Company and any termination of employment by Executive
for Good Reason may only be made upon 30 days prior
written notice to the Company.
(b) For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following, other
than with the consent of Executive:
i) Any failure to continue Executive as Senior Vice
President of the Corporation and Chief Technology
Officer or any material reduction by the Company
of Executive's duties or responsibilities (except
in connection with the termination of Executive's
employment for Cause, as a result of Permanent
Disability, as a result of Executive's death or
by Executive other than for Good Reason);
ii) a reduction by the Company in Executive's Base
Salary or Target Bonus (as herein defined), other
than a reduction which is part of a general
salary reduction program affecting senior
executives of the Company.
iii) any material breach by the Company of the
provisions of this Agreement; and
iv) the Company's requiring the Executive to be based
more than fifty miles from Norwalk, Connecticut
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except for required travel on the Company's
business to an extent substantially consistent
with the business travel obligations of Executive
hereunder.
(c) For purposes of this Agreement, "Cause" shall mean (i)
willful malfeasance or willful misconduct by Executive
in connection with his employment, (ii) continuing
refusal by Executive to perform his duties hereunder
or any lawful direction of the Board of Directors of
the Company (other than due to Executive's physical or
mental incapacity), after a demand for a substantial
performance is delivered to the Executive by the Board
which identifies the manner in which the Executive has
not performed his duties, (iii) any material breach of
this Agreement by Executive, (iv) the willful engaging
by the Executive in conduct which is materially
injurious to the Company or (v) the indictment of
Executive for (A) any felony or (B) a misdemeanor
involving moral turpitude. Termination of Executive
for Cause shall be made by delivery to Executive of a
copy of a resolution duly adopted by the affirmative
vote of not less than a majority of the Directors at a
meeting of the Board of Directors of the Company
called and held for the purpose (after 30 days prior
written notice to Executive and reasonable opportunity
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for Executive to be heard before the Board prior to
such vote), finding that in the reasonable judgment of
such Board, Executive was guilty of the conduct set
forth in any of clauses (i) through (iv) above and
specifying the particulars thereof; provided, however,
that with respect to clause (v) herein the Board shall
determine in good faith that Executive's indictment is
reasonably likely to have a material adverse effect on
Executive's ability to perform his duties hereunder as
the Senior Vice President of the Company.
(d) For purposes of this Agreement, "Permanent Disability"
means the absence of the Executive from his duties
with the Company on a full-time basis for one hundred
and eighty (180) consecutive days as a result of
incapacity due to physical or mental illness, such
that executive would be entitled to long term
disability benefits under the long term disability
plan of the Company in effect at such time.
3. Compensation.
(a) The Company will pay to Executive a base salary ("Base
Salary") at the rate of $375,000 per annum for the
period commencing on the beginning of Executive's term
of employment hereunder and ending on the Termination
Date. Base Salary shall be payable in accordance with
the ordinary payroll practices of the Company. Any
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increase in Base Salary shall be in the discretion of
the Board and, as so increased, shall constitute "Base
Salary" hereunder. It is understood that the Company
shall review Executive's Base Salary annually, and in
light of such review may, in the discretion of the
Board of Directors or its Compensation Committee,
increase such Base Salary taking into account the
Executive's responsibilities, compensation of other
executives of the Company and its subsidiaries,
increase in salaries of executives of other
corporations, performance by the Executive, and other
pertinent factors.
(b) During the Term, Executive shall be eligible to
receive an annual bonus (a "Bonus") in respect of each
Fiscal Year of the Company ("Fiscal Year") under, and
subject to the terms of, the Company Contingent
Compensation Plan (the "Bonus Plan") to the extent not
inconsistent with the terms hereof. Executive's
target bonus (the "Target Bonus") under the Bonus Plan
will be equal to 60 percent of Executive's Base Salary
and will be payable in accordance with the provisions
of the Bonus Plan; provided, however, that with
respect to Fiscal Year 1996, Executive shall receive a
Bonus of not less than $37,500.
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4. Stock Arrangements.
(a) Upon Executive's commencement of employment with the
Company, Executive shall be granted 15,000 shares of
restricted stock of the Company ("Restricted Stock")
in accordance with terms consistent with the Company's
1993 Stock Incentive Plan for Key Employees. (Company
has previously granted all available shares under such
plan. Accordingly, the grant to the Executive is
conditioned upon approval of the Company's
shareholders of a new plan or additional authorization
of shares under the Stock Plan. Until such approval,
the grant of Restricted Stock will be treated as a
"performance unit grant" which is consistent with the
terms of Restricted Stock but may not be voted by the
Executive.) The Restricted Stock will vest based on
the average per share market price for 90 consecutive
days of Company common stock as follows:
Average Per Share Market Price for 90 Days Vested Percentage
$59 33%
$66 33%
$73 33%
(b) As of May 7, 1996, Executive's commencement of
employment with the Company, the Company shall grant
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Executive an option (an "Option") to purchase at fair
market value on the date of grant 50,000 shares of
common stock of the Company under the Stock Plan. The
Option shall vest with respect to 50% of the shares
subject thereto on each of the first and second
anniversaries of the date of grant and shall expire
ten years following the date of grant. In addition to
the foregoing Option grant, the Company, subject to
the approval of the Board, anticipates making annual
Option grants to Executive of 25,000 shares per year,
when normally granted by the Company, beginning in
calendar year 1997.
(c) Unless otherwise specified in this Section 4, the
terms of all Restricted Stock and Options granted to
Executive hereunder, including, without limitation,
terms relating to vesting and forfeiture, shall be
governed by the Stock Plan.
(d) It is understood that Company policy anticipates that
Executive will maintain a level of stock ownership in
the Company equal to two times Executive's Base
Salary. Grants of Restricted Stock under the terms of
this Agreement and shares of Company stock acquired
upon exercise of an Option shall be credited towards
Executive's stock ownership. Executive is expected to
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achieve the foregoing level of stock ownership no
later than five years after the date hereof.
(e) For purposes only of vesting of Restricted Stock and
Options granted hereunder, in the event of Executive's
termination of employment his termination date will be
the May 7 following the date on which Executive's
employment is terminated.
5. Employee Benefits.
(a) During the Term, Executive shall be entitled to
participate in all employee benefit plans, programs or
arrangements ("Benefit Plans") of the Company, in
accordance with the terms thereof, as presently in
effect or as they may be modified by the Company from
time to time, which the Company makes available to
senior executives of the Company.
(b) During the Term, the Executive shall be entitled to a
paid annual vacation of not less than twenty (20)
business days during each calendar year and to
reasonable sick leave.
(c) During the Term, Executive shall receive an automobile
allowance of $15,000 per year and the Company shall
also reimburse Executive for the reasonable costs of
financial planning and tax preparation in accordance
with Company policy as in effect from time to time.
In addition, Executive shall be entitled, during the
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Term, to any other perquisites and fringe benefits not
specifically mentioned herein that are made available
to senior executives of the Company, subject to the
terms of this Agreement and commensurate with his
position with the Company.
(d) In addition to receiving credit under the Company's
qualified defined benefit plan ("Pension Plan") and
the Company's non-qualified Supplemental Retirement
Plan and Contingent Compensation Plan for Key
Executives (collectively, the "Non-Qualified Plans")
for Executive's service with the Company under the
terms of this Agreement, the Company shall pay
Executive a special supplemental pension benefit equal
to the amount which he would receive under the Pension
Plan and the Non-Qualified Plans if Executive were
credited with thirteen (13) years of service under the
Pension Plan and the Non-Qualified Plans.
(e) Company shall reimburse Executive for all reasonable
costs incurred by Executive in connection with his
relocation to Connecticut. At such time as the
Executive relocates to Connecticut, Executive shall
also receive $150,000 in order to assist in such
relocation. If Executive decides to delay selling his
residence in North Carolina, he may choose to make use
of Company's Home Sale Program (which is commensurate
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with that provided other executives of Company at
Executive's level) at any time during the first three
years of employment.
6. Severance; Benefits.
(a) In the event the Executive's employment is terminated
by the Company for reasons other than "Cause" (and not
due to death or Permanent Disability), or is
terminated by the Executive due to a Good Reason, and
the provisions of the Executive's Employment Agreement
of even date (entitling Executive to benefits
thereunder in the event of a "Change-in-Control" as
defined in such agreement (hereinafter referred to as
the "Change-in-Control Agreement")) are not applicable
to such termination, then the Executive shall be
entitled to, in addition to accrued retirement
benefits, an annual severance payment at the rate of
$150,000 per annum which shall be payable to the
Executive until age 65. In the event that the
Executive becomes eligible for said severance benefit,
the Executive shall have the option to receive such
benefit in an accelerated form or a lump sum based on
the net present value of such severance benefit at the
time of the Executive's eligibility therefor, and
using a discount rate of 4% to calculate such amount.
The severance benefit under this section 6 shall be in
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lieu of severance under any other severance pay plan
of the Company.
(b) In the event the Executive's employment terminates,
other than for Cause, the Executive's Company provided
medical insurance coverage and life insurance coverage
shall continue upon the same terms as in effect
immediately prior to the Termination Date for a period
of up to two (2) years following the Termination Date,
and the Executive shall be deemed to be on a leave of
absence for such purposes; provided, however, that in
the event the Executive obtains employment during such
two (2) year period and his employer provides medical
and life insurance coverage comparable to that
provided hereunder, then such leave of absence shall
end and insurance coverage hereunder shall terminate.
7. Separability; Legal Fees. If any provision of this
Agreement shall be declared to be invalid or
unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions
hereof, which shall remain in full force and effect. Each
party shall bear the costs of any legal fees and other
fees and expenses which may be incurred in respect of
enforcing its respective rights under this Agreement;
provided, however, that the Company shall pay the costs of
any reasonable legal fees incurred by Executive in good
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faith in enforcing his rights or entitlements under this
Agreement if Executive prevails in such enforcement
action.
8. Assignment. This Agreement shall be binding upon and
inure to the benefit of the heirs and representatives of
Executive and the assigns and successors of the Company,
but neither this Agreement nor any rights or obligations
hereunder shall be assignable or otherwise subject to
hypothecation by Executive (except by will or by operation
of the laws of intestate succession) or by the Company,
except that the Company may assign this Agreement to any
successor (whether by merger, purchase or otherwise) to
all or substantially all of the stock, assets or
businesses of the Company, if such successor expressly
agrees to assume the obligations of the Company hereunder.
9. No Obligation to Mitigate Damages. Except as specifically
provided in this Agreement, Executive shall not be
required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other
employment or otherwise, nor will any payments under this
Agreement be subject to offset in respect of any amounts
which Executive earns or becomes entitled to from any
other employer or other person after termination of his
employment with the Company.
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10. Amendment. This Agreement may only be amended by written
agreement of the parties hereto.
11. Survivorship. The respective rights and obligations of
the parties hereunder shall survive any termination of
this Agreement to the extent necessary to the intended
preservation of such rights and obligations. The
provisions of this Section 11 are in addition to the
survivorship provisions of any other section of this
Agreement.
12. Governing Law. This Agreement shall be construed,
interpreted and governed in accordance with the laws of
the State of New York, without reference to rules relating
to conflicts of law.
13. Effect on Prior Agreements. This Agreement and the
Change-in-Control Agreement contain the entire
understanding between the parties hereto and supersede in
all respects any prior or other agreement or understanding
between the Company and Executive.
14. Withholding. The Company shall be entitled to withhold
from payment any amount of withholding required by law.
15. Supersession. Notwithstanding any other provision of this
Agreement, in the event of a Change in Control of the
Company, as defined under the Change in Control Agreement,
the provisions of this Agreement shall be superseded by
the provisions of the Change in Control Agreement.
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16. Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed an
original.
THE XXXXXX-XXXXX CORPORATION
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chairman, President and
Chief Executive Officer
By: /s/ Xxxx X. Xxxxxx
Xx. Xxxx X. Xxxxxx
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