Exhibit 10.6
EMPLOYMENT AGREEMENT
Agreement, made as of November 3, 1987, amended as of June 14, 1994 and
as of November 1, 1995, and amended and restated as of March 24, 1997, at
Xxxxxx, New York, between The Xxxxxxx Corporation, a New York corporation
(hereinafter, together with its successors and assigns, "Xxxxxxx"), and Xxxx X.
Xxxxxxxxx (hereinafter "Employee").
WHEREAS Employee has contributed substantially to the growth and
success of Xxxxxxx through his leadership of Xxxxxxx as Chief Executive Officer
and Chairman of the Board of Directors; and
WHEREAS Xxxxxxx desires to retain his services as set forth in this
Agreement and to provide the necessary compensation to ensure such services;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, Xxxxxxx and Employee hereby agree as follows:
1. Employment. Xxxxxxx hereby employs Employee as Chief Executive
Officer and Chairman of the Board of Directors or in such other senior executive
position as the Board of Directors and Employee shall mutually agree. Employee
hereby accepts employment specified herein, agrees to perform the duties
prescribed by the Board of Directors, abide by the terms and conditions
described in this Agreement and to devote his best efforts and his full working
time to the interest and business of Xxxxxxx. Employee may devote a reasonable
amount of time to civic and community affairs. Employee shall not perform
services for any business organization except Xxxxxxx and its subsidiaries and
affiliated companies without the consent of the Board of Directors.
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2. Term of Employment. The term of employment under this Agreement
shall commence on the date on which this Agreement is amended and restated and
shall continue until terminated by Employee or Xxxxxxx in accordance with
paragraph 5 or 7.
3. Compensation. During the term of employment, Xxxxxxx shall pay to
Employee a base salary at the rate of $443,000 per annum, or such greater amount
as the Board of Directors shall determine. Such salary shall be payable in
substantially equal monthly installments. Xxxxxxx may pay Employee a bonus or
other incentive compensation in such amount and at such time as the Board of
Directors shall determine. Employee shall be eligible to participate in
Raymond's Profit Sharing Plan and Deferred Compensation Plan. In addition,
Xxxxxxx shall provide Employee with other benefits, facilities, services and
perquisites generally available to Xxxxxxx executive officers and no less
favorable than those Employee is receiving from Xxxxxxx on the date on which
this Agreement is amended and restated.
4. Pension and Supplemental Pension. Employee shall be eligible for
coverage under Raymond's Pension Plan. Xxxxxxx agrees to pay Employee a
supplemental pension, starting in December 1995, consisting of monthly payments
of $16,710.42, payable to Employee as a life annuity with a ten-year period
certain income option (the "50% Supplemental Pension"). Xxxxxxx agrees, starting
in April 1997, to increase the monthly payment amount payable to Employee to
$20,052.51 (the "60% Supplemental Pension"). Xxxxxxx has purchased a whole life
insurance policy with rights of conversion to an annuity contract to fund a
portion of the 50% Supplemental Pension (the "Company Insured Portion").
Employee has purchased a credit insurance policy to insure himself against any
loss with respect to the excess of the 50% Supplemental Pension over the Company
Insured Portion. If
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Employee is unable, despite his reasonable efforts, to obtain additional credit
insurance to cover the excess of the 60% Supplemental Pension over the 50%
Supplemental Pension (the "Spread"), Xxxxxxx shall contribute assets equal to
the Spread, calculated by Employee's actuary, to a grantor trust of which
Xxxxxxx will be the grantor, no later than 30 days after Employee has given
Xxxxxxx notice of his inability to obtain additional insurance.
5. Termination.
(a) Resignation Without Breach by Xxxxxxx; Termination for Cause;
Death or Disability. If:
(i) Employee shall resign from the employ of Xxxxxxx for any
reason prior to a Change in Control as defined in paragraph 6
herein except after a material breach of this Agreement by
Xxxxxxx; or
(ii) Xxxxxxx terminates Employee's employment for Cause (as
defined in subparagraph 5(d) herein); or
(iii) Executive dies or becomes permanently disabled (as
determined under Raymond's disability insurance plan);
then Employee shall not be entitled to further compensation under this
Agreement except as expressly provided herein, but shall be eligible for any
payments and benefits otherwise provided under Raymond's compensation and
benefit plans.
(b) Termination Other than for Cause; Resignation with Breach by
Xxxxxxx. If (other than following a Change in Control) Xxxxxxx terminates
Employee's employment for other than Cause as defined in subparagraph 5(d)
herein, or if Employee resigns after a breach of this Agreement by Xxxxxxx,
then, no later than 30 days following his termination, Employee shall receive
(i) a lump sum in an amount equal to Employee's
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then current base salary under paragraph 3 herein and (ii) all other vested
benefits under Raymond's compensation and benefit plans. Xxxxxxx shall continue
to provide Employee, at its expense, medical, dental and life insurance under
Xxxxxxx plans, or with benefits equivalent to Raymond's plans then in effect at
the date of termination for twelve months following termination.
(c) For purposes of this Agreement, "Cause" shall mean:
(i) any material misappropriation of funds or property of
Xxxxxxx by Employee; or
(ii) unreasonable and persistent neglect or refusal by Employee
to perform his duties as provided in paragraph 1 hereof, which
results in material harm to Xxxxxxx; or
(iii) conviction of Employee of a felony.
6. Change of Control. The term "Change of Control" shall mean a change
of control of Xxxxxxx of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934 or, if Item 6(e) is no longer in effect, any
regulations issued by the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934 which serves similar purposes; provided that,
without limitation, such a Change of Control shall be deemed to have occurred if
and when:
(a) any "Person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial
owner, directly or indirectly, of securities of Xxxxxxx representing 25% or more
of a combined voting power of Raymond's then outstanding securities; or
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(b) individuals who on the date this Agreement is amended and
restated constituted the Board of Directors (together with any new directors
whose election by such Board of Directors, or whose nomination for election by
the shareholders of Xxxxxxx, was approved by a vote of a majority of the
directors of Xxxxxxx then still in office who were either directors on the date
this Agreement is amended and restated or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office; or
(c) any Person is or becomes a beneficial owner, directly or
indirectly, of securities of Xxxxxxx representing 20% or more of a combined
voting power of Raymond's then outstanding securities, and, at any time within
twenty-four months after such event, individuals who were members of the Board
of Directors of Xxxxxxx immediately prior to such event (but excluding any
individuals who constituted any part of such "person") shall not constitute at
least 75% of the Board of Directors of Xxxxxxx; or
(d) the stockholders of Xxxxxxx approve any transaction or series of
transactions under which Xxxxxxx is merged or consolidated with any other
company, other than a merger or consolidation which would result in the voting
securities of Xxxxxxx outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 75% of the combined voting power
of the voting securities of Xxxxxxx or such surviving entity outstanding
immediately after such merger or consolidation; or
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(e) the stockholders of Xxxxxxx approve a plan of complete
liquidation of Xxxxxxx or an agreement for the sale or disposition by Xxxxxxx of
all or substantially all of Raymond's assets.
7. Termination After a Change of Control.
(a) "Event(s) of Termination" as used herein are:
(i) termination of Employee by Xxxxxxx within three years
following a Change of Control; or
(ii) termination of Employee by Xxxxxxx, if Employee was
terminated at the request of any potential purchaser of
Raymond's stock or assets, and, within one year following such
termination, a Change of Control occurs; or
(iii) termination of Employee at Employee's discretion within
eighteen months following a Change of Control.
If Employee is terminated within one year prior to a Change in Control pursuant
to paragraph 7(a)(ii) above, the "Event of Termination" shall be his termination
of employment, which shall be deemed to have occurred immediately after the
Change in Control.
(b) On an Event of Termination, Employee shall be entitled to the
following payments ("Termination Payments") and benefits:
(i) an amount equal to three times the sum of (A) the Employee's
base salary in effect on the Event of Termination and (B) the
Employee's target annual bonus (or, if higher, the average of
the Employee's actual annual bonuses (paid or accrued) for the
three fiscal years immediately
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preceding the Event of Termination), payable in a lump sum
within 30 days following an Event of Termination; and
(ii) an amount equal to the Employee's target annual bonus for
the fiscal year in which the Event of Termination occurs,
multiplied by a fraction, the numerator of which is the number
of days in such fiscal year that the Employee was employed by
Xxxxxxx and the denominator of which is 365, payable in a lump
sum within 30 days following an Event of Termination; and
(iii) all benefits, compensation and perquisites (including,
without limitation, life, medical, dental, travel, accident and
disability insurance) in such amounts and with such benefits,
compensation and perquisites no less than those in effect for
the Employee immediately prior to the Event of Termination, for
a period of three years following the Event of Termination; and
(iv) after the three-year period set forth in clause 7(b)(iii)
above, retiree medical and life insurance in such amounts and
with such benefits equivalent to that in effect for the Employee
on the Event of Termination, for the remainder of the Employee's
life.
(c) Upon an Event of Termination, (i) Xxxxxxx shall purchase an
annuity contract from a major national insurance company authorized to issue
such contracts in the state of New York (or fully pay and convert to an annuity
any life insurance policy then in effect) sufficient to pay to Employee a
supplemental pension benefit in an amount and on the terms provided in paragraph
4 of this Agreement, (ii) Employee shall have the option of
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taking an actuarially reduced benefit under said contract, (iii) Xxxxxxx shall
contribute said contract to a grantor trust of which Xxxxxxx shall be the
grantor and (iv) any amounts transferred to a grantor trust pursuant to
paragraph 4 of this Agreement shall become payable to Employee to the extent
necessary to provide Employee with a full supplemental pension benefit.
(d) If any amounts payable to Employee in connection with a Change
of Control (whether or not such amounts are payable pursuant to this Agreement)
(the "Severance Payments") are subject to the tax (the "Excise Tax") imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") (or
any similar federal, state or local tax that may hereafter be imposed), then
Xxxxxxx shall pay to Employee within 30 days after an Event of Termination an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Employee, after deduction of any Excise Tax on the Total Payments (as
hereinafter defined) and any federal, state and local income tax and Excise Tax
upon the payment provided for by this Section 3(c), shall be equal to the Total
Payments. For purposes of determining whether any of the Severance Payments will
be subject to the Excise Tax and the amount of such Excise Tax: (i) any other
payments or benefits received or to be received by Employee in connection with a
Change in Control or Employee's termination of employment (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with
Xxxxxxx, any Person whose actions result in a Change in Control or any other
Person affiliated with Xxxxxxx or such Person) (which, together with the
Severance Payments, constitute the "Total Payments") shall be treated as
"Parachute Payments" within the meaning of Section 280G(b)(2) of the Code, and
all "Excess Parachute Payments" within the meaning of Section 280G(b)(1) of the
Code shall be treated as subject
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to the Excise Tax, unless in the opinion of nationally-recognized tax counsel
selected by Employee such other payments or benefits (in whole or in part) do
not constitute Parachute Payments, or such Excess Parachute Payments (in whole
or in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the base
amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax; (ii) the amount of the Total Payments which shall
be treated as subject to the Excise Tax shall be equal to the lesser of (A) the
total amount of the Total Payments and (B) the amount of Excess Parachute
Payments (after applying Section 3(c)(i) hereof); and (iii) the value of any
non-cash benefits or any deferred payments or benefit shall be determined by a
nationally-recognized accounting firm selected by Employee in accordance with
the principles of Sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, Employee shall be deemed to pay
federal income taxes at the highest marginal rate of federal income taxation in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Employee's residence on the Event of Termination, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder at the time
of the Event of Termination, Employee shall repay to Xxxxxxx within ten days
after the time that the amount of such reduction in Excise Tax is finally
determined the portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the Excise Tax and
federal and state and local income tax imposed on the Gross-Up Payment being
repaid by Employee if such repayment results in a reduction in
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Excise Tax and/or federal and state and local income tax deduction) plus
interest on the amount of such repayment at the rate provided in Section
1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to
exceed the amount taken into account hereunder at the time of the Event of
Termination (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), Xxxxxxx shall make an
additional gross-up payment in respect of such excess within ten days after the
time that the amount of such excess is finally determined.
8. Benefits Triggered Solely Upon a Change in Control. Upon a Change in
Control, all equity-based awards held by the Employee shall be fully vested, and
such awards shall be fully exercisable pursuant to the terms of the plans under
which such awards were granted.
9. No Mitigation. Employee shall not be required to seek employment
with any subsequent employer following his termination of employment from
Xxxxxxx, and no amounts payable hereunder shall be reduced by reason of any
compensation or benefits received by Employee from a subsequent employer.
10. Noncompetition. Except in the case where an Event of Termination
occurs (in which case this paragraph 10 shall not apply), Employee agrees that
for two years after the termination of his employment he will not, without prior
written consent of Xxxxxxx, directly or indirectly, as a principal, officer,
director, stockholder (except as the owner of less than 5% of the stock of a
company whose stock is publicly traded), partner, employee or in any other
capacity whatsoever, engage in or become associated with, or advise or assist,
any business or enterprise which is engaged in providing any goods or services
that are competitive with any goods or services that are or may at any time in
the period be offered by Xxxxxxx. For the
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purposes of this paragraph, a business or enterprise shall be deemed to be
engaged in providing goods or services that are competitive with any goods or
services offered by Xxxxxxx if the Board of Directors of Xxxxxxx so determines.
11. Confidential Information. Employee agrees that unless duly
authorized in writing by Xxxxxxx, he will neither during his employment by
Xxxxxxx nor at any time thereafter disclose or use directly or indirectly any
trade secrets or confidential or proprietary information of Xxxxxxx.
12. Withholding. Xxxxxxx may withhold from any amounts due Employee
under this Agreement such amounts as may be required under applicable federal,
state or local tax laws.
13. Funding. Xxxxxxx may in its discretion establish a trust to fund
any of the payments which are or may become payable to Employee under this
Agreement.
14. Notice. Any and all notices referred to herein shall be sufficient
if furnished in writing and sent by registered mail to the parties.
15. Transferability. The rights and benefits of Xxxxxxx under this
Agreement shall be transferable and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by or against its successors and
assigns. Whenever the term "Xxxxxxx" is used in this Agreement, such term shall
mean and include The Xxxxxxx Corporation and its successors and assigns. The
rights and benefits of Employee under this Agreement shall not be transferable
other than by will or the laws of descent and distribution.
16. Waiver. Any waiver of any breach of any of the terms of this
Agreement shall not operate as a waiver of any other breach of such terms or
conditions of any other such
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terms or conditions, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof.
17. Severability. If any provision of this Agreement or the application
thereof is held invalid or unenforceable, the invalidity or unenforceability
thereof shall not affect any other provisions of this Agreement which can be
given effect without the invalid or unenforceable provision, and to this end the
provisions of this Agreement are to be severable.
18. Choice of Law and Arbitration. The Agreement shall be governed and
continued in accordance with the laws of the State of New York, without
reference to principles of conflict of laws. Employee and Xxxxxxx hereby agree
to resolve any dispute arising out of this Agreement through arbitration, and
Xxxxxxx shall bear all costs relating to any such arbitration (except that
Employee shall bear his portion of the costs if Employee initiates the
arbitration and an arbitrator expressly determines that such action was brought
in bad faith).
19. Modification. This Agreement may not be amended or modified except
in writing, executed by the parties or their respective successors or legal
representatives.
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IN WITNESS WHEREOF, the parties have amended and restated this
Agreement as of March 24, 1997.
The Xxxxxxx Corporation
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
General Counsel
/s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
Employee
