1
Exhibit 10.2
Employment Agreement Dated as of March 6, 2000 between Xxxx X. Xxxxx and Xxxxx
Enterprises, Incorporated.
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the 6th day of March, 2000, by and
between XXXXX ENTERPRISES, INCORPORATED, a Florida corporation (the "Company"),
and XXXX X. XXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to assure itself of the Executive's continued
employment in an executive capacity;
WHEREAS, the Company recognizes that circumstances may arise in which a change
in control of the Company occurs, through acquisition or otherwise, thereby
causing uncertainty about the Executive's future employment with the Company
without regard to the Executive's competence or past contributions, which
uncertainty may result in the loss of valuable services of the Executive to the
detriment of the Company and its shareholders, and the Company and the
Executive wish to provide reasonable security to the Executive against changes
in the Executive's relationship with the Company in the event of any such
change in control;
WHEREAS, the Company and the Executive are desirous that any proposal for a
change in control or acquisition of the Company will be considered by the
Executive objectively and with reference only to the best interests of the
Company and its shareholders;
WHEREAS, the Executive will be in a better position to consider the Company's
best interests if the Executive is afforded reasonable security, as provided in
this Agreement, against altered conditions of employment which could result
from any such change in control or acquisition;
WHEREAS, the Executive desires to be employed by the Company on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
covenant and agree as follows:
1. EMPLOYMENT AND DUTIES. Subject to the terms and conditions of this
Agreement, the Company agrees to employ the Executive, and the Executive hereby
agrees to serve the Company in two separate capacities: 1) as Chairman of the
Board ("Chairman") and 2) as Chief Executive Officer ("CEO"). As Chairman, the
Executive shall render to the Company such management and policy-making
services of the type customarily performed by persons serving in similar
capacities with other employers that are similar to the Company, together with
such other duties with which he is charged by the Company's By-laws. As CEO,
the Executive shall report directly to the Company's Board of Directors and
shall render to the Company such management and policy-making services of the
type customarily performed by persons serving in similar capacities with other
employers that are similar to the Company, together with such other duties with
which he is charged by the Company's By-laws and subject to the overall
direction And control of the Company's Board of Directors. The Executive
accepts such employment and agrees to devote his best efforts and substantially
all of his business time, skill, labor and attention to the performance of such
duties. In addition, the Executive agrees to serve without additional
compensation if elected or appointed to any office or position, including as a
director, of the Company or any subsidiary or affiliate of the Company;
provided, however, that the Executive shall be entitled to receive such
benefits and additional compensation, if any, that is paid to executive
officers of the Company in connection with such service.
2. TERM. Subject to the terms and conditions of this Agreement, including
but not limited to the provisions for termination set forth in Section 5
hereof, the employment of the Executive under this Agreement shall commence on
the date hereof and shall continue through and including the close of business
on the fifth anniversary of the date hereof (the "Initial Term"); provided,
however, that this Agreement shall renew automatically on the anniversary of
such termination date for successive two-year terms unless terminated as set
forth in Section 5 hereof (such term, including any such two-year extension
thereof, shall herein be defined as the "Term").
2
3. COMPENSATION.
(a) Annual Base Salary and Bonus. As compensation for his
services under this Agreement, the Executive shall receive,
and the Company shall pay, an annual base salary of such
amount as shall be determined by the Company's Board of
Directors not less than Five Hundred Fifty Thousand Dollars
($550,000) for the first year of the Term, and thereafter
during the Term at such annual base salary as shall be
determined by the Company's Board of Directors; provided,
however, the annual base salary shall be increased by at
least thirty percent (30%) at the expiration of the Initial
Term and shall be increased by at least fifteen percent (15%)
at the expiration of each two-year automatic renewal term.
Such annual base salary shall be payable in equal
installments in accordance with the policy then prevailing
for the Company's executives. In addition to such annual base
salary, the Executive shall be entitled, during the Term, to
a performance bonus as determined by the Compensation
Committee of the Board of Directors (or other committee
performing similar functions), and to participate in and
receive payments from all other bonus and other incentive
compensation plans as may be adopted by the Company as are
made available to other executive officers of the Company.
(b) Payments. All amounts paid pursuant to this Agreement shall
be subject to withholding or deduction by reason of the
Federal Insurance Contribution Act, Federal income tax, state
and local income tax, if any, and comparable laws and
regulations.
(c) Other Benefits. The Executive shall be reimbursed by the
Company for all reasonable and customary travel and other
business expenses incurred by him in the performance of his
duties hereunder in accordance with the Company's standard
policy regarding expense verification practices. The
Executive shall be entitled to the fringe benefits described
in Exhibit A hereto, that number of weeks paid vacation per
year that is available to other executive officers of the
Company, and shall be eligible to participate in such
pension, life insurance, health insurance, disability
insurance and other employee benefits plans, if any, which
the Company may from time to time make available to its
executive officers generally.
4. COVENANT NOT TO COMPETE.
(a) The Executive covenants and agrees that during his employment
by the Company (whether during the Term hereof or otherwise), and thereafter
for a period of two (2) years following the termination of the Executive's
employment with the Company, he will not:
(i) directly or indirectly engage in, continue in or
carry on the business of the Company, or any
business substantially similar thereto, including
owning or controlling any financial interest in, any
corporation, partnership, firm or other form of
business organization which competes with or is
engaged in or carries on any aspect of such business
or any business substantially similar thereto;
(ii) consult with, advise or assist in any way, whether
or not for consideration, any corporation,
partnership, firm or other business organization
which is now, becomes or may become a competitor of
the Company in any aspect of the Company's business
during the Executive's employment with the Company,
including, but not limited to: advertising or
otherwise endorsing the products of any such
competitor; soliciting customers or otherwise
serving as an intermediary for any such competitor;
or loaning money or rendering any other form of
financial assistance to or engaging in any form of
business transaction whether or not on an arms'
length basis with any such competitor; or
(iii) engage in any practice the purpose of which is to
evade the provisions of this Agreement or to commit
any act which is detrimental to the successful
continuation of, or which adversely affects, the
business or the Company;
provided, however, that the foregoing shall not preclude the Executive's
ownership of not more than 5 % of the equity securities of a corporation which
has such securities registered under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
3
(b) The Executive agrees that the geographic scope of this
covenant not to compete shall extend to (i) the entire United
States, which is the geographic area in which the Company has
operated its business at some time during the two years
preceding the date of this Agreement; or (ii) such broader
geographic area where the Company conducts business at any
time during the Term of this Agreement.
(c) In the event of any breach of this covenant not to compete,
the Executive recognizes that the remedies at law will be
inadequate and that in addition to any relief at law which
may be available to the Company for such violation or breach
and regardless of any other provision contained in this
Agreement, the Company shall be entitled to equitable
remedies (including an injunction) and such other relief as a
court may grant after considering the intent of this Section
4.
(d) In the event a court of competent jurisdiction determines
that the provisions of this covenant not to compete are
excessively broad as to duration, geographic scope,
prohibited activities or otherwise, the parties agree that
this covenant shall be reduced or curtailed to the extent
necessary to render it enforceable.
5. TERMINATION.
(a) Death. The Executive's employment hereunder shall terminate
upon his death.
(b) Disability. If, during the Term, the Executive becomes
physically or mentally disabled in accordance with the terms
and conditions of any disability insurance policy covering
the Executive or, if due to such physical or mental
disability, the Executive becomes unable for a period of more
than twelve (12) consecutive months to perform his duties
hereunder on substantially a full-time basis as determined by
the Company in its sole reasonable discretion, the Company
may, at its option, terminate the Executive's employment
hereunder upon not less than thirty (30) days' written notice
of termination.
(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause effective immediately upon written notice
of termination. For purposes of this Agreement, the Company
shall have "Cause" to terminate the Executive's employment
hereunder: (i) if the Executive engages in conduct which has
caused, or is reasonably likely to cause, demonstrable and
serious injury to the Company; (ii) if the Executive is
convicted of a felony, as evidenced by a binding and final
judgment, order or decree of a court of competent
jurisdiction, which substantially impairs the Executive's
ability to perform his duties hereunder; or (iii) for the
Executive's material violation of this Agreement, including
without limitation, Section 4 hereof.
(d) Voluntary Termination by Executive. The Executive may
terminate his employment hereunder upon (i) a Change of
Control of the Company (as defined in Appendix A), (ii) a
good faith determination by the Executive that there has been
a breach of the Agreement by the Company (iii) a material
adverse change in the Executive's working conditions or
status, (iv) a significant relocation of the Executive's
principal office, (v) a significant increase in travel
requirements, or (vi) an impairment of the Executive's health
to an extent that makes the continued performance of his
duties hereunder hazardous to his physical or mental health
or his life (any one of the preceding constituting "Good
Reason"), by delivering written notice of termination to the
Company indicating in reasonable detail the facts and
circumstances alleged to provide a basis for such termination
and shall cease performing the Executive's duties hereunder
on the date which is ten (10) days after delivery of the
notice, which date shall also be the date of termination of
the Executive's employment.
(e) Severance Payment. In the event of a termination of the
Executive's employment other than by the Company for Cause or
by the Executive in a manner which does not satisfy Section
5(d) the Company shall pay the Executive (subject to the
provisions of Section 6 of this Agreement) a one-time,
lump-sum severance payment equal to the product of three (3)
times the sum of (i) the Executive's annual base salary in
effect at the time of such termination and (ii) the
Executive's average annual bonus and other compensation for
the three (3) full calendar years immediately preceding such
termination ("Severance Payment"). The Severance Payment
shall be paid to the Executive in cash equivalent not later
than ten (10) business days after the date of termination of
the Executive's employment, subject to the provisions of
Section 6 of this Agreement.
4
(f) Benefits. The following shall apply upon termination of the
Executive's employment for any reason:
(i) Notwithstanding anything to the contrary herein
contained, the Executive shall receive all
compensation and other benefits to which he was
entitled under this Agreement or otherwise as an
employee of the Company through the termination
date, including payments of base salary accrued
hereunder through the calendar month in which such
termination occurs.
(ii) The Company shall maintain in full force and effect,
for the continued benefit of the Executive during
his lifetime and if Executive is married at his time
of death, for his then spouse during her lifetime,
all employee benefit plans and programs in which the
Executive was entitled to participate immediately
prior to the date of termination of the Executive's
employment provided that the Executive's (or his
spouse) continued participation is possible under
the general terms and provisions of such plans and
programs. In the event that the Executive's (or his
spouse) participation in any such plan or program is
barred as a result of a disability, the Executive
shall be entitled to receive an amount equal to the
annual contributions, payments, credits or
allocations which would have been made by the
Company to him, to his account or on his behalf
under such plans and programs from which his
continued participation is barred.
(iii) At the Executive's option, the Company shall either
make available an office to the Executive, or
reimburse the Executive for any fees and lease
payments incurred in connection with occupying an
off-site office. Also, the Company shall reimburse
the Executive for any and all wages paid to a
secretary hired to assist the Executive and for
one-third (1/3rd) of the costs of maintaining any
health care, dental, life insurance or disability
benefit plans for such a secretary. The benefits
under this Section 5(f)(iii) shall continue so long
as the Executive elects to receive the same for his
benefit.
6. TAX PROVISIONS.
(a) No Excess Parachute Payment. It is the intention of the
Company and the Executive that no portion of the Severance
Payment or any other payment or benefit under this Agreement,
or payments to or for the benefit of the Executive under any
other agreement or plan (collectively, the "Severance
Benefits") be deemed to be an excess parachute payment as
defined in Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto.
Notwithstanding any other provision of this Agreement, if any
portion of the Severance Benefits would constitute a
parachute payment within the meaning of Section 280G of the
Code, such Severance Benefits shall be reduced to an amount
equal to One Dollar ($1.00) less than the maximum amount
which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code (or any successor
provision) or which the Company may pay without loss of
deduction under Section 280G(a) of the Code (or any successor
provision).
(b) Opinion. For purposes of this Section, within sixty (60) days
after delivery of a written notice of termination by the
Executive or by the Company pursuant to this Agreement or
written notice by the Company to the Executive of its belief
that there is a payment or benefit due the Executive which
will result in an excess parachute payment as defined in
Section 280G of the Code or any successor provision thereto,
the Executive and the Company shall obtain, at the Company's
expense, the opinion (which need not be unqualified) of
nationally recognized tax counsel ("Tax Counsel") selected by
the Company's independent auditors and acceptable to the
Executive in the Executive's sole discretion, which sets
forth (A) the "base amount" within the meaning of Section
280G; (B) the aggregate present value of the payments in the
nature of compensation to the Executive as prescribed in
Section 280G(b)(2)(A)(ii); and (C) the amount and present
value of any "excess parachute payment" within the meaning of
Section 280G(b)(1). If such an opinion of Tax Counsel is
sought, no portion of the Severance Payment shall be paid to
the Executive by the Company until ten (10) days after the
opinion is obtained.
In the event that such opinion determines that there would be an
excess parachute payment, the Severance
5
Benefits shall be reduced or eliminated as specified by the Executive in a
written notice delivered to the Company within thirty (30) days of his receipt
of such opinion or, if the Executive fails to so notify the Company then as the
Company shall reasonably determine, so that under the bases of calculation set
forth in such opinion there will be no excess parachute payment. For purposes
of such opinion, the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in accordance
with the principles of Sections 280G, which determination shall be evidenced in
a certificate of such auditors addressed to the Company and the Executive. Such
opinion shall be dated as of the date of termination of the Executive's
employment and addressed to the Company and the Executive and shall be binding
upon the Company and the Executive.
The provisions of this Section 6(b), including the calculations,
notices and opinions provided for herein shall be based upon the conclusive
presumption that the compensation earned by the Executive pursuant to the
Company's compensation programs prior to a change of control is reasonable,
provided, however, that in the event such Tax Counsel so requests in connection
with the opinion required by this Section 6(b), the Company shall obtain at its
expense, and Tax Counsel may rely on in providing the opinion, the advice of a
firm of recognized executive compensation consultants as to the reasonableness
of any item of compensation to be received by the Executive.
(c) Ruling. The Executive shall have the right to request that
the Company obtain a ruling from the Internal Revenue Service
("IRS") as to whether any or all payments or benefits
determined by such Tax Counsel are, in the view of the IRS,
"parachute payments" under Section 280G. If a ruling is
sought pursuant to the Executive's request, no Severance
Benefits payable under this Agreement in excess of the
Section 280G limitation shall be made to the Executive until
after fifteen (15) days from the date of such ruling;
however, Severance Benefits shall continue to be paid during
the time up to the amount of that limitation. For purposes of
this Section 6, the Executive and the Company shall agree to
be bound by the IRS's ruling as to whether payments
constitute "parachute payments" under Section 280G. If the
IRS declines, for any reason, to provide the ruling
requested, the Tax Counsel's opinion shall control and the
period during which the Severance Benefits may be deferred
shall be extended to a date fifteen (15) days from the date
of the IRS's notice indicating that no ruling would be
forthcoming.
(d) Effect of Change in Law. In the event that the provisions of
Sections 280G and 4999 of the Code (or any successor
provisions) are repealed, this Section 6 shall cease to be
effective on the effective date of such repeal. The parties
to this Agreement recognize that final regulations
promulgated under Section 280G of the Code may affect the
amounts that may be paid under this Agreement and agree that,
upon issuance of such final regulations, this Agreement may
be modified as the parties hereto may in good xxxxx xxxx
necessary in light of the provisions of such regulations to
achieve the purposes of this Agreement, and that consent to
such modification shall not be unreasonably withheld.
7. ADDITIONAL PAYMENT.
(a) If, notwithstanding the provisions of Section 6 of this
Agreement, it is ultimately determined by a court or pursuant
to a final determination by the IRS that any portion of the
Severance Benefits is subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code (or any successor
provision), then the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net
amount retained by the Executive, after deduction of (i) any
Excise Tax; (ii) any federal, state or local income tax,
interest charges or penalties arising in respect of the
imposition of such Excise Tax; and (iii) any federal, state
or local income tax or Excise Tax imposed upon the payment
provided for by this Section 7, shall be equal to the
Severance Benefits. For purposes of determining the amount of
the Gross-Up Payment, the Executive 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 rates of taxation in the state and locality
of the Executive's domicile for income tax purposes on the
date the Gross-Up Payment is made, net of the maximum
reduction in federal income taxes that could be obtained from
deduction of such state and local taxes.
(b) If legislation is enacted that would require the Company's
stockholders to approve this Agreement, prior to a Change in
Control, due solely to the provision contained in subsection
(a) of this Section 7, then (i) from and after such time as
stockholder approval would be required, until stockholder
approval is obtained
6
as required by such legislation, subsection (a) shall be of
no force and effect; (ii) if the Company seeks stockholder
approval of any other agreement providing similar benefits to
any other executive of the Company, the Company shall seek
stockholder approval of this Agreement at the same
stockholders meeting or meetings at which the stockholders
consider any such other agreement; and (iii) the Company and
the Executive shall use their best efforts to consider and
agree in writing upon an amendment to this Section 7 such
that, as amended, such Section would provide the Executive
with the benefits intended to be afforded to the Executive by
subsection (a) without requiring stockholder approval.
8. SUCCESSORS.
(a) If the Company sells, assigns or transfers all or
substantially all of its business and assets to any Person or
if the Company merges into or consolidates or otherwise
combines (where the Company does not survive such
combination) with any Person (any such event, a "Sale of
Business"), then the Company shall assign all of its right,
title and interest in this Agreement as of the date of such
event to such Person, and the Company shall cause such
Person, by written agreement in form and substance reasonably
satisfactory to the Executive, to expressly assume and agree
to perform from and after the date of such assignment all of
the terms, conditions and provisions imposed by this
Agreement upon the Company. Failure of the Company to obtain
such agreement prior to the effective date of such Sale of
Business shall be a breach of this Agreement. In case of such
assignment by the Company and of assumption and agreement by
such Person, as used in this Agreement, "Company" shall
thereafter mean such Person which executes and delivers the
agreement provided for in this Section 8 or which otherwise
becomes bound by all the terms and provisions of this
Agreement by operation of law, and this Agreement shall inure
to the benefit of, and be enforceable by, such Person. The
Executive shall, in the Executive's discretion, be entitled
to proceed against any or all of such Persons, any Person
which theretofore was such a successor to the Company (as
defined in the first paragraph of this Agreement) and the
Company (as so defined) in any action to enforce any rights
of the Executive hereunder. Except as provided in this
Subsection, this Agreement shall not be assignable by the
Company. This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company.
(b) This Agreement and all rights of the Executive shall inure to
the benefit of and be enforceable by the Executive's personal
or legal representatives, executors, administrators, heirs
and beneficiaries. All amounts payable to the Executive under
Sections 3, 5, and 7 of this Agreement if the Executive had
lived shall be paid, in the event of the Executive's death,
to the Executive's estate, heirs and representatives;
provided, however, that the foregoing shall not be construed
to modify any terms of any benefit plan of the Company, as
such terms are in effect on the date of the Executive's
death, that expressly govern benefits under such plan in the
event of the Executive's death.
9. SEVERABILITY. The provisions of this Agreement shall be regarded as
divisible, and if any of said provisions or any part hereof are
declared invalid or unenforceable by a court of competent
jurisdiction, then the validity and enforceability of the remainder of
such provisions or parts hereof and the applicability thereof shall
not be affected thereby.
10. AMENDMENT. This Agreement may not be amended or modified at any time
except by written instrument executed by the Company and the
Executive.
11. WITHHOLDING. The Company shall be entitled to withhold from amounts to
be paid to the Executive hereunder any federal, state or local
withholding or other taxes or charges which it is from time to time
required to withhold; provided, that the amount so withheld shall not
exceed the minimum amount required to be withheld by law (unless the
Executive has otherwise indicated in writing). The Company shall be
entitled to rely on an opinion of nationally recognized tax counsel if
any question as to the amount or requirement of any such withholding
shall arise.
12. NOTICE. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be
deemed to have been duly given when actually received, whether
hand-delivered (as long as receipt is acknowledged), sent by
telecopier, facsimile transmission or other electronic means of
transmitting
7
written documents (as long as receipt is acknowledged) or mailed by
United States certified or registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xxxx X. Xxxxx
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to the Company:
Xxxxx Enterprises, Incorporated
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that a notice of change of address shall
be effective only upon receipt.
13. NO WAIVER; ENTIRE AGREEMENT. No waiver by any party hereto of any
breach of this Agreement by any other party hereto shall be deemed a
waiver of any similar or dissimilar term or condition at the same or
at any prior or subsequent time. This Agreement is the entire
agreement between the parties hereto with respect to the Executive's
employment by the Company and there are no agreements or
representations, oral or otherwise, expressed or implied, with respect
to or related to the employment of the Executive which are not set
forth in this Agreement.
14. NO ASSIGNMENT. Except as expressly set forth herein, no party shall
assign any of his or its rights under this Agreement without the prior
written consent of the other party and any attempted assignment
without such prior written consent shall be null and void and without
legal effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together will constitute but one and the same instrument.
16. GOVERNING LAW.
(a) The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the
State of Florida, except that Section 16(b) shall be
construed in accordance with the Federal Arbitration Act if
arbitration is chosen by the Executive as the method of
dispute resolution.
(b) Any dispute arising out of this Agreement shall, at the
Executive's election, be determined by either (i) arbitration
under the rules of the American Arbitration Association then
in effect (but subject to any evidentiary standards set forth
in this Agreement), in which both parties shall be bound by
the arbitration award, or (ii) by litigation. Whether the
dispute is to be settled by arbitration or litigation, the
venue for the arbitration or litigation shall be Tampa,
Florida or, at the Executive's election, if the Executive is
no longer residing or working in the Tampa, Florida
metropolitan area, in the judicial district encompassing the
city in which the Executive resides; provided, that, if the
Executive is not then residing in the United States, the
election of the Executive with respect to such venue shall be
either Tampa, Florida or in the judicial district
encompassing that city in the United States among the thirty
cities having the largest population (as determined by the
most recent United States Census data available at that time)
that is closest to the Executive's residence. The parties
consent to personal jurisdiction in each trial court in the
selected venue having subject matter jurisdiction
notwithstanding their residence or situs, and each party
irrevocably consents to service of process in the manner
provided hereunder for the giving of notices.
17. CERTAIN RULES OF CONSTRUCTION. No party shall be considered as being
responsible for the drafting of this Agreement for the purpose of
applying any rule construing ambiguities against the drafter or
otherwise. No draft of this Agreement shall be taken into account in
construing this Agreement. Any provision of this Agreement which
requires an agreement in writing shall be deemed to require that the
writing in question be signed by the Executive and an authorized
representative of the Company.
8
18. HEADINGS. The headings herein contained are for reference only and
shall not affect the meaning or interpretation of any provision of
this Agreement.
APPENDIX A
For purposes of Section 5(d) of this Agreement, a Change of Control shall be
deemed to have occurred if the event set forth in any one of the following
paragraphs shall have occurred:
(i) any person or entity, or group thereof acting in concert (a
"Person") (other than (A) the Company or any of its
subsidiaries, (B) a trustee or other fiduciary holding
securities under any employee benefit plan of the Company or
any of its subsidiaries, (C) an underwriter temporarily
holding securities pursuant to an offering of such securities
or (D) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same
proportions as their ownership of stock in the Company),
being or becoming the "beneficial owner" (as such term is
defined in Securities and Exchange Commission ("SEC") Rule
13d-3 under the Exchange Act) of securities of the Company
which, together with securities previously owned, confer upon
such person, entity or group the combined voting power, on
any matters brought to a vote of shareholders, of twenty
percent (20%) or more of the then outstanding shares of
voting securities of the Company; or
(ii) the sale, assignment or transfer of assets of the Company or
any subsidiary or subsidiaries, in a transaction or series of
transactions, if the aggregate consideration received or to
be received by the Company or any such subsidiary in
connection with such sale, assignment or transfer is greater
than fifty percent (50%) of the book value, determined by the
Company in accordance with generally accepted accounting
principles, of the Company's assets determined on a
consolidated basis immediately before such transaction or the
first of such transactions; or
(iii) the merger, consolidation, share exchange or reorganization
of the Company (or one or more direct or indirect
subsidiaries of the Company) as a result of which the holders
of all of the shares of capital stock of the Company as a
group would receive less than fifty percent (50%) of the
combined voting power of the voting securities of the Company
or such surviving or resulting entity or any parent thereof
immediately after such merger, consolidation, share exchange
or reorganization; or
(iv) the adoption of a plan of complete liquidation or the
approval of the dissolution of the Company; or
(v) the commencement (within the meaning of SEC Rule 13e-4 under
the Exchange Act) of a tender or exchange offer which, if
successful, would result in a Change of Control of the
Company; or
(vi) a determination by the Board of Directors of the Company, in
view of the then current circumstances or impending events,
that a Change of Control of the Company has occurred or is
imminent, which determination shall be made for the specific
purpose of triggering the operative provisions of this
Agreement.
9
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
XXXXX ENTERPRISES, INCORPORATED
Dated: March 6, 2000 By:
----------------------- --------------------------------------
Xxxxx X. Xxxxxx, President
EXECUTIVE
Dated: March 6, 2000
----------------------- --------------------------------------
Xxxx X. Xxxxx
10
EXHIBIT A TO EMPLOYMENT AGREEMENT
Performance Bonus: up to 100% Base Salary as determined by the Board of
Directors of the Company, payable at the time during the year that the Company
customarily pays bonuses. The annual performance Bonus will be based upon the
following factors, weighted in the manner below indicated, unless otherwise
agreed by the Company and the Executive:
50% Achieving all street expectations for the quarters and
the relevant year
30% Achieving the Operating Plan for the relevant year
20% Personal effectiveness of the Executive in his assigned role
Performance Options: For each calendar year in which this Exhibit A shall be in
effect, the Executive shall be granted options to acquire 720,000 shares at an
exercise price determined in accordance with the terms of the 1997 Management
Stock Incentive Plan. The exercise price per share effective for grants under
the 1997 Management Stock Incentive Plan for 2000 is $18. The Performance
Options shall vest quarterly in accordance with the following Schedule upon
meeting the financial performance standards stated below:
Standard Q1 Q2 Q3 Q4
-------- -- -- -- --
Revenues at street level 60,000 60,000 60,000 60,000
Gross Profit Margin at
street level 60,000 60,000 60,000 60,000
Operating Net Profit at
street level 60,000 60,000 60,000 60,000
An additional award of 100,000 options shall be made for each of the foregoing
financial performance standards which are met for all 4 quarters.
IN WITNESS WHEREOF, the parties have executed this Exhibit A as of the 6th day
of March, 2000.
XXXXX ENTERPRISES, INCORPORATED
By:
--------------------------------------
Xxxxx Xxxxxx, President
--------------------------------------
XXXX X. XXXXX