EMPLOYMENT AGREEMENT
AGREEMENT entered into as of June 20, 1996 between THE
XXXXXX-XXXXX CORPORATION, a New York corporation having its
principal place of business at Norwalk, Connecticut (the
"Company") and Xxxxxx X. Xxxx, residing at 0000 Xxxxx Xxxx,
Xx. Xxxxxxxxxx, XX 00000 (the "Employee").
WHEREAS, the Employee has rendered and/or will render
valuable services to the Company and it is regarded essential by
the Company that it have the benefit of Employee's services in
future years; and
WHEREAS, the Board of Directors of the Company believes
that it is essential that, in the event of the possibility of a
Change in Control of the Company (as defined herein), the
Employee be able to continue his attention and dedication to his
duties and to assess and advise the Board of Directors of the
Company (the "Board") whether such proposals would be in the best
interest of the Company and its shareholders without distraction
regarding any uncertainty concerning his future with the Company;
and
WHEREAS, the Employee is willing to agree to continue
to serve the Company in the future;
NOW, THEREFORE, it is mutually agreed as follows:
1. Employment. The Company agrees to employ Employee,
and the Employee agrees to serve as an employee of the Company or
one or more of its subsidiaries after a Change of Control during
the Period of Employment (as those terms are defined in Section 2
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hereof) in such executive capacity as Employee served immediately
prior to the Change in Control which caused the commencement of
the Period of Employment. The Employee also agrees to serve
during the Period of Employment, if elected or appointed thereto,
as a Director of the Board of Directors of the Company and as a
member of any committee of the Board of Directors. Notwith-
standing anything to the contrary herein, the Period of
Employment shall not commence and the Employee shall not be
entitled to any rights, benefits, or payments hereunder unless
and until a Change in Control has occurred.
2. Definitions.
(a) Cause. During the Period of Employment, "Cause"
means termination upon (i) the willful and continued failure by
the Employee to perform substantially his duties with the Company
(other than any such failure resulting from the Employee's
incapacity due to physical or mental illness) after a demand for
a substantial performance is delivered to the Employee by the
Chief Executive Officer of the Company ("CEO") which specifically
identifies the manner in which the CEO believes that the Employee
has not substantially performed his duties, or (ii) the willful
engaging by the Employee in illegal conduct which is materially
and demonstrably injurious to the Company. For purposes of this
Section 2(a), no act, or failure to act, on the part of the
Employee shall be considered "willful" unless done, or omitted to
be done, by the Employee in bad faith and without reasonable
belief that the Employee's action or omission was in, or not
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opposed to, the best interests of the Company. Any act, or
failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be
done, or omitted to be done, by the Employee in good faith and in
the best interests of the Company. Notwithstanding the
foregoing, the Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by
the affirmative vote of not less than three quarters of the
entire membership of the Board at a meeting of the Board called
and held for that purpose (after reasonable notice to the
Employee and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion
of the Board the Employee was guilty of the conduct set forth
above in (i) or (ii) of this Section 2(a) and specifying the
particulars thereof in detail.
(b) Cash Compensation. "Cash Compensation" shall mean
the sum of (i) Employee's Base Salary (determined in accordance
with the provisions of Section 4(a) hereof) and (ii) Executive's
incentive compensation (provided for under Section 4(b) hereof),
which shall be an amount equal to the greatest of (x) the average
of the amount of Employee's incentive compensation for the last
three completed fiscal years immediately prior to the Employee's
termination of employment (whether or not such years occurred
during the Period of Employment), (y) the target amount of such
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Employee's incentive compensation for the fiscal year in which
his termination of employment occurs or (z) the Employee's target
amount for the fiscal year in which the Change in Control occurs.
(c) Change in Control. "Change in Control" means the
occurrence of any of the following: an event that would be
required to be reported (assuming such event has not been
"previously reported") in response to Item 1(a) of the Current
Report on Form 8-K, as in effect on the date hereof, pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934;
provided, however, that, without limitation, such a Change in
Control shall be deemed to have occurred at such time as (i) any
"person" within the meaning of Section 14(d) of the Securities
Exchange Act of 1934 becomes the "beneficial owner" as defined in
Rule 13d-3 thereunder, directly or indirectly, of more than 25%
of the Company's Common Stock; (ii) during any two-year period,
individuals who constitute the Board of Directors of the Company
(the "Incumbent Board") as of the beginning of the period cease
for any reason to constitute at least a majority thereof,
provided that any person becoming a director during such period
whose election or nomination for election by the Company's
stockholders was approved by a vote of at least three quarters of
the Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is named
as a nominee for director without objection to such nomination)
shall be, for purposes of this clause (ii), considered as though
such person were a member of the Incumbent Board; or (iii) the
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approval by the Company's stockholders of the sale of all or
substantially all of the stock or assets of the Company.
(d) Disability. "Disability" means the absence of the
Employee from his duties with the Company on a full-time basis
for one hundred eighty (180) consecutive days as a result of
incapacity due to physical or mental illness.
(e) Good Reason. During the Period of Employment,
"Good Reason" means:
(i) an adverse change in the status of the Employee
(other than any such change primarily attributable to the fact
that the Company may no longer be publicly owned) or position(s)
as an officer of the Company as in effect immediately prior to
the Change in Control or the assignment to the Employee of any
duties or responsibilities which, in his reasonable judgment, are
inconsistent with such status or position(s), or any removal of
the Employee from or any failure to reappoint or reelect him to
such position(s) (except in connection with the termination of
the Employee's employment for Cause, Disability, or upon
attaining age 65 or upon taking early retirement under any of the
Company's retirement plans, or as a result of death or by the
Employee other than for Good Reason);
(ii) a reduction by the Company after a Change in
Control in the Employee's Base Salary;
(iii) a material reduction after a Change in Control
in the Employee's total annual compensation; provided, however,
that for these purposes a reduction for any year of over 10% of
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total compensation measured by the preceding year without a
substantially similar reduction to all other executives
participating in incentive compensation plans shall be considered
"material"; and the failure of the Company to adopt or renew a
stock option plan or to grant amounts of restricted stock or
stock options, which are consistent with the Company's prior
practices, to the Employee shall also be considered a material
reduction, unless the Employee participates in substitute
programs that provide substantially equivalent economic value to
the Employee;
(iv) the failure by the Company to continue in effect
any Benefit Plan (as hereinafter defined) in which Employee was
participating at the time of the Change in Control (or Benefit
Plans providing Employee with at least substantially similar
benefits) other than as a result of the normal expiration of any
such Benefit Plan in accordance with its terms as in effect at
the time of the Change in Control, or the taking of any action,
or the failure to act, by the Company which would adversely
affect Employee's continued participation in any such Benefit
Plans on at least as favorable a basis to Employee as is the case
immediately prior to the Change in Control or which would
materially reduce Employee's benefits in the future under any of
such Benefit Plans or deprive Employee of any material benefit
enjoyed by Employee immediately prior to the Change in Control;
(v) the failure by the Company after a Change in
Control to provide and credit Employee with the number of paid
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vacation days to which Employee was then entitled in accordance
with the Company's normal vacation policy as in effect
immediately prior to the Change in Control; or
(vi) the Company's requiring the Employee after a
Change in Control to be based more than fifty miles from the
Employee's principal place of business immediately prior to the
Change in Control except for required travel on the Company's
business to an extent substantially consistent with the business
travel obligations which he undertook on behalf of the Company
prior to the Change in Control.
(f) Period of Employment. (i) "Period of Employment"
means, subject to the provisions of Section 2(f)(ii), the period
of thirty-six (36) months commencing on the date of a Change in
Control (as defined in Section 2(c) hereof) and the period of any
extension or extensions thereof in accordance with the terms of
this Section. The Period of Employment shall be extended
automatically by one week for each week in which the Employee's
employment continues after the date of a Change in Control.
(ii) Notwithstanding the provisions of Section 2(f)(i)
hereof, the Period of Employment shall terminate upon the
occurrence of the earliest of (A) the Employee's attainment of
age 65, or the election by the Employee to retire early from the
Company under any of its retirement plans, (B) the death of the
Employee, (C) the Disability of the Employee or (D) a termination
of Employee's employment by the Company for Cause or by the
Employee without Good Reason.
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(g) Termination Date. "Termination Date" means the
date on which the Period of Employment terminates.
3. Duties During the Period of Employment. While
employed by the Company during the Period of Employment, the
Employee shall devote his full business time, attention, and best
efforts to the affairs of the Company and its subsidiaries;
provided, however, that the Employee may engage in other
activities, such as activities involving charitable, educational,
religious, and similar types of organizations, speaking
engagements, membership on the board of directors of other
organizations, and similar types of activities to the extent that
such other activities do not prohibit the performance of his
duties under this Agreement, or inhibit or conflict in any
material way with the business of the Company and its
subsidiaries.
4. Current Cash Compensation.
(a) Base Salary. The Company will pay to the Employee
while employed by the Company during the Period of Employment an
annual base salary ("Base Salary") in an amount determined by the
Board of Directors or its Compensation Committee which shall
never be less than the greater of (i) the Employee's Base Salary
prior to the commencement of the Period of Employment or (ii) his
Base Salary during the preceding year of the Period of
Employment; provided, however, that it is agreed between the
parties that the Company shall review annually the Employee's
Base Salary, and in light of such review may, in the discretion
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of the Board of Directors or its Compensation Committee, increase
such Base Salary taking into account the Employee's responsi-
bilities, inflation in the cost of living, increase in salaries
of executives of other corporations, performance by the Employee,
and other pertinent factors. The Base Salary shall be paid in
substantially equal biweekly installments while Employee is
employed by the Company.
(b) Incentive Compensation. While employed by the
Company during the Period of Employment, the Employee shall
continue to participate in such of the Company's incentive
compensation programs for executives as the Employee participated
in prior to the commencement of the Period of Employment. Any
amount awarded to the Employee under such programs shall be paid
to Employee in accordance with the terms thereof.
5. Employee Benefits.
(a) Vacation and Sick Leave. The Employee shall be
entitled during the Period of Employment to a paid annual
vacation of not less than twenty (20) business days during each
calendar year while employed by the Company and to reasonable
sick leave.
(b) Regular Reimbursed Business Expenses. The Company
shall reimburse the Employee for all expenses and disbursements
reasonably incurred by the Employee in the performance of his
duties during the Period of Employment.
(c) Employment Benefit Plans or Arrangements. While
employed by the Company, Employee shall be entitled to
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participate in all employee benefit plans, programs, or
arrangements ("Benefit Plans") of the Company, in accordance with
the terms thereof, as in effect from time to time, which provide
benefits to senior executives of the Company. For purposes of
this Agreement, Benefit Plans shall include, without limitation,
any compensation plan such as an incentive, deferred, stock
option or restricted stock plan, or any employee benefit plan
such as a thrift, pension, profit sharing, pre-tax savings,
medical, dental, disability, salary continuation, accident, life
insurance plan, or a relocation plan or policy, or any other
plan, program, or policy of the Company intended to benefit
employees.
6. Termination of Employment.
(a) Termination by the Company for Cause or
Termination by the Employee Other Than for Good Reason. If
during the Period of Employment the Company terminates the
employment of the Employee for Cause or if the Employee
terminates his employment other than for Good Reason the Company
shall pay the Employee (i) the Employee's Base Salary through the
end of the month in which the Termination Date occurs, (ii) any
incentive compensation payable to him pursuant to Section 4(b)
hereof, including a pro rata share for any partial year, (iii)
any accrued vacation pay, and (iv) benefits payable to him
pursuant to the Company's Benefit Plans as provided in Section
5(c) hereof through the end of the month in which the Termination
Date occurs. The amounts and benefits set forth in clauses (i),
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(ii), (iii) and (iv) of the preceding sentence shall hereinafter
be referred to as "Accrued Benefits."
(b) Termination by the Company Without Cause or by the
Employee for Good Reason. If during the Period of Employment the
Company terminates the Employee's employment with the Company
without Cause or the Employee terminates his employment with the
Company for Good Reason, the Company will pay to Employee all
Accrued Benefits and, in addition, pay or provide to the Employee
the following:
(i) within thirty (30) days after the date of
termination, a lump sum equal to the greater of
(A) the Employee's Cash Compensation for the
remainder of the Period of Employment or (B) two
times the Employee's Cash Compensation;
(ii) for the greater of two years or the remainder of
the Period of Employment immediately following the
Employee's date of termination, the Employee and
Employee's family shall continue to participate in
any Benefit Plans of the Company (as defined in
Section 5(c) hereof) in which Employee or
Employee's family participated at any time during
the one-year period ending on the day immediately
preceding Employee's termination of employment,
provided that (a) such continued participation is
possible under the terms of such Benefit Plans, and
(b) the Employee continues to pay contributions for
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such participation at the rates paid for similar
participation by active Company employees in
similar positions to that held by the Employee
immediately prior to the date of termination. If
such continued participation is not possible, the
Company shall provide, at its sole cost and
expense, substantially identical benefits to the
Employee plus pay an additional amount to the
Employee equal to the Employee's liability for
federal, state and local income taxes on any
amounts includible in the Employee's income by
virtue of the terms of this Section 6(b)(ii) so
that Employee does not have to personally pay any
federal, state and local income taxes by virtue of
the terms of this Section 6(b)(ii);
(iii) three additional years of service credit under the
Company's Non-Qualified Plans and, for purposes of
such plans, Employee's final average pay shall be
deemed to be his Cash Compensation for the year in
which the date of termination occurs;
(iv) the Company shall take all reasonable actions to
cause any Company restricted stock ("Restricted
Stock") granted to Employee to become fully vested
and any options to purchase Company stock
("Options") granted to Employee to become fully
exercisable, and in the event the Company cannot
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effect such vesting or acceleration within sixty
(60) days, the Company shall pay within thirty
(30) days thereafter to Employee (i) with respect
to each Option, an amount equal to the product of
(x) the number of unvested shares subject to such
Option, multiplied by (y) the excess of the fair
market value of a share of Company common stock on
the date of Employee's termination of employment,
over the per share exercise price of such Option
and (ii) with respect to each unvested share of
Restricted Stock an amount equal to the fair
market value of a share of Company common stock on
the date of Employee's termination of employment.
Except as provided in the following sentence, the amounts payable
to the Employee under this Section 6(b) shall be absolutely owing
and shall not be subject to reduction or mitigation as a result
of employment of the Employee elsewhere after the date of
termination. Notwithstanding any provision herein to the
contrary, the benefits described in clauses (i), (ii) and (iii)
of this Section 6(b) shall only be payable with respect to the
period ending upon the earlier of (i) the end of the period
specified in each such clause or (ii) Employee's attainment of
age 65.
7. Gross-Up. In the event any amounts due to the
Employee under this Agreement after a Change in Control, under
the terms of any Benefit Plan, or otherwise payable by the
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Company or an affiliate of the Company are subject to excise
taxes under Section 4999 of the Internal Revenue Code of 1986, as
amended ("Excise Taxes"), the Company shall pay to the Employee,
in addition to any other payments due under other provisions of
this Agreement, an amount equal to the amount of such Excise
Taxes plus the amount of any federal, state and local income or
other taxes and Excise Taxes attributable to all amounts,
including income taxes, payable under this Section 7, so that
after payment of all income, Excise and other taxes with respect
to the amounts due to the Employee under this Agreement, the
Employee will retain the same net after tax amount with respect
to such payments as if no Excise Taxes had been imposed.
8. Governing Law. This Agreement is governed by, and
is to be construed and enforced in accordance with, the laws of
the State of Connecticut. If under such laws any portion of this
Agreement is at any time deemed to be in conflict with any
applicable statute, rule, regulation, or ordinance, such portion
shall be deemed to be modified or altered to conform thereto or,
if that is not possible, to be omitted from this Agreement, and
the invalidity of any such portion shall not affect the force,
effect, and validity of the remaining portion hereof.
9. Notices. All notices under this Agreement shall be
in writing and shall be deemed effective when delivered in person
(in the Company's case, to its Secretary) or seventy-two (72)
hours after deposit thereof in the U.S. mail, postage prepaid,
for delivery as registered or certified mail -- addressed, in the
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case of the Employee, to the Employee at Employee's residential
address, and in the case of the Company, to its corporate
headquarters, attention of the Secretary, or to such other
address as the Employee or the Company may designate in writing
at any time or from time to time to the other party. In lieu of
personal notice or notice by deposit in the U.S. mail, a party
may give notice by telegram, fax or telex.
10. Miscellaneous. This Agreement may be amended only
by a subsequent written agreement of the Employee and the
Company. This Agreement shall be binding upon and shall inure to
the benefit of the Employee, the Employee's heirs, executors,
administrators, beneficiaries, and assigns and to the benefit of
the Company and its successors. Notwithstanding anything in this
Agreement to the contrary, nothing herein shall prevent or
interfere with the ability of the Company to terminate the
employment of the Employee prior to a Change in Control nor be
construed to entitle Employee to be continued in employment prior
to a Change in Control and this Agreement shall terminate if
Employee or the Company terminates Employee's employment prior to
a Change in Control. Similarly, nothing herein shall prevent the
Employee from retiring under any of the Company's retirement
plans and receiving the corresponding benefits thereunder
consistent with the treatment of other Company employees.
11. Fees and Expenses. The Company shall pay all
reasonable legal fees and related expenses incurred by the
Employee in connection with this Agreement following a Change in
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Control of the Company, including, without limitation, all such
fees and expenses, if any, incurred in connection with:
(i) contesting or disputing any termination of the Employee's
employment hereunder; or (ii) the Employee seeking to obtain or
enforce any right or benefit provided by the Agreement.
12. Arbitration. Any dispute or controversy arising
under or in connection with this Agreement shall be settled
exclusively by arbitration in Connecticut by three arbitrators in
accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction; provided, however, that
the Employee shall be entitled to be paid as if his or her
employment continued during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
The Company shall bear all costs and expenses arising in
connection with any arbitration pursuant to this Section 12.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the year and day first above written.
THE XXXXXX-XXXXX CORPORATION
By: /s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Chairman, President and
Chief Executive Officer
ATTEST:
By: /s/ X. X. Xxxxx
Xxxxxxx X. Xxxxx
Vice President
General Counsel & Secretary
ACCEPTED AND AGREED:
/s/ Xxxxxx X. Xxxx
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