EXHIBIT 10
RETIREMENT AGREEMENT
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This Retirement Agreement (the "Agreement") is entered
into by Xxxxxxxx X. Xxxxxx (the "Employee") and Xxxxxx Group
Inc., a Delaware corporation (the "Company") (collectively, the
"Parties"), in consideration of the respective agreements and
promises of the Parties contained in this Agreement. The Parties
acknowledge that the terms and conditions of this Agreement have
been voluntarily agreed to and that such terms are intended to be
final and binding.
1. Retirement. (a) It is hereby agreed that
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Employee will retire on a date mutually agreeable to the Parties,
but in no event later than December 15, 1998 (the "Retirement
Date"). Employee agrees that, effective as of the Retirement
Date, Employee will resign from his positions as President and
Chief Executive Officer and as an employee and a director of the
Company and, as applicable, as an employee, officer and director
of each of the Company's subsidiaries. Employee further agrees
to execute any documents as reasonably requested by the Company
to properly reflect such retirement. Employee understands and
agrees that, from and after the Retirement Date, he will no
longer be authorized to incur any expenses, obligations or
liabilities on behalf of the Company.
(b) Employee agrees that, for the period
beginning on the date of this Agreement and expiring on the
Retirement Date, Employee shall: (i) continue to hold the titles
of President and Chief Executive Officer of the Company; (ii)
continue to serve as a director of the Company; and (iii) to the
extent requested by the Company's Board of Directors or its
designee, (a) assist in the management of the Company, (b) assist
in the search and recruitment of a successor and (c) if a
successor is named prior to the Retirement Date, cooperate with
the successor until the Retirement Date in facilitating a smooth
transition of leadership.
2. Retirement Benefits. Subject to this Agreement
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becoming effective in accordance with Section 12, and in
consideration for acceptance of the terms contained in this
Agreement and the release of claims contained in Section 3, the
Company agrees to provide Employee with the compensation and
benefits set forth in paragraphs (a) through (n) of this Section
2 (the "Retirement Benefits"):
(a) The Company shall continue to pay to Employee
his base salary, at the rate in effect on the Retirement Date,
which is $47,084 per month (the "Base Salary"), from the
Retirement Date until August 21, 2001 (the "Continuation Period"),
which shall not be reduced by any compensation received by Employee
from any other employment (including self-employment). In the
event Employee dies prior to August 21, 2001, the Employee's
spouse, or if the Employee's spouse dies prior to August 21, 2001,
the Employee's designated beneficiary (which may be a trust
established by Employee), shall be entitled to continue to receive
the payments to which Employee would have been entitled under this
paragraph (a) until August 21, 2001.
(b) The Company shall pay to Employee a short
term incentive award in respect of 1998, which shall be equal to
$847,512 (150% of the Base Salary) (the "Annual Bonus"). The
amount and payment of the Annual Bonus shall not be contingent
upon the attainment of any performance goals. The Annual Bonus
in respect of 1998 shall be paid at the same time as annual
bonuses are paid to the Company's other senior executives in
respect of 1998 (the "1998 Bonus Payment Date"). In the event
Employee dies prior to the 1998 Bonus Payment Date, the Employee's
spouse, or if the Employee's spouse dies prior to the 1998 Bonus
Payment Date, the Employee's designated beneficiary (which may be
a trust established by Employee), shall be entitled to receive the
payment to which Employee would have been entitled under this
paragraph (b).
(c) On January 5, 1999, and on or before the fifth
(5th) day of each calendar month through and including August 2001,
the Company shall pay to Employee an amount equal to $70,626
(one-twelfth (1/12) of the Annual Bonus); PROVIDED, HOWEVER, that
the payment in respect of August 2001 shall be $47,843 (21/31 of
$70,626). In the event Employee dies prior to August 21, 2001, the
Employee's spouse, or if the Employee's spouse dies prior to August
21, 2001, the Employee's designated beneficiary (which may be a
trust established by Employee), shall be entitled to continue to
receive the payments to which Employee would have been entitled
under this paragraph (c) until August 21, 2001.
(d) During the Continuation Period, the Company
shall continue Employee's and his spouse's participation in and
coverage under the Company's medical and dental plans in which
the Employee and his spouse participated immediately prior to the
Retirement Date, subject to Employee's or his spouse's, as the
case may be, payment of all applicable employee contributions or
premiums at the rate in effect from time to time for the
Company's active employees.
(e) Following the Continuation Period, the
Employee and his spouse shall be eligible for that health
insurance coverage, if any, generally provided by the Company to
senior executives retiring on the last day of the Continuation
Period and their spouses. Employee's and his spouse's
eligibility shall be determined as if Employee continued in
employment with the Company through the end of the Continuation
Period.
(f) The Company shall continue to pay all
premiums on Employee's life insurance policy issued under the
Company's Officer Enhanced Life Insurance Program (the "Life
Insurance Program") until the Employee's sixty-fifth (65th)
birthday. The Company shall provide Employee an income tax
gross-up equal to the product of (1) 35% plus the applicable
state income rate and (2) the Employee's taxable income in
respect of these premiums.
(g) The Company shall pay to Employee within ten
(10) days after the Retirement Date an amount in cash equal to
$1,305,420 in satisfaction of all of his outstanding performance
units under the Company's 1996 Long Term Incentive Plan.
(h) In satisfaction of any benefits payable to
Employee under the Company's Supplemental Senior Officer
Retirement Plan (the "SORP"), Supplemental Executive Retirement
Plan (the "SERP") and Retirement Benefit Equalization Plan, the
Company shall pay
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to Employee, beginning September 1, 2001, a
monthly lifetime benefit under the SORP of $33,576.10 and a
monthly lifetime benefit under the SERP of $4,977.03. In the
event Employee dies after September 1, 2001, and is survived by
his spouse, Employee's spouse shall be entitled to receive a
monthly lifetime benefit under the SORP of $16,788.05 commencing
on the first day of the month following the Employee's death. No
benefit is payable to Employee's spouse under the SERP. In lieu
of the form of payment specified in this paragraph (h) in respect
of the SORP, Employee may elect to receive an actuarially
equivalent benefit payable in any of the optional forms of
benefit provided under the SORP. Any such election must be
irrevocable and made prior to September 1, 2000. In the event
Employee dies prior to September 1, 2001, and is survived by his
spouse, Employee's spouse shall be entitled to receive a monthly
lifetime benefit, beginning September 1, 2001, equal to
$16,788.05. Actuarial equivalence for purposes of this paragraph
(h) shall be determined in accordance with the provisions of the
SORP as in effect on the date of this Agreement.
(i) Within ten (10) days after the Retirement
Date, the Company shall (1) transfer to Employee the title of
the Company-provided automobile being utilized by the Employee as
of the Retirement Date and (2) provide Employee an income tax
gross-up equal to the product of (x) 35% plus the applicable
state income tax rate and (y) the value of the car includible as
taxable income by Employee. The Company shall be responsible for
any sales tax imposed on the transfer of title.
(j) On or before December 15, 1998, the Company
shall offer to purchase Employee's primary residence at a price
established by a third party appraiser selected by Employee and
reasonably acceptable to the Company. The Company shall, in
accordance with the Company's policy, reimburse Employee for the
costs of relocating Employee and his spouse to any location
within the forty-eight contiguous states. The Company shall
provide Employee an income tax gross-up equal to the product of
(1) 35% plus the applicable state income tax rate and (2)
Employee's taxable income in respect of the Company's purchase of
Employee's residence and relocation of Employee and his spouse.
(k) During the Continuation Period, the Company
shall provide Employee with financial planning services in
accordance with the Company's policy as in effect from time to
time for the Company's active employees, but, in no event, on
terms less favorable than under the Company's policy as in effect
on the date of this Agreement. The annual cost to the Company
shall not exceed $5,000. The Company shall provide Employee an
income tax gross-up equal to the product of (1) 35% plus the
applicable state income tax rate and (2) Employee's taxable
income in respect of the financial planning services.
(l) All outstanding stock options held by the
Employee shall become vested as of the Retirement Date. In
accordance with the Company's amended and restated 1991 Stock
Incentive Plan, Employee shall have five (5) years from the
Retirement Date within which to exercise the options; PROVIDED,
HOWEVER, that if the 1991 Stock Incentive Plan is amended to
provide for a longer post-employment exercise period, Employee
shall be allowed to exercise his stock options for that longer
period which shall be deemed to have commenced on the Retirement
Date.
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(m) In respect of all incentive stock units granted
to the Employee, the Company shall pay to the Employee an amount
equal to the product of (1) 125,199 and (2) the greater of (i)
the closing per share price of the Company's common stock on the
Retirement Date and (ii) $30. The Company shall pay such amount
in cash within ten (10) days after the Retirement Date. In addition,
on January 15, 1999, the Company shall pay to the Employee an amount
equal to the product of (1) 96,000 and (2) the aggregate per share
cash dividends paid to the Company's shareholders in the third and
fourth quarters of 1998.
(n) The Company shall reimburse Employee for his
attorney's fees in connection with negotiating this Agreement,
subject to a maximum amount of $1,000. The Company shall provide
Employee an income tax gross-up equal to the product of (1) 35%
plus the applicable state income tax rate and (2) the amount of
reimbursement.
The Retirement Benefits shall be paid or provided
subject to the withholding of any taxes or other amounts required
by law to be withheld.
Any gross-up payments under Sections 1(f), (i), (j),
(k) and (n) shall be payable on or before January 15 of the year
following the year for which the income is includible in the
Employee's taxable income.
It is mutually agreed that a portion of the Retirement
Benefits provided to Employee under this Section 2 exceed what he
is already entitled to under the Company's plans, policies and
practices.
3. Release of Claims. In consideration for the
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Retirement Benefits, the sufficiency of which is acknowledged
hereby, the Employee, with the intention of binding himself and
his heirs, executors, administrators and assigns, does hereby
release, remise, acquit and forever discharge the Company and its
present and former officers, directors, executives, agents,
attorneys, employees, affiliated companies, subsidiaries,
successors, predecessors and assigns (collectively the "Released
Parties"), of and from any and all claims, actions, causes of
action, complaints, charges, demands, rights, damages, debts,
sums of money, accounts, financial obligations, suits, expenses,
attorneys' fees and liabilities of whatever kind or nature in
law, equity or otherwise, whether accrued, absolute, contingent,
unliquidated or otherwise and whether now known or unknown,
suspected or unsuspected, which the Employee, individually or as
a member of a class, now has, owns or holds, or has at any time
heretofore had, owned or held, against any Released Party arising
out of or in any way connected with the Employee's employment
relationship with the Company, its subsidiaries, predecessors or
affiliated entities, or the termination thereof, including
without limitation, any claims for severance or vacation
benefits, unpaid wages, salary or incentive payment, breach of
contract, wrongful discharge, impairment of economic opportunity,
defamation, intentional infliction of emotional harm or other
tort, all applicable state and local labor and employment laws
(including all laws concerning unlawful and unfair labor and
employment practices) or employment discrimination under any
applicable federal, state or local statute, provision, order or
regulation including, but not limited to, any claim under Title
VII of the Civil Rights Act of 1964 ("Title VII"), Civil Rights
Act of 1988, Fair labor Standards Act, Americans with
Disabilities Act, Employee Retirement Income Security Act,
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the Federal Age Discrimination in Employment Act ("ADEA") and any
similar or analogous state statute, including without limitation
Connecticut's Human Rights Law, excepting only:
(a) those obligations of the Company under this
Agreement;
(b) any rights to indemnification the Employee
may have under applicable corporate law, the
by-laws or certificate of incorporation of any
Released Party or as an insured under any
Director's and Officer's liability insurance
policy now or previously in force; and
(c) any claims for benefits under any Company
employee benefit plans (within the meaning of
Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended).
The Employee acknowledges and agrees that this
Agreement is not to be construed in any way as an admission of
any liability whatsoever by any Released Party under Title VII,
ADEA or any other federal or state statute or the principals of
common law, any such liability having been expressly denied.
The Employee acknowledges and agrees that he has
not, with respect to any transaction or state of facts existing
prior to the date of this Agreement, filed any complaints,
charges or lawsuits against any of the Released Parties with any
governmental agency or any court or tribunal.
4. Press Releases; Confidentiality of Agreement.
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Except as may be required by applicable law, the Parties shall
mutually agree on the form of any press release relating to
Employee's retirement from the Company. Other than with respect
to information provided in any such press release or required to
be disclosed by court order, the Employee agrees not to disclose
the terms of this Agreement to any person or entity, other than
the Employee's immediate family and financial or legal advisors
who agree to be bound by the confidentiality provisions of this
Agreement.
5. Return of Company Property. Employee agrees to
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return to the Company all documents, files, and other property of
any kind belonging to the Company by no later than the Retirement
Date.
6. Non-Solicitation; Non-Discouragement of Business.
Until August 21, 2001, Employee shall not, directly or
indirectly, employ, attempt to employ or solicit for employment,
any person who currently is an employee of the Company, its
subsidiaries or affiliates; PROVIDED, HOWEVER, that the preceding
clause shall not apply with respect to Employee's two sons,
Xxxxxxx Xxxxxx and Xxxxxxx Xxxxxx. Employee further agrees that,
until August 21, 2001, he shall not discourage, or attempt to
discourage, any person, firm, corporation or business entity from
doing business with the Company or otherwise interfere with the
business relationships between the Company and any person, firm,
corporation or other business entity.
7. Non-Disparagement. Employee agrees that he will
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not make or publish any disparaging statements (whether written
or oral) regarding the Company or its subsidiaries,
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affiliates, directors, officers or employees. The Company agrees
that it shall use its best efforts to ensure that its directors and
officers do not make or publish any disparaging statements
(whether written or oral) regarding the Employee or any member of
his immediate family. Within five (5) days of the date of this
Agreement, the Company shall inform its officers and directors of
the Company's obligation under this Section 7.
8. Non-Competition. By and in consideration of the
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Retirement Benefits and as an inducement to the Company to enter
into this Agreement with Employee, Employee agrees that until
August 21, 2001, Employee shall not directly or indirectly become
engaged, concerned or interested in or be affiliated with any
other business (a "Competing Business") competing in any respect
with any material business of the Company or any of its
subsidiaries as of the date of this Agreement; PROVIDED, HOWEVER,
that nothing contained in this Agreement shall preclude the
holding (directly or through nominees) for investment of
securities of any such Competing Business which are listed on any
recognized securities exchange or are otherwise traded publicly
so long as not more than one percent (1%) of any issue of such
securities of any one company shall be so held. Employee
acknowledges that the non-competition provisions contained in
this Agreement are reasonable and necessary, in view of the
nature of the Company and Employee's knowledge thereof, in order
to protect the legitimate interests of the Company.
9. Non-Disclosure. The Parties agree that Employee
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has obtained knowledge of confidential information regarding the
business and affairs of the Company. It is therefore agreed that
Employee shall respect and protect the confidentiality of all
confidential information pertaining to the Company and its
subsidiaries, and Employee represents and agrees that he has not
and will not appropriate for his own use, disclose to any third
party, or authorize anyone else to disclose, unless authorized by
the Company in writing, any secret, confidential, proprietary or
financial information concerning the operations, future plans,
methods of doing business, or financial condition of the Company
or its subsidiaries or affiliates, any customer lists, customer
files or other information relating to the customers of the
Company or its subsidiaries or affiliates, or any lists of the
Company's shareholders that he obtained as a result of his
employment with the Company and which is not otherwise publicly
available (unless it became publicly available in violation of
this Section 9 or any other agreement of Employee). This Section
9 shall not apply to information required to be disclosed by
court order provided that the Employee shall notify the Company
prior to the disclosure of any information required to be
disclosed by court order.
10. Review Period. The Employee represents that he
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has carefully read and fully understands the terms of this
Agreement, that he has been given not less than twenty-one (21)
days to consider this Agreement, that he has been advised to
seek, and has had the opportunity to seek, the advice and
assistance of counsel with regard to this Agreement, and that he
knowingly and voluntarily, of his own free will, without any
duress, being fully informed and after due deliberate thought and
action, accepts the terms of and executes the same as his own
free act. If Employee executes this Agreement prior to the
expiration of the twenty-one day period, Employee acknowledges
that he has done so voluntarily and knowingly.
11. Revocation. Employee acknowledges and understands
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that this Agreement may be revoked by him within seven (7) days
of signing it and shall not be effective until the period during
which Employee may revoke this Agreement has expired without
Employee having
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revoked this Agreement. Revocation shall be made
by sending a written notice of revocation to Xxxxxx X. Xxxxxx,
Chairman, at Xxxxxx Group Inc., 000 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxx 00000-0000. For this revocation to be effective,
written notice must be received no later than the close of
business of the seventh (7th) day after Employee signs this
Agreement. If Employee revokes this Agreement, it shall not be
effective or enforceable and Employee will not receive or be
entitled to receive any of the Retirement Benefits provided for
in this Agreement. This Agreement shall be final and binding on
the eighth (8th) day after it has been executed and delivered to
the Company.
12. Notices. All notices and communications provided
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for in this Agreement shall be in writing and shall be deemed to
have been duly given when personally delivered or sent by
certified mail, return receipt requested, postage prepaid; if to
Employee, addressed to him at his most recent address as provided
to the Company in writing, and if to the Company, addressed to
Xxxxxx X. Xxxxxx, Chairman, at Xxxxxx Group Inc., 000 Xxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000-0000, or to such other address
as any party may have furnished to any other in accordance
herewith. All notices and communications shall be deemed to have
been received on the date of delivery thereof or on the third
business day after the mailing thereof, except that notice of
change of address shall be effective only upon receipt.
13. Breach of Representation. As a further material
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inducement to the Company to enter into this Agreement, Employee
agrees that in the event Employee breaches this Agreement or it
is discovered that any representation made in this Agreement was
false when made, all further payment or provision of the
Retirement Benefits, other than the benefit to which Employee
would be entitled under the SORP and SERP in the absence of this
Agreement based on his service and compensation through the
Retirement Date, shall cease.
14. Complete Agreement. The Parties acknowledge and
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agree that this Agreement constitutes the complete agreement
between them and that no oral modification of this Agreement is
permissible. The Parties further acknowledge and agree that this
Agreement and the terms contained herein supersede all previous
contracts and agreements between the Parties, and that all
previous contracts and agreements between the Parties, other than
contracts and agreements under which Employee has a vested right,
shall become null and void upon execution of this Agreement.
15. Counterparts. This Agreement may be executed in
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several counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the
same instrument.
16. Successors. This Agreement shall be binding upon
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any and all successors and assigns of Employee and the Company.
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17. Governing Law. Except for issues or matters as to
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which federal law is applicable, this Agreement shall be governed
by and construed and enforced in accordance with the laws of the
State of Connecticut without giving effect to the conflicts of
law principles thereof.
XXXXXX GROUP INC.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chairman
STATE OF CONNECTICUT )
) SS.
COUNTY OF HARTFORD )
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On this 6 day of July , 1998, before me
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personally appeared Xxxxxx X. Xxxxxx, to me known to be the
person who executed this Agreement and acknowledged that he
executed the same as his free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand
and affixed my official seal in the Country and State aforesaid,
the day and year first above written.
Notary Public
My Commission Expires: 06/30/01 /s/ Xxxxx X. Xxxx
By: /s/ Xxxxxxxx X. Xxxxxx
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Xxxxxxxx X. Xxxxxx
STATE OF CONNECTICUT )
) SS.
COUNTY OF HARTFORD )
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On this 6 day of July , 1998, before me
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personally appeared Xxxxxxxx X. Xxxxxx, to me known to be the
person described in and who executed this Agreement and acknowledged
that he executed the same as his free act and deed.
IN TESTIMONY WHEREOF, I have hereunto set my hand
and affixed my official seal in the Country and State aforesaid,
the day and year first above written.
Notary Public
My Commission Expires: 06/30/01 /s/ Xxxxx X. Xxxx
27279.10 (NY04)
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