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XXXXXXXX CORPORATION
EMPLOYMENT AGREEMENT
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This agreement ("Agreement") has been entered into this
27th day of November, 1996, by and between Xxxxxxxx Corporation, a
Missouri corporation ("Company"), and Xxxxxxxx X. Xxxxxxxxx, an
individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its
stockholders to reinforce and encourage the continued attention and
dedication of the Executive to the Company as a member of the
Company's management and to assure that the Company will have the
continued dedication of the Executive, notwithstanding the
possibility or occurrence of a Triggering Transaction (as defined
below) with respect to the Company or any of its Operating Lines of
Business (as defined below). The Board desires to provide for the
continued employment of the Executive on terms competitive with
those of other corporations, and the Executive is willing to
rededicate himself and continue to serve the Company.
Additionally, the Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a potential or pending
Triggering Transaction and to encourage the Executive's full
attention and dedication to the Company currently and in the event
of any potential or pending Triggering Transaction, and to provide
the Executive with compensation and benefits arrangements upon any
breach of this Agreement by the Company or upon a termination of
employment either immediately prior to or after a Triggering
Transaction which ensure that the compensation and benefits
expectations of the Executive will be satisfied. Therefore, in
order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall have
the meanings specified below, unless the context plainly requires
a different meaning.
1.1(a) "ACCRUED COMPENSATION" has the meaning set
forth in Section 4.5 of this Agreement.
1.1(b) "ACCRUED OBLIGATIONS" has the meaning set
forth in Section 4.1(a) of this Agreement.
1.1(c) "ANNUAL BASE SALARY" has the meaning set forth
in Section 2.4(a) of this Agreement.
1.1(d) "BOARD" means the Board of Directors of the
Company.
1.1(e) "CAUSE" has the meaning set forth in Section
3.3 of this Agreement.
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1.1(f) "CHANGE IN CONTROL" means:
(i) The acquisition by any individual, entity or
group, or a Person (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of
ownership of 30% or more of either (a) the then
outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or
(b) the combined voting power of the then
outstanding voting securities of the Company
entitled to vote generally in the election of
directors (the "Outstanding Company Voting
Securities"); or
(ii) Individuals who, as the date hereof,
constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a
majority of the Board; provided, however, that
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any individual becoming a director subsequent to
the date hereof whose election, or nomination for
election by the Company's stockholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board
shall be considered as though such individual
were a member of the Incumbent Board, but
excluding, as a member of the Incumbent Board,
any such individual whose initial assumption of
office occurs as a result of either an actual or
threatened election contest (as such terms are
used in Rule l4a-11 of Regulation l4A promulgated
under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Approval by the stockholders of the
Company of a reorganization, merger or
consolidation, in each case, unless, following
such reorganization, merger or consolidation,
(a) more than 50% of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such reorganization,
merger or consolidation and the combined voting
power of the then outstanding voting securities
of such corporation entitled to vote generally in
the election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and entities
who were the beneficial owners, respectively, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately
prior to such reorganization, merger or
consolidation in substantially the same
proportions as their ownership, immediately prior
to such reorganization, merger or consolidation,
of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (b) no Person beneficially owns,
directly or indirectly, 30% or more of,
respectively, the then outstanding shares of
common stock of the corporation resulting from
such reorganization, merger or consolidation or
the combined voting power of the then outstanding
voting securities of such corporation, entitled
to vote generally in the election of directors
and (c) at least a majority of the members of the
board of directors of the corporation resulting
from such reorganization, merger or consolidation
were members of the Incumbent Board at the time
of the execution of the initial agreement
providing for such reorganization, merger or
consolidation; or
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(iv) Approval by the stockholders of the Company
of (a) a complete liquidation or dissolution of
the Company or (b) the sale or other disposition
of all or substantially all of the assets of the
Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than 50% of, respectively,
the then outstanding shares of common stock of
such corporation and the combined voting power of
the then outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially owned,
directly or indirectly, by all or substantially
all of the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to
such sale or other disposition in substantially
the same proportion as their ownership,
immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities,
as the case may be, (2) no Person beneficially
owns, directly or indirectly, 30% or more of,
respectively, the then outstanding shares of
common stock of such corporation and the combined
voting power of the then outstanding voting
securities of such corporation entitled to vote
generally in the election of directors and (3) at
least a majority of the members of the board of
directors of such corporation were members of the
Incumbent Board at the time of the execution of
the initial agreement or action of the Board
providing for such sale or other disposition of
assets of the Company.
1.1(g) "COMPANY" has the meaning set forth in the
first paragraph of this Agreement and, with regard to
successors, in Section 6.2 of this Agreement.
1.1(h) "CODE" shall mean the Internal Revenue Code of
1986, as amended.
1.1(i) "CURRENT TARGET BONUS" has the meaning set
forth in Section 4.1(a) of this Agreement.
1.1(j) "DATE OF TERMINATION" has the meaning set
forth in Section 3.6 of this Agreement.
1.1(k) "DISABILITY" has the meaning set forth in
Section 3.2 of this Agreement.
1.1(l) "DISABILITY EFFECTIVE DATE" has the meaning
set forth in Section 3.2 of this Agreement.
1.1(m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the stock of an
Operating Line of Business that is or becomes a
separate corporation, limited liability
corporation, partnership or other business
entity, the sale, exchange, transfer,
distribution or other disposition of the
ownership, either beneficially or of record or
both, by the Company of more than 50% of either
(a) the then outstanding shares of common stock
(or the equivalent equity interests) of such
Operating Line of Business, or (b) the combined
voting power of the then outstanding voting
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securities of such Operating Line of Business
entitled to vote generally in the election of the
Board or the equivalent governing body of the
Operating Line of Business;
(ii) when used with reference to the merger or
consolidation of an Operating Line of Business
that is or becomes a separate corporation,
limited liability corporation, partnership or
other business entity, any such transaction that
results in the Company owning, either
beneficially or of record or both, less that 50%
of either (a) the then outstanding shares of
common stock (or the equivalent equity interests)
of such Operating Line of Business, or (b) the
combined voting power of the then outstanding
voting securities of such Operating Line of
Business entitled to vote generally in the
election of the Board or the equivalent governing
body of the Operating Line of Business; or
(iii) when used with reference to the assets of
an Operating Line of Business, the sale,
exchange, transfer, liquidation, distribution or
other disposition of assets of such Operating
Line of Business (a) having a fair market value
(as determined by the Incumbent Board)
aggregating more than 50% of the aggregate fair
market value of all of the assets of such
Operating Line of Business as of the Triggering
Transaction Date, (b) accounting for more than
50% of the aggregate book value (net of
depreciation and amortization) of all of the
assets of such Operating Line of Business, as
would be shown on a balance sheet for such
Operating Line of Business, prepared in
accordance with generally accepted accounting
principles then in effect, as of the Triggering
Transaction Date; or (c) accounting for more than
50% of the net income of such Operating Line of
Business, as would be shown on an income
statement, prepared in accordance with generally
accepted accounting principles then in effect,
for the 12 months ending on the last day of the
month immediately preceding the month in which
the Triggering Transaction Date occurs.
1.1(n) "EFFECTIVE DATE" means the date of this
Agreement.
1.1(o) "EMPLOYMENT PERIOD" means the period beginning
on the Effective Date and ending on the later of (i)
December 31, 1999, or (ii) December 31 of any
succeeding fiscal year during which notice is given by
either party (as described in Section 1.1(dd) of this
Agreement) of such party's intent not to renew this
Agreement.
1.1(p) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
1.1(q) "EXCISE TAX" has the meaning set forth in
Section 4.2(e) of this Agreement.
1.1(r) "GOOD REASON" has the meaning set forth in
Section 3.4 of this Agreement.
1.1(s) "GROSS-UP PAYMENT" has the meaning set forth
in Section 4.2(i) of this Agreement.
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1.1(t) "INCENTIVE BONUS" has the meaning set forth in
Section 2.4(b) of this Agreement.
1.1(u) "INCUMBENT BOARD" has the meaning set forth in
Section 1.1(f)(ii) of this Agreement.
1.1(v) "NOTICE OF TERMINATION" has the meaning set
forth in Section 3.5 of this Agreement.
1.1(w) "OPERATING LINES OF BUSINESS" means the
following lines of business of the Company, whether
operated as a division or as a separate subsidiary: (i)
textile rental and laundry services, which provides
textiles and laundry services, principally to health
care institutions, and, to a more limited extent, to
hotels, casinos, motels and restaurants in or near
major metropolitan areas of the United States; (ii)
uniform and business apparel manufacturing and
marketing, which manufactures and sells uniforms and
business apparel to a wide variety of institutions and
businesses in the United States, Canada and the United
Kingdom; and (iii) retail specialty stores, which
operates a nationwide chain of specialty retail stores
primarily for a clientele of nurses and other health
care professionals.
1.1(x) "OTHER BENEFITS" has the meaning set forth in
Section 4.1(d) of this Agreement.
1.1(y) "OUTSTANDING COMPANY COMMON STOCK" has the
meaning set forth in Section 1.1(f)(i) of this
Agreement.
1.1(z) "OUTSTANDING COMPANY VOTING SECURITIES" has
the meaning set forth in Section 1.1(f)(i) of this
Agreement.
1.1(aa) "PAYMENT" has the meaning set forth in Section
4.2(i) of this Agreement.
1.1(bb) "PERSON" means any "person" within the meaning
of Sections 13(d) and 14(d) of the Exchange Act.
1.1(cc) "SUPPLEMENTAL PLAN" has the meaning set forth
in Section 4.2(e) of this Agreement.
1.1(dd) "TERM" means the period that begins on the
Effective Date and ends on the earlier of: (i) the Date
of Termination as defined in Section 3.6 of this
Agreement, or (ii) the close of business on the later
of December 31, 1999 or December 31 of any renewal term
as set forth in Section 2.1 of this Agreement.
1.1(ee) "TRIGGERING TRANSACTION" means (i) a Change in
Control of the Company or (ii) a Disposition of a Major
Part of two or more of the Company's Operating Lines of
Business.
1.1(ff) "TRIGGERING TRANSACTION DATE" shall mean the
date of the Triggering Transaction.
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1.2 GENDER AND NUMBER. When appropriate, pronouns in
this Agreement used in the masculine gender include the feminine
gender, words in the singular include the plural, and words in the
plural include the singular.
1.3 HEADINGS. All headings in this Agreement are
included solely for ease of reference and do not bear on the
interpretation of the text. Accordingly, as used in this
Agreement, the terms "Article" and "Section" mean the text that
accompanies the specified Article or Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Missouri,
without reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in
accordance with the terms and provisions of this Agreement. This
Agreement will automatically renew for annual one-year periods
unless either party gives the other written notice, by September
30, 1999, or September 30 of any succeeding year, of such party's
intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the
Executive shall serve as Senior Vice President - Finance
and Administration and Chief Financial Officer subject to
the reasonable directions of the Board. The Executive
shall have such authority and shall perform such duties as
are substantially similar to the authority and duties
assigned to him on the Effective Date, subject to the
control exercised by the Board from time to time.
2.2(b) Throughout the Term of this Agreement (but
excluding any periods of vacation and sick leave to which
the Executive is entitled), the Executive shall devote
reasonable attention and time during normal business hours
to the business and affairs of the Company and shall use
his reasonable best efforts to perform faithfully and
efficiently such responsibilities as are assigned to him
under or in accordance with this Agreement; provided that,
it shall not be a violation of this paragraph for the
Executive to (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures or fulfill
speaking engagements, or (iii) manage personal
investments, so long as such activities do not
significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company
in accordance with this Agreement or violate the Company's
conflict of interest policy as in effect immediately prior
to the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed at the
location where the Executive was employed immediately prior to the
Effective Date, or any office of the Company which is located in
the greater St. Louis area.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first calendar year
within the Term of this Agreement, the Executive shall
receive an annual base salary ("Annual Base Salary") of
one hundred and sixty-four thousand dollars ($164,000),
which shall be paid in equal or
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substantially equal semi-monthly installments. During
the Term of this Agreement, the Annual Base Salary
payable to the Executive shall be reviewed at least
annually and shall be increased at the discretion of the
Board or the Compensation Committee of the Board but
shall not be reduced.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base
Salary, the Executive shall be awarded the opportunity to
earn an incentive bonus on an annual basis ("Incentive
Bonus") under any incentive compensation plan which are
generally available to other peer executives of the
Company. During the Term of this Agreement, the annual
target Incentive Bonus which the Executive will have the
opportunity to earn shall be reviewed at least annually
and be increased at the discretion of the Board or the
Compensation Committee of the Board, but in no case shall
such target annual Incentive Bonus which the Executive
will have the opportunity to earn be reduced below
Seventy-Eight Thousand Dollars ($78,000) and, further, in
no event shall the Executive receive less than 50% of such
annual target Incentive Bonus.
2.4(c) INCENTIVE, SAVINGS AND RETIREMENT PLANS.
Throughout the Term of this Agreement, the Executive shall
be entitled to participate in all incentive, savings and
retirement plans generally available to other peer
executives of the Company.
2.4(d) WELFARE BENEFIT PLANS. Throughout the Term of
this Agreement (and thereafter, subject to Sections 4.1(c)
and 4.2(g) hereof), the Executive and/or the Executive's
family, as the case may be, shall be eligible for
participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs
provided by the Company (including, without limitation,
medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death
and travel accident insurance plans and programs) to the
extent generally available to other peer executives of the
Company.
2.4(e) EXPENSES. Throughout the Term of this Agreement,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies, practices and
procedures generally applicable to other peer executives
of the Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of this
Agreement, the Executive shall be entitled to such fringe
benefits as generally are provided to other peer
executives of the Company.
2.4(g) OFFICE AND SUPPORT STAFF. Throughout the Term of
this Agreement, the Executive shall be entitled to an
office or offices of a size and with furnishings and other
appointments, and to personal secretarial and other
assistance, at least equal to those generally provided to
other peer executives of the Company.
2.4(h) VACATION. Throughout the Term of this Agreement,
the Executive shall be entitled to paid vacation in
accordance with the plans, policies, programs and
practices generally provided with respect to other peer
executives of the Company.
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SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment
Period.
3.2 DISABILITY. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability set
forth below), the Company may give to the Executive written notice
in accordance with Section 7.2 of its intention to terminate the
Executive's employment. In such event, the Executive's employment
with the Company shall terminate effective on the thirtieth (30th)
day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the thirty (30) days after
such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean that the Executive has been
unable to perform the services required of the Executive hereunder
on a full-time basis for a period of one hundred eighty (180)
consecutive business days by reason of a physical and/or mental
condition. "Disability" shall be deemed to exist when certified by
a physician selected by the Company and acceptable to the Executive
or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably). The Executive will
submit to such medical or psychiatric examinations and tests as
such physician deems necessary to make any such Disability
determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate
the Executive's employment during the Employment Period for "Cause,"
which shall mean termination based upon: (i) the Executive's
willful and continued failure to substantially perform his duties
with the Company (other than as a result of incapacity due to
physical or mental condition), after a written demand for
substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which the
Executive has not substantially performed his duties, (ii) the
Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (iii)
the Executive's material breach of any provision of this Agreement.
For purposes of this Section, no act, or failure to act on the
Executive's part shall be considered "willful" unless done, or
omitted to be done, without good faith and without reasonable
belief that the act or omission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until (i) he
receives a Notice of Termination from the Company, (ii) he is given
the opportunity, with counsel to be heard before the Board, and
(iii) the Board finds, in its good faith opinion, the Executive was
guilty of the conduct set forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his
employment with the Company for "Good Reason," which shall mean:
3.4(a) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding
for this purpose any action not taken in bad faith and
which is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
3.4(b) (i) the failure by the Company to continue in
effect any benefit or compensation plan, stock ownership
plan, life insurance plan, health and accident plan or
disability plan to which the Executive is entitled as
specified in Section 2.4, (ii) the taking of any action
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by the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or
deprive the Executive of any material fringe benefit
enjoyed by the Executive as described in Section 2.4(f),
or (iii) the failure by the Company to provide the
Executive with paid vacation to which the Executive is
entitled as described in Section 2.4(h).
3.4(c) the Company's requiring the Executive to be based
at any office or location other than that described in
Section 2.3;
3.4(d) a material breach by the Company of any provision
of this Agreement;
3.4(e) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement;
3.4(f) within a period ending at the close of business
on the date two (2) years after the Triggering Transaction
Date of any Change in Control, if the Company has failed
to comply with and satisfy Section 6.2 on or after such
Triggering Transaction Date; or
For purposes of this Section, any good faith determination
of "Good Reason" made by the Executive shall be
conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the
Company for Cause or Disability, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other
party, given in accordance with Section 7.2. For purposes of this
Agreement, a "Notice of Termination" means a written notice which
(i) indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated, and (iii) if the Date of Termination (as
defined in Section 3.6 hereof) is other than the date of receipt of
such notice, specifies the termination date (which date shall be
not more than fifteen (15) days after the giving of such notice).
The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the
Executive or the Company hereunder or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the Date of Termination
shall be the date of receipt of the Notice of Termination or any
later date specified therein, as the case may be, (ii) if the
Executive's employment is terminated by reason of death or
Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be,
or (iii) if the Executive's employment is terminated by the Company
other than for Cause, death, or Disability, the Date of Termination
shall be the date of receipt of the Notice of Termination; provided
that if within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the
parties, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
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SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE OR FOR GOOD REASON NOT IN
CONNECTION WITH A TRIGGERING TRANSACTION. If, prior to a
Triggering Transaction during the Employment Period (except in the
event that one of the following terminations of employment occurs
within the six-month period prior to the earlier of (a) a
Triggering Transaction or (b) the execution of a definitive
agreement or contract that eventually results in a Triggering
Transaction, which shall result in the payment of severance
benefits set forth in Section 4.2 of this Agreement): (i) the
Company shall terminate the Executive's employment without Cause,
or (ii) the Executive shall terminate employment with the Company
for Good Reason, the Executive shall be entitled to the payment of
the benefits provided below as of the Date of Termination:
4.1(a) Accrued Obligations. Within thirty (30) days
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after the Date of Termination, the Company shall pay to
the Executive the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid, (2) the accrued benefit payable to the
Executive under any deferred compensation plan, program or
arrangement in which the Executive is a participant
subject to the computation of benefits provisions of such
plan, program or arrangement, and (3) any accrued vacation
pay; in each case to the extent not previously paid (the
"Accrued Obligations").
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will
be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of
which is the number of days during the fiscal year for
which the Incentive Bonus is paid prior to the Date of
Termination and denominator of which is 365. For purposes
of this Agreement, the term "Current Target Bonus" means
the Incentive Bonus that would have been paid to the
Executive for the fiscal year in which the termination of
employment occurred, if the Executive's employment had not
been so terminated and the Executive had earned 100% of
the Incentive Bonus that he could have earned for such
year.
4.1(b) Annual Base Salary Continuation. For the
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remainder of the Employment Period, the Company shall pay
to the Executive, the Executive's then-current Annual Base
Salary as would have been paid to the Executive had the
Executive remained in the Company's employ throughout the
Employment Period; provided that in all cases the
Executive shall receive, at minimum, the then-current
Annual Base Salary for a period beginning on the Date of
Termination and ending two years thereafter. The Company
at any time may elect to pay the balance of such payments
then remaining in a lump sum, in which case the total of
such payments shall be discounted to present value on the
basis of the applicable Federal short-term monthly rate as
determined according to Code Section 1274(d) for the month
in which the Executive's Date of Termination occurred.
4.1(c) Medical and Health Benefit Continuation. For the
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remainder of the Employment Period (but in no case less
than one (1) year after the Date of Termination), or such
longer period as any plan, program, practice or policy may
provide, the Company shall continue medical and health
benefits to the Executive and/or the Executive's family at
least equal to those which would have been provided to
them in accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's
employment had not been terminated, in accordance with the
plans, practices, programs or policies of the
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Company as those provided generally to other peer
executives and their families; provided, however, that if
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the Executive becomes reemployed with another employer
and is eligible to receive medical or health benefits
under another employer-provided plan, the medical and
health benefits described herein shall be secondary to
those provided under such other plan during such
applicable period of eligibility.
4.1(d) Other Benefits. To the extent not previously
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paid or provided, the Company shall timely pay or provide
to the Executive and/or the Executive's family any other
amounts or benefits required to be paid or provided for
which the Executive and/or the Executive's family is
eligible to receive pursuant to this Agreement and under
any plan, program, policy or practice or contract or
agreement of the Company as those provided generally to
other peer executives and their families ("Other
Benefits").
4.2 BENEFITS UPON TERMINATION IN CONNECTION WITH A
TRIGGERING TRANSACTION. If (a) a Triggering Transaction occurs
during the Employment Period and within three years after the
Triggering Transaction Date (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall
terminate employment with the Company for Good Reason, or,
alternatively, (b) if one of the above-described terminations of
employment occurs within the six-month period prior to the earlier
of (i) a Triggering Transaction or (ii) the execution of a
definitive agreement or contract that eventually results in a
Triggering Transaction, then the Executive shall become entitled to
the payment of the benefits as provided below as of either (y) the
Date of Termination, in the case where the sequence of the
requisite events is as set forth in subsection (a) above or (z) the
Triggering Transaction Date, in the case where the sequence of the
requisite events occurred as set forth in subsection (b) above (the
relevant date for purposes of entitlement to the benefits as set
forth in this Section 4.2 is hereinafter referred to as the
"Entitlement Date"):
4.2(a) Accrued Obligations. Within thirty (30) days
-------------------
after the Entitlement Date, the Company shall pay to the
Executive the Accrued Obligations.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will
be paid an amount equal to the product of the Current
Target Bonus multiplied by a fraction, the numerator of
which is the number of days during the fiscal year for
which the Incentive Bonus is paid prior to the Date of
Termination and denominator of which is 365.
4.2(b) Severance Amount. Within thirty (30) days after
----------------
the Entitlement Date, the Company shall pay to the
Executive as severance pay in a lump sum, in cash, an
amount equal to 2.99 times an amount equal to his then-
current Annual Base Salary and Current Target Bonus. In
the event such severance amount is payable pursuant to
this Section on account of a Triggering Transaction, and
the Executive is entitled to a benefit under Article IV of
the Xxxxxxxx Corporation Management Retention and
Incentive Plan (the "Management Retention Plan") on
account of a Change in Control (as defined in the
Management Retention Plan), the Executive shall be
entitled to the larger of the amounts computed pursuant to
this Section and the amounts computed pursuant to the
Management Retention Plan without regard to this Section.
Such benefit shall be in lieu of any other benefit payable
pursuant to the Management Retention Plan.
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4.2(c) Stock Options. To the extent not otherwise
-------------
provided for under the terms of the Company's stock option
plans or the Executive's stock option agreements, all
stock options held by the Executive that have not expired
in accordance with their respective terms shall vest and
become fully exercisable as of the Entitlement Date.
4.2(d) Stock Bonus and Incentive Plan Shares. To the
-------------------------------------
extent not otherwise provided for under the terms of the
Company's Stock Bonus and Incentive Plan, all "Matching
Shares" (as defined in such plan) held by or for the
benefit of the Executive that are unvested and restricted
at the Date of Termination shall vest and become
unrestricted as of the Entitlement Date and all "Elected
Shares" (as defined in such plan) held by or for the
benefit of the Executive that are restricted at the Date
of Termination shall become unrestricted as of the
Entitlement Date.
4.2(e) Enhanced Supplemental Retirement Plan Benefits.
----------------------------------------------
The benefit payable to the Executive under the Xxxxxxxx
Corporation Supplemental Plan (as originally effective
April 1, 1980 and as amended from time to time, including
a restatement as of January 23, 1990) (the "Supplemental
Plan") shall be determined taking into account the
following modifications:
(i) The amount payable to the Executive pursuant to
Section 4 of the Supplemental Plan shall be
determined on the basis of the service with the
Company the Executive would have completed if he
had continued to be employed by the Company until
he attained age 65; provided such additional
imputed service shall not exceed ten years.
(ii) The Executive may begin to receive payments at
any time after he has reached age 55 without any
discount because the payments commence before the
Executive is age 65, regardless of the provisions
of Section 6 of the Supplemental Plan.
(iii) In addition to the benefit payable to the
Executive as determined above, if the Executive
has not attained age 65 as of his Entitlement
Date, he shall be entitled to receive a monthly
benefit equal to the amount of old-age insurance
benefit to which he would be entitled at age 65
under the Social Security Act, based upon the
assumption that he will continue to receive until
reaching age 65 compensation that would be
treated as wages for purposes of the Social
Security Act at the same rate as he received such
compensation at the time of retirement or
severance, which benefit shall commence on the
Executive's Entitlement Date and shall end when
the Executive attains the age of 65 years.
The Executive shall be entitled to receive his entire
benefit, including the enhanced benefits provided by this
Agreement, in a single lump sum cash payment within thirty
(30) days after the Entitlement Date, in which case the
total of such payments shall be discounted to present
value on the basis of the average of the interest rates,
as reported in the Wall Street Journal as of the close of
trading for the 20 days that immediately preceded the
Entitlement Date on which the New York Stock Exchange was
open for trading, of the shortest term U.S. Treasury bond
that matures at least 20 years after the Entitlement Date.
In the event enhanced Supplemental Plan benefits are
payable pursuant to this Section on account of a
Triggering Transaction, and the Executive is entitled to
a benefit under Section 10 of the
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Supplemental Plan on account of a Change in Control (as
defined in the Supplemental Plan), the Executive shall be
entitled to the larger of the amounts computed pursuant
to this Section and the amounts computed pursuant to the
Supplemental Plan without regard to this Section. Such
benefit shall be in lieu of any other benefit payable
pursuant to the Supplemental Plan.
4.2(f) Enhanced Deferred Compensation Plan Benefits. For
--------------------------------------------
purposes of determining the amount payable to Executive
pursuant to the Xxxxxxxx Corporation Deferred Compensation
Option Plan for Selected Management Employees (the
"Deferred Compensation Plan"), the attained age of the
Executive and years of service with the Company shall be
determined as if the Executive were ten years older than
his actual age (but not older than age 65) and had
continued to be employed by the Company until age 65 (but
not more than ten years of imputed service). The
Executive shall be entitled to receive such enhanced
benefit in a single lump sum cash payment within thirty
(30) days after the Entitlement Date in an amount equal to
the present value of such enhanced Normal Retirement
Benefits (as defined in the Deferred Compensation Plan) of
the Executive. Such present value shall be determined on
the basis of the average of the interest rates, as
reported in the Wall Street Journal as of the close of
trading for the 20 days that immediately preceded the
Entitlement Date on which the New York Stock Exchange was
open for trading, of the shortest term U.S. Treasury bond
that matures at least 20 years after the Entitlement Date.
In the event enhanced Deferred Compensation Plan benefits
are payable pursuant to this Section on account of a
Triggering Transaction, and the Executive is entitled to
a benefit under Article VII of the Deferred Compensation
Plan on account of a Change in Control (as defined in the
Deferred Compensation Plan), the Executive shall be
entitled to the larger of the amounts computed pursuant to
this Section and the amounts computed pursuant to the
Deferred Compensation Plan without regard to this Section.
Such benefit shall be in lieu of any other benefit payable
pursuant to the Deferred Compensation Plan.
4.2(g) Medical and Health Benefit Continuation. For a
---------------------------------------
period of ten years after the Entitlement Date and without
cost to the Executive and/or his family, the Company shall
continue medical and health benefits to the Executive
and/or the Executive's family at least equal to those
which were being provided to them prior to the Date of
Termination; provided, however, that if the Executive
-----------------
becomes reemployed with another employer and is eligible
to receive medical or health benefits under another
employer-provided plan, the medical and health benefits
described herein shall be secondary to those provided
under such other plan during such applicable period of
eligibility.
4.2(h) Other Benefits. To the extent not previously
--------------
paid or provided, the Company shall timely pay or provide
to the Executive and/or the Executive's family any Other
Benefits required to be paid or provided for which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of
the Company as those provided generally to other peer
executives and their families.
4.2(i) Excess Parachute Payment. Anything in this
------------------------
Agreement to the contrary notwithstanding, in the event
that it shall be determined that any payment or
distribution by the Company to or for the benefit of
Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise but determined without regard to any additional
payments required under this Section 4.2(i)) (a "Payment")
would
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be subject to the excise tax imposed by Code Section
4999 (or any successor provision) or any interest or
penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall
be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest or
penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment on an after-tax basis
equal to the Excise Tax imposed upon the Payment.
The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful,
would require the payment by the Company of the Gross-Up
Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the
Executive is informed in writing of such claim by the
Internal Revenue Service and the notification shall
apprise the Company of the nature of the claim and the
date on which such claim is required to be paid. The
Executive shall not pay such claim prior to the expiration
of a 30-day period following the date on which the
Executive has given such notification to the Company (or
such shorter period ending on the date that any payment of
taxes with respect to such claim is required). If the
Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such
claim, the Executive shall cooperate with the Company in
so contesting; provided, however, that the Company shall
-----------------
bear and pay all costs and expenses (including additional
interest and penalties) incurred in connection with such
contest, on an after-tax basis to the Executive.
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period
(either prior or subsequent to a Triggering Transaction), this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for (i) payment of Accrued Obligations (as defined in Section
4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination) and (ii) the timely payment
or provision of Other Benefits (as defined in Section 4.1(d)),
including death benefits pursuant to the terms of any plan, policy,
or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability during the
Employment Period (either prior or subsequent to a Triggering
Transaction), this Agreement shall terminate without further
obligations to the Executive, other than for (i) payment of Accrued
Obligations (as defined in Section 4.1(a)) (which shall be paid to
the Executive in a lump sum in cash within thirty (30) days of the
Date of Termination) and (ii) the timely payment or provision of
Other Benefits (as defined in Section 4.1(d)) including Disability
benefits pursuant to the terms of any plan, policy or arrangement
of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the
Employment Period (either prior or subsequent to a Triggering
Transaction), this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the Company
during the Employment Period, (excluding a termination for Good
Reason), this Agreement shall terminate without further obligations
to the Executive, other than for the payment of Accrued
Compensation (as defined in this Section) and the
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timely payment or provision of Other Benefits (as defined in Section
4.1(d)). In such case, all Accrued Compensation shall be paid to the
Executive in a lump sum in cash within thirty (30) days of the Date of
Termination.
For the purpose of this Section, the term "Accrued
Compensation" means the sum of (i) the Executive's Annual Base
Salary through the Date of Termination to the extent not previously
paid, (ii) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon), and (iii)
any accrued vacation pay in each case to the extent not previously
paid.
4.6 NON-EXCLUSIVITY OF RIGHTS; SUPERSESSION OF CERTAIN
BENEFITS. Except as provided in Sections 4.1(c) and 4.2(g) and in
this Section 4.6, nothing in this Agreement shall prevent or limit
the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which
the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any
contract or agreement with the Company. Amounts which are vested
benefits of which the Executive is otherwise entitled to receive
under any plan, policy, practice or program of, or any contract or
agreement with, the Company at or subsequent to the Date of
Termination, shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform
its obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no
event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and,
except as provided in Sections 4.1(c) and 4.2(g), such amounts
shall not be reduced whether or not the Executive obtains other
employment. The Company agrees to pay promptly as incurred, to the
full extent permitted by law, all legal fees and expenses which the
Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
regarding the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. If there shall be any
dispute between the Company and the Executive (i) in the event of
any termination of the Executive's employment by the Company,
whether such termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good Reason
existed, then, unless and until there is a final, nonappealable
judgment by a court of competent jurisdiction declaring that such
termination was for Cause or that the determination by the
Executive of the existence of Good Reason was not made in good
faith, the Company shall pay all amounts, and provide all benefits,
to the Executive and/or the Executive's family or other
beneficiaries, as the case may be, that the Company would be
required to pay or provide pursuant to Section 4.1 or 4.2 as though
such termination were by the Company without Cause or by the
Executive with Good Reason; provided, however, that the Company
-----------------
shall not be required to pay any disputed amounts pursuant to this
Section except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
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SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period beginning on
the date the Term of this Agreement expires and ending one
(1) year thereafter, the Executive shall not, without
prior written approval of the Board, become an officer,
employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined
in Section 5.1(b)) with the Company; provided that, if the
Executive is terminated by the Company without Cause or if
the Executive terminates his employment for Good Reason,
then he will not be subject to the restrictions of this
Section.
5.1(b) For purposes of Section 5.1, a business
enterprise with which the Executive becomes associated as
an officer, employee, agent, partner, or director shall be
considered in substantial direct competition, if such
entity competes with the Company in any business in which
the Company is engaged and is within in the Company's
market area as of the date that the Employment Period
expires.
5.1(c) The above constraint shall not prevent the
Executive from making passive investments, not to exceed
five percent (5%), in any enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company and which shall not be or
become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to
anyone other than the Company and those designated by it. In no
event shall an asserted violation of the provisions of this Section
constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the
Company, the rights (but not the obligations) shall not be
assignable by the Executive otherwise than by will or the laws of
descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle the Executive to
terminate the Agreement at his option on or after the Triggering
Transaction Date for Good Reason. As used in this Agreement,
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"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 OTHER AGREEMENTS. The Board may, from time to
time in the future, provide other incentive programs and bonus
arrangements to the Executive with respect to the occurrence of a
Triggering Event that will be in addition to the benefits required
to be paid in the designated circumstances in connection with the
occurrence of a Triggering Transaction. Such additional incentive
programs and/or bonus arrangements will affect or abrogate the
benefits to be paid under this Agreement only in the manner and to
the extent explicitly agreed to by the Executive in any such
subsequent program or arrangement.
7.2 NOTICE. For purposes of this Agreement, notices and
all other communications provided for in the Agreement shall be in
writing and shall be deemed to have been duly given when delivered
or mailed by certified or registered mail, return receipt
requested, postage prepaid, addressed to the respective addresses
as set forth below; provided that all notices to the Company shall
be directed to the attention of the Chairman of the Board, or to
such other address as one party may have furnished to the other in
writing in accordance herewith, except that notice of change of
address shall be effective only upon receipt.
Notice to Executive:
-------------------
Xxxxxxxx X. Xxxxxxxxx
00 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Notice to Company:
-----------------
Xxxxxxxx Corporation
000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
7.3 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
7.4 WITHHOLDING. The Company may withhold from any
amounts payable under this Agreement such Federal, state or local
taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
7.5 WAIVER. The Executive's or the Company's failure to
insist upon strict compliance with any provision hereof or any
other provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
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IN WITNESS WHEREOF, the Executive and, the Company,
pursuant to the authorization from its Board, have caused this
Agreement to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxxxxxx X. Xxxxxxxxx
---------------------------------------
Xxxxxxxx X. Xxxxxxxxx
XXXXXXXX CORPORATION
By /s/ X. X. Xxxxx
-------------------------------------
Name: X. X. Xxxxx
----------------------------------
Title: Chairman and President
---------------------------------
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