Exhibit 10.20
LONG TERM INCENTIVE COMPENSATION PLAN AND AGREEMENT
WITH XXXXXXX X. XXXXXXXXX
THIS LONG TERM INCENTIVE COMPENSATION PLAN AND AGREEMENT (this "Agreement")
is made this 23rd day of November, 2005, by and between XXXXXXX XXXXXX
COMPANIES, INC., a Maryland corporation (the "Company"), and Xxxxxxx X.
Xxxxxxxxx, an employee of the Company ("Participant").
RECITALS:
A. The Company believes it is in the best interests of the Company and
Participant to establish a plan for the purpose of providing certain benefits
for Participant (the "Long Term Incentive Compensation Plan").
B. The Company desires to recognize the valuable and meritorious service
performed on behalf of the Company and to offer an inducement to Participant to
remain as an employee in the form of long term incentive compensation for
services which he/she has rendered or will hereafter render.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants hereinafter set forth, and of other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending legally to be bound, hereby agree as follows:
ARTICLE I
EMPLOYMENT
SECTION 1.1 EMPLOYMENT
The Company employs Participant as an at will employee. This Agreement is
solely to provide long term incentive compensation for services rendered by
Participant to the Company and is neither an agreement nor commitment by the
Company to continue to employ Participant, nor an agreement or commitment of
Participant to continue to serve the Company in any capacity. The terms of
Participant's employment shall continue to be governed exclusively by the
Company's policies and procedures.
ARTICLE II
BENEFIT
SECTION 2.1 AMOUNT AND PAYMENT OF LONG TERM INCENTIVE COMPENSATION
(a) For and in consideration of Participant's services to the Company,
subject to the terms of this Agreement, the Company shall and hereby does
establish for the benefit of Participant a long term incentive compensation
account (the "Account") on the terms and conditions hereinafter provided. Each
year during Participant's employment, the Company may add a discretionary amount
to the Account determined in the manner hereinafter provided. For calendar year
2005, the Company hereby establishes an initial amount for the benefit of
Participant's Account of Three Hundred Thousand Dollars ($300,000). It is
contemplated that for future years the Company, prior to the commencement of
each plan fiscal year on October 1st, will establish performance or other
criteria on which that year's amount will be established and will send written
notice thereof to Participant. Nevertheless, the bonus program and the amounts
contemplated hereunder shall be within the sole discretion of the Company, and
the Company shall be under no obligation whatsoever beyond what is established
(if anything) prior to the commencement of a particular plan year.
(b) Participant's rights with respect to the initial amount and each annual
additional amount shall vest over the term of Participant's employment with the
Company at the rate of twenty percent (20%) per year for each plan year
Participant is employed by the Company after the establishment of the Account.
The annual vesting shall occur on the 30th of September of each year, with the
first 20% vesting on September 30, 2006. If Participant's employment with the
Company terminates for any reason whatsoever (other than death or permanent
disability, as defined below), including but not limited to termination by the
Company without cause, Participant shall forfeit all rights in the unvested
portion of the Account (including any income thereon credited pursuant to
Section 2.2), which amount shall immediately revert to and be withdrawn by the
Company. By way of example, if Participant terminates his/her employment after
three (3) years of employment by the Company after the establishment of the
Account, Participant shall forfeit forty percent (40%) of the first year
credited amount; sixty percent (60%) of the second year credited amount, and
eighty percent (80%) of the third year credited amount. In the event of
Participant's death, or permanent disability which results in the termination of
his/her employment, all unvested amounts credited to the Account shall vest
immediately and the entire balance of the Account shall be paid out to him/her,
his/her estate or his/her designated beneficiary within ninety (90) days
thereof. For purposes of this paragraph (d), permanent disability shall mean
Participant is unable to perform the customary tasks and duties assigned to
him/her for 270 days out of any consecutive 365 day period. Participant's rights
will also fully vest in any unvested amounts upon retirement from active
employment with the Company after attaining the age of sixty-five (65). Nothing
herein shall obligate the Company to make any specific contributions or
additional amounts to the Account or to continue this Long Term Incentive
Compensation Plan for any specified period of time, the Company expressly
reserving the right to terminate and discontinue this Long Term Incentive
Compensation Plan at any time; provided, however, such termination shall not
have any impact or affect on additional amounts or contributions made prior to
such termination. The Company makes no representations or warranty regarding the
tax consequences of this Long Term Incentive Compensation Plan and
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Agreement. All payments made from the Account to Participant shall be subject to
appropriate federal income tax and other applicable withholding tax.
(c) Participant must be employed by the Company on the last day of each
applicable plan fiscal year (i.e., September 30) in order to be entitled to the
contribution contemplated and determined for that year. In addition,
notwithstanding anything in this Agreement to the contrary, in the event
Participant's employment with the Company terminates for any reason whatsoever
prior to September 30, 2008 (other than due to death or permanent disability),
including, but not limited to, termination by the Company without cause,
Participant shall forfeit all rights hereunder to any payment, including any
amounts that have otherwise vested. Commencing on September 30, 2008, and on
each anniversary thereafter (provided Participant is employed by the Company on
such date), all amounts vested as of such date will be paid to Participant in a
lump sum within thirty (30) days following the end of such plan fiscal year. By
way of example, if the sum of $100,000 is credited to Participant's Account in
each of the first three (3) years, then, in such event, following the end of the
third (3rd) year, Participant will receive a payment of $120,000 ($60,000 +
$40,000 + $20,000). At the end of the fourth (4th) year, assuming an additional
contribution of $100,000 has been made, Participant will receive a payment of
$80,000 ($20,000 + $20,000 + $20,000 + $20,000).
SECTION 2.2 ACCRETION TO ACCOUNT
The Account shall be credited annually in an amount equal to Wall Street
Journal Prime Rate multiplied by the average outstanding amount credited to the
Account for such fiscal year. The additional credit pursuant to this Section 2.2
shall be made annually on the last day of each plan fiscal year utilizing the
Wall Street Journal Prime Rate in effect as of such date.
SECTION 2.3 NO RIGHT TO SPECIFIC ASSETS
While the Account shall be for the benefit of Participant, it shall at all
times be an unfunded account and the Company shall have no obligation to reserve
or otherwise set aside any amounts in respect of the Account. Participant's
rights shall be solely to receive the benefits determined in accordance with
this Agreement. Participant shall have no claim, right, title, or interest or
claim in any specific asset, fund, reserve, account or property of any kind
whatsoever owned by the Company or in which it may have a right, title or
interest, now in the future. No provision or terms contained herein or the
establishment of any account or records on the books of the Company in
furtherance of carrying out the provisions of this Agreement shall be deemed to
create a trust or escrow arrangement of any kind, or create a fiduciary
relationship, between the Company and Participant.
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ARTICLE III
MISCELLANEOUS
SECTION 3.1 GOVERNING LAW
This Agreement shall be subject to, and governed by, the laws of the
Commonwealth of Virginia irrespective of the fact that one or more of the
parties now is, or may become, a resident of a different state.
SECTION 3.2 VOID LANGUAGE
In the event any parts of this Agreement are found to be void, the
remaining provisions of this Agreement shall nevertheless be binding with the
same effect as though the void parts were deleted.
SECTION 3.3 AGREEMENT BINDING
This Agreement shall be binding upon the parties hereto, their heirs,
executors, administrators, successors and assigns.
SECTION 3.4 AMENDMENT
This Agreement may be amended at any time, and from time to time, by a
written instrument executed by a duly authorized officer of the Company and the
Participant.
SECTION 3.5 CLAIMS FOR BENEFIT
Claims for benefits under this Agreement shall be made in writing to the
Company. If such claim for benefits is wholly or partially denied, the Company
shall, within a reasonable period of time, but no later than ninety (90) days
after receipt of the claim, notify the claimant of the denial of the claim. Such
notice of denial (i) shall be in writing, (ii) shall be written in a manner
calculated to be understood by the claimant, and (iii) shall contain (a) the
specific reason or reasons for denial of the claim, (b) a specific reference to
the pertinent provisions upon which the denial is based, (c) a description of
any additional material or information necessary for the claimant to perfect the
claim, along with an explanation why such material or information is necessary,
and (d) an explanation of the claim review procedure.
SECTION 3.6 REQUEST FOR REVIEW OF DENIAL OF CLAIM
Within one hundred twenty (120) days of the receipt by the claimant of the
written notice of denial of the claim, or such later time as shall be deemed
reasonable taking into account the nature of the benefit subject to the claim
and any other attendant circumstances or if the claim has not been granted
within a reasonable period of time, the claimant may file a written request with
the Company that it conduct a full and fair review of the denial of the
claimant's claim for benefits, including the conduction of a hearing, if deemed
necessary by the reviewing party. In
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connection with the claimant's appeal of the denial of his benefit, the claimant
may review pertinent documents and may submit issues and comments in writing.
SECTION 3.7 DECISION ON REVIEW OF DENIAL OF CLAIM
The Company shall deliver to the claimant a written decision on the claim
promptly, but not later than sixty (60) days, after the receipt of the
claimant's request for review, except that if there are special circumstances
(such as the need to hold a hearing) which require an extension of time for
processing, the aforesaid sixty (60) day period shall be extended to one hundred
twenty (120) days. Such decision shall (a) be written in a manner calculated to
be understood by the claimant, (b) include specific reasons for the decision,
and (c) contain specific references to the pertinent provisions upon which the
decision is based.
SECTION 3.8 NO ASSIGNMENT
The rights of Participant to any payments hereunder are not subject to the
voluntary or involuntary transfer, alienation or assignment, and to the fullest
extent permitted by law are not subject to attachment, execution, garnishment,
sequestration or other legal or equitable process.
SECTION 3.9 ENTIRE AGREEMENT
This Agreement sets forth all of the promises, agreements and
understandings of the parties hereto with respect to the matters described
herein, and there are no promises, agreements or understandings, oral or
written, express or implied, between them with respect to such matters. Any and
all prior promises, agreements and understandings between the parties hereto
with respect to the matters described herein, are hereby revoked.
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IN WITNESS WHEREOF, the parties hereto have executed this Long Term
Incentive Compensation Plan and Agreement on the day and year first above
written.
XXXXXXX XXXXXX COMPANIES, INC.
By:
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Name: Xxxxxx X. Alloy
Title: President
PARTICIPANT
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Xxxxxxx X. Xxxxxxxxx
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