EMPLOYMENT AGREEMENT
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of March 28,
2006, between RTW, INC., a Minnesota corporation (the “Company”), and Xxxxxxx X. Xxxxxx
(“Employee”).
In consideration of the mutual covenants and agreements herein contained and for other good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties intending to be legally bound do hereby agree as follows:
7.1. Grant. In addition to options granted in conjunction with the Company’s 2005
Incentive Program, the Company hereby further grants Employee ten-year stock options to purchase up
to 10,000 shares of the Company’s Common Stock (the “Option(s)”). The per share price to be paid
by Employee upon exercise of the Option(s) is the closing price of the Company’s Common Stock, as
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reported by NASDAQ, on the date this agreement is executed. The Option(s) will be incentive
stock options to the extent allowed by the Internal Revenue Code. The Compensation Committee will
consider similar future grants as part of its duty in reviewing Employee’s annual compensation.
7.2. Vesting. The Option(s) will become exercisable in three (3) installments of the
Company’s Common Stock (“Option Installment”) as follows: (i) the first Option Installment
representing 3,334 shares is immediately exercisable as of the date this agreement is executed, and
(ii) two additional Option Installments of 3,333 shares will vest on each of the following two
anniversary dates of this Agreement, if the Employee is still employed by the Company on such
dates.
7.3. Exercise Period. The Option(s) will become void and expire as to all unexercised
Option shares ten years from the effective date of this Agreement.
7.4. Additional Terms. The remaining terms of the Option(s) are as set forth in the
Option Agreement(s) dated this date.
8.1. General. This Agreement and Employee’s employment may be terminated as set forth
in Section 8.2. In the event of termination of employment for any of the following reasons,
Employee must resign as a director and officer of the Company and any of its subsidiaries at or
prior to the effective Date of Termination.
8.2. Events of Termination. The Agreement may be terminated as follows:
(i) | By Employee, upon 60 days prior written notice to the Company; | ||
(ii) | By Employee for Good Reason (as defined in Section 8.4 (iii) of this Agreement) upon 60 days prior written notice to the Company; | ||
(iii) | By the Company for Cause (as defined in this Agreement), immediately upon written notice to Employee; | ||
(iv) | By the Company for any reason (without cause) and at any time, upon 60 days prior written notice to Employee; or | ||
(v) | By the Company at any time in the event of Employee’s Disability (as defined in this Agreement.) |
8.3. Death. This Agreement will automatically terminate upon Employee’s death.
8.4. Definitions. For purposes of this Agreement, the following terms have the
meanings set forth below:
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(i) | Disability. “Disability” means that if, in the reasonable judgment of the Board of Directors, the Employee’s incapacity due to physical or mental illness, or otherwise, keeps him from performing satisfactorily all of his duties hereunder on a substantially full-time basis for a period of three months during the term of this Agreement. | ||
(ii) | Cause. The Company will have “Cause” to terminate Employee’s employment hereunder upon Employee’s: |
(A) | refusal or neglect to perform and discharge his duties and responsibilities hereunder; | ||
(B) | gross misconduct that is injurious to the Company; | ||
(C) | fraud, embezzlement or other act of dishonesty of Employee with respect to the Company; | ||
(D) | conviction of, or plea of guilty or nolo contendere entered by Employee to, a felony or crime involving moral turpitude or which conviction or plea is likely to have a material adverse effect upon the Company or upon Executive’s ability to perform his duties hereunder; | ||
(E) | willful or prolonged absence from work by Employee (other than by reason of disability due to physical or mental illness); or | ||
(F) | willful commission of acts or making of false statements by Employee that reflect adversely, in material respects, upon the Company or its business, customers or other employees. |
(iii) | Good Reason. “Good Reason” means the Company, without express written consent, |
(A) | materially reduces Employee’s principal duties, responsibilities, or authority as President and Chief Executive Officer, including requiring Employee to report to any person or body other than the Board of Directors of the Company; | ||
(B) | reduces Employee’s annual base compensation as described in Section 4; or | ||
(C) | materially breaches this Agreement. |
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The occurrence of an event described in this subparagraph 8.4(iii) will not constitute Good Reason unless, within 60 days thereof Employee provides the Company written notice stating that an event of Good Reason has occurred and describing that event, and the Company does not correct the same, if the same is correctable, within 30 days. | |||
(iv) | Date of Termination. The term “Date of Termination” means the earlier of: |
(A) | the Expiration Date, or | ||
(B) | if Employee’s employment is terminated by his death, the date of his death, or | ||
(C) | if Employee’s employment is terminated for any other reason, the date on which notice of termination is given either to Employee by the Company or to the Company by Employee unless another date is specified in the Notice of Termination. |
9.1. Termination for Cause; Voluntary Resignation without Good Reason. If employment
is terminated by the Company for Cause or by Employee without Good Reason, then Employee will be
paid (i) his base salary to the date of termination and (ii) the unpaid portion of any bonus or
incentive amount earned for the fiscal year ending prior to the termination of employment that
Employee is entitled to receive under the terms of the annual incentive plan. Employee will not be
entitled to receive any base salary or fringe benefits for any period after the date of
termination, except for the right to receive benefits that have become vested under any benefit
plan or to which Employee is entitled as a matter of law.
9.2. Termination without Cause; Resignation for Good Reason. If the Company
terminates employment without Cause or does not extend the term of employment, or if Employee
resigns employment for Good Reason, then:
(i) | For a period of nine months after the effective date of the termination of employment; |
(A) | The Company will continue to pay Employee’s then current base salary in accordance with the Company’s normal payroll practice; and |
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(B) | Employee will be entitled to continued participation in the health care coverage and life insurance benefit plans of the Company, as in effect on the date of termination. The Company will continue to pay its share of the health care and life insurance premiums for this coverage, and Employee will pay his share of the cost associated with that coverage as if he were still actively employed by the Company. If Employee cannot be covered under any of the Company’s group plans or policies, the Company will reimburse Employee for his full cost of obtaining comparable alternative or individual coverage elsewhere, less any contribution that Employee would have been required to make under the Company’s group plans or policies. If, during the aforesaid nine-month period, Employee is employed by a third party and becomes eligible for any health care coverage provided by that third party, the Company will not, thereafter, be obligated to provide Employee with the insurance benefits described in this clause (B). This nine -month coverage will run concurrently with COBRA and thereafter Employee will be responsible for the full cost of any such coverage for which he may be entitled by law. |
(ii) | The Company will pay the unpaid portion of any bonus or incentive amount earned by Employee for the fiscal year ending prior to the termination of employment that Employee is entitled to receive under the terms of the applicable incentive plan as well as any pro-rata bonus or incentive amount through the date of termination. Any pro rata bonus or other incentive amount due pursuant to this paragraph 9.2 (ii) will be due on the date the payments are made to other employees of the Company. | ||
(iii) | The Company will pay Employee $25,000 for out-placement and job search services. |
9.3. Termination in the Event of Death or Disability. If employment terminates due to
Employee’s Death or if the Company terminates employment due to a Disability, then:
(i) | The Company will continue to pay base salary to Employee’s estate or to Employee for the remainder of the month in which the death occurs or in |
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which employment is terminated due to Disability, together with the unpaid portion of any bonus or incentive amount earned by Employee for the fiscal year ending prior to the termination of employment which he is entitled to receive under the terms of the applicable incentive plan as well as any pro-rata bonus or incentive amount through the date of termination; and in the event of termination due to Disability, Employee will continue to receive, during that month, all of the fringe benefits then being paid or provided to him; and | |||
(ii) | Employee will be entitled to receive all Disability and other benefits, such as continued health coverage or life insurance proceeds, provided in accordance with the terms and condition of the health care coverage, life insurance, disability, or other employee benefit plans of the Company and applicable law. |
All notices to the Company must be sent to: | ||
RTW, Inc. | ||
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx | ||
Xxxxxxxxxxx, XX 00000 | ||
Attn: Chairman of the Board |
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All notices to Employee must be sent to: | ||
Xx. Xxxxxxx X. Xxxxxx | ||
000 Xxxxx Xxxxx Xxxx | ||
Xxxxxxxxx, XX 00000 |
These addresses may be changed by notice given in accordance with this Section 11.
12. Miscellaneous. This Agreement may not be changed nor may any provision hereof be
waived, except by an instrument in writing duly signed by the party to be charged. This Agreement
will be interpreted, governed and controlled by the internal laws of the State of Minnesota,
without reference to principles of conflict of law. This Agreement will terminate in the event of
the liquidation and winding up of the business of the Company but will continue in effect in the
event of the merger or sale of the Company into or to another entity or the transfer of
substantially all of the assets of the Company to another entity. The provisions of Section 10
hereof will survive any termination of this Agreement. This agreement replaces in its entirety
Employee’s employment agreement dated as of March 12, 2004.
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COMPANY: | EMPLOYEE: | |||||||
RTW, Inc. | ||||||||
By:
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/s/ Xxxx X. Xxxxxxxx | /s/ Xxxxxxx X. Xxxxxx | ||||||
Xxxx X. Xxxxxxxx | Xxxxxxx X. Xxxxxx | |||||||
Chairman of the Board | President and CEO |
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