1
EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into this 1st day of
October, 1997, but is effective for all purposes as of the date specified below
in Section 2, by and between ECHELON INTERNATIONAL CORPORATION, a Florida
corporation (the "Company"), and W. XXXXXXX XXXXXXX, residing at 0000
Xxxxxxxxxxxx Xxxx., Xxxxxx, Xxxxx 00000 (the "Executive").
W I T N E S S E T H:
1. EMPLOYMENT
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. TERM
Subject to the provisions for termination as hereinafter provided, the
term of employment under this Agreement shall begin as of October 1, 1997, the
date of closing of the acquisition of all of the assets of Mission Development
Company by the Company (the "Acquisition"), and shall continue through December
31, 2000, provided, however, that this Employment Agreement shall automatically
be renewed for successive one year terms unless either party gives the other
written notice of termination at least ninety (90) days prior to the end of any
such term.
3. COMPENSATION
(a) Base Salary. The Company shall pay to the Executive as basic
compensation for all services rendered by the Executive during the term of this
Agreement a basic annualized salary of $225,000 per year, or such other sum in
excess of that amount as the parties may agree on from time to time or as
provided in the next sentence (as in effect from time to time, the "Base
Salary"), payable monthly or in other more frequent installments, as determined
by the Company. The Board of Directors shall have no authority to reduce the
Executive's Base Salary in effect from time to time. In addition, the Board of
Directors, in its discretion, may award a bonus or bonuses to the Executive in
addition to the bonuses provided for in Section 3(b).
(b) Bonuses. In addition to the Base Salary to be paid pursuant to
Section 3(a), for the three months ending December 31, 1997 and for each of the
Company's two fiscal years ending December 31, 1998 and December 31, 1999 during
the term of this Agreement, provided the Executive continues to be employed by
the Company under this Agreement, the Executive shall be eligible to earn as
incentive compensation the annual bonuses specified, to the extent earned, on
Exhibit A to this Agreement. For each fiscal year ending after December 31,
1999, so long as the Employee remains employed by the Company, the Executive
shall be eligible to participate in incentive compensation annual bonus plan(s)
adopted by the Board of Directors of the Company from time to time in accordance
with the terms of such plans, any such bonuses to be comparable to bonuses for
Employment Agreement -- 1
2
other executive officers of the Company with comparable duties and
responsibilities to those of the Executive.
(c) Certain Plans and Initial Award. (i) The Company has adopted
certain incentive compensation plans including a long term incentive plan (the
"LTIP"), providing for annual or other periodic awards to key employees of,
among other things, restricted stock and a stock option plan (the "ISO/NSO
Plan"), providing for the annual or other periodic issuance of options to
purchase the Company's common stock. The LTIP and ISO/NSO are referred to
collectively in this Agreement as the "Plans." The Executive will be given an
opportunity to participate in the Plans, in accordance with and subject to the
terms of the Plans as they may be adopted, amended and administered from time to
time.
(ii) In addition to the incentive compensation referred to in
Section 3(c)(i), the Company hereby agrees to grant to the Executive under the
LTIP, effective upon the consummation of the Acquisition, options to purchase
one hundred twenty-five thousand (125,000) shares of the Company's common stock
(the "Initial Options"), which Initial Options shall be exercisable as to
one-fourth of the shares of common stock covered by the Initial Options one year
from the effective date of the grant as specified by the Company's Compensation
Committee, and as to an additional one-fourth of such shares each year
thereafter. All of such shares shall be registered on a Form S-8 registration
statement. The exercise price for 88,414 of the Initial Options (including the
options for 62,500 shares to become exercisable within the first two years
following the date of grant) shall be $20.00 and the exercise price for the
remaining 36,586 of the Initial Options shall be the closing price on the New
York Stock Exchange (or such other market on which the Company's stock trades if
it is not listed on the New York Stock Exchange) on the trading day which is the
effective date of the grants of the Initial Options as specified by the
Company's Compensation Committee (the "Option Pricing Date"), which shall be the
date of the Acquisition, or if the Option Pricing Date is not a trading day, the
first trading day thereafter.
(iii) The Initial Options shall be fully vested and shall be
exercisable as to all of the shares of common stock covered by the Initial
Options upon (a) the death of the Executive or termination of employment upon
the "Permanent Disability" (as that term is defined in Section 7(b)(ii) of this
Agreement) of the Executive, (b) the termination of employment of the Executive
by the Company "Without Good Cause" (as that term is defined in Section 8(b)(ii)
of this Agreement) (c) the exercise by the Executive of his rights to terminate
his employment under Section 8(d)(ii) following a "Change of Control" (as that
term is defined in Section 8(d)(i) of this Agreement), or (d) the exercise by
the Executive of his rights to terminate his employment under Section 8(e)
following a "CEO Termination Event" (as that term is defined in Section 8(e) of
this Agreement).
(d) Reimbursement. The Company shall reimburse the Executive, in
accordance with the Company's policies and practices for senior management, for
all reasonable expenses incurred by the Executive in the performance of the
Executive's duties under this Agreement, provided, however, that the Executive
must furnish to the Company an itemized account, reasonably satisfactory to the
Company, in substantiation of such expenditures.
(e) Certain Benefits. The Executive shall be entitled to such fringe
benefits including, but not limited to, medical and other insurance benefits as
may be provided from time to time by the
Employment Agreement -- 2
3
Company to other senior officers of the Company. In addition, without
restricting the foregoing, the Company shall provide the Executive at the
Company's sole cost and expense with (i) a policy or policies of term life
insurance (the "Basic Life Insurance") providing, among other things, basic
death benefits of not less than two times the Base Salary in effect from time to
time, (ii) directors and officers liability insurance with coverage, terms and
limits suitable for an executive vice president of a New York Stock Exchange
listed company comparable in financial size and wherewithal to that of the
Company and (iii) a monthly allowance of $500 cash to reimburse the Executive
for the use and maintenance of his automobile in furtherance of the business and
affairs of the Company, provided that the Executive shall at all times insure
the Executive and the Company in such amounts as may be reasonably requested by
the Company against claims for bodily injury, death and property damages
occurring as a result of its use. The Company shall use its reasonable best
efforts to make available to the Executive in connection with providing and
paying for the Basic Life Insurance the opportunity to purchase at the
Executive's sole cost and expense additional life insurance with a basic death
benefit (the "Optional Life Insurance") equal to two times the Executive's Base
Salary in effect from time to time (affording the Executive the opportunity to
have basic death benefit life insurance coverage equal to four times such Base
Salary). The Company shall use its reasonable best efforts to effect the
transfer of the ownership to the Executive of the policy or policies for the
Basic Life Insurance and the Optional Life Insurance, if any, upon the
termination of the Executive's employment by the Company. After the Executive's
termination, payment of any premiums would be the obligation of the Executive.
(f) Other Incentive and Benefit Plans. The Executive shall be eligible
to participate, in accordance with the terms of such plans as they may be
adopted, amended and administered from time to time, in incentive, bonus,
benefit or similar plans, including without limitation, any stock option, bonus
or other equity ownership plan, any short, mid or long term incentive plan and
any other bonus, pension or profit sharing plans established by the Company from
time to time.
(g) Right to use certain Proprietary Information. Reference is made to
that certain Consulting Agreement between the Company and Mission Development
Company ("MDC"), a Texas corporation, which was effective as of July 30, 1996,
was subsequently amended and has been terminated October 1, 1997 (the "MDC
Consulting Agreement"). Upon the termination of the Executive's employment with
the Company for any reason other than for "Good Cause," and provided the
Executive is not then in breach or violation of any other agreement with or
other obligation to the Company, then, effective upon such termination, the
Company shall license to the Executive the non-exclusive, non-transferrable
royalty-free right to use the System and the Manual as such terms were defined
in the MDC Consulting Agreement. Such license shall be pursuant to a license
agreement in substantially the same form as is attached hereto as Exhibit B (the
"System and Manual License Agreement"). The Executive shall have no rights to
the System and the Manual upon the termination of his employment by the Company
for "Good Cause."
4. DUTIES
(a) General. The Executive is engaged as the Executive Vice President
of the Company. In addition, at the request of the Board of Directors, the
Executive shall serve in any other positions in any wholly owned subsidiary of
the Company, without any additional compensation. The Executive
Employment Agreement -- 3
4
shall have such duties and hold such other offices as may from time to time be
reasonably assigned to him by the Board of Directors of the Company.
(b) Indemnification. To the fullest extent permitted by law, the
Company shall indemnify and hold harmless the Executive for all liabilities,
costs, expenses and damages arising out of or in connection with the Executive's
service to the Company under this Agreement. In furtherance of this indemnity,
the Company shall enter into an indemnification agreement, in form and substance
reasonably satisfactory to the Executive and the Company. In addition, the
indemnity provided hereunder shall extend to service by the Executive as an
officer or director, or service in a similar capacity, for any civic, community
or charitable organization, provided such service is undertaken at the request
of or with the knowledge and acquiescence of the Company. The foregoing
indemnification shall be in addition to any rights or benefits the Executive may
have under statute, the Bylaws or Articles of Incorporation of the Company,
under a policy of insurance, or otherwise.
5. EXTENT OF SERVICES; VACATIONS AND DAYS OFF
(a) Extent of Services. During the term of the Executive's employment
under this Agreement, except during customary vacation periods and periods of
illness, the Executive shall devote full-time energy and attention during
regular business hours to the benefit and business of the Company as may be
reasonably necessary in performing the Executive's duties pursuant to this
Agreement.
(b) Vacations. The Executive shall be entitled to vacations with pay
and to such personal and sick leave with pay in accordance with the policy of
the Company as may be established from time to time by the Company and applied
to other senior officers of the Company. In no event shall the Executive be
entitled to fewer than four weeks' annual vacation. Unused vacation days may be
carried over from one year to the next for a period of up to two years. Any
vacation days which remain unused on the second anniversary of the end of the
fiscal year to which they originally related shall expire and shall thereafter
no longer be useable by the Executive.
6. FACILITIES
The Company shall provide the Executive with a fully furnished office,
and the facilities of the Company shall be generally available to the Executive
in the performance of the Executive's duties pursuant to this Agreement, it
being understood and contemplated by the parties that all equipment, supplies
and office personnel required in the performance of the Executive's duties under
this Agreement shall be supplied by and at the sole expense of the Company.
7. ILLNESS OR INCAPACITY, TERMINATION ON DEATH, ETC.
(a) Death. If the Executive dies during the term of the Executive's
employment, the Company shall pay to the estate of the Executive within 30 days
after the date of death such Base Salary and any cash bonus compensation earned
pursuant to the provisions of any incentive
Employment Agreement -- 4
5
compensation plan then in effect but not yet paid, as would otherwise have been
payable to the Executive up to the end of the month in which the Executive's
death occurs. After receiving the payments provided in this Section 7(a) the
Executive and the Executive's estate shall have no further rights under this
Agreement (other than those rights already accrued).
(b) Disability. (i) During any period of disability, illness or
incapacity during the term of this Agreement which renders the Executive at
least temporarily unable to perform the services required under this Agreement,
the Executive shall receive the Base Salary payable under Section 3(a) of this
Agreement plus any cash bonus compensation earned pursuant to the provisions of
any incentive compensation plan then in effect but not yet paid, less any cash
benefits received by him under any disability insurance carried by or provided
by the Company. Upon the Executive's "Permanent Disability" (as defined below),
which permanent disability continues during the payment periods specified
herein, the Company shall pay to the Executive for the period of time specified
below an amount (the "Disability Payment") equal to the (i) sum of (A) the Base
Salary, paid in the same monthly or other periodic installments as in effect at
the time of the Executive's Permanent Disability plus (B) an equal monthly pro
rata portion of an amount of cash equal to the target level of the annual cash
bonus payable to the Executive under the Company's Management Incentive
Compensation Plan as described on Exhibit A or any similar bonus or incentive
plans or programs then in effect (the "MICP Target Amount"), which MICP Target
Amount shall be paid in pro rata equal monthly installments over the period of
time specified below (ii) reduced by the amount of any monthly payments under
any policy of disability income insurance paid for by the Company which payments
are received during the time when any Disability Payment is being made to the
Executive following the Executive's Permanent Disability. For so long as the
Executive's Permanent Disability continues, the Disability Payment shall be paid
by the Company to the Executive at the same time or times as would have been the
case for payment of Base Salary over the unexpired term of this Agreement if the
Executive had not become permanently disabled and had remained employed by the
Company hereunder, but in no case shall such period exceed 24 months. The
Executive may be entitled to receive payments under any disability income
insurance which may be carried by or provided by the Company from time to time.
Upon "Permanent Disability" (as that term is defined in Section 7(b)(ii) below)
of the Executive, except as provided in this Section 7(b), all rights of the
Executive under this Agreement (other than rights already accrued) shall
terminate.
(ii) The term "Permanent Disability" as used in this Agreement
shall mean, in the event a disability insurance policy is maintained by the
Company covering the Executive at such time and is in full force and effect, the
definition of permanent disability set forth in such policy. In the event no
disability insurance policy is maintained with respect to the executive at such
time and in full force and effect, "Permanent Disability" shall mean the
inability of the Executive, as determined by the Board of Directors of the
Company, by reason of physical or mental disability to perform the duties
required of him under this Agreement for a period of one hundred and eighty
(180) days in any one-year period. Successive periods of disability, illness or
incapacity will be considered separate periods unless the later period of
disability, illness or incapacity is due to the same or related cause and
commences less than six months from the ending of the previous period of
disability. Upon such determination, the Board of Directors may terminate the
Executive's employment under this Agreement upon ten (10) days' prior written
notice. If any determination of the Board of Directors with respect to permanent
disability is disputed by the Executive, the parties hereto agree to abide by
the decision of a panel of three physicians. The Executive and Company shall
each appoint one
Employment Agreement -- 5
6
member, and the third member of the panel shall be appointed by the other two
members. The Executive agrees to make himself available for and submit to
examinations by such physicians as may be directed by the Company. Failure to
submit to any such examination shall constitute a breach of a material part of
this Agreement.
8. OTHER TERMINATIONS
(a) By the Executive. (i) The Executive may terminate the Executive's
employment hereunder upon giving at least ninety (90) days' prior written
notice. In addition, the Executive shall have the right to terminate the
Executive's employment hereunder on the conditions and at the times provided for
in Section 8(d) of this Agreement and such termination shall be deemed pursuant
to Section 8(d) hereof.
(ii) If the Executive gives notice pursuant to Section 8(a)(i)
above, the Company shall have the right (but not the obligation) to relieve the
Executive, in whole or in part, of the Executive's duties under this Agreement,
or direct the Executive to no longer perform such duties, or direct that the
Executive should no longer report to work, or any combination of the foregoing.
In any such event, the Executive shall be entitled to receive only the Base
Salary not yet paid, as would otherwise have been payable to the Executive up to
the end of the month specified as the month of termination in the termination
notice. In the event the Executive gives notice pursuant to Section 8(a)(i)
above but specifies a termination date in excess of ninety (90) days from the
date of such notice, the Company shall have the right (but not the obligation)
to accelerate the termination date to any date prior to the date specified in
the notice that is in excess of ninety (90) days from the date of the notice,
and the Company shall have the right (but not the obligation) to relieve the
Executive, in whole or in part, of the Executive's duties under this Agreement,
or direct the Executive to no longer perform such duties, or direct that the
Executive should no longer report to work, or any combination of the foregoing;
provided, however, that in any such event the Executive shall be entitled to
receive the Base Salary, as would otherwise have been payable to the Executive
up to the end of the month of the termination date properly selected by the
Company. Upon receiving the payments provided for under this Section 8(a), all
rights of the Executive under this Agreement (other than rights already accrued)
shall terminate.
(b) Termination for "Good Cause". (i) Except as otherwise provided in
this Agreement, the Company may terminate the employment of the Executive
hereunder only for "good cause," which shall mean (a) the willful, substantial,
continued and unjustified refusal of the Executive substantially to perform his
duties with the Company to the extent of his ability to do so (other than any
failure due to physical or mental incapacity) or (b) willful misconduct
materially and demonstrably injurious to the Company, financially or otherwise,
in each case, as determined in the reasonable discretion of the Board of
Directors, but with respect to each of the foregoing bases for termination
specified in the preceding clause, only if (1) the Executive has been provided
with written notice of any assertion that there is a basis for termination for
good cause which notice shall specify in reasonable detail specific facts
regarding any such assertion and the Executive has been given a reasonable
period of time within which to remedy or cure the problem or complaint, (2) such
notice is provided to the Executive a reasonable time before the Board of
Directors meets to consider any possible termination for cause, (3) at or prior
to the meeting of the Board of Directors to consider the matters described
Employment Agreement -- 6
7
in the written notice, an opportunity is provided to the Executive and his
counsel to be heard by the Board of Directors with respect to the matters
described in the written notice, before it acts with respect to such matter, (4)
any resolution or other action by the Board of Directors with respect to any
deliberation regarding or decision to terminate the Executive for good cause is
duly adopted by a vote of a majority of the entire Board of Directors of the
Company at a meeting of the Board duly called and held and (5) the Executive is
promptly provided with a copy of the resolution or other corporate action taken
with respect to such termination. No act or failure to act by the Executive
shall be considered willful unless done or omitted to be done by him not in good
faith and without reasonable belief that his action or omission was in the best
interests of the Company.
(ii) If the employment of the Executive is terminated for good
cause under Section 8(b)(i) of this Agreement, the Company shall pay to the
Executive any Base Salary earned prior to the effective date of termination but
not yet paid and any cash bonus compensation earned pursuant to the provisions
of any incentive compensation plan then in effect but not paid to the Executive
prior to the effective date of such termination. Under such circumstances, such
payments shall be in full and complete discharge of any and all liabilities or
obligations of the Company to the Executive hereunder, and the Executive shall
be entitled to no further benefits under this Agreement (other than rights
already accrued).
(iii) Termination of the employment of the Executive other
than as expressly specified above in this Section 8(b) for good cause shall be
deemed to be a termination of employment "Without Good Cause."
(c) Termination Without Good Cause. (i) Notwithstanding any other
provision of this Agreement, the Company shall have the right to terminate the
Executive's employment Without Good Cause pursuant to the provisions of this
Section 8(c). If the Company shall terminate the employment of the Executive
Without Good Cause effective on a date earlier than the termination date
provided for in Section 2 (with the effective date of termination as so
identified by the Company being referred to herein as the "Accelerated
Termination Date"), the Executive, until the end of the term of this Agreement
then in effect as provided for in Section 2 or until the date which is 12 months
after the Accelerated Termination Date, whichever is greater, shall continue to
receive (1) the Base Salary, paid in the same monthly or other periodic
installments as in effect prior to the Accelerated Termination Date; (2) an
equal monthly pro rata portion of an amount of cash equal to the MICP Target
Amount (as that term is defined in Section 7(b)(i)) in respect of the year
during which the Executive's employment terminates, or, if greater, the MICP
Target Amount multiplied times the number of years (or fractions thereof)
remaining in the then unexpired term of this Agreement plus; (3) an equal
monthly pro rata portion of an amount of cash equal to the cash value of any
bonus paid or to be paid to the Executive in the form of performance shares or
restricted stock under the LTIP as described on Exhibit A or any similar bonus
or incentive plans or programs then in effect (valued, if applicable under the
terms of such plans or programs, at the greater of the closing price on the New
York Stock Exchange, or other such market on which the Company's stock trades if
it is not listed on the New York Stock Exchange, on the first trading day of the
plan or program cycle or the Accelerated Termination Date, or if the Accelerated
Termination Date is not a trading day, on the first trading day thereafter) in
respect of the then-current three year cycle of such plans or programs or such
other cycle as is then in effect, calculated as if the then-current cycle were
completed and the target levels attained (the "LTIP Target Amount"), which cash
payment shall be in lieu and in full
Employment Agreement -- 7
8
satisfaction of any rights under the LTIP in respect of such stock or shares as
described in Exhibit A or any similar bonus or incentive plans or programs in
effect at the time of such payment (all of which stock or shares shall be
cancelled upon such payment and receipt); and (4) any other cash or other bonus
compensation earned prior to the date of such termination pursuant to the terms
of all incentive compensation plans then in effect other than the Company's
Management Incentive Compensation Plan as described on Exhibit A or any similar
bonus on incentive plans or programs then in effect; provided that,
notwithstanding such termination of employment, the Executive's covenants set
forth in Section 10 and Section 11 are intended to and shall remain in full
force and effect; and provided further that, upon determination that such
termination shall occur, the Company shall have the right (but not the
obligation), pending such termination, to relieve the Executive, in whole or in
part, of the Executive's duties under this Agreement, or direct the Executive to
no longer perform such duties, or direct that the Executive no longer be
required to report to work, or any combination of the foregoing.
(ii) The parties agree that, because there can be no exact
measure of the damage that would occur to the Executive as a result of a
termination by the Company of the Executive's employment Without Good Cause, the
payments and benefits paid and provided pursuant to this Section 8(c) shall be
deemed to constitute liquidated damages and not a penalty for the Company's
termination of the Executive's employment Without Good Cause.
(d) Change of Control. (i) For purposes of this Agreement, a "Change
in Control" shall mean the first to occur of:
(1) a change in control of the Company of a nature that
is required, pursuant to the Securities Exchange Act
of 1934 (the "1934 Act"), to be reported in response
to Item 1(a) of a Current Report on Form 8-K or Item
6(e) of Schedule 14A under the 1934 Act (in each case
under this Agreement, references to provisions of the
1934 Act and the rules and regulations promulgated
thereunder being understood to refer to such law,
rules and regulations as the same are in effect on
November 1, 1996); or
(2) the acquisition of "Beneficial Ownership" (as defined
in Rule 13d-3 under the 0000 Xxx) of the Company's
securities comprising 35% or more of the combined
voting power of the Company's outstanding securities
by any "person" (as that term is used in Sections
13(d) and 14(d)(2) of the 1934 Act and the rules and
regulations promulgated thereunder, but not including
any trustee or fiduciary acting in that capacity for
an employee benefit plan sponsored by the Company)
and such person's "affiliates" and "associates" (as
those terms are defined under the 1934 Act), but
excluding any ownership by the Executive and his
affiliates and associates; or
(3) the failure of the "Incumbent Directors" (as defined
below) to constitute at least a majority of all
directors of the Company (for these purposes,
"Incumbent Directors" means individuals who were the
directors of the Company on November 1, 1996, and,
after his or her election, any individual becoming a
director subsequent to November 1, 1996, whose
election, or
Employment Agreement -- 8
9
nomination for election by the Company's
stockholders, is approved by a vote of at least
two-thirds of the directors then comprising the
Incumbent Directors, except that no individual shall
be considered an Incumbent Director who is not
recommended by management and whose initial
assumption of office as a director is in connection
with an actual or threatened "election contest"
relating to the "election of directors" of the
Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the 0000 Xxx); or
(4) the closing of a sale of all or substantially all of
the assets of the Company;
(5) the Company's adoption of a plan of dissolution or
liquidation; or
(6) the closing of a merger or consolidation involving
the Company in which the Company is not the surviving
corporation or if, immediately following such merger
or consolidation, less than seventy-five percent
(75%) of the surviving corporation's outstanding
voting stock is held or is anticipated to be held by
persons who are stockholders of the Company
immediately prior to such merger or consolidation.
(ii) If a Change in Control of the Company occurs, the
Executive shall have the right, exercisable for a period of one year thereafter
by delivering a written statement to that effect to the Company, to immediately
terminate this Agreement and upon such a determination the Executive shall have
the right to receive and the Company shall be obligated to pay to Executive in
cash a lump sum payment in an amount equal to the sum of (1) three times the
annual Base Salary then in effect, (2) three times the MICP Target Amount (as
that term is defined in Section 7(b)(i)) in the year in which employment
terminates, (3) the cash value of the LTIP Target Amount (as that term is
defined in Section 8(c)), which cash payment shall be in lieu and in full
satisfaction of any rights under the LTIP in respect of such stock or shares as
described in Exhibit A or any similar bonus or incentive plans or programs in
effect at the time of such payment (all of which stock or shares shall be
cancelled upon such payment and receipt), and (4) the additional payments
necessary to discharge certain tax liabilities (the "Gross Up") as that term is
defined in Section 13 of this Agreement (the sum of the foregoing amounts other
than the Gross Up being referred to as the "Change in Control Payment"). If the
Executive fails to exercise his rights under this Section 8(d) within one year
following a Change in Control, such rights shall expire and be of no further
force or effect.
(e) Termination of Employment of Chief Executive Officer. Upon the
termination of Xxxxxx X. XxXxxxx'x employment with the Company (the "CEO
Termination Date"), for any reason other than the death of Xxxxxx X. XxXxxxx,
the Executive, for a period of six (6) months from the CEO Termination Date, may
terminate the Executive's employment hereunder upon giving at least thirty (30)
days' prior written notice; provided however, the Executive shall not be
entitled to terminate this agreement in accordance with this section if the
Executive, either as an individual, partner, officer, director, stockholder,
employee, advisor, independent contractor, joint venturer, consultant, agent, or
representative or salesman for any person, firm, partnership, corporation or
other entity, is to be employed by or consult with Xxxxxx X. XxXxxxx or any
entity employing Xxxxxx X. XxXxxxx after the CEO Termination Date (the
"Prohibited Activity"). In the event of the death of Xxxxxx X. XxXxxxx, provided
this Agreement remains in effect for a period of one year from the date of
Xxxxxx X.
Employment Agreement -- 9
10
XxXxxxx'x death (the "Trigger Event"), the Executive, for a period of six (6)
months after the Trigger Event, may terminate the Executive's employment
hereunder upon giving at least thirty (30) days' prior written notice. Upon
termination of the Executive's employment pursuant to this section, the
Executive shall be entitled to receive, until the end of the term of this
Agreement then in effect as provided for in Section 2 or until the date which is
12 months after the CEO Termination Date, whichever is later, (1) the Base
Salary, paid in the same monthly or other periodic installments as in effect
prior to the CEO Termination Date; (2) an equal monthly pro rata portion of an
amount of cash equal to the MICP Target Amount (as that term is defined in
Section 7(b)(i)) in respect of the year during which the Executive's employment
terminates, or, if greater, the MICP Target Amount multiplied times the number
of years (or fractions thereof) remaining in the then unexpired term of this
Agreement plus; (3) the cash value of the LTIP Target Amount (as that term is
defined in Section 8(c)), which cash payment shall be in lieu and in full
satisfaction of any rights under the LTIP in respect of such stock or shares as
described in Exhibit A or any similar bonus or incentive plans or programs in
effect at the time of such payment (all of which stock or shares shall be
cancelled upon such payment and receipt); and (4) any other cash or other bonus
compensation earned prior to the date of such termination pursuant to the terms
of all incentive compensation plans then in effect other than the Company's
Management Incentive Compensation Plan as described on Exhibit A or any similar
bonus on incentive plans or programs then in effect; provided that,
notwithstanding such termination of employment, the Executive's covenants set
forth in Section 10 and Section 11 are intended to and shall remain in full
force and effect and provided further that in the event of such termination, the
Company shall have the right (but not the obligation) to relieve the Executive,
in whole or in part, of the Executive's duties under this Agreement, or direct
the Executive to no longer perform such duties, or direct that the Executive no
longer be required to report to work, or any combination of the foregoing.
Notwithstanding the foregoing, the payments provided for under this section
shall immediately cease if the Executive engages in any Prohibited Activity
after the CEO Termination Date. After receiving the payments provided in this
Section the Executive shall have no further rights under this Agreement (other
than those rights already accrued).
(f) Intentions Regarding Certain Stock and Benefit Plans. Except as
otherwise provided herein, upon any termination of the Executive's employment
Without Good Cause or upon the exercise by the Executive of his rights to
terminate his employment in accordance with Section 8(e) or pursuant to Section
8(d), it is the intention of the parties that any and all vesting or performance
requirements or conditions affecting any outstanding restricted stock,
performance stock, stock option, stock appreciation right, bonus, award, right,
grant or any other incentive compensation under any of the Plans, under this
Agreement, or otherwise received, shall be deemed to be fully satisfied and any
risk of forfeiture with respect thereto shall be deemed to have lapsed.
(g) Certain Rights Mutually Exclusive. The provisions of Section 8(c)
and Section 8(d) are mutually exclusive, provided, however, that if within one
year following commencement of an 8(c) payout there shall be a Change in Control
as defined in Section 8(d)(i), then the Executive shall be entitled to the
amount payable to the Executive under Section 8(d)(ii). The triggering of the
lump sum payment requirement of Section 8(d) shall cause the provisions of
Section 8(c) to become inoperative.
Employment Agreement -- 10
11
9. DISCLOSURE
The Executive agrees that during the term of the Executive's employment
by the Company, the Executive will disclose and disclose only to the Company all
ideas, methods, plans, developments or improvements known by him which relate
directly or indirectly to the business of the Company, whether acquired by the
Executive before or during the Executive's employment by the Company. Nothing in
this Section 9 shall be construed as requiring any such communication where the
idea, plan, method or development is lawfully protected from disclosure as a
trade secret of a third party or by any other lawful prohibition against such
communication. The covenants of this Section 9 shall not be violated by ordinary
and customary communications with reporters, bankers and securities analysts and
other members of the investment community.
10. CONFIDENTIALITY
The Executive agrees to keep in strict secrecy and confidence any and
all information the Executive assimilates or to which the Executive has access
during the Executive's employment by the Company and which has not been publicly
disclosed and is not a matter of common knowledge in the fields of work of the
Company. The Executive agrees that both during and after the term of the
Executive's employment by the Company, the Executive will not, without the prior
written consent of the Company, disclose any such confidential information to
any third person, partnership, joint venture, company, corporation or other
organization. The foregoing covenants shall not be breached to the extent that
any such confidential information becomes a matter of general knowledge other
than through a breach by the Executive of the Executive's obligations under this
Section 10 or to the extent the disclosure is required by applicable law.
11. NONCOMPETITION AND NONSOLICITATION
(a) General. The Executive hereby acknowledges that, during and solely
as a result of the Executive's employment by the Company, the Executive has
received and shall continue to receive: (1) special training and education with
respect to the operations of the Company's real estate development and
management businesses and its leasing, lending and financing activities, and
other related matters, and (2) access to confidential information and business
and professional contacts. In consideration of the special and unique
opportunities afforded to the Executive by the Company as a result of the
Executive's employment, as outlined in the previous sentence, the Executive
hereby agrees to the restrictive covenants in this Section 11.
(b) Noncompetition. During the term of the Executive's employment,
whether pursuant to this Agreement, any automatic or other renewal hereof or
otherwise, and, except as may be otherwise herein provided, for a period of one
(1) year after the termination of the Executive's employment with the Company,
regardless of the reason for such termination, the Executive shall not, directly
or indirectly, enter into, engage in, be employed by or consult with any
business which competes with the Company's real estate lending, leasing,
development or management businesses in Florida. The Executive shall not engage
in such prohibited activities, either as an individual, partner, officer,
director, stockholder, employee, advisor, independent contractor, joint
venturer, consultant, agent,
Employment Agreement -- 11
12
or representative or salesman for any person, firm, partnership, corporation or
other entity so competing with the Company. The restrictions of this Section 11
shall not be violated by (i) the ownership of no more than 2% of the outstanding
securities of any company whose stock is traded on a national securities
exchange or is quoted in the Automated Quotation System of the National
Association of Securities Dealers (NASDAQ), or (ii) other outside business
investments that do not in any manner conflict with the services to be rendered
by the Executive for the Company and that do not diminish or detract from the
Executive's ability to render the Executive's required attention to the business
of the Company.
(c) Nonsolicitation. During the Executive's employment with the Company
and, except as may be otherwise herein provided, for a period of one (1) year
following the termination of the Executive's employment with the Company,
regardless of the reason for such termination, the Executive agrees the
Executive will refrain from and will not, directly or indirectly, as an
individual, partner, officer, director, stockholder, employee, advisor,
independent contractor, joint venturer, consultant, agent, representative,
salesman or otherwise solicit any of the employees of the Company to terminate
their employment; provided however, that except upon the termination of the
Executive's employment with the Company for "Good Cause," the provisions of this
section shall not apply to the Executive with respect to the solicitation of J.
Xxxxxxx Xxxxxx, K. Xxxxx Xxxxxx, Xxxxx Xxxxx and Xxxxxxxxx Xxxxxx or any persons
employed by the Company to replace such individuals.
(d) Term Extended or Suspended. The period of time during which the
Executive is prohibited from engaging in certain business practices pursuant to
Sections 11(b) or (c) shall be extended by any length of time during which the
Executive is in breach of such covenants.
(e) Essential Element. It is understood by and between the parties
hereto that the foregoing restrictive covenants set forth in Sections 11(a)
through (c) are essential elements of this Agreement, and that, but for the
agreement of the Executive to comply with such covenants, the Company would not
have agreed to enter into this Agreement. Such covenants by the Executive shall
be construed as agreements independent of any other provision in this Agreement.
The existence of any claim or cause of action of the Executive against the
Company, whether predicated on this Agreement, or otherwise, shall not
constitute a defense to the enforcement by the Company of such covenants.
(f) Severability. It is agreed by the Company and Executive that if any
portion of the covenants set forth in this Section 11 are held to be invalid,
unreasonable, arbitrary or against public policy, then such portion of such
covenants shall be considered divisible both as to time and geographical area.
The Company and Executive agree that, if any court of competent jurisdiction
determines the specified time period or the specified geographical area
applicable to this Section 11 to be invalid, unreasonable, arbitrary or against
public policy, a lesser time period or geographical area which is determined to
be reasonable, non-arbitrary and not against public policy may be enforced
against the Executive. The Company and the Executive agree that the foregoing
covenants are appropriate and reasonable when considered in light of the nature
and extent of the business conducted by the Company.
(g) Limitation on Breach by Company of Material Provision.
Notwithstanding anything to the contrary, if at any time during the term of this
Agreement the Company is in material breach of its obligations under this
Agreement, such breach remains uncured for a period of fifteen (15)
Employment Agreement -- 12
13
business days after written notice thereof by the Executive to the Company, the
Executive is not in material breach his obligations under this Agreement and the
Executive elects on account of such breach by the Company to terminate his
Employment by the Company, then Sections 11(b) and 11(c) of this Agreement shall
not apply to the Executive upon or after such termination.
12. SPECIFIC PERFORMANCE
The Executive agrees that damages at law will be an insufficient remedy
to the Company if the Executive violates the terms of Sections 9, 10 or 11 of
this Agreement and that the Company would suffer irreparable damage as a result
of such violation. Accordingly, it is agreed that the Company shall be entitled,
upon application to a court of competent jurisdiction, to obtain injunctive
relief to enforce the provisions of such Sections, which injunctive relief shall
be in addition to any other rights or remedies available to the Company. The
Executive agrees to pay to the Company all reasonable costs and expenses
incurred by the Company relating to the enforcement of the terms of Sections 9,
10 or 11 of this Agreement, including reasonable fees and reasonable
disbursements of counsel selected by the Company (during investigation and
before and at trial and in appellate proceedings).
13. PAYMENT OF EXCISE TAXES
(a) Payment of Excise Taxes. If the Executive is to receive any (1)
Change of Control Payment under Section 8(d), (2) any benefit or payment under
Section 7 as a result of or following the death or Permanent Disability of the
Executive, (3) any benefit or payment under Section 8(c) as a result of or
following any termination of employment hereunder Without Good Cause, (4) any
benefit or payment under Section 8(e), (5) any benefit or payment under the
Plans as a result of a Change of Control, following the death of Permanent
Disability of the Executive or following the termination of employment hereunder
Without Good Cause (such sections being referred to as the "Covered Sections"
and the benefits and payments to be received thereunder being referred to as the
"Covered Payments"), the Executive shall be entitled to receive the amount
described below to the extent applicable. If any Covered Payment(s) under any of
the Covered Sections or by the Company under another plan or agreement
(collectively, the "Payments") are subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986 (as amended from time to time, the
"Code"), or any successor or similar provision of the Code (the "Excise Tax"),
the Company shall pay the Executive an additional amount (the "Gross Up") such
that the net amount retained by the Executive after deduction of any Excise Tax
on the Payments and the federal income tax on any amounts paid under this
Section 13 shall be equal to the Payments.
(b) Certain Adjustment Payments. For purposes of determining the Gross
Up, the Executive shall be deemed to pay the federal income tax at the highest
marginal rate of taxation (currently 39.5%) in the calendar year in which the
payment to which the Gross Up applies is to be made. The determination of
whether such Excise Tax is payable and the amount thereof shall be made upon the
opinion of tax counsel selected by the Company and reasonably acceptable to the
Executive. The Gross Up, if any, that is due as a result of such determination
shall be paid to the Executive in cash in a lump sum within thirty (30) days of
such computation. If such opinion is not finally accepted by
Employment Agreement -- 13
14
the Internal Revenue Service upon audit or otherwise, then appropriate
adjustments shall be computed (without interest but with Gross Up, if
applicable) by such tax counsel based upon the final amount of the Excise Tax so
determined; any additional amount due the Executive as a result of such
adjustment shall be paid to the Executive by his or her Company in cash in a
lump sum within thirty (30) days of such computation, or any amount due the
Executive's Company as a result of such adjustment shall be paid to the Company
by the Executive in cash in a lump sum within thirty (30) days of such
computation.
14. MISCELLANEOUS
(a) Waiver of Breach. The waiver by either party to this Agreement of a
breach of any of the provisions of this Agreement by the other party shall not
be construed as a waiver of any subsequent breach by such other party.
(b) No Right to Continued Employment. Notwithstanding the fact that
certain provisions of this Agreement and Exhibit A reference a three year cycle
or provide for benefits upon a third year of employment, this Agreement shall
have a two year term with annual one year renewal terms subject to the
termination provisions contained herein.
(c) Compliance With Other Agreements. The Executive represents and
warrants that the execution of this Agreement by him and the Executive's
performance of the Executive's obligations hereunder will not conflict with,
result in the breach of any provision of or the termination of or constitute a
default under any Agreement to which the Executive is a party or by which the
Executive is or may be bound.
(d) Binding Effect; Assignment. The rights and obligations of the
Company under this Agreement shall inure to the benefit of and shall be binding
upon the successors and assigns of the Company. This Agreement is a personal
employment contract and the rights, obligations and interests of the Executive
hereunder may not be sold, assigned, transferred, pledged or hypothecated.
(e) Entire Agreement. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment, modification or discharge is sought.
(f) Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
(g) No Duty to Mitigate. The Executive shall be under no duty to
mitigate any loss of income as result of the termination of his employment
hereunder and any payments due the Executive upon termination of employment
shall not be reduced in respect of any other employment compensation received by
the Executive following such termination.
Employment Agreement -- 14
15
(h) Florida Law. This Agreement shall be construed pursuant to and
governed by the substantive laws of the State of Florida (except that any
provision of Florida law shall not apply if the law of a state or jurisdiction
other than Florida would otherwise apply).
(i) Venue; Process. The parties to this Agreement agree that
jurisdiction and venue in any action brought pursuant to this Agreement to
enforce its terms or otherwise with respect to the relationships between the
parties shall properly lie in and only in the Circuit Court of the Sixth
Judicial Circuit of the State of Florida in and for Pinellas County (the
"Circuit Court") and the parties agree that jurisdiction shall not properly lie
in any other jurisdiction provided, however, if jurisdiction does not properly
lie with the Circuit Court, the parties agree that jurisdiction and venue shall
properly lie in and only in the United States District Court for the Middle
District of Florida, Tampa Division. The parties hereby waive any objections
which they may now or hereafter have based on venue and/or forum non conveniens
and irrevocably submit to the jurisdiction of any such court in any legal suit,
action or proceeding arising out of or relating to this Agreement. The parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without the necessity for ser vice by
any other means provided by statute or rule of court.
(j) Severability. Any provision of this Agreement which is determined
by a court of competent jurisdiction to be prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the validity,
enforceability or legality of such provision in any other jurisdiction. In any
such case, such determination shall not affect any other provision of this
Agreement, and the remaining provisions of this Agreement shall remain in full
force and effect. If any provision or term of this Agreement is susceptible to
two or more constructions or interpretations, one or more of which would render
the provision or term void or unenforceable, the parties agree that a
construction or interpretation which renders the term or provision valid shall
be favored.
(k) Deduction for Tax Purposes. The Company's obligations to make
payments under this Agreement are independent of whether any or all of such
payments are deductible expenses of the Company for federal income tax purposes.
(l) Enforcement. If, within 10 days after demand to comply with the
obligations of one of the parties to this Agreement served in writing on the
other, compliance or reasonable assurance of compliance is not forthcoming, and
the party demanding compliance engages the services of an attorney to enforce
rights under this Agreement, the prevailing party in any action shall be
entitled to recover all reasonable costs and expenses of enforcement (including
reasonable attorneys' fees and reasonable expenses during investigation, before
and at trial and in appellate proceedings). In addition, each of the parties
agrees to indemnify the other in respect of any and all claims, losses, costs,
liabilities and expenses, including reasonable fees and reasonable disbursements
of counsel (during investigation prior to initiation of litigation and at trial
and in appellate proceedings if litigation ensues), directly or indirectly
resulting from or arising out of a breach by the other party of their respective
obligations hereunder. The parties' costs of enforcing this Agreement shall
include prejudgment interest. Additionally, if any party incurs any
out-of-pocket expenses in connection with the enforcement of this Agreement, all
such amounts shall accrue interest at 18% per annum (or such lower rate as may
be required to avoid any limit imposed by applicable law) commencing 30 days
after any such expenses are incurred.
Employment Agreement -- 15
16
(m) Notices. All notices which are required or may be given under this
Agreement shall be in writing and shall be deemed to have been duly given when
received if personally delivered; when transmitted if transmitted by telecopy or
similar electronic transmission method; one working day after it is sent, if
sent by recognized expedited delivery service; and three days after it is sent,
if mailed, first class mail, certified mail, return receipt requested, with
postage prepaid. In each case notice shall be sent to:
To the Company: Echelon International Corporation
Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xx. Xxxxxxxxxx, XX 00000
Attn: Chairman of the Board
Telecopy: (000) 000-0000
To the Executive at the Executive's address herein first above written,
or to such other address as either party may specify by written notice to the
other in accordance with this section 14(m).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ATTEST: ECHELON INTERNATIONAL CORPORATION
(Corporate Seal)
________________________________ By:____________________________________
Secretary Xxxxxx X. XxXxxxx, President
EXECUTIVE
Witnesses:
________________________________ _______________________________________
W. Xxxxxxx Xxxxxxx
________________________________
As to Executive
Employment Agreement -- 16
17
EXHIBIT A
TO
EMPLOYMENT AGREEMENT WITH W. XXXXXXX XXXXXXX
DATED OCTOBER 1, 1997
The Company has established a Management Incentive Compensation Plan
("MICP") and Long Term Incentive Plan ("LTIP") for its senior management in
which the Executive will participate. During the three months ending on December
31, 1997, the MICP will provide for an annual cash bonus based upon the
Company's net income for such year. During the fiscal years ending on December
31, 1998, and December 31, 1999, respectively (the "Covered Years"), the MICP
will provide for annual cash bonuses 60% of which will be payable upon
satisfaction of specific threshold, target and maximum goals to be determined
each year by the Board of Directors or the Compensation Committee, which
specific goals shall be set forth in writing and attached as a schedule hereto
no later than January 31 of each year (the "Performance Goals"), and 40% will be
payable based upon the Company's net income for each of the Covered Years. The
LTIP will provide the opportunity to earn restricted shares and options 60% of
which will be earned upon the cumulative satisfaction of the Performance Goals
for each of the Covered Years and 40% of which will be earned based upon the
Company's cumulative results of operation for three year cycles, beginning with
the three year cycle including the Covered Years and the year ending December
31, 1997 (the "Cycle Years"), provided in each case that the Executive continues
to be employed by the Company under this Agreement. The Executive's
participation in the MICP and the LTIP during the Covered Years and the Cycle
Years shall be based upon the criteria set forth below and set forth on the
schedules to be attached hereto and shall include awards with the values
indicated in the tables set forth below and as more fully described in this
Exhibit A.
MICP
During each of the Covered Years, (i) all MICP bonuses shall be paid in
cash; (ii) if Threshold Net Income is not achieved, no MICP cash bonus will be
paid; (iii) if actual net income exceeds Threshold Net Income, but is less than
Target Net Income, or exceeds Target Net Income but is less than Maximum Net
Income, the percentage of the MICP bonus shall be proportionately increased
above the Threshold bonus amount or the Target Bonus amount, as the case may be,
and (iv) if actual net income equals or exceeds Maximum Net Income, the Maximum
MICP cash bonus will be paid, but no additional cash bonus will be payable under
the MICP regardless of the amount by which actual net income in that Covered
Year exceeds Maximum Net Income. The following table sets forth information
regarding the MICP Net Income Threshold, Target and Maximum and the total cash
bonuses to be paid upon satisfaction of both the MICP Performance Goals and Net
Income Goals. Of the total cash bonuses set forth below, 60% of the applicable
cash bonus amount (Threshold, Target or Maximum) shall be paid, if any, upon
satisfaction of the applicable Performance Goals (Threshold, Target or Maximum)
as set forth on the schedule to be attached hereto and 40% of the applicable
cash bonus amount (Threshold, Target or Maximum) shall be paid, if any, upon
satisfaction of the applicable Net Income level (Threshold, Target or Maximum).
Employment Agreement -- 17
18
MICP 1997 1998 1999
-----------------------------------------------------------------------------------
THRESHOLD
-----------------------------------------------------------------------------------
Net Income $1,584,274.00 $1,768,816.00 $2,132,640.00
-----------------------------------------------------------------------------------
MICP Cash Bonus $11,250.00 $45,000.00 $45,000.00
(% of Base Salary) (5%) (20%) (20%)
-----------------------------------------------------------------------------------
TARGET
-----------------------------------------------------------------------------------
Net Income $2,112,366 $2,358,422.00 $2,843,521.00
-----------------------------------------------------------------------------------
MICP Cash Bonus $22,500.00 $90,000.00 $90,000.00
(% of Base Salary) (10%) (40%) (40%)
-----------------------------------------------------------------------------------
MAXIMUM
-----------------------------------------------------------------------------------
Net Income $2,640,457 $ 2,948,027.00 $3,554,401.00
-----------------------------------------------------------------------------------
MICP Cash Bonus $45,000.00 $135,000.00 $135,000.00
(% of Base Salary) (20%) (60%) (60)%
-----------------------------------------------------------------------------------
LTIP
The sum of each year's Threshold Net Income for the three Cycle Years
shall be referred to as the "Threshold LTIP Net Income"; the sum of each year's
Target Net Income for the three Cycle Years shall be referred to as "Target LTIP
Net Income"; and the sum of each year's Maximum Net Income forth the three Cycle
Years shall be referred to as "Maximum LTIP Net Income," in each case, as set
forth in the following tables.
------------------------------------------------------------------------------------------------
LTIP 1997 1998 1999 LTIP NET INCOME
------------------------------------------------------------------------------------------------
THRESHOLD THRESHOLD
------------------------------------------------------------------------------------------------
Net Income $1,584,274.00 $1,768,816.00 $2,132,640.00 $5,485,730.00
------------------------------------------------------------------------------------------------
TARGET TARGET
------------------------------------------------------------------------------------------------
Net Income $2,112,366.00 $2,358,422.00 $2,843,521.00 $7,314,309.00
------------------------------------------------------------------------------------------------
MAXIMUM MAXIMUM
------------------------------------------------------------------------------------------------
Net Income $2,640,457.00 $2,948,027.00 $3,554,401.00 $9,142,885.00
------------------------------------------------------------------------------------------------
The following table sets for information regarding the Threshold,
Target and Maximum LTIP Net Income and the total restricted stock values and
number of options associated with satisfying the Performance Goals and achieving
such levels of cumulative net income. Of the total restricted stock values and
number of options set forth below, 60% of the applicable restricted stock values
and number of options (Threshold, Target or Maximum) shall be paid, if any, upon
satisfaction of the applicable Performance Goals (Threshold, Target or Maximum)
as set forth on the schedule to be attached hereto and 40% of the total
applicable restricted stock values and number of options
Employment Agreement -- 18
19
(Threshold, Target or Maximum) shall be paid, if any, upon satisfaction of the
applicable cumulative Net Income level (Threshold, Target or Maximum) set forth
below:
-------------------------------------------------------------------------------------
LTIP Three Years Ending December 31, 1999
-------------------------------------------------------------------------------------
Options to Purchase
Dollar Value of Number of Shares
Restricted Stock of Common Stock
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
THRESHOLD
-------------------------------------------------------------------------------------
Cumulative Net Income $5,485,730.00
-------------------------------------------------------------------------------------
LTIP Value $45,000.00 5,000
(% of Base Salary) (20%)
-------------------------------------------------------------------------------------
TARGET
-------------------------------------------------------------------------------------
Cumulative Net Income $7,314,309.00
-------------------------------------------------------------------------------------
LTIP Value $90,000.00 10,000
(% of Base Salary) (40%)
-------------------------------------------------------------------------------------
MAXIMUM
-------------------------------------------------------------------------------------
Cumulative Net Income $9,142,885.00
-------------------------------------------------------------------------------------
LTIP Value $135,000.00 15,000
(% of Base Salary) (60%)
-------------------------------------------------------------------------------------
For purposes of administering the LTIP, during the first three-year
cycle, (i) all LTIP awards shall be paid in the form of restricted shares and
options as indicated above; (ii) the number of restricted shares shall be
determined by dividing the dollar value of the Maximum LTIP Value $135,000 by
the closing price on January 1, 1998, or the first trading day thereafter, on
the New York Stock Exchange (or such other market on which the Company's stock
trades if it is not listed on the New York Stock Exchange); (iii) the restricted
shares, among other things, shall be subject to a risk of forfeiture if and to
the extent that the performance criteria set forth in this Exhibit A are not
met; (iv) if actual cumulative net income for the three-year period ending
December 31, 1999, does not equal or exceed Threshold LTIP Net Income, all
restricted shares shall be forfeited, and no LTIP bonus will have been earned;
(v) if actual cumulative net income for the three year period ending December
31, 1999, exceeds Threshold LTIP Net Income, but is less than Target LTIP Net
Income, or exceeds Target LTIP Net Income but is less than Maximum LTIP Net
Income, the percentage of the LTIP restricted shares as to which the risks on
forfeiture shall lapse shall be proportionately increased above the Threshold
bonus amount or the Target Bonus amount, as the case may be; (vi) if cumulative
net income for the three-year period ending December 31, 1999 equals or exceeds
Maximum LTIP Net Income, the risks of forfeiture shall lapse as to all
restricted shares, but no additional restricted shares will be issuable under
the LTIP regardless of the amount by which actual cumulative net income for the
three years ending December 31, 1999 exceeds Maximum LTIP Net Income (vii) the
option exercise price shall be the closing price on December 31 1999, or the
first trading day thereafter, on the New York Stock Exchange (or such other
market on which the
Employment Agreement -- 19
20
Company's stock trades if it is not listed on the New York Stock Exchange); and
(vii) the options shall be 100% vested as of the date of the satisfaction of the
applicable performance goal.
Employment Agreement -- 20
