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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 L. Xxxxxx Xxxx, 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,
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that 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 Controller and Assistant Secretary
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
Seventy-Nine thousand Six Hundred and Nineteen dollars
($79,619), which shall be paid
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in equal or 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 Twenty-One
Thousand Dollars ($21,000) 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 the Executive
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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 paid
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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 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:
-------------------
L. Xxxxxx Xxxx
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxxxx, 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/ L. Xxxxxx Xxxx
---------------------------------------
X. Xxxxxx Xxxx
XXXXXXXX CORPORATION
By /s/ X. X. Xxxxx
-------------------------------------
Name: X. X. Xxxxx
----------------------------------
Title: Chairman and President
---------------------------------
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