[LOGO] THE XXXXXXX-XXXXXXXXXX CORPORATION
000 Xxxxxxxx Xxxxxxxxx - Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Tel: (000) 000-0000 - Fax: (000) 000-0000
TERMINATION AND GENERAL RELEASE AGREEMENT
In consideration of the covenants undertaken and releases contained in
this General Release Agreement (the "Agreement"), and for other good and
valuable consideration, receipt of which is hereby acknowledged, The
XxxXxxx-Xxxxxxxxxx Corporation (the "Company") and Xxxxxx X. Xxxxx ("Xxxxx")
agree as follows:
1. Xxxxx'x employment as President and Chief Executive Officer of the
Company and as an officer, employee or director (if applicable) with any
subsidiaries of the Company is to be terminated effective January 31, 1999. All
employment obligations, accruals, benefits, payments, and other obligations
(except as expressly provided in paragraph 2 below) shall cease as of that date;
provided, that nothing herein shall affect Xxxxx'x relationship with the Company
as a member of the Company's Board of Directors pursuant to arrangements which
are to be deemed outside the scope of this Agreement. Xxxxx acknowledges receipt
of full payment of salary and accrued vacation through January 31, 1999, as
required by previous obligations and by law. Xxxxx shall have the option to
convert and continue health insurance coverage as provided under federal law
(COBRA) and Section 5(b) of the Separation Agreement between Company and Xxxxx
(the "Separation Agreement"). Xxxxx will be entitled to his full contribution
under the Company's 401(K) retirement plan in accordance with the Company's
normal practices for 1998. Following the date of this Agreement, Xxxxx shall
continue to be covered by the Company's officers and other liability insurance
policies as in effect from time to time for all his activities and capacities
relating to the Company prior to the date hereof, and shall continue to be
covered by the Company's liability insurance policies applicable to directors.
Any statutory, common law and contractual rights of Xxxxx to be indemnified,
held harmless, defended or reimbursed by or on behalf of the Company or its
affiliates or contractors with respect to his activities and capacities relating
to the Company shall not be terminated or released by this Agreement and shall
continue to be applicable to him.
2. This Agreement does not modify or supersede the terms and conditions
of the Separation Agreement other than deleting paragraph 5(d) therein and
replacing it with the treatment of Xxxxx'x options as described in this
paragraph and on Schedule A attached hereto. Other than paragraph 5(d), the
terms and provisions of that Separation Agreement shall continue and Xxxxx'x
termination shall be deemed to be by MSC without cause, covered by Section 5
thereof. Any and all stock options held by Xxxxx will be
treated as provided on Schedule A hereto; and to the extent the terms of
these options as provided on Schedule A are modified to be different from the
terms contained in the Stock Option Agreements that they were issued under,
the terms contained in Schedule A shall control and the Stock Option
Agreements are hereby modified to conform to Schedule A (including, but not
limited to, with respect to vesting, exercisability, cancellation and option
termination date). However, Xxxxx and the Company agree that Xxxxx will not
be granted any "Reload Options" as such term is defined in the Stock Option
Agreements. Xxxxx and the Company agree that the Change in Control Agreement
between Xxxxx and the Company dated as of February 7, 1995, a copy of which
is attached as Schedule B, is hereby terminated.
3. Except for those obligations expressly set forth in this Agreement,
and except for future obligations arising under the Separation Agreement and
agreements relating to the stock options referenced on Schedule A, Xxxxx hereby
acknowledges full and complete satisfaction of and releases and discharges and
covenants not to sue the Company, its subsidiaries, parent and affiliated
corporations, past and present, and each of them, as well as its and their
directors, officers, shareholders, representatives, assignees, successors,
agents and Xxxxx'x, past and present, and each of them (individually and
collectively, "Releasees") from and with respect to any and all claims, wages,
agreements, obligations, demands and causes of action, known or unknown,
suspected or unsuspected, of any nature whatsoever arising out of or in any way
related to any transactions, occurrences, statements, acts or omissions
occurring on or prior to the date of this Agreement and relating to Xxxxx'x
relationships or capacities with the Company (individually and collectively the
"Claims") whether based on contract, tort, statute or any other source. Such
Claims include but are not limited to those arising out of or in any way
connected with Xxxxx'x employment relationship with the Company, or termination
thereof, such as and without limiting the generality of the foregoing, any Claim
for employment, wages, severance pay, stock option, bonus or similar benefit,
sick leave, pension, retirement, vacation pay, life insurance, health, medical
or disability insurance or any other fringe benefit, workers' compensation or
disability, and any claim under Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
Family and Medical Leave Act, the California Fair Employment and Housing Act,
the California Family Rights Act, or any other federal, state or local law,
regulation or ordinance. If by operation of law there are any Claims which are
not deemed fully discharged and satisfied by the releases herein, then the value
of the above consideration shall be credited and applied against any liability
or debt to Xxxxx which the Company may have pursuant to any such unreleased
Claim(s); provided, that such credit shall not exceed 90% of the amount of the
full value of the above consideration.
4. The parties intend the releases of this Agreement to be as
comprehensive as permitted by law, and to be effective as a bar to every Claim,
demand and cause of action stated above, whether known or unknown, suspected or
unsuspected, even if Xxxxx later discovers additional or different claims or
facts which if known at the time of executing this Agreement may have affected
this settlement. Xxxxx hereby expressly
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waives any rights and benefits conferred by SECTION 1542 of the CALIFORNIA
CIVIL CODE, with provides that, "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME
OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED
HIS SETTLEMENT WITH THE DEBTOR."
5. Xxxxx expressly acknowledges and agrees that, by entering into this
Agreement, Xxxxx is waiving any and all rights or claims that he may have
arising under the Age Discrimination in Employment Act of 1967, as amended,
which have arisen on or before the date of execution of this Agreement. In
furtherance of this intention, Xxxxx expressly acknowledges and agrees that:
(a) In return for this Agreement, Xxxxx will receive
compensation and consideration beyond that to which Xxxxx was already
entitled to receive before entering into this Agreement;
(b) Xxxxx has been advised by the Company, and is xxxxxx
advised in writing by this Agreement, to consult with an attorney
before signing this Agreement;
(c) Xxxxx was given a copy of this Agreement on January 31,
1999, and informed that Xxxxx has up to twenty one (21) calendar days
within which to consider it, although Xxxxx may sign and return it
sooner if Xxxxx wishes to do so; and
(x) Xxxxx has been informed, and is hereby informed, that
Xxxxx has seven (7) days following his signature of the Agreement, in
which to revoke this Agreement. Such revocation must be in writing and
hand-delivered to the Company during or at the end of the seven-day
period. If there is no such revocation, this Agreement shall become
binding and effective upon expiration of the seven-day period.
6. If any provision of this Agreement or its application is held
invalid, the invalidity shall not affect other provisions or applications of the
Agreement which can be given effect without the invalid provisions or
application and, therefore, the provisions of this Agreement are declared to be
severable. This Agreement may be modified only by a writing signed by the
parties. Xxxxx agrees to keep the terms of this Agreement confidential.
7. Any dispute or controversy between Xxxxx, on the one hand, and the
Company (or any other Releasee), on the other hand, in any way arising out of,
related to, or connected in any way with this Agreement or any subject matter
related thereto shall be resolved in accordance with the Separation Agreement.
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The undersigned acknowledge that they have carefully read this
Agreement, and that they fully understand its terms. They understand that it
includes a full and final release and settlement of all Claims of any kind which
Xxxxx may have against the Company or other Releasees, as of the date of
signing, whether or not such claims are currently known or suspected, and they
voluntarily sign it with such understanding.
EXECUTED this 15th day of Feb. 1999, at Pasadena,
California.
/s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx
The XxxXxxx-Xxxxxxxxxx Corporation
By: /s/ Xxxxx Xxxxx
----------------------------------
Xxxxx Xxxxx
Its: Chairman of the Board
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SCHEDULE A FOR XXXXXX X. XXXXX
Unvested Unvested Exercisable Exercisable
Originally Prior to After Prior to After Termination
No. Option Date Granted Price Vested Cancelled 1/31/99 1/31/1999* 1/31/99 1/31/99 Date of Option
1483 12/7/94 60,000 $11.000 60,000 0 -- -- 60,000 60,000 1/31/04
1504 1/1/95 70,000 $10.375 70,000 0 -- -- 70,000 70,000 1/31/04
1270 12/06/95 5,000 $15.375 5,000 0 -- -- 5,000 5.000 1/31/04
1575 12/06/95 100,000 $15.375 75,000 0 25,000 12,500 75,000 87,500 1/31/04
1588 3/27/96 100,000 $13.750 100,000 0 -- -- 100,000 100,000 1/31/04
1601 12/11/96 20,000 $ 8.250 10,000 0 10,000 5,000 10,000 15,000 1/31/04
2257 1/14/98 50,000 $ 9.875 -- 0 50,000 25,000 -- 62,500 1/31/04
2288 1/15/98 125,000 $ 9.000 -- 0 125,000 62,500 -- 62,500 1/31/04
Total 530,000 320,000 0 210,000 105,000 320,000 425,000
*These options will be cancelled as of January 31, 1999.
SCHEDULE B
CHANGE IN CONTROL AGREEMENT
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THE XXXXXXX-XXXXXXXXXX CORPORATION
000 Xxxxxxxx Xxxxxxxxx Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Tel: (000) 000-0000 - TWX: 000 000-0000 - Telex 0000000 - Fax: (000) 000-0000
February 7, 1995
Xx. Xxxxxx X. Xxxxx
The XxxXxxx-Xxxxxxxxxx Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxxx:
The XxxXxxx-Xxxxxxxxxx Corporation (the "Company") considers the
establishment and maintenance of sound and vital management to be essential
to protecting and enhancing the best interests of the Company and its
stockholders. The Company also considers it essential to the best interest of
the Company and its stockholders that its key management personnel be
encouraged to remain with the Company and continue to devote full attention
to the Company's business in the event an effort is made to obtain control of
the Company through a tender offer or otherwise. In this connection, the
Company recognizes that the possibility of a change in control and the
uncertainty and questions which it may raise among management may result in
the departure or distraction of key management personnel to the detriment of
the Company and its stockholders. Although no such change in control is
currently anticipated, the board of directors of the Company has determined
that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of key members of the Company's management
to their assigned duties without distraction in the face of the potentially
disturbing circumstances arising from the possibility of a change in control
of the Company.
The board recognizes that your contributions to the past and future growth
and success of the Company have been substantial. Should the Company receive
any proposal from a third person concerning a possible business combination
with, or acquisition of equity securities of, the Company, the board believes
it is imperative that the Company and the board be able to rely upon you to
continue in your position, and that the Company be able to receive and rely
upon your advice, if so requested, as to the best interests of the Company
and its stockholders without concern that you might be distracted by the
personal uncertainties and risks created by such a proposal. Should the
Company receive any such proposals, in addition to your regular duties, you
may be called upon to assist in the assessment of such proposals, advise
management and the board as to whether such proposals would be in the best
interests of the Company and its stockholders, and to take such actions as
the board might determine to be appropriate.
Accordingly, to assure the Company that it will have your continued undivided
attention and services and the availability of your advice and counsel
notwithstanding the possibility, threat or occurrence of a bid to take over
control of the Company, and to induce you to remain in the employ of the
Company, and for other good and valuable consideration, this letter
agreement (the "Agreement") sets forth benefits which the Company agrees
will be provided to you in the event of a change in control of the Company
(as defined below) prior to the expiration of this Agreement and while you are
still an employee of the Company.
1. CHANGE IN CONTROL. A "Change in Control" of Company means and shall be
deemed to have occurred if and when: (i) within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, any person or group becomes a
beneficial owner, directly or indirectly, of securities of Company
representing 20% or more of the combined voting power of Company's then
outstanding securities; (ii) individuals who were members of the board of
directors of Company immediately prior to a meeting of the stockholders of
Company involving a contest for the election of directors shall not
constitute a majority of the board of directors following such election;
(iii) the stockholders of Company approve the dissolution or liquidation of
Company; (iv) the stockholders of Company approve an agreement to merge or
consolidate, or otherwise reorganize, with or into one or more entities which
are not subsidiaries, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity are, or are to be,
owned by former stockholders of Company (excluding from the term "former
stockholders" a stockholder who is, or as a result of the transaction in
question becomes, an "affiliate," as that term is used in the Securities
Exchange Act of 1934 and the rules promulgated thereunder, of any party to
such merger, consolidation or reorganization); or (v) the stockholders of
Company approve the sale of substantially all of Company's business and/or
assets to a person or entity which is not a subsidiary; PROVIDED, HOWEVER,
that no Change in Control of Company shall be deemed to have occurred if the
transaction giving rise thereto was approved by a majority of the board of
directors who were in office immediately prior to such transaction.
2. TERMINATION OF EMPLOYMENT FOLLOWING A CHANGE IN CONTROL. If, within two
years following a Change in Control of Company, Company terminates Employee's
employment for any reason, or if Employee terminates his employment with
Company for any reason other than death or disability, Company shall pay
Employee a lump sum amount equal to 2.5 times Employee's "base amount" as
defined below. Such amount shall be payable within 10 days after such
termination of employment.
3. ESTABLISHMENT OF TRUST: FUNDING OF TRUST UPON CHANGE IN CONTROL.
(a) Company shall establish, as soon as practicable, a trust for the
purpose of holding assets to make any payments that may be required
under the terms of this agreement. Such trust, which may be a sub-trust
of a larger
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trust, shall be revocable prior to a Change in Control but shall become
irrevocable upon a Change in Control. Such trust shall be a grantor trust
under which the income is taxable to the Company and no contributions or
income are taxable to the Employee until funds are distributed to him.
(b) The trust described herein shall be initially funded with a contribution
of $1.00. Within 10 days following a Change in Control of Company,
Company shall transfer to the trust sufficient funds to cover the
maximum payment which could become payable to Employee under this
Agreement in the event Employee's employment with Company is terminated
within two years following the Change in Control.
4. PARACHUTE PAYMENTS.
(a) Notwithstanding anything in this Agreement to the contrary, any
"parachute payments" to be made to or for the benefit of Employee,
whether pursuant to this Agreement or otherwise, shall be modified to
the extent necessary so that the requirements of either subparagraph (i)
or (ii) before are satisfied:
(i) the aggregate of "present value" of all "parachute payments"
payable to or for the benefit of Employee, whether pursuant to
this Agreement or otherwise, shall be less than three times
Employee's "base amount"; or
(ii) each "parachute payment" payable to or for the benefit of
Employee, whether pursuant to this Agreement or otherwise, shall
be in an amount which does not exceed the "reasonable
compensation" allocable to such "parachute payment."
(b) Notwithstanding anything in any other section of this Agreement to the
contrary, no "illegal parachute payments" shall be made to or for the
benefit of Employee.
(c) For purposes of this section:
(i) The term "base amount" shall have the meaning ascribed to it under
Section 280G(b)(3) of the Internal Revenue Code of 1986, as
amended (the "Code");
(ii) the term "illegal parachute payment" shall mean a payment
described in Section 280G(b)(2)(B) of the Code;
(iii) the term "parachute payment" shall have the meaning ascribed in
Section 280G(b)(2)(A) of the Code, without regard to Section
280G(b)(2)(A)(ii) of the Code but with regard to Section
280G(b)(4)(A);
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7. GOVERNING LAW. This Agreement is made and entered into in the State of
California, and the laws of California shall govern its validity and
interpretation and the performance by the parties hereto of their respective
duties and obligations hereunder.
8. AMENDMENT OF AGREEMENT. This Agreement may be amended or modified only
by an instrument in writing executed by all of the parties hereto.
9. ARBITRATION. Any dispute, controversy, or claim arising out of or
relating to this Agreement or breach thereof, shall be submitted to
arbitration in accordance with the Voluntary Labor Arbitration Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitration may be entered in any court in the State of California, or in any
other court of competent jurisdiction. In reach his or her decision, the
arbitrator shall have no authority to ignore, change, modify, add to or
delete from any provision of this Agreement, but instead is limited to
interpreting this Agreement. In the case of any arbitration or subsequent
judicial proceeding arising after a Change in Control, the Employee shall be
awarded his or her costs, including attorneys' fees.
10. NOTICES. Any notice or communications required or permitted to be given
to the parties hereto shall be delivered personally or be sent by United
States registered or certified mail, postage prepaid and return receipt
requested, and addressed or delivered as follows, or at such other address as
the party addressed may have substituted by notice pursuant to this section:
(a) If to Company:
The XxxXxxx-Xxxxxxxxxx Corporation
000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000-1777
Attention: President
(b) If to Employee:
Xxxxxx X. Xxxxx
0000 Xxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
11. SEVERABILITY. In case any one or more of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein and there shall be deemed substituted such other
provision as will most nearly accomplish the intent of the parties to the
extent permitted by the applicable law. In case this Agreement, or any one or
more of the provisions hereof, shall be held to be invalid, illegal or
unenforceable within any
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governmental jurisdiction or subdivision thereof, the Agreement or any such
provision thereof shall not as a consequence be deemed to be invalid, illegal
or unenforceable in any other governmental jurisdiction or subdivision
thereof.
12. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of
which shall together constitute one and the same Agreement.
The parties have executed this Agreement as of the date first written above.
Employee The XxxXxxx-Xxxxxxxxxx Corporation
/s/ Xxxxxx X. Xxxxx By /s/ Xxxxxxx X. XxxXxxx
----------------------------- --------------------------------
Xxxxxx X. Xxxxx Xxxxxxx X. XxxXxxx
Chairman
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