XXXXX XXXXXX CORPORATION
00 XXXXXX XXXXXX
XXX XXXXXX, XXXXXXXXXXX 00000
February 3, 1995
PERSONAL AND CONFIDENTIAL
Xx. Xxxxxxx X. Xxxxxxxxx
00 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Dear Xx. Xxxxxxxxx:
This letter will confirm the terms and conditions of
your Employment Agreement (the "Agreement") with Xxxxx
Xxxxxx Corporation ("SCO").
1. You will be employed as the President and
Chief Operating Officer of SCO, reporting to me.
2. Your compensation in such capacity will be:
(a) A base salary at the initial annual rate
of $250,000. You will be reviewed periodically.
(b) You will participate in the SCO Short-
Term Incentive Compensation Program. Your maximum bonus
percentage will be sixty percent (60%) of your base salary.
3. You will be eligible for consideration of
grants of SCO share options when other officers are
considered, usually annually; upon commencement of your
employment, you received 145,000 share options based on the
average share price on the day of the grant. All options
will be exercisable in accordance with the SCO Corporation
1990 Stock Option Plan, as amended from time to time.
(a) In the event that (i) the Board of
Directors of SCO terminates your employment for reasons
other than Cause, or (ii) you terminate your employment
within the ninety (90) day period commencing on the ninety-
first (91st) day following the first occurrence of an event
of Good Reason (a "Good Reason Termination"), you shall be
free to seek and accept employment elsewhere, but you shall
nonetheless be paid your base salary, plus fringe benefits
as set forth in Paragraph 4 below, for the balance of this
Agreement, but not less than twenty four (24) months. "Good
Reason" is defined herein to mean reduction in your base
compensation or in your incentive compensation target
opportunities, substantial curtailment of your status or
responsibilities, or your forced relocation of more than 35
miles (whether or not any other executives are required to
relocate), and "Cause" shall mean a material breach of, or
willful misconduct in, the performance of your duties as an
employee of SCO; employment by a firm not affiliated with
SCO while you are employed by SCO; theft, embezzlement,
bribery or other act of comparable dishonesty or disloyalty
or breach of trust against SCO; or the conviction of a
felony. The fact that SCO ceases to be publicly held, in
and of itself, shall not be deemed "substantial curtailment
of your status or responsibilities" within the meaning of
this Agreement. Moreover, this continuation of salary will
not be applicable if you obtain employment, or enter into
any personal service arrangement, which would result in your
providing services that would relate directly or indirectly
to the business of providing equipment and/or supplies for
the small office/home market on behalf of a competitor of
SCO or its successor or if your employment terminates by
reason of your death, permanent disability or your voluntary
retirement or resignation other than a Good Reason
Termination.
(b) If your employment should terminate for
a reason entitling you to salary continuation under Section
3(a) above following a Change-in-Control (defined below),
the twenty-four (24) months referenced in Section 3(a)
above, will be changed to "2.9 years". For purposes of this
Section 3(b), "Change-in-Control" of SCO shall be deemed to
have occurred if (a) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) excluding HM
Holdings Inc. and/or any entity controlling, under common
control with or controlled by HM Holdings, Inc. is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of SCO representing 51% or more of the combined
voting power of SCO's then outstanding securities; or (b) if
at any time a majority of the members of the board have been
elected or designated by any "person" (including, without
limitation, any persons or entities affiliated with such
person but excluding without limitation, HM Holdings Inc.
and/or any entity controlling, under common control or
controlled by HM Holdings Inc.).
(c) Notwithstanding anything in the
foregoing to the contrary, if any of the payments provided
for in this Agreement, together with any other payments
which you have the right to receive from SCO or any
corporation which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which SCO is a member, would
constitute a "parachute payment" (as defined in Section
280(g)(2) of the Code), the payments to be made pursuant to
this Agreement shall be reduced to the largest amount as
will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code;
provided, however, that the determination as to whether any
reduction in the payments under this Agreement pursuant to
this provision is necessary shall be made by SCO in good
faith.
4. You will be entitled to receive the following
fringe benefits:
(a) Term life insurance coverage equal to
two times your annual base salary.
(b) A company car in accordance with the SCO
policy, or a car allowance of $575/month plus the IRS
allowance for business mileage.
(c) Participation in the SCO Salaried
Employees' Pension Plan (the "Salaried Plan"). Upon your
termination of employment for any reason including death,
you (or your beneficiaries) will be entitled to receive
pension benefits under Salaried Plan in accordance with the
provisions of that Plan. For the purpose of service and
credited service under such Plan, service attributable to
the severance period shall be counted only for the period
for which you would have received severance in accordance
with the terms of such Plan.
(d) Participation in the SCO Supplemental
Executive Retirement Plan. The period of any salary
continuation under Paragraph 3(a) or (b) above shall not
count as Credited Service under the SCO Supplemental
Executive Retirement Plan.
(e) Participation in the Executive Medical
Program.
(f) Participation in the SCO disability
plan.
5. SCO will provide you with assistance in the
securing of a bridge loan, if needed.
6. If your employment should terminate for a
reason entitling you to salary continuation under Section
3(a) above, SCO will provide you, at its sole cost and
expense up to a maximum of $20,000, with outplacement
assistance at a firm selected by SCO. At your option and in
lieu of SCO's obligations to provide you with outplacement
assistance, SCO will pay you $12,000 as soon as practicable
after you make such an election and communicate your
election to SCO.
7. When you retire (that is, when your employment
is terminated at a time when you are eligible for benefits
under the Salaried Plan) you will receive payment directly
from SCO calculated as follows:
An amount equal to the amount, if any, that would
be payable to you under the Salaried Plan based on your
combined service with Xxxxxx Industries (9 years, 1 month)
and SCO (from 7/2/90 to termination); less
(i) the amount actually payable to you
under the Salaried Plan based upon your Credited Service
with SCO (from 7/2/90 to termination, including, if any, the
severance period referred to in 4.(c) above), and less
(ii) the amount, or the actuarial
equivalent for retirement before age 60, that would be
payable to you under the Xxxxxx Industries Corporate
Retirement Plan based on your age at retirement from SCO,
and less
(iii) the amount, if any payable to you
under the SCO Supplemental Retirement Plan based upon your
Credited Service with SCO (from 7/2/90 to termination).
It is understood that the amount payable under this
arrangement may, at the option of SCO, be paid to you as a
lump sum based on the Pension Benefit Guaranty Corporation
interest rate in effect at your retirement date and the
mortality table referred to in the Salaried Plan.
8. The terms of this Agreement shall expire on
June 30, 1995 and may be renewed for subsequent one-year
periods at the discretion of the Board of Directors.
9. This Agreement, upon your acceptance in the
space provided below, shall be a binding contract to be
governed by and construed in accordance with the laws of the
state of Connecticut and it shall supersede and replace all
prior agreements and understandings between the parties.
10. The parties hereto hereby agree that the
calculations of Deloitte & Touche LLP attached hereto as
Exhibit A and made a part hereof, setting forth change in
control calculations as of March 1, 1995 and as of December
1, 1994, are a true and correct estimate of such figures as
of such dates. Each party affirms that such party is not
presently aware of any other facts or circumstances which
would render the figures on Exhibit A incorrect.
As the terms described in this letter exceed
normal SCO policy regarding employee separation, it is
understood that this Agreement sets forth the entire
agreement between SCO and you relating to your employment;
that your acceptance of these arrangements is a compromise
and settlement of any and all claims which you may have
against SCO; and that you release SCO from any liability
other than that to which SCO has agreed above.
Very truly yours,
XXXXX XXXXXX CORPORATION
By:_/s/X. Xxx Xxxxxxxx_____
X. Xxx Xxxxxxxx
Chairman and Chief
Executive Officer
I accept and agree to the
foregoing terms and conditions.
__________________________
Xxxxxxx X. Xxxxxxxxx
______________________
Date
