1 Exhibit 10(i)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is entered into as of the 24th day of
September, 1994 by and between XxXxxxxxx Xxxxxxx Corporation, a Maryland
corporation (the "Company"), and Xxxxx X. Xxxxxxxxxxx ("Executive").
RECITALS
A. The Company desires to employ Executive as President and Chief
Executive Officer and for Executive to serve as a member of its Board of
Directors.
B. In return for the compensation, bonuses and other consideration
provided for herein, Executive has agreed to become President and Chief
Executive Officer and a member of the Board of Directors of the Company
pursuant to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing, and the
representations, warranties and covenants hereinafter, the parties hereto
agree as follows (the "Agreement"):
1. Employment. At all times during the Employment Period (as
hereinafter defined), Company shall employ Executive in the capacity of
President and Chief Executive Officer. In such capacity, Executive shall
devote his full time and professional efforts to such position, shall be
assigned and undertake only such duties and tasks as are appropriate for a
person in the position of President and Chief Executive Officer, and shall
exercise such authority over all of Company's operations and employees as
is customarily exercised by a President and Chief Executive Officer,
subject to the overall supervision of the Board of Directors of the Company
(the "Board").
2. Employment Period. The term of the Executive's employment
under this Agreement shall commence on September 24, 1994 (the
"Commencement Date") and shall expire, subject to earlier termination of
employment as hereinafter provided, on September 23, 1997 (the "Employment
Period"); provided, however, that on September 23, 1996 and each
anniversary of such date, the Employment Period shall automatically be
extended for an additional one year period unless prior thereto either
party has given written notice to the other that such party does not wish
to extend the term of this Agreement. Notwithstanding any other provision
of this Section 2, in no event shall the Employment Period extend beyond
May 16, 2001.
3. Compensation. Except as otherwise provided for herein,
throughout the Employment Period the Company shall pay or provide Executive
with the following, and Executive shall accept the same, as compensation
for the performance of his undertakings and the services to be rendered by
him throughout the Employment Period under this Agreement:
2 Exhibit 10(i)
(a) Annual Compensation.
(i) Base Salary: $825,000 per year, to be reviewed
annually by the Management Compensation and Succession Committee
("Compensation Committee") of the Company's Board of Directors, but Base
Salary may not be reduced by the Compensation Committee to a rate that is
less than the highest rate Executive has attained on an annualized basis
unless such reduction is part of a general salary reduction applied to
members of the Company's senior management as a group.
(ii) Annual Incentive Compensation: $575,000 target
incentive compensation for 1995 pursuant to the terms and conditions of the
Company's Performance Sharing Plan or any successor plan (collectively
"PSP"); this amount is guaranteed for 1995, payable in 1996 first quarter.
Thereafter, the amount determined in accordance with the terms and
conditions of PSP as applied for other members of senior management of the
Company.
(iii) 1994 Signing Bonus: $750,000 to $1,000,000 with
the actual amount of this one-time signing bonus within these limits to be
determined by subtracting from the sum of $1,000,000, all other forms of
compensation payable by the Company to Executive in 1994, which are
includable for purposes of calculating Applicable Employee Remuneration
under Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").
(b) Long Term Incentive Compensation.
(i) Years of Service based Restricted Stock: 60,000
shares of restricted stock with 42,000 shares granted effective as of the
Commencement Date and 18,000 shares granted no later than January 31, 1995
with vesting as follows:
(a) 14,000 shares of the 42,000 shares on March 31,
1995, and an additional 14,000 shares per year in each of the first
quarters of 1996 and 1997.
(b) the remaining 18,000 shares no later than the
end of the first quarter of 2002.
(ii) Performance based Restricted Stock: 40,000 shares
of performance based restricted stock to be granted in equal installments
of 10,000 shares no later than the end of the first quarter of each of the
following years: 1995, 1996, 1997 and 1998. Vesting, performance periods
and other criteria to be the same as those set for the Chief Executive
Officer's award in April 1994, or as set by the Compensation Committee for
other members of senior management in accordance with the terms and
conditions of the Company's 1994 Performance and Equity Incentive Plan
("PEIP").
3 Exhibit 10(i)
(iii) Stock Options: Options to purchase 150,000 shares
of the Company's common stock at the fair market value of the Company's
common stock on the Commencement Date, vesting and exercisable as follows:
30,000 shares per year beginning on the second anniversary of the
Commencement Date, exercisable over a ten-year period, continuing after
Executive's retirement.
(c) All restricted stock and stock options shall be granted
and issued under the terms and conditions of the PEIP (including agreements
to be issued pursuant to the terms thereof), and Executive's participation
thereunder shall continue as long as such plan remains in effect, with
participation on the same basis as other corporate officers in any future
incentive compensation or other bonus plan covering the Company's executive
employees. Notwithstanding the foregoing, the Long Term Incentive
Compensation in Section 3(b) herein is intended to be the total long term
incentive compensation of Executive during his employment with Company.
Additional long term incentive awards to Executive, if any, will be granted
at the sole discretion of the Compensation Committee. Executive shall also
participate in the Company's other employee benefit plans, policies,
practices and arrangements in which senior Company executives are presently
eligible to participate, or plans and arrangements substituted therefor or
in addition thereto, including without limitation any defined benefit
retirement plan, excess or supplementary plan, profit sharing plan, savings
plan, health and dental plan, disability plan, survivor income and life
insurance plan, executive financial planning program, or other arrangement
(PEIP and such other benefit plans collectively hereinafter referred to as
the "Benefit Plans").
(d) Paid vacation of no less than four (4) weeks per year in
accordance with the Company's vacation policy as in effect from time to
time, and all paid holidays given by the Company to its executive officers.
(e) All fringe benefits and perquisites including without
limitation the payment by the Company of initiation fees and dues for one
country club in accordance with the Company's policies presently in effect.
(f) Moving and relocation expenses incurred by Executive to
move his residence to the world headquarters city of Company, including
third party relocation service for disposal of Executive's current
residence. Any pay-back provision contained in Company's moving and
relocation policy shall not apply to Executive unless he is terminated for
"Cause" as hereinafter defined. Executive shall receive a lump sum payment
in an amount sufficient to reimburse him for income taxes payable by him as
a result of such moving and relocation expenses and the payment received
under this paragraph.
4 Exhibit 10(i)
(g) The Executive's entitlement to any other compensation or
benefits shall be determined in accordance with the terms and conditions of
this Agreement and the Benefit Plans and other applicable programs,
practices and arrangements then in effect, to the extent that such plans,
programs, practices and arrangements do not conflict with the terms of this
Agreement.
(h) If all or any portion of the payments and benefits
provided to Executive under this Agreement constitute "excess parachute
payments" within the meaning of Section 280G of the Code that are subject
to the tax imposed by Section 4999 of the Code (or similar tax and/or
assessment), the Company (or its successor) shall make a single lump sum
payment to Executive in an amount equal to the amount necessary to place
Executive in the same after-tax position as he would have been in (taking
into account any taxes which would be payable on such amount including, but
not limited to, income taxes) had no such tax been imposed on such payments
and benefits. The determination of the amount payable to Executive
hereunder shall initially be made, at the Company's expense, by the
independent accounting firm employed by the Company immediately prior to
the occurrence of any change of control of the Company which will result in
the imposition of such tax. If, after such lump sum payment has been made
to Executive, it is determined (pursuant to final regulations or published
rulings of the Internal Revenue Service, final judgment of a court of
competent jurisdiction or otherwise) that the amount of tax payable by
Executive pursuant to Section 4999 of the Code is greater than the amount
of such tax as calculated by the Company's independent accounting firm and
reflected in the lump sum payment made to Executive as aforesaid, then the
Company (or its successor) shall pay Executive an amount equal to the sum
of (i) the difference between the amount of such tax as initially
determined by such independent accounting firm hereunder and the amount of
such tax which is determined to be payable by Executive, (ii) any interest,
fines and penalties imposed on Executive by any taxing authority due to any
underpayment of such taxes by Executive, plus (iii) the amount necessary to
reimburse Executive for any income, excise or other taxes which are payable
by Executive with respect to the amounts specified in (i) and (ii) above,
and the reimbursement provided for by this clause (iii).
4. Expenses. During the Employment Period, the Company shall
promptly pay or reimburse Executive for all reasonable out-of-pocket
expenses incurred by Executive in the performance of duties hereunder in
accordance with the Company's policies and procedures then in effect.
5. Conditions of Employment. Throughout the Employment Period,
(a) the Company shall not require or assign duties to Executive which would
require him to have the location of his principal business office or his
principal place of residence other than at the world headquarters of the
Company, (b) the Company shall not require or assign duties to Executive
which would require him to spend more than ninety (90) normal working days
away from his office during any consecutive twelve-month period, (c) the
Company shall provide an office to Executive, the location and furnishings
of which shall be equivalent to the offices provided to other members of
5 Exhibit 10(i)
the Office of the Chairman of the Company on the date of this Agreement;
and (d) the Company shall provide secretarial services and other
administrative services to Executive which shall be equivalent to the
secretarial services and other administrative services provided to other
members of the Office of the Chairman of the Company on the date of this
Agreement.
6. Termination. In addition to the termination rights in Section
2 of this Agreement, this Agreement shall terminate upon the following
circumstances:
(a) At any time at the election of Company for Cause.
"Cause" for this purpose shall mean (i) Executive committing a material
breach of this Agreement or acts involving moral turpitude, including
fraud, dishonesty, disclosure of confidential information or the commission
of a felony, or direct and deliberate acts constituting a material breach
of his duty of loyalty to Company; (ii) Executive willfully or continuously
refusing to perform the material duties reasonably assigned to him by the
Board which are consistent with the provisions of this Agreement; or (iii)
the inability of Executive to obtain and maintain appropriate United States
security clearances.
(b) At any time at the election of Executive for Good Reason.
"Good Reason" for this purpose shall mean (i) a material breach of this
Agreement by the Company; (ii) the failure of the Executive to continue to
serve as a member of the Company's Board of Directors, or removal from his
position as President and Chief Executive Officer, other than for Cause;
(iii) the assignment to Executive of duties which are reasonably deemed by
Executive not to be appropriate for someone in the position of President
and Chief Executive Officer; (iv) the Executive's responsibilities
hereunder are reasonably deemed by Executive to be substantially
diminished, or any other person shall be appointed by the Board or the
shareholders of Company to a position equal to or superior to the
Executive's position; or (v) the Company providing written notice to the
Executive pursuant to Section 2 hereof that it does not wish to extend the
term of this Agreement.
(c) Executive's death or his being unable to render the
services required to be rendered by him during the Employment Period for a
period of one hundred eighty (180) days during any twelve-month period
("Disability").
(d) In the event the Company or Executive intend to terminate
this Agreement for Cause or Good Reason, respectively, such termination may
only be accomplished upon compliance with the following procedures:
(i) The party seeking to terminate the Agreement (the
"Notifying Party") shall provide the other (the "Defaulting Party") with
written notice of its or his belief that Cause or Good Reason, as the case
may be, exists. The parties shall for a period of 30 days from the date of
such notice attempt to resolve to their mutual satisfaction whether or not
Cause or Good Reason exists, and, if so, the rights and obligations of the
parties.
6 Exhibit 10(i)
(ii) In the event the parties are unable to reach a
mutually acceptable resolution during such 30-day period, the Notifying
Party shall afford the Defaulting Party an additional thirty (30) days or
such longer period as the Notifying Party may determine to cure the alleged
breach.
(iii) In the event the Defaulting Party does not cure
the breach during such 30-day period, the Notifying Party shall be required
to institute an arbitration proceeding to determine whether Cause or Good
Reason, as the case may be, existed and has not been cured. The
arbitration will be conducted in the world headquarters city of the Company
and shall be conducted in accordance with the then governing rules of the
American Arbitration Association.
(iv) This Agreement shall be terminated as of the date
when the Notifying Party institutes an arbitration proceeding in accordance
with subsection (iii) preceding; provided, however, that in the event Good
Reason exists as a result of the application of Section 6(b)(v), no further
employment services will be required or expected of Executive and Executive
and Company will coordinate the timing and press releases of his departure.
The sole decision of the arbitrator in such proceeding shall be to
determine whether Cause (if initiated by Company) or Good Reason (if
initiated by Executive) exists. Thereafter, the obligations of the parties
to each other shall be determined by applying the decision of the
arbitrator(s) in accordance with Exhibit A hereto. In the event the
Company does not prevail in any such proceeding initiated by it for Cause,
Executive's termination shall be deemed to have occurred for Good Reason.
In the event Executive does not prevail in any such proceeding initiated by
him for Good Reason, Executive shall be considered as having voluntarily
terminated employment other than for Good Reason, and his rights under this
Agreement shall be determined as if he had been terminated by Company for
Cause.
(e) Upon expiration or termination of this Agreement under
Section 2 or Section 6 herein, Executive shall be entitled to receive
compensation and other benefits provided for herein in accordance with
Exhibit A hereto. The parties agree that, in the event of termination by
Executive for Good Reason under Section 6, such payments and benefits shall
be deemed to constitute liquidated damages for the breach of this Agreement
by Company.
(f) In the event it is determined by the arbitrator that
Executive has terminated this Agreement for Good Reason, Executive shall be
entitled to receive within 30 days of such determination the net present
value of annual Base Salary and targeted Annual Incentive Compensation for
the remainder of the Employment Period, with targeted Annual Incentive
Compensation being determined for this purpose based upon the targeted
Annual Incentive Compensation for the year of termination and with net
present value calculated by using an interest rate discount factor of 6.5%.
Notwithstanding the foregoing, in the event the acceleration of any amount
payable in accordance with the preceding sentence would result in such
amount not being deductible by the Company under Section 162(m) of the
Code, as currently in effect
7 Exhibit 10(i)
or as may be hereafter amended, or under any regulations promulgated
thereunder, the non-deductible amount shall be deferred and be paid to
Executive as early as possible in the next year in which the deductibility
of his compensation is not subject to or would not exceed the limitations
of Section 162(m).
7. Covenant Not to Compete. Without the consent of the Company,
Executive shall not directly or indirectly at any time during the
Employment Period (without regard to (i) an earlier termination for Cause
or Good Reason as provided for in Section 6 herein, and (ii) any future
extensions under Section 2 herein; but subject to such longer period as
provided for in Section 9) undertake employment as an owner, director,
partner, officer, employee, affiliate or consultant with any business
entity directly engaged in the manufacture and/or sale of products
competitive with any material product or product line of the Company;
provided, however, that Executive shall not be deemed to have breached this
undertaking if his sole relation with such entity consists of his holding,
directly or indirectly, an equity interest in such entity not greater than
two percent (2%) of such entity's outstanding equity interest so long as
such holding does not exceed 10% of the liquid net worth of Executive. For
purposes hereof, the term "material product or product line of the Company"
shall mean any product or product line of the Company, the gross sales of
which during any calendar year during the five (5) year period preceding
the Executive's undertaking such employment were at least $50 million.
8. Disclosure of Confidential Information. Without the express
written consent of the Company, Executive shall not at any time (either
during or after the termination of this Agreement for any reason) disclose
to any other business entity proprietary or confidential information
concerning the Company or the Company's trade secrets of which Executive
has gained knowledge during his employment with the Company.
9. Effect of Breach of Sections 7 or 8. So long as any restricted
stock grant or stock option provided for in Section 3(b) herein shall not
be vested or shall not have been exercised, the vesting of such shares and
the exercise of such stock options shall each be subject to Executive's
full compliance with the terms and conditions of Section 7 (which shall
continue to apply for this purpose) and Section 8 herein; provided,
however, that any such breach will not have any effect on restricted stock
grants vested or stock options exercised prior to the date of such breach.
Executive further agrees that a breach of Sections 7 or 8 cannot adequately
be compensated by money damages and, therefore, Company shall be entitled,
in addition to any other right or remedy available to it (including, but
not limited to, an action for damages), to an injunction restraining such
breach or a threatened breach and to specific performance of either such
provision, and Executive hereby consents to the issuance of such injunction
and to the ordering of specific performance.
10. Legal Expenses. The Company shall pay to Executive all out-of-
pocket expenses, including reasonable attorneys' fees, incurred by
Executive in connection with any claim or legal action or proceeding
brought under or involving this Agreement, whether brought by Executive or
by or on behalf of the Company or by another party; provided, however, the
Company shall not be obligated to pay to Executive out-of-pocket expense,
8 Exhibit 10(i)
including attorneys' fees, incurred by Executive in any claim or legal
action or proceeding involving Sections 6, 7, 8 or 9 of this Agreement if
Company prevails in such litigation or arbitration. Company agrees to
reimburse Executive for reasonable attorneys' fees and out-of-pocket
expenses in an amount not to exceed $15,000, which are incurred by him in
the negotiation and preparation of this Agreement.
11. Retirement Plans. Notwithstanding anything stated herein to
the contrary, the benefits and obligations payable to Executive under the
Employee Retirement Income Plan of XxXxxxxxx Xxxxxxx Corporation - Salaried
Plan ("Pension Plan"), the Supplemental Employee Retirement Income Plan of
XxXxxxxxx Xxxxxxx Corporation ("Supplemental Pension Plan"), and any other
retirement plan provided by the Company shall not be reduced, offset or
otherwise limited by the Executive's coverage or benefit entitlement
pursuant to any retirement plan provided by any former employer of the
Executive, except as provided in this Section 11. For the purposes of
calculating the Executive's benefits under the Company's retirement plans,
Executive will receive credit for twice as many years of service as he
actually works for the Company with the excess benefit above what the
Pension Plan provides to be paid through the Supplemental Pension Plan. In
addition, Company agrees to provide a supplemental pension payment in an
amount equal to the difference between (i) what Executive would have
received from his current employer had he stayed with such other company
through the end of the Employment Period, or the earlier termination date
of this Agreement if it is terminated by the Company for Cause or as a
result of Executive's death or disability (the "Calculation Period"), and
(ii) the pension payments he is actually entitled to receive from such
other company and the Company (determined without regard to this sentence).
The Calculation Period shall be increased by one year in the event this
Agreement expires on a scheduled expiration date, or if terminated by
Executive for Good Reason. In determining the amount of this supplemental
pension payment, in addition to amounts payable to Executive under the
Company's Pension Plan and Supplemental Pension Plan, the actuarial
equivalent of the value of the Company's matching contributions for
Executive's benefit under its Savings Plan and Supplemental Savings Plan
shall be included. For this purpose, the actuarial assumptions set forth
in the Pension Plan shall be used. In determining amounts which would have
been payable to Executive by his current employer, it will be assumed that
Executive's final average earnings under Executive's current employer's
retirement plans (as reflected in Executive's "Personal Statement of
Benefits" from his current employer dated April 14, 1994) increases at an
annual rate of 4% from January 1, 1995 to the end of the Calculation
Period. Such additional pension amounts payable to Executive shall be made
under the Supplemental Pension Plan.
12. No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be offset
or reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment.
13. Notices. All notices required or permitted under this
Agreement shall be in writing, may be made by personal delivery or
facsimile transmission, effective on the day of such delivery or receipt of
such transmission, or may be mailed by registered or certified mail,
effective two (2) days after the date of mailing, addressed as follows:
9 Exhibit 10(i)
to Company: XxXxxxxxx Xxxxxxx Corporation
Post Office Box 516, Mail Code 100-1240
Xx. Xxxxx, Xxxxxxxx 00000-0000
Attention: F. Xxxx Xxxxxxxx
Senior Vice President-Administration and
General Counsel
Facsimile number: (000) 000-0000
or such other person or address as designated in writing to Executive at
his last known residence address or to such other addresses as designated
by him in writing to Company.
14. Successors. This Agreement may not be assigned by the Company
(other than by merger or operation of law) without the express written
consent of Executive, and the obligations of the Company provided for in
this Agreement shall be binding legal obligations of any successor to the
Company or the principal business of Company by purchase, merger,
consolidation, or otherwise. This Agreement may not be assigned by
Executive during his life, and upon his death will be binding upon and
inure to the benefit of his heirs, legatees and the legal representatives
of his estate.
15. Waiver, Modification and Interpretation. No provisions of
this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in a writing signed by Executive and
an appropriate officer of the Company empowered to sign same by the Board
of Directors of the Company. No waiver by either party at any time of any
breach by the party of, or compliance with, any condition or provision of
this Agreement to be performed by the other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same time or at
any prior to subsequent time. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the
State of Missouri; provided, however, that the corporate law of the state
of incorporation of the Company shall govern issues related to the issuance
of shares of the Company's common stock. Any action brought to enforce or
interpret this Agreement (other than an action arising under Section 6
herein, for which the arbitration procedures provided for therein shall
govern) shall be maintained in the State courts of Missouri or the U.S.
Federal District Court for the Eastern District of Missouri located in St.
Louis, Missouri. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
16. Headings. The headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation
of any provision of this Agreement.
17. Entire Agreement. This Agreement (together with the Exhibit
hereto) constitutes the entire agreement between the parties, supersedes in
all respects any prior agreement between Company and Executive and may not
be changed except by a writing duly executed and delivered by Company and
Executive in the same manner as this Agreement.
10 Exhibit 10(i)
18. Counterparts. Company and Executive may execute this
Agreement in any number of counterparts, each of which shall be deemed to
be an original but all of which shall constitute but one instrument. In
proving this Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
THIS CONTRACT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
XxXXXXXXX XXXXXXX CORPORATION
/s/ Xxxx X. XxXxxxxxx
By: -----------------------------------
Xxxx X. XxXxxxxxx
Chairman of the Board
Executive:
/s/ Xxxxx X. Xxxxxxxxxxx
By: ------------------------------------
Xxxxx X. Xxxxxxxxxxx
11 Exhibit 10(i)
EXHIBIT A
EFFECT OF CONTRACT TERMINATION
------------------------------
Reason for Termination
-----------------------
Type of Compensation/
Benefit Base Salary
---------------------------------------------------------------------------
Normal Expiration Date of Payable through Employment Period, as defined
Agreement or Renewal Period in contract (i.e., through end of first 3
years or renewal period).
By Executive for Receives Base Salary for remainder of Employ-
"Good Reason" ment Period, payable in accordance with
Section 6(f) of the Agreement.
By Employer for "Cause" Payable through date of early termination.
Death or Disability (as Payable through end of month in which death
defined in Agreement) or disability occurs.
Type of Compensation/
Benefit Annual Incentive Compensation
---------------------------------------------------------------------------
Normal Expiration Date of Payable through Employment Period; amount
Agreement or Renewal Period determined by Compensation Committee based
on Company's and Executive's performance.
By Executive for Receives targeted incentive compensation for
"Good Reason" remainder of Employment Period (based on
targeted incentive compensation for year of
termination), payable in accordance with
Section 6(f) of the Agreement.
By Employer for "Cause" Amount determined by Compensation Committee
in its sole discretion; would likely be zero.
Death or Disability (as Amount earned (determined by the Compensation
defined in Agreement) Committee based on Company's and Executive's
performance for the year in which death or
disability occurs) will be prorated.
12 Exhibit 10(i)
Type of Compensation/
Benefit Restricted Stock: Years of Service Shares
---------------------------------------------------------------------------
Normal Expiration Date of Full number of shares without reduction;
Agreement or Renewal Period however, shares vesting in 2002 still subject
to non-compete, non-disclosure provisions
until vesting date.
By Executive for Full number of shares without reduction.
"Good Reason" Shares whose scheduled vesting date has not
occurred will remain subject to non-compete,
non-disclosure provisions until scheduled
vesting date(s).
By Employer for "Cause" Shares not vested as of date of early
termination would be forfeited.
Death or Disability (as Compensation Committee would determine
defined in Agreement) reduction, if any, to the number of
restricted shares; but the number will not
be less than a pro rata amount.
Type of Compensation/
Benefit Restricted Stock: Performance Shares
---------------------------------------------------------------------------
Normal Expiration Date of Pro rata adjustment for each grant to be
Agreement or Renewal Period based on a fraction determined by adding
or By Executive for one year to the number of years Executive
"Good Reason" employed (or would have been employed had
he been employed for remainder of Employment
Period) during the 6-year performance period
of such grant and dividing this sum by 6;
the number of shares vested or forfeited
for each grant would then be determined in
accordance with the performance factors and
other terms and conditions of the plan/
grants; receipt of shares remains subject to
non-compete, non-disclosure provisions until
shares are vested.
By Employer for "Cause" Shares not vested as of date of early
termination would be forfeited.
Death or Disability (as Compensation Committee would determine
defined in Agreement) reduction, if any, to the number of
restricted shares; but the number will
not be less than a pro rata amount.
Shares will then vest or be forfeited
in accordance with terms and conditions
of plan/grants.
13
Type of Compensation/
Benefit Stock Options
--------------------------------------------------------------------------
Normal Expiration Date of Options not vested within one year after end
Agreement or Renewal Period of Employment Period lapse/are cancelled;
options vested as of such date must be
exercised within three years, unless employ-
ment continued to May 16, 2001, in which
event vested options exercisable for
balance of 10-year term; vested but
unexercised options remain subject to non-
compete and non-disclosure provisions prior
to exercise date.
By Executive for Options not vested within one year after end
"Good Reason" of Employment Period lapse/are cancelled;
options scheduled to vest on or prior to that
time will vest as scheduled and must be
exercised within three years from that date;
vested but unexercised options remain subject
to non-compete and non-disclosure provisions
prior to exercise date.
By Employer for "Cause" Unexercised options as of termination date
lapse (whether or not vested).
Death or Disability (as Vested but unexercised options as of date of
defined in Agreement) death/disability remain exercisable for
three years from date of death or disability;
options not vested are cancelled.
Type of Compensation/ Other Employee Benefits
Benefit (including Health Insurance)
---------------------------------------------------------------------------
Normal Expiration Date of Continue through end of Employment Period,
Agreement or Renewal Period subject to legal and contractual rights in
plans to convert or extend coverages.
By Executive for Continue through end of Employment Period,
"Good Reason" subject to legal and contractual rights in
plans to convert or extend coverages.
By Employer for "Cause" Continue through date of early termination,
subject to legal and contractual rights in
plans to convert or extend coverages.
Death or Disability (as Continue through end of month in which death
defined in Agreement) or disability occurs, subject to legal and
contractual rights to convert or extend
coverages.
14 Exhibit 10(i)
March 25, 1995
Xxxxx X. Xxxxxxxxxxx
President & Chief Executive Officer
XxXxxxxxx Xxxxxxx Corporation
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Dear Xxxxx:
Pursuant to Section 3(b)(i) of the Employment Agreement entered into
as of September 24, 1995 by and between you and XxXxxxxxx Xxxxxxx
Corporation (the "Company"), you have received 180,000 shares of restricted
shares of MDC stock, 42,000 of which will vest on March 31 of 1995, 1996
and 1997, and 54,000 of which will vest on March 31, 2002 (collectively the
Service Based Restricted Shares). Effective immediately, the Service Based
Restricted Shares will be converted to an equal number of MDC stock
equivalents which will vest or be forfeited on the same terms as provided
in the Employment Agreement, including Exhibit A thereto, for the Service
Based Restricted Shares. This letter sets forth the terms of the
conversion and other necessary modifications of the Employment Agreement.
Unless specifically defined in this letter, capitalized terms in this
letter shall have the same meaning ascribed to such terms in the Employment
Agreement.
Dividend equivalent payments on stock equivalents will be reinvested
on MDC dividend payment dates into additional stock equivalents based on
the closing price of MDC common stock on such dividend payment date. The
stock equivalents will not have voting rights. The stock equivalents will
be paid in cash only on the later of (i) vesting or (ii) your death,
Disability or termination of employment, subject to the termination
provisions of the Employment Agreement (such later date referred to
hereinafter as the "Payment Date" and the Payment Date may not be the same
for all stock equivalents). The value of each stock equivalent will be
fixed at the closing price of a share of MDC common stock on the applicable
Payment Date. Payment will be in a lump sum unless, at least one year
prior to the applicable Payment Date, you make a one-time irrevocable
election to receive the payment over a period of years.
If the payment is lump sum, the Company will pay you or your
beneficiary in cash (less withholding taxes) for your stock equivalents
within 14 days of the applicable Payment Date. If you elect to receive
installment payments, the value of your stock equivalents will be
determined as of the applicable Payment Date. Payment will be made to you
in cash in the number of equal annual installments that you select (less
withholding taxes) within 14 days of the applicable Payment Date and each
anniversary thereof. The unpaid amount will earn interest at a fixed rate
of the then current prime rate as reported in The Wall Street Journal,
compounded quarterly. The interest will be paid to you on the same date as
the installment to which it relates is paid.
15 Exhibit 10(i)
In addition, the following amendments are being made to the Employment
Agreement:
1. Insert the following sentence after the first sentence of Section
3(c):
Stock equivalents granted hereunder are granted outside the PEIP;
however, Sections 3.3 ("Adjustments"), 19.2 ("Unfunded Status of the
Plan"), 19.3 ("Designation of Beneficiary") and 19.4 ("Nontransferability")
of the PEIP are incorporated herein and will govern the stock equivalents
as if they were issued under the PEIP. Capitalized terms in such sections
shall have the meaning ascribed to such terms in the PEIP.
2. Delete the entire first sentence of Section 9 and replace it with
the following:
So long as any restricted stock, stock equivalent or stock option
grant provided for in Section 3(b) herein shall not be vested or shall not
have been exercised, the vesting of such restricted shares or stock
equivalents and the exercise of such stock options shall each be subject to
Executive's full compliance with the terms and conditions of Section 7
(which shall continue to apply for this purpose) and Section 8 herein;
provided, however, that any such breach will not have any effect on
restricted stock or stock equivalents that vested or stock options
exercised prior to the date of such breach.
If you agree with the foregoing, please sign and return one copy of
this letter, which shall constitute an amendment to your Employment
Agreement with the Company.
Very truly yours,
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President, Associate General
Counsel & Secretary
ACCEPTED AND AGREED TO
as of the date written above:
/s/ Xxxxx X. Xxxxxxxxxxx
________________________________
Xxxxx X. Xxxxxxxxxxx
