EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of April 1,
1998 (the "Effective Date"), between The Xxxxxxx Xxxxxx Company, a Massachusetts
corporation (the "Company"), and Xxxxxxx X. Xxxxx ("Executive"). Certain
capitalized terms that are used in this Agreement are defined in paragraph 11.
The parties agree as follows:
1. Employment. The Company agrees to employ Executive, and Executive
hereby accepts employment with the Company, upon the terms and
conditions set forth in the Agreement for the period beginning on the
Effective Date and ending as provided in paragraph 4 (the "Employment
Period").
2. Position and Duties.
--------------------
a) During the Employment Period, Executive shall serve as Chief
Financial Officer of the Company and shall have the normal
duties, responsibilities and authority of such office, subject to
any limitations imposed by the bylaws of the Company and to the
power of the board of directors and senior officers of the
Company to expand or limit such duties, responsibilities and
authority and to override actions of Executive.
b) Executive shall report to the Chief Executive Officer of the
Company and Executive shall devote his best efforts and his full
business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to
the business and affairs of the Company. Executive shall perform
his duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner.
c) Executive's principal office and place of employment shall be at
the Company's Principal Executive Offices.
3. Compensation.
-------------
a) Base Salary. Executive's base salary shall be $200,000.00 per
annum
b) Annual Cash Bonus Plan. Executive shall be a participant in the
Company's Annual Cash Bonus Plan and be eligible for an annual
award under such plan at a maximum award level equal to no less
than sixty-five percent (65%) of Executive's average Base Salary
in effect during the calendar year for which the award is made.
c) Vacation. Executive shall be entitled to three (3) weeks paid
vacation annually.
d) Fringe Benefits. Executive shall receive such fringe benefits as
are made available to executive level employees of the Company
together with a monthly car allowance of $600.00 and such other
benefits, payments or allowances as the Company's board of
directors (or an appropriate committee of the board) may from
time to time made available to Executive (collectively, the
"Fringe Benefits"). Without prejudice to Executive's rights under
this Agreement, the Company reserves the right (i) to modify the
terms of any benefit plan that is generally made available to
executive level employees of the Company and in which Executive
participates so long as such changes affect all plan participants
equally (or in proportion to their respective interests), and
(ii) to make reasonable changes in the Fringe Benefits at the
direction of the Company's board of directors, so long as the
Fringe Benefits available to Executive after giving effect to
such change are not materially different from those being
provided prior to such change.
e) Business Expenses. The Company shall reimburse Executive for all
reasonable and necessary expenses incurred by him in connection
with the performance of his duties and responsibilities pursuant
to this Agreement which are consistent with the Company's
policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the
Company's reasonable requirements with respect to reporting and
documentation of such expenses.
4. Term and Termination.
---------------------
a) The Employment Period shall initially extend until March 31,
1999, but shall be extended for an additional one-year period on
each Anniversary Date unless either the Company or Executive
gives
2
the other written notice at least sixty (60) days prior to such
Anniversary Date of its or his intention not to further extend
the term of this Agreement; provided that (i) the Employment
Period shall terminate prior to such date upon Executive's
resignation, Retirement or death and (ii) the Employment Period
may be terminated by the Company at any time prior to such date
for Cause, Executive's Disability or Without Cause.
b) Any termination of Executive's employment by the Company pursuant
to clause 4(a)(ii) above, and any termination of Executive's
employment by Executive pursuant to clause 4(a)(i) above, shall
be communicated by written Termination Notice given to the other
party hereto; provided, that in the case of Executive's death, a
Termination Notice shall be deemed to have been given as of the
date of his death; and provided, further, that, in the case of a
termination for Cause, there shall also have been delivered to
Executive the written findings by the Company's Chief Executive
Officer as provided in the definition of Cause. For purposes of
this Agreement, a "Termination Notice" shall mean a notice which
shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so
indicated.
c) "Termination Date" means (i) if this Agreement is terminated for
Disability, 30 days after Termination Notice is given (provided
that Executive shall not have returned to the performance of his
duties on a full-time basis during such 30-day period), (ii) if
Executive resigns or takes Retirement, the date specified in
Executive's Termination Notice (or if no Termination Notice is
given, the date upon which such termination is effective), (iii)
if Executive dies, on the last day of the month next succeeding
the month during which Executive's death occurs, and (iv) if
Executive's employment is terminated for any other reason, the
date on which a Termination Notice is given.
5. Severance Compensation.
-----------------------
a) General. If Executive resigns, terminates employment by his death
or Retirement or is
3
terminated for Cause, the Company will pay Executive his Base
Salary in effect at the time the Termination Notice is given (or
deemed given) through the Termination Date and the Company shall
not have any further obligations to Executive under this
Agreement. Without prejudice to any accrued and vested rights
Executive may have under the Annual Cash Bonus Plan, the
Retirement Savings Plan or the Severance Pay Plan and except as
otherwise required by law, all of Executive's rights to the
Fringe Benefits from the Company will cease as of the Termination
Date.
b) Disability. During any period that Executive fails to perform his
duties as a result of incapacity due to mental illness or
physical illness or injury, he shall continue to receive his full
Base Salary and the Fringe Benefits until the Company terminates
his employment for Disability. Thereafter, he will be entitled to
major medical health insurance coverage under the Company's
employee group health insurance (or substantially similar health
insurance) for a period of two (2) years or until Executive
obtains employment with another employer that makes health
insurance available to its employees and Executive is eligible to
be covered under such insurance, whichever occurs first, and
shall be entitled to receive disability benefits in accordance
with the disability income insurance plan or plans maintained by
the Company covering Executive at the Termination Date. Without
prejudice to any accrued and vested rights Executive may have
under the Annual Cash Bonus Plan or the Retirement Savings Plan
and except as otherwise required by law or this Section 5(b), all
of Executive's rights to the Fringe Benefits from the Company
will cease as of the Termination Date.
c) Without Cause. If Executive is involuntarily terminated by the
Company Without Cause, (i) Executive shall be entitled to
continue to receive his full Base Salary, as in effect on the
Termination Date, through the reminder of the Employment Period
(as in effect immediately prior to the delivery of the
Termination Notice and without regard to the automatic extension
provisions of paragraph 4(a) hereof) so long as Executive has not
breached the provisions of paragraphs 6, 7 or 8. The amounts
payable pursuant to this paragraph 5(c) in respect of Base
4
Salary may be payable, at Executive's discretion, in one lump sum
payment within 30 days following the Termination Date equal to
the present value (determined using a discount rate equal to the
"prime" rate of interest charged by Chase Manhattan Bank in New
York plus two (2) percentage points) of the payments otherwise
payable pursuant to this paragraph 5(c) and (ii) notwithstanding
any provision in the Annual Cash Bonus Plan to the contrary,
Executive shall become fully vested and have a nonforfeitable
interest in the benefits which he has accrued under the Annual
Cash Bonus Plan as of the Termination Date and he shall be given
full credit under the Plan for the benefit that he would have
accrued for the plan year during which the Termination Date
occurs (which determination may take into account whether Company
performance goals established by the plan or its administrator
for such year have been met, but which may not take into account
whether personal performance goals established for Executive by
the plan or its administrator have been met) as if he were
employed by the Company on the last day of such plan year. The
amounts payable in respect of accrued benefits under the Annual
Cash Bonus Plan shall be payable at the time provided for in, and
in accordance with the provision of, the Annual Cash Bonus Plan.
This paragraph 5(c) sets forth Executive's exclusive remedy for a
termination of his employment Without Cause and Executive shall
have no other right or remedy against the Company in connection
therewith.
d) Executive's right to receive payments under this Agreement shall
not decrease the amount of, or otherwise adversely affect, any
other benefits payable to Executive under any plan, agreement or
arrangement relating to employee benefits provided by the Company
(or an Affiliated Corporation); provide, however, that the
amounts payable to Executive under paragraph 5 (c)(i) shall be
reduced by the amount of any severance compensation payable to
Executive under the Company's Severance Pay Plan.
e) Executive shall not be required to mitigate the amount of any
payment provided for in this paragraph 5 by seeking other
employment or otherwise, nor shall the amount of any payment or
benefit provided for in this paragraph 5 be
5
reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive's
receipt of, or right to receive, any retirement or other benefits
after the date of termination of employment or otherwise (except
as otherwise provided in this paragraph 5).
6. Confidential Information. Executive acknowledges that the non-public
information obtained by him while employed by the Company concerning
the business or affairs of the Company or any Subsidiary of the
Company("Confidential Information") are the property of the Company or
such Subsidiary. For purposes of this Agreement, the term
"Confidential Information" does not include information that Executive
can demonstrate (a) was in Executive's possession prior to his initial
employment with the Company, provided that such information is not
known by Executive to be subject to another confidentiality agreement
with, or other obligation of secrecy to, the Company or another
party,(b) is generally available to the public and became generally
available to the public other than as a result of a disclosure in
violation of this Agreement or (c) became available to Executive on a
non-confidential basis from a third party, provided that such third
party is not known by Executive to be bound by a confidentiality
agreement with, or other obligation of secrecy to, the Company or
another party or is otherwise prohibited from providing such
information to Executive by a contractual, legal or fiduciary
obligation. Executive agrees that he will not disclose Confidential
Information to any person (other that employees of the Company or any
of its Subsidiaries or any other person expressly authorized by the
Company's Chief Executive Officer to receive Confidential Information)
or use for his own account any Confidential Information without prior
written consent of the Company's Chief Executive Officer. Executive
shall deliver to the Company at the Termination of the Employment
Period, or at any other time the Company's Chief Executive Officer may
request in writing, all memoranda, notes, plans, records, reports,
computer tapes and software and other documents and data (and copies
thereof) containing Confidential Information or Work Product which he
may then possess or have under his control.
7. Work Product. Executive agrees that all inventions,innovations,
improvements, developments, methods, designs, analyses, reports and
all similar or related
6
information which relate to the Company's or any of its Subsidiaries'
actual or anticipated business, research and development or existing
or future products or services and which are conceived, developed or
made by Executive while employed with the Company ("Work Product")
belong to the Company or such Subsidiary. Upon the written request of
the Company's Chief Executive Officer, Executive will promptly
disclose such Work Product to the Company's Chief Executive Officer
and perform all actions reasonably requested by the Company's Chief
Executive Officer (whether during or after the Employment Period) to
establish and confirm such ownership.
8. Noncompete, Non-Solicitation
----------------------------
a) Executive acknowledges that in the course of his employment with
the Company he will become familiar with the trade secrets and
other confidential information of the Company and its
Subsidiaries and that his services will be of special, unique and
extraordinary value to the Company. Therefore, Executive agrees
that, during the Employment Period and for one year thereafter
(or six months thereafter, if Executive's employment is
terminated Without Cause (the "Noncompete Period"), he shall not
directly or indirectly own, manage, control, participate in,
consult with, render services for, or in any manner engage in any
business competing with the businesses of the Company or any of
its Subsidiaries which (i) exist on the date of the termination
of Executive's employment or (ii) are commenced during the
Noncompete Period (but, for purposes of this clause (ii) only if
the Company or such Subsidiary had determined prior to the
Termination Date to determine the feasibility of entering into
such business), within the United States and any other
geographical area in which the Company or any of its Subsidiaries
engage in such businesses. Nothing herein shall prohibit
Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly
traded, so long as Executive has no active participation in the
business of such corporation.
b) During the Noncompete Period, Executive shall not directly or
indirectly through another entity (i) induce or attempt to induce
any employee of the Company or any of its Subsidiaries to leave
the
7
employ of such person, ,or in any way interfere with the
employment relationship between the Company or any of its
Subsidiaries and any employee thereof, (ii) hire any person who
was an employee of the Company or any of its Subsidiaries at any
time during the Employment Period (other than individuals who
have not been employed by the Company or any of its Subsidiaries
for a period of at least six months prior to employment by
Executive directly or indirectly through another entity), or
(iii) induce or attempt to induce any customer, supplier,
licensee or other person having a business relationship with the
Company or any of its Subsidiaries to cease doing business with
the Company or such Subsidiary, or interfere materially with the
relationship between any such customer, supplier, licensee or
other person having a business relationship with the Company or
any of its Subsidiaries.
c) If, at the time of enforcement of this paragraph 8, a court shall
hold that the duration, scope or area restrictions stated herein
are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope or area reasonable under
such circumstances shall be substituted for the stated duration,
scope or area and the court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope
and area permitted by law.
d) In the event of the breach or a threatened breach by Executive of
any of the provisions of this paragraph 8, the Company, in
addition and supplementary to other rights and remedies existing
in its favor, may apply to any court of law or equity of
competent jurisdiction for specific performance or injunctive or
other relief in order to enforce or prevent any violations of the
provisions hereof (without posting a bond or other security).
9. Incapacity. Without prejudice to Executive's rights under this
Agreement, if at any time during the term of this Agreement Executive
is absent from his duties with the Company for 30 consecutive days as
a result of incapacity due to mental illness or physical illness or
injury, the Company's board of directors or Chief Executive Officer
may appoint an interim Chief Financial Officer or assume extended
management responsibilities for the duration of Executive's absence.
Unless Executive's
8
employment has been terminated previously under this Agreement,
Executive shall be permitted to resume performance of his duties and
responsibilities under this Agreement upon regaining the capacity to
do so.
10. Executive Representations. Executive hereby represents and warrants to
the Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which Executive is a party or by which he
is bound, (b) Executive in not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any
other person or entity with which this Agreement would conflict or
constitute a breach thereof and (c) upon the execution and delivery of
this Agreement by the Company, this Agreement shall be the valid and
binding obligation of Executive, enforceable against Executive in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws
affecting the enforceability of contractual obligations and creditor's
rights generally and to federal and state constitutional proscriptions
and by the application of equitable principles by courts of competent
jurisdiction, sitting at law or in equity.
11. Certain Defined Terms. As used in this Agreement, the following terms
shall have the meanings set forth below:
"Affiliated Corporation" means any corporation that is a member of the
"affiliated group" (as defined in Section 1504 of the Code) of which
the Company is a member.
"Anniversary Date" means any or a specific anniversary of the
Effective Date, as the context requires.
"Base Salary" is defined in paragraph 3(a).
"Cause" means (a) conviction of Executive for a felony, or the entry
by Executive of a plea of guilty or nolo contendere to a felony, (b) a
willful and material breach by Executive of paragraph 6, 7 or 8 of the
Agreement, (c) the commission of an act of fraud involving dishonesty
for personal gain which is materially injurious to the Company, (d)
the willful and continued refusal by Executive to substantially
9
perform his duties with the Company (other than any such refusal
resulting from his incapacity due to mental illness or physical
illness or injury), after a demand for substantial performance is
delivered to Executive by the Company's Chief Executive Officer where
such demand specifically identifies the manner in which the Company's
Chief Executive Officer believes that Executive has refused to
substantially perform his duties and the passage of a reasonable
period of time for Executive to comply with such demand or (e) the
willful engaging by Executive in gross misconduct materially and
demonstrably injurious to the Company or its Subsidiaries. For
purposes of this paragraph, no act or failure to act on Executive's
part shall be considered "willful" unless done, or omitted to be done,
by Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or its
Subsidiaries. Notwithstanding the foregoing, with respect to
termination for Cause arising out of conduct described in clause (b),
(c), (d) or (e) above, Executive may not be terminated for Cause
unless there shall have been delivered to Executive a written finding
by the Company's board of directors or Chief Executive Officer finding
that in the good faith opinion of the Board of Directors or the
Company's Chief Executive Officer, Executive had engaged in conduct
described above in clause (b), (c), (d) or (e) of the first sentence
of this paragraph and specifying the particulars thereof in detail.
Such a finding by the Company's board of directors or Chief Executive
Officer is a prerequisite to a termination for cause pursuant to
clauses (b), (c), (d) or (e) above, provided, however, such a finding
may be challenged, by appropriate judicial process, on the merits
(i.e., that Cause did not exist) or on the basis that the Board's or
Chief Executive Officer's finding was not made in good faith (provided
that proof that cause for termination existed shall be a complete
defense to any showing that the Board's or Chief Executive Officer's
findings were not made in good faith).
"Code" means the Internal Revenue Code of 1986, as amended.
"Disability" means Executive shall have been absent from his duties
with the Company for 26 consecutive weeks as a result of incapacity
due to mental illness or physical illness or injury, and he shall not
have returned to the full-time performance of his duties within 30
days after written notice of termination of this Agreement is given by
the Company's board of directors or Chief Executive Officer.
10
"Fringe Benefits" is defined in paragraph 3(d).
"Good Reason" means, unless Executive shall have consented in writing
thereto, any of the following:
a) except as provided in paragraph 9, a material reduction
in Executive's title, duties, responsibilities or status, as
compared to such title, duties, responsibilities or status
on the Effective Date;
b) the assignment to Executive of a material amount of
different or additional duties that are significantly
inconsistent with Executive's office on the Effective Date;
or
c) any material breach of this Agreement by the Company;
provided, however, that Executive shall not have the right to
terminate his employment for "Good Reason" unless he shall have given
thirty (30) days prior written notice to the Chief Executive Officer
of the Company in which Executive sets forth in reasonable detail the
circumstances that Executive believes constitute "Good Reason"
pursuant to the preceding clauses (a) through (c) and the Company
shall not have remedied the matter within said thirty (30) day period;
and provided, further, however that the fact that the Company does or
does not so remedy said matter shall not be deemed an admission by the
Company that such circumstances constitute "Good Reason".
"Remaining Term" is defined in paragraph 5(c).
"Retirement" means termination of Executive's employment in accordance
with the Company's normal retirement policy generally applicable to
its salaried employees (or, at Executive's election, at any time after
attaining age 60 or at any earlier time upon the occurrence of any
event entitling Executive to receive disability benefits under any
long-term disability policy maintained by the Company that covers
Executive) or in accordance with any other retirement arrangement
established with Executive's consent with respect to Executive.
"Retirement Savings Plan" means the Company's Defined Contribution
401(k) savings plan in effect as of the Effective Date, as the same is
amended from time to time.
11
"Severance Pay Plan" means the Company's Severance Pay Plan for Exempt
Employees, in effect as of the Effective Date, as the same is amended
from time to time.
"Subsidiary" means with respect to any corporation, another
corporation of which the securities having a majority of the voting
power in electing directors are, at the time of determination, owned
by the first corporation, directly or through one of more
Subsidiaries.
"Termination Date" is defined in paragraph 4(c).
"Termination Notice" is defined in paragraph 4(b).
"Without Cause" means an involuntary termination of Executive's
employment by the Company other than for Cause or due to Executive's
death or Disability or a termination of employment by Executive for
Good Reason.
12. Survival. Paragraphs 6, 7 and 8 shall survive and continue in full
force in accordance with their terms notwithstanding any termination
of the Employment Period.
13. Expenses. The Company shall pay all of Executive's expenses (including
reasonable attorneys' fees and expenses) paid by Executive in
connection with the negotiation and preparation of this Agreement and
all related documents. In the event Executive prevails in any
arbitration or litigation arising out of his termination of employment
or his seeking to obtain or enforce any right or benefit provided by
this Agreement or by any other plan or arrangement maintained by the
Company under which he is or may be entitled to receive benefits, the
Company shall pay all reasonable legal fees and related expenses
(including the costs of experts, evidence and counsel and other such
expenses included in connection with any litigation or appeal)
incurred by Executive in such an arbitration or litigation. The
Company further agrees to pay prejudgment interest on any money
judgement against the Company obtained by Executive in any arbitration
or litigation against it to enforce such right calculated at the Prime
Rate as reported in the Wall Street Journal in effect from time to
time from the date it is determined that payment to him should have
been made under this Agreement.
12
14. Notices. Any notice provided in this Agreement shall be in writing and
shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below
indicated:
Notices to Executive:
---------------------
Xxxxxxx X. Xxxxx
00 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Notices to the Company:
c/o The Xxxxxxx Xxxxxx Company
0000 Xxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxx, XX
Chairman & Chief Executive Officer
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the
sending party. Any notice under this Agreement will be deemed to have
been given when so delivered or on the second business day after being
deposited for delivery with the United Sates Postal Service.
15. Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable
law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
16. Complete Agreement. This Agreement, those documents expressly referred
to herein and other documents of even date herewith embody the
complete agreement and understanding among the parties and supersede
and preempt any prior understandings, agreements or representations by
or among the parties, written or oral, which may
13
have related to the subject matter hereof in any way, including,
without limitation, the Prior Agreement.
17. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
18. Successors and Assigns. This Agreement is intended to bind and insure
to the benefit of and be enforceable by Executive, the Company and
their respective heirs, successors and assigns, except that no party
may assign him or its rights or delegate his or its obligations
hereunder without prior written consent of the other parties to this
Agreement.
19. Choice of Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New York, without
giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction) that
would cause the application of any jurisdiction other than the state
of New York.
20. Amendment and Waiver. The provision of this Agreement may be amended
or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing
the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
THE XXXXXXX XXXXXX COMPANY
By:
-----------------------------------
Xxxxxxxxx X. Xxxxx, XX
Chairman & Chief Executive Officer
-----------------------------------
Xxxxxxx X. Xxxxx
