Exhibit 10.8
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as of
September 17, 1997, by and between XXXXXXX INDUSTRIES, INC., a Delaware
corporation having its principal address at 0000 Xxxxx Xxxx Xxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxxx 00000 (the "Employer"), and XXXXXX XXXX, an individual
residing at Xxxx Xxx Xxxx, (X.X. Xxx 00) Xxxx Xxxxxxx, Xxx Xxxx 00000 (the
"Executive").
WITNESSETH:
WHEREAS, the Executive has entered into an Employment Agreement with
the Employer, effective as of October 1, 1991, as amended by an Amendment,
effective as of January 1, 1994 (the "Existing Employment Agreement"); and
WHEREAS, the Executive and the Employer wish to modify the terms of the
Existing Employment Agreement by amending and restating the Existing
Employment Agreement in the form of this Amended and Restated Employment
Agreement (the "Agreement");
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Executive and the Employer hereby amend and restate the Existing
Employment Agreement as follows:
1. Term of Employment.
The Employer agrees to employ the Executive, and the Executive
hereby accepts such employment, as Chairman of the Board of Directors of the
Employer. This Agreement shall have a three-year rolling term, which shall
commence as of the date first above written and automatically be extended so
that the unexpired term on any date is always three years (the "Employment
Period"), until such time as either party gives written notice to the other
of its election not to extend such term. The Employment Period shall end
three years from the date on which such notice is given unless it is
terminated earlier as provided in Section 4 hereof.
2. Duties and Authority.
a. During the Employment Period the Executive shall serve as
Chairman of the Board of Directors of the Employer. The Executive shall
devote his best efforts and full working time and attention to services for
the Employer. The Executive agrees to hold any other office or position
with the Employer or any of the Employer's subsidiaries without additional
compensation if elected or appointed to such office or position.
b. To the degree required by the Employer, the Executive shall be
responsible to identify and propose to the Employer's Board of Directors
persons suitable to serve as President of the Employer.
-1-
3. Compensation.
a. As compensation for the Executive's services in all capacities
during the Employment Period, the Employer shall pay the Executive the
following:
(i) a base salary at the rate of $606,373 per annum to be paid in
equal installments in accordance with normal payroll practices of the
Employer but not less frequently than monthly, provided that in each
subsequent calendar year or part thereof during which the Executive is
employed commencing in 1998, the Executive's base salary shall be
adjusted upward annually from the Executive's current base salary at a
rate at least commensurate with increases granted to other key
executives (the "Base Salary");
(ii) a discretionary cash incentive bonus (the "Bonus") for each
calendar year or part thereof during which the Executive is employed,
the amount of such Bonus to be consistent with the executive bonus
program which the Employer establishes for other key employees.
b. The Executive shall be entitled to reimbursement for reasonable
business and travel expenses incurred in the performance of his duties in
accordance with the Employer's normal reimbursement practices.
c. Subject to the terms of the applicable plan and/or program, the
Executive shall participate in all bonus, incentive, stock option, pension,
disability and health plans and programs and all fringe benefit plans
maintained by or on behalf of the Employer and in which senior executives of
the Employer are entitled to participate.
4. Termination of Employment.
a. The Executive's employment hereunder shall terminate upon the
Executive's death, and the Employer shall have the right to terminate the
Executive's employment upon his permanent disability. A permanent
disability is a physical or mental disability which results in the
Executive's inability to substantially perform his duties hereunder for a
period of 180 consecutive days or for a period of 200 days within any period
of 12 consecutive months, except that a permanent disability shall not
include a physical or mental disability which occurs in connection with the
Executive's employment hereunder. In the event of termination by reason of
death or permanent disability, the Employer's obligation to pay further
compensation hereunder shall cease on the date of termination, except that
the Executive (or, in the case of death, his beneficiaries, or his estate if
no beneficiary has been named) shall be entitled to receive his Base Salary
and Bonus prorated on a calendar day basis through the date of such
termination.
b. The Employer may terminate the Executive's employment hereunder
for Cause (as defined below) upon not less than 30 days prior written notice
specifying such cause. If the Executive's employment hereunder is
terminated for Cause, the Executive shall forfeit all existing Employer
stock options effective as of the date of the termination of his employment,
but such options shall remain exercisable for the 30-day period following
the Executive's receipt of written notice required under this Section 4(b).
For purposes of this Agreement, the term "Cause" shall mean (i) the
Executive's willful and continued failure to substantially perform his
-2-
duties hereunder, (ii) the engaging by the Executive in willful misconduct
which is demonstrably and materially injurious to the Employer, or (iii) the
Executive's conviction of a felony for a crime of moral turpitude. For
purposes of this Section 4(b), no act, or failure to act, on the Executive's
part shall be considered "willful" unless done, or omitted to be done, by
him not in good faith and without reasonable belief that his action or
omission was in the best interest of the Employer. The Executive shall not
be terminated for Cause in the case of actions or omissions described in
clauses (i) or (ii) of this Section 4(b) unless the Employer shall have
given the Executive an opportunity to cure any such actions or omissions
during the 30-day period after the Executive's receipt of written notice
required under this Section 4(b).
c. The Executive's employment hereunder may be terminated by the
Employer without Cause upon not less than 90 days prior written notice or by
the Executive for "Good Reason" (as defined below) upon not less than 10
days prior written notice. In such event, (i) the Executive shall continue
to receive his then current Base Salary otherwise payable pursuant to
Section 3 hereof as if his employment had continued for the remainder of the
Employment Period and an annual bonus for the remainder of the Employment
Period equal to the average Bonus for the three calendar years immediately
preceding the written notice, such bonus to be paid in the normal course at
the time other executive bonuses are normally paid, and (ii) all of the
outstanding unvested Employer stock options then held by Executive shall
immediately vest and become exercisable upon such notice. In addition, at
the Employer's expense, the Executive shall continue to participate in all
of the Employer's health plans and programs and the Employer shall continue
to furnish Executive with an office and a secretary in New York City in the
Borough of Manhattan for the remainder of the Employment Period as if he
remained employed for such period, such benefits and office to be comparable
in quality and location to those currently provided. For purposes of this
Agreement, "Good Reason" shall mean (A) a failure by the Employer to comply
with any material provision of this Agreement which has not been cured
within ten (10) days after notice of such noncompliance has been given by
the Executive to the Employer, (B) the assignment to the Executive by the
Employer of duties inconsistent with the Executive's position, authority,
duties, responsibilities or status with the Employer as in effect
immediately after the date of execution of this Agreement, including, but
not limited to, any reduction whatsoever in such position, authority,
duties, responsibilities or status, or a change in the Executive's titles or
offices, as then in effect, or any removal of the Executive from, or any
failure to reelect the Executive to, any of such positions, except in
connection with the termination of his employment on account of his death,
disability, or for Cause, (C) the requirement of excessive travel on the
part of the Executive, (D) a relocation by the Employer of the Executive's
principal place of employment to any location outside a thirty mile radius
from the Executive's current principal place of employment, (E) the failure
of the Employer to have any successor to the Employer assume the Agreement,
(F) the delivery to the Executive of notice of the Employer's decision to
terminate the Executive's employment without Cause, or (G) any other
material change in the conditions of employment if the Executive determines
in good faith that his customary duties can no longer be performed because
of the change.
-3-
d. The Executive shall also have the right to resign voluntarily
without Good Reason from employment during the Employment Period by written
notice to the Employer at least 60 days prior to the effective date of the
resignation. Upon his resignation without Good Reason, the Executive shall
be entitled to receive any accrued but unpaid Base Salary. The Employer
shall have discretion whether or not to award the Executive a Bonus for any
calendar year in which he resigns without Good Reason.
e. If the Executive's employment is terminated for Cause pursuant to
Section 4(b), or if the Executive shall voluntarily resign for any reason
other than Good Reason, the Executive's right to receive the Base Salary
(except any accrued and unpaid salary), the Bonus, and any other
compensation and benefits to which he would otherwise be entitled under this
Agreement shall be forfeited as of the date of termination of employment.
f. Except as provided in Section 4(b) hereof or any relevant option
agreement, the Executive's death or termination of employment shall not
affect his rights under any Employer stock options.
g. Notwithstanding anything to the contrary herein, the Executive
may also terminate his employment upon a "Change in Control" (as hereinafter
defined). If the Executive terminates his employment upon a "Change in
Control" then:
(i) the Employer shall pay the Executive as severance pay in a lump
sum within thirty (30) days following such termination, the following
amounts, which shall not be discounted to take into account present
value:
(1) the Executive's Base Salary through the date of termination
at the rate in effect immediately prior to the termination
date; and
(2) an amount equal to the product of (x) the Executive's annual
Base Salary at the rate in effect immediately prior to the
date of termination, multiplied by (z) the number of years
(including partial years) then remaining in the Employment
Period; and
(3) an amount equal to the product of (x) the average annual
Bonus for the three calendar years immediately preceding the
date of termination, multiplied by (z) the number of years
(including partial years as full years) then remaining in
the Employment Period;
(ii) the Employer shall, at the Employer's expense, allow the
Executive to continue to participate, for the number of years
(including partial years) then remaining in the Employment Period, in
all the Employer's benefits, to the same extent and upon the same terms
and conditions as the Executive participated immediately prior to the
termination, provided that the Executive's continued participation is
permissible or otherwise practicable under the general terms and
provisions of such benefit plan; and
-4-
(iii) the Employer shall, at the Employer's expense, continue to
furnish Executive with an office and a secretary in New York City in
the Borough of Manhattan for the number of years (including partial
years) then remaining in the Employment Period, such benefit to be
comparable in quality and location to that provided currently; and
(iv) on the later of (x) the day the Executive notifies the Employer
he is terminating upon a Change in Control, and (y) ten (10) days prior
to the date the Executive actually terminates his employment, all
remaining unvested options previously granted the Executive shall
become immediately exercisable on that date.
"Change in Control", as used in Section 4(g) of the Agreement, is
defined to mean the occurrence of any of the following three events:
(1) a change in control of a nature that would be required to be
reported in response to any form or report to the Securities and Exchange
Commission or any stock exchange on which the Employer's shares are listed
which requires the reporting of a change in control of the Employer;
(2) when any "person," as such terms is used in Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is or becomes the "beneficial owner," as defined in Rule 13d-3 under
the Exchange Act, directly or indirectly, of 20% of the voting power of the
Employer's then outstanding securities, other than (x) beneficial owners of
more than 5% of the Employer's Common Stock on August 10, 1995, (y)
"Exempted Persons" as defined in Section 1(a) of the Employer's Rights
Agreement, dated as of November 10, 1994, (z) mutual funds, banks,
investment advisors registered under the Investment Advisers Act of 1940, as
amended, and other institutional investors, which either (i) became 20%
beneficial owners as a result of an acquisition of Common Stock by the
Employer which, by reducing the number of such shares then outstanding,
increases the proportionate number of shares beneficially owned by such
person to 20% or more of the outstanding Common Stock except that if such
person, after such share purchased by the Employer, becomes the beneficial
owner of any additional shares of Common Stock, then this exception would
not apply, or (ii) were exempted from the operation of this provision with
the prior approval of eighty percent of the Board of Directors of the
Employer; or
(3) when the individuals who, on the effective date of this
Agreement constitute the Board of Directors of the Employer cease for any
reason to constitute at least a majority thereof, provided, however, that a
director who was not a director on the effective date of this Agreement
shall be deemed to have been a director at that date if such director was
elected by, or on the recommendation of or with the approval of, at least
sixty percent of the directors who were directors on the effective date of
this Agreement (either directly or by prior operation of this provision);
provided, however, that an occurrence shall cease to be a "Change in
Control" for purposes of this Section 4(g) six months after the occurrence
of an event that would otherwise constitute a "Change in Control," except
that, for purposes of computing this six-month period, the six-month time
period shall not commence until, as to clause (1) above, the date on which a
change in control form or report is actually filed, and as to clause (2)
above, the date on which a beneficial owner discloses in a public filing
that it has crossed the 20% threshold.
-5-
5. Notices.
Any notice or other communication hereunder shall be made in writing
by hand-delivery or telecopier (and, if by telecopier, followed by a copy
either delivered by hand within three days thereafter or sent by registered
first-class mail on the next business day) and shall be deemed to have been
delivered and received when delivered by hand, if personally delivered, and
when receipt acknowledged, if telecopied, as follows: (a) if to the
Executive at the address shown at the beginning of this Agreement and at the
following telecopier numbers: (000) 000-0000 and (000) 000-0000 or to such
other person(s) or address(es) or telecopier number(s) as the Executive
shall have furnished to the Employer in writing, and (b) if to the Employer
at the address shown at the beginning of this Agreement and at the following
telecopier number: (000) 000-0000, attention of the Board of Directors,
with copies to the Employer at the same address, Attention: General
Counsel, and to Xxxxxxx Xxxx & Xxxxxxxxx, One Citicorp Center, 000 X. 00xx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Xxxxxx X. Xxxxx, Esq., telecopier
number (000) 000-0000, or to such other person(s) or address(es) or
telecopier number(s) as such persons or the Employer shall have furnished to
the Executive in writing.
6. Registration of Options.
The Employer agrees that, at the Employer's cost, it will file a
Registration Statement on Form S-8 (or its equivalent) relating to the
Executive's existing options to acquire shares of common stock of the
Employer. The Executive agrees to provide the Employer with reasonable
notice of the Executive's desire to have such a Registration Statement
prepared and filed with the Securities and Exchange Commission.
7. Certain Additional Payments by the Employer.
a. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment, distribution, waiver of
Employer rights, acceleration of vesting of any stock options or restricted
stock, or any other payment or benefit in the nature of compensation to or
for the benefit of the Executive, alone or in combination (whether such
payment, distribution, waiver, acceleration or other benefit is made
pursuant to the terms of this Agreement or any other agreement, plan or
arrangement providing payments or benefits in the nature of compensation to
or for the benefit of the Executive, but determined without regard to any
additional payments required under this Section 7) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code (or any
successor provision) or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes with respect to the Gross-Up Payment
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
-6-
b. Subject to the provisions of Section 7(c), all determinations
required to be made under this Section 7, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made
by the nationally recognized accounting firm then auditing the accounts of
the Employer (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Employer and the Executive within 15 business days
of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Employer. In the event that the
Accounting Firm is unwilling or unable to perform its obligations pursuant
to this Section 7, the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to hereunder as the Accounting Firm).
All fees and expenses of the Accounting Firm shall be borne solely by the
Employer. Any Gross-Up Payment, determined pursuant to this Section 7,
shall be paid by the Employer to the Executive within five days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Employer and the Executive. The
parties hereto acknowledge that, as a result of the potential uncertainty in
the application of Section 4999 of the Code (or any successor provision) at
the time of the initial determination by the Accounting Firm hereunder, it
is possible that the Employer will not have made Gross-Up Payments which
should have been made consistent with the calculations required to be made
hereunder (an "Underpayment"). In the event that the Employer exhausts its
remedies pursuant to Section 7(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Employer to or for the benefit of the Executive.
c. The Executive shall notify the Employer in writing of any claim
by the Internal Revenue Service that, if successful, would require the
payment by the Employer of the Gross-Up Payment. Such notification shall be
given as soon as practicable but no later than 20 business days after the
Executive is informed in writing of such claim and shall apprise the
Employer of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which he gives such
notice to the Employer (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Employer
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Employer any information reasonably requested by
the Employer relating to such claim,
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Employer,
(iii) cooperate with the Employer in good faith in order
effectively to contest such claim, and
(iv) permit the Employer to participate in any
proceedings relating to such claim;
-7-
provided, however, that the Employer shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limiting the
foregoing provisions of this Section 7(c), the Employer shall control all
proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Employer shall determine; provided,
however, that if the Employer directs the Executive to pay such claim and
xxx for a refund, the Employer shall advance the amount of such payment to
the Executive, on an interest-free basis, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Employer's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
d. If, after the receipt by the Executive of an amount advanced by
the Employer pursuant to Section 7(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Employer's complying with the requirements of Section 7(c)) promptly
pay to the Employer the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Employer pursuant to
Section 7(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Employer does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
8. Assignability.
This Agreement shall not be assignable by the Employer
except to a majority-owned subsidiary or parent entity of the Employer and
shall be binding upon and inure to the benefit of the Employer and its
successors and assigns. This Agreement shall not be assignable by the
Executive, but it shall be binding upon, and to the extent provided in
Section 4(a) shall inure to the benefit of, the Executive's heirs,
executors, administrators and legal representatives.
-8-
9. Entire Agreement.
This Agreement supersedes the Existing Employment
Agreement and all prior understandings between the Executive and the
Employer as to the subject matter hereof.
10. Waivers, Amendments and Further Agreements.
Neither this Agreement nor any term or condition hereof,
including without limitation the terms and conditions of this Section 10,
may be waived, modified or amended in whole or in part as against the
Employer or the Executive except by written instrument executed by each of
the parties expressly stating that it is intended to operate as a waiver,
modification or amendment of this Agreement or the applicable term or
condition hereof. Each of the parties hereto agrees to execute all such
further instruments and documents and to take all such further action as the
other party may reasonably require in order to effectuate the terms and
purposes of this Agreement.
11. Severability.
In case one or more of the provisions contained in this
Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
12. No Conflicting Obligations.
The Executive represents and warrants to the Employer that
the Executive is not now under any obligation to anyone other than the
Employer and other entities of which he is a non-executive director and has
no interest which is inconsistent or in conflict with this Agreement, or
which would prevent, limit or impair, in any way, the Executive's
performance of any of the covenants or duties hereinabove set forth.
However, subject to Section 2 hereof, nothing herein shall be deemed to
limit the Executive's participation in, or pursuit of, non-conflicting
business interests.
13. Survival.
Except as otherwise provided herein, the covenants,
agreements, representations and warranties contained in or made pursuant to
this Agreement shall survive the Executive's termination of employment,
irrespective of any investigation made by or on behalf of any party.
14. Governing Law.
This Agreement shall be governed by and construed and
enforced in accordance with the law of the State of New York, without regard
to the principles of conflicts of law thereof.
-9-
15. Arbitration; Legal Fees.
Any dispute, controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be finally settled by
arbitration by a single arbitrator in accordance with the rules then in
effect of the American Arbitration Association in an arbitration in New
York, New York. Judgment upon an award rendered by the arbitrator may be
entered in any court of competent jurisdiction. To the extent that the
Executive prosecutes or defends, whether by arbitration or through a
judicial proceeding, a dispute, controversy or claim relating to this
Agreement which results in a judgment, award or settlement in the
Executive's favor in any material respect, the Employer shall reimburse the
Executive for all reasonable fees and costs (including legal fees) incurred
by the Executive in such successful prosecution or defense.
16. Headings.
The headings in this Agreement are solely for convenience
of reference and shall be given no effect in the construction or
interpretation of this Agreement.
17. Counterparts.
This Agreement may be executed in counterparts each of which
shall be deemed an original but which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement effective as of the date first above written.
XXXXXXX INDUSTRIES, INC.
[Seal] By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
Title: Chief Executive Officer
Date: September 17, 1997
/s/ Xxxxxx Xxxx
Xxxxxx Xxxx
Date: September 17, 1997
-10-
