AMENDED CONTINUITY AGREEMENT
Exhibit
10.5
AMENDED
CONTINUITY AGREEMENT
This
Amended Agreement (the
"Agreement") is dated as of May
22, 2006
by and between Xxxx-XxXxx Corporation, a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxxxxx (the "Executive"), and amends and supersedes that certain
Continuity Agreement dated January 11, 2000.
WHEREAS,
the Company's Board of Directors considers the continued services of key
executives of the Company to be in the best interests of the Company and its
stockholders; and
WHEREAS,
the Company's Board of Directors desires to assure, and has determined that
it
is appropriate and in the best interests of the Company and its stockholders
to
reinforce and encourage the continued attention and dedication of key executives
of the Company to their duties of employment without personal distraction or
conflict of interest in circumstances which could arise from the occurrence
of a
change in control of the Company; and
WHEREAS,
the Company's Board of Directors has authorized the Company to enter into
amended continuity agreements with those key executives of the Company and
any
of its respective subsidiaries (all of such entities, together with the Company,
are hereinafter referred to as an "Employer"), such agreements to set forth
the
severance compensation which the Company agrees under certain circumstances
to
pay such executives; and
WHEREAS,
the Executive is a key executive of an Employer and has been designated as
an
executive to be offered such a continuity compensation agreement with the
Company.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Executive agree as follows:
1. Term.
This Agreement shall become effective on the date hereof (the "Effective
Date") and remain in effect until the third anniversary thereof; provided,
however,
that this Agreement shall automatically renew for an additional year on each
successive anniversary of the Effective Date, unless an Employer informs the
Executive, in writing, at least 180 days prior to the renewal date, that this
Agreement shall not be renewed. The foregoing shall constitute the "Term" of
this Agreement for purposes hereof.
2. Change
in Control.
No compensation or other benefit pursuant to Section 4 hereof shall be payable
under this Agreement unless and until either (i) a Change in Control of the
Company (as hereinafter defined) shall have occurred while the Executive is
employed by an Employer and the Executive's employment by an Employer thereafter
shall have terminated in accordance with Section 3 hereof or (ii) the
Executive's employment by an Employer shall have terminated in accordance with
Section 3(a)(ii) hereof prior to the occurrence of the Change in Control. For
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred when, during the Term of this Agreement:
(a) any
person ("Person") as defined in Section 3(a)(9) of the Securities Exchange
Act
of 1934, as amended (the "Exchange Act"), and as used in Section 13(d) and
14(d)
thereof, including a "group" as defined in Section 13(d) of the Exchange Act
but
excluding the Company and any subsidiary and any employee benefit plan sponsored
or maintained by the Company or any subsidiary (including any trustee of such
plan acting as trustee), directly or indirectly, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities (other than indirectly as a result of the Company's
redemption of its securities); or
(b) the
consummation of any merger or other business combination of the Company, sale
of
50% or more of the Company's assets, liquidation or dissolution of the Company
or combination of the foregoing transactions (the "Transactions") other than
a
Transaction immediately following which the shareholders of the Company and
any
trustee or fiduciary of any Company employee benefit plan immediately prior
to
the Transaction own at least 60% of the voting power, directly or indirectly,
of
(A) the surviving corporation in any such merger or other business combination;
(B) the purchaser of or successor to the Company's assets; (C) both the
surviving corporation and the purchaser in the event of any combination of
Transactions; or (D) the parent company owning 100% of such surviving
corporation, purchaser or both the surviving corporation and the purchaser,
as
the case may be; or
(c) within
any twenty-four month period, the persons who were directors immediately before
the beginning of such period (the "Incumbent Directors") shall cease (for any
reason other than death) to constitute at least a majority of the Board or
the
board of directors of a successor to the Company. For this purpose, any director
who was not a director at the beginning of such period shall be deemed to be
an
Incumbent Director if such director was elected to the Board by, or on the
recommendation of or with the approval of, at least two-thirds of the directors
who then qualified as Incumbent Directors (so long as such director was not
nominated by a person who commenced or threatened to commence an election
contest or proxy solicitation by or on behalf of a Person (other than the Board)
or who has entered into an agreement to effect a Change in Control or expressed
an intention to cause such a Change in Control); or
(d) a
majority of the members of the Board of Directors in office immediately prior
to
a proposed transaction determine by a written resolution that such proposed
transaction, if taken, will be deemed a Change in Control and such proposed
transaction is consummated.
3. Termination
of Employment; Definitions.
(a) Termination
without Cause by the Company or for Good Reason by the Executive.
(i)
The Executive shall be entitled to the compensation provided for in Section
4
hereof, if within two years after a Change in Control, the Executive's
employment by an Employer shall be terminated (A) by an Employer for any reason
other than (I) the Executive's Disability or Retirement, (II) the Executive's
death or (III) for Cause, or (B) by the Executive with Good Reason (all terms
are as hereinafter defined), unless such termination occurs with the Executive's
prior written consent expressly waiving the rights provided
hereunder.
(ii)
In addition, the Executive shall be entitled to the compensation provided for
in
Section 4 hereof if, (A) in the event that an agreement is signed which, if
consummated, would result in a Change of Control and, within 12 months
thereafter, the Executive is terminated without Cause by the Company or an
Employer (other than on account of Executive's Death or Disability) or
terminates employment with Good Reason prior to the Change in Control, (B)
such
termination is at the request or instigation of the acquiror or merger partner
or otherwise in connection with the anticipated Change in Control, and (C)
within said 12 month period, such Change in Control actually
occurs.
(b) Disability.
For purposes of this Agreement, "Disability" shall mean the Executive's absence
from the full-time performance of the Executive's duties (as such duties existed
immediately prior to such absence) for 180 consecutive business days, when
the
Executive is disabled as a result of incapacity due to physical or mental
illness.
(c) Retirement.
For purposes of this Agreement, "Retirement" shall mean the Executive's
voluntary termination of employment pursuant to late, normal or early retirement
under a pension plan sponsored by an Employer, as defined in such plan, but
only
if such retirement occurs prior to a termination by an Employer without Cause
or
by the Executive for Good Reason.
(d) Cause.
For purposes of this Agreement, "Cause" shall mean:
(i)
the
willful and continued failure of the Executive to perform substantially all
of
his or her duties with an Employer (other than any such failure resulting from
incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to such Executive by the Board of Directors
(the "Board") of the Company which specifically identifies the manner in which
the Board believes that the Executive has not substantially performed his or
her
duties;
(ii)
the
willful engaging by the Executive in gross misconduct which is materially and
demonstrably injurious to the Company or any Employer; or
(iii)
the
conviction of, or plea of guilty or nolo contendere
to, a felony.
Termination
of the Executive for Cause shall be made by delivery to the Executive of a
copy
of a resolution duly adopted by the affirmative vote of not less than a
three-fourths majority of the non-employee Directors of the Company or of the
ultimate parent of the entity which caused the Change in Control (if the Company
has become a subsidiary) at a meeting of such Directors called and held for
such
purpose, after 30 days prior written notice to the Executive specifying the
basis for such termination and the particulars thereof and a reasonable
opportunity for the Executive to cure or otherwise resolve the behavior in
question prior to such meeting, finding that in the reasonable judgment of
such
Directors, the conduct or event set forth in any of clauses (i) through (iii)
above has occurred and that such occurrence warrants the Executive's
termination.
(e) Good
Reason.
For purposes of this Agreement, "Good Reason" shall mean the occurrence, within
the Term of this Agreement, of any of the following without the Executive's
written consent expressly waiving the rights provided hereunder:
(i)
any
material and adverse diminution in the Executive's duties or responsibilities
with the Company (or any affiliate thereof) from those in effect immediately
prior to the Change in Control; provided,
however,
that no such diminution shall be deemed to exist solely because of changes
in
Executive’s duties, responsibilities or titles as a consequence of the Company
ceasing to be a company with publicly-traded securities or becoming a
wholly-owned subsidiary of another company;
(ii)
any
reduction in the Executive's annual base salary or any adverse change in bonus
opportunity or participation in cash bonus programs in effect immediately prior
to the Change in Control;
(iii)
any
requirement that Executive be based at a location more than 35 miles from the
location at which the Executive was based immediately prior to the Change in
Control (or a substantial increase in the amount of travel Executive is required
to do because of a relocation of the executive offices);
(iv)
any
failure by the Company to obtain from any successor to the Company an agreement
reasonably satisfactory to the Executive to assume and perform this Agreement,
as contemplated by Section 10(a) hereof;
(v) during
the thirty-day period immediately following the first anniversary of the Change
in Control, the voluntary termination of employment by the Executive for any
reason or no reason at all; or
(vi) any
amendment, reduction or termination of any benefit plan, program or arrangement,
which has the effect of causing the Executive to have benefits which are not
substantially similar, in the aggregate, to those benefits provided to the
Executive immediately prior to the Change in Control.
Notwithstanding
the foregoing, in the event Executive provides the Company with a Notice of
Termination (as defined below) referencing this Section 3(e) (with the exception
of Section 3(e)(v)), the Company shall have 30 days thereafter in which to
cure
or resolve the behavior otherwise constituting Good Reason. Any good faith
determination by Executive that Good Reason exists shall be presumed correct
and
shall be binding upon the Company.
(f) Notice
of Termination.
Any purported termination of the Executive's employment (other than on account
of Executive's death) with an Employer, if such termination occurs after the
occurrence of a Change in Control or under circumstances specified under Section
3(a)(ii) above, shall be communicated by a Notice of Termination to the
Executive, if such termination is by an Employer, or to an Employer, if such
termination is by the Executive. For purposes of this Agreement, "Notice of
Termination" shall mean a written 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 the Executive's employment under the provisions so indicated;
provided,
however,
that in connection with a termination for Good Reason under Section 3(e)(v),
no
details shall be necessary other than reference to such Section. For
purposes of this Agreement, no purported termination of Executive's employment
with an Employer shall be effective without such a Notice of Termination having
been given.
4. Compensation
Upon Termination After a Change in Control.
Subject
to Section 9 hereof, if within two years of a Change in Control, the Executive's
employment by an Employer shall be terminated in accordance with Section 3(a)
(the "Termination"), the Executive shall be entitled to the following payments
and benefits:
(a) Severance.
The Company shall pay or cause to be paid to the Executive a cash severance
amount equal to (i) three
(3) times the sum of (A) the Executive's annual base salary on the date of
the
Change in Control (or, if higher, the annual base salary in effect immediately
prior to the giving of the Notice of Termination) and (B) the higher of: (x)
the
average of the actual bonuses earned by the Executive in respect of the three
years prior to the year in which the Change in Control occurs under an
Employer's incentive award program, or (y) the Executive's target bonus for
the
year of Termination, plus (ii) in lieu of continuation of any of the Executive's
perquisites as provided to the Executive prior to the Change in Control (or,
if
greater, at the time of Termination), a cash payment equal to 7 percent of
the
Executive's annual base salary as in effect on the date of the Change in Control
for each of the three (3) years following the date of Termination. This cash
severance amount shall be payable in a lump sum.
(b) Additional
Payments and Benefits.
The Executive shall also be entitled to:
(i)
a
lump sum cash payment equal to the sum of (A) the Executive's accrued but unpaid
annual base salary through the date of Termination, (B) the unpaid portion,
if
any, of bonuses previously earned by the Executive pursuant to the Company's
Executive incentive award program, plus the pro rata portion of the
target
bonus to be paid for the year in which the date of Termination occurs
(calculated through the date of Termination), and (C) an amount, if any, equal
to any
accrued vacation pay, in full
satisfaction of Executive's rights thereto.
(ii)
a
lump sum cash payment equal to the aggregate sum of (A) additional pension
contributions in an amount equal to the Company's contributions under the
Company's 401(k) plan, profit sharing or other savings pension plans (or such
other qualified and nonqualified defined contribution pension plans as then
in
effect) for the three (3) year
period following the date of Termination (the "Separation Period") (based on
assumed rates of Executive's contributions at the level of participation in
effect as of the last date Executive was permitted to participate); and (B)
the
difference between the discounted present value (i.e., lump sum value) of the
annuity benefit the Executive is entitled to receive under the Company's
qualified and nonqualified defined benefit retirement programs in which the
Executive is a participant calculated through the date of Termination and the
discounted present value (i.e., lump sum value) of the annuity benefit the
Executive would be entitled to receive under such retirement programs calculated
after adding an additional five years of credit to age and service up to a
maximum of age 65 as if the executive had been paid at the rate used to
calculate the payments under Section 4(a), provided that the additional credits
added with respect to each retirement program shall not exceed five years when
added to any additional credits already provided by the terms of such programs
in respect of the Termination covered hereby.
(iii)
continued
medical, dental, vision, and life insurance coverage (excluding accident, death,
and disability insurance) for the Executive and the Executive's eligible
dependents or, to the extent such coverage is not commercially available, such
other arrangements reasonably acceptable to the Executive, on the same basis
as
in effect prior to the Change in Control or the Executive's Termination,
whichever is deemed to provide for more substantial benefits, for a period
ending on the earlier of (A) the end of the Separation Period or (B) the
commencement of comparable coverage by the Executive with a subsequent
employer;
(iv)
unless
it would adversely affect the Company's ability to use pooling of interest
accounting in a Change in Control transaction in which such accounting is
intended to be used, immediate 100% vesting of all outstanding stock options,
stock appreciation rights and restricted stock granted or issued by any Employer
to the extent not previously vested on or following the Change of Control;
and
(v) all
other accrued or vested benefits in accordance with the terms of the applicable
plan (with an offset for any amounts paid under Section 4(b)(i)(C),
above).
All
lump sum payments under this Section 4 shall be paid within 15 business days
after Executive's date of Termination. At the Company’s option, it may within
the 15-day period either (x) make the payment to the Executive subject to the
Executive’s obligation to promptly return the funds if the release required
under Section 13 is revoked by the Executive as provided in the release or
(y)
deposit the funds with a third party escrow agent pursuant to customary
arrangements where the only condition to release of the escrowed funds to the
Executive is that the release has not been revoked by the Executive as provided
in the release. Discounted present value (i.e., lump sum value) for purposes
of
subsection (ii) above shall be calculated using a discount factor equal to
one
percentage point below the rate of interest, per annum, publicly announced
by
The Chase Manhattan Bank, N.A. as its prime rate in effect at its principal
office in New York City, and using the actuarial factors set forth in the
defined benefit retirement program.
(c) Outplacement.
If so requested by the Executive, outplacement services shall be provided by
a
professional outplacement provider selected by Executive; provided,
however,
that such outplacement services shall be provided the Executive at an aggregate
total cost to the Company of not more than ten (10) percent of such Executive's
annual base salary.
(d) Withholding.
Payments and benefits provided pursuant to this Section 4 shall be subject
to
any applicable payroll and other taxes required to be withheld.
5. Compensation
Upon Termination for Death, Disability or Retirement.
If
an Executive's employment is terminated by reason of Death, Disability or
Retirement prior to any other termination, Executive will receive:
(a) the
sum of (i) Executive's accrued but unpaid salary through the date of
Termination, (ii) the pro rata portion of the Executive's target bonus for
the
year of Executive's Death or Disability (calculated through the date of
Termination), and (iii) an amount equal to any accrued
vacation pay; and
(b) other
accrued or vested benefits in accordance with the terms of the applicable plan
(with an offset for any amounts paid under item (a)(iii), above).
5A. Application
of Section 409A of the Code.
To the extent Section 409A of the Internal Revenue Code of 1986, as amended
(the
"Code"), applies to any compensation or other benefit payable under this
Agreement (including, but not limited to, Sections 4 and 5), this Section 5A
applies, and to the extent that it conflicts with any other provision of the
Agreement, it supersedes such conflicting provisions. If Section 409A of the
Code does not apply to any compensation or other benefits payable under this
Agreement, this Section 5A shall have no effect.
(a) In
General.
This Section 5A is intended to comply with the provisions of Section 409A of
the
Code. In furtherance of this intent, to the extent this Agreement is subject
to
Section 409A of the Code, it shall be interpreted, operated, and administered
in
a manner consistent with these intentions, and the parties agree to amend this
Agreement further (if necessary) in order to avoid the adverse tax consequences
of Section 409A of the Code.
| (b) |
Definitions.
For purposes of, and as used in, this Section 5A only,
|
Key
Employee
shall mean an employee who is treated as a "specified employee" under Section
409A(a)(2)(B)(i) of the Code, i.e., a key employee (as defined in Section 416(i)
of the Code, without regard to paragraph (5) thereof, and determined as of
each
December 31 in accordance with Section 409A of the Code) of the
Company.
Separation
from
Service
shall mean a "separation from service" within the meaning of Section 409A of
the
Code.
6. Excess
Parachute Payments.
(a)
(i) If it is determined (as hereafter provided) that any payment or distribution
by the Company or any Employer to or for the benefit of the Executive, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement, including without limitation any stock option,
stock appreciation right or similar right, or the lapse or termination of any
restriction on or the vesting or exercisability of any of the foregoing (a
"Severance Payment"), would be subject to the excise tax imposed by Section
4999
of the Code
(or any successor provision thereto) by reason of being "contingent on a change
in ownership or control" of the Company, within the meaning of Section 280G
of
the Code (or any successor provision thereto) or to any similar tax imposed
by
state or local law, or any interest or penalties with respect to such excise
tax
(such tax or taxes, together with any such interest and penalties, are hereafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment or payments (a "Gross-Up Payment")
in
an amount such that, after payment by the Executive of all taxes (including
any
interest or penalties imposed with respect to such taxes), including any 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 Severance
Payments.
(ii)
Subject
to the provisions of Section 6(a)(i) hereof, all determinations required to
be
made under this Section 6, including whether an Excise Tax is payable by the
Executive and the amount of such Excise Tax and whether a Gross-Up Payment
is
required and the amount of such Gross-Up Payment, shall be made by the
nationally recognized firm of certified public accountants (the "Accounting
Firm") used by the Company prior to the Change in Control (or, if such
Accounting Firm declines to serve, the Accounting Firm shall be a nationally
recognized firm of certified public accountants selected by the Executive).
The
Accounting Firm shall be directed by the Company or the Executive to submit
its
preliminary determination and detailed supporting calculations to both the
Company and the Executive within 15 calendar days after the Termination Date,
if
applicable, and any other such time or times as may be requested by the Company
or the Executive. If the Accounting Firm determines that any Excise Tax is
payable by the Executive, the Company shall pay the required Gross-Up Payment
to, or for the benefit of, the Executive within five business days after receipt
of such determination and calculations. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall, at the same time as it
makes such determination, furnish the Executive with an opinion that he has
substantial authority not to report any Excise Tax on his/her federal, state,
local income or other tax return. Any determination by the Accounting Firm
as to
the amount of the Gross-Up Payment shall be binding upon the Company and the
Executive absent a contrary determination by the Internal Revenue Services
or a
court of competent jurisdiction; provided,
however,
that no such determination shall eliminate or reduce the Company's obligation
to
provide any Gross-Up Payment that shall be due as a result of such contrary
determination. As a result of the uncertainty in the application of Section
4999
of the Code (or any successor provision thereto) and the possibility of similar
uncertainty regarding state or local tax law at the time of any determination
by
the Accounting Firm hereunder, it is possible that Gross-Up Payments that will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
6
hereof and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount
of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company to, or
for
the benefit of, the Executive within five business days after receipt of such
determination and calculations.
(iii)
The
federal, state and local income or other tax returns filed by the Executive
(or
any filing made by a consolidated tax group which includes the Company) shall
be
prepared and filed on a consistent basis with the determination of the
Accounting Firm with respect to the Excise Tax payable by the Executive. The
Executive shall make proper payment of the amount of any Excise Tax, and at
the
request of the Company, provide to the Company true and correct copies (with
any
amendments) of his/her federal income tax return as filed with the Internal
Revenue Service and corresponding state and local tax returns, if relevant,
as
filed with the applicable taxing authority, and such other documents reasonably
requested by the Company, evidencing such payment. If prior to the filing of
the
Executive's federal income tax return, or corresponding state or local tax
return, if relevant, the Accounting Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive shall within five business
days pay to the Company the amount of such reduction.
(iv)
The
Company and the Executive shall each provide the Accounting Firm access to
and
copies of any books, records and documents in the possession of the Company
or
the Executive, as the case may be, reasonably requested by the Accounting Firm,
and otherwise cooperate with the Accounting Firm in connection with the
preparation and issuance of the determination contemplated by Section 6(a)
hereof.
(v) The
fees and expenses of the Accounting Firm for its services in connection with
the
determinations and calculations contemplated by Sections 6(a)(ii) and (iv)
hereof shall be borne by the Company. If such fees and expenses are initially
advanced by the Executive, the Company shall reimburse the Executive the full
amount of such fees and expenses within five business days after receipt from
the Executive of a statement therefor and reasonable evidence of his/her payment
thereof.
(b) In
the event that the Internal Revenue Service claims that any payment or benefit
received under this Agreement constitutes an "excess parachute payment," within
the meaning of Section 280G(b)(1) of the Code, the Executive shall notify the
Company in writing of such claim. Such notification shall be given as soon
as
practicable but no later than 10 business days after the Executive is informed
in writing of such claim and shall apprise the Company 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 the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such
claim is due). If the Company 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 Company any information reasonably requested by the Company
relating to such claim; (ii) take such action in connection with contesting
such
claim as the Company 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 Company and reasonably
satisfactory to the Executive; (iii) cooperate with the Company in good faith
in
order to effectively contest such claim; and (iv) permit the Company to
participate in any proceedings relating to such claim; provided,
however,
that the Company shall bear and pay directly all costs and expenses (including,
but not limited to, additional interest and penalties and related legal,
consulting or other similar fees) incurred in connection with such contest
and
shall indemnify and hold the Executive harmless, on an after-tax basis, for
and
against any Excise Tax or other tax (including interest and penalties with
respect thereto) imposed as a result of such representation and payment of
costs
and expenses.
(c) The
Company 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, pay the tax claimed and direct the
Executive to xxx for a refund or direct
the Executive to
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
Company shall determine; provided,
however,
that if the Company pays such claim and directs the Executive to xxx for a
refund, the Company shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed with respect to such payment or with
respect to any imputed income with respect to such payment; and provided,
further,
that if the Executive is required to extend the statute of limitations to enable
the Company to contest such claim, the Executive may limit this extension solely
to such contested amount. The Company's control of the contest shall be limited
to issues with respect to which a corporate deduction would be disallowed
pursuant to Section 280G of the Code 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. In addition, no position may
be
taken nor any final resolution be agreed to by the Company without the
Executive's consent if such position or resolution could reasonably be expected
to adversely affect the Executive (including any other tax position of the
Executive unrelated to matters covered hereby).
(e)
Notwithstanding
the foregoing, if the payment described in Section 6(c) is determined by the
Company to be impermissible under applicable law, then no such payment shall
be
made, nor shall the Company direct the Executive to pay the tax claimed and
xxx
for a refund.
7. Expenses.
In addition to all other amounts payable to the Executive under this Agreement,
the Company shall pay or reimburse the Executive for reasonable legal fees
(including without limitation, any and all court costs and reasonable attorneys'
fees and expenses) incurred by the Executive in connection with or as a result
of any claim, action or proceeding brought by the Company, any other Employer
or
the Executive with respect to or arising out of this Agreement or any provision
hereof; provided,
however,
that the Company shall have no obligation to pay any such legal fees, if (i)
in
the case of an action brought by the Executive, the Company or any other
Employer is successful in establishing with the court that the Executive's
action was frivolous or otherwise without any reasonable legal or factual basis;
or (ii) in connection with any such claim, action or proceeding arising out
of
Section 12 of this Agreement.
8. Obligations
Absolute; Non-Exclusivity of Rights; Joint and
Several Liability.
(a) The
obligations of the Company to make the payments to the Executive, and to make
the arrangements, provided for herein shall be absolute and unconditional and
shall not be reduced by any circumstances, including without limitation any
set-off, counterclaim, recoupment, defense or other right which the Company
or
any other Employer may have against the Executive or any third party at any
time.
(b) Nothing
in this Agreement shall prevent or limit the Executive's continuing or future
participation in any benefit, bonus, incentive or other plan or program provided
by the Company or any other Employer and for which the Executive may qualify,
nor shall anything herein limit or reduce such rights as the Executive may
have
under any agreements with the Company or any other Employer;
provided, however, the terms and conditions of compensation or benefits
specifically addressed in this Agreement (e.g., the right to severance pay
for a
termination of employment within two years following a Change in Control)
shall
be determined solely in accordance with the terms of this Agreement. The
terms
and conditions of compensation or benefits not specifically addressed in
this
Agreement shall be determined in accordance with the applicable documents
governing such compensation and benefits (e.g., the amount and timing of
payments with respect to performance units upon a Change in Control is governed
by the appropriate long term incentive plan, and the amount and timing of
benefits under the Xxxx-XxXxx Corporation Executive Deferred Compensation
Plan
(EDCP) is governed by the EDCP), and the amount and timing of benefits under
the
Company’s qualified and non-qualified defined benefit retirement programs are
governed by the applicable retirement plan.
(c) Each
entity included in the definition of "Employer" and any successors or assigns
shall be joint and severally liable with the Company under this
Agreement.
9. Not
an Employment Agreement; Effect On Other Rights.
(a) This
Agreement is not, and nothing herein shall be deemed to create, a contract
of
employment between the Executive and the Company or any other Employer. The
Company or any other Employer may terminate the employment of the Executive
by
the Company at any time, subject to the terms of this Agreement and/or any
employment agreement or arrangement between the Company or any other Employer
and the Executive that may then be in effect.
(b) This
Agreement supersedes all prior agreements covering change in control or any
other subject matter covered by this Agreement and Executive hereby represents
that the Executive has no other oral or written representations, understandings
or agreements with the Company, any other Employer, or any of their officers,
directors or representatives covering any such subject matter and agrees that
any and all prior written agreements relating to such subject matter shall
be
terminated effective as of the date of execution of this Agreement and shall
be
of no further force or effect. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any Company plan or program
of
the Company or any other Employer shall be payable in accordance with such
plan
or program, except as explicitly modified by this Agreement.
10. Successors;
Binding Agreement, Assignment.
(a) The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
of the Company, by agreement to expressly, absolutely and unconditionally assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken
place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a material breach of this
Agreement and shall entitle the Executive to terminate the Executive's
employment with the Company or such successor for Good Reason immediately prior
to or at any time after such succession. As used in this Agreement, "Company"
shall mean (i) the Company as hereinbefore defined, and (ii) any successor
to
all the stock of the Company or to all or substantially all of the Company's
business or assets which executes and delivers an agreement provided for in
this
Section 10(a) or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law, including any parent or subsidiary of
such a successor.
(b) This
Agreement shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Executive should die while any
amount would be payable to the Executive hereunder if the Executive had
continued to live, all such amounts, unless otherwise provided herein, shall
be
paid in accordance with the terms of this Agreement to the Executive's estate
or
designated beneficiary. Neither this Agreement nor any right arising hereunder
may be assigned or pledged by the Executive.
11. Notice.
For purpose of this Agreement, notices and all other communications provided
for
in this Agreement or contemplated hereby shall be in writing and shall be deemed
to have been duly given when personally delivered, delivered by a nationally
recognized overnight delivery service or when mailed United States certified
or
registered mail, return receipt requested, postage prepaid, and addressed,
in
the case of the Company, to the Company at:
Xxxx-XxXxx
Corporation
000
Xxxxxx X. Xxxx Xxxxxx
P.O.
Box 25861
Xxxxxxxx
Xxxx, Xxxxxxxx 00000
Attention:
Chief Executive Officer
(with
a copy to General Counsel)
and
in the case of the Executive, to the Executive at the address set forth on
the
execution page at the end hereof.
Either
party may designate a different address by giving notice of change of address
in
the manner provided above, except that notices of change of address shall be
effective only upon receipt.
12. Confidentiality.
(a)
The
Executive shall retain in confidence any and all confidential information
concerning the Company, each other Employer and their respective business which
is now known or hereafter becomes known to the Executive, except as otherwise
required by law and except information (i) ascertainable or obtained from public
information, (ii) received by the Executive at any time after the Executive's
employment by the Company and all other Employers shall have terminated, from
a
third party not employed by or otherwise affiliated with the Company or any
other Employer or (iii) which is or becomes known to the public by any means
other than a breach of this Section 12. Upon the Termination of employment,
the
Executive will not take or keep any proprietary or confidential information
or
documentation belonging to the Company.
(b) The
Executive acknowledges and agrees that the Company's and Employer’s remedies at
law for a breach or threatened breach of any of the provisions of this Section
12 would be inadequate and, in recognition of this fact, Executive agrees that,
in the event of such a breach or threatened breach, in addition to any remedies
at law, the Company, or any other Employer, without posting any bond, shall
be
entitled to cease making any payments or providing any benefit otherwise
required by this Agreement during the pendency of any dispute involving such
Section and to obtain equitable relief in the form of specific performance,
temporary restraining order, temporary or permanent injunction or any other
equitable remedy which may then be available. Upon the resolution of such
dispute, any payments or benefits required by this Agreement which were
suspended during the pendency of the dispute shall be paid or provided to the
Executive if it is determined that no breach of this Section 12
occurred.
This
paragraph 12 shall survive this Agreement.
13.
Release.
The Executive shall enter into a release, in the form attached hereto as Exhibit
A, or such other form as the Company and the Executive shall agree, as a
condition to providing any payments or benefits under this
Agreement.
14. Miscellaneous.
No provision of this Agreement may be amended, altered, modified, waived or
discharged unless such amendment, alteration, modification, waiver or discharge
is agreed to in writing signed by the Executive and such officer of the Company
as shall be specifically designated by the Committee or by the Board of
Directors of the Company. No waiver by either party, at any time, of any breach
by the other party of, or of compliance by the other party with, any condition
or provision of this Agreement to be performed or complied with by such other
party shall be deemed a waiver of any similar or dissimilar provision or
condition of this Agreement or any other breach of or failure to comply with
the
same condition or provision at the same time or at any prior or subsequent
time.
No agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.
15. Severability.
If any one or more of the provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability
of
the remaining provisions of this Agreement shall not be affected thereby. To
the
extent permitted by applicable law, each party hereto waives any provision
of
law which renders any provision of this Agreement invalid, illegal or
unenforceable in any respect.
16. Governing
Law; Venue.
The validity, interpretation, construction and performance of this Agreement
shall be governed exclusively by the laws of the State of Delaware
without giving effect to its conflict of laws rules. For purposes of
jurisdiction and venue, the Company and each Employer hereby consents to
jurisdiction and venue in any suit, action
or proceeding with respect to this Agreement in any court of competent
jurisdiction in the state in which Executive resides at the commencement of
such
suit, action or proceeding and waives any objection, challenge or dispute as
to
such jurisdiction or venue being proper.
17. Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be an original and all of which shall be deemed to constitute one and the same
instrument.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first above written.
|
XXXX-XXXXX
CORPORATION
By:
/s/ Xxxx X. Xxxxxxx
Xxxx
X. Xxxxxxx
Chairman
and Chief Executive Officer
|
|
|
/s/
Xxxxxx X. Xxxxxxxx
Xxxxxx
X. Xxxxxxxx
[address]
|
Exhibit
A
RELEASE
[__________]
(“Executive”), for and in consideration of the payments and benefits that
Executive shall receive under this Agreement, hereby executes the following
General Release (“Release”) and agrees as follows:
1. Effective
on the date all payments have been made by the Company to the Executive under
the Continuity Agreement, dated [Insert
Date],
between the Company and the Executive (the “Continuity Agreement”), Executive,
on behalf of Executive, Executive’s agents, assignees, attorneys, successors,
assigns, heirs and executors, agrees to, and Executive does hereby fully and
completely forever, release the Company and its affiliates, predecessors and
successors and all of their respective past and/or present officers, directors,
partners, members, managing members, managers, Executives, agents,
representatives, administrators, attorneys, insurers and fiduciaries in their
individual and/or representative capacities (hereinafter collectively referred
to as the “Releasees”), from any and all causes of action, suits, agreements,
promises, damages, disputes, controversies, contentions, differences, judgments,
claims, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, variances, trespasses, extents, executions
and demands of any kind whatsoever (each a “claim”), which Executive or
Executive’s heirs, executors, administrators, successors and assigns ever had,
now have or may have against the Releasees or any of them, in law, admiralty
or
equity, whether known or unknown to Executive, for, upon, or by reason of,
any
matter, action, omission, course or thing whatsoever occurring up to the date
this Release is signed by Executive, including, without limitation, in
connection with or in relationship to Executive’s employment or other service
relationship with the Company or its affiliates, the termination of any such
employment or service relationship and any applicable employment, compensatory
or equity arrangement with the Company or its respective affiliates (such
released claims, subject to the provisos in the next clause, are collectively
referred to herein as the “Released Claims”); provided
that such released claims shall not include (i) any claims to enforce
Executive’s rights under, or with respect to, the Continuity Agreement,
including with respect to accrued or vested benefits referenced in clauses
4(b)(v), 5(b), and/or 9(b) of the Continuity Agreement, (ii) any claims to
enforce Executive’s rights to any indemnification or contribution under the
Company’s charter or by-laws, by contract or by law, including without
limitation any rights to advancement of funds, or to any insurance whether
or
not obtained by the Company or (iii) any claims used as defenses to, or rights
of set off relating to, any actions against the Executive, Executive’s agents,
assignees, attorneys, successors, assigns, heirs and executors.
2. Notwithstanding
the generality of clause (1) above, the Released Claims include, without
limitation, (a) any and all claims under Title VII of the Civil Rights Act
of
1964, the Age Discrimination in Employment Act of 1967, the Civil Rights Act
of
1971, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Executive
Retirement Income Security Act of 1974, the Americans with Disabilities Act,
the
Family and Medical Leave Act of 1993, and any and all other federal, state
or
local laws, statutes, rules and regulations pertaining to employment or
otherwise, and (b) any claims for wrongful discharge, breach of contract, fraud,
misrepresentation or any compensation claims, or any other claims under any
statute, rule, regulation or under the common law, including compensatory
damages, punitive damages, attorney’s fees, costs, expenses and all claims for
any other type of damage or relief.
3. This
means that, by signing this Release, the Executive shall have waived any right
to which the Executive may have had to bring a lawsuit or make any claim against
the releasees based on any acts or omissions of the releasees up to the date
of
the signing of this Release.
4. Executive
represents that he has read carefully and fully understands the terms of this
Release, and that Executive has been advised to consult with an attorney and
have had the opportunity to consult with an attorney prior to signing this
Release. Executive acknowledges that he is executing this Release voluntarily
and knowingly and that he has not relied on any representations, promises or
agreements of any kind made to Executive in connection with Executive’s decision
to accept the terms of this Release, other than those set forth in this Release.
Executive acknowledges that Executive has been given at least twenty-one (21)
days to consider whether Executive wants to sign this Release and that the
Age
Discrimination in Employment Act gives Executive the right to revoke this
Release within seven (7) days after it is signed, and Executive understands
that
(1) if the Company makes any payments to Executive pursuant to the Continuity
Agreement prior to the expiration of such seven (7) day revocation period (the
“Revocation Period”), Executive shall promptly return the funds to the Company
if Executive revokes this Release prior to such expiration or (2) if the Company
deposits the funds necessary to make such payment to Executive into escrow
as
described in the Continuity Agreement, such funds will be released to Executive
upon the expiration of the Revocation Period without Executive having revoked
this Release. To the extent Executive has executed this Release within less
than
twenty-one (21) days after its delivery to Executive, Executive hereby
acknowledges that his decision to execute this Release prior to the expiration
of such twenty-one (21) day period was entirely voluntary.
XXXX-XXXXX
CORPORATION
________________________
_________________________________
Executive Title:
Name:
