EXHIBIT 10.26
AGREEMENT
AGREEMENT by and between VIVID TECHNOLOGIES, INC., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxx (the
"Executive"), dated as of the 4th day of June, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat, or occurrence of a Change of Control (as defined below) of
the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change
of Control which ensure that the compensation and benefits
expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall be
the first date during the "Change of Control Period" (as defined in
Section 1(b)) on which a Change of Control occurs. Anything in
this Agreement to the contrary notwithstanding, if the Executive's
employment with the Company is terminated or the Executive ceases
to be an officer of the Company prior to the date on which a Change
of Control occurs, and it is reasonably demonstrated that such
termination of employment (1) was at the request of a third party
who has taken steps reasonably calculated to effect the Change of
Control or (2) otherwise arose in connection with or anticipation
of the Change of Control, then for all purposes of this Agreement
the "Effective Date" shall mean the date immediately prior to the
date of such termination of employment, or cessation of officer
status.
(b) The "Change of Control Period" is the period commencing
on the date hereof and ending on the third anniversary of such
date; provided, however that commencing on the date one year after
the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof is hereinafter referred to
as the "Renewal Date"), the Change of Control Period shall be
automatically extended without any further action by the Company or
the Executive so as to terminate three years from such Renewal
Date; provided, however, that if the Company shall give notice in
writing to the Executive, at least 60 days prior to the Renewal
Date, stating that the Change of Control Period shall not be
extended, then the Change of Control Period shall expire three
years from the last effective Renewal Date.
2. Change of Control. For the purpose of this Agreement, a
"Change of Control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of the then outstanding shares of common
stock of the Company (the "Outstanding Company Common
Stock"); provided, however, that any acquisition by the
Company or its subsidiaries, or any employee benefit plan
(or related trust) of the Company or its subsidiaries of
20% or more of Outstanding Company Common Stock shall not
constitute a Change in Control; and provided, further,
that any acquisition by a corporation with respect to
which, following such acquisition, more than 50% of the
then outstanding shares of common stock of such
corporation, is then beneficially owned, directly or
indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners
of the Outstanding Company Common Stock immediately prior
to such acquisition in substantially the same proportion
as their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock,
shall not constitute a Change in Control; or
(b) Any transaction which results in the Continuing
Directors (as defined in the Certificate of Incorporation
of the Company) constituting less than a majority of the
Board of Directors of the Company; or
(c) Approval by the stockholders of the Company of
(i) a reorganization, merger or consolidation, in each
case, with respect to which all or substantially all of
the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock
immediately prior to such reorganization, merger or
consolidation do not, following such reorganization,
merger or consolidation, beneficially own, directly or
indirectly, more than 50% of the then outstanding shares
of common stock of the corporation resulting from such a
reorganization, merger or consolidation, (ii) a complete
liquidation or dissolution of the Company or (iii) the
sale or other disposition of all or substantially all of
the assets of the Company, excluding a sale or other
disposition of assets to a subsidiary of the Company.
Anything in this Agreement to the contrary notwithstanding, if
an event that would, but for this paragraph, constitute a Change of
Control results from or arises out of a purchase or other
acquisition of the Company, directly or indirectly, by a
corporation or other entity in which the Executive has a greater
than ten percent (10%) direct or indirect equity interest, such
event shall not constitute a Change of Control.
3. Employment Period. Subject to the terms and conditions
hereof, the Company hereby agrees to continue the Executive in its
employ, and the Executive hereby agrees to remain in the employ of
the Company, for the period commencing on the Effective Date and
ending on the last day of the thirty-sixth month following the
month in which the Effective Date occurs (the "Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
During the Employment Period, (A) the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is
entitled, the Executive agrees to devote his full business time to
the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive's reasonable best efforts
to perform faithfully and efficiently such responsibilities. During
the Employment Period it shall not be a violation of this Agreement
for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (C) manage
personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the
extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date, including, without
limitation, activities with respect to Vivid Technologies, Inc.,
shall not thereafter be deemed to interfere with the performance of
the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment
Period, the Executive shall receive an annual base salary ("Annual
Base Salary"), which shall be paid at a monthly rate, at least
equal to twelve times the highest monthly base salary paid or
payable to the Executive by the Company and its affiliated
companies in respect of the twelve-month period immediately
preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base
salary awarded in the ordinary course of business to other peer
executives of the Company and its affiliated companies. Any
increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to the Executive under this Agreement. Annual
Base Salary shall not be reduced after any such increase and the
term Annual Base Salary as utilized in this Agreement shall refer
to Annual Base Salary as so increased. As used in this Agreement,
the term "affiliated companies" includes any company controlled by,
controlling or under common control with the Company.
(iii) Annual Bonus. In addition to Annual Base
Salary, the Executive shall be awarded, for each fiscal year during
the Employment Period, an annual bonus (the "Annual Bonus") in cash
at least equal to the average annualized (for any fiscal year
consisting of less than twelve full months or with respect to which
the Executive has been employed by the Company for less than twelve
full months) bonus (the "Average Annual Bonus") paid or payable to
the Executive by the Company and its affiliated companies in
respect of the three fiscal years immediately preceding the fiscal
year in which the Effective Date occurs. Each such Annual Bonus
shall be paid no later than the end of the third month of the
fiscal year next following the fiscal year for which the Annual
Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus pursuant to deferral plans of the
Company.
(iv) Special Bonus. In addition to Annual Base Salary
and Annual Bonus payable as hereinabove provided, if the Executive
remains employed with the Company and/or its affiliated companies
through the first anniversary of the Effective Date, the Company
shall pay to the Executive a special bonus (the "Special Bonus") in
recognition of the Executive's services during the crucial one-year
transition period following the Change of Control in cash equal to
the sum of (A) the Executive's Annual Base Salary and (B) the
greater of (x) the Annual Bonus paid or payable (and annualized for
any fiscal year consisting of less than twelve full months or for
which the Executive has been employed for less than twelve full
months) to the Executive for the most recently completed fiscal
year during the Employment Period, if any, and (y) the Average
Annual Bonus (such greater amount hereafter referred to as the
"Highest Annual Bonus"). The Special Bonus shall be paid no later
than 30 days following the first anniversary of the Effective Date.
(v) Incentive, Savings and Retirement Plans. In
addition to Annual Base Salary and Annual Bonus payable as
hereinabove provided, the Executive shall be entitled to
participate during the Employment Period in all incentive, savings
and retirement plans, practices, policies and programs applicable
to other peer executives of the Company and its affiliated
companies, but in no event shall such plans practices, policies and
programs provide the Executive with incentive, savings and
retirement benefits opportunities, in each case, less favorable, in
the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time
during the one-year immediately preceding the Effective Date, or,
if more favorable to the Executive, those provided generally at any
time after the Effective Date to other peer executives of the
Company and its affiliated companies.
(vi) Welfare Benefit Plans. During the Employment
Period, the Executive and/or the Executive's family, as the case
may be, shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and
programs provided by the Company and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
and applicable to other peer executives of the Company and its
affiliated companies, but in no event shall such plans, practices,
policies and programs provide benefits which are less favorable, in
the aggregate, than the most favorable of such plans, practices,
policies and programs in effect at any time during the one-year
period immediately preceding the Effective Date, or, if more
favorable to the Executive, those provided generally at any time
after the Effective Date to other peer executives of the Company
and its affiliated companies.
(vii) Expenses. During the Employment Period, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive upon submission of
appropriate accountings in accordance with the most favorable
policies, practices and procedures of the Company and its
affiliated companies in effect at any time during the one-year
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to other peer executives of the Company and its
affiliated companies.
(viii) Fringe Benefits. During the Employment Period,
the Executive shall be entitled to fringe benefits in accordance
with the most favorable plans, practices, programs and policies of
the Company and its affiliated companies in effect at any time
during the one-year period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies.
(ix) Office and Support Staff. During the Employment
Period, the Executive shall be entitled to an office or offices of
a size and with furnishings and other appointments, and to
exclusive personal secretarial and other assistance, at least equal
to the most favorable of the foregoing provided to the Executive by
the Company and its affiliated companies at any time during the one-
year period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided at any time thereafter with
respect to other peer executives of the Company and its affiliated
companies.
(x) Vacation. During the Employment Period, the
Executive shall be entitled to paid vacation in accordance with the
most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect at any time
during the one-year period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other peer incentives of the Company and
its affiliated companies.
5. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition
of "Disability" set forth below), it may give to the Executive
written notice in accordance with Section 12(b) of this Agreement
of its intention to terminate the Executive's employment. In such
event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within
the 30 days after such receipt, the Executive shall not have
returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" means the absence of the
Executive from the Executive's duties with the Company on a full-
time basis for 180 consecutive business days as a result of
incapacity due to mental or physical illness which is determined to
be total and permanent by a physician selected by the Company or
its insurers and acceptable to the Executive or the Executive's
legal representative (such agreement as to acceptability not to be
withheld unreasonably).
(b) Cause. The Company may terminate the Executive's
employment during the Employment Period for "Cause". For purposes
of this Agreement, "Cause" means (i) an act or acts of personal
dishonesty taken by the Executive and intended to result in
substantial personal enrichment of the Executive at the expense of
the Company, (ii) repeated violations by the Executive of the
Executive's obligations under Section 4(a) of this Agreement (other
than as a result of incapacity due to physical or mental illness)
which are demonstrably willful and deliberate on the Executive's
part, which are committed in bad faith or without reasonable belief
that such violations are in the best interests of the Company and
which are not remedied in a reasonable period of time after receipt
of written notice from the Company or (iii) the conviction of the
Executive of a felony involving moral turpitude.
(c) Good Reason. The Executive's employment may be
terminated during the Employment Period by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as
contemplated by Section 4(a) of this Agreement, or any
other action by the Company which results in a diminution
in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any
of the provisions of Section 4(b) of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith and which is remedied
by the Company promptly after receipt of notice thereof
given by the Executive;
(iii) the Company's requiring the Executive to
be based at any office or location other than that
described in Section 4(a)(i)(B) hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and
satisfy Section 11(c) of this Agreement.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be
conclusive.
Anything in this Agreement to the contrary notwithstanding, a
termination by the Executive for any reason during the 90 day
period immediately following the first anniversary of the Effective
Date shall be deemed to be a termination for Good Reason for all
purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company
for Cause or by the Executive for Good Reason shall be communicated
by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of
this Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
fifteen days after the giving of such notice). The failure by the
Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company from
asserting such fact or circumstance in enforcing the Executive's or
the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" means the
date of receipt of the Notice of Termination or any later date
specified therein, as the case may be; provided however, that (i)
if the Executive's employment is terminated by the Company other
than for Cause, death or Disability, the Date of Termination shall
be the date on which the Company notifies the Executive of such
termination and (ii) if the Executive's employment is terminated by
reason of death or Disability, the Date of Termination shall be the
date of death of the Executive or the Disability Effective Date, as
the case may be.
6. Obligations of the Company upon Termination.
(a) Death. If the Executive's employment is terminated by
reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other than
for (i) payment of the sum of the following amounts: (A) the
Executive's Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (B) the product of (I) the Highest
Annual Bonus and (II) a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365, (C) the Special
Bonus, if due to the Executive pursuant to Section 4(b)(iii), to
the extent not theretofore paid, and (D) any compensation
previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued bonus amounts or
vacation pay, in each case, to the extent not yet paid by the
Company (the amounts described in subparagraphs (A), (B), (C) and
(D) are hereafter referred to as "Accrued Obligations" and shall be
paid to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination), (ii)
for the remainder of the Employment Period, or such longer period
as any plan, program, practice or policy may provide, the Company
shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided in
accordance with the applicable plans, programs practices and
policies described in Section 4(b)(v) of this Agreement as if the
Executive's employment had not been terminated in accordance with
the most favorable plans, practices, programs or policies of the
Company and its affiliated companies as in effect and applicable
generally to other peer executives and their families during the
one year period immediately preceding the Effective Date or, if
more favorable to the Executive, as in effect at any time
thereafter with respect to other peer executives of the Company and
its affiliated companies and their families (such continuation of
such benefits for the applicable period herein set forth shall be
hereinafter referred to as "Welfare Benefit Continuation") (for
purposes of determining eligibility of the Executive for retiree
benefits pursuant to such plans, practices, programs and policies,
the Executive shall be considered to have remained employed until
the end of the Employment Period and to have retired on the last
day of such period), and (iii) payment to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination of an amount equal to the sum of the
Executive's Annual Base Salary and the Highest Annual Bonus.
Subject to the provisions of Section 9 hereof, but, otherwise,
anything herein to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the
most favorable benefits provided by the Company and any of its
affiliated companies to surviving families of peer executives of
the Company and such affiliated companies under such plans,
programs, practices and policies relating to family death benefits,
if any, as in effect with respect to other peer executives and
their families at any time during the one year period immediately
preceding the Effective Date or, if more favorable to the Executive
and/or the Executive's family, as in effect on the date of the
Executive's death with respect to other peer executives of the
Company and its affiliated companies and their families.
(b) Disability. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further obligations
to the Executive, other than for (i) payment of the Accrued
Obligations (which shall be paid in a lump sum in cash within 30
days of the Date of Termination), (ii) the timely payment and
provision of the Welfare Benefit Continuation, and (iii) payment to
the Executive in a lump sum in cash within 30 days of the Date of
Termination of an amount equal to the sum of the Executive's Annual
Base Salary and the Highest Annual Bonus. In addition, the Company
shall transfer to the Executive the insurance policy written with
respect to the Executive under the Company's Group Term Life
Insurance Policy for Executive Officers and the right to the full
cash surrender value thereof. Subject to the provisions of Section
9 hereof, but, otherwise, anything herein to the contrary
notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits
at least equal to the most favorable of those provided by the
Company and its affiliated companies to disabled executives and/or
their families in accordance with such plans, programs, practices
and policies relating to disability, if any, as in effect with
respect to other peer executives and their families at any time
during the one year period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter with respect to other
peer executives of the Company and its affiliated companies and
their families.
(c) Cause, Other than for Good Reason. If the Executive's
employment shall be terminated by the Company for Cause or by the
Executive other than for Good Reason (and other than by reason of
his death or disability) during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive Annual
Base Salary through the Date of Termination, plus the amount of any
compensation previously deferred by the Executive and any accrued
bonus amounts or vacation pay, in each case, to the extent
theretofore unpaid. In such case, such amounts shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination. The Executive shall, in such event, also be entitled
to any benefits required by law that are not otherwise provided by
this Agreement.
(d) Good Reason; Other Than for Cause or Disability. If,
during the Employment Period, the Company shall terminate the
Executive's employment other than for Cause, death or Disability,
or if the Executive shall terminate employment under this Agreement
for Good Reason:
(i) the Company shall pay to the Executive in a
lump sum in cash within 30 days after the Date of
Termination the aggregate of the following amounts:
A. all Accrued Obligations; and
B. the amount (such amount shall be
hereinafter referred to as the "Severance Amount") equal
to one dollar ($1.00) less than the product of (I) three
(3) and (II) the Executive's "base amount" as defined in
Section 280G(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code").
(ii) the Company shall timely pay and provide the
Welfare Benefit Continuation, provided, however, that if
the Executive becomes reemployed with another employer
and is eligible to receive medical or other welfare
benefits under another employer provided plan, the
medical or other welfare benefits described herein shall
be secondary to those provided under such other plan
during such applicable period of eligibility; and
(iii) to the extent not theretofore paid or
provided, the Company shall timely pay or provide to the
Executive and/or the Executive's family any other amounts
or benefits required to be paid or provided or which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of
the Company and its affiliated companies as in effect and
applicable generally to other peer executives of the
Company and its affiliated companies and their families
(such other amounts and benefits shall be hereinafter
referred to as the "Other Benefits"); and
(iv) all unvested options or stock appreciation
rights which Executive then holds to acquire securities
from the Company shall be immediately and automatically
exercisable as of the Effective Date, and the Executive
shall have the right to exercise any such options or
stock appreciation rights for a period of one year after
the Date of Termination. Notwithstanding the foregoing,
until two years from the date of this Agreement, such
options and/or stock appreciation rights shall not be
accelerated if such acceleration would result in the
failure of a transaction which has been approved by the
Continuing Directors (as defined in the Company's
charter) and entered into by the Company to qualify as a
pooling for accounting purposes; and
(v) the Company shall transfer to the Executive the
insurance policy written with respect to the Executive
under the Company's Group Term Life Insurance Policy for
Executive Officers and the right to the full cash
surrender value thereof.
7. Non-exclusivity of Rights. Except as provided in Section
6, nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any benefit, bonus, incentive
or other plans, programs, policies or practices, provided by the
Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise
affect such rights as the Executive may have under any other
agreements with the Company or any of its affiliated companies.
Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice or
program of the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program except as
explicitly modified by this Agreement.
8. Full Settlement. (a) The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-
off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement and, except as provided in Section 6(d)(ii), such
amounts shall not be reduced whether or not the Executive obtains
other employment. The Company agrees to pay promptly as incurred,
to the full extent permitted by law, all legal fees and expenses
which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive
or others of the validity or enforceability of, or liability under,
any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive
about the amount of any payment pursuant to this Agreement, unless
a court of competent jurisdiction determines that the Executive
made such effort in bad faith), plus in each case interest at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Internal Revenue Code of 1986, as amended (the "Code").
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the Executive's
employment by the Company, whether such termination was for Cause,
or (ii) in the event of any termination of employment by the
Executive, whether Good Reason existed, then, unless and until
there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that
the determination by the Executive of the existence of Good Reason
was not made in good faith, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or the Executive's
family or other beneficiaries, as the case may be, that the Company
would be required to pay or provide pursuant to Section 6(d) as
though such termination were by the Company without Cause, or by
the Executive with Good Reason; provided, however, that the Company
shall not be required to pay any disputed amount pursuant to this
paragraph except upon receipt of an undertaking by or on behalf of
the Executive to repay all such amounts to which the Executive is
ultimately adjudged by such court not to be entitled.
9. Certain Reduction in Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company 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 (a "Payment"),
would be nondeductible by the Company for Federal income tax
purposes because of Section 280G of the Code or would subject the
Executive to the excise tax imposed by Section 4999 of the Code,
then the aggregate present value of amounts payable or
distributable to or for the benefit of the Executive pursuant to
this Agreement (such payments or distributions pursuant to this
Agreement are hereinafter referred to as "Agreement Payments")
shall be reduced (but not below zero) to the Reduced Amount. The
"Reduced Amount" shall be one dollar less than an amount expressed
in present value which maximizes the aggregate present value of
Agreement Payments but which does not result in any of the amount
paid to the Executive being not deductible by reason of Section
280G of the Code or subject to the excise tax imposed by Section
4999 of the Code. For purposes of this Section 9, present value
shall be determined in accordance with Section 280G(d)(4) of the
Code.
(b) All determinations required to be made under this Section
9 shall be made by Xxxxxx Xxxxxxxx LLP (or its successor) unless
such firm shall be the accounting firm of the individual, entity or
group effecting the Change of Control or any affiliate of the
Company at the Date of Termination, in which case such
determinations shall be made by an accounting firm of national
standing agreed to by the Company and the Executive, or, if the
Company does not so agree within 10 days of the Date of
Termination, such an accounting firm shall be selected by the
Executive (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive
within 15 business days of the date such firm is selected or such
earlier time as is requested by the Company and an opinion to the
Executive that he has substantial authority not to report any
Excise Tax on his Federal income tax return with respect to any
Agreement Payments. Any such determination by the Accounting Firm
shall be binding upon the Company and the Executive. Within five
business days of the determination by the Accounting Firm as to the
Reduced Amount, the Company shall pay to or distribute to or for
the benefit of the Executive such amounts as are then due to the
Executive under this Agreement.
(c) As a result of the uncertainty in the application of
Section 280G of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Agreement
Payments will have been made by the Company which should not have
been made ("Overpayment") or that additional Agreement Payments
which will not have been made by the Company could have been made
("Underpayment"), in each case, consistent with the calculations
required to be made hereunder. In the event that the Accounting
Firm, based upon the assertion of a deficiency by the Internal
Revenue Service against the Executive which the Accounting Firm
believes has a high probability of success determines that an
Overpayment has been made, any such Overpayment paid or distributed
by the Company to or for the benefit of the Executive shall be
treated for all purposes as a loan ab initio to the Executive which
the Executive shall repay to the Company together with interest at
the applicable Federal rate provided for in Section 7872(f)(2) of
the Code. In the event that the Accounting Firm, based upon
controlling precedent or other substantial authority, determines
that an Underpayment has occurred, any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive
together with interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code.
10. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company
or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other
than by acts by the Executive or representatives of the Executive
in violation of this Agreement). After termination of the
Executive's employment with the Company, the Executive shall not,
without the prior written consent of the Company or as may
otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10 constitute
a basis for deferring or withholding any amounts otherwise payable
to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the
Executive and without the prior written consent of the Company
shall not be assignable by the Executive otherwise than by will or
the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of the Company
to assume expressly 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. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise. In addition, the Executive shall be entitled, upon
exercise of any outstanding stock options or stock appreciation
rights of the Company, to receive in lieu of shares of the
Company's stock, shares of such stock or other securities of such
successor as the holders of shares of the Company's stock received
pursuant to the terms of the merger, consolidation or sale.
12. Miscellaneous. (a) This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Massachusetts, without reference to principles of conflict of laws.
The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications hereunder shall be
in writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Xxxxxxx X. Xxxxx
00 Xxx Xxxx Xxxx
Xxxxxxx, XX 00000
If to the Company:
Vivid Technologies, Inc.
00X Xxxxxxxx Xxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: S. Xxxxx Xxxxxxxxxx
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notices and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under
this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof shall not be deemed to
be a waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire understanding of the
Company and the Executive with respect to the subject matter hereof
and by entering into this Agreement the Executive waives all rights
he may have under the Company's separation policy, provided that if
the Company's separation policy would provide greater benefits to
the Executive than this Agreement, than the Executive may elect to
receive benefits under the Company's separation policy in lieu of
the benefits provided hereunder.
(g) The Executive and the Company acknowledge that, except as
may otherwise be provided under any other written agreement between
the Executive and the Company, prior to the Effective Date, the
employment of the Executive by the Company is "at will" and may be
terminated by either the Executive or the Company at any time.
Moreover, if prior to the Effective Date, (i) the Executive's
employment with the Company terminates, or (ii) the Board
determines by majority vote that the Executive shall cease to be an
officer of the Company, then the Executive shall have no further
rights under this Agreement, unless, in the case of (ii), the Board
otherwise determines that this Agreement shall remain in effect.
Notwithstanding anything contained herein, if, during the
Employment Period, the Executive shall terminate employment with
the Company other than for Good Reason, the Executive shall have no
liability to the Company.
IN WITNESS WHEREOF, the Executive has hereunto set his hand
and, pursuant to the authorization from its Board of Directors, the
Company has caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.
VIVID TECHNOLOGIES, INC.
By: /s/ S. Xxxxx Xxxxxxxxxx
Name:S. Xxxxx Xxxxxxxxxx
Title: Chief Executive Officer
EXECUTIVE
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
