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XXXXXXXX CORPORATION
EMPLOYMENT AGREEMENT
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This agreement ("Agreement") has been entered into this 8th day
of April, 1997, by and between Xxxxxxxx Corporation, a Missouri corporation
("Company"), and Xxxxxxx X. Xxxxxxx, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stockholders to
reinforce and encourage the continued attention and dedication of the
Executive to the Company as a member of the Company's management and to
assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility or occurrence of a Triggering Transaction (as
defined below) with respect to the Company or the Operating Line of Business
(as defined below). The Board desires to provide for the continued
employment of the Executive on terms competitive with those of other
corporations, and the Executive is willing to rededicate himself and continue
to serve the Company. Additionally, 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 potential or pending Triggering
Transaction and to encourage the Executive's full attention and dedication to
the Company currently and in the event of any potential or pending Triggering
Transaction, and to provide the Executive with compensation and benefits
arrangements upon any breach of this Agreement by the Company or upon a
termination of employment either immediately prior to or after a Triggering
Transaction which ensure that the compensation and benefits expectations of
the Executive will be satisfied. Therefore, in order to accomplish these
objectives, the Board has caused the Company to enter into this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following
words and phrases, whether or not capitalized, shall have the meanings
specified below, unless the context plainly requires a different meaning.
1.1(a) "ACCRUED COMPENSATION" has the meaning set forth in
Section 4.5 of this Agreement.
1.1(b) "ACCRUED OBLIGATIONS" has the meaning set forth in
Section 4.1(a) of this Agreement.
1.1(c) "ANNUAL BASE SALARY" has the meaning set forth in
Section 2.4(a) of this Agreement.
1.1(d) "BOARD" means the Board of Directors of the
Company.
1.1(e) "CAUSE" has the meaning set forth in Section 3.3 of
this Agreement.
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1.1(f) "CHANGE IN CONTROL" means:
(i) The acquisition by any individual, entity or
group, or a Person (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) of
ownership of 30% or more of either (a) the then
outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (b) the
combined voting power of the then outstanding
voting securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities"); or
(ii) Individuals who, as the date hereof,
constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of
the Board; provided, however, that any individual
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becoming a director subsequent to the date hereof
whose election, or nomination for election by the
Company's stockholders, was approved by a vote of
at least a majority of the directors then
comprising the Incumbent Board shall be considered
as though such individual were a member of the
Incumbent Board, but excluding, as a member of the
Incumbent Board, any such individual whose initial
assumption of office occurs as a result of either
an actual or threatened election contest (as such
terms are used in Rule l4a-11 of Regulation l4A
promulgated under the Exchange Act) or other actual
or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board;
or
(iii) Approval by the stockholders of the Company
of a reorganization, merger or consolidation, in
each case, unless, following such reorganization,
merger or consolidation, (a) more than 50% of,
respectively, the then outstanding shares of common
stock of the corporation resulting from such
reorganization, merger or consolidation and the
combined voting power of the then outstanding
voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all
or substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation in substantially the same proportions
as their ownership, immediately prior to such
reorganization, merger or consolidation, of the
Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be,
(b) no Person beneficially owns, directly or
indirectly, 30% or more of, respectively, the then
outstanding shares of common stock of the
corporation resulting from such reorganization,
merger or consolidation or the combined voting
power of the then outstanding voting securities of
such corporation, entitled to vote generally in the
election of directors and (c) at least a majority
of the members of the board of directors of the
corporation resulting from such reorganization,
merger or consolidation were members of the
Incumbent Board at the time of the execution of the
initial agreement providing for such
reorganization, merger or consolidation; or
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(iv) Approval by the stockholders of the Company
of (a) a complete liquidation or dissolution of the
Company or (b) the sale or other disposition of all
or substantially all of the assets of the Company,
other than to a corporation, with respect to which
following such sale or other disposition, (1) more
than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled to
vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all
or substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition
in substantially the same proportion as their
ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as
the case may be, (2) no Person beneficially owns,
directly or indirectly, 30% or more of,
respectively, the then outstanding shares of common
stock of such corporation and the combined voting
power of the then outstanding voting securities of
such corporation entitled to vote generally in the
election of directors and (3) at least a majority
of the members of the board of directors of such
corporation were members of the Incumbent Board at
the time of the execution of the initial agreement
or action of the Board providing for such sale or
other disposition of assets of the Company.
1.1(g) "COMPANY" has the meaning set forth in the first
paragraph of this Agreement and, with regard to successors, in
Section 6.2 of this Agreement.
1.1(h) "CODE" shall mean the Internal Revenue Code of
1986, as amended.
1.1(i) "CURRENT TARGET BONUS" has the meaning set forth in
Section 4.1(a) of this Agreement.
1.1(j) "DATE OF TERMINATION" has the meaning set forth in
Section 3.6 of this Agreement.
1.1(k) "DISABILITY" has the meaning set forth in Section
3.2 of this Agreement.
1.1(l) "DISABILITY EFFECTIVE DATE" has the meaning set
forth in Section 3.2 of this Agreement.
1.1(m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the stock of the
Operating Line of Business that is or becomes a
separate corporation, limited liability
corporation, partnership or other business entity,
the sale, exchange, transfer, distribution or other
disposition of the ownership, either beneficially
or of record or both, by the Company of more than
50% of either (a) the then outstanding shares of
common stock (or the equivalent equity interests)
of the Operating Line of Business, or (b) the
combined voting power of the then outstanding
voting
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securities of the Operating Line of Business
entitled to vote generally in the election of the
Board or the equivalent governing body of the
Operating Line of Business;
(ii) when used with reference to the merger or
consolidation of the Operating Line of Business
that is or becomes a separate corporation, limited
liability corporation, partnership or other
business entity, any such transaction that results
in the Company owning, either beneficially or of
record or both, less that 50% of either (a) the
then outstanding shares of common stock (or the
equivalent equity interests) of the Operating Line
of Business, or (b) the combined voting power of
the then outstanding voting securities of the
Operating Line of Business entitled to vote
generally in the election of the Board or the
equivalent governing body of the Operating Line of
Business; or
(iii) when used with reference to the assets of the
Operating Line of Business, the sale, exchange,
transfer, liquidation, distribution or other
disposition of assets of the Operating Line of
Business (a) having a fair market value (as
determined by the Incumbent Board) aggregating more
than 50% of the aggregate fair market value of all
of the assets of the Operating Line of Business as
of the Triggering Transaction Date, (b) accounting
for more than 50% of the aggregate book value (net
of depreciation and amortization) of all of the
assets of the Operating Line of Business, as would
be shown on a balance sheet for the Operating Line
of Business, prepared in accordance with generally
accepted accounting principles then in effect, as
of the Triggering Transaction Date, or (c)
accounting for more than 50% of the net income of
the Operating Line of Business, as would be shown
on an income statement, prepared in accordance with
generally accepted accounting principles then in
effect, for the 12 months ending on the last day of
the month immediately preceding the month in which
the Triggering Transaction Date occurs.
1.1(n) "EFFECTIVE DATE" means the date of this Agreement.
1.1(o) "EMPLOYMENT PERIOD" means the period beginning on
the Effective Date and ending on the later of (i) a date two
years after the Effective Date ("Ending Date") or (ii) the
same date as the Ending Date of any succeeding fiscal year
during which notice is given by either party (as described in
Section 1.1(aa) of this Agreement) of such party's intent not
to renew this Agreement.
1.1(p) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
1.1(q) "EXCISE TAX" has the meaning set forth in Section
4.2(f) of this Agreement.
1.1(r) "GOOD REASON" has the meaning set forth in Section
3.4 of this Agreement.
1.1(s) "GROSS-UP PAYMENT" has the meaning set forth in
Section 4.2(f) of this Agreement.
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1.1(t) "INCENTIVE BONUS" has the meaning set forth in
Section 2.4(b) of this Agreement.
1.1(u) "INCUMBENT BOARD" has the meaning set forth in
Section 1.1(f)(ii) of this Agreement.
1.1(v) "NOTICE OF TERMINATION" has the meaning set forth in
Section 3.5 of this Agreement.
1.1(w) "OPERATING LINE OF BUSINESS" means the following
line of business of the Company, whether operated as a
division or as a separate subsidiary: retail specialty stores,
which line of business operates a nationwide chain of
specialty retail stores primarily for a clientele of nurses
and other health care professionals.
1.1(x) "OTHER BENEFITS" has the meaning set forth in
Section 4.1(c) of this Agreement.
1.1(y) "OUTSTANDING COMPANY COMMON STOCK" has the meaning
set forth in Section 1.1(f)(i) of this Agreement.
1.1(z) "OUTSTANDING COMPANY VOTING SECURITIES" has the
meaning set forth in Section 1.1(f)(i) of this Agreement.
1.1(aa) "PAYMENT" has the meaning set forth in Section
4.2(f) of this Agreement.
1.1(bb) "PERSON" means any "person" within the meaning of
Sections 13(d) and 14(d) of the Exchange Act.
1.1(cc) "TERM" means the period that begins on the Effective
Date and ends on the earlier of: (i) the Date of Termination
as defined in Section 3.6 of this Agreement, or (ii) the close
of business on the later of the Ending Date of the initial
term or any renewal term as set forth in Section 2.1 of this
Agreement.
1.1(dd) "TRIGGERING TRANSACTION" means (i) a Change in
Control of the Company or (ii) a Disposition of a Major Part
of the Operating Line of Business.
1.1(ee) "TRIGGERING TRANSACTION DATE" shall mean the date of
the Triggering Transaction.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this
Agreement used in the masculine gender include the feminine gender, words in
the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are included solely
for ease of reference and do not bear on the interpretation of the text.
Accordingly, as used in this Agreement, the terms "Article" and "Section"
mean the text that accompanies the specified Article or Section of the
Agreement.
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1.4 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri, without
reference to its conflict of law principles.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in the
employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement. This Agreement will
automatically renew for annual one-year periods unless either party gives the
other written notice, within the Ending Date of the initial term or any
succeeding term, of such party's intent not to renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive
shall serve as President of the Operating Line of Business, subject
to the reasonable direction of the Board and the Chief Executive
Officer. The Executive shall have such authority and shall perform
such duties as are substantially similar to the authority and
duties assigned to him on the Effective Date, subject to the
control exercised by the Board and the Chief Executive Officer from
time to time.
2.2(b) Throughout the Term of this Agreement (but excluding
any periods of vacation and sick leave to which the Executive is
entitled), the Executive shall devote reasonable attention and time
during normal business hours to the business and affairs of the
Company and shall use his reasonable best efforts to perform
faithfully and efficiently such responsibilities as are assigned to
him under or in accordance with this Agreement; provided that, it
shall not be a violation of this paragraph for the Executive to
(i) serve on corporate, civic or charitable boards or committees,
(ii) deliver lectures or fulfill speaking engagements or
(iii) 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 or violate the Company's conflict of interest policy
as in effect immediately prior to the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement,
the Executive's services shall be performed at the location where the
Executive was employed immediately prior to the Effective Date, or any office
of the Company or any of its subsidiaries to which Executive shall be
transferred.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first calendar year
within the Term of this Agreement, the Executive shall receive an
annual base salary ("Annual Base Salary") of One hundred five
thousand dollars ($105,000), which shall be paid in equal or
substantially equal semi-monthly installments. During the Term of
this Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and shall be increased at the
discretion of the Board or the Chief Executive Officer but shall
not be reduced.
2.4(b) INCENTIVE BONUSES. In addition to Annual Base
Salary, the Executive shall be awarded the opportunity to earn an
incentive bonus on an annual basis ("Incentive
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Bonus") under any incentive compensation plan which are generally
available to other similarly situated executives of the Company.
During the Term of this Agreement, the annual target Incentive
Bonus which the Executive will have the opportunity to earn shall
be reviewed at least annually and be increased at the discretion of
the Board or the Chief Executive Officer.
2.4(c) WELFARE BENEFIT PLANS. Throughout the Term of this
Agreement (and thereafter), 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
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs)
to the extent generally available to other similarly situated
executives of the Company.
2.4(d) EXPENSES. Throughout the Term of this Agreement,
the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the policies, practices and procedures generally applicable to
other similarly situated executives of the Company.
2.4(e) OFFICE AND SUPPORT STAFF. Throughout the Term of
this Agreement, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to personal secretarial and other assistance, at least equal to
those generally provided to other similarly situated executives of
the Company.
2.4(f) VACATION. Throughout the Term of this Agreement,
the Executive shall be entitled to paid vacation in accordance with
the plans, policies, programs and practices generally provided with
respect to other similarly situated executives of the Company.
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. 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), the Company may
give to the Executive written notice in accordance with Section 7.2 of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the
thirtieth (30th) day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the thirty (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" shall mean that the Executive has been unable to perform the
services required of the Executive hereunder on a full-time basis for a
period of one hundred eighty (180) consecutive business days by reason of a
physical and/or mental condition. "Disability" shall be deemed to exist when
certified by a physician selected by the Company and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably). The Executive will submit to
such medical or psychiatric examinations and tests as such physician deems
necessary to make any such Disability determination.
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3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued
failure to substantially perform his duties with the Company (other than as
a result of incapacity due to physical or mental condition), after a written
demand for substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which the Executive has
not substantially performed his duties; (ii) the Executive's commission of an
act constituting a criminal offense involving moral turpitude, dishonesty or
breach of trust; or (iii) the Executive's material breach of any provision of
this Agreement. For purposes of this Section, no act, or failure to act on
the Executive's part, shall be considered "willful" unless done, or omitted
to be done, without good faith and without reasonable belief that the act or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for
Cause unless and until (i) he receives a Notice of Termination from the
Company, (ii) he is given the opportunity, with counsel, to be heard before
the Board, and (iii) the Board finds, in its good faith opinion, the
Executive was guilty of the conduct set forth in the Notice of Termination.
3.4 GOOD REASON. Pursuant to Section 4.2, the Executive may
terminate his employment with the Company for "Good Reason," which shall
mean:
3.4(a) 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
2.2(a) or any other action by the Company which results in a
material diminution in such position, authority, duties or
responsibilities, excluding for this purpose any action not taken
in bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
3.4(b) (i) the failure by the Company to continue in effect
any benefit or compensation plan, stock ownership plan, life
insurance plan, health and accident plan or disability plan to
which the Executive is entitled as specified in Section 2.4, (ii)
the taking of any action by the Company which would adversely
affect the Executive's participation in, or materially reduce the
Executive's benefits under, any plans described in Section 2.4, or
(iii) the failure by the Company to provide the Executive with paid
vacation to which the Executive is entitled as described in Section
2.4(f);
3.4(c) a material breach by the Company of any provision of
this Agreement;
3.4(d) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
3.4(e) within a period ending at the close of business on
the date two (2) years after the Triggering Transaction Date of any
Change in Control, if the Company has failed to comply with and
satisfy Section 6.2 on or after such Triggering Transaction Date.
For purposes of this Section, any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the Company for
Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.2. For purposes of this Agreement, a "Notice of Termination"
means
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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 in Section 3.6 hereof) is
other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen (15) 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.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the Date of Termination shall be the date of
receipt of the Notice of Termination or any later date specified therein, as
the case may be, (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, or
(iii) 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 of
receipt of the Notice of Termination; provided that if within thirty (30)
days after any Notice of Termination is given, the party receiving such
Notice of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the date on
which the dispute is finally determined, either by mutual written agreement
of the parties, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE NOT IN CONNECTION WITH A TRIGGERING
TRANSACTION. If, prior to a Triggering Transaction during the Employment
Period (except in the event that one of the following terminations of
employment occurs within the six-month period prior to the earlier of (a) a
Triggering Transaction or (b) the execution of a definitive agreement or
contract that eventually results in a Triggering Transaction, which shall
result in the payment of severance benefits set forth in Section 4.2 of this
Agreement), the Company shall terminate the Executive's employment without
Cause, the Executive shall be entitled to the payment of the benefits
provided below as of the Date of Termination:
4.1(a) Accrued Obligations. Within thirty (30) days after
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the Date of Termination, the Company shall pay to the Executive the
sum of (1) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, and (2) any accrued
vacation pay; in each case to the extent not previously paid (the
"Accrued Obligations").
In addition, on the date that Incentive Bonuses are paid to
other peer executives for the year in which the Executive's
employment is terminated, the Executive will be paid an amount
equal to the product of the Current Target Bonus multiplied by a
fraction, the numerator of which is the number of days during the
fiscal year for which the Incentive Bonus is paid prior to the Date
of Termination and the denominator of which is 365. For purposes
of this Agreement, the term "Current Target Bonus" means the
Incentive Bonus that would have been paid to the Executive for the
fiscal year in which the termination of employment occurred, if the
Executive's employment had not been so terminated and the Executive
had earned 100% of the Incentive Bonus that he could have earned
for such year.
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4.1(b) Severance Payment. If the Date of Termination
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occurs within two years after the date hereof, within thirty (30)
days after the Date of Termination, the Company shall pay to the
Executive as severance pay in a lump sum, in cash, an amount equal
to (i) one-twelfth the Executive's then-current Annual Base Salary
times (ii) twenty-four (24).
4.1(c) Other Benefits. To the extent not previously paid
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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 for 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 as those provided generally to
other peer executives and their families ("Other Benefits").
4.2 BENEFITS UPON TERMINATION IN CONNECTION WITH A TRIGGERING
TRANSACTION. If (a) a Triggering Transaction occurs during the Employment
Period and within two years after the Triggering Transaction Date (i) the
Company shall terminate the Executive's employment without Cause, or (ii) the
Executive shall terminate employment with the Company for Good Reason, or,
--
alternatively, (b) if one of the above-described terminations of employment
occurs within the six-month period prior to the earlier of (i) a Triggering
Transaction or (ii) the execution of a definitive agreement or contract that
eventually results in a Triggering Transaction, then the Executive shall
become entitled to the payment of the benefits as provided below as of either
(y) the Date of Termination, in the case where the sequence of the requisite
events is as set forth in subsection (a) above or (z) the Triggering
Transaction Date, in the case where the sequence of the requisite events
occurred as set forth in subsection (b) above (the relevant date for purposes
of entitlement to the benefits as set forth in this Section 4.2 is
hereinafter referred to as the "Entitlement Date"):
4.2(a) Accrued Obligations. Within thirty (30) days after
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the Entitlement Date, the Company shall pay to the Executive the
Accrued Obligations.
In addition, on the date that Incentive Bonuses are paid to
other peer executives for the year in which the Executive's
employment is terminated, the Executive will be paid an amount
equal to the product of the Current Target Bonus multiplied by a
fraction, the numerator of which is the number of days during the
fiscal year for which the Incentive Bonus is paid prior to the Date
of Termination and the denominator of which is 365.
4.2(b) Severance Amount. Within thirty (30) days after the
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Entitlement Date, the Company shall pay to the Executive as
severance pay in a lump sum in cash, an amount equal to two times
an amount equal to his then-current Annual Base Salary and Current
Target Bonus. In the event such severance amount is payable
pursuant to this Section on account of a Triggering Transaction,
and the Executive is entitled to a benefit under Article IV of the
Xxxxxxxx Corporation Management Retention and Incentive Plan (the
"Management Retention Plan") on account of a Change in Control (as
defined in the Management Retention Plan), the Executive shall be
entitled to the larger of the amounts computed pursuant to this
Section and the amounts computed pursuant to the Management
Retention Plan without regard to this Section. Such benefit shall
be in lieu of any other benefit payable pursuant to the Management
Retention Plan.
4.2(c) Stock Options. To the extent not otherwise provided
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for under the terms of the Company's stock option plans or the
Executive's stock option agreements, all stock
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options held by the Executive that have not expired in accordance
with their respective terms shall vest and become fully exercisable
as of the Entitlement Date.
4.2(d) Stock Bonus and Incentive Plan Shares. To the extent
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not otherwise provided for under the terms of the Company's Stock
Bonus and Incentive Plan, all "Matching Shares" (as defined in such
plan) held by or for the benefit of the Executive that are unvested
and restricted at the Date of Termination shall vest and become
unrestricted as of the Entitlement Date and all "Elected Shares"
(as defined in such plan) held by or for the benefit of the
Executive that are restricted at the Date of Termination shall
become unrestricted as of the Entitlement Date.
4.2(e) Other Benefits. To the extent not previously paid
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or provided, the Company shall timely pay or provide to the
Executive and/or the Executive's family any Other Benefits required
to be paid or provided for 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 as those provided generally to
other peer executives and their families.
Any provision in any plan or program of the Company in which
Executive is a participant that precludes Executive from competing
with the Company, or denies Executive entitlement to a benefit in
the event Executive does compete with the Company, shall be null
and void.
4.2(f) Excess Parachute Payment. Anything in this Agreement
------------------------
to the contrary notwithstanding, in the event that it shall be
determined that any payment or distribution by the Company to or
for the benefit of Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise but determined without regard to any
additional payments required under this Section (a "Payment") would
be subject to the excise tax imposed by Code Section 4999 (or any
successor provision) or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes
(and any interest or penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment on an after-tax basis equal to
the Excise Tax imposed upon the Payment.
The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the
payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than ten
business days after the Executive is informed in writing of such
claim by the Internal Revenue Service and the notification shall
apprise the Company of the nature of the claim and the date on
which such claim is required to be paid. The Executive shall not
pay such claim prior to the expiration of a 30-day period following
the date on which the Executive has given such notification to the
Company (or such shorter period ending on the date that any payment
of taxes with respect to such claim is required). If the Company
notifies the Executive in writing prior to the expiration of such
period that it desires to contest such
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claim, the Executive shall cooperate with the Company in so
contesting; provided, however, that the Company shall bear and pay
-----------------
all costs and expenses (including additional interest and
penalties) incurred in connection with such contest, on an
after-tax basis to the Executive.
4.3 DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period (either prior or
subsequent to a Triggering Transaction), this Agreement shall terminate
without further obligations to the Executive's legal representatives under
this Agreement, other than for (i) payment of Accrued Obligations (as defined
in Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within thirty (30) days of
the Date of Termination) and (ii) the timely payment or provision of Other
Benefits (as defined in Section 4.1(c)), including death benefits pursuant to
the terms of any plan, policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period (either
prior or subsequent to a Triggering Transaction), this Agreement shall
terminate without further obligations to the Executive, other than for
(i) payment of Accrued Obligations (as defined in Section 4.1(a)) (which
shall be paid to the Executive in a lump sum in cash within thirty (30) days
of the Date of Termination) and (ii) the timely payment or provision of Other
Benefits (as defined in Section 4.1(c)) including Disability benefits
pursuant to the terms of any plan, policy or arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If the
Executive's employment shall be terminated for Cause during the Employment
Period (either prior or subsequent to a Triggering Transaction), this
Agreement shall terminate without further obligations to the Executive other
than the obligation to pay to the Executive his Accrued Compensation (as
defined in this Section). If the Executive terminates employment with the
Company during the Employment Period (excluding a termination for Good
Reason), this Agreement shall terminate without further obligations to the
Executive, other than for the payment of Accrued Compensation (as defined in
this Section) and the timely payment or provision of Other Benefits (as
defined in Section 4.1(c)). In such case, all Accrued Compensation shall be
paid to the Executive in a lump sum in cash within thirty (30) days of the
Date of Termination.
For the purpose of this Section, the term "Accrued Compensation"
means the sum of (i) the Executive's Annual Base Salary through the Date of
Termination to the extent not previously paid, (ii) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon), and (iii) any accrued vacation pay in each case to the
extent not previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS; SUPERSESSION OF CERTAIN BENEFITS.
Except as provided in this Section 4.6, nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
plan, program, policy or practice provided by the Company and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any contract or agreement with
the Company, except for the elimination of penalties for competing as
provided in Section 4.2(e). Amounts which are vested benefits of which the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of, or any contract or agreement with, the Company at or
subsequent to the Date of Termination, shall be payable in accordance with
such plan, policy, practice or program or contract or agreement except as
explicitly modified by this Agreement.
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4.7 FULL SETTLEMENT. 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
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 regarding the amount of any payment pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal
rate provided for in Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. 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 4.1
or 4.2 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 amounts pursuant to this Section 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.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period beginning on the
date the Term of this Agreement expires and ending one (1) year
thereafter, the Executive shall not, without prior written approval
of the Board, become an officer, employee, agent, partner or
director of any business enterprise in substantial direct
competition (as defined in Section 5.1(b)) with the Company;
provided that, if the Executive is terminated by the Company
without Cause or if the Executive terminates his employment for
Good Reason, then he will not be subject to the restrictions of
this Section.
5.1(b) For purposes of Section 5.1, a business enterprise
with which the Executive becomes associated as an officer,
employee, agent, partner or director shall be considered in
substantial direct competition, if such entity competes with the
Operating Line of Business and is within the Company's market area
as of the date that the Employment Period expires.
5.1(c) The above constraint shall not prevent the Executive
from making passive investments, not to exceed five percent (5%),
in any enterprise.
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5.2 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
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 constitute a basis for deferring or
withholding any amounts otherwise payable to the Executive under this
Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the
Executive and, without the prior written consent of the Company, the rights
(but not the obligations) 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.
6.2 SUCCESSORS OF COMPANY. 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. Failure of the Company to obtain
such agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Executive to terminate the
Agreement at his option on or after the Triggering Transaction Date for Good
Reason. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
SECTION 7: MISCELLANEOUS.
7.1 OTHER AGREEMENTS. The Board may, from time to time in the
future, provide other incentive programs and bonus arrangements to the
Executive with respect to the occurrence of a Triggering Event that will be
in addition to the benefits required to be paid in the designated
circumstances in connection with the occurrence of a Triggering Transaction.
Such additional incentive programs and/or bonus arrangements will affect or
abrogate the benefits to be paid under this Agreement only in the manner and
to the extent explicitly agreed to by the Executive in any such subsequent
program or arrangement.
7.2 NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the Chairman of the Board, or
to such other address as one party may have furnished to the other in writing
in accordance herewith, except that notice of change of address shall be
effective only upon receipt.
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Notice to Executive:
-------------------
Xxxxxxx X. Xxxxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Notice to Company:
-----------------
Xxxxxxxx Corporation
000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000-0000
7.3 VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
7.4 WITHHOLDING. 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.
7.5 WAIVER. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.4
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Xxxxxxx X. Xxxxxxx
XXXXXXXX CORPORATION
By /s/ X. X. Xxxxx
-------------------------------------
Name: X. X. Xxxxx
----------------------------------
Title: Chairman and President
---------------------------------
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