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Exhibit 10.2
Xxxxxx X. Xxxxxxx & Sons, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 0000-0000
November 23, 1999
PRIVATE AND CONFIDENTIAL
Mr. Xxxxx Xxxxxx
0 Xxxx Xxxxxx - Xxxx 00
Xxxxxxxx, XX 00000
Dear Xxxxx:
This letter will confirm our offer to you to join Seagram as Senior Vice
President - Tax of The Seagram Company Ltd., ("SCL") and of Xxxxxx X. Xxxxxxx &
Sons, Inc., ("Company") (collectively, "Seagram") and will set forth terms and
conditions of your employment. As agreed, you will commence employment on
January 4, 2000.
1. Position and Duties. As Senior Vice President-Tax, you will be
responsible, subject to the direction of the Chief Financial Officer of the
Company, to whom you will report, for developing and implementing SCL's and the
Company's tax planning and compliance policies. You will be hired as a Grade 64
executive and your principal office will be located in New York City. Except for
reasonable travel requirements associated with your position, you will be
performing your services hereunder in the New York City metropolitan area.
2. Base Salary. Your base salary ("Base Salary") will be payable at a
rate of $450,000 per year in accordance with the Company's payroll policies
applicable to its executives at your level.
3. Annual Bonus. You will be eligible to receive an annual bonus
award pursuant to the SCL Management Incentive Plan (the "MIP") for each fiscal
year of the Company ending during your employment hereunder. Your target
management incentive award will be 65% of your Base Salary (i.e.,
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$292,500), appropriately prorated based on the number of months you are employed
during the Company's fiscal year ending June 30, 2000.
4. Option Grant. (a) We have recommended for approval to our Human
Resources Committee a one-time grant, effective on your date of employment
hereunder, of 150,000 options pursuant to the SCL 1996 Stock Incentive Plan (
the "1996 Plan") at an exercise price equal to the fair market value of an SCL
common share on the date of grant (the "Special Award"). One-third of the
Special Award will vest and become exercisable immediately upon the effective
date of the grant; an additional one-third of the Special Award will vest and
become exercisable on January 1, 2001 and the final one-third of the Special
Award will vest and become exercisable on January 1, 2002. The Special Award
will expire on the day before the tenth anniversary of the grant, provided that
should your employment terminate before the Special Award expires, treatment of
the Special Award, including vesting, exercise and cancellation, will be in
accordance with the terms of the 1996 Plan; and provided further that for any
termination of your employment to qualify as a retirement for purposes of the
1996 Plan, the sum of your total years of service with Seagram and your age on
such date of termination must equal or exceed 65.
(b) You will also be eligible to participate in the 1996 Plan (or any
successor plans) on an annual basis and your initial target annual grant of
options will be 37,500 for grants issued in the year 2000. Options are generally
granted in February of each year at an exercise price equal to the fair market
value on the date of grant. These options are subject to a three-year vesting
schedule, with the first one-third vesting and becoming exercisable on the first
anniversary of the date of grant, the second one-third vesting and becoming
exercisable on the second anniversary of the date of grant, and the third
one-third vesting and becoming exercisable on the third anniversary of the date
of grant. These options expire on the day before the tenth anniversary of the
date of grant, provided that should your employment with the Company and SCL
terminate before any such option expires, treatment of such options, including
vesting, exercise and cancellation will be in accordance with the 1996 Plan (or
applicable successor plan); and provided further that for any termination of
your employment to qualify as a retirement for purposes of the 1996 Plan (or
applicable successor plan) the sum of your total years of service with Seagram
and your age on such date of termination must equal or exceed 65.
5. Additional Sign-On Inducements. (a) Subject to the terms and conditions
set forth hereinafter, you will receive a payment of $1,000,000 to replace part
of the unrealized gain on the unvested portion of stock options provided to you
by your previous employer, which options will be canceled by reason of your
leaving. This amount shall be payable in three equal installments, with the
first
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installment to be paid within 30 days after your date of employment hereunder,
the second installment to be paid on January 31, 2001 and the third such
installment to be paid on January 31, 2002. Should your employment with the
Company and SCL terminate before the payment dates described in this paragraph
for any reason other than for Cause (as defined herein) or your voluntary
termination without Good Reason (as defined herein) the then remaining
installments shall be paid to you in accordance with this Agreement, as if you
had remained employed.
(b) Provided that you commence employment with Seagram before the date
upon which your previous employer ordinarily pays bonuses to its senior
executives and you do not receive such bonus, you will receive a payment of
$225,000 to be paid within 30 days after your date of employment hereunder.
(c) You will be granted, effective as of your date of employment
hereunder, 10,000 restricted stock units. Each restricted stock unit represents
the right to receive, on the date such unit vests (unless the parties agree to
defer payment), one SCL common share. One-third of the total units shall vest on
each of the first, second and third anniversaries of the date of the grant. As
cash dividends are paid on SCL common shares, you will be treated, on the record
date of such dividends, as if you were a holder of 10,000 SCL common shares, or
the adjusted number if there is any change in the capital structure of SCL. As a
result, you will be credited with such hypothetical cash dividends, which
themselves will be converted into further restricted stock units based upon the
mean between the high and low trading prices of SCL common shares on the New
York Stock Exchange, as reported in the Wall Street Journal, on the dividend
payment date. If there is any change in the capital structure of SCL through
reorganization, recapitalization or otherwise, or if there is a dividend of SCL
common shares payable in equity securities of SCL or other property (other than
cash) or a stock split or combination of shares, then the number of restricted
stock units granted hereunder shall be appropriately adjusted, as determined by
SCL. In the event of a merger or consolidation of SCL with another company, you
shall be credited hereunder with the merger or consolidation consideration, as
if you were a holder of SCL common shares. Should your employment with the
Company or SCL terminate at any time prior to the full vesting of the restricted
stock units described herein other than for Cause, or your voluntary termination
without Good Reason, the restrictions with respect to all the units of the Award
shall be waived and the units will be deemed fully vested, and paid out on the
otherwise applicable dates, as if you had remained employed.
6. Pension (a) Upon your retirement from the Company and SCL, you will be
entitled to receive a pension in an amount equal to the greater of (i) the
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amount payable in accordance with the terms of the Company's pension, retirement
and similar plans then generally applicable to senior executives of the Company;
or (ii) an annual life annuity equal to the product of $30,000 multiplied by the
number of years (or portion thereof) of your continuous services with Seagram.
(b) The pension payments due you under paragraph 6(a) (ii) will commence
upon your retirement, but no earlier than your attainment of age 60, and will
not be reduced actuarially or otherwise, except to the extent that you elect to
receive a joint and survivor benefit with your spouse, and
(c) For purposes of determining the comparative value of the benefits
under 6 (a) (i) and 6 (a) (ii), and for determining the actuarial reduction in
the event you choose a joint and survivor benefit under 6 (b), the actuarial
factors and assumptions then in use under Seagram's qualified defined benefit
plan will apply.
7. Other Benefits. While you are employed hereunder you will be
eligible to participate in our Senior Executive Compensation and Benefits
Program which provides medical benefits, accident, life insurance and disability
salary continuation, flexible perquisites, matching contributions and related
benefits. In addition, the Company agrees that it will pay the lease payment on
your automobile, in the amount of $1,584.41 per month until the current lease is
terminated on June 30, 2000.
8. Severance. In the event your employment is terminated by Seagram
other than for death, Permanent Disability (as defined below) or Cause, or you
voluntarily resign for Good Reason, Seagram will, for a period of two and
one-half years following your termination of employment (a) continue to pay you
your Seagram annual Base Salary at the annual rate in effect on the date of your
termination, and (b) continue the medical, dental and life insurance aspects of
our Senior Executive Benefits Program. Should you request payment of your Base
Salary in a lump sum, the Company shall continue the medical, dental and life
insurance aspects of our Senior Executive Benefits Program for the three month
period following the month in which the lump sum payment is made to you.
For purposes of this paragraph, "Cause" will mean (i) your conviction of
a felony, (ii) any willful misconduct by you which is substantially
injurious to SCL, the Company, or their affiliates or (iii) your willful
and continuing refusal or failure to perform your duties and obligation
under this Agreement which is not corrected within 30 days following the
written notice from the Company, its affiliates or SCL to you specifying
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such refusal or failure. In no event shall your incompetence in the
performance of your duties hereunder or a bona fide disagreement over
corporate policy be deemed grounds for termination for Cause. In the case
of (i) or (ii) above, Cause shall include a conviction or misconduct that
occurs prior to your employment hereunder. In the event of a termination
for willful misconduct described in (ii) above, you will receive five
days advance notice of termination of employment.
"Good Reason" will mean any material breach by SCL or the Company of its
obligations to you under this Agreement including, without limitation,
(i) the refusal or failure of SCL or the Company to pay you the
compensation and/or benefits due under the Agreement, (ii) any diminution
(without your consent), other than an insignificant or incidental
diminution in your duties, authority, responsibilities or reporting
requirements (whether or not accompanied by a change in title), (iii) the
failure to appoint you to the position of Senior Vice President - Tax of
SCL and the Company, or (iv) relocation of your principal office outside
of the New York City metropolitan area, which is not corrected within 30
days following written notice from you to the Company specifying the
breach.
"Permanent Disability" will mean disability as defined in the Company's
Senior Executive Disability Salary Continuation Arrangement.
9. Legal Fees. The Company will reimburse you for all reasonable
fees and disbursements incurred by you should you prevail in connection with a
dispute over the enforcement of your rights under this Agreement.
10. Confidentiality. You will not, without the prior consent of the
Company, divulge confidential information regarding the Company, SCL their
officers and directors or their operations during your employment hereunder or
at any time thereafter
11. Withholding. The Company and SCL will be entitled to withhold from
any payment hereunder the amount of withholding tax required by law.
12. No Mitigation. You will not be required to mitigate any payments
due to you under this Agreement by seeking alternative employment, nor will any
payments from SCL or the Company be reduced by any amounts received in
connection with such alternative employment.
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13. Successors. This Agreement shall be binding upon a successor to
substantially all of the business of the Company and SCL whether by reason of a
transfer of stock or assets.
14. Governing Law. This Agreement will be construed, interpreted, and
governed in accordance with the laws of the State of New York, without reference
to rules relating to conflicts of law.
15. Counterparts. This Agreement may be signed in counterparts.
On behalf of the Company and myself, I am delighted to describe Seagram's
offer to you. I am confident that you will make significant contributions to the
success of Seagram while at the same time having the opportunity to accomplish
your personal and professional goals.
Should you have any questions, please do not hesitate to contact me.
Best regards,
/s/ Xxxxxx Xxxxxxxxx Xxxx
READ, ACCEPTED AND AGREED
On this 26th day of November, 1999
/s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
