EX-10.5
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is made as of the 13th day of October 1997 by and
between X.X. XXXXXXXXX & COMPANY, INC., a Delaware corporation (the
"Corporation"), and Xxxxxx X. Xxxxxxx (the "Executive").
W I T N E S S E T H :
The Corporation wishes to continue to employ Executive and Executives
wishes to continue in the employ of the Corporation on the terms and conditions
contained in this Agreement.
NOW THEREFORE, in consideration of the facts, mutual promises and covenants
contained herein and intending to be legally bound hereby, Corporation and
Executive agree as follows:
1. Position and Responsibilities.
1.1. The Executive shall serve in an executive capacity as Senior Vice
President and General Counsel of the Corporation. The Executive shall perform
such functions and undertake such responsibilities as are customarily associated
with such capacity. The Executive shall hold such directorships and executive
officerships in the Corporation and any subsidiary to which, from time to time,
he may be elected or appointed during the term of this Agreement.
1.2. The Executive shall devote his full time and best efforts to the
business and affairs of the Corporation and to the promotion of its interests.
1.3. The principal executive offices of the Corporation shall be
maintained in Philadelphia, Pennsylvania and the Executive shall not be required
to relocate outside Philadelphia, Pennsylvania, without his prior consent.
2. Term of Employment.
2.1. The term of employment shall be one (1) year, commencing with the
date hereof, unless sooner terminated as provided in this Agreement. The initial
term of employment and any extension thereof is herein referred to as the
"Term."
2.2. Notwithstanding the provisions of Section 2.1 hereof, the
Corporation shall have the right, on written notice to the Executive, to
terminate the Executive's employment for Cause, such termination to be effective
as of the date on which notice is given or as of such later date otherwise
specified in the notice.
2.3. For purposes of this Agreement, the term "Cause" shall mean any of
the following actions by the Executive: (a) failure to comply with any of the
material terms of this Agreement, which shall not be cured within 30 days after
written notice; (b) engagement in gross misconduct injurious to the Corporation
which shall not be cured within 30 days after written notice; (c) knowing and
willful neglect or refusal to attend to the material duties reasonably assigned
to him by the Board of Directors of the Corporation, which shall not be cured
within 30 days after written notice; (d) intentional misappropriation of
property of the Corporation to the Executive's own use; (e) the commission by
the Executive of an act of embezzlement; (f) Executive's conviction for a felony
or (g) Executive's engaging in any activity which would constitute a material
conflict of interest with the Corporation, which shall not be cured within 30
days after written notice. If the provisions contained in subsections (a),(b),
(c) or (g) above cannot be cured within 30 days due to the nature of the breach,
the cure period shall then be extended for a reasonable period of time;
provided, however, the Executive undertakes and continues in good faith to cure
the same.
2.4. No later than three (3) months prior to the end of the Term, the
Corporation and the Executive shall meet to discuss the terms and conditions of
an extension of the Term. If the Term of this Agreement shall not be extended,
at the end of the Term the Corporation shall pay as severance pay to Executive
his salary at the rate in effect as of the termination for a period of six
months after the termination in accordance with the Corporation's normal payroll
practices;
2.5. If the Executive's employment with the Corporation shall be
terminated (a) by the Corporation other than pursuant to Sections 2.2, 4.1 or
4.2 hereof or (b) by the Executive for Good Reason (as defined herein), then the
Corporation shall continue to provide or pay to the Executive a period of time
equal to the period for which Executive is entitled to severence pursuant to
Section 2.4 above or for the balance of the Term of this Agreement, whichever is
longer, the salary, bonus and benefits received by the Executive prior to such
termination. The Executive shall have the right for a period of 30 days after
the occurrence of a Good Reason event to terminate this Agreement for Good
Reason.
2.6. For purposes of this Agreement, the term "Good Reason" shall mean
any of the following: (a) the assignment to the Executive by the Corporation of
duties inconsistent with, or a material reduction in the nature of, Executive's
responsibilities hereunder; (b) a reduction by the Corporation in the
Executive's base salary as in effect on the later of the date of this Agreement
or the last date on which base salary is increased; (c) a relocation of the
Executive's place of employment outside of Philadelphia, Pennsylvania without
Executive's prior consent; (d) a reduction in amount of bonus which may be
earned by the Executive; (e) (i) prior to a Change in Control, failure of the
Corporation to continue to maintain the same medical benefit plans covering the
Executive as are made available to other senior executives of the Corporation or
(ii) after a Change in Control, failure of the Corporation to continue to
maintain at least the same medical benefits covering the Executive as were made
available to him
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immediately prior to the Change in Control; or (f) failure by the Corporation to
comply with any of the material terms of this Agreement, which shall not have
been cured within 30 days after written notice thereof.
3. Compensation.
3.1. The Corporation shall pay or cause X.X. Xxxxxxxxx & Company, Inc.,
a Pennsylvania corporation ("JGW"), to pay to the Executive for the services to
be rendered by the Executive hereunder a salary at the rate of $170,000 per
annum. The salary shall be payable in equal installments in accordance with the
Corporation's normal payroll practices. Such salary will be reviewed at least
annually and shall be increased (but not decreased) by the Compensation
Committee of the Board of Directors of the Corporation in such amount as
determined in its sole discretion.
3.2 The Corporation shall pay or cause JGW to pay to Executive an annual
bonus calculated in accordance with Schedule A attached hereto. The bonus shall
be payable to Executive in a single lump sum no later than 90 days after the end
of each fiscal year.
3.3 Within ninety (90) days after the date of this Agreement, the
Corporation shall issue to Executive, under the terms of the Company's 1997
Stock Incentive Plan, stock options to purchase 50,000 shares of the
Corporation's Common Stock. The vesting of such options shall accelerate upon
Executive terminating his employment for "Good Reason."
3.4. The Executive shall be entitled to participate in, and receive
benefits from, any insurance, medical, disability, bonus, incentive compensation
or other employee benefit plan (regardless of any special insurance rating
Executive may have), if any are adopted, of the Corporation or any subsidiary
which may be in effect at any time during the course of his employment by the
Corporation and which shall be generally available to the Executive on terms no
less favorable than (i) to other senior executives of the Corporation or its
subsidiaries or (ii) those which Executive enjoyed in his immediate prior
employment, whichever are more valuable.
3.5. The Corporation agrees to reimburse the Executive for all
reasonable and necessary business expenses incurred by him on behalf of the
Corporation in the course of his duties hereunder upon the presentation by the
Executive of appropriate vouchers therefor.
3.6. The Executive will be entitled each year of this Agreement to a
paid vacation of two (2) weeks, no more than half of which may be carried
forward to future years.
3.7. The Corporation agrees to reimburse the Executive for all
reasonable costs and expenses incurred by Executive related to any one or more
of the following: (i) health and fitness club membership fees and dues; (ii)
country club annual membership fees and dues and monthly usage charges; (iii)
professional license and bar association dues and costs for
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mandatory continuing legal education; and (iv) all reasonable costs and
expenses, including, without limitation, lease payments, maintenance of required
insurance, of the motor vehicle used primarily by Executive in connection with
the performance of his duties hereunder.
3.8. In addition to the benefit conferred in Section 4.4 hereof, uUpon
termination of this Agreement for Cause or due to the death or incapacity of the
Executive (as defined in Section 4.1), the Executive (or his estate) shall be
entitled to all compensation (including pro rata bonus) and benefits accrued and
unpaid up to the date of termination.
3.9. The Executive shall not be required to mitigate damages or the
amount of any payment provided to him under this Agreement by seeking other
employment or otherwise, except as provided in Section 2.4 hereof.
4. Death; Incapacity.
4.1. If, during the period of employment hereunder, because of illness
or other incapacity, the Executive shall fail for a period of 120 consecutive
days, or for shorter periods aggregating more than 120 days during any twelve
month period, to render the services contemplated hereunder, then the
Corporation, at its option, may terminate the term of employment hereunder upon
not less than 10 days written notice from the Corporation to the Executive,
effective on the 10th day after giving of such notice; provided, however, that
no such termination will be effective if prior to the 10th day after giving such
notice, the Executive's illness or incapacity shall have terminated and he shall
be physically and mentally able to perform the services required hereunder and
shall be performing such services.
4.2. In the event of the death of the Executive during the term hereof,
the employment hereunder shall terminate on the date of death of the Executive.
4.3. The Corporation (or its designee) shall have the right to obtain
for its benefit an appropriate life insurance policy on the life of the
Executive, naming the Corporation (or its designee) as the beneficiary. If
requested by the Corporation, the Executive agrees to cooperate with the
Corporation in obtaining such policy.
4.4. In the event the employment of Executive is terminated by the
Corporation as the result of the death or incapacity of the Executive, the
Corporation agrees to continue to pay the Executive (or his estate) his then
rate of salary for a period of one year after such termination.
5. Other Activities During Employment; Non-Competition; Solicitation.
5.1. The Executive shall not during the term of this Agreement,
undertake or engage in any other employment, occupation or business enterprise.
Subject to compliance with the provisions of this Agreement, the Executive may
engage in charitable, civic, fraternal,
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professional and trade activities (including all required time for mandatory
continuing legal education) and reasonable activities with respect to personal
investments of the Executive and may serve as a director of other corporations
provided that such service as director shall not entail any management duties
and that any such activities or services shall not materially interfere with the
performance of Executive's duties hereunder.
5.2. During Executive's employment, and for an additional one year
period after the termination of such employment (for any reason), neither the
Executive nor any entity in which he may be interested as a partner, trustee,
director, officer, employee, shareholder, option holder, lender of money,
guarantor or consultant shall be engaged directly or indirectly in any business
engaged in by the Corporation in any area where the Corporation, or any
subsidiary, conducts such business at any time during this Agreement; provided,
however, that the foregoing shall not be deemed to prevent the Executive from
investing in securities if such class of securities in which the investment is
so made is listed on a national securities exchange or is issued by a company
registered under Section 12(g) of the Securities Exchange Act of 1934, so long
as such investment holdings do not, in the aggregate, constitute more than 5% of
the voting stock of any of such company's securities.
5.3. The Executive will not at any time during his employment with the
Corporation and for an additional one year period after the termination of such
employment (for any reason), solicit (or assist or encourage the solicitation
of) any employee of the Corporation or any of its subsidiaries or affiliates to
work for Executive or for any business, firm, corporation or other entity in
which the Executive, directly or indirectly, in any capacity described in
Section 5.2 hereof, participates or engages (or expects to participate or
engage) or has (or expects to have) a financial interest or management position.
5.4. The Executive shall not at any time during this Agreement or for a
period of one year after the termination hereof directly or indirectly divulge,
furnish, use, publish or make accessible to any person or entity any
Confidential Information (as hereinafter defined). Any records of Confidential
Information prepared by the Executive or which come into Executive's possession
during this Agreement are and remain the property of the Corporation and upon
termination of Executive's employment all such records and copies thereof shall
be either left with or returned to the Corporation.
5.5. The term "Confidential Information" shall mean information
disclosed to the Executive or known, learned, created or observed by him as a
consequence of or through his employment by the Corporation, not generally known
in the relevant trade or industry, about the Corporation's business activities,
services and processes, including but not limited to information concerning
advertising, sales promotion, publicity, sales data, research, finances,
accounting methods, processes, business plans, broker or correspondent lists and
records and potential broker or correspondent lists and records. Confidential
Information shall not include information disclosed in response to subpoena,
legal process or other legal requirement, or in connection with the payment and
reporting of income taxes.
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6. Assignment. The Corporation shall require any successor or assign to all
or substantially all the assets of the Corporation (whether by merger or by
acquisition of stock, assets or otherwise) prior to consummation of any
transaction therewith, to expressly assume and agree to perform in writing this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no such succession or assignment had taken place.
This Agreement shall inure to the benefit of and be binding upon the
Corporation, its successors and assigns, and upon the Executive and his heirs,
executors, administrators and legal representatives. This Agreement shall not be
assignable by the Executive.
7. Change in Control. Upon the occurrence of a "Change in Control" (as
hereinafter defined) of the Corporation, Executive may at his election, at any
time within six months thereafter, terminate this Agreement, and Executive shall
be entitled to the following compensation, in lieu of any other compensation and
bonuses provided herein:
(a) The Corporation shall pay as severance pay to Executive, no
later than the fifth day following the termination, a lump sum severance payment
equal to (i) 100% of Executive's salary for the greater of one year or the
balance of the Term, at the rate in effect as of the termination, and (ii) any
bonuses due to the Executive pursuant to Section 3.1. through the end of the
fiscal quarter in which such termination was so effective.
(b) For 12 months after such termination, the Corporation shall
use its best efforts to arrange to provide Executive with group health benefits
substantially similar to those which Executive was receiving immediately prior
to the termination. Benefits otherwise receivable by the Executive pursuant to
this paragraph (b) shall be reduced to the extent comparable benefits are
actually received by Executive during such period.
(c) Executive shall not be required to mitigate the amount of any
payment provided for in this Section 7 by seeking employment or otherwise.
(d) In the event that any payment or benefit received or to be
received by Executive in connection with a Change in Control of the Corporation
or the termination of Executive's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Corporation,
any person whose actions result in a Change in Control or any person affiliated
with the Corporation or such person) (collectively the "Total Payments") would
not be deductible (in whole or in part) as a result of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), by the Corporation, an
affiliate or other person making such payment or providing such benefit, the
payments or benefits shall be so reduced until no portion of the Total Payments
is not deductible. Executive shall be entitled to elect which payments or
benefits shall be so reduced. For purposes of this limitation, (1) no portion of
the Total Payments the receipt or enjoyment of which Executive shall have
effectively waived in writing prior to the date of payment shall be taken into
account, (2) no portion of the Total Payments shall be taken into account which
in the opinion of tax counsel selected by the Corporation's independent auditors
and acceptable to Executive does not constitute a "parachute
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payment" within the meaning of Section 280G(b)(2) of the Code, and (3) the value
of any noncash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the Corporation's independent auditors in
accordance with the principles of Sections 280(d)(3) and (4) of the Code.
(e) For purposes hereof, a "Change in Control" shall be deemed to
have occurred if (a) Xxxxx X Xxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx and
Xxxx Xxxxxxx (collectively, the "Principal Stockholders") shall cease to be the
owners of at least 25% of the outstanding shares of common stock of the
Corporation, (b) if the Corporation shall sell all or substantially all its
assets, or (c) if the Corporation shall merge or consolidate with another entity
and as a result thereof the Principal Stockholders cease to be the owners,
either directly or indirectly, of at least 25% of the outstanding shares of
common stock of the entity surviving the merger or consolidation.
(f) The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by the Executive
on, after or in connection with a Change in Control as statements therefor are
received (whether or not the Executive is successful) as a result of (a) the
Executive's termination or non-renewal of employment (including all such fees
and expenses, if any, incurred in contesting or disputing any such termination
or non-renewal of employment), (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under which the Executive is or may be
entitled to receive benefits or (c) in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder.
8. No Third Party Beneficiaries. This Agreement does not create, and shall
not be construed as creating, any rights enforceable by any person not a party
to this Agreement, except as provided in Section 6 hereof.
9. Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10. Interpretation. In case any one or more of the provisions contained in
this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held by a court of competent
jurisdiction to be unenforceable because it is excessively broad as to duration,
geographical scope, activity or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
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11. Notices. All notices under this Agreement shall be in writing and shall
be deemed to have been given at the time when mailed by registered or certified
mail, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Corporation:
X.X. Xxxxxxxxx & Company, Inc.
The Xxxxxx Building, 10th Floor
15th and Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: President
- copy to -
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
Twelfth Floor Packard Building
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
To the Executive:
Xxxxxx X. Xxxxxxx
00 Xxxxxxx Xxx
Xxxxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
12. Waivers. If either party should waive any breach of any provision of
this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
13. Complete Agreement; Amendments. The foregoing is the entire agreement
of the parties with respect to the subject matter hereof and may not be amended,
supplemented, canceled or discharged except by written instrument executed by
both parties hereto.
14. Equitable Remedies. The Executive acknowledges that he has been
employed for his unique talents and that his leaving the employ of the
Corporation would seriously hamper the business of the Corporation and that the
Corporation will suffer irreparable damage if any provisions of Section 5 hereof
are not performed strictly in accordance with their terms or are otherwise
breached. The Executive hereby expressly agrees that the Corporation
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shall be entitled as a matter of right to injunctive or other equitable relief,
in addition to all other remedies permitted by law, to prevent a breach or
violation by the Executive and to secure enforcement of the provisions of
Section 5. Resort to such equitable relief, however, shall not constitute a
waiver or any other rights or remedies which the Corporation may have.
15. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflicts of law.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
X.X. XXXXXXXXX & COMPANY, INC.
By:_____________________________________________________
Name: Xxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
_____________________________________________________
Xxxxxx X. Xxxxxxx
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