XXXXX XXXXXX CORPORATION
00 XXXXXX XXXXXX
XXX XXXXXX, XXXXXXXXXXX 00000
February 3, 1995
PERSONAL AND CONFIDENTIAL
Xx. Xxxxxx X. XxXxxxx
00 Xxxxxxx Xxxx
Xxxxxx, XX 00000
Dear Xx. XxXxxxx:
This letter will confirm the terms and conditions of
your Employment Agreement (the "Agreement") with Xxxxx
Xxxxxx Corporation ("SCO").
1. You will be employed as the Executive Vice
President and Chief Financial Officer of SCO, reporting to
me.
2. Your compensation in such capacity will be:
(a) An initial base salary at the annual
rate of $185,000.
(b) You will participate in the SCO Short-
Term Incentive Compensation Program. Your maximum bonus
percentage will be fifty-five percent (55%) of your base
salary.
3. You will be eligible for consideration of
grants of SCO share options when other officers are
considered, usually annually; upon commencement of your
employment, you received 40,000 share options based on the
average share price on the day of the grant. All options
will be exercisable in accordance with the SCO 1990 Stock
Option Plan, as amended from time to time.
(a) In the event that (i) the Board of
Directors of SCO terminates your employment for reasons
other than Cause, or (ii) you terminate your employment
within the ninety (90) day period commencing on the ninety-
first (91st) day following the first occurrence of an event
of Good Reason (a "Good Reason Termination"), you shall be
free to seek and accept employment elsewhere, but you shall
nonetheless be paid your base salary, plus fringe benefits
as set forth in Paragraph 4 below, for the balance of this
Agreement, but not less than twenty four (24) months. "Good
Reason" is defined herein to mean reduction in your base
compensation or in your incentive compensation target
opportunities, substantial curtailment of your status or
responsibilities, or your forced relocation of more than 35
miles (whether or not any other executives are required to
relocate), and "Cause" shall mean a material breach of, or
willful misconduct in, the performance of your duties as an
employee of SCO; employment by a firm not affiliated with
SCO while you are employed by SCO; theft, embezzlement,
bribery or other act of comparable dishonesty or disloyalty
or breach of trust against SCO; or the conviction of a
felony. The fact that SCO ceases to be publicly held, in
and of itself, shall not be deemed "substantial curtailment
of your status or responsibilities" within the meaning of
this Agreement. Moreover, this continuation of salary will
not be applicable if you obtain employment, or enter into
any personal service arrangement, which would result in your
providing services that would relate directly or indirectly
to the business or providing equipment and/or supplies for
the small office/home office market on behalf of a
competitor of SCO or its successor or if your employment
terminates by reason of your death, permanent disability or
your voluntary retirement or resignation other than a Good
Reason Termination.
(b) If your employment should terminate for
a reason entitling you to salary continuation under Section
3(a) above following a Change-in-Control (defined below),
the twenty-four (24) months referenced in Section 3(a)
above, will be changed to "2.9 years". For purposes of this
Section 3(b), "Change-in-Control" of SCO shall be deemed to
have occurred if (a) any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) excluding HM
Holdings Inc. and/or any entity controlling, under common
control with or controlled by HM Holdings, Inc. is or
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of SCO representing 51% or more of the combined
voting power of SCO's then outstanding securities; or (b) if
at any time a majority of the members of the board have been
elected or designated by any "person" (including, without
limitation, any persons or entities affiliated with such
person but excluding without limitation, HM Holdings Inc.
and/or any entity controlling, under common control or
controlled by HM Holdings Inc.)
(c) Notwithstanding anything in the
foregoing to the contrary, if any of the payments provided
for in this Agreement, together with any other payments
which you have the right to receive from SCO or any
corporation which is a member of an "affiliated group" (as
defined in Section 1504(a) of the Code without regard to
Section 1504(b) of the Code) of which SCO is a member, would
constitute a "parachute payment" (as defined in Section
280(g)(2) of the Code), the payments to be made pursuant to
this Agreement shall be reduced to the largest amount as
will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code;
provided, however, that the determination as to whether any
reduction in the payments under this Agreement pursuant to
this provision is necessary shall be made by SCO in good
faith.
4. You will be entitled to receive the following
fringe benefits:
(a) Term life insurance coverage equal to
two times your annual base salary;
(b) A company car in accordance with the SCO
policy;
(c) Participation in the SCO Salaried
Employees' Retirement Plan (the "Salaried Plan"). Upon your
termination of employment for any reason including death,
you (or your beneficiaries) will be entitled to receive
pension benefits under SCO's Salaried Plan in accordance
with the provisions of that Plan. For the purpose of
service and credited service under such Plan, service
attributable to the severance period shall be counted only
for the period for which you would have received severance
in accordance with the terms of such Plan.
(d) Participation in the SCO Supplemental
Executive Retirement Plan. The period of any salary
continuation under Paragraph 3(a) or (b) above shall not
count as Credited Service under the SCO Supplemental
Executive Retirement Plan.
(e) Participation in the Executive Medical
Program;
(f) Participation in the SCO disability plan
or equivalent.
5. If your employment should terminate for a
reason entitling you to salary continuation under Section
3(a) above, SCO will provide you, at its sole cost and
expense up to a maximum of $20,000, with outplacement
assistance at a firm selected by SCO. At your option and in
lieu of SCO's obligations to provide you with outplacement
assistance, SCO will pay you $12,000 as soon as practicable
after you make such an election and communicate your
election to SCO.
6. When you retire (that is, when your
employment is terminated at a time when you are eligible for
benefits under the Salaried Plan), you will receive payment
directly from SCO calculated as follows:
An amount equal to the amount, if any, that would be
payable to you under the Salaried Plan based on your
combined service with SCM Corporation (23 years, 9 months)
and SCO (from 4/1/91 to termination); less
(i) the amount actually payable to you under the Salaried
Plan based upon your Credited Service with SCO (from 4/1/91 to
termination, including, if any, the severance period referred to
in 4.(c) above), and less
(ii) the amount that would be payable to you under the
SCM Salaried Employees Retirement Plan based on your age at your
retirement from SCO, and less
(iii) the amount, if any, payable to you under the SCO
Supplemental Retirement Plan based upon your Credited Service with
SCO (from 4/1/91 to termination).
It is understood that the amount payable under this
arrangement may, at the option of SCO, be paid to you as a lump
sum based on the Pension Benefit Guaranty Corporation interest
rate in effect at your retirement date and the mortality table
referred to in the Salaried Plan.
7. The terms of this Agreement shall expire on June
30, 1995 with renewals for subsequent one-year periods at the
discretion of the Board of Directors.
8. This Agreement, upon your acceptance in the space
provided below, shall be in a binding contract to be governed and
construed in accordance with the laws of the state of Connecticut
and it shall supersede and replace all prior agreements and
understandings between the parties.
The parties hereto hereby agree that the calculations
of Deloitte & Touche LLP attached hereto as Exhibit A and made a
part hereof, setting forth change in control calculations as of
March 1, 1995 and as of December 1, 1994, are a true and correct
estimate of such figures as of such dates. Each party affirms
that such party is not presently aware of any other facts or
circumstances which would render the figures on Exhibit A
incorrect.
As the terms described in this letter exceed normal
SCO policy regarding employee separation, it is understood that
this Agreement sets forth the entire agreement between SCO and you
relating to your employment; that your acceptance of these
arrangements is a compromise and settlement of any and all claims
which you may have against SCO; and that you release SCO from any
liability other than that to which SCO has agreed above.
Very truly yours,
XXXXX XXXXXX CORPORATION
By:_/s/ X. Xxx Thompson__
G. Xxx Xxxxxxxx
Chairman and Chief
Executive Officer
I accept and agree to the
foregoing terms and conditions.
Xxxxxx X. XxXxxxx
Date
