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EXHIBIT 10(a)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") has been made as of
April 1, 2000 by and between TRANSMATION, INC., an Ohio corporation (the
"Corporation"), and XXXXXX X. XXXXXXXXXXX (the "Employee").
The parties agree as follows:
1. MUTUAL AGREEMENT OF THE PARTIES. The Corporation hereby agrees to
continue to employ the Employee, and the Employee hereby agrees to accept such
continued employment, for the period and on the terms and conditions set forth
in this Agreement.
2. TERM OF EMPLOYMENT. The term of this Agreement and of the Employee's
employment hereunder (the "TERM") shall commence on the date hereof and shall
expire on March 31, 2003, subject to earlier termination as provided by Section
9 hereof. As used herein, the term "Year" shall mean any period during the Term
commencing on April 1 and ending on the next succeeding March 31.
3. AUTHORITY AND DUTIES. During the Term the Employee shall be the
President and Chief Executive Officer of the Corporation. As such, he shall: (a)
report and be responsible to the Board of Directors of the Corporation (the
"BOARD OF DIRECTORS"); (b) be responsible for all of the business and operations
of the Corporation; and (c) have and exercise such powers and authority as are
customarily enjoyed by a president and chief executive officer of a corporation,
subject only to direction by the Board of Directors. The Employee shall devote
such time to the affairs of the Corporation as is necessary for the performance
of his duties hereunder, and shall use his best efforts to promote its best
interests.
4. COMPENSATION. During the Term the Corporation shall pay to the
Employee, and the Employee shall accept, as compensation for all services
rendered under this Agreement, the compensation provided by this Section 4.
(a) SALARY. The Corporation shall pay the Employee a cash
salary at the annual rates of (i) $275,000 during the first Year of the Term,
(i) $300,000 during the second Year of the Term, and (iii) $325,000 during the
third Year of the Term. Such salary shall be payable at such intervals (but not
less often than biweekly or semi-monthly) as the Corporation pays the salaries
of other senior executives during the Term.
(b) ANNUAL BONUS. The Corporation shall pay the Employee, in
respect of each Year (or portion thereof) during the Term, a bonus (if any) paid
under and pursuant to the terms of the Corporation's Annual Executive Bonus Plan
adopted by the Compensation, Benefits and Stock Options Committee the Board of
Directors for that Year.
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5. BENEFITS.
(a) VACATION. During the Term, the Employee shall be entitled
to the same amount of paid vacation time per annum as the Corporation provides
its other senior executives.
(b) AUTOMOBILE ALLOWANCE. During the Term, the Corporation
shall provide the Employee with an automobile allowance in the amount of $1,000
per month.
(c) CLUB MEMBERSHIP. During the Term, the Corporation shall,
at its expense, provide the Employee with membership in one country club of his
choosing.
(d) OTHER BENEFITS. During the Term, the Corporation shall, at
its expense, provide in the name and for the benefit of the Employee and his
designated beneficiaries all fringe benefit plans and programs which the
Corporation then provides for its senior executives, except if and to the extent
that the Employee waives his rights thereto. Nothing contained herein shall be
deemed to restrict or limit the right of the Corporation at any time to modify,
amend or terminate any or all such fringe benefit plans and programs.
(e) ONE-TIME BENEFIT PAYMENT. As soon as practicable after the
date hereof, the Corporation shall pay to the Employee the amount of $48,970,
representing the cost to the Corporation of Corporation-provided benefits which
the Employee has waived since the commencement of his employment by the
Corporation in 1994.
6. BUSINESS EXPENSES. The Corporation shall pay or reimburse the
Employee for all reasonable travel and other expenses incurred or paid by him in
connection with the performance of his duties under this Agreement, upon
presentation to the Corporation of expense statements or vouchers and such other
supporting documentation as it may, from time to time, reasonably require;
provided, however, that the amount available for such expenses may, at any time
or from time to time, be fixed in advance by the Board of Directors.
7. NON-COMPETITION. The Employee agrees that during the Term he shall
not, without the express written consent of the Corporation, engage directly or
indirectly (whether by means of stock ownership or otherwise) in any business
which is in competition, directly or indirectly, with the business of the
Corporation. A direct or indirect investment by the Employee in less than 5
percent of the total capital of any such competitive enterprise or business
whose stock is publicly traded shall not be deemed a violation of this Section
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8. CONFIDENTIALITY. The Employee acknowledges that in the course of his
employment by the Corporation he has had and will have access to confidential
information relating to the business and affairs of the Corporation, including
without limitation information relating to business ideas, trade secrets,
product development, secret processes, plans and/or materials, statistical
information and customer lists. The Employee agrees that he will not, either
during the Term or after its expiration, without the prior express written
consent of the Corporation, disclose, divulge, furnish, release or otherwise
make available to any person or entity any of such confidential information,
except for: (a) disclosures made, in furtherance of the Corporation's interests,
with the approval or at the direction of investment bankers (if any) retained by
the Corporation, and (b) disclosures of information which, through no breach of
the Employee's obligations under this Section 8, is no longer confidential.
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9. TERMINATION.
(a) TERMINATION. This Agreement and the Employee's employment
hereunder shall terminate at the close of business on the earliest of the
following dates:
(i) March 31, 2003; or
(ii) the date of the Employee's death; or
(iii) the thirtieth day following the date on which
the Corporation receives written notice of the Employee's termination
of this Agreement; or
(iv) the thirtieth day following the date on which
the Employee receives written notice of the Board of Directors'
termination of this Agreement with or without "Cause" (as defined in
Section 9(b) hereof).
(b) CAUSE FOR TERMINATION. For purposes of this Agreement, the
term "Cause" shall mean a reasonable determination by vote of a majority of the
members of the Board of Directors then holding office (other than the Employee
if he shall then be a director) that one of the following conditions exists or
one of the following events has occurred:
(i) the willful misconduct or gross negligence of the
Employee in connection with the performance of his duties hereunder; or
(ii) the Employee's conviction of any crime or
offense involving money, property or personnel of the Corporation, or
of any other crime which constitutes a felony; or
(iii) the Employee's use, possession or being under
the influence of any narcotic or controlled substance while at work, or
his being under the influence of any alcoholic beverage while at work;
or
(iv) subject to the further provisions of this
Section 9(b), the Corporation's failure to achieve as of the close of
any Year during the Term the net income required by the budget for that
Year adopted by the Board of the Directors, subject to the exception
from the budget of such extraordinary items as the Board of Directors
may, in its discretion, approve from time to time.
It is the intention of the Board of Directors and the Employee that the
circumstances contemplated by Section 9(b)(iv) hereof be fair reflections of the
Employee's performance as the Corporation's President and Chief Executive
Officer. To that end, the Board of Directors and the Employee shall both act in
good faith in the creation and adoption of each such budget and the
consideration of each such exception.
10. SEVERANCE.
(a) CERTAIN DEFINITIONS. As used herein:
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(i) "TOTAL COMPENSATION" means and includes without
limitation salary, bonuses (if any), benefits (if any) and
compensation (if any) in the form of stock or options to
purchase stock; provided, however, that any such compensation
that is payable to the Employee other than in cash shall be
valued for the purposes of this Section 10 at its fair market
value on the date it is payable.
(ii) "NORMAL TERMINATION DATE" means the applicable
date of termination specified in Section 9(a) hereof.
(iii) A "CHANGE IN CONTROL" shall have occurred if:
(A) the Corporation is merged or
consolidated with another entity and as a result thereof less
than 50 percent of the outstanding voting securities of the
surviving or resulting entity shall then be owned in the
aggregate by the former shareholders of the Corporation; or
(B) as a result of, or in connection with,
any tender offer or exchange offer, merger or other business
combination, or sale or other disposition of assets, or any
combination of the foregoing transactions, persons
constituting a majority of the Board on the date hereof shall
not constitute a majority of the board of directors of the
surviving or resulting entity; or
(C) a tender offer or exchange offer for the
ownership of securities of the Corporation representing over
50 percent of the combined voting power of the Corporation's
then outstanding voting securities is made and consummated; or
(D) any "person," including a "group" within
the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended, is or becomes, directly or indirectly,
the beneficial owner of securities of the Corporation
representing over 50 percent of the combined voting power of
the Corporation's then outstanding securities.
(iv) "SUCCESSOR" means any successor to the assets,
rights or business of the Corporation as a result of a Change in
Control, including without limitation the Corporation if it is the
surviving or resulting entity of the Change in Control.
(v) "TRIGGER TERMINATION" means any termination,
after the effective date of a Change in Control, of this Agreement,
except for the following terminations which are not Trigger
Terminations: (A) the Employee's voluntary termination for reasons
other than a Material Change (as hereinafter defined); (B) termination
upon the Employee's death or total disability; and (C) termination by
expiration of the Term on March 31, 2003.
(vi) "MATERIAL CHANGE" means any or all of the
following:
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(A) a change by the Successor in the nature
or scope of the Employee's authority, duties or
responsibilities, from those applicable to him immediately
prior to the Change in Control, that is so substantial and
material a reduction, or so substantially and materially
burdensome, as would make a reasonable person determine not to
continue such employment (it being the intent hereof to
include in the definition of "Material Change" a change that
would, in effect, force the Employee to terminate his
employment voluntarily, but to exclude from the definition of
"Material Change" a change that is ordinary and customary in
the course of any change in control of a business); or
(B) any reduction in the aggregate annual
amount of compensation and benefits payable to the Employee by
the Successor from that payable to him by the Corporation
immediately prior to the Change in Control; or
(C) a change in the location of the
Employee's principal place of employment, without his express
written consent, to a location which is outside the general
metropolitan area of Rochester, New York.
(b) SEVERANCE PAYMENT IF TERMINATION WITHOUT CAUSE. In the
event that the Board of Directors terminates this Agreement without Cause, the
Corporation shall pay to the Employee as severance an amount equal to the
greater of: (i) the Total Compensation payable to the Employee by the
Corporation during the 12 months immediately preceding the Termination Date; or
(ii) the Total Compensation that would have been payable to the Employee
hereunder from the Termination Date until March 31, 2003 had this Agreement not
been terminated. Such severance amount shall be paid to the Employee in cash
within 30 days following the Termination Date unless and to the extent that the
Employee determines otherwise.
(c) SEVERANCE PAYMENT IF TERMINATION IN CONNECTION WITH A
CHANGE IN CONTROL. In the event that a Trigger Termination occurs during the
Term, the Successor shall pay to the Employee as severance an amount equal to
300 percent of the Total Compensation payable to the Employee by the Corporation
or the Successor during the 12 months immediately preceding the effective date
of the Trigger Termination. Such severance amount shall be paid to the Employee
in cash within 30 days following the effective date of the Trigger Termination
unless and to the extent that the Employee determines otherwise.
(d) REDUCTION OF SEVERANCE AMOUNT IN CERTAIN CIRCUMSTANCES.
(i) Notwithstanding anything in this Agreement or any
other agreement to the contrary, in the event that it is determined
that any payment or distribution by the Successor, any affiliate
thereof or any other person to or for the benefit of the Employee,
whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement, pursuant to any other plan of deferred
compensation, or pursuant to any other agreement or arrangement with
the Successor or any affiliate thereof now or hereafter in effect (a
"PAYMENT"), would be subject to the excise tax imposed by Section 4999,
or the denial of deductions imposed by Section 280G, of the Internal
Revenue Code of 1986, as amended, or any successor statute thereto (the
"TAX PENALTY"), then the Payments made to or for the benefit of the
Employee pursuant to this Agreement shall be reduced such that the
aggregate present value is maximized without
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causing any payment to be subject to the Tax Penalty (the "REDUCED
AMOUNT"). In the alternative, at the sole discretion of the Successor,
the full amount of the Payments may be made to the Employee and the
Employee shall be entitled to receive an additional payment (a
"GROSS-UP PAYMENT") in an amount such that after payment by the
Employee of all taxes (including any interest or penalties imposed with
respect to such taxes), including any excise tax, imposed upon the
Gross-Up Payment, Employee retains an amount of the Gross-Up Payment
equal to the excise tax imposed upon the Payments.
(ii) An initial determination as to whether a Tax
Penalty would be imposed, and the amount of the Reduced Amount required
by Section 10(d)(i) hereof or any Gross-Up Payment elected by the
Successor, shall be made by a national independent accounting firm not
regularly engaged by the Employee or the Successor and mutually
acceptable to Employee and the Successor (the "ACCOUNTING FIRM"). All
fees, costs and expenses of the Accounting Firm shall be borne by the
Successor, which shall pay such fees, costs and expenses as they become
due. The Accounting Firm shall promptly provide detailed supporting
calculations, acceptable to the Employee and the Successor, to them.
The amount of the Reduced Amount or, if elected by the Successor, the
full Payment plus the Gross-Up Payment, if any, as determined pursuant
to this Section 10(d)(ii) shall be paid by the Successor to the
Employee within five business days of receipt of the Accounting Firm's
determination. If the Accounting Firm determines that no Tax Penalty
would be imposed, the Successor and the Employee shall use their best
efforts to ensure that the Accounting Firm furnishes both the Employee
and the Successor with an unqualified opinion to that effect. Any such
initial determination by the Accounting Firm of the Reduced Amount
and/or the Gross-Up Payment shall be binding upon the Successor and the
Employee.
(iii) In the event that it is determined that an
excise tax will be imposed on any Payments, the Successor shall pay to
the applicable governmental taxing authorities as excise tax
withholding, the amount of the excise tax that the Successor has
actually withheld from the Payments.
(e) RELATED MATTERS.
(i) The Employee shall not be required to mitigate
the amount of any severance payable hereunder by seeking other
employment or otherwise, nor shall the amount of any severance payable
hereunder be reduced by any compensation earned by the Employee as the
result of his employment by another employer or otherwise.
(ii) The provisions of this Section 10 shall not
affect the Employee's right to receive all earned but unpaid salary or
bonus, accrued but unpaid vacation pay, and submitted but outstanding
travel or other expenses due and owing from the Corporation or the
Successor on the effective date of termination of this Agreement, or
any incentive compensation earned but unpaid prior to or coincidental
with the effective date of such termination, all of which shall be paid
to the Employee when ordinarily payable under the Corporation's or the
Successor's plans, programs and practices.
(f) EXCLUSIVITY. The Employee shall not be entitled to any
severance except as expressly provided by this Section 10.
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11. IN GENERAL.
(a) BINDING OBLIGATION. This Agreement shall be binding upon
and shall inure to the benefit of the Employee and his personal representatives,
and the Corporation and its successors and assigns, including without limitation
the Successor and any other successor to the business of the Corporation,
whether by way of merger, reorganization, transfer of assets or otherwise. The
term "Corporation" as used herein shall include all such successors and assigns.
(b) NOTICES. Any notice required or permitted by this
Agreement shall be given by hand or by certified mail, return receipt requested,
addressed to the Corporation at its then principal office, or to the Employee at
his then residence address, or to either party at such other address as it or he
may from time to time specify for the purpose in a notice similarly given to the
other party.
(c) APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State.
(d) ENTIRE AGREEMENT, ETC. This Agreement contains the entire
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties with respect to the subject matter hereof. No
modification of this Agreement shall be valid unless it is in writing and signed
by the Corporation and by the Employee. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the day and year first above written.
TRANSMATION, INC.
By: /s/ Xxxxxxxxx X. Xxxxxx
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Xxxxxxxxx X. Xxxxxx
Chairman of the Board
/s/ Xxxxxx X. Xxxxxxxxxxx
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XXXXXX X. XXXXXXXXXXX
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