SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement"), dated as of September 17, 1997,
is made and entered by and between Xxxxxx Corporation, a Delaware corporation
(the "Company"), and Xxx X. Xxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive is a senior executive of the Company or one or more of
its Subsidiaries and has made and is expected to continue to make major
contributions to the short- and long-term profitability, growth and financial
strength of the Company;
WHEREAS, the Company recognizes that, as is the case for most publicly held
companies, the possibility of a Change in Control (as defined below) exists;
WHEREAS, the Company desires to assure itself of both present and future
continuity of management and desires to establish certain minimum severance
benefits for certain of its senior executives, including the Executive,
applicable in the event of a Change in Control;
WHEREAS, the Company wishes to ensure that its senior executives are not
practically disabled from discharging their duties in respect of a proposed
or actual transaction involving a Change in Control; and
WHEREAS, the Company desires to provide additional inducement for the
Executive to continue to remain in the ongoing employ of the Company;
NOW, THEREFORE, the Company and the Executive agree as follows:
1. CERTAIN DEFINED TERMS. In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement
with initial capital letters:
(a) "Base Pay" means the Executive's annual base salary at a rate not less
than the Executive's annual fixed or base compensation as in effect
for Executive immediately prior to the occurrence of a Change in
Control or such higher rate as may be determined from time to time by
the Board or a committee thereof.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means that, prior to any termination pursuant to Section 3(b),
the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or theft in
connection with his duties or in the course of his employment
with the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the Company or any
Subsidiary;
(iii) intentional wrongful disclosure of secret processes or
confidential information of the Company or any Subsidiary; or
(iv) intentional wrongful engagement in any Competitive Activity;
and any such act shall have been materially harmful to the Company.
For purposes of this Agreement, no act or failure to act on the part
of the Executive shall be deemed "intentional" if it was due primarily
to an error in judgment or negligence, but shall be deemed
"intentional" only if done or omitted to be done by the Executive not
in good faith and without reasonable belief that his action 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" hereunder unless and until there shall have been delivered
to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three quarters of the Board then in
office at a meeting of the Board called and held for such purpose,
after reasonable notice to the Executive and an opportunity for the
Executive, together with his counsel (if the Executive chooses to have
counsel present at such meeting), to be heard before the Board,
finding that, in the good faith opinion of the Board, the Executive
had committed an act constituting "Cause" as herein defined and
specifying the particulars thereof in detail. Nothing herein will
limit the right of the Executive or his beneficiaries to contest the
validity or propriety of any such determination.
(d) "Change in Control" means the occurrence during the Term of any of the
following events:
(i) The Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a
result of such merger, consolidation or reorganization less
than a majority of the combined voting power of the
then-outstanding Voting Stock of such corporation or person
immediately after such transaction are held in the aggregate
by the holders of Voting Stock of the Company immediately
prior to such transaction;
(ii) The Company sells or otherwise transfers all or substantially
all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than [a
majority] of the combined voting power of the then-outstanding
Voting Stock of such corporation or person immediately after
such sale or transfer is held in the aggregate by the holders
of Voting Stock of the Company immediately prior to such sale
or transfer; or
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(iii) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated
pursuant to the Exchange Act, disclosing that any person (as
the term "person" is used in Section 13(d)(3) or
Section 14(d)(2) of the Exchange Act) other than an Original
Investor has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of securities representing 25% or more of the combined
voting power of the then-outstanding Voting Stock of the
Company;
Notwithstanding the foregoing provisions of Section 1(d)(iii), unless
otherwise determined in a specific case by majority vote of the Board,
a "Change in Control" shall not be deemed to have occurred for
purposes of Section 1(d)(iii) solely because (A) the Company, (B) a
Subsidiary, or (C) any Company-sponsored employee stock ownership plan
or any other employee benefit plan of the Company or any Subsidiary
either files or becomes obligated to file a report or a proxy
statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item
therein) under the Exchange Act disclosing beneficial ownership by it
of shares of Voting Stock, whether in excess of 25% or otherwise, or
because the Company reports that a change in control of the Company
has occurred or will occur in the future by reason of such beneficial
ownership.
(e) "Competitive Activity" means the Executive's participation, without
the written consent of an officer of the Company, in the management of
any other mortgage guaranty insurance company or any majority or sole
owner of any mortgage guaranty insurance company, including becoming
an employee, owner (except for passive investments of not more than
one percent of the outstanding shares of, or any other equity interest
in, any company or entity listed or traded on a national securities
exchange or in an over-the-counter security market), officer, agent,
consultant or director of any such company or owner thereof.
(f) "Employee Benefits" means the perquisites, benefits and service credit
for benefits as provided under any and all employee retirement income
and welfare benefit policies, plans, programs or arrangements in which
Executive is entitled to participate, including without limitation any
stock option, stock purchase, stock appreciation, savings, pension,
supplemental executive retirement, or other retirement income or
welfare benefit, deferred compensation, incentive compensation, group
or other life, health, medical/hospital or other insurance (whether
funded by actual insurance or self-insured by the Company),
disability, salary continuation, expense reimbursement and other
employee benefit policies, plans, programs or arrangements that may
now exist or any equivalent successor policies, plans, programs or
arrangements that may be adopted hereafter by the Company, providing
perquisites, benefits and service credit for benefits at least as
great in the aggregate as are payable thereunder prior to a Change in
Control.
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(g) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(h) "Incentive Pay" means an annual amount equal to not less than the
highest aggregate annual bonus, incentive or other payments of cash
compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any calendar year during the three calendar years
immediately preceding the year in which the Change in Control occurred
pursuant to any bonus, incentive, profit-sharing, performance,
discretionary pay or similar agreement, policy, plan, program or
arrangement (whether or not funded) of the Company, or any successor
thereto providing benefits at least as great as the benefits payable
thereunder prior to a Change in Control.
(i) "Original Investor" means any of the five institutional investors
which owned any capital stock of the Company as of November 1, 1995.
(j) "Severance Period" means the period of time commencing on the date of
the first occurrence of a Change in Control and continuing until the
earliest of (i) the second anniversary of the occurrence of the Change
in Control, (ii) the Executive's death, or (iii) the Executive's
attainment of age 65.
(k) "Subsidiary" means an entity in which the Company directly or
indirectly beneficially owns 50% or more of the outstanding Voting
Stock.
(l) "Term" means the period commencing as of the date hereof and expiring
as of the later of (i) the close of business on December 31, 2002, or
(ii) the expiration of the Severance Period; PROVIDED, HOWEVER, that
(A) commencing on January 1, 2002 and each January 1 thereafter, the
term of this Agreement will automatically be extended for an
additional year unless, not later than September 30 of the immediately
preceding year, the Company or the Executive shall have given notice
that it or the Executive, as the case may be, does not wish to have
the Term extended and (B) subject to the last sentence of Section 9,
if, prior to a Change in Control, the Executive ceases for any reason
to be an employee of the Company and any Subsidiary, thereupon without
further action the Term shall be deemed to have expired and this
Agreement will immediately terminate and be of no further effect. For
purposes of this Section 1(k), the Executive shall not be deemed to
have ceased to be an employee of the Company and any Subsidiary by
reason of the transfer of Executive's employment between the Company
and any Subsidiary, or among any Subsidiaries.
(m) "Termination Date" means the date on which the Executive's employment
is terminated, the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive
if the termination is pursuant to Section 3(b).
(n) "Voting Stock" means securities entitled to vote generally in the
election of directors.
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2. OPERATION OF AGREEMENT. This Agreement will be effective and binding
immediately upon its execution, but, anything in this Agreement to the
contrary notwithstanding, this Agreement will not be operative unless and
until a Change in Control occurs. Upon the occurrence of a Change in
Control at any time during the Term, without further action, this Agreement
shall become immediately operative; PROVIDED, HOWEVER, that this Agreement
shall not become operative and shall be of no force and effect if operation
of this Agreement would cause the Company to be unable to use the pooling
of interests method of accounting in connection with the transactions
resulting in such Change in Control.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL.
(a) In the event of the occurrence of a Change in Control, the Executive's
employment may be terminated by the Company during the Severance
Period and the Executive shall be entitled to the benefits provided by
Section 4 unless such termination is the result of the occurrence of
one or more of the following events:
(i) The Executive's death;
(ii) If the Executive becomes permanently disabled within the
meaning of, and begins actually to receive disability benefits
pursuant to, the long-term disability plan in effect for, or
applicable to, Executive immediately prior to the Change in
Control; or
(iii) Cause.
If, during the Severance Period, the Executive's employment is
terminated by the Company or any Subsidiary other than pursuant to
Section 3(a)(i), 3(a)(ii) or 3(a)(iii), the Executive will be entitled
to the benefits provided by Section 4 hereof.
(b) In the event of the occurrence of a Change in Control, the Executive
may terminate employment with the Company and any Subsidiary during
the Severance Period with the right to severance compensation as
provided in Section 4 upon the occurrence of one or more of the
following events (regardless of whether any other reason, other than
Cause as hereinabove provided, for such termination exists or has
occurred, including without limitation other employment):
(i) Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially
equivalent office or position, of or with the Company and/or a
Subsidiary, as the case may be, which the Executive held
immediately prior to a Change in Control, or the removal of
the Executive as a Director of the Company (or any successor
thereto) if the Executive shall have been a Director of the
Company immediately prior to the Change in Control;
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(ii) (A) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties
attached to the position with the Company and any Subsidiary
which the Executive held immediately prior to the Change in
Control, (B) a reduction in the aggregate of the Executive's
Base Pay and Incentive Pay received from the Company and any
Subsidiary, or (C) the termination or denial of the
Executive's rights to Employee Benefits or a reduction in the
scope or value thereof (except that the level of any such
Employee Benefits may be reduced in the event of a
corresponding reduction generally applicable to all recipients
of or participants in such Employee Benefits), any of which is
not remedied by the Company within 10 calendar days after
receipt by the Company of written notice from the Executive of
such change, reduction or termination, as the case may be;
(ii) The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or
substantially all of its business and/or assets, unless the
successor or successors (by liquidation, merger,
consolidation, reorganization, transfer or otherwise) to which
all or substantially all of its business and/or assets have
been transferred (directly or by operation of law) assumed all
duties and obligations of the Company under this Agreement
pursuant to Section 11(a); or
(vi) Without limiting the generality or effect of the foregoing,
any material breach of this Agreement by the Company or any
successor thereto.
(d) A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b) will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company providing Employee Benefits, which rights
shall be governed by the terms thereof.
4. SEVERANCE COMPENSATION.
(a) If, following the occurrence of a Change in Control, the Company
terminates the Executive's employment during the Severance Period
other than pursuant to Section 3(a), or if the Executive terminates
his employment pursuant to Section 3(b), the Company will pay to the
Executive the following amounts within thirty business days after the
Termination Date and continue to provide to the Executive the
following benefits:
(i) A lump sum payment in an amount equal to three (3) times the
Base Pay (at the highest rate in effect for any period prior
to the Termination Date).
(ii) For a period of two years following the Termination Date (the
"Continuation Period"), the Company will arrange to provide
the Executive with Employee Benefits that are welfare benefits
(but not stock
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option, stock purchase, stock appreciation or similar
compensatory benefits) substantially similar to those that
the Executive was receiving or entitled to receive
immediately prior to the Termination Date (or, if greater,
immediately prior to the reduction, termination, or denial
described in Section 3(b)(ii)), except that the level of any
such Employee Benefits to be provided to the Executive may
be reduced in the event of a corresponding reduction
generally applicable to all recipients of or participants in
such Employee Benefits. If and to the extent that any
benefit described in the immediately preceding sentence is
not or cannot be paid or provided under any policy, plan,
program or arrangement of the Company or any Subsidiary, as
the case may be, then the Company will itself pay or provide
for the payment to the Executive, his dependents and
beneficiaries, of such Employee Benefits. Without otherwise
limiting the purposes or effect of Section 5, Employee
Benefits otherwise receivable by the Executive pursuant to
the first sentence of this Section 4(a)(ii) will be reduced
to the extent comparable welfare benefits are actually
received by the Executive from another employer during the
Continuation Period following the Executive's Termination
Date, and any such benefits actually received by the
Executive shall be reported by the Executive to the Company.
(b) Without limiting the rights of the Executive at law or in equity, if
the Company fails to make any payment or provide any benefit required
to be made or provided hereunder on a timely basis, the Company will
pay interest on the amount or value thereof at an annualized rate of
interest equal to the so-called composite "prime rate" as quoted from
time to time during the relevant period in the Northeast Edition of
THE WALL STREET JOURNAL. Such interest will be payable as it accrues
on demand. Any change in such prime rate will be effective on and as
of the date of such change.
(c) Notwithstanding any provision of this Agreement to the contrary, the
parties' respective rights and obligations under this Section 4 and
under Sections 5 and 7 will survive any termination or expiration of
this Agreement or the termination of the Executive's employment
following a Change in Control for any reason whatsoever.
5. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, but
subject to Section 5(h), in the event that this Agreement shall become
operative and it shall be determined (as hereafter provided) that any
payment or distribution by the Company or any of its affiliates to or
for the benefit of the Executive paid or payable or distributed or
distributable pursuant to the terms of this Agreement (a "Payment"),
would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") (or any
successor provision thereto) by reason of being considered "contingent
on a change in ownership or control" of the Company, within the
meaning of Section 280G of the
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Code (or any successor provision thereto) or to any similar tax
imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as
the "Excise Tax"), then the Executive shall be entitled to receive
an additional payment or payments (collectively, a "Gross-Up
Payment"). The Gross-Up Payment shall be 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 any
Excise Tax imposed upon the Gross-Up Payment, the Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payment.
(b) Subject to the provisions of Section 5(f), all determinations required
to be made under this Section 5, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether
a Gross-Up Payment is required to be paid by the Company to the
Executive and the amount of such Gross-Up Payment, if any, shall be
made by a nationally recognized accounting firm (the "Accounting
Firm") selected by the Executive in his sole discretion. The
Executive shall direct the Accounting Firm to submit its determination
and detailed supporting calculations to both the Company and the
Executive within 30 calendar days after the Termination Date, if
applicable, and any such other time or times as may be requested by
the Company or the Executive. If the Accounting Firm determines that
any Excise Tax is payable by the Executive, the Company shall pay the
required Gross-Up Payment to the Executive within fifteen business
days after receipt of such determination and calculations with respect
to any Payment to the Executive. If the Accounting Firm determines
that no Excise Tax is payable by the Executive, it shall, at the same
time as it makes such determination, furnish the Company and the
Executive an opinion that the Executive has substantial authority not
to report any Excise Tax on his federal, state or local income or
other tax return. As a result of the uncertainty in the application
of Section 4999 of the Code (or any successor provision thereto) and
the possibility of similar uncertainty regarding applicable state or
local tax law at the time of any determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In
the event that the Company exhausts or fails to pursue its remedies
pursuant to Section 5(f) and the Executive thereafter is required to
make a payment of any Excise Tax, the Executive shall direct the
Accounting Firm to determine the amount of the Underpayment that has
occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as
possible. Any such Underpayment shall be promptly paid by the Company
to, or for the benefit of, the Executive within fifteen business days
after receipt of such determination and calculations.
(c) The Company and the Executive shall each provide the Accounting Firm
access to and copies of any books, records and documents in the
possession of the Company or the Executive, as the case may be,
reasonably requested by the Accounting Firm, and otherwise cooperate
with the Accounting Firm in
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connection with the preparation and issuance of the determinations
and calculations contemplated by Section 5(b). Any determination
by the Accounting Firm as to the amount of the Gross-Up Payment
shall be binding upon the Company and the Executive.
(d) The federal, state and local income or other tax returns filed by the
Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax
payable by the Executive. The Executive shall make proper payment of
the amount of any Excise Payment, and at the request of the Company,
provide to the Company true and correct copies (with any amendments)
of his federal income tax return as filed with the Internal Revenue
Service and corresponding state and local tax returns, if relevant, as
filed with the applicable taxing authority, and such other documents
reasonably requested by the Company, evidencing such payment. If
prior to the filing of the Executive's federal income tax return, or
corresponding state or local tax return, if relevant, the Accounting
Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within fifteen business days pay to the
Company the amount of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by
Section 5(b) shall be borne by the Company. If such fees and expenses
are initially paid by the Executive, the Company shall reimburse the
Executive the full amount of such fees and expenses within fifteen
business days after receipt from the Executive of a statement therefor
and reasonable evidence of his payment thereof.
(f) The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if
successful, would require the payment by the Company of a Gross-Up
Payment. Such notification shall be given as promptly as practicable
but no later than 10 business days after the Executive actually
receives notice of such claim and the Executive shall further apprise
the Company of the nature of such claim and the date on which such
claim is requested to be paid (in each case, to the extent known by
the Executive). The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30-calendar-day period following
the date on which he gives such notice to the Company and (ii) the
date that any payment of amount with respect to such claim is due. If
the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive
shall:
(i) provide the Company with any written records or documents in
his possession relating to such claim reasonably requested by
the Company;
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to
time, including without limitation accepting legal
representation with respect to such claim by an attorney
competent in respect of the subject matter and reasonably
selected by the Company;
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(iii) cooperate with the Company in good faith in order effectively
to contest such claim; and
(iv) permit the Company to participate in any proceedings relating
to such claim;
PROVIDED, HOWEVER, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and shall indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and
expenses. Without limiting the foregoing provisions of this Section
5(f), the Company shall control all proceedings taken in connection
with the contest of any claim contemplated by this Section 5(f) and,
at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that the
Executive may participate therein at his own cost and expense) and
may, at its option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall determine;
PROVIDED, HOWEVER, that if the Company directs the Executive to pay
the tax claimed and xxx for a refund, the Company shall advance the
amount of such payment to the Executive on an interest-free basis and
shall indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income or other tax, including interest
or penalties with respect thereto, imposed with respect to such
advance; and PROVIDED FURTHER, HOWEVER, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim shall
be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(g) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(f), the Executive receives any refund
with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 5(f)) promptly
pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto).
If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5(f), a determination is made that the
Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its
intent to contest such denial or refund prior to the expiration of 30
calendar days after such determination, then such advance shall be
forgiven and shall not be required to be
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repaid and the amount of any such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid
by the Company to the Executive pursuant to this Section 5.
(h) Notwithstanding any provision of this Agreement to the contrary, if
(i) but for this sentence, the Company would be obligated to make a
Gross-Up Payment to the Executive, (ii) the aggregate "present value"
of the "parachute payments" to be paid or provided to the Executive
under this Agreement or otherwise does not exceed 1.15 multiplied by
three times the Executive's "base amount," and (iii) but for this
sentence, the net after-tax benefit to the Executive of the Gross-Up
Payment would not exceed $50,000 (taking into account both income
taxes and any Excise Tax) as compared to the maximum net after-tax
benefit to the Executive of parachute payments the present value of
which is not equal to or greater than three times the Executive's base
amount, then the payments and benefits to be paid or provided under
this Agreement will be reduced to the minimum extent necessary (but in
no event to less than zero) so that no portion of any payment or
benefit to the Executive, as so reduced, constitutes an "excess
parachute payment." For purposes of this Section 5(h), the terms
"excess parachute payment," "present value," "parachute payment," and
"base amount" will have the meanings assigned to them by Section 280G
of the Code. The determination of whether any reduction in such
payments or benefits to be provided under this Agreement is required
pursuant to the preceding sentence will be made at the expense of the
Company, if requested by the Executive or the Company, by the
Accounting Firm. The fact that the Executive's right to payments or
benefits may be reduced by reason of the limitations contained in this
Section 5(h) will not of itself limit or otherwise affect any other
rights of the Executive other than pursuant to this Agreement. In the
event that any payment or benefit intended to be provided under this
Agreement or otherwise is required to be reduced pursuant to this
Section 5(h), the Executive will be entitled to designate the payments
and/or benefits to be so reduced in order to give effect to this
Section 5(h). The Company will provide the Executive with all
information reasonably requested by the Executive to permit the
Executive to make such designation. In the event that the Executive
fails to make such designation within 10 business days of the
Termination Date, the Company may effect such reduction in any manner
it deems appropriate.
6. NO MITIGATION OBLIGATION. The Company hereby acknowledges that it will
be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive. Accordingly, the payment of
the severance compensation by the Company to the Executive in accordance
with the terms of this Agreement is hereby acknowledged by the Company
to be reasonable, and the Executive will not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor will any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset,
reduction or any other obligation on the part of the Executive
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hereunder or otherwise, except as expressly provided in the last sentence
of Section 4(a)(ii).
7. LEGAL FEES AND EXPENSES. It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's
rights under this Agreement by litigation or otherwise because the cost and
expense thereof would substantially detract from the benefits intended to
be extended to the Executive hereunder. Accordingly, if it should appear
to the Executive that the Company has failed to comply with any of its
obligations under this Agreement or in the event that the Company or any
other person takes or threatens to take any action to declare this
Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from, the Executive
the benefits provided or intended to be provided to the Executive
hereunder, the Company irrevocably authorizes the Executive from time to
time to retain counsel of Executive's choice, at the expense of the Company
as hereafter provided, to advise and represent the Executive in connection
with any such interpretation, enforcement or defense, including without
limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer,
stockholder or other person affiliated with the Company, in any
jurisdiction. Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive's entering into an attorney-client relationship
with such counsel, and in that connection the Company and the Executive
agree that a confidential relationship shall exist between the Executive
and such counsel. Without respect to whether the Executive prevails, in
whole or in part, in connection with any of the foregoing, the Company will
pay and be solely financially responsible for any and all attorneys' and
related fees and expenses incurred by the Executive in connection with any
of the foregoing.
8. COMPETITIVE ACTIVITY. During a period ending one year following the
Termination Date, if the Executive shall have received or shall be
receiving benefits under Section 4, and, if applicable, Section 5, the
Executive shall not, without the prior written consent of the Company,
which consent shall not be unreasonably withheld, engage in any Competitive
Activity.
9. EMPLOYMENT RIGHTS. Nothing expressed or implied in this Agreement will
create any right or duty on the part of the Company or the Executive to
have the Executive remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control. Any termination of
employment of the Executive or the removal of the Executive from the office
or position in the Company or any Subsidiary following the commencement of
any discussion with a third person that ultimately results in a Change in
Control shall be deemed to be a termination or removal of the Executive
after a Change in Control for purposes of this Agreement.
10. WITHHOLDING OF TAXES. The Company may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as the Company
is required to withhold pursuant to any law or government regulation or
ruling.
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11. SUCCESSORS AND BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation, reorganization or otherwise) to all
or substantially all of the business or assets of the Company, by
agreement in form and substance satisfactory to the Executive,
expressly to assume and agree to perform this Agreement in the same
manner and to the same extent the Company would be required to perform
if no such succession had taken place. This Agreement will be binding
upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly
or indirectly all or substantially all of the business or assets of
the Company whether by purchase, merger, consolidation, reorganization
or otherwise (and such successor shall thereafter be deemed the
"Company" for the purposes of this Agreement), but will not otherwise
be assignable, transferable or delegable by the Company.
(b) This Agreement will inure to the benefit of and be enforceable by the
Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the parties hereto
shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 11(a) and 11(b). Without limiting the
generality or effect of the foregoing, the Executive's right to
receive payments hereunder will not be assignable, transferable or
delegable, whether by pledge, creation of a security interest, or
otherwise, other than by a transfer by Executive's will or by the laws
of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company
shall have no liability to pay any amount so attempted to be assigned,
transferred or delegated.
12. NOTICES. For all purposes of this Agreement, all communications, including
without limitation notices, consents, requests or approvals, required or
permitted to be given hereunder will be in writing and will be deemed to
have been duly given when hand delivered or dispatched by electronic
facsimile transmission (with receipt thereof orally confirmed), or five
business days after having been mailed by United States registered or
certified mail, return receipt requested, postage prepaid, or three
business days after having been sent by a nationally recognized overnight
courier service such as Federal Express, UPS, or Purolator, addressed to
the Company (to the attention of the Secretary of the Company) at its
principal executive office and to the Executive at his principal residence,
or to such other address as any party may have furnished to the other in
writing and in accordance herewith, except that notices of changes of
address shall be effective only upon receipt.
13. GOVERNING LAW. The validity, interpretation, construction and performance
of this Agreement will be governed by and construed in accordance with the
substantive laws of
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the State of Illinois, without giving effect to the principles of conflict
of laws of such State.
14. VALIDITY. If any provision of this Agreement or the application of any
provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of such provision to any other person or circumstances will
not be affected, and the provision so held to be invalid, unenforceable or
otherwise illegal will be reformed to the extent (and only to the extent)
necessary to make it enforceable, valid or legal.
15. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto or compliance
with any condition or provision of this Agreement to be performed by such
other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements
or representations, oral or otherwise, expressed or implied with respect to
the subject matter hereof have been made by either party which are not set
forth expressly in this Agreement. References to Sections are to
references to Sections of this Agreement.
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16. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together
will constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.
Xxxxxx Corporation
By: /s/ Xxxxxxxx X. Xxxxxx XX
_________________________
Senior Vice President
/s/ Xxx X. Xxxxxx
_________________________
Xxx X. Xxxxxx
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