EXHIBIT 10ff
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 1st day of
January, 1999, by and between Xxxx Atlantic Corporation, its successors and
assigns ("Xxxx Atlantic"), and Xxxx X. Xxxxxxxxxx, Chief Executive Officer of
Xxxx Atlantic (the "Key Executive"). In this Agreement, "Xxxx Atlantic
Companies" means all of, and "Xxxx Atlantic Company" means any one of, Xxxx
Atlantic, all corporate subsidiaries or other companies affiliated with Xxxx
Atlantic, all companies in which Xxxx Atlantic directly or indirectly owns a
substantial equity interest, and their successors and assigns.
WHEREAS, Xxxx Atlantic and the Key Executive have previously entered
into an Executive Retention Agreement last amended March 14, 1997 (the
"Retention Agreement") and an Employment Agreement dated as of August 14, 1997
(the "Prior Employment Agreement"); and
WHEREAS, Xxxx Atlantic and the Key Executive wish to supersede, in their
entirety, the Retention Agreement and Prior Employment Agreement;
NOW, THEREFORE, for good and valuable consideration, the Key Executive
and Xxxx Atlantic hereby agree as follows:
1. Term of Employment. The term of employment under this Agreement
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(the "Term of Employment") shall commence on January 1, 1999 and end on December
31, 2003.
2. Obligations of the Xxxx Atlantic Companies. During the Term of
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Employment, the Xxxx Atlantic Companies shall have the following obligations and
duties and shall provide the following compensation to the Key Executive.
(a) Salary. Xxxx Atlantic shall employ the Key Executive as
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Chief Executive Officer and shall compensate the Key Executive at a base
salary of not less than $1,200,000 per year, subject to annual review by
the Board of Directors of Xxxx Atlantic (the "Board") in January, 2000
and each January thereafter during the Term of Employment.
(b) STIP. The Key Executive shall participate in the Xxxx
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Atlantic Senior Management Short Term Incentive Plan or any successor to
that plan ("STIP") and shall be eligible for a potential maximum award
which, for each performance year during the Term of Employment, shall be
equal to or greater than 2.25 multiplied by the Key Executive's base
salary in effect on January 1 of each such year.
(c) Stock Options. The Key Executive shall participate in the
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Xxxx Atlantic 1985 Incentive Stock Option Plan or any successor to that
plan (the "Stock Option Plan") and shall receive an annual grant of
options thereunder with a value equal to or greater than 2.5 multiplied
by the Key Executive's base salary in effect on the date of grant.
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Employment Agreement Page 1 Xxxx X. Xxxxxxxxxx
(d) Vacation. The Key Executive shall have the same holidays
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per calendar year recognized by Xxxx Atlantic for its management
employees and shall have an aggregate of 4 management personal days and
5 weeks vacation per calendar year, provided that such management
personal days and vacation days shall be scheduled with due regard to
the needs of the business.
(e) Corporate Aircraft. The Key Executive and his immediate
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family shall use Xxxx Atlantic corporate aircraft for all business and
personal travel, except that the Key Executive may use commercial
aircraft where use of corporate aircraft is not practical. The Key
Executive shall be responsible for the payment of taxes on imputed
income attributable to personal use of corporate aircraft, except that,
whenever the Key Executive uses corporate aircraft for business purposes
and is accompanied by an immediate family member whose use of corporate
aircraft results in the imputation of income to the Key Executive, the
Company shall pay the Key Executive additional cash compensation in an
amount sufficient to allow the Key Executive to pay taxes on (i) such
additional compensation, plus (ii) the income imputed to the Key
Executive because of such family member's use of corporate aircraft.
(f) Other Benefit Plans. To the extent not otherwise modified
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by the terms of this Agreement, the Key Executive shall be eligible to
participate in all of the benefit and compensation plans, and the
programs or perquisites, applicable to senior managers of Xxxx Atlantic,
as those plans and programs may be amended, supplemented, replaced or
terminated from time to time.
(g) Board of Directors. The Key Executive shall be nominated
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for election to the Board at each annual meeting of shareowners which
occurs prior to the end of the Term of Employment, and shall be
appointed as Chairman of the Board.
3. Obligations of the Key Executive. During the Term of Employment,
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the Key Executive shall have the following obligations and duties.
(a) Director and Officer. The Key Executive shall fully and
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faithfully perform his duties and responsibilities (i) as Chairman of
the Board, and (ii) as the Chief Executive Officer of Xxxx Atlantic,
reporting only to the Board.
(b) Entire Business Efforts. The Key Executive shall continue
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to diligently devote his entire business skill, time and effort to the
affairs of the Xxxx Atlantic Companies in accordance with the duties
assigned to him, and shall perform all such duties, and otherwise
conduct himself, in a manner reasonably calculated in good faith by him
to promote the best interests of the Xxxx Atlantic Companies. Prior to
the Key Executive's termination of employment, except to the extent
specifically permitted by the Board, and except for memberships on
boards of directors which the Key Executive holds on the date of this
Agreement, the Key Executive shall not, directly or indirectly, render
any services of a business, commercial or professional nature to any
other person or organization other than a Xxxx Atlantic Company or a
venture in which a Xxxx Atlantic Company has a financial interest,
whether or not the services are rendered for compensation.
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Employment Agreement Page 2 Xxxx X. Xxxxxxxxxx
4. Potential Interim Amount. Effective January 1, 1999, Xxxx
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Atlantic shall credit $3,224,483 to the Company Contribution sub-account
contained within the Key Executive's account under the Xxxx Atlantic Income
Deferral Plan ("IDP"). This credit shall be allocated in full to the Xxxx
Atlantic Shares Fund maintained under the IDP. The Key Executive shall have the
right to change this allocation from the Xxxx Atlantic Shares Fund to any other
permitted investment option in accordance with the terms of the IDP. The parties
acknowledge that such credit is in complete satisfaction of and will fully
discharge any right or entitlement that the Key Executive may have, now or in
the future, to a Potential Interim Amount ("PIA") under the IDP or under any
other benefit plan maintained by any Xxxx Atlantic Company.
5. Retention Agreement Payments.
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(a) Retention Award. Effective January 1, 1999, the Key
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Executive will forfeit any right or entitlement that he may have, now or
in the future, to the Retention Award provided for in Section 3(e) of
the Retention Agreement. In lieu thereof, Xxxx Atlantic shall credit the
Key Executive's account under the IDP with the number of Xxxx Atlantic
shares comprising, as of January 1, 1999, the Retention Award. This
credit valued as $1,016,636 shall be allocated in full to the Xxxx
Atlantic Shares Fund maintained under the IDP, provided that the Key
Executive shall have the right to change this allocation from the Xxxx
Atlantic Shares Fund to any other permitted investment option in
accordance with the terms of the IDP.
(b) Severance. Effective January 1, 0000, Xxxx Xxxxxxxx shall
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credit the Key Executive's account under the IDP with the value of the
Severance Payment, including the Global Balanced Fund Account, provided
for in Section 3(h) of the Retention Agreement. Such value shall be
determined in accordance with the provisions of the Retention Agreement,
except that the value shall be determined as of December 31, 1998. This
credit shall be allocated to the following investment funds maintained
under the IDP: a) $136,146 of the Severance Payment shall be credited to
the Xxxx Atlantic Shares Fund; and b) the balance of the Severance
Payment in the amount of $4,377,290 shall be credited to the Government
Money Market Fund. The Key Executive shall have the right to change
these allocations to any other permitted investment option in accordance
with the terms of the IDP. The parties acknowledge that these credits to
the IDP shall be in complete satisfaction of, and will fully discharge,
any right or entitlement that the Key Executive may have, now or in the
future, to the Severance Payment.
6. Special Incentive.
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(a) Incentive Accounts. Xxxx Atlantic shall establish three
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sub-accounts within the Key Executive's account under the IDP. These
sub-accounts shall consist of the 2001 Account, the 2002 Account and the
2003 Account (together, the "Incentive Accounts").
(b) Credit. Effective January 1, 1999, Xxxx Atlantic shall
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credit $6,000,000 to the 2001 Account, $2,000,000 to the 2002 Account,
and $2,000,000 to the 2003 Account. These credits shall be allocated to
the Global Balanced Fund maintained under the IDP, and shall continue to
be allocated to such Fund until the credits vest as provided in Section
6(c) of this Agreement. The credits, plus any earnings or losses, shall
constitute the "Incentive Awards". The Key Executive shall have no right
or
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Employment Agreement Page 3 Xxxx X. Xxxxxxxxxx
entitlement to these Awards unless, and only to the extent that, rights
to these Awards vest under Section 6(c) of this Agreement.
(c) Vesting. Provided the Key Executive is an "employee in
good standing" (as hereinafter defined) on the respective vesting dates
described in clauses (i) through (iii), the Key Executive's rights under
the IDP to the Incentive Awards shall vest as follows:
(i) 2001 Account: if "adjusted earnings per share"
(or "AEPS"), as hereinafter defined, for Xxxx Atlantic for the
fiscal year ending December 31, 2001 are less than 121.0% of the
AEPS for the fiscal year ending December 31, 1998 (the "1998
Base Year"), the Key Executive shall forfeit any right or
entitlement to the Incentive Award in the 2001 Account; if such
earnings are equal to 121.0% of the 1998 Base Year AEPS, the Key
Executive's rights to 70% of such Incentive Award shall vest as
of December 31, 2001; if such earnings are equal to or greater
than 136.0% of the 1998 Base Year AEPS, the Key Executive's
rights to 130% of such Incentive Award shall vest as of December
31, 2001; and, if such earnings are between 121.0% and 136.0% of
the 1998 Base Year AEPS, the Key Executive's rights to a pro
rated amount of between 70% to 130% of such Incentive Award
shall vest as of December 31, 2001;
(ii) 2002 Account: if AEPS for Xxxx Atlantic for the
fiscal year ending December 31, 2002 are less than 107.0% of the
AEPS for the fiscal year ending December 31,2001 (the "2001 Base
Year"), the Key Executive shall forfeit any right or entitlement
to the Incentive Award in the 2002 Account; if such earnings are
equal to 107.0% of the 2001 Base Year AEPS, the Key Executive's
rights to 70% of such Incentive Award shall vest as of December
31, 2002; if such earnings are equal to or greater than 112.0%
of the 2001 Base Year AEPS, the Key Executive's rights to 130%
of such Retention Award shall vest as of December 31, 2002; and,
if such earnings are between 107.0% and 112.0% of the 2001 Base
Year AEPS, the Key Executive's rights to a pro rated amount of
between 70% and 130% of such Incentive Award shall vest as of
December 31, 2002; and
(iii) 2003 Account: if AEPS for Xxxx Atlantic for the
fiscal year ending December 31, 2003 are less than 107.0% of the
AEPS for the fiscal year ending December 31, 2002 (the "2002
Base Year"), the Key Executive shall forfeit any right or
entitlement to the Incentive Award in the 2003 Account; if such
earnings are equal to 107.0% of the 2002 Base Year AEPS, the Key
Executive's rights to 70% of such Incentive Award shall vest as
of December 31, 2003; if such earnings are equal to or greater
than 112.0% of the 2002 Base Year AEPS, the Key Executive's
rights to 130% of such Incentive Award shall vest as of December
31, 2003; and, if such earnings are between 107.0% and 112.0% of
the 2002 Base Year AEPS, the Key Executive's rights to a pro
rated amount of between 70% and 130% of such Incentive Award
shall vest as of December 31, 2003.
(d) Adjusted Earnings Per Share and Earnings Targets.
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"Adjusted earnings per share" for any year shall be the earnings per
share of Xxxx Atlantic adjusted,
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Employment Agreement Page 4 Xxxx X. Xxxxxxxxxx
in the discretion of the Board, to eliminate or modify any
extraordinary, non-reoccurring, one-time or other such items necessary
to more appropriately reflect the ongoing results of the Xxxx Atlantic
businesses. In addition, the Board, in its discretion, may modify or
change the earnings targets set forth in Section 6(c) of this Agreement
to take into account acquisitions, mergers, dispositions,
reorganizations, changes in capital structure, or other such events.
(e) Definition of Employee in Good Standing. For purposes of
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this Agreement, the Key Executive will be considered to be an "employee
in good standing" on a given date if, on or before that date, the Key
Executive has not terminated employment for any reason (other than
"constructive discharge" as defined in Section 8(d) of this Agreement),
has not tendered oral or written notice of intent to resign or retire
effective as of a date on or before the given date (other than pursuant
to a "constructive discharge"), and has not behaved in a manner that
would be grounds for discharge with "cause" as defined in Section 8(b)
of this Agreement.
7. Stay Bonus.
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(a) Closing of Merger. If Xxxx Atlantic and GTE Corporation
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("GTE") merge their businesses (the "Merger") pursuant to the terms of
the Agreement and Plan of Merger dated as of July 27, 1998, among Xxxx
Atlantic, GTE, and Beta Gamma Corporation (the "Definitive Agreement"),
and if the Key Executive has remained an Employee in Good Standing of a
Xxxx Atlantic Company from the date of this Agreement to the closing
date of the Merger (the "Closing Date"), then, not later than 30
calendar days following the Closing Date, Xxxx Atlantic shall pay the
Key Executive a special bonus (a "Stay Bonus") consisting of a single
cash payment in an amount equal (before withholding of taxes) to 1.5
multiplied by the sum, as of the Closing Date, of (i) the Key
Executive's annual rate of base salary, and (ii) 50% of the Key
Executive's maximum short-term incentive under the STIP.
(b) Business Discretion of Xxxx Atlantic/Termination of
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Merger Plan. Nothing in this Agreement is intended to limit the
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discretion of any Xxxx Atlantic Company to take any action with regard
to the Merger which Xxxx Atlantic may consider appropriate, including,
without limitation, postponing the Closing Date or terminating the
Definitive Agreement. If the Definitive Agreement is terminated without
the Merger occurring, the Key Executive shall have no right to receive
the Stay Bonus or any portion of such bonus.
8. Terminations of Employment.
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(a) Voluntary Resignation, Retirement, or Discharge for
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Cause. In the event that, prior to the end of the Term of Employment,
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the Key Executive voluntarily resigns or retires for any reason (except
a "constructive discharge"), or is discharged by Xxxx Atlantic for
"cause", the Key Executive shall forfeit any and all rights to receive
the compensation and benefits set forth in Sections 2, 6 and 7 of this
Agreement which as of the relevant date have not yet been earned under
this Agreement, but shall otherwise be eligible to receive any and all
compensation and benefits for which a senior manager would be eligible
under the applicable provisions of the compensation and benefit plans
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Employment Agreement Page 5 Xxxx X. Xxxxxxxxxx
in which he is then eligible to participate, as those plans may be
amended from time to time.
(b) Cause. For purposes of this Agreement, the term "cause"
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shall mean (i) grossly incompetent performance or substantial or
continuing inattention to or neglect of the duties and responsibilities
assigned to the Key Executive; fraud, misappropriation or embezzlement
involving any Xxxx Atlantic Company; or a material breach of the
Employee Code of Business Conduct or Paragraphs 10 (Non-Compete/No
Solicitation), 11 (Return of Property; Intellectual Property Rights) or
12 (Proprietary and Confidential Information) of this Agreement; each of
the foregoing as determined in the reasonable discretion and judgment of
the Board, or (ii) commission of any felony of which the Key Executive
is finally adjudged guilty in a court of competent jurisdiction. In the
event that Xxxx Atlantic terminates the employment of the Key Executive
for Cause, it will state in writing the grounds for such termination and
provide this statement to the Key Executive within 10 business days
after the date of termination.
(c) Involuntary Terminations. Except in the case of a
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discharge for Cause, in the event that Xxxx Atlantic discharges the Key
Executive, or the Key Executive is "constructively discharged", prior to
the end of the Term of Employment, then the Key Executive shall be
entitled to receive, as liquidated damages, subject to signing and
delivering the Release (attached as Exhibit A), the following payments,
credits and benefits in lieu of any payment, credit or benefit otherwise
provided in Sections 2, 6 and 7 of this Agreement, provided that each
payment, credit and benefit shall be contingent upon the absence, at the
time such payment, credit or benefit is due, of any act that would
constitute a material breach of this Agreement:
(i) Salary: through the Term of Employment, on a
monthly basis, an amount equal to the monthly salary which would
have been paid to the Key Executive under Section 2 of this
Agreement, assuming that his annual rate of salary would have
been increased each January 1 by the greater of (A) 5%, or (B)
the general percentage increase, if any, approved by the Human
Resources Committee ("HRC") of the Board for comparable
positions in the senior management group based on the HRC's
review of market-median values for such comparable positions;
(ii) Short-Term Incentives: through the Term of
Employment, on an annual basis, not later than 30 days after the
date on which incentives are awarded by Xxxx Atlantic under the
STIP for the prior year's performance, an amount equal to the
value of the potential maximum award which the Key Executive
would have been entitled to receive under the STIP based on the
maximum STIP award for comparable positions in the senior
management group, without adjustment for individual performance;
(iii) Special Incentive: if the separation from service
occurs prior to December 31, 2001, vested rights under the IDP
to 100% of the Incentive Awards in each of the Incentive
Accounts; if the separation from service occurs after December
31, 2001 but before December 31, 2002, vested rights under the
IDP to 100% of the Retention Awards in the 2002 and 2003
Incentive Accounts; and,
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Employment Agreement Page 6 Xxxx X. Xxxxxxxxxx
if the separation from service occurs after December 31, 2002,
vested rights under the IDP to 100% of the Incentive Award in
the 2003 Incentive Account;
(iv) Stock Options: through the Term of Employment,
on an annual basis, within 30 days of the granting of stock
options for the year to senior managers, an amount equal to 2.5
multiplied by the annual salary amount determined in accordance
with clause (i) above; provided further, with respect to any and
all Xxxx Atlantic stock options which are outstanding on the
date of the Key Executive's separation from service, the Key
Executive shall be deemed, for purposes of determining the
duration of the Key Executive's right to exercise any and all
such stock options, to have remained in active service with Xxxx
Atlantic continuously through the Term of Employment, and then
to have separated from service with whatever rights would then
be applicable to a holder of such options under the Stock Option
Plan;
(v) IDP Benefits: through the Term of Employment,
company credits to the Company Contribution sub-account
contained within the Key Executive's account under the IDP to
the fullest extent provided, and at the same time such amounts
would have been credited, as if the Key Executive had remained
actively employed until the end of the Term of Employment and
received the salary and maximum STIP awards determined in
accordance with clauses (i) and (ii) above; provided further,
that Xxxx Atlantic shall also credit to such IDP sub-account an
amount each year equal to the sum of (A) the amount which the
Key Executive would otherwise have been eligible to receive as
company matching contributions under the Xxxx Atlantic Savings
Plan or any successor to that plan (if he had fully participated
in contributions to that plan) and (B) the pay credits which the
Key Executive would otherwise have been eligible to receive
under the Xxxx Atlantic Cash Balance Plan or any successor to
that plan;
(vi) Split- Dollar Benefits: regardless of whether
the Key Executive is retirement eligible at the time of his
separation from service, split-dollar life insurance benefits
applicable to a retiring participating senior manager, under the
terms of the Xxxx Atlantic Senior Management Estate Management
Program;
(vii) Flexible Perquisites: through the Term of
Employment, on a monthly basis, $3,000 in lieu of the Flexible
Perquisites Account allowance that the Key Executive would have
been entitled to receive;
(viii) Stay Bonus: if the Merger subsequently occurs
pursuant to the Definitive Agreement, a single cash payment, not
later than 30 days after the Closing Date of the Merger, which
shall be equal (before withholding of taxes) to the Stay Bonus
which would otherwise have become payable under Section 7(a) of
this Agreement, provided that the date of separation from
service shall be substituted for the Closing Date for purposes
of calculating the dollar amount of such payment; and
(ix) Other: accommodations for travel, office support
and facilities, executive assistance and other perquisites as
provided previous retiring Chairmen.
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Employment Agreement Page 7 Xxxx X. Xxxxxxxxxx
(d) Constructive Discharge. The Key Executive shall be deemed
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to have been "constructively discharged" for purposes of this Agreement
if the Key Executive is an Employee in Good Standing and he terminates
his employment for any of the following reasons: Xxxx Atlantic (or the
Key Executive's employing company) has materially breached this
Agreement; the Key Executive's responsibilities have been significantly
reduced in type or scope; there has been a significant adverse change in
the Key Executive's reporting relationship; there has been a significant
adverse change in the Key Executive's relative compensation (including a
negative individual performance adjustment which causes the Key
Executive's STIP award for a particular year to be reduced by 10% or
more); the Key is removed from the position of Chairman of the Board
during the Term of Employment; or there has been a "change of control"
of Xxxx Atlantic. For purposes of this Agreement, a "change of control"
of Xxxx Atlantic shall mean that any of the following events or
circumstances has occurred:
(i) any "Person" (as such term is used in sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
becomes a beneficial owner, directly or indirectly, of shares of
one or more classes of stock of Xxxx Atlantic representing 20%
or more of the total voting power of Xxxx Atlantic's then
outstanding voting stock, provided, however, that if such
beneficial ownership is acquired in a transaction that has been
negotiated and approved by the Board, such acquisition of
beneficial ownership shall not be treated as a change of control
of Xxxx Atlantic for purpose of this Agreement;
(ii) a tender offer (for which a filing has been or is
required to be made with the Securities and Exchange Commission
under section 14(d) of the Securities Exchange Act of 1934) is
made for the stock of Xxxx Atlantic, and the Person making the
offer owns or has accepted for payment shares of one or more
classes of Xxxx Atlantic stock which represent, when combined
with any shares otherwise acquired and owned by such Person, 20%
or more of the total voting power of Xxxx Atlantic's then
outstanding stock, provided, however, that if such tender offer
has been negotiated and approved by the Board, such tender offer
and stock acquisition shall not be treated as a change of
control of Xxxx Atlantic for purposes of this Agreement; or
(iii) there ceases to be a majority of the Board
comprised of individuals who either (A) have been members of the
Board continuously for a period of not less than two years, or
(B) are new directors whose election by the Board or nomination
for election by shareowners of Xxxx Atlantic was approved by a
vote of at least two-thirds of the directors then in office who
either were directors described in clause (A) hereof or whose
election or nomination for election was previously so approved.
(e) Disability or Death. If, during the Term of Employment at
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a time when the Key Executive is an Employee in Good Standing, the Key
Executive terminates employment on account of disability (within the
meaning of the applicable disability benefit plans in which the Key
Executive participates from time to time) or dies, and provided Xxxx
Atlantic receives a Release in the form of Exhibit A from the Key
Executive
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Employment Agreement Page 8 Xxxx X. Xxxxxxxxxx
(in the case of disability) or from his estate (in the case of death),
then Xxxx Atlantic shall pay to the Key Executive (in the case of
disability) or pay to the Key Executive's estate (in the case of death)
the amounts determined as if, at the date of termination of employment
on account of disability or death, the Key Executive had been terminated
without cause under Section 8(c) of this Agreement; provided, however,
that in lieu of the amount described in Section 8(c)(viii) of this
Agreement (the "Stay Bonus Amount"), the Key Executive (or his estate)
shall receive the Stay Bonus Amount multiplied by the following
fraction: the numerator shall be the number of days that have elapsed
between the date of this Agreement and the date of the Key Executive's
death or disability, and the denominator shall be the number of days
that have elapsed between the date of this Agreement and the Closing
Date of the Merger; and, provided further, that in the case of a
termination of employment on account of disability, the amounts paid
pursuant to Sections 8(c)(i) and (ii) of this Agreement shall reduce
dollar for dollar the disability benefits which would otherwise be
payable to the Key Executive during the remainder of the Term of
Employment under the various disability benefit plans in which he
participates.
9. Payments Subject to Excise Tax. In the event that it shall be
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determined, in the manner described in Exhibit B, that any payment or
distribution by any Xxxx Atlantic Company to or for the benefit of the Key
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, Xxxx
Atlantic shall pay the Key Executive an additional amount, determined in
accordance with and subject to the provisions of Exhibit B, to compensate the
Key Executive for his excise tax cost.
10. Prohibition Against Competitive Activities.
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(a) Prohibited Conduct by the Key Executive. During the
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period of the Key Executive's employment with any Xxxx Atlantic Company,
and for a period of 24 months following the Key Executive's termination
of employment for any reason from all Xxxx Atlantic Companies, the Key
Executive, without the prior written consent of the Board, shall not:
(i) personally engage in "Competitive Activities" (as
defined in Section 9(b) of this Agreement); or
(ii) work for, own, manage, operate, control or
participate in the ownership, management, operation or control
of, or provide consulting or advisory services to, any
individual, partnership, firm, corporation or institution
engaged in Competitive Activities, or any company or person
affiliated with such person or entity engaged in Competitive
Activities; provided, however, that the Key Executive's purchase
or holding, for investment purposes, of securities of a
publicly-traded company shall not constitute "ownership" or
"participation in ownership" for purposes of this paragraph so
long as the Key Executive's equity interest in any such company
is less than a controlling interest.
(b) Competitive Activities. For purposes of this Agreement,
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"Competitive Activities" means business activities relating to products
or services of the same or similar type as the products or services
which (i) are sold (or, pursuant to an existing
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Employment Agreement Page 9 Xxxx X. Xxxxxxxxxx
business plan, will be sold) to paying customers of one or more Xxxx
Atlantic Companies, and (ii) for which the Key Executive then has
responsibility to plan, develop, manage, market or oversee, or had any
such responsibility within the prior 24 months. Notwithstanding the
previous sentence, a business activity will not be treated as a
Competitive Activity if the geographic marketing area of the relevant
products or services sold by the Key Executive or a third party does not
overlap with the geographic marketing area for the applicable products
and services of the Xxxx Atlantic Companies.
(c) No Solicitation of Xxxx Atlantic Employees. During the
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period of the Key Executive's employment with any Xxxx Atlantic Company,
and for a period of 24 months following the Key Executive's termination
of employment for any reason from all Xxxx Atlantic Companies, the Key
Executive shall not, without the consent of the Board:
(i) recruit or solicit any active employee of any Xxxx
Atlantic Company for employment or for retention as a consultant
or service provider;
(ii) hire or participate (with another company or third
party) in the process of hiring (other than for a Xxxx Atlantic
Company) any person who is then an active employee of any Xxxx
Atlantic Company, or provide names or other information about
Xxxx Atlantic employees to any person or business (other than a
Xxxx Atlantic Company) under circumstances which could lead to
the use of that information for purposes of recruiting or
hiring; or
(iii) interfere with the relationship of any Xxxx
Atlantic Company with any of its employees, agents, or
representatives.
(d) Waiver. Nothing in this Agreement shall bar the Key
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Executive from requesting, at the time of the Key Executive's
termination of employment or at any time thereafter, that the Board
waive, in its sole discretion, Xxxx Atlantic's rights to enforce some or
all of this Section.
11. Return of Property; Intellectual Property Rights. The Key
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Executive agrees that on or before the Key Executive's termination of employment
for any reason with all Xxxx Atlantic Companies, the Key Executive shall return
to the appropriate Xxxx Atlantic Company all property owned by each such company
or in which any such company has an interest. The Key Executive acknowledges
that Xxxx Atlantic or an applicable Xxxx Atlantic Company is the rightful owner
of any programs, ideas, inventions, discoveries, copyright material or
trademarks which the Key Executive may have originated or developed, or assisted
in originating or developing, during the Key Executive's period of employment
with any Xxxx Atlantic Company, where any such origination or development
involved the use of company time or resources, or the exercise of the Key
Executive's responsibilities for or on behalf of any such company. The Key
Executive shall at all times, both before and after termination of employment,
cooperate with Xxxx Atlantic in executing and delivering documents requested by
any Xxxx Atlantic Company, and taking any other actions, that are necessary or
requested by Xxxx Atlantic to assist any Xxxx Atlantic Company in patenting,
copyrighting or registering any programs, ideas, inventions, discoveries,
copyright material or trademarks, and to vest title thereto in the applicable
company.
12. Proprietary and Confidential Information. The Key Executive
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shall at all times preserve the confidentiality of all proprietary information
and trade secrets of any and all Xxxx
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Employment Agreement Page 10 Xxxx X. Xxxxxxxxxx
Atlantic Companies, except to the extent that disclosure of such information is
legally required. "Proprietary information" means information that has not been
disclosed to the public, and which is treated as confidential within the
business of any Xxxx Atlantic Company.
13. Nondisclosure. Unless and until the precise terms of this Agreement,
-------------
and the precise amount of any payment eligible to be paid or actually paid under
this Agreement, are disclosed in writing to the public by any Xxxx Atlantic
Company, the Key Executive shall hold the terms of this Agreement and the amount
of any payment, benefit, credit, or right hereunder in strict confidence, except
that the Key Executive may disclose such details (i) on a confidential basis to
his spouse (if any), and to any financial counselor, tax adviser or legal
counsel retained by the Key Executive, or (ii) to the extent such disclosure is
legally required.
14. Assignment by Xxxx Atlantic. The obligations of Xxxx Atlantic
---------------------------
hereunder shall be the obligations of any and all successors and assigns of Xxxx
Atlantic. Xxxx Atlantic may assign this Agreement without the Key Executive's
consent to any company that acquires all or substantially all of the stock or
assets of Xxxx Atlantic, or into which or with which Xxxx Atlantic is merged or
consolidated. This Agreement may not be assigned by the Key Executive, and no
person other than the Key Executive (or the Key Executive's estate) may assert
the rights of the Key Executive under this Agreement.
15. Non-Benefit Bearing Payments. The amounts to be paid, provided or
----------------------------
credited under Sections 4, 5, 6, 7, 8, and 9 of this Agreement shall not be
treated as compensation for purposes of computing or determining any additional
benefit payable under any savings plan, insurance plan, pension plan, or other
employee benefit plan maintained by any Xxxx Atlantic Company.
16. Deferrals under IDP. Amounts otherwise payable to the Key Executive
-------------------
under Sections 7 or 8 of this Agreement may be deferred under the IDP or any
successor plan, but only if and to the extent that a valid deferral election is
in place and deferral of such amounts is permitted under the terms of the IDP or
successor plan.
17. Forfeiture of IDP Amounts. The Key Executive acknowledges that if he
-------------------------
breaches Section 10 (Non-Compete/No Solicitation) of this Agreement or engages
in serious misconduct that is contrary to written policies of Xxxx Atlantic and
is harmful to any Xxxx Atlantic Company or its reputation, he may forfeit any
balance remaining in any Company Contribution sub-account contained within his
account under the IDP.
18. Waiver. Failure to insist upon strict compliance with any of the
------
terms, covenants or conditions of this Agreement shall not be deemed a waiver of
such term, covenant or condition, nor shall any waiver or relinquishment of any
right or power hereunder at any one or more times be deemed a waiver or
relinquishment of such right or power at any other time or times.
19. Additional Remedies. In addition to any other rights or remedies,
-------------------
whether legal, equitable or otherwise, which each of the parties may have, the
Key Executive acknowledges that Sections 10 (Non-Compete/No Solicitation), 11
(Return of Property), 12 Proprietary and Confidential Information), and 13
(Nondisclosure) of this Agreement are essential to the continued good will and
profitability of Xxxx Atlantic and further acknowledges that the application and
operation thereof shall not involve a substantial hardship upon the Key
Executive's future
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Employment Agreement Page 11 Xxxx X. Xxxxxxxxxx
livelihood. The parties hereto further recognize that irreparable damage to Xxxx
Atlantic will result in the event that these sections of the Agreement are not
specifically enforced and that monetary damages will not adequately protect Xxxx
Atlantic from a breach of these sections of the Agreement. If any dispute arises
concerning the violation by the Key Executive of these sections of the
Agreement, the parties hereto agree that an injunction may be issued restraining
such violation pending the determination of such controversy, and no bond or
other security may be required in connection therewith.
20. Reformation and Severability. The Key Executive and Xxxx Atlantic
----------------------------
agree that the agreements contained herein and within the Release shall each
constitute a separate agreement independently supported by good and adequate
consideration, and shall each be severable from the other provisions of the
Agreement and the Release. If an arbitrator or court of competent jurisdiction
determines that any term, provision or portion of this Agreement or the Release
is void, illegal or unenforceable, the other terms, provisions and portions of
this Agreement or the Release shall remain in full force and effect and the
terms, provisions and portions that are determined to be void, illegal or
unenforceable shall either be limited so that they shall remain in effect to the
extent permissible by law, or such arbitrator or court shall substitute, to the
extent enforceable, provisions similar thereto or other provisions, so as to
provide to Xxxx Atlantic, to the fullest extent permitted by applicable law, the
benefits intended by this Agreement and the Release.
21. GTE Merger. If the Merger occurs pursuant to the Definitive
----------
Agreement, any action taken to implement succession as contemplated under
Section 7.10 of the Definitive Agreement shall not result in a breach of this
Agreement or constitute grounds for Constructive Discharge under Section 8(d) of
this Agreement, and this Agreement shall be amended to the extent necessary to
permit such succession.
22. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been duly given if delivered by hand or
messenger, transmitted by telex or telegram or mailed by registered or certified
mail, return receipt requested and postage prepaid, as follows:
(a) If to Xxxx Atlantic, to:
Xxxx Atlantic Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Executive Vice President
and General Counsel
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Employment Agreement Page 12 Xxxx X. Xxxxxxxxxx
(b) If to the Key Executive, to:
0 Xxxxx Xxxxxx Xxxx
Xxxx Xxxxx, XX 00000
or to such other person or address as either of the parties shall hereafter
designate to the other from time to time by similar notice.
23. Arbitration. Any dispute arising out of or relating to this
-----------
Agreement, except any dispute arising out of or relating to Sections 10 through
13 of this Agreement, shall be settled by final and binding arbitration, which
shall be the exclusive means of resolving any such dispute, and the parties
specifically waive all rights to pursue any other remedy, recourse or relief.
With respect to disputes by Xxxx Atlantic arising out of or relating to Sections
10 through 13 of this Agreement, Xxxx Atlantic has retained all its rights to
legal and equitable recourse and relief, including but not limited to injunctive
relief. Notice of the existence of a dispute which a party wishes to have
resolved by arbitration shall be provided pursuant to Section 22 of this
Agreement. The arbitration shall be expedited and conducted in New York, New
York pursuant to the Center for Public Resources ("CPR") Rules for
Non-Administered Arbitration of Employment Disputes in effect at the time of
notice of the dispute before one neutral arbitrator appointed by CPR from the
CPR Panel of Neutrals unless the parties mutually agree to the appointment of a
different neutral arbitrator. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Sections 1-16, and judgment upon the award
rendered by the arbitration may be entered by any court having jurisdiction. The
finding of the arbitrator may not change the express terms of this Agreement and
shall be consistent with the arbitrator's understanding of the findings a court
of proper jurisdiction would make in applying the applicable law to the facts
underlying the dispute. In no event whatsoever shall such an arbitration award
include any award of damages other than the amounts in controversy under this
Agreement. The parties waive the right to recover, in such arbitration, punitive
damages.
24. Governing Law. This Agreement shall be construed and enforced in
-------------
accordance with the laws of the State of New York.
25. Entire Agreement. Except for the terms of other compensation and
----------------
benefit plans in which the Key Executive participates, this Agreement shall set
forth the entire understanding of Xxxx Atlantic and the Key Executive and shall
supersede all prior agreements and communications, whether oral or written,
between Xxxx Atlantic and the Key Executive including, without limitation, the
Retention Agreement and the Prior Employment Agreement. This Agreement shall not
be modified except by written agreement of the Key Executive and Xxxx Atlantic.
26. Tax Withholding. Any payment made pursuant to this Agreement will be
---------------
subject to applicable withholding taxes under federal, state and local law.
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Employment Agreement Page 13 Xxxx X. Xxxxxxxxxx
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
XXXX ATLANTIC CORPORATION
By:
-------------------------
THE KEY EXECUTIVE
----------------------------
Xxxx X. Xxxxxxxxxx
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Employment Agreement Page 14 Xxxx X. Xxxxxxxxxx
EXHIBIT A
---------
THIS RELEASE (the "Release") is entered into by _____________________
(the "Key Executive"), for the benefit of XXXX ATLANTIC CORPORATION (the
"Company"), and all companies, and their officers, directors and employees,
which are affiliated with the Company or in which the Company owns a substantial
economic interest, and any benefit plan maintained by any Xxxx Atlantic Company
(or any plan administrator of any such plan). Capitalized terms in this document
which are not otherwise defined herein shall have the respective meanings
assigned to them in the Employment Agreement between the Company and the Key
Executive, dated ____________, _____ (the "Agreement").
WHEREAS, the Key Executive has separated from service with the Key
Executive's employing company (the "Employer") on __________ , _____ (the
"Separation Date") pursuant to the terms of the Agreement, and the Key Executive
wishes to execute this Release as contemplated under the terms of the Agreement.
NOW, THEREFORE, the Key Executive affirms as follows:
1. The Key Executive hereby waives any and all claims which the Key
Executive might have against any Xxxx Atlantic Company, and any benefit plan
maintained by any Xxxx Atlantic Company (or any plan administrator of any such
plan), for salary payments, vacation pay, incentives, bonuses, or other
remuneration or employee benefits of any kind, with the exception of any
obligations of the Company or Employer arising after the Separation Date under
Sections 8 and 9 of the Agreement.
2. Except as provided in Section 1 hereof, the Key Executive hereby
voluntarily releases and discharges each and every Xxxx Atlantic Company and
their successors and assigns, and the directors, officers, employees, and agents
of each of them, and any benefit plan maintained by any Xxxx Atlantic Company
(or any plan administrator of any such plan), of and from any and all debts,
obligations, claims, demands, judgments or causes of action of any kind
whatsoever, known or unknown, in tort, contract, by statute or on any other
basis, for equitable relief, compensatory, punitive or other damages, expenses
(including attorneys' fees), reimbursements or costs of any kind which the Key
Executive might have or assert against any of said entities or persons as of the
Separation Date by reason of the Key Executive's employment by any Xxxx Atlantic
Company or the termination of said employment, and all circumstances related
thereto, including but not limited to, any and all claims, demands, rights and
causes of action, including those which might arise out of allegations relating
to a claimed breach of an alleged oral or written employment contract, or
relating to purported employment discrimination or civil rights violations, such
as, but not limited to, those arising under Title VII of the Civil Rights Act of
1964 (42 U.S.C. Section 2000e et seq.), the Civil Rights Acts of 1866 and 1871
(42 U.S.C. Sections 1981 and 1983), Executive Order 11246, as amended, the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C. Section 621 et
seq.), the Equal Pay Act of 1963 (29 U.S.C. Section 206(d)(1)), the
Rehabilitation Act of 1973 (29 U.S.C. Sections 701-794), the Civil Rights Act of
1991, the Americans with Disabilities Act, the Employee Retirement Income
Security Act ("ERISA") or any other applicable federal, state or local
employment discrimination statute or ordinance.
3. The Key Executive hereby reaffirms all covenants and promises given
by the Key Executive under the Agreement, and all other terms and conditions of
the Agreement, in all respects.
4. Should any provision of this Release be declared or be determined by
any court to be illegal or invalid, the validity of the remaining parts, terms
or provisions shall not be affected thereby, and said illegal or invalid part,
term or provision shall be deemed not to be a part of this Release.
STATEMENT BY THE KEY EXECUTIVE WHO IS SIGNING BELOW: THE COMPANY HAS
---------------------------------------------------
ADVISED ME IN WRITING TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE. THE COMPANY HAS FULFILLED ITS DUTIES TO ME UNDER THE OLDER WORKERS
BENEFITS PROTECTION ACT, AND I ACKNOWLEDGE THAT THIS RELEASE IS LEGALLY
ENFORCEABLE BY THE COMPANY. I HAVE CAREFULLY READ AND FULLY UNDERSTAND THE
PROVISIONS OF THIS RELEASE AND HAVE HAD SUFFICIENT TIME AND OPPORTUNITY (OVER A
PERIOD OF SUBSTANTIALLY MORE THAN 21 DAYS) TO CONSULT WITH MY PERSONAL TAX,
FINANCIAL AND LEGAL ADVISORS PRIOR TO EXECUTING THIS DOCUMENT, AND I INTEND TO
BE LEGALLY BOUND BY ITS TERMS. I UNDERSTAND THAT I MAY REVOKE THIS RELEASE
WITHIN SEVEN (7) DAYS FOLLOWING MY SIGNING, AND THIS RELEASE WILL NOT BECOME
ENFORCEABLE OR EFFECTIVE UNTIL THAT SEVEN-DAY PERIOD HAS EXPIRED.
THE UNDERSIGNED, intending to be legally bound, has executed this
Release as of the ___ day of _________, _____, that being the Key Executive's
Separation Date.
THE KEY EXECUTIVE
Signed:
--------------------------------
THIS IS A RELEASE
READ CAREFULLY BEFORE SIGNING
--------------------------------------------------------------------------------
Employment Agreement Page 16 Xxxx X. Xxxxxxxxxx
EXHIBIT B
---------
Determination of Gross-Up Payment. In the event that any payment or
---------------------------------
benefit received or to be received by the Key Executive pursuant to the terms of
the Agreement (the "Contract Payments") or of any other plan, arrangement or
agreement of any Xxxx Atlantic Company ("Other Payments" and, together with the
Contract Payments, the "Payments") would be subject to the excise tax (the
"Excise Tax") imposed by section 4999 of the Internal Revenue Code (the "Code")
as determined in accordance with this paragraph, Xxxx Atlantic shall pay to the
Key Executive, at the time specified below, an additional amount (the "Gross-Up
Payment") such that the net amount retained by the Key Executive, after
deduction of the Excise Tax on Payments and any federal, state and local income
tax and the Excise Tax upon the Gross-Up Payment, and any interest, penalties or
additions to tax payable by the Key Executive with respect thereto, shall be
equal to the total present value (using the applicable federal rate (as defined
in Section 1274(d) of the Code) in such calculation) of the Payments at the time
such Payments are to be made. For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amount of such Excise Tax,
(i) the total amount of the Payments shall be treated as "parachute payments"
within the meaning of section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, except to the extent that, in the written opinion
of independent counsel selected by Xxxx Atlantic and reasonably acceptable to
the Key Executive ("Independent Counsel"), a Payment (in whole or in part) does
not constitute a "parachute payment" within the meaning of section 280G(b)(2) of
the Code, or such "excess parachute payments" (in whole or in part) are not
subject to the Excise Tax; (ii) the amount of the Payments that shall be treated
as subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Payments or (B) the amount of "excess parachute payments" within
the meaning of section 280G(b)(1) of the Code (after applying clause (i)
hereof); and (iii) the value of any noncash benefits or any deferred payment or
benefit shall be determined by Independent Counsel in accordance with the
principles of sections 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Key Executive shall be
deemed to pay federal income taxes at the highest marginal rates of federal
income taxation applicable to individuals in the calendar year in which the
Gross-Up Payment is to be made and state and local income taxes at the highest
marginal rates of taxation applicable to individuals as are in effect in the
state and locality of the Key Executive's residence in the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes that can be obtained from deduction of such state and local
taxes, taking into account any limitations applicable to individuals subject to
federal income tax at the highest marginal rates.
Timing of Gross-Up Payment. The Gross-Up Payments provided for in this
--------------------------
Exhibit B shall be made upon the earlier of (i) the payment to the Key Executive
of any Payment or (ii) the imposition upon the Key Executive or payment by the
Key Executive of any Excise Tax.
Adjustments to Gross-Up Payment. If it is established pursuant to a
-------------------------------
final determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax is less than the
amount previously taken into account hereunder, the Key Executive shall repay to
Xxxx Atlantic within thirty (30) days of
--------------------------------------------------------------------------------
Employment Agreement Page 17 Xxxx X. Xxxxxxxxxx
the Key Executive's receipt of notice of such final determination or opinion the
portion of the Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and federal, state and
local income tax imposed on the Gross-Up Payment being repaid by the Key
Executive if such repayment results in a reduction in Excise Tax or a federal,
state and local income tax deduction) plus any interest received by the Key
Executive on the amount of such repayment, provided, however, that if any such
amount has been paid by the Key Executive as an Excise Tax or other tax, the Key
Executive shall cooperate with Xxxx Atlantic in seeking a refund of any tax
overpayments, and shall not be required to make repayments to Xxxx Atlantic
until the overpaid taxes and interest thereon are refunded to the Key Executive.
If it is established pursuant to a final determination of a court or an Internal
Revenue Service proceeding or the written opinion of Independent Counsel that
the Excise Tax exceeds the amount taken into account hereunder (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), Xxxx Atlantic shall make an additional
Gross-Up Payment in respect of such excess within thirty (30) days of Xxxx
Atlantic's receipt of notice of such final determination or opinion.
Change in Law or Interpretation. In the event of any change in, or
-------------------------------
further interpretation of, sections 280G or 4999 of the Code and the regulations
promulgated thereunder, the Key Executive shall be entitled, by written notice
to Xxxx Atlantic, to request a written opinion of Independent Counsel regarding
the application of such change to any of the foregoing, and Xxxx Atlantic shall
use its best efforts to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Independent Counsel incurred in connection
with this Exhibit B shall be borne by Xxxx Atlantic.
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Employment Agreement Page 18 Xxxx X. Xxxxxxxxxx
