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Exhibit 10.23
EMPLOYMENT AGREEMENT
Anixter Inc., ("Company") and Xxxxxx X. Xxxxxx ("Executive") agree as follows:
1. Company will employ Executive and Executive will work for Company in an
executive capacity until termination of Executive's employment on the date
specified in a written notice of termination delivered by either party to
the other, which date, except in the case of Good Cause for Termination,
shall be at least six months after the delivery of the written notice of
termination.
2. "Good Cause for Termination" shall mean:
- Death of Executive or total disability of Executive as defined in
Company's then long-term disability insurance policy.
- In the case of termination by Executive, Executive is required to
relocate without Executive's concurrence, Executive's then level
of responsibilities are significantly reduced, Executive is no
longer the Chief Financial Officer (with all responsibilities
that normally accompany that position) of the business enterprise
that includes the Company and the Issuer of the stock to be
purchased pursuant to the options to purchase stock that have
been granted to Executive by AXE or Company, or Executive's then
salary, regular bonus opportunity and benefits are significantly
reduced and, in each case, this situation is not corrected by
Company within 15 days of notice from Executive, provided that a
reduction in level of responsibilities during first 6 months or a
failure to continue as Chief Financial Officer as provided above
during the first 12 months following a notice of termination by
Executive or the occurrence of a Change in Control shall not be
considered Good Cause for Termination, during and only during
such 6 or 12 month period as the case may be.
- In the case of termination by Company, repeated material failure
by Executive to follow appropriate instructions, material breach
by Executive of his fiduciary obligations to the Company, or
commission of dishonest acts by Executive that in the reasonable
judgment of Company makes the continuation of Executive's
employment inappropriate.
3. A "Change of Control" shall occur if (a) substantially all the assets of
Company or its parent Anixter International Inc. ("AXE") are sold to a
Third Party or a Third Party becomes the Beneficial Owner of the greater of
(I) 25%, or (ii) the percentage owned by Xxx Xxxx and his affiliates, of
Company's or AXE's securities that vote for
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the election of directors or (b) a majority of the Board of Directors of
Company or AXE were not nominated for election by the Board of Directors of
Company or AXE. A "Third Party" is any Person, other than Xxxxxx Xxxx or
his Affiliates and other than Anixter International Inc. or its
subsidiaries. "Person," "Affiliates," and "Beneficial Owner" shall be
defined as those terms are defined pursuant to the Securities Exchange Act
of 1934, as amended.
4. If within the four year period following a Change of Control, the
employment of Executive is terminated by Company without Good Cause for
Termination or is terminated by Executive with Good Cause for Termination,
Executive will be entitled to the following Severance Benefits (except as
indicated in the case of termination for death or disability):
- All Executive's options to purchase stock of AXE or Company,
which are not already vested, will immediately vest and be
exercisable for the lesser of two years or their remaining life.
(This is not applicable in the case of termination for death or
disability.)
- Executive will be paid at the time of termination a pro rata
portion of the regular annual incentive bonus opportunity for the
partial year in which terminated. The portion of this bonus
dependent on earnings or other objective goals shall be based on
performance through the last completed fiscal quarter and target
performance thereafter. The portion dependent on subjective goals
shall be based on the amount for target performance.
- Executive will be paid the amount being held for Executive under
Company's Enhanced Management Incentive Plan for 1999-2000 as
provided in Section 6 below.
- Executive will be paid monthly for the next two years (`Severance
Period") an amount equal to 140.68% of Executive's then salary
for the portion of this period prior to 2001 and an amount equal
to 181.36% of Executive's then salary for the portion of this
period after 2000. (This is not applicable in the case of
termination for death or disability.)
- Executive will be provided medical and life insurance coverage
during the Severance Period on same terms as such coverage was
provided prior to the Change of Control. (This is not applicable
in the case of termination for death or disability.)
- All Executive's deferred compensation and earnings thereon under
Company's Deferred Compensation Plan will be paid in accordance
with the terms of that plan
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These Severance Benefits shall be in lieu of the six-month notice of
termination by Company provided by Section 1. These Severance Benefits
shall not be subject to reduction or offset for any compensation Executive
may earn from others during the Severance Period.
5. A. If in connection with or following a Change of Control, there is a
transaction or a series of related transactions in which 25% or more of
AXE's common stock will be converted to or exchanged for any consideration
other than publicly traded common stock ("Non-stock Consideration"), the
unvested stock options of Executive will be exercisable for the period and
to the extent necessary to enable Executive to receive in such transaction
or series of related transactions the same pro rata portion of such
Non-stock Consideration as Executive would have been able to receive if all
his options were exercisable.
B. Upon the occurrence of either of the following events, all of
Executive's options to purchase stock of AXE or Company or the stock of any
business enterprise that has been substituted for the stock of AXE or
Company will immediately vest and will be exercisable for the lesser of two
years after termination of Executive's employment or for the remaining life
of the options:
- In connection with a Change of Control, Executive is not notified
in writing that for the foreseeable future his responsibilities
are continuing as the Chief Financial Officer (with all the
responsibilities that normally accompany that position) of the
business enterprise that includes the Company and the issuer of
the stock to be purchased pursuant to the options; or
- Following a Change of Control, Executive is not the Chief
Financial Officer of such business enterprise as provided above.
6. A. If a Change of Control shall occur prior to 2000, Executive shall be
cashed out of his rights in Company's Enhanced Management Incentive Plan
for 1999-2000 (the "Plan") as follows: A number of Shares of AXE Stock
("Shares") shall be determined by dividing the greater of $ 854,000 or the
sum of $427,000 plus the amount that would be earned for the current year
based on actual results through the most recent month end prior to the
Change of Control plus the target amount, as defined by the Plan, for the
balance of the year, by the average closing price for the Shares for the
trading days in 1999 prior to the Change of Control in accordance with the
provisions of the Plan. This number of shares shall be multiplied by the
higher of the average price per Share paid by the Third Party at the time
of the Change of Control or the average closing price of the Shares for the
ten trading days preceding the Change of Control. Half this amount shall be
paid to the Executive by January 15, 2000 and the remainder shall be paid
in four equal installments on each anniversary of the Change of Control.
Upon termination pursuant to Section 4 above or death or disability as
provided in Section 1 above, any remaining payments shall be promptly made.
No payment shall be due for any anniversaries
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following the termination of Executive's employment, other than by death or
disability, by Company with Good Cause for Termination or by Executive
without Good Cause for Termination.
B. If a Change of Control shall occur in 2000, Executive shall be cashed
out of his rights in the Plan for 2000 as follows: A number of Shares of
AXE Stock ("Shares") shall be determined by dividing the higher of
Executive Enhanced Incentive Opportunity for 2000 or, $ 427,000 by the
average closing price for the Shares for the trading days in 2000 prior to
the Change of Control in accordance with the provisions of the Plan. This
number of shares shall be multiplied by the higher of the average price per
Share paid by the Third Party at the time of the Change of Control or the
average closing price of the Shares for the ten trading days preceding the
Change of Control. This amount shall be paid in four equal installments on
each anniversary of the Change of Control. Upon termination pursuant to
Section 4 above or death or disability as provided in Section 1 above, any
remaining payments shall be promptly made. No payment shall be due for any
anniversaries following the termination of Executive's employment, other
than by death or disability, by Company with Good Cause for Termination or
by Executive without Good Cause for Termination.
7. Company will promptly pay to Executive the amount of any excise taxes
imposed on Executive under Section 4999 of the Internal Revenue Code by
reason of payments or benefits under the provisions of this Agreement,
including this provision, and the amount of any federal and state income
taxes imposed on Executive by reason of payments to Executive under this
Section.
8. During the term of Executive' employment and continuing through the later
of the end of the Severance Benefits or two years from a Change of Control,
except on behalf of Company, Executive will not participate individually or
as an employee, consultant, officer, director, agent, investor or otherwise
in any of the following activities:
- The recruitment for employment of any person who was employed by
Company at, or within 60 days prior to, the time of the
termination of Executive's employment if that person at the time
of recruitment is, or was in the preceding 60 days, employed by
Company at an annual salary of more than $60,000.
- The selling to the same customers of any products that perform
substantially the same functions (the "Competing Products) as any
products that Company is selling (the "Protected Products") those
customers. Protected Products and Competing Products shall not
include products that neither (a) perform the same function as
products that Company was distributing at the time of the
termination of Executive's employment nor (b) are replacements
for or
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enhancements of products that Company was distributing at the
time of the termination of Executive's employment. This
prohibition shall not apply if the then aggregate monthly
revenues from either the Competing Products or the Protected
Products do not exceed $200,000.
Executive shall not be deemed to be in breach of these prohibitions after
termination of Executive's employment merely by reason of employment with a
business that is engaging in prohibited activities as long as Executive is
not supervising or otherwise participating in those activities or by reason
of employment with a business that sells Competing Products solely through
independent distributors. A Beneficial Ownership of less than one percent
shall not be considered a prohibited participation
Executive at any time may submit a written request to the General Counsel
for Company for advice on whether any planned activities of Executive would
violate the provisions of this Section. The details of such request shall
be maintained in confidence and the written advice of the General Counsel
shall be binding on Company. If the General Counsel does not respond to
such a request within 15 days, it shall be deemed that the General Counsel
advised that such activity would not violate this Section.
Executive agrees that non-public information about the activities of
Company that Executive obtained before the term of this Agreement or
obtains during the term of this Agreement is confidential and proprietary
and will not be used or disclosed by Executive except on behalf of Company
until that information otherwise becomes generally known or the fifth
anniversary of the termination of Executive's employment, whichever shall
first occur.
It is the intent of the parties that the provisions of this Section be
interpreted and applied in an enforceable manner. To the extent necessary
to achieve this intent, the parties agree that the provisions of this
Section shall be deemed modified. Executive acknowledges that damages would
not be an adequate remedy for violation of the provisions of this Section
and agrees that Company would be entitled to an injunction to prevent
Executive from engaging in such activities, and in seeking such an
injunction should not be required to post any bond.
9. Any modification or binding interpretation of this Agreement must be in
writing. Any such writing must be approved by the Board of Directors of
Company, except as provided in Section 8 for advice by Company's General
Counsel.
10. The prevailing party in any litigation concerning this Agreement shall be
reimbursed by the party found to be in breach of this Agreement for all
reasonable costs, including attorney fees, incurred by the prevailing
party.
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11. This Agreement may be assigned by Company to a purchaser of substantially
all of its assets if that purchaser assumes all of Company's obligations
under this Agreement. This Agreement shall be binding on any successor of
Company by merger or consolidation. Any such purchaser or successor shall
be deemed to be "Company."
12. This Agreement shall terminate on the date specified in a written notice of
termination delivered by either party to the other, which date shall be at
least twelve months after the delivery of the written notice of
termination. Termination of this Agreement shall not effect any obligation,
whether or not contingent, that arose under this Agreement prior to its
termination. For example, termination of this Agreement after a Change of
Control will not affect the obligations of Company in the event of a
termination of employment within the provisions of Section 4 even if that
termination of employment occurs after the termination of this Agreement.
Executed this 22nd day of July 1999.
Anixter Inc.
By __________________ _____________________
Executive
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