EMPLOYMENT AGREEMENT
Exhibit 10.3
EMPLOYMENT AGREEMENT (this “Agreement”), effective as of July 1, 2010 (the “Effective Date”),
among Xxxx, Inc., a Maryland corporation (“Xxxx”), Xxxx Services, LLC, a Maryland limited liability
company and a wholly-owned subsidiary of Xxxx (“LLC”, and together with Xxxx, the “Employers”), and
Xxxx X. Xxxxxxxxxx (“Employee”).
Recitals
WHEREAS, Employee is currently employed by the Employers under an Employment Agreement dated
as of May 17, 2007 (as extended effective May 30, 2010 and June 30, 2010, the “Prior Agreement”);
and
WHEREAS, the Employers desire to employ Employee as Chief Financial Officer of Xxxx and as
Chief Financial Officer of LLC, and Employee desires to be employed by the Employers in such
capacities effective as of the Effective Date pursuant to the terms and conditions set forth below.
NOW, THEREFORE, Employee and Employers, in consideration of the mutual agreements, covenants
and conditions contained herein, and for other good and valuable consideration, hereby agree as
follows:
1. Basic Employment Provisions.
(a) Employment Period. Subject to the terms and conditions of this Agreement, (i) the
Employers hereby employ Employee, and (ii) Employee agrees to be employed by the Employers, in each
case for a period of three years from the Effective Date (the “Employment Period”).
(b) Duties. During the Employment Period, Employee shall serve as the Chief Financial
Officer of Xxxx and as the Chief Financial Officer of LLC. Employee shall report directly to the
Chief Executive Officer and/or President of Xxxx and Employee’s principal place of employment shall
be 000 Xxxxx Xxxxxx, Xxx Xxxx, XX (the “Principal Location”). Subject to the direction of and
reporting to the Chief Executive Officer and/or President of Xxxx, Employee shall perform all
services, acts or things advisable to manage and conduct the financial operations of Xxxx and LLC,
and such other areas consistent with his title as the Chief Executive Officer and/or President of
Xxxx may request. Such services, acts and other things shall include, without limitation, (a) the
financial management of Xxxx, LLC and their affiliated entities as assigned to Employee from time
to time, and (b) conducting such other activities that are necessary or appropriate to assist Xxxx
in conducting its business as it relates to the foregoing, it being understood that Employee shall
not be required to perform any services, acts or things not in accordance with applicable law or
ethical standards or in the best interests of the shareholders of either Employer. During the
Employment Period, Employee agrees to perform his duties hereunder faithfully and to the best of
his ability and to devote his full professional working time, attention and energies to the
transaction of the Employers’ business, in each case subject to the terms hereof. During the
Employment Period, Employee shall not be employed or otherwise engaged in any other business or
enterprise without the written consent of the Employers. Notwithstanding any other term hereof, but subject to the terms and provisions of Sections 8
and 9, nothing contained herein shall preclude Employee from (i) engaging in charitable activities
and community affairs, (ii) managing his personal and family investments and affairs or (iii)
serving on the boards of a reasonable number of other trade associations and/or civic or charitable
organizations and businesses which do not compete with the business of the Employers (it being
understood that a reasonable number would be one public company board and one private company
board), in each case as long as such activities do not materially interfere with the discharge of
his duties and responsibilities under this Section 1(b).
(c) Compliance with Employers’ Policies. During the Employment Period, Employee shall
be governed by and be subject to, and Employee hereby agrees to comply with, all Employers’
policies applicable to employees generally or to employees at Employee’s grade level, including
without limitation, the Employers’ Codes of Business Ethics and Conduct, in each case, as any such
policies may be amended from time to time in the Employers’ sole discretion (collectively, the
“Policies”).
2. Compensation.
(a) Salary. As compensation for the services to be rendered by Employee hereunder,
the Employers are jointly and severally obligated to pay to Employee for each year of the
Employment Period, commencing on the Effective Date, a gross annual base salary of not less than
$265,000 per year (as in effect from time to time after any increase (but not decrease), the “Gross
Annual Base Salary”), payable in accordance with the payroll practices of the Employers in effect
from time to time (but in all events no less frequently than semi-monthly). Employee shall be
entitled to such increases (but not decreases) in Gross Annual Base Salary, if any, as may be
determined from time to time by the Compensation Committee of the Board of Directors (the “Board”)
of Xxxx (the “Compensation Committee”). The Compensation Committee shall consider such increases
in Gross Annual Base Salary at least annually, and shall take into account market data, the
consumer price index, and any other factors it deems relevant.
(b) Bonus.
(i) During the Employment Period, Employee shall be eligible to receive in addition to his
Gross Annual Base Salary an annual cash bonus award (or a pro-rated portion thereof in the event
that the applicable fiscal year began prior to the Effective Date, the “Annual Bonus”), with a
target bonus opportunity of not less than $160,000 (or if the Gross Annual Base Salary is increased
during any year of the Employment Period, an amount not less than such Gross Annual Base Salary
multiplied by the ratio of $160,000 to $265,000), based upon the achievement of target performance
goals established by the Compensation Committee (as in effect from time to time after any increase
(but not decrease), the “Target Bonus”) in its sole discretion, in accordance with the Employers’
annual incentive plan as in effect from time to time.
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(ii) The Annual Bonus will be paid in cash to Employee not later than the date annual bonuses
are generally paid to senior executives of the Employers, but in all events not later than the
later of the 15th day of the third month following the end of Employee’s first taxable
year in which the right to payment is no longer subject to a “substantial risk of forfeiture”
(within the meaning of Section 409A of the Code and any proposed, temporary or final
regulation, or any other guidance, promulgated with respect to Section 409A of the Code by the U.S.
Department of Treasury or the Internal Revenue Service (“Section 409A”)). The Annual Bonus payable
with respect to the 2010 portion of the Employment Period shall be reduced, but not to an amount
less than zero, by $59,706.25 (representing the bonus paid to Employee under the Prior Agreement
with respect to the first six months of 2010). In addition, if this Agreement expires according to
its terms (other than as set forth in Section 3), the Annual Bonus payable to Employee for the pro
rated year of such expiration shall be a lump sum payment equal to the pro rata portion of the
Target Bonus (as in effect on the date of expiration) that Employee would have been eligible to
receive pursuant to this Section 2(b) for the fiscal year in which the expiration occurs, based
upon the percentage of the fiscal year that shall have elapsed through the date of expiration.
Such lump sum payment shall be payable within 45 days of such expiration.
(c) Benefits. During the Employment Period, the Employers shall provide Employee (and
Employee’s spouse and eligible dependents) with the benefits to which senior executives of the
Employers are or become entitled under the terms of any benefit plans or programs instituted by the
Employers, as in effect from time to time (it being understood that Xxxx or LLC may amend or
terminate such benefit plans or programs in accordance with such plans or programs at any time
during the Employment Period). For purposes of determining Employee’s eligibility for
participation in employee benefit plans and for other fringe benefits, Employee shall be deemed to
be a full time employee of whichever of the Employers provides more favorable benefits, in the
aggregate, to its senior executives. Employee shall be entitled to (i) any paid time off in
accordance with the relevant Paid Time Off Policy of the Employers in effect from time to time, to
be taken at the mutual convenience of Employee and the Employers, (ii) paid holidays and floater
holidays in accordance with the regular policies and procedures of the Employers and (iii)
additional time off in the discretion of the Chief Executive Officer and/or President of Xxxx. In
addition, notwithstanding anything contained in this Agreement to the contrary, as soon as
reasonably practicable following the Effective Date, the Employers shall secure and maintain a
five-year term life insurance policy with a top-rated insurer, with a death benefit equal to
$132,500, with beneficiary(ies) selected by Employee, and which contains such terms and conditions
as are reasonably acceptable to Employee (if for any reason, other than as a result of Employee’s
actions or inaction, the required policy has not been obtained, is not able to be obtained or is
not otherwise in force at the time of Employee’s death during the Employment Period, the Company
will, within five business days of the Employee’s death, pay $132,500 to Employee’s estate or
beneficiary(ies)).
(d) Equity Awards.
(i) Annual Long-Term Incentive Awards. During the Employment Period, Employee shall
be entitled to receive annual equity and/or long-term incentive awards at the time such awards are
generally made by the Employers to senior executives of the Employers. All grants of annual equity
and/or long-term incentive awards made to Employee will be at the sole discretion of Xxxx and LLC.
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(ii) Initial Restricted Stock Unit Grant. In addition to any equity awards described
in Section 2(d)(i), as of July 30, 2010, the Employers shall grant Employee 25,000
restricted stock units of Xxxx (the “Initial Units”) pursuant to the applicable stock
incentive compensation plan, which shall provide for customary adjustment provisions in the event
of a stock split, reverse stock split, merger or other change in the capitalization of Xxxx. The
Initial Units shall vest in equal installments on June 30, 2011, June 30, 2012 and June 30, 2013
(subject to earlier acceleration as otherwise provided in this Agreement).
(iii) Acceleration. Upon a Change of Control (as defined herein or in the applicable
stock incentive compensation plan), all Employee’s outstanding equity awards (including the Initial
Units) shall vest and become non-forfeitable, with any outstanding stock options immediately
vesting and becoming exercisable, the restriction period (including any vesting requirements) on
any restricted stock and restricted stock units held by Employee shall lapse, and any other vesting
requirements or conditions with respect to the foregoing or other equity-based awards held by
Employee shall lapse and be disregarded.
(iv) Other Incentive Compensation. Employee shall be eligible to participate in any
other incentive compensation methods or programs established by the Employers and offered to senior
executives of Xxxx or LLC.
3. Termination. Employee’s employment may be terminated prior to the expiration of the
Employment Period under the following conditions, in each case subject to the terms of Section 4.
In the event any party or parties (in the case of the Employers) elect to terminate the Employment
Period, such party or parties shall deliver written notice thereof (other than a termination
pursuant to Section 3(a)) in accordance with the terms of this Section 3, which written notice
shall set forth the provision of this Section 3 under which such termination is effective. A
notice of termination hereunder may not be retracted or withdrawn by the party or parties
delivering the same, without the consent of the other party or parties hereto.
(a) Death. The Employment Period shall terminate automatically, without notice,
effective upon the death of Employee.
(b) Disability. The Employers may terminate the Employment Period at any time
effective upon not less than 10 days prior written notice to Employee after Employee has been
unable to perform the essential duties of his positions because of a “Disability.” “Disability”
shall mean that, as determined by a consensus of two doctors as mutually chosen by the Employers,
on the one hand, and Employee, on the other hand (with any expenses incurred for the cost of office
visits, testing and travel expenses which is not covered by the Employers’ health plan being
reimbursed to Employee by the Employers), Employee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months.
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(c) Cause. The Employers may terminate the Employment Period at any time for Cause,
effective upon delivery of prior written notice to Employee. For the purposes of this Agreement,
“Cause” shall mean Employee’s (i) breach of Section 9, (ii) material breach of any other term or
provision of this Agreement which is not cured by Employee within 20 days of written notice thereof
from either of the Employers (which notice shall specify that such notice is being delivered for
purposes of this Section 3(c)(ii)), (iii) fraud or dishonesty in the course of
Employee’s employment, (iv) for reasons other than Disability, continued gross neglect of the
duties to be performed by Employee hereunder which results in material harm to the Employers and
which is not cured by Employee within 20 days of written notice thereof from the Employers (which
notice shall specify that such notice is being delivered for purposes of this Section 3(c)(iv)),
(v) material violation of any of the Policies that results in material injury to one or both of the
Employers or (vi) conviction or pleading guilty or nolo contendere to any felony charge.
Notwithstanding the foregoing, Employee shall not be deemed to have been terminated for Cause
pursuant to clauses (i) through (v) of this Section 3(c) unless and until there shall have been
delivered to Employee a copy of a good faith determination signed by the Chief Executive Officer of
Xxxx at the written direction of the Board (after reasonable notice to Employee and an opportunity
for Employee, together with counsel of Employee’s choosing, to be heard before the Chief Executive
Officer and the Board not less than 10 days after the giving of such notice), finding that in the
good faith opinion of the Chief Executive Officer and the Board, Employee conducted himself as set
forth above in clauses (i) through (v) of this Section 3(c) and specifying the particulars of such
conduct in detail. Notwithstanding anything contained in this Agreement to the contrary,
Employee’s failure to perform his duties or fulfill his obligations under this Agreement after
receiving a notice of termination shall not constitute proper Cause for purposes of this Agreement.
(d) Change of Control.
(i) In the event there is a termination by the Employers without Cause or a termination by
Employee for Good Reason, upon or within the one-year period following a Change of Control (the
“Change of Control Period”), Employee shall be entitled to payment under Section 4(d).
(ii) For purposes of this Agreement, “Change of Control” shall mean the occurrence of any of
the following after the Effective Date, whether directly or indirectly, voluntarily or
involuntarily, whether as part of a single transaction or a series of transactions: (A) individuals
who as of the Effective Date constitute the Board cease, for any reason, to constitute at least a
majority of the Board, unless the election or nomination for election of each new director was
approved by at least two-thirds of the directors then still in office who were directors as of the
Effective Date (either by a specific vote of such directors or by the approval of Xxxx’x proxy
statement in which each such individual is named as a nominee for a director without written
objection to such nomination by such directors); provided, however, that no individual initially
elected or nominated as a director as a result of an actual or threatened election contest with
respect to directors or as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to be approved (solely
for purposes of this Section 3(d)(ii)); or (B) the sale, transfer or other disposition of all or
substantially all of the assets of either of the Employers (other than to a wholly owned direct or
indirect subsidiary of either of the Employers or a benefit plan of either of the Employers); or
(C) any person or entity or group of affiliated persons or entities (other than Employee, Xxxxxxxx
Xxxxxxxx, Xxxxx Xxxxxxx or a group including any of them) acquiring beneficial ownership (as that
term is used in Rules 13d-3, 13d-5 or 16a-1 under the Securities Exchange Act of 1934, as amended,
whether or not applicable) of 30% or more of the shares of capital stock or other equity of either
of the Employers, having by the terms thereof voting power to elect the members of the Board (in
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the case
of Xxxx only), or, convertible into shares of such capital stock or other equity of either of the Employers (collectively, “Voting Shares”), as
the case may be; or (D) the stockholders or members of either of the Employers adopting a plan of
liquidation providing for the distribution of all or substantially all of either of the Employers’
assets or approving the dissolution of either of the Employers; or (E) the merger, consolidation,
or reorganization of either of the Employers or any similar transaction which results in (1) the
beneficial owners of the Voting Shares of either of the Employers immediately prior to such merger,
consolidation, reorganization or transaction beneficially owning, after giving effect to such
merger, consolidation, reorganization or transaction, interests or securities of the surviving or
resulting entity representing 50% or less of the shares of capital stock or other equity of the
surviving or resulting entity having by the terms thereof voting power to elect the members of the
board or directors (or equivalent thereof) or convertible into shares of such capital stock or
other equity of such entity or (2) any person or entity or group of affiliated persons or entities
(other than Employee, Xxxxxxxx Xxxxxxxx, Xxxxx Xxxxxxx or a group including any of them) owning,
after giving effect to such merger, consolidation, reorganization or transaction, interests or
securities of the surviving or resulting entity, representing 30% or more of the shares of capital
stock or other equity of the surviving or resulting entity having by the terms thereof voting power
to elect the members of the board of directors (or equivalent thereof) or convertible into shares
of such capital stock or other equity of such entity.
(iii) For purposes of this Agreement, “comparable employment” (as defined in Section 3(e)
below) must be offered by the successor entity within 15 calendar days after the event resulting in
the Change of Control. Notwithstanding anything herein to the contrary, if the Change of Control
occurs within the 16-calendar day period prior to the third anniversary of the Effective Date, then
the Employment Period shall be extended until the sixteenth calendar day following the third
anniversary of the Effective Date.
(iv) Notwithstanding anything herein to the contrary, if Employee’s employment is terminated
within the twelve months prior to a Change of Control and Employee reasonably demonstrates that
such termination: (i) was at the request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change of Control and who effectuates a Change of Control
or (ii) otherwise occurred in connection with, or in anticipation of, a Change of Control which
actually occurs, then for all purposes of this Agreement, the date of a Change of Control with
respect to Employee shall mean the date immediately prior to the date of such termination of
employment, and Employee shall be entitled to the payments under Section 4(d), net of any other
payments separately made or payable to Employee pursuant to any other provision of Section 4.
(e) Good Reason. Employee may terminate the Employment Period at any time for Good
Reason, provided, however, that Employee must assert any termination for Good Reason by written
notice to the Company no later than 40 days following the date on which arises the event or events
giving Employee the right to assert such a termination (which notice shall specify that it is being
delivered under this Section 3(e)), and the Employers must have an opportunity within 30 days
following delivery of such notice to cure the Good Reason condition. For purposes of this
Agreement, “Good Reason” means the occurrence of one of the following, unless cured by the
Employers as described herein: (i) a material diminution in Employee’s duties or responsibilities
for either of the Employers, or a material demotion of Employee; (ii) either of the Employers’
material breach of
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this
Agreement; or (iii) Employee’s being required to report to an office to work on a regular basis at a location outside of Manhattan, Northern
New Jersey or outside a 50-mile radius from the address of Employee set forth in the personnel
records of the Employers at the Effective Date, as long as the location is not east of the Xxxxxx
River, other than Manhattan. In the event of a Change of Control, Good Reason shall also include
any deviation from comparable employment, subject to the notice and cure provisions in the first
sentence of this Section 3(e). For purposes of this Agreement, Employee shall be deemed to have
received an offer of “comparable employment” if he receives an offer to continue his employment for
at least the balance of the term covered by this Agreement, and he remains the CFO of a
publicly-traded company pursuant to which Employee would perform the same type of duties he had
been performing under this Agreement for both Employers, at a salary and Target Bonus not less than
that provided for in Section 2(a) and (b) hereof, and the employment is at a physical location that
is located in Manhattan, Northern New Jersey or within a 50-mile radius from the address of
Employee set forth in the personnel records of the Employers at the Effective Date, as long as the
location is not east of the Xxxxxx River, other than Manhattan.
(f) Termination of the Employment Period Other Than for Death, Disability, Cause, Change
of Control or Good Reason. The Employers may terminate Employee’s employment at any time, for
any or no reason, effective upon not less than 30 days prior written notice. Employee may
terminate his employment, or resign, from the Employers at any time, for any or no reason,
effective upon not less than 30 days prior written notice.
4. Obligations of the Employers Upon Termination of the Employment Period.
(a) Termination Pursuant to Section 3(a) (Death). In the event that the Employment
Period terminates pursuant to Section 3(a), no further compensation shall be paid to Employee
following the effective date of termination, provided that:
(i) within 45 days of the effective date of termination, the Employers shall pay to Employee’s
estate or other beneficiary(ies), as applicable, a lump sum cash payment equal to the sum of (A)
Employee’s Gross Annual Base Salary through the effective date of termination to the extent not
theretofore paid, (B) any accrued vacation pay to the extent not theretofore paid, (C) subject to
Section 6, all business expenses which were incurred by Employee prior to or as of the effective
date of termination but not yet reimbursed by the Employers and (D) the Annual Bonus payable for
each year preceding the year during which termination occurs, to the extent not theretofore paid
(the aggregate amounts set forth in clauses (A), (B), (C) and (D) above, collectively the “Accrued
Obligations”);
(ii) within 45 days of the effective date of termination, the Employers shall pay to
Employee’s estate or other beneficiary(ies), as applicable, a lump sum cash payment of a pro rata
portion of the Target Bonus (as in effect on the effective date of termination) that Employee would
have been eligible to receive pursuant to Section 2(b) for the fiscal year in which the effective
date of termination occurs, based upon the percentage of the fiscal year that shall have elapsed
through the effective date of termination (the “Pro Rata Bonus”);
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(iii) for 9 months following the effective date of termination, the Employers will reimburse
Employee’s spouse and eligible dependents on a monthly basis (within 30 days of
the cost being incurred) for the cost (on a grossed-up basis) of maintaining health benefits
(including medical insurance, prescription coverage and dental) for Employee’s spouse and eligible
dependents under a group health plan of the Employers, provided that (A) Employee’s spouse and/or
legal guardian for Employee’s eligible dependents timely elects the continuation of group health
plan benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and (B)
Employee’s spouse and/or legal guardian for Employee’s eligible dependents makes a monthly payment
to the Employers in an amount equal to the monthly premium payments (both the employee and employer
portion) required to maintain such coverage. Employee and the Employers acknowledge that this
coverage will count towards the Employers’ and such group health plan’s obligation to provide
Employee’s spouse and eligible dependents with the right to continuation coverage pursuant to COBRA
and that Employee’s spouse and/or eligible dependents will be able to continue such coverage at
their own expense for the balance of the period provided under COBRA (for the avoidance of doubt,
the foregoing will not cover any short term or long term disability insurance benefits); and
(iv) as of the effective date of termination, all of Employee’s outstanding equity awards
(including the Initial Units) shall vest and become non-forfeitable, with any outstanding stock
options immediately vesting and becoming exercisable (and with all stock options remaining
exercisable for three years following Employee’s termination date (but no later than the original
term)), the restriction period (including any vesting requirements) on any restricted stock and
restricted stock units held by Employee shall lapse, and any other vesting requirements or
conditions with respect to the foregoing or other equity-based awards held by Employee shall lapse
and be disregarded, and such awards shall be settled in accordance with the terms of the plan
and/or the applicable award agreement (all acceleration pursuant to this paragraph, together, the
“Equity Acceleration”).
(b) Termination Pursuant to Section 3(b) (Disability). In the event that the
Employment Period is terminated pursuant to Section 3(b), no further compensation shall be paid to
Employee following the effective date of termination, provided that:
(i) within 45 days of the effective date of termination, the Employers shall pay to Employee
or his legal representative, as applicable, a lump sum cash payment equal to the Accrued
Obligations;
(ii) within 45 days of the effective date of termination, the Employers shall pay to Employee
or his legal representative, as applicable, a lump sum cash payment equal to the Pro Rata Bonus;
(iii) for 9 months following the effective date of termination, the Employers will reimburse
Employee on a monthly basis (within 30 days of the cost being incurred) for the cost (on a
grossed-up basis) of maintaining health benefits for Employee (and Employee’s spouse and eligible
dependents) under a group health plan of the Employers, provided that (A) Employee timely elects
the continuation of group health plan benefits under COBRA and (B) Employee makes a monthly payment
to the Employers in an amount equal to the monthly premium payments (both the employee and employer
portion) required to maintain such coverage. Employee and the Employers acknowledge that this
coverage will count towards the Employers’ and such group health plan’s obligation to provide
Employee with the right to
continuation coverage pursuant to COBRA and that Employee will be able to continue such
coverage at Employee’s own expense for the balance of the period provided under COBRA (for the
avoidance of doubt, the foregoing will not cover any short term or long term disability insurance
benefits) (with the exception of the duration, all such reimbursement payments, gross-ups and
related conditions described in this paragraph, the “COBRA Reimbursement”); and
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(iv) as of the effective date of termination, Employee shall be entitled to the Equity
Acceleration.
(c) Termination Pursuant to Section 3(c) (Cause). In the event that the Employment
Period is terminated pursuant to Section 3(c), no further compensation shall be paid to Employee
following the effective date of termination, provided that, within 45 days of the effective date of
termination, the Employers shall pay to Employee a lump sum cash payment equal to the Accrued
Obligations.
(d) Termination Pursuant to Section 3(d) (Change of Control). In the event that the
Employment Period is terminated during the Change of Control Period (A) by the Employers for any
reason (other than Employee’s death or Disability, or with Cause) or (B) by Employee for Good
Reason, no further compensation shall be paid to Employee following the effective date of
termination, provided that:
(i) within 45 days of the effective date of termination, the Employers shall pay to Employee a
lump sum cash payment equal to the Accrued Obligations;
(ii) within 45 days of the effective date of termination, the Employers shall pay to Employee
a lump sum cash payment equal to the Pro Rata Bonus (as in effect on the effective date of
termination or, if higher, as in effect immediately prior to any such Change of Control);
(iii) within 45 days of the effective date of termination, the Employers shall pay to Employee
a lump sum cash payment equal to 2 multiplied by the Gross Annual Base Salary (as in effect on the
effective date of termination or, if higher, as in effect immediately prior to any such Change of
Control);
(iv) for 9 months following the effective date of termination, the Employers will provide
Employee with the COBRA Reimbursement on a monthly basis (within 30 days of the cost being
incurred) (and, in addition, to the extent Employee remains eligible (provided that Employee may at
any time supplement any cost necessary to allow for continued eligibility as provided under the
terms of the applicable policy), Employee may continue participation in the Employers’ long-term
disability plan on the same basis as provided prior to the termination of Employee’s employment, at
his own cost and expense, through the end of the Employment Period, without regard to any earlier
termination of employment); and
(v) as of the effective date of termination, Employee shall be entitled to the Equity
Acceleration.
(e) Termination by Employee Without Good Reason. In the event that the Employment
Period is terminated by Employee without Good Reason, no further compensation
shall be paid to Employee following the effective date of termination, provided that, within
45 days of the effective date of termination, the Employers shall pay to Employee a lump sum cash
payment equal to the Accrued Obligations.
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(f) Termination by the Employers Without Cause or by Employee for Good Reason. In the
event that the Employment Period is terminated (other than during the Change of Control Period)
either (A) by the Employers for any reason (other than Employee’s death or Disability, or with
Cause) or (B) by Employee for Good Reason, no further compensation shall be paid to Employee
following the effective date of termination, provided that:
(i) within 45 days of the effective date of termination, the Employers shall pay to Employee a
lump sum cash payment equal to the Accrued Obligations;
(ii) within 45 days of the effective date of termination, the Employers shall pay to Employee
a lump sum cash payment equal to the Pro Rata Bonus;
(iii) within 45 days of the effective date of termination, the Employers shall pay to Employee
a lump sum cash payment equal to 1.5 multiplied by the Gross Annual Base Salary (as in effect on
the effective date of termination);
(iv) for 9 months following the effective date of termination, the Employers will provide
Employee with the COBRA Reimbursement on a monthly basis (within 30 days of the cost being
incurred) (and, in addition, to the extent Employee remains eligible (provided that Employee may at
any time supplement any cost necessary to allow for continued eligibility as provided under the
terms of the applicable policy), Employee may continue participation in the Employers’ long-term
disability plan on the same basis as provided prior to the termination of Employee’s employment, at
his own cost and expense, through the end of the Employment Period, without regard to any earlier
termination of employment); and
(v) as of the effective date of termination, Employee shall be entitled to the Equity
Acceleration.
(g) Customary Release of Claims. All payments under this Section 4 shall be
conditioned upon Employee’s, or Employee’s estate or other beneficiary(ies), as applicable,
execution and delivery within 21 days following Xxxx’x delivery to Employee for signature of a
release (in form and substance satisfactory to Xxxx) of any claims he may have against Xxxx or LLC.
The Employers shall deliver to Employee, or Employee’s estate, the release of claims agreement
within five business days of the date of termination of employment.
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5. Potential Reductions.
(a) Notwithstanding any other provisions in this Agreement, in the event that any payment or
benefit received or to be received by Employee (including any payment or benefit received in
connection with a Change of Control or the termination of Employee’s employment, whether pursuant
to the terms of this Agreement or any other plan, program, arrangement or agreement) (all such
payments and benefits, together the “Total Payments”) would be subject (in whole or part), to any
excise tax imposed under Section 4999 of the Code, or any successor provision thereto (the “Excise
Tax”), then, after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan, program,
arrangement or agreement, the Employers will reduce Employee’s payments and/or benefits under this
Agreement, to the extent necessary so that no portion of the Total Payments is subject to the
Excise Tax (but in no event to less than zero), in the following order: (i) any cash severance
amounts derived based upon the sum of Gross Annual Base Salary and Pro Rata Bonus; (ii) any cash
severance amounts derived based upon the Pro Rata Bonus; (iii) any COBRA Reimbursement or other
reimbursement of health benefits; and (iv) any Equity Acceleration or other acceleration of
outstanding equity awards (the payments and benefits set forth in clauses (i) through (iv) of this
Section 5(a), together, the “Potential Payments”); provided, however, that the Potential Payments
shall only be reduced if (y) the net amount of such Total Payments, as so reduced (and after
subtracting the net amount of federal, state and local income taxes on such reduced Total Payments
and after taking into account the phase out of itemized deductions and personal exemptions
attributable to such reduced Total Payments) is greater than or equal to (z) the net amount of such
Total Payments without such reduction (but after subtracting the net amount of federal, state and
local income taxes on such Total Payments and the amount of Excise Tax to which Employee would be
subject in respect of such unreduced Total Payments and after taking into account the phase out of
itemized deductions and personal exemptions attributable to such unreduced Total Payments.
(b) For purposes of determining whether and the extent to which the Total Payments will be
subject to the Excise Tax: (i) no portion of the Total Payments the receipt or enjoyment of which
Employee shall have waived at such time and in such manner as not to constitute a “payment” within
the meaning of Section 280G(b) of the Code shall be taken into account; (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”)
reasonably acceptable to Employee and selected by the accounting firm which was, immediately prior
to the Change of Control, the Employers’ independent auditor (the “Auditor”), does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of
Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total
Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable
compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the
Code, in excess of the “base amount” (as set forth in Section 280G(b)(3) of the Code) that is
allocable to such reasonable compensation; and (iii) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined by the Auditor in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
(c) At the time that payments are made under this Agreement, the Employers shall provide
Employee with a written statement setting forth the manner in which such payments were calculated
and the basis for such calculations, including, without limitation, any opinions or other advice
the Employers received from Tax Counsel, the Auditor, or other advisors or consultants (and any
such opinions or advice which are in writing shall be attached to the statement). If Employee
objects to the Employers’ calculations, the Employers shall pay to Employee such portion of the
Potential Payments (up to 100% thereof) as Employee determines is necessary to result in the proper
application of this Section 5. All determinations required by this Section 5 (or requested by
either Employee or the Employers in connection with this Section 5) shall be at the expense of the
Employers. The fact that Employee’s right to payments or
benefits may be reduced by reason of the limitations contained in this Section 5 shall not
of itself limit or otherwise affect any other rights of Employee under this Agreement.
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6. Reimbursement of Expenses. The applicable Employer shall reimburse Employee for any and
all reasonable expenses incurred by him in the performance of his duties hereunder, including,
without limitation, travel and entertainment, cell phone and data plans, subject to the presentment
of appropriate vouchers in accordance with the applicable Employer’s normal policies for expense
verification and subject to Section 22.
7. No Mitigation; No Offset. All amounts paid or due Employee under Section 4 shall be
paid without regard to whether Employee has taken or takes actions to mitigate damages. Employee
shall be under no obligation to seek other employment. Accordingly, there shall be no offset
against amounts due to Employee under this Agreement, or otherwise, on account of any remuneration
attributable to any subsequent employment that he may obtain or on account of any claim that either
of the Employers may have against him. The Employers’ obligation to make the payments provided for
in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Employers may
have against Employee or others.
8. Ownership of Materials. All records, materials, lists, files, manuals, tapes and all
other written or recorded data and information in whatever form that are made available to Employee
by the Employers or used in connection with his employment hereunder (“Materials”) are and shall
remain the sole property of the Employers. As soon as practicable following the voluntary or
involuntary termination of Employee’s employment hereunder, Employee shall return or cause to be
returned to the Employers Materials in Employee’s possession and/or under his control. Upon
termination of employment for any reason, Employee shall have the right to remove or have delivered
promptly to Employee or Employee’s estate all of his documents, materials and effects of a personal
nature or use or not primarily related to the Employers’ business and shall include contact or
rolodex information.
9. Covenant Not to Compete; Covenant Not to Solicit; Confidentiality. Employee expressly
recognizes and acknowledges that:
(a) The Employers have developed and established a valuable and extensive clientele for their
real estate information reporting services.
(b) The Employers’ business connections and clients have been established and maintained at
great expense and are of great value to the Employers.
(c) Employee has and will become familiar with and possessed of the manner, method, secrets,
and confidential and proprietary information pertaining to the Employers’ business methods and the
business requirements and needs of their clients (collectively, “Confidential Information”).
(d) By virtue of this Agreement and predecessor agreements, Employee has and will become
personally acquainted with the clients, business methods, and trade secrets of the Employers.
- 12 -
(e) In recognition and in consideration of the foregoing, Employee expressly covenants and
agrees as follows:
(i) During the Employment Period and continuing until the Client Non-Solicitation Termination
Date (as defined below), Employee shall not in any way, directly or indirectly, for himself or on
behalf of or in conjunction with any other person or entity, solicit for the benefit of a
Competitive Business (as defined below), divert, take away, or attempt to take away, any of the
Employers’ clients or the business or patronage of any such clients. For purposes of applying this
provision after the termination or expiration of the Employment Period, “clients” shall mean any
person or entity to whom the Employers provided their services within six months prior to such
effective date of termination or expiration.
(ii) During the Employment Period and continuing until the Employee Non-Solicitation
Termination Date (as defined below), Employee shall not in any way, directly or indirectly, for
himself or on behalf of or in connection with any other person or entity, solicit, entice, hire,
employ, or endeavor to employ, any of the Employers’ employees. For purposes of applying this
provision after the termination or expiration of the Employment Period, “employees” shall mean any
person employed by the Employers within six months prior to such effective date of termination or
expiration.
(iii) During the Employment Period and continuing until the Non-Competition Termination Date
(as defined below), Employee shall not, directly or indirectly, for himself or on behalf of or in
connection with any other person or entity: (i) enter into the employ of or render any services to
any person, firm, corporation or other entity engaged in any Competitive Business; (ii) engage in
any Competitive Business for his own account; or (iii) become associated with or own an interest in
any Competitive Business as an individual, partner, shareholder, member, creditor, director,
officer, principal, agent, employee, trustee, consultant, advisor or in any other relationship or
capacity; provided that so long as Employee is not otherwise in breach hereof, following his
termination of employment, Employee’s entering into the employ of or rendering any services to an
entity that engages in a Competitive Business that generated less than 20% of such entity’s
aggregate annual gross revenues from such Competitive Business (calculated as an average of the
three most recently completed fiscal years of such entity immediately prior to Employee’s
commencement of employment by or rendering services to such entity) shall not, in and of itself, be
deemed a breach hereof so long as Employee is not rendering any services with respect to and has no
direct or indirect involvement with such Competitive Business. For purposes of this Agreement,
“Competitive Business” means (1) the business of developing data, analysis or forecasts pertaining
to the construction, absorption, occupancy, rents, sales prices, automated valuation, or automated
credit risk analysis for United States commercial office, industrial, retail, multi-family, hotel
or other properties or real estate markets including, without limitation, hotel properties and (2)
each other business in which the Employers are engaged during the Employment Period. For
informational purposes only and not for the purpose of construing or restricting the scope of the
term “Competitive Business,” the parties hereto hereby agree that the following companies and/or
their respective affiliates are currently engaged in a Competitive Business: Capmark Financial
Group Inc., CoStar Group Inc. (including Property & Portfolio Research, Inc.), LoopNet, Inc.,
Xxxxx’x KMV, Real Capital Analytics Inc. and CBRE Econometric Advisors. Mere passive ownership of
stock representing
2% or less of the capital stock of a publicly held company shall not be deemed to constitute
participation in a Competitive Business.
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(iv) During the Employment Period and thereafter, Employee shall not divulge to others or use
for his own benefit, or assist others in using such information for their benefit, any Confidential
Information obtained prior to or after the date hereof from the Employers by virtue of the
relationship created hereunder or otherwise, unless such Confidential Information is or becomes
generally available to the public (other than by reason of Employee’s breach of this Section
9(e)(iv)) and except in connection with (A) the performance of Employee’s duties hereunder, (B)
enforcement of Employee’s rights under this Agreement or (C) as required by law.
(v) Employee acknowledges that damages resulting from the breach of the provisions of this
Section 9(e) may be difficult to calculate. In the event of a breach or threatened breach by
Employee of the provisions of this Section 9(e), the Employers shall be entitled to apply to any
court of competent jurisdiction for an injunction against such breach, actual or threatened.
Notwithstanding the foregoing, the Employers shall at all times retain their right to recover from
Employee, or any other person or entity that may be held liable, their damages resulting from such
breach.
(f) For purposes of this Agreement, (i) “Client Non-Solicitation Termination Date” shall mean
the date that is eighteen months after Employee’s employment ends for any reason, (ii) “Employee
Non-Solicitation Termination Date” shall mean the date that is one year after Employee’s employment
ends for any reason and (iii) “Non-Competition Termination Date” shall mean the date that is one
year after Employee’s employment ends for any reason.
10. Proprietary Rights.
(a) For purposes of this Agreement, “Works” shall mean intellectual property and proprietary
rights, including without limitation, ideas, designs, concepts, techniques, inventions, discoveries
and works of authorship, whether or not patentable or protectable by copyright or as a mask work,
and whether or not reduced to practice, including, without limitation, devices, processes, trade
secrets, formulas, techniques, compositions of matter, computer software programs, mask works and
methods, together with any improvements thereon or thereto, derivative works made therefrom and
know how related thereto.
(b) Employee hereby agrees that all Works made, conceived, developed or reduced to practice,
in whole or in part, solely by Employee or jointly with others, either during or after his term of
employment with the Employers, if such Works are (i) made through the use of any of the
Confidential Information or any of the Employers’ equipment, facilities, supplies or time, or (ii)
result from any work performed by Employee for either Employer, or (iii) relate to either
Employer’s present or prospective business and/or activities, or (iv) either Employer’s actual or
demonstrably anticipated research and development during such term of engagement, shall belong
exclusively to the Employers and shall be deemed part of the Confidential Information for purposes
of this Agreement whether or not fixed in a tangible medium of expression. Without limiting the
forgoing, Employee agrees that all such Works shall be deemed to be “works made for hire” under the
U.S. Copyright Act of 1976, as amended, and that the
Employers shall be deemed the author and owner thereof, provided that in the event and to the
extent such Works are determined not to constitute “works made for hire” as a matter of law,
Employee hereby irrevocably assigns and transfers to the Employers the entire right, title and
interest, domestic and foreign, of Employee in and to such Works. Employers shall have the right
to obtain and to hold in their own names, copyrights, registrations or such other protection as may
be appropriate to the subject matter, and any extensions and renewals thereof. Employee agrees to
give Employers, and any person designated by Employers, any assistance Employers deem necessary or
appropriate to perfect the rights defined in this Section 10.
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(c) Employee will promptly disclose in writing (which may be by e-mail) to the Chief Executive
Officer or President of Xxxx or its designee, every Work made, conceived, developed or reduced to
practice, in whole or in part, solely by Employee or jointly with others, in connection with the
business of either Employer either (i) during the term of his employment with the Employers,
whether or not Employee believes the Work to have been made, conceived, developed or reduced to
practice within the course and scope of his employment, or (ii) after the termination of
employment, if such Work is made through the use of Confidential Information or any equipment,
facilities, supplies or time of either Employer, or results from any work performed by Employee for
either Employer.
(d) Employee agrees to (i) keep and maintain adequate and current records (in the form of
notes, drawings, software, object code, source code, manuals, plans, research, specifications,
designs, documentation, data, processes, procedures, discoveries, models or in other appropriate
forms) of all Works, which records shall be available at all times to the Employers and shall
remain the sole property of the Employers; and (ii) assist each Employer, both during and
subsequent to his employment with the Employers, in obtaining and enforcing for each Employer’s own
benefit patents, copyrights, mask work rights, trade secret rights and other legal protections in
any and all countries for any and all Works made by Employee (in whole or in part), the rights to
which belong to or have been assigned to the Employers pursuant to this Agreement. Upon request,
Employee will execute all applications, assignments, instruments and papers and perform all acts
that either Employer or its counsel may deem necessary or desirable to obtain or enforce any and
all such patents, copyrights, mask work rights, trade secret rights and other legal protections in
such Works and otherwise to protect the interests of each Employer therein. Employers jointly and
severally agree to bear all expenses which they cause to be incurred by Employee in assigning,
obtaining, maintaining and enforcing said patents, copyrights, trade secret rights, mask work
rights and other legal protections in accordance with this Agreement.
(e) Employee understands that utilization of the Works is in the sole discretion of Employers,
and that neither Employer is obligated to develop, market or otherwise use any device or product.
11. Breach of Certain Provisions.
(a) If Employee commits a breach, or threatens to commit a breach, of any of the provisions of
Section 9 or 10, the Employers shall have the right and remedy: (i) to have the provisions of this
Agreement specifically enforced (without posting bond) by any court having equity jurisdiction,
including, without limitation, the right to an entry against Employee of
restraining orders and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such provisions, it being
acknowledged and agreed by Employee that any such breach or threatened breach will cause
irreparable injury to the Employers and that money damages will not provide an adequate remedy to
the Employers; (ii) to have any court of competent jurisdiction require Employee to account for and
pay over to the Employers all compensation, profits, monies, accruals, increments or other benefits
(collectively, “Benefits”) derived or received by Employee as the result of any transaction
constituting a breach of any of the provisions of Section 9 or 10 and Employee hereby agrees to
comply with any order by such court to account for and pay over such Benefits to the Employers; and
(iii) to immediately terminate this Agreement for Cause pursuant to Section 3(c).
- 15 -
(b) Each of the rights and remedies enumerated in this Section 11 shall be independent of the
other, and shall be severally enforceable, and such rights and remedies shall be in addition to,
and not in lieu of, any other rights and remedies available to the Employers under law or equity.
12. Assignment. This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and permitted assigns,
but neither this Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any of the parties hereto without the prior written consent of all other parties
(except that Employee’s rights to payments hereunder may be transferred by will or the laws of
descent or distribution without any such prior written consent). Each Employer will require any
successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) or
purchaser of all or substantially all of the business and/or assets of such Employer to expressly
assume and agree in writing to perform this Agreement in the same manner and to the same extent
that such Employer would be required to perform it if no such succession had taken place. Failure
of such Employer to obtain and deliver to Employee such assumption and agreement prior to (but
effective only upon) such succession shall be a breach of this Agreement, except that for purposes
of implementing the foregoing, the date on which any such succession or purchase becomes effective
shall be deemed the date of termination. As used in this Agreement, “Employers” shall mean the
Employers as hereinbefore defined and any successors and/or assigns to its business and/or all or
substantially all of its assets. In the event of Employee’s death while any payment, benefit or
entitlement is due to Employee hereunder, such payment, benefit or entitlement shall be paid or
provided to Employee’s designated beneficiaries, or if there are no such beneficiaries, to
Employee’s estate.
13. Representations. Employee represents and warrants to both Employers that (a) the
execution, delivery, and performance of this Agreement by Employee does not, with or without the
giving of notice or the passage of time, or both, conflict with, result in a default, right to
accelerate, or loss of rights under any provision of any agreement of understanding to which
Employee is a party or by which Employee may be bound or affected and (b) this Agreement is the
legal, valid and binding obligation of Employee, enforceable against him in accordance with its
terms (except to the extent enforcement may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general applicability affecting
the rights of creditors). Each of the Employers represents and warrants to Employee that the
execution, delivery, and performance of this Agreement by the
Employers does not, with or without the giving of notice or the passage of time, or both, conflict with, result in a
default, right to accelerate, or loss of rights under any provision of any agreement or
understanding to which either of the Employers, or, to the best knowledge of each of the Employers,
any of the Employers’ affiliates is a party or by which either of the Employers, or, to the best
knowledge of each of the Employers, any of the Employers’ affiliates may be bound or affected.
Each of the Employers further represents and warrants to Employee that (i) it has full power and
authority to enter into and perform its obligations under this Agreement, (ii) the execution and
delivery of this Agreement by such Employer has been duly authorized by all necessary corporate or
limited liability company actions, as applicable, and (iii) this Agreement is the legal, valid and
binding obligation of each of the Employers, enforceable against it in accordance with its terms
(except to the extent enforcement may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability affecting the rights
of creditors).
- 16 -
14. Survival. The obligations of Employee and Employers under this Agreement which by
their nature may require either partial or total performance after the expiration of the Employment
Period (including without limitation those under Sections 2(c), 4, 9, 10, 15, 24 and 26) will
survive any termination or expiration of this Agreement.
15. Indemnification; Insurance.
(a) To the fullest extent authorized by applicable law, the Employers shall jointly and
severally indemnify and hold harmless Employee from and against any and all claims, liabilities,
judgments, fines, penalties, costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) reasonably incurred by Employee in connection with any threatened or
pending action, suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that Employee was or is a director, officer or employee of the Employers,
whether the basis of such proceeding is alleged action or inaction in an official capacity as a
director, officer or employee while serving as a director, officer or employee. The right to
indemnification hereunder shall include the right to be paid by the Employers the expenses
(including reasonable attorneys’ fees and expenses) incurred in defending any such proceeding in
advance of its final disposition; provided, however, that such advance shall be made to Employee
only upon delivery to the Employers of an undertaking by Employee to repay all amounts so advanced
if it shall ultimately be determined by final judicial decision from which there is no further
right to appeal that Employee is not entitled to indemnification and to such advancement under this
Section 15 or otherwise. For avoidance of doubt, the rights of Employee under this Section 15
shall survive the termination or expiration of this Agreement.
(b) The Employers shall pay all legal fees and related expenses (including, without
limitation, the costs of experts, evidence and counsel) reasonably incurred by Employee as they
become due as a result of (i) the termination of Employee’s employment (including, without
limitation, all such fees and expenses, if any, incurred in contesting or disputing any such
termination of employment), (ii) Employee’s seeking to obtain or enforce any right or benefit
provided by this Agreement or by any other plan or arrangement maintained by the Employers under
which Employee is or may be entitled to receive benefits, (iii) Employee’s hearing before the Chief
Executive Officer of Xxxx and/or the Board as contemplated in Section 3(c) or (iv) any
action taken by the Employers against Employee. The Employers’ obligations under this
paragraph shall apply without regard to the outcome of any such contest or dispute.
Notwithstanding the foregoing, the Employee shall be required to reimburse the Employer (without
interest) for any payments made to the Employee under this Section 15(b) only if (i) the
circumstances underlying the contest or dispute (A) arose or existed prior to a Change of Control
and (B) do not relate in any way to and were not in connection with a transaction or series of
transactions which, if consummated, would result in a Change of Control and (ii) after a final
nonappealable judgment on the merits, the Employee has not prevailed on any material claim with
respect to such contest or dispute.
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(c) Xxxx shall continue to maintain Employee as a named beneficiary under any liability
insurance policies maintained for directors and/or officers of Xxxx and its subsidiaries for so
long as Employee shall remain an officer of either Employer. In addition, Employee shall become,
and continue as, a named beneficiary under any liability insurance policies maintained by either
Employer after a Change of Control for persons who were directors or officers prior to a Change of
Control to the extent they provide coverage for events prior to the Change of Control. The
Employers agree to maintain the coverages referred to above unless, in each case, any modification
in indemnification and insurance coverage applies uniformly to all officers and directors of the
relevant Employer, as the case may be.
16. Captions. The captions, headings and arrangements used in this Agreement are for
convenience only and do not in any way affect, limit, or amplify the provisions hereof.
17. Notices. All notices required or permitted to be given hereunder shall be in writing
and shall be deemed delivered when actually received or, if mailed, whether or not actually
received, five days after deposited in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, addressed to the party to whom notice is being given at
the following address or at such other address as such party may designate by notice (except that
notice of a change of address shall be effective only upon receipt):
| To the Employers: | Xxxx, Inc. | |||
| 000 Xxxxx Xxxxxx, 0xx Xxxxx | ||||
| Xxx Xxxx, XX 00000 | ||||
| Attention: Chief Executive Officer | ||||
| Employee: | The most recent address of Employee set forth in the personnel records of the Employers. | |||
| with a copy to: | Xxxxxxxxxxx X. Xxxxxxx | |||
| Xxxxx & XxXxxxxx LLP | ||||
| 1 Prudential Plaza | ||||
| 000 X. Xxxxxxxx Xxxxx, Xxxxx 0000 | ||||
| Xxxxxxx, XX 00000 |
18. Severability. In the event that any one or more of the provisions of this Agreement
shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not be affected thereby. Any
such invalid, illegal or unenforceable provision shall be replaced by other provisions which are as
similar as possible in terms to such invalid, illegal or otherwise unenforceable provisions but are
valid and enforceable (but without expanding the time period or the scope of any restriction in
Section 9).
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19. Entire Agreement; Amendments. This Agreement contains the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof (including, without limitation, the
Prior Agreement). This Agreement may be amended only by an instrument in writing duly executed by
an officer of the Employers and by Employee. In the event of a conflict between any provision of
this Agreement and any other provision of any plan, program, policy, arrangement or other agreement
of the Employers, the provisions of this Agreement, to the extent more favorable to Employee, shall
apply.
20. Counterparts. This Agreement may be executed in multiple counterparts, each of which
shall constitute an original, and all of which together shall constitute one and the same
agreement, with the same effect as if the signatures upon such counterparts were upon the same
instrument.
21. Governing Law. This Agreement shall be governed by and construed and enforced
according to the laws of the State of New York, without regard to conflicts of laws principles
thereof (except that indemnification obligations owed to Employee in his capacity as an officer,
director or manager of either of the Employers shall be governed by Maryland law). The parties
agree that the state and federal courts located in the State of New York shall have jurisdiction in
any action, suit or proceeding based on or arising out of this Agreement and the parties hereby:
(a) submit to the personal jurisdiction of such courts; (b) consent to service of process in
connection with any action, suit or proceeding; (c) agree that venue is proper and convenient in
such forum; and (d) waive any other requirement (whether imposed by statute, rule of court or
otherwise) with respect to personal jurisdiction, subject matter jurisdiction, venue, or service of
process.
22. Compliance With Section 409A.
(a) The parties intend that any amounts payable under this Agreement, and the Employers’ and
Employee’s exercise of authority or discretion hereunder comply with the provisions of Section 409A
so as not to subject Employee to the payment of the additional tax, interest and any tax penalty
which may be imposed under Section 409A. The Employers shall administer this Agreement in
compliance with Section 409A. In furtherance thereof, to the extent that any provision hereof
would result in Employee being subject to payment of the additional tax, interest and tax penalty
under Section 409A, the parties agree to amend this Agreement if permitted under Section 409A in a
manner which does not impose any additional taxes, interests or penalties on Employee in order to
bring this Agreement into compliance with Section 409A, without materially changing the economic
value of the arrangements under this Agreement to any party, and thereafter the parties will
interpret its provisions in a manner that complies with Section 409A.
- 19 -
(b) Notwithstanding any provisions of this Agreement to the contrary, if Employee is a
“specified employee” (within the meaning of Section 409A and determined pursuant to policies
adopted by the Employers consistent with Section 409A) at the time of Employee’s separation from
service and if any portion of the payments or benefits to be received by Employee upon separation
from service would be considered deferred compensation under Section 409A and cannot be paid or
provided to Employee without his incurring taxes, interest or penalties under Section 409A, amounts
that would otherwise be payable pursuant to this Agreement (the “Delayed Payments”) and benefits
that would otherwise be provided pursuant to this Agreement (the “Delayed Benefits”), in each case,
during the six-month period immediately following Employee’s separation from service (such period,
the “Delay Period”) will instead be paid or made available on the earlier of (i) the first day of
the seventh month following the date of Employee’s separation from service and (ii) Employee’s
death (the applicable date, the “Permissible Payment Date”). The Employers will also reimburse
Employee for the after-tax cost incurred by Employee in independently obtaining any Delayed
Benefits (the “Additional Delayed Payments”), with any gross-up payment being paid to Employee
promptly but in no event later than the end of Employee’s taxable year immediately following the
year in which this gross-up payment is due.
(c) With respect to any amount of expenses eligible for reimbursement or the provision of any
in-kind benefits under this Agreement, to the extent such payment or benefit constitutes “deferred
compensation” under Section 409A or is required to be included in Employee’s gross income for
federal income tax purposes, such expenses (including expenses associated with in-kind benefits)
shall be reimbursed by the Employers no later than December 31st of the year following
the year in which Employee incurs the related expenses. In no event shall the reimbursements or
in-kind benefits to be provided by the Employers in one taxable year affect the amount of
reimbursements or in-kind benefits to be provided in any other taxable year, nor shall Employee’s
right to reimbursement or in-kind benefits be subject to liquidation or exchange for another
benefit.
(d) Each payment under this Agreement is intended to be a “separate payment” and not of a
series of payments for purposes of Section 409A.
(e) A termination of employment shall not be deemed to have occurred for purposes of any
provision of this Agreement providing for the payment of any amounts or benefits subject to Section
409A upon or following a termination of employment unless such termination is also a “separation
from service” (within the meaning of Section 409A), and notwithstanding anything contained herein
the contrary, the date on which such separation from service takes place shall be the termination
date.
23. No Waiver. The failure of a party to insist upon strict adherence to any term of this
Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such
party of the right thereafter to insist upon strict adherence to that term or any other term of
this Agreement. Any waiver of this Agreement to be effective must be in writing specifically
referencing the provision being waived and signed by the party against whom the waiver is being
enforced.
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24. Grantor Trust. If Employee’s employment terminates pursuant to Section 3(d), then the
Employers shall deposit any and all cash amounts payable or shares (or cash proceeds thereof)
deliverable to Employee under Section 4(d) (including any amount due if a Delayed Payment would
result in the payment being made after any such Change of Control, as well as any estimated Delayed
Payments and estimated Additional Delayed Payments) into an irrevocable grantor trust established
pursuant to a trust agreement approved by the Board in good faith (the “Grantor Trust”) not later
than the 10th business day following Employee’s termination date. From and after such
time until the payment of all amounts from the Grantor Trust, the Employers shall deposit
additional amounts into the Grantor Trust on a monthly basis equal to the interest accrued on the
cash amounts contained therein (including the interest paid previously) at the United States
five-year treasury rate, and the amounts and property held in the Grantor Trust shall be
paid/delivered to Employee in accordance with the terms of the Grantor Trust on the
payment/delivery dates specified in Section 4(d) or, if required by Section 22, on the Permissible
Payment Date.
25. Withholding Taxes. The Employers may withhold from any amounts payable under this
Agreement such federal, state and local income and employment taxes as may be required to be
withheld pursuant to any applicable law or regulation.
26. Cooperation. During and subsequent to expiration of the term of this Agreement,
Employee will cooperate with the Employers, and furnish any and all complete and truthful
information, testimony or affidavits in connection with any matter that arose during Employee’s
employment, that in any way relates to the business or operations of the Employers or any of their
parents or subsidiary corporations or affiliates, or of which Employee may have any knowledge or
involvement; and will consult with and provide information to the Employers and their
representatives concerning such matters. Subsequent to the term of this Agreement, the parties will
make their best efforts to have such cooperation performed at reasonable times and places and in a
manner as not to unreasonably interfere with any other employment in which Employee may then be
engaged. If the Employers require Employee to travel outside the metropolitan area in the United
States where Employee then resides to provide any testimony or otherwise provide any such
assistance, then the Employers will reimburse Employee for any reasonable, ordinary, and necessary
travel and lodging expenses incurred by Employee to do so provided Employee submits all
documentation required under the Employers’ standard travel expense reimbursement policies and as
otherwise may be required to satisfy any requirements under applicable tax laws for the Employers
to deduct those expenses. Nothing in this Agreement shall be construed or interpreted as requiring
Employee to provide any testimony, sworn statement, declaration or affidavit that is not complete
and truthful.
27. Acknowledgement and Interpretation. Employee acknowledges and agrees that (i) he has
had an opportunity to seek advice of counsel in connection with this Agreement and (ii) the
restrictive covenants set forth in Section 9 are reasonable in geographical and temporal scope and
in all other respects. If any of the rights or restrictions contained or provided for in this
Agreement shall be deemed by a court of competent jurisdiction to be unenforceable by reason of the
extent, duration or geographical scope, the parties agree that the court shall reduce such extent,
duration, geographical scope and enforce this Agreement in its reduced form for all purposes in the
manner contemplated hereby to the maximum extent enforceable by law. Should any of the provisions
of this Agreement require judicial interpretation, it is agreed that the court
interpreting or construing this Agreement shall not apply a presumption that any provision shall be
more strictly construed against one party by reason of the rule of construction that a document is
to be construed more strictly against the party who itself or through its agents prepared the same,
it being agreed that both parties and their respective agents have participated in the preparation
of this Agreement.
[signature page to follow]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the date(s)
written below, but effective as of the Effective Date set forth above.
| XXXX, INC. | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Title: Chief Executive Officer & President | ||||||
| Date: July 30, 2010 | ||||||
| XXXX SERVICES, LLC | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Title: Chief Executive Officer & President | ||||||
| Date: July 30, 2010 | ||||||
| /s/ Xxxx X. Xxxxxxxxxx | ||||||
| Xxxx X. Xxxxxxxxxx | ||||||
| Date: July 30, 2010 | ||||||
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