EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED AGREEMENT by and between XXXXXX INTERNATIONAL,
INC. (the "Company") and Xxxxxxx X. Xxxxxxxx, Xx. (the "Executive"),
dated as of the 22nd day of March, 1990.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its stockholders to
assure that the Company will have the continued dedication of the
Executive, notwithstanding the possibility, threat, or occurrence of a
Change of Control (as defined below) of the Company. The Board believes it
is imperative to diminish the inevitable distraction of the Executive by
virtue of the personal uncertainties and risks created by a pending or
threatened Change of Control and to encourage the Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change of Control, and to provide the Executive with
compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the
Board has caused the Company to enter into this Amended and Restated
Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Change of Control Date" shall be the
first date during the Change of Control Period on which a Change of Control
(as defined in Section 2) occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and the Company has
terminated the Executive's employment (other than under circumstances which
would constitute Cause or Disability (as such terms are defined below)) or
the Executive has terminated his employment under circumstances which would
constitute Good Reason (as defined below) if such termination occurred the
day after the Change of Control Date, and if it is reasonably demonstrated
by the Executive (i) that such termination of employment was at the request
of a third party who has taken steps reasonably calculated to effect the
Change of Control or (ii) that the Company's actions otherwise arose in
connection with or in anticipation of the Change of Control, then for all
purposes of this Agreement the "Change of Control Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on
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each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal
Date"), the Change of Control Period shall be automatically extended so as
to terminate three years from such Renewal Date, unless at least 60 days
prior to the Renewal Date the Company shall give notice to the Executive
that the Change of Control Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
20% or more of either (i) the then outstanding shares of common stock of
the Company (the "Outstanding Company Common Stock") or (ii) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company (excluding an acquisition by virtue of the
exercise of a conversion privilege), (ii) any acquisition by the Com-
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pany, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled
by the Company or (iv) any acquisition by a corporation pursuant to a
reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and
(iii) of subsection (c) of this Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
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(c) Approval by the stockholders of the Company of a reorganization,
merger, or consolidation, unless, following such reorganization, merger or
consolidation, (i) more than 60% of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such reorganization,
merger or consolidation, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding the Company, any employee benefit plan (or related trust) of the
Company or such corporation resulting from such reorganization, merger or
consolidation and any Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or indirectly, 20% or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
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indirectly, 20% or more of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then
outstanding voting securities of such corporation, entitled to vote
generally in the election of directors and (iii) at least a majority of the
members of the board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the Incumbent Board
at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or
(d) Approval by the stockholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or other
disposition of all or substantially all of the assets of the Company, other
than to a corporation, with respect to which following such sale or other
disposition, (A) more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then benefically owned, directly
or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately prior to
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such sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other disposition, of
the Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) no Person (excluding the Company and
any employee benefit plan (or related trust) of the Company or such
corporation and any Person beneficially owning, immediately
prior to such sale or other disposition, directly or indirectly, 20% or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly,
20% or more of, respectively, the then outstanding shares of common stock
of such corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in the
election of directors and (C) at least a majority of the members of the
board of directors of such corporation were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the
Board providing for such sale or other disposition of assets of the
Company.
3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the
employ of the Company, for the period commencing on the Change of Control
Date and ending on the third anniversary of such date (the "Employment
Period").
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4. Terms of Employment. (a) Position and Duties. (i) During the
Employment Period, (A) the Executive's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the
90-day period immediately preceding the Change of Control Date and (B) the
Executive's services shall be performed at the location (the "Principal
Business Location") where the Executive was employed immediately preceding
the Change of Control Date or at any office or location which does not
result in a material increase in the distance or time of commutation
between the Executive's place of primary residence at the Change of Control
Date and the Executive's Principal Business Location, or materially
adversely affect the mode of such commutation.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
agrees to devote reasonable attention and time during normal business hours
to the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it shall
not
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be a violation of this Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees, (B) deliver lectures,
fulfill speaking engagements or teach at educational institutions and (C)
manage personal investments, so long as such activities do not
significantly interfere with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the
Change of Control Date, the continued conduct of such activities (or the
conduct of activities similar in nature and scope thereto) subsequent to
the Change of Control Date shall not thereafter be deemed to interfere with
the performance of the Executive's responsibilities to the Company.
(b) Compensation and Employment. (i) Base Salary. During the
Employment Period, the Executive shall receive in accordance with the
Company's payroll practices at the Change of Control Date an annual base
salary ("Annual Base Salary"), at least equal to twelve times the highest
monthly base salary paid or payable to the Executive by the Company and its
affiliated companies in respect of the twelve-month period immediately
preceding the month in which the Change of Control Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed at least
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annually and shall be increased at any time and from time to time as
shall be substantially consistent with increases in base salary awarded in
the ordinary course of business to other peer executives of the Company and
its affiliated companies but in no event shall the annual increase in Base
Salary be less than a percentage at least equal to the increase, if any, in
the cost-of-living shown on the Consumer Price Index for the area in which
the Principal Business Location is located, published by the Bureau of
Labor Statistics of the United States Department of Labor for the
immediately preceding twelve-month period (or, if no such Consumer Price
Index is then published, any successor index thereto). Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation
to the Executive under this Agreement. Annual Base Salary shall not be
reduced after any such increase and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased. As
used in this Agreement, the term "affiliated companies" includes (i) any
company controlled by, controlling or under common control with the Company
and (ii) with respect to any period or part of a period prior to July 1,
1989, the Company's predecessor, Xxxxxx Thiokol, Inc.
(ii) Bonus. (A) In addition to Annual Base Salary, the Executive shall
be awarded, for each fiscal year
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beginning or ending during the Employment Period, an annual bonus (the
"Annual Bonus") in cash at least equal to the highest annualized (for any
fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve
full months) bonus paid or payable (including any amount subject to a
deferral election) to the Executive by the Company and its affiliated
companies in respect of the three fiscal years immediately preceding the
fiscal year in which the Change of Control Date occurs (the "Recent Annual
Bonus"). Each such Annual Bonus shall be paid no later than the end of the
third month of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Annual Bonus.
(B) In addition to Annual Base Salary and the Annual Bonus, the
Executive shall be paid, for each fiscal year beginning or ending during
the Employment Period, a long-term bonus (the "Long-Term Bonus") in cash at
least equal to the average long-term incentive bonus (the "Recent Long-Term
Bonus") paid or payable to the Executive by the Company and its affiliated
companies under the Company's Long-Term Incentive Compensation Plan (or any
predecessor or successor plan thereto including pursuant to performance
unit awards granted under the Xxxxxx Thiokol, Inc. 1985
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Stock Option and Performance Unit Plan) (the "LTIP") in respect of the
last three completed performance cycles ending with the performance cycle
ending in the fiscal year preceding the fiscal year in which the Change of
Control Date occurs (or, if less, in respect of the number of completed
performance cycles for which the Executive has received a long-term bonus).
If the Executive was not a participant in the LTIP in one of such cycles,
but is, at the Change of Control Date, a participant in the LTIP, the
Recent Long-Term Bonus shall be equal to the amount payable to such
Executive under the LTIP upon a Change of Control (as defined in the LTIP),
divided by the number of performance cycles in which the Executive was
participating at such time. For the fiscal year in which the Change of
Control Date occurs and for the next two fiscal years, any such payment may
be reduced (but not below zero) by the amount actually paid upon the Change
of Control (as defined in the LTIP) to the Executive under the terms of the
LTIP with respect to the performance cycle that otherwise would have ended
in such fiscal year. Each such Long-Term Bonus shall be paid pursuant to a
plan which has three-year performance cycles and is otherwise substantially
similar to the LTIP and shall be paid no later than the end of the third
month of the fiscal year next following the fiscal year for which the
Long-Term Bonus is awarded, unless the Executive shall elect to defer the
receipt of such Long-Term Bonus.
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(iii) Incentive, Savings and Retirement Plans. In addition to Annual
Base Salary, Annual Bonus and Long-Term Bonus payable as hereinabove
provided, the Executive shall be entitled to participate during the
Employment Period in all incentive, savings and retirement plans,
practices, policies and programs applicable to other peer executives of the
Company and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Executive with incentive,
savings and retirement benefits opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by
the Company and its affiliated companies for the Executive under such
plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Change of Control Date.
(iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under welfare
benefit plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group
life, accidental death and travel accident insurance plans and programs)
and applicable to other peer executives of the Company and its affiliated
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companies, but in no event shall such plans, practices, policies and
programs provide benefits which are less favorable, in the aggregate, than
the most favorable of such plans, practices, policies and programs in
effect at any time during the 90-day period immediately preceding the
Change of Control Date.
(v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in
effect at any time during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in effect
at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.
(vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits including, without limitation, club
memberships and annual physicals, in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as in effect at any time
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thereafter with respect to other peer executives of the Company and its
affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, to exclusive personal secretarial and
other assistance, and to a Company-provided car, at least equal to the most
favorable of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as provided at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated
companies as in effect at any time during the 90-day period immediately
preceding the Change of Control Date or, if more favorable to the
Executive, as in effect at any time thereafter with respect to other peer
executives of the Company and its affiliated companies with similar lengths
of service.
5. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate auto-
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matically upon the Executive's death during the Employment Period. If
the Company determines in good faith that the Disability of the Executive
has occurred during the Employment Period (pursuant to the definition of
"Disability" set forth below), it may give to the Executive written notice
in accordance with Section 12(b) of this Agreement of its intention to
terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Change of Control
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties.
For purposes of this Agreement, "Disability" means the absence of the
Executive from the Executive's duties with the Company on a full-time basis
for 180 consecutive business days as a result of incapacity due to mental
or physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's employment during
the Employment Period for "Cause." For purposes of this Agreement, "Cause"
means (i) an act or acts of personal dishonesty taken by the Executive and
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intended to result in substantial personal enrichment of the Executive
at the expense of the Company, (ii) repeated violations by the Executive of
the Executive's obligations under Section 4(a) of this Agreement which are
demonstrably willful and deliberate on the Executive's part and which are
not remedied in a reasonable period of time after receipt of written notice
from the Company or (iii) the conviction of the Executive of a felony
involving moral turpitude. For purposes of this Section 5(b), no act, or
failure to act, on the Executive's part shall be considered "willful"
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action or omission was in the best interest of
the Company. Notwithstanding the foregoing, the Executive shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution, duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for the purpose
(after reasonable notice to the Executive and an opportunity for him,
together with his counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, the Executive was guilty of conduct
set forth above in clause (i), (ii), or (iii) of the second sentence of
this Section 5(b) and specifying the particulars thereof in detail.
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(c) Good Reason. The Executive's employment may be terminated during
the Employment Period by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" means
(i) the assignment to the Executive of any duties inconsistent in
any respect with the Executive's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B)
hereof;
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(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the Executive
for any reason during the 30-day period immediately following the first
anniversary of the Change of Control Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the Company for Cause or
by the Executive for Good Reason shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 12
(b) of this Agreement. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other
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than the date of receipt of such notice, specifies the termination date
(which date shall be not more than fifteen days after the giving of such
notice). The failure by the Executive to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Executive hereunder or
preclude the Executive from asserting such fact or circumstance in
enforcing the Executive's rights hereunder.
(e) Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein,
as the case may be; provided, however, that (i) if the Executive's employment
is terminated by the Company other than for Cause or Disability, the Date
of Termination shall be the date on which the Company notifies the
Executive of such termination and (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall
be the date of death of the Executive or the Disability Change of Control
Date, as the case may be.
6. Obligations of the Company upon Termination. (a) Death. If the
Executive's employment terminates by reason of the Executive's death during
the Employment Period, this Agreement shall terminate without further
obligations to the Executive's legal representatives under this
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Agreement, other than the following obligations: (i) the Executive's
Annual Base Salary through the Date of Termination, to the extent not
theretofore paid, (ii) any amount payable to the Executive pursuant to
4(b)(ii) hereof in respect of the most recently completed fiscal year, to
the extent not theretofore paid, (iii) if the Change of Control Date
occurred after the end of the most recently completed fiscal year and no
Annual Bonus was paid to the Executive in respect of such period, an amount
equal to the Recent Annual Bonus, (iv) the product of the greater of the
Annual Bonus paid or payable (and annualized for any fiscal year consisting
of less than twelve full months or for which the Executive has been
employed for less than twelve full months) to the Executive for the most
recently completed fiscal year during the Employment Period, if any, or the
Recent Annual Bonus (such greater amount hereafter referred to as the
"Highest Annual Bonus") and a fraction, the numerator of which is the
number of days in the current fiscal year through the Date of Termination,
and the denominator of which is 365, (v) for each performance cycle under
the LTIP or any successor thereto which has commenced on or after the
Change of Control Date, the product of the greater of the Long-Term Bonus
paid or payable to the Executive for the most recently completed
performance cycle during the Employment Period, if any, or the Recent
Long-Term Bonus (such
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greater amount hereafter referred to as the "Greater Long-Term Bonus")
and a fraction, the numerator of which is the number of days which have
elapsed in the performance cycle through the Date of Termination, and the
denominator of which is 1095, and (vi) any compensation previously deferred
by the Executive (together with any accrued interest thereon) and not yet
paid by the Company and any accrued vacation pay not yet paid by the
Company (the amounts described in paragraphs (i) through (vi) hereof are
hereinafter referred to as "Accrued Obligations"). All Accrued Obligations
shall be paid to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Executive's family
shall be entitled to receive benefits at least equal to the most favorable
benefits provided by the Company and any of its affiliated companies to
surviving families of peer executives of the Company and such affiliated
companies under such plans, programs, practices and policies relating to
family death benefits, if any, as in effect with respect to other peer
executives and their families at any time during the 90-day period
immediately preceding the Change of Control Date or, if more favorable to
the Executive and/or the Executive's family, as in effect on the date of
the Executive's death with respect to other peer executives of the Company
and its affiliated companies and their families.
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(b) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement
shall terminate without further obligations to the Executive, other than
for Accrued Obligations. All Accrued Obligations shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive
shall be entitled after the Disability Change of Control Date to receive
disability and other benefits at least equal to the most favorable of those
provided by the Company and its affiliated companies to disabled executives
and/or their families in accordance with such plans, programs, practices
and policies relating to disability, if any, as in effect with respect to
other peer executives and their families at any time during the 90-day
period immediately preceding the Change of Control Date or, if more
favorable to the Executive and/or the Executive's family, as in effect at
any time thereafter with respect to other peer executives of the Company
and its affiliated companies and their families.
(c) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period or if the
Executive terminates employment during the Employment Period other than for
Good Reason, this Agreement shall terminate without further obliga-
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tions to the Executive other than the obligation to pay to the
Executive Annual Base Salary through the Date of Termination plus the
amount of any compensation previously deferred by the Executive and accrued
vacation pay, in each case to the extent theretofore unpaid.
(d) Good Reason; Other Than for Cause or Disability. If, during the
Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability, or if the Executive shall terminate
employment under this Agreement for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the
amounts described in paragraphs A, B and C, below, less the amount
described in paragraph D:
A. the product of (x) three and (y) the sum of (i) Annual Base
Salary, (ii) the Highest Annual Bonus and (iii) the Greater
Long-Term Bonus; and
B. all Accrued Obligations; and
C. a lump-sum retirement benefit equal to the difference
between (a) the actuarial equivalent of the benefit under the
Xxxxxx International, Inc. Pension Plan and the Xxxxxx
International, Inc.
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Excess Pension Plan as in effect on the Change of Control Date
or any successor plan which provides more favorable benefits to the
Executive (the "Retirement Plans") which the Executive would
receive if the Executive's employment continued at the compensation
level provided for in Sections 4(b)(i) and 4(b)(ii) of this
Agreement for three years, assuming for this purpose that all
accrued benefits are fully vested, and (b) the actuarial equivalent
of the Executive's actual benefit (paid or payable), if any, under
the Retirement Plans; less
D. the sum of the following amounts calculated for each
performance cycle under the LTIP with respect to which a payment
was made under the terms of the LTIP as a result of the Change of
Control (as defined in the LTIP): the product of (x) the number of
days (but not less than zero) that would have remained in such
cycle as of the Date of Termination if the Change of Control (as
defined in the LTIP) had not occurred divided by 1095 and (y) the
amount paid upon the Change of Control under the terms of the LTIP
with respect to such cycle; and
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(ii) for the remainder of the Employment Period, or such longer
period as any plan, program, practice or policy may provide, the
Company shall continue benefits to the Executive and/or the Executive's
family at least equal to those which would have been provided to them
in accordance with the plans, programs, practices and policies
described in Section 4(b)(iv) and (vi) of this Agreement if the
Executive's employment had not been terminated in accordance with the
most favorable plans, practices, programs or policies of the Company
and its affiliated companies applicable to other peer executives and
their families during the 90-day period immediately preceding the
Change of Control Date or, if more favorable to the Executive, as in
effect at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families. For
purposes of determining the Executive's age and length of service at
the time of his termination of employment in order to determine
eligibility of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be
considered to have remained employed until the end of the Employment
Period and to have terminated employment on the last day of such
period; provided, however, that the Executive shall be entitled to the
more favorable of
- 26 -
the retiree benefits in effect on the Date of Termination or
the retiree benefits in effect on the date that would have been
the last date of the Employment Period if the Executive had
remained employed.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plans, programs, policies or practices, provided
by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect
such rights as the Executive may have under any other agreements with the
Company or any of its affiliated companies. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company or any of its affiliated
companies at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program except as explicitly
modified by this Agreement.
8. Full Settlement. The Company's 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 Company may have
- 27 -
against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement. The Company agrees to pay, from time to time
promptly upon invoice, to the full extent permitted by law, all legal fees
and expenses which the Executive may reasonably incur as a result of any
contest or controversy (regardless of the outcome thereof and whether or
not litigation is involved) by the Company, the Executive or others of the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of
any contest by the Executive about the amount of any payment pursuant to
Section 9 of this Agreement).
9. Certain Additional Payments by the Company. (a) Anything in this
Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 9) (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
or any interest or penalties are incurred by the Executive with
- 28 -
respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that after
payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be
made by Ernst & Young (the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the Company. In
the event that the Accounting Firm is serving (or has, during the three
years preceding the Effective Date, served) as accountant or auditor for
the individual, entity or group
- 29 -
effecting the Change of Control, the Executive shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 9, shall be paid by the Company to the Executive
within five days of the receipt of the Accounting Firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by the
Executive, it shall furnish the Executive with a written opinion that
failure to report the Excise Tax on the Executive's applicable federal
income tax return would not result in the imposition of a negligence or
similar penalty. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have
been made ("Underpayment"), consistent with the calculations required to be
made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 9(c) and the Executive thereafter is required to make
a payment of any Excise Tax, the Accounting Firm shall determine the amount
of the
- 30 -
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect
- 31 -
to such claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively
to contest such claim, and
(iv) permit the Company to participate in any proceedings relating
to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 9(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate
- 32 -
courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on
an after-tax basis, from any Excise Tax or income tax (including interest
or penalties with respect thereto) imposed with respect to such advance or
with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount. Furthermore, the Company's control of the contest shall
be limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 9(c)) promptly pay to
the Company the amount of such refund
- 33 -
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its
intent to contest such denial of refund prior to the expiration of 30 days
after such determination, then such advance shall be forgiven and shall not
be required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
10. Confidential Information. (a) During the period of his employment
hereunder, the Executive shall not, without the written consent of the
Chief Executive Officer, disclose to any person, other than an employee of
the Company or a person to whom disclosure is reasonably necessary or
appropriate in connection with the performance by the Executive of his
duties as an executive of the Company, any material confidential
information obtained by him while in the employ of the Company or Xxxxxx
Thiokol, Inc. with respect to any of the products, improvements, formulas,
designs or styles, processes, customers, methods of distribution or methods
of manufacture of the Company or Xxxxxx Thiokol, Inc., the disclosure of
which he knows will be ma-
-34 -
terially damaging to the Company; provided, however, that confidential
information shall not include any information known generally to the public
(other than as a result of unauthorized disclosure by the Executive) or any
information of a type not otherwise considered confidential by persons
engaged in the same business or a business similar to that conducted by the
Company. For the period ending two years following the Date of
Termination, the Executive shall not disclose any confidential information
of the type described above except as determined by him to be reasonably
necessary in connection with any business or activity in which he is then
engaged.
(b) Any and all inventions made, developed or created by the Executive
(whether at the request or suggestion of the Company or otherwise, whether
alone or in conjunction with others, and whether during regular hours of
work or otherwise) during the period of his employment by the Company or
Xxxxxx Thiokol, Inc., which may be directly or indirectly useful in, or
relate to, the business of or tests being carried out by the Company or any
of its subsidiaries or affiliates, will be promptly and fully disclosed by
the Executive to an appropriate executive officer of the Company and shall
be the Company's exclusive property as against the Executive, and the
Executive will promptly deliver to an appropriate executive officer of the
Company
- 35 -
all papers, drawings, models, data and other material relating to any
invention made, developed or created by him as aforesaid.
(c) The Executive will, upon the Company's request and without any
payment therefor, execute any documents necessary or advisable in the
opinion of the Company's counsel to direct issuance of patents to the
Company with respect to such inventions as are to be the Company's
exclusive property as against the Executive under Section 10(b) above or to
vest in the Company title to such inventions as against the Executive,
provided, however, that the expense of securing any such patent will be
borne by the Company.
(d) The foregoing provisions of this Section 10 shall be binding upon
the Executive's heirs, successors and legal representatives.
(e) In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by
the Executive otherwise than by will or the laws of descent and
distribution.
- 36 -
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company to assume expressly and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place.
12. Miscellaneous. (a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, without
reference to principles of conflict of laws. The captions of this
Agreement are not part of the provisions hereof and shall have no force or
effect. This Agreement may not be amended or modified otherwise than by a
written agreement executed by the parties hereto or their respective
successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
- 37 -
If to the Executive:
-------------------
Home address as currently shown
on Human Resources Department
records of Executive's business unit.
If to the Company:
-----------------
Xxxxxx International
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Secretary
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications shall
be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(e) The Executive's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or
any other provision thereof.
- 38 -
(f) This Agreement contains the entire understanding of the Company and
the Executive with respect to the subject matter hereof.
(g) Anything in this Agreement to the contrary notwithstanding, the
Executive and the Company acknowledge that the employment of the Executive
by the Company is "at will", and, except as provided in Section 1 hereof,
prior to the Change of Control Date, the employment of the Executive may be
terminated by either the Executive or the Chief Executive Officer of the
Company at any time. Upon a termination of the Executive's employment
prior to the Change of Control Date, except as provided in Section I
hereof, there shall be no further rights under this Agreement.
(h) This Agreement shall supercede and replace the Employment Agreement
dated February 27, 1989 by and between the Executive and the Company.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be
- 39 -
executed in its name on its behalf, all as of the day and year first
above written.
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
----------------------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
XXXXXX INTERNATIONAL, INC.
By: /s/ X. X. Xxxxx
------------------------------------
X. X. Xxxxx
Chairman and Chief Executive
Officer
- 40 -
