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EXHIBIT 10.27
CHANGE IN CONTROL AGREEMENT
This Change In Control Agreement ("Agreement") is dated as of
September 27, 1997, and is entered into by and between R. XXXXXXX
XXXXXXX, ("Executive") and Xxxxxx International, Inc., a California corporation
("Xxxxxx").
RECITALS
Xxxxxx considers it to be in the best interest of Xxxxxx and its
shareholders that Executive be encouraged to continue his employment with Xxxxxx
and continue to devote full attention to Xxxxxx'x business notwithstanding the
possibility, threat or occurrence of an acquisition, merger, or change of
control involving Xxxxxx. Xxxxxx also believes that it is in the best interest
of Xxxxxx and its shareholders to minimize potential conflicts of interest and
to diminish inevitable distractions arising from the possibility of an
acquisition, merger or change of control.
Accordingly, in order to secure these benefits for Xxxxxx, and to
induce Executive to remain in the employ of Xxxxxx,
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and for other good and valuable consideration, the Board of Directors of Xxxxxx,
upon the recommendation of its Compensation Committee, has caused Xxxxxx to
enter into this Agreement.
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TERMS AND CONDITIONS
Executive and Xxxxxx hereby agree to the following terms and
conditions:
1. Term of Agreement/Expiration Date. This Agreement shall be
effective as of the date first indicated above and shall remain in effect until
the Expiration Date described below. The "Expiration Date" is the third
anniversary of the date either party gives written notice of the termination of
this Agreement.
2. Event Date. The "Event Date" shall mean the first date during
the term of this Agreement on which an Event (as defined in Section 3) occurs;
[provided, however, that if an Event occurs and if Executive's employment with
Xxxxxx is terminated within the six-month period prior to the date on which the
Event occurs, the "Event Date" shall mean the date immediately prior to the date
of such termination.]
3. Event. "Event" shall mean any of the following:
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(a) The dissolution or liquidation of Xxxxxx following a Change
in Control;
(b) The merger, consolidation, or other reorganization of Xxxxxx
with or into one or more entities which are not "Subsidiaries" (as
defined below), as a result of which 50% or less of the outstanding
voting securities of the surviving or resulting entity are, or are to
be, owned by former shareholders of Xxxxxx;
(c) The sale or transfer of substantially all of Xxxxxx'x
business and/or assets to a person or entity which is not a Subsidiary;
or
(d) A Change in Control. A "Change in Control" shall be deemed to
have occurred if:
(i) any "person", alone or together with all "affiliates"
and "associates" of such person is or becomes the "beneficial
owner" of 35% or more of the outstanding Class A Common Shares or
100% of the outstanding Class B Common Shares of Xxxxxx (the
terms
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"person", "affiliates", "associates" and "beneficial owner" are
used as such terms are used in the Securities Exchange Act of
1934 and the General Rules and Regulations thereunder); provided,
however, that a "Change in Control" shall not be deemed to have
occurred if such "person" is (x) any Subsidiary or any employee
benefit plan or employee stock plan of Xxxxxx or of any
Subsidiary, or any trust or other entity organized, established
or holding shares of such voting securities by, for or pursuant
to, the terms of any such plan, or (y) Executive or Executive and
one or more other persons acting as a partnership, limited
partnership, syndicate, or other group for the purpose of
acquiring, holding or disposing of securities of Xxxxxx; or
(ii) individuals who at the beginning of any period of two
consecutive calendar years constitute the Board of Directors
cease for any reason, during such period, to constitute at least
a majority thereof, unless the election, or the nomination for
election by Xxxxxx'x shareholders, of each new Board member was
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approved by a vote of at least three-quarters of the Board
members then still in office who were Board members at the
beginning of such period.
"Subsidiary" shall mean any corporation or other entity of which
more than 50% of the outstanding voting stock or voting power is
beneficially owned directly or indirectly by Xxxxxx. If the approval of
the shareholders of Xxxxxx for any of the occurrences set forth in
subsections (a) through (d) is obtained prior to such occurrence, then
such shareholder approval shall constitute the Event.
4. Effective Period. For the purpose of this Agreement, the
"Effective Period" is the period commencing on the Event Date, and ending on the
earlier of the Expiration Date or the third anniversary of the Event Date.
5. Termination of Employment.
(a) General. Executive shall be entitled to the payments and
benefits described in Section 6(a) of this Agreement in the event
Executive's employment is terminated
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(i) by Xxxxxx during the Effective Period for any reason, other than as
a result of Executive's death or for Disability or Cause in accordance
with the terms of this Section 5, or (ii) by Executive for Good Reason
pursuant to a Notice of Termination delivered during the Effective
Period.
(i) Death. Executive's employment shall terminate
automatically upon Executive's death.
(ii) Disability. If the Disability of Executive occurs
during the Effective Period (pursuant to the definition of
Disability set forth below), Xxxxxx may give Executive written
notice in accordance with Section 15 of this Agreement of its
intention to terminate Executive's employment. In such event,
Executive's employment with Xxxxxx shall terminate effective on
the 30th day after receipt of such notice by Executive (the
"Disability Effective Date"), provided that, within the 30 days
after such receipt, Executive shall not have returned to
full-time performance of Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of
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Executive from Executive's duties with Xxxxxx on a full-time
basis for 180 consecutive business days or such shorter period as
a result of incapacity due to mental or physical illness which is
both (i) determined to be total and permanent by a physician
selected by Xxxxxx or its insurers and acceptable to Executive or
Executive's legal representative, and (ii) entitles Executive to
the payment of long-term disability benefits from Xxxxxx'x
long-term disability plan commencing immediately upon the
Disability Effective Date.
(iii) Cause. Xxxxxx may terminate Executive's employment
during the Effective Period for Cause. For purposes of this
Agreement, "Cause" shall be limited to:
[a] The conviction of Executive for commission of a
felony, or
[b] The willful engaging by Executive in gross
misconduct which materially and demonstrably
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injures Xxxxxx. For purposes of this paragraph, no act or
failure to act on the part of Executive shall be considered
"willful" unless done, or omitted to be done, by Executive
not in good faith and without reasonable belief that
Executive's action or omission was in the best interest of
Xxxxxx.
[c] The issuance of an order, judgment or decree of
any court of competent jurisdiction permanently enjoining
Executive from violating any provision of the Securities
Act of 1933, the Securities Exchange Act of 1934 and
applicable securities law statute of a state.
[d] A final judgment of a court holding Executive
liable in a civil action based upon conduct showing that
Execution breached a fiduciary duty to Xxxxxx or its
Shareholders.
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(iv) Good Reason. Executive's employment may be terminated
by Executive for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
[a] The assignment to Executive of any duties
inconsistent in any material respect with Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as in
effect on the Event Date, or any other action by Xxxxxx
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 Xxxxxx promptly
after receipt of notice thereof given by Executive;
[b] Any failure by Xxxxxx to reappoint Executive to
a position held by Executive on the Event Date, except as
a result of the termination of Executive's employment by
Xxxxxx for Cause or Disability, the death of Executive, or
the
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termination of Executive's employment by Executive other
than for Good Reason;
[c] Reduction by Xxxxxx in Executive's base salary
as in effect on the date hereof or as the same may be
increased from time-to-time;
[d] The taking of any action by Xxxxxx (including
the elimination of medical and life insurance plans
without providing substitutes therefore or the reduction
of Executive's benefits thereunder) that would
substantially diminish the aggregate value of Executive's
incentive awards and other fringe benefits including
executive benefits and perquisites from the levels in
effect prior to the Event Date;
[e] Xxxxxx'x requiring Executive to be based at any
office or location which increases the distance from
Executive's home to the office or location by more than
35 miles above the number of
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miles Executive drives to the office as of the Event Date;
[f] Any purported termination by Xxxxxx of
Executive's employment otherwise than pursuant to a Notice
of Termination; or
[g] Any failure by Xxxxxx to comply with and
satisfy Section 10(c) of this Agreement.
For purposes of this Section, any good faith determination of "Good
Reason" made by Executive shall be conclusive.
(b) Notice of Termination. Any termination of Executive's
employment by Xxxxxx during the Effective Period for any reason, or by
Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section
15 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) to the extent
applicable, sets forth in reasonable detail the
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facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date of receipt
of such notice, specifies the termination date (which date shall be not
more than thirty days after the giving of such notice). The facts and
circumstances set forth in any Notice of Termination given by Xxxxxx
pursuant to a purported termination of Executive for Cause shall
constitute the exclusive set of facts and circumstances upon which
Xxxxxx may rely to attempt to demonstrate that Cause for such
termination existed. The failure by 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 Executive hereunder or
preclude Executive from asserting such fact or circumstance in enforcing
Executive's rights hereunder.
(c) Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated by Xxxxxx for Cause, or by
Executive for Good Reason, the date of receipt of the Notice of
Termination or a later date (within the limit set forth in subsection
(b)) specified therein, as the
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case may be, (ii) if Executive's employment is terminated by Xxxxxx
other than for Cause or Disability, the Date of Termination shall be the
date on which Xxxxxx notifies Executive of such termination and (iii) if
Executive's employment is terminated by reason of death or Disability,
the Date of Termination shall be the date of death of Executive or the
Disability Effective Date, as the case may be.
6. Obligations of Xxxxxx upon Termination.
(a) Good Reason, Other Than for Cause, Death or Disability. If
Xxxxxx shall terminate Executive's employment other than for Cause or
Disability during the Effective Period, or Executive shall terminate
employment for Good Reason pursuant to a Notice of Termination delivered
during the Effective Period, Xxxxxx agrees to make the payments and
provide the benefits described below. Xxxxxx shall not be obligated to
make such payments and provide such benefits if the Executive's
employment with Xxxxxx terminates as a result of Executive's death.
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(i) Xxxxxx shall pay to Executive in a lump sum in cash
within 10 days after the Date of Termination an amount equal to
the product of (1) and (2), where (1) is three and (2) is the sum
of (x) Executive's highest rate of annual base salary in effect
at any time in the two years preceding the Date of Termination
and (y) the highest annual amount of incentive compensation
(including both short and long term compensation) paid in respect
of the most recent three fiscal years ending before the Date of
Termination under; provided, however, that if the incentive
compensation otherwise payable under Xxxxxx'x Incentive
Compensation Plan in respect of the fiscal year preceding the
fiscal year in which the Date of Termination occurs has not been
paid in full on or before the Date of Termination, "three" in
this clause (y) shall be replaced by "four." (The amount in this
clause (y) is referred to hereinafter as the "Incentive
Compensation Payment.")
(ii) (A) Xxxxxx shall pay Executive his or her full base
salary through the Date of Termination at the rate in effect at
the time the Notice of Termination is
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given [plus a pro-rata share of the Incentive Compensation
Payment.] Such pro-rata share shall equal the fraction of
Xxxxxx'x fiscal year which preceded the Date of Termination. (B)
In addition, if the incentive compensation otherwise payable
under Xxxxxx'x incentive compensation plan of Xxxxxx in respect
of the fiscal year preceding the fiscal year in which the Date of
Termination occurs has not been paid in full on or before the
Date of Termination, Xxxxxx shall pay Executive an amount equal
to the difference between the Incentive Compensation Payment and
the portion (if any) which was actually paid to the Executive of
such incentive compensation in respect of the fiscal year
preceding the fiscal year in which the Date of Termination
occurs.
(iii) For two years after Executive's Date of Termination,
Xxxxxx shall continue to provide medical and life insurance
benefits and fringe benefits and other perquisites to Executive
and Executive's family at least equal to those which would have
been provided to them if Executive's employment had not been
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terminated in accordance with the most favorable plans,
practices, programs or policies of Xxxxxx and its affiliated
companies applicable generally to other peer executives and their
families immediately preceding the Date of Termination; provided,
however, that if Executive becomes reemployed with another
employer, the medical, life insurance and other benefits
described herein shall cease and terminate thirty (30) days after
the effective date of Executive's reemployment. In connection
with the foregoing, Executive agrees to notify Xxxxxx in writing
of his reemployment within Ten days (10) of such reemployment.
For purposes of determining eligibility (but not the time of
commencement of benefits) of Executive for retiree benefits
pursuant to such plans, practices, programs and policies,
Executive shall be considered to have remained employed until
three years after the Date of Termination and to have retired on
the last day of such period. Following the period of continued
benefits referred to in this subsection, Executive and
Executive's family shall be given the right provided in Section
49808 of the Internal Revenue Code to elect to
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continue benefits in all group medical plans. In the event that
Executive's participation in any of the plans, programs,
practices or policies of Xxxxxx referred to in this subsection is
barred by the terms of such plans, programs, practices or
policies, Xxxxxx shall provide Executive with benefits
substantially similar to those which Executive would be entitled
as a participant in such plans, programs, practices or policies.
At the end of the period of coverage, Executive shall have the
option to have assigned to Executive, at no cost and with no
apportionment of prepaid premiums, any assignable insurance
policy owned by Xxxxxx and relating specifically to Executive.
(iv) Xxxxxx shall enable Executive to purchase the
automobile, if any, that Xxxxxx was providing for Executive at
the time Notice of Termination was given at the wholesale value
of such automobile at such time, as shown in the current addition
of the National Auto Research Publication Blue Book. Any
outstanding relocation loans to Executive from Xxxxxx shall not
be accelerated. The obligations set forth in this
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Section 6(a) (iv) are hereinafter referred to as the "Special
Obligations."
(v) Any compensation previously deferred by the Executive
(together with any accrued earnings or interest thereon) and any
accrued vacation pay, in each case to the extent not theretofore
paid (the amount referred to in this clause (v) and clause (ii)
above being referred to as "Accrued Obligations").
(vi) To the extent not theretofore paid or provided,
Xxxxxx shall timely pay or provide Executive any other amounts or
benefits required to be paid or provided or which Executive is
eligible to receive under any plan, program, policy, practice,
contract or agreement of Xxxxxx and its affiliated companies,
including but not limited to any benefits payable to Executive
under a plan, policy, practice, etc., referred to in Section 7
below, (such other amounts and benefits being hereinafter
referred to as "Other Benefits") in accordance with the terms of
such plan, program, policy, practice, contract or agreement.
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(vii) Upon a Change of Control, any and all options,
warrants and grants to purchase Class A Common Stock of Xxxxxx
shall become immediately vested and exercisable by Executive.
(b) Death. If the Executive's employment is terminated by reason
of the Executive's death during the Effective Period, this Agreement
shall terminate without further obligations to the Executive's legal
representatives under this Agreement, other than for timely performance
of the Special Obligations, payment of Accrued Obligations and payment
or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 10 days of the Date of Termination.
(c) Disability. If the Executives employment is terminated by
reason of the Executive's Disability during the Effective Period,
this Agreement shall terminate without further obligations to the
Executive, other than for timely performance of the Special
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Obligations, payment of Accrued Obligations and payment or
provision of Other Benefits. Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of
Termination.
(d) Cause. If Executive's employment shall be terminated for
Cause during the Effective Period, this Agreement shall terminate
without further obligations to Executive (other than the obligation to
pay to Executive his base salary earned through the Date of Termination
and payment or provision of the Other Benefits).
(e) The provisions of this Paragraph 8 supersede and replace any
other agreement between Xxxxxx and Executive relating to the payment of
any benefits as a results of the Termination of Executive by Xxxxxx or
Executive's voluntary termination for any reason.
(f) Other than for Good Reason.
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(i) If Executive shall voluntarily terminate employment,
excluding a termination for Good Reason, within the six month
period following the Event Date, this Agreement shall terminate
without further obligations to Executive, except that Xxxxxx
shall (i) pay to Executive his base salary earned through the
Date of Termination and pay or provide the Other Benefits.
(ii) If Executive shall voluntarily terminate employment,
excluding a termination for Good Reason, within the Effective
Period, but after the six month period following the Event Date,
this Agreement shall terminate without further obligations to
Executive, except that Xxxxxx shall (i) pay to Executive his base
salary earned through the Date of Termination and pay or provide
the Other Benefits, and (ii) timely perform the Special
Obligations.
7. Non-Exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Executive's continuing or future participation in any plan,
program, policy or practice provided by Xxxxxx or any of its affiliated
companies and for which Executive
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may qualify, nor, subject to Section 19, shall anything herein limit or
otherwise affect such rights as Executive may have under any contract or
agreement with Xxxxxx or any of its affiliated companies. Amounts which are
vested benefits or which Executive is otherwise entitled to receive under any
plan, policy, practice or program of or any contract or agreement with Xxxxxx 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 or
contract or agreement except as explicitly modified by this Agreement.
8. Full Settlement. Xxxxxx'x 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 Xxxxxx may have against Executive
or others. In no event shall Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to Executive
under any one or more provisions of this Agreement and, except as provided in
Section 6(a) (iii), such amounts shall not be reduced whether or not Executive
obtains other employment. Xxxxxx agrees to pay, to the full extent permitted by
law, all legal fees and expenses which Executive may reasonably incur as a
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result of any contest (regardless of the outcome thereof) by Xxxxxx, 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 Executive about the amount of any payment pursuant
to this Agreement), plus in each case interest on any delayed payment at the
applicable Federal Rate, provided for in Section 7872(f) (2) (A) of the Internal
Revenue Code of 1986, as amended (the "Code"). Executive shall be entitled to
payment of such legal fees and expenses on a monthly basis during the pendency
of any contest. Accordingly, Xxxxxx shall, on the tenth business day of each
month following the Executive's Date of Termination, pay Executive any legal
fees and expenses incurred by Executive as a result of a contest hereunder for
which the Executive presented invoices to Xxxxxx on or before the last business
day of the preceding month. Notwithstanding the foregoing, Xxxxxx shall be
entitled to reimbursement by the Executive (1) for any legal fees or expenses of
Executive in any contest by Executive about the amount of any payment under this
Agreement if it is determined that Xxxxxx did not breach this Agreement and
Executive's claim was not made in good faith, and (2) to the extent it is
determined
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that the amount of such legal fees and expenses was not reasonable.
9. Certain Additional Payments by Xxxxxx.
(a) In the event that any payment or distribution by Xxxxxx to or
for the benefit of 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)) ("Payments") is determined to be subject to (1) the excise
tax imposed by Section 4999 of the Code or its successor, (2) any
corresponding state excise tax, or (3) any interest or penalties are
incurred by Executive with respect to such state or federal excise tax
(such state or federal excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise
Tax"), then Xxxxxx shall pay to Executive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by 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
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imposed with respect thereto) and Excise Tax imposed upon the Gross-Up
Payment, 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 amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be
made by a certified public accounting firm as may be designated by
Executive and which is reasonably satisfactory to Xxxxxx (the
"Accounting Firm"), which shall provide detailed supporting calculations
both to Xxxxxx and Executive within 15 business days of the receipt of
request from Executive or Xxxxxx. All fees and expenses of the
Accounting Firm shall be borne solely by Xxxxxx. Any Gross-Up Payment,
as determined pursuant to this Section 9(b), shall be paid by Xxxxxx to
Executive within five days of the receipt of the Accounting Firm's
determination. 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
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by Xxxxxx should have been made ("Underpayment"), consistent with the
calculations required to be made hereunder. In the event that Xxxxxx
exhausts its remedies pursuant to Section 9 (c) and Executive thereafter
is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by Xxxxxx to or for the benefit
of Executive.
(c) Executive shall notify Xxxxxx in writing of any written claim
actually received by Executive from the Internal Revenue Service
requesting the payment by Executive of an Excise Tax in respect of
Payments. Such notification shall be given as soon as practicable (which
shall be deemed to have occurred if it is given within 20 business days)
after Executive actually receives such claim and shall apprise Xxxxxx of
the nature of such claim, and the date on which such claim is requested
to be paid. 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
Xxxxxx (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If
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Xxxxxx notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall:
(i) Give Xxxxxx any information reasonably
requested by Xxxxxx relating to such claim,
(ii) Take such action in connection with contesting such
claim as Xxxxxx shall reasonably request in writing from time to
time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by Xxxxxx,
(iii) Cooperate with Xxxxxx in good faith in order to
contest such claim effectively, and
(iv) Permit Xxxxxx to participate in any proceedings
relating to such claim;
provided, however, that Xxxxxx shall bear and pay directly all costs and
expenses (including additional interest and
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penalties) incurred in connection with such contest and shall indemnify
and hold 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), Xxxxxx shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option,
either direct Executive to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and Executive agrees to
prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Xxxxxx shall determine; provided, however, that if
Xxxxxx directs Executive to pay such claim and xxx for a refund, Xxxxxx
shall advance the amount of such payment to Executive, on an
interest-free basis and shall indemnify and hold 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
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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
Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, Xxxxxx'x
control of the contest shall be limited to issues with respect to which
a Gross Up Payment would be payable hereunder and 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 Executive of an amount advanced by
Xxxxxx pursuant to Section 9 (c), Executive becomes entitled to receive
any refund with respect to such claim, Executive shall (subject to
Xxxxxx'x complying with the requirements of Section 9 (c)) promptly pay
to Xxxxxx the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the receipt
by Executive of an amount advanced by Xxxxxx pursuant to Section 9 (c),
a determination is made that Executive shall not be entitled to any
refund with respect to
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such claim and Xxxxxx does not notify 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. Successors.
(a) This Agreement is personal to Executive and without the prior
written consent of Xxxxxx shall not be assignable by Executive otherwise
than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon Xxxxxx and its successors and assigns.
(c) Xxxxxx will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
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to all or substantially all of the business and/or assets of Xxxxxx to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that Xxxxxx would be required to perform it if no
such succession had taken place. As used in this Agreement, "Xxxxxx"
shall mean Xxxxxx as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise.
11. Arbitration.
(a) Because it is agreed that time will be of the essence in
determining whether any payments are due to Executive under this
Agreement, Executive may, if he desires, submit any claim for payment
under this Agreement or dispute regarding the interpretation of this
Agreement to arbitration. This right to select arbitration shall be
solely that of Executive, and Executive may decide whether or not to
arbitrate in his discretion. The "right to select arbitration" is not
mandatory on Executive, and Executive may choose in lieu thereof to
bring an action in an appropriate civil court. Once an arbitration is
commenced, however, it
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may not be discontinued without the mutual consent of both parties to
the arbitration. During the lifetime of Executive only he can use the
arbitration procedure set forth in this Section.
(b) Any claim for arbitration may be submitted as follows: If
Executive disagrees with Xxxxxx regarding the interpretation of this
Agreement and the claim is finally denied by Xxxxxx in whole or in part,
such claim may be filed in writing with an arbitrator of Executive's
choice who is by the method described in the next three sentences. The
first step of the selection shall consist of Executive's submitting a
list of five potential arbitrators to Xxxxxx. Each of the five
arbitrators must be either (1) a member of the National Academy of
Arbitrators located in the State of California or (2) a retired
California Superior Court or Appellate Court judge. Within two weeks
after receipt of the list, Xxxxxx shall select one of the five
arbitrators as the arbitrator for the dispute in question. If Xxxxxx
fails to select an arbitrator in a timely manner, Executive shall then
designate one of the five arbitrators as the arbitrator for the dispute
in question.
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(c) The arbitration hearing shall be held in the county which
includes the address last given prior to the commencement of arbitration
by the Executive for notices under Section 15; provided that if such is
outside the United States, the arbitration hearing shall be held in
Orange County, California. The arbitration hearing shall be held within
thirty days (or as soon thereafter as possible) after the picking of the
arbitrator. No continuance of said hearing shall be allowed without the
mutual consent of Executive and Xxxxxx. Absence from or nonparticipation
at the hearing by either party shall not prevent the issuance of an
award. Hearing procedures which will expedite the hearing may be ordered
at the arbitrator's discretion, and the arbitrator may close the hearing
in his or her sole discretion when he or she decides he or she has heard
sufficient evidence to satisfy issuance of an award.
(d) The arbitrator's award shall be rendered as expeditiously as
possible and in no event later than thirty days after the close of the
hearing. In the event the arbitrator finds that Xxxxxx has breached this
Agreement, he
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or she shall order Xxxxxx to immediately take the necessary steps to
remedy the breach. The award of the arbitrator shall be final and
binding upon the parties. The award may be enforced in any appropriate
court as soon as possible after its rendition. If an action is brought
to confirm the award, both Xxxxxx and Executive agree that no appeal
shall be taken by either party from any decision rendered in such
action.
(e) Xxxxxx will be considered the prevailing party in a dispute
if the arbitrator determines (1) that Xxxxxx has not breached this
Agreement and (2) the claim by, Executive was not made in good faith.
Otherwise, Executive will be considered the prevailing party. In the
event that is the prevailing party, the fee of the arbitrator and all
necessary expenses of the hearing (including all attorneys' fees
incurred by Executive in pursuing his claim and, if the Executive's home
on the Date of Termination was more than 70 miles from the location of
the arbitration, his reasonable travel and living expenses during the
arbitration) including the fees of a stenographic reporter if employed,
shall be paid by Xxxxxx.
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12. Governing Law. The laws of California shall govern the
validity and interpretation of this Agreement, with regard to conflicts of laws.
13. Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
14. Amendment. 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.
15. Notices. All notices and other communications 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:
If to Executive:
-------------------------
-------------------------
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If to Xxxxxx:
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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. Neither the failure of Executive to
give any notice required by this Agreement (including but not limited to the
notice specified in Section 9(c) hereof ), nor defects or errors in any notice
given by Executive, shall relieve Xxxxxx of any corresponding obligation under
this Agreement unless, and only to the extent that, Xxxxxx is actually and
materially prejudiced thereby.
16. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
17. Withholding Taxes. Xxxxxx may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
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18. No Waiver. Executive's or Xxxxxx'x failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right Executive or Xxxxxx may have
hereunder, including, without limitation the right of Executive to terminate
employment for Good Reason shall not be deemed to be a waiver of such provision
or right or any other provision or right of this Agreement.
19. At-Will Employment. Executive and Xxxxxx acknowledge that,
except as may otherwise be provided under any other written agreement between
Executive and Xxxxxx, the employment of Executive by Xxxxxx prior to the Event
Date is "at will" and, prior to the Event Date, Executive's employment may be
terminated by either Executive or Xxxxxx at any time, in which case Executive
shall have no further rights under this Agreement. This Agreement shall
supersede any other agreement between the parties with respect to the subject
matter hereof.
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20. Counterparts. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which shall together constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered as of the day and year first written above.
XXXXXX INTERNATIONAL, INC.
By: /s/ XXXXXX XXXXXXXXX
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XXXXXX XXXXXXXXX, Chairman
EXECUTIVE
/s/ R. XXXXXXX XXXXXXX
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