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Xxxxxxx Technology Company, Inc.
00 Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Tel: 000-000-0000
Fax: 000-000-0000
March 19, 2001
Xx. Xxxxxx X. Xxxxx
00000 Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Dear Xx. Xxxxx:
This Agreement sets forth the terms of your employment with Xxxxxxx
Technology Company, Inc., a Delaware corporation (the "Company"), it
supersedes our agreement dated November 25, 1997, and it is effective as of
March 19, 2001.
1. DUTIES. During the term of your employment hereunder, you shall be
employed as the President and the Chief Executive Officer of the Company, and
you shall direct and manage the business, affairs, and property of the Company
subject to the direction of the Board of Directors of the Company (the "Board
of Directors").
2. COMPENSATION. As compensation for your services during the term of
your employment hereunder:
A. Salary. You shall be paid a salary at the annual rate of
three hundred thirty-three thousand nine hundred dollars ($333,900) (the "base
salary"), payable in appropriate installments to conform with regular payroll
dates for salaried personnel of the Company.
B. Reviews and Adjustments. As of July 1, 2001 and each
succeeding July 1 during the term of your employment hereunder, your
performance shall be reviewed by the Board of Directors, your attainment of
mutually agreed-upon objectives shall be evaluated, and the base salary
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payable to you for the twelve (12) months beginning on such July 1 may be
adjusted upward (but not downward) by the Board of Directors.
C. Incentive Compensation. During the term of your
employment hereunder, and at such other times subsequent thereto as are
otherwise set forth herein, you shall be paid annually, no later than ninety
(90) days after the end of each fiscal year, beginning with the fiscal year
ending June 30, 2001, incentive compensation which shall be determined under
the Company's Executive and Key Person Cash Incentive Program.
D. Deferred Compensation. You shall be paid, at such times
as are set forth in this Agreement, deferred compensation based upon an amount
equal to a range from forty percent (40%) to fifty percent (50%) of your Final
Average Pay (the "Deferred Compensation"), which percent shall be set at any
time, and may be set from time to time, by the Board of Directors; provided,
however, that such percent shall in no event be set later than the time at
which your Final Average Pay is to be determined hereunder. For purposes of
this Agreement, the term "Final Average Pay" shall mean an amount equal to (i)
the total of (a) the sum of the base salary and incentive compensation paid to
you with respect to each of the two (2) fiscal years ending immediately
preceding the fiscal year in which you become entitled to the Deferred
Compensation, plus (b) the base salary and incentive compensation payable to
you at the time that you become entitled to the Deferred Compensation
(annualized to twelve (12) months), (ii) divided by three (3). The amount of
the foregoing percent (as so determined by the Board of Directors) of your
Final Average Pay, when calculated, shall then be restated to a monthly amount
by dividing such amount by twelve (12) (the "Monthly Amount"), and the Monthly
Amount shall be paid monthly, to you or your estate, as the case may be,
beginning on the day set forth in this Agreement, for a period of one hundred
eighty
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(180) months or the period ending with the month of your death, whichever is
longer. In this regard, if you die after the date on which you first become
entitled to payment of the Deferred Compensation, whether or not the first
payment of the Monthly Amount has been made, and prior to the payment of the
Monthly Amount for one hundred eighty (180) months, the Monthly Amount shall be
paid monthly for the balance of such one hundred eighty (180) month period to
the beneficiary or beneficiaries designated by you in writing to the Company,
or, if none are designated, to your estate. As of July 1, 2000 the amount of
Deferred Compensation has vested to the extent of one hundred percent (100%) so
that as of the date of this Agreement the full amount determined by the
foregoing formula is due and payable to you in the instances as set forth
elsewhere in this Agreement.
3. CLASS A STOCK AND CLASS B STOCK.
A. Class A Stock.
(i) The Company shall issue or transfer to you, at
such times when you have earned them and at no cost to you, a total of one
hundred sixty thousand (160,000) shares of the Company's Class A Common Stock,
par value $.01 per share ("Class A Stock") in four (4) equal installments of
forty thousand (40,000) shares each. You will be deemed to have earned the
first of the four (4) installments of forty thousand (40,000) shares of Class
A Stock on a date when the closing price of the Class A Stock on the American
Stock Exchange (the "Fair Market Value") reaches seven and 875/1,000 dollars
($7.875); each of the three (3) subsequent installments of Class A Stock shall
similarly be deemed to be earned by you when the Fair Market Value of the
Class A Stock increases by an additional two dollars ($2.00) per share over
the Fair Market Value at which the previous installment was earned. A stock
certificate for the Class A Stock so earned shall be
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issued and delivered to you within fifteen (15) days of the date such Class A
Stock was deemed to be earned by you.
(ii) In the event of a reorganization,
recapitalization, change of shares, stock split, spinoff, stock dividend,
reclassification, subdivision or combination of shares, merger, consolidation,
rights offering, or any other change in the corporate structure or shares of
capital stock of the Company, the number of shares and increase in price of
the Fair Market Value as stated in Paragraph 3A(i) hereof shall be adjusted
appropriately.
(iii) With regard to each installment of the Class
A Stock issued under Paragraph 3A(i) hereof, the Company grants to you the
right to require the Company to include the Class A Stock issued to you in any
registration statement that the Company may file in the future (such right to
be known as the "Piggy-Back Registration Rights"). In the event the Company
does not file and cause to become effective a registration statement
subsequent to your earning each installment of the Class A Stock as outlined
in Paragraph 3A(i) hereof on which you could have exercised your Piggy-Back
Registration Rights, the Company further grants to you a one-time right to
demand that the Company file and cause to become effective a registration
statement for each installment of the Class A Stock issued to you under
Paragraph 3A(i) hereof, by written notice to the Company (such right to be
known as the "Demand Registration Right"). In the event you notify the Company
of your exercise of a Demand Registration Right, the Company shall use its
best efforts to have a registration statement with respect to the Class A
Stock issued under Paragraph 3A(i) hereof prepared, filed, and declared
effective by the Securities and Exchange Commission as soon as practicable.
Notwithstanding anything in this Paragraph 3A(iii) to the contrary, the
Company shall not be required to file a registration statement during the
period between (a) the date on which
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its financial statements for any fiscal year become available and (b) the date
on which it is required to file an annual report with respect to such fiscal
year on Form 10-K under the Securities Exchange Act of 1934; provided,
however, that the Company shall during such period be required to continue to
use its best efforts to prepare such registration statement for filing and to
file such registration statement as soon as possible after the date described
in clause (b) above. Your right to exercise each Demand Registration Right
shall expire, respectively, on or before the earlier of (c) the date the
Company files and causes to become effective a registration statement on which
you could have exercised your PiggyBack Registration Right for each
installment of Class A Stock issued under Paragraph 3A(i) hereof, or (d) three
(3) years after the date each installment of shares of the Class A Stock is
issued to you under Paragraph 3A(i) hereof.
B. Class B Stock.
(i) In order to facilitate your purchase of three
hundred fifteen thousand one hundred forty-four (315,144) shares of the
Company's Class B Common Stock, par value $.01 per share (the "Class B
Stock"), the Company, on November 30, 1993, loaned to you one million eight
hundred seventeen thousand three hundred twenty-one dollars and sixteen cents
($1,817,321.16) (the "Loan"). The Loan was made pursuant to a Loan and Pledge
Agreement dated November 30, 1993, which was amended on November 25, 1997 by
an Amended and Restated Loan and Pledge Agreement (the "Amended Agreement"),
and is evidenced by a demand promissory note dated November 30, 1993 (the
"Note"). As of November 25, 1997 the principal balance outstanding under the
Note was one million five hundred thousand dollars ($1,500,000). The Note
bears interest, payable annually, at a rate equal to the Company's borrowing
rate (as adjusted quarterly) on its U.S. short-term banking facilities. The
Amended Agreement provides that if your employment under this
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Agreement terminates for any reason other than death or for "cause," as the
term "cause" is defined in Xxxxxxxxx 0X hereof, the Company will not demand
payment of the outstanding principal of and accrued interest on the Note for a
period of six (6) months after such termination, or for a period of twelve
(12) months after such termination in the case of your death. Notwithstanding
anything to the contrary contained in this Paragraph 3B(i), at any time that
you sell any of the shares of Class B Stock while any amount of the Note
remains unpaid, you shall, within five (5) days of receipt of the funds from
such sale, pay to the Company, in repayment of part or all, as the case may
be, of the Loan, an amount equal to five dollars and seventy-seven cents
($5.77) times the number of shares of the Class B Stock so sold, but not in
excess of the unpaid balance of the Loan, plus interest, as set forth in this
Paragraph 3B(i), on the amount so repaid to the extent that such interest
accrued to the date of such repayment.
(ii) Except as provided in Paragraph 3B(iii)
hereof, upon your death the Company shall be required to redeem from the
personal representative of your estate (the "Personal Representative") the
aggregate of (a) all shares of Class B Stock that are owned by you at the time
of your death, plus (b) the aggregate of all shares of Class B Stock that are
acquired by the Personal Representative after your death pursuant to (1) your
exercise prior to your death of any options to purchase shares of Class B
Stock (the "B Options"), plus (2) the Personal Representative's timely
exercise of any B Options owned by you at the time of your death (the
aggregate of such shares of Class B Stock being referred to herein as the
"Date of Death Class B Shares").
(iii) Notwithstanding anything to the contrary
contained in Paragraph 3B(ii) hereof, the number of the Date of Death Class B
Shares required to be redeemed from the Personal Representative shall be
limited to the quotient determined by dividing (a) the aggregate of
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(1) the unpaid balance of the Loan, plus (2) the accrued interest on the Loan,
as such unpaid balance and accrued interest exist at the date of your death
(together the "Loan Amount Due"), by (b) the aggregate of (1) the mean average
(the "Average") of the closing price of a single share of Class A Stock on the
American Stock Exchange on each of the ten (10) trading days immediately
preceding the date of your death, plus (2) an amount equal to ten percent
(10%) of the Average (such limited number being referred to herein as the
"Maximum Required-To-Be-Redeemed Class B Shares").
(iv) To the extent that the number of the Date of
Death Class B Shares exceeds the number of the Maximum Required To-Be-Redeemed
Class B Shares (such excess being referred to herein as the "Excess Number of
Class B Shares"), the Personal Representative shall be entitled to either (a)
sell to any buyer or buyers such number of the Excess Number of Class B Shares
that the Personal Representative chooses to sell, (b) convert, pursuant to
Article FOURTH (3) of the Company's Restated Certificate of Incorporation, on
or prior to such date that is ten (10) months after the date of your death,
such number of the Excess Number of Class B Shares that the Personal
Representative chooses to convert (the "Converted Number of Shares") into such
number of Class A Shares that equals the Converted Number of Shares; i.e., a
one-to-one conversion, or (c) any combination of the foregoing items (a) and
(b). The Class A Shares to be delivered by the Company to the Personal
Representative on any such conversion shall be issued pursuant to an exemption
from registration under the Securities Act of 1933, as amended, without a
restrictive legend, and shall be delivered to the Personal Representative at
least forty-two (42) days prior to the date that the Company redeems from the
Personal Representative the Maximum Required-To-Be-Redeemed Class B Shares;
provided, however, that the Company shall redeem from the Personal
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Representative the Maximum Required-To-Be-Redeemed Class B Shares not more than
fifty (50) days after such date of any such delivery of Class A Shares.
(v) In the event that, at the time of your death,
you own any unexercised B Options, and the Personal Representative fails to
timely exercise all of such unexercised B Options as set forth in Paragraph
3B(ii)(b)(2) hereof, then the Personal Representative shall be treated as
having relinquished, and turned over, to the Company, on the day immediately
succeeding the end of the timely-exercise period, all unexercised B Options,
and such unexercised B Options shall become null and void, and completely
unexerciseable.
(vi) The Company's redemption from your Personal
Representative of the Maximum Required-To-Be-Redeemed Class B Shares is
intended by you and the Company to qualify as a "distribution in part or full
payment in exchange for stock" within the meaning of Section 302(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), as a redemption
described in either Section 302(b)(2) of the Code or Section 302(b)(3) of the
Code, and the Company shall consult, and cooperate, with the Personal
Representative's tax advisor, to facilitate such exchange treatment under
Section 302(a) of the Code; provided, however, that doing so does not result
in any unreimbursed cost or expense to the Company.
4. LIFE INSURANCE.
A. The $500,000 Policy. During the term of your employment
hereunder, the Company shall continue to pay the premiums on an existing
contract of life insurance on your life in the amount of five hundred thousand
dollars ($500,000), which contract is currently owned by your spouse, and
pursuant to which your spouse is the sole beneficiary.
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B. The $2,000,000 Policy. During the term of your employment
hereunder, the Company shall continue to pay the premiums on an existing
contract of life insurance on your life in the amount of two million dollars
($2,000,000), which contract is currently owned by the GAN Irrevocable Trust,
dated July 31, 2000, under which you are the creator and your spouse is the
initial trustee (the "Trust"), and pursuant to which the Trust is the sole
beneficiary.
C. The $3,000,000 Policy.
(i) During the term of your employment hereunder,
the Company shall continue to pay the premiums on an existing contract of life
insurance on your life in the amount of three million dollars ($3,000,000),
which contract is currently owned by the Company, and pursuant to which the
Company is the sole beneficiary.
(ii) The Company shall reserve, from the proceeds
of the contract referred to in Paragraph 4C(i) hereof (the "Proceeds"), the
redemption price of the Maximum Required-To-Be-Redeemed Class B Shares (the
"Redemption Price"), and the Redemption Price shall be paid to the Personal
representative in money by certified check or official bank check payable to
the order of the Personal Representative.
(iii) The Personal representative shall use the
Redemption Price to pay all of the Loan Amount Due, or such part of the Loan
Amount Due that equals the Redemption Price.
5. REIMBURSEMENT OF EXPENSES. In addition to the compensation
provided for herein, the Company shall reimburse to you, or pay directly, all
reasonable expenses incurred by you in connection with the business of the
Company, and its subsidiaries and affiliates, including but not limited to
business-class travel if overseas, reasonable accommodations, and
entertainment, subject to documentation in accordance with the Company's
policy. In this connection, it is
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understood that certain business of the Company will require the presence of
your spouse, and this Paragraph 5 applies as well to such expenses relating to
her.
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6. EXTENT OF SERVICES.
A. In General. During the term of your employment hereunder
you shall devote your best and full-time efforts to the business and affairs
of the Company.
B. Limitation on Other Services. During the term of your
employment hereunder, you shall not undertake employment with, or participate
in, the conduct of the business affairs of any other person, corporation, or
entity, except at the direction or with the written approval of the Board of
Directors; provided, however, that this Paragraph 6B shall not apply to the
affairs of your family's farming and ranching activities in Montana and the
States and Canadian Provinces adjoining Montana.
C. Personal Investments. Nothing herein shall preclude you
from having, making, or managing personal investments which do not involve
your active participation in the affairs of the entities in which you so
invest, but, unless approved in writing by the Board of Directors, during the
term of your employment hereunder, you shall not have more than a one percent
(1%) ownership interest in any entity which is directly competitive with any
business conducted by the Company at that time. The phrase "conducted by the
Company" as used in this Xxxxxxxxx 0X and in Paragraph 13 hereof shall mean
the business conducted by the Company or by any corporation or other entity in
which the Company owns stock possessing fifty percent (50%) or more of the
stock (either voting or non-voting) in such corporation or fifty percent (50%)
or more of the equity interests (either voting or non-voting) in such other
entity (a "Subsidiary").
7. LOCATION. Your duties hereunder shall be performed for the Company
worldwide, with particular emphasis in the Company's office in Shelton, CT.
8. VACATION; OTHER BENEFITS.
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A. Vacation. During the term of your employment hereunder,
you shall be entitled to a vacation or vacations, with pay, totalling four (4)
weeks in each fiscal year. You may accumulate up to twelve (12) weeks
vacation, but not more than three (3) weeks from any single prior year. Any
such accumulated vacation may be used in any subsequent year or years in
addition to the four (4) weeks of vacation to which you are entitled for each
such year.
B. The Company's Benefit Plans. During the term of your
employment hereunder, you shall be eligible for inclusion, to the extent
permitted by law, as a full-time employee of the Company or any Subsidiary, in
any and all (i) pension, profit sharing, savings, and other retirement plans
and programs as in effect at the time, (ii) life and health (medical, dental,
hospitalization, short-term and long-term disability) insurance plans and
programs as in effect at the time, (iii) stock option and stock purchase plans
and programs as in effect at the time, (iv) accidental death and dismemberment
protection plans and programs as in effect at the time, (v) travel accident
insurance plans and programs as in effect at the time, and (vi) other plans
and programs at the time sponsored by the Company or any Subsidiary for
employees or executives generally as in effect at the time, including any and
all plans and programs that supplement any or all of the foregoing types of
plans or programs (except for any annual bonus plan, other than the incentive
compensation payable under Xxxxxxxxx 0X hereof, for employees in general).
C. Automobile, Club, and Professional Services. During the
term of your employment hereunder, (i) the Company shall provide an automobile
for your continued business use pursuant to the arrangement between you and
the Company that was in effect immediately prior to the effective date of this
Agreement, (ii) the Company shall pay dues, not in excess of five thousand
dollars ($5,000), for your membership at a social club of your choice, and
(iii) the Company shall
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reimburse to you, or pay directly, upon submission by you to the Company of
statements for services, the amounts payable by you to any person or persons
of your choice that you retain to advise you with regard to financial,
investment, and tax matters; provided, however, that such reimbursement or
payment shall not exceed ten thousand dollars ($10,000) per fiscal year
beginning with the fiscal year ending June 30, 2001.
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D. Post-Termination Benefits. In addition to any other
payments and benefits provided in this Agreement, effective with the
termination of your employment by the Company without cause, you shall be
entitled to (i) continued medical and dental benefits for a period of two (2)
years from the effective date of your termination or until you secure other
employment, whichever occurs first, and (ii) reimbursement of reasonable
expenses incurred by you in connection with job search services.
9. TERMINATION OF EMPLOYMENT.
A. Termination by the Company Without Cause. The Company
may, without cause, terminate your employment hereunder at any time upon ten
(10) or more days' written notice to you. In the event your employment is
terminated under this Paragraph 9A, the Company shall pay to you the
following:
(i) A single lump sum payment, no later than the
last day of your employment, of:
(a) Any accrued but unpaid salary set
forth in Paragraph 2A hereof (as adjusted by Paragraph 2B hereof), including
salary in respect of any accrued and accumulated vacation, due to you at the
date of such termination;
(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof; and
(c) An amount equal to the product of two
and nine-tenths (2.9) times your "base salary" under Paragraph 2A hereof (as
adjusted by Paragraph 2B hereof);
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation set forth in Paragraph 2C hereof due to you at
the date of such termination for the
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fiscal year ending immediately prior to the date of such termination, which
shall be paid no later than ninety (90) days after the end of such fiscal
year;
(iii) A single lump sum payment of any incentive
compensation set forth in Paragraph 2C hereof earned in the fiscal year of the
termination of your employment, which incentive compensation shall be
determined on the basis of the Company's operations through June 30 of such
fiscal year, shall be pro-rated through the last day of your employment, and
shall be paid no later than ninety (90) days after the end of such fiscal
year; and
(iv) If and to the extent vested, the Deferred
Compensation as set forth in Paragraph 2D hereof, with payment of the Monthly
Amount beginning on the first day of the month immediately succeeding the last
day of your employment.
The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
B. Termination by Mutual Consent. You may terminate your
employment hereunder at any time with the written consent of the Company. In
the event your employment is terminated under this Paragraph 9B, the Company
shall pay to you the following:
(i) A single lump sum payment, no later than the
last day of your employment, of:
(a) Any accrued but unpaid salary set
forth in Paragraph 2A hereof (as adjusted by Paragraph 2B hereof), including
salary in respect of any accrued and accumulated vacation, due to you at the
date of such termination;
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(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof; and
(c) An amount equal to your annual "base
salary" under Paragraph 2A hereof (as adjusted by Paragraph 2B hereof);
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation set forth in Paragraph 2C hereof due to you at
the date of such termination for the fiscal year ending immediately prior to
the date of such termination, which shall be paid no later than ninety (90)
days after the end of such fiscal year;
(iii) A single lump sum payment of any incentive
compensation set forth in Paragraph 2C hereof earned in the fiscal year of the
termination of your employment, which incentive compensation shall be
determined on the basis of the Company's operations through June 30 of such
fiscal year, shall be pro-rated through the last day of your employment, and
shall be paid no later than ninety (90) days after the end of such fiscal
year; and
(iv) If and to the extent vested, the Deferred
Compensation as set forth in Paragraph 2D hereof, with payment of the Monthly
Amount beginning on the first day of the month immediately succeeding the last
day of your employment.
The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
C. Termination by the Company With Cause. The Company may
for cause terminate your employment hereunder at any time by written notice to
you. For purposes of this Agreement, the term "cause" shall mean (1) a failure
by you to remedy either (a) a continuing neglect
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in the performance of your duties under this Agreement, or (b) any action
taken by you that seriously prejudices the interests of the Company, in either
event within ten (10) days of the Company's written notice to you of such
neglect or action, or (2) your conviction of a felony. In the event of the
termination of your employment hereunder for cause, the Company shall pay to
you the following:
(i) A single lump sum payment, no later than ten
(10) days after the last day of your employment, of
(a) Any accrued but unpaid salary set
forth in Paragraph 2A hereof (as adjusted by Paragraph 2B hereof), including
salary in respect of any accrued and accumulated vacation, due to you at the
date of such termination; and
(b) Any amounts owing, but not yet paid,
pursuant to Paragraph 5 hereof;
(ii) A single lump sum payment of any accrued but
unpaid incentive compensation set forth in Paragraph 2C hereof due to you at
the date of such termination for the fiscal year ending immediately prior to
the date of such termination, which shall be paid no later than ninety (90)
days after the end of such fiscal year; and
(iii) If and to the extent vested, the Deferred
Compensation as set forth in Paragraph 2D hereof, with payment of the Monthly
Amount beginning on the first day of the month immediately succeeding the last
day of your employment. You shall forfeit the incentive compensation set forth
in Xxxxxxxxx 0X hereof for the fiscal year in which such termination occurs.
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The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
D. Events. If any of the following described events occurs
during the term of your employment hereunder, you may terminate your
employment hereunder by written notice to the Company either prior to, or not
more than six (6) months after, the happening of such event. In such event,
your employment hereunder will be terminated effective as of the later of ten
(10) days after the notice or ten (10) days after the event, and the Company
shall make to you the same payments that the Company would have been obligated
to make to you under Paragraph 9A hereof if the Company had terminated your
employment hereunder effective on such date. The events, the occurrence of
which shall permit you to terminate your employment hereunder under this
Paragraph 9D, are as follows:
(i) The removal of you or the election of any other
person as the President or the Chief Executive Officer of the Company;
provided, however, that you shall not have approved such removal or such
election, in your capacity as a director, by voting for such removal or such
election.
(ii) Any merger or consolidation by the Company
with or into any other entity or any sale by the Company of substantially all
of its assets; provided, however, that you shall not have approved such
transaction, in your capacity as a director, by voting for it.
(iii) Any change of a majority of the directors of
the Company occurring within any thirteen (13) month period, or the
acquisition by a single person or entity or a related group of persons or
entities, of shares of any class or classes of voting stock of the Company
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representing twenty-five percent (25%) or more of the total votes entitled to
be cast by all of the then outstanding shares of all classes of voting stock
of the Company; provided, however, that you shall not have approved such
change in directors or acquisition, in your capacity as a shareholder or
director, by voting for any of such new directors or for such acquisition, and
that there shall be excluded from any such calculation of percentage of
ownership all stock held by any officer of the Company on the effective date
of this Agreement.
(iv) The adoption by the Company of any plan of
liquidation providing for the distribution of all or substantially all of its
assets; provided, however, that you shall not have approved the adoption of
such plan, in your capacity as a director, by voting for it.
(v) The failure by the Company to observe or comply
in any material respect with any of the provisions of this Agreement,
including a material diminution in your duties, or the assignment to you of
duties that are materially inconsistent with your duties or that materially
impair your ability to function as the President or the Chief Executive of the
Company if such failure has not been cured within thirty (30) days after
written notice thereof has been given by you to the Company.
E. Disability or Death. If you should suffer a Permanent
Disability, the Company may terminate your employment hereunder upon ten (10)
or more days' prior written notice to you. For purposes of this Agreement, a
"Permanent Disability" shall be deemed to have occurred only when you are
qualified for benefits under the Company's or a Subsidiary's Long Term
Disability Insurance Policy. In the event of the termination of your
employment hereunder by reason of Permanent Disability or death at any time,
the Company shall pay:
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(i) In the case of Permanent Disability only, to
you, in conformity with regular payroll dates for salaried personnel of the
Company, an amount equal to fifty percent (50%) of the base salary you were
receiving at the date of such termination under Paragraph 2A hereof (as
adjusted by Paragraph 2B hereof), payable through August 5, 2003, at which
time monthly payments of the Deferred Compensation set forth in Paragraph 2D
hereof shall begin; provided, however, that the amount payable under this
Paragraph 9E(i) (but not the Deferred Compensation payments) shall be reduced
to the extent of any payments made to you through any Company-sponsored group
disability plan;
(ii) To you or your legal representative, or any
beneficiary or beneficiaries designated by you in writing to the Company, a
single lump sum payment of:
(a) No later than ten (10) days after the
last day of your employment, any accrued but unpaid salary set forth in
Paragraph 2A hereof (as adjusted by Paragraph 2B hereof), including salary in
respect of any accrued and accumulated vacation, due to you at the date of
such termination;
(b) No later than ten (10) days after the
last day of your employment, any amounts owing, but not yet paid, pursuant to
Paragraph 5 hereof;
(c) A single lump sum payment of any
accrued but unpaid incentive compensation as set forth in Paragraph 2C hereof
due to you at the date of such termination for the fiscal year ending
immediately prior to the date of such termination, which shall be paid no
later than ninety (90) days after the end of such fiscal year; and
(d) Any incentive compensation set forth
in Paragraph 2C hereof earned in the fiscal year in which the termination of
your employment occurs, which incentive
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compensation shall be determined on the basis of the Company's operations
through June 30 of such fiscal year, and shall be pro-rated through the last
day of your employment, and shall be paid no later than ninety (90) days after
the end of such fiscal year; and
(iii) In the case of death only, to your legal
representative, or any beneficiary or beneficiaries designated by you in
writing, the vested portion of the Deferred Compensation set forth in
Paragraph 2D hereof, with payment of the Monthly Amount beginning on the first
day of the month immediately succeeding the last day of your employment.
The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
F. No Excess Parachute Payments. Notwithstanding anything
to the contrary contained in this Agreement, if the Company obtains a written
opinion of its tax counsel ("Tax Counsel") to the effect that there exists a
material possibility that any payment to which you would (but for the
application of this Paragraph 9F) be entitled under this Agreement, would (but
for such application) be treated as an "excess parachute payment" (as defined
in Section 280G(b) of the Code and the Treasury Regulations promulgated
thereunder):
(i) Unless you and the Company agree to an
alternative amendment of this Agreement that satisfies the requirements of
Paragraph 9F(ii) hereof, this Agreement shall be amended by reducing the
payments to which you are entitled hereunder, in the order specified in the
last sentence of this Xxxxxxxxx 0X, to the extent necessary so that, in the
opinion of Tax Counsel, there does not exist a material possibility that any
payment to which you are entitled under this Agreement (as so amended) will be
treated as an excess parachute payment; or
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(ii) If you and the Company agree to amend this
Agreement by modifying the amount and/or timing of the payments to which you
are entitled hereunder in a manner other than that specified in Paragraph
9F(i) hereof, and if, in the opinion of Tax Counsel, there does not exist a
material possibility that any payment to which you are entitled under this
Agreement (as so amended) will be treated as an excess parachute payment, this
Agreement shall be so amended. An amendment to this Agreement pursuant to
Paragraph 9F(i) hereof shall reduce, first, the Deferred Compensation (and,
concomitantly, the Monthly Amount), second (if applicable), the amount payable
under Paragraph 9A(i)(c) hereof by virtue of your election under Paragraph 9D
hereof to treat an event described therein as constituting the termination of
your employment, and third, on a pro-rata basis, all other amounts (other than
amounts payable pursuant to Paragraph 5 hereof, which shall in any event be
paid in full) to which you are entitled hereunder.
G. Retirement. If not previously terminated under any of the
previously outlined provisions, your employment hereunder shall terminate when
you retire from full-time employment with the Company, which shall occur no
earlier than August 5, 2003, at which time the Company shall pay to you the
following:
(i) A single lump sum payment, no later than the last day
of your employment, of:
(a) Any accrued but unpaid salary set forth in
Paragraph 2A hereof (as adjusted by Paragraph 2B hereof), including salary in
respect of any accrued and accumulated vacation, due to you at the date of
such termination; and
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(b) Any amounts owing, but not yet paid, pursuant
to Paragraph 5 hereof;
(ii) A single lump sum payment of any accrued but unpaid
incentive compensation as set forth in Paragraph 2C hereof due to you at the
date of such termination for the fiscal year ending immediately prior to the
date of such termination, which shall be paid no later than ninety (90) days
after the end of such fiscal year;
(iii) A single lump sum payment of any incentive
compensation set forth in Paragraph 2C hereof earned in the fiscal year of the
termination of your employment, which incentive compensation shall be determined
on the basis of the Company's operations through June 30 of such fiscal year,
and shall be pro-rated through the last day of your employment, and shall be
paid no later than ninety (90) days after the end of such fiscal year; and
(iv) The Deferred Compensation as set forth in Paragraph 2D
hereof, with payment of the Monthly Amount beginning on the first day of the
month immediately succeeding the last day of your employment.
The Company shall have no further obligation to you under this
Agreement and you shall have no further obligation to the Company under this
Agreement except as provided in Paragraph 12 and Paragraph 13 hereof.
10. SOURCE OF PAYMENTS. All payments provided for hereunder shall be
paid from the general funds of the Company. The Company may, but shall not be
required to, make any investment or investments whatsoever, including the
purchase of a life insurance contract or contracts on your life, to provide it
with funds to satisfy its obligations hereunder; provided, however, that
neither you nor your beneficiary or beneficiaries, nor any other person, shall
have any right, title, or
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interest whatsoever in or to any such investment or contracts. If the Company
shall elect to purchase a life insurance contract or contracts on your life to
provide the Company with funds to satisfy its obligations hereunder, the
Company shall at all times be the sole and complete owner and beneficiary of
such contract or contracts, and shall have the unrestricted right to use all
amounts and to exercise all options and privileges thereunder without the
knowledge or consent of you, your beneficiary or beneficiaries, or any other
person, it being expressly agreed that neither you, any such beneficiary or
beneficiaries, nor any other person shall have any right, title, or interest
whatsoever in or to any such contract or contracts. Notwithstanding anything
to the contrary contained in this Paragraph 10, if the Company purchases any
such contract or contracts, you shall have the right, upon the termination of
your employment by the Company to purchase as soon after such termination as
possible any one or more of such contracts for an amount equal to the cash
surrender value thereof; provided, however, that you notify the Company in
writing of your intention to make any such purchase no later than thirty (30)
days subsequent to such termination.
11. ENFORCEMENT OF RIGHTS. Nothing in this Agreement, and no action
taken pursuant to its terms, shall create or be construed to create a trust or
escrow account of any kind, or a fiduciary relationship between the Company
and you, your beneficiary or beneficiaries, or any other person. You, your
beneficiary or beneficiaries, and any other person or persons claiming a right
to any payments or interests hereunder shall rely solely on the unsecured
promise of the Company, and nothing herein shall be construed to give you,
your beneficiary or beneficiaries, or any other person or persons, any right,
title, interest, or claim in or to any specific asset, fund, reserve, account,
or property of any kind whatsoever owned by the Company or in which it may
have any right, title, or interest now or in the future, but you or your
beneficiary or beneficiaries shall have the right to
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enforce a claim for benefits hereunder against the Company in the same manner
as any unsecured creditor. Notwithstanding anything to the contrary set forth
in this Paragraph 11, the Company agrees to consider the feasibility of paying
to a so-called "rabbi trust," as described in the Internal Revenue Service's
Revenue Procedure 92-64, the amounts necessary for the Company to fund the
Deferred Compensation set forth in Paragraph 2D hereof.
12. INVENTIONS AND CONFIDENTIAL INFORMATION. So long as you shall be
employed by the Company, you agree promptly to make known to the Company the
existence of any and all creations, inventions, discoveries, and improvements
made or conceived by you, either solely or jointly with others, during the
term of this Agreement and for three (3) years thereafter, and to assign to
the Company the full exclusive right to any and all such creations,
inventions, discoveries, and improvements relating to any subject matter with
which the Company is now or shall become concerned, or relating to any other
subject matter if made with the use of the Company's time, materials, or
facilities. To the fullest extent permitted by law, any of the foregoing
inventions shall be considered as "work-made-for-hire" and the Company shall
be the owner thereof. You further agree, without charge to the Company but at
its expense, if requested to do so by the Company, to execute, acknowledge,
and deliver all papers, including applications or assignments for patents,
trademarks, and copyrights, and papers relating thereto, as may be considered
by the Company to be necessary or desirable to obtain or assign to the Company
any and all patents, trademarks, or copyrights for any and all such creations,
inventions, discoveries, and improvements in any and all countries, and to
vest title thereto in the Company in all such creations, inventions,
discoveries, and improvements as indicated above conceived during your
employment by the Company, and for three
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(3) years thereafter. You further agree that you will not disclose
to any third person any trade secrets or proprietary information of the Company,
or use any trade secrets or proprietary information of the Company in any
manner, except in the pursuit of your duties as an employee of the Company, and
that you will return to the Company all materials (whether originals or copies)
containing any such trade secrets or proprietary information (in whatever
medium) on termination of your employment by the Company. The obligations set
forth in this Paragraph 12 shall survive the termination of your employment
hereunder. This Paragraph 12 replaces the agreement executed by you on January
5, 1993, which prior agreement is now null and void.
13. RESTRICTIVE COVENANT. For a period of three (3) years after the
termination of your employment by the Company, you shall not, in any
geographical location at which there is at that time business conducted by the
Company which was conducted by the Company at the date of such termination,
directly or indirectly, own, manage, operate, control, be employed by,
participate in, or be connected in any manner with, the ownership, management,
operation, or control of any business similar to or competitive with such
business conducted by the Company without the written consent of the Company;
provided, however, that you may have an ownership interest of up to one
percent (1%) in any entity, notwithstanding that such entity is directly
competitive with any business conducted by the Company at the date of such
termination.
14. LEGAL FEE. The Company shall reimburse to you, or pay directly,
upon submission in either event to the Company of a statement for services,
the amount payable by you to any attorney of your choice that you have
retained to advise you with regard to this Agreement; provided, however, that
such reimbursement or payment shall not exceed twenty thousand dollars
($20,000).
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15. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or the breach or asserted breach thereof, shall be settled
by arbitration to be held in New York, New York in accordance with the rules
then obtaining of the American Arbitration Association, and the judgment upon
the award rendered may be entered in any court having jurisdiction thereof.
The arbitrator shall determine which party shall bear the costs of such
arbitration, including attorneys' fees.
16. NON-ASSIGNABILITY. Your rights and benefits hereunder are
personal to you, and shall not be alienated, voluntarily or involuntarily,
assigned or transferred.
17. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, and their respective assigns, successors, executors, administrators,
and heirs. In the event the Company becomes a party to any merger,
consolidation, or reorganization, this Agreement shall remain in full force
and effect as an obligation of the Company or its successors in interest. None
of the payments provided for by this Agreement shall be subject to seizure for
payment of any debts or judgments against you or your beneficiary or
beneficiaries, nor shall you or any such beneficiary or beneficiaries have any
right to transfer or encumber any right or benefit hereunder; provided,
however, that the undistributed portion of the Deferred Compensation shall at
all times be subject to set-off by the Company for debts owed by you to the
Company.
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18. ENTIRE AGREEMENT. This Agreement contains the entire agreement
relating to your employment by the Company. It may not be changed orally, and
may be changed only by an agreement in writing signed by the party against
whom enforcement of any waiver, change, modification, extension, deletion, or
revocation is sought. Our agreement dated January 31, 1994 is now null and
void.
19. NOTICES. All notices and communications hereunder shall be in
writing, sent by certified or registered mail, return receipt requested,
postage prepaid; by facsimile transmission, time and date of receipt noted
thereon; or by hand-delivery properly receipted. The actual date of receipt as
shown by the receipt therefor shall determine the time at which notice was
given. All payments required hereunder by the Company to you shall be sent
postage prepaid, or, at your election, shall be transferred to you
electronically to such bank as you designate in writing to the Company,
including designation of the applicable electronic address. The foregoing
items (other than any electronic transfer to you) shall be addressed as
follows (or to such other address as the Company and you may designate in
writing from time to time):
To the Company: To you:
Xxxxxxx Technology Company, Inc. Xxxxxx X. Xxxxx
00 Xxxxxxxx Xxxxx 00000 Xxxxxxxxxx Xxxxx
X.X. Xxx 000 Xxxxxx, XX 00000
Xxxxxxx, XX 00000-0000 Facsimile: 000-000-0000
Facsimile: 000-000-0000
20. NEW YORK LAW TO GOVERN. This Agreement shall be governed by, and
construed and enforced according to, the domestic laws of the State of New York
without giving effect to the principles of conflict of laws thereof.
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Very truly yours,
XXXXXXX TECHNOLOGY COMPANY, INC.
By: /s/Xxxxx X. Xxxxxxxx
----------------------------
AGREED TO AND ACCEPTED:
/s/Xxxxxx X. Xxxxx
------------------
Xxxxxx X. Xxxxx
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