SECOND AMENDED AND RESTATED SEVERANCE AGREEMENT
This SECOND AMENDED AND RESTATED SEVERANCE AGREEMENT (the "Agreement") is
made as of the ____ day of November, 2000, by and between Xxxxxx Electronics,
Inc., a New York corporation with its principal office at 000 Xxxxx Xxxxxx,
Xxxxxxxxx, XX 00000, ("Xxxxxx," which term shall include any successor to Xxxxxx
Electronics, Inc. as a result of a "Change in Control" event, as defined below)
and Xxxxxxxx X. Xxxx, residing at 00 Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx
00000 (the "Executive").
WHEREAS, Xxxxxx and the Executive entered into a certain Severance
Agreement dated April 3, 1997 (the "Severance Agreement") and an Amended and
Restated Severance Agreement dated May 24, 2000 (the "Amended Severance
Agreement") which superceded the Severance Agreement;
WHEREAS, Xxxxxx and the Executive desire to amend and restate the Amended
Severance Agreement on the terms and conditions set forth herein;
NOW THEREFORE, Xxxxxx and the Executive hereby agree that the Severance
Agreement is amended and restated in its entirety as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have
the meanings indicated below:
(i) "Base Salary" shall mean the compensation paid by Xxxxxx to the
Executive as was or would have been reported on a Form W-2, excluding
reimbursement of expenses, for the twelve (12) months prior to the Change in
Control, Potential Change in Control, Disability or termination absent a Change
in Control, Potential Change in Control or Disability (as hereinafter defined).
(ii) "Cause" shall be deemed to be the commission of any of the following
acts by the Executive:
(a) The Executive shall have committed any act of gross negligence in
the performance of his duties to Xxxxxx, or, without proper cause, shall
have willfully refused or habitually neglected to perform such duties;
(b) The Executive shall have committed any material act of willful
misconduct, dishonesty or breach of trust which directly or indirectly
causes Xxxxxx or any of its subsidiaries to suffer any loss, fine, civil
penalty, judgment, claim, damage or expense; or
(c) The Executive shall have been convicted of, or shall have pled
guilty or nolo contendere to, a felony or indictable offense (unless
committed in the reasonable, good faith belief that the Executive's actions
were in the best interests of Xxxxxx and its stockholders and would not
violate criminal law).
(iii) "Disability" shall be deemed to have occurred if the Executive has
been unable to perform his duties for six (6) consecutive months or an aggregate
of nine (9) months in any period of twelve (12) consecutive months, as
determined in good faith by the Board of Directors of Xxxxxx.
(iv) "Change in Control" of Xxxxxx shall be deemed to have occurred upon
the happening of any one of the following events:
(a) the acquisition of Beneficial Ownership (as hereinafter defined),
directly or indirectly, by any entity, person or group (other than Xxxxxx,
any of its subsidiaries, or any executive benefit plan of Xxxxxx, including
any trustee of such plan) of securities of Xxxxxx representing more than
fifty (50%) percent of the combined voting power of Xxxxxx'x outstanding
securities.
(b) individuals who constitute the Board of Directors as of the date
hereof (the "Incumbent Board") cease for any reason to constitute at least
a majority thereof, provided that any individual becoming a director
subsequent to the date hereof whose election was approved by a vote of at
least three-quarters (3/4) of the directors comprising the Incumbent Board,
or whose nomination for election by the stockholders of Xxxxxx was approved
by the Incumbent Board, shall be, for purposes of this paragraph (b),
considered as though he were a member of the Incumbent Board; or
(c) the consummation of a reorganization, merger, or consolidation of
Xxxxxx occurs in which stockholders of Xxxxxx immediately prior to such
reorganization, merger or consolidation do not own at least fifty (50%)
percent of the voting securities of the entity which is formed or which
exists following such reorganization, merger or consolidation; or
(d) the sale or disposition by Xxxxxx of substantially all its assets;
or
(e) Xxxxxxx Xxxxx ceases to serve as Chairman of the Board of Xxxxxx
for any reason other than his voluntary resignation; or
(f) the assignment to the Executive of any duties inconsistent in any
adverse respect with the Executive's current position, authority or
responsibilities; or
(g) the corporate office of Xxxxxx is moved from Lyndhurst, New Jersey
to a new location and that location is more than thirty (30) miles from
Mineola, New York, and the Executive declines to relocate.
(v) "Beneficial Ownership" shall have the meaning set forth in Rule 13d-3
under the Securities Exchange Act of 1934;
(vi) "Potential Change in Control" of Xxxxxx shall be deemed to have
occurred upon the happening of any one of the following events:
(a) any person commences a tender offer, which if consummated would
result in such person becoming the Beneficial Owner of more than fifty
percent (50%) of Xxxxxx'x voting securities;
(b) proxies are solicited by anyone other than Xxxxxx or any of its
subsidiaries: (x) for the election of directors of Xxxxxx, or (y) seeking
shareholder approval of a plan of reorganization, merger, or consolidation
of Xxxxxx with one or more corporations as a result of which the
outstanding shares subject to the plan or transaction are to be exchanged
for or converted into cash, property or securities not issued by Xxxxxx; or
(c) the execution by Xxxxxx of an agreement, the consummation of which
would result in a Change of Control of Xxxxxx.
2. Severance Payment. In the event of:
(a) a Change in Control; or
(b) a Potential Change of Control; or
(c) a Disability of the Executive,
and within one hundred eighty (180) days of the occurrence of the
event in Section 2(a), 2(b), or 2(c),
(1) Xxxxxx terminates the Executive's employment for reasons other
than for Cause; or (2) the Executive terminates his employment for any
reason,
then Xxxxxx shall pay the Executive, subject to Section 4, the amounts and
provide the Executive with the benefits described below:
(i) a cash amount equal to the higher of: (x) the Executive's Base
Salary prior to the event giving rise to the Change in Control, Potential
Change in Control or Disability, or (y) the Executive's Base Salary prior
to the event giving rise to the Executive's right to terminate his
employment for any reason (the "Severance Payment");
(ii) a cash payment equal to the higher of
(a) twelve (12) months of the Executive's highest monthly car
allowance or monthly average travel reimbursement in effect within the
six (6) month period immediately prior to the Change in Control,
Potential Change in Control or Disability, not to exceed Twelve
Thousand and 00/100 ($12,000) Dollars; or
(b) twelve (12) months of the Executive's highest monthly car
allowance or monthly average travel reimbursement in effect within the
six (6) month period immediately prior to the date the Executive
terminates his employment for any reason, not to exceed Twelve
Thousand and 00/100 ($12,000) Dollars.
(iii) the maximum/highest benefits which the Executive was receiving
at any time during a two-year period prior to termination, relating to
health insurance, accident insurance, long-term care, life insurance and
disability, shall continue for one (1) year beyond the date of termination
of the Executive's employment;
(iv) any stock options granted to the Executive on or prior to
termination date shall immediately vest as of the date of termination; and
(v) any other benefits, not named herein but provided by Xxxxxx to its
executives, shall immediately vest upon termination; and
(vi) cash payment for accrued but unpaid vacation and sick days.
If any payments are due to Executive pursuant to this Section 2, Executive shall
not be entitled to any payments or benefits pursuant to Section 3.
3. Severance Payment Absent Change in Control. Notwithstanding anything to the
contrary contained herein, in the event (i) Executive is terminated for any
reason other than for Cause and (ii) a Change in Control, a Potential Change in
Control or a Disability shall not have occurred, then Xxxxxx shall pay the
Executive, subject to Section 4, the amounts and provide the Executive with the
benefits described below:
a) the cash payments provided in Sections 2(i) and 2(ii);
b) the benefits provided in Sections 2(iii), 2(v) and (vi); and
c) any stock options granted to the Executive on or prior to
termination date shall immediately vest as of the date of termination.
If any payments are due to Executive pursuant to this Section 3, Executive shall
not be entitled to any payments or benefits pursuant to Section 2.
4. Condition Precedent to Severance Payment. Notwithstanding the foregoing, as a
condition precedent to Executive's right to receive the payments and/or benefits
described in Section 2 or Section 3, the Executive shall execute, on or about
the date of the Executive's termination, a general release (the "Release") in
favor of Xxxxxx in substantially the form annexed hereto as Exhibit A. Executive
shall have twenty one (21) days in which to execute and return the Release. Any
cash payment due to the Executive pursuant to Section 2 or Section 3 shall be
paid in a single lump sum ten (10) days after the date the Release is executed
and delivered to Xxxxxx, unless Xxxxxx is directed otherwise by the Executive in
writing, in which case, the payment shall be payable in accordance with
Executive's instructions. In the event of a Disability or death of Executive,
following (i) an event giving rise to a payment due to Executive from Xxxxxx
pursuant to Section 2 or Section 3, and (ii) the execution and delivery of the
Release and any payments are still due and payable pursuant to Section 2 or
Section 3, then any such payment shall be paid to Executive's spouse or legal
representative.
5. No Rights as an Employee. This Agreement confers no rights to Executive with
respect to his employment with Xxxxxx, or his Base Salary prior to a Change in
Control or Potential Change in Control event.
6. Amendments. This Agreement may be amended only in writing signed by both
parties hereto.
7. Governing Law. This Agreement shall be governed by, construed and interpreted
in accordance with the laws of the State of New York, without regard to
principles of conflict of laws.
8. Entire Agreement. This Agreement represents the entire agreement between the
parties with respect to the subject matter hereof, and supercedes all prior
agreements, arrangements and understanding between the parties, whether oral or
written, with respect thereto including the Severance Agreement and Amended
Severance Agreement.
9. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their permitted heirs, executors,
administrators, successors and assigns.
10. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as the
date first written above.
XXXXXX ELECTRONICS, INC.
By:_____________________________ ______________________________
XXXXXXX X. XXXXX, CHAIRMAN XXXXXXXX X. XXXX, President
EXHIBIT A
FORM OF RELEASE
(PLEASE READ CAREFULLY. THIS AGREEMENT AND GENERAL RELEASE HAS IMPORTANT LEGAL
CONSEQUENCES.)
This Agreement and General Release (the "Agreement") is between Xxxxxx
Electronics, Inc. ("Xxxxxx") and Xxxxxxxx X. Xxxx ("Executive"). The term
"Xxxxxx" shall include any subsidiaries or related companies, directors,
officers, shareholders, employees, agents, attorneys, and successors of Xxxxxx.
IT IS AGREED THAT:
1..Executive's last date of employment with Xxxxxx is _________________.
2. Ten (10) days after the date Executive executes this Agreement, Xxxxxx will
pay Executive the payments and/or benefits described in a certain Amended and
Restated Severance Agreement executed by and between the Executive and Xxxxxx,
dated _________,less applicable federal, state, and local legally required
deductions (the "Payment"). Executive agrees that Xxxxxx owes Executive nothing
else, including but not limited to wages or benefits.
3. In exchange for the payment, Executive understands that Executive releases
and forever gives up the right to xxx or make any claim whatsoever against
Xxxxxx, for any reason whatsoever, including but not limited to any claim under
contract and/or equity and/or any law, relating in any way to Executive's
employment with Xxxxxx or the termination of that employment. This waiver of
claims includes any claims of discrimination on any grounds, whether or not
Executive has previously filed such a claim. Executive understands that
Executive is giving up any rights or claims which Executive may have under the
numerous laws and regulations regulating employment, whether on the federal,
state, or local level, including, but not limited to, the Age Discrimination in
Employment Act of 1967, as amended, Title VII of the Civil Rights Act of 1964,
as amended, the Fair Labor Standards Act, the Equal Pay Act, and the New York
State Human Rights Law.
4. Executive agrees that Executive has returned to Xxxxxx any and all
identification cards, files, books, records, materials, equipment or documents
in Executive's possession which were provided to or obtained by Executive in
connection with Executive's employment.
5. It is understood and agreed that Executive will not talk about, discuss or
communicate with anyone, orally or in writing, concerning the matter which is
the subject of this Agreement or any aspect of Executive's employment with
Xxxxxx except Executive may (i) discuss this Agreement with Executive's spouse
and children, (ii) permit Executive's accountant to review this Agreement in
connection with the filing of tax returns, (iii) permit attorney(s) of
Executive's choice to review this Agreement, and (iv) testify truthfully under
oath pursuant to a subpoena (in which event Executive will provide Xxxxxx with
prompt notice of the subpoena).
6. Executive represents that Executive is not aware of any breach of contract,
wrongdoing or liability by Xxxxxx, and Executive expressly agrees that this
Agreement is not and shall not in any way be deemed to constitute an admission
or evidence of any breach of contract, wrongdoing or liability on the part of
Xxxxxx, nor of any violation of any federal, state or municipal statute,
regulation or principle of common law or equity.
7. Executive acknowledges that Executive has received a copy of this Agreement
and that Xxxxxx has informed Executive that Executive should consult with an
attorney in connection with it. Executive acknowledges that Executive's decision
to consult with an attorney or not to consult with an attorney was made without
influence by Xxxxxx. Executive further acknowledges that Executive has had at
least 21 days in which to consider, execute, and return this Agreement.
Notwithstanding Executive's right to consider this Agreement for 21 days, if
Executive signs this Agreement before the expiration of the 21-day period,
Executive will have done so knowingly and voluntarily, and will have expressly
waived Executive's right to consider this Agreement for the balance of the
21-day period.
8. This Agreement shall not become effective until seven (7) days after the date
Executive executes the Agreement, and Executive may cancel this Agreement within
seven (7) days of the date Executive executes it, except that any cancellation
must be in writing, signed by Executive, and delivered to Xxxxxx.
9. This Agreement is made in the State of New York. This Agreement is to be
interpreted under the law of the State of New York.
10. EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS CAREFULLY READ THIS AGREEMENT;
THAT EXECUTIVE HAS HAD AT LEAST 21 DAYS IN WHICH TO CONSIDER AND RETURN THIS
AGREEMENT; THAT EXECUTIVE HAS HAD AN OPPORTUNITY TO CONSULT WITH AN ATTORNEY OF
EXECUTIVE'S CHOICE IN CONNECTION WITH THIS AGREEMENT; THAT EXECUTIVE FULLY
UNDERSTANDS THE TERMS, CONDITIONS, AND SIGNIFICANCE AND CONSEQUENCES OF THIS
AGREEMENT; AND THAT EXECUTIVE HAS EXECUTED THIS AGREEMENT KNOWINGLY AND
VOLUNTARILY, AND OF EXECUTIVE'S OWN FREE WILL.
XXXXXX ELECTRONICS, INC.
By: Dated:
------------------------------------ -----------------------------
Dated:
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XXXXXXXX X. XXXX
President
