RETENTION AGREEMENT
This Agreement between Xxxxxx X. Xxxxx (you) and Xxxxxxx Xxxxxx Associates Group
Inc. (Company) have been entered into as of February 17, 1999. This Agreement
promises you severance benefits if, following a Change of Control, a Potential
Change in Control or a Change of Management, (referred to collectively hereafter
as the "Change") you are terminated without Cause or resign for Good Reason
during the Term of this Agreement. Capitalized terms are defined in the last
section of this Agreement.
1. Purpose
The Company considers a sound and vital management team to be
essential. Management personnel who become concerned about the possibility that
the Company may undergo a Change in Control or a Change in Management may
terminate employment or become distracted. Accordingly, the Board has determined
that appropriate steps should be taken to minimize the distraction executives
may suffer from the possibility of a Change in Control or Management. One step
is to enter into this Agreement with you.
2. Your Promise
If one or more of the events set forth in section 3 below occur during
the Term of this Agreement, you promise not to resign for at least 12 full
calendar months except as follows: (a) you may resign if you are given Good
Reason to do so; and (b) you may terminate employment on account of retirement
on or after attaining age 65 or because you become unable to work due to serious
illness or injury.
3. Events That Trigger Severance Benefits
(a) Termination After a Change in Management
You will receive Severance Benefits under this Agreement if, during the
Term of this Agreement and within twelve months after a Change in Management has
occurred, your employment is terminated by the Company without Cause (other than
on account of your Disability) or you resign for Good Reason.
(b) Termination After a Change in Control
You will receive Severance Benefits under this Agreement if, during the
Term of this Agreement and within twelve months after a Change in Control has
occurred, your employment is terminated by the Company without Cause (other than
on account of your Disability) or you resign for Good Reason.
(c) Termination After a Potential Change in Control
You also will receive Severance Benefits under this Agreement if,
during the Term of this Agreement and within twelve months after a Potential
Change in Control has occurred but before a Change in Control actually occurs,
your employment is terminated by the Company without Cause or you resign for
Good Reason, but only if either: (i) you are terminated at the direction of a
Person who has entered into an agreement with the Company that will result in a
Change in Control; or (ii) the event constituting Good Reason occurs at the
direction of such Person.
(d) Successor Fails To Assume This Agreement
You also will receive Severance Benefits under this Agreement if,
during the Term of this Agreement, a successor to the Company fails to assume
this Agreement, as provided in Section 13(a).
4. Events That Do Not Trigger Severance Benefits
You will not be entitled to Severance Benefits if your employment ends
because you are terminated for Cause or on account of Disability or because you
resign without Good Reason, retire, or die. Except as provided in Section 3(c),
you will not be entitled to Severance Benefits while you remain protected by
this Agreement and remain employed by the Company, its affiliates, or their
successors.
5. Termination Procedures
If you are terminated by the Company after the Change and during the
Term of this Agreement, you will receive written notice of your termination If
you are being terminated for Cause, your notice of termination will include a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board (at a meeting of the Board called
and held for the purpose of considering your termination (after reasonable
notice to you and an opportunity for you and your counsel to be heard before the
Board)) finding that, in the good faith opinion of the Board, Cause for your
termination exists and specifying the basis for that opinion in detail.
6. Severance Benefits
(a) In General
If you become entitled to Severance Benefits under this Agreement, you
may receive all of the Severance Benefits described in this Section. Severance
benefits will be payable to you following your termination of employment only if
you deliver to the Company (on the form and by the deadline it prescribes) your
executed general release of all claims you may have against the Company and its
affiliates relating to your termination of employment, other than claims under
this Agreement, indemnification rights for your acts in the course and scope of
your employment, or under ERISA-regulated employee benefit plans of the Company.
(b) Lump-Sum Payment in Lieu of Future Compensation
In lieu of any further cash compensation for periods after your
employment ends, you will be paid a cash lump sum equal to 1.0 times your annual
base salary in effect when your employment ends or, if higher, in effect
immediately before the Change, or Good Reason event for which you terminate
employment
(c) Group Insurance Benefit Continuation
During the period that begins when you become entitled to Severance
Benefits under this Agreement and ends on the last day of the 12th calendar
month beginning thereafter, the Company shall provide, at no cost to you or your
spouse or dependents, the life, disability, accident, and health insurance
benefits (or substantially similar benefits) it was providing to you and your
spouse and dependents immediately before you became entitled to Severance
Benefits under this Agreement (or immediately before a benefit reduction that
constitutes Good Reason, if you terminate employment for that Good Reason).
These benefits shall be treated as satisfying the Company's COBRA obligations.
After benefit continuation under this subsection ends, you and your spouse and
dependents will be entitled to any remaining COBRA rights.
(d) Acceleration of Vesting under Stock Option Plans
To the extent permitted by the terms of the plans or under applicable
law, your rights to options granted under any of the Company's stock option
plans shall be immediately vested.
(e) Allowance for Professional Services
You will receive an allowance of $10,000 for your use for outplacement,
legal services, tax advice, or other professional services in connection with
the termination of your employment with the Company. Upon presentation of
invoices, the Company will pay the service providers directly until the
allowance has been exhausted. If any balance remains in the allowance fund at
the end of six months following termination, that balance will be paid to you in
a lump sum; the unused balance shall be determined on the basis of invoices
received by the Company on or before the end of the allowance period. The
Company shall have no other responsibility for expenses incurred by you except
as otherwise set forth in this Agreement.
(f) Payment of Accrued Personal Time Off ("PTO")
The Company will pay you all PTO that has accrued through the date your
employment terminates. No additional PTO shall accrue thereafter.
(g) Deferred Compensation Plans
Your vested rights under the Company's 401(k) Salary Deferral Plan and
the Company's Rabbi Trust Non-Qualified Salary Deferral Plan shall continue to
be governed by the terms and conditions of the Plan documents and applicable
law.
7. Time for Payment
You will be paid your cash Severance Benefits within 15 days after you
become entitled to Severance Benefits under this Agreement (e.g., within 15 days
following your termination of employment
8. Relation to Other Severance Programs
Your Severance Benefits under this Agreement are in lieu of any
severance or similar benefits that may be payable to you under any other
employment agreement or other arrangement; to the extent any such benefits are
paid to you, they shall be applied to reduce the amount due under this
Agreement. This Agreement constitutes the entire agreement between you and the
Company and its affiliates with respect to such benefits. Notwithstanding any
other provision of this Agreement, if you are terminated for any reason not
addressed by this Agreement, other than termination for Cause, you will receive
separation benefits consistent with the Companys written severance policy or six
months salary, whichever is greater.
9. Disability
Following a Change in Control, while you are absent from work as a
result of physical or mental illness, the Company will continue to pay you your
full salary and provide you all other compensation and benefits payable to you
under the Company's compensation or benefit plans, programs, or arrangements.
These payments will stop if and when your employment is terminated by the
Company for Disability or at the end of the Term of this Agreement, whichever is
earlier. Severance Benefits under this Agreement are not payable if you are
terminated on account of your Disability.
10. Effect of Reemployment
Your Severance Benefits will not be reduced by any other compensation
you earn or could have earned.
11. Successors
(a) Assumption Required
In addition to obligations imposed by law on a successor to the
Company, during the Term of this Agreement the Company will require any
successor to all or substantially all of the business or assets of the Company
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company was required to perform. If the Company
fails to obtain such an assumption and agreement before the effective date of a
succession, you will be entitled to Severance Benefits as if you were terminated
by the Company without Cause on the effective date of that succession.
Notwithstanding the foregoing, you and the Company or its successor may in
writing agree to replace or modify the terms of this Agreement.
(b) Heirs and Assigns
This Agreement will inure to the benefit of, and be enforceable by,
your personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees, and legatees. If you die while any amount is
still payable to you under this Agreement, that amount will be paid to the
executor, personal representative, or administrator of your estate.
12. Amendments
This Agreement may be modified only by a written agreement executed by
you and the Chairman of the Board of Directors of the Company.
13. Governing Law
This Agreement creates a "top hat" employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, and it shall be interpreted,
administered, and enforced in accordance with that law; the Company is the "plan
administrator." To the extent that state law is applicable, the statutes and
common law of the State of California (excluding its choice of law statutes or
common law) shall apply.
14. Dispute Resolution
(a) Sole Remedy
Both you and the Company agree that the sole and exclusive remedy for
any alleged breach of this Agreement by the other, or for any other dispute
arising out of any act or omission of you or the Company affecting, involving or
relating to this Agreement, shall be final and binding arbitration conducted by
and pursuant to the Employment Dispute Resolution Rules of the American
Arbitration Association in the County of San Francisco, California. The Parties
expressly waive venue in any other county or state in which they live or might
live.
(b) Time
Before demanding arbitration, the Party making the demand shall serve
written notice upon the other Party of the alleged breach or claim. Such written
notice must be served by hand delivery or by being placed in the U.S. Mail,
postage pre-paid, return receipt requested, or with an overnight mail delivery
service, not more than ninety (90) days after the breach or after the claim
arises. Failure timely to serve such notice shall constitute a waiver of the
claim. The party upon whom the notice is served shall have thirty (30) days from
the date of receipt of the notice to respond. If the party upon whom the notice
is served fails to respond within that time, of if the claim is not resolved
within that time, the party seeking arbitration must serve a demand for
arbitration upon the American Arbitration Association within fourteen (14) days.
Failure timely to serve the demand shall constitute a waiver of the claim.
(c) Expenses and Attorneys' Fees
The prevailing party in any such proceeding, as determined by the
arbitrator, shall be entitled to an award of its reasonable attorneys' fees and
costs, including the full cost of the arbitration.
15. Limitation on Employee Rights
This Agreement does not give you the right to be retained in the
service of the Company.
16. Validity
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. Counterparts
This Agreement may be executed in several counterparts, each of which
will be deemed an original, but all of which will constitute one and the same
instrument.
18. Giving Notice
(a) To the Company
All communications from you to the Company relating to this Agreement
must be sent to the Company in writing, addressed as follows (or in any other
manner the Company notifies you to use):
If Mailed Xxxxxxx Xxxxxx Associates
Attention: Xxxx Xxxxx
0000 Xxxxxxx Xxxxxxxxx
X. X. Xxx 000
Xxxxxx, Xxxxxxxxxx 00000
If Faxed Xxxxxxx Xxxxxx Associates
Attention: Xxxx Xxxxx
Fax: (415) 892 - 0685
Tel.: (415) 892 - 0821
(b) To You
All communications from the Company to you relating to this Agreement
must be sent to you in writing, addressed as indicated at the end of this
Agreement.
19. Definitions
(a) Agreement
"Agreement" means this contract, as amended.
(b) Beneficial Owner
"Beneficial Owner" has the meaning set forth in Rule 13d-3 under the
Exchange Act.
(c) Board
"Board" means the Board of Directors of the Company.
(d) Cause
"Cause" means any of the following:
(1) Willful Failure to Perform Duties. You continue willfully to
fail to perform your duties for the Company after a written
demand for performance has been delivered to you by the Board
that specifically identifies how you have failed to perform.
Your conduct will not be considered "willful" if you
reasonably believed that you were acting in the best interests
of the Company or if your failure to perform was caused by
your physical or mental illness. You may not be terminated for
Cause under this paragraph after you have properly notified
the Company that you are resigning for Good Reason.
(2) Willful Adverse Conduct. You willfully engage in conduct that
is demonstrably and materially injurious to the Company or its
affiliates, monetarily or otherwise. Your conduct will not be
considered "willful" if you reasonably believed that you were
acting in the best interests of the Company.
(e) Change in Control
"Change in Control," means the first of the following to occur after
the date of this Agreement:
(1) Acquisition of Controlling Interest. Any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the
Company representing 51 percent or more of the combined voting
power of the Company's then outstanding securities. In
applying the preceding sentence, securities acquired directly
from the Company or its affiliates by or for the Person shall
not be taken into account.
(2) Merger Approved. The shareholders of the Company approve a
merger or consolidation of the Company with any other
corporation unless: (a) the voting securities of the Company
outstanding immediately before the merger or consolidation
would continue to represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity) at least 60 percent of the combined voting power of
the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation;
and (b) no Person becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 51
percent or more of the combined voting power of the Company's
then outstanding securities.
(3) Sale of Assets. The shareholders of the Company approve an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets or a plan of
complete liquidation of the Company.
(f) Change in Management
"Change in Management," means the Company has hired a new Chief
Executive Officer ("CEO").
(g) Code
"Code" means the Internal Revenue Code of 1986, as amended.
(h) Company
"Company" means Xxxxxxx Xxxxxx Associates Group Inc. and any successor
to its business or assets that (by operation of law, or otherwise) assumes and
agrees to perform this Agreement. However, for purposes of determining whether a
Change in Control has occurred in connection with such a succession, the
successor shall not be considered to be the Company.
(i) Disability
"Disability" means that, due to physical or mental illness: (i) you
have been absent from the full-time performance of your duties with the Company
for substantially all of a period of 6 consecutive months; (ii) the Company has
notified you that it intends to terminate you on account of Disability; and
(iii) you do not resume the full-time performance of your duties within 30 days
after receiving notice of your intended termination on account of Disability.
(j) Exchange Act
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(k) Good Reason
"Good Reason" means the occurrence of any of the following without your
express written consent after the Change:
(1) Demotion. Your duties and responsibilities are substantially
and adversely altered from those in effect immediately before
the Change, other than merely as a result of the Company
ceasing to be a public company, a change in your title, or
your transfer to an affiliate.
(2) Pay Cut. Your annual base salary is reduced other than as part
of across-the-board salary reductions affecting all employees
of similar status employed by the Company and any Person in
control of the Company.
(3) Relocation. Your principal office is transferred to another
location, which increases your one-way commute to work by more
than 50 miles, based on your residence when the transfer was
announced or, if you consent to the transfer, the Company
fails to pay (or reimburse you) for all reasonable moving
expenses you incur in changing your principal residence in
connection with the relocation and to indemnify you against
any loss you may realize when you sell your principal
residence in connection with the relocation in an arm's-length
sale for adequate consideration. For purposes of the preceding
sentence, your "loss" will be the difference between the
actual sales price of your residence and the higher of: (a)
your aggregate investment in the residence; or (b) the fair
market value of the residence, as determined by a real estate
appraiser designated by you and satisfactory to the Company.
(4) Discontinuance of Compensation Plan Participation. Other than
as part of an across-the-board reduction affecting all
employees of similar status employed by the Company and any
Person in control of the Company, the Company fails to
continue, or continue your participation in, any compensation
plan in which you participated immediately before the Change
that is material to your total compensation, unless an
equitable substitute arrangement has been adopted or made
available on a basis not materially less favorable to you than
the plan in effect immediately before the Change, both as to
the benefits you receive and your level of participation
relative to other participants. The plans referred to in the
preceding sentence include such programs as Incentive
Compensation Plan and Incentive Stock Option Plan (if still in
effect immediately before the Change), similar programs, and
any substitute plans adopted before the Change.
(5) Discontinuance of Benefits. Other than as part of an
across-the-board change affecting all employees of similar
status employed by the Company, the Company stops providing
you with benefits that, in the aggregate, are substantially as
valuable to you as those you enjoyed immediately before the
Change under the Company's pension, savings, deferred
compensation, life insurance, medical, health, disability,
accident, vacation, and any other fringe benefit plans,
programs, and arrangements.
(6) Notice of Prospective Action. During the Term of this
Agreement, you are officially notified or it is officially
announced that the Company will take any of the actions listed
above.
However, an event that is or would constitute Good Reason shall cease to be Good
Reason if: (a) you do not terminate employment within 90 days after the event
occurs; (b) the Company reverses the action or cures the default that
constitutes Good Reason before you terminate employment; or (c) you were a
primary instigator of the Good Reason event and the circumstances make it
inappropriate for you to receive benefits under this Agreement (e.g., you agree
temporarily to relinquish your position on the occurrence of a merger
transaction you negotiate). If you have Good Reason to terminate employment, you
may do so even if you are on a leave of absence due to physical or mental
illness or any other reason.
(l) Person
"Person" has the meaning given in Section 3(a)(9) of the Exchange Act,
as modified and used in Section 13(d) of that Act, and shall include a "group,"
as defined in Rule 13d-5 promulgated thereunder. However, a Person shall not
include: (i) the Company or any of its subsidiaries; (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
any of its subsidiaries; (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities; or (iv) a corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
(m) Potential Change in Control
"Potential Change in Control" means that any of the following has
occurred during the term of this Agreement:
(1) Agreement Signed. The Company enters into an agreement that
will result in a Change in Control.
(2) Notice of Intent to Seek Change in Control. The Company or any
Person publicly announces an intention to take or to consider
taking actions that will result in a Change in Control.
(3) Board Declaration. With respect to this Agreement, the Board
adopts a resolution declaring that a Potential Change in
Control has occurred.
(n) Severance Benefits
"Severance Benefits" means your benefits under Section 6 of this
Agreement.
(o) Term of this Agreement
"Term of this Agreement" means the period that commences on the date of
this Agreement and ends on the later of:
(1) The last day of the 24th month from the date of this Agreement.
or
(2) The last day of the 12th month from the Change.
Date 02/22/99 /s/Xxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Vice President - Human Resources
Date 02/17/99 /s/X.X. Xxxxxx
Xxxxxx X. Xxxxxx
Chairman - Compensation Committee
Date 02/17/99 /s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Company notices to you shall be addressed as follows (or in any other manner you
notify the Company to use):
If Mailed Xxxxxx X. Xxxxx
0000 X. Xxxxxxxxx.
Xxxxxx, XX 00000
If Faxed Xxxxxx X. Xxxxx
Fax: N/A
Tel.: (000) 000-0000
