Exhibit 10.1
EMPLOYMENT AGREEMENT
AGREEMENT, made and entered into as of January 19, 2001 by and between Xxx
Xxxxxxxx Xxxxxxx, a Delaware corporation (together with its successors and
assigns permitted under this Agreement, the "Company"), and Xxxxx X. Xxxxx (the
"Executive").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment (this "Agreement") and the
Executive desires to enter into this Agreement and to accept such employment,
subject to the terms and provisions of this Agreement; NOW, THEREFORE, in
consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually
acknowledged, the Company and the Executive (individually a "Party" and together
the "Parties") agree as follows:
1. Definitions.
(a) "Affiliate" of a specified person or entity shall mean a person or
entity that directly or indirectly controls, is controlled by, or is under
common control with the person or entity specified.
(b) "Base Salary" shall mean the annualized salary provided for in
Section 4 below or any increased salary granted to the Executive pursuant to
Section 4.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Bonus Payment Amount" shall mean the amount actually paid to the
Executive pursuant to Section 13 of the Company's Incentive Bonus Plan or any
comparable provision of any successor annual bonus plan.
(e) "Cause" shall mean:
(i) the Executive is convicted of, or pleads guilty
or nolo contendere to, a felony or of any crime involving moral turpitude; or
(ii) the Executive is guilty of willful gross neglect in
carrying out his duties under this Agreement or of willful gross misconduct that
results, or could reasonably be expected to result, in either case, in material
harm to the business or reputation of the Company, unless, in either case, the
Executive acted, or failed to act, in a good faith belief that such act or
failure to act was in, or not contrary to, the best interests of the Company.
(f) "Change of Control" shall mean
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or
more of either (A) the then-outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock") or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that, for purposes of this Section 1(f)(i), the following
acquisitions of Outstanding Company Common Stock or Outstanding Company Voting
Securities shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Affiliated Company or (iv) any acquisition by
any corporation pursuant to a transaction that is excluded from Section
1(f)(iii) because it complies with Sections l(f)(iii)(A), l(f)(iii)(B) and
l(f)(iii)(C).
(ii) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board.
(iii) Consummation of a reorganization, merger, consolidation or
sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals and
entities that were the beneficial owners of the Outstanding Company Common Stock
and the Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60% of the
then-outstanding shares of common stock and the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that, as a result of
such transaction, owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and the Outstanding Company
Voting Securities, as the case may be, (B) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then-outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then-outstanding voting securities of such corporation, except to the extent
that such ownership existed prior to the Business Combination, and (C) at least
a majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement or of the action of the Board
providing for such Business Combination; or
(iv) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
(g) "Change of Control Effective Date" shall mean the first date on
which a Change of Control occurs. Notwithstanding anything in this Agreement to
the contrary, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to a Change of Control, and if it is
reasonably demonstrated by the Executive that such termination of employment
(1) was at the request of a third party that has taken steps reasonably
calculated to effect a Change of Control or (2) otherwise arose in connection
with or anticipation of a Change of Control, then "Change of Control Effective
Date" means the date immediately prior to the date of such termination of
employment.
(h) "Commencement Date" shall be January 19, 2001.
(i) "Disability" shall mean the Executive's inability, due to physical
or mental incapacity, to substantially perform his duties and responsibilities
under this Agreement for a period of six consecutive months as determined by a
medical doctor selected by the Company and the Executive. If the Parties cannot
agree on a medical doctor, each Party shall select a medical doctor and the two
doctors shall select a third who shall be the approved medical doctor for this
purpose.
(j) "Fair Market Value", when used with respect to the value of a
security on a particular date, shall mean (A) the average of the high and low
trading prices of the security on the principal national securities exchange or
national market system on which the security is then listed or traded, in each
case during normal business hours on such date or, if such date is not a trading
day, on the most recent trading day that precedes such date or (B) if the
security is not listed or traded on a national market system or national
securities exchange as of such date, then the value as agreed by the Parties, or
in the absence of such agreement, fair market value as determined by an
independent appraiser on a going forward basis, determined without discount for
transfer restrictions, lack of liquidity, minority status, or similar factors.
For purposes of this Section 1(j), an "independent appraiser" is a nationally
recognized, independent investment banking or accounting firm that has relevant
appraisal experience and that is agreed upon by both Parties.
(k) "Good Reason" shall mean the occurrence of any of the following
events without the prior written consent of the Executive:
(i) a reduction in the Executive's then current Base Salary or
target bonus opportunity as a percentage of Base Salary;
(ii) the taking of any other action by the Company that would
diminish the incentive opportunities of the Executive as required hereunder;
(iii) the taking of any action by the Company that would
significantly diminish the aggregate value of the benefits (other than an
across-the-board reduction applicable to employees generally) provided to the
Executive under the Company's medical, health, accident, disability, life
insurance, thrift and retirement plans;
(iv) the failure to elect or reelect the Executive to any of the
positions described in Section 3 below or removal of him from any such position;
(v) a material diminution in the Executive's duties or the
assignment to the Executive of duties which are materially inconsistent with his
duties or which materially impair the Executive's ability to function as the
Chairman and Chief Executive Officer of the Company;
(vi) a change in the reporting structure so that the Executive
reports to someone other than the Board;
(vii) relocation of the Executive's principal place of
employment to a location other than Boston, Massachusetts, or, after the Change
of Control Effective Date, requiring the Executive to travel on Company business
to a substantially greater extent than required immediately prior to such Change
of Control Effective Date;
(viii) a material breach by the Company of any provision of this
Agreement or the stock option agreement the form of which is attached hereto as
Exhibit A;
(ix) any purported termination of the Executive's employment by
the Company that is not effected in accordance with Section 14(b), Section 14(c)
or Section 14(d) (relating, respectively, to Disability, Cause or "without
Cause" terminations); or
(x) the failure of the Company to obtain the assumption in
writing of its obligation to perform this Agreement by any successor to all or
substantially all of the assets of the Company within 15 days after a merger,
consolidation, sale or similar transaction.
After the Change of Control Effective Date, any good faith determination of
Good Reason by the Executive shall be conclusive.
(l) "Highest Annual Bonus" shall mean an amount equal to the product of
(i) the Executive's Base Salary at the date of termination and (ii) the Highest
Annual Bonus Percentage.
(m) "Highest Annual Bonus Percentage" shall mean the higher of (i) the
Executive's Recent Annual Bonus Percentage and (ii) one-hundred percent (100%).
(n) "Pro Rata" shall mean a fraction, the numerator of which is the
number of days that the Executive was employed in the applicable performance
period and the denominator of which shall be the number of days in the
applicable performance period.
(o) "Recent Annual Bonus Percentage" shall mean the highest actual
annual bonus percentage awarded to the Executive under the Company's annual
incentive plans, or any comparable bonus under any predecessor or successor
plan, for the last three full fiscal years (or such lesser number of years that
the Executive has been employed) prior to the Change of Control Effective Date.
(p) "Term of Employment" shall mean the period specified in Section 2
below (including any extension as provided therein).
2. Term of Employment.
The Term of Employment shall begin as of the Commencement Date, and
shall extend until January 19, 2004, with automatic one-year extensions on each
anniversary of the Commencement Date, commencing with the first anniversary,
unless either Party notifies the other at least 90 days before such anniversary
that the Term of Employment is not to so extend. Notwithstanding the foregoing,
the Term of Employment shall end on the date on which the Executive's employment
is earlier terminated by either Party in accordance with the provisions of
Section 14.
3. Position, Duties and Responsibilities.
(a) The Executive shall serve as the Chairman of the Board and Chief
Executive Officer of the Company and shall, subject to the following sentence,
be responsible for the general management of the affairs of the Company. The
Executive shall assume his responsibilities as Chief Executive Officer effective
February 12, 2001. The Executive shall be a member of the Board during the Term
of Employment and the Board shall designate the Executive as its Chairman. The
Executive, in carrying out his duties under this Agreement, shall report to the
Board. During the Term of Employment, the Executive shall devote substantially
all of his business time and attention to the business and affairs of the
Company.
(b) Nothing herein shall preclude the Executive from (i) serving on the
boards of directors of a reasonable number of other corporations with the
concurrence of the Board (which approval shall not be unreasonably withheld),
(ii) serving on the boards of a reasonable number of trade associations and/or
charitable organizations, (iii) engaging in charitable activities and community
affairs, and (iv) managing his personal investments and affairs, provided that
such activities set forth in this Section 3(b) do not conflict or materially
interfere with the effective discharge of his duties and responsibilities under
Section 3(a).
4. Base Salary.
During the Term of Employment, the Executive shall be paid a Base
Salary, payable in accordance with the regular payroll practices of the Company,
of $1 million per year. The Base Salary shall be reviewed annually for any
increase in the discretion of the Personnel Committee of the Board.
5. Annual Incentive Award.
During the Term of Employment, the Executive shall have a target bonus
opportunity each year equal to 100% of Base Salary, payable in that amount if
the performance goals established for the relevant year are met. If such
performance goals are exceeded, the Executive shall receive a larger amount of
up to 200% of Base Salary. For the year 2001, Executive's minimum award shall be
equal to target, determined on a Pro Rata basis. The performance goals for each
year shall be established by the Personnel Committee in consultation with the
Executive. The Executive shall be paid his annual incentive awards no later than
the date other senior executives of the Company are paid their annual incentive
awards and in no event later than 90 days following the last day of the fiscal
year in respect of which the annual incentive award is being paid. The Company
may, but shall not be required to, implement the foregoing pursuant to a
shareholder-approved bonus plan or arrangement that satisfies the requirements
for exemption from the limitation on deductibility imposed by Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") that is set forth in
Section 162(m)(4)(C) of the Code.
Notwithstanding the foregoing, for each fiscal year of the Company which
ends in the two-year period following the Change in Control Effective Date, the
Executive's award shall be not less than the amount determined by multiplying
his Base Salary for such year by the Recent Annual Bonus Percentage.
6. Sign-on Arrangements.
(a) Cash Sign-on Bonus. As soon as practicable following the
Commencement Date, the Company shall pay the Executive a cash bonus of $250,000.
(b) Stock Option Grant. As of the Commencement Date the Company shall
grant the Executive a ten-year option to purchase 2 million shares of Xxx
Xxxxxxxx Xxxxxxx common stock, in the form attached hereto as Exhibit A.
7. Additional Long-Term Incentive Awards.
(a) Stock Options. The Executive shall receive a minimum stock option
grant of 650,000 shares, subject to adjustment as provided in the next paragraph
, in each of 2001, 2002 and 2003. The grants shall be made no later than the
date on which the first grant of options is made to the Company's senior
executives generally for such year, but in no event later than December 31.
The grants shall be made pursuant to Xxx Xxxxxxxx Xxxxxxx 1971 Stock Option Plan
(the "Plan") or successor plan (if any) and contain the terms and conditions set
forth in Exhibit B attached hereto. In the event there is no plan in place under
which the options can be granted, the Executive's grants shall be made
substantially in the form attached hereto as Exhibit A, except that the vesting
schedule shall be as set forth in Exhibit B.
If, before the grant of any of the options provided for in this Section
7(a) there occurs an event described in Section 9 of the Plan (or in the
comparable section of a successor plan), the number and kind of shares to be
granted pursuant to such options shall be adjusted to the extent determined to
be appropriate by the Board, in a manner consistent with the adjustments made to
outstanding stock options held by Executive (if any) and by other senior-level
executives of the Company, in order to preserve the value of the options.
(b) Ongoing Term Incentive Awards. The Executive shall be eligible to
participate in any long-term incentive program that may hereafter be made
available to other senior-level executives generally; provided, that the
Executive's participation therein shall take into account the options to be
granted to him pursuant to Section 7(a) hereof.
8. Stock Purchase.
Executive agrees to buy $1 million in Xxx Xxxxxxxx Xxxxxxx common stock
with his own funds from the Company on the Commencement Date at a price per
share equal to the Fair Market Value on the Commencement Date, with payment to
be made by the Executive no later than the close of business of the Company on
January 26, 2001 and to hold such stock for a period of no less than the lesser
of three years or until the date of termination of his employment.
9. Employee Benefit Programs.
During the Term of Employment, the Executive shall be entitled to
participate in all employee pension and welfare benefit plans, programs and
arrangements made available to the Company's senior-level executives or to its
employees generally on the same terms and conditions as other senior-level
executives, as such plans, programs or arrangements may be in effect from time
to time, including, without limitation, pension, profit sharing, savings, estate
preservation and other retirement plans or programs, 401(k), medical, dental,
hospitalization, short-term and long-term disability and life insurance plans,
accidental death and dismemberment protection, travel accident insurance, and
all other pension or retirement plans or programs and employee welfare benefit
plans or programs that may be sponsored by the Company from time to time,
including any plans or programs that supplement the above-listed types of plans
or programs, whether funded or unfunded. Company-provided life insurance will be
no less than 300% of Base Salary. The Executive's participation shall be based
on, and the calculation of all benefits shall be based on, the assumptions that
the Executive has met all service-period and other requirements for such
participation. The Executive shall be entitled to six weeks paid vacation per
calendar year of employment. The Executive agrees to cooperate with any required
eligibility procedures with respect to such plans, programs and arrangements,
including without limitation customary medical underwriting procedures.
10. Supplemental Pension.
(a) Following any termination of his employment with the Company other
than by the Company for Cause or as a result of his death, the Executive shall
be entitled to receive a supplemental pension benefit with annual payments equal
to five percent (5%) of his Average Final Annual Compensation (as defined below)
multiplied by his full and partial years of service with the Company (including
any additional years of credited service pursuant to Sections 14(d) and 15(c));
provided however, that the maximum annual pension to which the Executive shall
be entitled shall be 50% of his Average Final Annual Compensation. For this
purpose, "Average Final Annual Compensation" shall be defined as the Executive's
average cash compensation for the 36 consecutive months of highest cash
compensation or such shorter period as the Executive has been employed by the
Company, if the Executive has been employed for less than 36 months with the
Company. Cash compensation shall include all salary and bonuses earned in
respect of such 36-month period, regardless of when paid. The supplemental
pension shall be fully vested and shall be paid monthly with the first payment
to be made at the beginning of the first month following the termination of the
Executive's employment hereunder. The Executive's entitlement to the
supplemental pension benefit (apart from the determination of the amount of the
benefit as set forth in the first sentence) shall apply without regard to the
period of the Executive's employment with the Company.
(b) If the Executive should die with a spouse surviving him after he has
commenced receiving a benefit under this Section 10 (or would have commenced
receiving a benefit but for the offset provided under Section 10(c)), the
spouse's benefit, payable monthly, shall be determined in accordance with an
election to be made by the Executive prior to the commencement of the
supplemental pension benefit. The post-retirement benefit provided the spouse
shall result in the normal actuarial discount applied to a joint and survivor
benefit pursuant to the Company's tax-qualified pension plan.
(c) Notwithstanding the foregoing, the supplemental pension benefit
(including a spouse's benefit) determined in accordance with this Section 10
shall be offset (but not below zero) by any pension benefit (including a
survivor's benefit) or long-term disability benefit received by the Executive
(or pension or survivor benefit received by the spouse) under any of the
Company's defined benefit pension or long-term disability benefit plans but
shall not be offset by any other pension or retirement benefit paid by any prior
employer of the Executive.
11. Perquisites.
The Executive shall be entitled to perquisites on the same basis as
provided to other senior level executives and, in any event, shall be entitled
to have the Company provide the following:
(a) a car and driver for business purposes, including commutation, as
provided in Section 13, and as needed or required for security purposes;
(b) reimbursement of tax and financial counseling fees up to $15,000 per
year;
(c) a residential security system;
(d) membership and annual fees for two luncheon clubs; and
(e) an annual physical by the doctor of his choice, including gross-up
for any tax liabilities the Executive incurs in respect to the provision of such
annual physical.
12. Aircraft Travel.
For security purposes, the Executive shall be required to use, at
Company expense, private aircraft for travel in North America including, without
limitation, his weekly commutation as provided in Section 13. Outside North
America he shall be entitled to first class air travel.
13. Reimbursement of Business and Other Expenses; Commutation; Relocation.
The Executive is authorized to incur reasonable expenses in connection
with carrying out his duties and responsibilities under this Agreement and the
Company shall promptly reimburse him for all such expenses incurred in
connection with carrying out the business of the Company, subject to
documentation in accordance with the Company's policy. The Company shall pay
legal fees and expenses up to $100,000 incurred by the Executive in connection
with the negotiation and implementation of the Executive's employment
arrangements with the Company, including, without limitation, gross-up for any
tax liabilities the Executive incurs with respect to such payments.
The Executive shall be under no obligation to relocate his personal
residence to the Boston area. The Company shall provide and maintain for the
Executive a 2-room apartment with full hotel services in the Boston area
mutually acceptable to the Company and the Executive and pay any costs
associated with the Executive's weekly commuting from Boston to the Executive's
residence in Rye, New York including, without limitation, gross-up for any tax
liabilities Executive incurs with respect to commutation costs.
In the event the Executive relocates from the New York area to the
Boston area, the Company will pay all costs associated with his relocation,
including, without limitation, gross-up for any tax liabilities Executive incurs
with respect to such relocation payments or reimbursements.
14. Termination of Employment.
(a) Termination Due to Death. In the event that the Executive's
employment hereunder is terminated due to his death, his estate or his
beneficiaries, as the case may be, shall be entitled to the following:
(i) Base Salary through the date of his death;
(ii) a Pro-Rata annual incentive award for the year in which the
Executive's death occurs based on the target bonus for the year of termination,
payable promptly following his death; and
(iii) full vesting and exercisability of all outstanding stock
options which shall remain exercisable for a period equal to the lesser of one
year and the remainder of their originally scheduled terms.
(b) Termination Due to Disability. In the event that the Executive's
employment hereunder is terminated by either Party hereto due to the Executive's
Disability, he shall be entitled to the following:
(i) Disability benefits provided in accordance with the long-
term disability program in effect for senior executives at the Company;
provided, however, in no event shall such benefits provide the Executive less
than 50% of his then Base Salary to age 65;
(ii) Base Salary through the end of the month before the month
in which Disability benefits commence;
(iii) a Pro-Rata annual incentive award for the year in which
the termination occurs based on the target bonus for the year of termination,
payable promptly following the termination of his employment;
(iv) full vesting and exercisability of all outstanding options
which shall remain exercisable for a period equal to the lesser of one year and
the remainder of their originally scheduled terms; and
(v) continued participation in all medical, dental, vision and
hospitalization insurance coverage and benefits and in all other employee
welfare benefit plans or programs in which he was participating on the date of
the termination of his employment for a period of 24 months following such date,
on the same terms and conditions as if he had remained employed by the Company;
provided that to the extent that the Company's plans do not permit continuation
of the Executive's participation throughout such period, the Company shall
provide the Executive, no less frequently than quarterly in advance, with an
amount which, after taxes, is sufficient for him to purchase equivalent
benefits.
In no event shall a termination of the Executive's employment hereunder
for Disability occur until the Party terminating his employment gives written
notice to the other Party in accordance with Section 28 below.
(c) Termination by the Company for Cause.
(i) A termination for Cause shall not take effect unless the
provisions of this subclause (i) are complied with. The Executive shall be given
written notice by the Board of the intention to terminate him for Cause, such
notice (A) to state in detail the particular act or acts or failure or failures
to act that constitute the grounds on which the proposed termination for Cause
is based and (B) to be given within 60 days of the Board's learning of such act
or acts or failure or failures to act. In the event the proposed termination is
based on subclause (ii) of Section 1(d) above, the Executive shall have ten
calendar days after the date that such written notice has been given to the
Executive in which to cure such conduct. If he fails to cure such conduct, the
Executive shall then be entitled to a hearing before the Board, and, thereafter,
upon a determination by affirmative vote of no fewer than three-quarters of the
members of the Board that Cause exists, he shall be terminated for Cause.
(ii) In the event the Company terminates the Executive's
employment hereunder for Cause:
(A) he shall be entitled to Base Salary through the
date of the termination; and
(B) all stock options shall be forfeited.
(d) Termination without Cause or Termination for Good Reason.
In the event (x) the Executive's employment hereunder is terminated by
the Company without Cause, other than due to Disability or death, or (y) the
Executive terminates his employment for Good Reason hereunder at his initiative
within 60 days following the occurrence of a Good Reason which has not been
cured by the Company within 20 calendar days of receipt of notice thereof from
the Executive, the Executive shall be entitled to the following benefits:
(i) Base Salary through the date of termination;
(ii) a Pro-Rata annual incentive award for the year of
termination, based on the target bonus for such year, payable promptly following
such termination;
(iii) a lump sum payment in an amount equal to two times the
Executive's Base Salary, determined as provided in the last sentence of this
Section 14(d), payable promptly following such termination;
(iv) a lump sum payment in an amount equal to two times the
Executive's target annual incentive award for the year of termination, payable
promptly following such termination;
(v) all outstanding stock options shall become fully vested and
exercisable and shall remain exercisable for a period equal to the lesser of
five years and the remainder of their originally scheduled terms;
(vi) two additional years of service for the purpose of
determining the supplemental pension benefit pursuant to Section 10; provided,
however, that the total number of years of service taken into account in
determining such benefit shall in no event exceed ten (10); and
(vii) continued participation in all medical, dental, vision and
hospitalization insurance coverage and benefits and in all other employee and
senior-level executive welfare benefit plans, programs and arrangements in which
he was participating on the date of the termination of his employment, on the
same terms and conditions as if he had remained employed by the Company, for a
period equal to 24 months following the termination of his employment; provided,
however, that if the Executive becomes re-employed with another employer and is
eligible to receive medical or other welfare benefits under another
employer-provided plan, the medical and other welfare benefits described above
shall be secondary to those provided under such other plan during such
applicable period of eligibility, provided that, to the extent that the
Company's plans, programs and arrangements do not permit such continuation of
the Executive's participation following his termination, the Company shall
provide the Executive, no less frequently than quarterly in advance with an
amount which, after taxes, is sufficient for him to purchase equivalent
benefits.
For purposes of Section 14(d)(iv) above, Base Salary shall be determined by
the Base Salary at the annualized rate in effect on the date of termination of
the Executive's employment, provided however, if, prior to the termination of
the Executive's employment pursuant to this Section 14(d), the Base Salary has
been reduced without the Executive's consent, the Base Salary in effect on the
date of termination of the Executive's employment shall be deemed to be the Base
Salary as in effect prior to such reduction.
(e) Voluntary Termination. In the event that Executive terminates his
employment hereunder on his own initiative, other than a termination in
accordance with Section 14(a), 14(b) or 14(d) (relating respectively to death,
Disability and "without Cause" terminations) (except to the extent otherwise
provided in Section 14(f)), he shall be entitled to:
(i) Base Salary through the date of termination; and
(ii) the lesser of 90 days and the remainder of the regularly
scheduled option term to exercise vested stock options and all unvested options
shall be forfeited.
A voluntary termination by the Executive is not a breach of this Agreement.
(f) Retirement. The Executive shall be entitled to retire, for purposes
of the stock options granted pursuant to Section 6(b) and 7(a) hereof, by
voluntarily terminating his employment on or after the third anniversary of the
Commencement Date. Upon such termination for retirement, any stock options which
are not then vested shall become exercisable and all stock options shall remain
exercisable for a period equal to the lesser of the remainder of the originally
scheduled term and five years.
(g) Other Termination Benefits. In the case of any termination of his
employment with the Company, the Executive or his estate, where applicable,
shall also be entitled to prompt payment or provision of:
(i) the supplemental pension benefit described in Section 10
(other than following a termination for Cause or death);
(ii) unless Executive has been terminated for Cause, the balance
of any incentive awards due for performance periods which have been completed,
but which have not yet been paid (subject to deferral of payments to the extent
the Executive has elected, irrevocably, such deferral);
(iii) any expense reimbursements due the Executive; and
(iv) other benefits, including senior level executive benefits,
if any, in accordance with applicable plans, programs and arrangements of the
Company.
(h) No Mitigation; No Offset. In the event of any termination of his
employment hereunder, the Executive shall be under no obligation to seek other
employment and except in the event of a termination by the Company for Cause
there shall be no offset against amounts or benefits due the Executive under
this Agreement on account of any claims asserted by the Company or any
remuneration or benefits attributable to any subsequent employment that he may
obtain, except to the extent set forth in Section 14(d)(vii).
(i) Nature of Payments. Any amounts due under this Section 14 are in the
nature of severance payments considered to be reasonable by the Company and are
not in the nature of a penalty.
(j) Resignation. Notwithstanding any other provision of this Agreement,
upon the termination of the Executive's employment for any reason, unless
otherwise requested by the Board he shall immediately resign from the Board and
from all boards of directors of subsidiaries and Affiliates of the Company of
which he may be a member. The Executive hereby agrees to execute any and all
documentation of such resignations upon request by the Company, but he shall be
treated for all purposes as having so resigned upon termination of his
employment, regardless of when or whether he executes any such documentation.
(k) Cooperation in Litigation. For a period of two years following the
termination of his employment, upon the reasonable request by the Company, the
Executive shall cooperate in any litigation or other dispute relating to any
matter in which he was involved during his employment with the Company;
provided, that the Executive shall not be obligated to spend time and/or travel
in connection with such cooperation to the extent it would interfere with his
other commitments and obligations. The Company shall reimburse the Executive for
all expenses he reasonably incurs in so cooperating, and shall pay the Executive
a mutually agreed fee for his time spent in such cooperation (including without
limitation any travel time); provided, that if the Executive and the Company
cannot agree on such fee, they shall mutually select an independent expert to
determine the appropriate amount of such fee based upon prevailing market
practices. The determination of any such independent expert shall be final and
binding, and the fees and expenses of such expert in making such determination
shall be paid by the Company.
15. Change of Control.
(a) Notwithstanding any other provision of this Agreement, the
provisions of this Section 15 shall apply if there occurs a Change of Control
during the Term of Employment and the Executive's employment is terminated (i)
during the period from the Change of Control Effective Date through the second
anniversary thereof by the Company, other than for Cause or as a result of the
Executive's Disability or death, or by the Executive for Good Reason, (ii) by
the Executive for any reason during the 30-day period immediately following the
first anniversary of a Change of Control, or (iii) by the Company prior to a
Change of Control, if, in accordance with the definition of Change of Control
Effective Date, it is reasonably demonstrated by the Executive that such
termination of employment (A) was at the request of a third party that has taken
steps reasonably calculated to effect a Change of Control or (B) otherwise arose
in connection with or anticipation of a Change of Control.
(b) In the event of a termination of the Executive's employment
described in Section 15(a), then the Executive shall be entitled to the benefits
set forth in Section 14(d), as modified by this Section 15. In lieu of the lump
sum payments provided for in clauses (i), (ii), (iii) and (iv) of Section 14(d),
the Company shall pay to the Executive, in a lump sum in cash within 30 days
after the date of termination, an amount equal to the aggregate of the following
amounts:
(i) the sum of (A) the Executive's Base Salary through the date
of termination to the extent not theretofore paid, (B) the product of (x) the
Highest Annual Bonus and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the date of termination and the
denominator of which is 365, reduced (but not below zero), if the date of
termination occurs in the same fiscal year as the Change of Control, by the
Executive's Bonus Payment Amount, (C) if elected by the Executive, any
compensation previously deferred by the Executive under the Company's
Supplemental Savings Plan, Incentive Bonus Plan and/or Stock Equivalent Unit
Plan or any other plan, agreement or arrangement of the Company (together with
any accrued interest or earnings thereon), and (D) any accrued vacation pay, in
each case to the extent not theretofore paid;
(ii) the amount equal to the product of (A) three and (B) the
sum of (x) the Executive's Base Salary and (y) the Executive's Highest Annual
Bonus; and
(iii) if elected by the Executive within 60 days following
execution of this Agreement and prior to the Change of Control Effective Date,
in lieu of and in substitution for the monthly benefit represented thereby, an
amount equal to the lump sum actuarial equivalent (utilizing the interest rate
and mortality table in effect for lump sum distributions under the Company's
tax-qualified pension plan immediately prior to the Change of Control Effective
Date, and determined assuming benefit commencement as of the date of
termination) of that portion (if any) of the Executive's monthly supplemental
pension benefit otherwise payable under Section 10, that accrues as a result of
the application of the first sentence of Section 15(c).
(c) In addition, in the event of a termination of the Executive's
employment described in Section 15(a), in lieu of the benefit provided in clause
(vi) of Section 14(d), the Executive shall be entitled to three (3) additional
years of service for the purpose of determining the supplemental pension benefit
pursuant to Section 10; provided, however, that the total number of years of
service taken into account in determining such benefit shall in no event exceed
ten (10).
(d) Finally, in the event of a termination of the Executive's employment
described in Section 15(a), the following additional benefits shall be provided
to the Executive:
(i) for purposes of determining the Executive's eligibility for
retiree benefits pursuant to the Company's welfare plans, practices, programs
and policies, the Executive shall be considered to have remained employed until
three years after the date of termination, provided, however, that the
Executive's commencement of such retiree benefits shall not be any sooner than
the Executive's earliest retirement date under the Company's Retirement Plan and
Supplemental Retirement Plan;
(ii) the Company shall, at its sole expense as incurred, provide
the Executive with outplacement services the scope and provider of which shall
be selected by the Executive in the Executive's sole discretion; and
(iii) clause (vii) of Section 14(d) shall be amended by changing
the phrase "24 months" to "36 months".
16. Excise Tax.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, benefit or distribution from the
Company or its Affiliates to or for the benefit of the Executive (whether paid
or payable, received or receivable, or distributed or distributable pursuant to
the terms of this Agreement, any plan or program of the Company or its
Affiliates or otherwise but determined without regard to any additional payments
required under this Section 16) (the "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code, or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, collectively, the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (the
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payment.
(b) Subject to the provisions of Section 16(c), all determinations
required to be made under this Section 16, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by KPMG Peat
Marwick or such other certified public accounting firm as may be designated by
the Executive (the "Accounting Firm") that shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 16, shall be paid
by the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (the
"Underpayment"), consistent with the calculations required to be made hereunder.
In the event the Company exhausts its remedies pursuant to Section 16(c) and the
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 the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 10 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which the Executive gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the
expiration of such period that the Company desires to contest such claim, the
Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income or other 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 16(c), the Company shall control all
proceedings taken in connection with such contest, and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such claim and
may, at its sole option, either direct the Executive to pay the tax claimed and
xxx for a refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that, if
the Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax (including interest
or penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and provided,
further, that any extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 16(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 16(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 16(c), a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
17. Confidentiality; Non-Competition.
(a) The Executive agrees that he will not at any time during the Term of
Employment or thereafter disclose or use any confidential information of a
proprietary nature relating to the Company or any Affiliate, and their
respective businesses, which information shall have been obtained by the
Executive during the Executive's employment by the Company or any Affiliate. For
this purpose, "confidential information of a proprietary nature" shall include
pricing policies, technical processes, formulae, inventions, research projects
or other information regarding the financial and business affairs of the Company
or any Affiliate that at the time in question have not been disclosed to the
public or within the relevant trade or industry. Notwithstanding the foregoing
provisions of this Section 17, the Executive may disclose or use any such
information (i) as such disclosure or use may be required or appropriate in the
course of his employment with the Company, (ii) when required by a court of law,
by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) with apparent jurisdiction, or (iii) with the prior written consent of
the Company.
(b) The Executive agrees that at the time of the termination of his
employment with the Company, whether at the instance of the Executive or the
Company, and regardless of the reasons therefor, he will deliver to the Company,
and not keep or deliver to anyone else, any and all notes, files, memoranda,
papers and, in general, any and all physical matter and computer files
containing information, including any and all documents significant to the
conduct of the business of the Company or any subsidiary or Affiliate of the
Company which are in his possession, except for any documents for which the
Company or any subsidiary or Affiliate of the Company has given written consent
to removal at the time of the termination of the Executive's employment and his
personal rolodex, personal files, phone book and similar items.
(c) During the Term of Employment and for a period of two years
following the termination of his employment, the Executive shall not, other than
in the course of performing his duties hereunder during the Term of Employment
or as agreed by the Company in writing, engage in a "Competitive Business",
directly or indirectly, as an individual, partner, shareholder, director,
officer, principal, agent, employee, trustee, consultant, or in any other
relationship or capacity, in any geographic location in which the Company or any
of its Affiliates is engaged in business.
The Executive shall not be deemed to be in violation of this Section
17(c) from (i) his acquiring, solely as an investment, up to five percent (5%)
of the outstanding equity securities (measured by value) of any entity, (ii) his
becoming a consultant, advisor and/or agent to any entity providing consulting,
investing or other services to any Competitor, so long as the Executive does not
render services or advice, directly or indirectly, to any Competitor or
Affiliate of the Competitor or (iii) his becoming affiliated with an entity
which is not a Competitor which is subsequently acquired by or merged with a
Competitor; provided that following such acquisition or merger, his duties do
not involve any responsibilities with regard to any Competitive Business.
"Competitive Business" shall mean a business that competes with a
business that (i) was being conducted by the Company or any of its Affiliates at
the time of the Executive's termination, and is being conducted at the time of
the alleged violation, or (ii) the Company or any of its Affiliates was seeking
to conduct, or seriously considering conducting, at the time of the Executive's
termination and the Company or any of its Affiliates is actually conducting, or
which the Company is seeking to conduct or seriously considering conducting, at
the time of the alleged violation. "Competitor" shall mean any entity which
engages in any Competitive Business.
(d) The Executive agrees that for a period of two years following the
termination of his employment, he will not, without the prior written consent of
the Company, directly or indirectly, knowingly solicit or encourage any officer,
employee or consultant of the Company or any of its subsidiaries to leave the
employ of the Company and its subsidiaries. Notwithstanding the foregoing, the
Company agrees that the Executive's (i) responding to an unsolicited request of
an employee of the Company for advice on employment matters or (ii) responding
to an unsolicited request for an employment reference regarding an employee of
the Company shall not by itself be deemed a violation of this Section 17(d).
(e) The Executive agrees that the Company's remedies at law would be
inadequate in the event of a breach or threatened breach of this Section 17;
accordingly, the Company shall be entitled, in addition to its rights at law, to
seek injunctive and other equitable relief. If the Company defers or withholds
payment of any amount otherwise payable under this Agreement on the basis of an
asserted violation of the provisions of this Section 17, and it is subsequently
finally determined that the Executive did not commit any such violation, the
Company shall promptly pay all such unpaid amounts to the Executive, together
with interest at the applicable federal rate as defined in Section 1274 of the
Code, from the date such payments should have been made under this Agreement
until the date they are actually paid.
18. Resolution of Disputes.
Any dispute arising under, or relating to, this Agreement, any other
agreement between Executive and the Company or its Affiliates, the Executive's
employment with the Company or any termination of such employment shall be
resolved by binding arbitration, to be held in Boston, Massachusetts, in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator, including any
injunctive relief, may be entered in any court having jurisdiction thereof. The
Company shall advance to the Executive all reasonable fees, costs and expenses
incurred by him in connection with such arbitration within 20 days after receipt
by the Company of a written request for such advance, subject to repayment by
the Executive thereof, if the arbitrator(s) determines that the Executive had no
reasonable good faith basis for asserting his position with respect to the
dispute in question.
19. Indemnification.
(a) The Company agrees that if the Executive is made a party, or is
threatened to be made a party, to any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "Proceeding"), by reason of the
fact that he is or was a director, officer or employee of the Company or is or
was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, limited liability corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, the Executive shall be indemnified and held
harmless by the Company to the fullest extent legally permitted or authorized by
the Company's certificate of incorporation or bylaws or resolutions of the
Company's Board of Directors or, if greater, by the laws of the State of
Delaware, against all cost, expense, liability and loss (including, without
limitation, attorney's fees, judgments, fines, ERISA excise taxes or other
liabilities or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by the Executive in connection therewith, and
not otherwise received by him from another source, such as insurance, and such
indemnification shall continue as to the Executive even if he has ceased to be a
director, member, employee or agent of the Company or other entity and shall
inure to the benefit of the Executive's heirs and legal representatives. The
Company shall advance to the Executive all costs and expenses incurred by him in
connection with a Proceeding within 20 calendar days after receipt by the
Company of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses; provided that the amount of such obligation to repay shall
be limited to the after-tax amount of any such advance except to the extent the
Executive is able to offset such taxes incurred on the advance by the tax
benefit, if any, attributable to a deduction for the repayment.
(b) Neither the failure of the Company (including its board of
directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any proceeding concerning payment of
amounts claimed by the Executive under Section 19(a) above that indemnification
of the Executive is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its board of directors,
independent legal counsel or stockholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption that the Executive
has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors' and
officers' liability insurance policy covering the Executive with terms and
conditions no less favorable than the most favorable coverage then applying to
any other present or former director or officer of the Company, both during the
Term and for six years thereafter; provided, that during any periods when such
insurance policy remains in effect but the Executive is not serving as an
officer or director of the Company, such policy shall cover only acts, omissions
and events occurring during his period of service as an officer or director of
the Company.
20. Assignability; Binding Nature.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of the Executive)
and assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company except that such rights or obligations
may be assigned or transferred pursuant to a merger or consolidation in which
the Company is not the continuing entity, or the sale or liquidation of all or
substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the business and
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law. The Company further agrees that, in the
event of a sale of assets or liquidation as described in the preceding sentence,
it shall take whatever action it reasonably can in order to cause such assignee
or transferee to expressly assume the liabilities, obligations and duties of the
Company hereunder. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his rights
to compensation and benefits, which may be transferred only by will or operation
of law, except as provided in Section 26.
21. Entire Agreement.
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the Parties with respect thereto.
22. Representations.
(a) The Company represents and warrants that (i) it is fully authorized
by action of its Board (and of any other person, entity or body whose action is
required) to enter into this Agreement and to perform its obligations under it;
(ii) the execution, delivery and performance of this Agreement by it will not
violate any applicable law, regulation, order, judgment or decree or any
agreement, plan or corporate governance document to which it is a party or by
which it is bound; and (iii) upon the execution and delivery of this Agreement
by the Parties, this Agreement shall be a valid and binding obligation of the
Company, enforceable against it in accordance with its terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally.
(b) The Executive represents and warrants that (i) he has the free and
unfettered right to enter into this Agreement and to perform his obligations
under it; (ii) to the best of his knowledge, the execution, delivery and
performance of this Agreement by him will not violate any contract or agreement
to which he is a party or by which he is bound; and (iii) upon the execution and
delivery of this Agreement by the Parties, this Agreement shall be a valid and
binding obligation of the Executive, enforceable against him in accordance with
its terms.
23. Amendment or Waiver.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
24. Severability.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law so as to
achieve the purposes of this Agreement.
25. Survivorship.
Except as otherwise expressly set forth in this Agreement, upon the
expiration of the Term of Employment, the respective rights and obligations of
the Parties shall survive such expiration to the extent necessary to carry out
the intentions of the Parties as embodied in the rights (such as vested rights)
and obligations of the Parties under this Agreement. This Agreement itself (as
distinguished from the Executive's employment) may not be terminated by either
Party without the written consent of the other Party.
26. Beneficiaries; References.
The Executive shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefit payable hereunder following the Executive's death by
giving the Company written notice thereof. In the event of the Executive's death
or a judicial determination of his incompetence, references in this Agreement to
the Executive shall be deemed, where appropriate, to refer to his beneficiary,
estate or other legal representative.
27. Governing Law.
This Agreement shall be governed in accordance with the laws of Delaware
without reference to principles of conflict of laws.
28. Notices.
All notices and other communications required or permitted hereunder
shall be in writing and shall be deemed given when (a) delivered personally, (b)
three days after mailing by certified or registered mail, postage prepaid,
return receipt requested or (c) delivered by overnight courier (provided that a
written acknowledgment of receipt is obtained by the overnight courier) to the
Party concerned at the address indicated below or to such changed address as
such Party may subsequently give such notice of:
If to the Company: Xxx Xxxxxxxx Xxxxxxx
Prudential Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: General Counsel
If to the Executive: Xx. Xxxxx X. Xxxxx
c/o Xxx Xxxxxxxx Xxxxxxx
Prudential Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
29. Headings.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
30. Withholding.
The Company shall withhold from any amounts payable under this Agreement
such United States federal, state or local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation. The Executive
acknowledges that except for such withholding, and except for such gross-ups as
are specifically provided herein, he is responsible for paying his own taxes.
31. Counterparts.
This Agreement may be executed in two or more counterparts.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first written above.
Xxx Xxxxxxxx Xxxxxxx
By: /s/ Xxxxxx X. XxXxxxx
----------------------------------------
Xxxxxx X. XxXxxxx
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
EXHIBIT A
STOCK OPTION AGREEMENT
1. Grant of Option. Xxx Xxxxxxxx Xxxxxxx (the "Company") hereby grants to
Xxxxx X. Xxxxx (the "Optionee"), effective as of January 19, 2001 (the "Grant
Date"), an option to purchase an aggregate of 2,000,000 shares of common stock
of the Company (the "Common Stock") at a price of $34.16 per share, purchasable
as set forth in, and subject to the terms and conditions of, this Stock Option
Agreement and the Employment Agreement dated as of January 19, 2001 between the
Company and the Optionee (the "Employment Agreement"). All capitalized terms not
defined in this Stock Option Agreement shall have the meanings ascribed to such
terms in the Employment Agreement.
2. Exercisability of Option.
(a) On the Grant Date, this option shall vest and be exercisable with
respect to 500,000 shares. On each of the first three anniversaries of the Grant
Date, except as otherwise provided below, this option shall vest and become
exercisable with respect to an additional 500,000 shares.
(b) In the event that the Optionee's employment with the Company is
terminated due to death or Disability, pursuant to Section 14(a) or 14(b),
respectively, of the Employment Agreement, this option, to the extent not yet
vested and exercisable, shall become fully vested and exercisable as of the date
of termination, and shall remain exercisable for all shares through the first
anniversary of such date, or, if earlier, January 19, 2011, at which time it
shall expire to the extent it is not yet exercised.
(c) In the event that the Optionee's employment with the Company is
terminated for Cause, pursuant to Section 14(c) of the Employment Agreement,
this option shall expire.
(d) In the event that the Optionee's employment with the Company is
terminated without Cause or for Good Reason, pursuant to Section 14(d) of the
Employment Agreement, or Retirement, pursuant to Section 14(f) of the Employment
Agreement, this option shall become fully vested and exercisable as of the date
of termination and shall remain fully exercisable through the fifth anniversary
of the date of termination, or, if earlier, January 19, 2011, at which time it
shall expire to the extent it is not yet exercised.
(e) In the event that the Optionee voluntarily terminates his employment
with the Company prior to the third anniversary of the Grant Date, pursuant to
Section 14(e) of the Employment Agreement, this option (x) to the extent that it
is exercisable as of the date of termination, shall remain fully exercisable for
90 days following such date, or, if earlier, January 19, 2011, at which time it
shall expire, and (y) to the extent that it is not exercisable as of the date of
termination, shall expire.
(f) Anything elsewhere to the contrary notwithstanding, (x) immediately
prior to any Change of Control that occurs while this option remains outstanding
during the Optionee's employment with the Company (to permit the Optionee, if he
chooses, to exercise the option and acquire the shares subject to such exercise
prior to the Change of Control), this option shall become fully vested and
exercisable, (y) upon any termination by the Optionee which occurs pursuant to
notice given by the Optionee within the 30 day period following the first
anniversary of a Change of Control (a Termination under Section 15(a)(ii) of the
Employment Agreement), this option shall remain fully exercisable through the
fifth anniversary of the date of termination, or, if earlier, January 19, 2011,
and (z) upon any involuntary termination by the Company without Cause which
occurs during the one year period following a Change of Control, this option
shall remain fully exercisable through January 19, 2011.
(g) Anything herein to the contrary notwithstanding, this option shall
cease to be exercisable with respect to any shares at the end of the day on
January 19, 2011.
3. Exercise of Option.
(a) Method of Exercise and Payments. Subject to the conditions set forth
in this Stock Option Agreement, this option may be exercised in accordance with
any method applicable either to options granted under the Company's 1971 Stock
Option Plan, as amended (so long as the Company has any options outstanding
under such plan and regardless of whether there are options outstanding
thereunder if the Company shall not have adopted a successor plan) or under any
successor stock option plan from time to time in effect (collectively, the
"Plan"), including, without limitation, the provisions for payment of the
exercise price of options and the provisions for delivery of shares purchased,
and in accordance with the practices and procedures of the Company applicable to
exercise of options by senior executives generally. The Company has in effect,
and agrees to continue in effect and to make available to the Optionee at his
election, for the term of this option, a "brokered exercise" program under the
Plan. The Company will make available to the Optionee loans or guarantees with
respect to the exercise price insofar as made available to any other senior
executive or any director of the Company under the Plan or any other plan,
program or arrangement of the Company.
(b) Reservation of Shares. The Company shall at all times reserve, out
of its authorized and unissued shares, a number of shares sufficient to provide
for the exercise in full of this option. All shares issued upon exercise of this
option shall be duly authorized and, when issued upon such exercise, shall be
(i) validly issued, fully paid and nonassessable, (ii) registered for sale, and
for resale, under Federal and state securities laws and (iii) listed, or
otherwise qualified, for trading in the United States on a national securities
exchange or national securities market system.
4. Deferral of Option Gains.
(a) Notwithstanding anything elsewhere in this Agreement to the
contrary, the Optionee shall have the right, by furnishing written notice to the
Company during his employment with the Company and at least six months prior to
any exercise of this option, to elect to defer all or a portion of any gains
realized upon or in connection with such exercise. Any such deferral shall be
made in such manner as may reasonably be required by the Company, including
without limitation such requirements as may apply in order to defer such gains
for Federal and state income tax purposes. Payment of the exercise price for
such exercise shall be made by presenting to the Company shares of Common Stock
(the "Presentation Shares") owned by the Optionee (which, in the event they were
acquired by the previous exercise of a stock option, shall have been held by the
Optionee for at least six months before the date of such exercise) and having a
fair market value (as defined in the Plan) equal to the exercise price. The
excess of the number of shares for which the option is exercised over the number
of Presentation Shares shall be deferred in the form of "Share Units" as
discussed in the next sentence. A "Share Unit" shall represent a share of Common
Stock, including any dividends and other distributions that may be declared or
made thereon during the period of the deferral. The Share Units shall be paid
out under the terms of the Optionee's election to defer in the form of shares of
Common Stock.
(b) To the extent that any gain that would be realized by the Optionee
upon an exercise of this option during his employment with the Company may not
be deductible in full by the Company by virtue of Section 162(m) of the Internal
Revenue Code of 1986, as amended (such Section, together with any successor
thereto and any regulations thereunder, referred to herein as "Section 162(m)"),
then the Optionee shall be deemed to have made a timely election to defer such
portion of such gain pursuant to Section 4(a) above until the later of (i) the
time (if any) actually elected pursuant to Section 4(a) and (ii) 30 days
following the date on which payment of all or part of such deferral amount will
not result in loss of deductibility under Section 162(m) (but only up to that
amount which can be paid without loss of deductibility under Section 162(m)).
5. Nontransferability of Option. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process, except that this option may
be transferred in whole or in part (a) by will or the laws of descent and
distribution, (b) to any Family Member or to any trust, limited liability
company, partnership or comparable entity, the principal beneficiaries of which
are the Optionee and/or his Family Members, provided that such Family Members
and/or entities (and upon distribution their beneficiaries) agree to be bound by
the provisions of this Stock Option Agreement or (c) to organizations qualifying
as charitable organizations within the meaning of Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended. For purposes of clause (b) of the
preceding sentence, "Family Member" shall mean the Optionee's spouse, parents,
the parents of the Optionee's spouse, and lineal descendants of any of the
foregoing (including descendants by adoption) and any other individual or entity
included in the definition of "family member" for purposes of Form S-8
Registration Statement, as from time to time amended. Any individual or entity
to whom this option has been transferred in whole or in part in accordance with
the first sentence of this Section 5 shall, to the extent of the transfer,
succeed to the rights, and assume the obligations, of the Optionee under this
Stock Option Agreement but may not transfer this option (in whole or in part)
other than to the Optionee without the prior written consent of the Company,
which consent shall not be unreasonably withheld. The Optionee shall give notice
to the Company of any transfer of this option, in whole or in part, pursuant to
clause (b) of the first sentence of this Section 5. Notwithstanding the
foregoing, no such transfer shall be effective unless and until Optionee and the
transferee(s) have executed such documentation of their respective rights and
obligations as the Company may reasonably determine to be necessary or
appropriate.
6. Adjustment Provisions. The provisions of the Plan (as defined in Section
3(a) above, including Section 9 of the 1971 Stock Option Plan, as amended, or
any corresponding provision of a successor plan) with respect to changes in the
Common Stock in certain events shall be applicable to this option as if
incorporated herein, and they are hereby incorporated by reference.
In addition, notwithstanding the last sentence of Section 9 of the 1971
Stock Option Plan, as amended, and any corresponding provision of any successor
plan, upon the occurrence of any event described in such sentence, the Company
shall, if the Optionee so requests and the Board approves, use its reasonable
best efforts to arrange to have the surviving corporation or any corporation of
which the Company has become the direct or indirect subsidiary, assume this
option or grant a replacement option to the Optionee.
7. Tax Withholding. The Company's obligation to deliver shares upon the
exercise of this option shall be subject to the Optionee's satisfaction of all
applicable Federal, state and local income, excise, and employment tax
withholding requirements ("tax obligations"). The Optionee may satisfy any such
tax obligations (a) in any of the manners provided in Section 3(a) above for
payment of the purchase price; (b) by authorizing the Company to sell securities
that would otherwise have been delivered to the Optionee having a Fair Market
Value equal to, but not greater than, the minimum amount of tax required to be
withheld; or (c) by any combination of (a) and (b).
8. The Company's Representations. The Company represents and warrants that
(a) it is fully authorized by action of its Board (and of any person or body
whose action is required) to enter into this Stock Option Agreement and to
perform its obligations under it; (b) the execution, delivery and performance of
this Stock Option Agreement by the Company does not violate any applicable law,
regulation, order, judgment or decree or any agreement, plan or corporate
governance document of the Company or any agreement among holders of its shares;
and (c) upon the execution and delivery of this Stock Option Agreement by the
Company and the Optionee, this Stock Option Agreement shall be the valid and
binding obligation of the Company, enforceable in accordance with its terms,
except to the extent enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally.
9. Miscellaneous.
(a) Any dispute arising out of or relating to this Stock Option
Agreement shall be resolved by binding arbitration in accordance with Section 18
of the Employment Agreement.
(b) All notices and other communications relating to this Stock Option
Agreement shall be given as provided in Section 28 of the Employment Agreement.
(c) Sections 20 (other than the last sentence thereof), 23, 25, 26
(second sentence only), 29 and 31 of the Employment Agreement (relating,
respectively, to assignability; amendment or waiver; survivorship; references;
headings; and counterparts) shall be deemed incorporated herein in full, with
the references to the "Agreement" in such Sections being treated as references
to this Stock Option Agreement and the references to the "Executive" in such
Sections being treated as references to the Optionee.
(d) Nothing contained in this Stock Option Agreement shall be construed
or deemed under any circumstances to bind the Company to continue the employment
of the Optionee for the period within which this option may be exercised.
(e) This Stock Option Agreement shall be governed, construed, performed
and enforced in accordance with its express terms, and otherwise in accordance
with the laws of the State of Delaware, without reference to conflict of laws
principles.
Grant Date: January 19, 2001
XXX XXXXXXXX XXXXXXX
By: /s/ Xxxxxx X. XxXxxxx
---------------------------
Name: Xxxxxx X. XxXxxxx
Title: Senior Vice President --
Personnel and Administration
ACCEPTED
--------
OPTIONEE
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
EXHIBIT B
SUMMARY OF KEY TERMS AND CONDITIONS
FOR ADDITIONAL STOCK OPTIONS
1. Date, Size and Term of Grants: Not less than 650,000 shares in each of
2001, 2002 and 2003, subject to adjustment pursuant to Section 7(a) of the
Employment Agreement. The term of each option shall be 10 years.
2. Exercise Price: Equal to the Fair Market Value on the date of grant.
3. Vesting: Each option shall vest and become exercisable in substantially
equal annual installments on the first three anniversaries of its grant date,
unless earlier vested upon termination of employment or Change of Control.
4. Consequences of Different Terminations:
(a) Death or Disability: Upon the Executive's death or Disability, all
outstanding options shall be fully vested and remain exercisable for the lesser
of one year and their remaining originally scheduled terms.
(b) Termination for Cause: All outstanding options shall be forfeited.
(c) Termination by the Company without Cause or by the Executive for
Good Reason or upon Retirement pursuant to Section 14(f) of the Employment
Agreement: All outstanding options shall be fully vested and remain exercisable
for the lesser of five years and the remainder of their originally scheduled
terms.
(d) Voluntary Termination: Outstanding options that are vested at the
date of termination shall remain exercisable for the lesser of 90 days and the
remainder of their originally scheduled terms; all unvested options shall be
forfeited.
(e) Certain Terminations After a Change of Control: Upon any termination
of the Executive's employment (1) by the Executive pursuant to a notice given by
him within the 30-day period following the first anniversary of a Change of
Control, outstanding options shall remain exercisable for the lesser of five
years and the remainder of their originally scheduled terms, and (2) by the
Company without Cause during the one-year period following a Change of Control,
outstanding options shall remain exercisable for the remainder of their
originally scheduled terms.
5. Consequences of a Change of Control: Immediately prior to any Change of
Control, all outstanding options shall be fully vested.
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment is made as of January 19, 2001 by and between Xxx Xxxxxxxx
Xxxxxxx, a Delaware corporation (together with its successors and assigns
permitted under this Agreement, the "Company"), and Xxxxx X. Xxxxx (the
"Executive").
WITNESSETH THAT:
---------------
WHEREAS, the Company and the Executive have heretofore entered into an
Employment Agreement dated as of January 19, 2001 (the "Employment Agreement");
and
WHEREAS, both parties are desirous of modifying the Employment Agreement as
regards the Company's obligations to provide certain life insurance coverage
during the Executive's term of employment with the Company.
NOW, THEREFORE, the Company and the Executive agree to modify the
Employment Agreement, pursuant to Section 23 thereof, by amending Section 9 of
the Employment Agreement to read in its entirety as follows:
"9. Employee Benefit Programs.
"During the Term of Employment, the Executive shall be entitled to
participate in all employee pension and welfare benefit plans, programs and
arrangements made available to the Company's senior-level executives or to its
employees generally on the same terms and conditions as other senior-level
executives, as such plans, programs or arrangements may be in effect from time
to time, including, without limitation, pension, profit sharing, savings, estate
preservation and other retirement plans or programs, 401(k), medical, dental,
hospitalization, short-term and long-term disability plans, accidental death and
dismemberment protection, travel accident insurance, and all other pension or
retirement plans or programs and employee welfare benefit plans or programs that
may be sponsored by the Company from time to time, including any plans or
programs that supplement the above-listed types of plans or programs, whether
funded or unfunded; provided, however, that the Executive shall not participate
in any of the Company's executive or group life insurance programs and, in lieu
thereof and substitution therefor, the Company shall pay the premium cost of the
certain term life insurance policies (nos. XX0000000 and MH0003677 each issued
as of December 28, 1999 by Old Line Life Insurance Co. of America) covering the
Executive and his spouse during the Term of Employment or until the sooner
termination of such policies. The Executive's participation shall be based on,
and the calculation of all benefits shall be based on, the assumptions that the
Executive has met all service-period and other requirements for such
participation. The Executive shall be entitled to six weeks paid vacation per
calendar year of employment. The Executive agrees to cooperate with any required
eligibility procedures with respect to such plans, programs and arrangements,
including without limitation customary medical underwriting procedures."
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
XXX XXXXXXXX XXXXXXX
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
Amendment to Employment Agreement Dated January 19, 2001
This amendment to the Employment Agreement by and between Xxx Xxxxxxxx
Xxxxxxx (the "Company") and Xxxxx X. Xxxxx (the "Executive") is made and entered
into as of this 27th day of August 2002.
Whereas the Company has amended the post termination exercise periods for
all options granted under its Stock Option Plan beginning in the year 2002;
Whereas it is the intention of the Company to provide the Executive with
option exercise terms no less favorable than the terms of options granted to
other plan participants;
Now, Therefore, in consideration of the above premises and mutual covenants
contained in the Employment Agreement and for good and other valuable
consideration, the Parties agree to amend the Employment Agreement as follows:
Paragraph 14 (a) (iii) is amended to read as follows:
"(iii) full vesting of all outstanding stock options with exercise periods
(a)for all outstanding stock options granted prior to the year 2002, equal
to the lesser of one year and the remainder of their originally scheduled
terms and (b)for all outstanding stock options granted in the year 2002 and
thereafter, equal to the lesser of three years and the remainder of their
originally scheduled terms."
Paragraph 14 (b) (iv) is amended to read as follows:
"(iv) full vesting of all outstanding stock options with exercise periods
(a) with respect to all outstanding stock options granted prior to the year
2002, equal to the lesser of one of year and the remainder of their
originally scheduled terms and (b)with respect to all stock options granted
in the year 2002 and thereafter, equal to the lesser of three years and the
remainder of their originally scheduled terms; and"
Xxxxxxxxx 00 (x) (v) is amended to read as follows:
"(v) all outstanding stock options shall become fully vested and
exercisable. All stock options granted prior to the year 2002 shall remain
exercisable for a period equal to the lesser of the remainder of their
originally scheduled terms and five years and all stock options granted in
the year 2002 or thereafter shall remain exercisable for the remainder of
their originally scheduled terms."
Paragraph 14(f) is amended to read as follows:
"Retirement. The Executive shall be entitled to retire, for purposes of the
stock options granted to him, whether pursuant to Section 6(b) and 7(a)
hereof or otherwise, by voluntarily terminating his employment on or after
the third anniversary of the Commencement Date. Upon such termination for
retirement, any stock options which are not then vested shall become
exercisable. All stock options granted prior to the year 2002 shall remain
exercisable for a period equal to the lesser of the remainder of their
originally scheduled terms and five years and all stock options granted in
the year 2002 or thereafter shall remain exercisable for the remainder of
their originally scheduled terms."
Xxx Xxxxxxxx Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
Amendment to Employment Agreement
This amendment (the "Amendment") to the Employment Agreement by and between
Xxx Xxxxxxxx Xxxxxxx (the "Company") and Xxxxx X. Xxxxx (the "Executive") dated
January 19, 2001, as amended as of January 19, 2001 and as further amended
August 27, 2002 (the "Employment Agreement") is made and entered into as of this
6th day of August, 2003.
Whereas, unless otherwise specified below, terms defined in the Employment
Agreement shall have the same meaning when used in this Amendment;
Whereas, the Company and the Executive mutually desire to extend the term
of the Employment Agreement through January 19, 2005, under certain modified
terms and conditions;
In consideration of the premises and mutual covenants contained herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Executive agree as follows:
1. The Executive and the Company mutually waive their rights, as
provided in the first sentence of Paragraph 2 of the Employment Agreement, to
terminate the Employment Agreement as of January 19, 2004. The Company and the
Executive mutually agree to extend the Term of Employment for an additional year
expiring on January 19, 2005. This waiver shall not affect the termination
rights of the Company or the Executive with respect to extensions of the
Agreement beyond January 19, 2005.
2. The Company hereby grants the Executive a contract extension award
which shall be calculated and become payable in accordance with the following
terms and conditions:
(a) The amount of the contract extension award shall be
calculated by multiplying the amount, if any, of the increase in the Fair Market
Value of a share of the Company's common stock ("FMV") between June 19, 2003 and
the Valuation Date (as defined below) by One Million ("the Award").
(b) (i) If the Executive ceases to be employed by the Company
prior to January 2, 2004 by reason of a termination of employment by the Company
without Cause or by the Executive with Good Reason or by reason of Death or
Disability, the provisions of paragraph 2(c) below shall not apply and both the
Valuation Date and the Settlement Date shall be the earlier of (A) a date
selected by the Executive (or in the case of the Executive's death, the personal
representative of his estate) or (B) (x) in the event of termination by the
Company without Cause or by the Executive with Good Reason the earlier of June
19, 2013 or, in the event of the Executive's death following such termination,
the third anniversary of his death or (y) in the event of termination by reason
of Death or Disability, the third anniversary of such termination. If a Change
of Control occurs prior to January 2, 2004 and the Executive's employment with
the Company terminates as described in this clause (b) (i) the Award will be
appropriately and equitably adjusted with respect to any or all of the number,
price and kind of shares underlying the Award to preserve the potential value of
the Award.
(ii) If a Change of Control occurs prior to January 2, 2004 and
the Executive remains employed by the Company on January 2, 2004, the Settlement
Date shall be January 2, 2004 and the Valuation Date shall be the date of the
Change of Control.
(iii) Upon the occurrence of such Settlement Date, the Executive
or, in the case of his death, his estate, shall be paid in cash the amount of
the Award.
(c) (i) In the event the Executive remains employed by the
Company on January 2, 2004, the Award shall be converted into Stock Units
("SUs") and be credited to a Stock Unit account for the Executive on the books
of the Company as of January 2, 2004. The number of SUs (rounded to the nearest
thousandth of a share) shall be calculated by dividing the amount of the Award
by the FMV on January 2, 2004. If such date is not a business day on which the
Company's common stock is traded on the NYSE, such calculation shall be made
using the FMV on the next business day on which the Company's common stock is
traded on the NYSE (January 2, 2004 or such later date, "the Calculation Date".
Each time a dividend is paid on the Company's common stock having a record
date on or after January 2, 2004, the Company shall make additional credits to
the Executive's SU account calculated by multiplying the dividend amount per
share of the Company's common stock by the number of SUs credited to the
Executive's account as of the record date of the dividend and dividing the
result by the FMV as of the dividend payment date.
(ii) The value of the Executive's SU account shall be paid to
the Executive in cash in a single lump sum on the "Payment Date" which shall be
the earlier of (A) the date one year from the date of his termination of
employment or (B) a Change of Control. The payment shall equal the FMV of the
SUs credited to his account on the Payment Date. If such date does not fall a
business day on which the Company's common stock is traded on the NYSE, such
calculation shall be made using the FMV as of the next business day on which the
Company's common stock is traded on the NYSE.
(iii) Notwithstanding the above, the Executive shall be entitled
to receive the dollar value of the SUs held in his account only if he remains
employed by the Company through January 19, 2005 unless prior to such date there
is (A) a Change of Control or (B) a termination of employment which is initiated
by the Company without Cause, initiated by the Executive for Good Reason, or as
a result of Death or Disability. In the event the Executive's employment is
terminated by the Company with Cause or by the Executive voluntarily without
Good Reason prior to January 19, 2005, the Award shall be cancelled and no
payment shall be made by the Company pursuant to this Paragraph 2. In the event
of the Executive's death prior to the payment of the award, the value of his SU
account shall be paid to his estate on the one year anniversary of his
termination of employment.
3. Unless the Executive's employment is terminated prior to January 2,
2004 the Company will grant the Executive, under Xxx Xxxxxxxx Xxxxxxx 1971 Stock
Option Plan or any successor plan, a ten year option to purchase One Million
shares of common stock of the Company at a price representing FMV on January 2,
2004; provided that if a Change of Control has occurred prior to January 2,
2004, the number, price and kind of shares subject to such option shall be
appropriately and equitably adjusted to preserve the potential value of such
options. If the Company's stock, for any reason, is not traded on the NYSE on
January 2, 2004, such options shall be priced on the next business day
thereafter that the Company's stock is traded on the New York Stock Exchange.
Such options shall vest annually in one third segments over a three year period,
such that the first segment vests on January 19, 2005, the second segment vests
on January 19, 2006, and the final segment vests on January 19, 2007. If the
Executive's employment is terminated prior to January 19, 2005 due to
termination by the Company for Cause or Voluntary Termination, the option shall
be cancelled and no portion thereof shall be exercisable. If the Executive's
employment is terminated prior to January 19, 2005 due to Death, Disability,
termination at the initiation of the Company without Cause or the Executive's
resignation for Good Reason or a Change of Control of the Company occurs, all
segments of the option shall vest upon such event and remain exercisable for the
remaining term of the option .
4. Paragraph 14(f) of the Agreement is amended to read as follows:
"Retirement. The Executive shall be entitled to retire for the purposes
of the stock options granted to him prior to January 2, 2004, by voluntarily
terminating his employment after January 19, 2004 whereupon any such stock
options which are not then vested shall become vested and exercisable. The
Executive shall be entitled to retire for the purposes of any stock options or
other equity-based or other long-term incentive awards granted to him on or
after January 2, 2004 ("New Awards") by voluntarily terminating his employment
after January 19, 2005 whereupon any New Awards which are not then vested shall
become vested and exercisable. All stock options granted prior to the year 2002
shall remain exercisable for a period equal to the lesser of the remainder of
their originally scheduled terms and five years and all stock options granted in
the year 2002 and thereafter shall remain exercisable for the remainder of their
originally scheduled terms."
5. Paragraph 11(b) of the Agreement is amended to read as follows:
"(b) reimbursement of tax and financial counseling fees under the terms
of the Company's Senior Executive Financial Planning Program;"
6. Unless specifically modified herein, all other terms and conditions
of the Agreement shall remain in effect.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
date first written above.
XXX XXXXXXXX XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, Xx. V.P., Human Resources
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
Amendment to Employment Agreement
This amendment to the Employment Agreement by and between Xxx Xxxxxxxx
Xxxxxxx (the "Company") and Xxxxx X. Xxxxx (the "Executive") dated January 19,
2001, as amended as of January 19, 2001 and as further amended August 27, 2002
and August 6, 2003 (the "Employment Agreement") is made and entered into as of
this 24th day of March, 2004.
Whereas, unless otherwise specified below, terms defined in the Employment
Agreement shall have the same meaning when used in this amendment;
Whereas, the Company and the Executive mutually desire to extend the term
of the Employment Agreement through January 19, 2006, under certain modified
terms and conditions;
In consideration of the premises and mutual covenants contained herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the Company and the Executive agree as follows:
1. The Executive and the Company having mutually waived their rights
under Paragraph 2 of the Employment Agreement mutually agree to extend the term
of the Employment Agreement for an additional year expiring on January 19, 2006.
This waiver shall not affect the termination rights of the Company or the
Executive with respect to extensions of the Agreement beyond January 19, 2006.
2. (a) Unless the Executive's employment is terminated prior to June 30,
2004 by reason of Termination for Cause, resignation without Good Reason,
Disability or Death, no later than June 30, 2004 the Company will grant the
Executive, under Xxx Xxxxxxxx Xxxxxxx 1971 Stock Option Plan or any successor
plan thereto, a long term equity opportunity consisting of options to purchase
shares of common stock of the Company and/or such other equity awards as may be
permitted under a successor plan in such amount and on such terms as shall be
determined by the Board of Directors of the Company taking into consideration
the long term incentive compensation opportunities for the comparable long term
cycle of the chief executive officers of peer group companies ("the 2004 Equity
Award").
(b) If the Executive's employment is terminated prior to January 19,
2006 due to termination by the Company for Cause or resignation without Good
Reason, the 2004 Equity Award shall be cancelled.
(c) If the Executive's employment is terminated after the date of the
date of grant but prior to January 19, 2006 due to Death, Disability,
Termination by the Company without Cause, the Executive's resignation for Good
Reason or a Change of Control occurs, the 2004 Equity Award shall vest and
become non-forfeitable and immediately exercisable, redeemable and/or otherwise
free of restrictions.
3. (a) Unless the Executive's employment is terminated prior to June 30,
2005 by reason of Termination for Cause, resignation without Good Reason,
Disability or Death, no later than June 30, 2005 the Company will grant the
Executive, under Xxx Xxxxxxxx Xxxxxxx 1971 Stock Option Plan or any successor
plan thereto, a long-term equity opportunity consisting of options to purchase
shares of common stock of the Company and/or such other equity awards as may be
permitted under a successor plan in such amount and upon such terms as shall be
determined by the Board of Directors of the Company taking into consideration
the long term incentive compensation opportunities for the comparable long term
cycle of chief executive officers of peer group companies ("the 2005 Equity
Award").
(b) If the Executive's employment is terminated prior to January 19,
2006 due to termination by the Company for Cause or resignation without Good
Reason, the 2005 Equity Award shall be cancelled.
(c) If the Executive's employment is terminated after the date of grant
but prior to January 19, 2006 due to Death, Disability, Termination by the
Company without Cause, the Executive's resignation for Good Reason or a Change
of Control occurs, the 2005 Equity Award shall vest and become non-forfeitable
and immediately exercisable, redeemable and/or otherwise free of restrictions.
4. Paragraph 14(f) of the Agreement is amended to read as follows:
"Retirement.
(i) Options granted on or prior to January 2, 2004.
The Executive shall be entitled to retire for the purposes of the stock
options granted to him prior to January 2, 2004, by voluntarily terminating his
employment after January 19, 2004 whereupon any such stock options which are not
then vested shall become vested and exercisable. The Executive shall be entitled
to retire for the purposes of any stock options granted to him on January 2,
2004 by voluntarily terminating his employment after January 19, 2005 whereupon
any such stock options that are not then vested shall become vested and
exercisable. All stock options granted prior to the year 2002 shall remain
exercisable for a period equal to the lesser of the remainder of their
originally scheduled terms or five years, and all stock options granted during
the years 2002, 2003 and the January 2, 2004 grant shall remain exercisable for
the remainder of their originally scheduled terms.
(ii) The 2004 and 2005 Equity Award.
The Executive shall be entitled to retire with respect to the 2004
Equity Award and the 2005 Equity Award by voluntarily terminating his employment
after January 19, 2006. Upon such termination for retirement, the 2004 Equity
Award and the 2005 Equity Award shall vest and become non-forfeitable,
redeemable and/or otherwise free of restrictions and, in the case of any stock
options granted under either award, shall become immediately exercisable and
shall remain exercisable for the remainder of their original terms; provided
that in the event of such a retirement, absent a Change of Control, any shares
of stock acquired upon the exercise of any stock options granted under the 2004
Equity Award which vest and become exercisable by reason of such retirement
shall not be sold by the Executive for one year from the date of such retirement
and any shares of stock acquired by the Executive upon the exercise of any stock
options granted under the 2005 Equity Award which vest and become exercisable by
reason of such retirement shall not be sold by the Executive for two years from
the date of such retirement."
5. Unless specifically modified herein, all other terms and conditions of
the Agreement shall remain in effect.
XXX XXXXXXXX XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
Senior Vice President, Human Resources
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
