EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1996, is by and between Xxxx
Corporation, a Delaware corporation ("Company"), and Xxxxxx XxXxxxxx
("Executive").
WHEREAS, Executive and Company desire to enter into a new employment
agreement which supercedes in its entirety the Agreement dated as of March 14,
1994;
NOW, THEREFORE, in consideration of the foregoing recital and of the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. Executive agrees to enter into the employment of the
Company, and the Company agrees to employ Executive, on the terms and conditions
set forth in this Agreement. Executive agrees during the term of his employment
to devote substantially all of his business time, efforts, skills and abilities
to the performance of his duties as stated in this Agreement and to the
furtherance of the Company's business.
Executive's job title will be Chairman of the Board and Chief Executive
Officer and his duties will be those as are designated by the Board of Directors
of the Company ("Board"), consistent with the position of Chairman of the Board
and Chief Executive Officer. Executive further agrees to serve, without
additional compensation, as an officer or director, or both, of any subsidiary,
division or affiliate of the Company or any other entity in which the Company
holds an equity interest, provided, however, that (a) the Company shall
indemnify Executive from liabilities in connection with serving in any such
position to the same extent as his indemnification rights pursuant to the
Company's Certificate of Incorporation, By-laws and applicable Delaware law, and
(b) such other position shall not materially detract from the responsibilities
of Executive pursuant to this Section 1 or his ability to perform such
responsibilities.
2. COMPENSATION. (a) BASE SALARY. During the term of Executive's
employment with the Company pursuant to this Agreement, the Company shall pay to
Executive as compensation for his services an annual base salary of not less
than $850,000 payable semi-monthly ("Base Salary"). Executive's Base Salary
will be payable in arrears in accordance with the Company's normal payroll
procedures and will be reviewed annually and subject to upward adjustment at the
discretion of the Board or an authorized Committee or representative thereof.
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(b) INCENTIVE BONUS. Executive's incentive compensation program for
the term of this Agreement shall be determined under the Company's Executive
Bonus Program, established by the Board in its discretion. Executive is
eligible to receive up to 110% of his base salary in accordance with the terms
and conditions of the Executive Bonus Program.
(c) VACATION. Executive shall be entitled to a reasonable vacation of
not less than 5 weeks each year of the term of this Agreement. Vacations not
taken shall not be cumulative or carried over to a subsequent year.
(d) EXECUTIVE PERQUISITES. Executive shall be entitled to receive
such executive perquisites and fringe benefits as are provided to top executives
and their families under the Company's Key Executive Program in effect from time
to time and such other benefits as are customarily available to executives of
the Company and their families.
(e) CLUB MEMBERSHIP. The Company shall pay all fees for membership
by Executive in a club of his choice, together with the dues therefor for use by
Executive for conferences, meetings and entertainment within the scope of his
employment.
(f) STOCK OPTIONS. The Compensation Committee of the Board joins
in executing this Agreement for the purpose of confirming that, on July 9, 1996,
the Committee granted Executive an incentive option (to the extent permitted by
law) and to the extent not so permitted, a non-qualified stock option, pursuant
to the Company's Omnibus Stock Incentive Plan, entitling Executive to purchase
500,000 shares of Common stock of the Company at an exercise price equal to 100%
of the fair market value per share on the date of the grant, as that phrase is
defined in the Company's Omnibus Stock Incentive Plan. As provided under such
Plan, the options will vest 25% on the first anniversary of the grant and an
additional 25% on each anniversary thereafter, so that the options will be fully
exercisable four years from the date of grant. The options will expire ten
years after the date of grant.
(g) TAX WITHHOLDING. The Company has the right to deduct from any
compensation payable to Executive under this Agreement social security (FICA)
taxes and all federal, state, municipal or other such taxes or charges as may
now be in effect or that may hereafter be enacted or required.
(h) LIFE INSURANCE. In addition to the Company's group life
insurance coverage, the Company shall provide Executive with additional life
insurance coverage in the amount of $2,000,000.
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(i) MEDICAL INSURANCE. In addition to the Company's group medical
insurance coverage and/or Executive Medical Insurance Plan ("Medical Plans"),
the Company shall reimburse Executive for all additional medical expenses
incurred by Executive which are defined as reimbursable under the Company's
Medical Plans.
3. TERM. The term of Executive's employment under this Agreement will
begin on August 1, 1996 (the "Commencement Date") and will continue for five
years.
Notwithstanding the foregoing, this Agreement (other than Sections 5
through 11 hereof) will terminate upon the earliest to occur of: (a) the date
the Company terminates Executive's employment, (b) the date Executive resigns
from the Company, (c) notice from the Company following the disability of
Executive that renders him unable to perform his obligations under this
Agreement for at least 90 days out of any 120 consecutive day period, or (d) the
death of Executive, provided, however, that in the event of the death of the
Executive, the Company shall pay to the estate of the Executive twelve months of
Base Salary commencing with the next regular pay period after the date of his
death ("Death Benefit"). Any Death Benefit otherwise payable by the Company
shall be offset by (1) proceeds from any life insurance furnished to Executive
by the Company, and (2) any other life insurance which the Company elects to
purchase on the life of the Executive, the proceeds of which are payable to his
estate.
4. TERMINATION BY THE COMPANY; DEFINITION OF CAUSE. Executive's
employment under this Agreement (and his right to receive the compensation set
forth in Section 2 hereof) may be terminated by the Company at any time with
"Cause", or (subject to the rights of Executive pursuant to Section 5 hereof)
without "Cause". As used herein, "Cause" shall mean:
(a) any dishonest or fraudulent act or course of conduct by
Executive, or other act or course of conduct by Executive constituting a
criminal act or which results in gain or personal enrichment of Executive at the
expense of the Company, or the commission by Executive of an act or a course of
conduct involving moral turpitude; or
(b) Executive's insubordination to the Board or willful violation of
this Agreement or of policies established by the Board, provided, however, that
no such termination pursuant to this clause (b) shall be effective unless the
Company shall have given Executive ten days' prior written notice of any
insubordination or willful violation of this Agreement or such policies which,
if not discontinued or corrected would lead to his termination for Cause.
Executive will have the opportunity
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to cure such non-complying conduct or performance within such 10-day
period. Termination pursuant to this clause (b) shall be effective with
respect to matters referred to in this clause (b) ten days after such
notice unless such conduct has been cured in the good faith judgment of
the board.
5. SEVERANCE PAYMENT ON TERMINATION WITHOUT CAUSE.
(a) TERMINATION WITHOUT CAUSE. If Executive's employment is
terminated by the Company without Cause during the term of this Agreement, the
Company shall be obligated to continue to pay Executive his Base Salary for the
remainder of the term of this Agreement; provided, however, that such payments
are subject to reduction in accordance with the provisions of Section 5(b)
hereof. Executive shall also continue to receive the fringe benefits he is
entitled to receive pursuant to Sections 2(c), (d), (e) and (h) hereof for the
first twelve months of the period he is entitled to receive such Base Salary
payments. In the event of termination without Cause, the Executive's right to
exercise the stock options to be granted hereunder shall be governed by the
terms of the Company's Omnibus Stock Incentive Plan, as may be in effect at that
time.
(b) OFFSET. If Executive's employment with the Company is
terminated pursuant to Section 5(a), this clause (b) shall apply. The payments
which would have been due and payable in accordance with Section 5(a) hereof
shall be reduced by an amount equal to any amounts that Executive receives in
connection with any other employment during the period such payments pursuant to
Section 5(a) would have been due and payable. For purposes of this Section (b),
any fringe benefits received by Executive in connection with any other
employment that are reasonably comparable, but not necessarily as beneficial, to
Executive as the fringe benefits then being provided by the Company pursuant to
Section 5(a) hereof, shall be deemed to be the equivalent of, and shall
terminate the Company's responsibility to continue providing, the fringe
benefits then being provided by the Company pursuant to Section 5(a) hereof.
The Company acknowledges that, if Executive's employment with the Company is
terminated pursuant to Section 5(a), Executive shall have no duty to mitigate
his damages.
(c) GENERAL RELEASE. Acceptance by Executive of any amounts
pursuant to this Section 5 shall constitute a full and complete release by
Executive of any and all claims Executive may have against the Company, its
officers, directors and affiliates, including, but not limited to, claims he
might have relating to Executive's cessation of employment with the Company;
provided, however, that there may properly be excluded from the scope of such
general release the following:
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(i) claims that Executive may have against the Company for
reimbursement of ordinary and necessary business expenses incurred by him
during the course of his employment;
(ii) claims that may be made by the Executive for payment of
Base Salary, fringe benefits or stock options properly due to him; or
(iii) claims respecting matters for which the Executive is
entitled to be indemnified under the Company's Certificate of Incorporation
or Bylaws, respecting third party claims asserted or third party litigation
pending or threatened against the Executive.
A condition to Executive's receipt of any amounts pursuant to this Section 5
shall be Executive's execution and delivery of a general release as described
above. In exchange for such release, the Company shall, if Executive's
employment is terminated without Cause, provide a release to Executive, but only
with respect to claims against Executive which are actually known to the Company
as of the time of such termination.
6. EFFECT OF CHANGE IN CONTROL. (a) If a Change in Control (as
hereinafter defined) shall occur on or prior to the termination of this
Agreement, the term of this Agreement shall be automatically extended to a date
which is not less than 30 months from the date on which such Change in Control
is consummated (if such period is longer than the then unexpired term of this
Agreement), unless the Company has given notice to the Executive that it is
terminating this Agreement pursuant to Section 4 prior to such Change in
Control, provided, however, that in the event the Company gives such notice of
termination at a time that it is actively considering participating in a Change
in Control, and such Change in Control is consummated within four months
following such notice, Executive shall be entitled to the benefits of this
Section 6 as if he had not received notice of termination prior to the Change in
Control.
(b) As used herein, a "Change in Control" shall be deemed to have
occurred if, subsequent to the date hereof, (1) any "person" (as such term is
defined in Section 13(d) of the Securities Exchange Act of 1934)becomes the
beneficial owner, directly or indirectly, of either (A) thirty percent (30%) of
the Company's outstanding Common Stock or (B) securities of the Company
representing thirty percent (30%) of the combined voting power of the Company's
then outstanding voting securities, or (2) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board of
Directors of the Company cease, at any time after the beginning of such
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period, for any reason to constitute a majority of the Board of
Directors of the Company unless the election of each new director was
nominated or ratified by at least two-thirds of the directors still in
office who were directors at the beginning of such two-year period.
(c) Notwithstanding any other provision of this Agreement, if the
aggregate present value of the "parachute payments" to the Executive, determined
under Section 280G(b) of the Internal Revenue Code of 1986, as amended ("Code"),
is at least three times the "base amount" determined under such Section 280G,
then the Base Salary otherwise payable under this Agreement and any other amount
payable hereunder or any other severance plan, program, policy or obligation of
the Company or any other affiliate thereof shall be reduced so that the
aggregate present value of the "parachute payments" to the Executive, determined
under such Section 280G, does not exceed 2.99 times the base amount. In no
event, however, shall any benefit provided hereunder be reduced to the extent
such benefit is specifically excluded by Section 280G(b) of the Code as a
"parachute payment" or as an "excess parachute payment." Any decisions
regarding the requirement or implementation of such reductions shall be made by
such tax counsel as may be selected by the Company and acceptable to Executive.
7. NONSOLICITATION OF EMPLOYEES. For a period of two years after the
termination or cessation of his employment with the Company for any reason
whatsoever, Executive shall not, on his own behalf or on behalf of any other
person, partnership, association, corporation, or other entity, solicit or in
any manner attempt to influence or induce any employee of the Company or its
subsidiaries or affiliates (known by the Executive to be such) to leave the
employment of the Company or its subsidiaries or affiliates, nor shall he use or
disclose to any person, partnership, association, corporation or other entity
any information obtained while an employee of the Company concerning the names
and addresses of the Company's employees.
8. NONDISCLOSURE OF TRADE SECRETS. During the term of this Agreement,
Executive will have access to and become familiar with various trade secrets and
proprietary and confidential information of the Company, its subsidiaries and
affiliates, including, but not limited to, processes, computer programs,
compilations of information, records, sales procedures, customer requirements,
pricing techniques, customer lists, methods of doing business and other
confidential information (collectively, referred to as "Trade Secrets") which
are owned by the Company, its subsidiaries and/or affiliates and regularly used
in the operation of its business, and as to which the Company, its subsidiaries
and/or affiliates take precautions to prevent
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dissemination to persons other than certain directors, officers and
employees. Executive acknowledges and agrees that the Trade Secrets (1)
are secret and not known in the industry; (2) give the Company or its
subsidiaries or affiliates an advantage over competitors who do not know
or use the Trade Secrets; (3) are of such value and nature as to make it
reasonable and necessary to protect and preserve the confidentiality and
secrecy of the Trade Secrets; and (4) are valuable, special and unique
assets of the Company or its subsidiaries or affiliates, the disclosure
of which could cause substantial injury and loss of profits and goodwill
to the Company or its subsidiaries or affiliates. Executive may not use
in any way or disclose any of the Trade Secrets, directly or indirectly,
either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment under this Agreement,
if required in connection with a judicial or administrative proceeding,
or if the information becomes public knowledge other than as a result of
an unauthorized disclosure by the Executive. All files, records,
documents, information, data and similar items relating to the business
of the Company, whether prepared by Executive or otherwise coming into
his possession, will remain the exclusive property of the Company and
may not be removed from the premises of the Company under any
circumstances without the prior written consent of the Board (except in
the ordinary course of business during Executive's period of active
employment under this Agreement), and in any event must be promptly
delivered to the Company upon termination of Executive's employment with
the Company. Executive agrees that upon his receipt of any subpoena,
process or other request to produce or divulge, directly or indirectly,
any Trade Secrets to any entity, agency, tribunal or person, Executive
shall timely notify and promptly hand deliver a copy of the subpoena,
process or other request to the Board. For this purpose, Executive
irrevocably nominates and appoints the Company (including any attorney
retained by the Company), as his true and lawful attorney-in-fact, to
act in Executive's name, place and stead to perform any act that
Executive might perform to defend and protect against any disclosure of
any Trade Secrets.
9. SEVERABILITY. The parties hereto intend all provisions of Sections 7
and 8 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of Section 7 or 8 hereof is too broad to be enforced as
written, the parties intend that the court reform the provision to such narrower
scope as it determines to be reasonable and enforceable. In addition, however,
Executive agrees that the nonsolicitation and nondisclosure agreements set forth
above each constitute separate agreements independently supported by good and
adequate consideration shall be severable from the other provisions of, and
shall survive, this Agreement. The existence of any claim or
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cause of action of Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of the covenants of Executive contained in
the nonsolicitation and nondisclosure agreements. If any provision of
this Agreement is held to be illegal, invalid or unenforceable under
present or future laws effective during the term hereof, such provision
shall be fully severable and this Agreement shall be construed and
enforced as if such illegal, invalid or unenforceable provision never
constituted a part of this Agreement; and the remaining provisions of
this Agreement shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added as part of this Agreement,
a provision as similar in its terms to such illegal, invalid or
enforceable provision as may be possible and be legal, valid and
enforceable.
10. ARBITRATION - EXCLUSIVE REMEDY.
(a) The parties agree that the exclusive remedy or method of
resolving all disputes or questions arising out of or relating to this Agreement
shall be arbitration. Arbitration shall be held in Dallas, Texas by three
arbitrators, one to be appointed by the Company, a second to be appointed by
Executive, and a third to be appointed by those two arbitrators. The third
arbitrator shall act as chairman. Any arbitration may be initiated by either
party by written notice ("Arbitration Notice") to the other party specifying the
subject of the requested arbitration and appointing that party's arbitrator.
(b) If (i) the non-initiating party fails to appoint an arbitrator
by written notice to the initiating party within ten days after the Arbitration
Notice, or (ii) the two arbitrators appointed by the parties fail to appoint a
third arbitrator within ten days after the date of the appointment of the second
arbitrator, then the American Arbitration Association, upon application of the
initiating party, shall appoint an arbitrator to fill that position.
(c) The arbitration proceeding shall be conducted in accordance with
the rules of the American Arbitration Association. A determination or award
made or approved by at least two of the arbitrators shall be the valid and
binding action of the arbitrators. The costs of arbitration (exclusive of the
expense of a party in obtaining and presenting evidence and attending the
arbitration and of the fees and expenses of legal counsel to a party, all of
which shall be borne by that party) shall be borne by the Company only if
Executive receives substantially the relief sought by him in the arbitration,
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whether by settlement, award or judgment; otherwise, the costs shall be borne
equally between the parties. The arbitration determination or award shall be
final and conclusive on the parties, and judgment upon such award may be entered
and enforced in any court of competent jurisdiction.
11. MISCELLANEOUS.
(a) NOTICES. Any notices, consents, demands, requests, approvals
and other communications to be given under this Agreement by either party to the
other must be in writing and must be either (i) personally delivered, (ii)
mailed by registered or certified mail, postage prepaid with return receipt
requested, (iii) delivered by overnight express delivery service or same-day
local courier service, or (iv) delivered by telex or facsimile transmission, to
the address set forth below, or to such other address as may be designated by
the parties from time to time in accordance with this Section 11(a):
If to the Company: Xxxx Corporation
000 X. Xxxxxx Xxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxx,
Senior Vice President and
General Counsel
If to Executive: Xxxxxx XxXxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Notices delivered personally or by overnight express delivery service
or by local courier service are deemed given as of actual receipt. Mailed
notices are deemed given three business days after mailing. Notices delivered
by telex or facsimile transmission are deemed given upon receipt by the sender
of the answer back (in the case of a telex) or transmission confirmation (in the
case of a facsimile transmission).
(b) ENTIRE AGREEMENT. This Agreement supersedes any and all other
agreements, either oral or written, between the parties with respect to the
subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect to the subject matter of this
Agreement.
(c) MODIFICATION. No change or modification of this Agreement is
valid or binding upon the parties, nor will any waiver of any term or condition
in the future be so binding, unless the change or modification or waiver is in
writing and signed by the parties to this Agreement.
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(d) GOVERNING LAW AND VENUE. The parties acknowledge and agree that
this Agreement and the obligations and undertakings of the parties under this
Agreement will be performable in Irving, Dallas County, Texas. This Agreement
is governed by, and construed in accordance with, the laws of the State of
Delaware. If any action is brought to enforce or interpret this Agreement,
venue for the action will be in Dallas County, Texas.
(e) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which constitutes an original, but all of which constitutes one
document.
(f) COSTS. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, each party shall bear its own
costs and expenses.
(g) ESTATE. If Executive dies prior to the expiration of the term
of employment or during a period when monies are owing to him, any monies that
may be due him from the Company under this Agreement as of the date of his death
shall be paid to his estate and as when otherwise payable.
(h) ASSIGNMENT. The Company shall have the right to assign this
Agreement to its successors or assigns. The terms "successors" and "assigns"
shall include any person, corporation, partnership or other entity that buys all
or substantially all of the Company's assets or all of its stock, or with which
the Company merges or consolidates. The rights, duties and benefits to
Executive hereunder are personal to him, and no such right or benefit may be
assigned by him.
(i) BINDING EFFECT. This Agreement is binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and permitted assigns.
(j) WAIVER OF BREACH. The waiver by the Company or Executive of a
breach of any provision of this Agreement by Executive or the Company may not
operate or be construed as a waiver of any subsequent breach.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
By: /s/ XXXXXX X. XXXXXXXX 10/25/96
-----------------------------------
Xxxxxx X. XxXxxxxx
XXXX CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXXX 10/30/96
-----------------------------------
Xxxxxxx X. Xxxxxxxxxx
Its: E.V.P.
--------------------------------
Compensation Committee of the Xxxx
Corporation Board of Directors
By: /s/ XXXXXXX X. XXXXXX 10/23/96
-----------------------------------
Xxxxxxx X. Xxxxxx
Its: Chairman
--------------------------------
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