EXHIBIT 10.1
EMPLOYMENT AND CONSULTING AGREEMENT
THIS EMPLOYMENT AND CONSULTING AGREEMENT (this "Agreement") is made and
entered into as of July ___, 2002 (the "Effective Date") by and among XXXXXXX &
XXXXXX CORPORATION, a Delaware corporation (the "Corporation"), XXXXXXX & XXXXXX
PRODUCTS CO., a Delaware corporation (the "Company") and XXXXXX X. XXXXXXX
("Employee").
WITNESSETH:
WHEREAS, the Company wishes to retain Employee's services by providing
Employee the compensation and benefits set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties agree as follows:
1. Term of Employment and Consulting.
(a) Employment Term. The Company hereby agrees to employ the Employee,
and the Employee hereby accepts employment for the period commencing on the date
hereof and ending on December 31, 2003, unless sooner terminated pursuant to
paragraph 6 below (the "Employment Term").
(b) Consulting Term. From the period beginning at the end of the
Employment Term and ending on June 30, 2005 ("Consulting Term"), the Company
shall retain Employee as a consultant to the Company and Employee shall provide
consulting services regarding discontinued operations of the Company
("Consulting Services") to the Company from time to time at the reasonable
request of the Company. The Consulting Services requested by the Company shall
not interfere with any full-time employment that the Employee might have with
another employer, and the Consulting Services shall be advisory and general in
nature. The Employee shall not be required to spend any minimum time providing
the Consulting Services, and the Employee shall not be required to report to any
of the Company's offices.
2. Position of Employment. During the Employment Term, Employee shall
be employed in the position of Senior Vice President, General Counsel and
Secretary of the Corporation, the Company and their affiliates and shall perform
such usual services of the position for the Corporation, the Company and its
affiliates as may be assigned to him from time to time by the Chairman or the
Board of Directors of the Company. However, at any time during the Employment
Term, the Company may give the Employee thirty (30) days prior written notice
that for the remainder of the Employment Term the Employee shall render services
relating to discontinued operations of the Company or other issues as directed
by the Chief Financial Officer. At such time, Employee's title shall become
Senior Vice President - Law of the Corporation, Company and their affiliates,
and he shall report to the Chief Financial Officer of the Company or any other
executive officer as directed by the Chief Executive Officer. The location of
Employee's employment and office during the Employment Term shall be in
Charlotte, North Carolina. At all times during the Employment Term, the Employee
shall receive all of the base salary, bonus payments, benefits, perquisites and
expenses as set forth in paragraphs 3, 4 and 5 below regardless of which title
Employee shall have.
3. Compensation.
(a) Base Salary. The Company shall pay to Employee a base salary at an
annual rate not less than $236,200 during the Employment Term. Such amount shall
be reviewed annually by the Chairman and Chief Executive Officer of the Company
and may be increased in his sole discretion.
(b) Bonus Plan. Employee shall receive a payment in the amount of
$66,600 in July or August 2002 as previously acknowledged by the Company. During
the Employment Term, Employee shall participate in the Company's annual
Executive Incentive Compensation Plan (the "EIC Plan") in accordance with the
applicable provisions of the EIC Plan. The standard bonus under the EIC Plan
shall be forty percent (40%) of Employee's base salary; provided however
notwithstanding any provision of the EIC Plan to the contrary, the Employee
shall receive a bonus each year for 2002 and 2003 of not less than $94,480 per
year, payable no later than April 1, 2003 and April 1, 2004 respectively.
4. Benefits and Perquisites.
(a) General. During the Employment Term and Consulting Term, Employee
shall receive such benefits and perquisites, and participate in such pension,
profit sharing and benefit plans as are made available to executives of the
Company as of the Effective Date, including but not limited to major medical,
extended medical and disability insurance, automobile gas charges, group term
life insurance and annual holidays, sick days, and vacation time and indemnities
and insurance coverages of no less scope or amounts than the current practice of
Corporation and Company applicable to Employee as an employee, officer or
attorney of Corporation, Company or their subsidiaries or affiliates and
applicable to Employee in the same scope and amounts as a consultant thereto. In
addition, the Company shall pay to the Employee during the Employment Term and
Consulting Term a net annual amount of $20,000 in equal monthly payments, and
shall pay all taxes necessary to gross up such amount consistent with current
practice (the "Perq Account").
(b) Stock Options. Pursuant to the Corporation's 2002 Employee Stock
Option Plan, the Corporation shall grant to Employee, immediately after approval
of such 2002 plan at the annual stockholders meeting in 2002 and the 1 for 2.5
reverse split of the Corporation's common stock, options to purchase 60,000
underlying shares of the Corporation's common stock at $10.00 per share (the
"Options"). Thirty thousand (30,000) Options shall vest on January 1, 2003 and
thirty thousand (30,000) Options shall vest on January 1, 2004. The remaining
unvested shares pursuant to the option grant to Employee in October 1999 shall
vest in October 2002 as previously agreed. Additionally, all stock options
previously granted to Employee under the Corporation's 1993 and 1994 Employee
Stock Option Plans, whether or not vested, shall be repriced to $10 per share if
the option price at the time of repricing is above $10 (based upon the
post-reverse split prices) at the same time in 2002 that repricing of such stock
options granted to other Company executives occurs. All stock options granted to
Employee under the 1993, 1994 and 2002 Employee Stock Option Plans of the
Corporation shall remain fully exercisable by the Employee for the full ten (10)
year term of each such grant (except for the option grant on 60,000 underlying
shares described in this paragraph 4(b) which shall remain fully exercisable by
the Employee until June 11, 2010) and all underlying shares shall be subject to
sale by Employee at any time on or after exercise, notwithstanding any provision
of any stock option plan, or stock option agreement or any other agreement with
Employee to the contrary.
(c) SRIP Payments and Retirement Benefits. Employee is a participant in
the Company's Supplemental Retirement Income Plan (the "SRIP"). In addition to
the benefits and payments to which Employee is entitled under the Company
pension, profit sharing and shadow retirement plans and any other entitlement,
payment or benefit vested or due Employee, and notwithstanding any provision of
the SRIP to the contrary, at the end of the Consulting Term, regardless of
whether a prior termination pursuant to paragraph 6 has taken place, Employee
shall be considered as having satisfied the requirements for "Retirement" under
the SRIP, and for purposes of determining the amount of Employee's benefits
under the SRIP, Employee shall be credited with twenty (20) "Years of Service"
and $330,680 of "Total Annual Compensation" under the SRIP. The annual payments
Employee and his spouse shall receive under the SRIP shall be actuarially
determined and agreed upon in writing by
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Employee and the Company, in accordance with the terms and conditions of the
SRIP as of the Effective Date. Employee shall be eligible to commence his SRIP
benefits and all other benefits and entitlements which retiring Company
executives are eligible to receive at any time at or after the end of the
Consulting Term. The benefits, entitlements and payments described in this
paragraph 4(c) shall be payable to and received by Employee and his spouse
notwithstanding any termination or amendment after the Effective Date of the
SRIP or any other relevant benefits, entitlements or payments.
5. Reimbursement of Expenses. During the Employment Term and the
Consulting Term, the Company shall reimburse Employee for all reasonable travel,
entertainment and other reasonable business expenses reasonably incurred by
Employee in connection with the performance of his duties hereunder, provided
that Employee furnishes to the Company adequate records or other evidence
respecting such expenditures.
6. Termination of Employment. Employee's employment under this
Agreement may be terminated prior to the expiration of the Employment Term only
as follows:
(a) by the Company upon Employee's death (which shall be referred to as
a "Death Termination") or Employee's physical or mental disability for any
consecutive six-month period (measured from the first date on which Employee is
absent from work due to such disability to the same date in the sixth succeeding
calendar month, or, if there is no such date or such date is not a business day,
the next succeeding business day) (which shall be referred to as an "Disability
Termination");
(b) by the Company at any time for any reason upon 45 days written
notice to Employee (which shall be referred to as a "Company Termination");
(c) by Employee at any time for any reason upon 45 days written notice
to the Company other than a "Constructive Termination" (which shall be referred
to as an "Employee Termination"), or
(d) by Employee within 30 days after the occurrence of one or more of
the following: (i) a reduction in Employee's total compensation and benefits
package, (ii) an adverse change (in the judgment of Employee) in Employee's
responsibilities, position (including status, office, title, reporting
relationships or working conditions), authority or duties, or (iii) a Company
requirement that the Employee relocate from Charlotte, North Carolina (any of
which shall be referred to as a "Constructive Termination"); provided, however,
no event or circumstance described in clause (i) or (ii) shall give rise to a
"Constructive Termination" for purposes of this Agreement unless Employee shall
have given notice to the Company of Employee's determination of the occurrence
of an event or circumstance described in clause (i) or (ii), and such event or
circumstance shall be continuing as of the end of 10 days after the giving of
such notice.
7. Benefits Upon Termination.
(a) Termination as a Result of Death, Disability or Employee
Termination. If Employee's employment under this Agreement is terminated prior
to the expiration of the Employment Term as a result of a Death Termination, a
Disability Termination or an Employee Termination, the Company shall pay
Employee or, if applicable, Employee's estate or legal representative, (i)
Employee's unpaid base salary under paragraph 3(a) accrued to the date on which
his employment terminates, if applicable, (ii) any accrued but unused vacation,
if applicable, and (iii) all vested and accrued benefits earned by Employee
under any employee benefit plans and programs sponsored by the Company in which
Employee participates; (iv) an amount equal to Employee's standard annual bonus
under paragraph 3(b) prorated through the termination date; (v) all outstanding
stock options granted to Employee under the
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Corporation's stock option plans will immediately vest, including the grant set
forth in paragraph 4(b) and will continue to be fully exercisable by the
Employee for the full ten (10) year term of each such grant (except for the
option grant on 60,000 underlying shares described in paragraph 4(b) which shall
remain fully exercisable by the Employee until June 11, 2010), and all
underlying shares shall be subject to sale by Employee at any time on or after
exercise, notwithstanding any provision of any stock option plan, or stock
option or any other agreement with Employee to the contrary; and (vi) the
payments, entitlements and benefits, including but not limited to SRIP benefits
and payments, described in paragraph 4(c).
(b) Company Termination or Constructive Termination. If Employee's
employment under this Agreement is terminated prior to the expiration of the
Employment Term as a result of a Company Termination or a Constructive
Termination, the Company shall pay and provide to Employee the following
benefits:
(i) Employee's base salary through December 31, 2003;
(ii) an amount equal to Employee's unpaid bonuses payable
under paragraph 3(b) through December 31, 2003;
(iii) continued participation in, and payments pursuant to the
benefits, perquisites and expenses described in paragraphs 4(a) and 5
through June 30, 2005; and
(iv) all of the payments, entitlements and benefits referenced
in paragraph 7(a) (i-vi).
(c) Method of Payment. All cash amounts due to Employee pursuant to
paragraph 7 above relating to salary, bonus, accrued vacation and the Perq
Account shall be paid in a lump sum no later than 60 days after the termination
date.
8. Covenants of Employee.
(a) Non-disparagement. Employee shall at all times refrain from taking
any action or making any statements, written or oral, which are intended to and
do disparage the goodwill or reputation of the Company or any of its
subsidiaries or affiliates or any directors or officers thereof or which could
adversely affect the morale of employees of the Company or its subsidiaries.
(b) Cooperation. During Employee's employment by the Company and
thereafter, Employee shall promptly notify the Company of any threatened,
pending or contemplated investigation, claim, action, suit or proceeding,
whether civil, criminal, administrative or investigative ("Proceeding"), in
which he may be involved, whether as an actual or potential party or witness or
otherwise, or with respect to which he may receive requests for information, by
reason of his future, present or past association with the Company or any of its
subsidiaries or affiliates. Employee shall cooperate fully with the Company and
its subsidiaries and affiliates in connection with any Proceeding at no expense
to the Company or any of its subsidiaries or affiliates other than the
reimbursement of Employee's reasonable out-of-pocket expenses. Employee shall
not disclose any confidential or privileged information in connection with any
Proceeding without the consent of the Company and shall give prompt notice to
the Company of any request therefor.
9. Mutual Release. In consideration of the promises, payments and
services exchanged pursuant to this Agreement, Employee and the Company and the
Corporation, on their behalf and on behalf of their affiliates, parents,
officers, directors, employees, stockholders, bondholders, agents,
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representatives, attorneys, successors and assigns (collectively "Company
Releasors") hereby unconditionally release and covenant not to xxx the other and
their respective subsidiaries and affiliates and directors, officers, employees,
successors, heirs, assigns, and stockholders, from any and all claims,
liabilities, costs and obligations of any nature in any way relating to
Employee's employment, the work performed by Employee during such employment,
including but not limited to acts and omissions as an officer, attorney,
employee, signatory or representative in regard to the Corporation or the
Company or to any parent, affiliate, subsidiary or formerly owned business or
company, any Consulting Services or the termination of Employee's employment
including, without limitation, any claims arising out of alleged legal
restrictions on the Company's right to terminate its employees, such as any
implied contract of employment or termination contrary to public policy. The
Company, Corporation and Employee shall be required to provide written
confirmation of such release and covenant not to xxx upon the completion of the
Consulting Term. The foregoing release does not apply to any claims, rights,
liabilities, costs or obligations arising out of or in any way relating to this
Agreement, including but not limited to any indemnities or insurance coverages
which are or have been applicable to Employee as an employee, officer,
consultant or attorney of the Corporation, Company or any subsidiary or
affiliate thereof, at any time during Employee's employment or consulting or in
any way relating to any claims for benefits under employee benefit plans,
programs or arrangements or any other payments, benefits or entitlements vested
or due to Employee.
10. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the laws of Michigan, regardless of the laws that
might be applied under applicable principles of conflicts of laws.
11. Entire Agreement. This Agreement constitutes the entire agreement
and understanding between the parties hereto with respect to the matters
referred to herein and supersedes all prior agreements and understandings
between the parties hereto with respect to the matters referred to herein.
12. Notice. Any written notice required to be given by one party to the
other party hereunder shall be deemed effective if mailed by certified or
registered mail, if delivered personally or if sent by a reputable overnight
courier:
To the Company: Xxxxxxx & Xxxxxx Products Co.
000 Xxxxxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx
Senior Vice President, Human Resources
To Employee: Xx. Xxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
13. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their personal representatives
and heirs, and, in the case of the Company, the Corporation and their
affiliates, successors and assigns, and paragraph 9 shall also inure to the
benefit of the other persons and entities identified therein; provided, however,
that Company or Corporation shall not, without the prior written consent of
Employee, transfer, assign, convey, pledge or encumber this Agreement or any
interest under this Agreement. unless such assignment is made to a financially
solvent company which purchases substantially all of the assets of Corporation
or Company and which agrees in writing to assume and to perform and fulfill all
of the obligations to Employee under this Agreement.
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14. Amendment. This Agreement may be amended or canceled only by an
instrument in writing duly executed and delivered by each party to this
Agreement.
15. Indemnification. The Company and Corporation shall defend,
indemnify and hold harmless the Employee from all claims, costs and liabilities
relating to the Company or Corporation or their subsidiaries or affiliates
and/or the Employee's position with, or employment by the Company or Corporation
or Consulting Services and to all matters subject to the release and covenant
not to xxx in paragraph 9 above to the fullest extent permitted by applicable
law, including the current payment of any legal fees or other costs incurred by
the Employee, as well as any claim or allegation of any third party relating to
any acts or omissions of Employee in any way relating to his employment the
subject mater of this indemnification or any matter subject to the release and
covenant not to xxx in paragraph 9 above.
16. Guarantee. The Corporation and the Company on behalf of their
subsidiaries and affiliates hereby guarantee the payment and performance of all
obligations of the Company and the Corporation under this Agreement. No
assignment pursuant to the terms of paragraph 13 above shall affect the validity
or enforceability of this guarantee against the Corporation or the Company or
any subsidiary or affiliate thereof.
17. Survival of Agreement. The provisions of paragraphs 4, 7, 8, 9, 10,
11, 12, 13, 15 and 16 shall survive any termination or expiration of this
Agreement.
18. Headings. Headings contained in this Agreement are for or
convenience only and shall not limit this Agreement or affect the interpretation
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
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Xxxxxx X. Xxxxxxx
XXXXXXX & XXXXXX CORPORATION
XXXXXXX & XXXXXX PRODUCTS CO.
By:
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Xxxxxx X. Xxxxx, Chairman and Chief
Executive Officer
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