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EXHIBIT 10(f)(3)
EMPLOYMENT AGREEMENT
This is an agreement (the "Agreement") between Xxxxx Equity, Inc. (the
"Company"), a Florida corporation, and Xxxxx X. Xxxxx of Ponte Vedra, Florida
(the "Executive"), dated as of the 18th of February, 1998, to be effective as of
April 1, 1998 (the "Effective Date").
WHEREAS, the operations of the Company require direction and leadership
in a variety of areas, including its financial affairs, corporate development
and strategic planning;
WHEREAS, the Executive has experience and expertise that qualify him to
provide that direction and leadership, and the Company therefore wishes to
employ him as its Executive Vice President and chief financial officer, and he
wishes to accept such employment; and
WHEREAS, the Compensation Committee of the Board of Directors of the
Company and the Board of Directors of the Company have approved this Agreement;
NOW, THEREFORE, the parties agree as follows:
1. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers and the Executive hereby accepts
employment.
2. Term. Subject to earlier termination as provided in Section 5 below,
the term of the Executive's employment hereunder (the "Term of Employment")
shall be a period starting on April 1, 1998 and ending on the third anniversary
of the beginning of the Term of Employment or, if later, the 180th day following
the date on which either the Company or the Executive gives written notice to
the other that he or it is terminating the Term of Employment under this
Agreement. The Term of Employment may be otherwise extended or renewed only by a
written agreement signed by the Executive and an expressly authorized
representative of the Company.
3. Capacity and Performance. During the Term of Employment, the
Executive shall:
(a) serve the Company on a full-time basis as its Executive Vice
President and chief financial officer;
(b) perform such duties and responsibilities on behalf of the Company
as may be designated from time to time by the Board of Directors of the Company
(the "Board") or its chief executive officer to whom the Executive shall report,
consistent with the position of Executive Vice President and chief financial
officer, with executive responsibility for the Company's financial affairs,
including accessing of capital markets and strategic acquisitions and
divestitures;
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(c) devote substantially all of his business time and his best efforts,
business judgment, skill and knowledge exclusively to the advancement of the
business and interests of the Company and to the discharge of his duties and
responsibilities under this Agreement, and he shall not engage in any other
business activity or serve in any industry, trade, professional, governmental or
academic position during the Term of Employment, except (i) service as a
director of business, industry, trade, professional, governmental or academic
organizations which service does not interfere in any material way with the
performance of the Executive's duties and responsibilities hereunder; (ii)
service as a consultant or adviser to those companies specified in the letter
between the Executive and the Company of even date, so long as such service does
not interfere in any material way with the performance of the Executive's duties
and responsibilities hereunder; and (iii) as may otherwise be expressly approved
in writing in advance by the Board or the chief executive officer.
(d) The Company agrees to use its best efforts to cause the election of
the Executive to the Board during the Term of Employment.
4. Compensation and Benefits.
(a) Base Salary. During the Term of Employment, the Company shall pay
the Executive base salary ("Base Salary") at the rate of $200,000 per year,
prorated for any partial period. All Base Salary shall be payable in accordance
with the payroll practices of the Company for its executives and subject to
increase from time to time by the Board (or its Compensation Committee) in its
sole discretion.
(b) Equity.
(i) Stock option. As an inducement to his accepting
employment by the Company, the Company shall grant to the Executive a
ten-year stock option to purchase 125,000 shares of common stock of the
Company at a price per share equal to the fair market value of such
stock on February 18, 1998. Such option is evidenced by a Stock Option
Agreement of even date between the Company and the Executive. The
option shall become exercisable as to 41,667 shares on the first
anniversary of the date of grant, 41,667 shares on the second
anniversary of the Effective Date, and 41,666 shares on the third
anniversary.
The following terms shall apply to the option: (1) in the
event of the Executive's death the entire option shall become fully
vested and immediately exercisable and may be exercised for the entire
period of the option; (2) in the event the Executive's Employment with
the company terminates because of retirement (in accordance with the
Company's Employee Policy Manual), the option shall be exercisable in
accordance with its terms as though the Executive had remained an
employee of the Company; (3) in the event the Executive's employment
with the Company is terminated by the Company for "cause," as defined
in Section 5(b), the option shall immediately terminate; (4) if the
Executive's
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employment is terminated by the Company for any reason other than
cause, the option shall immediately become fully exercisable and shall
remain exercisable in accordance with its terms; (5) if the Executive
voluntarily terminates employment with the Company for reasons other
than those specified in Section 5(e)(i), the option shall immediately
terminate to the extent not then exercisable and shall remain
exercisable to the extent then exercisable for a period of 180 days
(but not longer than it would have been exercisable had he remained an
employee) and shall then terminate; and (6) in the event of a "covered
transaction" (as defined below), the option shall as determined by the
Board either become exercisable in full commencing 30 days prior to the
covered transaction, be canceled in consideration of the issuance of
substitute options of another corporation having substantially
equivalent value and terms or canceled at the closing of such
transaction in consideration of a cash payment equal to the difference
between the exercise price of such options and the consideration paid
for shares of Company common stock in such transaction (valuing any
noncash consideration at fair market value).
(ii) Registration. The grant of options provided for in
subpart (i) of this Section 4(b) and the issuance of stock pursuant to
the exercise of any such options shall be covered by an effective
registration statement of the Company on Form S-8 under the Securities
Act of 1933.
(iii) Covered transaction. The term "covered transaction"
means a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of
substantially all the Company's outstanding capital stock by a single
person or entity or by a group of persons and/or entities acting in
concert or the sale or transfer of substantially all the Company's
assets or a dissolution or liquidation of the Company.
(c) Discretionary Bonuses. The Executive will be considered for
year-end bonuses if the Company performs well, and will be included with the
Chairman and chief executive officer and the President and chief operating
officer for such purpose, but the determination whether or not any such bonuses
will be paid shall be in the sole discretion of the Compensation Committee of
the Board, provided that in the event of the disability or death of Executive or
his termination by the Company other than for Cause, Executive shall be paid an
amount at least equal to a Stipulated Bonus. A Stipulated Bonus shall be equal
to the average bonus paid to Executive in respect of the three years prior to
termination for death, disability or other than for Cause (or such lesser time
as Executive has been employed by the Company), prorated through the date of
termination in the case of death or disability or for the balance of the Term of
Employment in the case of termination other than for Cause (disregarding such
termination).
(d) SERP. As of the Effective Date, the Executive shall become a
participant in the SERP and shall be added to a new Schedule E to the SERP, and
for purposes of determining the Executive's vesting under Section 3.2(a)(i) of
the SERP, the Executive must be employed by the Company for at least three full
years instead of five full years.
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(e) Vacations. During the Term of Employment the Executive shall be
entitled to five weeks of vacation per year, prorated for partial calendar
years, to be taken at such times and intervals as he wishes, subject to the
reasonable business needs of the Company. The Executive shall be entitled to
cash compensation for vacation time not taken only to the extent approved by the
Board.
(f) Other Benefits. During the Term of Employment the Executive shall
be entitled to participate in all employee benefit plans (including insurance
plans) of the Company that cover senior executives of the Company generally. The
Executive's participation shall be subject to (i) the terms of the applicable
plan documents and (ii) generally applicable Company policies. The Company may
alter, modify, supplement or delete its employee benefit plans at any time as it
sees fit, without recourse by the Executive.
(g) Business Expenses. The Company shall pay or reimburse the Executive
for all reasonable, customary business expenses incurred or paid by the
Executive in the performance of the duties and responsibilities of his position,
subject to any restrictions on such expenses set by the Board or in Company
policies and to such reasonable substantiation and documentation as may be
required by the Company. During a transition period commencing on the Effective
Date and ending on the earlier of the first anniversary thereof or the
Executive's relocation to Jacksonville, the Company will pay or reimburse the
Executive for (i) temporary housing in the Jacksonville area, including
utilities and insurance, (ii) a rental automobile, including insurance, and
(iii) air travel (and related ground travel or parking expense) between
Jacksonville and New York.
(h) Relocation Expenses. The Company shall pay or reimburse the
Executive's moving expenses in connection with the relocation of his principal
residence to the Jacksonville area. Payment or reimbursement of all such
expenses shall be subject to such reasonable documentation as may be required by
the Company.
5. Termination of Employment.
(a) Death. Except for obligations under this Agreement which survive
the death of the Executive, if the Executive dies during the Term of Employment,
the Company shall have no further obligations under this Agreement other than to
pay to the Executive's estate Base Salary through the end of the calendar month
of his death, any Stipulated Bonus as provided for herein, and any other
compensation hereunder that has been earned but not paid. The Company agrees to
keep in force during the Term of Employment group life insurance, substantially
equivalent to that in effect generally for the Company's executives on the
Effective Date.
(b) Disability. The Company may terminate the Executive's employment by
written notice in the event that, for any reason, he becomes disabled, either
physically or psychologically, and is unable to perform substantially all of his
duties and responsibilities under this Agreement for 180 days during any period
of 365 consecutive days. Except for obligations
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under this Agreement which survive the death of the Executive, in the event of
such a termination, the Company shall have no further obligations under this
Agreement other than to pay to the Executive Base Salary through the end of the
calendar month of his termination, any Stipulated Bonus as provided for herein,
and any other compensation hereunder that has been earned but not paid. The
Company agrees to keep in force during the Term of Employment group disability
income insurance, substantially equivalent to that in effect generally for the
Company's executives on the Effective Date.
The Executive may, and at the request of the Company shall, submit to a
medical examination by a physician selected by the Company, to whom the
Executive or his duly appointed guardian has no reasonable objection, to
determine whether the Executive is disabled. Such determination shall be
conclusive. If the Executive fails to submit to such medical examination, the
Company's determination of the Executive's disability shall be conclusive.
(c) Termination by the Company for Cause. The Company may terminate the
Executive's employment for Cause at any time upon written notice setting forth
in reasonable detail the nature of the Cause. The following, as determined by
the Board in its reasonable judgment, will constitute Cause:
(i) fraud, embezzlement or other material dishonesty by the
Executive with respect to the Company; or
(ii) the Executive's conviction of, or plea of nolo contendere
to, a felony or other crime involving moral turpitude.
Upon termination of the Executive's employment for Cause, the Company shall have
no further obligations under this Agreement other than to pay to the Executive
any Base Salary and any other amounts that have been earned but not paid.
(d) Termination by the Company Other Than for Cause. The Company may
terminate the Executive's employment hereunder other than for Cause at any time
upon written notice. In the event of such termination, the Company shall:
(i) at the election of the Executive, either continue to pay
Base Salary and any Stipulated Bonus to the Executive during the
remainder of the Term of Employment or pay to him the present value
(using the prime rate as reported in The Wall Street Journal on the
date of termination to calculate the discount factor) of such Base
Salary and any Stipulated Bonus in a lump sum;
(ii) at the election of the Executive, either continue to
contribute to the cost of the Executive's participation in the
Company's medical and life insurance arrangements during the remainder
of the Term of Employment or pay to him in a lump sum the present value
(determined as provided in clause (i) above) of the greater of the
Company's contribution to such cost or the amount required to purchase
individual coverage with
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substantially equivalent benefits if Executive is no longer eligible to
participate in such medical and life insurance arrangements;
(iii) pay to Executive any other compensation hereunder that
has been earned but not paid including any Stipulated Bonus; and
(iv) regardless of whether the termination occurs during or
after the Term of Employment, treat the Executive as having satisfied
the vesting requirements under the SERP and being entitled to his
retirement benefits as described in Section 5.1 of the SERP and the
payment of such benefits shall commence immediately without reduction
under Section 5.3 of the SERP notwithstanding any of the provisions of
the SERP, and with respect to stock options provided for in Section
4(b) hereof such that options which would otherwise become vested
during the full Term of Employment shall become immediately vested upon
such termination and be fully exercisable over the full term of the
options.
The Company shall have no other obligations under this Agreement. The Executive
shall have no obligation to mitigate.
(e) Termination by the Executive.
(i) If the Executive terminates his employment during the
Term of Employment because the Company has breached this Agreement by
failing to pay Base Salary in accordance with Section 4(a) or failing
to pay other compensation or expenses contemplated hereby or because
the Company otherwise commits a material breach of its obligations to
the Executive hereunder (including the Company's not using its best
efforts to cause the Executive to be elected as a director with the
result that the Executive ceases to be a director of the Company
notwithstanding his willingness to serve, assignment of duties and
responsibilities inconsistent with his position, any change in his
permanent place of employment or any other action that is materially
inconsistent with Executive's position as a senior executive and a
director of the Company), the termination shall, for purposes of this
Agreement, be treated as a termination by the Company other than for
Cause and governed by Section 5(d).
(ii) If the Executive terminates his employment with the
Company for any other reason, the Company shall have no further
obligations under this Agreement other than to pay to the Executive any
Base Salary that has been earned but not paid.
(f) Gross-up Payment. The payments and benefits called for by this
agreement are not in any way conditioned on a change of ownership or control of
the Company. The Company intends such payments and benefits to be reasonable
compensation for services rendered by the Executive, and intends that the
Executive receive the full economic benefit of such payments and benefits.
Therefore, in the event that it is determined that any payment or benefit
provided by the
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Company to or for the benefit of Executive, either under this Agreement or
otherwise, will be subject to the excise tax imposed by section 4999 of the
Internal Revenue Code or any successor provision ("section 4999"), the Company
will, prior to the date on which any amount of the excise tax must be paid or
withheld, make an additional lump-sum payment (the "gross-up payment") to
Executive. The gross-up payment will be sufficient, after giving effect to all
federal, state and other taxes and charges (including interest and penalties, if
any) with respect to the gross-up payment, to make Executive whole for all taxes
(including withholding taxes) and any associated interest and penalties, imposed
under or as a result of section 4999.
Determinations under this Section 5(f) will be made by the Company's
independent auditors unless Executive has reasonable objections to the use of
that firm, in which case the determinations will be made by a comparable firm
chosen by Executive after consultation with the Company (the firm making the
determinations to be referred to as the "Firm"). The determinations of the Firm
will be binding upon the Company and Executive except as the determinations are
established in resolution (including by settlement) of a controversy with the
Internal Revenue Service to have been incorrect. All fees and expenses of the
Firm will be paid by the Company.
If the Internal Revenue Service asserts a claim that, if successful,
would require the Company to make a gross-up payment or an additional gross-up
payment, the Company and Executive will cooperate fully in resolving the
controversy with the Internal Revenue Service. The Company will make or advance
such gross-up payments as are necessary to prevent Executive from having to bear
the cost of payments made to the Internal Revenue Service in the course of, or
as a result of, the controversy. The Firm will determine the amount of such
gross-up payments or advances and will determine after resolution of the
controversy whether any advances must be returned by Executive to the Company.
The Company will bear all expenses of the controversy and will gross Executive
up for any additional taxes that may be imposed upon Executive as a result of
its payment of such expenses.
6. Nondisclosure. During the Term of Employment, the Executive may
become aware of information which is nonpublic, confidential or proprietary in
nature with respect to the Company or with respect to other companies, persons,
entities, ventures or business opportunities in which the Company has, or, if it
were disclosed to the Company, the Company might have, an interest
("Confidential Information"). All Confidential Information will be kept strictly
confidential by the Executive and the Executive shall not: (a) copy, reproduce,
distribute or disclose any Confidential Information to any third party except in
the course of his employment by the Company; (b) use any Confidential
Information for any purpose other than in connection with his employment by the
Company; or (c) use any Confidential Information in any way that is detrimental
to the Company.
Confidential Information shall not include information which the
Executive can demonstrate: (a) is or becomes generally available to the public
other than by breach by the Executive of his agreement herein; (b) is disclosed
by the Executive, pursuant to obligations
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under law, regulation or court order; or (c) was prior to the Effective Date, or
thereafter becomes, known to the Executive on a nonconfidential basis.
Upon termination of the Executive's employment, he shall immediately
return or destroy all Confidential Information, including all notes, copies,
reproductions, summaries, analyses, or extracts thereof, then in his possession.
Such return or destruction shall not abrogate the continuing obligations of the
Executive under this Agreement.
In the event that the Executive is requested or required (by
interrogatories, requests for information or documents, subpoena, civil
investigative demand or similar process) to disclose any Confidential
Information, he shall provide the Company with prompt written notice so that it
may seek a protective order or other appropriate remedy. In the event such
protection or other remedy is not obtained, the Executive shall furnish only
that portion of the Confidential Information which he is advised by counsel is
legally required and shall exercise best efforts to obtain assurance that
confidential treatment will be accorded to such Confidential Information.
The Executive agrees that until the expiration of five years from the
date of termination of his employment by the Company, he will not without the
prior written approval of the Company (i) in any manner acquire, agree to
acquire or make any proposal to acquire, directly or indirectly, any securities,
assets or property of the Company or any of its subsidiaries, whether such
agreement or proposal is with the Executive or with a third party, other than
shares of common stock he is entitled to acquire under the terms of this
Agreement or any stock option or other employee benefit plan, (ii) propose to
enter into, directly or indirectly, any merger or other business combination
involving the Company or any of its subsidiaries, (iii) make, or in any way
participate, directly or indirectly, in any "solicitation" of "proxies" (as such
terms are used in the proxy rules of the Securities and Exchange Commission) to
vote, or seek to advise or influence any person with respect to the voting of,
any voting securities of the Company or any of its subsidiaries, (iv) form, join
or in any way participate in a "group" (within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934) with respect to any voting securities of
the other party or any of its subsidiaries, (v) otherwise act, alone or in
concert with others, to seek to control or influence the management, board of
directors or policies of the Company, (vi) disclose any intention, plan or
arrangement inconsistent with the foregoing or (vii) advise, encourage, provide
assistance (including financial assistance) to or hold discussions with any
other persons in connection with any of the foregoing.
The Executive hereby acknowledges that he is aware that the United
States securities laws prohibit any person who has material, nonpublic
information concerning the Company from purchasing or selling securities of the
Company or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell such securities. The obligations of the Executive stated in
this Section 6 shall, except where expressly limited as to time, continue
without limit as to time and without regard to the employment status of the
Executive.
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7. Conflicting Agreements. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which he
is a party or is bound and that he is not now subject to any covenants against
competition or similar covenants that would affect the performance of his
obligations hereunder. The Executive will not disclose to or use on behalf of
the Company any proprietary information of a third party without such party's
consent.
8. Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
9. Cost of Enforcement. The Company shall pay reasonable costs and
expenses (including fees and expenses of counsel) incurred by the Executive in
connection with an action to enforce his rights under this Agreement in which
action the Executive prevails.
10. Indemnification. The Company shall, to the maximum extent permitted
from time to time under the law of the State of Florida, indemnify and upon
request shall advance expenses to the Executive in the event he is or was a
party or is threatened to be made a party to any threatened, pending or
completed action, suit, proceeding or claim, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to be a director, officer or employee of the Company or while a director,
officer or employee is or was serving at the request of the Company as a
director, officer, partner, trustee, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, against expenses (including attorney's fees
and expenses), judgments, fines, penalties and amounts paid in settlement
incurred in connection with the investigation, preparation to defend or defense
of such action, suit, proceeding or claim; provided, however, that the foregoing
shall not require the Company to indemnify or advance expenses to the Executive
in connection with any action, suit, proceeding, claim or counterclaim initiated
by or on behalf of the Executive. The Executive shall be deemed to have met the
standard of conduct required for such indemnification unless the contrary shall
be established. The provisions of this Section 10 shall be in addition to any
right of indemnification to which the Executive may be entitled under the
Company's charter or by-laws, pursuant to any other contract, or by operation of
law.
11. Assignment. Except as provided in this Section 11, neither the
Company nor the Executive may make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written
consent of the other. The Company may without the consent of the Executive
assign its rights and obligations under this Agreement to any wholly-owned
subsidiary of the Company or to any corporation or other business entity into
which the Company has merged or with which it has consolidated or which has
acquired substantially all of the Company's assets, provided that no such
assignment shall relieve the Company of its obligations under this Agreement.
This Agreement shall inure to the benefit of
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and be binding upon the Company and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the subject matter hereof. The
Executive may have other rights and obligations under other agreements,
insurance policies and plans and employee benefit and welfare plans of the
Company, including, without limitation, the SERP.
13. Amendment. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by an expressly authorized
representative of the Company.
14. Governing Law. This is a Florida contract and shall be construed
and enforced under and be governed in all respects by the laws of the State of
Florida.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Executive, as of the date first above written.
XXXXX X. XXXXX XXXXX EQUITY, INC.
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Chairman and Chief Executive
Officer
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