EXHIBIT 10.14
XXXXX CORPORATION LIMITED
c/x Xxxxx Executive Offices
One Canterbury Green 6th Floor
Stamford, CT 06901
February 14, 2003
Xxxxxxxx X. Xxxxxxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxx 00000
Dear Xxx:
On behalf of Xxxxx Corporation Limited (the "COMPANY"), we are all
extremely pleased that you have agreed to serve as Executive Vice President -
Business and Legal Affairs of the Company, effective as soon as practicable, but
not later than March 17, 2003, in accordance with the provisions of this letter
agreement (this "AGREEMENT"), which, along with any employment and other
policies applicable to employees of the Company and its subsidiaries from time
to time during the term of your employment, governs the terms of your
employment.
We and you hereby acknowledge that your employment with the Company
constitutes "at-will" employment and that either party may terminate this
Agreement at any time, upon written notice of termination within a reasonable
period of time before the effective date of the termination. With respect to the
terms of your employment with the Company, you will have the customary duties,
responsibilities and authorities of a executive vice president for business and
legal affairs at a corporation of a similar size and nature, including being
primarily responsible for the global legal matters pertaining to the Company,
the board of directors of the Company (the "BOARD"), all committees of the Board
and all subsidiaries and affiliates of the Company. You will report to the chief
executive officer of the Company.
I. COMPENSATION
With respect to compensation for your services as Executive Vice President
- Business and Legal Affairs of the Company, you will receive the following
compensation and benefits, from which the Company may withhold any amounts
required by applicable law:
(i) The Company will pay you a base salary ("BASE SALARY") at the
rate of U.S. $400,000 per year. This Base Salary will be paid in
accordance with the normal payroll practices of the Company.
(ii) The Company will pay you an annual bonus (the "ANNUAL BONUS")
of 100% of your Base Salary in respect of each fiscal year of the Company
in accordance with the Company's annual incentive compensation plan if the
Company achieves the performance objectives set forth by the Board (the
"BOARD") (or any designated committee thereof) from time to time. The
Annual Bonus shall be approved by the Board and shall be paid on an
all-or-nothing basis.
(iii) You will be eligible to participate in any additional bonus
plans or programs established from time to time by the Board (or any
designated committee thereof) if the Board (or any designated committee
thereof) so determines, which may be based upon the Company's achievement
of designated performance objectives or other factors set forth by the
Board (or any designated committee thereof) from time to time.
(iv) In addition, you will be immediately eligible to participate in
any nonqualified pension plans (with no waiting period) and qualified
plans, if any (subject to applicable waiting periods), in which the senior
executive officers of the Company customarily participate, and, in any
event, you will be eligible (a) to participate in the Company's
Supplemental Executive Retirement Plan and Supplemental Executive Health
Plan, (b) for medical, hospital, dental, vision, life and accidental death
and dismemberment insurance in customary amounts, and (c) to receive
customary financial planning services.
(v) You will be eligible for four (4) weeks vacation annually.
(vi) You will be eligible for a car allowance of $1,400 monthly.
II. SEVERANCE; CHANGE IN CONTROL
If (i) the Company terminates your employment as Executive Vice President
- Business and Legal Affairs without Cause, as defined in Annex A, or (ii) you
terminate your employment for Good Reason, as defined in Annex A, the Company
will pay you an amount equal to one and one-half (1 -1/2) times your Annualized
Total Compensation (as defined below), subject to the execution by you of a
customary release, which amount shall be payable in equal installments over the
eighteen (18) month period following the date your employment with the Company
is terminated (the "TERMINATION DATE"). The Company will also provide to you a
continuation of all benefits, including automobile and other related benefits,
if any, which you were eligible to receive immediately prior to such
termination, for a period of eighteen (18) months following the Termination
Date.
"ANNUALIZED TOTAL COMPENSATION" means Base Salary plus Annual Bonus (as if
all necessary targets and objectives were met) for one year at the rate in
effect immediately before the Termination Date. For purposes of calculating
Annualized Total Compensation in connection with this Section II, Annual Bonus
shall be computed at a rate no less than the Annual Bonus rate set forth in
Section I(ii) hereof.
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If the Company terminates your employment without Cause, or if you
terminate your employment for Good Reason, following a Change in Control, as
defined in Annex A, such amount will be increased to three times rather than one
and one-half times Annualized Total Compensation and, if applicable, you will be
entitled to receive Gross-Up Payments as described in Annex B. Any termination
by the Company without Cause or termination by you for Good Reason, which takes
place within six (6) months prior to a Change in Control, shall be,
presumptively, a termination following a Change in Control. Upon any termination
by the Company without Cause or termination by you for Good Reason, all
outstanding stock options, grants, restricted stock awards or other equity
grants issued to you will vest 100% immediately either as of the Termination
Date (in the case of a termination by the Company without Cause or a termination
by you for Good Reason) or prior to the Change in Control becoming effective
(solely in the event that upon or in connection with such Change in Control your
employment with the Company is terminated without Cause or you terminate your
employment for Good Reason), as applicable. The payments under this paragraph
are in lieu of any notice requirements of any Canadian federal or provincial
law.
In the event of any termination of your employment, you agree to resign as
an officer and director of the Company and its subsidiaries and affiliates. Your
rights of indemnification under the Company's and its subsidiaries' and
affiliates' organizational documents, any plan or agreement at law or otherwise
and your rights thereunder to director's and officer's liability insurance
coverage for, in both cases, actions as an officer and director of the Company
and its affiliates shall survive any termination of your employment.
In addition, effective immediately, you will be granted a restricted stock
award of 75,000 common shares, no par value, of the Company ("COMMON SHARES") to
be issued under the Company's stock option plan or long term incentive plan or
in accordance with Canadian law or regulation (the "INITIAL GRANT"). All
restricted Common Shares in the Initial Grant shall vest 25% per year over four
(4) years beginning on the first anniversary of the date the restricted stock
award is granted and then on each succeeding anniversary of the date the
restricted stock award is granted provided you are then employed. Each year, you
will also be considered by the Board or the applicable committee thereof to
receive additional incentive compensation under the Company's incentive plans as
may be in effect from time to time after the date of this Agreement.
III. GENERAL
You agree (i) that at all times both during and after your employment, you
will respect the confidentiality of Company's and its subsidiaries' and
affiliates' confidential information and will not disparage the Company and its
subsidiaries and affiliates or their officers, directors or employees, and (ii)
during your employment and for eighteen (18) months thereafter, you will not (a)
accept a position with, or provide material services to, an entity that competes
with a portion of the Company's business representing more than $25 million of
the Company's revenues on the date of your departure, (b) solicit or hire,
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or assist others in the solicitation or hiring of, the Company's employees or
(c) interfere with the Company's business relationships with any material
customers or suppliers.
All notices or communications under this Agreement must be in writing,
addressed; (i) if to the Company, to the attention of the Chief Executive
Officer at the principal executive offices of the Company from time to time and
(ii) if to you, at your address first written above (or to any other addresses
as either party may designate in a notice duly delivered as described in this
paragraph). Any notice or communication shall be delivered by facsimile (with
proof of transmission), by hand or by courier (with proof of delivery). Notices
and communications may also be sent by certified or registered mail, return
receipt requested, postage prepaid, addressed as above. Notice shall be
effective upon the actual receipt of notice by the recipient thereof.
Any controversy or claim arising out of or relating to this Agreement or
the breach of this Agreement that cannot be resolved by you and the Company,
including any dispute as to the calculation of any payments hereunder, and the
terms of this Agreement, shall be determined by a single arbitrator in New York,
New York, in accordance with the rules of the American Arbitration Association.
The decision of the arbitrator shall be final and binding and may be entered in
any court of competent jurisdiction. The arbitrator may award the party he
determines has prevailed in the arbitration any legal fees and other fees and
expenses that may be incurred in respect of enforcing its respective rights
under this Agreement. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York.
This Agreement sets forth the entire agreement between us with respect to
the matters set forth herein, and fully supersedes any prior agreements or
understandings between us. This Agreement may be executed in counterparts. This
Agreement may not be modified or terminated orally.
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If the foregoing terms and conditions are acceptable and agreed to by you,
please sign on the line provided below to signify such acceptance and agreement
and return the executed copy to the Chief Executive Officer of the Company, One
Canterbury Green, Stamford, Connecticut 06901.
XXXXX CORPORATION LIMITED
By: /s/ Xxxx X. Xxxxxxxx
-----------------------
Name:
Title:
Accepted and Agreed as of this 14th day of February, 2003
/s/ Xxxxxxxx X. Xxxxxxxxxx
---------------------------
Xxxxxxxx X. Xxxxxxxxxx
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ANNEX A
DEFINITIONS
a. "CAUSE" means (i) the willful and continued failure of Executive to
perform substantially his duties with the Company (other than any such failure
resulting from Executive's incapacity due to physical or mental illness or any
such failure subsequent to Executive being delivered a notice of termination
without Cause by the Company or delivering a notice of termination for Good
Reason to the Company) after a written demand for substantial performance is
delivered to Executive by the Chief Executive Officer or the Board that
specifically identifies the manner in which the Chief Executive Officer or the
Board believes that Executive has not substantially performed Executive's
duties, (ii) the willful engaging by Executive in conduct which is demonstrably
and materially injurious (monetarily or otherwise) to the business, reputation,
character or community standing of the Company or its subsidiaries and
affiliates, (iii) conviction of or the pleading of nolo contendere with regard
to, a felony or any crime involving fraud, dishonesty or moral turpitude, or
(iv) refusal or failure to attempt in good faith to follow the written direction
of the Chief Executive Officer or the Board (provided that such written
direction is consistent with Executive's duty and station) promptly upon receipt
of such written direction. A termination for Cause after a Change in Control
shall be based only on events occurring after such Change in Control; provided,
however, the foregoing limitation shall not apply to an event constituting Cause
which was not discovered by the Company prior to a Change in Control. For
purpose of this paragraph (a), no act or failure to act by Executive shall be
considered "willful" unless done or omitted to be done by Executive in bad faith
and without reasonable belief that Executive's action or omission was in the
best interests of the Company or its subsidiaries and affiliates. Any act, or
failure to act, based upon authority given pursuant to a resolution duly adopted
by the Board or based upon the advice of the Company's principal outside counsel
shall be conclusively presumed to be done, or omitted to be done, by Executive
in good faith and in the best interests of the Company.
b. "CHANGE IN CONTROL" means the occurrence of any one of the following
events:
(i) individuals who, on the date of this Agreement, constitute the
Board (the "INCUMBENT DIRECTORS") cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a
director subsequent to the date of this Agreement, whose election or
nomination for election was approved by a vote of at least two-thirds of
the Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as
a result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board
shall be deemed to be an Incumbent Director;
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ANNEX A
(ii) any "person" (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the "EXCHANGE ACT") and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or
more of the combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board (the "COMPANY
VOTING SECURITIES"); provided, however, that the event described in this
paragraph (ii) shall not be deemed to be a Change in Control by virtue of
any of the following acquisitions: (A) by the Company or any subsidiary,
(B) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities,
or (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii));
(iii) the consummation of an arrangement, amalgamation, merger,
consolidation, statutory share exchange or similar form of corporate
transaction involving the Company or any of its Subsidiaries that requires
the approval of the Company's stockholders, whether for such transaction
or the issuance of securities in the transaction (a "BUSINESS
COMBINATION"), unless immediately following such Business Combination: (A)
more than 50% of the total voting power of (x) the corporation resulting
from such Business Combination (the "SURVIVING CORPORATION"), or (y) if
applicable, the ultimate parent corporation that directly or indirectly
has beneficial ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the "PARENT CORPORATION"),
is represented by Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same proportion as the
voting power of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (B) no person (other than
any employee benefit plan (or related trust) sponsored or maintained by
the Surviving Corporation or the Parent Corporation), is or becomes the
beneficial owner, directly or indirectly, of 35% or more of the total
voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) other than persons set forth in
(A) through (D) of paragraph (ii) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there
is no Parent Corporation, the Surviving Corporation) following the
consummation of the Business Combination were Incumbent Directors at the
time of the Board's approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which
satisfies all of the criteria specified in (A), (B) and (C) above shall be
deemed to be a "NON-QUALIFYING TRANSACTION");
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ANNEX A
(iv) the closing of a sale of all or substantially all of the
Company's assets, other than to an entity or in a manner where the voting
securities immediately prior to such sale represent directly or indirectly
after such sale at least 50% of the voting securities of the entity
acquiring such assets in approximately the same proportion as prior to
such sale; or
(v) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 35% of the Company Voting Securities as a result of the acquisition
of Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.
c. "GOOD REASON" means, without Executive's express written consent, the
occurrence of any of the following events:
(i) a change in the Executive's duties or responsibilities
(including reporting responsibilities) that taken as a whole represents a
material and adverse diminution of the Executive's duties,
responsibilities or status with the Company (other than a temporary change
that results from or relates to the incapacitation of the Executive due to
physical or mental illness);
(ii) a reduction by the Company in Executive's rate of annual base
salary or annual target bonus opportunity (including any material and
adverse change in the formula for such annual bonus target) as the same
may be increased from time to time;
(iii) any requirement of the Company that Executive's office be more
than seventy-five (75) miles from Bannockburn, Illinois; or
(iv) any material breach of the Agreement by the Company.
In addition, upon a change in the Company's chief executive officer, the
Executive and the Company's new chief executive officer shall endeavor
reasonably and in good faith to agree mutually upon the Executive's continued
role with the Company. If the Executive and the Company's new chief executive
officer cannot mutually agree upon the Executive's continued role with the
Company and the Company's chief executive officer on the date of this Agreement
no longer has a continuing role with the Company as a senior executive officer
or the Company's non-executive chairman, such occurrence shall constitute "Good
Reason".
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ANNEX A
Notwithstanding the foregoing, a Good Reason event shall not be deemed to
have occurred if the Company cures such action, failure or breach within ten
(10) days after receipt of notice thereof given by Executive. Executive's right
to terminate employment for Good Reason shall not be affected by Executive's
incapacities due to mental or physical illness and Executive's continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any event or condition constituting Good Reason; provided, however, that
Executive must provide notice of termination of employment within ninety (90)
days following Executive's knowledge of an event constituting Good Reason or
such event shall not constitute Good Reason under this Agreement.
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ANNEX B
GROSS-UP PAYMENTS
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment, award, benefit or distribution
(or any acceleration of any payment, award, benefit or distribution) by the
Company (or any of its affiliated entities) or any entity which effectuates a
Change in Control (or any of its affiliated entities) to or for the benefit of
Executive (whether pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Annex
B) (the "PAYMENTS") would be subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "CODE"), or any interest
or penalties are incurred by Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "EXCISE TAX"), then the Company shall pay to
Executive an additional payment (a "GROSS-UP PAYMENT") in an amount such that
after payment by Executive of all taxes (including any Excise Tax) imposed upon
the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payments. For purposes of determining the
amount of the Gross-up Payment, the Executive shall be deemed to (i) pay federal
income taxes at the highest marginal rates of federal income taxation for the
calendar year in which the Gross-up Payment is to be made, and (ii) pay
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. Notwithstanding the foregoing provisions of this
Annex B, if it shall be determined that Executive is entitled to a Gross-Up
Payment, but that the Payments would not be subject to the Excise Tax if the
Payments were reduced by an amount that is less than 10% of the portion of the
Payments that would be treated as "parachute payments" under Section 280G of the
Code, then the amounts payable to Executive under this Agreement shall be
reduced (but not below zero) to the maximum amount that could be paid to
Executive without giving rise to the Excise Tax (the "SAFE HARBOR CAP"), and no
Gross-Up Payment shall be made to Executive. The reduction of the amounts
payable hereunder, if applicable, shall be made by reducing first the payments
under Section I(a)(ii), unless an alternative method of reduction is elected by
Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only
amounts payable under this Agreement (and no other Payments) shall be reduced.
If the reduction of the amounts payable hereunder would not result in a
reduction of the Payments to the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision.
(b) Subject to the provisions of paragraph (a) of this Annex B, all
determinations required to be made under this Annex B, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the
reduction of the Payments to the Safe Harbor Cap and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Change in Control (the "ACCOUNTING FIRM") which shall provide detailed
supporting calculations both to the Company and
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ANNEX B
Executive within fifteen (15) business days of the receipt of notice from the
Company or the Executive that there has been a Payment, or such earlier time as
is requested by the Company (collectively, the "DETERMINATION"). In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, Executive may appoint another
nationally recognized public 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 and the Company shall enter into any agreement reasonably
requested by the Accounting Firm in connection with the performance of the
services hereunder. The Gross-up Payment under this Annex B with respect to any
Payments shall be made no later than thirty (30) days following such Payment. If
the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion to such effect, and to the effect
that failure to report the Excise Tax, if any, on Executive's applicable federal
income tax return will not result in the imposition of a negligence or similar
penalty. In the event the Accounting Firm determines that the Payments shall be
reduced to the Safe Harbor Cap, it shall furnish Executive with a written
opinion to such effect. The Determination by the Accounting Firm shall be
binding upon the Company and Executive, except as provided below. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the Determination, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("UNDERPAYMENT") or Gross-up
Payments are made by the Company which should not have been made
("OVERPAYMENT"), consistent with the calculations required to be made hereunder.
In the event that the Executive thereafter is required to make payment of any
Excise Tax or additional Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall
be promptly paid by the Company to or for the benefit of Executive. In the event
the amount of the Gross-up Payment exceeds the amount necessary to reimburse the
Executive for his Excise Tax, the Accounting Firm shall determine the amount of
the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2) of the Code) shall be
promptly paid by Executive (to the extent he has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company. Executive shall cooperate, to the extent his
expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax and the Executive shall permit the
Company to control issues related to the Excise Tax (at its expense) to permit a
representative of the Company to accompany the Executive to any conference with
any taxing authority and to promptly deliver to the Company copies of any
written communications and summaries of any verbal communications with any
taxing authority regarding the Excise Tax.
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