EXHIBIT 10.149
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of March 31, 1995 by and
between The Xxxxxxx Xxxxxx Corporation, a Delaware Corporation (hereinafter
referred to as the "Company"), and Xxxxxxx X. Xxxxxx, an individual (hereinafter
referred to as the "Executive") effective March 31, 1995.
WITNESSETH:
WHEREAS, the Company desires to reward the Executive for his continuing
contribution to the Company and provide additional security for the Executive
and to provide an inducement to the Executive to remain with the Company and not
to engage in competition with it.
NOW THEREFORE, in consideration of the mutual obligations herein
contained, the parties hereto, intending to be legally bound hereby, covenant
and agree as follows:
1. EMPLOYMENT
(a) The Company hereby employs the Executive to render services to the
Company in the positions of Chairman of the Board and Chief
Executive Officer, in the capacity defined in the By-laws of the
Company, as may be amended from time to time. The Executive shall
perform such duties commensurate with his position and shall have
full authority and responsibility, subject to the control of the
Board of Directors, for the overall strategic direction,
management, and leadership of the Company.
(b) Throughout the term of this Agreement, the Executive shall devote
his full business time and undivided attention to the business and
affairs of the Company and its subsidiaries, except for reasonable
vacations and except for illness or incapacity, but nothing in the
Agreement shall preclude the Executive from devoting reasonable
periods required for serving, as appropriate, on Boards of
Directors of other companies, and from engaging in charitable and
public service activities provided such activities do not
materially interfere with the performance of his duties and
responsibilities under this Agreement.
2. TERM
This Agreement shall commence on March 31, 1995, and shall continue
through March 31, 2000, subject to the terms and conditions herein set
forth. Beginning on March 31, 1996, and on each subsequent anniversary
of this date, one year shall be added to the term of the Agreement,
unless, prior to such anniversary, the Company or the Executive has
notified the other party hereto that such extension will not become
effective.
3. COMPENSATION
For services rendered by the Executive during the term of this
Agreement, and for his performance of all additional obligations of
employment, the Company agrees to pay the Executive and the Executive
agrees to accept the following salary, other compensation, and
benefits:
(a) Base Salary. During the term of this Agreement, the Company shall
pay the Executive in periodic installments, a base salary at the
annual rate of $800,000, such base salary to be reviewed on March
31, 1996, and on each subsequent anniversary, taking into account,
among other things, individual performance, competitive practice,
and general business conditions.
(b) Annual Incentive. In addition to the base salary provided in
Section 3(a) above, the Executive shall be eligible to receive an
annual incentive award based upon the Company's attainment of
pre-established performance targets relative to specified
performance standards. The performance standards upon which annual
incentive payments will be earned shall be defined to include
consolidated pretax profit margin (defined as net income before
taxes, divided by net revenue) and annual net revenue percentage
growth of the Company.
For each fiscal year during the term of this Agreement, the
Executive's incentive opportunity shall be computed as the amount
of total cash compensation earned pursuant to the formula-based
matrix, which shall be adopted each year by the Compensation
Committee of the Board of Directors of the Company, minus the
Executive's actual base salary paid during that year. For the 1995
fiscal year, the target total annual cash compensation amount
(including base salary) is $3,500,000; therefore, the incentive
target is $2,700,000 for achieving specified pretax profit margin
and revenue growth objectives.
The formula-based matrix, as amended at the sole discretion of the
Board of Directors, shall be the sole basis for determining the
Executive's annual incentive award. For each calendar year for
which this Agreement is in effect, beginning with the calendar
year 1996, the interior values in the formula-based matrix shall
be increased by a fraction, based on the U.S. Consumer Price Index
(for all consumers, as published by the Bureau of Labor
Statistics); provided that no interior value shall be increased
above $12 million. The fractional increase shall be the CPI for
that year divided by the CPI for calendar year 1995. The
Compensation Committee of the Board shall annually review and
approve the performance standards and targets with respect to the
Executive's incentive opportunity, which review and approval shall
be completed no later than the 90th day of the Company's fiscal
year for which such incentive opportunity may be earned.
(c) Long-Term Incentive. The Executive will be considered for stock
options in accordance with the Company's 1992 Stock Incentive
Plan, as amended, or any successor thereto ("Stock Option
Program") and any other long-term incentives offered to other
executives of the Company from time to time during the term of
this Agreement.
(d) Benefits. The Executive shall be entitled to participate, as long
as he is an employee of the Company, in any and all of the
Company's present or future employee benefit plans, including
without limitation pension plans, thrift and savings plans,
insurance plans, and other benefits that are generally applicable
to the Company's executives; provided, however, that the accrual
and/or receipt by the Executive of benefits under and pursuant to
any such present or future employee benefit plan shall be
determined by the provisions of such plan.
(e) Perquisites. The Executive will be provided such additional
perquisites as are customary for senior level executives of the
Company provided that each perquisite is approved by the Board of
Directors.
(f) Business Expenses. The Executive will be reimbursed for all
reasonable expenses incurred in connection with the conduct of the
Company's business upon presentation of evidence of such
expenditures, including but not limited to travel expenses
incurred by the Executive in the performance of his duties,
security for the Executive, his family, and principal residence,
professional organization dues, and club initiation fees, dues and
expenses.
(g) Any annual incentive award earned by Executive under this Section
3 shall be paid as soon as reasonably practical after the end of
the Company's fiscal year end; provided, however, that if any such
payment would be nondeductible to the Company under Internal
Revenue Code Section 162(m), then any nondeductible amounts shall
be deferred from year to year until the payment of such amounts is
deductible by the Company.
4. TERMINATION OF EMPLOYMENT
(a) Resignation. Notwithstanding Section 2 hereof, this Agreement may
be terminated by the Executive at any time upon six (6) months
written notice of resignation by the Executive to the Company, and
in such event any payments pursuant to Section 3 and 4 of this
Agreement shall automatically terminate (except for the Company's
obligations relation to voluntary termination under its
compensation and benefit plans, as specified in the various plan
documents, and the Executive's obligations set forth in Section
5). Subsequent payments may be made to the Executive as provided
pursuant to Section 6 of this Agreement.
(b) Termination by the Company Other Than for Cause. Termination of
the Executive by the Company other than for Cause, as defined in
Section 4(c) below, shall cause the Company to make payments to
the Executive hereunder pursuant to the provisions of this Section
4(b). Such a termination shall require at least sixty (60)
business days' prior notice and must be signed by at least
three-fourths (3/4) of all the non-employee members of the Board
of Directors.
Notwithstanding anything to the contrary contained in Stock Option
Program or any agreement or document related thereto, the
Executive's total outstanding and unvested shares and/or options
under the Stock Option Plan shall at the date of termination be
deemed to be 100% vested. No further grants of stock or options
shall be made under the Plan after such termination.
With respect to base salary and annual incentive compensation, the
Company's obligation shall be to pay the Executive, according to
the terms of this Agreement and for a period of thirty-six (36)
months, an amount equal to the annual salary and incentive paid to
the Executive [at the bonus level for the year prior to which such
termination occurs unless performance of the Company as defined in
the matrix referenced in Section 3(b) is better in the year of
termination, in which event such bonus shall be based on the
matrix calculation as described in Section 3(b)], such annual
amounts to be paid in equal monthly installments.
During the 36-month severance payment period, the Executive shall
be entitled to all payments, benefits and perquisites as provided
for in this Agreement, and office space and secretarial support
comparable to that provided to the Executive during his employment
by the Company. The Executive shall be entitled to all payments
and benefits as provided for in this Section for a period of
thirty-six (36) months.
If the Board of Directors fails to reelect the Executive to a
position comparable to that described in Section 1(a) of this
Agreement or, without terminating the Executive's employment,
removes the Executive from his position for reasons other than
Cause, substantively reduces the Executive's duties and
responsibilities, reduces his pay and/or benefits, forces
relocation, or requires excessive travel, then the Executive may,
by notice to the Company, treat such action or removal as a
termination of the Executive by the Company pursuant to this
Section 4(b).
In the event of the Executive's death before the completion of the
payments pursuant to this Section 4(b), the remaining payments
hereunder shall be made to the beneficiary or beneficiaries
designated by the Executive to the Company in writing or, absent
such a designation, to his estate.
(c) Termination by the Company for Cause. The Company may terminate
the Executive's employment for Cause if the Executive has
committed a felonious act, or the Executive, in carrying out his
duties hereunder has been willfully and grossly negligent or has
committed willful and gross misconduct resulting, in either case,
in material harm to the Company. An act or omission shall be
deemed "willful" only if done, or omitted to be done, in bad faith
and without reasonable belief that it was in the best interest of
the Company. In the event of termination of the Executive by the
Company for Cause, the Executive shall no longer be entitled to
receive any payments or any other rights or benefits under this
Agreement.
(d) Disability. In the event the Executive's employment terminates due
to total and permanent disability (for the purposes of this
Agreement "disability" shall have the same meaning as applies
under the Company's Long-Term Disability Plan), he will continue
to receive the same base salary and benefits which he was
receiving prior to such disability for 36 months, offset by
payments under the Company's Long-Term Disability Plan. In
addition, he shall receive a pro-rated annual incentive payment
for the year in which is employment is terminated, based on the
formula described in Section3(b).
(e) Death. In the event of the death of the Executive during the term
of this Agreement, the rights and benefits under employee benefit
plans and programs of the Company, including life insurance, will
be determined in accordance with the terms and conditions of such
plans and programs as in effect on his date of death. In such
event, the Company shall pay in a lump sum to the Executive's
estate an amount equal to five times the then current rate of the
Executive's base salary, and no further payments shall be required
pursuant to this Agreement.
(f) Change in Control. In the event of a change in control of the
Company, as set forth below, the Executive may at any time and in
his complete discretion during a 24-month period following a
change in control, elect to terminate his employment with the
Company. For purposes of this Agreement, a "change in control"
shall mean a change in ownership of the Company that would be
required to be reported in response to Item 1(a) of a Current
Report on Form 8-K pursuant to the Securities and Exchange Act of
1934 ("Exchange Act"), as in effect on the date hereof, except
that any merger, consolidation or corporate reorganization in
which the owners of the capital stock entitled to vote in the
election of directions of the Employer or the Company ("Voting
Stock") prior to said combination, own 75% or more of the
resulting entity's Voting Stock shall not be considered a change
in control for the purposes of this Agreement; provided that,
without limitation, such a change in control shall be deemed to
have occurred if (i) any "person" (as that term is used in
Sections 13(d) and 14(d)(2) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company is or becomes the beneficial owner
(as that is used in Section 13(d) of the Exchange Act), directly
or indirectly, or 30% or more of the Voting Stock of the Company
or its successor; or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute
the Board of Directors of the Company ("Incumbent Board") cease
for any reason to constitute at least a majority thereof;
provided, however, that any person becoming a director of the
Company after the beginning of the period whose election was
approved by a vote of at least three-quarters of the directors
comprising the incumbent Board shall, for the purposes hereof, be
considered as though he were a member of the incumbent Board; or
(iii) there shall occur the sale of all or substantially all of
the assets of the Company. Notwithstanding anything in the
foregoing to the contrary, no change in control of the Company
shall be deemed to have occurred for purposes of this Agreement by
virtue of any transaction which results in the Executive, or a
group of persons which includes the Executive acquiring, directly
or indirectly, more than 30 percent of the combined voting power
of the Company's outstanding securities. If any of the events
constituting a change in control shall have occurred during the
term hereof, the Executive shall be entitled to the privilege
provided in subparagraph (f) herein to terminate his employment.
Any termination by the Executive pursuant to this Section shall be
communicated by a written "Notice of Termination."
If, following a change in control, the Executive shall for any
reason voluntarily terminate his employment during the 24-month
period following a change in control, then the Company shall pay
base salary up to the date of termination and a prorated annual
incentive award based on the calculated bonus for the year in
which termination occurred, as defined in Section 3(b), in a lump
sum on the thirtieth (30th) day following the Date of Termination.
5. COVENANT NOT TO COMPETE
(a) As a material inducement to the Company's entering into this
Agreement, the Executive agrees that during the term of this
Agreement, he will not become associated with, render service to
or engage in any other business competitive with any existing or
contemplated business of the Company or its subsidiaries, except
that the Executive may serve as a member of the board of directors
of other companies or organizations, provided that he provides
written notice to the Board of each significant activity, and that
he will do nothing inconsistent with his duties and
responsibilities to the Company.
(b) If the Executive voluntarily resigns from the employ of the
Company prior to the expiration of the term of this Agreement, he
specifically agrees that for a period of five (5) years commencing
with the date of his voluntary resignation he will not engage in
or perform any services either on a full-time or a part-time or on
a consulting or advisory basis for any business organization that
is in competition with the Company at the time such services are
being performed by Executive, with the exception that this Section
5(b) shall not apply in the event the Executive resigns
voluntarily following a change in control of the Company as
defined in Section 4(f).
(c) The Executive will not at any time, whether while employed by the
Company or after voluntary or involuntary termination or after
retirement, reveal to any person, firm or entity any trade or
business secrets or confidential, secret, or privileged
information about the business of the Company or its subsidiaries
or affiliates except as shall be required in the proper conduct of
the Company's business.
6. CONSULTING ARRANGEMENT
Following a voluntary termination of employment pursuant to Section
4(a) and 4(f), or an involuntary termination subsequent to a change in
control of the Company, for any reason but during a 24-month period
following a change in control as defined in Section4(f), after the
Executive ceases to render services as the Chief Executive Officer, he
may in his sole discretion elect to act as a consultant to the Company
for a period of five (5) years. During this period of consulting
services, the Executive shall, at reasonable times and places, taking
into account any other employment or activities he may then have, hold
himself available to consult with and advise the officers, directors,
and other representatives of the Company. As compensation thereof, the
Executive shall be entitled to receive, and Company shall pay, an
annual amount equal to seventy-five percent (75%) of his annual base
salary rate in effect immediately prior to his termination of
employment, but in no event an annual amount to exceed $1,000,000, for
each year of such period, payable in equal monthly installments.
7. WITHHOLDING
All amounts payable hereunder which are or may become subject to
withholding under pertinent provisions of law or regulation shall be
reduced for applicable income and/or employment taxes required to be
withheld.
8. MISCELLANEOUS
(a) This Agreement supersedes any prior agreements or understandings,
oral or written, with respect to employment of the Executive and
constitutes the entire Agreement with respect thereto; provided,
however, that nothing contained herein shall supercede that
certain Assignment and License Agreement entered into as of March
31, 1987, as amended. This Agreement cannot be altered or
terminated orally and may be amended only by a subsequent written
agreement executed by both of the parties hereto or their legal
representatives, and any material amendment must be approved by a
majority of the voting shareholders of the Company.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns. In that
this constitutes a personal service agreement, it may not be
assigned by the Executive and any attempted assignment by the
Executive in violation of this covenant shall be null and void.
(d) For the purpose of this Agreement, the phrase "designated
beneficiary or beneficiaries" shall include the estates of such
beneficiaries in the event of their death before the receipt of
all payments under this Agreement and shall also include any
alternate or successor beneficiaries designated in writing to the
Company by the Executive.
(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any
other provisions, which shall remain in full force and effect.
(f) The Section and Paragraph headings contained herein are for
reference purposes only and shall not in any way affect the
meanings or interpretation of this Agreement.
(g) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration,
conducted before a panel of arbitrators in accordance with the
rules of the American Arbitration Association then in effect.
Judgement may be entered on the arbitrators award in any court
having jurisdiction. The expense of such arbitration shall be
borne by the Company.
(h) Any notices, requests or other communications provided for by this
Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address
he has filed in writing with the Company or, in the case of the
Company, at its principal offices.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first above written.
Company:
ATTEST THE XXXXXXX XXXXXX CORPORATION
By: /s/ Xxxx X. Xxxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
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Corporate Secretary Title: Executive Vice President - Human Resources
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Executive: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
EXHIBIT A
Performance Standards and Target Incentive Matrix ($000)
Pre-Tax Profit Margin Percent*
less
than 7% 7% 10% 13% 15% 17% 20% 23% 25%
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30% $800 $1,625 $3,115 $5,120 $6,300 $7,415 $8,925 $10,950 $12,000
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Percent 25% 800 1,475 2,420 4,175 5,120 5,930 7,145 8,765 9,575
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Annual Net 20% 800 1,340 1,880 3,500 4,175 4,715 6,200 7,550 8,360
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Revenue 15% 800 1,205 1,610 2,960 3,500 4,175 5,120 6,200 7,145
----------------------------------------------------------------------------------------------
Growth 10% 800 1,070 1,475 2,150 2,960 3,500 4,310 5,390 6,200
----------------------------------------------------------------------------------------------
Over Prior 5% 800 900 1,070 1,475 2,150 2,960 3,500 4,590 5,525
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Year 0% 800 800 800 1,070 1,475 2,150 2,960 3,500 4,715
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(5%) to 0% 800 800 800 800 800 1,475 2,150 2,960 3,500
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less than (5)% 800 800 800 800 800 800 800 800 800
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* All dollar amounts shown in the matrix are in thousands (000).
In the matrix above, where the value in any year is shown at an amount
less than the Executive's actual base salary for that year, his total
cash compensation shall be no less than and no greater than his actual
base salary. If the Company's actual financial results are between the
values shown here, payments earned will be calculated on the basis of
an interpolated result. Pre-tax profit margin shall be determined on an
LBO-adjusted basis.
