AMENDED AND RESTATED SEVERANCE COMPENSATION AGREEMENT
AMENDED
AND RESTATED
This
is a
SEVERANCE COMPENSATION AGREEMENT, originally effective August 15, 1990 and
now
amended and restated effective as of January 1, 2005, by and between Xxxxxx
& Xxxxxx Group, Inc., a New York corporation (the "Company"), and Xxxxxxx X.
Xxxxxx (the "Executive"). This amendment and restatement is made to update
the
Plan for Internal Revenue Code (the "Code") Section 409A.
WHEREAS,
the Company and the Executive are parties to an employment agreement effective
as of August 2, 2007 (the "Employment Agreement") providing for the employment
of the Executive by the Company for a period and upon the other terms and
conditions therein stated; and
WHEREAS,
the Company considers the maintenance of a sound and vital senior management
to
be essential to protecting and enhancing the interests of the Company and its
shareholders; and
WHEREAS,
the Company recognizes that, as is the case with many publicly owned
corporations, the possibility of a change in control of the Company may arise
and that such possibility, and the uncertainty and questions which it may raise
among senior management, may result in the departure or distraction of senior
management personnel to the detriment of the Company and its shareholders;
and
WHEREAS,
accordingly the Company has determined that appropriate steps should be taken
to
reinforce and encourage the continued attention and dedication of members of
the
Company's senior management to their assigned duties and long-range
responsibilities without distraction in circumstances arising from the
possibility of a change in control of the Company; and
WHEREAS,
the Company believes it important and in the best interests of the Company
and
its shareholders, should the Company face the possibility of a change in
control, that the senior management of the Company be able to assess and advise
the Board of Directors of the Company whether such a proposed change in control
would be in the best interests of the Company and its shareholders and to take
such other action regarding such a proposal as the Board of Directors might
determine to be appropriate, without senior management being influenced by
the
uncertainties of their own employment situations; and
WHEREAS,
in order to induce the Executive to remain in the employ of the Company in
the
event of any actual or threatened change in control of the Company, the Company
has determined to set forth the severance benefits which the Company will
provide to the Executive under the circumstances set forth below.
NOW,
THEREFORE, the parties hereto hereby agree as follows:
1.
Definitions.
(a) All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Employment Agreement.
(b) "Change
in Control" shall mean the occurrence of any of the following
events:
(i)
any
person, within the meaning of Section 13(d)(3) of the Securities Exchange Act
of
1934, as amended (the "Exchange Act") , or group of persons, within the meaning
of Exchange Act Rule 13d-5, other than the Company or any of its subsidiaries,
becomes a beneficial owner, directly or indirectly, of thirty percent (30%)
or
more in voting power or amount of the Company's then outstanding equity
securities, without the approval of not less than two-thirds of the Board in
existence prior to such ownership;
(ii)
individuals
who constitute the Board on any day (the "Incumbent Board") cease for any reason
other than their deaths or resignations to constitute at least a majority of
the
Board on the following day (which day shall be considered the day upon which
occurs the Change in Control), provided that any individual becoming a director
subsequent to the date of this Agreement whose election or nomination for
election by the Company's shareholders was approved by a vote of not less than
three-quarters of the Incumbent Board or not less than two-thirds of the then
incumbent Nominating Committee of the Board shall be for purposes of this
subsection considered as though such person were a member of the Incumbent
Board;
(iii)
The
necessary majority of the Company's shareholders approve any reorganization
(other than a mere change in identity, form or place of organization of the
Company, however effected), merger or consolidation of the Company, or any
other
transaction with one or more business entities or persons as a result of which
the stock of the Company is exchanged for or converted into cash or property
or
securities not issued by the Company, or as a result of which there is a change
in ownership of existing equity securities of the Company or the issuance of
new
equity securities of the Company (or the right or option to acquire such equity
securities) which equals or exceeds thirty percent (30%) in voting power or
amount of the equity securities of the Company outstanding upon completion
of
such transaction, unless such reorganization, merger consolidation or other
transaction shall have been affirmatively recommended to the Company's
shareholders by not less than two-thirds of the Incumbent Board;
(iv)
the
necessary majority of the Company's shareholders approve the sale of (or
agreement to sell or grant of a right or option to purchase as to) all or
substantially all of the assets of the Company to any person or business entity,
unless such sale or other transaction shall have been affirmatively recommended
to the Company's shareholders by not less than two-thirds of the
Board;
(v)
the
dissolution or liquidation of the Company;
(vi)
the
occurrence of any circumstance having the effect that persons who were nominated
for election as directors by the Board shall fail to become directors of the
Company other than because of their death or withdrawal;
-
2
-
(vii)
a
change
in control of a nature that would be required to be reported in response to
Item
1(a) of the Current Report on Form 8-K, as in effect on the date hereof,
pursuant to Section 13 or 15(d) of the Exchange Act, unless such change in
control is approved by not less than two-thirds of the Board in existence prior
to such change in control;
(viii) such
other events as the Board may designate.
2. Termination
of Employment.
If
the
Executive is an employee of the Company on the day before a Change in Control
and the Executive's Period of Employment (as defined in the Employment
Agreement, being a Code Section 409A separation from service definition) with
the Company terminates (i) by the Executive or (ii) by the Company as a Without
Cause Termination, in either case within one year from the date of such Change
in Control, the Company hereby agrees to provide to the Executive the following
benefits:
(a) a
lump
sum payment, payable in cash, cashier's check or by wire, six months and one
day
after the date of such termination of Executive's Period of Employment, equal
to
2.99 times the Executive's average Base Salary plus other amounts included
in
the Executive's income as compensation from the Company, but excluding bonus,
incentive, Profit Sharing Plan and equity compensation, over the most recent
five (5) years preceding the year in which the Change in Control
occurred;
(b) a
lump
sum payment, payable in cash, cashier's check or by wire, six months and one
day
after the date of such termination of the Executive's Period of Employment,
in
an amount equal to any amounts forfeited, on account of such termination, under
any employee pension benefit plan, as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), maintained or
contributed to by the Company and participated in by the Executive at any time
between the day before the Change in Control and the day of the Executive's
termination of employment, including benefits under the Executive Mandatory
Retirement Benefit Plan;
(c) retirement
benefits as stated in Section 10 of the Employment Agreement, and all other
benefits provided for under the Employment Agreement upon termination of the
Executive's Period of Employment by the Company that is a Without Cause
Termination or termination by the Executive that is a Constructive Discharge
(even if such sections are not otherwise applicable), provided that such
benefits shall not duplicate the benefits provided hereunder. Further, in the
event that 2.99 times five year average base salary is payable under Section
2(a), then the Executive shall not also be paid two times Base Salary
under Section 8(a) of the Executive's Employment Agreement with the Company.
3. No
Obligation to Mitigate Damages; No Effect on Other Contractual
Rights.
(a) The
Executive shall not be required to mitigate damages or the amount of any payment
provided for under this Agreement by seeking other employment or otherwise,
nor
shall the amount of any payment provided for under this Agreement be reduced
by
any compensation earned by the Executive as the result of employment by another
employer after the date of termination of his employment with the Company or
otherwise.
-
3
-
(b) Except
as
expressly provided in Section 2(c), the provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amounts otherwise payable,
supersede, affect or in any way diminish the Executive's existing rights, or
rights which would accrue solely as a result of the passage of time, under
any
applicable law or any pension benefit or welfare benefit plan, employment
agreement or other contract, plan or arrangement.
4. Limitation
on Benefits; Attorney's Fees; Interest.
(a) Notwithstanding
any provisions to the contrary in this Agreement, if any part of the payments
provided for under Section 2 of this Agreement (the "Agreement Payments") would,
if paid, constitute a "parachute payment" under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), then the Agreement Payments
shall
be payable to the Executive only if (i) the sum of the value of the Agreement
Payments and of the value of all other to or for the benefit of the Executive
that constitute "parachute payments", less the amount of any excise taxes
payable under Code Section 4999 and any similar or comparable taxes in
connection with such payments, is greater than (ii) the greatest value of
payments in the nature of compensation contingent upon a change in control
that
could be paid at such time to or for the benefit of the Executive and not
constitute a "parachute payment" (the "Alternative Payment"); otherwise, only
the Alternative Payment shall be payable to the Executive. For purposes of
this
Section 4(a), the value of payments shall be determined in accordance with
Code
Section 280G(d)(4) and any regulations issued thereunder.
(b) In
the
event that the Alternate Payment is to be made under 4(a), the 2.99 times
specified compensation payment referenced in Section 2(a) shall be reduced
as
required to limit total payments to the Alternate Payment amount. Further,
should the Internal Revenue Service ever determine to the Executive's
satisfaction that any of Alternate Payment constitutes a "parachute payment,"
the Executive shall repay to the Company an amount sufficient at that time
to
prevent any of such payments from constituting a "parachute payment".
(c) If
the
Company shall fail to pay or provide benefits under this Agreement or under
any
benefit plan, agreement or arrangement established, agreed to or contracted
for
by the Company for the benefit of or with the Executive, the Executive shall
be
entitled to consult with independent counsel, and the Company shall pay the
reasonable fees and expenses of such counsel for the Executive in advising
him
in connection therewith or in bringing any proceedings, or in defending any
proceedings, involving the Executive's rights under this Agreement, such right
to reimbursement to be immediate upon the presentment by the Executive of
written xxxxxxxx of such reasonable fees and expenses and shall be considered
a
reimbursement that is not deferred compensation under Treasury Regulation
Section 1.409A-1(b)(9)(v) to the extent such expense is incurred no later than
the end of the second calendar year after termination of the Period of
Employment and is reimbursed no later than three taxable years following
termination of the Executive's Period of Employment. The Executive shall be
entitled to interest at the "prime rate" established from time to time by the
Bank of New York for any payments of such expenses, or any other payments
following the Executive's termination of employment, that are overdue.
(d) The
Company shall have the right to withhold from all payments due hereunder all
income and excise taxes required to be withheld by applicable law and
regulations.
-
4
-
5. Governing
Law.
This
agreement shall be governed by and construed in accordance with the laws of
the
State of New York.
6. Miscellaneous.
(a) If
any
rights pursuant to Section 2 above have accrued to the Executive prior to the
Executive's death or a judicial determination of the Executive's incompetence,
but have not been fully satisfied hereunder at the time of such event, such
rights shall survive and shall inure to the benefit of the Executive's heirs,
beneficiaries and legal representative. Otherwise, this Agreement shall
terminate upon the Executive's death or a judicial determination of the
Executive's incompetence.
(b) Nothing
herein (other than as provided in Section 2(c)) shall be deemed to affect or
alter the Executive's current employment status and the status of the Employment
Agreement.
(c) In
the
event that any provision or portion of this Agreement shall be determined to
be
invalid or unenforceable for any reason, the remaining provisions or portions
of
this Agreement shall be unaffected thereby and shall remain in full force and
effect to the fullest extent permitted by law.
7. Notice.
All
notices or communications hereunder shall be given in accordance with the
requirements for notices contained in the Employment Agreement.
8. Amendment;
Termination; Waiver.
No
provisions of this Agreement may be amended, modified or waived and this
Agreement may not be terminated unless such is authorized by a majority of
the
Board and agreed to in writing by the Executive; provided that if the term
of
the Employment Agreement, as such may be extended, expires, this Agreement
shall
simultaneously be terminated. No waiver by either party hereto of any breach
by
the other party hereto of any condition or any provision of this Agreement
to be
performed by such other party shall be deemed a waiver of a subsequent breach
of
such condition or provision or waiver of a similar or dissimilar condition
or
provision at the same time or any subsequent time.
9. Successors.
(a) Except
as
otherwise provided herein, the Company's rights, duties and obligations under
this Agreement shall be binding upon and inure to the benefit of the Company
and
any successor of the Company, including, without limitation, any business entity
or business entities acquiring directly or indirectly all or substantially
all
of the assets or shares of Stock whether by merger, consolidation, sale or
otherwise –
and such successor shall thereafter be deemed the "Company" for all purposes
of
this Agreement -- but such rights, duties and obligations shall not otherwise
be
assignable by the Company.
-
5
-
(b) Within
thirty (30) days following a Change in Control, the Company (including any
successor of the Company) shall in writing affirm to the Executive its
obligations under this Agreement, and any failure by the Company to so affirm
this Agreement shall, for purposes of this Agreement only, be considered a
Without Cause Termination of the Executive's Period of Employment.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed and its
seal to be affixed hereunto by its duly authorized officers, and the Executive
has signed and delivered this Agreement, all as of January 1, 2005, but actually
on the dates set forth below.
| XXXXXX & XXXXXX GROUP, INC. | ||
| |
|
|
| /s/ Xxxxxxx X. Xxxxxxx | ||
|
Xxxxxxx X. Xxxxxxx, President |
||
| Date: August 2, 2007 | ||
| |
|
|
| /s/ Xxxxxxx X. Xxxxxx | ||
|
Xxxxxxx X. Xxxxxx |
||
| Date: August 2, 2007 | ||
-
6
-
