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EXHIBIT 10.5
EG&G, INC.
EMPLOYMENT AGREEMENT
This Agreement made as of the 1st day of November, 1993, between EG&G,
Inc., a Massachusetts corporation (hereinafter called the "Company"), and Xxxxxx
X. Xxxxxxxxxx of Lynnfield, Massachusetts (hereinafter referred to as the
"Employee").
WITNESSETH:
WHEREAS, the Employee has been employed in a management position with
the Company; and
WHEREAS, the Employee hereby agrees to continue to perform such
services and duties of a management nature as shall be assigned to him; and
WHEREAS, the Employee hereby agrees to the compensation herein provided
and agrees to serve the Company to the best of his ability during the period of
this Agreement.
NOW, THEREFORE, in consideration of the sum of One Dollar, and of the
mutual covenants herein contained, the parties agree as follows:
1. a) Except as hereinafter otherwise provided, the Company agrees
to continue to employ the Employee in a management position with the Company,
and the Employee agrees to remain in the employment of the Company in that
capacity for a period of one year from the date hereof and from year to year
thereafter until such time as this Agreement is terminated.
b) The Company will, during each year of the term of this
Agreement, place in nomination before the Board of Directors of the Company the
name of the Employee for election as an Officer of the Company except when a
notice of termination has been given in accordance with Paragraph 5(b).
2. The Employee agrees that, during the specified period of employment, he
shall, to the best of his ability, perform his duties, and shall not engage in
any business, profession or occupation which would conflict with the rendition
of the agreed upon services, either directly or indirectly, without the prior
approval of the Board of Directors.
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3. During the period of his employment under this Agreement, the Employee
shall be compensated for his services as follows:
a) Except as otherwise provided in this Agreement, he shall be
paid a salary during the period of this Agreement at a base rate to be
determined by the Company on an annual basis. Except as provided in Subparagraph
3d, such annual base salary shall under no circumstances be fixed at a rate
below the annual base rate then currently in effect.
b) He shall be reimbursed for any and all monies expended by him
in connection with his employment for reasonable and necessary expenses on
behalf of the Company in accordance with the policies of the Company then in
effect;
c) He shall be eligible to participate under any and all bonus,
benefit, pension, compensation, and option plans which are, in accordance with
company policy, available to persons in his position (within the limitation as
stipulated by such plans). Such eligibility shall not automatically entitle him
to participate in any such plan;
d) if, because of adverse business conditions or for other
reasons, the Company at any time puts into effect salary reductions applicable
to all management employees of the Company generally, the salary payments
required to be made under this Agreement to the Employee during any period in
which such general reduction is in effect may be reduced by the same percentage
as is applicable to all management employees of the Company generally. Any
benefits made available to the Employee which are related to base salary shall
also be reduced in accordance with any salary reduction;
4. a) During the period of his employment by the Company or for any
period which the Company shall continue to pay the Employee his salary under
this Agreement, whichever shall be the longer, the Employee shall not directly
or indirectly own, manage, control, operate, be employed by, participate in or
be connected with the ownership, management, operation or control of any
business which competes with the Company or its subsidiaries, provided, however,
that the foregoing shall not apply to ownership of stock in a publicly held
corporation which ownership is disclosed to the Board of Directors nor shall it
apply to
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any other relationship which is disclosed to and approved by the Board of
Directors.
b) During the period of his employment by the Company and two
years following the Company's last payment of salary to him, the Employee shall
not utilize or disclose to others any proprietary or confidential information of
any type or description which term shall be construed to mean any information
developed or identified by the Company which is intended to give it an advantage
over its competitors or which could give a competitor an advantage if obtained
by him. Such information includes, but is not limited to, product or process
design, specifications, manufacturing methods, financial or statistical
information about the Company, marketing or sales information about the Company,
sources or supply, lists of customers, and the Company's plans, strategies, and
contemplated actions.
c) During the period of his employment by the Company or for any
period during which the Company shall continue to pay the Employee his salary
under this Agreement, whichever shall be longer, the Employee shall not in any
way whatsoever aid or assist any party seeking to cause, initiate or effect a
Change in Control of the Company as defined in Paragraph 6 without the prior
approval of the Board of Directors.
5. Except for the Employee covenants set forth in Paragraph 4 which
covenants shall remain in effect for the periods stated therein, and subject to
Paragraph 6, this Agreement shall terminate upon the happening of any of the
following events and (except as provided herein) all the Company's obligation
under this Agreement, including, but not limited to, making payments to the
Employee shall cease and terminate:
a) On the effective date set forth in any resignation submitted
by the Employee and accepted by the Company, or if no effective date is agreed
upon, the date of receipt of such letter.
b) One year after written notice of termination is given by
either party to the other party.
c) At the end of the month in which the Employee shall have
attained the age of sixty-five years;
d) At the death of the Employee;
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e) At the termination of the Employee for cause. As used in the
Agreement, the term "cause" shall mean:
1) Misappropriating any funds or property of the
Company;
2) Unreasonable refusal to perform the duties assigned
to him under this Agreement;
3) Conviction of a felony;
4) Continuous conduct bringing notoriety to the Company
and having an adverse effect on the name or public image of the Company;
5) Violation of the Employee's covenants as set forth in
Paragraph 4 above; or
6) Continued failure by the Employee to observe any of
the provisions of this Agreement after being informed of such breach.
f) At termination of the Employee by the Company without cause.
g) Twelve months after written notice of termination is given by
the Company to the Employee based on a determination by the Board of Directors
that the Employee is disabled (which, for purposes of this Agreement, shall mean
that the Employee is unable to perform his regular duties, with such
determination to be made by the Board of Directors, in reliance upon the opinion
of the Employee's physician or upon the opinion of one or more physicians
selected by the Company). Such notice shall be given by the Company to the
Employee on the 106th day of continuous disability of the Employee.
Notwithstanding the foregoing, if, during the twelve-month notice period
referred to above, the Employee is no longer disabled and is able to return to
work, such notice of employment termination shall be rescinded, and the
employment of the Employee shall continue in accordance with the terms of this
Agreement. During the first 106 days of continuous disability of the Employee,
the Company will make periodic payments to the Employee in an amount equal to
the difference between his base salary
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and the benefits provided by the Company's Short-Term Disability Income Plan.
During the twelve-month notice period following 106 days of continuous
disability, the Company will make periodic payments to the Employee in an amount
equal to the difference between his base salary and the benefits provided by the
Company's Long-Term Disability Plan. If the employment of the Employee
terminates at the end of such twelve-month notice period, the Company will make
periodic payments to the Employee, up to the amount remaining in his sick leave
reserve account, in an amount equal to the difference between his base pay and
the post-employment benefits provided to him under the Company's Long-Term
Disability Plan. Due to the fact that payments to the Employee under the
Company's Long-Term Disability Plan are not subject to federal income taxes, the
payments to be made directly by the Company pursuant to the two preceding
sentences shall be reduced such that the total amount received by the Employee
(from the Company and from the Long-Term Disability Plan), after payment of any
income taxes, is equal to the amount that the Employee would have received had
he been paid his base salary, after payment of any income taxes on such base
salary.
h) Notwithstanding the foregoing provisions, in the event of the
termination of the Employee by the Company without cause, the Employee shall,
until the expiration of his then current employment term or one year from the
date of such termination, whichever is later, (i) continue to receive his Full
Salary (as defined below), which shall be payable in accordance with the payment
schedule in effect immediately prior to his employment termination, and (ii)
continue to be entitled to participate in all employee benefit plans and
arrangements of the Company (such as life, health and disability insurance and
automobile arrangements) to the same extent (including coverage of dependents,
if any) and upon the same terms as were in effect immediately prior to his
termination. For purposes of this Agreement, "Full Salary" shall mean the
Employee's annual base salary, plus the amount of any bonus or incentive
payments received by the Employee with respect to the last full fiscal year of
the Company for which all bonus or incentive payments to be made have been made.
6. a) In the event that there is a Change in Control of the Company
(as defined below), the provisions of this Agreement shall be amended as
follows:
1) Xxxxxxxxx 0x xxxxx xx amended to read in its entirety as
follows:
"Except as hereinafter otherwise provided, the Company agrees to
continue to employ the Employee in a management position with the
Company, and the Employee agrees to remain in the employment in the
Company in
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that capacity, for a period of five (5) years less one day from the
date of the Change in Control. Except as provided in Paragraph 3d, the
Employee's salary as set forth in Paragraph 3a and his other employee
benefits pursuant to the plans described in Paragraph 3c shall not be
decreased during such period."
2) Xxxxxxxxx 0x xxxxx xx amended by the addition of the
following provision at the end of such paragraph:
", provided that the Employee agrees not to resign, except for Good
Reason (as defined below), during the one-year period following the
date of the Change in Control."
3) Paragraph 5b shall be deleted in its entirety.
4) Paragraph 5h shall be amended to read in its entirety
as follows:
"Notwithstanding the foregoing provisions, in the event of the termination of
the Employee by the Company without cause, or the resignation of the Employee
for Good Reason, the Employee shall (i) receive, on the date of his employment
termination, a cash payment in an amount equal to his Full Salary (as defined
below) multiplied by the number of years (including any portions thereof)
remaining until the expiration of his then current employment term or five years
from the date of such termination, whichever is later (it being agreed that such
amount shall not be discounted based upon the present value of such amount), and
(ii) continue to be entitled to participate in all employee benefit plans and
arrangements of the Company (such as life, health and disability insurance and
automobile arrangements) to the same extent (including coverage of dependents,
if any) and upon the same terms as were in effect immediately prior to his
termination. For purposes of this Agreement, "Full Salary" shall mean the
Employee's annual base salary, plus the amount of any bonus or incentive
payments received by the Employee with respect to the last full fiscal year of
the Company for which all bonus or incentive payments to be made have been made.
Payments under this Paragraph 5h shall be made without regard to whether the
deductibility of such payments (or any other "parachute payments," as that term
is defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), to or for the benefit of the Employee) would be limited or precluded by
Section 280G and without regard to whether such payments (or any other
"parachute payments" as so defined) would subject the
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Employee to the federal excise tax levied on certain "excess parachute payments"
under Section 4999 of the Code; provided that if the total of all "parachute
payments" to or for the benefit of the Employee, after reduction for all
federal, state and local taxes (including the tax described in Section 4999 of
the Code, if applicable) with respect to such payments (the "Total After-Tax
Payments"), would be increased by the limitation or elimination of any payment
under this Paragraph 5h, amounts payable under this Paragraph 5h shall be
reduced to the extent, and only to the extent, necessary to maximize the Total
After-Tax Payments. The determination as to whether and to what extent payments
under this Paragraph 5h are required to be reduced in accordance with the
preceding sentence shall be made at the Company's expense by Xxxxxx Xxxxxxxx LLP
or by such other certified public accounting firm as the Board of Directors of
the Company may designate prior to a Change in Control of the Company. In the
event of any underpayment or overpayment under this Paragraph 5h as determined
by Xxxxxx Xxxxxxxx LLP (or such other firm as may have been designated in
accordance with the preceding sentence), the amount of such underpayment or
overpayment shall forthwith be paid to the Employee or refunded to the Company,
as the case may be, with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code."
5) Paragraph 8 shall be amended to read in its entirety
as follows:
"The Employee may pursue any lawful remedy he deems necessary or
appropriate for enforcing his rights under this Agreement following a
Change in Control of the Company, and all costs incurred by the
Employee in connection therewith (including without limitation
attorneys' fees) shall be promptly reimbursed to him by the Company,
regardless of the outcome of such endeavor."
b) For purposes of this Agreement, a "Change in Control of the
Company" shall occur or be deemed to have occurred only if (i) any "person", as
such term is used in Section 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than the Company, any trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or any corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportion as their ownership of stock in
the Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the
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Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the combined voting power of the Company's then outstanding
securities; (ii) during any period of two consecutive years ending during the
term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors of the Company, and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were either directors at the beginning of the period or
whose election or whose nomination for election was previously so approved,
cease for any reason to constitute a majority of the Board of Directors; (iii)
the stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation; or (iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
c) For purposes of this Agreement, "Good Reason" shall mean the
occurrence of any of the following events, except as provided in Paragraph 3d:
(i) a reduction in the Employee's base salary as in effect on the date hereof or
as the same may be increased from time to time; (ii) a failure by the Company to
pay annual cash bonuses to the Employees in an amount at least equal to the most
recent annual cash bonuses paid to the Employee; (iii) a failure by the Company
to maintain in effect any material compensation or benefit plan in which the
Employee participated immediately prior to the Change in Control, unless an
equitable arrangement has been made with respect to such plan, or a failure to
continue the Employee's participation therein on a basis not materially less
favorable than existed immediately prior to the Change in Control; (iv) any
significant and substantial diminution in the Employee's position, duties,
responsibilities or title as in effect immediately prior to the Change in
Control; (v) any requirement by the Company that the location at which the
Employee performs his principal duties be changed to a new location outside a
radius of 25 miles from the Employee's principal place of
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employment immediately prior to the Change in Control; or (vi) any requirement
by the Company that the Employee travel on an overnight basis to an extent not
substantially consistent with the Employee's business travel obligations
immediately prior to the Change in Control. Notwithstanding the foregoing, the
resignation shall not be considered to be for Good Reason if any such
circumstances are fully corrected prior to the date of resignation.
7. Neither the Employee nor, in the event of his death, his legal
representative, beneficiary or estate, shall have the power to transfer, assign,
mortgage or otherwise encumber in advance any of the payments provided for in
this Agreement, nor shall any payments nor assets or funds of the Company be
subject to seizure for the payment of any debts, judgments, liabilities,
bankruptcy or other actions.
8. Any controversy relating to this Agreement and not resolved by the
Board of Directors and the Employee shall be settled by arbitration in the City
of Boston, Commonwealth of Massachusetts, pursuant to the rules then obtaining
of the American Arbitration Association, and judgment upon the award may be
entered in any court having jurisdiction, and the Board of Directors and
Employee agree to be bound by the arbitration decision on any such controversy.
Unless otherwise agreed by the parties hereto, arbitration will be by three
arbitrators selected from the panel of the American Arbitration Association. The
full cost of any such arbitration shall be borne by the Company.
9. Failure to insist upon strict compliance with any of the terms,
covenants, or conditions hereof shall not be deemed a waiver of such term,
covenant, or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times by either party.
10. All notices or other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered personally to the
Employee or to the General Counsel of the Company or when mailed by registered
or certified mail to the other party (if to the Company, at 00 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000, attention General Counsel; if to the Employee,
at the last known address of the Employee as set forth in the records of the
Company).
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11. This Agreement has been executed and delivered and shall be construed
in accordance with the laws of the Commonwealth of Massachusetts. This Agreement
is and shall be binding on the respective legal representatives or successors of
the parties, but shall not be assignable except to a successor to the Company by
virtue of a merger, consolidation or acquisition of all or substantially all of
the assets of the Company. All previous employment contracts between the
Employee and the Company or any of the Company's present or former subsidiaries
or affiliates is hereby canceled and of no effect.
IN WITNESS WHEREOF, the Company has caused its seal to be hereunto
affixed and these presents to be signed by its proper officers, and the Employee
has hereunto set his hand and seal the day and year first above written.
EG&G, INC.
(SEAL) BY: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx,
Chairman and Chief
Executive Officer
EMPLOYEE: /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
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