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Exhibit 10(b)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") has been made as of
January 29, 2001 by and between TRANSMATION, INC., an Ohio corporation (the
"CORPORATION"), and XXXXX X. XXXXXXX (the "EMPLOYEE").
The parties agree as follows:
1. MUTUAL AGREEMENT OF THE PARTIES. The Corporation hereby agrees to employ the
Employee, and the Employee hereby agrees to accept such employment, for the
period and on the terms and conditions set forth in this Agreement.
2. TERM OF EMPLOYMENT. The term of this Agreement and of the Employee's
employment hereunder (the "TERM") shall commence on the date hereof and shall
expire on January 28, 2004, subject to earlier termination as provided by
Section 9 hereof. As used herein, the term "YEAR" shall mean any period during
the Term commencing on January 29 and ending on the next succeeding January 28.
3. AUTHORITY AND DUTIES. During the Term, the Employee shall be the Chief
Financial Officer of the Corporation. As such, he shall: (a) report and be
responsible to the President and CEO of the Corporation (the "PRESIDENT AND
CEO"); (b) be responsible for all of the financial aspects of the Corporation
including without limitation banking and financing matters, logistics,
facilities, management information systems, secretarial reporting, tax
compliance, financial statement preparation and accuracy and cash flow; and (c)
have and exercise such powers and authority as are customarily enjoyed by a
Chief Financial Officer of a corporation, subject only to direction by the
President and CEO and the Board of Directors of the Corporation (the "BOARD OF
DIRECTORS"). The Employee shall devote his full business time, attention and
energies to the affairs of the Corporation, and shall use his best efforts to
promote its best interests.
4. COMPENSATION. During the Term, the Corporation shall pay to the Employee, and
the Employee shall accept, as compensation for all services rendered under this
Agreement, the compensation provided by this Section 4.
(a) SALARY. The Corporation shall pay the Employee a cash salary at the
annual rates of (i) $195,000 during the first Year of the Term, (ii) $220,000
during the second Year of the Term, and (iii) $238,000 during the third Year of
the Term. Such salary shall be payable at such intervals (but not less often
than biweekly or semi-monthly) as the Corporation pays the salaries of other
senior executives during the Term.
(b) ANNUAL BONUS. The Corporation shall pay the Employee, in respect of
each Year (or portion thereof) during the Term, a bonus (if any) paid under and
pursuant to the terms of the Corporation's Annual Executive Bonus Plan adopted
by the Compensation, Benefits and Stock Options Committee and the Board of
Directors for the then-current fiscal year of the Corporation, except that a
bonus shall be paid during the first Year amounting to $25,000 pursuant to the
formula set forth in EXHIBIT A annexed hereto.
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(c) STOCK OPTIONS. The Compensation, Benefits and Stock Options
Committee of the Corporation shall approve a 75,000-share incentive stock option
grant to the Employee at its first meeting after the date of this Agreement.
5. BENEFITS.
(a) VACATION. During the Term, the Employee shall be entitled to the
same amount of paid vacation time per annum as the Corporation provides its
other senior executives.
(b) AUTOMOBILE ALLOWANCE. During the Term, the Corporation shall
provide the Employee with an automobile allowance in the amount of $750 per
month.
(c) OTHER BENEFITS. During the Term, the Corporation shall, at its
expense, provide in the name and for the benefit of the Employee and his
designated beneficiaries all fringe benefit plans and programs which the
Corporation then provides for its senior executives, except if and to the extent
that the Employee waives his rights hereto. Nothing contained herein shall be
deemed to restrict or limit the right of the Corporation at any time to modify,
amend or terminate any or all such fringe benefit plans and programs.
6. BUSINESS EXPENSES. The Corporation shall pay or reimburse the Employee for
all reasonable travel and other expenses incurred or paid by him in connection
with the performance of his duties under this Agreement, upon presentation to
the Corporation of expense statements or vouchers and such other supporting
documentation as it may, from time to time, reasonably require; provided,
however, that the amount available for such expenses may, at any time or from
time to time, be fixed in advance by the Board of Directors.
7. NON-COMPETITION. The Employee agrees that during the Term he shall not,
without the express written consent of the Corporation, engage directly or
indirectly (whether by means of stock ownership or otherwise) in any business
which is in competition, directly or indirectly, with the business of the
Corporation. A direct or indirect investment by the Employee in less than 5
percent of the total capital of any such competitive enterprise or business
whose stock is publicly traded shall not be deemed a violation of this Section
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8. CONFIDENTIALITY. The Employee acknowledges that in the course of his
employment by the Corporation, he will have access to confidential information
relating to the business and affairs of the Corporation, including without
limitation information relating to business ideas, trade secrets, product
development, secret processes, plans and/or materials, statistical information
and customer lists. The Employee agrees that he will not, either during the Term
or after its expiration, without the prior express written consent of the
Corporation, disclose, divulge, furnish, release or otherwise make available to
any person or entity any of such confidential information, except for: (a)
disclosures made, in furtherance of the Corporation's interests, with the
approval or at the direction of the President and CEO or investment bankers (if
any) retained by the Corporation, and (b) disclosures of information which,
through no breach of the Employee's obligations under this Section 8, is no
longer confidential.
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9. TERMINATION.
(a) TERMINATION. This Agreement and the Employee's employment hereunder
shall terminate at the close of business on the earliest of the following dates:
(i) January 28, 2004; or
(ii) the date of the Employee's death; or
(iii) the thirtieth day following the date on which the Corporation
receives written notice of the Employee's termination of this Agreement; or
(iv) the thirtieth day following the date on which the Employee
receives written notice of the President and CEO's termination of this Agreement
with or without "Cause" (as defined in Section 9(b) hereof).
(b) CAUSE FOR TERMINATION. For purposes of this Agreement, the term
"Cause" shall mean a reasonable determination by vote of a majority of the
members of the Board of Directors then holding office (other than the Employee
if he shall then be a Director) that one of the following conditions exists or
one of the following events has occurred:
(i) the willful misconduct or gross negligence of the Employee
in connection with the performance of his duties hereunder; or
(ii) the Employee's conviction of any crime or offense involving
money, property or personnel of the Corporation, or of any other crime which
constitutes a felony; or
(iii) the Employee's use, possession or being under the influence
of any narcotic or controlled substance while at work, or his being under the
influence of any alcoholic beverage while at work; or
(iv) subject to the further provisions of this Section 9(b), the
Corporation's failure to achieve as of the close of any fiscal quarter,
half-year or year of the Corporation (each, a "FISCAL PERIOD") during the Term
the net income required by the budget for that Fiscal Period adopted by the
Board of the Directors, subject to the exception from the budget of such
extraordinary items as the Board of Directors may, in its discretion, approve
from time to time.
It is the intention of the Corporation and the Employee that the circumstances
contemplated by Section 9(b)(iv) hereof be fair reflections of the Employee's
performance as the Corporation's Chief Financial Officer. To that end, the
President and CEO and the Employee shall both act in good faith in the creation
and adoption of each such budget and the consideration of each such exception.
10. SEVERANCE.
(a) CERTAIN DEFINITIONS. As used herein:
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(i) "TOTAL COMPENSATION" means and includes without limitation
salary, bonuses (if any), benefits (if any) and compensation (if any) in the
form of stock or options to purchase stock; provided, however, that any such
compensation that is payable to the Employee other than in cash shall be valued
for the purposes of this Section 10 at its fair market value on the date it is
payable.
(ii) "NORMAL TERMINATION DATE" means the applicable date of
termination specified in Section 9(a) hereof.
(iii) A "CHANGE IN CONTROL" shall have occurred if:
(A) the Corporation is merged or consolidated with another
entity and as a result thereof less than 50 percent of the outstanding voting
securities of the surviving or resulting entity shall then be owned in the
aggregate by the former shareholders of the Corporation; or
(B) as a result of, or in connection with, any tender offer
or exchange offer, merger or other business combination, or sale of other
disposition of assets, or any combination of the foregoing transactions, persons
constituting a majority of the Board on the date hereof shall not constitute a
majority of the Board of Directors of the surviving or resulting entity; or
(C) a tender offer or exchange for the ownership of
securities of the Corporation representing over 50 percent of the combined
voting power of the Corporation's then outstanding voting securities is made and
consummated; or
(D) any "person", including a "group" within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, is or
becomes, directly or indirectly, the beneficial owner of securities of the
Corporation representing over 50 percent of the combined voting power of the
Corporation's then outstanding securities.
(iv) "SUCCESSOR" means any successor to the assets, rights or
business of the Corporation as a result of a Change in Control, including
without limitation the Corporation if it is the surviving or resulting entity of
the Change in Control.
(v) "TRIGGER TERMINATION" means any termination, after the
effective date of a Change in Control, of this Agreement, except for the
following terminations which are not Trigger Terminations: (A) the Employee's
voluntary termination for reasons other than a Material Change (as hereinafter
defined); (B) termination upon the Employee's death or total disability; and (C)
termination by expiration of the Term on January 28, 2004.
(v) "MATERIAL CHANGE" means any or all of the following:
(A) a change by the Successor in the nature or scope of the
Employee's authority, duties or responsibilities, from those applicable to him
immediately prior to the
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Change in Control, that is so substantial and material a reduction, or so
substantially and materially burdensome, as would make a reasonable person
determine not to continue such employment (it being the intent hereof to include
in the definition of "Material Change" a change that would, in effect, force the
Employee to terminate his employment voluntarily, but to exclude from the
definition of "Material Change" a change that is ordinary and customary in the
course of any change in control of a business); or
(B) any reduction in the aggregate annual amount of
compensation and benefits payable to the Employee by the Successor from that
payable to him by the Corporation immediately prior to the Change in Control; or
(C) a change in the location of the Employee's principal
place of employment, without his express written consent, to a location which is
outside the general metropolitan area of Rochester, New York.
(b) SEVERANCE PAYMENT IF TERMINATION WITHOUT CAUSE. In the event that
the Corporation terminates this Agreement without Cause, the Corporation shall
pay to the Employee as severance an amount equal to the greater of: (i) the
Total Compensation payable to the Employee by the Corporation during the 12
months immediately preceding the Termination Date; or (ii) the Total
Compensation that would have been payable to the Employee hereunder from the
Termination Date until January 28, 2004 had this Agreement not been terminated.
Such severance amount shall be paid to the Employee in cash within 30 days
following the Termination Date unless and to the extent that the Employee
determines otherwise.
(c) SEVERANCE PAYMENT IF TERMINATION IN CONNECTION WITH A CHANGE IN
CONTROL. In the event that a Trigger Termination occurs during the Term, the
Successor shall pay to the Employee as severance an amount equal to 300 percent
of the Total Compensation payable to the Employee by the Corporation or the
Successor during the 12 months immediately preceding the effective date of the
Trigger Termination. Such severance amount shall be paid to the Employee in cash
within 30 days following the effective date of the Trigger Termination unless
and to the extent that the Employee determines otherwise.
(d) REDUCTION OF SEVERANCE AMOUNT IN CERTAIN CIRCUMSTANCES.
(i) Notwithstanding anything in this Agreement or any other
agreement to the contrary, in the event that it is determined that any payment
or distribution by the Successor, any affiliate thereof or any other person to
or for the benefit of the Employee, whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement, pursuant to any other
plan of deferred compensation, or pursuant to any other agreement or arrangement
with the Successor or any affiliate thereof now or hereafter in effect (a
"PAYMENT"), would be subject to the excise tax imposed by Section 4999, or the
denial of deductions imposed by Section 280G, of the Internal Revenue Code of
1986, as amended, or any successor statute thereto (the "TAX PENALTY"), then the
Payments made to or for the benefit of the Employee pursuant to this Agreement
shall be reduced such that the aggregate present value is maximized without
causing any payment to be subject to the Tax Penalty (the "REDUCED AMOUNT"). In
the alternative, at the sole discretion of the Successor, the full amount of the
Payments may be made to the Employee
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and the Employee shall be entitled to receive an additional payment (a "GROSS-UP
PAYMENT") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any excise tax, imposed upon the Gross-Up Payment, Employee retains an
amount of the Gross-Up Payment equal to the excise tax imposed upon the
Payments.
(ii) An initial determination as to whether a Tax Penalty would be
imposed, and the amount of the Reduced Amount required by Section 10(d)(i)
hereof or any Gross-Up Payment elected by the Successor, shall be made by a
national independent accounting firm not regularly engaged by the Employee or
the Successor and mutually acceptable to Employee and the Successor (the
"ACCOUNTING FIRM"). All fees, costs and expenses of the Accounting Firm shall be
borne by the Successor, which shall pay such fees, costs and expenses as they
become due. The Accounting Firm shall promptly provide detailed supporting
calculations, acceptable to the Employee and the Successor, to them. The amount
of the Reduced Amount or, if elected by the Successor, the full Payment plus the
Gross-Up Payment, if any, as determined pursuant to this Section 10(d)(ii) shall
be paid by the Successor to the Employee within five business days of receipt of
the Accounting Firm's determination. If the Accounting Firm determines that no
Tax Penalty would be imposed, the Successor and the Employee shall use their
best efforts to ensure that the Accounting Firm furnishes both the Employee and
the Successor with an unqualified opinion to that effect. Any such initial
determination by the Accounting Firm of the Reduced Amount and/or the Gross-Up
Payment shall be binding upon the Successor and the Employee.
(iii) In the event that it is determined that an excise tax will be
imposed on any Payments, the Successor shall pay to the applicable governmental
taxing authorities as excise tax withholding, the amount of the excise tax that
the Successor has actually withheld from the Payments.
(e) RELATED MATTERS.
(i) The Employee shall not be required to mitigate the amount of
any severance payable hereunder by seeking other employment or otherwise, nor
shall the amount of any severance payable hereunder be reduced by any
compensation earned by the Employee as the result of his employment by another
employer or otherwise.
(ii) The provisions of this Section 10 shall not affect the
Employee's right to receive all earned but unpaid salary or bonus, accrued but
unpaid vacation pay, and submitted but outstanding travel or other expenses due
and owing from the Corporation or the Successor on the effective date of
termination of this Agreement, or any incentive compensation earned but unpaid
prior to or coincidental with the effective date of such termination, all of
which shall be paid to the Employee when ordinarily payable under the
Corporation's or the Successor's plans, programs and practices.
(f) EXCLUSIVITY. The Employee shall not be entitled to any severance
except as expressly provided by this Section 10.
11. IN GENERAL.
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(a) BINDING OBLIGATION. This Agreement shall be binding upon and shall
inure to the benefit of the Employee and his personal representatives, and the
Corporation and its successors and assigns, including without limitation the
Successor and any other successor to the business of the Corporation, whether by
way of merger, reorganization, transfer or assets or otherwise. The term
"Corporation" as used herein shall include all such successors and assigns.
(b) NOTICES. Any notice required or permitted by this Agreement shall
be given by hand or by certified mail, return receipt requested, addressed to
the Corporation at its then principal office, or to the Employee at his then
residence address, or to either party at such other address as it or he may from
time to time specify for the purpose in a notice similarly given to the other
party.
(c) APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State.
(d) ENTIRE AGREEMENT, ETC. This Agreement contains the entire
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties with respect to the subject matter hereof. No
modification of this Agreement shall be valid unless it is in writing and signed
by the Corporation and by the Employee. A waiver of the breach of any term or
condition of this Agreement shall not be deemed to constitute a waiver of any
subsequent breach of the same or any other term or condition.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the day and year first above written.
TRANSMATION, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxxx
President and CEO
/s/ Xxxxx X. Xxxxxxx
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XXXXX X. XXXXXXX
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