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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
November 26, 1996, by and between Xxxxxxx X. Xxxxxxxx (the "Executive") and Xxxx
Industries, Inc., a California corporation (the "Company"), to be effective as
of the effective date of the Merger (as defined below) with reference to the
following facts:
A. Executive is currently a director, Chief Executive Officer and
President of Milgray Electronics, Inc., a New York corporation ("Milgray");
B. Pursuant to an agreement dated as of November 26, 1996, ME
Acquisition, Inc., a New York corporation and wholly owned subsidiary of the
Company ("Acquisition Sub") will make a tender offer to acquire all of the
outstanding capital stock of Milgray (the "Tender Offer"). After completion of
the Tender Offer, it is intended that Acquisition Sub will be merged with and
into Milgray, and Milgray will become a wholly-owned subsidiary of the Company
(the "Merger");
C. The Company wishes to ensure the continued services of Executive
after the Merger by having him serve as Vice Chairman of the Board and an
Assistant Secretary of the Company; and
D. Executive is willing to accept employment by the Company on the
terms and conditions hereinafter set forth.
NOW THEREFORE, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. EMPLOYMENT
The Company does hereby employ Executive and Executive hereby accepts
such employment as Vice Chairman of the Board and an Assistant Secretary of the
Company, such employment to commence on the effective date of the Merger.
Executive shall be entitled to an office and access to secretarial services at
Milgray's executive offices during the Term of this Agreement comparable to
those Executive presently has at Milgray. Executive's duties under this
Agreement are to be performed on Long Island in New York State. Executive shall
devote such time to performance of his services as Vice Chairman of the Board
and an Assistant Secretary of the Company as Executive and the Company shall
mutually agree from time to time.
2. TERM
This Agreement shall be in full force and effect for a period (the
"Term") which shall commence as of the effective date of the Merger (the
"Effective Date") and shall continue for a period of one (1) year, unless sooner
terminated as hereafter provided.
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Thereafter, this Agreement will automatically renew for annual one year periods,
unless both parties mutually agree to the contrary.
3. COMPENSATION
As compensation for the services to be performed by Executive during
the continuance of this Agreement, the Company shall pay Executive a salary of
$100,000 per year during the first year of his employment hereunder (the "Base
Salary"). Executive's Base Salary in any subsequent year of employment under
this Agreement shall be a nominal amount to be set by the Company, it being
understood that such amount shall be sufficient to enable Executive to
participate in the Company's medical insurance plan. Executive's Base Salary
shall be payable in substantially equal bi-weekly installments and reduced on a
pro rata basis for any fraction of a year or month during which Executive is not
so employed. Executive shall be entitled to reimbursement for all amounts
reasonably expended on behalf of the Company, subject to verification similar to
that required of and provided by the Company's other senior executives. The
Company shall deduct from Executive's gross compensation appropriate amounts for
standard employee deductions (e.g., income tax withholding, social security and
state disability insurance) and any other amounts authorized for deduction by
Executive. At all such times as Executive may be a member of the Company's Board
of Directors, Executive will be deemed to be an "employee director".
4. INDEMNIFICATION
Executive shall be indemnified by the Company to the full extent
permitted by law in respect of his actions as an officer or director of the
Company and shall be provided with such liability insurance coverage in this
connection as is provided to other Company executives. In addition, the Company
shall enter into an Indemnification Agreement with Executive in the form
attached as Exhibit 4.
5. TERMINATION OF EMPLOYMENT
Employment shall terminate upon the occurrence of any of the following
events:
5.1 Mutual Agreement
Whenever the Company and Executive mutually agree in writing to
termination;
5.2 Termination for Cause
At any time for Cause. For purposes of this Agreement, "Cause" shall
mean conviction of Executive by, or a plea of guilty in, a court of competent
jurisdiction of a felony or other major crime (a plea of nolo contendere shall
be deemed a conviction).
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5.3 Voluntary Termination
Executive may terminate his employment under this Agreement at any time
upon thirty days written notice.
6. NONDISCLOSURE
Both during and after Executive's employment with the Company,
Executive shall keep secret all confidential matters of the Company not in the
public domain and will not disclose them to anyone outside of the Company.
7. MISCELLANEOUS
7.1 Arbitration
All disputes, controversies or claims arising out of or in respect of
this Agreement (or its validity, interpretation or enforcement), the employment
relationship or the subject matter hereof shall be submitted to binding
arbitration taking place in the State of New York before a single arbitrator in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association and judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Expenses of the arbitration
shall be apportioned between the parties by the arbitrator on the basis of
relative fault.
7.2 No Third-Party Beneficiaries
This Agreement shall not confer any rights or remedies upon any person
other than the parties and their respective successors and permitted assigns.
7.3 Entire Agreement
This Agreement (including the documents referred to herein) constitutes
the entire agreement between the parties and supersedes any prior
understandings, agreements, or representations between the parties, written or
oral, to the extent they have related in any way to the subject matter hereof.
7.4 Succession and Assignment
This Agreement shall be binding upon and inure to the benefit of the
parties named herein and their respective successors and permitted assigns. No
party may assign either this Agreement or any of his or its rights, interests,
or obligations hereunder without the prior written approval of the other.
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7.5 Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together will constitute one
and the same instrument.
7.6 Headings
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
7.7 Notices
All notices, requests, demands, claims, and other communications
required or permitted hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and then
two business days after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the intended recipient as
set forth below:
IF TO THE COMPANY:
Xxxx Industries, Inc.
00000 Xxx Xxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: President
IF TO EXECUTIVE:
Xxxxxxx X. Xxxxxxxx
c/o Milgray Electronics, Inc.
00 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxx Xxxx 00000
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving notice in the
manner herein set forth.
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7.8 Governing Law
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York without giving effect to any
choice or conflict of law provision or rule (whether of the State of New York or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
7.9 Amendments and Waivers
No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the Company and Executive. No waiver
by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
7.10 Severability
Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
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IN WITNESS THEREOF, the parties hereto have executed this
Agreement as of the date first above written.
XXXX INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
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EXHIBIT 5
FORM OF INDEMNIFICATION AGREEMENT
INDEMNITY AGREEMENT
This Agreement is made as of the _____ day of __________, 1996, by and
between Xxxx Industries, Inc., a California corporation (the "Corporation"), and
Xxxxxxx X. Xxxxxxxx (the "Indemnitee"), a Director and/or Officer of the
Corporation.
WHEREAS, it is essential to the Corporation to retain and
attract as Directors and Officers the most capable persons available, and
WHEREAS, the substantial increase in corporate litigation subjects
Directors and Officers to expensive litigation risks at the same time that the
availability of Directors' and Officers' liability insurance has been severely
limited, and
WHEREAS, it is now and has always been the express policy of the
Corporation to indemnify its Directors and Officers so as to provide them with
the maximum possible protection permitted by law, and
WHEREAS, the Corporation does not regard the protection available to
Indemnitee as adequate in the present circumstances, and realizes that
Indemnitee may not be willing to serve as a Director or Officer without adequate
protection, and the Corporation desires Indemnitee to serve in such capacity;
NOW, THEREFORE, in consideration of Indemnitee's service as a Director
or Officer after the date hereof the parties agree as follows:
1. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether brought by or
in the right of the Corporation or otherwise and whether of a civil,
criminal, administrative or investigative nature.
(b) The term "Expenses" shall include, but is not limited to,
expenses of investigations, judicial or administrative proceedings or
appeals, damages, judgments, fines, amounts paid in settlement by or on
behalf of Indemnitee, attorneys' fees and disbursements and any
expenses of establishing a right to indemnification under this
Agreement.
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(c) The terms "Director" and "Officer" shall include
Indemnitee's service at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise as well as a Director and/or Officer
of the Corporation.
2. Indemnity of Director or Officer. Subject only to the limitations
set forth in Section 3, Corporation will pay on behalf of the Indemnitee all
Expenses actually and reasonably incurred by Indemnitee because of any claim or
claims made against him in a Proceeding by reason of the fact that he is or was
a Director and/or Officer.
3. Limitations on Indemnity. Corporation shall not be obligated under
this Agreement to make any payment of Expenses to the Indemnitee
(a) which payment it is prohibited by applicable law from
paying as indemnity;
(b) for which payment is actually made to the Indemnitee under
an insurance policy, except in respect of any excess beyond the amount
of payment under such insurance;
(c) for which payment the Indemnitee is indemnified by
Corporation otherwise than pursuant to this Agreement and payment is
actually made to the Indemnitee except in respect of any excess beyond
the amount of the payment under such indemnification;
(d) resulting from a claim decided in a Proceeding adversely
to the Indemnitee based upon or attributable to the Indemnitee gaining
in fact any personal profit or advantage to which he was not legally
entitled; and, if the Indemnitee is a Director, based upon any of the
exceptions set forth in clauses (i) through (iv) of Article Tenth of
this Corporation's Articles of Incorporation;
(e) resulting from a claim decided in a Proceeding adversely
to the Indemnitee for an accounting of profits made from the purchase
or sale by the Indemnitee of securities of Corporation within the
meaning of Section 16(b) or 16(c) of the Securities Exchange Act of
1934 and amendments thereto or similar provisions of any state
statutory law or common law; or
(f) brought about or contributed to by the dishonesty of the
Indemnitee seeking payment hereunder; however, notwithstanding the
foregoing, the Indemnitee shall be indemnified under this Agreement as
to any claims upon which suit may be brought against him by reason of
any alleged dishonesty on his part, unless it shall be decided in a
Proceeding that he committed (i) acts of active and deliberate
dishonesty (ii) with actual dishonest purpose and intent, and (iii)
which acts were material to the cause of action so adjudicated.
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For purposes of Sections 3 and 4, the phrase "decided in a Proceeding"
shall mean a decision by a court, arbitrator(s), hearing officer or other
judicial agent having the requisite legal authority to make such a decision,
which decision has become final and from which no appeal or other review
proceeding is permissible.
4. Advance Payment of Costs. Expenses incurred by Indemnitee in
defending a claim against him in a Proceeding shall be paid by the Corporation
as incurred and in advance of the final disposition of such Proceeding;
provided, however, that Expenses of defense need not be paid as incurred and in
advance where the judicial agent of first impression has decided the Indemnitee
is not entitled to be indemnified pursuant to this Agreement or otherwise.
Indemnitee hereby agrees and undertakes to repay such amounts advanced if it
shall be decided in a Proceeding that he is not entitled to be indemnified by
the Corporation pursuant to this Agreement or otherwise.
5. Enforcement. If a claim under this Agreement is not paid by
Corporation, or on its behalf, within thirty days after a written claim has been
received by Corporation, the Indemnitee may at any time thereafter bring suit
against Corporation to recover the unpaid amount of the claim and if successful
in whole or in part, the Indemnitee shall be entitled to be paid also the
Expenses of prosecuting such claim.
6. Subrogation. In the event of payment under this Agreement,
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable Corporation effectively to bring
suit to enforce such rights. Notwithstanding the foregoing, if any of the
provisions hereof would impair or jeopardize Indemnitee's coverage under the
Corporation's Directors' and Officers' Liability Policy, such provisions shall
be ineffective and shall be deemed deleted from this Agreement.
7. Notice. The Indemnitee, as a condition precedent to his right to be
indemnified under this Agreement, shall give to Corporation notice in writing as
soon as practicable of any claim made against him for which indemnity will or
could be sought under this Agreement. Notice to Corporation shall be given at
its principal office and shall be directed to the President (or such other
address as Corporation shall designate in writing to the Indemnitee); notice
shall be deemed received if sent by prepaid mail properly addressed, the date of
such notice being the date postmarked. In addition, the Indemnitee shall give
Corporation such information and cooperation as it may reasonably require.
8. Saving Clause. If this Agreement or any portion thereof shall be
invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee to the full extent permitted
by any applicable portion of this Agreement that shall not have been invalidated
or by any other applicable law.
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9. Indemnification Hereunder Not Exclusive. Nothing herein shall be
deemed to diminish or otherwise restrict the Indemnitee's right to
indemnification under any provision of the Articles of Incorporation or Bylaws
of the Corporation or under California law.
10. Applicable Law. This Agreement shall be governed by and construed
in accordance with California law.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute the original.
12. Successors and Assigns. This Agreement shall be binding upon the
Corporation and its successors and assigns.
13. Continuation of Indemnification. The indemnification under this
Agreement shall continue as to Indemnitee even though he may have ceased to be a
Director and/or Officer and shall inure to the benefit of the heirs and personal
representatives of Indemnitee.
14. Coverage of Indemnification. The indemnification under this
Agreement shall cover Indemnitee's service as a Director and/or Officer prior to
or after the date of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the day and year first above written.
INDEMNITEE CORPORATION
By:_______________________ By:___________________
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