THIS EMPLOYMENT AGREEMENT (the "1999 Agreement") is made as of the 1st
day of June, 1999, by and between Intermagnetics General Corporation, a New York
corporation (the "Company"), and Xxxxx X. Xxxxxxx ("Executive").
WHEREAS, Executive has served as the President and Chief Operating
Officer of the Company under an Employment Letter dated March 20, 1997 between
the Company and Executive (the "Letter");
WHEREAS, the parties amended the Letter by an agreement dated April 1,
1997 (the "First Amendment") and an agreement dated October 15, 1998 (the
"Second Amendment")(the Letter, the First Amendment and the Second Amendment to
be referred to collectively as the "1998 Agreement"); and
WHEREAS, the parties now wish to extend the term of the employment
provisions of the 1998 Agreement and make certain other changes in the
employment relationship between the Company and Executive on such terms and
conditions as will secure the benefit of Executive's services to the Company as
President and Chief Executive Officer; and
WHEREAS, Executive and the Company desire that the 1998 Agreement be
superseded in all respects by this 1999 Agreement, except as to the vesting
provisions for the options previously granted to Executive under the fifth
paragraph on page one of the Letter and except as to the non competition,
confidentiality and no solicitation provisions of the 1998 Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. Employment.
The Company hereby employs or retains Executive, and Executive hereby
accepts such employment and agrees to perform his duties and responsibilities
hereunder, in accordance with the terms and conditions hereinafter set forth.
1.1 Term.
Subject to the provisions of Sections 8 and 9 below, Executive shall
be employed as a full-time employee of the Company for the term running three
years beginning June 1, 1999 and ending on May 31, 2002 (the "Initial Employment
Term"). As used in this 1999 Agreement, the term "year" shall refer to a three
hundred and sixty five (365) day period. The "Initial Employment Term" shall be
automatically renewed from year to year for one (1) year periods, beginning on
June 1, 2002 (the Initial Employment Period and such renewal periods to be
referred to as the "1999 Agreement Term"), unless either party provides written
notice to the other at least sixty (60) days prior to the anniversary or renewal
date thereof of its or his desire to terminate the employment of Executive. The
terms of said Agreement after June 1, 2002 shall remain the same except for any
increase in salary, bonus or benefits provided by the Company to Executive.
1.2 Duties and Responsibilities.
(a) During the 1999 Agreement Term, Executive shall serve as Chief
Executive Officer and President of the Company and shall perform all duties and
accept all responsibilities incidental to such position or as may be assigned to
him from time to time by the Company's Board of Directors, to whom he shall
directly report, and he shall cooperate fully with the Board of Directors and
other executive officers of the Company. During the 1999 Agreement Term
Executive shall also be available to perform similar duties on behalf of
subsidiaries or divisions of the Company. During the 1999 Agreement Term
Executive shall at all times comply with policies and procedures adopted by the
Company and ratified by the Board of Directors for executive employees of the
Company and its subsidiaries, including without limitation the procedures and
policies adopted by the Company regarding conflicts of interest.
(b) Executive represents and covenants to the Company that he is not
subject, or a party, to any employment agreement, non-competition covenant,
non-disclosure agreement or any similar agreement, covenant, understanding or
restriction which would prohibit Executive from executing this 1999 Agreement or
from adhering to the terms and provisions of the 1998 Agreement, and performing
his duties and responsibilities hereunder during the 1999 Agreement Term or
which would in any manner, directly or indirectly, limit or affect the duties
and responsibilities which may now or in the future be assigned to Executive by
the Company or the scope of assistance to which he may now or in the future
provide to subsidiaries or divisions of the Company, including without
limitation any duties and responsibilities relating to the development,
production and/or sale of (i) superconductive wire and materials, (ii) permanent
and superconductive magnet systems, or RF coils, used in MRI diagnostic imaging
systems, (iii) NMR spectroscopy systems, (iv) devices for separation of
materials by magnetic means, (v) cryogenic equipment and refrigeration systems,
(vi) permanent magnet applications as part of the U.S. strategic defense
initiative program, (vii) CFC replacement products, or (viii) products related
to any other business in which the Company or any of its affiliates is engaged
as of the date of Executive's separation of employment with the Company for any
reason whatsoever.
1.3 Extent of Service.
(a) During the 1999 Agreement Term, Executive agrees to use his best
efforts to carry out his duties and responsibilities under Section 1.2(a) hereof
and to devote his full time, attention and energy thereto. Executive further
agrees not to work either on a part time or independent contracting basis for
any other business or enterprise during the 1999 Agreement Term without the
prior written consent of the Board of Directors of the Company.
(b) Except as provided in Section 5 hereof, subsection (a) hereof
shall not be construed as preventing Executive from making investments in other
businesses or enterprises, or from serving as a director of any other business
or enterprise, provided that such directorship is approved by the Company's
Board of Directors and that Executive agrees not to become engaged in any other
business activity which may interfere with his ability to discharge his duties
and responsibilities to the Company as an executive.
1.4 Base Compensation During 1999 Agreement Term.
For all the services rendered by Executive during the 1999 Agreement
Term, the Company shall pay Executive an annual salary at the rate of $250,000
for each full year of the 1999 Agreement Term, plus additional amounts, if any,
as may be approved, from time to time, by the Company's Board of Directors, less
withholdings required by law or agreed to by Executive, payable in installments
at such times as the Company customarily pays its other senior officers (but in
any event no less often than monthly). The Compensation Committee of the Board
of Directors of the Company shall annually review Executive's salary based on
Executive's job performance, the Company's financial condition, and the
profitability and performance of the Company, and in its sole discretion shall
provide Executive with an adjustment in Executive's annual salary. Executive's
annual salary shall not be reduced unless mutually agreed to by Executive and
the Compensation Committee. During the 1999 Agreement Term, Executive shall also
be (i) entitled to participate in such vacation pay, life insurance, pension
benefits and other fringe benefit plans as may exist from time to time for the
senior officers of the Company (subject to payment of such portion of the costs
thereof as the Company requires from its senior officers) (referred to herein as
"the Common Benefit Plans"), excluding any supplemental pension, savings,
retirement of other such plan that may subsequently be adopted by the Company
for its senior officers; provided, however, that nothing herein shall be deemed
to require the Company to maintain in force any of the Common Benefit Plans
during the term of this 1999 Agreement or to limit its right to amend the same
for executives and other senior officers of the Company in any manner during the
employment term; (ii) provided with full access and personal use of a suitable
Company owned and assigned vehicle including all related expenses and insurance;
(iii) provided with one social club membership as chosen by Executive; (iv)
provided with a term life insurance policy for the duration of Executive's
employment as President and Chief Executive Officer with the Company payable to
Executive's designated beneficiary or beneficiaries in the face amount of three
times Executive's annual base salary as of June 1, 1999 (i.e. a face amount of
$750,000); and (v) entitled to be reimbursed for the reasonable expenses
incurred by him in obtaining advice and services related to financial and
retirement planning, not to exceed Ten Thousand Dollars ($10,000) annually.
Notwithstanding the foregoing, during the 1999 Agreement Term, the Company shall
provide Executive, annually, with a lump sum payment of an amount sufficient to
enable him to purchase a disability insurance policy for Executive with coverage
equal to sixty percent (60%) of his then current base salary, with a waiting
period of 26 weeks, subject to reductions for Social Security disability and
worker's compensation payments, if any, received by Executive. The disability
policy shall define "disability" to be Executive's inability because of physical
or mental impairment of Executive to perform his material duties on a full-time
basis, as described in Sections 1.2 and 1.3, and shall provide for partial
disability coverage in the event Executive is unable to perform those duties on
a full-time basis and his income is reduced because of such disability.
1.5 Bonus.
In addition to the compensation set forth above, during the 1999
Agreement Term Executive shall be entitled to participate in the following bonus
plan. Executive shall be eligible to receive in respect to each of the three
years during the 1999 Agreement Term, and subsequent years if this 1999
Agreement is renewed, a bonus up to a maximum twenty-five percent (25%) of
annual base salary which shall be made up of the following two (2) components:
(1) one half of the bonus, or a potential of twelve and one half percent (12
1/2%) of current annual base salary, shall be determined by the Company's Board
of Directors taking into account the pre-tax profitability of the Company,
subject to the audited financials of the Company (the bonus amounts and
financial objectives to be agreed upon by the Compensation Committee of the
Board and the Executive Committee); and (2) the second half of the bonus, or an
additional potential twelve and a half percent (12 1/2%) of current annual base
salary, shall be determined solely at the discretion of the Compensation
Committee, taking into account subjective criteria including Executive's and the
Company's performance (other than financial performance of the Company). Subject
to the cap set forth in this paragraph, the amount of annual bonus may change
depending upon the financial and other performance of the Company and Executive.
The bonus shall be paid to Executive as soon as possible after the audited
financial statements for such fiscal year are available, but in no event later
than 90 days after the end of the fiscal year.
1.6 Stock Options.
In consideration for Executive's continued employment under this 1999
Agreement, the Company on June 1, 1999 will grant to Executive a non-qualified
option to purchase 500,000 shares (subject to adjustment for future stock
dividends or splits) of Common Stock of the Company, with the option vesting at
a rate of 33.33% on each of June 1, 2000, June 1, 2001 and June 1, 2002
respectively. The grant will be made pursuant to the 1990 Stock Option Plan of
the Company, or any successor plan qualified under the rules and regulations
pursuant to Section 16 of the 1934 Act, and adopted by the Company's
shareholders as required by Rule 16b-3 of the 1934 Act, and a stock option
agreement for non-qualified options in the form used generally by the Company,
and the term of the stock option will be five years. The exercise price of the
option shall be determined as of the closing price of the stock of the Company
on the American Stock Exchange on June 1, 1999.
1.7 Supplemental Benefits.
In addition to the compensation and equity participation set forth
above, during the first year of the 1999 Agreement Term the Company shall create
for Executive a lump-sum amount of Forty-Five Thousand Dollars ($45,000) and for
each subsequent year of the 1999 Agreement Term the Company shall establish a
lump-sum amount for Executive of Thirty-Five Thousand Dollars ($35,000) from
which he shall select either a non-qualified Supplemental Executive Benefit
Agreement or other similar program for which the intent is to remove caps
imposed by US Government tax regulations on the Company's qualified retirement
and savings programs. The Company's sole obligation with respect to such
supplemental benefits shall be to establish annually an available lump sum as
set forth in the first sentence of this paragraph from which Executive shall
choose said supplemental benefits. Executive shall not be eligible to
participate in any such supplemental benefit program as may be established in
the future by the Company for its other senior officers.
2. Expenses.
Executive shall be reimbursed for the reasonable and necessary
business expenses incurred by him in connection with his performance of services
hereunder during the 1999 Agreement Term upon presentation of an itemized
account in accordance with Company policies.
3. Developments.
All developments (including inventions, whether patentable or
otherwise, trade secrets, discoveries, improvements, ideas and writings) which
either directly or indirectly relate to or may be useful in the business of the
Company or any of its affiliates (the "Developments") including business plans,
programs, financial or operating reports, projections or budgets, which
Executive, either by himself or in conjunction with any other person or persons,
has conceived, made, developed, acquired or acquired knowledge of while an
employee of the Company or which Executive, either by himself or in conjunction
with any other person or persons, shall conceive, make, develop, acquire or
acquire knowledge of during the 1998 Agreement Term or 1999 Agreement Term,
shall become and remain the sole and exclusive property of the Company.
Executive hereby assigns, transfers and conveys, and agrees to so assign,
transfer and convey, all of his right, title and interest in and to any and all
such Developments and to disclose fully as soon as practicable, in writing, all
such Developments to the Board of Directors of the Company. At any time and from
time to time, upon the request and at the expense of the Company, Executive will
execute and deliver any and all instruments, documents and papers, give evidence
and do any and all other acts which, in the opinion of counsel for the Company,
are or may be necessary or desirable to document such transfer or to enable the
Company to file and prosecute applications for and to acquire, maintain and
enforce any and all patents, trademark registrations or copyrights under United
States or foreign law with respect to any such Developments or to obtain any
extension, validation, reissue, continuance or renewal of any such patent,
trademark or copyright. The Company will be responsible for the preparation of
any such instruments, documents and papers and for the prosecution of any such
proceedings and will reimburse Executive for all reasonable expenses incurred by
him and any income lost by him in compliance with the provisions of this
Section.
4. Confidential Information.
Executive recognizes and acknowledges that by reason of his employment
by the Company he has had and, by reason of his continued employment with the
Company, will continue to have access to confidential information of the Company
and its affiliates, including, without limitation, information and knowledge
pertaining to products, inventions, innovations, designs, ideas, plans, trade
secrets, proprietary information, manufacturing, packaging, advertising,
distribution and sales methods and systems, sales and profit figures, customer
and client lists, business policies, programs, operating reports, procedures or
booklets, and relationships between the Company and its affiliates and dealers,
distributors, wholesalers, customers, clients, suppliers and others who have had
or will have business dealings with the Company and its affiliates
("Confidential Information"). Executive acknowledges that such Confidential
Information is a valuable and unique asset and covenants that he will not,
either during or after the 1999 Agreement Term, disclose any such Confidential
Information to any person for any reason whatsoever (except as his duties during
the 1999 Agreement Term may require) without the prior written authorization of
the Company's Board of Directors, unless such information is in the public
domain through no fault of Executive or except as may be required by law.
5. Non-Competition.
5.1 Limitation.
During such time as Executive is employed by the Company, and for two
(2) years following the separation of the employment of Executive for any reason
whatsoever with the Company (or such longer period as may be provided for in
Sections 8.4 and 8.5 hereof) (the "Restricted Period") he will not, unless
acting pursuant hereto or with the prior express written consent of the Board of
Directors of the Company, directly or indirectly, own, manage, operate, join,
control, finance or participate in the ownership, management, operation, control
or financing of, or be connected as a director, officer, employee, partner,
principal, agent, representative, consultant or otherwise with or use or permit
his name to be used in connection with, any business or enterprise engaged in
the development, production, sale, rental or repair of (i) superconductive wire
and materials, (ii) permanent and superconductive magnet systems, or RF coils,
used in MRI diagnostic imaging systems, (iii) NMR spectroscopy systems, (iv)
devices for separation of materials by magnetic means, (v) cryogenic equipment
and refrigeration systems, (vi) permanent magnet applications as part of the
U.S. strategic defense initiative program, (vii) CFC replacement products, or
(viii) products related to any other business in which the Company or any of its
affiliates is engaged as of the date of Executive's separation of employment
with the Company for any reason whatsoever. It is recognized by Executive that
the business of the Company and the other subsidiaries or divisions of the
Company which provide similar products or services and Employee's connection
therewith is or will be international in scope, and that geographical
limitations on this noncompetition covenant (and the non-solicitation covenant
set forth in Section 6 hereof) are therefore not appropriate.
5.2 Exception.
The foregoing restriction shall not be construed to prohibit the
ownership by Executive of not more than five percent (5%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses having a class of securities registered pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act"), provided that such ownership
represents a passive investment and that neither Executive nor any group of
persons including Executive in any way, either directly or indirectly, manages
or exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes any part in its business (other than exercising his
rights as a shareholder), or seeks to do any of the foregoing.
6. No Solicitation of Customers or Employees.
(a) Executive agrees that during the 1999 Agreement Term and for a
period of two (2) years after termination of Executive's employment relationship
with the Company for any reason whatsoever (or such longer period as may be
provided for in Sections 8.4 and 8.5 hereof) (the "Restricted Period"), he will
not, directly or indirectly, on his behalf or in the service or on behalf of
others, call on or solicit, either directly or indirectly, any person, firm,
corporation or other entity who or which at the time of such termination was, or
within two years prior to the termination of Executive's employment with the
Company had been, a customer of the Company or any of its affiliates with
respect to the activities prohibited by Section 5 hereof.
(b) Executive agrees that during the Restricted Period he will not
undertake, either directly or indirectly, on his behalf, or in the service or
behalf of others, to solicit, divert or hire in any way, or attempt to solicit,
divert or hire, for any other business or enterprise, company, partnership or
proprietorship, a full-time, part-time or temporary employee of the Company.
7. Equitable Relief.
7.1 Right to Equitable Relief.
Executive acknowledges that the restrictions contained in Sections 4,
5 and 6 hereof are the essence of the contract from the Company's standpoint and
are reasonable and necessary to protect the legitimate interests of the Company
and its affiliates, that the Company would not have entered into this 1999
Agreement in the absence of such restrictions, and that any violation of any
provision of those Sections will result in irreparable injury to the Company and
its shareholders for which there is no adequate remedy at law. Executive also
acknowledges that the Company shall be entitled to preliminary and permanent
injunctive relief, without the necessity of proving actual damages, as well as
an equitable accounting of all earnings, profits and other benefits arising from
any such violation, which rights shall be cumulative and in addition to any
other rights or remedies to which the Company may be entitled. Executive agrees
that in the event of any such violation, an action may be commenced by the
Company for any such preliminary and permanent injunctive relief and other
equitable relief in any court of competent jurisdiction within the State of New
York or in a court of competent jurisdiction in any other state. Executive
hereby waives any objections on the grounds of improper jurisdiction or venue to
the commencement of an action in the State of New York and agrees that effective
service of process may be made upon him by mail under the notice provisions
contained in Section 16 hereof. In the event that any of the provisions of
Sections 4, 5 or 6 hereof should ever be adjudicated to exceed the time,
geographic, product or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, product or other limitations permitted by
applicable law. The seeking or granting of such equitable relief shall be in
addition to any other forms of relief or damages available to the Company in the
event of a breach of this Agreement by Executive.
7.2 Dissemination of Restrictions.
Executive agrees that until the expiration of the covenants contained
in Sections 3, 4, 5 and 6 of this 1999 Agreement, he shall provide, and that the
Company may similarly provide, a copy of the covenants contained in such
Sections to any business or enterprise, company, partnership or proprietorship
(i) which he may directly or indirectly own, manage, operate, finance, join,
control or participate in the ownership, management, operation, financing or
control of, or (ii) with which he may be connected with as a director, employee,
officer, executive, partner, principal, agent, representative, consultant or
otherwise, or (iii) in connection with which he may use or permit his name to be
used.
8. Termination.
Unless otherwise modified by the terms of Section 1.1, hereof, this
1999 Agreement shall terminate prior to the expiration of the 1999 Agreement
Term upon the occurrence of any one of the following events:
8.1. Disability.
In the event that Executive is unable to perform his material duties
and responsibilities hereunder to the full extent required by the Board of
Directors of the Company by reason of physical or mental illness, impairment or
incapacity for 26 weeks in any fifty-two (52) week period, during which time he
shall continue to be compensated as provided in Section 1.4 hereof (less any
payments due Executive under disability benefit programs, including Social
Security disability, worker's compensation and disability retirement benefits),
this 1999 Agreement and any renewal thereto may be terminated by the Company, by
providing thirty (30) days written notice to Executive. In such event, the
Company shall have no further liability or obligation to Executive for
compensation hereunder; provided, however, that Executive will be entitled to
receive, in addition to amounts due him in such circumstances under any pension
or benefit plans of the Company (including, without limitation, the Company's
Retirement Plan, Supplemental Retirement Plan (if any), Supplemental Income Plan
and Savings Plan (if any)), (i) during the 1999 Agreement Term, the payments
prescribed under any disability benefit plan which may be in effect for
employees of the Company and in which he participated (subject, however, to the
minimum disability benefit provisions set forth in Section 1.4 hereof), and (ii)
a pro rata portion of the bonus, if any, referred to in Section 1.5 hereof in
respect of the period prior to the date on which Executive first became
disabled. Executive agrees, in the event of any dispute under this Section 8.1,
to submit to a physical examination by a licensed physician selected by the
Board of Directors of the Company.
8.2 Death.
In the event that Executive dies during the 1999 Agreement Term or any
renewal term thereof, the Company shall pay to his executors, legal
representatives or administrators an amount equal to the installment of his
salary or compensation referred to in Section 1.4 hereof for the month in which
he dies plus a further amount equal to six months' salary or compensation
referred to in Section 1.4 hereof and thereafter, the Company shall have no
further liability or obligation hereunder to his executors, legal
representatives, administrators, heirs or assigns or any other person claiming
under or through him; provided, however, that Executive's estate or designated
beneficiaries shall be entitled to receive, in addition to amounts due him in
such circumstances under any pension or benefit plans of the Company (including,
without limitation, the Company's Retirement Plan, Supplemental Retirement Plan
(if any), Supplemental Income Plan and Savings Plan (if any)), (i) during the
1999 Agreement Term, the payments prescribed for such recipients under any death
benefit plan which may be in effect for employees of the Company and in which
Executive participated (subject, however, to the minimum life insurance
provisions set forth in Section 1.4 hereof), and (ii) a pro rata portion of the
bonus, if any, referred to in Section 1.5 hereof in respect of the year during
which Executive died.
8.3 Voluntary Termination.
In the event that subsequent to June 1, 1999 Executive voluntarily
terminates the 1999 Agreement Term at any time upon 30 days prior written notice
to the Company.
8.4 Termination Without Cause, Nonrenewal of Agreement.
The Company shall have the right, exercisable at any time during the
term of this 1999 Agreement or any renewal term thereof, to terminate
Executive's employment without cause upon thirty (30) days prior written notice
or by the Company's nonrenewal of this 1999 Agreement or any extension thereof.
If Executive's employment is terminated without cause, or the Company provides
Executive with written notice of nonrenewal of this 1999 Agreement in accordance
with Section 1.1 hereof, he shall be entitled to the greater of an amount equal
to (i) Executive's then-base annual salary for the balance of Executive's
Initial Employment Term (only if Executive is terminated by the Company without
cause), or (ii) twelve (12) months salary plus one (1) additional month's salary
for each full year of Executive's service as President and Chief Executive
Officer, up to a maximum of eighteen (18) months' salary (such payments to be
referred to as the "Severance Payments"). In such event Executive's obligations
under the provisions of Section 5.1 and Section 6 of this 1999 Agreement shall
remain binding on Executive as long as he is eligible to receive Severance
Payments from the Company pursuant to this paragraph, or two (2) years,
whichever is longer.
8.5 Resignation for Good Reason.
(a) During the term hereof, Executive may regard Executive's employment
as being constructively terminated and may, therefore, resign within 30 days of
the occurrence of one or more of the following events, any of which will
constitute "good reason" for such resignation: (i) failing to continue the
appointment of Executive as Chief Executive Officer (except for a decision by
the Company not to continue the appointment of Executive as Chief Executive
Officer as of the termination of this 1999 Agreement); (ii) materially
diminishing the duties and responsibilities of Executive as Chief Executive
Officer, as the same are set forth hereinabove; (iii) assigning to Executive
duties and responsibilities inconsistent with his position as Chief Executive
Officer; (iv) requiring Executive to relocate his place of employment to a
location outside of the 48 contiguous states of the United States; or (v) the
failure of the Company to obtain an agreement from any Successors and Assigns to
assume and agree to perform this 1999 Agreement, as contemplated in Section 12
hereof.
(b) In the event of the occurrence of any of the events or conditions
described in Section 8.5(a) and in the event Executive wishes to resign on the
basis of occurrence of such event, Executive shall give the Board of Directors
notice of his proposed resignation within 30 calendar days of the occurrence of
such event, and the Board of Directors shall have 30 calendar days following its
receipt of such notice to remedy the occurrence giving rise to such proposed
resignation, following which, if the Board of Directors fails to so remedy said
occurrence, Executive shall be deemed to have resigned from his employment with
the Company for good reason pursuant to this Section 8.5, effective as of the
date of such notice, and will be entitled to severance in accordance with
Section 8.4. In such event, Executive's obligations under the provisions of
Section 5.1 and Section 6 of this 1999 Agreement shall remain binding on
Executive as long as he is eligible to receive Severance Payments from the
Company pursuant to this paragraph, or two (2) years, whichever is longer.
8.6 Cause.
Nothing in this 1999 Agreement shall be construed to prevent its
termination by the Company at any time for "cause." For purposes of this 1999
Agreement, "cause" shall mean (i) Executive's willful or gross neglect (other
than as a result of his disability) of his material duties and responsibilities
as an employee and officer of the Company; provided that Executive has received
written notice of such neglect from the Board of Directors, has had an
opportunity to respond to the notice in a meeting with the Board or a duly
appointed committee thereof, and has failed to substantially cure such neglect
within 30 calendar days of such notice; (ii) conviction of (or his plea of
guilty or nolo contendere to) any felony or any crime involving moral turpitude;
(iii) fraud, gross misconduct, breach of trust or other act of dishonesty
materially and negatively affecting the Company's business; provided that
Executive has received written notice of such event from the Board of Directors
and has had an opportunity to respond to the notice in a meeting with the Board
of Directors or a duly appointed committee thereof; or (iv) any violation of
Sections 3, 4, 5 and/or 6 of this 1999 Agreement. The Company may, in its
discretion, suspend Executive with pay during its investigation or inquiry into
such matters as may constitute "cause", and if Executive's employment is
terminated for "cause" following such suspension, Executive will be responsible
for repayment to the Company of all compensation and the value of all benefits
provided to him during the period of such suspension.
Section 8.7 Payments to Executive.
Payment to Executive under this Section 8 shall be made by the Company
on a weekly basis. The Company's liability, if any, for payments to Executive by
virtue of the operation of any subsection or clause in Section 8 of this 1999
Agreement shall be reduced by and to the extent of any compensation received by
or accrued for the benefit of Executive, from any source, as an employee, owner,
consultant or otherwise, during any period that such payments are made pursuant
to this 1999 Agreement.
9. Extraordinary Termination.
In the event of an Extraordinary Termination during the 1999 Agreement
Term, as defined in Section 9.1(b), the following provisions shall apply.
9.1. Definitions.
The following terms shall have the meanings indicated for purposes of
this Section 9:
(a) "Control Transaction" means a change in control of the Company of
a nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Exchange Act, as in effect
on the date of this 1999 Agreement, in a Form 8-K filed under the Exchange Act
or in any other filing by the Company with the Securities and Exchange
Commission; provided that, without limitation, such a Control Transaction shall
be deemed to have occurred if:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes a "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) or
more of the voting power of the then outstanding securities of the
Company;
(ii) during any period of two consecutive calendar years there is a
change of twenty-five percent (25%) or more in the composition of
the Board of Directors of the Company in office at the beginning
of the period except for changes approved by at least two-thirds
of the directors then in office who were directors at the
beginning of the period.
(b) "Extraordinary Termination" means (i) termination by the Company
of the employment of Executive with the Company for any reason other than as set
forth in Section 8 hereof, within three years after a Control Transaction, or
(ii) resignation of Executive upon the occurrence of any of the following events
within two years after a Control Transaction:
(1) an assignment to Executive of any duties inconsistent with, or a
significant change in the nature or scope of Executive's authority or duties
from, those held by Executive immediately prior to the Control Transaction;
(2) a reduction in Executive's annual salary or bonus program in
effect immediately prior to the Control Transaction;
(3) the relocation of Executive's place of employment to a location
outside of the 00 xxxxxxxxxx xxxxxx xx xxx Xxxxxx Xxxxxx;
(4) during the 1999 Agreement Term, the failure by the Company to
provide Executive with a reasonable number of paid vacation days at least equal
to the number of paid vacation days to which he was entitled in the last full
calendar year prior to the Control Transaction;
(5) the failure of the Company to provide Executive with substantially
the same fringe benefits that were provided to him immediately prior to the
Control Transaction, or with a package of fringe benefits that, though one or
more of such benefits may vary from those in effect immediately prior to the
Control Transaction, is substantially at least as beneficial to Executive in all
material respects to such fringe benefits taken as a whole; or
(6) the failure of the Company to obtain the express written
assumption of and agreement to perform this 1999 Agreement by any successor as
and to the extent required by Section 12 of this 1999 Agreement.
9.2 Termination Payments.
(a) In the event of an Extraordinary Termination during the 1999
Agreement Term, the Company shall, in addition to any amounts due for periods
prior to the Extraordinary Termination, if any, pay to Executive in cash within
sixty (60) days after the Extraordinary Termination an amount equal to the sum
of:
(i) three times the greater of
(1) Executive's annual salary at the time of the Control
Transaction, or
(2) Executive's annual salary immediately prior to the
Extraordinary Termination; plus
(ii) three times Executive's average annual bonus for the three
prior years prior to the Extraordinary Termination; plus
(iii) at the option of Executive and in lieu of his exercising any
stock options that he might hold at the time, an amount equal to the excess of
the aggregate market price at the close of business on the date of the
Extraordinary Termination of the Company's shares subject to all stock options
outstanding and unexercised, whether vested or unvested, over the aggregate
exercise price of all such stock options; plus
(iv) payment in lieu of all unused paid personal leave and accrued
sick time.
(b) Executive may elect to defer the payment of all or part of the
amount to be paid to him under subsection (a) for up to twelve months after the
Extraordinary Termination, or to have all or part of such amount paid to him in
installments over a period not to exceed twelve months after the Extraordinary
Termination.
(c) In addition to payment of the amounts specified in subsection (a);
(i) for a period of twelve months following an Extraordinary Termination during
the 1999 Agreement Term the Company will continue or cause to be continued, at
no cost to Executive, medical care and life insurance benefits substantially
comparable to those furnished to Executive by the Company immediately prior to
the Extraordinary Termination and (ii) the Company shall provide Executive
immediate vesting of all Company contributions to any established qualified or
non-qualified retirement or savings programs.
(d) It is the intention of the parties that the payments under this
Section 9 shall not constitute "excess parachute payments" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated by the Internal Revenue Service thereunder. In the event
that the independent accountants acting as auditors for the Company on the date
of a Control Transaction (or another accounting firm designated by them)
determine that the payments under this Section constitute "excess parachute
payments," the amounts payable under this Section shall be reduced to the
maximum amount which may be paid without constituting the payments "excess
parachute payments." Such determination shall take into account (i) whether the
payments under this 1999 Agreement are "parachute payments" within the meaning
of Section 280G and, if so, (ii) the amount of payments under this Section that
constitutes reasonable compensation within the meaning of Section 280G. The fees
and expenses of the accountants performing this calculation shall be paid in
full by the Company. Nothing contained in this 1999 Agreement shall prevent the
Company after a Control Transaction from agreeing to pay Executive compensation
or benefits in excess of those provided in this 1999 Agreement.
9.3 Interest and Expenses.
If the Company shall fail or refuse to pay any amount due under this
Section 9 within the time required, the Company shall pay to Executive, in
addition to the payment of any other sums required under this Section:
(a) interest, compounded daily, on any amount remaining unpaid from
the date payment is required under this Section until payment to Executive, at
the rate from time to time announced by Corestates Bank as its prime rate plus
1.5%, each change in the rate of interest hereunder to take effect on the
effective date of the change in such prime rate; and
(b) on demand, the amount necessary to reimburse Executive for all
expenses (including reasonable attorneys' fees and disbursements) incurred by
Executive in enforcing any of the obligations of the Company under this Section.
9.4 Payment Obligations Absolute.
The obligation of the Company to pay Executive the compensation and to
make the arrangements provided herein shall be absolute and unconditional and
shall not be affected by any circumstances, including, without limitation, any
setoff, counterclaim, recoupment, defense or other right that the Company may
have against him or anyone else except any offset due to the Company from
Executive by virtue of Executive's engaging in conduct violative of any of the
provisions of Sections 4, 5, 6(a) or 6(b) of this 1999 Agreement, or any offset
provided for in Section 8.7 of this 1999 Agreement. Except as modified above,
all amounts payable by the Company hereunder shall be paid without notice or
demand. The Company waives all rights which it may now have or may hereafter
have conferred upon it, by statute or otherwise, to terminate, cancel or rescind
this Section, or any other section of this 1999 Agreement, in whole or in part.
Except as modified above, each and every payment made hereunder by the Company
shall be final and the Company will not seek to recover all or any part of such
payment from Executive or from whomsoever may be entitled thereto, for any
reason whatsoever, except as provided in Section 9.2(d) hereof Executive shall
not be required to mitigate the amount of any payment provided for in this
Section by seeking other employment or otherwise.
10. Withholding of Taxes.
The Company may withhold from any payments under this 1999 Agreement
all federal, state or local taxes and FICA taxes as shall be required pursuant
to any law, regulation or ruling.
11. Non-Alienation.
Executive shall not have any right to pledge, hypothecate, anticipate
or in any way create a lien upon any amounts provided under this 1999 Agreement,
and no benefit payable hereunder shall be assignable in anticipation of payment
either by voluntary or involuntary acts, or by operation of law.
12. Successor Company.
The Company shall require any successor or successors (whether direct
or indirect, by purchase, merger, consolidation or otherwise, and whether in one
transaction or a series of transactions) to all or substantially all of the
business and/or assets of the Company, by agreement in form and substance
satisfactory to Executive, to expressly assume and agree to perform this 1999
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this 1999 Agreement. As used in this 1999
Agreement, the "Company" shall mean the Company as herein before defined and any
such successors to its business and/or assets.
13. Survival.
Notwithstanding the termination of this 1999 Agreement by reason of
Executive's disability under Section 8.1, voluntary termination under Section
8.3, termination without cause or non-renewal of agreement under Section 8.4,
resignation for good reason under Section 8.5, termination for cause under
Section 8.6 or upon an Extraordinary Termination under Section 9, his
obligations under Sections 3, 4, 5 and 6 hereof shall survive and remain in full
force and effect indefinitely or for such period therein provided, and the
provisions for equitable relief against Executive in Section 7 hereof shall
likewise continue in force.
14. Governing Law.
This 1999 Agreement shall be governed by and interpreted under the
laws of the State of New York without giving effect to any conflict of laws
provisions.
15. Resolution of Disputes.
In the event a dispute exists between the parties concerning any
controversy or claim arising out of or relating to this 1999 Agreement, or the
breach thereof, other than a dispute concerning or related to Sections 3, 4, 5,
6 and/or 7 hereof, the parties shall first attempt to resolve such dispute
through mediation under the auspices of JAMS/Endispute in the City and State of
New York in accordance with the rules of JAMS/Endispute. The mediation shall be
before one (1) mediator from the existing panel of employment law mediators
maintained by JAMS/Endispute. If mediation is unsuccessful in resolving the
dispute the matter shall be referred to arbitration by an agreed-upon arbitrator
selected from the panel of JAMS/Endispute's arbitrators specializing in
employment law which shall not include the mediator who had attempted to mediate
the dispute. In the event the parties are unable to agree upon either a mediator
or an arbitrator from the respective JAMS/Endispute panel, either party may
petition the Supreme Court, County of New York of the State of New York, for
appointment of the mediator or arbitrator from the JAMS/Endispute panel. The
arbitrator shall not have the authority to add to, subtract from or in any way
modify the express written terms of the Agreement, and in rendering an award,
the arbitrator shall be required to adhere to the express written provisions of
this Agreement and the intention of the parties appearing therefrom. The
mediation agreement or the decision of the arbitrator, as the case may be, shall
be final and binding on the parties hereto and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof.
The costs for the mediation and/or arbitration shall be borne equally
by both parties.
16. Compliance with Securities Laws.
Executive shall comply with all federal and state securities laws and
Company policies and guidelines relating thereto concerning xxxxxxx xxxxxxx,
reporting requirements, and confidentiality of undisclosed internal material
information about the Company.
17. Litigation, Mediation and Arbitration Expenses.
In the event a judicial action or proceeding, mediation or arbitration
is initiated by either party to enforce the provisions of this 1999 Agreement,
the prevailing party, if any, as determined by the court, mediator or
arbitrator, shall be entitled to recover reasonable costs, expenses and
attorneys' fees from the other party.
18. Notices.
All notices and other communications required or permitted hereunder
or necessary or convenient in connection herewith shall be in writing and shall
be deemed to have been given when hand delivered or mailed by registered or
certified mail, as follows (provided that notice of change of address shall be
deemed given only when received):
If to the Company, to:
Intermagnetics General Corporation
000 Xxx Xxxxxxxxx Xxxx
XXX 000
Xxxxxx, XX 00000
Attention: Board of Directors
If to Executive, to:
Xxxxx X. Xxxxxxx
POB 261
000 Xxxxxx Xxxxx 00
Xxxxx Xxxxxxx, XX 00000
or to such other names or addresses as the Company or Executive, as the case may
be, shall designate by notice to each other person entitled to receive notices
in the manner specified in this Section.
19. Contents of 1999 Agreement; Amendment and Assignment.
(a) This 1999 Agreement supersedes all prior agreements (including the
1998 Agreement) and sets forth the entire understanding among the parties hereto
with respect to the subject matter hereof (except as for the vesting of stock
option granted to Executive under the terms of the 1998 Agreement) and cannot be
changed, modified, extended or terminated except upon written amendment approved
by the Board of Directors of the Company and executed on its behalf by a duly
authorized officer; provided, however, that (i) the provisions of Sections 3, 4
and 7 shall be in addition to, and not in limitation of, any other invention
assignment, confidentiality or similar agreement between the Company and
Executive. Without limitation, nothing in this 1999 Agreement shall be construed
as giving Executive any right to be retained in the employ of the Company,
except as specifically provided herein, during the 1999 Agreement Term.
(b) Executive acknowledges that from time to time, the Company may
establish, maintain and distribute employee manuals or handbooks or personnel
policy manuals, and officers or other representatives of the Company may make
written or oral statements relating to personnel policies and procedures. Such
manuals, handbooks and statements are intended only for general guidance and
shall not be binding on Executive to the extent that they conflict with the
provisions of this 1999 Agreement.
(c) All of the terms and provisions of this 1999 Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, wherever applicable, except that the duties and
responsibilities of Executive hereunder are of a personal nature and shall not
be assignable or delegable in whole or in part by Executive.
20. Severability.
If any provision of this 1999 Agreement or application thereof to
anyone or under any circumstances is adjudicated to be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect any
other provision or application of this 1999 Agreement which can be given effect
without the invalid or unenforceable provision or application and shall not
invalidate or render unenforceable such provision or application in any other
jurisdiction.
21. Remedies Cumulative; No Waiver.
No remedy conferred upon the Company or Executive by this 1999
Agreement is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to any other remedy
given hereunder or now or hereafter existing at law or in equity. No delay or
omission by the Company or Executive in exercising any right, remedy or power
hereunder or existing at law or in equity shall be construed as a waiver
thereof, and any such right, remedy or power may be exercised by the Company or
Executive from time to time and as often as may be deemed expedient or necessary
by the Company or Executive in their sole discretion.
IN WITNESS WHEREOF, the undersigned have executed this 1999 Agreement
as of the date first above written.
ATTEST INTERMAGNETICS GENERAL CORPORATION
/s/ Xxxx X. Xxxxxx /s/ Xxxxxxx Xxxxxx
------------------------------- ------------------------------------
Xxxxxxx Xxxxxx
Chairman, Compensation Committee of
the Board of Directors
Witness XXXXX X. XXXXXXX
/s/ Xxxxxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
------------------------------- ------------------------------------
