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EXHIBIT 10.1
EMPLOYMENT AND CONSULTING AGREEMENT
THIS AGREEMENT (the "Agreement") made November 4, 1985, by and between
Xxxxx Corporation, a Michigan corporation, (hereinafter called "Corporation")
and Xxxxxxx X. Xxxxx (hereinafter called "Employee").
R E C I T A L S:
A. Employee is President and Chief Executive Officer of
Corporation.
B. Corporation and Employee desire to set forth in this Agreement
the terms and conditions pursuant to which Employee accepts continued
employment with Corporation.
NOW, THEREFORE, the parties hereto agree as follows:
1. Active Employment
Corporation agrees to employ Employee as President and Chief Executive
Officer for a period of 10 years commencing November 1, 1985 through October
31, 1995. Such employment period as it may be extended or reduced pursuant to
paragraph 6(b) hereof is referred to as the "Active Employment Period".
Employee accepts this employment and agrees during the Active Employment Period
to devote his entire time and energy during usual business hours to the affairs
of Corporation. The duties and responsibilities of Employee during the Active
Employment Period shall be to manage and direct the affairs of Corporation, and
shall be rendered in the Troy, Michigan area.
2. Compensation During Active Employment Period
During the Active Employment Period, Corporation shall pay to Employee
compensation as follows:
(a) A minimum salary of $210,000 per year payable in equal
bi-weekly installments (the "base salary").
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(b) An annual bonus award calculated as follows:
(i) Employee shall receive an annual bonus during the Active
Employment Period equal to 25% of his base salary for each fiscal year
of Corporation during which the Corporation's net income (as determined
in accordance with generally accepted accounting principles, including
charges for compensation paid or accrued hereunder) exceeds zero;
(ii) Employee shall also receive an annual bonus during the
Active Employment Period equal to 8% of the amount by which the
Corporation's pre-tax income (as determined in accordance with generally
accepted accounting principles consistently applied) during each fiscal
year of the Corporation exceeds 12% of shareholders' equity (as
determined in accordance with generally accepted accounting principles,
including charges for compensation paid or accrued hereunder) as of the
beginning of such fiscal year;
(iii) In no event shall the sum of the bonuses provided in
clauses (i) and (ii), above, exceed 150% of Employee's base salary for
such fiscal year.
(c) Notwithstanding anything contained in paragraph 2(a) to the
contrary, Employee shall also receive increases in his base salary and such
additional or other incentive compensation as the Board of Directors deems
appropriate, taking into account the growth of Corporation, its profitability
and Employee's performance, and all other benefits generally available to the
officers of Corporation, which benefits shall not aggregate less in annual
financial value to Employee than the benefits presently available to him. The
base salary shall be adjusted on
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November 1 of each year to reflect percentage increases in the National
Consumer Price Index.
(d) During each year of the Active Employment Period, Employee
shall receive life insurance coverage in an amount at least equal to
300% of Employee's total compensation during the prior fiscal year.
3. Consulting Period
Upon the termination of the Active Employment Period for any reason
(including voluntary termination by Employee) other than death, disability or
termination by Corporation for cause pursuant to paragraph 6(a), Employee shall
continue to be employed for a period of 5 additional years (the "Consulting
Period") as a consultant to Corporation. The compensation payable to Employee
during the Consulting Period shall be at the following percentages of the
average of Employee's total annual compensation for the prior three years at the
termination of the Active Employment Period, payable by-weekly:
Year Percent
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1 90%
2 80%
3 75%
4 75%
5 60%
The duties of Employee during the Consulting Period shall be to consult with
senior officers of Corporation concerning the general operations and affairs of
Corporation, and shall be performed by Employee as reasonably requested by
senior officers of Corporation. Corporation shall reimburse Employee for his
reasonable expenses in rendering any consulting services, and during the
Consulting Period he shall receive all other benefits generally available to
officers of Corporation.
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4. Retirement Payments
Upon the termination of Employee's Active Employment Period and
Consulting Period, Employee shall be entitled to receive annual retirement
payments equal to 40% of the base salary to which he was entitled during the
last year of the Active Employment Period, up until his death; after Employee's
death such payments shall be made to Employee's wife, until her death. The
obligation of Corporation pursuant to this paragraph 4 shall not be funded by
Corporation, shall be paid out of the general assets of Corporation and shall
not take precedence over any other general debts of Corporation.
5. Disability or Death
(a) In the event that during the Active Employment Period or Consulting
Period Employee becomes unable by reason of physical or mental disability to
render the services required hereunder and such disability continues for a
period of 18 months, the employment of Employee hereunder shall terminate.
Commencing at the date of termination of employment for disability, Employee
shall receive annually a sum of equal to 35% of his annual compensation at the
time of termination of employment, including base salary and additional or
incentive compensation paid with respect to the preceding fiscal year, in
monthly installments, until he attains age 65, or his death if earlier. Employee
benefits for Employee shall also continue until Employee attains age 65, or
until his death if earlier. Upon attaining age 65, Employee shall receive
retirement payments as provided in paragraph 4, above. In the event that the
parties disagree as to the disability of Employee, the judgment of a physician
chosen by a physician designated by the Company and by a physician designated by
Employee shall be conclusive, subject to paragraph 10
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hereof. Disability payments hereunder shall be reduced by the amount of other
Corporation financed disability benefits made available to Employee through
insurance or otherwise.
(b) In the event that the Active Employment Period hereunder is
terminated by death, Employee's designated beneficiary shall receive:
(i) continuation of base salary at the rate paid at the time
of death and bonus and incentive compensation at the rate for the
preceding fiscal year, payable for a period of 6 months after death and
at 50% of those amounts for an additional 18 months after the expiration
of the six month period;
(ii) continuation of employee benefit coverage for a period of 24
months; and
(iii) life insurance proceeds from insurance provided by the
Corporation in accordance with Paragraph 2(d) hereof.
6. Termination and Renewal
(a) Corporation shall have the right to terminate the employment of
Employee hereunder for cause upon 30 days written notice to Employee. As used
in this Agreement "cause" shall mean intentional and material dishonesty
adversely affecting Corporation, intentional gross neglect of duties, or
competitive activities in violation of paragraph 7 hereof.
(b) The Active Employment Period may be terminated by Employee at any
time during the Active Employment Period if Employee shall give Corporation
written notice of termination at least 120 days prior to the date of such
termination. The Active Employment Period shall be automatically extended for
an additional one year term on November 1 of each year commencing with 1995
unless written notice of termination is given either by
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Corporation or by Employee to the other party at least 120 days prior to the
applicable November 1.
7. Noncompetition
During the Active Employment Period and Consulting Period, Employee
shall not engage directly or indirectly, as a director, officer, employee,
agent, consultant, stockholder (except as owner of less than 2% of a
corporation's outstanding publicly traded shares) or partner in any business
activity which competes with a significant portion of the business of
Corporation or its subsidiaries as then conducted. In addition to its other
remedies, Corporation shall be entitled to injunctive relief to protect its
interests hereunder.
8. No Mitigation
Employee shall not be obligated to seek other employment in mitigation
of amounts payable or arrangements made under the provisions of this Agreement
and the obtaining of any such other employment shall in no event affect any
reduction of the Corporation's obligations to make the payments and
arrangements required to be made under this Agreement.
9. Non-Assignability
Employee may not anticipate, alienate or assign any of his rights
under this Agreement, and any attempt to do so shall be void.
10. Arbitration
Any dispute under this Agreement shall be settled by submission of such
dispute to binding arbitration in Detroit, Michigan pursuant to the Commercial
Arbitration Rules of the American Arbitration Association. Corporation shall
pay all costs associated with any such arbitration.
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11. Successors
This Agreement shall inure to the benefit of and be binding upon
Corporation, its successors and assigns, including any corporation or other
business or entity that shall purchase all or substantially all of the business
and assets of Corporation, or shall succeed to such business through merger,
liquidation or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date written above.
XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Its: Treasurer
---------------------------
("Corporation")
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-------------------------------------
("Employee")
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FIRST AMENDMENT TO
EMPLOYMENT AND CONSULTING AGREEMENT
THIS FIRST AMENDMENT TO EMPLOYMENT AND CONSULTING AGREEMENT (the
"Amendment") made April 1, 1986, by and between Xxxxx Corporation, a Michigan
corporation (hereinafter called "Corporation"), and Xxxxxxx X. Xxxxx
(hereinafter called "Employee").
R E C I T A L S:
A. Employee is President and Chief Executive Officer of Corporation.
B. Corporation and Employee entered into that certain Employment and
Consulting Agreement (the "Agreement") on November 4, 1985.
C. Corporation and Employee desire to amend the Agreement to partially
revise the terms and conditions pursuant to which Employee accepts continued
employment with Corporation.
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendment of Section 2(d) of the Agreement.
Section 2(d) of the Agreement is hereby amended to provide in its
entirety as follows:
"During each year of the Active Employment Period, Employee shall
receive, at his option, either (i) life insurance coverage in an amount
at least equal to 300% of Employee's total compensation during the prior
fiscal year or (ii) cash in the amount of the annual premium which the
Corporation would otherwise be required to pay for such life insurance
coverage."
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2. No Other Modifications.
Except as provided in Section 1 of this Amendment, all provisions of
the Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the
date written above.
XXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Its: Senior Vice President
("Corporation")
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
---------------------------------------
("Employee")
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AMENDMENT TO EMPLOYMENT AND
CONSULTING AGREEMENT
This Amendment to Employment and Consulting Agreement (this
"Amendment") dated as of August 31, 1994, by and among Xxxxx Corporation, a
Michigan corporation (hereinafter called the "Corporation"), Xxxxxxx X. Xxxxx
(hereinafter called "Employee"), and Xxxxxxxx X. Xxxxx (hereinafter called
"Mrs. Sandy").
RECITALS:
A. Employer is Chairman and Chief Executive Officer of the Corporation.
B. The Corporation and Employee entered into an Employment and Consulting
Agreement (the "Agreement") dated as of November 4, 1985, pursuant to
which Employer is and has been employed by the Corporation.
C. Section 4 of the Agreement provides for annual retirement payments to be
made to Employee and to his spouse upon termination of Employee's Active
Employment Period (as that term is defined in the Agreement) and
Consulting Period (as that term is defined in the Agreement).
D. The Corporation has accrued, as of the date of this Amendment, the sum
of $652,650 as an expense related to the retirement payments scheduled
to be paid under the Agreement, and is scheduled to accrue an additional
$91,820 on August 31, 1995 related to the retirement payments scheduled
to be paid in the Agreement.
E. The Corporation and Employee wish to amend the Agreement, to provide for
certain payments to be made by the Corporation to Employee in lieu of
the retirement payments provided for in the Agreement.
F. Mrs. Sandy consents to the actions being taken by and in this
Amendment.
NOW, THEREFORE, the parties hereto agree as follows:
1. Payment of Accrued Amounts
On the date of this Amendment, the Corporation is paying Employee the
sum of $652,650. On August 31, 1995, the Corporation shall pay Employee the
sum of $91,820. Each such payment shall be treated by the Corporation and by
Employee as compensation for federal and state income tax purposes.
2. Extinguishment of Retirement Payment Obligations
The payments described in Section 1 of this Amendment should be in lieu
of the retirement payments provided in Section 4 of the Agreement. Section 4
of the Agreement is hereby deleted from the Agreement, and shall be of no
further force and effect.
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3. Consent of Mrs. Sandy
Mrs. Sandy consents to the actions being taken by this Agreement, including
specifically the termination of Employee's retirement payments under the
Agreement which in certain circumstances could be payable to her.
4. Effect on Agreement
Except to the extent modified herein, the Agreement shall remain binding on
the Corporation and Employee and in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first written above.
XXXXX CORPORATION, a Michigan corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxxxxx, President
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxxx X. Xxxxx
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THIRD AMENDMENT TO EMPLOYMENT
AND CONSULTING AGREEMENT
THIS THIRD AMENDMENT TO EMPLOYMENT AND CONSULTING AGREEMENT (this
"Amendment") is made as of August 22, 1995, by and among XXXXX CORPORATION, a
Michigan corporation (the "Corporation"), XXXXXXX X. XXXXX ("Employee"), and
XXXXXXXX X. XXXXX ("Mrs. Sandy").
R E C I T A L S:
A. Employee is Chairman and Chief Executive Officer of the Corporation.
B. The Corporation and Employee entered into an Employment and
Consulting Agreement dated as of November 4, 1985, as amended by a First
Amendment to Employment and Consulting Agreement dated as of April 1, 1986, and
by an Amendment to Consulting Agreement dated as of August 31, 1994 (such
Employment and Consulting Agreement, as amended, being referred to herein as
the "Agreement"), pursuant to which Employee is and has been employed by the
Corporation.
C. Section 2 of the Agreement provides that Employee is to receive from
the Corporation an annual bonus award during the Active Employment Period (as
that term is defined in the Agreement).
D. Employee's Active Employment Period shall terminate upon the date of
the closing (the "Closing Date") of the merger of ADP Mergerco, Inc., a
Michigan corporation, with and into the Corporation (the "Merger"), which
Closing Date shall occur during the Corporation's 1996 fiscal year.
E. Section 3 of the Agreement provides for Employee's retention as a
consultant to the Corporation for a period of five years (the "Consulting
Period") upon termination of Employee's Active Employment Period.
F. Employee estimates that the present value of the sum of (i) all
compensation and benefits to be paid to him under Sections 3 and 5 of the
Agreement and (ii) the bonus award, if any, payable to Employee in respect of
the period from September 1, 1995 through the Closing Date under Sections 2 and
5 of the Agreement, will be approximately $1,475,000 on the Closing Date.
G. The Corporation and Employee wish to amend the Agreement to provide
for the acceleration of certain payments to be made by the Corporation to
Employee under the Agreement and to amend certain other provisions contained in
the Agreement.
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NOW, THEREFORE, the parties hereto agree as follows:
1. Acceleration of Payments. In full and complete satisfaction of
(i) the Corporation's obligations to pay and provide compensation and benefits
to Employee under Sections 3 and 5 of the Agreement and (ii) the Corporation's
obligation, if any, to pay a bonus award to Employee in respect of the period
from September 1, 1995 through the Closing Date under Sections 2 and 5 of the
Agreement, the Corporation agrees to pay Employee the sum of $1,475,000 on the
Closing Date.
2. Termination of Active Employment Period; 1995 Bonus.
Notwithstanding anything to the contrary contained in Section 6 of the
Agreement, Employee's Active Employment Period shall terminate, and Employee's
Consulting Period shall commence, on the Closing Date. During the period from
September 1, 1995 until the Closing Date, Employee's base salary (as defined in
the Agreement) shall continue to be paid at the base salary rate paid during
the 1995 fiscal year. Any bonus due to Employee for employment during the
period of September 1, 1994 through August 31, 1995 shall be calculated based
on the Corporation's net income, as determined in accordance with generally
accepted accounting principles consistently applied (which determination shall
take into account all expenses incurred by the Corporation in connection with
the Merger and in connection with the consideration of any other business
combination).
3. Permanent Waiver of Foregone Compensation. Employee hereby
permanently and irrevocably waives any rights he may have in respect of any
amounts of compensation heretofore voluntarily deferred by him, including,
without limitation, all amounts of compensation deferred pursuant to his
July 26, 1988 letter to the Compensation Committee and his July 20, 1992
letter to Xxxxx Xxxxxxx.
4. Effect on Agreement. Except to the extent specifically
modified herein, the Agreement shall remain binding on the Corporation and
Employee and shall remain in full force and effect.
5. Consent of Mrs. Sandy. Mrs. Sandy consents to the actions
taken by this Amendment, including specifically the amendment of any right to
health care benefits given to her under the Agreement.
6. Counterparts. This Amendment may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Amendment on the
date first written above.
XXXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-----------------------------------
Its: President
-----------------------------------
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxxx X. Xxxxx
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