Exhibit 10.253
EMPLOYMENT AGREEMENT
This Agreement, as amended, is made and entered into effective as of March
31, 2003 by and between The Xxxxxxx Xxxxxx Corporation, a Delaware Corporation
(hereinafter referred to as the "Company"), and Xxxxxxx X. Xxxxxx, an individual
(hereinafter referred to as the "Executive").
WITNESSETH:
WHEREAS, the Company desires to reward the Executive for his continuing
contribution to the Company and provide additional security for the Executive
and to provide an inducement to the Executive to remain with the Company and not
to engage in competition with it.
NOW THEREFORE, in consideration of the mutual obligations herein contained,
the parties hereto, intending to be legally bound hereby, covenant and agree as
follows:
1. EMPLOYMENT
(a) The Company hereby employs the Executive to render services to the
Company in the positions of Chairman of the Board in the capacity
defined in the By-laws of the Company, as may be amended from time to
time. The Executive shall perform such duties commensurate with his
position and shall have authority and responsibility in working with
the Chief Executive Officer, subject to the control of the Board of
Directors, for the overall strategic direction and leadership of the
Company.
(b) Throughout the term of this Agreement, the Executive shall devote
his full business time and undivided attention to the business and
affairs of the Company and its subsidiaries, except for reasonable
vacations and except for illness or incapacity, but nothing in the
Agreement shall preclude the Executive from devoting reasonable
periods required for serving, as appropriate, on Boards of Directors
of other companies, and from engaging in charitable and public service
activities provided such activities do not materially interfere with
the performance of his duties and responsibilities under this
Agreement.
2. TERM
This Agreement shall commence on March 31, 2003, and shall continue through
March 31, 2008, subject to the terms and conditions herein set forth.
Beginning on March 31, 2004, and on each subsequent anniversary of this
date, one year shall be added to the term of the Agreement, unless, prior
to such anniversary, the Company or the Executive has notified the other
party hereto that such extension will not become effective.
3. COMPENSATION
For services rendered by the Executive during the term of this Agreement,
and for his performance of all additional obligations of employment, the
Company agrees to pay the Executive and the Executive agrees to accept the
following salary, other compensation, and benefits:
(a) Base Salary. During the term of this Agreement, the Company shall
pay the Executive in periodic installments, a base salary at the
annual rate of $900,000, such base salary to be reviewed on March 31,
2004, and on each subsequent anniversary the Board may adjust it up or
down, taking into account, among other things, individual performance,
competitive practice, and general business conditions.
(b) Annual Incentive. In addition to the base salary provided in
Section 3(a) above, the Executive shall be eligible to receive an
annual incentive award based upon the Company's attainment of
pre-established performance targets relative to specified performance
standards. The performance standards upon which annual incentive
payments will be earned shall be adopted at the beginning of each year
by the Compensation Committee of the Board of Directors (the
"Committee"), to be selected by the Committee from among the
following: revenue growth, net revenue growth, operating revenue
growth, consolidated pretax profit margin, consolidated pretax
operating margin, consolidated after-tax profit margin, consolidated
after-tax operating profit margin, customer net new asset growth,
stockholder return, return on assets, earnings per share, return on
equity, and return on investment.
For each fiscal year during the term of this Agreement, the
Executive's incentive opportunity shall be computed as the amount of
total cash compensation earned pursuant to the formula-based matrix,
which shall be adopted each year by the Compensation Committee of the
Board of Directors of the Company, minus the Executive's actual base
salary paid during that year. For the 2003 fiscal year, the target
total annual cash compensation amount (including base salary) is
$5,400,000; therefore, the incentive target is $4,500,000 for
achieving specified objectives (see above).
The formula-based matrix, as amended at the sole discretion of the
Committee, shall be the sole basis for determining the Executive's
annual incentive award. The Committee shall annually review and
approve the performance standards and targets with respect to the
Executive's incentive opportunity, which review and approval shall be
completed no later than the 90th day of the Company's fiscal year for
which such incentive opportunity may be earned.
Notwithstanding anything to the contrary, the Executive's maximum
annual cash compensation (including base salary and annual incentive)
may not exceed $8,000,000.
(c) Long-Term Incentive. The Executive will be considered for stock
options in accordance with the Company's 2001 Stock Incentive Plan, as
amended, or any successor thereto ("Stock Option Program") and any
other long-term incentives offered to other executives of the Company
from time to time during the term of this Agreement.
(d) Benefits. The Executive shall be entitled to participate, as long
as he is an employee of the Company, in any and all of the Company's
present or future employee benefit plans, including without limitation
pension plans, thrift and savings plans, insurance plans, and other
benefits that are generally applicable to the Company's executives;
provided, however, that the accrual and/or receipt by the Executive of
benefits under and pursuant to any such present or future employee
benefit plan shall be determined by the provisions of such plan.
(e) Perquisites. The Executive will be provided such additional
perquisites as are customary for senior level executives of the
Company provided that each perquisite is approved by the Board of
Directors.
(f) Business Expenses. The Executive will be reimbursed for all
reasonable expenses incurred in connection with the conduct of the
Company's business upon presentation of evidence of such expenditures,
including but not limited to travel expenses incurred by the Executive
in the performance of his duties, security for the Executive, his
family, and principal residence, professional organization dues, and
club initiation fees, dues and expenses.
(g) Any annual incentive award earned by Executive under this Section
3 shall be paid as soon as reasonably practical after the end of the
Company's fiscal year end; provided, however, that if any such payment
would be nondeductible to the Company under Internal Revenue Code
Section 162(m), then any nondeductible amounts shall be deferred from
year to year until the payment of such amounts is deductible by the
Company.
4. TERMINATION OF EMPLOYMENT
(a) Resignation. Notwithstanding Section 2 hereof, this Agreement may
be terminated by the Executive at any time upon six (6) months written
notice of resignation by the Executive to the Company, and in such
event any payments pursuant to Section 3 and 4 of this Agreement shall
automatically terminate (except for the Company's obligations relating
to voluntary termination under its compensation and benefit plans, as
specified in the various plan documents, and the Executive's
obligations set forth in Section 5). Subsequent payments may be made
to the Executive as provided pursuant to Section 6 of this Agreement.
(b) Termination by the Company Other Than for Cause. Termination of
the Executive by the Company other than for Cause, as defined in
Section 4(c) below, shall cause the Company to make payments to the
Executive hereunder pursuant to the provisions of this Section 4(b).
Such a termination shall require at least sixty (60) business days'
prior notice and must be signed by at least three-fourths (3/4) of all
the non-employee members of the Board of Directors.
Notwithstanding anything to the contrary contained in the Stock Option
Program or any agreement or document related thereto, the Executive's
total outstanding and unvested shares and/or options under the Stock
Option Plan shall at the date of termination be deemed to be 100%
vested. No further grants of stock or options shall be made under the
Plan after such termination.
With respect to base salary and annual incentive compensation, the
Company's obligation shall be to pay the Executive, according to the
terms of this Agreement and for a period of thirty-six (36) months, an
amount equal to the annual salary and incentive paid to the Executive
at the bonus level for the year prior to which such termination occurs
unless performance of the Company as defined in the matrix referenced
in Section 3(b) is better in the year of termination, in which event
such bonus shall be based on the matrix calculation as described in
Section 3(b), such annual amounts to be paid in equal monthly
installments.
During the 36-month severance payment period, the Executive shall be
entitled to all payments, benefits and perquisites as provided for in
this Agreement, and office space and secretarial support comparable to
that provided to the Executive during his employment by the Company.
The Executive shall be entitled to all payments and benefits as
provided for in this Section for a period of thirty-six (36) months.
If the Board of Directors fails to reelect the Executive to a position
comparable to that described in Section 1(a) of this Agreement or,
without terminating the Executive's employment, removes the Executive
from his position for reasons other than Cause, substantively reduces
the Executive's duties and responsibilities, reduces his pay and/or
benefits without the written consent of the Executive, forces
relocation, or requires excessive travel, then the Executive may, by
notice to the Company, treat such action or removal as a termination
of the Executive by the Company pursuant to this Section 4(b).
In the event of the Executive's death before the completion of the
payments pursuant to this Section 4(b), the remaining payments
hereunder shall be made to the beneficiary or beneficiaries designated
by the Executive to the Company in writing or, absent such a
designation, to his estate.
(c) Termination by the Company for Cause. The Company may terminate
the Executive's employment for Cause if the Executive has committed a
felonious act, or the Executive, in carrying out his duties hereunder
has been willfully and grossly negligent or has committed willful and
gross misconduct resulting, in either case, in material harm to the
Company. An act or omission shall be deemed "willful" only if done, or
omitted to be done, in bad faith and without reasonable belief that it
was in the best interest of the Company. In the event of termination
of the Executive by the Company for Cause, the Executive shall no
longer be entitled to receive any payments or any other rights or
benefits under this Agreement.
(d) Disability. In the event the Executive's employment terminates due
to total and permanent disability (for the purposes of this Agreement
"disability" shall have the same meaning as applies under the
Company's Long-Term Disability Plan), he will continue to receive the
same base salary and benefits which he was receiving prior to such
disability for 36 months, offset by payments under the Company's
Long-Term Disability Plan. In addition, he shall receive a pro-rated
annual incentive payment for the year in which is employment is
terminated, based on the formula described in Section 3(b).
(e) Death. In the event of the death of the Executive during the term
of this Agreement, the rights and benefits under employee benefit
plans and programs of the Company, including life insurance, will be
determined in accordance with the terms and conditions of such plans
and programs as in effect on his date of death. In such event, the
Company shall pay in a lump sum to the Executive's estate an amount
equal to five times the then current rate of the Executive's base
salary, and no further payments shall be required pursuant to this
Agreement.
(f) Change in Control. In the event of a change in control of the
Company, as set forth below, the Executive may at any time and in his
complete discretion during a 24-month period following a change in
control, elect to terminate his employment with the Company. For
purposes of this Agreement, a "change in control" shall mean a change
in ownership of the Company that would be required to be reported in
response to Item 1(a) of a Current Report on Form 8-K pursuant to the
Securities and Exchange Act of 1934 ("Exchange Act"), as in effect on
the date hereof, except that any merger, consolidation or corporate
reorganization in which the owners of the capital stock entitled to
vote in the election of directors of the Employer or the Company
("Voting Stock") prior to said combination, own 75% or more of the
resulting entity's Voting Stock shall not be considered a change in
control for the purposes of this Agreement; provided that, without
limitation, such a change in control shall be deemed to have occurred
if (i) any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company is or
becomes the beneficial owners (as that is used in Section 13(d) of the
Exchange Act), directly or indirectly, of 30% or more of the Voting
Stock of the Company or its successor; or (ii) during any period of
two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company ("Incumbent Board")
cease for any reason to constitute at least a majority thereof;
provided, however, that any person becoming a director of the Company
after the beginning of the period whose election was approved by a
vote of at least three-quarters of the directors comprising the
incumbent Board shall, for the purposes hereof, be considered as
though he were a member of the incumbent Board; or (iii) there shall
occur the sale of all or substantially all of the assets of the
Company. Notwithstanding anything in the foregoing to the contrary, no
change in control of the Company shall be deemed to have occurred for
purposes of this Agreement by virtue of any transaction which results
in the Executive, or a group of persons which includes the Executive
acquiring, directly or indirectly, more than 30 percent of the
combined voting power of the Company's outstanding securities. If any
of the events constituting a change in control shall have occurred
during the term hereof, the Executive shall be entitled to the
privilege provided in subparagraph (f) herein to terminate his
employment.
Any termination by the Executive pursuant to this Section shall be
communicated by a written "Notice of Termination."
If, following a change in control, the Executive shall for any reason
voluntarily terminate his employment during the 24-month period
following a change in control, then the Company shall pay base salary
up to the date of termination and a prorated annual incentive award
based on the calculated bonus for the year in which termination
occurred, as defined in Section 3(b), in a lump sum on the thirtieth
(30th) day following the Date of Termination.
5. COVENANT NOT TO COMPETE
(a) As a material inducement to the Company's entering into this
Agreement, the Executive agrees that during the term of this
Agreement, he will not become associated with, render service to or
engage in any other business competitive with any existing or
contemplated business of the Company or its subsidiaries, except that
the Executive may serve as a member of the board of directors of other
companies or organizations, provided that he provides written notice
to the Board of each significant activity, and that he will do nothing
inconsistent with his duties and responsibilities to the Company.
(b) If the Executive voluntarily resigns from the employ of the
Company prior to the expiration of the term of this Agreement, he
specifically agrees that for a period of five (5) years commencing
with the date of his voluntary resignation he will not engage in or
perform any services either on a full-time or a part-time or on a
consulting or advisory basis for any business organization that is in
competition with the Company at the time such services are being
performed by Executive, with the exception that this Section 5(b)
shall not apply in the event the Executive resigns voluntarily
following a change in control of the Company as defined in Section
4(f).
(c) The Executive will not at any time, whether while employed by the
Company or after voluntary or involuntary termination or after
retirement, reveal to any person, firm or entity any trade or business
secrets or confidential, secret, or privileged information about the
business of the Company or its subsidiaries or affiliates except as
shall be required in the proper conduct of the Company's business.
6. CONSULTING ARRANGEMENT
Following a voluntary termination of employment pursuant to Section 4(a)
and 4(f), or an involuntary termination subsequent to a change in control
of the Company, for any reason but during a 24-month period following a
change in control as defined in Section 4(f), after the Executive ceases to
render services as the Chairman, he may in his sole discretion elect to act
as a consultant to the Company for a period of five (5) years. During this
period of consulting services, the Executive shall, at reasonable times and
places, taking into account any other employment or activities he may then
have, hold himself available to consult with and advise the officers,
directors, and other representatives of the Company. As compensation
therefore, the Executive shall be entitled to receive, and Company shall
pay, an annual amount equal to seventy-five percent (75%) of his annual
base salary rate in effect immediately prior to his termination of
employment, but in no event an annual amount to exceed $1,000,000, for each
year of such period, payable in equal monthly installments.
7. WITHHOLDING
All amounts payable hereunder which are or may become subject to
withholding under pertinent provisions of law or regulation shall be
reduced for applicable income and/or employment taxes required to be
withheld.
8. MISCELLANEOUS
(a) This Agreement supersedes any prior agreements or understandings,
oral or written, with respect to employment of the Executive and
constitutes the entire Agreement with respect thereto; provided,
however, that nothing contained herein shall supercede that certain
Assignment and License Agreement entered into as of March 31, 1987, as
amended. This Agreement cannot be altered or terminated orally and may
be amended only by a subsequent written agreement executed by both of
the parties hereto or their legal representatives, and any material
amendment must be approved by a majority of the voting shareholders of
the Company.
(b) This Agreement shall be governed by and construed in accordance
with the laws of the State of California.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns. In that this
constitutes a personal service agreement, it may not be assigned by
the Executive and any attempted assignment by the Executive in
violation of this covenant shall be null and void.
(d) For the purpose of this Agreement, the phrase "designated
beneficiary or beneficiaries" shall include the estates of such
beneficiaries in the event of their death before the receipt of all
payments under this Agreement and shall also include any alternate or
successor beneficiaries designated in writing to the Company by the
Executive.
(e) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions, which shall remain in full force and effect.
(f) The Section and Paragraph headings contained herein are for
reference purposes only and shall not in any way affect the meanings
or interpretation of this Agreement.
(g) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration, conducted
before a panel of arbitrators in accordance with the rules of the
American Arbitration Association then in effect. Judgement may be
entered on the arbitrators award in any court having jurisdiction. The
expense of such arbitration shall be borne by the Company.
(h) Any notices, requests or other communications provided for by this
Agreement shall be sufficient if in writing and if sent by registered
or certified mail to the Executive at the last address he has filed in
writing with the Company or, in the case of the Company, at its
principal offices.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
Company:
ATTEST THE XXXXXXX XXXXXX CORPORATION
By: Xxxxxx Xxxxx By: Xxxx XxXxxx
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Corporate Secretary Title: Executive Vice President - Human Resources
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Executive: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
