Exhibit 10.15
December 31, 1997
Xx. Xxxxxxxx X. Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xx. Xxxxxx:
We are pleased to confirm the employment agreement ("Agreement") between
you and Xxxxxx Investments, Inc. ("Xxxxxx"). In consideration of the covenants
and agreements set forth below, Xxxxxx hereby agrees that you shall continue to
be employed by Xxxxxx, and you hereby agree to continue your employment with
Xxxxxx, on the following terms and conditions:
1. TERM. Subject to the provisions of paragraph 4 below, this Agreement
shall become effective as of the date hereof (the "Effective Date") and shall
have a term that continues through and including December 31, 2001 (the "Term").
For purposes of this Agreement, the word "Term" shall mean the actual, ultimate
duration of this Agreement, taking into account any early termination of this
Agreement.
2. DUTIES AND RESPONSIBILITIES.
A. During the Term of this Agreement, you shall have, and you agree
to carry out to the best of your ability, the duties and responsibilities of
President and Chief Executive Officer of Xxxxxx reporting to the Chief Executive
Officer of Xxxxx & XxXxxxxx Companies, Inc. ("MMC"), subject to the provisions
of paragraph 4 below. You shall devote your full business time and best efforts
to the performance of your duties and responsibilities under this Agreement, and
you shall not pursue any other business activity of any type (including any
positions as an outside director) without prior written consent of the Chief
Executive Officer of MMC.
B. MMC shall use its best efforts to include you on the management
slate of nominees for directors of MMC and to have you reelected to the Board of
Directors of MMC (the "MMC Board") at its year 2000 annual meeting and you
hereby consent to so serve. Anything herein to the contrary notwithstanding,
nothing shall preclude you from serving on the boards of a reasonable number of
trade associations and/or charitable organizations, engaging in charitable
activities and community affairs and managing your personal investments and
affairs, provided that such activities do not interfere with the proper
performance of your duties and responsibilities hereunder. Furthermore, upon
termination of your employment with MMC or any subsidiary of MMC for any reason,
you agree to retire from the MMC Board effective as of the date of such
termination.
3. COMPENSATION AND BENEFITS. You shall be entitled to receive the
following compensation and benefits:
A. BASE SALARY. Commencing on the Effective Date and during the
remainder of the Term, Xxxxxx shall pay you a base salary at the annual rate of
$1,000,000.00 (the base salary in effect from time to time referred to as "Base
Salary"). Base Salary shall be paid to you in periodic installments in
accordance with Xxxxxx'x payroll practices then in effect.
B. ANNUAL CASH BONUS. Xxxxxx agrees to pay you an annual cash bonus
(the "Annual Bonus"), with respect to each calendar year of your employment
which either commences or terminates during the Term, in accordance with the
terms and conditions of MMC's Senior Management Incentive Compensation Plan (the
"ICP"). The amount of the bonus shall be determined by the Compensation
Committee of the MMC Board (the "Compensation Committee") in its sole
discretion. In no case, however, shall the Annual Bonus exceed the maximum
award which may be made to you under the ICP. The Annual Bonus shall be paid in
the following form: the portion of the Annual Bonus that is equal to the total
Fair Market Value (as used here and hereinafter, as defined in the Xxxxxx
Investments, Inc. Equity Partnership Plan (the "Equity Partnership Plan")),
determined as of the award date, of the Purchased Xxxxxx Restricted Stock Units
(as defined in paragraph 3.D(iii) below) awarded to you on the Effective Date,
with respect to the Annual Bonus relating to 1997, and in the first quarter of
the calendar year following the year to which such Annual Bonus relates with
respect to Annual Bonuses relating to 1998 and thereafter, (or the entire Annual
Bonus, if the Annual Bonus does not equal or exceed
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such total Fair Market Value) shall be paid in the form of such Purchased Xxxxxx
Restricted Stock Units and in accordance with the provisions of paragraph
3.D(iii) and the remainder of the Annual Bonus shall be paid in cash in the
first quarter of the calendar year following the year to which the Annual Bonus
relates.
C. GENERAL BENEFITS; SUPPLEMENTAL DISABILITY BENEFITS. During the
Term, you shall be entitled to participate, to the extent you are otherwise
eligible, in all group insurance programs or other welfare benefit plans which
Xxxxxx shall make available to similarly situated employees, and in the Xxxxxx
Profit Sharing Retirement Plan. Xxxxxx shall make reasonable efforts to obtain
additional disability insurance benefits under which you shall have the option,
at your own expense, to purchase disability benefits equal to a maximum of
seventy percent (70%) of the total Base Salary and a maximum of sixty percent
(60%) of up to $300,000 of the Annual Bonus which you receive under paragraphs
3.A and 3.B, respectively.
D. EQUITY AWARDS.
(i) XXXXXX STOCK OPTIONS. Effective as of the Effective Date,
the Compensation Committee hereby grants to you, pursuant to the MMC 1997 Senior
Executive Incentive and Stock Award Plan (the "1997 Plan"), a nonqualified
option (the "First Xxxxxx Option") to purchase 150,000 shares of Class B Common
Stock of Xxxxxx ("Class B Shares") at a per share exercise price of $41.51, and
a second nonqualified option to purchase 175,000 Class B Shares at a per share
exercise price of $47.98 (the "Second Xxxxxx Option"). The First and Second
Xxxxxx Options shall each expire on November 1, 2007 and shall each become
exercisable with respect to 25% of Class B Shares subject thereto on each of
December 31, 1998, December 31, 1999, December 31, 2000 and December 31, 2001.
You shall also be entitled to receive pursuant to the 1997 Plan in the first
quarter of 1999 and again in the first quarter of 2000, an additional
nonqualified option (the "Third Xxxxxx Option" and "Fourth Xxxxxx Option,"
respectively, and, collectively with the First Xxxxxx Option and the Second
Xxxxxx Option, the "Xxxxxx Options"), in each case at a per share exercise price
equal to the Fair Market Value of a Class B Share as of each such date, the
number of Class B Shares subject to such Third and Fourth Xxxxxx Option to be
determined by the Compensation Committee in its sole discretion using criteria
similar to that used for awards at that time to senior
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participants in the Equity Partnership Plan. The Third Xxxxxx Option shall
expire on November 1, 2007 and become exercisable with respect to 25% of Class B
Shares subject thereto on each anniversary of the date of grant in each of 2000,
2001, 2002 and 2003, and the Fourth Xxxxxx Option shall expire on November 1,
2007 and become exercisable with respect to 25% of Class B Shares subject
thereto on each anniversary of the date of grant in each of 2001, 2002, 2003 and
2004. In all other respects, each Xxxxxx Option granted pursuant to this
Agreement shall be treated as if it were subject to the terms and conditions of
the Equity Partnership Plan and as if each such Xxxxxx Option had been granted
thereunder, except that
(a) any and all rights or obligations of Xxxxxx
pursuant to the Equity Partnership Plan with respect to
cancellation, forfeiture, purchase, sale, exchange, conversion or
similar events affecting Xxxxxx Options or Class B Shares
acquired by exercise of the Xxxxxx Options shall be rights or
obligations of MMC and not Xxxxxx (and any amounts paid to you
pursuant to the exercise of such rights shall be paid to you as
soon as practicable following the Payment Date, as defined in
paragraph 3.D(iii) below);
(b) in the event of a termination of your employment
pursuant to paragraph 4.B of this Agreement or upon your
retirement after December 31, 2001, the Xxxxxx Options granted
hereunder shall not be subject to the cancellation provision of
Section 7(a)(i) of the Equity Partnership Plan;
(c) in the event of a termination of your employment
pursuant to paragraphs 4.D or 4.E of this Agreement, the Xxxxxx
Options granted hereunder shall not be subject to the termination
provision of Section 7(c)(i) of the Equity Partnership Plan;
provided, however, that if your termination is pursuant to
paragraph 4.E where Good Cause relating to such termination is a
Change in Control of MMC or a Change in Control of Xxxxxx, then
this paragraph 3.D(i)(c) shall not apply but instead the
applicable provisions of the Equity Partnership Plan shall apply;
(d) MMC may exercise the rights, set forth in the
first sentence of Section 8(b)(ii) of the Equity Partnership
Plan, to cancel Xxxxxx
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Options or Class B Shares acquired by exercise of the Xxxxxx
Options only if all options granted under the Equity Plan or all
Class B Shares, as applicable, are also cancelled; and
(e) for purposes of the Equity Partnership Plan, any
termination of your employment with Xxxxxx after December 31,
2001 shall be deemed a "retirement".
The number of Class B Shares subject to Xxxxxx Options and the
exercise price of outstanding Xxxxxx Options shall be adjusted if such an
adjustment has been made to outstanding options granted under the Equity
Partnership Plan to reflect any dividend, stock split or share combination or
any recapitalization, merger, consolidation, exchange of shares, liquidation or
dissolution of Xxxxxx or similar corporate event. Each Xxxxxx Option granted to
you shall be evidenced by an Award Agreement substantially in the form of the
award agreement attached as Exhibit A hereto.
(ii) MMC STOCK OPTION. Effective as of the Effective Date,
the Compensation Committee hereby grants to you, pursuant to the 1997 Plan, a
nonqualified option ("MMC Stock Option") to purchase 100,000 shares of Common
Stock of MMC ("MMC Shares") at an exercise price per share equal to the fair
market value of an MMC Share as of such date, as defined in the 1997 Plan, which
shall expire on November 1, 2007 and shall vest with respect to 25% of the
shares subject thereto per year on each of December 31, 1998, December 31, 1999,
December 31, 2000 and December 31, 2001. If your employment with Xxxxxx is
terminated by Xxxxxx or MMC (acting through its Compensation Committee) pursuant
to paragraph 4.A of this Agreement or by you for any reason other than pursuant
to paragraph 4.E of this Agreement, then you shall forfeit the MMC Stock Option
granted pursuant to this paragraph 3.D(ii), whether or not then exercisable, to
the extent not exercised as of the date of such termination. If your employment
with Xxxxxx is terminated in accordance with paragraphs 4.B, 4.D or 4.E of this
Agreement, then the MMC Stock Option shall vest and become exercisable as of the
date of such termination. In the event of a termination of your employment
pursuant to paragraph 4.C of this Agreement, then the MMC Stock Option shall
vest and become exercisable and the person or persons to whom your rights under
the MMC Stock Option shall pass by will or the laws of descent and distribution
shall be entitled to exercise such MMC Stock Option within one year after the
date of death, but in no
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event shall the MMC Stock Option be exercised beyond its expiration date. The
MMC Stock Option granted to you shall be evidenced by an Award Agreement
substantially in the form of the award agreement attached as Exhibit B hereto.
(iii) XXXXXX RESTRICTED STOCK UNITS. Effective as of the
Effective Date, you shall receive, pursuant to the 1997 Plan, 300,000 shares of
Xxxxxx restricted stock units ("Xxxxxx Restricted Stock Units"), 150,000 of
which shall vest on December 31, 2001 ("Excluded Units") and 150,000 of which
shall vest at the rate of 25% per year on each of December 31, 1998, December
31, 1999, December 31, 2000 and December 31, 2001. During the Term you shall
also be entitled to receive, in the first quarter of 1999, additional Xxxxxx
Restricted Stock Units which shall vest at the rate of 25% per year on each
anniversary of the date of grant in each of 2000, 2001, 2002 and 2003 and, in
the first quarter of 2000, additional Xxxxxx Restricted Stock Units which shall
vest at the rate of 25% per year on each anniversary of the date of grant in
each of 2001, 2002, 2003 and 2004, with the number of such additional Xxxxxx
Restricted Stock Units to be determined by the Compensation Committee in its
sole discretion using criteria similar to that used for awards at that time to
senior participants in the Equity Partnership Plan. Each individual Xxxxxx
Restricted Stock Unit shall represent (and shall have a Fair Market Value equal
to the Fair Market Value of) one Class B Share and shall be treated as if it
were subject to the terms and conditions of the Equity Partnership Plan
applicable to shares of Restricted Stock awarded under the Equity Partnership
Plan, except that
(a) dividend equivalents (rather than actual
dividends) plus earnings, but net of any losses, resulting
from the investment thereof shall be payable in cash with
respect to the Xxxxxx Restricted Stock Units and such
dividend equivalents shall be paid as soon as practicable
following the earliest date that payment may be made without
causing such payment to be nondeductible by MMC by reason of
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code") (such earliest date, the "Payment
Date"). The dividend equivalents shall be deemed invested
from their respective dividend payment dates, pursuant to
your investment direction, among the various Xxxxxx funds;
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(b) payments in respect of Xxxxxx Restricted
Stock Units shall be made in Class B Shares, such payments
to be made as soon as practicable following the Payment
Date;
(c) any and all rights or obligations of Xxxxxx
pursuant to the Equity Partnership Plan with respect to
cancellation, forfeiture, purchase, sale, exchange,
conversion or similar events affecting Xxxxxx Restricted
Stock Units or Class B Shares shall be rights or obligations
of MMC and not of Xxxxxx (and any amounts paid to you
pursuant to the exercise of such rights shall be paid to you
as soon as practicable following the Payment Date);
(d) MMC may exercise the rights, set forth in the
first sentence of Section 8(b)(ii) of the Equity Partnership
Plan, to cancel Xxxxxx Restricted Stock Units, or Class B
Shares acquired by payment with respect to Xxxxxx Restricted
Stock Units, only if all restricted stock granted under the
Equity Plan, or all Class B Shares, as applicable, are also
cancelled;
(e) in the event of a termination of your
employment pursuant to paragraphs 4.D or 4.E of this
Agreement, the Xxxxxx Restricted Stock Units granted
hereunder shall not be subject to the termination provision
of Section 7(c)(ii) of the Equity Partnership Plan;
provided, however, that if your termination is pursuant to
paragraph 4.E where Good Cause relating to such termination
is a Change in Control of MMC or a Change in Control of
Xxxxxx, then this paragraph 3.D(iii)(e) shall not apply; and
(f) for purposes of the Equity Partnership Plan,
any termination of your employment with Xxxxxx after
December 31, 2001 shall be deemed a "retirement".
The number of Xxxxxx Restricted Stock Units referred to above
shall be adjusted if such an adjustment has been made pursuant to the Equity
Partnership Plan to the number of outstanding shares of Restricted Stock
thereunder to reflect any dividend, stock split or share combination or any
recapitalization, merger, consolidation, exchange of shares, liquidation or
dissolution of Xxxxxx or similar
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corporate event. The Xxxxxx Restricted Stock Units granted to you shall be
evidenced by an Award Agreement substantially in the form of the award agreement
attached as Exhibit A hereto.
All Xxxxxx Restricted Stock Units except the Excluded Units shall
be "Purchased Xxxxxx Restricted Stock Units" and shall constitute a form of
payment of the Annual Bonus, in accordance with paragraph 3.B above. If the
Annual Bonus with respect to a year does not equal or exceed the total Fair
Market Value, determined as of the award date, of the Purchased Xxxxxx
Restricted Stock Units relating to such Annual Bonus, then (unless you have
timely declined such excess Purchased Xxxxxx Restricted Stock Units) within 30
days of the date such Annual Bonus is paid, you will pay MMC an amount equal to
the excess of such total Fair Market Value over such Annual Bonus.
(iv) MMC RESTRICTED STOCK UNITS. Effective as of the Effective
Date, the Compensation Committee hereby grants to you, pursuant to the 1997
Plan, 100,000 shares of MMC restricted stock units ("MMC Restricted Stock
Units") which shall vest on February 1, 2002. If your employment with Xxxxxx is
terminated by Xxxxxx or MMC (acting through its Compensation Committee) pursuant
to paragraph 4.A of this Agreement or by you prior to December 31, 2001 for any
reason other than pursuant to paragraph 4.E of this Agreement, then you shall
forfeit all MMC Restricted Stock Units granted pursuant to this paragraph
3.D(iv). If your employment with Xxxxxx is terminated in accordance with
paragraphs 4.B, 4.C, 4.D or 4.E of this Agreement prior to December 31, 2001, or
for any reason after December 31, 2001, then the MMC Restricted Stock Units
granted to you pursuant to this paragraph 3.D(iv) shall vest as of the date of
such termination. The award of MMC Restricted Stock Units granted to you shall
be evidenced by an Award Agreement substantially in the form of the award
agreement attached as Exhibit C hereto. Payment in respect of MMC Restricted
Stock Units shall be made in MMC Shares as soon as practicable following the
Payment Date; and dividend equivalents plus earnings, but net of any losses,
resulting from the investment thereof shall be payable in cash with respect to
the MMC Restricted Stock Units as soon as practicable following the Payment
Date. The dividend equivalents shall be deemed invested from their respective
dividend payment dates, pursuant to your investment direction, among the various
Xxxxxx funds.
(v) AGREEMENT BETWEEN MMC AND XXXXXX. In connection with the
grant of Xxxxxx Options and Xxxxxx
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Restricted Stock Units referred to in this paragraph 3.D, Xxxxxx agrees to issue
to MMC from time to time that number of Class B Shares as may be necessary for
MMC to issue to you upon exercise of such Xxxxxx Options or in payment of such
Xxxxxx Restricted Stock Units, such issuance to be in exchange for an equal
number of shares of Class A Common Stock, par value $.01 per share, of Xxxxxx
("Class A Shares") held by MMC. In the event that (x) MMC acquires Class B
Shares from you or your transferee (including any Class B Shares acquired by you
through the exercise of Xxxxxx Stock Options or as a result of the payment of
Xxxxxx Restricted Stock Units, and any shares acquired by you upon an adjustment
to reflect any dividend, stock split or share combination or any
recapitalization, merger, consolidation, exchange of shares, liquidation or
dissolution of Xxxxxx or similar corporate event) pursuant to paragraphs
3.D(i)(a) and 3.D(iii)(c) hereof, or (y) Class B Shares (as well as any Xxxxxx
Options or Xxxxxx Restricted Stock Units related to Class B Shares held by MMC)
held by you or MMC are otherwise cancelled, sold, purchased, forfeited,
exchanged for a payment or converted into a Class A Share, or are otherwise
similarly affected, then Xxxxxx agrees to return to, and shall be deemed to have
returned to, MMC with respect to the Class B Shares so affected, an equal number
of Class A Shares (as may have been adjusted in accordance with the adjustment
provision set forth above) and MMC agrees to return to, and shall be deemed to
have returned to, Xxxxxx (irrespective of whether such shares were cancelled or
are still outstanding) the Class B Shares so affected. The provisions of this
paragraph 3.D(v) shall be adjusted to the extent appropriate to reflect any
actions contemplated by Section 11(a) of the Equity Partnership Plan.
(vi) In the event of a termination of your employment pursuant to
paragraphs 4.B, 4.D or 4.E (except where Good Cause relating to such termination
is a Change in Control of MMC or a Change in Control of Xxxxxx) or any
termination of your employment after December 31, 2001, any right of MMC under
Section 7(d)(i) of the Equity Partnership Plan to repurchase Class B Shares then
held by you or thereafter acquired by you may not be exercised by MMC until
after November 1, 2007 and any right you have under Section 7(d)(ii) of the
Equity Partnership Plan to request that MMC purchase the Class B Shares then
held by you or thereafter acquired by you may be exercised in accordance with
the terms of the Equity Partnership Plan through November 1, 2007.
Notwithstanding the above, with respect to Class B Shares which have been held
by you for less than six months, the rights described in the immediately
preceding sentence
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may not be exercised by MMC or by you, as applicable, prior to the date six
months following the applicable Grant Date (in case of Restricted Stock Units)
or date of exercise (in case of Class B Shares acquired upon exercise of Xxxxxx
Options).
E. SPECIAL RETIREMENT BENEFIT. In consideration for your covenants
set forth in paragraph 7, you shall be entitled to receive a special retirement
benefit of a gross value estimated at $1,500,000 per year for your lifetime. As
of the Effective Date, MMC and Xxxxxx shall determine an amount which represents
the actuarial estimated equivalent sufficient to fund their commitment at the
Effective Date. This funded amount, which has been determined to equal
$15,000,000.00, shall be deemed invested from the Effective Date, pursuant to
your investment direction, among the various Xxxxxx funds. On the latest of (a)
November 1, 2002, (b) your retirement from Xxxxxx or MMC and (c) the Payment
Date you shall be entitled to receive in cash the amount referenced in the
immediately preceding sentence, plus the earnings, if any, net of any losses, if
any, of the deemed investment thereof (such total, the "Special Retirement
Benefit") in a lump sum, installments or as an annuity, pursuant to your
election made prior to a date one year immediately preceding the commencement of
the payment of the Special Retirement Benefit. However, if you choose a
lifetime annuity, the equivalent of the lump sum payment, net of applicable
withholding taxes, will be used to purchase in your name an annuity contract
from the insurance company or other financial institution of your choice and the
purchase thereof will relieve Xxxxxx and MMC of all liability for such payment.
F. SERVICES FURNISHED. During the Term, Xxxxxx shall furnish you
with appropriate office space and secretarial services, and such other
facilities and services as are suitable to your position and adequate for the
performance of your duties as set forth in paragraph 2 hereof.
G. AUTOMOBILE. During the Term, Xxxxxx shall furnish you with an
automobile similar to that provided to you immediately prior to the Effective
Date, on substantially similar terms as those in effect immediately prior to the
Effective Date.
H. HOTEL REIMBURSEMENT. During the Term, Xxxxxx shall reimburse you
at a rate of $2,121.00 per month, for expenses relating to the maintenance and
upkeep on your apartment in New York City, such reimbursement to be paid in
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lieu of reimbursement of any expenses you might otherwise have incurred for
hotel and related expenses.
4. TERMINATION. You, Xxxxxx or MMC shall be free to terminate this
Agreement, as follows:
A. BY XXXXXX OR BY MMC FOR CAUSE OR BY YOU WITHOUT GOOD CAUSE.
Xxxxxx or MMC (acting through its Compensation Committee) shall have the right
to terminate your employment hereunder for "Cause" upon thirty (30) days' prior
written notice. For purposes of this Agreement only, "Cause" shall be defined
to include 1) material willful misconduct in the performance of your duties and
responsibilities hereunder, 2) material willful nonperformance of your duties
and responsibilities hereunder other than for reasons of disability, 3) breach
by you of a material term of this Agreement, or 4) conviction of, or your
written admission to, a felony or other crime involving moral turpitude, or
imprisonment for any crime; PROVIDED, HOWEVER, that in the event of a potential
termination for Causes l, 2 or 3 above, such termination may not occur until at
least thirty (30) days after Xxxxxx or MMC (acting through its Compensation
Committee) has provided you with a detailed written notice of the ground(s) for
the termination, and then only if you have failed to correct the behavior giving
rise to such potential termination. Notwithstanding any other provision of this
Agreement, the 1997 Plan or the Equity Partnership Plan or any applicable award
agreement, in the event of a termination for Cause pursuant to this paragraph
4.A or in the event of a termination by you without Good Cause (as defined in
paragraph 4.E below), (x) Xxxxxx shall only be obligated to pay you your Base
Salary through the date of your termination, together with such other benefits
and payments to which you may be entitled by law or pursuant to the benefit
plans of Xxxxxx then in effect and (y) any awards granted pursuant to paragraph
3.D of this Agreement, whether or not then vested, and any Class B Shares then
held by you, shall be cancelled and forfeited as of the date of termination
pursuant to this paragraph 4.A. Notwithstanding the preceding sentence or any
other provision of this Agreement, the 1997 Plan, the Equity Partnership Plan or
any applicable award agreement, in the event of a termination for Cause pursuant
to this paragraph 4.A, you shall forfeit the Special Retirement Benefit.
Subject to paragraph 7 of this Agreement, in the event of a termination by you
without Good Reason, the Special Retirement Benefit shall be paid to you in
three equal installments, the first such installment to be paid on the January
10 next following such date of termination, and the second and third such
installments to
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be paid on the first and second anniversaries, respectively, of the payment of
the first installment.
B. DISABILITY. Xxxxxx or MMC (acting through its Compensation
Committee) shall have the right to terminate your employment hereunder in the
event that you shall be prevented, by illness, accident, disability or any other
physical or mental condition (to be determined by means of a written opinion of
a competent medical doctor chosen by mutual agreement of Xxxxxx or MMC, as
applicable, and you or your personal representative), from substantially
performing your duties and responsibilities hereunder for one or more periods
totaling one hundred twenty (120) days in any twelve (12) month period. In the
event of a termination pursuant to this paragraph, you shall continue to receive
your Base Salary through the end of the year in which the termination of your
employment pursuant to this paragraph 4.B occurs, after which your right to
receive income continuation shall be determined in accordance with the terms and
conditions of Xxxxxx'x short-term and long-term disability plans then in effect.
You shall also be entitled to receive, at the time it would otherwise have been
payable, the Annual Bonus with respect to the year in which the termination
pursuant to this paragraph 4.B occurs, in an amount equal to the average of the
Annual Bonuses with respect to the two most recently completed years.
Furthermore, Xxxxxx shall pay you, as soon as practicable following the Payment
Date, the Special Retirement Benefit.
C. DEATH. In the event of a termination of your employment during
the Term by reason of your death, Xxxxxx shall pay to your estate, designated
beneficiary or legal representative, after the Payment Date, an amount equal to
your Base Salary through the end of the year in which your death occurs. In the
event of a termination of your employment during the Term by reason of your
death, Xxxxxx shall also pay to your estate, designated beneficiary or legal
representative, as soon as practicable following the Payment Date, the Special
Retirement Benefit in a lump sum. Xxxxxx shall also pay to your estate,
designated beneficiary or legal representative, at the time it would otherwise
have been payable, the Annual Bonus with respect to the year in which your death
occurs, in an amount equal to the average of the Annual Bonuses for the two most
recently completed years.
D. TERMINATION BY XXXXXX OR BY MMC OTHER THAN FOR CAUSE, DISABILITY
OR DEATH. Xxxxxx or MMC (acting through its Compensation Committee) shall have
the right to
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terminate your employment hereunder other than for Cause, disability or death
upon thirty (30) days' prior written notice to you; PROVIDED, HOWEVER, that in
the event of a termination pursuant to this paragraph, Xxxxxx shall be required
to pay you, after the Payment Date, your Base Salary through the period ending
with the date of your termination, and an amount equal to the sum of your Base
Salary and Annual Bonuses (the Annual Bonus shall, for this purpose, be deemed
to equal no less than the higher of (x) the average of the Annual Bonuses with
respect to the two most recently completed years and (y) the Minimum Amount (as
defined in paragraph 4.E below)) through and including December 31, 2001.
Furthermore, Xxxxxx shall pay you, as soon as practicable following the Payment
Date, the Special Retirement Benefit.
E. TERMINATION BY YOU FOR GOOD CAUSE. In the event that you resign
your employment with Xxxxxx, by providing to Xxxxxx and MMC a written notice of
resignation within thirty (30) days following an event constituting "Good
Cause," as that phrase is defined below, your resignation shall be deemed to be
a termination of your employment by Xxxxxx other than for Cause pursuant to
paragraph 4.D above, in which event both you and Xxxxxx shall have your
respective rights and obligations in the event of such a termination. If you do
not send Xxxxxx and MMC a written notice of resignation pursuant to this
paragraph within thirty (30) days following an event constituting Good Cause,
your rights under this paragraph 4.E on the basis solely of such event shall
cease. For purposes of this Agreement, the phrase "Good Cause" shall mean (a) a
breach by MMC or Xxxxxx of a material term of this Agreement which is not cured
within 30 business days from receipt of written notice thereof from you, (b)
relocation of Xxxxxx'x executive offices outside of the Boston area, (c)
reassignment of you to a location outside of the Boston area, (d) failure to pay
you an Annual Bonus with respect to each full year of your employment during the
Term of at least the sum (such sum, the "Minimum Amount") of (x) a cash amount
equal to (i) in the case of the Annual Bonus for the year ended December 31,
1997, at least $12,000,000 and (ii) in the case of Annual Bonuses for future
years, two times the average annual cash bonus received under the Xxxxxx
Partners Incentive Compensation Plan (or which would have been received had that
plan continued) by the three participants who received (or who would have
received had that plan continued) the highest cash bonus under the Xxxxxx
Partners Incentive Compensation Plan with respect to such year, as determined on
a basis consistent with the provisions, Award Percentage (as that
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term is defined in the Xxxxxx Partners Incentive Compensation Plan) and
individual percentage participations existing for the Xxxxxx Partners Incentive
Compensation Plan and the associated financial measurements as of the Effective
Date, plus (y) the total Fair Market Value, determined as of the date you
acquired them, of the Purchased Xxxxxx Restricted Stock Units acquired by you
which relate to such Annual Bonus, (e) a Change in Control of MMC or a Change in
Control of Xxxxxx, each as defined below, or (f) failure to grant to you the
Third Xxxxxx Option and the Fourth Xxxxxx Option with respect to, in the
aggregate, 105,000 or more Class B Shares or failure to grant to you additional
Xxxxxx Restricted Stock Units in 1999 and 2000 with respect to, in the
aggregate, 105,000 or more Class B Shares.
(i) For purposes of this Agreement, the phrase "Change in
Control of MMC" means the first to occur of the following events after the
Effective Date: (a) any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended ("Exchange Act") (other
than MMC, any trustee or other fiduciary holding securities under an employee
benefit plan of MMC or any corporation owned, directly or indirectly, by the
stockholders of MMC in substantially the same proportions as their ownership of
stock of MMC), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of MMC
representing 50% or more of the combined voting power of MMC's then outstanding
voting securities; or (b) during any period of two consecutive years,
individuals who at the beginning of such period constitute the MMC Board, and
any new director (other than a director designated by a person who has entered
into an agreement with MMC to effect a transaction described in clause (a), (b),
or (d) of this paragraph 4.E(i)) whose election by the MMC Board or nomination
for election by MMC's stockholders was approved by a vote of at least two-thirds
(2/3) of the directors then still in office who either were directors at the
beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof; or (c) the stockholders of MMC approve a merger or consolidation of MMC
with any other corporation, other than (1) a merger or consolidation which would
result in the voting securities of MMC outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving or parent entity) more than 50% of the
combined voting power of the voting securities of MMC or such surviving or
parent entity outstanding immediately after
14
such a merger or consolidation or (2) a merger or consolidation effected to
implement a recapitalization of MMC (or similar transaction) in which no
"person" (as hereinabove defined) acquired 50% or more of the combined voting
power of MMC's then outstanding securities; or (d) the stockholders of MMC
approve a plan of complete liquidation of MMC or an agreement for the sale or
disposition by MMC of all or substantially all of MMC's assets (or any
transaction having a similar effect).
(ii) For purposes of this Agreement, the phrase "Change in
Control of Xxxxxx" means the first to occur of the following events after the
Effective Date: (a) MMC approves a plan of complete liquidation of Xxxxxx, or a
sale or other disposition of all or substantially all of its assets to an entity
of which MMC holds less than 50% of the voting power of securities; or (b) MMC,
together with its subsidiaries, trustees or other fiduciaries holding securities
of Xxxxxx under an employee benefit plan maintained by MMC or by a subsidiary of
MMC, ceases for any reason (including by reason of a sale or other disposition,
including a spinoff or public offering) to be a beneficial owner of securities
of Xxxxxx representing more than 50% of the voting power of the securities of
Xxxxxx.
F. ADDITIONAL PAYMENT. If any payment under this Agreement
attributable to the Second Xxxxxx Option (as defined in paragraph 3.D(i)), the
Excluded Units (as defined in paragraph 3.D(iii)), the MMC Option or the MMC
Restricted Stock Units (the "Payments") will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax that may hereafter
be imposed), you shall be entitled to receive, at the time specified below, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
you after deduction of any Excise Tax on such Payments and any federal, state
and local income and employment tax and Excise Tax upon payment provided for by
this paragraph 4.F, shall be equal to the Payments. For purposes of determining
whether any of the Payments will be subject to the Excise Tax and the amount of
such Excise Tax, (i) all payments or benefits received or to be received by you
in connection with a Change in Control of Xxxxxx or of MMC or your termination
of employment with Xxxxxx (pursuant to this Agreement) shall be treated as
"parachute payments" within the meaning of Section 280G(b)(2) of the Code, and
all "excess parachute payments" within the meaning of Section 280G(b)(1) shall
be treated as subject to the Excise Tax, unless in the opinion of tax counsel
selected by MMC's independent auditors and acceptable to you such payments or
15
benefits (in whole or in part) do not constitute parachute payments, or such
excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code, or otherwise not subject to the Excise Tax; (ii)
the amount of the Payments which shall be treated as subject to the Excise Tax
shall be equal to the lesser of (1) the total amount of the Payments or (2) the
amount of excess parachute payments within the meaning of Section 280G(b)(1)
(after applying clause (1) above); and (iii) the value of any non-cash benefits
or any deferred payment or benefit shall be determined by MMC's independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4) of the
Code. For purposes of determining the amount of the Gross-Up Payment, you shall
be deemed to pay federal income taxes at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of your residence on the date such Gross-Up Payment is made,
net of the maximum reduction in federal income taxes which could be obtained
from deduction of such state and local taxes. In the event that the Excise Tax
is subsequently determined to be less than the amount taken into account
hereunder at the time of the Gross-Up Payment, you shall repay to the Company at
the time that the amount of such reduction in Excise Tax is finally determined,
the portion of the Gross-up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax and federal and
state and local income tax imposed on the Gross-Up Payment being repaid by you
if such repayment results in a reduction in Excise Tax and/or a federal and
state and local income tax deduction) plus interest on the amount of such
repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time of the Gross-Up Payment (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), you shall be entitled to an additional Gross-Up Payment in
respect of such excess (plus any interest payable with respect to such excess)
at the time that the amount of such excess is finally determined. Any Gross-Up
Payment to be made to you under this paragraph shall be payable within thirty
(30) days of the date of the Change in Control of MMC or change in control of
Xxxxxx, as applicable.
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G. GENERAL APPLICABLE TERMS. In the event of a termination of your
employment pursuant to paragraphs 4.D or 4.E of this Agreement, Xxxxxx
acknowledges that any amounts due you under this paragraph 4 are intended solely
as severance pay and not, e.g., as damages. Accordingly, Xxxxxx acknowledges
and agrees that you will have no duty to mitigate any loss of income by seeking
other employment or otherwise, and any earnings you may receive subsequent to
termination of employment shall not reduce or in any manner affect the amounts
due under this paragraph 4, if any. Whether or not any amounts are due you
following termination of your employment, you, your estate or other beneficiary
or representative shall in any event receive such payments or benefits you or
they would be entitled to by law or pursuant to benefit plans of Xxxxxx then in
effect.
5. CONFIDENTIALITY. You agree that you will not at any time, during or
after your employment by Xxxxxx, or any of its affiliates (collectively, for
purposes of this paragraph 5, "Xxxxxx"), without MMC's prior written consent,
reveal or disclose to any person outside of Xxxxxx, or use for your own benefit
or the benefit of any other person or entity, any confidential information
concerning the business or affairs of Xxxxxx or MMC, or concerning Xxxxxx'x or
MMC's customers, clients or employees ("Confidential Information"). For
purposes of this Agreement, Confidential Information shall include, but shall
not be limited to, financial information or plans; sales and marketing
information or plans; business or strategic plans; salary, bonus or other
personnel information of any type; information concerning methods of operation;
proprietary systems or software; legal or regulatory information; cost and
pricing information or policies; information concerning new or potential
products or markets; investment models, practices, procedures, strategies or
related information; research and/or analysis; and information concerning new or
potential investors, customers, clients, or shareholders. Confidential
Information shall not include Confidential Information already available to the
public through no act of yours and salary, bonus or other personnel information
specific to you, nor shall this paragraph be construed so as to interfere with
your right to use your general knowledge, experience, memory and skills,
whenever and wherever acquired, in any future employment, subject to the
limitations set forth in paragraph 7 hereof.
You further understand and agree that all such Confidential
Information, however or whenever produced, shall be Xxxxxx'x or MMC's sole
property, and shall not be removed by you (or anyone acting at your direction or
on
17
your behalf) from Xxxxxx'x or MMC's custody or premises without Xxxxxx'x or
MMC's prior written consent. Upon the termination of your employment, you will
promptly deliver to Xxxxxx or MMC all copies of all documents, equipment,
property or materials of any type in your possession, custody or control, that
belong to Xxxxxx or MMC, and/or that contain, in whole or in part, any
Confidential Information.
6. INVENTIONS. During the Term of this Agreement, you shall promptly
disclose to Xxxxxx or any successor or assign, and grant to Xxxxxx and its
successors and assigns (without any separate remuneration or compensation other
than that received by you in the course of your employment), your entire right,
title and interest in and to any and all inventions, developments, discoveries,
models, or any other intellectual property of any type or nature whatsoever
("Intellectual Property"), whether developed by you during or after business
hours, or alone or in connection with others, in any way related to the business
of Xxxxxx, its affiliates, successors or assigns. This provision shall not
apply to books or articles authored by you during non-work hours, consistent
with your obligations under this Agreement, so long as such books or articles a)
are not funded in whole or in part by Xxxxxx, or b) do not contain any
Confidential Information or Intellectual Property. You agree, at Xxxxxx'x
expense, to take all steps necessary or proper to vest title to all such
Intellectual Property in Xxxxxx, its affiliates, successors, assigns, nominees
or designees, and to cooperate fully and assist Xxxxxx in any litigation or
other proceedings involving any such Intellectual Property.
7. NONCOMPETITION COVENANT; CONSULTING COVENANT.
A. NONCOMPETITION COVENANT DURING YOUR EMPLOYMENT AND THEREAFTER.
During the Term of this Agreement and until you attain the age of 65, you shall
not, directly or indirectly, for your own account, or in any capacity on behalf
of any other third person or entity, whether as an officer, director, employee,
partner, joint venturer, consultant, investor or otherwise, engage, or assist
others engaged, in whole or in part, in any business in competition with the
business of Xxxxxx within the geographical areas in which Xxxxxx has conducted
its business operations or provided services as of the date of this Agreement or
at any time prior to your termination hereunder, subject to the following
special provisions:
(i) For purposes of this covenant, "Xxxxxx" means only any or
all of Xxxxxx Investments, Inc., its
18
wholly or majority-owned subsidiaries, and any other affiliate of Xxxxxx
Investments, Inc. engaged on a regular basis in providing services to Xxxxxx
Investments, Inc., to such a subsidiary, or to third persons in association with
Xxxxxx Investments, Inc. or such a subsidiary.
(ii) Any investment you may make in a business in competition
with the business of Xxxxxx shall not be considered to give rise to a violation
of this covenant if the following three conditions are met: (a) the stock of
such business is publicly traded, (b) your equity interest in such business does
not exceed five percent (5%) of the aggregate outstanding equity interests of
such business and (c) you do not otherwise participate in the management or
operational affairs of such business.
(iii) This covenant shall not be considered violated by your
management of funds (whether personally or as an employee or partner of a
business formed for this purpose) solely on behalf of yourself or yourself and
one or more of your family members or other relatives.
Notwithstanding any provision to the contrary contained herein, in the
event that you breach the noncompetition covenant of this paragraph 7.A, you
shall forfeit and be required to return to Xxxxxx each of the following: (a)
the Special Retirement Benefit; (b) any and all Xxxxxx Options (whether or not
then exercisable, with all of such Xxxxxx Options being cancelled and
terminated) and Xxxxxx Restricted Stock Units; (c) all Class B Shares then held
by you; (d) all rights with respect to other payments to which you may become
entitled with respect to Xxxxxx Options, Xxxxxx Restricted Stock Units or Class
B Shares; and (e) 50% of all proceeds from any prior sales of any Class B Shares
or cancellation, forfeiture, exchange or conversion of Xxxxxx Options, Xxxxxx
Restricted Stock Units or Class B Shares, or other cash payments received with
respect to Xxxxxx Options, Xxxxxx Restricted Stock Units or Class B Shares. The
relief Xxxxxx and MMC is entitled to pursuant to the preceding sentence shall be
in addition to, and not in lieu of, any other relief to which it may be entitled
by law (including without limitation its actual damages as a result of any such
breach). If, at any time, the provisions of this paragraph 7.A shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this paragraph 7.A shall
be considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable
19
and enforceable by the court or other body having jurisdiction over the matter;
and you agree that this paragraph 7.A as so amended shall be valid and binding
as though any invalid or unenforceable provision had not been included herein.
B. CONSULTING COVENANT. Following the termination of your
employment for any reason, and until you attain the age of 65, you shall make
yourself available to consult and advise the Chief Executive Officer of Xxxxxx
and MMC with respect to such matters involving the business of Xxxxxx as may be
requested; and Xxxxxx shall reimburse you for any reasonable out-of-pocket
expenses relating thereto; provided, however, that you shall not be required to
make yourself so available for more than ten hours during any month or at any
location inconvenient for you. For the duration of your consulting obligations,
the provisions of paragraph 3.F (as it relates to your position and duties as a
consultant) and 3.G shall continue to apply.
8. MUTUAL NONDISPARAGEMENT COVENANT. You agree that you will not at any
time speak or act in any manner that is intended to, or does in fact, damage the
goodwill or the business of MMC or Xxxxxx, or the business or personal
reputations of any of MMC's or Xxxxxx'x directors, officers, agents, employees,
clients or suppliers, and you further agree that you will not engage in any
other deprecating conduct or communications with respect to MMC or Xxxxxx. In
connection with any termination of your employment, MMC agrees to negotiate in
good faith with you as to a mutually acceptable description of the reasons for
your termination of employment. Each of MMC and Xxxxxx agrees that it will not,
and will not permit any of its directors, officers, agents, or employees to, at
any time speak or act in any manner inconsistent with such negotiated
description or that is intended to, or does in fact, damage your business or
personal reputation.
9. FAILURE TO PAY AMOUNTS DUE UNDER THIS AGREEMENT. If MMC or Xxxxxx
withholds or fails to pay you any amounts which it is obligated to pay you under
this Agreement, and you are forced to file suit to collect such amounts, and
succeed in collecting such amounts, MMC and Xxxxxx shall be obligated to pay you
your reasonable costs and attorneys' fees incurred in collecting such amounts.
10. SPECIFIC PERFORMANCE. You recognize and agree that Xxxxxx'x remedy at
law for breach of paragraphs 5, 6, 7 and 8 of this Agreement would be
inadequate, and further
20
agree that, for breach of such provisions, Xxxxxx shall be entitled to
injunctive relief and to enforce its rights by an action for specific
performance. Xxxxxx recognizes and agrees that your remedy at law for breach of
paragraph 8 of this Agreement would be inadequate, and further agree that, for
breach of such provision, you shall be entitled to injunctive relief and to
enforce your rights by an action for specific performance.
11. CHOICE OF LAW. This Agreement, and all disputes arising under or
related to it, shall be governed by the law of the Commonwealth of
Massachusetts.
12. CODE SECTION 162(M). Notwithstanding any other provision of this
Agreement, no payments shall be made hereunder prior to the earliest date that
any such payment may be made without causing such payment to be nondeductible by
reason of Section 162(m) of the Code; provided, however, that the above
limitation shall not apply to any benefits provided to you pursuant to any
employee benefit or fringe benefit plan of Xxxxxx which is generally applicable
to senior executives of Xxxxxx and provided, further, that Xxxxxx shall, in the
event of an unanticipated deferral of any payment pursuant to this paragraph 12,
take such reasonable actions as may be appropriate to minimize any cost or
inconvenience to you and equitably compensate you in a manner consistent with
the expectations set forth in this Agreement. Any amounts deferred pursuant to
the immediately preceding sentence shall be deemed invested, pursuant to your
investment direction, among the various Xxxxxx funds.
13. ASSIGNMENT. This Agreement, and the rights and obligations of you,
MMC and Xxxxxx hereunder, shall inure to the benefit of and shall be binding
upon, you, your heirs and representatives, and upon MMC and Xxxxxx, and their
respective successors and assigns. This Agreement may not be assigned by you.
14. NOTICES. All notices required by this shall be in writing and shall
be deemed to have been duly delivered when delivered in person or when mailed by
certified mail, return receipt requested, as follows:
A. If to you:
Xxxxxxxx X. Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
21
B. If to Xxxxxx:
Xxxxxx Investments, Inc.
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: General Counsel
with a copy to:
Xxxxx & McLennan Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
C. If to MMC:
Xxxxx & XxXxxxxx Companies, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: General Counsel
or to such other address as a party hereto shall specify in writing given in
accordance with this paragraph.
15. SEVERABILITY. In the event that any one or more of the provisions of
this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. Moreover, if any one or more of the
provisions contained in this Agreement shall be held to be excessively broad as
to duration, activity or subject, such provision shall be construed by limiting
or reducing them so as to be enforceable to the maximum extent compatible with
applicable law.
16. CONSULTATION WITH COUNSEL; NO REPRESENTATIONS. You agree and
acknowledge that you have had a full and complete opportunity to consult with
counsel of your own choosing concerning the terms, enforceability and
implications of this Agreement, and that neither MMC nor Xxxxxx has made any
representations or warranties to you concerning the terms, enforceability or
implications of this Agreement other than are as reflected in this Agreement.
17. UNFUNDED STATUS OF AGREEMENT. With respect to any payments not yet
made to you pursuant to the Agreement, nothing contained herein shall give you
any rights which are greater than those of a general creditor of Xxxxxx.
22
18. WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable tax withholding required under federal, state or
local law.
19. ARBITRATION. Except as otherwise provided in Paragraph 10, all
controversies, claims or disputes arising out of or related to this Agreement
shall be settled by arbitration in Boston, Massachusetts under the rules of the
American Arbitration Association then in effect in the Commonwealth of
Massachusetts, as the sole and exclusive remedy of either party, and judgment
upon such award rendered by the arbitrator(s) may be entered in any court of
competent jurisdiction.
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. SURVIVAL. Your obligations and those of Xxxxxx and MMC shall survive
the termination of the Term of this Agreement and your employment hereunder as
necessary to give full effect to the provisions of this Agreement.
23
If the foregoing correctly conforms to your understanding of the
Agreement between you and Xxxxxx, please sign and date the enclosed copy of this
letter and return it to us.
Very truly yours,
XXXXXX INVESTMENTS, INC.
By: /s/ A.J.C. Xxxxx
--------------------------
Title: Director
-----------------------
Agreed and Accepted:
/s/ Xxxxxxxx X. Xxxxxx
----------------------------
Xxxxxxxx X. Xxxxxx
24
