Exhibit 10.1
Pittway Corporation
September 30, 1999
Form 10-Q
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") made
as of January 1, 1999, between Pittway Corporation, a Delaware
corporation (the "Company"), and Xxx X. Xxxxxxx ("Executive").
Executive currently serves as the chief executive officer of the
Pittway Security Group (f/k/a the Ademco Security Group) of the
Company pursuant to an Employment Agreement dated as of January 1,
1996 (the "Existing Employment Agreement").
The Company and Executive desire to replace the Existing Employment
Agreement (insofar as it relates to periods from and after the date
hereof) with this Agreement.
In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company shall employ Executive, and Executive
accepts continued employment with the Company, upon the terms and
conditions set forth in this Agreement for the period beginning on
the date hereof and ending as provided in paragraph 5 hereof (the
"Employment Period").
2. POSITION AND DUTIES.
(a) During the Employment Period, Executive shall serve as the
chief executive officer of the Pittway Security Group of the
Company or any successor to such Group, in each case as constituted
from time to time (the "Group"), and shall have the normal duties,
responsibilities and authority of an executive serving in such
position, subject to the power of the Board of Directors of the
Company (the "Board") or the President of the Company to expand or
limit such duties, responsibilities and authority, either generally
or in specific instances. Executive shall have the title Chairman
and Chief Executive Officer of the Group, subject to the power of
the Board or the President of the Company to change such title from
time to time. During the Employment Period, Executive shall also
serve as a director of the Company for so long as the Board
nominates him to that position and he is elected to it, as a Vice-
Chairman of the Company for so long as the Board elects or appoints
him to that position and as a director of any affiliate of the
Company (or other entity in which the Company has an investment)
designated by the Board for so long as the Board causes him to be
elected to such position.
(b) Executive shall report to the President of the Company.
(c) During the Employment Period, Executive shall devote his best
efforts and his full business time and attention (except for
permitted vacation periods, reasonable periods of illness or other
incapacity, and, provided such activities do not exceed those in
which Executive has engaged in the past, participation in
charitable and civic endeavors and management of Executive's
personal investments and business interests) to the business and
affairs of the Group and the business and affairs of any other
group of the Company, any division of the Company, or any
subsidiary or affiliate of the Company (or any group or division
thereof), engaged in the security, alarm or monitoring products
business or any other business the same as or similar to or related
to that then engaged in by the Group. Executive shall perform his
duties and responsibilities to the best of his abilities in a
diligent, trustworthy, businesslike and efficient manner.
(d) Executive shall perform his duties and responsibilities
principally in the New York metropolitan area, and shall not be
required to travel outside that area any more extensively than he
has done in the past in the ordinary course of the business of the
Group.
3. SALARY AND BENEFITS.
(a) The Company agrees to pay Executive a salary during the
Employment Period, in monthly installments.
(b) Executive's initial salary shall be $550,000 per annum.
(c) Executive's salary may be increased by the Board from time to
time.
(d) The Board may, in its sole discretion, award a bonus to
Executive for any calendar year during the Employment Period.
(e) The Company shall reimburse Executive for all reasonable
expenses incurred by him in the course of performing his duties
under this Agreement which are consistent with the Company's
policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the Company's
requirements with respect to reporting and documentation of such
expenses.
(f) In addition to the salary and any bonus(es) payable to
Executive pursuant to this paragraph, Executive shall be entitled
during the Employment Period to participate, on the same basis as
other executives of the Company (but subject to variations among
executives resulting from differences in the levels of benefits
made available to employees at particular business units under the
Company's 401(k) plan or any other plan of the Company), in the
Company's Standard Executive Benefits Package. The Company's
"Standard Executive Benefits Package" means those benefits
(including insurance, vacation, company car or car allowance and/or
other benefits) for which substantially all of the executives of
the Company are from time to time generally eligible, as determined
from time to time by the Board.
(g) In addition to participation in the Company's Standard
Executive Benefits Package pursuant to this paragraph, Executive
shall be entitled during the Employment Period to:
(i) additional term life insurance coverage in an
amount equal to Executive's salary; but only if and so long as
such additional coverage is available at standard rates from
the insurer providing term life insurance coverage under the
Standard Executive Benefits Package or a comparable insurer
acceptable to the Company (If Executive is not participating
in term life insurance coverage under the Standard Executive
Benefits Package and if such additional coverage would be
available at standard rates from such insurer if Executive
were so participating, Executive shall instead be entitled to
an amount each calendar year, payable monthly, equal to the
amount the Company would have been required to pay for such
additional coverage for such year.);
(ii) supplementary long-term disability coverage in an
amount which will increase maximum covered annual compensation
to $330,000 and maximum monthly payments to $18,333; but only
if and so long as such supplementary coverage is available at
standard rates from the insurer providing long-term disability
coverage under the Standard Executive Benefits Package or a
comparable insurer acceptable to the Company; and
(iii) participation in the Pittway Corporation Supplemental
Executive Retirement Plan (the "SERP"), a copy of which, as
currently in effect, is attached hereto as Exhibit A.
4. ADJUSTMENTS. Notwithstanding paragraphs 2 and 3 hereof, at
any time during the Employment Period Executive may elect, by means
of advance written notice to the Company at least ninety (90) days
prior to the effective date of such election, to reduce the
business time and attention he is required to devote pursuant to
paragraph 2(c) hereof to the number of hours per week specified in
such election (which shall not be less than eight (8) hours per
week). Any such election, once made, shall be irrevocable.
In the event of any such election:
(i) if the number of hours per week specified in such
election is less than twenty (20), at the effective date of
such election Executive's salary shall automatically be
reduced to $350,000 per annum; and if the number of hours per
week specified in such election is twenty (20) or more, at the
effective date of such election Executive's salary shall
automatically be reduced to an amount, between $350,000 and
$550,000 per annum, to be negotiated between Executive and the
President of the Company promptly following the Company's
receipt of such election;
(ii) unless Executive's actual hours of work during the
calendar year in which the effective date of such election
occurs or any subsequent calendar year equal or exceed 1,000,
Executive shall not expect any bonus for such calendar year;
(iii) Executive shall not thereafter participate in any
benefits included in the Company's Standard Executive Benefits
Package for which a minimum number of regularly scheduled
hours of work or actual hours of work during a year are
required unless Executive, in fact, meets such requirement;
(iv) if, under clause (iii) above, Executive ceases to
participate in term life insurance coverage, Executive shall
also cease to be entitled to any additional term life
insurance coverage pursuant to paragraph 3(g)(i) hereof (but
not to any amount in lieu thereof to which he is otherwise
entitled pursuant to such paragraph);
(v) if, under clause (iii) above, Executive ceases to
participate in long-term disability coverage, Executive shall
also cease to be entitled to any supplementary long-term
disability coverage pursuant to paragraph 3(g)(ii) hereof;
(vi) if, under clause (iii) above, Executive ceases to
participate in the Company's health insurance program, then
for so long during the remainder of the Employment Period as
the Company maintains a health insurance program the Company
shall maintain for Executive (and his dependents) private
health insurance providing substantially the same benefits as
those provided to executives of the Company under the
Company's health insurance program in effect from time to
time, provided that (A) such private health insurance is
available, (B) the premium for such private health insurance
does not exceed 150% of the gross rate (before any cost-
sharing under the terms of the program) allocated to employees
of the Group under the Company's health insurance program and
(C) Executive pays the percentage of the premium for such
private health insurance equivalent to any cost-sharing
requirement imposed under the terms of the Company's health
insurance program;
(vii) at the effective date of such election, the level of
any continuing benefits included in the Standard Executive
Benefits Package or provided for in paragraph 3(g) hereof the
amount of which is based on salary or compensation shall be
adjusted to reflect Executive's reduced salary; and
(viii) if the Board so determines, Executive shall cease to
serve as the chief executive officer of the Group.
Without limiting the generality of clause (iii) above, if Executive
were to elect to reduce to eight hours the business time and
attention he is required to devote pursuant to paragraph 2(c)
hereof, under the current terms of the Company's benefits it is
anticipated that Executive would not be eligible to continue to
participate in any health, disability or insurance benefit or to
receive any award under the Pittway Corporation 1990 Stock Awards
Plan and would not be entitled to any increase in benefit under the
Pittway Corporation Retirement Plan, but would be eligible to
participate in the Company's 401(k) plan and the SERP and, subject
to the terms of clause (vi) above, to private health insurance
coverage.
5. EMPLOYMENT PERIOD.
(a) Except as hereinafter provided, the Employment Period shall
continue until, and shall end upon, September 26, 2004.
(b) Notwithstanding (a) above, the Employment Period shall end
early upon the first to occur of any of the following events:
(i) Executive's death;
(ii) Executive's retirement upon or after reaching age 65
("Retirement");
(iii) the Company's termination of Executive's employment
on account of Executive's having become unable (as
determined by the Board in good faith) to regularly perform
his duties hereunder by reason of illness or incapacity for
a period of more than six (6) consecutive months
("Termination for Disability");
(iv) the Company's termination of Executive's
employment for Cause ("Termination for Cause");
(v) the Company's termination of Executive's employment
other than a Termination for Disability or a Termination for
Cause ("Termination without Cause"); or
(vi) Executive's termination of Executive's employment for
Good Reason, by means of advance written notice to the
Company at least thirty (30) days prior to the effective
date of such termination identifying such termination as a
Termination by Executive for Good Reason ("Termination by
Executive for Good Reason").
(c) For purposes of this Agreement, "Cause" shall mean:
(i) the commission by Executive of a felony or a crime
involving moral turpitude;
(ii) the commission by Executive of a fraud;
(iii) the commission by Executive of any act involving
dishonesty or disloyalty with respect to the Company or any of
its subsidiaries or affiliates;
(iv) conduct by Executive tending to bring the
Company or any of its subsidiaries or affiliates into
substantial public disgrace or disrepute;
(v) gross negligence or willful misconduct by Executive
with respect to the Company or any of its subsidiaries or
affiliates;
(vi) repudiation of this Agreement by Executive or
Executive's abandonment of his employment with the Company (it
being expressly understood that a Termination by Executive for
Good Reason shall not constitute such a repudiation or
abandonment);
(vii) breach by Executive of any of the agreements in
paragraph 10 hereof; or
(viii) any other breach by Executive of this Agreement
which is material and which is not cured within thirty (30)
days after written notice thereof to Executive from the
Company.
(d) For purposes of this Agreement, "Good Reason" shall mean:
(i) a reduction by the Company in Executive's salary, other
than pursuant to paragraph 4 hereof, to an amount less than
"Executive's Reference Salary" (i.e., $550,000 or, upon
reduction pursuant to paragraph 4 hereof, the reduced amount
pursuant to such paragraph); or
(ii) any breach by the Company of this Agreement which is
material and which is not cured within thirty (30) days after
written notice thereof to the Company from Executive.
6. POST-EMPLOYMENT PERIOD PAYMENTS.
(a) If the Employment Period ends on September 26, 2004, or if
the Employment Period ends early pursuant to paragraph 5 hereof for
any reason, Executive shall cease to have any rights to salary,
bonus (if any) or benefits other than: (i) any salary which has
accrued but is unpaid, and any expenses which have been incurred
but are unpaid, as of the end of the Employment Period, (ii) (but
only to the extent provided in the SERP or any other benefit plan
in which Executive has participated as an employee of the Company)
any plan benefits which by their terms extend beyond termination of
Executive's employment and (iii) any other amount(s) payable
pursuant to the succeeding provisions of this paragraph 6 or the
provisions of paragraph 7.
(b) If the Employment Period ends early pursuant to paragraph 5
hereof on account of Executive's death, the Company shall pay to
Executive's estate (or such person or persons as Executive may
designate in a written instrument signed by him and delivered to
the Company prior to his death) either (i) amounts during the
period of fifteen years from and after the end of the Employment
Period equal to one-half of the monthly installments which would
have been paid to Executive pursuant to paragraph 7 hereof had the
Employment Period instead ended early pursuant to paragraph 5
hereof on account of Retirement or (ii) if so elected by the
payee(s) by written notice to the Company within the period of
sixty (60) days after the date of Executive's death, a lump sum
amount equivalent to the discounted present value of such amounts,
discounted at the publicly announced reference rate for commercial
lending of Bank of America, N.A. in effect at the date of notice to
the Company of such election, with said amount to be paid on a date
no later than thirty (30) days following the date of notice to the
Company of such election.
(c) If the Employment Period ends early pursuant to paragraph 5
hereof on account of Termination for Disability, the Company shall
pay to Executive (or his personal representative) amounts during
the period of fifteen years from and after the end of the
Employment Period equal to the monthly installments which would
have been paid to Executive pursuant to paragraph 7 hereof had the
Employment Period instead ended early pursuant to paragraph 5
hereof on account of Retirement (in the event Executive is entitled
during the payment period to any payments under any disability
benefit plan or the like in which Executive has participated as an
employee of the Company, less such payments); provided, however,
that in the event of Executive's death during the payment period,
the Company shall not be obligated to pay any subsequent such
amounts, but the Company shall pay to Executive's estate (or such
person or persons as Executive may designate in a written
instrument signed by him and delivered to the Company prior to his
death) either (i) amounts during the remainder of the payment
period equal to one-half the amounts which would have been paid to
Executive but for his death or (ii) if so elected by the payee(s)
by written notice to the Company within the period of sixty (60)
days after the date of Executive's death, a lump sum amount
equivalent to the discounted present value of such amounts,
discounted at the publicly announced reference rate for commercial
lending of Bank of America, N.A. in effect at the date of notice to
the Company of such election, with said amount to be paid on a date
no later than thirty (30) days following the date of notice to the
Company of such election.
(d) If the Employment Period ends early pursuant to paragraph 5
hereof on account of Termination for Cause, the Company shall pay
Executive an amount equal to that Executive would have received as
salary (based on Executive's salary then in effect) had the
Employment Period remained in effect until the later of the
effective date of the Company's termination of Executive's
employment or the date thirty days after the Company's notice to
Executive of such termination.
(e) If the Employment Period ends early pursuant to paragraph 5
hereof on account of a Termination without Cause or a Termination
by Executive for Good Reason, the Company shall pay to Executive
amounts equal to the amounts Executive would have received as
salary (based on Executive's salary then in effect or, if greater,
Executive's Reference Salary) had the Employment Period remained in
effect until September 26, 2004 and for consulting services had the
Consulting Period (as defined in paragraph 7 hereof) thereafter
continued until September 26, 2019, at the times such amounts would
have been paid (in the event Executive is entitled during the
payment period to any payments under any disability benefit plan or
the like in which Executive has participated as an employee of the
Company, less such payments); provided, however, that in the event
of Executive's death during the payment period, the Company shall
not be obligated to pay any subsequent such amounts, but the
Company shall pay to Executive's estate (or such person or persons
as Executive may designate in a written instrument signed by him
and delivered to the Company prior to his death) either (i) amounts
during the remainder of the payment period equal to one-half of the
amounts which would have been paid to Executive but for his death
or (ii) if so elected by the payee(s) by written notice to the
Company within the period of sixty (60) days after the date of
Executive's death, a lump sum amount equivalent to the discounted
present value of such reduced amounts, discounted at the publicly
announced reference rate for commercial lending of Bank of America,
N.A. in effect at the date of notice to the Company of such
election, with said amount to be paid on a date no later than
thirty (30) days following the date of notice to the Company of
such election. It is expressly understood that the Company's
payment obligations under this (e) shall cease in the event
Executive breaches any of his agreements in paragraph 8, 10 or 11
hereof.
7. AVAILABILITY FOR CONSULTING. If the Employment Period ends
pursuant to paragraph 5 hereof on September 26, 2004, or if the
Employment Period ends early pursuant to paragraph 5 hereof on
account of Retirement, during the period of fifteen years from and
after the end of the Employment Period, or, if shorter, during the
period from the end of the Employment Period until the date of
termination of the Consulting Period pursuant to the final
paragraph of this paragraph 7 (the "Consulting Period"), Executive
shall make himself available to the Company as a consultant at such
times as the Company requests upon reasonable advance notice to
Executive. In return, (i) Executive shall be paid, in monthly
installments, at a rate per annum equal initially to $100,000 but
which shall increase on September 26, 2005 and on each subsequent
September 26th by the percentage of the amount in effect on the
immediately preceding day equal to the Social Security
Administration automatic cost-of-living adjustment (COLA) that
became effective on the immediately preceding January 1st, and (ii)
the Company shall reimburse Executive for all reasonable expenses
incurred by him in the course of performing consulting services at
the Company's request which are consistent with the Company's
policies in effect from time to time with respect to travel and
other business expenses, subject to the Company's requirements with
respect to reporting and documentation of such expenses. Any
request for the performance of consulting services shall be
ineffective unless it is received by Executive at least two weeks
in advance of the date such services are to be performed, and shall
also be ineffective to the extent the performance of such services
would be impractical for Executive in view of Executive's health or
travel or vacation plans or any employment, consulting or family-
related commitments which Executive may have at the time. At the
time of Executive's receipt of a Company request, Executive shall
advise the Company of any relevant such impracticality and the
basis therefor. To the extent deemed practical by the Company,
Executive shall provide his consulting advice by telephone. In any
event, Executive shall not be required to travel in connection with
the performance of his consulting services, except to the Group's
offices. It is expressly understood that Executive shall not be
required to spend more than 20 hours in the performance of his
consulting services during any particular month.
The Company may terminate the Consulting Period early for Cause, in
which event the Company's obligations under the foregoing
provisions of this paragraph 7 shall cease.
8. INVENTIONS AND OTHER INTELLECTUAL PROPERTY. Executive agrees
that all inventions, innovations, improvements, developments,
methods, designs, analyses, drawings, reports, trademarks, slogans,
product or other designs, advertising or marketing programs, and
all similar or related information which relate to the Company's or
any of its subsidiaries' or affiliates' actual or anticipated
business, research and development or existing or future products
or services and which are (or were prior to the date of this
Agreement) conceived, developed or made by Executive, whether alone
or jointly with others, while employed by the Company or any such
subsidiary or affiliate or any predecessor thereof ("Work Product")
belong to the Company or such subsidiary or affiliate. Executive
will promptly disclose such Work Product to the President of the
Company and perform all actions reasonably requested by the
President of the Company (whether during or after the Employment
Period) to establish and confirm such ownership (including, without
limitation, assignments, consents, powers of attorney and other
instruments).
9. LIMITATION. Paragraph 8 of this Agreement regarding the
ownership of inventions and other intellectual property does not
apply to the extent application thereof is prohibited by any law
the benefits of which cannot be waived by Executive. Executive
hereby waives the benefits of any such law to the maximum extent
permitted by law.
10. CONFIDENTIAL INFORMATION. Executive acknowledges that the
information, observations and data obtained by him while employed
by the Company pursuant to this Agreement or during the Consulting
Period, as well as those obtained by him while employed by the
Company or any of its subsidiaries or affiliates or any predecessor
thereof prior to the date of this Agreement, concerning the
business or affairs of the Company or any of its subsidiaries or
affiliates or any predecessor thereof (unless and except to the
extent the foregoing become generally known to and available for
use by the public other than as a result of Executive's acts or
omissions to act, "Confidential Information") are the property of
the Company or such subsidiary or affiliate. Therefore, Executive
agrees that he shall not disclose any Confidential Information
without the prior written consent of the President of the Company
unless and except to the extent that such disclosure is (i) made in
the ordinary course of Executive's performance of his duties under
this Agreement or (ii) required by any subpoena or other legal
process (in which event Executive will give the Company prompt
notice of such subpoena or other legal process in order to permit
the Company to seek appropriate protective orders), and that he
shall not use any Confidential Information for his own account
without the prior written consent of the President of the Company.
Executive shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may request,
all memoranda, notes, plans, records, reports, computer tapes and
software and other documents and data (and copies thereof) relating
to the Confidential Information, the Work Product or the business
of the Company or any of its subsidiaries or affiliates which he
may then possess or have under his control.
11. NON-COMPETE, NON-SOLICITATION.
(a) Executive acknowledges that in the course of his employment
with the Company pursuant to this Agreement and any consulting
services for the Company pursuant to this Agreement he will become
familiar, and during the course of his employment by the Company or
any of its subsidiaries or affiliates or any predecessor thereof
prior to the date of this Agreement he has become familiar, with
trade secrets and customer lists of and other confidential
information concerning the Company and its subsidiaries and
affiliates and predecessors thereof and that his services have been
and will be of special, unique and extraordinary value to the
Company.
(b) Executive agrees that during the Employment Period and the
Consulting Period and, if Executive has performed any consulting
services during the final year of the Consulting Period, for one
year after the performance of such services, he shall not in any
manner, directly or indirectly, through any person, firm or
corporation, alone or as a member of a partnership or as an
officer, director, stockholder, investor or employee of or in any
other corporation or enterprise or otherwise, engage or be engaged
in, or assist any other person, firm, corporation or enterprise in
engaging or being engaged in, the security, alarm or monitoring
products business or any other business then actively being
conducted by the Group, in any geographic area in which the Group
is then conducting such business (whether through manufacturing or
production, calling on customers or prospective customers, or
otherwise). Notwithstanding the foregoing, subsequent to the
Employment Period Executive may engage or be engaged in, or assist
any other person, firm, corporation or enterprise in engaging or
being engaged in, any business activity which is not competitive
with a business activity being conducted by the Group at the time
subsequent to the Employment Period Executive first engages or
assists in such business activity (a "Non-competitive Business
Activity").
(c) Executive further agrees that during the Employment Period
and the Consulting Period and, if Executive has performed any
consulting services during the final year of the Consulting Period,
for one year after the performance of such services, he shall not
in any manner, directly or indirectly, (i) induce or attempt to
induce any employee of the Company or of any of its subsidiaries or
affiliates to quit or abandon his employ, or any customer of the
Company or of any of its subsidiaries or affiliates to quit or
abandon its relationship, for any purpose whatsoever, or (ii) in
connection with any business to which the first sentence of (b)
above applies, except where such activity constitutes a Non-
competitive Business Activity, call on, service, solicit or
otherwise do business with any then current or prospective customer
of the Company or of any of its subsidiaries or affiliates.
(d) Nothing in this paragraph 11 shall prohibit Executive from
being: (i) a stockholder in a mutual fund or a diversified
investment company or (ii) a passive owner of not more than 2% of
the outstanding stock of any class of a corporation which is
publicly traded, so long as Executive has no active participation
in the business of such corporation.
(e) If, at the time of enforcement of this paragraph, a court
holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the
maximum period, scope or geographical area reasonable under such
circumstances shall be substituted for the stated period, scope or
area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area
permitted by law.
12. ENFORCEMENT. Because Executive's services are unique and
because Executive has access to Confidential Information and Work
Product, the parties hereto agree that the Company would be damaged
irreparably in the event any of the provisions of paragraph 8, 10
or 11 hereof were not performed in accordance with their specific
terms or were otherwise breached and that money damages would be an
inadequate remedy for any such non-performance or breach.
Therefore, the Company or its successors or assigns shall be
entitled, in addition to other rights and remedies existing in
their favor, to an injunction or injunctions to prevent any breach
or threatened breach of any of such provisions and to enforce such
provisions specifically (without posting a bond or other security).
13. EXECUTIVE REPRESENTATIONS. Executive represents and warrants
to the Company that (i) the execution, delivery and performance of
this Agreement by Executive does not and will not conflict with,
breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party
or by which he is bound, (ii) Executive is not a party to or bound
by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii)
upon the execution and delivery of this Agreement by the Company,
this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms.
14. SURVIVAL. Paragraphs 8, 10 and 11 hereof shall survive and
continue in full force in accordance with their terms notwithstand-
ing the end of the Employment Period or the end of the Consulting
Period, in each case regardless of the cause.
15. NOTICES. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, or mailed by
first class mail, return receipt requested, to the recipient at the
address below indicated:
Notices to Executive:
Xx. Xxx X. Xxxxxxx
00 Xxxxxxx Xxxx
Xxx Xxxxxxxx, XX 00000
Notices to the Company:
Xx. Xxxx Xxxxxx
President
Pittway Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
or such other address or to the attention of such other person as
the recipient party shall have specified by prior written notice to
the sending party. Any notice under this Agreement will be deemed
to have been given when so delivered or mailed.
16. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any
respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any
other provision or any other jurisdiction, but this Agreement shall
be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been
contained herein.
17. CHANGE OF CONTROL. In the event that there is a Change of
Control of the Company: (i) the Company shall establish a grantor
trust (within the meaning of Sections 671, et. seq., of the
Internal Revenue Code of 1986, as amended) designed, taking into
account the investment of the corpus thereof, to fund the Company's
payment obligations to Executive thereafter as and when due, and
shall fund the corpus of such grantor trust in accordance with such
design (which grantor trust the Company shall establish and fund
prior to the Change of Control of the Company in the event it has
sufficient advance notice thereof to do so; and otherwise which the
Company shall establish and fund promptly following its becoming
aware of the Change of Control of the Company); and (ii) if, after
the Change of Control of the Company, the Company wrongfully
withholds from Executive any amount payable to Executive pursuant
to this Agreement or the SERP and Executive obtains a final
judgment against the Company for such amount, the Company shall
reimburse Executive for any costs and expenses (including without
limitation attorneys' fees) reasonably incurred by Executive in
obtaining such judgment and shall pay Executive interest on the
amount of each such cost or expense from the date of payment
thereof by Executive to the date of reimbursement by the Company at
a floating rate per annum equal to the publicly announced reference
rate for commercial lending of Bank of America, N.A. in effect from
time to time. For purposes of the foregoing, a "Change of Control
of the Company" will be deemed to have occurred if but only if, for
purposes of Section 13(d) of the Securities Exchange Act of 1934,
as amended, a person or group other than one or more members of the
Xxxxxx Group (as currently defined in the Company's Restated
Certificate of Incorporation, as amended) becomes the beneficial
owner of stock of the Company possessing a majority of the voting
power under ordinary circumstances with respect to the election of
directors.
18. COMPLETE AGREEMENT. This Agreement embodies the
complete agreement and understanding between the parties with
respect to the subject matter hereof and effective as of its date
supersedes and preempts any prior understandings, agreements or
representations by or between the parties, written or oral, which
may have related to the subject matter hereof in any way, including
without limitation the Existing Employment Agreement.
19. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be an original and
both of which taken together shall constitute one and the same
agreement.
20. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of and be enforceable by Executive, the Company and
their respective heirs, executors, personal representatives,
successors and assigns, except that neither party may assign any of
his or its rights or delegate any of his or its obligations
hereunder without the prior written consent of the other party.
Executive hereby consents to the assignment by the Company of all
of its rights and obligations hereunder to: (i) any subsidiary or
affiliate of the Company in the event all or any substantial part
of the business to which Executive's duties under this Agreement
relate are transferred thereto and (ii) any successor to the
Company by merger or consolidation or purchase of all or
substantially all of the Company's assets; in each case provided
such transferee or successor assumes the liabilities of the Company
hereunder.
21. CHOICE OF LAW. This Agreement shall be governed by the
internal law, and not the laws of conflicts, of the State of New
York.
22. AMENDMENT AND WAIVER. The provisions of this Agreement may
be amended or waived only with the prior written consent of the
Company and Executive, and no course of conduct or failure or delay
in enforcing the provisions of this Agreement shall affect the
validity, binding effect or enforceability of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.
PITTWAY CORPORATION
By KING HARRIS
Its President
XXX X. XXXXXXX
