EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of September 10,
2002, between XXXXXX XXXXXXX LTD., a Bermuda company (the "Company"), and Xxxxxx
X. X'Xxxxx (the "Executive").
The Executive is currently employed by the Company, and the Executive
and the Company wish to continue their employment relationship, on the terms and
conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT, DUTIES. The Company hereby agrees to continue to
employ the Executive for the Term (as defined in Section 2.1), to render
exclusive and full-time services to the Company, in the capacity of Senior Vice
President & General Counsel of the Company and to perform such other duties
consistent with such position (including service as a director or officer of any
affiliate of the Company if elected) as may be assigned by the Chairman,
President and Chief Executive Officer; provided, however, that the Executive may
participate in civic, charitable, industry, and professional organizations to
the extent that such participation does not materially interfere with the
performance of Executive's duties hereunder. The Executive's title shall be
Senior Vice President & General Counsel, or such other titles of at least
equivalent level consistent with the Executive's duties from time to time as may
be assigned to the Executive by the Company consistent with such position, and
the Executive shall have all authorities as are customarily and ordinarily
exercised by executives in similar positions in similar businesses of similar
size in the United States.
1.2 ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, and consistent
with the above, the Executive agrees to serve the Company faithfully and to the
best of the Executive's ability, to devote the Executive's entire business time,
energy and skill to such employment, and to use the Executive's best efforts,
skill and ability to promote the Company's interests.
1.3 LOCATION. The duties to be performed by the Executive
hereunder shall be performed primarily at the Company's offices in Clinton, New
Jersey, subject to reasonable travel requirements consistent with the nature of
the Executive's duties from time to time on behalf of the Company. The Executive
shall keep
Executive's primary residence within reasonable daily commute of the
Clinton, New Jersey area throughout the Term.
2. TERM OF EMPLOYMENT.
2.1 TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on September 10, 2002 (the "Effective
Date"), and shall end on the date on which the Term is terminated pursuant to
Section 4.
3. COMPENSATION; BENEFITS.
3.1 SALARY. As compensation for all services to be rendered
pursuant to this Agreement, the Company agrees to pay to the Executive during
the Term a base salary, payable monthly in arrears, at the initial annual rate
of $338,000 (the "Base Salary"). On each anniversary of the Effective Date or
such other appropriate date during each year of the Term when the salaries of
executives at the Executive's level are normally reviewed, the Company shall
review the Base Salary and determine if, and by how much, the Base Salary should
be increased. All payments of Base Salary or other compensation hereunder shall
be less such deductions or withholdings as are required by applicable law and
regulations.
3.2 BONUS. Executive shall be eligible to participate, as
determined by the Compensation Committee of the Board of Directors of the
Company (the "Board"), in the Company's annual incentive program as in effect
from time to time for executives at the Executive's level. Initially, the
Executive's participation shall be in the discretionary bonus program designated
the "Xxxxxx Xxxxxxx Annual Incentive Plan for 2002 and Subsequent Years."
3.3 STOCK OPTIONS. Executive shall be eligible for annual stock
option grants, as determined by the Compensation Committee of the Board, under
the Company's stock option plan covering executives at the Executive's level, as
in effect from time to time.
3.4 BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive's services under this
Agreement, subject to and in accordance with applicable expense reimbursement
and related policies and procedures as in effect from time to time.
3.5 VACATION. During the Term, the Executive shall be entitled to
an annual paid vacation period or periods in accordance with the applicable
executive vacation policy as in effect from time to time, which in no event
shall be less than the vacation policy as in effect on the Effective Date.
3.6 BENEFITS AND PERQUISITES. During the Term, the Executive
shall be entitled to participate in those defined benefit, defined contribution,
group insurance, medical, dental, disability and other benefit plans and such
perquisites of the
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Company as from time to time in effect and on a basis no less favorable than any
other executive at the Executive's level.
3.7 CHANGE OF CONTROL. The Executive shall be covered under the
Company's Change in Control Agreement as in effect from time to time for
executives at the Executive's level. Any amounts and/or benefits payable, paid
or provided to the Executive under such Change in Control Agreement shall be in
lieu of and not in addition to amounts and/or benefits payable or provided under
this Agreement. This Agreement is not intended to preclude benefits payable
under the Change in Control Agreement should the events described therein occur.
4. TERMINATION.
4.1 TERMINATION EVENTS.
4.1.1 Executive's employment and the Term shall terminate
immediately upon the occurrence of any of the following:
(i) the death of the Executive;
(ii) the physical or mental disability of the
Executive, whether totally or partially, such that with or without reasonable
accommodation the Executive is unable to perform the Executive's material
duties, for a period of not less than one hundred and eighty (180) consecutive
days; or
(iii) notice of termination for "Cause". As used
herein, "Cause" means (i) conviction of a felony; (ii) actual or attempted theft
or embezzlement of Company assets; (iii) use of illegal drugs; (iv) material
breach of the Agreement that the Executive has not cured within thirty (30) days
after the Company has provided the Executive notice of the material breach which
shall be given within sixty (60) days of the Company's knowledge of the
occurrence of the material breach; (v) commission of an act of moral turpitude
that in the judgment of the Board can reasonably be expected to have an adverse
effect on the business, reputation or financial situation of the Company and/or
the ability of the Executive to perform the Executive's duties; (vi) gross
negligence or willful misconduct in performance of the Executive's duties; (vii)
breach of fiduciary duty to the Company; or (viii) willful refusal to perform
the duties of Executive's titled position.
4.1.2 The Executive may immediately resign the Executive's
position for Good Reason and, in such event, the Term shall terminate. As used
herein, "Good Reason" means without the Executive's consent (i) material
diminution in title, duties, responsibilities or authority; (ii) reduction of
Base Salary and benefits except for across-the-board changes for executives at
the Executive's level; (iii) exclusion from executive benefit/compensation
plans; (iv) relocation of the Executive's principal business location by the
Company of greater than fifty (50) miles; (v) material breach of the Agreement
that the Company has not cured within thirty (30) days after the Executive has
provided the Company notice of the material breach which
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shall be given within sixty (60) days of the Executive's knowledge of the
occurrence of the material breach; or (vi) resignation in compliance with
applicable law or rules of professional conduct.
4.1.3 The Company may terminate the Executive's employment
thirty (30) days following notice of termination without Cause given by the
Company and, in such event, the Term shall terminate. During such thirty (30)
day notice period, the Company may require that the Executive cease performing
some or all of the Executive's duties and/or not be present at the Company's
offices and/or other facilities.
4.1.4 The Executive may voluntarily resign the Executive's
position effective thirty (30) days following notice to the Company of the
Executive's intent to voluntarily resign without Good Reason and, in such event,
the Term shall terminate. During such thirty (30) day notice period, the Company
may require that the Executive cease performing some or all of the Executive's
duties and/or not be present at the Company's offices and/or other facilities.
4.1.5 The date upon which Executive's employment and the
Term terminate pursuant to this Section 4.1 shall be the Executive's
"Termination Date" for all purposes of this Agreement.
4.2 PAYMENTS UPON A TERMINATION EVENT.
4.2.1 Following any termination of the Executive's
employment, the Company shall pay or provide to the Executive, or the
Executive's estate or beneficiary, as the case may be, (i) Base Salary earned
through the Termination Date; (ii) the balance of any awarded but as yet unpaid,
annual cash incentive or other incentive awards for any calendar year prior to
the calendar year during which the Executive's Termination Date occurs; (iii) a
payment representing the Executive's accrued but unused vacation; (iv) any
vested, but not forfeited benefits on the Termination Date under the Company's
employee benefit plans in accordance with the terms of such plans; and (v)
benefit continuation and conversion rights to which the Executive is entitled
under the Company's employee benefit plans.
4.2.2 Following a termination by the Company without Cause
or by the Executive for Good Reason, the Company shall pay or provide to the
Executive in addition to the payments in Section 4.2.1 above, (i) Base Salary at
the rate in effect on the Termination Date ("Termination Base Salary Rate"),
payable monthly following the Termination Date and continuing for twenty-four
months thereafter; (ii) an annual cash incentive payment for the calendar year
that includes the Executive's Termination Date and the following calendar year
equal to a percentage of the Termination Base Salary Rate equal to the average
percentage of base salaries paid as bonuses to the executives of the Company at
the Executive's level under the Company's annual incentive program during such
applicable calendar year and payable at the time that the Company pays annual
cash incentive payments to other participants in such program; (iii) two
additional years of age and service to be credited under the Company's
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pension plan and supplemental pension plan; (iv) two years of continued health
and welfare benefit plan coverage following the Termination Date (excluding any
additional vacation accrual or sick leave) at active employee levels and active
employee cost; (v) except as prohibited by law, removal of transfer and other
restrictions from all shares of capital stock of the Company registered in the
Executive's name; (vi) full vesting of all stock options to purchase shares of
capital stock of the Company; and (vii) executive level career transition
assistance services by a firm selected by the Executive and approved by the
Company. Notwithstanding any other provision of this Agreement, as consideration
for the pay and benefits that the Company shall provide the Executive pursuant
to this Section 4.2.2, the Executive shall provide the Company an enforceable
waiver and release agreement in a form that the Company normally requires.
4.3 NO MITIGATION. Upon termination of the Executive's employment
with the Company, the Executive shall be under no obligation to seek other
employment or otherwise mitigate the obligations of the Company under this
Agreement.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1 The Executive acknowledges that the Executive's services will
be unique, that they will involve the development of Company-subsidized
relationships with key customers, suppliers, and service providers as well as
with key Company employees and that the Executive's work for the Company will
give the Executive access to highly confidential information not available to
the public or competitors, including trade secrets and confidential marketing,
sales, product development and other data and information which it would be
impracticable for the Company to effectively protect and preserve in the absence
of this Section 5 and the disclosure or misappropriation of which could
materially adversely affect the Company. Accordingly, the Executive agrees:
5.1.1 except in the course of performing the Executive's
duties provided for in Section 1.1, not at any time, whether before, during or
after the Executive's employment with the Company, to divulge to any other
entity or person any confidential information acquired by the Executive
concerning the Company's or its subsidiaries' or affiliates' financial affairs
or business processes or methods or their research, development or marketing
programs or plans, or any other of its or their trade secrets. The foregoing
prohibitions shall include, without limitation, directly or indirectly
publishing (or causing, participating in, assisting or providing any statement,
opinion or information in connection with the publication of) any diary, memoir,
letter, story, photograph, interview, article, essay, account or description
(whether fictionalized or not) concerning any of the foregoing, publication
being deemed to include any presentation or reproduction of any written, verbal
or visual material in any communication medium, including any book, magazine,
newspaper, theatrical production or movie, or television or radio programming or
commercial. In the event that the Executive is requested or required to make
disclosure of information subject to this Section 5.1.1 under any court order,
subpoena or other judicial process, then, except as prohibited by law, the
Executive will promptly notify the Company, take all reasonable steps requested
by the Company to defend against the compulsory disclosure and permit the
Company to control with
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counsel of its choice any proceeding relating to the compulsory disclosure. The
Executive acknowledges that all information, the disclosure of which is
prohibited by this section, is of a confidential and proprietary character and
of great value to the Company and its subsidiaries and affiliates.
5.1.2 to deliver promptly to the Company on termination of
the Executive's employment with the Company, or at any time that the Company may
so request, all confidential memoranda, notes, records, reports, manuals,
drawings, software, electronic/digital media records, blueprints and other
documents (and all copies thereof) relating to the Company's (and its
subsidiaries' and affiliates') business and all property associated therewith,
which the Executive may then possess or have under the Executive's control.
5.2 In consideration of the Company's entering into this
Agreement, the Executive agrees that at all times during the Term and thereafter
for the time period described hereinbelow, the Executive shall not, directly or
indirectly, for Executive or on behalf of or in conjunction with, any other
person, company, partnership, corporation, business, group, or other entity
(each, a "Person"):
5.2.1 until the first anniversary of the Termination Date,
engage in any activity for or on behalf of a Competitor, as director, employee,
shareholder, consultant or otherwise, which is the same as or similar to
activity in which Executive engaged at any time during the last two (2) years of
employment by the Company;
5.2.2 until the second anniversary of the Termination Date,
(i) call upon any Person who is, at such Termination Date, engaged in activity
on behalf of the Company or any subsidiary or affiliate of the Company for the
purpose or with the intent of enticing such Person to cease such activity on
behalf of the Company or such subsidiary or affiliate; or (ii) solicit, induce,
or attempt to induce any customer of the Company to cease doing business in
whole or in part with or through the Company or a subsidiary or affiliate, or to
do business with any Competitor.
For purposes of this Agreement, "Competitor" means a person or entity
who or which is engaged in a material line of business conducted by the Company.
For purposes of this Agreement, "a material line of business conducted by the
Company" means an activity of the Company generating gross revenues to the
Company of more than twenty-five million dollars ($25,000,000) in the
immediately preceding fiscal year of the Company.
5.3 If the Executive commits a breach or threatens to breach any
of the provisions of Section 5.1 or 5.2 hereof, the Company shall have the right
and remedy to have the provisions of this Agreement specifically enforced by
injunction or otherwise by any court having jurisdiction, it being acknowledged
and agreed that any such breach will cause irreparable injury to the Company in
addition to money damage and that money damages alone will not provide a
complete or adequate remedy to the Company, it being further agreed that such
right and remedy shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity.
5.4 If any of the covenants contained in Sections 5.1, 5.2 or
5.3, or any part thereof, hereafter are construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect, without regard to the invalid
portions.
5.5 The period during which the prohibitions of Section 5.2 are
in effect shall be extended by any period or periods during which the Executive
is in violation of Section 5.2.
5.6 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable, the parties agree that the court
making such determination shall have the power to revise or modify such
provision to make it enforceable to the maximum extent permitted by applicable
law and, in its revised or modified form, said provision shall then be
enforceable.
5.7 The parties hereto intend to and hereby confer jurisdiction
to enforce the covenants contained in Sections 5.1, 5.2 and 5.3 upon the courts
of any state within the geographical scope of such covenants. In the event that
the courts of any one or more of such states shall hold such covenants wholly
unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties' hereto that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other states within the geographical scope of such covenants as to breaches of
such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being for this purpose severable into diverse and
independent covenants.
6. INTELLECTUAL PROPERTY.
Notwithstanding and without limiting the provisions of Section 5, the
Company shall be the sole owner of all the products and proceeds of the
Executive's services hereunder, including, but not limited to, all materials,
ideas, concepts, formats, suggestions, developments, arrangements, packages,
programs and other intellectual properties that the Executive may acquire,
obtain, develop or create in connection with or during the Term, free and clear
of any claims by the Executive (or anyone claiming under the Executive) of any
kind or character whatsoever (other than the Executive's right to receive
payments hereunder), the Executive shall, at the request of the Company, execute
such assignments, certificates or other instruments as the Company may from time
to time deem necessary or desirable to evidence, establish, maintain, perfect,
protect, enforce or defend its right, title or interest in or to any such
properties.
7. INDEMNIFICATION.
In addition to any rights to indemnification to which the Executive
is entitled under the Company's charter and by-laws, to the extent permitted by
applicable
law, the Company will indemnify, from the assets of the Company supplemented by
insurance in an amount determined by the Company, the Executive at all times,
during and after the Term, and, to the maximum extent permitted by applicable
law, shall pay the Executive's expenses (including reasonable attorneys' fees
and expenses, which shall be paid in advance by the Company as incurred, subject
to recoupment in accordance with applicable law) in connection with any
threatened or actual action, suit or proceeding to which the Executive may be
made a party, brought by any shareholder of the Company directly or derivatively
or by any third party by reason of any act or omission or alleged act or
omission in relation to any affairs of the Company or any subsidiary or
affiliate of the Company of the Executive as an officer, director or employee of
the Company or of any subsidiary or affiliate of the Company. The Company shall
use its best efforts to maintain during the Term and thereafter insurance
coverage sufficient in the determination of the Company to satisfy any
indemnification obligation of the Company arising under this Section 7.
8. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to have
been duly given if delivered personally, one day after sent by overnight courier
or three days after mailed first class, postage prepaid, by registered or
certified mail, as follows (or to such other address as either party shall
designate by notice in writing to the other in accordance herewith):
If to the Company, to:
Xxxxxx Xxxxxxx, Inc.
Xxxxxxxxxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000-0000
Attention: General Counsel
If to the Executive, to the Executive's principal residence as
reflected in the records of the Company.
9. GENERAL.
9.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey applicable to
agreements made between residents thereof and to be performed entirely in New
Jersey.
9.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
9.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject
matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof
including, but not limited to, that certain letter agreement between the Company
and/or its subsidiary and the Executive dated on or about May 29, 2001. No
representation, promise or inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound by or liable for
any alleged representation, promise or inducement not so set forth.
9.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive, nor may the Executive pledge,
encumber or anticipate any payments or benefits due hereunder, by operation of
law or otherwise. The Company may assign its rights, together with its
obligations, hereunder (i) to any affiliate or (ii) to a third party in
connection with any sale, transfer or other disposition of all or substantially
all of any business to which the Executive's services are then principally
devoted, provided that no assignment pursuant to clause (ii) shall relieve the
Company from its obligations hereunder to the extent the same are not timely
discharged by such assignee.
9.5 The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement or the Term to the
extent necessary to the intended preservation of such rights and obligations.
9.6 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
9.7 This Agreement may be executed in two or more counterparts,
each of which shall he deemed to be an original but all of which together will
constitute one and the same instrument.
9.8 The parties acknowledge that this Agreement is the result of
arm's-length negotiations between sophisticated parties each afforded the
opportunity to utilize representation by legal counsel. Each and every provision
of this Agreement shall be construed as though both parties participated equally
in the drafting of same, and any rule of construction that a document shall be
construed against the drafting party shall not be applicable to this Agreement.
10. DISPUTE RESOLUTION.
Subject to the rights of the Company pursuant to Section 5.3 above,
any controversy, claim or dispute arising out of or relating to this Agreement,
the breach thereof, or the Executive's employment by the Company shall be
settled by arbitration
with three arbitrators. The arbitration will be administered by the American
Arbitration Association in accordance with its National Rules for Resolution of
Employment Disputes. The arbitration proceeding shall be confidential, and
judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction. Any such arbitration shall take place in the Clinton, New
Jersey area, or in any other mutually agreeable location. In the event any
judicial action is necessary to enforce the arbitration provisions of this
Agreement, sole jurisdiction shall be in the federal and state courts, as
applicable, located in New Jersey. Any request for interim injunctive relief or
other provisional remedies or opposition thereto shall not be deemed to be a
waiver or the right or obligation to arbitrate hereunder. The arbitrator shall
have the discretion to award reasonable attorneys' fees, costs and expenses to
the prevailing party. To the extent a party prevails in any dispute arising out
of this Agreement or any of its terms and provisions, all reasonable costs, fees
and expenses relating to such dispute, including the parties' reasonable legal
fees, shall be borne by the party not prevailing in the resolution of such
dispute, but only to the extent that the arbitrator or court, as the case may
be, deems reasonable and appropriate given the merits of the claims and defenses
asserted.
11. FREE TO CONTRACT.
The Executive represents and warrants to the Company that Executive
is able freely to accept engagement and employment by the Company as described
in this Agreement and that there are no existing agreements, arrangements or
understandings, written or oral, that would prevent Executive from entering into
this Agreement, would prevent Executive or restrict Executive in any way from
rendering services to the Company as provided herein during the Term or would be
breached by the future performance by the Executive of Executive's duties
hereunder. The Executive also represents and warrants that no fee, charge or
expense of any sort is due from the Company to any third person engaged by the
Executive in connection with Executive's employment by the Company hereunder,
except as disclosed in this Agreement.
12. SUBSIDIARIES AND AFFILIATES.
As used herein, the term "subsidiary" shall mean any corporation or
other business entity controlled directly or indirectly by the Company or other
business entity in question, and the term "affiliate" shall mean and include any
corporation or other business entity directly or indirectly controlling,
controlled by or under common control with the Company or other business entity
in question.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
XXXXXX XXXXXXX LTD.
By:/S/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxxxxxx
Chairman, President and
Chief Executive Officer
/S/XXXXXX X. X'XXXXX
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Xxxxxx X. X'Xxxxx
