EMPLOYMENT AGREEMENT
This EMPOLOYMENT AGREEMENT is made as of the 13th day of October 1997
by and between X.X. XXXXXXXXX & COMPANY, INC., a Delaware corporation (the
"Corporation"), and Xxxxx X. Xxxxxxx (the "Executive").
W I T N E S S E T H :
The Corporation wishes to continue to employ Executive and Executives
wishes to continue in the employ of the Corporation on the terms and conditions
contained in this Agreement.
NOW THEREFORE, in consideration of the facts, mutual promises and
covenants contained herein and intending to be legally bound hereby, Corporation
and Executive agree as follows:
1. Position and Responsibilities.
1.1. The Executive shall serve in an executive capacity as
President and Chief Executive Officer of the Corporation. The Executive shall
perform such functions and undertake such responsibilities as are customarily
associated with such capacity. The Executive shall hold such directorships and
executive officerships in the Corporation and any subsidiary to which, from time
to time, he may be elected or appointed during the term of this Agreement.
1.2. The Executive shall devote his full time and best efforts
to the business and affairs of the Corporation and to the promotion of its
interests.
1.3. The principal executive offices of the Corporation shall
be maintained in Philadelphia, Pennsylvania and the Executive shall not be
required to relocate outside Philadelphia, Pennsylvania, without his prior
consent.
2. Term of Employment.
2.1. The term of employment shall be three (3) years,
commencing with the date hereof, unless sooner terminated as provided in this
Agreement. The initial term of employment and any extension thereof is herein
referred to as the "Term."
2.2. Notwithstanding the provisions of Section 2.1 hereof, the
Corporation shall have the right, on written notice to the Executive, to
terminate the Executive's employment for Cause, such termination to be effective
as of the date on which notice is given or as of such later date otherwise
specified in the notice.
2.3. For purposes of this Agreement, the term "Cause" shall
mean any of the following actions by the Executive: (a) failure to comply with
any of the material terms of this Agreement, which shall not be cured within 30
days after written notice; (b) engagement in gross misconduct injurious to the
Corporation which shall not be cured within 30 days after written notice; (c)
knowing and willful neglect or refusal to attend to the material duties
reasonably assigned to him by the Board of Directors of the Corporation, which
shall not be cured within 30 days after written notice; (d) intentional
misappropriation of property of the Corporation to the Executive's own use; (e)
the commission by the Executive of an act of embezzlement; (f) Executive's
conviction for a felony or (g) Executive's engaging in any activity which would
constitute a material conflict of interest with the Corporation, which shall not
be cured within 30 days after written notice. If the provisions contained in
subsections (a),(b), (c) or (g) above cannot be cured within 30 days due to the
nature of the breach, the cure period shall then be extended for a reasonable
period of time; provided, however, the Executive undertakes and continues in
good faith to cure the same.
2.4. No later than six (6) months prior to the end of the
Term, the Corporation and the Executive shall meet to discuss the terms and
conditions of an extension of the Term. If the Term of this Agreement shall not
be extended, at the end of the Term the Corporation shall pay as severance pay
to Executive his salary at the rate in effect as of the termination for a period
of six months after the termination in accordance with the Corporation's normal
payroll practices;
2.5. If the Executive's employment with the Corporation shall
be terminated (a) by the Corporation other than pursuant to Sections 2.2, 4.1 or
4.2 hereof or (b) by the Executive for Good Reason (as defined herein), then the
Corporation shall continue to provide or pay to the Executive for the balance of
the Term of this Agreement, the salary, bonus and benefits received by the
Executive prior to such termination. The Executive shall have the right for a
period of 30 days after the occurrence of a Good Reason event to terminate this
Agreement for Good Reason.
2.6. For purposes of this Agreement, the term "Good Reason"
shall mean any of the following: (a) the assignment to the Executive by the
Corporation of duties inconsistent with, or a material reduction in the nature
of, Executive's responsibilities hereunder; (b) a reduction by the Corporation
in the Executive's base salary as in effect on the later of the date of this
Agreement or the last date on which base salary is increased; (c) a relocation
of the Executive's place of employment outside of Philadelphia, Pennsylvania
without Executive's prior consent; (d) a reduction in amount of bonus which may
be earned by the Executive; (e) (i) prior to a Change in Control, failure of the
Corporation to continue to maintain the same medical benefit plans covering the
Executive as are made available to other senior executives of the Corporation or
(ii) after a Change in Control, failure of the Corporation to continue to
maintain at least the same medical benefits covering the Executive as were made
available to him immediately prior to the Change in Control; or (f) failure by
the Corporation to comply with any of the material terms of this Agreement,
which shall not have been cured within 30 days after
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written notice thereof.
3. Compensation.
3.1. The Corporation shall pay or cause X.X. Xxxxxxxxx and
Company, Inc., a Pennsylvania corporation ("JGW"), to pay to the Executive for
the services to be rendered by the Executive hereunder a salary at the rate of
$195,000 per annum. The salary shall be payable in equal installments in
accordance with the Corporation's normal payroll practices. Such salary will be
reviewed at least annually and shall be increased (but not decreased) by the
Compensation Committee of the Board of Directors of the Corporation in such
amount as determined in its sole discretion. In addition, the salary each year
shall be increased by the percentage increase in the United States Consumer
Price Index for all Urban Consumers (for Philadelphia-Atlantic City- Wilmington,
PA-NJ-DE CSMA)- All Items (1982-84=100) published by the United States
Department of Labor, Bureau of Labor Statistics (or if such index is not
available, a comparable index published by the United States Department of
Labor) for the year preceding such year over the prior year.
3.2 The Corporation shall pay or cause JGW to pay to Executive
an annual bonus calculated in accordance with Schedule A attached hereto. The
bonus shall be payable to Executive in a single lump sum no later than 90 days
after the end of each fiscal year.
3.3. The Executive shall be entitled to participate in, and
receive benefits from, any insurance, medical, disability, bonus, incentive
compensation or other employee benefit plan, if any are adopted, of the
Corporation or any subsidiary which may be in effect at any time during the
course of his employment by the Corporation and which shall be generally
available to the Executive on terms no less favorable than to other senior
executives of the Corporation or its subsidiaries. At the option of Executive,
in lieu of participation the Corporation's group medical plan, the Executive
shall be entitled to reimbursement for the full cost of the medical and
disability insurance plans of the Executive's choice, provided that the costs
incurred by the Corporation for such reimbursement shall not exceed $25,000 per
annum in excess of the normal costs of Executive's participation in the
Corporation's group benefit plans.
3.4. Within ninety (90) days after the date of this Agreement,
the Corporation shall issue to Executive, under the terms of the Company's 1997
Stock Incentive Plan, stock options to purchase 50,000 shares of the
Corporation's Common Stock at an exercise price equal to the fair market value
of the Common Stock on the date of grant.
3.5. The Corporation agrees to reimburse the Executive for all
reasonable and necessary business expenses incurred by him on behalf of the
Corporation in the course of his duties hereunder upon the presentation by the
Executive of appropriate vouchers therefor.
3.6. The Executive will be entitled each year of this
Agreement to a paid vacation of four weeks, no more than half of which may be
carried forward to future years.
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3.7. The Corporation agrees to reimburse the Executive for all
reasonable costs and expenses incurred by Executive related to any one or more
of the following: (i) health and fitness club membership fees and dues; (ii)
country club annual membership fees and dues; and (iii) all costs and expenses
related to the purchase, maintenance and operation of, including without
limitation maintenance of insurance related to, one motor vehicle of Executive's
choice.
3.8. In addition to any rights of Executive to indemnification
and reimbursement of costs of litigation set forth in the Corporation's by-laws
or by separate agreement, Executive shall have the right, in connection any
proceeding giving rise to such right of indemnification, to reimbursment from
the Corporation for the reasonable fees and expenses of separate counsel of the
Executive's choice, such counsel being reasonably acceptable to the Corporation.
3.9. Upon termination of this Agreement for Cause or due to
the death or incapacity of the Executive (as defined in Section 4.1), the
Executive (or his estate) shall be entitled to all compensation (including pro
rata bonus) and benefits accrued and unpaid up to the date of termination.
3.10. The Executive shall not be required to mitigate damages
or the amount of any payment provided to him under this Agreement by seeking
other employment or otherwise, except as provided in Section 2.4 hereof.
4. Death
4.1. In the event of the death of the Executive during the
term hereof, the employment hereunder shall terminate on the date of death of
the Executive.
4.2. In the event the employment of Executive is terminated by
the Corporation as the result of the death of the Executive, the Corporation
agrees to continue to pay the Executive (or his estate) his then rate of salary
for a period of one year after such termination.
5. Other Activities During Employment; Non-Competition; Solicitation.
5.1. The Executive shall not during the term of this Agreement
undertake or engage in any other employment, occupation or business enterprise.
Subject to compliance with the provisions of this Agreement, the Executive may
engage in charitable, civic, fraternal and trade activities and reasonable
activities with respect to personal investments of the Executive and may serve
as a director of other corporations provided that such service as director shall
not entail any management duties and that any such activities or services shall
not materially interfere with the performance of Executive's duties hereunder.
5.2. During Executive's employment, neither the Executive nor
any entity in which he may be interested as a partner, trustee, director,
officer, employee, shareholder,
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option holder, lender of money, guarantor or consultant shall be engaged
directly or indirectly in any business engaged in by the Corporation in any area
where the Corporation, or any subsidiary, conducts such business at any time
during this Agreement; provided, however, that the foregoing shall not be deemed
to prevent the Executive from investing in securities if such class of
securities in which the investment is so made is listed on a national securities
exchange or is issued by a company registered under Section 12(g) of the
Securities Exchange Act of 1934, so long as such investment holdings do not, in
the aggregate, constitute more than 5% of the voting stock of any company's
securities.
5.3. The Executive will not at any time during his employment
with the Corporation, solicit (or assist or encourage the solicitation of) any
employee of the Corporation or any of its subsidiaries or affiliates to work for
Executive or for any business, firm, corporation or other entity in which the
Executive, directly or indirectly, in any capacity described in Section 5.2
hereof, participates or engages (or expects to participate or engage) or has (or
expects to have) a financial interest or management position.
5.4. The Executive shall not at any time during this Agreement
or for a period of one year after the termination hereof directly or indirectly
divulge, furnish, use, publish or make accessible to any person or entity any
Confidential Information (as hereinafter defined). Any records of Confidential
Information prepared by the Executive or which come into Executive's possession
during this Agreement are and remain the property of the Corporation and upon
termination of Executive's employment all such records and copies thereof shall
be either left with or returned to the Corporation.
5.5. The term "Confidential Information" shall mean
information disclosed to the Executive or known, learned, created or observed by
him as a consequence of or through his employment by the Corporation, not
generally known in the relevant trade or industry, about the Corporation's
business activities, services and processes, including but not limited to
information concerning advertising, sales promotion, publicity, sales data,
research, finances, accounting, methods, processes, business plans, broker or
correspondent lists and records and potential broker or correspondent lists and
records.
6. Assignment. The Corporation shall require any successor or assign to
all or substantially all the assets of the Corporation (whether by merger or by
acquisition of stock, assets or otherwise) prior to consummation of any
transaction therewith, to expressly assume and agree to perform in writing this
Agreement in the same manner and to the same extent that the Corporation would
be required to perform it if no such succession or assignment had taken place.
This Agreement shall inure to the benefit of and be binding upon the
Corporation, its successors and assigns, and upon the Executive and his heirs,
executors, administrators and legal representatives. This Agreement shall not be
assignable by the Executive.
7. Change in Control. Upon the occurrence of a "Change in Control" (as
hereinafter defined) of the Corporation, Executive may at his election, at any
time within six
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months thereafter, terminate this Agreement, and Executive shall be entitled to
the following compensation, in lieu of any other compensation and bonuses
provided herein:
(a) The Corporation shall pay as severance pay to Executive,
no later than the fifth day following the termination, a lump sum severance
payment equal to (i) 100% of Executive's salary for the greater of two (2) years
or the balance of the Term, at the rate in effect as of the termination, and
(ii) any bonuses due to the Executive pursuant to Section 3.1. through the end
of the fiscal quarter in which such termination was so effective.
(b) For 18 months after such termination, the Corporation
shall use its best efforts to arrange to provide Executive with group health
benefits substantially similar to those which Executive was receiving
immediately prior to the termination. Benefits otherwise receivable by the
Executive pursuant to this paragraph (b)shall be reduced to the extent
comparable benefits are actually received by Executive during such period.
(c) Executive shall not be required to mitigate the amount of
any payment provided for in this Section 7 by seeking employment or otherwise.
(d) In the event that any payment or benefit received or to be
received by Executive in connection with a Change in Control of the Corporation
or the termination of Executive's employment (whether pursuant to the terms of
this Agreement or any other plan, arrangement or agreement with the Corporation,
any person whose actions result in a Change in Control or any person affiliated
with the Corporation or such person) (collectively the "Total Payments") would
not be deductible (in whole or in part) as a result of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), by the Corporation, an
affiliate or other person making such payment or providing such benefit, the
payments or benefits shall be so reduced until no portion of the Total Payments
is not deductible. Executive shall be entitled to elect which payments or
benefits shall be so reduced. For purposes of this limitation, (1) no portion of
the Total Payments the receipt or enjoyment of which Executive shall have
effectively waived in writing prior to the date of payment shall be taken into
account, (2) no portion of the Total Payments shall be taken into account which
in the opinion of tax counsel selected by the Corporation's independent auditors
and acceptable to Executive does not constitute a "parachute payment" within the
meaning of Section 280G(b)(2) of the Code, and (3)the value of any noncash
benefit or any deferred payment or benefit included in the Total Payments shall
be determined by the Corporation's independent auditors in accordance with the
principles of Sections 280(d)(3) and (4) of the Code.
(e) For purposes hereof, a "Change in Control" shall be deemed
to have occurred if (a) Executive, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxx and Xxxx
Xxxxxxx (collectively, the "Principal Stockholders") shall cease to be the
owners of at least 25% of the outstanding shares of common stock of the
Corporation, (b) if the Corporation shall sell all or substantially all its
assets, or (c) if the Corporation shall merge or consolidate with another entity
and as a result thereof the Principal Stockholders cease to be the owners,
either directly or
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indirectly, of at least 25% of the outstanding shares of common stock of the
entity surviving the merger or consolidation.
(f) The Company shall pay all legal fees and related expenses
(including the costs of experts, evidence and counsel) incurred by the Executive
on, after or in connection with a Change in Control as statements therefor are
received (whether or not the Executive is successful) as a result of (a) the
Executive's termination or non-renewal of employment (including all such fees
and expenses, if any, incurred in contesting or disputing any such termination
or non-renewal of employment), (b) the Executive seeking to obtain or enforce
any right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under which the Executive is or may be
entitled to receive benefits or (c) in connection with any tax audit or
proceeding to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder.
8. No Third Party Beneficiaries. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person not a
party to this Agreement, except as provided in Section 6 hereof.
9. Headings. The headings of the sections hereof are inserted for
convenience only and shall not be deemed to constitute a part hereof nor to
affect the meaning thereof.
10. Interpretation. In case any one or more of the provisions contained
in this Agreement shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein. If, moreover, any one or more of the provisions
contained in this Agreement shall for any reason be held by a court of competent
jurisdiction to be unenforceable because it is excessively broad as to duration,
geographical scope, activity or subject, it shall be construed by limiting and
reducing it, so as to be enforceable to the extent compatible with the
applicable law as it shall then appear.
11. Notices. All notices under this Agreement shall be in writing and
shall be deemed to have been given at the time when mailed by registered or
certified mail, addressed to the address below stated of the party to which
notice is given, or to such changed address as such party may have fixed by
notice:
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To the Corporation:
X.X. Xxxxxxxxx & Company, Inc.
The Xxxxxx Building, 10th Floor
15th and Xxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: President
- copy to -
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
Twelfth Floor Packard Building
000 Xxxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
To the Executive:
Xxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
provided, however, that any notice of change of address shall be effective only
upon receipt.
12. Waivers. If either party should waive any breach of any provision
of this Agreement, he or it shall not thereby be deemed to have waived any
preceding or succeeding breach of the same or any other provision of this
Agreement.
13. Complete Agreement; Amendments. The foregoing is the entire
agreement of the parties with respect to the subject matter hereof and may not
be amended, supplemented, canceled or discharged except by written instrument
executed by both parties hereto.
14. Equitable Remedies. The Executive acknowledges that he has been
employed for his unique talents and that his leaving the employ of the
Corporation would seriously hamper the business of the Corporation and that the
Corporation will suffer irreparable damage if any provisions of Section 5 hereof
are not performed strictly in accordance with their terms or are otherwise
breached. The Executive hereby expressly agrees that the Corporation shall be
entitled as a matter of right to injunctive or other equitable relief, in
addition to all other remedies permitted by law, to prevent a breach or
violation by the Executive and to secure enforcement of the provisions of
Section 5. Resort to such equitable relief, however, shall not constitute a
waiver or any other rights or remedies which the Corporation may have.
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15. Governing Law. This Agreement is to be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
X.X. XXXXXXXXX & COMPANY, INC.
By:
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Name:
Title:
-----------------------------------------
Xxxxx X. Xxxxxxx
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