CHANGE IN CONTROL AGREEMENT
AGREEMENT by and between XXXXXXXX INDUSTRIES, a California corporation,
(the "Company") and XXXXXXX X. XXXXXXX (the "Executive"), dated as of this 10th
day of January, 1997.
WHEREAS, the Executive currently serves as Executive Vice-President and a
Director of the Company;
WHEREAS, the Chief Executive Officer and the Board of Directors of the
Company (the "Board") have determined that it is in the best interests of the
Company and its shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility of a change in
control of the Company;
WHEREAS, the Chief Executive Officer and the Board wish to diminish the
distraction of the Executive by virtue of any pending or threatened change in
control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending change in
control;
WHEREAS, the Chief Executive Officer and the Board wish to provide the
Executive with compensation arrangements upon a change in control which satisfy
the expectations of the Executive and which are competitive with those of other
corporations; and
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WHEREAS, the Company desires to retain the consulting services of the
Executive upon his retirement and the Executive desires to provide such
consulting services, on the terms and subject to the conditions set forth below.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. TERM OF AGREEMENT.
(a) The term of this Agreement shall commence on the date of its execution
and, subject to Subsection (b) and Section 3(e) below, shall terminate
on December 31, 1999. Subject to Subsection (b) and Section 3(e)
below, on January 1, 2000, and on each January 1 thereafter, the term
of this Agreement shall automatically be extended for one additional
year, unless not later than the preceding July 1 both parties shall
have agreed in writing not to extend the term of this Agreement. The
term of this Agreement shall also be extended, if necessary, so that
it does not end during a Change in Control Period. All obligations
arising under Sections 5, 6, 8, 9, and 13, if applicable, during the
term of this Agreement shall survive the termination of the Agreement
until such obligations have been satisfied in full.
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(b) If a Change in Control occurs during the original term of this
Agreement or any extension thereof under Subsection (a) and the
Executive's employment does not terminate during the associated Change
in Control Period, this Agreement shall terminate on the last day of
the Change in Control Period.
(c) Notwithstanding anything to the contrary in this Section 1 or Section
3, this Agreement shall terminate --
(1) on the date of the termination of the Executive's employment with
the Company for any reason before the Change in Control Date,
subject to the Retirement provisions in Section 3(e) below; or
(2) on the Executive's Date of Termination on or after the Change in
Control Date if the Executive's employment with the Company is
terminated (A) by the Company for Cause or by reason of
Disability, (B) by reason of the Executive's death, or (C) by the
Executive without Good Reason other than by reason of his
Retirement; or
(3) upon the termination of the Executive's consulting arrangement
described in Section 3(e), by reason of the Executive's death or
Disability.
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2. CERTAIN DEFINITIONS. The following words and phrases, when used in
this Agreement, shall have the following meanings, unless otherwise
clearly required by the context.
(a) "AGREEMENT" shall mean this Change in Control Agreement.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CAUSE" shall mean:
(1) the willful and continued failure of the Executive as an
employee to perform substantially the Executive's duties
with the Company or its affiliates (for reasons other than
the Executive's Disability), after written notification is
delivered to the Executive specifying the manner in which
the Board believes that the Executive has not substantially
performed the Executive's duties, if the Executive does not
cure such failure within 90 days of receiving such written
notification; or
(2) the willful engaging by the Executive while an Employee in
criminal conduct or gross misconduct which is materially and
demonstrably injurious to the Company.
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For purposes of this Subsection (c), no act or failure to act, on
the part of the Executive, shall be considered "willful" unless
it is done, or not done, by the Executive in bad faith or without
reasonable belief that the Executive's action or failure to act
was in the best interests of the Company. Any act, or failure to
act, pursuant to a resolution duly adopted by the Board or upon
the instructions of the Chief Executive Officer or the Chairman
of the Board or based upon the advice of counsel for the Company,
shall be conclusively presumed to be done, or not done, by the
Executive in good faith and in the best interests of the Company.
The termination of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution, duly adopted
by the affirmative vote of not less than three-fourths of the
group consisting of the outside directors of the Company and the
Chairman of the Board, at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the
Executive and the Executive is given an opportunity, together
with his counsel, to be heard before the Board), finding that, in
the good faith opinion of this portion of the Board, the
Executive is guilty of the conduct or misconduct described in
Paragraph (1) or (2), and specifying the particulars thereof in
detail.
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(d) "CHANGE IN CONTROL" shall mean:
(1) the acquisition by any individual, entity, or group (within the
meaning of Section 13(d) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 30 percent or more of
either:
(A) the then outstanding shares of common stock of the Company
(the "Outstanding Company Common Stock"), or
(B) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities");
provided, however, that any of the preceding events shall not
constitute a Change in Control unless the conditions of Paragraph
(2) shall also be satisfied within six months of any of the
preceding events; and provided, further, that for purposes of
this Paragraph (1), the following acquisitions shall not
constitute a Change in Control:
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(C) any acquisition directly from the Company (including,
without limitation, a secondary offering of securities by
the Company);
(D) any acquisition by the Company (including, without
limitation, a repurchase or redemption of Company securities
by the Company);
(E) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
corporation controlled by the Company; or
(F) any acquisition by any corporation pursuant to a transaction
which complies with Subparagraphs (A), (B), and (C) of
Paragraph (3) of this Subsection (d);
(2) the failure of individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a member of the Board subsequent to the date
hereof whose election, or nomination for election by the
Company's shareholders, has been approved by a vote of at least a
majority of the members
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then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or
removal of members or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the
Board;
(3) approval by the shareholders of the Company of a reorganization,
merger, consolidation, or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination --
(A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 70
percent of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting
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securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting
from such Business Combination (including, without
limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of
the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination,
of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be;
(B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from
such Business Combination) beneficially owns, directly or
indirectly, 30 percent or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination; and
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(C) at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(4) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(e) "CHANGE IN CONTROL DATE" shall mean the first date on which a Change
in Control occurs. Notwithstanding any provision in this Agreement to
the contrary, if a Change in Control occurs and if the Executive's
employment with the Company terminates prior to the date on which the
Change in Control actually occurs, and if it is reasonably
demonstrated by the Executive that such termination --
(1) was at the request of a third party who has taken steps
reasonably calculated to effect a Change in Control, or
(2) otherwise arose in connection with or anticipation of a Change in
Control,
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for all purposes of this Agreement the Change in Control Date shall
mean the date immediately before the date of such termination of
employment.
(f) "CHANGE IN CONTROL PERIOD" shall mean the 24-month period beginning on
the first Change in Control Date to occur.
(g) "CODE" shall mean the Internal Revenue Code of 1986, as amended, and
all regulatory guidance promulgated thereunder.
(h) "COMPANY" shall mean Xxxxxxxx Industries.
(i) "COMPENSATION" shall mean the Executive's earned income, wages,
salaries, fees for professional services, and other amounts received
or deferred for personal services actually rendered in the course of
employment with the Company or its affiliates. Compensation shall
include, without limitation, commissions, compensation for services on
the basis of a percentage of profits, bonuses, director fees, amounts
voluntarily deferred by the Executive pursuant to a plan of deferred
compensation, and any contributions by the Executive to or under a
Code Section 125 cafeteria plan or any other employee benefit plan not
specified above. Amounts deferred or contributed by the Executive
pursuant to a qualified or nonqualified deferred compensation plan,
Code Section 125 cafeteria plan, or any other employee benefit plan
shall be deemed Compensation in the year in which
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the deferral or contribution is made rather than in the year any
amounts are received by the Executive under these plans. Bonuses and
other performance-based pay shall be deemed Compensation in the year
for which such pay is earned by the Executive rather than in the year
in which payment is made to the Executive. Notwithstanding the
foregoing, Compensation shall not include any amounts realized in
connection with any stock options or similar arrangements.
(j) "DATE OF TERMINATION" shall mean:
(1) if the Executive's employment is terminated by the Company for
Cause, or by the Executive for Good Reason, the date of receipt
of a written notice of termination, or any later date specified
therein;
(2) if the Executive's employment is terminated by the Company other
than for Cause or by reason of Disability, the date on which the
Company notifies the Executive of such termination; or
(3) if the Executive's employment is terminated by reason of death or
Disability, the date of death or 15 days after the date of
determination by the Company (under Subsection (k)) of
Disability.
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(k) "DISABILITY" shall mean an incapacity, due to physical injury or
illness or mental illness, rendering the Executive unable (1) while an
employee, to perform his duties with the Company on a full-time basis
for a period of at least six consecutive calendar months, or (2) while
covered under the consulting arrangement described in Section 3(e), to
perform his duties under the consulting arrangement. In the case of a
dispute between the Executive and the Company, the determination of
Disability shall be made by a doctor acceptable to both the Executive
and the Company. Nothing in this Agreement shall prevent or limit the
Executive from any benefits to which the Executive is, or may become,
entitled under any short- or long-term disability program sponsored by
the Company or any of its affiliates.
(l) "EXECUTIVE" shall mean Xxxxxxx X. Xxxxxxx.
(m) "GOOD REASON" shall mean:
(1) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles, and reporting requirements), authority, duties, or
responsibilities as of the date of this Agreement, or any other
action by the Company which results in a diminution in such
position, authority, duties, or responsibilities, excluding for
this purpose an isolated, insubstantial, or inadvertent action
not taken in bad faith and which is remedied by
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the Company promptly after receipt of notice thereof given by the
Executive;
(2) the Company's requiring the Executive to be based at any office
or location more than 30 miles from the Company's corporate
headquarters as of the day before the Change in Control Date or
the Company's requiring the Executive to travel on Company
business to a substantially greater extent than required
immediately prior to the Change in Control Date;
(3) any material reduction in the Executive's total annual cash
compensation from the Company and its affiliates (including,
without limitation, base salary, bonus, and incentive plan
payments) without the consent of the Executive;
(4) any material shift in the composition of the Executive's total
annual compensation from the Company and its affiliates, from
base salary to bonus or incentive plan payments or from cash to
non-cash compensation, without the consent of the Executive;
(5) any purported termination by the Company of the Executive's
employment other than as expressly permitted by this Agreement;
or
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(6) any failure by the Company to comply with and satisfy Section
12(c) of this Agreement.
(n) "Retirement" shall mean the voluntary termination of employment with
the Company by the Executive on or after attainment of age 59.
3. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) TERMINATION OF EMPLOYMENT OTHER THAN FOR CAUSE OR DISABILITY. If,
during the Change in Control Period, the Company terminates the
Executive's employment other than for Cause or Disability, the Company
shall be obligated to pay the Executive the compensation equivalency
under Subsection (a) of Section 4 and to provide the benefits or cash
payments described in Section 5.
(b) TERMINATION OF EMPLOYMENT FOR GOOD REASON. If, during the Change in
Control Period, the Executive terminates employment with the Company
for Good Reason (even if the Executive is eligible for Retirement),
the Company shall be obligated to pay the Executive the compensation
equivalency under Subsection (a) of Section 4 and to provide the
benefits or cash payments described in Section 5.
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(c) TERMINATION OF EMPLOYMENT BY REASON OF DEATH. If, during the Change
in Control Period, the Executive's employment with the Company is
terminated by reason of the Executive's death, this Agreement shall
terminate without further obligation to the Executive's legal
representatives under this Agreement.
(d) TERMINATION OF EMPLOYMENT BY THE COMPANY FOR CAUSE OR BECAUSE OF
DISABILITY, OR BY THE EXECUTIVE WITHOUT GOOD REASON. If, during the
Change in Control Period, the Company terminates the Executive's
employment for Cause or because of Disability, or if, during the
Change in Control Period, the Executive terminates employment without
Good Reason (other than by reason of Retirement), this Agreement shall
terminate without further obligation to the Executive.
(e) TERMINATION OF EMPLOYMENT BY REASON OF RETIREMENT. If, during the
term of this Agreement, the Executive voluntarily terminates
employment with the Company by reason of Retirement, the Company shall
retain the Executive, and the Executive shall act, as a consultant to
the Company for 24 months following the date of his Retirement. Under
this consulting arrangement,
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(1) the Company shall pay the Executive one-twenty-fourth of the
amount described in Section 4(a) in cash per month during the
term of the consulting arrangement;
(2) the Company shall continue to provide benefits or cash payments
described in Section 5 for each month during the term of the
consulting arrangement; and
(3) the Executive shall provide such consulting services as the
Company may reasonably request for up to 60 hours per month on
average, to the extent such consulting services do not prevent
the Executive from performing his obligations to his then current
employer.
Except as specified below, upon Retirement and the concurrent
commencement of this consulting arrangement, the provisions of this
Subsection (e) shall remain in force for 24 months and the consulting
arrangement shall not be terminated by the Company for any reason
other than the death or Disability of the Executive. The provisions
of this Subsection (e) shall not be changed during such 24-month term
without the mutual written consent of the Company and the Executive.
The Company may terminate such consulting relationship other than on
account of the death or Disability of the Executive, provided that the
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Company shall continue to provide the benefits or cash payments
described in Section 5 for the remainder of the 24-month period.
Additionally, the Company shall pay to the Executive, in accordance
with the provisions of Sections 7, 8, and 9, in a lump sum cash
payment as soon as practicable after termination of the arrangement,
the difference between the amounts determined under Paragraphs
(4) and (5).
(4) The amount determined under this Paragraph shall be the amount
described in Section 4(a).
(5) The amount determined under this Paragraph shall be the sum of
the monthly payments described in Paragraph (1) that have
actually been paid to the Executive under the consulting
arrangement.
4. COMPENSATION EQUIVALENCY. The following amount shall be paid by the
Company to the Executive to the extent required under, and in accordance
with, the provisions of Sections 3, 7, 8, and 9.
(a) AMOUNT OF PAYMENT. The Executive shall receive a cash payment equal
to the product of two times the greater of (1) the Executive's
Compensation for the last full calendar year ending on or before the
Executive's Date of Termination, or (2) $500,000.
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(b) TIMING OF PAYMENT. The amount determined above shall be payable as
soon as practicable after the Executive's Date of Termination, in a
single lump-sum cash payment.
5. BENEFITS. The following benefits (or cash payments, if applicable) shall
be provided by the Company for or to the Executive and (to the extent
applicable) his immediate family, to the extent required, and in accordance
with, the provisions of Sections 3, 7, 8, and 9.
(a) For two years after the Executive's Date of Termination, or such
longer period as may be provided under the terms of the appropriate
plan, program, practice, or policy, the Company shall continue
benefits to the Executive and/or the Executive's immediate family at a
level substantially equivalent to that which would have been provided
for him and/or them in accordance with the plans, programs, practices,
and policies described in Subsection (b) if the Executive's employment
had not terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other senior
executives of the Company and its affiliates and their families.
Notwithstanding the foregoing, if the Executive becomes reemployed
with another employer (other than pursuant to the consulting
arrangement described in Section 3(e)) and is eligible to receive any
medical or any other
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welfare benefits under any other employer-provided plan, or if the
Executive breaches any of the covenants listed in Section 8, all of
the benefits (or cash payments, if applicable) provided under this
Subsection (a) shall be immediately terminated.
If it is not reasonably practicable to provide the Executive and/or
the Executive's immediate family with one or more of the benefits
discussed above, or if the cost of providing any such benefit or
benefits (other than the cost associated with any benefit self-insured
by the Company) exceeds 200 percent of the average costs
applicable to similarly situated executives of the Company, the
Company instead may pay to the Executive a cash amount equal to 200
percent of said average costs associated with such benefit or
benefits, grossed up for any applicable Federal, state, and local
income taxes on such cash payments.
(b) The benefits described herein shall be all benefits under any welfare
benefit plans, arrangements, or programs provided by the Company and
its affiliates (including, without limitation, medical, prescription
drugs, dental, disability, employee and dependent life, group life,
accidental death, and travel accident insurance plans and programs) to
the extent applicable generally to other executives of the Company and
its affiliates, other than severance benefits, to the extent not
triggered by the Executive's termination of employment with the
Company.
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6. ACCELERATION OF STOCK OPTION VESTING. Upon a Change in Control or the
Retirement of the Executive, the Company shall cause the vesting of
any stock options with regard to stock of the Company or its
affiliates held by the Executive to be accelerated to the Change in
Control Date or the date of Retirement, as applicable. The Executive
shall be entitled to give notice of exercise of all such options for
30 days after the Change in Control Date or the date of Retirement or
such longer period permitted under the original documents granting
such options.
7. CONTINGENT LIMITATION ON AMOUNTS.
(a) Notwithstanding any other provisions of this Agreement or any
other agreement, plan, or arrangement (except as provided in the
following paragraph of this Subsection (a)), if any payment or
benefit received or to be received by the Executive (under the
terms of this Agreement, or any other plan, arrangement, or
agreement with the Company, or any other plan, arrangement, or
agreement with any person whose actions result in a Change in
Control or any person affiliated with the Company or any such
person)(all such payments and benefits being hereinafter called
"Total Payments") would be subject (in whole or in part) to taxes
imposed by Code Section 4999 (the "Excise Tax"), the portion of
the Total Payments payable under this Agreement shall be reduced
as herein provided.
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The Total Payments payable under this Agreement shall be reduced
to the extent necessary so that no portion of the Total Payments
shall be subject to the Excise Tax (after taking into account any
reduction in the Total Payments provided by reason of Code
Section 280G in any other plan, arrangement, or agreement) but
only if the amount determined under Paragraph (1) is greater than
the amount determined under Paragraph (2).
(1) The amount determined hereunder shall be the net amount of
such Total Payments, as so reduced (and after deduction of
the net amount of Federal, state, and local income taxes on
such reduced Total Payments computed at the Executive's
highest marginal tax rate).
(2) The amount determined hereunder shall be the excess of --
(A) the net amount of such Total Payments, without reduction
(but after deduction of the net amount of Federal, state,
and local income taxes (excluding any Excise Tax) on such
Total Payments computed at the Executive's highest marginal
tax rate), over
(B) the amount of Excise Tax to which the Executive would be
subject in respect of such Total Payments.
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Any reduction of the Total Payments shall be made under one of the two
alternative methods described in Subsection (b).
(b) If the Total Payments all become payable at approximately the same
time,
(1) the payments under Section 4 shall first be reduced (if
necessary, to zero);
(2) the other portions of the Total Payments shall next be reduced
(if necessary, to zero); and
(3) the acceleration of vesting of awards under stock options shall
be reduced as necessary.
If the Total Payments do not become due and payable at approximately
the same time, the respective Total Payments shall be paid in full in
the order in which they become payable until any portion thereof would
not be deductible, and such portion (and any subsequent portions) of
the Total Payments shall be reduced to zero. In such case, the
Company shall make every reasonable effort to make such payments in
the order that results in the most favorable tax treatment and
financial results for the Executive.
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(c) For purposes of determining whether and the extent to which the Total
Payments would be subject to the Excise Tax,
(1) no portion of the Total Payments the receipt or enjoyment of
which the Executive shall have effectively waived in writing
prior to the date of termination, Retirement, or cancellation of
the Executive's consulting arrangement shall be taken into
account; and
(2) no portion of the Total Payments shall be taken into account
which in the opinion of Xxxxxx Xxxxxxxx LLP (or suitable experts
selected by the Board) does not constitute a "parachute payment"
within the meaning of Code Section 280G(b)(2), including by
reason of Code Section 280G(b)(4)(A);
(3) no portion of the Total Payments shall be taken into account in
calculating any "excess parachute payment" which in the opinion
of Xxxxxx Xxxxxxxx LLP (or suitable experts selected by the
Board) which would be deemed reasonable compensation for services
actually rendered under Code Section 280G(b)(4)(B); and
(4) the value of any non-cash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by
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Xxxxxx Xxxxxxxx LLP (or suitable experts selected by the Board)
in accordance with the principles of Code Section 280G(d)
(3) and (4).
The Company shall provide the Executive with the calculation of the
foregoing amounts and any supporting materials as are reasonably necessary
for the Executive to evaluate the calculations. All calculations hereunder
shall be performed by Xxxxxx Xxxxxxxx LLP (or suitable experts selected by
the Board).
8. RESTRICTIVE COVENANTS.
(a) Until Retirement or any other termination of employment with the
Company, the Executive shall devote his full time, attention, and
energies to the business of the Company. The Executive shall not,
during the term of this Agreement, be engaged in any other activity
which interferes with the performance of his duties.
(b) During the term of this Agreement and the two-year period beginning on
the Executive's Date of Termination or Retirement, the Executive shall
not engage directly or indirectly, either as an owner, principal,
shareholder, agent, proprietor, director, officer, employee, or
adviser of (inclusive of the direct or indirect holdings of his
spouse, child, or parent), or participate in the ownership,
management, operation, or control of, or have any other significant
financial interest in, any of the following businesses, their
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affiliates, or any part thereof, or any successors or assigns (in
whole or in part) thereto:
(1) Arrow Electronics, Inc.;
(2) Avnet, Inc.;
(3) Xxxx Industries, Inc.;
(4) Wyle Electronics; or
(5) Pioneer-Standard Electronics, Inc.
(c) As part of the consideration for this Agreement, the Executive shall
not, at any time during the term of this Agreement or thereafter,
divulge to another person trade secrets or confidential information of
the Company and its affiliates including, but not limited to, the
Company's unique business methods, processes, operating techniques,
and "know-how" (all of which have been developed by the Company or its
affiliates through substantial effort and investment), profit and loss
results, market and supplier strategies, customer identity and needs,
information pertaining to employee effectiveness and compensation,
inventory strategy, product costs, gross margins, or any other
information relating to the affairs of the Company and its affiliates
that he may acquire during his employment with the Company.
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(d) The Executive shall not, at any time during the term of this Agreement
or the two-year period beginning on the Executive's Date of
Termination or Retirement, solicit or induce any of the employees of
the Company or its affiliates to terminate their employment with their
employer.
9. REMEDIES.
(a) The Executive agrees that the provisions of Section 8 are necessary
for the protection of the Company and that any breach thereof will
cause the Company irreparable damage for which there is no adequate
remedy at law. The Executive consents to the issuance of an
injunction in favor of the Company as a matter of right, enjoining the
breach of any of the aforesaid covenants by any court of competent
jurisdiction.
(b) Upon a breach by the Executive of any of the covenants listed in
Section 8, the Company's obligation to make any payments or provide
any benefits under Section 3 which have not yet been paid or provided,
to continue the consulting arrangement under Section 3(e), or to allow
the Executive to exercise any options the vesting of which was
accelerated under Section 6 but which remain unexercised, shall cease
and this Agreement shall cease without further obligations to the
Executive.
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(c) Upon a breach by the Executive of any of the covenants listed in
Section 8, to the extent the Company shall have paid any of the
compensation equivalency described in Section 4 pursuant to
Subsections (a) through (d) of Section 3, the Executive shall pay to
the Company, within 15 days of receipt of written demand by the
Company, the difference between the amounts determined under
Paragraphs (1) and (2).
(1) The amount determined under this Paragraph shall be 100 percent
of the amount the Executive received as a cash payment under
Sections 3 and 4.
(2) The amount determined under this Paragraph shall be the product
of 100 percent of the amount the Executive received as a cash
payment under Sections 3 and 4, and a fraction. The numerator of
this fraction shall be 730 less the number of days that have
elapsed from the Executive's Date of Termination or Retirement
through the first date of the breach by the Executive of one or
more of the covenants listed in Section 8. The denominator of
the fraction shall be 730.
Upon a breach by the Executive of any of the covenants listed in
Section 8, to the extent the Company shall have paid any of the
amounts described in Section 3(e) pursuant to any consulting
arrangement, the Executive shall pay to the Company, within 15 days of
receipt of written demand by the
28
Company, the portion of such payments made after the breach by the
Executive of such covenants.
(d) This Section 9 shall survive the termination of this Agreement. The
remedies described herein, including the Company's right to an
injunction, shall be cumulative and in addition to whatever other
remedies the Company may have under this Agreement or otherwise.
10. RIGHTS NOT EXCLUSIVE. Nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program,
policy, or practice provided by the Company or any of its affiliates for
which the Executive may otherwise qualify. Subject to Section 14(e),
nothing herein shall limit or otherwise affect such rights as the Executive
may have under any contract or agreement with the Company or any of its
affiliates. Amounts which are vested benefits or which the Executive is
otherwise entitled to receive under any plan, policy, practice, or program
of, or any contract or agreement with, the Company or any of its affiliates
at or subsequent to the Date of Termination or Retirement shall be payable
in accordance with such plan, policy, practice, program, contract, or
agreement except as explicitly modified by this Agreement.
11. FULL SETTLEMENT; LEGAL FEES. The Company's obligation to make any payments
required under this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense,
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or other claim, right, or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the
amounts payable or benefits provided to the Executive under any of the
provisions of this Agreement; and, except as specifically provided in
Sections 5, 7, 8, and 9, such amounts or benefits shall not be reduced
whether or not the Executive obtains other employment.
12. SUCCESSORS.
(a) This Agreement is personal to the Executive and, without the prior
written consent of the Company, shall not be assignable by the
Executive, other than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Executive's legal representatives. Notwithstanding the foregoing, the
rights transferable, assignable, or enforceable pursuant to this
Subsection shall only relate to benefits accrued and actually payable
to the Executive before his death. The provisions of this Subsection
shall not be deemed to create any additional rights or benefits.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
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(c) The Company shall require any successor (whether direct or indirect,
by purchase, merger, consolidation, or otherwise) to all or
substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or
otherwise.
13. ARBITRATION. Except for the Company's right to seek equitable relief as
provided herein, any controversy arising out of or relating to this
Agreement, or any written modification or extension thereof, including any
claim for damages, whether based on contract, tort, or any theory of law,
shall be settled by arbitration. Such arbitration shall take place in Los
Angeles, California, in accordance with the commercial rules then
applicable of the American Arbitration Association. The arbitrator or
arbitrators sitting in any such controversy shall have no power to alter or
modify any express provisions of this Agreement or any written instrument
modifying or extending this Agreement, or to render any award which by its
terms effects any such alteration or modification. The parties consent to
the jurisdiction of the Superior Court of the State of California and of
the U.S. District Court for the Central District of California for all
purposes in connection with arbitration, including the entry of judgment on
any award. The
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parties consent that any process or notice of motion or other application
to any of said courts, and any paper in connection with arbitration, may be
served by certified mail return receipt requested or by personal service or
in such other manner as may be permissible under the rules of the
applicable court or arbitration tribunal, provided a reasonable time for
appearance is allowed. The parties further agree that arbitration
proceedings shall be instituted within one year after the claimed breach
shall have occurred, and that any failure to institute arbitration
proceedings within such period shall constitute an absolute bar to the
institution of any administrative, court, or arbitration proceedings and a
waiver of all claims. The Company shall pay all of the Executive's
reasonable legal expenses and other reasonable costs in presenting the
matter and all reasonable costs of the arbitrator.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without reference to principles
of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified other than by a written
agreement executed by the parties hereto or their respective
successors and legal representatives.
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(b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed
as follows:
If to the Executive: Xx. Xxxxxxx X. Xxxxxxx
Executive Vice-President
___________________________________
___________________________________
If to the Company: Xx. Xxxxxx Xxxxx
Chief Executive Officer
Xxxxxxxx Industries
0000 Xxxxxxx Xxxxxx
Xx Xxxxx, XX 00000
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision
of this Agreement.
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(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state, local, and foreign taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
The Executive's or the Company's failure to insist upon compliance
with any provision of this Agreement or the failure to assert any
right that the Executive or the Company may have hereunder, including
without limitation the right of the Executive to terminate employment
for Good Reason and the right of the Company to any remedy under
Section 9, shall not be deemed to be a waiver of such provision or
right or any other provision or right of this Agreement.
(e) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the
Executive and the Company, the employment of the Executive by the
Company is "at will." Prior to Retirement or the Change in Control
Date, the Executive's employment may be terminated by either the
Executive or the Company at any time, in which case the Executive
shall have no further rights under this Agreement. From and after the
Change in Control Date, this Agreement shall supersede any other
agreement between the parties with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from the Board, the Company has caused
this Agreement to be executed in its name on its behalf, all as of the day
and year first above written.
/S/ XXXXXXX X. XXXXXXX
-----------------------------------
XXXXXXX X. XXXXXXX
Executive Vice-President
XXXXXXXX INDUSTRIES
By /S/ XXXXXX XXXXX
--------------------------------
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