EXHIBIT 10.1
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT dated as of August 1, 1998 (the "Agreement") by and
between XXXXX XXXXXXXX CORPORATION, a Delaware corporation (the "Company"), and
XXXX X. XXXXXX, III (the "Executive").
WHEREAS the Company desires to employ Executive and to enter into an
agreement embodying terms of such employment (the "Agreement"); and
WHEREAS Executive desires to accept such employment and to enter into such
an Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. Term of Employment. The Executive's period of employment hereunder
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shall extend from August 1, 1998 through April 10, 2001; provided, however, that
commencing April 10, 1999 and each April 10 thereafter if this Agreement is
still in effect, the period of employment shall automatically be extended for
one additional year unless, not later than March 1 of such year, the Company or
the Executive has given written notice to the other party that such term of
employment shall not be so extended. The period of Executive's employment
hereunder, including any extension or extensions pursuant to the foregoing
sentence, is referred to hereafter as the "Employment Term."
2. Position. Executive shall serve as Senior Vice President and General
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Counsel of the Company. Executive shall devote substantially all of his business
time and energies to the business of the Company. Notwithstanding the foregoing,
Executive may (a) continue to serve on the board of directors of any business
corporation on which he is serving as of the date of this Agreement (as shown on
Schedule A), (b) serve on the boards of directors or committees of non-profit
organizations and (c) with the prior approval of the Chief Executive Officer of
the Company or of the Board, serve on the boards of directors of other business
corporations, provided that in the Company's sole reasonable discretion none of
the foregoing activities materially interferes with the performance of
Executive's duties hereunder.
3. Base Salary. Company shall pay Executive a base salary at the rate
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of not less than $225,000 per year, as the same may from time to time be
increased at the sole discretion of the Board of Directors of the Company (the
"Board") or, prior to a Change in Control, decreased in the event of across the
board salary reductions within the corporate staff group or the business
division in which Executive is employed, whichever is applicable ("Base
Salary").
4. Incentive Compensation. Executive shall participate in the JM
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executive incentive compensation plans, as in effect from time to time during
the Employment Term, for which his level of employment makes him eligible.
(References herein to "JM executive incentive compensation plans" whether annual
or long-term, shall include such plans maintained by the Company from time to
time.) The JM executive incentive
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compensation plans in effect on the date hereof in which Executive participates
are listed on Schedule B.
5. Employee Benefits. Executive shall be eligible to participate in such
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other of the Company's employee benefit plans and to receive such benefits for
which his level of employment makes him eligible, in accordance with the
Company's policies as in effect from time to time during the Employment Term.
6. Business Expenses. Necessary and reasonable business expenses incurred
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by Executive during the Employment Term shall be reimbursed in accordance with
Company policies.
7. Termination Prior to a Change in Control.
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(a) Retirement. This Agreement shall terminate automatically upon
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Executive's Retirement, as defined hereafter. For purposes of this Agreement,
"Retirement" means termination of Executive's employment initiated by Executive,
other than for Good Reason as defined in Section 7(e) or Section 8(e) hereof,
whichever is applicable, whereby Executive is entitled to receive an immediately
payable benefit, including an early retirement benefit, under the Company's
retirement plan generally applicable to its salaried employees or under any
retirement arrangement established with respect to Executive with his consent,
in either case, whether or not Executive commences to receive such benefit at
the time of such termination. Upon termination of Executive's employment by
reason of Retirement prior to a Change in Control, Executive shall be entitled
to benefits determined in accordance with the Company's retirement, benefit and
insurance programs in effect at such time.
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(b) Death or Disability.
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(i) Disability. Executive's employment hereunder may be
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terminated by the Company if Executive becomes physically or mentally
incapacitated and is therefore unable for a period of six (6) consecutive months
to perform his duties (such incapacity is hereinafter referred to as
"Disability"). Any question as to the existence of the Disability of Executive
as to which Executive and the Company cannot agree shall be determined in
writing by a qualified independent physician mutually acceptable to Executive
and the Company. Upon any such termination for Disability prior to a Change in
Control, Executive shall be entitled to receive his Base Salary through the date
on which Executive is first eligible to receive payment of disability benefits
in lieu of salary under the Company's employee benefit plans as then in effect.
(ii) Death. Upon termination for death prior to a Change in
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Control, Executive shall be entitled to his Base Salary at the rate in effect at
the time of Executive's death through the end of the month in which his death
occurs.
(iii) Death or Disability Benefits. All other benefits to which
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Executive may be entitled following Executive's termination for death or
Disability prior to a Change in Control shall be determined in accordance with
the plans, policies and practices of the Company.
(c) For Cause by the Company; Voluntary Termination by Executive.
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Executive's employment hereunder may be terminated by the Company for "Cause".
For purposes of this Agreement, prior to a Change in Control, "Cause" shall mean
(i) Executive's willful and continued failure substantially to perform his
duties hereunder (other than as a result of total or partial incapacity due to
physical or mental illness or as
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a result of termination by Executive for Good Reason as defined in Section 7(e)
below), (ii) Executive's dishonesty in the performance of his duties hereunder
or (iii) Executive's conviction of a felony under the laws of the United States
or any state thereof. If Executive is terminated for Cause, or if Executive
voluntarily terminates employment hereunder other than for Good Reason, in
either case, prior to a Change in Control, he shall be entitled to receive his
Base Salary through the date of termination. All other benefits, if any, payable
to Executive following such termination of Executive's employment shall be
determined in accordance with the plans, policies and practices of the Company.
(d) Without Cause by the Company or with Good Reason by Executive.
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Subject to Section 7(g) below, if during the Employment Term and prior to a
Change in Control Executive's employment hereunder is terminated by the Company
without Cause (other than by reason of death or Disability) or by Executive with
"Good Reason" (as defined in Section 7(e) below) asserted in Notice of
Termination pursuant to Section 13(f) within one year of the event alleged to
constitute such Good Reason, Executive shall be entitled to receive the
following benefits:
(i) The Company shall pay Executive in equal monthly cash
payments, beginning on the fifth day of the month following such termination and
continuing on the fifth day of each month thereafter for a period of 24 months,
an aggregate amount equal to two times Executive's Base Salary in effect at the
time of such termination or, in the event of termination by Executive on account
of an event described in Section 7(e)(iv) below, the Base Salary as in effect
prior to the reduction or reductions referred to therein plus the bonus
Executive would have earned in respect of
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the year of termination under the Company's annual incentive compensation plan,
if any, in effect at the date of termination or, in the event of a termination
by Executive by reason of an event described in Section 7(e)(v), the plan in
effect prior to the elimination referred to therein, determined as if Executive
had been employed by the Company for the full year and without regard to any
right reserved by the Company to decrease or eliminate such bonus, and assuming
actual performance had equaled 100% of the performance objective established for
such year pursuant to the terms of such plan. In the event of a Change in
Control following such termination, all remaining amounts then payable pursuant
to this Section 7(d)(i) shall be paid in a lump sum in cash within 15 days of
the date of the event giving rise to the Change in Control.
(ii) For a 24-month period after such termination, the Company
shall cause Executive to be provided with life, accident, medical, dental and
prescription insurance benefits substantially similar to, and on the same terms
as, those benefits elected and received by Executive under the Company's "Flex
Benefit" program immediately prior to such termination; provided that, Executive
shall be charged an amount equal to any monthly payroll deduction charged for
similar benefits to executives in positions similar to that which Executive held
before his termination; and provided further that, if Executive receives medical
benefits under the Company's Retiree Comprehensive Health Care Plan and post-
retirement life insurance benefits (collectively, "Retiree Medical and Life
Insurance Benefits"), at any time during the 24-month period referred to above,
once such benefits begin Executive shall be entitled only to Retiree Medical and
Life Insurance Benefits.
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(iii) For a period of 24 months after such termination, the
Company shall provide or cause Executive to be provided with the perquisites
listed on Schedule C, attached hereto, as may be amended by the Company from
time to time without Executive's consent prior to such termination (provided
that nothing herein shall be deemed to permit such an amendment without
Executive's consent following a Change in Control), on the same terms and
conditions on which such perquisites were provided prior to Executive's
termination.
(iv) In addition to all other amounts payable to Executive
under this Section 7(d), Executive shall be entitled to receive all benefits
payable to Executive under any other plan, policy or agreement relating to
retirement or other benefits in accordance with the terms of such plans,
policies or agreements; provided, however that, amounts paid pursuant to this
Section 7(d) shall be in lieu of any payments under any Company separation
policy.
(v) The Company shall provide Executive with outplacement
services from the firm of Executive's choice at a cost to the Company not to
exceed the lesser of (A) 20% of Executive's Base Salary in effect at the time of
Executive's termination of employment with the Company or (B) $25,000.
(e) Good Reason. For purposes of this Agreement, prior to a Change
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in Control, "Good Reason" shall mean:
(i) a material reduction in Executive's responsibilities,
authorities or duties, all as contemplated by Section 2 hereof; provided,
however, that such reduction by reason of a termination for Cause or Disability
shall not constitute Good Reason;
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(ii) Executive's job is eliminated other than by reason of
promotion or termination for Cause or Disability.
(iii) the Company fails to pay Executive any amount otherwise
vested and due hereunder or under any plan or policy of the Company;
(iv) a reduction in Executive's Base Salary except in the event
of an across the board salary reduction within the corporate staff group or the
business division in which Executive is employed, whichever is applicable;
(v) a reduction in Executive's aggregate level of benefits
under the Company's pension, life insurance, medical, health and accident,
disability, deferred compensation or savings or similar plans, except in the
event of an across the board reduction in such benefits within the corporate
staff group or the business division in which Executive is employed, whichever
is applicable;
(vi) the elimination of an annual incentive compensation plan
or a material reduction in such a plan not applicable to other executives of the
Company; or
(vii) Executive's office is relocated outside of a 00-xxxx
xxxxxx xx Xxxxxx, Xxxxxxxx without his written consent.
If Executive provides to the Company a Notice of Termination, as
defined in Section 13(f), in connection with an event described in clauses (i)
through (vii) of this Section 7(e), the Company shall have ten (10) business
days from the date of receipt of such notice to effect a cure of the event
described therein, and upon cure thereof by the Company to Executive's
reasonable satisfaction, such event shall no longer constitute Good Reason for
purposes of this Agreement.
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(f) Mitigation. In the event of termination of Executive's employment
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hereunder by the Company without Cause or by Executive with Good Reason prior to
a Change in Control, benefits otherwise receivable by Executive pursuant to
subsection 7(d)(ii) shall be reduced to the extent comparable benefits are
received by Executive during the 24-month period following such termination.
Executive shall report to the Company any such benefits actually received by
Executive.
(g) Performance Related Termination. Notwithstanding any other
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provision of this Agreement, in the event (i) Executive's employment hereunder
is terminated by the Company without Cause prior to a Change in Control pursuant
to which payments are payable pursuant to Section 7(d) and (ii) such termination
is the result of a Performance Related Termination Event (as defined in Section
7(h) below), then (x) the benefits and perquisites provided pursuant to Sections
7(d)(ii) and 7(d)(iii) shall be provided for a 12-month period after such
termination in lieu of a 24-month period, (y) the benefits and services provided
pursuant to Sections 7(d)(iv) and 7(d)(v) shall remain unchanged and (z) the
amount payable pursuant to Section 7(d)(i) shall be reduced to the amount
provided in Section 7(g)(i) below:
(i) The Company shall pay Executive at the time of such
termination in a lump sum a cash amount equal to one times his Base Salary in
effect at the time of such termination plus a fraction of the annual bonus which
(absent such termination and without regard to any right reserved by the Company
to decrease or eliminate such bonus) Executive would have earned in respect of
the year of termination under the JM annual incentive compensation plan, if any,
in effect at the date of termination, assuming actual performance had equaled
100% of the
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performance objective established for such year pursuant to the terms of such
plan, the numerator of which fraction is the number of days in such year during
which the Executive was employed by the Company and the denominator of which is
365.
(h) Performance Related Termination Event. For purposes of the
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foregoing, "Performance Related Termination Event" shall mean Executive's
failure to meet in any material respect the expectations of the Company which
have been communicated to Executive and which are reasonable and material in
light of Executive's position after a written notice specifying this Section and
identifying such failure is delivered to Executive and Executive shall have
failed during the 60-day period following such written demand to have corrected
such failure (other than as a result of total or partial incapacity due to
physical or mental illness or as a result of termination by Executive for Good
Reason).
8. Termination Following a Change in Control.
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(a) Retirement. This Agreement shall terminate automatically upon
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Executive's Retirement. Upon a termination of Executive's employment by reason
of Retirement following a Change in Control, Executive shall be entitled to
benefits determined in accordance with the Company's retirement, benefit and
insurance programs in effect immediately prior to the Change in Control or, if
more generous, such programs in effect at the time of such Retirement.
(b) Death or Disability.
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(i) Disability. Executive's employment hereunder may be terminated
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by reason of Executive's Disability, subject to the procedure for determining
such Disability outlined in Section 7(b)(i). Upon any termination for Disability
following a
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Change in Control, Executive shall be entitled to receive his Base Salary for a
two-year period ending on the second anniversary of Executive's date of
termination. Such Base Salary shall be paid in equal monthly installments and
shall be reduced by any amounts received as disability benefits in lieu of
salary under the Company's employee benefit plans.
(ii) Death. Upon termination for death following a Change in
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Control, Executive shall be entitled to (x) his Base Salary at the rate in
effect at the time of Executive's death through the end of the month in which
his death occurs and (y) if and to the extent the death benefits provided
Executive by the Company are less than would have been paid immediately prior to
a Change in Control, a lump sum payment of cash in an amount equal to the value
of such shortfall. Any such lump sum payment shall be made within ten (10)
business days following Executive's death.
(iii) Death or Disability Benefits. All other benefits to which
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Executive may be entitled upon Executive's termination for death or Disability
following a Change in Control shall be determined in accordance with the plans,
policies and practices of the Company in effect immediately prior to the Change
in Control or, if more generous, such plans, policies and practices as in effect
at any time following the Change in Control; provided that, nothing in this
Section 8(b)(iii) shall be interpreted so as to result in the duplication of the
benefits provided under Section 8(b)(i) or (ii).
(c) For Cause by the Company; Voluntary Termination by Executive. For
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purposes of this Agreement, following a Change in Control, "Cause" shall mean
(i) Executive's willful and continued failure substantially to perform his
duties hereunder (other than as a result of total or partial incapacity due to
physical or mental illness or as
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a result of termination by Executive for Good Reason as defined in Section 8(e)
below) after a written demand for substantial performance is delivered to
Executive personally and Executive shall have failed during the 60-day period
following such written demand to have corrected such failure, (ii) Executive's
dishonesty in the performance of his duties hereunder or (iii) Executive's
conviction of a felony under the laws of the United States or any state thereof.
For purposes of this Section 8(c) no act or failure to act on Executive's part
shall be deemed willful unless done or omitted to be done by Executive not in
good faith and without reasonable belief that Executive's action or omission was
in the best interest of the Company.
If Executive is terminated for Cause, or if Executive voluntarily
terminates his employment with the Company other than for Good Reason, in either
case, following a Change in Control, he shall be entitled to receive his Base
Salary through the date of termination. All other benefits, if any, payable to
Executive following such termination of Executive's employment shall be
determined in accordance with the plans, policies and practices of the Company.
(d) Without Cause by the Company or With Good Reason by Executive. If
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during the Employment Term Executive's employment hereunder is terminated by the
Company following a Change in Control without Cause (other than by reason of
death or Disability) or by Executive with "Good Reason" (which following a
Change in Control shall have the meaning set forth in Section 8(e) below)
asserted in a Notice of Termination pursuant to Section 13(f) within two years
of the event alleged to constitute such Good Reason, Executive shall be entitled
to receive the following benefits:
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(i) The Company shall pay Executive at the time of termination
in a lump sum a cash amount equal to three times the sum of (A) Executive's Base
Salary in effect at the time of such termination or, in the event of termination
by Executive by reason of an event described in Section 8(e)(iv) below, the Base
Salary as in effect prior to the reduction or reductions referred to therein
plus (B) the bonus Executive would have earned in respect of the year of
termination under the JM annual executive incentive compensation plan, if any,
in effect at the date of termination or, in the event of a termination by
Executive by reason of an event described in Section 8(e)(v) below, the plan in
effect immediately prior to the reduction or reductions referred to therein,
determined as if Executive had been employed by the Company for the full year
and without regard to any right reserved by the Company to decrease or eliminate
such bonus, and assuming actual performance had equaled 100% of the performance
objective established for such year pursuant to the terms of such plan.
(ii) The Company shall pay Executive in a lump sum a cash amount
equal to a fraction of the annual bonus which (absent such termination and
without regard to any right reserved by the Company to decrease or eliminate
such bonus) Executive would have earned with respect to the year of termination
under the JM annual executive incentive compensation plan, if any, in effect at
the date of termination or, in the event of a termination by Executive by reason
of an event described in Section 8(e)(v), the plan in effect prior to the
reduction or reductions referred to therein, assuming actual performance had
equaled 100% of the performance objective established for such year pursuant to
the terms of such plan, the numerator of which fraction is the number of days in
such year during which the
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Executive was employed by the Company and the denominator of which is 365. Such
payment shall be made at the time of Executive's termination.
(iii) [Reserved.]
(iv) Executive shall receive credit under the Supplemental Plan
for Participants in the THE COMPANY'S Salaried Retirement Plan for two
additional years of service for purposes of both vesting and accrual of
benefits.
(v) For a 36-month period following Executive's termination,
the Company shall pay Executive in monthly installments the sum of the monthly
costs to Executive of purchasing life, accident, medical, dental and
prescription insurance benefits substantially similar to such benefits elected
and received by Executive under the Company's "Flex Benefit" program immediately
prior to Executive's termination or, if more generous, immediately prior to the
Change in Control ("Continued Benefits") less the monthly payroll deduction, if
any, charged to Executive immediately prior to Executive's termination, or, if
applicable, immediately prior to the Change in Control, for any of such
Continued Benefits; notwithstanding the foregoing, if Executive begins to
receive Retiree Medical and Life Insurance Benefits at any time during the 36-
month period referred to above, once such benefits begin, the monthly payment
due Executive under the preceding clause shall equal the monthly costs to
Executive of purchasing Continued Benefits not provided by the Company to
Executive as Retiree Medical and Life Insurance Benefits.
(vi) For a 24-month period after such termination, the Company
shall provide or cause Executive to be provided with the perquisites listed on
Schedule C, attached hereto (which the Company may amend from time to time prior
to a Change
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in Control, without Executive's consent), on the same terms and conditions on
which such perquisites were provided at the time of Executive's termination or,
if more generous, immediately prior to such termination.
(vii) In addition to all other amounts payable to Executive under
this Section 8(d), Executive shall be entitled to receive all benefits payable
to Executive under any other plan, policy or agreement relating to retirement or
other benefits, in accordance with the terms of such plans, policies or
agreements; provided, however that, amounts paid pursuant to this Section 8(d)
shall be in lieu of any payments under any Company separation policy.
(viii) The Company shall provide Executive with outplacement
services from the firm of Executive's choice at a cost to the Company not to
exceed 20% of Executive's Base Salary in effect at the time of such termination
or, in the event of termination by Executive by reason of an event described in
Section 8(e)(iv) below, the Base Salary as in effect prior to the reduction or
reductions referred to therein.
(e) Good Reason Following a Change in Control. For purposes of this
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Agreement, following a Change in Control, "Good Reason" shall mean:
(i) a material adverse change in the nature or scope of
Executive's responsibilities, authorities, duties and/or position (including by
reason of a substantial reduction in the size of the Company or other
substantial change in the character or scope of the Company's operations);
(ii) Executive no longer serves in the position described in
Section 2, other than by reason of a promotion or a termination for Cause or
Disability;
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(iii) the Company fails to pay Executive any amounts otherwise
vested and due hereunder or under any plan or policy of the Company;
(iv) a reduction in Executive's Base Salary in effect
immediately prior to the Change in Control or as the same may be increased from
time to time;
(v) a reduction in Executive's incentive compensation
opportunity, as defined below, under the JM executive incentive compensation
plans as in effect immediately prior to the Change in Control or as the same may
be increased from time to time (absent, in the case of any such reduction
relative to Executive's annual bonus, a corresponding increase in his Base
Salary);
(vi) the failure of the Company, to continue to provide
Executive with benefits and perquisites which are substantially similar in the
aggregate to those enjoyed by Executive under the Company's pension, life
insurance, medical, health and accident, disability, deferred compensation or
savings or similar plans and fringe benefit programs (including vacation) in
which Executive was participating immediately prior to the Change in Control; or
the failure by the Company to continue to provide Executive with directors' or
officers' insurance, as applicable, at the level maintained immediately prior to
the Change in Control;
(vii) the Executive's office is relocated outside of a 00-xxxx
xxxxxx xx Xxxxxx, Xxxxxxxx without his written consent;
(viii) the failure of the Company to obtain an agreement from any
successor to assume and agree to perform this Agreement, as contemplated in
Section 13(e) hereof; or
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(ix) any purported termination of Executive's employment by the
Company which is not effected pursuant to a Notice of Termination satisfying the
requirements of Section 13(f) and, if applicable, following the written demand
described in Section 8(c) and the relevant cure period.
If Executive provides a Notice of Termination, as defined in Section
13(f), in connection with an event described in clauses (i) through (vii) of
this Section 8(e), to the Company, the Company shall have ten (10) business days
from the date of receipt of such notice to effect a cure of the event described
therein, and upon cure thereof by the Company to Executive's reasonable
satisfaction, such event shall no longer constitute Good Reason for purposes of
this Agreement.
(f) Reduction in Incentive Compensation Opportunity. For purposes of
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this Agreement, a "reduction in Executive's incentive compensation opportunity"
under the JM executive incentive compensation plans shall include:
(i) the failure to maintain both an annual and a long-term
incentive plan;
(ii) any reduction or elimination by the Company of Executive's
annual or long-term incentive compensation pursuant to any reserved right under
any such plan to decrease or eliminate such bonus or award;
(iii) any reduction in Executive's participation level under any
such plan; and
(iv) any adverse change in the payout schedule or its equivalent
or in the manner of assessing actual performance under any such plan and/or any
extraordinary change in the applicable performance criteria thereunder.
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(g) Change in Control. For purposes of this Agreement, the phrase
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"Change in Control" shall mean the following and shall be deemed to have
occurred if any of the following events shall have occurred:
(i) any Person (as defined below) (other than the Company, any
trustee or other fiduciary holding securities under any employee benefit plan of
the Company, or any company owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of the
common stock of the Company) becomes the Beneficial Owner (as defined below)
(except that a Person shall be deemed to be the Beneficial Owner of all shares
that any such Person has the right to acquire pursuant to any agreement or
arrangement or upon exercise of conversion rights, warrants or options or
otherwise, without regard to the sixty day period referred to in Rule 13d-3
under the Exchange Act (as defined below)), directly or indirectly, of
securities of the Company or any Significant Subsidiary (as defined below),
representing 30 percent or more of the combined voting power of the Company's or
such subsidiary's then outstanding securities; provided, however, that such
event shall not constitute a Change in Control unless or until the percentage of
such securities owned beneficially, directly or indirectly, by such Person is
equal to or more than all such securities owned beneficially, directly or
indirectly, by Manville Personal Injury Settlement Trust (the "Trust");
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into an agreement
with the Company to effect a transaction described in clause (i), (iii), or (iv)
of this paragraph) whose
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election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the two-year period or
whose election or nomination for election was previously so approved but
excluding for this purpose any such new director whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of an individual, corporation, partnership, group, associate or
other entity or Person other than the Board, cease for any reason to constitute
at least a majority of the Board; provided, however, that such event shall not
constitute a Change in Control unless or until the percentage of voting
securities of the Company owned beneficially, directly or indirectly, by the
Trust is less than 50 percent of all such outstanding securities;
(iii) the consummation of a merger or consolidation of the
Company or any subsidiary owning directly or indirectly all or substantially all
of the consolidated assets of the Company (a "Significant Subsidiary") with any
other corporation, other than a merger or consolidation which would result in
the voting securities of the Company or a Significant Subsidiary outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving or
resulting entity) more than 50 percent of the combined voting power of the
surviving or resulting entity outstanding immediately after such merger or
consolidation;
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(iv) the stockholders of the Company or any affiliate approve a
plan or agreement for the sale or disposition of all or substantially all of the
consolidated assets of the Company (other than such a sale or disposition
immediately after which such assets will be owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of the common stock of the Company immediately prior to such sale or
disposition) in which case the Board shall determine the effective date of the
Change in Control resulting therefrom; or
(v) any other event occurs which the Board determines, in its
discretion, would materially alter the structure of the Company or its
ownership.
(vi) Defined terms.
(A) "Beneficial Owner" shall have the meaning ascribed to
such term in Rule 13d-3 under the Exchange Act and any successor to such Rule.
(B) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, including rules thereunder and successor
provisions and rules thereto.
(C) "Person" shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.
9. Golden Parachute Tax.
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(a) Anything herein to the contrary notwithstanding, in the event
that it is determined that any payment or distribution by the Company to or for
Executive's benefit, whether paid or payable or distributed or distributable
pursuant to the terms hereof or otherwise, other than any payment pursuant to
this Section 9(a) (a
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"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code") or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Executive shall be entitled to receive, within 15 days
following the determination described in Section 9(b) below, an additional
payment ("Excise Tax Adjustment Payment") in an amount such that after payment
by Executive of all applicable Federal, state and local taxes (computed at the
maximum marginal rates and including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Excise Tax
Adjustment Payment, Executive shall retain an amount of the Excise Tax
Adjustment Payment equal to the Excise Tax imposed upon the payments.
(b) All determinations required to be made under this Section 9,
including whether an Excise Tax Adjustment Payment is required and the amount of
such Excise Tax Adjustment Payment, shall be made by Coopers & Xxxxxxx, L.L.P.
or such accounting firm as the Company may designate prior to a Change of
Control, which shall provide to the Company and Executive detailed supporting
calculations within 15 business days of the date of Executive's termination of
Employment. Except as hereinafter provided, any determination by Coopers &
Xxxxxxx, L.L.P. or such other accounting firm as the Company may designate prior
to a Change of Control shall be binding upon the Company and Executive. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination hereunder, it is possible that (x) Excise Tax
Adjustment Payments which should have been made will not have been made by the
Company ("Underpayment"), or (y) certain
21
Excise Tax Adjustment Payments will have been made which should not have been
made ("Overpayment"), consistent with the calculations required to be made
hereunder. In the event of an Underpayment, the Company shall promptly determine
the amount of the Underpayment that has occurred and any such Underpayment shall
be promptly paid by the Company to or for Executive's benefit. In the event that
Executive discovers that an Overpayment shall have occurred, the amount thereof
shall be promptly repaid to the Employer.
10. Indemnification. The Company will indemnify Executive (and his heirs,
---------------
legal representatives or other successors) to the fullest extent permitted
(including payment of expenses in advance of final disposition of a proceeding)
by the laws of the jurisdiction of incorporation of the Company, as in effect at
the time of the subject act or omission, or by the Certificate of Incorporation
and By-Laws of the Company, as in effect at such time or on the effective date
of this Agreement, or by the terms of any indemnification agreement between the
Company and Executive, whichever affords or afforded greatest protection to
Executive, and Executive shall be entitled to the protection of any insurance
policies the Company may elect to maintain generally for the benefit of its
directors and officers (and to the extent the Company maintains such an
insurance policy or policies, Executive shall be covered by such policy or
policies, in accordance with its or their terms, to the maximum extent of the
coverage available for any Company officer or director), against all costs,
charges and expenses whatsoever incurred or sustained by him or his legal
representatives at the time such costs, charges and expenses are incurred or
sustained, in connection with any action, suit or proceeding to which he (or his
legal representatives or other successors) may be made
22
a party by reason of his being or having been a director, officer or employee of
the Company or any of its subsidiaries, or his serving or having served any
other enterprise as a director, officer or employee at the request of the
Company.
11. Legal Fees. In the event of a dispute between Executive and the
----------
Company with respect to any of Executive's rights under this Agreement, the
Company shall reimburse Executive for any and all legal fees and related
expenses incurred by him in connection with enforcing such rights, at the time
such fees and related expenses are incurred; provided that, if Executive's claim
is found by a court of competent jurisdiction to have been frivolous, Executive
shall reimburse the Company for all amounts paid by it under this Section.
12. Confidentiality; Specific Performance.
-------------------------------------
Executive will not at any time (whether during or after his employment
with the Company) disclose or use for his own benefit or purposes, or the
benefit or purposes of any other person, firm, partnership, joint venture,
association, corporation or other business organization, entity or enterprise
other than the Company and any of its subsidiaries or affiliates, any Trade
Secrets of the Company without first obtaining the written consent of the
Company.
Executive will not at any time during his employment with the Company
or for a period of two years after termination of his employment, disclose or
use for his own benefit or purposes or the benefit or purposes, of any other
person, firm, partnership, joint venture, association, corporation or other
business organization, entity or enterprise other than the Company and any of
its subsidiaries or affiliates, any Confidential Information of the Company
which is disclosed to or learned by Employee
23
during employment with the Company. Employee acknowledges that Confidential
Information and materials developed by Employee, or Confidential Information and
materials received by the Company in confidence from third parties, are also
included within the meaning of this Section.
As used herein "Trade Secret" means the whole or any portion or phrase
of any technical information, design, process, procedure, formula or improvement
known or used by the Company that is valuable and secret (in the sense that it
is not generally known to competitors of the Company). To the extent consistent
with the foregoing, Trade Secrets include (without limitation) the specialized
information and technology that provide the Company with an advantage over
competitors or potential competitors in its industry.
As used herein "Confidential Information" means any data or
information known by the Company related to the business of the Company, other
than Trade Secrets, that is of competitive significance to the Company and not
generally known by the public. To the extent consistent with the foregoing,
"Confidential Information" includes (without limitation): cost data (such as
labor or material costs pertaining to the products or services) of the Company;
data relating to efficiency of the Company's operations; the identity and
location of vendors and the terms of sale (including prices) negotiated with
such vendors; data relating to sales -- by customer, by location, by product
category, by sales price, or by end-use application; customer lists; financial
information hat has not been released to the public; future business plans,
marketing strategies, or advertising campaigns; and personnel files.
24
Executive agrees that upon termination of his employment with the
Company for any reason, he will return to the Company immediately all memoranda,
books, papers, plans, information, letters and other data, and all copies
thereof or therefrom, in any way relating to the business of the Company and its
affiliates, except that he may retain personal notes, notebooks and diaries.
Executive further agrees that he will not retain or use for his account at any
time any trade names, trademark or other proprietary business designation used
or owned in connection with the business of the Company or its affiliates.
Executive acknowledges and agrees that the Company's remedies at law
for a breach or threatened breach of any of the provisions of this Section would
be inadequate and, in recognition of this fact, Executive agrees that, in the
event of such a breach or threatened breach, in addition to any remedies at law,
the Company, without posting any bond, shall be entitled to obtain equitable
relief in the form of specific performance, temporary restraining order,
temporary or permanent injunction or any other equitable remedy which may then
be available.
13. Miscellaneous.
-------------
(a) Governing Law; Liability of the Executive. This Agreement shall
-----------------------------------------
be governed by and construed in accordance with the laws of the State of
Colorado. Executive shall not be subject to liability for breach of this
Agreement by reason of his termination of his employment hereunder.
(b) Entire Agreement/Amendments/Effectiveness. This Agreement shall
-----------------------------------------
supersede any and all existing employment, change-in-control or severance
agreements between Executive and the Company or any of its affiliates and
contains
25
the entire understanding of the parties with respect to the employment of
Executive by the Company. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein. This
Agreement and any amendment hereto shall not be effective unless and until
signed by the Chief Executive Officer of the Company and attested to by the
Secretary of the Company.
(c) No Waiver. The failure of a party to insist upon strict adherence
---------
to any term of this Agreement on any occasion shall not be considered a waiver
of such party's rights or deprive such party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.
(d) Severability. It is expressly understood and agreed that although
------------
Executive and the Company consider the restrictions contained in this Agreement
to be reasonable, if a final judicial determination is made by a tribunal of
competent jurisdiction that the time or territory or any other restriction
contained in this Agreement is unenforceable restriction against Executive, the
provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply to such maximum time and territory and to such maximum extent
as such tribunal may determine or indicate to be enforceable. In the event that
any one or more of the provisions of this Agreement shall be or become invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not be
affected thereby.
(e) Successors; Binding Agreement. (i) In the event of a Change in
-----------------------------
Control, the Company will require the successor to the Company as Executive's
26
employer (whether such succession is direct or indirect, by purchase, merger,
consolidation or otherwise, to any portion of the business and/or assets of the
Company) to expressly assume 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. Prior to a Change in Control, the term "Company", shall also mean
any affiliate of the Company to which Executive may be transferred and the
Company shall cause such successor employer to be considered the "Company" bound
by the terms of this Agreement and this Agreement shall be amended so to
provide. Following a Change in Control, the term "Company" shall not mean any
affiliate of the Company to which Executive may be transferred unless Executive
shall have previously approved of such transfer in writing, in which case the
Company shall cause such successor employer to be considered the "Company" bound
by the terms of this Agreement and this Agreement shall be amended so to
provide.
(ii) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
Executive's heirs, devisees, legatees or other designees or, if there is no such
designee, to Executive's estate. This Agreement shall not be assignable by
Executive.
27
(f) Notice; Notice of Termination. (i) For the purpose of this
-----------------------------
Agreement, notices and all other communications provided for in the Agreement
shall be in writing and, except as otherwise provided in paragraph (iii) below,
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, addressed to
the respective addresses set forth on the signature page of this Agreement;
provided that all notices to the Company shall be directed to the attention of
--------
the Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that notice of
change of address shall be effective only upon receipt.
(ii) Any purported termination of Executive's employment by the
Company or by Executive shall not be effective unless communicated by written
Notice of Termination to the other party hereto in accordance with paragraph (i)
above. For purposes of this Agreement, a "Notice of Termination" in the case of
a termination for Cause following a Change in Control shall mean a notice given
within ten (10) business days of the Company's having actual knowledge of the
events giving rise to such termination and in all cases shall mean a notice
which indicates the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
(iii) The date of termination of Executive's employment shall be
the date of receipt of the Notice of Termination, except in the case of (A)
Executive's death, in which case the date of termination of employment shall be
the date of death or (B) Executive's termination for Cause following a Change in
Control, in which case the
28
date of termination shall be ten (10) business days after actual receipt by
Executive of the Notice of Termination; provided that, if within thirty (30)
days after any Notice of Termination following a Change in Control is received,
the party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, the date of termination of
Executive's employment shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding
arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (which is not appealable or the time for appeal therefrom
has expired and no appeal has been perfected); and provided further that the
date of termination of Executive's employment shall be extended by a notice of
dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
Notwithstanding the pendency of any such dispute, the Company will continue to
pay Executive his full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, Base Salary and incentive
compensation) or, if higher, the compensation in effect immediately prior to the
Change in Control, and continue Executive as a participant in all compensation,
benefit (including fringe benefits and perquisites) and insurance plans in which
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with this paragraph
(iii). Amounts paid under this paragraph are in addition to all other amounts
due under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
29
(g) Arbitration. The parties hereby agree to submit all
-----------
controversies, claims and matters of difference in any way related to this
Agreement or the performance or breach of the whole or any part hereof, to
arbitration in Denver, Colorado, according to the rules and practices of the
American Arbitration Association from time to time in force. If such rules and
practices shall conflict with the Colorado Rules of Civil Procedure or any other
provisions of Colorado law then in force, such Colorado rules and provisions
shall govern. Arbitration of any such controversy, claim or matter of
difference shall be a condition precedent to any legal action thereon. This
submission and agreement to arbitration shall be specifically enforceable.
Awards shall be final and binding on all parties to the extent and in
the manner provided by Colorado law; provided that an arbitration award shall
not be binding on the Company to the extent such award exceeds the maximum
amount the Company would be required to pay Executive pursuant to the express
terms of this Agreement. All awards may be filed by any party with the Clerk of
the District Court in the County of Denver, Colorado and an appropriate judgment
entered thereon and execution issued therefor. At the election of any party,
said award may also be filed, and judgment entered thereon and execution issued
therefor, with the clerk of one or more other courts, state or federal, having
jurisdiction over the party against whom such award is rendered or its property.
(h) Counterparts. This Agreement may be signed in several
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
30
(i) Non-Disparagement. Executive and the Company shall each use all
-----------------
reasonable efforts not to make any statements or take any action that may be
derogatory or disparaging to the reputation of the other or, in the case of the
Executive, to the reputation of any of the Company's affiliates.
Notwithstanding the foregoing, nothing in this Agreement shall preclude either
party from truthful statements or disclosures that are required by applicable
law or regulation, or from taking any position in prosecuting or defending any
judicial, administrative or arbitration proceeding arising hereunder.
(j) Cooperation. Executive agrees that following termination of
-----------
Executive's employment with the Company prior to a Change in Control for a
period ending on the earlier to occur of the fifth anniversary of such
termination or a Change in Control, Executive shall make himself reasonably
available to the Company and its legal counsel, taking into consideration
Executive's other obligations, and shall cooperate with the Company in
connection with any litigation, investigation or other proceeding relating to
events occurring during Executive's employment hereunder or facts as to which he
has knowledge; provided that Executive shall be entitled to reimbursement of
necessary and reasonable expenses incurred in connection therewith subject to
provision of receipts therefor and provided further that (i) nothing herein
shall require Executive to make any but truthful statements and (ii) Executive
will not be required so to cooperate to the extent his position is in conflict
with that of the Company.
(k) Non-Competition/Non-Solicitation. (i) Executive acknowledges and
--------------------------------
recognizes the highly competitive nature of the business of the Company and its
31
affiliates and accordingly hereby agrees, in consideration of the agreements
herein of the Company, that from the date hereof through the termination of
Executive's employment with the Company and, if such termination occurs prior to
a Change in Control, through the two year period following such termination of
Executive's employment, (x) Executive shall not alone, or as a partner, member,
employee, agent, director, stockholder or investor of any corporation or other
business entity or in any other individual or representative capacity, directly
or indirectly, own, manage, operate or control, or participate in the ownership,
management, operation or control of, or work or provide consulting services to
(including, without limitation, without receiving a fee or other compensation),
or lend money to, any business, activity or person which competes with a
business or activity in North America, Europe and Asia in which the Company is
engaged or in which the Company or its affiliates is actively and seriously
considering engaging at the time in question in the case of conduct during such
employment or at the time of Executive's termination of employment in the case
of conduct during such two year period; provided the foregoing shall not
prohibit Executive from directly or indirectly making passive investments of not
more than one percent (1%) of the outstanding equity interests in, or public
debt of, any company or entity listed or traded on a national securities
exchange or an over the counter securities market and (y) Executive shall not,
directly or indirectly, recruit, seek to recruit, or hire any present or former
employee of the Company or any of its subsidiaries (level 30 or above) until at
least one year has passed from the date of termination of such person's
employment with the Company or any of its subsidiaries.
32
(ii) Executive hereby acknowledges that the business of the
Company and its affiliates is international in scope and that, accordingly, any
geographical limitation on the scope of the foregoing covenant to less than that
specified therein could be meaningless, and that, by reason thereof, Executive
acknowledges that the scope of the foregoing covenant is reasonable and
necessary in order to protect the interests of the Company and its affiliates
sought to be protected hereby.
(iii) The parties acknowledge and agree that their respective
remedies for a breach or threatened breach of any of the provisions of Section
13(i), (j) or (k) would be inadequate and, in recognition of this fact, the
parties agree that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the aggrieved party, without posting any bond,
shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, temporary or permanent injunction or
any other equitable remedy which may then be available.
33
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
/s/ Xxxxx X. Xxxxxx, III
-------------------------------------------------
Xxxx X. Xxxxxx, III
XXXXX XXXXXXXX CORPORATION
/s/ X. X. Xxxxx
-------------------------------------------------
X.X. Xxxxx
Chairman, Chief Executive Officer
and President
ATTEST:
/s/ Xxxx Xxxxxxx
-----------------------------
Name: Xxxx Xxxxxxx
Title: Vice President, Assistant General
Counsel and Secretary
34
XXXX X. XXXXXX, III
Schedule A
----------
Outside Directorships Held
--------------------------
None
35
XXXX X. XXXXXX, III
Schedule B
----------
Incentive Compensation Plans in Effect
--------------------------------------
Annual Incentive Compensation Plan for Xxxxx Xxxxxxxx Corporation.
Xxxxx Xxxxxxxx Corporation 1996 Executive Incentive Compensation Plan.
Xxxxx Xxxxxxxx Corporation 1996 Deferred Compensation Plan.
36
XXXX X. XXXXXX, III
Schedule C
----------
Fringe Benefit Arrangements and Perquisites in Effect
-----------------------------------------------------
Club Initiation Fee & Dues
The Company will pay the initial fee and dues for one country club and
one luncheon or city club of the Executive's choice. The initiation
fee and first year's dues will be "grossed up" for tax purposes.
Financial, Estate & Tax Planning
The Company will provide periodic financial, estate and tax planning
to the Executive through Ayco Company, L.P.
Annual Executive Physical Exam Program
37
