EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 15, 1998, between XXXXXX X.
XXXXXXXX (the "Employee") and X.X. XXXXXXX CORPORATION, a Delaware corporation
(the "Company").
WHEREAS, the Company desires to assure itself of the benefit of the
Employee's services and experience for a period of time and the Employee is
willing to enter into an agreement to that end upon the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the premises and covenants herein
contained, the parties hereto agree as follows:
1. TERM OF AGREEMENT. Subject to the terms and conditions hereof, the
term of employment of the Employee under this Agreement shall be for the period
of one year commencing from the date set forth above. Thereafter, so long as
Employee is capable of performing his duties hereunder and provided this
Agreement is not terminated pursuant to Section 4, this Agreement shall be
automatically renewed for successive periods of one year, unless, prior to 30
days before the termination date of any one-year period, either party notifies
the other of an intention to terminate this Agreement on such termination date
in which event the Agreement shall be terminated on such date. Such term of
employment, as renewed, is hereinafter referred to as the "Employment Period."
2. SERVICES TO BE RENDERED.
(a) During the term of employment of the Employee under this
Agreement (and any renewals thereof) the Employee shall serve the Company as
its President and Chief Operating Officer.
(b) The Employee agrees that he will, during the term of employment
under this Agreement (and any renewals thereof) devote his time, attention and
ability to the
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business of the Company and its subsidiaries as the Company's President and
Chief Operating Officer and shall well and faithfully serve the Company and
its subsidiaries and shall exercise the powers and authorities and fulfill
the responsibilities hereby conferred upon him honestly, diligently, in good
faith and in the best interest of the Company and its subsidiaries and use
his best efforts to promote their interests. The Employee may, however,
serve as an outside director of any other corporation provided Employee
obtains the consent of the Company, which shall not be unreasonably withheld.
3. COMPENSATION.
(a) In full payment for services rendered to the Company under this
Agreement, the Company shall pay the Employee a salary of Four Hundred Thousand
and 00/100 Dollars ($400,000) per year during the first year of the Employment
Period ("Base Salary"). The Compensation Committee of the Board of Directors of
the Company shall determine the salary to be paid to the Employee during
subsequent years of the Employment Period.
(b) In addition to the compensation otherwise provided for in this
Section 3, during the term of his employment hereunder, the Employee also shall
be entitled to: (i) participate in the Company's stock option plans, in
accordance with the terms thereof, as from time to time may be in effect;
(ii) by resolution of the Compensation Committee, participate in the Company's
incentive compensation plans, in accordance with the terms thereof, as from time
to time may be in effect; (iii) participate in the Company's retirement plans,
in accordance with the terms thereof, as from time to time may be in effect;
(iv) participate in such group life, disability, accident, hospital and medical
insurance plans ("Welfare Plans") in accordance with the terms thereof, as from
time to time may be in effect; provided, that any such participation is
generally appropriate to Employee's responsibilities hereunder; and provided,
further, that benefits and terms of participation under the Welfare Plans may be
changed by the Company
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from time to time in its sole discretion; and (v) the Executive is granted
options on 70,000 shares of X. X. Xxxxxxx Common Stock at an exercise price
of $57.750/share which was the closing price of the Company's Common Stock on
NYSE on January 15, 1998, as reported in the Wall Street Journal on January
16, 1998. The vesting dates of the options granted will be as follows: 1/4
on the first anniversary of this agreement; 1/4 on the second anniversary of
this agreement; 1/4 on the third anniversary of this agreement; and, 1/4 on
the fourth anniversary of this agreement. Notwithstanding the language
contained in Section 3(b) hereof, in the event that the Employee leaves the
employ of the Company for any reason voluntary or involuntary prior to any of
the four anniversary dates, there will be no partial vesting of these stock
options for the portion of the year completed. To the extent stock options
are to be granted in accordance with a Company stock option plan for the
Company fiscal year ending within the year Employee's employment agreement
terminates, Employee is entitled to such options in accordance with the
plan's terms.
(c) The Employee shall be entitled, during the Employment Period, to
vacations and fringe benefits consistent with the practices of the Company.
(d) The Company shall provide the Employee, during the Employment
Period, with the use of a Company-owned or leased automobile, and will pay
all taxes and insurance on said vehicle.
(e) The Company will reimburse the Employee for the costs
associated with relocation, pursuant to the standard relocation program in
effect at the time of relocation.
4. DISABILITY, DEATH AND TERMINATION.
(a) In the event of the Employee's inability to perform the principal
duties of his job at the Company due to physical or mental condition, as
determined by a physician ("Permanent Incapacitating Disability") for any
consecutive period of at least one year with or without accommodation, the
Company may, at its election, terminate the Employee's employment hereunder.
The date of Permanent Incapacitating Disability shall be on the last day
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of such period. In the event of any such termination, the Company shall be
obligated (i) for compensation earned by the Employee hereunder, but not yet
paid, prior to such termination, and (ii) to pay the Employee each month, for
twenty-four consecutive months, an amount equal to the monthly Termination
Benefit (the "Disability Benefit"); provided, however, that the amount of the
Disability Benefit shall be reduced by any amounts received by the Employee
in respect of the Employee's disability from any employee benefit or
disability plans maintained by the Company.
(b) The obligations of the Company under this Agreement shall
terminate upon the death of the Employee.
(c) If any of the following events should occur:
(1) the Employee voluntarily terminates employment
with the Company without Good Reason before retirement (which for
purposes of this Agreement shall be determined at or over the age
of 55 or at any earlier date approved by the Company), or
(2) the Company terminates the Employee's employment
for Cause,
the Company's obligations hereunder shall terminate and no further payments of
any kind (other than in respect of compensation earned by the Employee as
determined hereunder prior to such termination) shall thereafter be made by the
Company to the Employee hereunder.
For purposes of the foregoing, "Cause" means:
(i) any act or acts of the Employee constituting a felony (or
its equivalent) under the laws of the United States, any state thereof or
any foreign jurisdiction;
(ii) any material breach by the Employee of any employment
agreement with the Company or the policies of the Company or any of its
subsidiaries or the willful and persistent (after written notice to the
Employee) failure or refusal of the Employee to perform his duties of
employment or comply with any lawful directives of the Board of Directors
of the Company;
(iii) a course of conduct amounting to gross neglect, willful
misconduct or dishonesty; or
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(iv) any misappropriation of material property of the Company by
the Employee or any misappropriation of a corporate or business opportunity
of the Company by the Employee.
For purposes of the foregoing, "Good Reason" means:
(i) any material reduction by the Company of such Employee's
duties, responsibilities or titles;
(ii) any involuntary removal of such Employee from any position
previously held (except in connection with a promotion or a termination for
Cause, death or disability, or the voluntary termination by the Employee
other than for Good Reason);
(iii) within six months after a Change in Control; or
(iv) such other reasons (including nonemployment-related reasons)
as may be approved by the Company, in its sole discretion, from time to
time.
(d) If the Company terminates the Employee's employment without
Cause, if the Employee voluntarily terminates employment with the Company for
Good Reason, or if the Company notifies the Employee of its intention to
terminate this Employment Agreement pursuant to Section 1 hereof, the Company
shall:
(1) pay the Employee a monthly amount, for twenty-four
consecutive months after termination, equal to one twelfth of the
Employee's annual average Base Salary as computed by the Company for the
prior twenty-four consecutive months, or if the Employee has not been
employed for twenty-four consecutive months, for the number of consecutive
months employed, preceding the date of termination (the "Termination
Benefit") until the Termination Benefit is paid in full; and
(2) provide Employee with benefits in accordance with Section
3(b)(iv) and Section 3(d) for a period of twenty-four consecutive months
after termination.
5. CONFIDENTIALITY. For purposes of this Agreement, "proprietary
information" shall mean any information relating to the business of the Company
or any of its subsidiaries that has not previously been publicly released by
duly authorized representatives of the Company and shall include (but shall not
be limited to) Company information encompassed
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in all research, product development, designs, plans, formulations and
formulating techniques, proposals, marketing and sales plans, financial
information, costs, pricing information, strategic business plans, customer
information, and all methods, concepts, or ideas in or reasonably related to
the business of the Company.
The Employee agrees to regard and preserve as confidential all
proprietary information pertaining to the Company's business that has been or
may be obtained by the Employee in the course of his employment with the
Company, whether he has such information in his memory or in writing or other
physical form. The Employee will not, without prior written authority from the
Company to do so, use for his benefit or purposes, or disclose to any other
person, firm, partnership, corporation or other entity, either during the term
of his employment hereunder or thereafter, any proprietary information connected
with the business or developments of the Company, except as required in
connection with the performance by the Employee of his duties and
responsibilities as an employee of the Company. This provision shall not apply
after the proprietary information has been voluntarily disclosed to the public,
independently developed and disclosed by others, or otherwise enters the public
domain through lawful means.
6. REMOVAL OF DOCUMENTS OR OBJECTS. The Employee agrees not to remove
from the premises of the Company, except as an employee of the Company in
pursuit of the business of the Company or any of its subsidiaries, or except as
specifically permitted in writing by the Company, any document (regardless of
the medium on which it is recorded), object, computer program, computer source
code, object code or data (the "Documents") containing or reflecting any
proprietary information of the Company. The Employee recognizes that all such
Documents, whether developed by him or by someone else, are the exclusive
property of the Company.
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7. NON-COMPETITION. The Employee agrees that during the term of his
employment hereunder and for a period of two years after such term of employment
terminates or is terminated, he will not in any way, directly or indirectly,
manage, operate, control, solicit officers or employees of the Company, accept
employment, a directorship or a consulting position with or otherwise advise or
assist or be connected with or own or have any other interest in or right with
respect to (other than through ownership of not more than one percent of the
outstanding shares of a corporation's stock which is listed on a national
securities exchange) any enterprise which competes or shall compete with the
Company, by engaging in or otherwise carrying on the research, development,
manufacture or sale of any product of any type developed, manufactured or sold
by the Company or any subsidiary thereof, whether now or hereafter (to the
extent that any such product is under consideration by the Board of Directors of
the Company at the time the Employee's employment terminates or is terminated).
8. CORPORATE OPPORTUNITIES. The Employee agrees that during the
Employment Period he will not take any action which might divert from the
Company or any subsidiary of the Company any opportunity which would be within
the scope of any of the present or future businesses of the Company or any of
its subsidiaries (which future businesses are then under consideration by the
Board of Directors of the Company), the loss of which has or would have had, in
the reasonable judgment of the Board of Directors of the Company, an adverse
effect upon the Company, unless the Board of Directors of the Company has given
prior written approval.
9. RELIEF. It is understood and agreed by and between the parties hereto
that the service to be rendered by the Employee hereunder, and the rights and
privileges granted to the Company by the Employee hereunder, are of a special,
unique, extraordinary and intellectual character, which gives them a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law, and that a breach by the Employee of any of the
provisions contained in this Agreement will cause the Company great irreparable
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injury and damage.
The Employee hereby expressly agrees that the Company shall be
entitled to the remedies of injunction, specific performance and other equitable
relief to prevent a breach of this Agreement by the Employee. The Employee
further expressly agrees that in the event the Employee breaches the
non-competition provisions of Section 7 of this Agreement or the confidentiality
provisions of Section 5 of this Agreement, the balance of any payments due under
this Agreement shall be forfeited by the Employee.
The provisions of this Section 9 shall not, however, be construed as a
waiver of any of the rights which the Company may have for damages or otherwise.
10. WARRANTY. The Employee hereby warrants that he is free to enter into
this Agreement and to render his services pursuant hereto.
11. NON-ASSIGNABILITY. Except as otherwise provided herein, this
Agreement may not be assigned by either the Company or the Employee.
12. MERGER OR CONSOLIDATION. In the event (a) the Company merges with or
into, or consolidates with, another entity; (b) the Company sells, exchanges or
otherwise disposes of all or substantially all of the assets of the Company;
(c) 50% or more of the Company's then outstanding shares of voting stock is
acquired by another corporation, person or entity; (d) the Company liquidates or
dissolves; or (e) the Company recapitalizes or enters into any similar
transaction, and as a result of which the Common Stock either (i) is no longer a
voting equity security of the Company or (ii) is no longer listed on a national
securities exchange or authorized for quotation on an inter-dealer quotation
system of a national securities association (referred to collectively as a
"Change in Control"), this Agreement may be assigned and transferred to such
successor in interest as an asset of the Company upon such assignee assuming the
Company's obligations hereunder, in which event the Employee agrees to continue
to perform his duties and obligations according to the terms and conditions
hereof for such assignee or transferee of this
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Agreement subject to Employee's right to terminate for Good Reason in
accordance with Section 4(c)(iii).
13. WITHHOLDING. The Company shall have the right to withhold the amount
of taxes, which in the determination of the Company, are required to be withheld
under law with respect to any amount due or paid under this Agreement.
14. NOTICES. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been given if delivered personally or sent by registered or certified mail,
return receipt requested, postage prepaid:
(a) If to the Company, to it at:
X.X. Xxxxxxx Corporation
0000 Xxxx Xxx Xxxxxx Xxxx
Xxxx, Xxxxxxxx 00000
Attention: Secretary
(b) If to the Employee, to him at such address as set forth in the
signature page hereof or as he shall otherwise have specified by notice in
writing to the Company.
15. GOVERNMENTAL REGULATION. Nothing contained in this Agreement shall be
construed so as to require the commission of any act contrary to law and
wherever there is any conflict between any provision of this Agreement and any
statute, law, ordinance, order or regulation, the latter shall prevail, but in
such event any such provision of this Agreement shall be curtailed and limited
only to the extent necessary to bring it within the legal requirements.
16. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Michigan. Any suit,
action or proceeding against the Employee with respect to this Agreement, or any
judgment entered by any court in respect of any thereof, may be brought in any
court of competent jurisdiction in the State of
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Michigan and the Employee hereby submits to the exclusive jurisdiction of
such courts for the purpose of any such suit, action, proceeding or judgment.
The Employee hereby irrevocably waives any objections which he may now or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement brought in any court of
competent jurisdiction in the State of Michigan, and hereby further
irrevocably waives any claim that any such suit, action or proceeding brought
in any such court has been brought in any inconvenient forum. No suit, action
or proceeding against the Company with respect to this Agreement may be
brought in any court, domestic or foreign, or before any similar domestic or
foreign authority other than in a court of competent jurisdiction in the
State of Michigan, and the Employee hereby irrevocably waives any right which
he may otherwise have had to bring such an action in any other court,
domestic or foreign, or before any similar domestic or foreign authority.
The Company hereby submits to the jurisdiction of such courts for the purpose
of any such suit, action or proceeding. The Employee irrevocably waives his
right to trial by jury with regard to any suit, action, or proceeding with
respect to this Agreement; provided, however, that if such waiver of the
right to jury trial shall be held unenforceable, the invalidity or
unenforceability of this provision shall not impair the validity or
enforceability of any other provision of this Agreement.
17. ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth the entire
understanding of the parties in respect of the subject matter contained herein
and supersedes all prior agreement, arrangements and understandings relating to
the subject matter and may only be amended by a written agreement signed by both
parties hereto or their duly authorized representatives.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
X.X. XXXXXXX CORPORATION
By: /s/ Xxxxxxxxxx Xxxxxxxx
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Title: Chairman and Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxxx
-------------------------
Xxxxxx X. Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
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