EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT by and among Niagara Corporation, a Delaware
corporation (the "Company"), Niagara LaSalle Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company ("Niagara
LaSalle"), and Xxxxxxx Xxxxxx (the "Executive"), dated as of the first day
of January, 1999.
W I T N E S S E T H
WHEREAS, the Executive serves the Company as its Chairman, Chief
Executive Officer and President and serves Niagara LaSalle as its Chairman;
and
WHEREAS, the Company wishes to provide for the continued
employment by the Company of the Executive, and the Executive wishes to
continue to serve the Company, on the terms and conditions set forth in
this Agreement;
NOW, THEREFORE, it is hereby agreed as follows:
1. EMPLOYMENT PERIOD. The Company shall employ the Executive,
and the Executive shall serve the Company, on the terms and conditions set
forth in this Agreement, for the period beginning on the date hereof (the
"Effective Date") and ending on the fifth anniversary of the Effective Date
(together with any extensions made pursuant to this Section 1, the
"Employment Period"). Commencing on the third anniversary of the Effective
Date and each subsequent anniversary thereof (each of such third and
subsequent anniversaries, an "Extension Date"), the term of this Agreement
shall automatically be extended for one additional year unless, at least
three months prior to the applicable Extension Date, the Company or the
Executive shall have given notice not to extend this Agreement.
2. POSITION AND DUTIES. (a) During the Employment Period, the
Executive shall continue to serve the Company as its Chairman, Chief
Executive Officer and President and shall serve Niagara LaSalle as its
Chairman and Chief Executive Officer; in each case with such duties and
responsibilities as are consistent with past practice and are customarily
assigned to such positions, and such other duties and responsibilities not
inconsistent therewith as may from time to time be assigned to him by the
Board of Directors of the Company (the "Board") or the Board of Directors
of Niagara LaSalle, as applicable.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive
shall devote reasonable attention and time during normal business hours to
the business and affairs of the Company and, to the extent necessary to
discharge the responsibilities assigned to the Executive under this
Agreement, use the Executive's reasonable best efforts to carry out such
responsibilities faithfully and efficiently. It shall not be considered a
violation of the foregoing for the Executive to pursue his other business
interests or to serve on corporate, industry, civic or charitable boards or
committees, so long as such activities do not significantly interfere with
the performance of the Executive's responsibilities as an employee of the
Company in accordance with this Agreement.
(c) The Company's headquarters shall be located in New York, New
York, and the Executive shall be based primarily in New York, New York (or
such other location as may be approved by the Board and the Executive),
except for such reasonable travel obligations as do not materially exceed
the Executive's present travel obligations.
3. COMPENSATION. (a) BASE SALARY. During the Employment
Period, the Company shall pay the Executive a base salary at the annual
rate of not less than $480,000, subject to increase by the Board if
warranted by the Company's growth during such period ("Annual Base
Salary"). Annual Base Salary shall be payable in accordance with the
Company's regular payroll practice for its senior executives, as in effect
from time to time. Any increase in the Annual Base Salary shall not limit
or reduce any other obligation of the Company under this Agreement. The
Annual Base Salary shall not be reduced after any such increase, and the
term "Annual Base Salary" shall thereafter refer to the Annual Base Salary
as so increased.
(b) ANNUAL BONUS. With respect to each of the Company's fiscal
years occurring during the Employment Period, the Company shall, subject to
the immediately following sentence, pay the Executive an annual bonus, in
cash (the "Annual Bonus"), equal in amount to 50 % of Annual Base Salary,
as in effect on the first day of the Company's fiscal year with respect to
which the Annual Bonus is paid (the "Target Bonus"), based upon achievement
by the Company of an EBITDA target approved by the Compensation Committee
of the Board (the "Committee") for such year, and increasing by 1 % of such
Annual Base Salary for each 1% increment in EBITDA in excess of such
target. The EBITDA target shall be based on operations existing at the
time the target is approved, but the target may be amended by the
Compensation Committee based upon corporate acquisitions or dispositions,
or other relevant factors. The Company shall seek the approval of its
shareholders for the Annual Bonus during the Employment Period at its
annual shareholders' meeting following the execution of this Agreement, and
the Annual Bonus shall be paid only if such approval is obtained. If such
approval is not obtained, the Company and the Executive shall negotiate in
good faith to structure an alternative incentive compensation arrangement
to fairly compensate the Executive. For purposes of this Agreement, EBITDA
shall mean the Company's earnings before interest, taxes, depreciation and
amortization, as determined in accordance with the Company's audited
financial statements.
(c) STOCK OPTIONS. During the Employment Period, the Executive
shall receive annual grants of stock options pursuant to a stock option
plan of the Company, in such amount as the Committee may in its discretion
determine.
(d) SERP. Commencing on the first day of the month following
the month in which the Executive's employment with the Company and Niagara
LaSalle terminates for any reason, the Executive shall be entitled to
receive retirement income in an annual amount equal to the product of (1)
the Executive's Final Average Pay, (2) (subject to Section 5(a)(ii)), the
number of years, including fractional parts thereof, of the Executive's
service with the Company and (3) 2.5 %. Such retirement income shall be
paid to the Executive during his lifetime and, upon his death, an amount
equal to 50 % of such retirement income shall be paid to his surviving
spouse during her lifetime. For purposes of the SERP, Final Average Pay
shall mean the average of Executive's combined Annual Base Salary and
Annual Bonus for the three consecutive years during the ten years
immediately preceding the year in which occurs the Executive's termination
of employment during which such average is highest.
(e) MEDICAL COVERAGE. The Executive and his spouse and their
dependent children shall be entitled to receive health, medical, dental and
hospitalization coverage on a basis at least as favorable (on an after-tax
basis) as is provided to such persons on the date hereof, such coverage to
be provided during the Employment Period and, with respect to the Executive
and his surviving spouse, during each of their lifetimes, and, with respect
to their dependent children, for such period as coverage is permitted under
the terms of the Company's insurance policy as in effect on the date
hereof.
(f) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to receive six weeks' paid vacation each year
and paid holidays, each in accordance with past practice; Company
automobile, payment of private club membership fees and dues and any other
currently provided fringe benefits in accordance with past practice; and
individual tax advice and other financial planning services not to exceed
in the aggregate an annual amount of $25,000.
(g) OTHER BENEFITS. During the Employment Period the Executive
shall be entitled to participate in all other employee benefit plans,
practices, policies and programs of the Company on a basis at least as
favorable as any other executive of the Company.
4. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The
Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period. The Company shall be entitled to
terminate the Executive's employment because of the Executive's Disability
during the Employment Period. "Disability" means that (i) the Executive
has been unable, for the period specified in the Company's disability plan
for senior executives, but not less than a period of 180 consecutive
business days, to perform the Executive's duties under this Agreement, as a
result of physical or mental illness or injury, and (ii) a physician
selected by the Company or its insurers, and reasonably acceptable to the
Executive or the Executive's legal representative, has determined that the
Executive is disabled within the meaning of the applicable disability plan
for senior executives. A termination of the Executive's employment by the
Company for Disability shall be communicated to the Executive by written
notice, and shall be effective on the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), unless the Executive
returns to full-time performance of the Executive's duties before the
Disability Effective Date.
(b) TERMINATION BY THE COMPANY. (i) the Company may terminate
the Executive's employment during the Employment Period for Cause or
without Cause. "Cause" means the conviction of the Executive for the
commission of a felony, or willful gross misconduct by the Executive in
connection with his employment by the Company, in either case that results
in material and demonstrable financial harm to the Company. No act or
failure to act on the part of the Executive shall be considered "willful"
unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive's action or omission was in
the best interests of the Company. Any act or failure to act that is based
upon authority given pursuant to a resolution duly adopted by the Board, or
the advice of counsel for the Company, shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Company. In the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists
shall be given effect unless the Company establishes to the Board by clear
and convincing evidence that Cause exists.
(ii) A termination of the Executive's employment for Cause shall
be not be effective unless it is accomplished in accordance with the
following procedures. The Company shall give the Executive written notice
("Notice of Termination for Cause") of its intention to terminate the
Executive's employment for Cause, setting forth in reasonable detail the
specific conduct of the Executive that it considers to constitute Cause and
the specific provisions of this Agreement on which it relies, and stating
the date, time and place of the Special Board Meeting for Cause. The
"Special Board Meeting for Cause" means a meeting of the Board called and
held specifically and exclusively for the purpose of considering the
Executive's termination for Cause, that takes place not less than twenty
nor more than thirty business days after the Executive receives the Notice
of Termination for Cause. The Executive shall be given an opportunity,
together with counsel, to be heard at the Special Board Meeting for Cause.
The Executive's termination for Cause shall be effective when and if a
resolution is duly adopted at the Special Board Meeting for Cause by
affirmative vote of two-thirds of the entire membership of the Board
stating that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in the Notice of Termination for Cause and
that such conduct constitutes Cause under this Agreement.
(c) GOOD REASON. (i) The Executive may terminate employment
for Good Reason or without Good Reason. For purposes of this Agreement,
"Good Reason" shall mean any material breach of this Agreement by the
Company that is not remedied by the Company promptly after receipt of
notice thereof from the Executive.
(ii) A termination of employment by the Executive for Good
Reason shall be effectuated by giving the Company written notice ("Notice
of Termination for Good Reason") of the termination, setting forth in
reasonable detail the specific conduct of the Company that constitutes Good
Reason and the specific provision(s) of this Agreement on which the
Executive relies. A termination of employment by the Executive for Good
Reason shall be effective on the fifth business day following the date when
the Notice of Termination for Good Reason is given, unless the notice sets
forth a later date (which date shall in no event be later than 30 days
after the notice is given).
(iii) The failure to set forth any fact or circumstance in a
Notice of Termination for Good Reason shall not constitute a waiver of the
right to assert, and shall not preclude the party giving notice from
asserting, such fact or circumstance in an attempt to enforce any right
under or provision of this Agreement.
(iv) A termination of the Executive's employment by the
Executive without Good Reason shall be effected by giving the Company
written notice of the termination.
(d) DATE OF TERMINATION. The "Date of Termination" means the
date of the Executive's death, the Disability Effective Date, the date on
which the termination of the Executive's employment by the Company for
Cause or without Cause or by the Executive for Good Reason is effective, or
the date on which the Executive gives the Company notice of a termination
of employment without Good Reason, as the case may be.
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) OTHER THAN
FOR CAUSE, DEATH OR DISABILITY, OR FOR GOOD REASON. If, during the
Employment Period, the Company terminates the Executive's employment for
any reason other than Cause, death or Disability, or the Executive
terminates employment for Good Reason, the Company shall
(i) pay to the Executive, in a lump sum in cash, within five
business days after the Date of Termination, (A) an amount equal to the
product of (1) the greater of three and the number of years, including
fractional parts thereof, remaining until the date on which the Employment
Period would have ended had the termination of the Executive's employment
hereunder not been terminated (such number, the "Severance Multiple"), and
(2) the sum of the Executive's then current Annual Base Salary (without
giving effect to reductions thereto) and the average Annual Bonus earned in
respect of the three years preceding the Date of Termination or, if
greater, the Target Bonus for the year in which occurs the Date of
Termination; and (B) the Accrued Obligations (as defined in paragraph (b)
of this Section); and
(ii) provide additional years of service credit under the SERP
equal in number to the Severance Multiple; and
(iii) shall continue to provide life insurance benefits to the
Executive, for a period of years equal in number to the Severance Multiple,
at least equal to those provided to the Executive prior to the events
giving rise to the Executive's termination of employment; and
(iv) take all actions necessary to cause all of the Executive's
outstanding equity awards, to the extent then forfeitable, to immediately
and fully vest and, to the extent then not exercisable, to become
immediately and fully exercisable, and any posttermination exercise period
associated with such awards to commence on the anniversary of the Date of
Termination equal in number to the Severance Multiple;
and the Company shall have no further obligations under this Agreement,
except as specified in Section 6 below.
(b) DEATH AND DISABILITY. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall pay to the Executive or, in the case
of the Executive's death, to the Executive's designated beneficiaries (or,
if there is no such beneficiary, to the Executive's estate or legal
representative), in a lump sum in cash within 30 days after the Date of
Termination, the sum of the following amounts (the "Accrued Obligations"):
(1) any portion of the Executive's Annual Base Salary through the Date of
Termination that has not yet been paid; (2) an amount equal to the product
of (A) the Target Bonus that the Executive would have been eligible to earn
for the year during which such termination occurs, and (B) a fraction, the
numerator of which is the number of days in such year through the Date of
Termination, and the denominator of which is 365; and (3) all compensation
and benefits payable to the Executive under the terms of the Company's
compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination.
(c) BY THE COMPANY FOR CAUSE; BY THE EXECUTIVE OTHER THAN FOR
GOOD REASON. If the Executive's employment is terminated by the Company
for Cause or the Executive voluntarily terminates employment, other than
for Good Reason, during the Employment Period, the Company shall pay to the
Executive in a lump sum in cash within 30 days of the Date of Termination,
(1) any portion of the Executive's Annual Base Salary through the Date of
Termination that has not been paid; and (2) all compensation and benefits
payable to the Executive under the terms of the Company's compensation and
benefit plans, programs or arrangements as in effect immediately prior to
the Date of Termination.
(d) (i) In the event that any payment or benefit received or to
be received by the Executive pursuant to the terms of this agreement (the
"Contract Payments") or of any other plan, arrangement or agreement of the
Company (or any affiliate) ("Other Payments" and, together with the
Contract Payments, the "Payments") would be subject to the excise tax (the
"Excise Tax") imposed by section 4999 of the Internal Revenue Code of 1986,
as amended (the "Code") as determined as provided below, the Company shall
pay to the Executive, at the time specified in Section 5(d)(ii) below, an
additional amount (the "Gross-Up Payment") such that the net amount
retained by the Executive, after deduction of the Excise Tax on the
Payments and any federal, state and local income and employment tax and the
Excise Tax upon the Gross-Up Payment, and any interest, penalties or
additions to tax payable by the Executive with respect thereto, shall be
equal to the total present value (using the applicable federal rate (as
defined in section 1274(d) of the Code in such calculation) of the Payments
at the time such Payments are to be made. For purposes of determining
whether any of the Payments will be subject to the Excise Tax and the
amounts of such Excise Tax, (1) the total amount of the Payments shall be
treated as "parachute payments" within the meaning of section 280G(b)(2) of
the Code, and all "excess parachute payments" within the meaning of section
280G(b)(1) of the Code shall be treated as subject to the Excise Tax,
except to the extent that, in the opinion of the Company's independent
auditor (the "Auditor"), a Payment (in whole or in part) does not
constitute a "parachute payment" within the meaning of section 280G(b)(2)
of the Code, or such "excess parachute payments" (in whole or in part) are
not subject to the Excise Tax, (2) the amount of the Payments that shall be
treated as subject to the Excise Tax shall be equal to the lesser of (A)
the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of section 280G(b)(1) of the Code (after
applying clause (1) hereof), and (3) the value of any noncash benefits or
any deferred payment or benefit shall be determined by the Auditor in
accordance with the principles of sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up Payment, the
Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation applicable to individuals in the
calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rates of taxation applicable to
individuals as are in effect in the state and locality of the Executive's
residence in the calendar year in which the Gross-Up Payment is to be made,
net of the maximum reduction in federal income taxes that can be obtained
from deduction of such state and local taxes, taking into account any
limitations applicable to individuals subject to federal income tax at the
highest marginal rates.
(ii) The Gross-Up Payments provided for in Section 5(d)(i)
hereof shall be made upon the earlier of (i) ten days following termination
of the Executive's employment or (ii) the imposition upon the Executive or
payment by the Executive of any Excise Tax.
(iii) If it is established pursuant to a final determination of
a court or an Internal Revenue Service proceeding or the opinion of the
Auditor that the Excise Tax is less than the amount taken into account
under Section 5(d)(i) hereof, the Executive shall repay to the Company
within thirty (30) days of the Executive's receipt of notice of such final
determination or opinion the portion of the Gross-Up Payment attributable
to such reduction (plus the portion of the Gross-Up Payment attributable to
the Excise Tax and federal, state and local income and employment tax
imposed on the Gross-Up Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax or a federal, state and
local income and employment tax deduction) plus any interest received by
the Executive on the amount of such repayment. If it is established
pursuant to a final determination of a court or an Internal Revenue Service
proceeding or the opinion of the Auditor that the Excise Tax exceeds the
amount taken into account hereunder (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-
Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess within thirty (30) days of the Company's receipt of
notice of such final determination or opinion.
(iv) In the event of any change in, or further interpretation
of, sections 280G or 4999 of the Code and the regulations promulgated
thereunder, the Executive shall be entitled, by written notice to the
Company, to request an opinion of the Auditor regarding the application of
such change to any of the foregoing, and the Company shall use its best
efforts to cause such opinion to be rendered as promptly as practicable.
All fees and expenses of the Auditor incurred in connection with this
agreement shall be borne by the Company.
6. NON-EXCLUSIVITY OF RIGHTS. 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
affiliated companies for which the Executive may qualify, nor shall
anything in this Agreement limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company or any
of its affiliated companies. Vested benefits and other amounts that the
Executive is otherwise entitled to receive under any plan, policy, practice
or program of, or any contract of agreement with, the Company or any of its
affiliated companies on or after the Date of Termination shall be payable
in accordance with the terms of each such plan, policy, practice, program,
contract or agreement, as the case may be, except as explicitly modified by
this Agreement.
7. FULL SETTLEMENT. The Company's obligation to make the
payments provided for in, and otherwise to perform its obligations under,
this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that 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 to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced,
regardless of whether the Executive obtains other employment.
8. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge or data relating to the Company or any
of its affiliated companies and their respective businesses that the
Executive obtains during the Executive's employment by the Company or any
of its affiliated companies and that is not public knowledge (other than as
a result of the Executive's violation of this Section 8) ("Confidential
Information"). The Executive shall not communicate, divulge or disseminate
Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or as otherwise required by law or legal process.
9. ATTORNEYS' FEES. The Company agrees to pay, as incurred, to
the fullest extent permitted by law, all legal fees and expenses that the
Executive may incur in good faith as a result of any contest (regardless of
the outcome) by the Company, the Executive or others of the validity or
enforceability of or liability under, or otherwise involving, any provision
of this Agreement, together with interest on any delayed payment at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.
10. SUCCESSORS; JOINT OBLIGORS. (a) This Agreement is personal
to the Executive and, without the prior written consent of the Company,
shall not be assignable by the Executive otherwise 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.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(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 expressly to
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would have been required to perform it if no
such succession had taken place. As used in this Agreement, "the Company"
shall mean both the Company as defined above and any such successor that
assumes and agrees to perform this Agreement, by operation of law or
otherwise.
(d) The Company and Niagara LaSalle shall be jointly and
severally liable to the Executive for all obligations hereunder.
11. MISCELLANEOUS. (a) This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York,
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 except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.
(b) All notices and other communications under this Agreement
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:
__________________
__________________
__________________
If to the Company:
__________________
or to such other address as either party furnishes to the other in writing
in accordance with this paragraph (b) of Section 11. 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. If any provision of this Agreement shall be
held invalid or unenforceable in part, the remaining portion of such
provision, together with all other provisions of this Agreement, shall
remain valid and enforceable and continue in full force and effect to the
fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by
applicable laws or regulations.
(e) The Executive's or the Company's failure to insist upon
strict compliance with any provisions of, or to assert, any right under,
this Agreement (including, without limitation, the right of the Executive
to terminate employment for Good Reason pursuant to paragraph (c) of
Section 4 of this Agreement) shall not be deemed to be a waiver of such
provision or right or of any other provision of or right under this
Agreement.
(f) The Executive and the Company acknowledge that this
Agreement supersedes any other agreement between them concerning the
subject matter hereof.
(g) The rights and benefits of the Executive under this
Agreement may not be anticipated, assigned, alienated or subject to
attachment, garnishment, levy, execution or other legal or equitable
process except as required by law. Any attempt by the Executive to
anticipate, alienate, assign, sell, transfer, pledge, encumber or charge
the same shall be void. Payments hereunder shall not be considered assets
of the Executive in the event of insolvency or bankruptcy.
(h) This Agreement may be executed in several counterparts, each
of which shall be deemed an original, and said counterparts shall
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and the Company and Niagara LaSalle have caused this
Agreement to be executed in their names on their behalf, all as of the day
and year first above written.
NIAGARA CORPORATION
By: /s/ Xxxxxx Xxxx
_____________________________
Name: Xxxxxx Xxxx
Title: Chairman, Compensation Committee
NIAGARA LASALLE CORPORATION
By: /s/ Xxxxx Xxxxxx
_____________________________
Name: Xxxxx Xxxxxx
Title: President
/s/ Xxxxxxx Xxxxxx
________________________________
Xxxxxxx Xxxxxx
