EXHIBIT 10.2
EMPLOYMENT AGREEMENT
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AGREEMENT by and between Xxxxxxxx Corporation, a Delaware
corporation (the "Company") and Xxx X. Xxxxxxxx (the "Executive"), dated
as of the 22nd day of July, 1999.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company.
The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and
risks created by a pending or threatened Change of Control and to
encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation
and benefits expectations of the Executive will be satisfied and which
are competitive with those of other corporations. Therefore, in order
to accomplish these objectives, the Board has caused the Company to
enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Certain Definitions. (a) The "Effective Date" shall be
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the first date during the Protection Period (as defined in Section l(b))
on which a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if the
Executive's employment with the Company is terminated prior to the date
on which the Change of Control occurs, and if it is reasonably
demonstrated by the Executive that such termination of employment (i)
was at the request of a third party which has taken steps reasonably
calculated to effect the Change of Control or (ii) otherwise arose in
connection with or anticipation of the Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination of employment.
(b) The "Protection Period" shall be the period
commencing on the date hereof and ending 24 calendar months after the
date hereof; provided, however, that commencing on the date one year
after the date hereof, and on each annual anniversary of such date (such
date and each annual anniversary thereof shall be hereinafter referred
to as the "Renewal Date"), the Protection Period shall be automatically
extended so as to terminate 24 calendar months from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give
notice to the Executive that the Board has determined that the
Protection Period shall not be so extended.
2. Change of Control. For the purpose of this Agreement, a
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"Change of Control" shall mean the occurrence of any of the following
events:
(a) The Company is merged, consolidated or reorganized
into or with another corporation or other legal person, or there is an
offer to holders of the common stock generally relating to the
acquisition of their shares, and as a result of such merger,
consolidation, reorganization or offer, less than 75% of the outstanding
voting securities or other capital interests of the surviving, resulting
or acquiring corporation or other legal person are owned in the
aggregate by the stockholders of the Company immediately prior to such
merger, consolidation, reorganization or offer;
(b) The Company sells all or substantially all of its
business and/or assets to any other corporation or other legal person,
less than 75% of the outstanding voting securities or other capital
interests of which are owned in the aggregate, directly or indirectly,
by the persons who were stockholders of the Company immediately before
or after such sale; or
(c) During any period of two consecutive years,
individuals who at the beginning of any such period constitute the
directors of the Company cease for any reason to constitute at least a
majority thereof, unless the election, or the nomination for election by
the Company's stockholders, of each new director of the Company was
approved by a vote of at least two-thirds of such directors of the
Company then still in office who were directors of the Company at the
beginning of any such period.
3. Employment Period. The Company hereby agrees to continue
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the Executive in its employ, and the Executive hereby agrees to remain
in the employ of the Company, for the period commencing on the Effective
Date and ending 36 calendar months after the Effective Date (the
"Employment Period").
4. Terms of Employment. (a) Position and Duties. (i)
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During the Employment Period, (A) the Executive's position (including
status, offices, titles and reporting requirements), authority, duties
and responsibility shall be at least commensurate in all material
respects with the most significant of those held, exercised and assigned
at any time during the 90-day period immediately preceding the Effective
Date and (B) the Executive's services shall be performed at the location
where the Executive was employed immediately preceding the Effective
Date or any office or location less than 35 miles from the Executive's
primary residence immediately prior to such relocation.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the Executive is entitled,
the Executive agrees to 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 hereunder, to use the Executive's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for the
Executive to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or teach
at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance
of the Executive's responsibilities as an employee of the Company in
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accordance with this Agreement. It is expressly understood and agreed
that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such
activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Executive's responsibilities to
the Company.
(b) Compensation. (i) Base Salary. During the
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Employment Period, the Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid at a monthly rate, at least
equal to twelve times the highest monthly base salary paid or payable to
the Executive by the Company and its affiliated companies in respect of
the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed at least annually and shall be increased at any
time and from time to time as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of
business to other peer executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the
term Annual Base Salary as utilized in this Agreement shall refer to
Annual Base Salary as so increased. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by,
controlling or under common control with the Company.
(ii) Annual Bonus. In addition to Annual Base Salary,
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the Executive shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at least
equal to the midpoint of his current annual bonus range, but in no event
less than the average annualized (for any fiscal year consisting of less
than 12 full months or with respect to which the Executive has been
employed by the Company for less than 12 full months) bonus paid or
payable, including by reason of any deferral, to the Executive by the
Company and its affiliated companies in respect of the three fiscal
years immediately preceding the fiscal year in which the Effective Date
occurs. Each such Annual Bonus shall be paid no later than the end of
the third month of the fiscal year next following the fiscal year for
which the Annual Bonus is awarded, unless the Executive shall elect to
defer the receipt of such Annual Bonus.
(iii) Profit Sharing, Thrift, Savings and Pension Plans.
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In addition to Annual Base Salary and Annual Bonus payable as
hereinabove provided, the Executive shall be entitled to participate
during the Employment Period in all profit sharing, thrift, savings and
pension plans, practices, policies and programs generally applicable to
other peer executives of the Company and its affiliated companies, but
in no event shall such plans, practices, policies and programs provide
the Executive with profit sharing opportunities (measured with respect
to both regular and special profit sharing opportunities), thrift
opportunities, savings opportunities and pension benefits opportunities,
in each case, less favorable, in the aggregate, than the most favorable
of those provided by the Company and its affiliated companies for the
Executive under
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such plans, practices, policies and programs as in effect at any time
during the 90-day period immediately preceding the Effective Date.
(iv) Welfare Benefit Plans. During the Employment
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Period, the Executive and/or the Executive's family, as the case may be,
shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided
by the Company and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel
accident insurance plans and programs) to the extent generally
applicable to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide benefits which are less favorable, in the aggregate,
than the most favorable of such plans, practices, policies and programs
in effect for the Executive at any time during the 90-day period
immediately preceding the Effective Date.
(v) Expenses. During the Employment Period, the
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Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
most favorable policies, practices and procedures of the Company and its
affiliated companies in effect for the Executive at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies.
(vi) Perquisites. During the Employment Period, the
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Executive shall be entitled to perquisites in accordance with the most
favorable plans, practices, programs and policies of the Company and
its affiliated companies in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies.
(vii) Office and Support Staff. During the Employment
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Period, the Executive shall be entitled to an office or offices of a
size and with furnishings and other appointments, and to personal
secretarial and other assistance, at least equal to the most favorable
of the foregoing provided to the Executive by the Company and its
affiliated companies at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as
provided at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies.
(viii) Vacation. During the Employment Period, the
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Executive shall be entitled to paid vacation in accordance with the most
favorable plans, policies, programs and practices of the Company and its
affiliated companies as in effect for the Executive at any time during
the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
generally with respect to other peer incentives of the Company and its
affiliated companies.
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(ix) Substitution of Nonqualified Benefits. If the
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continued provision of benefits to the Executive under any employee
benefit plan of the Company at the level required by this Section 4(b)
would cause such employee benefit plan to violate any minimum coverage
or nondiscrimination requirement of any applicable provision of the
Internal Revenue Code of 1986 (the "Code"), the Company may provide the
closest possible economic equivalent of such benefit in the form of a
nonqualified plan or additional compensation.
5. Termination of Employment. (a) Death or Disability. The
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Executive's employment shall terminate automatically upon the
Executive's death during the Employment Period. If the Company
determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of
"Disability" set forth below), it may give to the Executive written
notice of its intention to terminate the Executive's employment. In
such event, the Executive's employment with the Company shall terminate
effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this Agreement,
"Disability" means the absence of the Executive from the Executive's
duties with the Company on a substantially full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
physician selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) Cause. The Company may terminate the Executive's
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employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) repeated violations by the Executive
of the material obligations of the Executive under Section 4(a) of this
Agreement (other than as a result of incapacity due to physical or
mental illness) which are demonstrably willful and deliberate on the
Executive's part, which are committed in bad faith or without reasonable
belief that such violations are in the best interests of the Company and
which are not remedied in a reasonable period of time after
receipt by the Executive of written notice from the Company of such
violations or (ii) the conviction of the Executive of a felony involving
moral turpitude.
(c) Good Reason. The Executive's employment may be
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terminated during the Employment Period by the Executive for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement,
or any other action by the Company which results in a diminution in
such position, authority, duties or responsibilities, excluding for
this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly
after receipt of notice thereof given by the Executive;
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(ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any
office or location other than that described in Section 4(a)(i)(B)
hereof;
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by
this Agreement; or
(v) any failure by the Company or any successor to comply with
and satisfy Section 11(c) of this Agreement, provided that such
successor has received at least ten days prior written notice from
the Company or the Executive of the requirements of Section 11(c)
of this Agreement.
For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Executive shall be conclusive. Anything in this
Agreement to the contrary notwithstanding, a termination by the
Executive for any reason during the 30-day period immediately following
the first anniversary of the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) Notice of Termination. Any termination by the
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Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which
(i) indicates the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifies the termination
date (which date shall be not more than 15 days after the giving of such
notice). The failure by the Executive or the Company to set forth in
the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause, as the case may be, shall not waive
any right of the Executive or the Company hereunder or preclude the
Executive or the Company from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" shall
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mean (i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the date of receipt
of the Notice of Termination or any later date specified therein, as the
case may be, (ii) if the Executive's employment is terminated by the
Company other than for Cause, Disability or death, the Date of
Termination shall be the date on which the Company notifies the
Executive of such termination, and (iii) if the Executive's employment
is terminated by reason of death or Disability, the Date of Termination
shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.
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6. Obligations of the Company upon Termination. (a) Good
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Reason; Other than for Cause or Disability. If, during the Employment
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Period, the Company shall terminate the Executive's employment other
than for Cause or Disability or the Executive shall terminate employment
for Good Reason, the Company shall have the following obligations.
(i) The Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of
the following amounts:
(A) the amount equal to the product of (x) 3.0 and (y)
the sum of the Executive's Annual Base Salary and the
Executive's Annual Bonus; provided, however, that such amount
shall be paid in lieu of, and the Executive hereby waives the
right to receive, any other amount of severance relating to
salary or bonus continuation to be received by the Executive
upon such termination of employment under any severance plan,
policy or arrangement of the Company; and
(B) the amount equal to the product of (x) the Annual
Bonus and (y) a fraction, the numerator of which is the number
of days in the then current fiscal year through the Date of
Termination, and the denominator of which is 365; and
(C) the amount of the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore
paid and the amount of any compensation previously deferred by
the Executive (together with any accrued interest thereon) and
not yet paid by the Company and any accrued vacation pay of
the Executive not yet paid by the Company.
For purposes of this Agreement, the aggregate of the amounts
described in clauses (A), (B) and (C) of this Section 6(a) shall
hereafter be referred to as the "Special Termination Amount."
(ii) For 36 months after such termination of employment, or
such longer period as any plan, program, practice or policy may
provide, the Company shall continue benefits to the Executive and,
where applicable, the Executive's family at least equal to those
which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Executive's employment had not
been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated
companies generally applicable to other peer executives and their
families during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect
at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and
their families (such continuation of such benefits for the
applicable period set forth herein hereinafter referred to as
"Welfare Benefit Continuation"). For purposes of determining
eligibility of the Executive for retiree benefits pursuant
to such plans, practices, programs and policies, the Executive
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shall be considered to have remained employed until the end of such
36 months' period and to have retired on the last day of such
period. In the event the Executive becomes reemployed with another
employer and is eligible to receive medical or other welfare
benefits under any employer provided plan, the medical or other
welfare benefits described herein shall not be provided by the
Company during such applicable period of eligibility, but shall
resume if such period of eligibility shall terminate. In the
case of any benefit subject to the continuation coverage
requirements of Section 4980A of the Code, the Executive and his
covered dependents shall be considered to have lost their coverage
by reason of the termination of employment at the end of the
Welfare Benefit Continuation period or, if earlier, on the day
before the day the Executive becomes covered by a plan sponsored
by another employer as provided above.
(iii) The 36 month period referred to in Section 6(a)(ii) of
this Agreement (or, if longer, the period provided in each such
plan) shall be considered a period of service for all purposes
(including, as applicable, benefit accrual, employer contributions,
and matching) under each of the plans described in Section
4(b)(iii) of this Agreement, and the accrued benefit or employer
contributions of the Executive under each such plan shall be
determined as if the Executive had been employed through the end of
such period; provided, however, that if the provision of benefits
under any employee benefit plan pursuant to this Section 6(a)(iii)
(or Section 6(a)(ii) of this Agreement) would cause such plan to
violate any minimum coverage or nondiscrimination requirement of
the Code, the provisions of Section 4(b)(ix) of this Agreement
shall apply. For purposes hereof, any matching employer
contribution for any period that ends during such 36 months shall
be determined as if the Executive had made the same employee
contribution during such period as he made during the last period
ending prior to or with the date of termination (or, if greater,
the actual amount of the Executive's contribution for such period).
(b) Death. If the Executive's employment is terminated
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by reason of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the Executive's
legal representatives under this Agreement, other than the payment by
the Company of the Special Termination Amount, provided however, that
the amount of such payment determined under Section 6(a)(i)(A) shall be
adjusted as follows. The amount set forth in clause (A) shall be offset
in all cases by any basic life insurance benefit paid or payable in
respect of the Executive's death as a consequence of any premiums paid
by the Company, and, in addition, if the death occurs after six months
following the Change of Control, it shall be offset by the amount of any
salary payments made to the Executive for any periods of employment
following the Change of Control. The Special Termination Amount shall
be paid to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination. Anything in
this Agreement to the contrary notwithstanding, the Executive's family
shall be entitled to receive benefits at least equal to the most
favorable benefits provided generally by the Company and any of its
affiliated companies to surviving families of peer executives of the
Company and such affiliated companies under such plans, programs,
practices and policies relating to
8
family death benefits, if any, as in effect generally with respect to
other peer executives and their families at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect on the date of the Executive's death generally with respect to
other peer executives of the Company and its affiliated companies and
their families.
(c) Disability. If the Executive's employment is
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terminated by reason of the Executive's Disability during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive, other than the payment by the Company of
the Special Termination Amount. Such Special Termination Amount, if
Executive's Disability occurs after six months following the Change of
Control, shall be offset by the amount of any salary payments made to
the Executive for any periods of employment following the Change of
Control. The Special Termination Amount shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the
Executive shall be entitled after the Disability Effective Date to
receive disability and other benefits at least equal to the most
favorable of those generally provided by the Company and its affiliated
companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to
disability, if any, as in effect generally with respect to other peer
executives and their families at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to the
Executive and/or the Executive's family, as in effect at any time
thereafter through the Date of Termination generally with respect to
other peer executives of the Company and its affiliated companies and
their families.
(d) Cause; Other than for Good Reason. If the
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Executive's employment shall be terminated for Cause during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the
Executive Annual Base Salary through the Date of Termination plus the
amount of any compensation previously deferred by the Executive, in each
case to the extent theretofore unpaid. If the Executive terminates
employment during the Employment Period, excluding a termination for
Good Reason, this Agreement shall terminate without further obligations
to the Executive, other than for the following obligations: (1) payment
of the Executive's Annual Base Salary through the Date of Termination to
the extent not theretofore paid, (ii) payment of the product of (x) the
Annual Bonus and (y) a fraction, the numerator of which is the number of
days in the current fiscal year through the Date of Termination, and the
denominator of which is 365 and (iii) payment of any compensation
previously deferred by the Executive (together with any accrued interest
thereon) and not yet paid by the Company and any accrued vacation pay of
the Executive not yet paid by the Company (the amounts described in
paragraphs (i), (ii) and (iii) shall be hereafter referred to as
"Accrued Obligations"). In such case, all Accrued Obligations shall be
paid to the Executive in a lump sum in cash within 30 days of the Date
of Termination.
7. Non-exclusivity of Rights. Except as explicitly modified
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or otherwise explicitly provided by this Agreement, (i) nothing in
this Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or
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other plans, programs, policies or practices provided by the Company or
any of its affiliated companies and for which the Executive may qualify,
nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any other agreements with the Company or any
of its affiliated companies and (ii) amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any
plan, policy, practice or program of the Company or any of its
affiliated companies at or subsequent to the Date of Termination shall
be payable in accordance with such plan, policy, practice or program
except as explicitly modified by this Agreement.
8. Full Settlement. The Company's obligation to make the
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payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off,
counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the
Executive under any of the provisions of this Agreement and, except as
provided in Section 6(a)(ii) of this Agreement, such amounts shall not
be reduced whether or not the Executive obtains other employment. The
Company agrees to pay, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result
of any contest (regardless of the outcome thereof) by the Company, the
Executive or others of the validity or enforceability of, or liability
under, any provision of this Agreement or any guarantee of performance
thereof (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate provided
for in Section 7872(f)(2)(B) of the Code. If there shall be any dispute
between the Company and the Executive (i) in the event of any
termination of the Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any termination of
employment by the Executive, whether Good Reason existed, then, unless
and until there is a final, nonappealable judgment by a court of
competent jurisdiction declaring that such termination was for Cause or
that the determination by the Executive of the existence of Good Reason
was not made in good faith, the Company shall pay all amounts, and
provide all benefits, to the Executive and/or the Executive's family or
other beneficiaries, as the case may be, that the Company would be
required to pay or provide pursuant to Section 6(a) as though such
termination were by the Company without Cause, or by the Executive with
Good Reason; provided, however, that the Company shall not be required
to pay any disputed amount pursuant to this paragraph except upon
receipt of an undertaking by or on behalf of the Executive to repay all
such amounts to which the Executive is ultimately adjudged by such court
not to be entitled.
9. Certain Additional Payments by the Company.
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(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that as a result,
directly or indirectly, of any payment or distribution by the Company to
or for the benefit of the Executive, whether paid or payable or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (a "Payment"), the Executive would be subject to the excise
tax imposed by
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Section 4999 of the Code or any interest or penalties are incurred
by the Executive 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 the Executive shall
be entitled to promptly receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, but excluding any income taxes on the
Payment, the Executive is in the same after-tax position as if no Excise
Tax had been imposed upon the Executive.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether or when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determinations, shall be made by the accounting firm of Xxxxxx Xxxxxxxx
& Co., or such other nationally recognized accounting firm selected by
the Company (the "Accounting Firm"), which shall provide detailed
supporting calculations both to the Company and the Executive within 15
business days of receipt of notice from the Executive that there has
been a Payment or such earlier time as is requested by the Company. All
fees and expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section
9, shall be paid to the Executive within five days of the receipt of the
Accounting Firm's determination. If the Accounting Firm determines that
no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax
on the Executive's applicable federal income tax return would not result
in the imposition of a negligence or similar penalty. Any determination
by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant
to Section 9(c) and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after the Executive knows of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim
is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If
the Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:
11
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and,
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold
the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax (including interest and penalties with respect thereto)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner, and
the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in
one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim and
xxx for a refund, the Company shall advance the amount of such payment
to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as
the case may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
(d) If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the Executive
shall (subject to the Company's complying with the requirements of
Section 9(c)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of
an amount advanced by the Company pursuant to Section 9(c), a
determination is made that the Executive shall not
12
be entitled to any refund with respect to such claim and the Company
does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid.
10. 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, which
shall have been obtained by the Executive during the Executive's
employment by the Company or any of its affiliated companies and which
shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of
the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone
other than the Company and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10 constitute a
basis for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
11. Successors. (a) This Agreement is personal to the
----------
Executive and without the prior written consent of the Company shall not
be assignable by the Executive 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 to
assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it
if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or otherwise.
12. Miscellaneous. (a) This Agreement shall be governed by
-------------
and construed in accordance with the laws of the State of Illinois,
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
otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives. This Agreement
replaces in its entirety the Employment Agreement between the Company
and the Executive dated as of September 17, 1996.
13
(b) All notices and other communications hereunder shall
be in writing and shall be given by hand delivery to the other party or
by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Executive:
-------------------
Xxx X. Xxxxxxxx
000 Xxx Xxx Xxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
If to the Company:
-----------------
Xxxxxxxx Corporation
0000 Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice 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.
(d) The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof shall not be deemed to
be a waiver of such provision or any other provision of this Agreement.
(f) The Executive and the Company acknowledge that,
except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive
by the Company is "at will" and, prior to the Effective Date, may be
terminated by either the Executive or the Company at any time.
Moreover, if prior to the Effective Date, the Executive's employment
with the Company terminates (other than as provided in Section 1
hereof), then the Executive shall have no further rights under this
Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in its
name on its behalf, all as of the day and year first above written.
14
/s/ Xxx X. Xxxxxxxx
--------------------------------
(Executive)
XXXXXXXX CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
------------------------------
15
