1
XXXXXXXX CORPORATION
EMPLOYMENT AGREEMENT
--------------------
This agreement ("Agreement") has been entered into this
1st day of May, 1997, by and between Xxxxxxxx Corporation, a Missouri
corporation ("Company"), and Xxxxxx X. Xxxxxx, an individual ("Executive").
RECITALS
The Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and
its stockholders to reinforce and encourage the continued
attention and dedication of the Executive to the Company as a
member of the Company's management and to assure that the Company
will have the continued dedication of the Executive,
notwithstanding the possibility or occurrence of a Triggering
Transaction (as defined below) with respect to the Company or the
Operating Line of Business (as defined below). The Board desires
to provide for the continued employment of the Executive on terms
competitive with those of other corporations, and the Executive
is willing to rededicate himself and continue to serve the
Company. Additionally, 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 potential or
pending Triggering Transaction and to encourage the Executive's
full attention and dedication to the Company currently and in the
event of any potential or pending Triggering Transaction, and to
provide the Executive with compensation and benefits arrangements
upon any breach of this Agreement by the Company or upon a
termination of employment either immediately prior to or after a
Triggering Transaction which ensure that the compensation and
benefits expectations of the Executive will be satisfied.
Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the
following words and phrases, whether or not capitalized, shall
have the meanings specified below, unless the context plainly
requires a different meaning.
1.1(a) "ACCRUED COMPENSATION" has the meaning set
forth in Section 4.5 of this Agreement.
1.1(b) "ACCRUED OBLIGATIONS" has the meaning set
forth in Section 4.1(a) of this Agreement.
1.1(c) "ANNUAL BASE SALARY" has the meaning set
forth in Section 2.4(a) of this Agreement.
1.1(d) "BOARD" means the Board of Directors of the
Company.
1.1(e) "CAUSE" has the meaning set forth in Section
3.3 of this Agreement.
2
1.1(f) "CHANGE IN CONTROL" means:
(i) The acquisition by any individual,
entity or group, or a Person (within the
meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act) of ownership of 30% or more
of either (a) the then outstanding shares of
common stock of the Company (the "Outstanding
Company Common Stock") or (b) the combined
voting power of the then outstanding voting
securities of the Company entitled to vote
generally in the election of directors (the
"Outstanding Company Voting Securities"); or
(ii) Individuals who, as the date hereof,
constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a
majority of the Board; provided, however,
-----------------
that any individual becoming a director
subsequent to the date hereof whose election,
or nomination for election by the Company's
stockholders, was approved by a vote of at
least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but excluding,
as a member of the Incumbent Board, any such
individual whose initial assumption of office
occurs as a result of either an actual or
threatened election contest (as such terms
are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies
or consents by or on behalf of a Person other
than the Board; or
(iii) Approval by the stockholders of the
Company of a reorganization, merger or
consolidation, in each case, unless,
following such reorganization, merger or
consolidation, (a) more than 50% of,
respectively, the then outstanding shares of
common stock of the corporation resulting
from such reorganization, merger or
consolidation and the combined voting power
of the then outstanding voting securities of
such corporation entitled to vote generally
in the election of directors is then
beneficially owned, directly or indirectly,
by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such reorganization,
merger or consolidation in substantially the
same proportions as their ownership,
immediately prior to such reorganization,
merger or consolidation, of the Outstanding
Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (b) no
Person beneficially owns, directly or
indirectly, 30% or more of, respectively, the
then outstanding shares of common stock of
the corporation resulting from such
reorganization, merger or consolidation or
the combined voting power of the then
outstanding voting securities of such
corporation, entitled to vote generally in
the election of directors and (c) at least a
majority of the members of the board of
directors of the corporation resulting from
such reorganization, merger or consolidation
were members of the Incumbent Board at the
time of the execution of the initial
agreement providing for such reorganization,
merger or consolidation; or
(iv) Approval by the stockholders of the
Company of (a) a complete liquidation or
dissolution of the Company or (b) the sale or
other disposition
- 2 -
3
of all or substantially all of the assets of
the Company, other than to a corporation, with
respect to which following such sale or other
disposition, (1) more than 50% of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
is then beneficially owned, directly or
indirectly, by all or substantially all of the
individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such sale or other
disposition in substantially the same
proportion as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (2) no Person beneficially owns,
directly or indirectly, 30% or more of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation
entitled to vote generally in the election of
directors and (3) at least a majority of the
members of the board of directors of such
corporation were members of the Incumbent
Board at the time of the execution of the
initial agreement or action of the Board
providing for such sale or other disposition
of assets of the Company.
1.1(g) "COMPANY" has the meaning set forth in the
first paragraph of this Agreement and, with regard to
successors, in Section 6.2 of this Agreement.
1.1(h) "CODE" shall mean the Internal Revenue Code
of 1986, as amended.
1.1(i) "CURRENT TARGET BONUS" has the meaning set
forth in Section 4.1(a) of this Agreement.
1.1(j) "DATE OF TERMINATION" has the meaning set
forth in Section 3.6 of this Agreement.
1.1(k) "DISABILITY" has the meaning set forth in
Section 3.2 of this Agreement.
1.1(l) "DISABILITY EFFECTIVE DATE" has the meaning
set forth in Section 3.2 of this Agreement.
1.1(m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the stock of
the Operating Line of Business that is or
becomes a separate corporation, limited
liability corporation, partnership or other
business entity, the sale, exchange,
transfer, distribution or other disposition
of the ownership, either beneficially or of
record or both, by the Company of more than
50% of either (a) the then outstanding shares
of common stock (or the equivalent equity
interests) of the Operating Line of Business,
or (b) the combined voting power of the then
outstanding voting securities of the
Operating Line of Business entitled to vote
generally in the election of the Board or the
equivalent governing body of the Operating
Line of Business;
- 3 -
4
(ii) when used with reference to the merger
or consolidation of the Operating Line of
Business that is or becomes a separate
corporation, limited liability corporation,
partnership or other business entity, any
such transaction that results in the Company
owning, either beneficially or of record or
both, less that 50% of either (a) the then
outstanding shares of common stock (or the
equivalent equity interests) of the Operating
Line of Business, or (b) the combined voting
power of the then outstanding voting
securities of the Operating Line of Business
entitled to vote generally in the election of
the Board or the equivalent governing body of
the Operating Line of Business; or
(iii) when used with reference to the assets
of the Operating Line of Business, the sale,
exchange, transfer, liquidation, distribution
or other disposition of assets of the
Operating Line of Business (a) having a fair
market value (as determined by the Incumbent
Board) aggregating more than 50% of the
aggregate fair market value of all of the
assets of the Operating Line of Business as
of the Triggering Transaction Date, (b)
accounting for more than 50% of the aggregate
book value (net of depreciation and
amortization) of all of the assets of the
Operating Line of Business, as would be shown
on a balance sheet for the Operating Line of
Business, prepared in accordance with
generally accepted accounting principles then
in effect, as of the Triggering Transaction
Date, or (c) accounting for more than 50% of
the net income of the Operating Line of
Business, as would be shown on an income
statement, prepared in accordance with
generally accepted accounting principles then
in effect, for the 12 months ending on the
last day of the month immediately preceding
the month in which the Triggering Transaction
Date occurs.
1.1(n) "EFFECTIVE DATE" means the date of this
Agreement.
1.1(o) "EMPLOYMENT PERIOD" means the period
beginning on the Effective Date and ending on the later
of (i) a date two years after the Effective Date
("Ending Date") or (ii) the same date as the Ending
Date of any succeeding fiscal year during which notice
is given by either party (as described in
Section 1.1(aa) of this Agreement) of such party's
intent not to renew this Agreement.
1.1(p) "EXCHANGE ACT" means the Securities Exchange
Act of 1934, as amended.
1.1(q) "GOOD REASON" has the meaning set forth in
Section 3.4 of this Agreement.
1.1(r) "INCENTIVE BONUS" has the meaning set forth
in Section 2.4(b) of this Agreement.
1.1(s) "INCUMBENT BOARD" has the meaning set forth
in Section 1.1(f)(ii) of this Agreement.
1.1(t) "NOTICE OF TERMINATION" has the meaning set
forth in Section 3.5 of this Agreement.
1.1(u) "OPERATING LINE OF BUSINESS" means the
following lines of business of the Company, whether
operated as a division or as a separate subsidiary: (i)
textile rental
- 4 -
5
and laundry services, which provide textiles and laundry
services, principally to health care institutions, and,
to a more limited extent, to hotels, casinos, motels and
restaurants in or near major metropolitan areas of the
United States; (ii) uniform and business apparel
manufacturing and marketing which manufactures and sells
uniforms and business apparel to a wide variety of
institutions and businesses in the United States, Canada
and the United Kingdom; and (iii) retail specialty
stores, which operate a nationwide chain of specialty
retail stores primarily for a clientele of nurses and
other health care professionals.
1.1(v) "OTHER BENEFITS" has the meaning set forth in
Section 4.1(c) of this Agreement.
1.1(w) "OUTSTANDING COMPANY COMMON STOCK" has the
meaning set forth in Section 1.1(f)(i) of this
Agreement.
1.1(x) "OUTSTANDING COMPANY VOTING SECURITIES" has
the meaning set forth in Section 1.1(f)(i) of this
Agreement.
1.1(y) "PAYMENT" has the meaning set forth in
Section 4.2(f) of this Agreement.
1.1(z) "PERSON" means any "person" within the
meaning of Sections 13(d) and 14(d) of the Exchange
Act.
1.1(aa) "TERM" means the period that begins on the
Effective Date and ends on the earlier of: (i) the Date
of Termination as defined in Section 3.6 of this
Agreement, or (ii) the close of business on the later
of the Ending Date of the initial term or any renewal
term as set forth in Section 2.1 of this Agreement.
1.1(bb) "TRIGGERING TRANSACTION" means (i) a Change
in Control of the Company or (ii) a Disposition of a
Major Part of two or more of the Company's Operating
Lines of Business.
1.1(cc) "TRIGGERING TRANSACTION DATE" shall mean the
date of the Triggering Transaction.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this
Agreement used in the masculine gender include the feminine gender,
words in the singular include the plural, and words in the plural
include the singular.
1.3 HEADINGS. All headings in this Agreement are included
solely for ease of reference and do not bear on the interpretation of
the text. Accordingly, as used in this Agreement, the terms "Article"
and "Section" mean the text that accompanies the specified Article or
Section of the Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Missouri,
without reference to its conflict of law principles.
- 5 -
6
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in
the employ of the Company throughout the Term of this Agreement in
accordance with the terms and provisions of this Agreement. This
Agreement will automatically renew for annual one-year periods unless
either party gives the other written notice, within the Ending Date of
the initial term or any succeeding year, of such party's intent not to
renew this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the
Executive shall serve as Treasurer of the Company, subject
to the reasonable direction of the Board and the Chief
Executive Officer. The Executive shall have such authority
and shall perform such duties as are substantially similar
to the authority and duties assigned to him on the Effective
Date, subject to the control exercised by the Chief
Financial Officer, the Board and the Chief Executive Officer
from time to time.
2.2(b) Throughout the Term of this Agreement (but
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 shall use his
reasonable best efforts to perform faithfully and
efficiently such responsibilities as are assigned to him
under or in accordance with this Agreement; provided that,
it shall not be a violation of this paragraph for the
Executive to (i) serve on corporate, civic or charitable
boards or committees, (ii) deliver lectures or fulfill
speaking engagements or (iii) 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 accordance with this Agreement
or violate the Company's conflict of interest policy as in
effect immediately prior to the Effective Date.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this
Agreement, the Executive's services shall be performed at the
location where the Executive was employed immediately prior to
the Effective Date, or any office of the Company or any of its
subsidiaries to which Executive shall be transferred.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the first calendar
year within the Term of this Agreement, the Executive shall
receive an annual base salary ("Annual Base Salary") of
Eighty-two thousand seven hundred eighty-eight dollars
($82,788), which shall be paid in equal or substantially
equal semi-monthly installments. During the Term of this
Agreement, the Annual Base Salary payable to the Executive
shall be reviewed at least annually and shall be increased
at the discretion of the Board or the Chief Executive
Officer but shall not be reduced.
2.4(b) INCENTIVE BONUSES. In addition to Annual
Base Salary, the Executive shall be awarded the opportunity
to earn an incentive bonus on an annual basis ("Incentive
Bonus") under any incentive compensation plan which are
generally available to other similarly situated executives
of the Company. During the Term of this Agreement, the
annual target Incentive Bonus which the Executive will have
the opportunity to earn shall
- 6 -
7
be reviewed at least annually and be increased at the
discretion of the Board or the Chief Executive Officer.
2.4(c) WELFARE BENEFIT PLANS. Throughout the Term
of this Agreement (and thereafter), 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 (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 available to other similarly situated executives
of the Company.
2.4(d) EXPENSES. Throughout the Term of this
Agreement, the Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by the
Executive in accordance with the policies, practices and
procedures generally applicable to other similarly situated
executives of the Company.
2.4(e) OFFICE AND SUPPORT STAFF. Throughout the
Term of this Agreement, 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 those generally provided to
other similarly situated executives of the Company.
2.4(f) VACATION. Throughout the Term of this
Agreement, the Executive shall be entitled to paid vacation
in accordance with the plans, policies, programs and
practices generally provided with respect to other similarly
situated executives of the Company.
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. 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), the
Company may give to the Executive written notice in accordance with
Section 7.2 of its intention to terminate the Executive's employment.
In such event, the Executive's employment with the Company shall
terminate effective on the thirtieth (30th) day after receipt of such
notice by the Executive (the "Disability Effective Date"), provided
that, within the thirty (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" shall mean that
the Executive has been unable to perform the services required of the
Executive hereunder on a full-time basis for a period of one hundred
eighty (180) consecutive business days by reason of a physical and/or
mental condition. "Disability" shall be deemed to exist when certified
by a physician selected by the Company and acceptable to the Executive
or the Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably). The Executive will
submit to such medical or psychiatric examinations and tests as such
physician deems necessary to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause,"
which shall mean termination based upon: (i) the Executive's
willful and continued failure to substantially perform his duties
with the Company (other than as a result of incapacity due to
physical or mental condition), after a written demand for
substantial performance is delivered to the Executive by the
Company, which specifically identifies the manner in which the
- 7 -
8
Executive has not substantially performed his duties; (ii) the
Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty or breach of trust; or
(iii) the Executive's material breach of any provision of this
Agreement. For purposes of this Section, no act, or failure to
act on the Executive's part, shall be considered "willful" unless
done, or omitted to be done, without good faith and without
reasonable belief that the act or omission was in the best
interest of the Company. Notwithstanding the foregoing, the
Executive shall not be deemed to have been terminated for Cause
unless and until (i) he receives a Notice of Termination from the
Company, (ii) he is given the opportunity, with counsel, to be
heard before the Board, and (iii) the Board finds, in its good
faith opinion, the Executive was guilty of the conduct set forth
in the Notice of Termination.
3.4 GOOD REASON. Pursuant to Section 4.2, the Executive
may terminate his employment with the Company for "Good Reason,"
which shall mean:
3.4(a) 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 2.2(a) or any other action by the
Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding
for this purpose any action not taken in bad faith and which
is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
3.4(b) (i) the failure by the Company to continue in
effect any benefit or compensation plan, stock ownership
plan, life insurance plan, health and accident plan or
disability plan to which the Executive is entitled as
specified in Section 2.4, (ii) the taking of any action by
the Company which would adversely affect the Executive's
participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, (iii)
the failure by the Company to provide the Executive with
paid vacation to which the Executive is entitled as
described in Section 2.4(f);
3.4(c) a material breach by the Company of any
provision of this Agreement;
3.4(d) any purported termination by the Company of
the Executive's employment otherwise than as expressly
permitted by this Agreement; or
3.4(e) within a period ending at the close of
business on the date two (2) years after the Triggering
Transaction Date of any Change in Control, if the Company
has failed to comply with and satisfy Section 6.2 on or
after such Triggering Transaction Date.
For purposes of this Section, any good faith
determination of "Good Reason" made by the Executive shall
be conclusive.
3.5 NOTICE OF TERMINATION. Any termination by the Company
for Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in
accordance with Section 7.2. For purposes of this Agreement, a "Notice
of Termination" means 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 in Section 3.6 hereof) is other than the date of receipt of
such notice, specifies the termination date (which date shall be not
more than fifteen (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 shall not waive any right of the
- 8 -
9
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.
3.6 DATE OF TERMINATION. "Date of Termination" means
(i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the Date of
Termination shall be 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 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, or (iii) if the Executive's employment is terminated
by the Company other than for Cause, death or Disability, the
Date of Termination shall be the date of receipt of the Notice of
Termination; provided that if within thirty (30) days after any
Notice of Termination is given, the party receiving such Notice
of Termination notifies the other party that a dispute exists
concerning the termination, the Date of Termination shall be the
date on which the dispute is finally determined, either by mutual
written agreement of the parties, or by a final judgment, order
or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been
perfected).
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION WITHOUT CAUSE NOT IN CONNECTION WITH
A TRIGGERING TRANSACTION. If, prior to a Triggering Transaction
during the Employment Period (except in the event that one of the
following terminations of employment occurs within the six-month
period prior to the earlier of (a) a Triggering Transaction or
(b) the execution of a definitive agreement or contract that
eventually results in a Triggering Transaction, which shall
result in the payment of severance benefits set forth in Section
4.2 of this Agreement), the Company shall terminate the
Executive's employment without Cause, the Executive shall be
entitled to the payment of the benefits provided below as of the
Date of Termination:
4.1(a) Accrued Obligations. Within thirty (30) days
-------------------
after the Date of Termination, the Company shall pay to the
Executive the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not previously
paid, and (2) any accrued vacation pay; in each case to the
extent not previously paid (the "Accrued Obligations").
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Target
Bonus multiplied by a fraction, the numerator of which is
the number of days during the fiscal year for which the
Incentive Bonus is paid prior to the Date of Termination and
the denominator of which is 365. For purposes of this
Agreement, the term "Current Target Bonus" means the
Incentive Bonus that would have been paid to the Executive
for the fiscal year in which the termination of employment
occurred, if the Executive's employment had not been so
terminated and the Executive had earned 100% of the
Incentive Bonus that he could have earned for such year.
4.1(b) Severance Payment. If the Date of
-----------------
Termination occurs within two years after the date hereof,
within thirty (30) days after the Date of Termination, the
Company shall pay to the Executive as severance pay in a
lump sum, in cash, an amount equal to (i) one-twelfth the
Executive's then-current Annual Base Salary times (ii)
twelve (12).
4.1(c) Other Benefits. To the extent not previously
--------------
paid or provided, the Company shall timely pay or provide to
the Executive and/or the Executive's family any other amounts
or benefits required to be paid or provided for which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
- 9 -
10
program, policy or practice or contract or agreement
of the Company as those provided generally to other peer
executives and their families ("Other Benefits").
4.2 BENEFITS UPON TERMINATION IN CONNECTION WITH A
TRIGGERING TRANSACTION. If (a) a Triggering Transaction occurs
during the Employment Period and within two years after the
Triggering Transaction Date (i) the Company shall terminate the
Executive's employment without Cause, or (ii) the Executive shall
terminate employment with the Company for Good Reason, or,
--
alternatively, (b) if one of the above-described terminations of
employment occurs within the six-month period prior to the
earlier of (i) a Triggering Transaction or (ii) the execution of
a definitive agreement or contract that eventually results in a
Triggering Transaction, then the Executive shall become entitled
to the payment of the benefits as provided below as of either (y)
the Date of Termination, in the case where the sequence of the
requisite events is as set forth in subsection (a) above or (z)
the Triggering Transaction Date, in the case where the sequence
of the requisite events occurred as set forth in subsection (b)
above (the relevant date for purposes of entitlement to the
benefits as set forth in this Section 4.2 is hereinafter referred
to as the "Entitlement Date"):
4.2(a) Accrued Obligations. Within thirty (30) days
-------------------
after the Entitlement Date, the Company shall pay to the
Executive the Accrued Obligations.
In addition, on the date that Incentive Bonuses are
paid to other peer executives for the year in which the
Executive's employment is terminated, the Executive will be
paid an amount equal to the product of the Current Target
Bonus multiplied by a fraction, the numerator of which is
the number of days during the fiscal year for which the
Incentive Bonus is paid prior to the Date of Termination and
the denominator of which is 365.
4.2(b) Severance Amount. Within thirty (30) days
----------------
after the Entitlement Date, the Company shall pay to the
Executive as severance pay in a lump sum in cash, an amount
equal to two times an amount equal to his then-current
Annual Base Salary and Current Target Bonus.
4.2(c) Stock Options. To the extent not otherwise
-------------
provided for under the terms of the Company's stock option
plans or the Executive's stock option agreements, all stock
options held by the Executive that have not expired in
accordance with their respective terms shall vest and become
fully exercisable as of the Entitlement Date.
4.2(d) Stock Bonus and Incentive Plan Shares. To the
-------------------------------------
extent not otherwise provided for under the terms of the
Company's Stock Bonus and Incentive Plan, all "Matching
Shares" (as defined in such plan) held by or for the benefit
of the Executive that are unvested and restricted at the
Date of Termination shall vest and become unrestricted as of
the Entitlement Date and all "Elected Shares" (as defined in
such plan) held by or for the benefit of the Executive that
are restricted at the Date of Termination shall become
unrestricted as of the Entitlement Date.
4.2(e) Supplemental Retirement Plan Benefits. In the
-------------------------------------
event the Executive has been employed by the Company for less
than ten years on the Date of Termination, Executive shall be
deemed to be vested in the Xxxxxxxx Corporation Supplemental
Plan (as originally effective April 1, 1980 and as amended from
time to time, including a restatement as of January 23, 1990)
(the "Supplemental Plan"), at a percentage equal to two and
one-half percent for each year the Executive has been employed
by the Company, up to ten years.
- 10 -
11
Vesting for eleven through thirty years of employment and the
payment of benefits shall be in accordance with the terms of the
Supplemental Plan.
4.2(f) Other Benefits. To the extent not previously
--------------
paid or provided, the Company shall timely pay or provide to
the Executive and/or the Executive's family any Other
Benefits required to be paid or provided for which the
Executive and/or the Executive's family is eligible to
receive pursuant to this Agreement and under any plan,
program, policy or practice or contract or agreement of the
Company as those provided generally to other peer executives
and their families.
Any provision in any plan or program of the Company in
which Executive is a participant that precludes Executive
from competing with the Company, or denies Executive
entitlement to a benefit in the event Executive does compete
with the Company, shall be null and void.
4.3 DEATH. If the Executive's employment is terminated
by reason of the Executive's death during the Employment Period
(either prior or subsequent to a Triggering Transaction), this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations (as defined in
Section 4.1(a)) (which shall be paid to the Executive's estate or
beneficiary, as applicable, in a lump sum in cash within thirty
(30) days of the Date of Termination) and (ii) the timely payment
or provision of Other Benefits (as defined in Section 4.1(c)),
including death benefits pursuant to the terms of any plan,
policy, or arrangement of the Company.
4.4 DISABILITY. If the Executive's employment is terminated
by reason of the Executive's Disability during the Employment Period
(either prior or subsequent to a Triggering Transaction), this Agreement
shall terminate without further obligations to the Executive, other than
for (i) payment of Accrued Obligations (as defined in Section 4.1(a))
(which shall be paid to the Executive in a lump sum in cash within
thirty (30) days of the Date of Termination) and (ii) the timely payment
or provision of Other Benefits (as defined in Section 4.1(c)) including
Disability benefits pursuant to the terms of any plan, policy or
arrangement of the Company.
4.5 TERMINATION FOR CAUSE; OTHER THAN GOOD REASON. If
the Executive's employment shall be terminated for Cause during the
Employment Period (either prior or subsequent to a Triggering
Transaction), this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive his Accrued Compensation (as defined in this
Section). If the Executive terminates employment with the
Company during the Employment Period (excluding a termination for
Good Reason), this Agreement shall terminate without further
obligations to the Executive, other than for the payment of
Accrued Compensation (as defined in this Section) and the timely
payment or provision of Other Benefits (as defined in Section
4.1(c)). In such case, all Accrued Compensation shall be paid to
the Executive in a lump sum in cash within thirty (30) days of
the Date of Termination.
For the purpose of this Section, the term "Accrued
Compensation" means the sum of (i) the Executive's Annual Base
Salary through the Date of Termination to the extent not
previously paid, (ii) any compensation previously deferred by the
Executive (together with any accrued interest or earnings
thereon), and (iii) any accrued vacation pay in each case to the
extent not previously paid.
4.6 NON-EXCLUSIVITY OF RIGHTS; SUPERSESSION OF CERTAIN
BENEFITS. Except as provided in this Section 4.6, nothing in
this Agreement shall prevent or limit the Executive's continuing
or future
- 11 -
12
participation in any plan, program, policy or practice provided by the Company
and for which the Executive may qualify, nor shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company, except for the elimination of penalties for
competing as provided in Section 4.2(f). Amounts which are vested benefits of
which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of, or any contract or agreement with, the Company at or
subsequent to the Date of Termination, shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
4.7 FULL SETTLEMENT. The Company's obligation to make
the 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 such amounts shall not be reduced whether or not
the Executive obtains other employment. The Company agrees to
pay promptly as incurred, 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 regarding 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 Code Section 7872(f)(2)(A).
4.8 RESOLUTION OF DISPUTES. 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 4.1 or 4.2 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 amounts
pursuant to this Section 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.
4.9 BENEFITS UPON TERMINATION BY EMPLOYMENT CONNECTED WITH
RELOCATION. If a Triggering Transaction occurs during the Employment Period
and within two years after the Triggering Transaction Date the Executive
shall terminate employment with the Company as a result of the Company's
requiring the Executive to be based at an office or location outside the
metropolitan St. Louis area, then the Executive shall become entitled to
the payment of the benefits as provided below to the extent not paid or
provided by the Company pursuant to this Section 4, as of the Date of
Termination.
4.9(a) Accrued Obligations. Within thirty (30) days
-------------------
after the Date of Termination, the Company shall pay to the
Executive the Accrued Obligations.
In addition, on the date that Incentive Bonuses are paid to
other peer executives for the year in which the Executive's
employment is terminated, the Executive will be paid an amount
equal to the product of the Current Target Bonus multiplied by
a fraction, the
- 12 -
13
numerator of which is the number of days during the
fiscal year for which the Incentive Bonus is paid prior to the
Date of Termination and the denominator of which is 365.
4.9(b) Severance Amount. Within thirty (30) days after
----------------
the Termination Date, the Company shall pay to the Executive as
severance pay in a lump sum in cash, an amount equal to his
then-current Annual Base Salary, divided by three.
4.9(c) Supplemental Retirement Plan Benefits. In the event
-------------------------------------
the Executive has been employed by the Company for less than ten
years on the Date of Termination, Executive shall be deemed to be
vested in the Xxxxxxxx Corporation Supplemental Plan (as originally
effective April 1, 1980 and as amended from time to time, including
a restatement as of January 23, 1990) (the "Supplemental Plan"), at
a percentage equal to two and one-half percent for each year the
Executive has been employed by the Company, up to ten years.
Vesting for eleven through thirty years of employment and the
payment of benefits shall be in accordance with the terms of
the Supplemental Plan.
4.9(d) Other Benefits. To the extent not previously paid
--------------
or provided, the Company shall timely pay or provide to the
Executive and/or the Executive's family any Other Benefits required
to be paid or provided for which the Executive and/or the
Executive's family is eligible to receive pursuant to this
Agreement and under any plan, program, policy or practice or
contract or agreement of the company as those provided generally
to other peer executives and their families.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period beginning
on the date the Term of this Agreement expires and ending
one (1) year thereafter, the Executive shall not, without
prior written approval of the Board, become an officer,
employee, agent, partner or director of any business
enterprise in substantial direct competition (as defined in
Section 5.1(b)) with the Company; provided that, if the
Executive is terminated by the Company without Cause or if
the Executive terminates his employment for Good Reason,
then he will not be subject to the restrictions of this
Section.
5.1(b) For purposes of Section 5.1, a business
enterprise with which the Executive becomes associated as an
officer, employee, agent, partner or director shall be
considered in substantial direct competition, if such entity
competes with the Operating Line of Business and is within
the Company's market area as of the date that the Employment
Period expires.
5.1(c) The above constraint shall not prevent the
Executive from making passive investments, not to exceed
five percent (5%), in any enterprise.
5.2 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 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
- 13 -
14
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
constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal
to the Executive and, without the prior written consent of the Company,
the rights (but not the obligations) 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.
6.2 SUCCESSORS OF COMPANY. The Company will 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. Failure of the Company to
obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle
the Executive to terminate the Agreement at his option on or
after the Triggering Transaction Date for Good Reason. As used
in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or
assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices
and all other communications provided for in the Agreement shall
be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective
addresses as set forth below; provided that all notices to the
Company shall be directed to the attention of the Chairman of the
Board, or to such other address as one party may have furnished
to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
Notice to Executive:
-------------------
Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxx
Xx. Xxxxx, XX 00000-0000
Notice to Company:
-----------------
Xxxxxxxx Corporation
000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, XX 00000-0000
7.2 VALIDITY. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
- 14 -
15
7.3 WITHHOLDING. 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.
7.4 WAIVER. The Executive's or the Company's failure
to insist upon strict compliance with any provision hereof or any
other provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder, including,
without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 3.4 shall not be
deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
IN WITNESS WHEREOF, the Executive and, the Company, pursuant
to the authorization from its Board, have caused this Agreement to be
executed in its name on its behalf, all as of the day and year first
above written.
/s/ Xxxxxx X. Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxx
XXXXXXXX CORPORATION
By /s/ X. X. Xxxxx
----------------------------------
Name: X. X. Xxxxx
-------------------------------
Title: Chairman and President
------------------------------
- 15 -
