EXHIBIT 10.1
XXXXXXXX CORPORATION
EMPLOYMENT AGREEMENT
This agreement (this "Agreement") has been entered into this 1st
day of June 2005 by and between Xxxxxxxx Corporation, a Missouri corporation
(the "Company"), and Xxxxx X. Xxx Xxxxx, an individual (the "Executive").
WHEREAS, the Board of Directors of the Company has determined that
it is in the best interests of the Company and its stockholders to retain
the Executive in the employ of the Company as President and Chief Operating
Officer of the Company as of the Effective Date (as defined below); and
WHEREAS, this Agreement contains the terms and conditions that have
been negotiated by the Company and the Executive as an inducement to the
Executive to accept an offer of employment with the Company and as an
incentive to reinforce and encourage the continued attention and dedication
of the Executive to the Company and its business throughout the Employment
Period (as defined below), even in connection with a Change in Control;
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties hereby agree 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 OBLIGATIONS" has the meaning set forth in
Section 4.1(a) of this Agreement.
1.1(b) "ANNUAL BONUS" has the meaning set forth in Section
2.4(b) 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.
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
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20% 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 of 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 Effective Date 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 an 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, (1) 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, (2) no Person beneficially owns,
directly or indirectly, 20% 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 (3) 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 (1) a complete liquidation or dissolution of
the Company or (2) the sale or other disposition
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, (A) 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
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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 proportions 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, (B) no Person beneficially
owns, directly or indirectly, 20% 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 (C) 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) "CHANGE IN CONTROL DATE" means the date that a Change
in Control first occurs.
1.1(h) "COMPANY" has the meaning set forth in the first
paragraph of this Agreement and, with regard to successors, in
Section 7.2 of this Agreement.
1.1(i) "DATE OF TERMINATION" has the meaning set forth in
Section 3.8 of this Agreement.
1.1(j) "DISABILITY" has the meaning set forth in Section 3.2
of this Agreement.
1.1(k) "DISABILITY EFFECTIVE DATE" has the meaning set forth
in Section 3.2 of this Agreement.
1.1(l) "EFFECTIVE DATE" means June 6, 2005.
1.1(m) "EMPLOYMENT PERIOD" means the period beginning on the
Effective Date and ending on the Date of Termination.
1.1(n) "ENTITLEMENT DATE" has the meaning set forth in Section
4.2 of this Agreement.
1.1(o) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
1.1(p) "GOOD REASON" has the meaning set forth in Section 3.4
of this Agreement.
1.1(q) "INCUMBENT BOARD" has the meaning set forth in Section
1.1(f)(ii) of this Agreement.
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1.1(r) "LONG-TERM BONUS" has the meaning set forth in Section
2.4(c) of this Agreement.
1.1(s) "NOTICE OF TERMINATION" has the meaning set forth in
Section 3.7 of this Agreement.
1.1(t) "OTHER BENEFITS" has the meaning set forth in Section
4.4 of this Agreement.
1.1(u) "OUTSTANDING COMPANY COMMON STOCK" has the meaning set
forth in Section 1.1(f)(i) of this Agreement.
1.1(v) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning
set forth in Section 1.1(f)(i) of this Agreement.
1.1(w) "PERSON" means any "person" within the meaning of
Sections 13(d) and 14(d) of the Exchange Act.
1.1(x) "RESTRICTED SHARES" has the meaning set forth in
Section 2.4(e) of this Agreement.
1.1(y) "SUPPLEMENTAL PLAN" has the meaning set forth in
Section 2.4(f) of this Agreement.
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. 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.
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT; TERM OF AGREEMENT. The Executive shall
remain in the employ of the Company throughout the Employment Period in
accordance with the terms and provisions of this Agreement. Either party to
this Agreement may terminate the Employment Period (and the Executive's
employment with the Company) at any time by giving the other party a Notice
of Termination, subject only to the obligation of the Company to pay the
benefits to the Executive as specified in Section 4 of this Agreement. The
term of this Agreement shall begin as of the Effective Date and shall end on
the Date of Termination.
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2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Employment Period, the Executive shall
serve as President and Chief Operating Officer of the Company,
subject to the reasonable directions of the Chief Executive
Officer of the Company and the Board. The Executive shall have
such authority and shall perform such duties as are specified
in or contemplated by the Bylaws of the Company for the
offices to which he has been appointed and shall so serve
subject to the control exercised by the Chief Executive
Officer of the Company and the Board from time to time.
2.2(b) Throughout the Employment Period (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
Section 2.2(b) 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 is in effect at such times. The
Executive agrees that during the Employment Period the
Executive will serve on no more than two corporate boards of
directors, of which not more than one such board membership
will be with a corporation that has securities that are
publicly traded on a national stock exchange, the Nasdaq
Market or the like.
2.3 SITUS OF EMPLOYMENT. Throughout the Employment Period, the
Executive's services shall be performed at the Company's divisional
headquarters offices located in the greater Atlanta, Georgia metropolitan
area.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. The Executive will initially
receive an annual base salary ("Annual Base Salary") of Three
Hundred Ten Thousand Dollars ($310,000.00), which shall be
paid in equal or substantially equal bi-weekly installments.
During the Employment Period, the Annual Base Salary payable
to the Executive shall be reviewed by the Board and/or the
Compensation and Organization Committee, initially in February
2006 and not less than once annually thereafter, and shall be
increased at the discretion of the Board or the Compensation
and Organization Committee of the Board but shall not be
reduced without the consent of the Executive.
2.4(b) ANNUAL INCENTIVE BONUSES. In addition to Annual Base
Salary, the Executive will be entitled to earn an incentive
bonus for each fiscal year (the "Annual Bonus") during the
Employment Period. The Board will set, on or before the 90th
day of such fiscal year, the criteria which will be required
to be achieved by the Executive
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during the fiscal year to earn all or a specified percentage
of his Annual Bonus. The maximum Annual Bonus that the
Executive may earn is one hundred percent (100%), and the
target bonus is fifty percent (50%), of the Executive's
then-current Annual Base Salary; PROVIDED, HOWEVER, that for
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the 2005 fiscal year ending January 28, 2006, any Annual Bonus
the Executive may earn will be prorated for the eight months
during which the Executive will be employed by the Company in
the fiscal year; and, PROVIDED, FURTHER, that the Executive's
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Annual Bonus for the 2005 fiscal year shall not be less than
One Hundred Twenty-Four Thousand Dollars ($124,000.00). Except
as set forth in this Section 2.4(b) and Section 4 below, the
Executive must be employed on the last day of the fiscal year
in order to be entitled to receive an Annual Bonus for such
fiscal year.
2.4(c) LONG-TERM INCENTIVE PLAN AWARDS. The Executive will be
entitled to earn long-term incentive awards payable in
accordance with a plan established by the Board or the
Compensation and Organization Committee (the "Long-Term
Incentive Awards"). The Executive will be eligible to earn
Long-Term Incentive Awards during the Employment Period
beginning with the 2006 to 2009 performance period on the
basis of the achievement of performance goals established for
the three-year performance periods. The Board will set, on or
before the 90th day of such performance period, the
performance goals to be achieved during the performance period
that is then commencing in order for the Executive to earn all
or a specified portion of each Long-Term Incentive Award. The
Long-Term Incentive Award amount that may be earned by the
Executive will be set at sixty percent (60%) of the
Executive's Annual Base Salary at the beginning of the
performance period.
2.4(d) STOCK OPTIONS. As a material inducement to the
Executive to accept employment with the Company as its
President and Chief Operating Officer, the Board will grant to
the Executive as of the Effective Date, options to purchase
Fifty Thousand (50,000) shares of the Company's Common Stock
with an exercise price equal to the closing price of the
Company's Common Stock on the New York Stock Exchange on the
day prior to the Effective Date. The options shall have a term
of ten years from the date of grant and all such options shall
vest and become exercisable on January 28, 2006.
As an additional material inducement to the Executive to
accept employment with the Company, the Board will grant to
the Executive as of the Effective Date additional options to
purchase: (i) Twenty-Five Thousand (25,000) shares of the
Company's Common Stock with an exercise price equal to 105% of
the closing price of the Company's Common Stock on the New
York Stock Exchange on the day prior to the Effective Date,
and (ii) Twenty-Five Thousand (25,000) shares of the Company's
Common Stock with an exercise price equal to 110% of the
closing price of the Company's Common Stock on the New York
Stock Exchange on the day prior to the Effective Date. Each of
these additional options shall have a term of ten years from
the date of grant and all such options shall vest and become
exercisable on January 28, 2006.
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The options described in this Section 2.4(d) will be granted
outside the Company's existing stock-based compensation plan,
but the Company will use its best efforts to file, and have
declared effective, a registration statement covering the
issuance of the shares subject to these options as soon as
practicable after the date of grant.
2.4(e) RESTRICTED STOCK. As a material inducement to the
Executive to accept employment with the Company as its
President and Chief Operating Officer, the Board will grant to
the Executive as of the Effective Date an award of Twenty
Thousand (20,000) shares of the Company's Common Stock (the
"Restricted Shares"). Unless vested sooner upon the occurrence
of a Change in Control, four thousand (4,000) of the
Restricted Shares shall be scheduled to vest upon the final
determination as of the end of each fiscal year of the Company
starting with the 2005 fiscal year and ending with the 2009
fiscal year that net revenue increases at a cumulative rate of
at least fifteen percent (15%) on an annual basis from the
2004 fiscal year baseline net revenue from continuing
operations (i.e., $316 million) AND gross margin increases by
---- ---
at least 0.9% on an annual basis from the 2004 fiscal year
baseline gross margin from continuing operations (i.e.,
----
15.5%). To the extent that the Restricted Shares for a
particular fiscal year do not fully vest due to the failure to
achieve the performance levels set forth in the immediately
preceding sentence: (i) two-thirds (2/3) of the Restricted
Shares attributable to such fiscal year will vest if the
cumulative rate of increase in net revenue from the 2004
fiscal year baseline through the end of such fiscal year is at
least ten percent (10%) on an annual basis AND the increase in
---
gross margin from the 2004 fiscal year baseline through the
most recently completed fiscal year is at least 0.6% on an
annual basis, or (ii) one-third (1/3) of the Restricted Shares
attributable to such fiscal year will vest if the cumulative
rate of increase in net revenue from the 2004 fiscal year
baseline through the end of such fiscal year is at least seven
percent (7%) on an annual basis AND the cumulative increase in
---
gross margin from the 2004 fiscal year baseline through the
end of such fiscal year is at least 0.3% on an annual basis.
For purposes of this Section 2.4(e), there will be no prorated
vesting of Restricted Stock above the designated partial
vesting levels if actual performance for a fiscal year is
higher than the levels designated.
To the extent that all or a portion of the Restricted Shares
that were scheduled to vest in a prior fiscal year or years
did not vest due to the failure to meet the cumulative
performance levels for such fiscal year or years, all or the
designated portion of the those unvested Restricted Shares
applicable to prior fiscal years will vest in any subsequent
fiscal year if, and at the level that, the cumulative
performance levels for such subsequent fiscal year are
achieved. By way of illustration, assume that for the 2005
fiscal year, only 1/3 of the Restricted Shares attributable to
that year are vested on the basis of the cumulative
performance levels through fiscal 2005, and in the 2006 fiscal
year only 2/3 of the Restricted Shares attributable to that
year are vested on the basis of the cumulative performance
levels through fiscal 2006 and in the 2007 fiscal year all of
the Restricted Shares attributable to that year are vested on
the basis of the cumulative performance levels through fiscal
2007. In this case, 1/3 of the 4,000 Restricted Shares
attributable to the 2005 fiscal year, or 1,333 Restricted
Shares, would fully vest after the 2005 fiscal year. After the
2006 fiscal year, 2/3 of the 4,000 Restricted Shares
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attributable to the 2006 fiscal year, or 2,667 Restricted
Shares, PLUS another 1/3 of the Restricted Shares, or 1,333
Restricted Shares, attributable to the 2005 fiscal year that
remained unvested after the 2005 fiscal year, would fully
vest. After the 2007 fiscal year, all 4,000 Restricted Shares
attributable to the 2007 fiscal year PLUS the remaining 1/3 of
the original shares attributable to the 2005 and 2006 fiscal
years, 2,666 Restricted Shares in the aggregate, that had not
vested after the prior fiscal year or years, would fully vest.
The Restricted Shares described in this Section 2.4(e) will be
awarded outside the Company's existing stock-based
compensation plan, but the Company will use its best efforts
to file, and have declared effective, a registration statement
covering the issuance of the Restricted Shares as soon as
practicable after the date of the award.
2.4(f) SAVINGS, DEFERRED COMPENSATION AND RETIREMENT PLANS.
Throughout the Employment Period, the Executive shall be
entitled to participate in all savings, deferred compensation
and retirement plans generally available to other peer
executives of the Company, including the Company's 401(k) Plan
and the Supplemental Retirement Benefits Plan. For purposes of
the Supplemental Retirement Benefits Plan (the "Supplemental
Plan"), the Executive will participate at the maximum
percentage of forty percent (40%) of his final average
compensation for purposes of computing the Executive's
benefits thereunder.
2.4(g) WELFARE BENEFIT PLANS. Throughout the Employment Period
(and thereafter, subject to Sections 4.1(c) and 4.2(e) of this
Agreement), 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 peer
executives of the Company.
2.4(h) RELOCATION EXPENSES. As set forth in Section 2.3 of
this Agreement, the Executive's principal office shall be
located in the Company's divisional headquarters in
metropolitan Atlanta, Georgia. The Executive's current plans
are to purchase a condominium in the Atlanta, Georgia
metropolitan area and maintain his primary home in the St.
Louis, Missouri metropolitan area for a period of up to two
years after the Effective Date. The Company will pay the
Executive a relocation bonus equal to Fifty Thousand Dollars
($50,000.00), due and payable upon the Executive closing on
the purchase of a condominium for his personal use in the
Atlanta, Georgia metropolitan area. The Company will also pay
to the Executive an additional relocation bonus of Twenty-Five
Thousand Dollars ($25,000.00), due and payable upon the
Executive being accepted for membership and joining a golf or
country club in the Atlanta, Georgia metropolitan area. The
Company will also reimburse the Executive for dues related to
such club membership not to exceed Three Hundred Twenty-Five
Dollars ($325.00) per month. The Executive shall also be
reimbursed for his actual out-of-pocket expenses
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associated with his move from the St. Louis, Missouri
metropolitan area to the Atlanta, Georgia metropolitan area,
subject to submission to the Company of proper documentation
to reasonably support the reimbursement. For a period of two
years after the Effective Date, the Executive will also be
reimbursed for the full cost of his commercial airfare between
Atlanta, Georgia and St. Louis, Missouri that is not otherwise
reimbursable under the Company's business expense
reimbursement policies, practices and procedures as set forth
in Section 2.4(i). The Executive will also be reimbursed for
the full cost of his spouse's commercial airfare between
Atlanta, Georgia and St. Louis, Missouri for up to ten (10)
round trips per year during the two-year period after the
Effective Date. The Executive will also be provided with a
leased vehicle mutually acceptable to the Executive and the
Company for his business and/or non-business uses while in the
Atlanta, Georgia metropolitan area, with such lease payments
and other leasing expenses (but not operating or maintenance
expenses) borne by the Company for the period of two years
after the Effective Date.
2.4(i) BUSINESS EXPENSES. Throughout the Employment Period,
the Executive shall be entitled to receive prompt
reimbursement for all reasonable business expenses incurred by
the Executive in the conduct of the business of the Company
(including travel and entertainment expenses) in accordance
with the policies, practices and procedures generally
applicable within the Company.
2.4(j) OFFICE AND SUPPORT STAFF. Throughout the Employment
Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments,
and to secretarial and other assistance commensurate with his
office, duties and responsibilities with the Company.
2.4(k) VACATION. For the balance of the 2005 fiscal year after
the Effective Date, the Executive shall be entitled to two (2)
weeks of paid vacation. Beginning in the 2006 fiscal year and
thereafter throughout the Employment Period, the Executive
shall be entitled to paid vacation equal to four (4) weeks per
year.
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 8.2 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 under this Agreement on a full-time basis
for a period of one hundred eighty (180)
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consecutive regular 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: (a) 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
Board or the Chief Executive Officer, which specifically identifies the
manner in which the Executive has not substantially performed his duties,
(b) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust, or (c) the
Executive's material breach of any provision of this Agreement. For purposes
of this Section 3.3, 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
on the part of the Executive and without the Executive's 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 (x) he receives a Notice of
Termination from the Company, (y) he is given the opportunity, with counsel,
to be heard before the Board or the Compensation and Organization Committee,
and (z) the Board or the Compensation and Organization Committee, as the
case may be, finds, in its good faith opinion, the Executive was guilty of
the conduct set forth in the Notice of Termination.
3.4 GOOD REASON. The Executive may terminate his employment with
the Company during the Employment Period 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 diminution in such position,
authority, duties or responsibilities, excluding for this
purpose any action (i) not taken in bad faith by the Company
and (ii) which the Company remedies 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,
provided that the Company may amend, modify or replace any
such plan or plans as long as the Executive is entitled to
benefits under the amended, modified or replaced plan or plans
that are substantially similar to those of the plan or plans
so amended, modified or replaced, (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, or deprive the Executive of any benefits enjoyed by the
Executive as described in Section 2.4(i) and (j), or (iii) the
failure by the Company to
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provide the Executive with paid vacation to which the
Executive is entitled as described in Section 2.4(k);
3.4(c) the Company's requiring the Executive to be based at
any office or location other than that described in Section
2.3;
3.4(d) a material breach by the Company of any provision of
this Agreement;
3.4(e) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted
by this Agreement; or
3.4(f) in connection with a Change in Control, the failure of
a successor of the Company to expressly assume and agree to
perform this Agreement pursuant to the provisions of Section
7.2 of this Agreement prior to the Change in Control Date;
provided, however, that a termination of employment by the
Executive: (A) subsequent to an express assumption and
agreement to perform this Agreement by such successor on or
after the Change in Control Date, or (B) subsequent to a date
that is two years after a Change in Control Date, shall not be
deemed to be for "Good Reason" under this subsection.
For purposes of this Section, any good faith determination of "Good
Reason" made by the Executive shall be conclusive unless and until such
determination is overturned by a court of competent jurisdiction.
3.5 VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may
voluntarily terminate his employment with the Company for any reason or for
no reason at any time during the Employment Period.
3.6 TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company may
terminate the Executive's employment with the Company for any reason or for
no reason, without citing Cause, at any time during the Employment Period,
subject to the provisions of Section 4 of this Agreement.
3.7 NOTICE OF TERMINATION. Any termination by the Company or by the
Executive shall be communicated by Notice of Termination given in accordance
with Section 8.2 to the other party. 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 3.8 hereof) is other than the date of
receipt of such notice, specifies the Date of Termination. 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 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.
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3.8 DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause or any other
reason, the date of receipt by the Executive 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 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
Executive for Good Reason, the date specified in the Notice of Termination
which date shall not be more than thirty (30) or less than fifteen (15) days
after the receipt of such notice; or (iv) if the Executive's employment is
terminated by the Executive voluntarily (either prior to or after a Change
in Control Date), the date that is specified in the Notice of Termination.
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 OR FOR GOOD REASON NOT IN CONNECTION
WITH A CHANGE IN CONTROL. If, prior to a Change in Control Date 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 Change in Control Date or (b) the execution of a definitive
agreement or contract that eventually results in a Change in Control, which
shall result in the payment of severance benefits set forth in Section 4.2
of this Agreement), (i) the Company shall terminate the Executive's
employment without Cause, or (ii) the Executive shall terminate his
employment for Good Reason, the Executive shall be entitled to the payment
of the benefits provided below:
4.1(a) ACCRUED OBLIGATIONS. Within thirty (30) days after the
Date of Termination, the Company shall pay to the Executive
the sum of (i) the Executive's Annual Base Salary through the
Date of Termination to the extent not previously paid, (ii)
the accrued benefit payable to the Executive under any
compensation plan, program or arrangement in which the
Executive is a participant subject to the computation of
benefits provisions of such plan, program or arrangement, and
(iii) any accrued vacation pay; in each case to the extent not
previously paid (the "Accrued Obligations").
4.1(b) ANNUAL BASE SALARY CONTINUATION. For a period of twelve
(12) months beginning in the month immediately subsequent to
the month in which the Date of Termination occurs, the Company
shall pay to the Executive, on a bi-weekly basis consistent
with its then-existing payroll practices, an amount equal to
one/twenty-sixth (1/26th) of the Executive's then-current
Annual Base Salary. The Company at any time may elect to pay
the balance of such payments then remaining in a lump sum,
without discount.
4.1(c) CONTINUATION OF MEDICAL AND HEALTH BENEFITS. The
Company shall, during the period specified below in this
Section 4.1(c), continue to make available to the
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Executive and to other eligible members of his immediate
family, medical and health benefits equivalent to those to
which the Executive and the eligible members of his immediate
family would have been entitled had the Executive's employment
with the Company continued. Such benefits will be made
available to the Executive for a period not to exceed twelve
(12) months following the Date of Termination, or until such
time as reasonably comparable benefits become available to the
Executive and the eligible members of his immediate family
under another employer-provided plan, whichever occurs
earlier. Such benefits, for so long as they are made available
hereunder, shall be made available to the Executive at a cost
to the Executive that is not greater than his cost would have
been had his employment with the Company continued.
4.1(d) ACCELERATION OF VESTING OF CERTAIN STOCK OPTIONS.
Notwithstanding anything to the contrary contained in this
Agreement, in any stock-based compensation plan maintained by
the Company under which stock options have been granted to the
Executive, or in any stock option agreement entered into
between the Company and the Executive pursuant to such plan or
otherwise, any stock options held by the Executive that have
not expired as of the Date of Termination that are scheduled
to vest in accordance with their respective terms within the
twelve-month period following the Date of Termination shall be
deemed to have vested immediately prior to the Date of
Termination. Any such option, and each option that vested
prior to the Date of Termination but remain unexercised on the
Date of Termination, shall remain exercisable in accordance
with the terms of the stock-based compensation plan and/or the
stock option agreement under which such stock option was
initially awarded to the Executive.
4.2 BENEFITS UPON TERMINATION WITHOUT CAUSE OR FOR GOOD REASON IN
CONNECTION WITH A CHANGE IN CONTROL. If (a) a Change in Control occurs
during the Employment Period and within one (1) years after the Change in
Control 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 Change in Control Date or (ii) the
execution of a definitive agreement or contract that eventually results in a
Change in Control, 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 Change in Control 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.
4.2(b) SEVERANCE AMOUNT. Subject to Section 5.1(a) of this
Agreement, the Company shall pay to the Executive within
thirty (30) days after the Entitlement Date as severance pay
in a lump sum, in cash, an amount equal to one and one-half
(1 1/2) times an amount equal to the Executive's then-current
Annual Base Salary.
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4.2(c) PRO-RATED ANNUAL BONUS. Subject to Section 5.1(a) of
this Agreement, the Company shall pay to the Executive within
thirty (30) days after the Entitlement Date in a lump-sum
payment, in cash, an amount equal to the Executive's maximum
Annual Bonus for the fiscal year in which the Entitlement Date
occurs, prorated with the numerator being the number of months
in the fiscal year to the Entitlement Date (including the
month in which the Entitlement Date occurs as a full month)
and the denominator being 12. This payment will be in lieu of
any right of the Executive to receive an Annual Bonus for the
fiscal year in which the Entitlement Date occurs.
4.2(d) STOCK OPTIONS AND RESTRICTED STOCK. To the extent not
otherwise provided for under the terms of the Company's
stock-based compensation plans or the Executive's award or
grant agreements, all stock options and restricted stock held
by the Executive that have not expired in accordance with
their respective terms shall fully vest as of the Entitlement
Date.
4.2(e) MEDICAL AND HEALTH BENEFIT CONTINUATION. The Executive
will be entitled to the continuation for two (2) years after
the Entitlement Date of medical and health benefits to the
Executive and/or 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 2.4(g) if the Executive's employment with the Company
had not been terminated; provided, however, that if the
Executive becomes reemployed with another employer and is
eligible to receive medical or health benefits under another
employer-provided plan, the medical and health benefits
described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.
4.2(f) SUPPLEMENTAL RETIREMENT BENEFITS. The Company shall
credit the Executive as of the Entitlement Date with an
additional five (5) years of service to be aggregated with the
Executive's actual years of service under the Supplemental
Plan for purposes of the calculation of the Executive's
entitlement to benefits under such plan.
4.3 BENEFITS UPON TERMINATION BY THE EXECUTIVE WITHOUT GOOD CAUSE
IN CONNECTION WITH A CHANGE IN CONTROL. If a Change in Control occurs and
the Executive determines to terminate his employment with the Company within
six months after the Change in Control Date without a showing of Good
Reason, then the Executive shall become entitled to the payment of benefits
as provided below:
4.3(a) ACCRUED OBLIGATIONS. Within thirty (30) days after the
Date of Termination, the Company shall pay to the Executive
the Accrued Obligations.
4.3(b) SEVERANCE AMOUNT. 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
one-half (1/2) times the Executive's then-current Annual Base
Salary.
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4.3(c) STOCK OPTIONS AND RESTRICTED STOCK. To the extent not
otherwise provided for under the terms of the Company's
stock-based compensation plans or the Executive's award or
grant agreements, all stock options and restricted stock held
by the Executive that have not expired in accordance with
their respective terms shall fully vest as of the Date of
Termination.
4.3(d) SUPPLEMENTAL RETIREMENT BENEFITS. The Company shall
credit the Executive as of the Date of Termination with an
additional five (5) years of service to be aggregated with the
Executive's actual years of service under the Supplemental
Plan for purposes of the calculation of the Executive's
entitlement to benefits under such plan.
4.4 DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period (either prior or
subsequent to the Change in Control Date), this Agreement shall terminate
without further obligations to the Executive's legal representatives under
this Agreement, other than for (i) payment of Accrued Obligations (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 such other benefits required to be
paid or provided by the Company to the Executive or the Executive's family
under any plan, program, policy, practice, contract or agreement of the
Company generally provided to other peer executives and their families
("Other Benefits"), including all such benefits payable in the event of
death.
4.5 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 Change in Control), this Agreement shall terminate
without further obligations to the Executive, other than for (i) payment of
Accrued Obligations (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 including all such benefits payable
in the event of Disability.
4.6 TERMINATION FOR ANY OTHER REASON. If the Executive's employment
shall be terminated for Cause or by the Executive voluntarily (either prior
to or subsequent to the six-month period after the Change in Control Date as
set forth in Section 4.3), this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the
Executive the Accrued Obligations. In such case, all of the Executive's
Accrued Obligations shall be paid to the Executive in a lump sum in cash
within thirty (30) days of the Date of Termination.
4.7 ENTIRE AGREEMENT; BENEFITS UNDER OTHER PLANS SUPERSEDED. This
Agreement is the entire agreement of the parties on the subject matter
contained herein. The benefits payable pursuant to this Agreement are in
lieu of and in substitution for any termination benefits payable by the
Company in conjunction with any other plan, program, policy, practice,
contract or agreement that the Company may have had either in the past,
currently or in the future.
4.8 FULL SETTLEMENT. The parties agree that the Company's
obligation to make the payments provided for in this Agreement and otherwise
to perform its obligations hereunder are intended to be in full settlement
of all claims that the Executive may have against the Company with respect
to the termination of the Executive's employment with the Company and the
Executive may be required to
15
execute and deliver an agreement to this effect prior to receipt of any
payments under this Agreement. The payments to be made by the Company or any
other obligation that the Company is required to perform pursuant to this
Agreement 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 Sections 4.1(c) and 4.2(e), such
amounts shall not be reduced whether or not the Executive obtains other
employment. To the extent the Executive prevails in any contest with respect
to 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), the Company agrees to pay promptly, to the full
extent permitted by law, all legal fees and expenses which the Executive may
reasonably incur as a result of any such contest, plus in each case interest
on any delayed payment at the applicable Federal rate provided for in Code
Section 7872(f)(2)(A).
4.9 RESOLUTION OF DISPUTES. If there shall be any dispute between
the Company and the Executive (i) as to whether any termination of the
Executive's employment was for Cause, or (ii) as to whether any termination
of the Executive's employment for Good Reason was made in good faith, then,
unless and until there is a final, non-appealable 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 was
without Cause or for Good Reason, as the case may be; provided, however,
that the Company shall not be required to pay any disputed amounts pursuant
to this Section 4.9 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.
SECTION 5: RETENTION BENEFITS AFTER CHANGE IN CONTROL.
5.1 ENTITLEMENT TO RETENTION BENEFITS. In the event that after a
Change in Control, the Executive is retained in the employment of the
Company without the occurrence of Good Reason and the Executive does not
exercise his right to terminate after a Change in Control without Good
Reason under Section 4.3, the Executive shall receive the payment of the
following benefits as a retention bonus:
5.1(a) RETENTION BONUS. On the date that is six (6) months
after the Change in Control Date, if the Executive remains
employed by the Company on such date, the Company shall pay to
the Executive the first installment of a retention bonus in a
lump sum, in cash, amount equal to three-quarters (3/4) of the
Executive's then-current Annual Base Salary plus one-half
(1/2) of the Executive's maximum Annual Bonus for the fiscal
year in which the Change in Control Date occurs, with the
Annual Bonus amount to be prorated with the numerator being
the number of months in the fiscal year to the Change in
Control Date (including the month in which the Change in
Control occurs as a full month) and the denominator being 12.
On the date that is twelve (12) months after the Change in
Control Date, if the Executive remains employed by the Company
on such
16
date, the Company shall pay to the Executive the second
installment of the retention bonus in a lump sum, in cash,
equal to the first installment of the retention bonus as set
forth in this Section 5.1(a). Any amounts paid to Executive
pursuant to this Section 5.1(a) will reduce on a
dollar-for-dollar basis the payments that would be made to the
Executive, if any, pursuant to Sections 4.2(b) and 4.2(c) of
this Agreement.
5.1(b) SUPPLEMENTAL RETIREMENT BENEFITS. If the Executive
remains employed as of the date that is twelve (12) months
after the Change in Control Date, the Company shall credit the
Executive as of the Date of Termination with an additional
five (5) years of service to be aggregated with the
Executive's actual years of service under the Supplemental
Plan for purposes of the calculation of the Executive's
entitlement to benefits under such plan.
SECTION 6: NON-COMPETITION.
6.1 NON-COMPETE AGREEMENT.
6.1(a) During the period beginning on the Date of Termination
and ending one (1) year thereafter, the Executive shall not,
without prior written approval of the Board, become a partner,
officer, director, stockholder, advisor, employee, consultant,
agent, salesman or otherwise of any business enterprise in
substantial direct competition (as defined in Section 6.1(b))
with the Company or any of its subsidiaries in the United
States or in any other country in which the Company does
business on the Date of Termination; provided that, if the
Executive's employment is terminated for Good Reason, then the
Executive will not be subject to the restrictions of this
Section 6.1(a). This restriction will not limit the
Executive's right to invest in five percent (5%) or less of
the outstanding capital stock or other equity securities of
any corporation, the stock or securities of which are publicly
traded on a national stock exchange.
6.1(b) For purposes of Section 6.1, a business enterprise with
which the Executive becomes associated shall be considered in
substantial direct competition, if such entity competes with
the Company or its subsidiaries in any business in which the
Company or any of its subsidiaries is engaged and is within
the Company's or the subsidiary's market area as of the Date
of Termination.
6.1(c) During the period beginning on the Date of Termination
and ending one (1) year thereafter, the Executive shall not
directly or indirectly solicit the employment of, recruit,
employ, hire, cause to be employed or hired, entice away or
establish a business relationship with, (i) any then current
employee of the Company or any of its subsidiaries or (ii) any
person who was employed by the Company or any of its
subsidiaries during the six (6) months immediately prior to
the date that the Executive first solicits such person.
6.2 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 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.
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SECTION 7: SUCCESSORS.
7.1 SUCCESSORS OF THE 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.
7.2 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 may entitle the Executive to terminate this
Agreement for Good Reason pursuant to Section 3.4(f). 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 8: MISCELLANEOUS.
8.1 OTHER AGREEMENTS. The Board may, from time to time in the
future, provide other incentive programs and bonus arrangements to the
Executive with respect to the occurrence of a Change in Control that will be
in addition to the benefits required to be paid in the designated
circumstances in connection with the occurrence of a Change in Control. Such
additional incentive programs and/or bonus arrangements will affect or
abrogate the benefits to be paid under this Agreement only in the manner and
to the extent explicitly agreed to by the Executive in any such subsequent
program or arrangement.
8.2 NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this 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 shall be
directed 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:
Xxxxx X. Xxx Xxxxx
c/o Xxxxxxxx Textile Services, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
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Notice to Company:
Xxxxxxxx Corporation
000 Xxxxx Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Secretary
8.3 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.
8.4 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.
8.5 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.
"Executive"
/s/ Xxxxx X. Xxx Xxxxx
---------------------------------------
Xxxxx X. Xxx Xxxxx
"Company"
XXXXXXXX CORPORATION
By: /s/ Xxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxx X. Xxxx
---------------------------------
Title: Vice President
--------------------------------
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