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1 EXHIBIT 10(c)
AMENDED AND RESTATED
SEVERANCE AGREEMENT
AGREEMENT made as of December 15, 2000, between Xxxxx-Xxxxx, Inc., a
Delaware corporation (the "Company"), and Xxxxx Xxxxxxxx (the "Executive").
WHEREAS, the Executive is currently serving as the Company's Chairman
and Chief Executive Officer and a member of the Board of Directors (the
"Board");
WHEREAS, the Executive possesses an intimate knowledge of the business
and affairs of the Company, its policies, methods, personnel and plans for the
future and has acquired contacts of considerable value to the Company; and
WHEREAS, the Board recognizes that the Executive's contribution to the
growth and success of the Company has been substantial and wishes to offer an
inducement to the Executive to remain in the employ of the Company; and
WHEREAS, the Company desires to amend and restate Executive's existing
Severance Agreement dated as of July 23, 1993 ("Prior Agreement"), to read as
hereinafter provided, in order to recognize Executive's increased
responsibilities with the Company and to reflect currently competitive
compensation practices for individuals of Executive's experience and
responsibility;
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, this Agreement amends
and restates the Prior Agreement, and sets forth benefits which the Company will
pay to Executive in the event of termination of Executive's employment during
the Term of this Agreement:
1. Term. The term of this Agreement shall be effective upon its
execution and continue until the earliest of (i) July 16, 2007, provided, that
if the Executive's employment with the Company is terminated (other than for
reasons set forth in Section 3(a)(1)(i), (ii) or (iii)) or a Change in Control
occurs, then this Agreement will continue past such date until the expiration of
the second anniversary of the Termination Date or Change in Control,
respectively, (ii) the Executive's death or (iii) the Executive's earlier
voluntary retirement (except as provided in Section 3(a)(2)) (the "Term").
2. Definitions.
(a) Cause. For "Cause" means that the Executive shall have
committed:
(i) an intentional material act of fraud or
embezzlement in connection with his duties or in the course of
his employment with the Company;
(ii) intentional wrongful material damage to property
of the Company; or
(iii) intentional wrongful disclosure of material
secret processes or material confidential information of the
Company.
For the purposes of this Agreement, no act, or failure to act,
on the part of the Executive will be deemed "intentional"
unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that his action or
omission was in the best interest of the Company.
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2 EXHIBIT 10(c)
(b) Change in Control. A "Change in Control" of the Company
shall have occurred if any of the following events shall occur:
(i) The Company is merged, consolidated or
reorganized into or with another corporation or other legal
person and as a result of such merger, consolidation or
reorganization less than 60% of the combined voting power of
the then outstanding securities of the remaining corporation
or legal person or its ultimate parent immediately after such
transaction is received in respect of or in exchange for
voting securities of the Company pursuant to such transaction;
(ii) The Company sells all or substantially all of
its assets to any other corporation or other legal person and
as a result of such sale less than 60% of the combined voting
power of the then outstanding securities of such corporation
or legal person or its ultimate parent immediately after such
transaction is received in respect of or in exchange for
voting securities of the Company pursuant to such sale;
(iii) Any person (including any "person" as such term
is used in Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act), has become the beneficial owner (as the term
"beneficial owner, is defined under Rule 13d-3 or any
successor rule or regulation promulgated under the Exchange
Act) of securities which when added to any securities already
owned by such person would represent in the aggregate 30% or
more of the combined voting power of the then outstanding
securities of the Company; or
(iv) Such other events that cause a Change in Control
of the Company as determined by the Board in its sole
discretion.
(c) Code. The "Code" shall mean the Internal Revenue Code of
1986, as amended.
(d) Disability. "Disability" shall have the meaning given to
disability in the Company's disability insurance plan.
(e) Severance Compensation. The "Severance Compensation" shall
be a lump sum cash amount equal to 200% of the sum of (A) the annual
base salary of the Executive in effect immediately prior to the
Termination Date, (or in the case of payment under Section 3(b) below,
immediately prior to the Change in Control) plus (B) the average of the
bonus or incentive compensation of the Executive received from the
Company for the two fiscal years preceding the Termination Date (or, in
the case of payment Section 3(b) below, preceding the Change in
Control).
(f) Termination Date. The "Termination Date" shall be the date
upon which the Executive or the Company effectively terminates the
employment of the Executive.
3. Rights of Executive Upon Termination or Change in Control.
(a) The Company shall provide the Executive, within ten days
following the Termination Date, or if later, within ten days after the
execution of the release described in Section 10 below, Severance
Compensation in lieu of compensation to the Executive for periods
subsequent to the Termination Date, if any of the following events
shall occur:
(1) the Company terminates the Executive's employment
during the Term of this Agreement other than for any of the
following reasons:
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3 EXHIBIT 10(c)
(i) the Executive dies;
(ii) the Executive suffers a Disability and
is unable to work, with or without reasonable
accommodation, for a period of 180 consecutive days;
or
(iii) for Cause.
(2) the Executive terminates his employment after the
occurrence of at least one of the following events:
(i) Without the mutual agreement of the
Company and the Executive (a) a change in the nature
or scope of the authorities, functions or duties
attached to the position with the Company that the
Executive had immediately prior to such change; (b) a
reduction in the Executive's salary, bonus or
incentive compensation; (c) a significant reduction
in scope or value of other monetary or nonmonetary
benefits (other than benefits pursuant to a broad
based employee benefit plan) to which the Executive
was entitled from the Company; any of which is not
remedied within ten calendar days after receipt by
the Company of written notice from the Executive of
such change, reduction, alteration or termination, as
the case may be;
(ii) A determination by the Executive made
in good faith that as a result of a change in policy
of the Company made by the Board, he has been
rendered substantially unable to carry out, or has
been substantially hindered in the performance of,
the authorities, functions or duties attached to his
position immediately prior to such change, which
situation is not remedied within ten calendar days
after receipt by the Company of written notice from
the Executive of such determination;
(iii) The Company shall require the
Executive to relocate his principal location of work
from the location thereof at the time this Agreement
was entered or to travel away from his office in the
course of discharging his responsibilities or duties
significantly more than required of him at the time
this Agreement was entered without, in either case,
the Executive's prior written consent; or
(iv) The Company commits any material
breach of this Agreement.
(b) The Company shall provide the Executive, within ten days
following a Change in Control, or if later, within ten days after
execution of the release described in Section 10 below, Severance
Compensation, provided that Executive has remained employed by the
Company immediately prior to the Change in Control, and grounds for
termination of the Executive for Cause did not exist at such time.
Payment under this paragraph 3(b) shall be in lieu of payment under
paragraph 3(a) above.
(c) Severance Compensation will not be subject to offset or
mitigation.
(d) Upon a Change in Control, or in the event the Company
becomes obligated to provide Severance Compensation pursuant to Section
3(a), all stock options not yet exercised will become vested and fully
exercisable by the Executive. Such options shall remain exercisable for
their original term, notwithstanding the Executive's termination of
employment; provided, however, that the Company has the right to
require the Executive to exercise such options within 90 days after
receipt of written notice to the Executive. If the Executive fails to
exercise his options within such 90-day period the Company has the
right to cancel the options.
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4 EXHIBIT 10(c)
(e) If the Executive's employment is terminated (except for
reasons set forth in Section 3(a)(1)(i), (ii) or (iii)), the Company
shall pay to the Executive, in addition to the Severance Compensation
payable hereunder, a lump sum cash payment in the amount necessary to
make continuation coverage (COBRA) payments under the Company's group
health insurance plan for a period of 18 months following the
Termination Date.
(f) The Company on behalf of the Executive will continue to
pay all premiums for split dollar life insurance and individual term
insurance for a period of two years.
(g) If the amounts due to the Executive in connection with a
Change of Control under this and/or other agreements, plans or
arrangements would result in an "excess parachute payment" within the
meaning of Section 280G of the Code, and the total amounts due to the
Executive would have to be reduced by more than ten percent (10%) to
avoid such an "excess parachute payment," then the Company shall pay to
Executive an additional amount in cash (a "Gross-Up Payment") equal to
the amount necessary to cause the amount of the aggregate after-tax
compensation and benefits received by the Executive hereunder (after
payment of the excise tax under Section 4999 of the Code with respect
to any excess parachute payment, and any state and federal income and
FICA taxes with respect to the Gross-Up Payment) to be equal to the
aggregate after-tax compensation and benefits such Participant would
have received if Sections 280G and 4999 of the Code had not been
enacted. A nationally recognized public accounting firm selected by the
Company shall determine the amount of the Gross-Up Payment at the
Company's expense. Notwithstanding the foregoing, no Gross-Up Payment
shall be made if, in the opinion of tax counsel selected by the
Company, no excess parachute payments would occur if the total amounts
due to the executive in connection with a Change of Control were
reduced by ten percent (10%) or less; in such event, total benefits
under this Agreement shall be reduced by up to ten percent (10%) in
value in the following order: (i) cash amounts payable as Severance
Compensation under Section 3(a) or 3(b) above shall be reduced first;
(ii) if necessary, amounts for the maintenance of continuation coverage
under Section 3(e) above shall be reduced next; and (iii) if necessary,
the accelerated vesting of options as provided in Section 3(d) above
shall be reduced.
4. Successors; Binding Agreement. This Agreement will be binding upon
the Company, its successors and assigns, and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
5. 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 received after being mailed by
United States registered mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx Xxxxxxxx
c/o Xxxxx-Xxxxx, Inc.
000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
If to the Company:
Xxxxx-Xxxxx, Inc.
000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
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or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
6. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the substantive laws of the State of Delaware, without regard to principles
of conflicts of law. This Agreement amends in full and replaces all prior
agreements, both written and oral, between the Company and the Executive with
respect to the subject matter of this Agreement.
7. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
8. Employment Rights. Nothing expressed or implied in this Agreement
shall create any right or duty on the part of the Company or the Executive to
have the Executive remain in the employment of the Company. The Executive may,
at any time during the Term, upon the giving of 30 days prior written notice,
terminate his employment. If this Agreement or the employment of the Executive
is terminated under circumstances in which the Executive is not entitled to any
Severance Compensation, neither the Executive nor the Company will have any
further obligation or liability hereunder.
9. Withholding of Taxes. The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or government regulation or ruling; provided,
however, that no withholding pursuant to Section 4999 of the Code shall be made
unless, in the opinion of tax counsel selected by the Company and acceptable to
the Executive, such withholding relates to payments which result in the
imposition of an excise tax pursuant to Section 4999 of the Code.
10. Release. In consideration for the benefits and payments provided
under Sections 3(a), 3(b) and 3(e) of this Agreement, unless such requirement is
waived by the Board in its sole discretion, the Executive agrees to execute a
release acceptable to the Company releasing the Company, its subsidiaries,
shareholders, partners, officers, directors, employees and agents from any and
all claims and from any and all causes of action of any kind, including but not
limited to all claims or causes of action arising out of the Executive's
employment with the Company or the termination of such employment. The Executive
shall execute such release prior to or as soon as practicable after his
Termination Date or a Change in Control, as applicable, unless the Board in its
sole discretion waives such requirement.
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6 EXHIBIT 10(c)
IN WITNESS WHEREOF, the parties have executed this Agreement effective
on the date and year first above written.
XXXXX-XXXXX, INC.
By: /s/ XXXXXX X. XXXXX
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Title: Senior Vice President, Legal
EXECUTIVE:
/s/ XXXXX XXXXXXXX
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Xxxxx Xxxxxxxx
