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Exhibit (d)(5)
XXXXXXXXX, XxXXXX
March 9, 2001
ACAS Acquisitions (Weston), Inc.
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, XX 00000
American Capital Strategies, Ltd.
0 Xxxxxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxx, XX 00000
Xxx X. Xxxxxx, Inc.
0000 Xxxxxx Xxx
Xxxx Xxxxxxx, XX00000
Gentlemen:
1. As used in this letter, the terms "Effective Time", "Merger",
"Closing", "Surviving Corporation" and "Termination Date" shall have the same
meaning as described in the Agreement and Plan of Merger (the "Merger
Agreement") dated March 9, 2001, among a wholly owned subsidiary of American
Capital Strategies, Ltd. ("ACAS") currently named ACAS Acquisitions (Weston),
Inc. ("Holding Company"), Weston Acquisition Corporation ("Weston Acquisition"),
and Xxx X. Xxxxxx, Inc. ("Weston").
2. With this letter agreement, ACAS, Holding Company and the
undersigned individual hereby agree that at the Effective Time of the Merger:
(A) Holding Company shall provide the undersigned individual with
Common Stock of Holding Company and Options for Common Stock of Holding Company,
as set forth on Exhibit 1 to this letter and with an Employment Agreement with
Surviving Corporation in the form attached as Exhibit 2 to this letter (such
Stock, Stock Options and Employment Agreement being referred to below as the
"Replacement Employment Compensation Package"); and
(B) The undersigned individual hereby accepts, effective at the
Effective Time, the Replacement Employment Compensation Package in exchange for
all of his respective rights under the Option Agreements, Stock Appreciation
Rights and/or Employment Agreements to which he and Weston are parties, all as
set forth on Exhibit A to the Financing Term Sheet (the "Term Sheet") dated as
of March 7, 2001 issued by American Capital to Holding Company
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Management Letter
March 9, 2001
Page 2
(the "Existing Employment Compensation Package"), and upon such
acceptance of the Replacement Employment Compensation Package, all rights of the
undersigned individual and obligations of the Surviving Corporation under the
Existing Employment Compensation Package shall cease, all as contemplated by
Section 3.3(c) of the Merger Agreement.
3. The undersigned individual and Xxxxxx agree that before the
Effective Time:
(A) none of the options under any Option Agreement included in
the Existing Employment Compensation Package will be exercisable and the
undersigned individual will not seek to exercise any of those options;
(B) no Stock Appreciation Right included in the Existing
Compensation Package will vest or be payable and the undersigned individual
shall have no right to receive any payment under any Stock Appreciation Right;
and
(C) the foregoing provisions of paragraph 3(A) and (B) of this
letter agreement shall be deemed to amend the provisions of each Option
Agreement and Stock Appreciation Right that is included in the Existing
Compensation Package.
4. The undersigned individual and/or an Individual Retirement
Account in his name will purchase $250,000 of Series A Preferred Stock and
Management Associated Common Stock, as part of the purchase of shares by
Management as described in Section V of the Term Sheet. This $250,000 purchase
shall not be made with the proceeds of any loan from the Surviving Company as
described in Exhibit E to the Term Sheet.
5. If the Board of Directors of Xxxxxx does not approve the
Merger Agreement by March 30, 2001, or if the Merger Agreement is terminated
without Closing of the Merger, all provisions of this letter agreement shall be
null and void for all purposes, and each Option Agreement and Stock Appreciation
Right included in the Existing Employment Compensation Package will be
enforceable in accordance with its terms as those terms existed before the date
of this letter agreement.
[Intentionally left blank]
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Management Letter
March 9, 2001
Page 3
6. This letter agreement may be executed in counterpart copies.
The parties hereto acknowledge that Weston Acquisition shall be permitted to
rely upon, and is an intended beneficiary of, the commitments and agreements
referenced herein.
Very truly yours,
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------------------
Name
AGREED AND ACCEPTED as of this 9th day of March, 2001
ACAS ACQUISITIONS (WESTON), INC.
By: /s/ Xxxxx Xxxxxxxxx Xxxxxxxxxx
___________________________________
Xxxxx Xxxxxxxxx Xxxxxxxxxx
Executive Vice President
AMERICAN CAPITAL STRATEGIES, LTD.
By: /s/ Xxxx Xxxxxxxxxx
___________________________________
Xxxx Xxxxxxxxxx
President and COO
XXX X. XXXXXX, INC.
By: /s/ Xxxxxxxxx X. Xxxxxx
______________________________
Xxxxxxxxx X. Xxxxxx
Chairman of the Board
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Exhibit 1:
Key Management and Senior Vice-President Replacement Compensation Package -
Common Stock and Common Stock Options - Xxxxxxx X. Xxxxxxxxx
---------------------------- ------------------- ---------------------- -------------------
NAME NUMBER OF NUMBER OF NUMBER OF TIME-
COMMON SHARES PER PERFORMANCE VESTED OPTION
PER SECTION VI.A. OPTION SHARES PER SHARES PER SECTION
OF TERM SHEET SECTION VI.B.1 OF VI.B.2 OF TERM
TERM SHEET SHEET
---------------------------- ------------------- ---------------------- -------------------
XXXXXXX X. XXXXXXXXX 339,858 60,000 100,738
---------------------------- ------------------- ---------------------- -------------------
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Exhibit 2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this "Agreement") is
dated as of ________, 2001 (the "Effective Date") by and between Xxx X. Xxxxxx,
Inc., a Pennsylvania corporation ("Company"), and Xxxxxxx X. Xxxxxxxxx (the
"Executive").
WHEREAS, Executive and Company entered in to an employment agreement
dated as of July 14, 1997, which was amended on May 19, 1998 and on March 20,
2000 (as amended, the "Existing Agreement"); and
WHEREAS, Executive is presently employed by Company as its Chief
Executive Officer;
WHEREAS, the parties desire to amend and restate in this Agreement the
terms and conditions of the Executive's employment by the Company as its Chief
Executive Officer; and
THEREFORE, in consideration of the mutual obligations contained in this
Agreement and the mutual benefits to be derived from those obligations, and
intending to be legally bound by this Agreement, the Executive and the Company
agree to amend and restate the Existing Agreement in its entirety as follows:
SECTION 1. CAPACITY AND DUTIES
1.1. EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT. Company hereby
employs Executive and Executive hereby accepts employment by the
Company, as Chairman and Chief Executive Officer upon the terms and
conditions set forth below in this Agreement.
1.2. CAPACITY AND DUTIES.
(a) Executive shall be employed by Company as its Chairman and
Chief Executive Officer, subject to the supervision of the Board of Directors
(the "Board"), and shall perform such duties and shall have such authority as
set forth in the Company's By-laws and as may from time to time be specified by
the Board. Executive shall report directly to the Company's Board and shall
perform his duties for Company principally from Company's office located in West
Chester, Pennsylvania, except for periodic travel that may be necessary or
appropriate in connection with the performance of Executive's duties under this
Agreement. Executive's responsibilities, duties and authority, including
Executive's rank, level, responsibility and scope as Chairman and Chief
Executive Officer, may be changed only by action of the Board of Directors.
(b) Executive shall devote his full working time, energy, skill
and best efforts to the performance of his duties under this Agreement, in a
manner which will faithfully and
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diligently further the business and interests of the Company and its affiliates
(as defined below), and shall not be employed by or participate or engage in or
be a part of the management or operation of any business enterprise other than
the Company and its affiliates, without the prior written consent of the Board,
which consent may be granted or withheld in the sole discretion of the Board.
For purposes of this Agreement, "affiliate" means any entity in which at least
50% of the voting power is controlled by the Company. Nothing in this paragraph
shall preclude Executive from serving as the Company's appointed member of the
board of directors of companies in which Company has an interest.
Notwithstanding any other provision of this Agreement, Executive shall have the
right to author and publish any book, article or other written work, for his own
account and profit, provided that (i) such activities do not in any way
interfere with Executive's performance of his duties as the Company's Chairman
and Chief Executive Officer and his other obligations hereunder, (ii) are not in
violation of any other provision of this Agreement (including, without
limitation, Section 5.2 herein, except as to rights to books, articles or any
other written work; such rights shall inure to the Executive), and (iii) that
Executive shall not therein disclose any confidential or proprietary information
or trade secret of the Company or client or customer of the Company or disparage
the Company or any such client or customer in any way. Any such book, article or
other written work ("the book") shall be the sole property of Executive, who
shall have all right to any profit derived from it. The Company shall not have,
and hereby disclaims, any right, title or interest in the book.
SECTION 2. TERM OF EMPLOYMENT
2.1. TERM. The Executive's employment under this Agreement shall
continue for a minimum term of one year and at will thereafter until terminated
in accordance with the provisions of this Agreement.
SECTION 3. COMPENSATION
3.1. BASIC COMPENSATION. As compensation for Executive's services under
this Agreement, Company shall pay to Executive a salary at the annual rate of
$315,322 (the "Base Salary"), payable in periodic installments in accordance
with the Company's regular payroll practices in effect from time to time. The
Base Salary shall be reviewed from time to time by the Board and/or its
Executive Committee as conditions warrant. The first such review shall take
place no later than February 2002, and future reviews shall be held not less
frequently than annually thereafter. Such review shall consider, but not be
limited to, Executive's performance as determined by the Board and/or its
Executive Committee.
3.2. INCENTIVE COMPENSATION. In addition to the Base Salary provided for
in Section 3.1, the Executive will participate in the Company's Pay for
Performance Incentive Compensation Program ("PFP") (formerly known as Salary-
At-Risk), with a PFP guideline incentive that will provide an annual incentive
payment to Executive that, on an annual basis,
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totals 30% of Executive's Base Salary if the Company meets its annual PFP Plan
(which includes achievement of the annual operating plan performance criteria
approved by the Company's Board of Directors). Executive understands that the
Company's PFP program may be reviewed and revised and Executive shall only be
entitled to participate in the current PFP program if, and to the extent that,
the program is maintained by the Company for its management personnel generally.
While the PFP program is maintained by the Company, Executive's performance
rating under that program shall be determined by the Company's Board. Executive
will be entitled to participate in any revised incentive program for officers of
the Company, under the terms of that revised program as approved by the Board.
3.3. EXECUTIVE BENEFITS. In addition to the compensation provided for in
Section 3.1 hereof, the Executive shall be entitled during the term of his
employment under this Agreement to participate in all benefit plans maintained
by the Company in which senior corporate officers are entitled to participate.
Such benefit plans currently include, among others, the Company's Retirement
Savings Plan, Supplemental Executive Retirement Plan, and Group Life, Disability
and Medical Plans. Notwithstanding anything else in this Agreement, other than
as set forth in Section 4 below, Executive shall not be eligible for any
severance or termination benefits under any Company plans, policies or
procedures providing for such benefits, including, but not limited to, the Xxx
X. Xxxxxx, Inc. Xxxxxxxxx Pay Plan and any predecessor or successor severance
plan.
3.4. VACATION. Executive shall be entitled to paid vacation in
accordance with the Company's vacation policy for officers.
3.5. EXPENSE REIMBURSEMENT. Company shall reimburse Executive for all
reasonable expenses incurred by him in connection with the performance of his
duties under this Agreement, in accordance with Company's regular reimbursement
policies in effect from time to time, and upon receipt of itemized vouchers for
such expenses and such other supporting information as Company may reasonably
require.
3.6. AUTOMOBILE. During his employment by Company, Company shall pay
Executive an automobile allowance and shall also reimburse Executive for his
gasoline and insurance costs for his automobile, all in accordance with the
Company's automobile allowance policies, which are subject to change from time
to time. Executive shall, in accordance with the Company's policies, notify
company as to the business and personal use of his automobile, so that Company
may withhold taxes, as appropriate in connection with the automobile allowance
and reimbursements.
SECTION 4. TERMINATION OF EMPLOYMENT
4.1. DEFINITIONS.
(a) FOR CAUSE. As used in this Agreement "For Cause" shall mean
that
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Executive committed or engaged in an intentional act of (i) fraud, embezzlement,
dishonesty or theft in connection with his duties under this Agreement or in the
course of his employment with Company, (ii) wrongful damage to Company's
property, (iii) wrongful disclosure of Company's secret processes or
confidential information, (iv) a material breach of Executive's obligations
under this Agreement, that materially impairs Executive's performance of his
obligations under this Agreement, (v) criminal misconduct, including illegal
drug use, that materially impairs Executive's performance of his obligations
under this Agreement, (vi) a material breach of the Company's written rules or
policies that materially impairs Executive's performance of his obligations
under this Agreement, or (vii) any kind, whether or not specifically referenced
in the foregoing clauses (i)-(vi), which is materially harmful to Company. No
act, or failure to act, shall be deemed "intentional" if it was due primarily to
an error in judgment or to negligence, but shall be deemed "intentional" only if
done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his act or omission was in Company's best interest.
(b) GOOD REASON RESIGNATION. As used in this Agreement, Executive
shall be deemed to have resigned his employment by Company for "Good Reason" if
either:
(i) Executive, at any time, elects in good faith to
discontinue his employment with Company because (A) his responsibilities, duties
or authority have been changed materially from their level on the effective date
of this Agreement, which change substantially reduces the rank or level,
responsibility or scope of Executive's position with Company (or its successor
in the case of a merger, consolidation, acquisition or transfer of substantially
all of its business assets) below that which he has on the effective date of
this Agreement as Company's Chairman and Chief Executive Officer or (B) his
salary (as adjusted from the effective date of this Agreement) has been
decreased; or
(ii) Executive elects to discontinue his employment with
the Company because the Company has changed the principal location for the
performance of Executive's duties to a place that is more than 50 miles from
Company's current headquarters in West Chester, PA.
If Executive elects to end his employment by Company for a reason which
Executive believes is a Good Reason as defined by this Section 4.1(d), he shall
provide the Company with written notice of such resignation and shall state in
that notice the specific matter or matters which he asserts constitute the Good
Reason for his resignation.
(c) DISABILITY. As used in this Agreement, "Disability" or
"Disabled" shall mean a physical or mental disability which is either (i) a
total and permanent disability as defined in the principal disability benefit
plan offered by the Company to its senior officers and in effect at the time
Executive becomes disabled (whether or not Executive has elected to purchase
such disability insurance), or (ii) determined to be a total and permanent
disability by a physician who is selected by the Company and is acceptable to
Executive or his legal representative (which acceptance shall not be
unreasonably withheld).
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4.2. TIME AND MANNER OF TERMINATION OR RESIGNATION. Executive's
employment by Company, including his office as Chairman and Chief Executive
Officer, shall be for a minimum term of one year and thereafter shall be at
will. Executive's employment shall cease immediately upon Executive's death or
Disability, or upon written notice to Executive that the Company is terminating
Executive's employment For Cause. Otherwise Executive's employment shall cease
on the date selected by the party initiating termination or resignation, which
date shall be specified in a written notice to the other party, and which (i) in
the event of termination of Executive by the Company for any reason other than
For Cause, shall be thirty (30) days after delivery of such notice unless a
longer period is approved by the Company's Board in its sole discretion, and
(ii) in the event of resignation by Executive, shall be thirty (30) days after
delivery of such notice unless a longer or shorter period is approved by the
Company's Board and by Executive. The date on which Executive's employment by
Company ceases is referred to in this Agreement as the "Employment Ending Date".
As of the Employment Ending Date, if Executive is a member of Company's Board or
of the Board of Directors of any affiliate, he shall provide Company with his
written resignation from each such Board and from his position as an officer of
any affiliate.
4.3. BENEFITS PAYABLE.
(a) SEVERANCE AMOUNT. If either (1) Company terminates
Executive's employment for any reason other than For Cause, death or Disability,
or (2) Executive resigns his employment by Company for Good Reason, Executive
shall be paid his monthly salary at the time of such termination or resignation,
for 12 months. For purposes of this Section 4.3(a) and Section 4.3(b),
Executive's "monthly salary" shall be one-twelfth of the sum of (A) Executive's
highest annual base salary rate during his employment by Company, plus (B) all
other amounts, including incentive payments, that would be deemed compensation
for purposes of IRS form W-2 and that were paid to Executive during the twelve
full calendar months preceding the calendar month in which the Employment Ending
Date occurs. Company shall make the severance payments under this Section 4.3(a)
beginning with the first calendar month after the Employment Ending Date, in
accordance with Company's regular pay policies for employees.
(b) PAYMENT FOR EXTENDED NON-COMPETE PERIOD. If either (1)
Company terminates Executive's employment for any reason other than For Cause,
death or Disability, or (2) Executive resigns his employment by Company for Good
Reason, then in addition to the other amounts payable to Executive under this
Section 4.3, and as consideration for Executive's agreement to the extended
non-compete period described in Section 5.3(b)(ii) below, Executive shall be
paid, for each of the 12 months following payment of the Severance Amount under
Section 4.3(a) above, an amount equal to his monthly salary (as defined in
Section 4.3(a)) at the time of such termination or resignation. Company shall
make the payments under this Section 4.3(b), beginning after the final payment
of the Severance Amount under Section 4.3(a), in accordance with Company's
regular pay policies for employees. Executive and Company also acknowledge and
agree that the provisions of Section 5.3 are mandatory and that, in the event
Company terminates Executive's employment for any reason other than For Cause,
death or
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Disability or Executive resigns his employment for Good Reason, he shall have no
right to unilaterally avoid compliance with the provisions of Section 5.3 by
foregoing the payment described in this Section 4.3(b); and Company shall have
no right to withhold such payment by unilaterally permitting Executive to forego
compliance with Section 5.3 during the extended non-compete period.
(c) ADDITIONAL SEVERANCE BENEFITS. If severance payments are
payable to Executive under Section 4.3(a) above, the following additional
severance benefits shall be provided to Executive by Company:
(i) Company shall pay Executive the amount earned under
its PFP program (or any applicable replacement incentive program in effect at
the time of the Employment Ending Date) for the portion of the calendar quarter
to and including the Employment Ending Date. Company shall make such payment on
or about the date Company makes such payments to other participating employees;
(ii) Company shall provide medical, dental and
prescription plan benefits for Executive, on the same cost-sharing and other
basis as is then in effect for active employees, for 24 months after the
Employment Ending Date or until Executive elects that such coverages sooner
cease. After such coverages cease in accordance with the previous sentence,
Executive may elect continuation coverage completely at his own expense as
provided by law;
(iii) Company shall provide Executive with outplacement
services at Company's expense at the level in effect for Executive Officers of
the Company on the Employment Ending Date.
(iv) Company shall pay Executive his automobile allowance
and reimbursement, at the level in effect on the Employment Ending Date, for 6
months after the Employment Ending Date.
(d) LIMITATION ON SEVERANCE BENEFITS. Notwithstanding any other
provision of this Agreement to the contrary, the amounts payable to Executive
under Sections 4.3(a) and 4.3(c) above, plus the value of any other non-cash
benefits, including but not limited to stock option vesting acceleration, that
would be counted in determining whether Executive is subject to excise tax under
sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the
"Code") shall not exceed the maximum amount that Company could pay to Executive
without causing Executive to be subject to such excise tax under the Code.
(e) WHEN BENEFITS/PAYMENTS NOT PAYABLE. None of the severance
benefits or other payments described in this Section 4.3 shall be payable to
Executive if (i) Executive's employment with Company is terminated For Cause or
by reason of Executive's death or Disability, or (ii) Executive voluntarily ends
his employment with Company other than by resigning for Good Reason. The
compensation and benefits and the non-compete payment which the Company is
required to pay Executive pursuant to this Section 4.3 are the only payments,
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compensation or benefits to which the Executive is entitled upon a termination
or resignation of employment, except for those rights, if any, under agreements
identified in Section 6.6 below, that by their terms survive termination or
resignation of employment.
(f) RELEASE. As a condition to receipt of the severance benefits
and other payments described in this Section 4.3, Executive shall deliver an
effective, executed release to Company in the form attached to this Agreement as
Exhibit "A" on or before the Employment Ending Date.
(g) COOPERATION. As a condition to receipt of the severance
benefits and other payments described in this Section 4.3, Executive shall
provide Company with such information pertaining to his employment with Company
as he may have and shall assist Company to transfer his duties to such successor
or successors as Company may designate. Company shall reimburse Executive for
all reasonable out-of-pocket expenses he incurs in fulfilling his obligation
under the preceding sentence.
(h) ACCELERATION ELECTION. Company may, at its sole option and in
its sole and absolute discretion, at any time or from time to time, accelerate
the time and the manner of making any one or more payments required under this
Section 4.3.
(i) TAXES. Company shall withhold from payments to Executive and
remit to the appropriate government agencies such payroll taxes and income
withholding as Company determines is or may be necessary under applicable law
with respect to amounts paid to Executive under this Section 4.3.
(j) GENERAL OBLIGATION. The rights and benefits of Executive to
receive payments under this Section 4.3 shall be solely those of an unsecured
creditor of Company.
(k) ESTATE TO RECEIVE BENEFITS/PAYMENTS. In the event that
Executive becomes entitled to receive any severance benefits or payments under
Sections 4.3(a) (b) or (c)(i)(ii) or (iv) above, and Executive dies before all
such benefits or payments are made by Company, the balance of such benefits or
payments shall be paid to Executive's estate.
SECTION 5. RESTRICTIVE COVENANTS
5.1. CONFIDENTIALITY. Executive shall comply with his duty of
confidentiality owed to Company during his employment by Company and shall not,
at any time after his employment by Company, retain in writing, use, divulge,
furnish, or make accessible to anyone, without the express authorization of the
Company's Board of Directors, any trade secret, private or confidential
information or knowledge of Company or any of its affiliates obtained or
acquired by him while so employed. All computer software, address books,
rolodexes, business cards, telephone lists, customer lists, price lists,
contract forms, catalogs, books, records, and files and
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know-how acquired while an employee of Company, are acknowledged to be the
property of Company and shall not be duplicated, removed from Company's
possession or made use of other than in pursuit of Company's business. Upon the
Employment Ending Date, Executive shall deliver to Company, without further
demand, all copies thereof which are then in his possession or under his
control.
5.2. INVENTIONS AND IMPROVEMENTS. During the term of his employment,
Executive shall promptly communicate to Company all ideas, discoveries and
inventions which are or may be useful to Company or its business. Executive
acknowledges that all ideas, discoveries, inventions, and improvements which are
made, conceived, or reduced to practice by him and every item of knowledge
relating to Company's business interests (including potential business
interests) gained by him during his employment hereunder are the property of
Company, and Executive hereby irrevocably assigns all such ideas, discoveries,
inventions, improvements, and knowledge to Company for its sole use and benefit,
without additional compensation. The provisions of this Section shall apply
whether such ideas, discoveries, inventions, improvements or knowledge are
conceived, made or gained by him alone or with others; whether during or after
usual working hours, whether on or off the job, whether applicable to matters
directly or indirectly related to Company's business interests (including
potential business interests), and whether or not within the specific realm of
his duties. Executive shall, upon request of Company, but at no expense to
Executive, at any time during or after his employment with Company, sign all
instruments and documents requested by Company and otherwise cooperate with
Company to protect its right to such ideas, discoveries, inventions,
improvements, and knowledge, including applying for, obtaining, and enforcing
patents and copyrights thereon in any and all countries.
5.3. NONCOMPETITION; NONSOLICITATION.
(a) Executive shall not, without Company's prior written
approval, either directly or indirectly, for his own account or for the account
of another person or entity, during the non-compete period as defined below in
this Section 5.3:
(i) acquire or hold more than a 5% ownership interest in
any competitor of Company or of any affiliate;
(ii) compete with Company or any affiliate in soliciting
any business from any person or entity that was at any time during the two years
immediately preceding the Employment Ending Date a client or potential client of
Company or any affiliate, as to which client or potential client Company or an
affiliate had rendered a significant volume of service or had a significant
amount of direct business contact for the purpose of soliciting future business;
(iii) render services within the United States of America
or any foreign country in which Company is providing services as of the
Employment Ending Date to any competitor of Company or an affiliate; or
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(iv) solicit or otherwise induce any employee of Company
or an affiliate to leave the employment of Company or the affiliate, or induce
any such employee to become an employee of, or otherwise become associated with,
any company or business other than Company or the affiliate. This paragraph
shall apply to inducement, hiring or solicitation of any employee of Company or
an affiliate, regardless of position.
If a "competitor of Company", or an entity that owns and/or operates a
"competitor of Company", also owns and/or operates any separate subsidiary or
other separate line of business ("separate business unit"), and that separate
business unit is not itself a competitor of the Company, the restrictions in
Sections 5.3(a) (i) and (iii) shall not apply to that separate business unit
(which shall not be deemed a "competitor of Company").
(b) (i) The non-compete period shall be the 365 days after the
Employment Ending Date if (a) Executive's employment with Company is terminated
For Cause or by reason of Executive's Disability, or (b) Executive voluntarily
ends his employment with Company other than by resigning for Good Reason.
(ii) The non-compete period shall be the 730 days after the
Employment Ending Date if (a) Executive's employment with Company is terminated
for any reason other than For Cause or by reason of Executive's Disability or
(b) Executive resigns his employment for Good Reason.
(c) Upon the breach by Executive of his obligations under this Section
5.3, in addition to Company's right to obtain appropriate injunctive relief as
set forth in Section 5.4 of this Agreement, Company's obligation to make
payments or provide severance benefits to Executive under Section 4 of this
Agreement shall terminate immediately and Executive shall, within 10 days after
written demand by Company, repay to Company all severance payments previously
made to Executive as well as an amount equal to the cost of severance benefits
previously provided to Executive.
(d) Executive acknowledges that he is bound by the restrictions
described in this Section 5.3 upon any termination or resignation of his
employment, including termination for Cause or without Cause, or by reason of
Disability or resignation for Good Reason or without Good Reason. Executive
acknowledges that he has agreed to these provisions voluntarily; that they are
reasonably required to protect the Company; and that they are supported by
adequate consideration (including but not limited to the consideration provided
under Section 4.3(b) for the extended non-compete period described in Section
5.3(b)(ii) above).
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5.4. INJUNCTIVE AND OTHER RELIEF.
(a) Executive acknowledges and agrees that his obligations
contained in this Agreement are fair and reasonable in light of the
consideration paid under this Agreement, and that damages alone shall not be an
adequate remedy for any breach by Executive of those obligations. Accordingly,
Executive expressly agrees that, in addition to any other remedies which Company
may have, Company shall be entitled to injunctive relief in any court of
competent jurisdiction for any breach or threatened breach of any of those
obligations by Executive. Nothing contained in this Agreement, including,
without limitation, Section 6.1 hereof, shall prevent or delay Company from
seeking, in any court of competent jurisdiction, specific performance or other
equitable remedies in the event of any breach or intended breach by Executive of
any of his obligations under this Agreement.
(b) Notwithstanding the equitable relief available to Company,
the Executive, in the event of a breach of his obligations contained in Section
5 hereof, understands and agrees that the uncertainties and delay inherent in
the legal process would result in a continuing breach for some period of time,
and therefore, continuing injury to Company until and unless Company can obtain
appropriate equitable relief. Therefore, in addition to such equitable relief,
Company shall be entitled to monetary damages for any such period of breach
until the termination of such breach, in an amount deemed reasonable to cover
all actual and consequential losses, plus all moneys received by Executive as a
result of said breach, and all costs and attorneys' fees incurred by Company in
enforcing this Agreement. If Executive should use or reveal to any other person
or entity any confidential information in violation of this Agreement, this will
be considered a continuing violation on a daily basis for so long a period of
time as such confidential information is made use of by Executive or any such
other person or entity.
SECTION 6. MISCELLANEOUS
6.1. ARBITRATION.
(a) Except as set forth in the last sentence of this Section 6.1,
all disputes arising out of or relating to this Agreement which cannot be
settled by the parties shall promptly be submitted to and settled exclusively by
arbitration in West Chester, Pennsylvania in accordance with the laws of the
Commonwealth of Pennsylvania by three arbitrators, one of whom shall be
appointed by the Company, one by the Executive and the third of whom shall be
appointed by the first two arbitrators. The arbitration shall be conducted in
accordance with the rules of the American Arbitration Association, except with
respect to the selection of arbitrators which shall be as provided in this
Section 6.1. Judgment upon the award rendered by a majority decision of the
arbitrators may be entered in any court having jurisdiction thereof. The Company
shall, however, have the right to seek and obtain preliminary injunctive relief,
in a court of competent jurisdiction, for any existing or threatened violation
by Executive of Section 5 of this Agreement.
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(b) The arbitrators shall award to the prevailing party in any
such arbitration or preliminary injunction proceeding, in addition to any other
appropriate relief, the costs and expenses (including reasonable attorneys fees)
incurred by that party in connection with the enforcement of that party's rights
under this Agreement, unless the arbitrators shall determine that under the
circumstances such an award would be unjust.
6.2. PRIOR EMPLOYMENT. Executive represents and warrants that he is not
a party to any other employment, non-competition or other agreement or
restriction which could interfere with his employment with Company or with his
or Company's rights and obligations under this Agreement; and that his
acceptance of employment with Company and the performance of his duties under
this Agreement will not breach the provisions of any contract, agreement, or
understanding to which he is party or any duty owed by him to any other person.
6.3. SEVERABILITY. The invalidity or unenforceability of any particular
provision or part of any provision of this Agreement shall not affect the other
provisions or parts of this Agreement, except that in the event that the Release
described in Section 4.3(f) hereof is given by Executive and is determined to be
invalid or unenforceable, such that Executive is permitted to maintain against
Company any claim purported to be released under that Release, then Company's
obligation to provide severance payments and benefits under Section 4.3 of this
Agreement shall be deemed null and void and Executive shall repay to Company any
of those severance payments and benefits already paid by Company. In the event
that any provision hereof is determined to be invalid or unenforceable by a
court of competent jurisdiction Executive and Company shall negotiate in good
faith to provide Company and Executive with protection as nearly equivalent to
that found to be invalid or unenforceable and if any such provision shall be so
determined to be invalid or unenforceable by reason of the duration or
geographical scope of the covenants contained therein, such duration or
geographical scope, or both, shall be considered to be reduced to a duration or
geographical scope to the extent necessary to cure such invalidity.
6.4. ASSIGNMENT. This Agreement shall not be assignable by Executive,
and shall be assignable by Company only to any person or entity which may become
a successor in interest (by purchase of assets or stock, or by merger, or
otherwise) to Company in the business or a portion of the business presently
operated by it. Subject to the foregoing, this Agreement and the rights and
obligations set forth herein shall inure to the benefit of, and be binding upon,
the parties hereto and each of their respective permitted successors, assigns,
heirs, executors and administrators.
6.5. NOTICES. All notices hereunder shall be in writing and shall be
sufficiently given if hand-delivered, sent by documented overnight delivery
service, or by registered or certified mail, postage prepaid, return receipt
requested, (confirmed by U.S. mail), addressed as set forth below or to such
other person and/or at such other address as may be furnished in writing by any
party hereto to the other. Any such notice shall be deemed to have been given as
of the date received, in the case of personal delivery, or on the date shown on
the receipt or confirmation therefor, in
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all other cases. Any and all service of process and any other notice in any such
action, suit or proceeding shall be effective against any party if given as
provided in this Agreement; provided that nothing herein shall be deemed to
affect the right of any party to serve process in any other manner permitted by
law.
If to Company:
0000 Xxxxxx Xxx
Xxxx Xxxxxxx, XX 00000
Attention: Chairman of the Board of Directors
With a copy to:
X. Xxxxxxx Xxxxxxx, Esq.
Drinker Xxxxxx and Xxxxx
One Xxxxx Square
18th and Cherry Sts.
Philadelphia, PA 19103
If to Executive:
Xxxxxxx X. Xxxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxx Xxxxxxx, XX 19382
6.6. ENTIRE AGREEMENT AND MODIFICATION. This Agreement constitutes the
entire agreement between the Company and the Executive with respect to the
matters contemplated herein and, unless otherwise stated in this Agreement,
supersedes all prior agreements and understandings with respect thereto,
provided, however, that the Supplemental Executive Retirement Agreement dated
January 1, 1998 between Executive and the Company will remain in effect. Any
amendment, modification, or waiver of this Agreement shall not be effective
unless in writing and signed by the party against whom enforcement is sought.
The failure by any party to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall a party's waiver or relinquishment of any right
or power hereunder at any one or more times be deemed a waiver or relinquishment
of such right or power at any other time or times.
6.7. GOVERNING LAW. This Agreement is made pursuant to, and shall be
construed and enforced in accordance with, the internal laws of the Commonwealth
of Pennsylvania (and United States federal law, to the extent applicable),
without giving effect to otherwise applicable principles of conflicts of law.
6.8. HEADINGS; COUNTERPARTS. The headings of paragraphs in this
Agreement are for
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convenience only and shall not affect its interpretation. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original and all of which, when taken together, shall be deemed to constitute
but one and the same Agreement.
6.9. FURTHER ASSURANCES. Each of the parties hereto shall execute such
further instruments and take such other actions as any other party shall
reasonably request in order to effectuate the purposes of this Agreement.
6.10. NON-ALIENATION. None of the rights or payments contemplated under
this Agreement may be sold, given away, assigned, transferred, pledged,
mortgaged, alienated, hypothecated or in any way encumbered or disposed of by
Executive, or any executor, administrator, heir, legatee, distributee, relative
or any other person or entity, whether or not in being, claiming under Executive
by virtue of this Agreement, and none of the rights or benefits contemplated by
this Agreement shall be subject to execution, attachment or similar process. Any
sale, gift, assignment, transfer, pledge, mortgage, alienation, hypothecation or
encumbrance, or other disposition of this Agreement or of such rights or
benefits contrary to the foregoing provisions, or the levy or any attachment or
similar process thereon, shall be null and void and without effect.
6.11. RIGHT TO USE LIKENESS. Executive hereby grants to Company the
absolute right and permission to copyright and use, re-use and/or publish for
lawful business purposes, any photographic portraits or pictures of Executive
(and printed matter in conjunction therewith) in which Executive may be included
in whole or in part or composite, for art, advertising, or trade.
6.12. CONSULTATION WITH COUNSEL. Executive acknowledges that he has had
the opportunity to consult separately with counsel of his choice concerning this
Agreement and the meaning of the terms of this Agreement; that he has been
advised by Company to do so; and that he has entered into this Agreement
knowingly and of his own free will and volition.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: XXX X. XXXXXX, INC.
By:
------------------------------------ --------------------------------------
Xxxxx Xxxxxxxxx Xxxxxxxxxx,
Executive Vice President
------------------------------------ --------------------------------------
Witness Executive - Xxxxxxx X. Xxxxxxxxx
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EXHIBIT "A"
CROSS RELEASE
Xxx X. Xxxxxx, Inc. ("Weston") and Xxxxxxx X. Xxxxxxxxx ("Employee")
entered into an Amended Employment Agreement as of _________, 2001 (the
"Employment Agreement"). To satisfy the requirement of Section 4.3(f) of the
Employment Agreement, Employee and Weston hereby grant the other the Releases
set forth below:
---------------------------------
1. Release by Xxxxxx. Xxxxxx, on behalf of itself and its subsidiaries,
irrevocably and unconditionally releases and forever discharges Employee, his
heirs, administrators and legal representatives from any and all manner of
actions, causes, matters, suits, debts, dues, accounts, bonds, covenants,
agreements, judgments, claims, controversies, guarantees, warranties, damages,
liabilities, or demands of any nature whatsoever in law or equity, whether or
not known to it, which it has ever had, now has, or hereafter can, shall or may
have, for, upon, or by reason of any matter, action, omission to act,
transaction, practice, conduct, thing or cause of any kind whatsoever from the
beginning of the world to the date it executes this Release. Such remise,
release and discharge of Employee includes, without limitation, any and all
claims under any and all federal or state statutes or the common law and extends
without limitation to any and all acts, practices or conduct by Employee whether
or not it has knowledge of such acts, omissions, practices, conduct or the
effects thereof, or if any such effects exist or may in the future exist as a
result of any acts, omissions, practices, or conduct that occurred prior to the
date it executes this Release.
2. Limitation on Weston's Release. Notwithstanding the foregoing, this
Release shall not prevent Xxxxxx from enforcing its rights under the Employment
Agreement.
3. Release by Employee. Employee, for himself, his heirs, and personal
and legal representatives, except as provided in Section 4 hereof, does hereby
irrevocably and unconditionally release, remise and forever discharge Weston,
its subsidiaries, affiliates, divisions, officers, directors and employees (the
"Releasees"), and each of them, however denominated, past, present and future,
and their predecessors, successors and assigns, of and from any and all manner
of actions, causes, matters, suits, dues, bonds, judgments, debts, accounts,
covenants, agreements, claims, controversies, guarantees, warranties, damages,
liabilities, or demands of any nature whatsoever in law or equity, whether or
not now known to him which he ever had, now has or hereafter can, shall or may
have, for, upon, or by reason of any matter, action, omission to act,
transaction, practice, conduct, cause or thing of any kind whatsoever from the
beginning of the world to the date hereof. Such release, remise and discharge of
the Releasees includes without limitation any and all claims under any and all
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federal and state statutes or common law and extends without limitation, to any
and all acts, practices or conduct by the Releasees, or the effects thereof,
whether or not Employee now has knowledge of such acts, omissions, practices,
conduct or the effects thereof, if any such effects exist or may in the future
exist as a result of any act, omission, practice or conduct that occurred prior
to the date hereof. Except as provided in Section 4, this release shall
specifically include, but not be limited to, the following:
(a) any and all claims and matters of any kind which arise or
might arise, or which otherwise relate to Employee's employment with Xxxxxx or
Employee's termination of employment pursuant to the Employment Agreement;
(b) any and all claims for wages and benefits (including without
limitation salary, stock, stock options, commissions, bonuses, severance pay,
health and welfare benefits, vacation pay and any other fringe-type benefit);
(c) any and all claims for wrongful discharge, breach of contract
(whether written or oral, express or implied), and implied covenants of good
faith and fair dealing;
(d) any and all claims for alleged employment discrimination on
the basis of age, race, color, religion, sex, national origin, veteran status,
disability and/or handicap, in violation of any federal, state or local statute,
ordinance, judicial precedent or executive order, including but not limited to
claims for discrimination under the following statutes: Title VII of the Civil
Rights Act of 1964, 42 U.S.C. Section 2000e et seq., the Civil Rights Act of
1866, 42 U.S.C. Section 1981, the Age Discrimination in Employment Act, 29
U.S.C. Section 621 et seq., the Older Workers Benefit Protection Act, the
Rehabilitation Act of 1972, 29 U.S.C. Section 701 et seq., the Americans with
Disabilities Act, 42 U.S.C. Section 1201 et seq., and the Pennsylvania Human
Relations Act, 43 P.S. Section 951 et seq.;
(e) any and all claims under any federal or state statute
relating to employee benefits;
(f) any and all claims in tort, including but not limited to any
claims for fraud, misrepresentation, defamation, interference with contract or
prospective economic advantage, intentional infliction of emotional distress
and/or negligence;
(g) any and all claims for additional commissions, compensation
or damages of any kind; and
(h) any and all claims for attorneys' fees and costs.
4. Limitation on Employee's Release. This Release (a) shall not prevent
Employee from enforcing his rights to receive severance payments and severance
benefits under Section 4
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of the Employment Agreement in accordance with the terms thereof, (b) shall have
no applicability to Weston's obligations to provide severance payments and
severance benefits under Section 4 of the Employment Agreement, and (c) shall
not release Weston from (i) any obligation it might otherwise have to indemnify
Employee and hold him harmless from any claims made against him arising out of
his activities as an officer or director of Weston or its affiliates, to the
same extent as Xxxxxx is or may be obligated to indemnify and hold harmless any
other officer or director, and (ii) any vested retirement benefit or any
obligation under any equity compensation agreement or shareholder agreement,
which benefit or obligation, by its express terms, survives termination of
Employee's employment.
5. Review and Revocation. Employee acknowledges that he has had the
opportunity to review this Release and to consider its terms with his attorneys
and advisors. Employee has forty-five (45) days from the date of distribution of
this Release to him to review it and seven (7) days after the execution date of
this Release to revoke it. This Release shall not be effective unless and until
Employee executes it and the seven-day period has expired.
UNDERSTOOD AND AGREED:
-------------------- ----------------------------------------
Witness Xxxxxxx X. Xxxxxxxxx
Attest: XXX X. XXXXXX, INC.
By: By:
------------------ --------------------------------------
Secretary
(Corporate Seal)
STATE OF :
-----------------------
: SS:
COUNTY OF :
----------------------
Before me, , on this day personally appeared ___________, known to me to
be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed such instrument for the purposes and
consideration therein expressed.
Given under my hand and seal of office this________day of
___________,_________ .
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NOTARY PUBLIC in and for
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