EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 4, 1998, between XXXXXX-XXXXXXX,
INC., a Delaware corporation (the "Company"), as the employer, and XXXXX XXXXXX
(the "Executive"), as the employee.
W I T N E S S E T H:
WHEREAS, the Executive has been employed by the Company
in an executive capacity for a number of years; and
WHEREAS, the Company desires to employ the Executive and the
Executive desires to be employed by the Company on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants
herein, the Company and the Executive agree as follows:
1. Period of Employment. The Company shall employ the
Executive pursuant to this Agreement for a period (the "Term")
commencing as of the date hereof and continuing until terminated
as provided in Section 8 of this Agreement.
2. Compensation. The Executive shall be paid a base salary at
the rate of not less than $884,000 per year during the Term, payable in equal
semi-monthly installments. Notwithstand ing the foregoing, said base salary may
be increased (but not decreased) as determined by the Company in accordance with
the policies of the Company and said increased salary shall thereafter be the
base salary of the Executive. In addition, the Executive shall be entitled to
participate, on a basis consistent with his position with the Company, in any
retirement, pension, profit sharing, bonus, stock option and restricted stock
award plans, and death and life insurance benefits and medical insurance
programs, of the Company, now in existence or hereafter adopted, in which other
executive employees participate, in accordance with the terms of any such plan,
benefit or program.
3. Reimbursement for Expenses. The Company shall reimburse the
Executive in a manner consistent with the policies of the Company for all
reasonable expenses of the Company incurred or paid by the Executive in
discharge of his duties hereunder.
4. Duties and Title of Executive. During the Term, the
Executive shall have the title of President and Chief Operating Officer, shall
report directly to the Chief Executive Officer of the Company (or, if the
Company becomes a subsidiary of another company, to the Chief Executive Officer
of the ultimate parent of such company) and shall have the powers, status and
duties that are normally exercised in and ordinarily pertain to these positions.
2
To the extent feasible and consistent with applicable law, the
Company shall use its best efforts to cause the Executive to be elected a
director of the Company and a member of the Company's Executive Committee and
Corporate Office.
The Executive's office shall be located at the Company's
executive office located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or in such other suitable and comparable space in New York City as the
Board of Directors may select.
5. Acceptance by Executive. The Executive accepts the
aforementioned employment at the compensation specified above. During the Term,
the Executive shall devote his best efforts to the service of the Company and to
the performance of the duties specified above. The Executive shall be permitted
to take vacation in each year of his employment in conformance with Company
vacation policy, the terms of which (as applied to the Executive) shall be no
less favorable than the terms of such policy as in effect on the date hereof.
3
6. Covenant Not to Compete; Nonsolicitation. (a) Except with
the prior written consent of the Company authorized by a resolution adopted by
the Board of Directors of the Company, during the Term and for a period of one
year after the termination of the Executive's employment for any reason, the
Executive will not, and will not permit any corporation, partnership or other
business entity in which the Executive has a financial interest, to engage
directly or indirectly in any business which is competitive with the business of
the Company; provided that the ownership by the Executive of not more than one
percent of the capital stock of any other corporation or a one percent interest
in any partnership or other business entity shall not be deemed to be a
violation of this Section 6.
(b) During the Term and for a period of one year after the
termination of the Executive's employment for any reason, the Executive shall
not personally (and shall not personally cause others to) (i) take any action to
solicit or divert any material business or customers away from the Company, (ii)
induce customers, potential customers, suppliers, agents or other persons
4
under contract or otherwise associated or doing business with the Company to
terminate, reduce or alter any such association or business, or (iii) induce any
person employed by the Company to (A) terminate such employment arrangement, (B)
accept employment with another person, or (C) interfere with the customers or
suppliers or otherwise with the Company in any manner.
7. Secrecy; Nondisparagement. (a) The Executive recognizes and
acknowledges that the information (such as, but not limited to, financial
information), trade secrets, formulae, manufacturing methods, technical data,
know-how and secret processes of the Company as acquired and used by the Company
are special, valuable and unique assets of the Company. The Executive will not,
during the Term or at any time thereafter, disclose any such information, trade
secrets, formulae, manufacturing methods, technical data, know-how and secret
processes to any person, firm, corporation, association or any other entity for
any reason or purpose whatsoever without the prior written consent of the
Company, unless such information shall have previously become public knowledge.
(b) The Executive agrees that he will not make any disparaging
statements about the Company or the directors,
5
officers or employees of the Company; provided that this Section 7(b) shall not
apply to truthful testimony as a witness, compliance with other legal
obligations, or truthful assertion of or defense against any claim or breach of
this Agreement, or to the Executive's truthful statements or disclosures to
officers or directors of the Company, and shall not require the Executive to
make false statements or disclosures. The Company agrees that neither the
directors nor the officers of the Company nor any spokesperson for the Company
shall make any disparaging statements about the Executive; provided that this
Section 7(b) shall not apply to truthful testimony as a witness, compliance with
other legal obligations, truthful assertion of or defense against any claim of
breach of this Agreement, or truthful statements or disclosures to the
Executive, and shall not require false statements or disclosures to be made.
8. Termination. (a) Cause. The Board of Directors, by a vote
of three-quarters of the entire Board of Directors, may terminate the employment
of the Executive if the conduct of the Executive shall, in the opinion of the
Board of Directors, constitute cause for immediate dismissal. As used in this
Agreement, the term "cause" shall mean (i) the Executive's willful and material
breach of Sections 6 or 7 of this Agreement;
6
(ii) the Executive's conviction of a felony; or (iii) the Executive's engagement
in conduct that constitutes willful gross neglect or willful gross misconduct in
carrying out his duties under this Agreement, resulting, in either case, in
material harm to the financial condition or reputation of the Company. For
purposes of this Agreement, an act or failure to act on the Executive's part
shall be considered "willful" if it was done or omitted to be done by him not in
good faith, and shall not include any act or failure to act resulting from any
incapacity of the Executive. Notwithstanding the foregoing, a termination for
"cause" shall not take effect unless the Executive has been given written notice
by the Company of its intention to terminate him for "cause", such notice (A) to
state in detail the particular act or acts or failure or failures to act that
constitute the grounds on which the proposed termination for "cause" is based
and (B) to be given within 90 days of the Company's learning of such act or acts
or failure or failures to act. The Executive shall have 20 days after the date
that such written notice has been given to him in which to cure such conduct, to
the extent such cure is possible. If he fails to cure such conduct, the
Executive shall then be entitled to a hearing before the Board of Directors at
which the Executive and
8
his counsel are entitled to appear. Such hearing shall be held within 25 days of
such notice to the Executive, provided he requests such hearing within 10 days
of the written notice from the Company of the intention to terminate him for
"cause". If, within five days following such hearing, the Executive is furnished
written notice by the Board of Directors confirming that, in its judgment,
grounds for "cause" on the basis of the original notice exist, he shall
thereupon be terminated for "cause."
(b) Without Cause. The Board of Directors, by a majority vote
of the entire Board of Directors, may terminate the employment of the Executive
without cause.
(c) Disability. The Board of Directors of the Company, by a
vote of a majority of the entire Board of Directors, may terminate the
employment of the Executive under this Agreement if the Executive has become
incapacitated or disabled to such an extent that he is incapable of performing
the duties and services required to be performed hereunder for a period or
periods aggregating in excess of six months in any twelve-month period.
(d) Death. The employment of the Executive shall terminate if
the Executive shall die.
8
(e) Voluntary Termination or Retirement. The employment of the
Executive shall terminate if the Executive shall voluntarily leave the
employment of the Company for other than good reason or shall retire. As used
herein, "good reason" shall mean (i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting relationships), authority, duties or
responsibilities as contemplated by Section 4 of this Agreement or any other
action by the Company that results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith that is remedied by
the Company promptly after receipt of notice thereof given by the Executive;
(ii) a decrease in the target annual incentive award opportunity below 56.25% of
his base salary; (iii) the transfer or attempted assignment of the Executive
without his consent to a location outside New York City or the assignment to the
Executive of duties that require that he travel outside New York City in any
fiscal year for more than the average number of days of business-related travel
in the preceding three fiscal years; or (iv) any failure of the Company to
comply with and satisfy Section 13(c) of this Agreement or any
9
other material breach of this Agreement by the Company. For purposes of this
Agreement, "retire" or "retirement" shall mean the Executive's voluntary
termination of employment with the Company after attaining age 65 or, if
earlier, the date on which the Executive is eligible to terminate employment
with the Company and promptly thereafter commence receiving retirement benefits
pursuant to any pension plan maintained by the Company without any reduction for
the failure to attain a prescribed age.
(f) Good Reason. The employment of the Executive may be
terminated by the Executive for good reason.
9. Obligations of the Company Upon Termination.
(a) Cause; Voluntary Termination or Retirement. If the
Executive's employment is terminated under subsections (a) or (e) of Section 8,
the Company shall have no further obligations to the Executive hereunder, except
that the Company shall pay to the Executive the Accrued Amounts (as hereinafter
defined) and, in the case of a retirement, a Pro-Rated Bonus (as hereinafter
defined). Moreover, in the case of a retirement, all of the Executive's then
outstanding options to purchase common stock of the Company shall become
immediately vested and exercisable for the remaining term of the options, and
all of the Executive's then outstanding restricted and deferred stock grants
relating to
10
common stock of the Company shall become immediately vested. For purposes of
this Agreement, the "Accrued Amounts" means the full amount due to the Executive
and not theretofore paid for base salary up to the date of such termination, the
amount of any accrued but unpaid bonus on account of the last full fiscal year
preceding the date of such termination and the amount of any accrued vacation
pay. A "Pro-Rated Bonus" means a pro-rated bonus reflecting the number of months
(treating any partial month as a full month for this purpose) in the Termination
Year (as hereinafter defined) during which the Executive was employed, such
bonus to be calculated and paid as soon as practicable following the end of the
Termination Year. As used herein, "Termination Year" means the fiscal year in
which the Executive's employment is terminated.
(b) Without Cause; Good Reason. If the Executive's employment
is terminated pursuant to subsections (b) or (f) of Section 8, the Company shall
pay to the Executive in a lump sum in cash within seven days after the date of
termination the aggregate of the following amounts:
(i) The Accrued Amounts;
(ii) Three times the Executive's Final
Compensation. For purposes of this Agreement, the
11
Executive's "Final Compensation" means the sum of (A) the Executive's
annual base salary as in effect immediately prior to the termination
and (B) the greater of (x) the highest bonus earned by the Executive in
any of the three full fiscal years preceding the date of termination
and (y) the target bonus (based on the assumed attainment of 100% of
the performance objectives) for the Termination Year; and
(iii) An amount equal to the increase in the lump-sum
benefit to which the Executive would be entitled under the
Xxxxxx-Xxxxxxx, Inc. Executive Pension Benefits Plan (assuming for this
purpose that he had elected a lump-sum benefit payable upon his
termination) if the calculation of the gross benefit thereunder (but
not of any offset amounts) were modified by (A) increasing his number
of years of benefit service by five and (B) substituting his Final
Compensation for his "Modified Average Compensation" in the benefit
formula.
In addition, for a period of three years following termination of the
Executive's employment, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the Executive and/or
his family at least equal to those which would have been provided in accordance
with
12
the welfare benefit plans, programs, practices and policies of the Company if
the Executive's employment had not been terminated, including medical, dental,
disability and group life insurance plans and programs, in accordance with the
most favorable plans, practices, programs or policies of the Company during the
90-day period immediately preceding the date the Executive's employment is
terminated or, if more favorable, as in effect from time to time thereafter with
respect to other senior executives of the Company and their families and, for
purposes of eligibility for retiree benefits pursuant to such plans, practices,
programs and policies, the Executive shall be considered to have remained
employed until the end of such three-year period and to have retired on the last
day of such period. Moreover, all of the Executive's then outstanding options to
purchase common stock of the Company shall become immediately vested and
exercisable for the remaining term of the options, and all of the Executive's
then outstanding restricted and deferred stock grants relating to common stock
of the Company shall become immediately vested.
(c) Disability. If the Executive's employment is terminated
pursuant to subsection (c) of Section 8, the Company shall (i) pay to the
Executive the Accrued Amounts and a Pro
13
Rated Bonus and (ii) make, or cause to be made, payments to the Executive,
including any payments made to the Executive under the Company's Long-Term
Disability Income Plan, equal to sixty percent of the Executive's annual base
salary rate in effect immediately prior to the termination of employment of the
Executive, payable in equal semi-monthly payments, from the date of such
termination until the date on which payments would cease to be payable under the
terms of such Plan as in effect on the date hereof.
(d) Death. If the Executive's employment is terminated
pursuant to subsection (d) of Section 8, the Company shall pay to the
Executive's estate the Accrued Amounts and a Pro-Rated Bonus.
(e) Nothing in this Section 9 shall be interpreted as reducing
or eliminating any benefits to which the Executive or his beneficiaries are
entitled, without regard to this Agreement, under any plan or program of the
Company following a termination of employment for any reason.
(f) In the event of any termination of employment under
Section 8, the Executive shall be under no obligation to seek other employment,
and there shall be no offset against any amounts due the Executive under this
Agreement on account of the
14
remuneration attributable to any subsequent employment that the Executive may
obtain. Any amounts due under this Section 9 are in the nature of severance
payments, or liquidated damages, or both, and are not in the nature of a
penalty.
(g) The Company shall pay fees and expenses reasonably
incurred by the Executive as a result of his seeking to obtain or enforce any
right or benefit provided by this Agreement, promptly and from time to time, at
his request as such fees and expenses are incurred unless the Executive's
actions in such regard are determined to be frivolous or in bad faith.
(h) The Executive agrees, as a condition to receipt of the
termination payments and benefits provided for in this Section 9, that he will
execute a release agreement, in a form reasonably satisfactory to the Company
and the Executive, releasing any and all claims arising out of the Executive's
employment (other than enforcement of this Agreement, the Executive's rights
under any of the Company's incentive compensation and employee benefit plans and
programs to which he is entitled under this Agreement or otherwise, and any
claim for any tort for personal injury not arising out of or related to his
termination of employment).
15
10. Excise Tax Gross-Up. If the Executive becomes entitled to
one or more payments (including, without limitation, the vesting of any non-cash
benefit or property), whether pursuant to the terms of this Agreement or any
other plan, arrangement, or agreement with the Company (all such amounts,
exclusive of additional payments pursuant to this Section 10, being referred to
herein as the "Total Payments"), which are or become subject to the tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code")
(or any similar tax that may hereafter be imposed) (the "Excise Tax"), the
Company shall pay to the Executive at the time specified below an additional
amount (the "Gross-Up Payment") such that the net amount retained by the
Executive, after reduction for (x) any Excise Tax (including any penalties or
interest thereon) on the Total Payments and on the Gross-Up Payment and (y) any
federal, state, or local income or employment tax on the Gross-Up Payment, shall
be equal to the sum of (a) the Total Payments, and (b) an amount equal to the
product of any deductions disallowed for federal, state, or local income tax
purposes because of the inclusion of the Gross-Up Payment in the Executive's
adjusted gross income multiplied by the highest applicable marginal rate
16
of federal, state, or local income taxation, respectively, for the calendar year
in which the Gross-Up Payment is to be made.
For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such Excise Tax, (i) the
Total Payments shall be treated as "parachute payments" within the meaning of
Section 280G(b)(2) of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless, and except to the extent that, in the written opinion of
independent tax counsel or auditors of nationally recognized standing selected
by the Company and reasonably acceptable to the Executive ("Independent
Advisors"), the Total Payments do not constitute parachute payments, or such
excess parachute payments in excess of the base amount within the meaning of
Section 280G(b)(3) of the Code represent reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code or are
otherwise not subject to the Excise Tax; and (ii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined by the
Independent Advisors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. If more than one Gross- Up Payment is made (including for
this purpose any parachute
18
excise tax gross-up payment pursuant to the terms of any other plan,
arrangement, or agreement with the Company), the amount of each Gross-Up Payment
shall be computed so as not to duplicate any prior Gross-Up Payment.
For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed (A) to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar year in which
the Gross-Up Payment is to be made; (B) to pay any applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of the Executive's adjusted gross income); and
(C) to have otherwise allowable deductions for federal, state, and local income
tax purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in the Executive's adjusted gross income.
The Gross-Up Payment shall be paid on or before the earlier of
(i) the 30th day after it has been determined that the Total Payments (or any
portion thereof) are subject to the Excise
18
Tax, or (ii) the date on which the Excise Tax becomes due and payable to the
taxing authorities; provided, however, that if the amount of such Gross-Up
Payment or portion thereof cannot be finally determined on or before such day,
the Company shall pay to the Executive on such day an estimate, as determined by
the Independent Advisors, of the minimum amount of such payments and shall pay
the remainder of such payments (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be
determined. In the event that the amount of the estimated payments exceeds the
amount subsequently determined by the Independent Advisors to have been due, the
Executive shall repay to the Company the amount of such excess, plus interest at
the rate provided in Section 1274(b)(2)(B) of the Code, within five days
following the Company's demand therefor.
In the event that the Excise Tax is subsequently determined,
in a final judicial determination or a final administrative settlement to which
the Executive is a party (a "Final Determination"), to be less than the amount
taken into account hereunder at the time the Gross-Up Payment is made, the
Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined (but, if
19
previously paid to the taxing authorities, not prior to the time the amount of
such reduction is refunded to the Executive or otherwise realized as a benefit
by the Executive), the portion of the Gross-Up Payment that would not have been
paid if such Excise Tax as finally determined had been applied in initially
calculating the Gross-Up Payment, plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined in a Final Determination to exceed the amount taken
into account hereunder at the time the Gross-Up Payment is made (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), the Company shall make an additional Gross-Up
Payment in respect of such excess (plus any interest and penalties payable with
respect to such excess) at the time that the amount of such excess if finally
determined.
The Company shall have the right to control all proceedings
with the Internal Revenue Service that may arise in connection with the
determination and assessment of any Excise Tax and, at its sole option, the
Company may pursue or forego any and all administrative appeals, proceedings,
hearings, and conferences with any taxing authority in respect of such Excise
20
Tax (including any interest or penalties thereon); provided, however, that the
Company's control over any such proceedings shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest any other issue raised by the
Internal Revenue Service or any other taxing authority. The Executive shall
cooperate with the Company in any proceedings relating to the determination and
assessment of any Excise Tax and shall not take any position or action that
would materially increase the amount of any Gross-Up Payment hereunder.
11. Remedies. In the event of a breach or threatened breach by
the Executive of the provisions of Section 6 or Section 7 of this Agreement, the
Company shall be entitled to seek an injunction restraining the Executive from
violating either of said provisions, or any other remedy, including the recovery
of damages from the Executive. If the Executive shall breach any of the
provisions of Section 6 or Section 7 of this Agreement, nothing herein shall be
construed as preventing the Company from withholding any payment or payments
required to be made hereunder to the Executive.
12. Assistance in Litigation. The Executive shall, upon
reasonable notice, furnish such information and proper
21
assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is or may become a party.
13. Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.
22
14. Notices. All communications hereunder shall be in writing
and delivered or mailed by registered mail to the Company at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Board of Directors, and to the
Executive, at 000 Xxxx Xxxxxx, Xxxxxxxxx 0-X, Xxx Xxxx, Xxx Xxxx 00000, unless
another address has been given to the other party hereto in writing.
15. Interpretation. No provision of this Agreement may be
altered or waived except in writing and executed by the other party hereto. This
Agreement constitutes the entire contract between the parties hereto and cancels
and supersedes all prior agreements, written or oral, relating to the employment
of the Executive. No party shall be bound in any manner by any warranties,
representations or guarantees, except as specifically set forth in this
Agreement. This Agreement shall be interpreted under the laws of the State of
New York.
16. Arbitration. The parties agree that any dispute or
controversy arising under or in connection with this Agreement shall be
submitted to and determined by arbitration in New York, New York in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
and agree to be bound by the decision in any such arbitration provision.
23
17. Renewals and Amendments. This Agreement may be renewed,
extended, altered or amended at any time by mutual written agreement signed by
both parties.
24
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
XXXXXX-XXXXXXX, INC.
By
---------------------------
Chairman of the Board
---------------------------
Xxxxx Xxxxxx
25
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of June 4, 1998, between XXXXXX-XXXXXXX,
INC., a Delaware corporation (the "Company"), as the employer, and XXXX X.
XXXXXX (the "Executive"), as the employee.
W I T N E S S E T H:
WHEREAS, the Executive has been employed by the Company in an
executive capacity for a number of years; and
WHEREAS, the Company desires to employ the Executive and the
Executive desires to be employed by the Company on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants
herein, the Company and the Executive agree as follows:
1. Period of Employment. The Company shall employ the
Executive pursuant to this Agreement for a period (the "Term") commencing as of
the date hereof and continuing until terminated as provided in Section 8 of this
Agreement.
2. Compensation. The Executive shall be paid a base salary at
the rate of not less than $780,000 per year during the Term, payable in equal
semi-monthly installments. Notwithstand ing the foregoing, said base salary may
be increased (but not decreased) as determined by the Company in accordance with
the policies of the Company and said increased salary shall thereafter be the
base salary of the Executive. In addition, the Executive shall be entitled to
participate, on a basis consistent with his position with the Company, in any
retirement, pension, profit sharing, bonus, stock option and restricted stock
award plans, and death and life insurance benefits and medical insurance
programs, of the Company, now in existence or hereafter adopted, in which other
executive employees participate, in accordance with the terms of any such plan,
benefit or program.
3. Reimbursement for Expenses. The Company shall
reimburse the Executive in a manner consistent with the policies
of the Company for all reasonable expenses of the Company
incurred or paid by the Executive in discharge of his duties
hereunder.
4. Duties and Title of Executive. During the Term,
the Executive shall have the title of Executive Vice President
and Chief Financial Officer, shall report directly to the
-2-
President and Chief Operating Officer of the Company and shall have the powers,
status and duties that are normally exercised in and ordinarily pertain to these
positions.
To the extent feasible and consistent with applicable law, the
Company shall use its best efforts to cause the Executive to be elected a
director of the Company and a member of the Company's Executive Committee and
Corporate Office.
The Executive's office shall be located at the Company's
executive office located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 or in such other suitable and comparable space in New York City as the
Board of Directors may select.
5. Acceptance by Executive. The Executive accepts the
aforementioned employment at the compensation specified above. During the Term,
the Executive shall devote his best efforts to the service of the Company and to
the performance of the duties specified above. The Executive shall be permitted
to take vacation in each year of his employment in conformance with Company
vacation policy, the terms of which (as applied to the Executive) shall be no
less favorable than the terms of such policy as in effect on the date hereof.
-3-
6. Covenant Not to Compete; Nonsolicitation. (a) Except with
the prior written consent of the Company authorized by a resolution adopted by
the Board of Directors of the Company, during the Term and for a period of one
year after the termination of the Executive's employment for any reason, the
Executive will not, and will not permit any corporation, partnership or other
business entity in which the Executive has a financial interest, to engage
directly or indirectly in any business which is competitive with the business of
the Company; provided that the ownership by the Executive of not more than one
percent of the capital stock of any other corporation or a one percent interest
in any partnership or other business entity shall not be deemed to be a
violation of this Section 6.
(b) During the Term and for a period of one year after the
termination of the Executive's employment for any reason, the Executive shall
not personally (and shall not personally cause others to) (i) take any action to
solicit or divert any material business or customers away from the Company, (ii)
induce customers, potential customers, suppliers, agents or other persons under
contract or otherwise associated or doing business with the Company to
terminate, reduce or alter any such
-4-
association or business, or (iii) induce any person employed by the Company to
(A) terminate such employment arrangement, (B) accept employment with another
person, or (C) interfere with the customers or suppliers or otherwise with the
Company in any manner.
7. Secrecy; Nondisparagement. (a) The Executive recognizes and
acknowledges that the information (such as, but not limited to, financial
information), trade secrets, formulae, manufacturing methods, technical data,
know-how and secret processes of the Company as acquired and used by the Company
are special, valuable and unique assets of the Company. The Executive will not,
during the Term or at any time thereafter, disclose any such information, trade
secrets, formulae, manufacturing methods, technical data, know-how and secret
processes to any person, firm, corporation, association or any other entity for
any reason or purpose whatsoever without the prior written consent of the
Company, unless such information shall have previously become public knowledge.
(b) The Executive agrees that he will not make any disparaging
statements about the Company or the directors, officers or employees of the
Company; provided that this Section 7(b) shall not apply to truthful testimony
as a witness,
-5-
compliance with other legal obligations, or truthful assertion of or defense
against any claim or breach of this Agreement, or to the Executive's truthful
statements or disclosures to officers or directors of the Company, and shall not
require the Executive to make false statements or disclosures. The Company
agrees that neither the directors nor the officers of the Company nor any
spokesperson for the Company shall make any disparaging statements about the
Executive; provided that this Section 7(b) shall not apply to truthful testimony
as a witness, compliance with other legal obligations, truthful assertion of or
defense against any claim of breach of this Agreement, or truthful statements or
disclosures to the Executive, and shall not require false statements or
disclosures to be made.
8. Termination. (a) Cause. The Board of Directors, by a vote
of three-quarters of the entire Board of Directors, may terminate the employment
of the Executive if the conduct of the Executive shall, in the opinion of the
Board of Directors, constitute cause for immediate dismissal. As used in this
Agreement, the term "cause" shall mean (i) the Executive's willful and material
breach of Sections 6 or 7 of this Agreement; (ii) the Executive's conviction of
a felony; or (iii) the Executive's engagement in conduct that constitutes
willful gross
-6-
neglect or willful gross misconduct in carrying out his duties under this
Agreement, resulting, in either case, in material harm to the financial
condition or reputation of the Company. For purposes of this Agreement, an act
or failure to act on the Executive's part shall be considered "willful" if it
was done or omitted to be done by him not in good faith, and shall not include
any act or failure to act resulting from any incapacity of the Executive.
Notwithstanding the foregoing, a termination for "cause" shall not take effect
unless the Executive has been given written notice by the Company of its
intention to terminate him for "cause", such notice (A) to state in detail the
particular act or acts or failure or failures to act that constitute the grounds
on which the proposed termination for "cause" is based and (B) to be given
within 90 days of the Company's learning of such act or acts or failure or
failures to act. The Executive shall have 20 days after the date that such
written notice has been given to him in which to cure such conduct, to the
extent such cure is possible. If he fails to cure such conduct, the Executive
shall then be entitled to a hearing before the Board of Directors at which the
Executive and his counsel are entitled to appear. Such hearing shall be held
within 25 days of such notice to the Executive, provided he
-7-
requests such hearing within 10 days of the written notice from the Company of
the intention to terminate him for "cause". If, within five days following such
hearing, the Executive is furnished written notice by the Board of Directors
confirming that, in its judgment, grounds for "cause" on the basis of the
original notice exist, he shall thereupon be terminated for "cause."
(b) Without Cause. The Board of Directors, by a majority vote
of the entire Board of Directors, may terminate the employment of the Executive
without cause.
(c) Disability. The Board of Directors of the Company, by a
vote of a majority of the entire Board of Directors, may terminate the
employment of the Executive under this Agreement if the Executive has become
incapacitated or disabled to such an extent that he is incapable of performing
the duties and services required to be performed hereunder for a period or
periods aggregating in excess of six months in any twelve-month period.
(d) Death. The employment of the Executive shall terminate if
the Executive shall die.
(e) Voluntary Termination or Retirement. The employment of the
Executive shall terminate if the Executive
-8-
shall voluntarily leave the employment of the Company for other than good reason
or shall retire. As used herein, "good reason" shall mean (i) the assignment to
the Executive of any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting relationships),
authority, duties or responsibilities as contemplated by Section 4 of this
Agreement or any other action by the Company that results in a diminution in
such position, authority, duties or responsibilities, excluding for this purpose
an isolated, insubstantial and inadvertent action not taken in bad faith that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; (ii) a decrease in the target annual incentive award opportunity
below 56.25% of his base salary; (iii) the transfer or attempted assignment of
the Executive without his consent to a location outside New York City or the
assignment to the Executive of duties that require that he travel outside New
York City in any fiscal year for more than the average number of days of
business-related travel in the preceding three fiscal years; or (iv) any failure
of the Company to comply with and satisfy Section 13(c) of this Agreement or any
other material breach of this Agreement by the Company. For purposes of this
Agreement, "retire" or "retirement" shall mean
-9-
the Executive's voluntary termination of employment with the Company after
attaining age 65 or, if earlier, the date on which the Executive is eligible to
terminate employment with the Company and promptly thereafter commence receiving
retirement benefits pursuant to any pension plan maintained by the Company
without any reduction for the failure to attain a prescribed age.
(f) Good Reason. The employment of the Executive may be
terminated by the Executive for good reason.
9. Obligations of the Company Upon Termination.
(a) Cause; Voluntary Termination or Retirement. If the
Executive's employment is terminated under subsections (a) or (e) of Section 8,
the Company shall have no further obligations to the Executive hereunder, except
that the Company shall pay to the Executive the Accrued Amounts (as hereinafter
defined) and, in the case of a retirement, a Pro-Rated Bonus (as hereinafter
defined). Moreover, in the case of a retirement, all of the Executive's then
outstanding options to purchase common stock of the Company shall become
immediately vested and exercisable for the remaining term of the options, and
all of the Executive's then outstanding restricted and deferred stock grants
relating to common stock of the Company shall become immediately vested. For
purposes of this Agreement, the "Accrued Amounts" means the full
-10-
amount due to the Executive and not theretofore paid for base salary up to the
date of such termination, the amount of any accrued but unpaid bonus on account
of the last full fiscal year preceding the date of such termination and the
amount of any accrued vacation pay. A "Pro-Rated Bonus" means a pro-rated bonus
reflecting the number of months (treating any partial month as a full month for
this purpose) in the Termination Year (as hereinafter defined) during which the
Executive was employed, such bonus to be calculated and paid as soon as
practicable following the end of the Termination Year. As used herein,
"Termination Year" means the fiscal year in which the Executive's employment is
terminated.
(b) Without Cause; Good Reason. If the Executive's employment
is terminated pursuant to subsections (b) or (f) of Section 8, the Company shall
pay to the Executive in a lump sum in cash within seven days after the date of
termination the aggregate of the following amounts:
(i) The Accrued Amounts;
(ii) Three times the Executive's Final
Compensation. For purposes of this Agreement, the
Executive's "Final Compensation" means the sum of (A) the
Executive's annual base salary as in effect immediately
-11-
prior to the termination and (B) the greater of (x) the highest bonus
earned by the Executive in any of the three full fiscal years preceding
the date of termination and (y) the target bonus (based on the assumed
attainment of 100% of the performance objectives) for the Termination
Year; and
(iii) An amount equal to the increase in the lump-sum
benefit to which the Executive would be entitled under the
Xxxxxx-Xxxxxxx, Inc. Executive Pension Benefits Plan (assuming for this
purpose that he had elected a lump-sum benefit payable upon his
termination) if the calculation of the gross benefit thereunder (but
not of any offset amounts) were modified by (A) increasing his number
of years of benefit service and age by five and (B) substituting his
Final Compensation for his "Modified Average Compensation" in the
benefit formula.
In addition, for a period of three years following termination
of the Executive's employment, or such longer period as any plan, program,
practice or policy may provide, the Company shall continue benefits to the
Executive and/or his family at least equal to those which would have been
provided in accordance with the welfare benefit plans, programs, practices and
policies of the Company if the Executive's employment had not been
-12-
terminated, including medical, dental, disability and group life insurance plans
and programs, in accordance with the most favorable plans, practices, programs
or policies of the Company during the 90-day period immediately preceding the
date the Executive's employment is terminated or, if more favorable, as in
effect from time to time thereafter with respect to other senior executives of
the Company and their families and, for purposes of eligibility for retiree
benefits pursuant to such plans, practices, programs and policies, the Executive
shall be considered to have remained employed until the end of such three-year
period and to have retired on the last day of such period. Moreover, all of the
Executive's then outstanding options to purchase common stock of the Company
shall become immediately vested and exercisable for the remaining term of the
options, and all of the Executive's then outstanding restricted and deferred
stock grants relating to common stock of the Company shall become immediately
vested.
(c) Disability. If the Executive's employment is terminated
pursuant to subsection (c) of Section 8, the Company shall (i) pay to the
Executive the Accrued Amounts and a ProRated Bonus and (ii) make, or cause to be
made, payments to the Executive, including any payments made to the Executive
under the
-13-
Company's Long-Term Disability Income Plan, equal to sixty percent of the
Executive's annual base salary rate in effect immediately prior to the
termination of employment of the Executive, payable in equal semi-monthly
payments, from the date of such termination until the date on which payments
would cease to be payable under the terms of such Plan as in effect on the date
hereof.
(d) Death. If the Executive's employment is terminated
pursuant to subsection (d) of Section 8, the Company shall pay to the
Executive's estate the Accrued Amounts and a Pro-Rated Bonus.
(e) Nothing in this Section 9 shall be interpreted as reducing
or eliminating any benefits to which the Executive or his beneficiaries are
entitled, without regard to this Agreement, under any plan or program of the
Company following a termination of employment for any reason.
(f) In the event of any termination of employment under
Section 8, the Executive shall be under no obligation to seek other employment,
and there shall be no offset against any amounts due the Executive under this
Agreement on account of the remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts due under this Section 9
-14-
are in the nature of severance payments, or liquidated damages, or both, and are
not in the nature of a penalty.
(g) The Company shall pay fees and expenses reasonably
incurred by the Executive as a result of his seeking to obtain or enforce any
right or benefit provided by this Agreement, promptly and from time to time, at
his request as such fees and expenses are incurred unless the Executive's
actions in such regard are determined to be frivolous or in bad faith.
(h) The Executive agrees, as a condition to receipt of the
termination payments and benefits provided for in this Section 9, that he will
execute a release agreement, in a form reasonably satisfactory to the Company
and the Executive, releasing any and all claims arising out of the Executive's
employment (other than enforcement of this Agreement, the Executive's rights
under any of the Company's incentive compensation and employee benefit plans and
programs to which he is entitled under this Agreement or otherwise, and any
claim for any tort for personal injury not arising out of or related to his
termination of employment).
10. Excise Tax Gross-Up. If the Executive becomes entitled to
one or more payments (including, without limitation, the vesting of any non-cash
benefit or property), whether
-15-
pursuant to the terms of this Agreement or any other plan, arrangement, or
agreement with the Company (all such amounts, exclusive of additional payments
pursuant to this Section 10, being referred to herein as the "Total Payments"),
which are or become subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") (or any similar tax that may
hereafter be imposed) (the "Excise Tax"), the Company shall pay to the Executive
at the time specified below an additional amount (the "Gross-Up Payment") such
that the net amount retained by the Executive, after reduction for (x) any
Excise Tax (including any penalties or interest thereon) on the Total Payments
and on the Gross-Up Payment and (y) any federal, state, or local income or
employment tax on the Gross-Up Payment, shall be equal to the sum of (a) the
Total Payments, and (b) an amount equal to the product of any deductions
disallowed for federal, state, or local income tax purposes because of the
inclusion of the Gross-Up Payment in the Executive's adjusted gross income
multiplied by the highest applicable marginal rate of federal, state, or local
income taxation, respectively, for the calendar year in which the Gross-Up
Payment is to be made.
For purposes of determining whether any of the Total Payments
will be subject to the Excise Tax and the amount of such
-16-
Excise Tax, (i) the Total Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, unless, and except to the extent that, in the
written opinion of independent tax counsel or auditors of nationally recognized
standing selected by the Company and reasonably acceptable to the Executive
("Independent Advisors"), the Total Payments do not constitute parachute
payments, or such excess parachute payments in excess of the base amount within
the meaning of Section 280G(b)(3) of the Code represent reasonable compensation
for services actually rendered within the meaning of Section 280G(b)(4) of the
Code or are otherwise not subject to the Excise Tax; and (ii) the value of any
non-cash benefits or any deferred payment or benefit shall be determined by the
Independent Advisors in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code. If more than one Gross- Up Payment is made (including for
this purpose any parachute excise tax gross-up payment pursuant to the terms of
any other plan, arrangement, or agreement with the Company), the amount of each
Gross-Up Payment shall be computed so as not to duplicate any prior Gross-Up
Payment.
-17-
For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed (A) to pay federal income taxes at the
highest marginal rate of federal income taxation for the calendar year in which
the Gross-Up Payment is to be made; (B) to pay any applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes if paid in such year (determined without regard to limitations on
deductions based upon the amount of the Executive's adjusted gross income); and
(C) to have otherwise allowable deductions for federal, state, and local income
tax purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Payment in the Executive's adjusted gross income.
The Gross-Up Payment shall be paid on or before the earlier of
(i) the 30th day after it has been determined that the Total Payments (or any
portion thereof) are subject to the Excise Tax, or (ii) the date on which the
Excise Tax becomes due and payable to the taxing authorities; provided, however,
that if the amount of such Gross-Up Payment or portion thereof cannot be finally
determined on or before such day, the Company shall pay
-18-
to the Executive on such day an estimate, as determined by the Independent
Advisors, of the minimum amount of such payments and shall pay the remainder of
such payments (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined. In
the event that the amount of the estimated payments exceeds the amount
subsequently determined by the Independent Advisors to have been due, the
Executive shall repay to the Company the amount of such excess, plus interest at
the rate provided in Section 1274(b)(2)(B) of the Code, within five days
following the Company's demand therefor.
In the event that the Excise Tax is subsequently determined,
in a final judicial determination or a final administrative settlement to which
the Executive is a party (a "Final Determination"), to be less than the amount
taken into account hereunder at the time the Gross-Up Payment is made, the
Executive shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined (but, if previously paid to the
taxing authorities, not prior to the time the amount of such reduction is
refunded to the Executive or otherwise realized as a benefit by the Executive),
the portion of the Gross-Up Payment that would not have been paid if such Excise
Tax as finally determined had been applied in initially calculating the Gross-Up
Payment, plus interest on the amount of such repayment at the rate provided in
Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
determined in a Final Determination to exceed the amount taken into account
hereunder at the time the Gross-Up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess if finally determined.
The Company shall have the right to control all proceedings
with the Internal Revenue Service that may arise in connection with the
determination and assessment of any Excise Tax and, at its sole option, the
Company may pursue or forego any and all administrative appeals, proceedings,
hearings, and conferences with any taxing authority in respect of such Excise
Tax (including any interest or penalties thereon); provided, however, that the
Company's control over any such proceedings shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder, and the
Executive shall be
-20-
entitled to settle or contest any other issue raised by the Internal Revenue
Service or any other taxing authority. The Executive shall cooperate with the
Company in any proceedings relating to the determination and assessment of any
Excise Tax and shall not take any position or action that would materially
increase the amount of any Gross-Up Payment hereunder.
11. Remedies. In the event of a breach or threatened breach by
the Executive of the provisions of Section 6 or Section 7 of this Agreement, the
Company shall be entitled to seek an injunction restraining the Executive from
violating either of said provisions, or any other remedy, including the recovery
of damages from the Executive. If the Executive shall breach any of the
provisions of Section 6 or Section 7 of this Agreement, nothing herein shall be
construed as preventing the Company from withholding any payment or payments
required to be made hereunder to the Executive.
12. Assistance in Litigation. The Executive shall, upon
reasonable notice, furnish such information and proper assistance to the Company
as may reasonably be required by the Company in connection with any litigation
in which it or any of its subsidiaries or affiliates is or may become a party.
-21-
13. Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.
14. Notices. All communications hereunder shall be in writing
and delivered or mailed by registered mail to the Company at 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Board of Directors, and to the
Executive, at 21
-22-
Londonderry Drive, Greenwich, Connecticut 06830, unless another address has been
given to the other party hereto in writing.
15. Interpretation. No provision of this Agreement may be
altered or waived except in writing and executed by the other party hereto. This
Agreement constitutes the entire contract between the parties hereto and cancels
and supersedes all prior agreements, written or oral, relating to the employment
of the Executive. No party shall be bound in any manner by any warranties,
representations or guarantees, except as specifically set forth in this
Agreement. This Agreement shall be interpreted under the laws of the State of
New York.
16. Arbitration. The parties agree that any dispute or
controversy arising under or in connection with this Agreement shall be
submitted to and determined by arbitration in New York, New York in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
and agree to be bound by the decision in any such arbitration provision.
17. Renewals and Amendments. This Agreement may be renewed,
extended, altered or amended at any time by mutual written agreement signed by
both parties.
-23-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
XXXXXX-XXXXXXX, INC.
By
---------------------------
Chairman of the Board
---------------------------
Xxxx X. Xxxxxx
-24-
