Exhibit10.3(a)
EMPLOYMENT AGREEMENT dated as of August 1, 1990, between THE
XXXXXX GROUP, INC., a Minnesota corporation (the "Corporation"),
and XXXXXX X. XXXXXXXX (the "Employee").
1. Employment, Acceptance and Term.
1.1 The Corporation hereby employs the Employee and the Employee hereby
accepts employment from the Corporation for a term continuing from the date
hereof through August 1, 2002 (the "Term"). The Term may be extended from time
to time by such additional period or periods as shall be mutually agreed to in
writing by the Corporation and the Employee; provided that the Term shall be
automatically extended for (i) an additional one-year period in the event that
either the Corporation or the Employee fails on or before January 31, 2002 to
give notice to the other of the intention not to extend the Term, and (ii) for
subsequent one-year periods in the event that either the Corporation or the
Employee fails to give notice of the termination of this Agreement at least six
(6) months prior to the expiration of any such one-year period. As used herein
"Te=" shall include the initial ten-year period and such one-year extensions as
may be provided hereunder.
2. Duties and Authority.
2.1 During the Term, the Employee shall devote his full
time and efforts to fulfill his obligations hereunder, with the understanding
that the Employee may participate in charitable and civic activities and have
business investments which may, from time to time, require minor portions of his
time but shall not interfere with his obligations hereunder. The Employee agrees
to use his best efforts, skill and abilities to promote the Corporation's
interests; to serve as a director and officer of the Corporation and any of its
subsidiary corporations if elected by the Board of Directors of the Corporation
(the "Board") or stockholders of the Corporation and any such subsidiary
corporation; and to perform such duties (consistent with his status as set forth
below in this Section 2) as may be assigned to him by the Board. The Employee
may continue to serve as a member of the boards of directors of business
corporations of which he is now a member and may serve as a member of the boards
of directors of other business corporations.
2.2 The Employee shall be the Vice Chairman and Chief Executive Officer
of the Corporation and shall be in charge of the business, affairs and
operations of the Corporation. The Employee shall perform his services subject
only to the direction and control of the Board (which direction and control
shall be such as is customarily exercised over a chief executive officer) and
shall report only to the Board.
2.3 The Corporation shall, for so long as the Employee's
employment by the Corporation continues, use its best efforts to (i) cause the
Employee to be nominated for election as a director and Vice Chairman of the
Corporation at each meeting of stockholders held for an election of directors;
(ii) cause the Employee to be continued in office as Vice Chairman and Chief
Executive Officer of the Corporation once so elected; (iii) cause the Employee
to be elected to serve as a member and Vice Chairman of an Executive Committee
so long as the Board shall appoint an Executive Committee; and (iv) not confer
on any other officer or employee authority, responsibility or powers superior or
equal to the authority, responsibility or powers vested in the Employee.
3. Principal Office.
3.1 The Employee's services under this Agreement will be performed
primarily at either of the Corporation's offices, currently maintained in Eden
Prairie, Minnesota and Dallas, Texas, subject to reasonable travel requirements
on behalf of the Corporation.
4. Compensation.
4.1 During the Term, the Corporation shall pay to the Employee a salary
at the annual rate of $120,000, which shall be paid in equal monthly or more
frequent installments (the "Base Salary").
4.2 Commencing on August 1, 1991 and on each August 1 thereafter (each
such, March 1 hereinafter referred to as an "Adjustment Date") the Base Salary
in effect for the preceding twelve (12) months shall be increased by an annual
amount (the "Annual Mandatory Adjustment") equal to the product of (x) the Base
Salary in effect for the preceding twelve (12) months multiplied by (y) ten
percent (10%). The Base Salary may be further increased as of any Adjustment
Date at the discretion of the Board taking into account all relevant factors,
including without limitation, the Employee's performance.
4.3 If the Base Salary shall be so increased for any reason, then, from
and after the date of such increase, the Base Salary shall be deemed-to be such
increased amount for all purposes hereunder, and may not be decreased during the
Term for any reason whatsoever.
4.4 The Corporation may pay the Employee such bonuses as the Board in
its discretion shall from time to time determine.
5. Expenses.
5.1 During the Term, the Corporation shall pay or reimburse the
Employee for all transportation (first-class) , hotel and living expenses
incurred by the Employee on business trips, and for all other business and
entertainment expenses reasonably incurred by him in connection with the
business of the Corporation
and its subsidiaries during the, term of his employment hereunder. Such expenses
shall include the cost of the Employee's membership in such luncheon and other
clubs as the Employee may determine is reasonably necessary, and the costs of an
automobile of the Employee's selection.
6. Employee Benefits.
6.1 During the Term, the Corporation shall, if the Employee is
insurable at standard rates, acquire and maintain, with a reputable insurer, a
life insurance policy on the life of the Employee naming the Employee's designee
or designees as beneficiary or beneficiaries and providing a net death benefit
of not less than $1,000,000. Employee agrees to submit to such physical
examinations as may be required by the insurer as a condition to the issuance of
such policy.
6.2 During the Term, the Employee shall be permitted to participate in
all group health, hospitalization and disability insurance plans, health
programs, pension plans, participation or extra compensation plans, and similar
benefits and perquisites that are now or may become available to other senior
executives of the Corporation, on the same terms as such other senior
executives. Employee shall participate in any stock option, restricted stock or
other equity based plans.
6.3 During each year of the Term, the Employee shall be entitled to
reasonable annual periods of vacation with full pay and allowances. The timing
and duration of individual vacation periods shall be determined by the Employee
taking into account the needs of the Corporation.
7. Termination of Employment Prior to End of Term;
Amounts Payable Upon Such Termination.
7.1 In the event that the Employee becomes disabled before the
expiration of the Term so that he is unable to substantially perform his
services hereunder for an aggregate of six (6) consecutive months or a total of
nine (9) months within any consecutive eighteen (18) months, the Corporation may
terminate the employment of the Employee; provided that the Corporation shall
pay to the Employee for the balance of the Term an annual amount, payable
monthly, equal to the lesser of (a) the sum of (i) the Base Salary in effect on
the date of termination and (ii) one-half (1/2) of any bonuses awarded to
Employee with respect to the preceding twenty-four (24) months (or if less than
two (2) years of the Term has then elapsed, the entire amount of any bonus paid
during the preceding twelve (12) months, or if less, the period of the Term then
elapsed) (such sum is hereinafter referred to as Employee's "Current Annual
Compensation"), and (b) $500,000. In the event of the Employee's death during
the Term, the Corporation shall pay the
Employee's salary to the date of death.
7.2 In the event that the Employee's employment is terminated as a
result of disability pursuant to this Section 7, the employee shall be entitled
to receive until the end of the month in which the Employee reaches age 65, (a)
disability payments from the Corporation or its insurer in such monthly amounts
as shall be provided for under such disability coverage as may be provided for
by the corporation, and (b) such health insurance and similar health-related
insurance. coverage and benefits of the Corporation in which the Employee
participated as of the date of disability hereunder or which are otherwise made
available generally to senior executives of the Corporation.
7.3 If the Employee shall not be continued in office during the Term as
Vice Chairman, Chief Executive Officer and a director of the Corporation and
appointed and continued in office as a member and Vice Chairman of the Executive
Committee (if any) appointed by the Board, or if the Employee shall not be
afforded the authority, responsibilities and prerogatives contemplated in
Paragraphs 2.2 and 02.3 hereof (including, without limitation, the continuation
of the Employee in the office of chief executive officer the Corporation during
the balance of the term of the Employee's employment hereunder and the failure
of the Board or any subsidiary to remove from office any corporate officer whose
removal shall be requested by the Employee or if the executive offices of the
Corporation shall have moved from the Eden Prairie, Minnesota area without the
consent of the Employee), the Employee shall have the right to terminate his
employment under this Agreement by sixty (60) days' prior written notice to the
corporation given at any time within ninety (90) days after such event. If the
Employee elects to terminate his employment pursuant to this Paragraph 7.3, the
Corporation shall pay to the Employee for five (5) years, or, if less, for the
balance of the Term, an annual amount, payable monthly, equal to his Current
Annual Compensation. Upon completion of such payments, the Corporation shall
have no further obligations to the Employee under this Agreement other than such
obligations as are expressly set forth. If the Employee shall die or become
disabled subsequent to the notice of termination of employment provided for in
this Paragraph 7.3, such death or disability shall not diminish or impair his
(or his legal representatives or other successor's) right to receive the
payments provided for in this Paragraph 7.3.
7.4 If the Employee shall be discharged without cause during the Term,
he shall be entitled to receive from the Corporation, on or before the date of
discharge, the payments determined as provided in Paragraph 7.3 above.
7.5 If the Employee shall be discharged for cause during
the Term, the Corporation's obligation to pay compensation or other amounts
payable hereunder to or for the benefit of the Employee, except for compensation
or other benefits payable in respect of services rendered prior to the date of
such discharge, shall terminate on the date of such discharge. As used herein
the term "for cause" shall mean any material breach by the Employee under this
Agreement, which breach if susceptible to cure shall not have been cured within
thirty (30) days after the Employee has received written notice thereof from the
Board, the conviction of the Employee for a felony, or the continued wilful
malfeasance or gross negligence by the Employee in the performance of his duties
under this Agreement for a period of thirty (30) days after the Board has
directed the Employee in writing to cease the activity giving rise to such
wilful malfeasance or gross negligence. The term "for cause" shall not include a
bona fide disagreement over corporate policy so long as the Employee does not
wilfully violate specific written directions from the Board, which directions
are consistent with the provisions of this Agreement.
7.6 In the event any amounts or other benefits are payable to or for
the Employee (or his legal representatives or other successors) pursuant to
Paragraphs 7.1, 7.2, 7.3, or 7.4 hereof in respect of any period following the
termination of his employment hereunder, such amounts or other benefits shall
not be
reduced in any manner by reason of any other earnings, income or benefits of or
to the Employee from any other source. By this provision the parties intend that
the Corporation shall waive any mitigation of damages rule that may otherwise
apply in such circumstances.
7.7 In the event there is a termination of employment pursuant to
Paragraphs 7.1, 7.3 or 7.4, the Corporation shall as of the date of such
termination vest, or cause to vest, in the Employee all of his rights accrued in
and under the Corporation's existing pension plan.
8. Indemnification and Payment of Legal Expenses.
8.1 The Corporation shall indemnify the Employee and his legal
representatives, to the fullest extent permitted by the laws of the State of
Delaware and the existing By-laws of the Corporation, and the Employee shall be
entitled to the protection of any insurance policies the Corporation may elect
to maintain generally for the benefit of its directors and officers, against all
costs, charges and expenses whatsoever incurred or sustained by him or his legal
representatives in connection with any action, suit or proceeding, or any
threatened action, suit or proceeding, to which he or his legal representatives
may be made a party, or threatened to be made a party, by reason of his being or
having been a director or officer of the Corporation or any of its
subsidiaries.
8.2 If the Employee or any Designated Representative shall be required
to initiate legal action in order to enforce or retain any right or benefit
provided by this Agreement in the event of a breach of or default under this
Agreement by the Corporation, and if the Employee or Designated Representative
shall prevail in such legal action, the Corporation shall indemnify the Employee
or such Designated Representative for all reasonable legal and accounting fees
and expenses incurred in connection therewith.
9. Non-Competition.
9.1 During the Term (without taking into account any automatic
extensions of the Term as provided in Section 1. 1) and for two (2) years
thereafter, unless the Employee is terminated under sections 7.3 or 7.4, the
Employee will not carry on or engage in any business (other than for the
Corporation, or any of its subsidiaries or affiliates) within fifty (50) miles
of any county in which the Corporation is doing business as owner (excluding
ownership of not more than 5% of the outstanding shares of a publicly-held
corporation, so long as such ownership does not involve any managerial or
operational responsibility or other employee status), partner, officer, employee
or consultant, which business is directly competitive with any business engaged
in or
carried on at the date of termination of the Term by the Corporation, or any of
its subsidiaries of affiliates, provided that if such corporations shall
discontinue any line of business subsequent to such date, this covenant not to
compete shall terminate with respect to such discontinued line of business.
9.2 During the Term (without taking into account any automatic
extensions of the Term as provided in section 1.1) and for two (2) years
thereafter, the Employee will not, without the prior written consent of the
Corporation, either directly or indirectly solicit or otherwise encourage any
person employed by the Corporation to leave the employ of the Corporation.
9.3 The Employee agrees that the Corporation will suffer irreparable
injury if, in breach of the covenants contained herein, he competes with the
business of the Corporation, or any of its subsidiaries or affiliates, and that
by reason of such competition the Corporation will be entitled to injunctive
relief in a court of competent jurisdiction. The Employee hereby stipulates to
the entry of temporary, preliminary and permanent injunctive relief prohibiting
him from competing with the Corporation, or any of its subsidiaries or
affiliates,, in breach of such covenants.
9.4 The Employee agrees that if in any judicial proceeding a court
shall refuse to enforce any covenant contained in this Agreement because it
covers too extensive a geographic area
or too broad a scope of activities or too long a period of time, such covenant
shall be reduced-in scope to the extent required by law.
10. Nondisclosure Agreement.
Except as the Corporation may otherwise permit or direct in writing,
the Employee will not disclose, during the Term and thereafter for a period of
three (3) years, any information, knowledge or data (unless readily
ascertainable from public information or sources, or required by law to be
disclosed) concerning the Corporation or any of its subsidiaries or affiliates,
which he has obtained or hereafter obtains during the Term that relates to the
business processes, trade secrets, methods, customers, machines, inventions,
discoveries or any other matters concerning the respective businesses, products
or work of the Corporation or any of its subsidiaries or affiliates. All
records, documents and other writings relating to the businesses of such
corporations which are or have been prepared or created by the Employee or which
have come or hereafter come into his possession during the Term are the property
of such corporations and upon termination of the Term shall be delivered to or
shall remain in the possession of such corporations, as the case may be.
11. Notices.
Any notice or other communication required to or which may be given to
any party hereunder shall be in writing and shall be deemed given effectively if
delivered personally to such party or if mailed by registered or certified mail,
postage prepaid, addressed to such party as follows (the third business day
following the date of mailing of any such notice is deemed the date of delivery
thereof):
To Employee:
Xx. Xxxxxx X. Xxxxxxxx
0000 Xxxxxxx Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
To the Corporation:
The Xxxxxx Group, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxx Xxxxxxx, XX 00000
Any party may change the persons and addresses to which notices or
other communications are to be sent by giving written notice of
such change to the other party in the manner provided herein for
giving notice.
12. Miscellaneous.
12.1 This Agreement shall be binding upon and inure to
the benefit of the heirs, next-of-kin and legal representatives of the Employee
and the successors and assigns of the Corporation, including any corporation
into or with which the Corporation shall consolidate or merge or to which it
shall sell or otherwise transfer substantially all of its assets, properties and
business. This Agreement is not assignable by the Employee.
12.2 This Agreement is to be governed by and interpreted in accordance
with the laws of the State of Minnesota applicable to agreements made and to be
performed wholly within such State.
12.3 This instrument is the entire agreement of the parties with
respect to the subject matter hereof and may not be amended, supplemented,
canceled or discharged except by written instrument executed by both parties
hereto. The parties do not intend to confer any benefit hereunder on any third
person and, without limiting the generality of the foregoing, the parties may,
in writing, without notice to or consent of any third person, at any time waive
any rights hereunder or amend this Agreement in any respect or terminate this
Agreement.
12.4 The termination of the Employee's employment hereunder shall not
affect those provisions of this Agreement that by their terms apply to any
period or periods subsequent to such termination.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THE XXXXXX GROUP, INC.
By
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Title
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Xxxxxx X. Xxxxxxxx
