1
EXHIBIT 10.17
EMPLOYMENT CONTRACT
AGREEMENT made as of August 22, 1997 between NEW XXXXXXX
HOLDINGS, INC., a Delaware corporation (the "Company"), and XXXXX X. XXXXX
(the "Executive"), but to be effective as of the Effective Date.
WHEREAS, Executive is currently employed by Xxxxxxx Enterprises,
Inc. ("Xxxxxxx") and the Company is a wholly-owned subsidiary of Xxxxxxx; and
WHEREAS, the Company, Xxxxxxx, and Capstone Pharmacy Services,
Inc. ("Capstone") have entered into an Agreement and Plan of Distribution dated
as of April 15, 1997 whereby Xxxxxxx intends to transfer all of its business
except the institutional pharmacy business to the Company and the Company will
be spun-off as a separate public corporation (the "Distribution"), and
immediately thereafter Xxxxxxx will merge with and into Capstone (the "Merger")
pursuant to an Agreement and Plan of Merger dated as of April 15, 1997 (the
"Merger Agreement"), and the Company will change its name to Xxxxxxx
Enterprises, Inc.; and
WHEREAS, as a result of the Distribution, the Executive will
become an employee of the Company or one of its wholly-owned consolidated
subsidiaries; and
WHEREAS, in connection with this Agreement and in exchange for
the consideration described herein (the receipt and sufficiency of which is
hereby acknowledged), the Executive has agreed to waive any rights he may
currently have under any change in control, severance, or employment agreement
or other compensation or employee benefit plan with or previously assumed by
Xxxxxxx and has agreed to waive any claim that either the Distribution or the
Merger constitutes a "Change in Control" under any such agreements or other
employee benefit or compensation plans under this Agreement; and
WHEREAS, the Company desires to assure itself of the management
services of the Executive by directly engaging the Executive as the Chairman
and Chief Executive Officer of the Company; and
WHEREAS, the Company recognizes that the Executive's contribution
to the Company's growth and success after the Distribution will be substantial;
and
WHEREAS, the Company wishes to encourage the Executive to remain
with and devote full time and attention to the business affairs of the Company
and wishes to provide income protection to the Executive for a period of time
in the event of an involuntary Termination of Employment not for Cause or a
voluntary Termination of Employment for Good Reason within the Term of this
Agreement, whether or not in connection with a Change in Control (other than a
Change in Control in connection with the Distribution or Merger);
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the Company and the
Executive hereby agrees as follows:
1. Definitions.
(a) "Base Salary" shall mean the Executive's regular
annual rate of base pay, as set forth in Paragraph 4(a), as of the date
in question.
2
(b) The "Benefit Multiplier" shall be equal to 2.0
except that if Executive's Termination of Employment is pursuant to
Paragraphs 6(b) or 6(c) it shall be equal to 3.0.
(c) The "Benefit Period" shall be the period of years
equal to the Benefit Multiplier which follows the Executive's
Termination of Employment.
(d) "Cause" shall mean the Executive's (i) conviction
of a crime involving moral turpitude or theft or embezzlement of
property from the Company or (ii) willful misconduct or willful failure
substantially to perform the duties of his position, but only if such
has continued after receipt of notice from the Company's Board of
Directors and such reasonable cure period as is set forth in such
notice.
(e) A "Change in Control" shall be deemed to have taken
place if, after the Distribution and Merger: (i) any person,
corporation, or other entity or group, including any "group" as defined
in Section l3(d)(3) of the Securities Exchange Act of 1934, other than
any employee benefit plan then maintained by the Company, becomes the
beneficial owner of shares of the Company having 30 percent or more of
the total number of votes that may be cast for the election of Directors
of the Company; (ii) as the result of, or in connection with, any
contested election for the Board of Directors of the Company, or any
tender or exchange offer, merger or other business combination or sale
of assets, or any combination of the foregoing (a "Transaction"), the
persons who were Directors of the Company before the Transaction shall
cease to constitute a majority of the Board of Directors of the Company
or any successor to the Company or its assets, or (iii) at any time (a)
the Company shall consolidate with, or merge with, any other Person and
the Company shall not be the continuing or surviving corporation, (b)
any Person shall consolidate with, or merge with the Company, and the
Company shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding Company stock shall
be changed into or exchanged for stock or other securities of any other
Person or cash or any other property, (c) the Company shall be a party
to a statutory share exchange with any other Person after which the
Company is a subsidiary of any other Person, or (d) the Company shall
sell or otherwise transfer 50% or more of the assets or earning power of
the Company and its subsidiaries (taken as a whole) to any Person or
Persons; provided, however, that notwithstanding anything to the
contrary herein, a Change in Control shall not include either (a) the
Distribution or Merger, or (b) any transfer to a consolidated
subsidiary, reorganization, spin-off, split-up, distribution, or other
similar or related transaction(s) or any combination of the foregoing in
which the core business and assets of the Company and its subsidiaries
(taken as a whole) are transferred to another entity ("Controlled") with
respect to which (1) the majority of the Board of Directors of the
Company (as constituted immediately prior to such transaction(s)) also
serve as directors of Controlled and immediately after such
transaction(s) constitute a majority of Controlled's board of directors,
and (2) more than 70% of the shareholders of the Company (immediately
prior to such transaction(s)) become shareholders or other owners of
Controlled and immediately after the transaction(s) control more than
70% of the ownership and voting rights of Controlled.
(f) The "Change in Control Date" shall mean the date
immediately prior to the effectiveness of the Change in Control.
(g) The "Committee" shall mean the Compensation
Committee of the Company's Board of Directors.
2
3
(h) The "Competitive Businesses" shall mean any of the
health care businesses in which the Company is engaged on the effective
date of the Distribution. Executive's serving on the Board of Directors
of Capstone is specifically excluded from the definition of competitive
businesses.
(i) "Effective Date" shall mean the effective date of
the Distribution; provided, however, that (a) in the event the Merger
Agreement is terminated prior to consummation of the Merger, or (b) all
of the Enumerated Executives do not enter into employment agreements
with the Company on or before the effective date of the Distribution,
then this Agreement shall be null and void ab initio and of no effect.
For purposes hereof, the "Enumerated Executives" consist of Xxxxx X.
Xxxxx, Xxxx X. Xxxxxxxxxxx, Xxxxxxx X. Xxxxxxx, T. Xxxxxx Xxxxx, Xxxxxx
X. Xxxxxxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx,
Xxxxxxxx Xxxxxxxxxxxxx, Xx., Xxxxxxx X. Small and Xxxxx X. Xxxxxxx.
(j) The Executive shall have "Good Reason" to terminate
employment if: (i) the Executive is not elected, reelected, or otherwise
continued in the office of the Company or any of its subsidiaries which
he held immediately prior to the Change in Control Date, or he is
removed as a member of the Board of Directors of the Company or any of
its subsidiaries if the Executive was a director immediately prior to
the Change in Control Date; (ii) the Executive's duties,
responsibilities or authority as an employee are materially reduced or
diminished from those in effect on the Change in Control Date without
the Executive's consent; (iii) the Executive's duties, responsibilities,
or authority as an employee are materially reduced or diminished from
those in effect on the Effective Date without the Executive's consent;
(iv) the Executive's compensation or benefits are reduced without the
Executive's consent, unless all Executive-level officers have their
compensation or benefits reduced in the same percentage amount; (v) the
Company reduces the potential earnings of the Executive under any
performance-based bonus or incentive plan of the Company in effect
immediately prior to the Change in Control Date; (vi) the Company
requires that the Executive's employment be based other than at its
location on the Effective Date without his consent; (vii) any purchaser,
assign, surviving corporation, or successor of the Company or its
business or assets (whether by acquisition, merger, liquidation,
consolidation, reorganization, sale or transfer of assets or business,
or otherwise) fails or refuses to expressly assume in writing this
Agreement and all of the duties and obligations of the Company hereunder
pursuant to Section 18 hereof; or (viii) the Company breaches any of the
provisions of this Agreement.
(k) "Person" shall have the meaning ascribed to such
term in Section 3(a)(9) of the Securities Exchange Act of 1934 and used
in Sections 13(d) and 14(d) thereof, including a "group" as defined in
Section 13(d).
(l) "Target Bonus" shall mean the target bonus (100%
level) established for the Executive for the year in question under the
Company's "Annual Incentive Plan."
(m) "Termination of Employment" shall mean the
termination of the Executive's employment by the Company other than such
a termination in connection with an offer of immediate reemployment by a
successor or assign of the Company or purchaser of the Company or its
assets under terms and conditions which would not permit the Executive
to terminate his employment for Good Reason.
3
4
2. Term. The initial term of this Agreement shall be for the
period commencing on the Effective Date and ending on the third anniversary of
the Effective Date. The Term shall be automatically extended by one additional
day for each day beyond the Effective Date of this Agreement that the Executive
remains employed by the Company until such time as the Company elects to cease
such extension by giving written notice of such to the Executive. (In such
event, the Agreement shall thus terminate on the third anniversary of the
effective date of such notice).
3. Position and Duties. During the Term, the Executive shall
serve, as an employee, as the Chairman and Chief Executive Officer of the
Company and shall have such duties, functions, responsibilities and authority
as are consistent with the Executive's position as the senior executive officer
in charge of the general management, business and affairs of the Company.
4. Compensation and Related Matters.
(a) Annual Base Salary. The Executive shall receive a
Base Salary at a rate of $700,000 per annum through December 31, 1997
and thereafter at any such greater rate as is determined by the
Committee.
(b) Benefits. During the Term, the Executive shall be
entitled to all of the following and any other benefits and
prerequisites offered by the Company to executives generally:
(i) Participate in the Company's present and
future stock option, restricted stock, phantom stock and other
similar equity-based incentive plans, pursuant to their terms.
Executive shall be 100% vested in his current stock option,
restricted stock, phantom stock, and performance share awards
issued by Xxxxxxx prior to the Distribution, and hereby agrees to
a substitution for all such stock options by a new grant of
similar Company stock options, as adjusted in number of shares
and exercise price to take into account the effect of the
Distribution.
(ii) Participate in the Company's Employee Stock
Purchase Plan, pursuant to its terms;
(iii) Participate in the Company's Executive
Deferred Compensation Plan, pursuant to its terms;
(iv) Participate in the Company's Executive
Retirement Plan, pursuant to its terms;
(v) $600,000 of individual life insurance
coverage under the Company's Executive Split Dollar Life
Insurance Plan;
(vi) $700,000 (or such greater amount as the
Company may make available to its senior executives generally) of
group term life insurance coverage;
(vii) $100,000 (or such greater amount as the
Company may make available to its senior executives generally) of
business travel accident insurance coverage when traveling on
Company business;
4
5
(viii) Participate in the Company's Medical Plan,
and Dental Plan, pursuant to their terms, except that the premium
cost for such shall be treated as a benefit under the Company's
Executive Medical Reimbursement Plan, described below, (and
therefore at the present time, there shall be no payroll
deduction as a condition of coverage in the Medical Plan and
Dental Plan);
(ix) Participate in the Company's Executive
Medical Reimbursement Plan (with a maximum benefit of $11,500 (or
such greater amount as the Company may make available to its
senior executives generally), a portion of which shall be deemed
applied to the payment of premiums under the Company's Medical
Plan and Dental Plan as described above), pursuant to its terms;
(x) Participate in the Company's group Long-Term
Disability Plan, at the maximum benefit level, pursuant to its
terms, and participate in the Company's Supplemental Long-Term
Disability Plan, according to its terms;
(xi) 4 weeks of paid vacation;
(xii) Participate in or receive benefits under any
other employee benefit plan or other arrangement made available
by the Company to any of its employees, subject to and on a basis
consistent with the terms, conditions and overall administration
of such plan or arrangement.
(c) Annual Bonus. As additional compensation for
services rendered, the Executive shall be eligible to receive an annual
bonus in cash pursuant to the Company's Annual Incentive Plan.
(d) Expenses. The Company shall promptly reimburse the
Executive for all reasonable travel and other business expenses incurred
by the Executive in the performance of his duties to the Company
hereunder.
(e) Reporting. The Executive shall report directly to
the Board of Directors of the Company.
5. Non-Solicitation.
(a) Executive shall not at any time during the period
of his employment with the Company, or during the one (1) year period
immediately following his Termination of Employment with the Company
("Non-Solicitation Period"), without the prior written consent of the
Company, on behalf of himself or any other person, solicit for
employment or employ any of the current officers or employees of the
Company; provided, however, that nothing contained herein shall prohibit
Executive from hiring employees of the Company when such employment
results from general solicitations for employment.
(b) Executive shall not at any time during the period
of his employment with the Company, or during the Non-Solicitation
Period, without the prior written consent of the Company, solicit for
his own use, or for the use of any company or person by whom he is
employed, or for whom he may be acting, any of the current customers of
the Company, nor shall he divulge to any other person any information or
fact relating to the management,
5
6
business (including prospective business), finances, its customers or
the terms of any of the contracts of the Company which has heretofore or
which may hereafter come to the knowledge of Executive which is not
freely available to the public.
(c) Executive shall not, during the Non-Solicitation
Period, in any way defame the Company or disparage its business
capabilities, products, plans or management to any customer, potential
customer, vendor, supplier, contractor, subcontractor of the Company so
as to affect adversely the goodwill or business of the Company.
(d) Executive covenants and agrees that a breach of
these subparagraphs (a), (b) or (c) would immediately and irreparably
harm the Company and that a remedy at law would be inadequate to
compensate the Company for its losses by reason of such breach and
therefore that the Company shall, in addition to any rights and remedies
available under this Agreement, at law or otherwise, be entitled to any
injunction to be issued by any court of competent jurisdiction enjoining
and restraining Executive from committing any violation of these
subparagraphs (a), (b) or (c), and Executive hereby consent to the
issuance of such injunction.
(e) For purposes of this Section 5 and in consideration
of this Agreement, this non-solicitation agreement has been separately
negotiated and bargained for, and constitutes a substantial portion of
the consideration for this Agreement.
6. Eligibility for Severance Benefits. The Executive shall
be eligible for the benefits described in Paragraph 7 (the "Severance
Benefits") if:
(a) during the Term, the Executive has a Termination
Employment initiated (i) by the Company without Cause or (ii) by the
Executive for Good Reason, and, in either case, subsections (b) or (c)
do not apply,
(b) during the Term there has been a Change in Control
and during the 31 day period commencing on the first day of the 13th
calendar month following the Change in Control Date (e.g. the period
April 1, 1999 - May 1, 1999, inclusive, for a Change in Control which is
effective in the month of March, 1998), the Executive has a Termination
of Employment initiated by the Executive without Good Reason, or
(c) during the Term either (i) there has been a Change
in Control and during the two year period commencing on the Change in
Control Date the Executive has a Termination of Employment which is
initiated by the Company without Cause or by the Executive for Good
Reason, or (ii) the Executive has a Termination of Employment initiated
by the Company without Cause or by the Executive for Good Reason
following the commencement of any discussion with a third person that
ultimately results in a Change in Control with such third person within
12 months of the commencement of such discussions (in which case, the
date of such discussion shall be substituted for the Change in Control
Date wherever appropriate, including in the definition of "Good Reason"
and in Paragraph 7 hereof).
7. Severance Benefit. Upon satisfaction of the requirements
set forth in Paragraph 6, and subject to Paragraphs 8 and 11, the Executive
shall be entitled to the following Severance Benefits:
6
7
(a) Cash Payment. The Executive shall be entitled to
receive an amount of cash equal to the Benefit Multiplier times the
greater of:
(i) the sum of the Executive's Base Salary as in
effect upon the Termination of Employment, and the greater of
(A) the Executive's Target Bonus as in
effect upon the Termination of Employment or,
(B) the Executive's actual bonus under
the Company's "Annual Incentive Plan" for the year prior
to the year of the Executive's Termination of Employment;
or
(ii) the sum of the Executive's Base Salary as in
effect on the Change in Control Date, and the greater of
(A) the Executive's Target Bonus as in
effect upon the Change in Control Date or,
(B) the Executive's actual bonus under
the Company's "Annual Incentive Plan" for the year prior
to the Change in Control Date.
The payment shall be made in a single lump sum within ten days following the
Executive's Termination of Employment.
(b) Long-Term Incentive Award; Equity-Based
Compensation. The Executive's interest under all of the Company's long-
term incentive plans shall be fully vested. Any and all (i) options to
purchase Company stock and (ii) restricted stock of the Company, owned
by the Executive shall be fully vested.
(c) Continuation of Benefits.
(i) For the Benefit Period, the Executive shall
be treated as if he had continued to be an executive employee for
all purposes under the Company's Medical Plan, Executive Medical
Reimbursement Plan and Dental Plan, as described in Paragraph
4(b). Following this period, the Executive shall be entitled to
receive continuation coverage under Part Six of Title I of ERISA
("COBRA Benefits") treating the end of this period as a
termination of the Executive's employment (other than for gross
misconduct).
(ii) The Company shall fully vest and maintain in
force, at its own expense, for the remainder of the Executive's
life, the life insurance in effect under the Company's Executive
Split Dollar Life Insurance Plan (as described in Paragraph 4(b))
as of the Change in Control Date or as of the date of Termination
of Employment, whichever is greater.
(d) Relocation Benefit; Office.
(i) If, within three years after the Executive's
Termination of Employment with the Company, the Executive gives
the Company written notice that
7
8
he desires to relocate within the continental United States, the
Company will reimburse the Executive for any reasonable
relocation expenses (in accordance with the Company's general
relocation policy for executives as then in effect, or, at the
Executive's election, as in effect on the Change in Control Date)
in connection with such relocation.
(ii) For the lesser of the Benefit Period or the
date Executive commences employment which provides an office to
Executive, the Company shall provide Executive with first-class
office space of not more than 800 square feet in a city to be
selected by the Executive and approved by the Company (with such
approval not to be unreasonably withheld).
(e) Executive Retirement Plan. For the year of the
Executive's Termination of Employment, the Company will make the
contribution to the Executive Retirement Plan on behalf of the Executive
that it would have made if the Executive had not had a Termination of
Employment, but in no event less than the percentage contribution it
made for the Executive in the immediately preceding year (and increased
to take account of the additional year of service), in each case taking
account of the Executive's annualized rate of "Compensation" (as defined
in the Executive Retirement Plan) and the percentage of such
Compensation that the Executive is contributing to the Executive
Retirement Plan, as of the date of Termination of Employment, and the
Company's matching contribution rate for such year (or, if greater, the
preceding year). The portion of the Company's matching contribution
which is based on the preceding year's contribution percentage shall be
contributed to the Executive Retirement Plan on behalf of the Executive
immediately upon the Executive's Termination of Employment and any
additional contribution required shall be paid as soon as the amount is
determined.
(f) Executive Deferred Compensation Plan. For the year
of the Executive's Termination of Employment, the Company will make the
contribution to its Executive Deferred Compensation Plan (the "EDC
Plan") that it would have made if the Executive had not had a
Termination of Employment determined based on the Executive's deferral
for such year. At Executive's election, the Company contribution shall
be paid to the Executive immediately upon his Termination of Employment.
(g) Disability. For the Benefit Period, the Company
shall provide long-term disability insurance benefits coverage to
Executive equivalent to the coverage that the Executive would have had
had he remained employed under the Company's Long-Term Disability Plan
and Supplemental Long-Term Disability Plan as described in Paragraph
4(b) applicable to Executive on the date of Termination of Employment,
or, at the Executive's election, the plan or plans applicable to
Executive as of the Change in Control Date. Should Executive become
disabled during such period, Executive shall be entitled to receive such
benefits, and for such duration, as the applicable plan(s) provide.
(h) Plan Amendments. The Company shall adopt such
amendments to its employee benefit plans and insurance policies as are
necessary to effectuate the provisions of this Agreement. If and to the
extent any benefits under this Paragraph 7 are not paid or payable or
otherwise provided to the Executive or his dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or
policy, the termination thereof, applicable law, or otherwise), then the
Company itself shall pay or provide for such benefits.
8
9
8. Golden Parachute Gross-Up. If, in the written opinion of
a Big 6 accounting firm engaged by either the Company or the Executive for this
purpose (at the Company's expense), or if so alleged by the Internal Revenue
Service, the aggregate of the benefit payments under Paragraph 7 would cause
the payment of one or more of such benefits to constitute an "excess parachute
payment" as defined in Section 280G(b) of the Internal Revenue Code ("Code"),
then the Company will pay to the Executive an additional amount in cash (the
"Gross-Up Payment") equal to the amount necessary to cause the net amount
retained by the Executive, after deduction of any (i) excise tax on the
payments under Xxxxxxxxx 0, (xx) federal, state or local income tax on the
Gross-Up Payment, and (iii) excise tax on the Gross-Up Payment, to be equal to
the aggregate remuneration the Executive would have received under Section 7,
excluding such Gross-Up Payment (net of all federal, state and local excise and
income taxes), as if Sections 280G and 4999 of the Code (and any successor
provisions thereto) had not been enacted into law. The Gross-Up Payment
provided for in this Paragraph shall be made within ten (10) days after the
termination of Executive's employment, provided however that if the amount of
the payment cannot be finally determined at the time, the Company shall pay to
Executive an estimate as determined in good faith by the Company 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 but in no event
later than the thirtieth (30th) day after the date of termination. Any dispute
concerning the application of this Paragraph shall be resolved pursuant to
Paragraph 10, and if Paragraph 11 applies, any reference in this Paragraph to
Paragraph 7 shall also be deemed to include a reference to Paragraph 11 as
well.
9. Waiver of Other Severance Benefits. The benefits payable
pursuant to this Agreement are in lieu of any other severance benefits which
may otherwise be payable to the Executive upon termination of employment with
either Xxxxxxx or the Company, whether or not in connection with a Change in
Control (including, without limitation, any benefits to which Executive might
otherwise have been entitled under any employment, change in control, or
severance agreement or other compensation or employee benefit plan to which
Xxxxxxx was a party or which was assumed by Xxxxxxx), except those benefits
which are to be made available to the Executive as required by applicable law.
10. Disputes. Any dispute or controversy arising under, out
of, in connection with or in relation to this Agreement shall, at the election
and upon written demand of either party, be finally determined and settled by
binding arbitration in the city of Fort Xxxxx, Arkansas, using a single
arbitrator, in accordance with the Labor Arbitration rules and procedures of
the American Arbitration Association, and judgment upon the award may be
entered in any court having jurisdiction thereof. The arbitrator shall have
the power to order specific performance, mandamus, or other appropriate legal
or equitable relief to enforce the provisions of this Agreement. The Company
shall pay all costs of the arbitration and all reasonable attorney's and
accountant's fees of the Executive in connection therewith.
11. Additional Payments Due to Dispute. Notwithstanding
anything to the contrary herein, and without limiting the Executive's rights at
law or in equity, if the Company fails or refuses to timely pay to the
Executive the benefits due under Paragraphs 7 and/or 8 hereof, then the
benefits under Paragraph 7(a) shall be increased and the benefits under
Paragraphs 7(c), 7(d), and 7(g) shall each be continued by one additional day
for each day of any such failure or refusal of the Company to pay. In
addition, any Gross-Up Payment due under Paragraph 8 shall be increased to take
into account any increased benefits under this Paragraph.
12. No Set-Off. There shall be no right of set-off or
counterclaim in respect of any claim, debt, or obligation against any payment
to or benefit for the Executive provided for in this Agreement.
9
10
13. No Mitigation Obligation. The parties hereto expressly
agree that the payment of the benefits by the Company to the Executive in
accordance with the terms of this Agreement will be liquidated damages, and
that the Executive shall not be required to mitigate the amount of any payment
provided for in this Agreement by seeking other employment or otherwise, nor
shall any profits, income, earnings or other benefits from any source
whatsoever create any mitigation, offset, reduction or any other obligation on
the part of the Executive hereunder or otherwise.
14. Trust. Any payments or installments that may be required
to be made to Executive under this Agreement shall be funded immediately prior
to any Change in Control Date (or, if earlier, within ten (10) days after any
Termination of Employment) by a contribution by the Company of the necessary
amount of cash, as determined by independent actuaries acceptable to both
Executive and the Company, to the irrevocable grantor trust created for such
purpose by Xxxxxxx and assumed by and transferred to the Company in connection
with the Distribution, with Chemical Bank as Trustee, a copy of which Trust
Agreement may be obtained from the Company or the Trustee.
15. Letter of Credit for Legal Fees. In order to ensure the
benefits intended to be provided to the Executive hereunder, immediately prior
to any Change in Control Date the Company shall establish and hereby agrees to
maintain throughout the remaining Term an irrevocable standby Letter of Credit
in favor of the Executive and each other person who is named an Executive under
similar agreements, drawn on a bank selected by the Company (the "Letter of
Credit") which provides for a credit amount of $250,000 being made available to
the Executive against presentation at any time and from time to time of his
clean sight drafts, accompanied by statements of his counsel for fees and
expenses, in an aggregate amount not to exceed $250,000, unless a larger amount
is authorized by either the Chief Executive Officer, General Counsel, Chief
Financial Officer, or an Executive Vice President of the Company.
16. Waiver of Rights with Respect to Xxxxxxx Enterprises, Inc.
Executive hereby waives any rights against Xxxxxxx, including without
limitation any rights under any employment, change in control, or severance
agreement; under any stock option or long-term incentive plan or any other
compensation or employee benefit plan; or any rights he may have by virtue of
the Distribution or Merger constituting a Change in Control under any such
agreement or plan or any other Xxxxxxx compensation or employee benefit plan.
Executive also agrees to the cancellation of his Xxxxxxx stock options and the
substitution of such options with new stock options to be issued by the Company
with similar terms and conditions (including 100% vesting) as the prior
options, other than an increase in the number of such options and a decrease in
the exercise price thereof in order to take into account the effect of the
Distribution. Executive also waives any rights against the Company or Capstone
which he might otherwise have by virtue of the Distribution or Merger
constituting a Change in Control under any such aforementioned Xxxxxxx
agreements or plans.
17. Non-disclosure of Proprietary Information, Surrender of
Records; Inventions and Patents.
(a) Proprietary Information. Executive shall not
during the term of employment or at any time thereafter (irrespective of
the circumstances under which Executive's employment terminates),
directly or indirectly use for his own purpose or for the benefit of any
person or entity other than Company, nor otherwise disclose, any
proprietary information, as defined below, to any individual or entity,
unless such disclosure has been authorized in writing by the Company or
is otherwise required by law. For purposes of this Agreement, the term
"proprietary information" shall include, but is not limited to: (a) the
name or address of any
10
11
client or affiliate of Company or any information concerning the
transactions or relations of any client or affiliate of Company with
Company or any of its shareholders; (b) any information concerning any
product, service, methodology, analysis, presentation, technology or
procedure employed by Company but not generally known to its clients or
competitors, or under development by or being tested by Company but not
at the time offered generally to clients; (c) any information relating
to Company's computer software, computer systems, pricing or marketing
methods, capital structure, operating results, borrowing arrangements or
business plans; (d) any information which is generally regarded as
confidential or proprietary in any line of business engaged in by
Company; (e) any information contained in any of Company's written or
oral policies and procedures or employee manuals; (f) any information
belonging to clients or affiliates of Company which Company has agreed
to hold in confidence; (g) any inventions, innovations or improvements
covered by subsection 17(c) below; (h) any other information which
Company has reasonably determined to be confidential or proprietary; and
(i) all written, graphic, electronic and other material relating to any
of the foregoing. Information that is not novel or copyrighted or
patented may nonetheless be proprietary information. Proprietary
information, however, shall not include any information that is or
becomes generally known to the industries in which Company competes
through sources independent of Company or Executive or through
authorized publication by Company to persons other than Company's
employees.
(b) Confidentiality and Surrender of Records.
Executive shall not during the term of employment or at any time
thereafter (irrespective of the circumstances under which Executive's
employment terminates), except as required by law, directly or
indirectly give or disclose any "confidential records" (as hereinafter
defined) to, or permit any inspection or copying of confidential records
by, any individual or entity other than in the ordinary course and scope
of such individual's or entity's employment or retention by Company, nor
shall he use or retain any of the same following termination of his
employment. Executive shall promptly return to Company all
"confidential records" upon the termination of Executive's employment
with Company. For purposes hereof, "confidential records" means all
correspondence, memoranda, files, analyses, studies, reports, notes,
documents, manuals, books, lists, financial, operating or marketing
records, computer software, magnetic tape, or electronic or other media
or equipment of any kind which may be in Executive's possession or under
his control or accessible to him which contain any proprietary
information as defined in subsection 17(a) above. All confidential
records shall be and remain the sole property of Company during the
term of employment and thereafter.
(c) Inventions, Patents, and Copyrights. All
inventions, innovations or improvements in Company's method of
conducting its business (including policies, procedures, products,
improvements, software, ideas and discoveries, whether or not patentable
or copyrightable) conceived or made by Executive, either alone or
jointly with others, during the term of employment belong to Company.
Executive will promptly disclose in writing such inventions, innovations
or improvements to Company and perform all actions reasonably requested
by Company to establish and confirm such ownership by Company,
including, but not limited to, cooperating with and assisting Company in
obtaining patents and copyrights for Company in the United States and in
foreign countries. Any patent or copyright application filed by
Executive within a year after termination of his employment hereunder
shall be presumed to relate to an invention or work of authorship which
was made during the term of employment unless Executive can provide
conclusive evidence to the contrary.
11
12
18. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by the
voluntary or involuntary dissolution of the Company or by any merger or
consolidation where the Company is not the surviving corporation, or
upon any transfer of all or substantially all of the Company's assets,
or any other Change in Control. The Company shall require any
purchaser, assign, surviving corporation or successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. This Agreement shall be
binding upon and inure to the benefit of the Company and any purchaser,
assign, surviving corporation or successor to the Company, including
without limitation any persons acquiring directly or indirectly all or
substantially all of the business and/or assets of the Company whether
by purchase, merger, consolidation, reorganization, transfer of all or
substantially all of the business or assets of the Company, or otherwise
(and such purchaser, assign, surviving corporation or successor shall
thereafter be deemed the "Company" for the purposes of this Agreement),
but this Agreement shall not otherwise be assignable, transferable or
delegable by the Company.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees and/or
legatees.
(c) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign,
transfer or delegate this Agreement or any rights or obligations
hereunder except as expressly provided in this Section 18. Without
limiting the generality of the foregoing, the Executive's right to
receive payments hereunder shall not be assignable, transferable or
delegable, whether by pledge, creation of a security interest or
otherwise, or otherwise subject to anticipation, alienation, sale,
encumbrance, charge, hypothecation, or set-off in respect of any claim,
debt, or obligation, or to execution, attachment, levy or similar
process, or assignment by operation of law, other than by a transfer by
his will or by the laws of descent and distribution. Any attempt,
voluntarily or involuntarily, to effect any action prohibited by this
Paragraph shall be null, void, and of no effect.
19. Notices. Any notice, request, claim, demand, document and
other communication hereunder to any party shall be effective upon receipt (or
refusal of receipt) and shall be writing and delivered personally or sent by
telex, telecopy, or certified or registered mail, postage prepaid, or other
similar means of communication, as follows:
(a) If to the Company, addressed to its principal
executive offices to the attention of its Secretary;
(b) If to the Executive, to him at the address set
forth below under the Executive's signature, or at any such other
address as either party shall have specified by notice in writing to the
other.
12
13
20. Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by the
Executive and by a duly authorized representative of the Board of Directors.
By an instrument in writing similarly executed, either party may waive
compliance by the other party with any provision of this Agreement that such
other party was or is obligated to comply with or perform; provided, however,
that such waiver shall not operate as a waiver of, or estoppel with respect to,
any other or subsequent failure. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, or
power hereunder preclude any other or further exercise thereof or the exercise
of any other right, remedy, or power provided herein or by law or in equity.
21. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of the subject matter contained
herein and supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto. The parties further
intend that this Agreement shall constitute the complete and exclusive
statement of its terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding involving
this Agreement.
22. Severability; Enforcement. If any provision of this
Agreement, or the application thereof to any person, place, or circumstance
shall be held by a court of competent jurisdiction to be invalid, unenforceable
or void, the remainder of this Agreement and such provisions as applied to
other persons, places and circumstances shall remain in full force and effect.
23. Indemnification. The Company shall indemnify, defend, and
hold the Executive harmless from and against any liability, damages, costs, or
expenses (including attorney's fees) in connection with any claim, cause of
action, investigation, litigation, or proceeding involving him by reason of his
having been an officer, director, employee, or agent of either the Company or
Xxxxxxx, unless it is judicially determined, in a final, nonappealable order
that the Executive was guilty of gross negligence or willful misconduct. The
Company also agrees to maintain adequate directors and officers liability
insurance for the benefit of Executive for the term of this Agreement and for
at least three years thereafter.
24. Governing Law. This Agreement shall be interpreted,
administered and enforced in accordance with the law of the State of Arkansas,
except to the extent pre-empted by Federal law.
13
14
The parties have duly executive this Agreement as of the date
first written above.
NEW XXXXXXX HOLDINGS, INC. EXECUTIVE
By:
------------------------------------- ----------------------------------
Xxxxx X. Xxxxxxx, Xx. Xxxxx X. Xxxxx
Chairman, Compensation Committee 3421 Free Ferry
Board of Directors Xxxx Xxxxx, XX 00000
By:
-------------------------------------
Xxxxxx X. Xxxxxxxxxxx Agreed as to those provisions
Secretary relating to or affecting
Xxxxxxx Enterprises, Inc.
0000 Xxxxxx Xxxxxx, Xxxxx 00-X XXXXXXX ENTERPRISES, INC.
Xxxx Xxxxx, XX 00000
Attention: Secretary By:
------------------------------
Xxxxx X. Xxxxxxx, Xx.
Chairman, Compensation
Committee Board of
Directors
By:
------------------------------
Xxxxxx X. Xxxxxxxxxxx
Secretary
14
