EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (this “Agreement”)
is made and entered into effective as of the 30th day of December, 2008 (the
“Effective
Date”), by and between Xxxxxx Industries,
Inc., a corporation organized under the laws of the State of Tennessee,
USA (the “Company”),
and Xxxxx Xxxxxxx (the “Executive”).
WHEREAS,
Executive and the Company entered into an employment agreement (the “Original
Agreement”) as of September, 1998, embodying the terms of Executive’s
employment and pursuant to which Executive has been serving as Executive Vice
President, General Counsel and Secretary of the Company; and
WHEREAS,
this Agreement amends and restates the Original Agreement as of the Effective
Date in order, inter alia, to evidence formal compliance with Section 409A of
the Internal Revenue Code of 1986, as amended, and the guidance thereunder (such
Section, referenced herein as “Section
409A”; and such code, referenced herein as the “Code”).
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein and for
other good and valuable consideration, the parties hereto agree as
follows:
1. Employment. Subject to the terms and conditions
of this Agreement, Executive shall be employed by the Company as Executive Vice
President, General Counsel and Secretary of the Company, and shall perform such
duties and functions for the Company and any company controlling, controlled by
or under common control with the Company (such companies hereinafter
collectively called “Affiliates”)
as shall be specified from time to time by the Chief Executive Officer (“CEO”)
or the Board of Directors of the Company; Executive hereby accepts such
employment and agrees to perform such executive duties as may be assigned to
him.
2. Duties. Executive shall devote his full
business related time and best efforts to accomplishing such executive duties at
such locations as may be requested by the CEO or Board of Directors of the
Company. While employed by the Company, Executive shall not serve as a
principal, partner, employee, officer or director of, or consultant to, any
other business or entity conducting business for profit without the prior
written approval of the CEO of the Company. In addition, under no circumstances
will Executive have any financial interest in any competitor of the Company;
provided, however, that Executive may invest in no more than 2% of the
outstanding stock or securities of any competitor whose stock or securities are
traded on a national stock exchange of any country.
3. Term.
The term of this Agreement shall be for a rolling, three (3) year term
commencing on the date hereof, and shall be deemed automatically (without
further action by either the Company or the Executive) to extend each day for an
additional day such that the remaining term of the Agreement shall continue to
be three (3) years; provided, however, that on Executive’s 62nd
birthday this Agreement shall cease to extend automatically and, on such date,
the remaining “term” of this Agreement shall be three (3) years; provided
further that the Company may, by notice to the Executive, cause this Agreement
to cease to extend automatically and, upon such notice, the “Term”
of this Agreement shall be three (3) years following such notice.
4. Compensation
and Benefits.
As compensation for his services during the Term of this Agreement, Executive
shall be paid and receive the amounts and benefits set forth in subsections (a),
(b), and (c) below:
(a) Base
Salary.
An annual base salary (“Base
Salary”) of $214,117 prorated for any partial year of employment.
Executive’s Base Salary shall be subject to annual review, for adjustments at
such time as the Company conducts salary reviews for its executive officers
generally. Executive’s salary shall be payable in accordance with the Company’s
regular payroll practices in effect from time to time for executive officers of
the Company.
(b) Bonus.
In addition to the Base Salary, the Executive shall be entitled to participate
in any of the Company’s present and future stock or cash based bonus plans that
are generally available to its executive officers, as such plans may exist or be
changed from time to time at the discretion of the Company
(c) Other
Benefits.
Executive shall be entitled to vacation with pay, life insurance, health
insurance, fringe benefits, and such other employee benefits generally made
available by the Company to its executive officers, in accordance with the
established plans and policies of the Company, as in effect from time to
time.
5. Termination.
(a) By
Executive. Executive may voluntarily terminate
his employment hereunder at any time, to be effective 60 days after delivery to
the Company of his signed, written resignation; Company may accept said
resignation and pay Executive in lieu of waiting for passage of the notice
period. Executive hereby agrees and acknowledges that if he voluntarily resigns
from his employment prior to the end of the Term of this Agreement, then he
shall be entitled to no payment or compensation whatsoever from the Company
under this Agreement, other than as may be due him through his last day of
employment.
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(b) By
Company.
Subject to the terms of this Paragraph and Paragraph 5(c) below, the Company may
terminate Executive’s employment hereunder, in its sole discretion, whether with
or without just cause (as defined in Paragraph 5(b)(viii) below and subject to
the notice periods described therein), at any time upon written notice to
Executive. If the Company terminates Executive’s employment for just cause (as
defined in (viii) below), Executive shall be entitled to no payment or
compensation whatsoever from the Company under this Agreement, other than as may
be due him through his last day of employment. If, prior to the end of the Term
of this Agreement, the Company terminates Executive’s employment without just
cause (as defined in (viii) below), the Executive shall be entitled to receive,
as damages payable as a result of, and arising from, a breach of this Agreement,
the compensation and benefits set forth in (i) through (iv) below. Except to the
extent provided in (vii) below, Executive shall not be required to mitigate
damages by reducing the amounts he is entitled to receive hereunder by earnings
from subsequent employment. The time periods in (i) through (iii) below shall be
the lesser of the 36-month period stated therein or the time period remaining
from the date of Executive’s termination to the end of the Term of this
Agreement. All compensation payable under (i) through (iv) below shall be
subject to the terms of Paragraph 8 below, which may delay the payment of the
compensation for up to 6 months.
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(i) Base
Salary. The Executive will continue to receive his current salary
(subject to withholding of all applicable taxes and any amounts referred
to in paragraph (iii) below) for a period of thirty-six (36) months from
his date of termination, payable in normal payroll periods, in the same
manner as it was being paid as of the date of termination, and no less
frequently than monthly. For purposes hereof, the Executive’s “current
salary” shall be the highest rate in effect during the twelve-month period
prior to the Executive’s termination.
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(ii) Bonus.
The Executive shall be paid bonus payments from the Company in each of the
thirty-six (36) months following the month in which his employment is
terminated in an amount for each such month equal to one-twelfth of the
average (“Average
Bonus”) of the bonuses earned by him for the three calendar years
immediately preceding the year in which such termination occurs. Any bonus
amounts that the Executive had previously earned from the Company but
which may not yet have been paid as of the date of termination shall not
be affected by this provision. Executive shall also receive, within 60
days after the date of his termination, a prorated bonus for any
uncompleted fiscal year at the date of termination equal to the Average
Bonus multiplied by the number of days he worked in such year divided by
365 days.
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(iii) Health
and Life Insurance Coverage. The Company shall provide Executive
(and any spouse or dependents covered at the time of the Executive’s
termination) with medical, dental, life insurance and other health
benefits (pursuant to the same Company Plans that are medical, dental,
life insurance and other health benefit plans and that are in effect for
active employees of the Company), for thirty-six (36) months following the
date of Executive’s termination of employment. The coverages provided for
in this paragraph shall be applied against and reduce the period for which
COBRA will be
provided.
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(1) To
the extent that such medical, dental or other health benefit plan coverage
is provided under a self-insured plan maintained by the Company (within
the meaning of Section 105(h) of the
Code):
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(X) the
charge to Executive for each month of coverage will equal the monthly
COBRA charge established by the Company for such coverage in which the
Executive or the Executive’s spouse or dependents (as applicable) are
enrolled from time to time, based on the coverage generally provided to
salaried employees (less the amount of any administrative charge typically
assessed by the Company as part of its COBRA charge), and Executive will
be required to pay such monthly charge in accordance with the Company’s
standard COBRA premium payment requirements;
and
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(Y) on
the date of Executive’s termination of employment (subject to delay under
Paragraph 8 below), the Company will pay Executive a lump sum in cash
equal, in the aggregate, to the monthly COBRA charge established by the
Company for the coverage being provided on Executive’s termination date to
the Executive and, if applicable, his spouse and dependents, for each
month of coverage in the 36-month period. For this purpose, the Company’s
monthly COBRA charge will be increased by 10% on each January in the
projected payment period and such increased amount shall apply to each
successive month in the calendar year in which the increase became
applicable.
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(2) To
the extent that such medical, dental or other health benefit plan coverage
is provided under a fully-insured medical reimbursement plan (within the
meaning of Section 105(h) of the Code), there will be no charge to
Executive for such
coverage.
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(iv) Stock
Options and Other Equity Awards. As of Executive’s date of
termination, all outstanding stock options, stock appreciation rights,
restricted stock units, and other equity awards granted to Executive under
the Stock Option and Incentive Plan and any other Company stock plans (the
“Stock
Option Plans”) shall become 100% vested and immediately
exercisable. To the extent necessary, the provisions of this paragraph
(iv) shall constitute an amendment of the Executive’s stock option or
other equity compensation agreements under the Stock Option
Plans.
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(v)
Effect
of Death. In the event of the Executive’s death after his
termination of employment by the Company under this Paragraph 5(b), the
benefits payable under (i) and (ii) of this Paragraph 5(b) shall continue
for a period of twelve (12) months, or, if shorter, until the end of the
Term of this Agreement; provided, however, such payments will be paid in a
lump sum payment within 60 days following the Executive’s death, to the
Executive’s surviving spouse, or, if none, to the Executive’s estate. In
addition, in the event of Executive’s death, any dependent coverage in
effect under (iii) of this Paragraph 5(b) shall continue, for a period of
12 months, or, if shorter, until the end of the Term of this
Agreement.
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(vi) Coordination
with Change in Control Agreement. Notwithstanding any provision of
this Agreement to the contrary, if Executive’s employment is terminated
(whether by the Company or by Executive) under circumstances that would
entitle him to receive benefits under his agreement with the Company
providing compensation and benefits for termination following a “change in
control” of the Company (as defined in such agreement), then any such
termination shall be treated under this Agreement as a termination by the
Company without just cause and the Executive shall be entitled to the
compensation and benefits set forth in (i) through (iv) above for the time
periods provided in this Paragraph 5(b), and such amounts shall be treated
as damages payable as a result of, and arising from, a breach of this
Agreement.
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(vii) Mitigation.
If Executive becomes entitled to compensation and benefits under this
Paragraph 5(b) and such payments would be considered to be severance
payments contingent upon a change in control under Code Section 280G,
Executive shall be required to mitigate damages (but only with respect to
amounts that would be treated as severance payments under Code Section
280G) by reducing the amount of severance payments he is entitled to
receive by any compensation and benefits he earns from subsequent
employment (but shall not be required to seek such
employment).
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(viii) “Just Cause”. For purposes of this
Agreement, the phrase “just cause” shall mean: (A) Executive’s material
fraud, malfeasance, gross negligence, or willful misconduct with respect
to business affairs of the Company which is directly or materially harmful
to the business or reputation of the Company or any subsidiary of the
Company; (B) Executive’s conviction of or failure to contest
prosecution for a felony or a crime involving moral turpitude; or (C)
Executive’s material breach of this Agreement. A termination of Executive
for just cause based on clause (A) or (C) of the preceding sentence shall
take effect 30 days after the Executive receives from Company written
notice of intent to terminate and Company’s description of the alleged
cause, unless Executive shall, during such 30-day period, remedy the
events or circumstances constituting cause; provided, however, that such
termination shall take effect immediately upon the giving of written
notice of termination of just cause under any clause if the Company shall
have determined in good faith that such events or circumstances are not
remediable (which determination shall be stated in such
notice).
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(c) By
Death. If Executive’s employment is
terminated due to Executive’s death, the Executive’s surviving spouse, or if
none, his estate, shall receive the benefits payable under (i) and (ii) of
Paragraph 5(b) above; provided, however, such payments shall be for a period of
12 months rather than 36 months and such payments shall be made in a lump sum
payment within 60 days of the Executive’s death.
(d) For
Disability.
If Executive’s employment is terminated due to Executive’s disability (as
defined in the Company’s long-term disability plan or insurance policy, or if no
such plan or policy, as determined in good faith by the Company), Executive
shall be entitled to the benefits payable or to be provided under (i), (ii),
(iii) and (iv) of Paragraph 5(b); provided, however, the benefits under (i),
(ii) or (iii) of Paragraph 5(b) shall be payable or to be provided for a period
of 24 months. Executive or his estate, as the case may be, shall not by
operation of this paragraph forfeit any rights in which he is vested at the time
of his death or disability.
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(e) Survival
of Restrictive Covenants.
Upon termination of Executive’s employment for any reason whatsoever (whether
voluntary on the part of Executive, for just cause, or other reasons), the
obligations of Executive pursuant to Paragraphs 6 and 7 hereof shall survive and
remain in effect for the periods described in Paragraph 6.
6.
Competition,
Confidentiality, and Nonsolicitation. Executive agrees to be bound by the
terms and conditions of the Noncompetition Agreement attached hereto as Exhibit
“A”, which is hereby made a part of this Agreement.
7.
Injunctive
Relief. The Executive acknowledges that his
services to be rendered to the Company are of a special and unusual character
which have a unique value to the Company, the loss of which cannot adequately be
compensated by damages in an action at law. Executive further acknowledges that
any breach of the terms of Paragraph 6, including Exhibit ”A”, would
result in material damage to the Company, although it might be difficult to
establish the monetary value of the damage. Executive therefore agrees that the
Company, in addition to any other rights and remedies available to it, shall be
entitled to obtain an immediate injunction (whether temporary or permanent) from
any court of appropriate jurisdiction in the event of any such breach thereof by
Executive, or threatened breach which the Company in good faith believes will or
is likely to result in irreparable harm to the Company. The existence of any
claim or cause of action by Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of Executive’s agreement under this Paragraph and Paragraph 6
above.
8.
Section
409A.
(a) Meaning
of Termination of Employment. Solely as necessary to comply with
Section 409A, for purposes of Paragraph 5(b) and Paragraph 5(d), “termination of
employment” or “employment termination” or similar terms shall have the same
meaning as “separation from service” under Section 409A(a)(2)(A)(i) of the
Code.
(b) Installment
Payments.
For purposes of Paragraph 5(b) with respect to amounts payable in the event of
termination of employment by the Company without just cause and Paragraph 5(d)
with respect to amount payable in the event of termination of Executive’s
employment for Disability, each such payment is a separate payment within the
meaning of the final regulations under Section 409A. Each such payment that is
made within 2-1/2 months following the end of the year that contains the date of
Executive’s termination of employment is intended to be exempt from Section 409A
as a short-term deferral within the meaning of the final regulations under
Section 409A, each such payment that is made later than 2-1/2 months following
the end of the year that contains the date of Executive’s termination of
employment is intended to be exempt under the two-times separation pay exception
of Treasury Reg. § 1.409A-1(b)(9)(iii) up to the limitation on the availability
of such exception specified in such regulation, and each such payment that is
made after the two-times separation pay exception ceases to be available shall
be subject to delay in accordance with Paragraph 8(c) below.
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(c) Six
Month Delay. This Agreement will be construed and
administered to preserve the exemption from Section 409A of payments that
qualify as a short-term deferral or that qualify for the two-times separation
pay exception. With respect to other amounts that are subject to Section 409A,
it is intended, and this Agreement will be so construed, that any such amounts
payable under this Agreement and the Company’s and Executive’s exercise of
authority or discretion hereunder shall comply with the provisions of Section
409A and the treasury regulations relating thereto so as not to subject
Executive to the payment of interest and additional tax that may be imposed
under Section 409A. As a result, in the event Executive is a “specified
employee” on the date of Executive’s termination of employment (with such status
determined by the Company in accordance with rules established by the Company in
writing in advance of the “specified employee identification date” that relates
to the date of Executive’s termination of employment, or in the absence of such
rules established by the Company, under the default rules for identifying
specified employees under Section 409A), any payment that is subject to Section
409A, that is payable to Executive in connection with Executive’s termination of
employment, shall not be paid earlier than six months after such termination of
employment (if Executive dies after the date of Executive’s termination of
employment but before any payment has been made, such remaining payments that
were or could have been delayed will be paid to Executive’s estate without
regard to such six-month delay).
9.
Miscellaneous.
(a) Notice. Any notice or other communication
required or permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered personally or
seven days after mailing if mailed first class by registered or certified mail,
postage prepaid, addressed as follows:
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If
to the Company:
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Xxxxxx
Industries, Inc.
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X.X.
Xxx 000
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0000
Xxxxxxx Xxxxx
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Xxxxxxxx,
Xxxxxxxxx 00000
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Attention:
President
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If
to the Executive:
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Xxxxx
Xxxxxxx
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000
Xx. Xxxxx Xxxxx
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Xxxxxxxx,
Xxxxxxx
00000
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or to
such other address as any party may designate by notice to the
others.
(b) Entire
Agreement. This Agreement constitutes the
entire agreement between the parties hereto with respect to the Executive’s
employment by the Company, and supersedes and is in full substitution for any
and all prior understandings or agreements with respect to the Executive’s
employment.
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(c) Amendment.
This Agreement may be amended only by an instrument in writing signed by
the parties hereto, and any provision hereof may be waived only by an instrument
in writing signed by the party or parties against whom or which enforcement of
such waiver is sought. The failure of either party hereto to comply with any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either party hereto
of a breach of any provision hereof be taken or held to be a waiver of any
succeeding breach of such provision, or a waiver of the provision itself, or a
waiver of any other provision of this Agreement.
(d) Binding
Effect.
This Agreement is binding on and is for the benefit of the parties hereto
and their respective successors, heirs, executors, administrators and other
legal representatives. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Executive or the Company, except for assignment
by the Company to any wholly owned subsidiary.
(e) Severability
and Modification.
If any provision of this Agreement or portion thereof is so broad, in
scope or duration, so as to be unenforceable, such provision or portion thereof
shall be interpreted to be only so broad as is enforceable. In addition, to the
extent that any provision of this Agreement as applied to either party or to any
circumstances shall be adjudged by a court of competent jurisdiction to be void
or unenforceable, the same shall in no way affect any other provision of this
Agreement or the validity or enforceability of this Agreement.
(f)
Interpretation.
This Agreement shall be interpreted, construed and governed by and under
the laws of the State of Tennessee. Each party irrevocably (i) consents to the
exclusive jurisdiction and venue of the courts of Xxxxxxxx County, State of
Tennessee and federal courts in the Eastern District of Tennessee, in any action
arising under or relating to this Agreement (including Exhibit “A” hereto), and
(ii) waives any jurisdictional defenses (including personal jurisdiction and
venue) to any such action. If any provision of this Agreement is deemed or held
to be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, this Agreement shall be considered divisible and
inoperative as to such provision to the extent it is deemed to be illegal,
invalid or unenforceable, and in all other respects this Agreement shall remain
in full force and effect; provided, however, that if any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable there shall
be added hereto automatically a provision as similar as possible to such
illegal, invalid or unenforceable provision as shall be legal, valid or
enforceable. Further, should any provision contained in this Agreement ever be
reformed or rewritten by any judicial body of competent jurisdiction, such
provision as so reformed or rewritten shall be binding upon the Executive and
the Company.
(g) Failure
to Enforce.
The failure of either party hereto at any time, or for any period of
time, to enforce any of the provisions of this Agreement shall not be construed
as a waiver of such provision(s) or of the right of such party hereafter to
enforce each and every such provision.
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(h) Counterparts.
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which shall constitute one and the same
instrument.
(i) No
Conflicting Agreement.
The Executive represents and warrants that he is not party to any
agreement, contract or understanding which would prohibit him from entering into
this Agreement or performing fully his obligations hereunder.
IN
WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the date first written above.
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XXXXXX
INDUSTRIES, INC.
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By:
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/s/
Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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President
and Co-Chief Executive Officer
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EXECUTIVE
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| /s/ Xxxxx Xxxxxxx | |||
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Xxxxx
Xxxxxxx
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