Exhibit 10.23
EXECUTIVE CHANGE-IN-CONTROL
SEVERANCE AGREEMENT FOR XXXXXXX X. XXXXXX
Xxxxxx Industries, Inc.
September 2005
CONTENTS
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Article 1. Definitions..................................................1
Article 2. Severance Benefits...........................................5
Article 3. Form and Timing of Severance Benefits........................9
Article 4. Noncompetition and Confidentiality...........................9
Article 5. Excise Tax Equalization Payment.............................10
Article 6. The Company's Payment Obligation............................11
Article 7. Term of Agreement...........................................11
Article 8. Legal Remedies..............................................12
Article 9. Successors..................................................12
Article 10. Miscellaneous...............................................12
XXXXXX INDUSTRIES, INC.
EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT
THIS EXECUTIVE CHANGE-IN-CONTROL SEVERANCE AGREEMENT is made, entered
into, and is effective this 16th day of September, 2005 (hereinafter referred to
as the "Effective Date"), by and between Xxxxxx Industries, Inc. (the
"Company"), a Delaware corporation, and Xxxxxxx X. Xxxxxx (the "Executive").
WHEREAS, the Executive is being employed by the Company; and
WHEREAS, the Company is desirous of assuring insofar as possible, that
it will continue to have the benefit of the Executive's services; and the
Executive is desirous of having such assurances; and
WHEREAS, the Company recognizes that circumstances may arise in which a
Change in Control of the Company occurs, through acquisition or otherwise,
thereby causing uncertainty of employment without regard to the Executive's
competence or past contributions. Such uncertainty may result in the loss of the
valuable services of the Executive to the detriment of the Company and its
shareholders; and
WHEREAS, both the Company and the Executive are desirous that any
proposal for a Change in Control or acquisition will be considered by the
Executive objectively and with reference only to the business interests of the
Company and its shareholders; and
WHEREAS, the Executive will be in a better position to consider the
Company's best interests if the Executive is afforded reasonable security, as
provided in this Agreement, against altered conditions of employment which could
result from any such Change in Control or acquisition.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE 1. DEFINITIONS
Wherever used in this Agreement, the following terms shall have the
meanings set forth below and, when the meaning is intended, the initial letter
of the word is capitalized:
(a) "Agreement" means this Executive Change-in-Control Severance
Agreement.
(b) "Base Salary" means, at any time, the then regular annual rate
of pay which the Executive is receiving as annual salary,
excluding amounts: (i) received under short-term or long-term
incentive or other bonus plans, regardless of whether or not
the amounts are deferred, or (ii) designated by the Company as
payment toward reimbursement of expenses.
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(c) "Beneficial Owner" shall have the meaning ascribed to such
term in Rule 13d-3 of the General Rules and Regulations under
the Exchange Act.
(d) "Board" means the Board of Directors of the Company.
(e) "Cause" shall be determined solely by the Committee in the
exercise of good faith and reasonable judgment, and shall mean
the occurrence of any one or more of the following:
(i) The Executive's willful and continued failure to
substantially perform his duties with the Company
(other than any such failure resulting from the
Executive's Disability), after a written demand for
substantial performance is delivered to the Executive
that specifically identifies the manner in which the
Committee believes that the Executive has not
substantially performed his duties, and the Executive
has failed to remedy the situation within fifteen
(15) business days of such written notice from the
Company; or
(ii) The Executive's conviction of a felony; or
(iii) The Executive's willful engaging in conduct that is
demonstrably and materially injurious to the Company,
monetarily or otherwise. However, no act or failure
to act on the Executive's part shall be deemed
"willful" unless done, or omitted to be done, by the
Executive not in good faith and without reasonable
belief that the action or omission was in the best
interests of the Company.
(f) "Change in Control" of the Company shall mean the occurrence
of any one (1) or more of the following events:
(i) Any Person (other than the Company or any corporation
owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as
their ownership of stock of the Company, and any
trustee or other fiduciary holding securities under
an employee benefit plan of the Company or such
proportionately owned corporation), is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Company representing more than
thirty percent (30%) of the combined voting power of
the Company's then outstanding securities;
(ii) During any period of not more than thirty-six (36)
consecutive months, individuals who at the beginning
of such period constitute the Board of Directors of
the Company, and any new director whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least a
majority (rounded up to the nearest whole number) of
the directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously so
approved, cease for any reason to constitute at least
a majority thereof;
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(iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than: (i) a
merger or consolidation which would result in the
voting securities of the Company outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity) more than sixty-six and two-thirds percent
(66-2/3%) of the combined voting power of the voting
securities of the Company or such surviving entity
outstanding immediately after such merger or
consolidation; or (ii) a merger or consolidation
effected to implement a recapitalization of the
Company (or similar transaction) in which no Person
acquires more than thirty percent (30%) of the
combined voting power of the Company's then
outstanding securities; or
(iv) The Company's stockholders approve a plan or an
agreement for the sale or disposition by the Company
of all or substantially all of the Company's assets
(or any transaction or series of transactions having
a similar effect).
Notwithstanding the foregoing, no Change in Control of the
Company shall be deemed to have occurred if the Company
undergoes a strategic realignment of its businesses (such as a
split-up or spin-off transaction), with or without a
shareholder vote, and the Executive remains the chairman and
chief executive officer of a newly formed or surviving
publicly traded company with the same compensation
arrangements that existed prior to such strategic realignment.
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the Compensation Committee of the Board of
Directors of the Company, or, if no Compensation Committee
exists, then the full Board of Directors of the Company, or a
committee of Board members, as appointed by the full Board to
administer this Agreement.
(i) "Company" means Xxxxxx Industries, Inc., a Delaware
corporation (including any and all subsidiaries), or any
successor thereto as provided in Article 9 herein.
(j) "Disability" or "Disabled" shall have the meaning ascribed to
such term in the Executive's governing long-term disability
plan, or if no such plan exists, at the discretion of the
Board.
(k) "Effective Date" means the date this Agreement is approved by
the Board, or such other date as the Board shall designate in
its resolution approving this Agreement, and as specified in
the opening sentence of this Agreement.
(l) "Effective Date of Termination" means the date on which a
Qualifying Termination occurs, as provided in Section 2.2
herein, which triggers the payment of Severance Benefits
hereunder.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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(n) "Good Reason" means, without the Executive's express written
consent, the occurrence after a Change in Control of the
Company of any one (1) or more of the following:
(i) The assignment of the Executive to duties materially
inconsistent with the Executive's authorities,
duties, responsibilities, and status (including
offices, titles, and reporting requirements) as an
executive and/or officer of the Company, or a
material reduction or alteration in the nature or
status of the Executive's authorities, duties, or
responsibilities from those in effect as of ninety
(90) calendar days prior to the Change in Control,
other than an insubstantial and inadvertent act that
is remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) The Company's requiring the Executive to be based at
a location in excess of fifty (50) miles from the
location of the Executive's principal job location or
office immediately prior to the Change in Control;
except for required travel on the Company's business
to an extent substantially consistent with the
Executive's then present business travel obligations;
(iii) A reduction by the Company of the Executive's Base
Salary in effect on the Effective Date hereof, or as
the same shall be increased from time to time;
(iv) The failure of the Company to continue in effect any
of the Company's short- and long-term incentive
compensation plans, or employee benefit or retirement
plans, policies, practices, or other compensation
arrangements in which the Executive participates
unless such failure to continue the plan, policy,
practice, or arrangement pertains to all plan
participants generally; or the failure by the Company
to continue the Executive's participation therein on
substantially the same basis, both in terms of the
amount of benefits provided and the level of the
Executive's participation relative to other
participants, as existed immediately prior to the
Change in Control of the Company;
(v) The failure of the Company to obtain a satisfactory
agreement from any successor to the Company to assume
and agree to perform the Company's obligations under
this Agreement, as contemplated in Article 9 herein;
and
(vi) A material breach of this Agreement by the Company
which is not remedied by the Company within ten (10)
business days of receipt of written notice of such
breach delivered by the Executive to the Company.
Unless the Executive becomes Disabled, the Executive's right
to terminate employment for Good Reason shall not be affected
by the Executive's incapacity due to physical or mental
illness. The Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to,
any circumstance constituting Good Reason herein.
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(o) "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this
Agreement relied upon, and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis
for termination of the Executive's employment under the
provision so indicated.
(p) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in Section
13(d).
(q) "Qualifying Termination" means any of the events described in
Section 2.2 herein, the occurrence of which triggers the
payment of Severance Benefits hereunder.
(r) "Severance Benefits" mean the payment of severance
compensation as provided in Section 2.3 herein.
ARTICLE 2. SEVERANCE BENEFITS
2.1 Right to Severance Benefits. The Executive shall be entitled
to receive from the Company Severance Benefits as described in Section 2.3
herein, if there has been a Change in Control of the Company and if, within
twenty-four (24) calendar months thereafter, the Executive's employment with the
Company shall end for any reason specified in Section 2.2 herein as being a
Qualifying Termination.
The Executive shall not be entitled to receive Severance Benefits if he
is terminated for Cause, or if his employment with the Company ends due to
death, Disability, voluntary normal retirement (as defined under the then
established rules of the Company's tax-qualified retirement plan), or due to a
voluntary termination of employment for reasons other than as specified in
Section 2.2(b) herein.
The Executive shall not be entitled to receive duplicative severance
benefits under any other Company-related plans or programs (including, without
limitation, the Executive's employment agreement dated as of August 25, 2005
(the Employment Agreement)) if benefits are triggered hereunder. In the event
that a termination of the Executive's employment could be deemed both to
constitute a Qualifying Termination under this Agreement and to give rise to a
severance obligation of the Company under paragraph 8 of the Employment
Agreement, the aggregate cash amount payable to the Executive as a consequence
of such termination in respect of base pay, bonus and consideration for
non-compete obligations shall be the greater of (a) the amount calculated
pursuant to paragraph 8(a) or 8(b) of the Employment Agreement, as applicable,
or (b) the amount calculated pursuant to Section 2.3(a), (b), (c) and (d) of
this Agreement. 25% of such amount shall be in consideration for the Executive
entering into a non-compete agreement as described in Article 4 herein.
2.2 Qualifying Termination. The occurrence of any one of the
following events within twenty-four (24) calendar months after a Change in
Control of the Company shall trigger the payment of Severance Benefits to the
Executive under this Agreement:
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(a) The Company's involuntary termination of the Executive's
employment without Cause; and
(b) The Executive's voluntary employment termination for Good
Reason.
For purposes of this Agreement, a Qualifying Termination shall not
include a termination of employment by reason of death, Disability, or voluntary
normal retirement (as such term is defined under the then established rules of
the Company's tax-qualified retirement plan), the Executive's voluntary
termination for reasons other than as specified in Section 2.2(b) herein, or the
Company's involuntary termination for Cause.
2.3 Description of Severance Benefits. In the event the Executive
becomes entitled to receive Severance Benefits, as provided in Sections 2.1 and
2.2 herein, the Company shall pay to the Executive and provide him with the
following Severance Benefits:
(a) A lump-sum amount equal to the Executive's unpaid Base Salary,
accrued vacation pay, unreimbursed business expenses, and all
other items earned by and owed to the Executive through and
including the Effective Date of Termination.
(b) A lump-sum amount equal to the Executive's annual bonus award
earned as of the Effective Date of Termination, based on
actual year-to-date performance, as determined at the
Committee's discretion (excluding any special bonus payments).
This payment will be in lieu of any other payment to be made
to the Executive under the annual bonus plan in which the
Executive is then participating for the plan year.
(c) A lump-sum amount equal to one and one-half (1.5) multiplied
by the sum of the following: (i) the higher of: (A) the
Executive's annual rate of Base Salary in effect upon the
Effective Date of Termination, or (B) the Executive's annual
rate of Base Salary in effect on the date of the Change in
Control; and (ii) the average of the actual annual bonus
earned (whether or not deferred) by the Executive under the
annual bonus plan (excluding any special bonus payments) in
which the Executive participated in the three (3) years
preceding the year in which the Executive's Effective Date of
Termination occurs. If the Executive has less than three (3)
years of annual bonus participation preceding the year in
which the Executive's Effective Date of Termination occurs,
then the Executive's annual target bonus established under the
annual bonus plan in which the Executive is then participating
for the bonus plan year in which the Executive's Effective
Date of Termination occurs shall be used for each year that
the Executive did not participate in the annual bonus plan, up
to a maximum of three (3) years, to calculate the three (3)
year average bonus payment.
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(d) A lump-sum amount equal to one-half (.5) multiplied by the sum
of the following: (i) the higher of: (A) the Executive's
annual rate of Base Salary in effect upon the Effective Date
of Termination, or (B) the Executive's annual rate of Base
Salary in effect on the date of the Change in Control; and
(ii) the average of the actual annual bonus earned (whether or
not deferred) by the Executive under the annual bonus plan
(excluding any special bonus payments) in which the Executive
participated in the three (3) years preceding the year in
which the Executive's Effective Date of Termination occurs. If
the Executive has less than three (3) years of annual bonus
participation preceding the year in which the Executive's
Effective Date of Termination occurs, then the Executive's
annual target bonus established under the annual bonus plan in
which the Executive is then participating for the bonus plan
year in which the Executive's Effective Date of Termination
occurs shall be used for each year that the Executive did not
participate in the annual bonus plan, up to a maximum of three
(3) years, to calculate the three (3) year average bonus
payment. Such amount shall be in consideration for the
Executive entering into a noncompete agreement as described in
Article 4 herein.
(e) Upon a Qualifying Termination, vesting and cash-out of any and
all outstanding cash-based long-term incentive awards held by
the Executive, as granted to the Executive by the Company as a
component of the Executive's compensation. The cash-out shall
be in a lump-sum amount equal to the target award level
established for each award, multiplied by a fraction the
numerator of which is the full number of completed days in the
preestablished performance period as of the Effective Date of
termination, and the denominator of which is the full number
of days in the entire performance period (i.e., typically
thirty-six (36) months). This payment will be in lieu of any
other payment to be made to the Executive under these
long-term performance-based award plans.
(f) Upon the occurrence of a change in control, an immediate full
vesting and lapse of all restrictions on any and all
outstanding equity-based long-term incentives, including but
not limited to stock options and restricted stock awards held
by the Executive. This provision shall override any
conflicting language contained in the Executive's respective
Award Agreements.
(g) Retirement benefits under the Xxxxxx Industries, Inc.
Retirement Savings Plan will become immediately fully vested,
to the extent not already fully vested, upon a Qualifying
Termination.
(h) Continuation for twenty-four (24) months of the Executive's
medical insurance and life insurance coverage. These benefits
shall be provided by the Company to the Executive beginning
immediately upon the Effective Date of Termination. Such
benefits shall be provided to the Executive at the same
coverage level and cost to the Executive as in effect
immediately prior to the Executive's Effective Date of
Termination.
The Executive shall qualify for full COBRA health benefit
continuation coverage beginning upon the expiration of the
aforementioned twenty-four (24) month period.
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Notwithstanding the above, these medical and life insurance
benefits shall be discontinued prior to the end of the stated
continuation period in the event the Executive receives
substantially similar benefits from a subsequent employer, as
determined solely by the Committee in good faith. For purposes
of enforcing this offset provision, the Executive shall be
deemed to have a duty to keep the Company informed as to the
terms and conditions of any subsequent employment and the
corresponding benefits earned from such employment, and shall
provide, or cause to provide, to the Company in writing
correct, complete, and timely information concerning the same.
(i) For a period of up to twenty-four (24) months following a
Qualifying Termination, the Executive shall be entitled, at
the expense of the Company, to receive standard outplacement
services from a nationally recognized outplacement firm of the
Executive's selection. However, the Company's total obligation
shall not exceed thirty-five percent (35%) of the Executive's
final annual rate of Base Salary with the Company, and such
Company obligation shall end prior to the end of the
twenty-four (24) month period upon the Executive becoming
employed by a subsequent employer.
(j) For a period of twenty-four (24) months following a Qualifying
Termination, the Executive shall be entitled to fringe
benefits in effect prior to the Qualifying Termination,
including, without limitation, financial and tax planning and
payment of club membership dues. These benefits shall be
provided by the Company to the Executive beginning immediately
upon the Effective Date of Termination. Such benefits shall be
provided to the Executive at the same cost and benefit level
as in effect immediately prior to the Executive's Effective
Date of Termination.
2.4 Termination for Total and Permanent Disability. Following a
Change in Control, if the Executive's employment is terminated with the Company
due to Disability, the Executive's benefits shall be determined in accordance
with the Company's retirement, insurance, and other applicable plans and
programs then in effect.
2.5 Termination for Retirement or Death. Following a Change in
Control, if the Executive's employment with the Company is terminated by reason
of his voluntary normal retirement (as defined under the then established rules
of the Company's tax-qualified retirement plan), or death, the Executive's
benefits shall be determined in accordance with the Company's retirement,
survivor's benefits, insurance, and other applicable programs then in effect.
2.6 Termination for Cause or by the Executive Other Than for Good
Reason. Following a Change in Control, if the Executive's employment is
terminated either: (i) by the Company for Cause; or (ii) voluntarily by the
Executive for reasons other than as specified in Section 2.2(b) herein, the
Company shall pay the Executive his full Base Salary at the rate then in effect,
accrued vacation, and other items earned by and owed to the Executive through
the Effective Date of Termination, plus all other amounts to which the Executive
is entitled under any compensation plans of the Company at the time such
payments are due, and the Company shall have no further obligations to the
Executive under this Agreement.
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2.7 Notice of Termination. Any termination of the Executive's
employment by the Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party.
ARTICLE 3. FORM AND TIMING OF SEVERANCE BENEFITS
3.1 Form and Timing of Severance Benefits. The Severance Benefits
described in Sections 2.3(a), 2.3(b), 2.3(c), and 2.3(d) herein shall be paid in
cash to the Executive in a single lump sum as soon as practicable following the
Effective Date of Termination, but in no event beyond ten (10) calendar days
from such date.
3.2 Withholding of Taxes. The Company shall withhold from any
amounts payable under this Agreement all federal, state, city, or other taxes as
legally shall be required.
ARTICLE 4. NONCOMPETITION AND CONFIDENTIALITY
In the event the Executive becomes entitled to receive Severance
Benefits as provided in Section 2.3 herein, the following shall apply:
(a) Noncompetition. During the term of employment and for a period
of twelve (12) months after the Effective Date of Termination,
the Executive shall not: (i) directly or indirectly act in
concert or conspire with any person employed by the Company in
order to engage in or prepare to engage in or to have a
financial or other interest in any business or any activity
which he knows (or reasonably should have known) to be
directly competitive with the business of the Company as then
being carried on; or (ii) serve as an employee, agent,
partner, shareholder, director or consultant for, or in any
other capacity participate, engage, or have a financial or
other interest in any business or any activity which he knows
(or reasonably should have known) to be directly competitive
with the business of the Company as then being carried on
(provided, however, that notwithstanding anything to the
contrary contained in this Agreement, the Executive may own up
to two percent (2%) of the outstanding shares of the capital
stock of a company whose securities are registered under
Section 12 of the Securities Exchange Act of 1934).
(b) Confidentiality. The Company has advised the Executive and the
Executive acknowledges that it is the policy of the Company to
maintain as secret and confidential all Protected Information
(as defined below), and that Protected Information has been
and will be developed at substantial cost and effort to the
Company. All Protected Information shall remain confidential
permanently and no Executive shall at any time, directly or
indirectly, divulge, furnish, or make accessible to any
person, firm, corporation, association, or other entity
(otherwise than as may be required in the regular course of
the Executive's employment with the Company), nor use in any
manner, either during the term of employment or after
termination, at any time, for any reason, any Protected
Information, or cause any such information of the Company to
enter the public domain.
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For purposes of this Agreement, "Protected Information" means
trade secrets, confidential and proprietary business
information of the Company, and any other information of the
Company, including, but not limited to, customer lists
(including potential customers), sources of supply, processes,
plans, materials, pricing information, internal memoranda,
marketing plans, internal policies, and products and services
which may be developed from time to time by the Company and
its agents or employees, including the Executive; provided,
however, that information that is in the public domain (other
than as a result of a breach of this Agreement), approved for
release by the Company or lawfully obtained from third parties
who are not bound by a confidentiality agreement with the
Company, is not Protected Information.
(c) Nonsolicitation. During the term of employment and for a
period of twelve (12) months after the Effective Date of
Termination, the Executive shall not employ or retain or
solicit for employment or arrange to have any other person,
firm, or other entity employ or retain or solicit for
employment or otherwise participate in the employment or
retention of any person who is an employee or consultant of
the Company.
(d) Cooperation. Executive agrees to cooperate with the Company
and its attorneys in connection with any and all lawsuits,
claims, investigations, or similar proceedings that have been
or could be asserted at any time arising out of or related in
any way to Executive's employment by the Company or any of its
subsidiaries.
(e) Nondisparagement. At all times, the Executive agrees not to
disparage the Company or otherwise make comments harmful to
the Company's reputation.
ARTICLE 5. EXCISE TAX EQUALIZATION PAYMENT
5.1 Excise Tax Equalization Payment. If any portion of the
Severance Benefits or any other payment under this Agreement, or under any other
agreement with, or plan of the Company (in the aggregate, "Total Payments")
would constitute an "excess parachute payment," such that a golden parachute
excise tax is due, the Company shall provide to the Executive, in cash, an
additional payment in an amount sufficient to cover the full cost of any excise
tax and all of the Executive's additional federal, state, and local income,
excise, and employment taxes that arise on this additional payment
(cumulatively, the "Full Gross-Up Payment"), such that the Executive is in the
same after-tax position as if he had not been subject to the excise tax. For
this purpose, the Executive shall be deemed to be in the highest marginal rate
of federal, state, and local income taxes in the state and locality of the
Executive's residence on the Effective Date of Termination. This payment shall
be made as soon as possible following the date of the Executive's Qualifying
Termination, but in no event later than ten (10) calendar days from such date.
For purposes of this Agreement, the term "excess parachute payment"
shall have the meaning assigned to such term in Section 280G of the Internal
Revenue Code, as amended (the "Code"), and the term "excise tax" shall mean the
tax imposed on such excess parachute payment pursuant to Sections 280G and 4999
of the Code.
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5.2 Subsequent Recalculation. In the event the Internal Revenue
Service subsequently adjusts the excise tax computation herein described, the
Company shall reimburse the Executive for the full amount necessary to make the
Executive whole on an after-tax basis (less any amounts received by the
Executive that the Executive would not have received had the computations
initially been computed as subsequently adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service.
ARTICLE 6. THE COMPANY'S PAYMENT OBLIGATION
6.1 Payment Obligations Absolute. The Company's obligation to make
the payments and the arrangements provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances including, without
limitation, any offset, counterclaim, recoupment, defense, or other right which
the Company may have against the Executive or anyone else. All amounts payable
by the Company hereunder shall be paid without notice or demand. Each and every
payment made hereunder by the Company shall be final, and the Company shall not
seek to recover all or any part of such payment from the Executive or from
whomsoever may be entitled thereto, for any reasons whatsoever.
The Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and the obtaining of any such other employment shall in no event
effect any reduction of the Company's obligations to make the payments and
arrangements required to be made under this Agreement, except to the extent
provided in Sections 2.3(g) and 2.3(h) herein.
6.2 Contractual Rights to Benefits. This Agreement establishes and
vests in the Executive a contractual right to the benefits to which he is
entitled hereunder. However, nothing herein contained shall require or be deemed
to require, or prohibit or be deemed to prohibit, the Company to segregate,
earmark, or otherwise set aside any funds or other assets, in trust or
otherwise, to provide for any payments to be made or required hereunder.
ARTICLE 7. TERM OF AGREEMENT
This Agreement will commence on the Effective Date and shall continue
in effect for two (2) full years. However, at the end of such two (2) year
period and, if extended, at the end of each additional year thereafter, the term
of this Agreement shall be extended automatically for one (1) additional year,
unless either party delivers written notice six (6) months prior to the end of
such term, or extended term, stating that the Agreement will not be extended. In
such case, the Agreement will terminate at the end of the term, or extended
term, then in progress.
However, in the event of a Change in Control of the Company, the term
of this Agreement shall automatically be extended for two (2) years from the
date of the Change in Control.
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ARTICLE 8. LEGAL REMEDIES
8.1 Dispute Resolution. The Executive shall have the right and
option to elect to have any good faith dispute or controversy arising under or
in connection with this Agreement settled by litigation or arbitration. If
arbitration is selected, such proceeding shall be conducted by final and binding
arbitration before a panel of three (3) arbitrators in accordance with the laws
then in effect and under the administration of the American Arbitration
Association.
8.2 Payment of Legal Fees. In the event that it shall be necessary
or desirable for the Executive to retain legal counsel and/or to incur other
costs and expenses in connection with the enforcement of any or all of his
rights under this Agreement, the Company shall pay (or the Executive shall be
entitled to recover from the Company) the Executive's attorneys' fees, costs,
and expenses in connection with the enforcement of his rights including the
enforcement of any arbitration award. This shall include, without limitation,
court costs and attorneys' fees incurred by the Executive as a result of any
claim, action, or proceeding, including any such action against the Company
arising out of, or challenging the validity or enforceability of, this Agreement
or any provision hereof.
ARTICLE 9. SUCCESSORS
9.1 Successors to the Company. The Company shall require any
successor (whether direct or indirect, by purchase, merger, reorganization,
consolidation, acquisition of property or stock, liquidation, or otherwise) of
all or a significant portion of the assets of the Company by agreement, in form
and substance satisfactory to the Executive, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor in accordance with the operation of law and such
successor shall be deemed the "Company" for purposes of this Agreement.
9.2 Assignment by the Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If the Executive dies while any amount would still be
payable to him hereunder had he continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee, or other designee, or if there is
no such designee, to the Executive's estate.
ARTICLE 10. MISCELLANEOUS
10.1 Employment Status. This Agreement is not, and nothing herein
shall be deemed to create, an employment contract between the Executive and the
Company or any of its subsidiaries. The Executive acknowledges that the rights
of the Company remain wholly intact to change or reduce at any time and from
time to time his compensation, title, responsibilities, location, and all other
aspects of the employment relationship, or to discharge him prior to a Change in
Control (subject to such discharge possibly being considered a Qualifying
Termination pursuant to Section 2.2).
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10.2 Entire Agreement. This Agreement contains the entire
understanding of the Company and the Executive with respect to the subject
matter hereof. In addition, the payments provided for under this Agreement in
the event of the Executive's termination of employment shall be in lieu of any
severance benefits payable under any severance plan, program, or policy of the
Company to which he might otherwise be entitled.
10.3 Notices. All notices, requests, demands, and other
communications hereunder shall be sufficient if in writing and shall be deemed
to have been duly given if delivered by hand or if sent by registered or
certified mail to the Executive at the last address he has filed in writing with
the Company or, in the case of the Company, at its principal offices.
10.4 Execution in Counterparts. This Agreement may be executed by
the parties hereto in counterparts, each of which shall be deemed to be
original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.
10.5 Conflicting Agreements. The Executive hereby represents and
warrants to the Company that his entering into this Agreement, and the
obligations and duties undertaken by him hereunder, will not conflict with,
constitute a breach of, or otherwise violate the terms of, any other employment
or other agreement to which he is a party, except to the extent any such
conflict, breach, or violation under any such agreement has been disclosed to
the Board in writing in advance of the signing of this Agreement.
Notwithstanding any other provisions of this Agreement to the contrary,
if there is any inconsistency between the terms and provisions of this Agreement
and the terms and provisions of Company-sponsored compensation and welfare plans
and programs, the Agreement's terms and provisions shall completely supersede
and replace the conflicting terms of the Company-sponsored compensation and
welfare plans and programs, where applicable.
10.6 Severability. In the event any provision of this Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement shall
be construed and enforced as if the illegal or invalid provision had not been
included. Further, the captions of this Agreement are not part of the provisions
hereof and shall have no force and effect.
Notwithstanding any other provisions of this Agreement to the contrary,
the Company shall have no obligation to make any payment to the Executive
hereunder to the extent, but only to the extent, that such payment is prohibited
by the terms of any final order of a federal or state court or regulatory agency
of competent jurisdiction; provided, however, that such an order shall not
affect, impair, or invalidate any provision of this Agreement not expressly
subject to such order.
10.7 Modification. No provision of this Agreement may be modified,
waived, or discharged unless such modification, waiver, or discharge is agreed
to in writing and signed by the Executive and by a member of the Board, as
applicable, or by the respective parties' legal representatives or successors.
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10.8 Applicable Law. To the extent not preempted by the laws of the
United States, the laws of Delaware shall be the controlling law in all matters
relating to this Agreement without giving effect to principles of conflicts of
laws.
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IN WITNESS WHEREOF, the parties have executed this Agreement on this
16th day of September, 2005.
ATTEST
Xxxxxx Industries, Inc.
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By: Xxxxxx Xxxxx, Chairman,
Compensation Committee of the
Board Directors
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Xxxxxxx X. Xxxxxx
