AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT, dated as of
December 5, 2001 (the "Agreement"), between Xxxxxxx Tire Group, Inc., a
Delaware corporation (the "Employer"), and Xxxxxxx X. Xxxxxxx (the
"Employee").
The Employer and the Employee are parties to an Executive Severance
Agreement, dated as of May 24, 1999 (the "Existing Severance Agreement"), and
desire to amend and restate, and have this Agreement supersede, the Existing
Severance Agreement in its entirety, taking into account, among other things,
that the Employee has served as Chief Executive Officer and President of the
Employer since January 22, 2001 and commitments by the Employer to provide the
Employee with the employment terms equivalent to those granted to his
predecessor in that position. The Employer desires to continue to retain the
Employee to supply services to the Employer, and the Employee desires to
continue provide such services to the Employer, on the terms and subject to the
conditions set forth in this Agreement.
In consideration of (i) the Employee's agreement to supply services
under this Agreement and (ii) the mutual agreements set forth below, the
sufficiency of which is hereby acknowledged, the Employer and the Employee agree
as follows:
SECTION 1. Employment Relationship.
(a) Employment by Employer. The Employer hereby employs the
Employee, and the Employee hereby agrees to be employed by the Employer, as
Chief Executive Officer and President of the Employer, and the Employee will
devote all of his business time, attention, knowledge and skills and use his
best efforts during the Employment Period to perform services and duties
consistent with his title and position (the "Services") for the Employer in
accordance with directions given to the Employee from time to time by the Board
of Directors of the Employer.
(b) Employment Period. The period commencing on the date of this
Agreement and ending on the date on which this Agreement is terminated is
referred to herein as the "Employment Period." During the Employment Period, the
Employee will be an at-will employee of the Employer. The Employment Period
shall be freely terminable for any reason by either party at any time.
SECTION 2. Compensation and Benefits. During the Employment Period:
(a) Base Compensation. The Employer shall pay to the Employee a
base salary of $400,000 per annum (the "Base Salary"), payable in accordance
with the Employer's payroll practices. The Base Salary shall be increased (but
not decreased) subject to additional discretionary increases (but not decreases)
as determined periodically by the Board of Directors, and shall be reviewed
annually.
(b) Additional Compensation. As additional compensation for the
Services, the Employer shall pay to the Employee an amount equal to the greater
of (x) with respect to calendar year 2001, an annual fixed bonus payment (the
"Fixed Bonus") equal to 15% of the Employee's Base Salary for such year, and (y)
(i) with respect to calendar year 2001 an annual bonus payment at the "Minimum",
"Plan" or "Maximum" percentage payment levels, as the case may be, in accordance
with the terms and conditions of the Employer's 2001 Executive Bonus Plan, or
(ii) with respect to subsequent calendar years, other annual incentive
compensation as the Board of Directors of the Employer determines in its sole
discretion to pay the Employee, payable in all cases on or around March 1 of the
following year. The Employee will be entitled to participate in the 2001
Executive Bonus Plan as a Level 0 Employee. The Employee acknowledges that the
Employer may terminate or modify its Executive Bonus Plan and other incentive
plans (excluding the Fixed Bonus payable hereunder and the 2001 Executive Bonus
Plan as in effect and applied to the Employee on the date hereof) at any time,
although no termination or amendment affecting the Employee will be made
effective unless it is consistently applied to other employees participating in
such plans. In the event of any conflict or inconsistency between the terms of
the 2001 Executive Bonus Plan and the terms of Section 2(b) or 3 of this
Agreement, the terms of Sections 2(b) and 3 of this Agreement shall control.
(c) Incentive Plans. The Employee shall be entitled to participate
in current or future equity incentive plans adopted by the Employer on terms
substantially similar to those offered to members of the Employer's Executive
Committee. Such grants may be awarded from time to time in the sole discretion
of the Employer's Board of Directors. Except as otherwise provided in stock
option agreements between the Employer and the Employee and in this Agreement
with respect to payments under the Executive Bonus Plan, and except as hereafter
mutually agreed by the Employer and the Employee, in the event of a Change in
Control (as defined below), to the extent not fully vested at such time, the
Employee shall become fully vested in all awards heretofore or hereafter granted
to him under all incentive compensation, deferred compensation, stock option,
stock appreciation rights, restricted stock, phantom stock or other similar
plans maintained by the Employer.
(d) Benefit Plans. During the Employment Period, the Employee
shall be entitled to receive benefits from the Employer consistent with those
currently in effect for the Employer's senior executives (including deferred
compensation plans, and company automobile and financial planning perquisites),
as those benefits are revised from time to time by the Board of Directors of the
Employer. Nothing contained herein is intended to require the Employer to
maintain any existing benefits or create any new benefits. The Employee will be
entitled to participate in the Employer's deferred compensation program as a
Level 1 Employee and to receive benefits thereunder in accordance with the terms
and conditions of such program. If the Employment Period is terminated by the
Employer or the Employee as set forth in Section 3(e)(ii) below, the Employee
and relevant family members shall be entitled to continue to participate in the
Employer's welfare benefit plans at the Employer's expense for a period of 18
months after the termination date. If the Employment Period is terminated by the
Employer or the Employee as set forth in Section 3(e)(iii) below, the Employee
and relevant family members shall be entitled to continue to participate in the
Employer's welfare benefit plans at the Employer's expense for a period of three
years after the termination date. For purposes of this Section 2(d), the
Employees'
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relevant family members shall be those members of the Employee's immediate
family covered by the applicable welfare benefit plan immediately prior to the
termination date.
(e) Vacation and Holidays. The Employee shall be entitled to a
minimum of four weeks' vacation each year and paid holidays in accordance with
the Employer's policy.
(f) No Mitigation. The Employee shall not be required to mitigate
the amount of any payments under this Agreement (whether by seeking new
employment or in any other manner), nor shall any such payment be reduced by any
earnings that the Employee may receive from any other source.
SECTION 3. Termination.
(a) Death or Disability. If the Employee dies during the
Employment Period, the Employment Period shall terminate as of the date of the
Employee's death. If the Employee becomes unable to perform the Services for 90
consecutive days due to a physical or mental disability, (i) the Employer may
elect to terminate the Employment Period at any time thereafter, and (ii) the
Employment Period shall terminate as of the date of such election. All
disabilities shall be certified by a physician acceptable to both the Employer
and the Employee, or, if the Employer and the Employee cannot agree upon a
physician within 15 days, by a physician selected by physicians designated by
each of the Employer and the Employee. The Employee's failure to submit to any
physical examination by such physician after such physician has given reasonable
notice of the time and place of such examination shall be conclusive evidence of
the Employee's inability to perform his duties hereunder.
(b) Cause. The Employer, at its option, may terminate the
Employment Period and all of the obligations of the Employer under this
Agreement for Cause. The Employer shall have "Cause" to terminate the Employee's
employment hereunder in the event of (i) the Employee's conviction of or plea of
guilty or nolo contendere to a felony, (ii) the Employee's gross negligence in
the performance of the Services, (iii) the Employee's knowingly dishonest act,
or knowing bad faith or willful misconduct in the performance of the Services,
or (iv) the Employee's material breach of any of his obligations under Sections
5 and 6. If the Employee is charged with a felony, then during the period while
such charge or related indictment remains outstanding and until finally
determined, the Employer shall have the right to suspend the Employee without
compensation.
(c) Without Cause. The Employer, at its option, may terminate the
Employment Period without Cause at any time.
(d) Termination by Employee for Good Reason. The Employee may
terminate this Agreement upon 60 days' prior written notice to the Employer for
Good Reason (as defined below) if the basis for such Good Reason is not cured
within a reasonable period of time (determined in light of the cure appropriate
to the basis of such Good Reason, but in no event less than 15 business days)
after the Employer receives written notice specifying the basis of such Good
Reason. "Good Reason" shall mean (i) the failure of the Employer to pay any
undisputed amount due under this Agreement or a reduction in Base Salary, Fixed
Bonus or benefits
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provided under this Agreement (other than immaterial reductions in benefits or a
reduction in benefits or salary applicable to all of the Employer's bonus
eligible employees) or a termination of, or reduction in the percentage level
of, the "plan" or "target" bonus opportunity applicable to the Employee from the
"Plan" percentage level under the 2001 Executive Bonus Plan in effect on the
date hereof, (ii) a substantial diminution in the status, position and
responsibilities of the Employee or (iii) the Employer requiring the Employee to
be based at any office or location that requires a relocation or commute greater
than 50 miles from the office or location to which the Employee is currently
assigned, provided, however, that Good Reason shall not be deemed to exist due
to the travel requirements consistent with the performance of the Employee's
services hereunder.
(e) Payments in the Event of Termination. (i) Basic Termination
Payment. Upon the termination of the Employment Period at any time for any
reason, the Employer shall pay to the Employee or his estate the Base Salary
earned to the date of termination, and if such termination occurs after December
31st of any year for which a bonus is payable pursuant to Section 2(b) but
before such bonus has been paid, the Employer shall pay to the Employee or his
estate the bonus due for the preceding year. Upon the termination of the
Employment Period at any time during calendar year 2001 for any reason other
than the reasons set forth in Section 3(e)(ii) or 3(e)(iii) below, the Employer
shall pay to the Employee within five business days after such termination, a
lump-sum amount equal to the Fixed Bonus earned to the date of termination. Any
Fixed Bonus payable under this Section 3(e)(i) shall be prorated if payable for
periods of less than one year and shall be payable regardless of whether the
Employee is still in the employ of the Employer on the date such bonuses are
otherwise declared or payable.
(ii) Additional Involuntary Termination Payment. Upon the
termination of the Employment Period at any time by the Employer without Cause
or by the Employee for Good Reason, the Employer shall pay to the Employee an
amount (in addition to the amount payable under the first sentence of Section
3(e)(i)) equal to (x) the sum of the Employee's annual Base Salary at the annual
rate in effect on the date of termination and the Severance Bonus Amount,
multiplied by (y) 1.75. Notwithstanding the foregoing, the Employee shall be
entitled to no payment under this Section 3(e)(ii) if he is entitled to receive
a payment under Section 3(e)(iii). "Severance Bonus Amount" means an amount
equal to the Employee's Base Salary at the annual rate in effect on the date of
termination multiplied by the bonus percentage applied under any executive bonus
plan or other incentive compensation program for purposes of determining the
Employee's annual bonus for the year preceding the year of termination. The
Employer may pay the amount (if any) owed to the Employee pursuant to this
Section 3(e)(ii) in equal installments pursuant to the Employer's customary pay
practices over a period of 21 months; provided, however, that the Employee may,
by giving written notice to the Employer at any time more than 6 months after
the date of termination, require the Employer to pay all amounts that then
remain outstanding under this Section 3(e)(ii) in a lump sum payment to be made
within 10 days; provided further, that no such lump sum payment shall be
required if the Board of Directors of the Employer determines in good faith that
a lump sum payment would be materially detrimental to the interests of the
Employer.
(iii) Additional Change in Control Payment. Upon the
termination of the Employment Period (x) by the Employer without Cause upon or
prior to a Change in Control,
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provided that the Employee reasonably demonstrates that such termination
occurred at the request of a third party participating in, or otherwise in
anticipation of or in connection with, such Change in Control, or (y) by the
Employee with Good Reason or by the Employer for any reason other than for Cause
within one year after a Change in Control, then the Employer shall pay to the
Employee an amount (in addition to the amount payable under the first sentence
of Section 3(e)(i)) equal to the sum of (A) the higher of (1) the Employee's
annual Base Salary at the date of such termination or (2) the Employee's annual
Base Salary at the time of the Change in Control, in each case multiplied by
three, and (B) the Severance Bonus Amount multiplied by three. If the Employment
Period is terminated by the Employee for any reason other than with Good Reason
on or after the first anniversary of a Change in Control but no later than the
30th day after such first anniversary, the Employee shall be entitled to 50% of
the payments specified in this Section 3(e)(iii). If the Employment Period is
terminated by the Employee with Good Reason at any time on or after the first
anniversary of a Change in Control, the Employee shall be entitled to the
payment specified in Section 3(e)(ii). The Employer may pay the amount (if any)
owed to the Employee pursuant to this Section 3(e)(iii) in equal installments
pursuant to the Employer's customary pay practices over a period of (X) 36
months, in the event of termination pursuant to the first sentence of this
Section 3(e)(iii), or (Y) 18 months, in the event of termination pursuant to the
second sentence of this Section 3(e)(iii); provided, however, that the Employee
may, at any time more than 6 months after the date of termination, require the
Employer to pay all amounts that then remain outstanding under this
Section 3(e)(iii) in a lump sum payment to be made within 10 days.
(iv) Change in Control Defined. "Change in Control" means
the first to occur of any of the following: (A) the sale (including by merger,
consolidation or sale of stock of subsidiaries or any other method) of all or
substantially all of the assets of the Employer and its consolidated
subsidiaries (taken as a whole) to any person or entity not directly or
indirectly controlled by the holders of at least 50% of the Combined Voting
Power of the then outstanding shares of capital stock of the Employer (excluding
shares owned by employees of the Employer as of the date of determination) (B)
at any time prior to the consummation of an initial public offering of Class A
Common Stock of the Employer or other common stock of the Employer having the
voting power to elect directors, a transaction (except pursuant to such initial
public offering) resulting in the Principal Shareholders owning, collectively,
less than 50% of the Combined Voting Power of the then outstanding shares of
capital stock of the Employer (excluding shares owned by employees of the
Employer as of the date of determination), (C) at any time after the
consummation of an initial public offering of Class A Common Stock of the
Employer or other common stock of the Employer having the voting power to elect
directors, the acquisition (except pursuant to such initial public offering) by
any person or entity (other than the Principal Shareholders) not directly or
indirectly controlled by the Employer's stockholders of more than 30% of the
Combined Voting Power of the then outstanding shares of capital stock of the
Employer (excluding shares owned by employees of the Employer as of the date of
determination), (D) individuals serving as directors of the Employer on the date
hereof and who were nominated or selected to serve as directors by one or more
Principal Shareholders (together with any new directors whose election was
approved by a vote of (x) such individuals or directors whose election was
previously so approved or (y) Principal Shareholders holding a majority of the
aggregate voting power of the capital stock of the Employer held by all
Principal Shareholders) cease for any reason to constitute a majority of the
Board of Directors of the
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Employer, (E) the adoption of a plan relating to the liquidation or dissolution
of the Employer in connection with an equity investment or sale or a business
combination transaction or (F) any other event or transaction that the Board of
Directors of the Employer deems to be a Change in Control. "Combined Voting
Power" with respect to capital stock of the Employer means the number of votes
such stock is normally entitled (without regard to the occurrence of any
contingency) to vote in an election of directors of the Employer. "Principal
Shareholders" means (i) Charlesbank Equity Fund IV, Limited Partnership and the
investors in such fund, (ii) Charlesbank Equity Fund IV G.P. Limited
Partnership, (iii) Charlesbank Capital Partners, LLC (and any other fund managed
by Charlesbank Capital Partners, LLC), (iv) any investor (other than The 1818
Mezzanine Fund, L.P.) whose investment in the Employer is approved by the
representative of management on the board of the Employer, (v) any new investors
in the Company designated as Principal Shareholders by Charlesbank Capital
Partners, LLC within one year of the initial investment by Charlesbank Equity
Fund IV, Limited Partnership, and (vi) any corporation, partnership, limited
liability company or other entity a majority of the capital stock or other
ownership interests of which are directly or indirectly owned by any of the
foregoing.
(v) Other Provisions Applicable to Payments. Any amounts
due under this Section 3 and not paid when due shall bear interest (compounded
annually) for the period from and including the date payable to but excluding
the date paid at a rate per annum equal to the sum of (x) four percent and (y)
the rate publicly announced by BankBoston, N.A. as its "prime rate."
(f) Termination of Obligations. In the event of termination of the
Employment Period in accordance with this Section 3, all obligations of the
Employer and the Employee under this Agreement shall terminate, except for any
amounts payable by the Employer as specifically set forth in Section 3(e);
provided, however, that notwithstanding anything to the contrary contained in
this Agreement, the provisions of Section 5 and Section 6 shall survive such
termination in accordance with their respective terms and the relevant
provisions of Section 7 shall survive such termination indefinitely. In the
event of termination of the Employment Period in accordance with this Section 3,
the Employee agrees to cooperate with the Employer in order to ensure an orderly
transfer of the Employee's duties and responsibilities.
SECTION 4. Parachute Excise Tax Gross-Up
(a) If, as a result of any payment or benefit provided under this
Agreement or under any other plan, arrangement or other agreement with the
Employer or any entity affiliated with the Employer, either alone or together
with such other payments and benefits which the Employee receives or is then
entitled to received from the Employer, the Employee becomes subject to the
excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), (together with any interest and penalties thereon an
"Excise Tax"), the Employer shall pay the Employee an amount (the "Gross-Up
Payment") sufficient to place the Employee in the same after-tax financial
position that he would have been in if he had not incurred any tax liability
under Section 4999 of the Code. For purposes of determining whether the Employee
is subject to an Excise Tax and the amount of any Gross-Up Payment, (i) any
payments or benefits received by the Employee (whether pursuant to the terms
hereof or pursuant to any plan, arrangement or other agreement with the Employer
or any entity affiliated with the
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Employer) which payments ("Contingent Payments") are deemed to be contingent on
a change described in Section 280G(b)(2)(A)(i) of the Code shall be taken into
account and (ii) the Employee shall be deemed to pay federal, state and local
taxes at the highest marginal applicable rates of such taxes for the calendar
year in which the Gross-Up Payment is to be made, net of the maximum deduction
from federal income taxes which could be obtained from deduction of any state
and local taxes deemed paid by the Employee.
(b) The determination of whether the Employee is subject to Excise
Tax and the amounts of such Excise Tax and Gross-Up Payment, as well as other
calculations hereunder, shall be made at the expense of the Employer by Xxxxxx
Xxxxxxxx, which shall provide the Employee with prompt written notice (the
"Employer Notice") setting forth their determinations and calculations. Within
30 days following the receipt by the Employee of the Employer Notice, the
Employee may notify the Employer in writing (the "Employee Notice") if the
Employee disagrees with such determinations or calculations, setting forth the
reasons for any such disagreement. If the Employer and the Employee do not
resolve such disagreement within 10 business days following receipt by the
Employer of the Employee Notice, such dispute will be resolved in accordance
with Section 7(f). The Employer shall pay all reasonable expense incurred by
either party in connection with the determinations, calculations, disagreements
or resolutions pursuant to this paragraph, including, but not limited to,
reasonable legal, consulting or other similar fees.
(c) The Employee shall notify the Employer in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Employer of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Employee is informed
in writing of such claim and shall apprise the Employer of the nature of such
claim and the date of which such claim is requested to be paid. The Employee
shall not pay such claim prior to the expiration of the 30 day period following
the date on which the Employee gives such notice to the Employer (or such
shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Employer notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim, the Employee
shall:
(i) give the Employer any information reasonably
requested by the Employer relating to such claim;
(ii) take such action in connection with contesting such
claim as the Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to
such claim by an attorney reasonably selected by the Employer and reasonably
satisfactory to the Employee;
(iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
(iv) permit the Employer to participate in any proceedings
relating to such claim;
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provided, however, that the Employer shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest and shall indemnify and hold the Employee harmless,
on an after-tax basis, for any Excise Tax or other tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.
(d) The Employer shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Employer shall
determine; provided, however, that if the Employer directs the Employee to pay
such claim and xxx for a refund, the Employer shall advance the amount of such
payment to the Employee on an interest-free basis, and shall indemnify and hold
the Employee harmless, on an after-tax basis, from any Excise Tax or other tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided, further, that if the Employee is required to extend the statute of
limitations to enable the Employer to contest such claim, the Employee may limit
this extension solely to such contested amount. The Employer's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. In addition, no position may be taken nor
any final resolution be agreed to by the Employer without the Employee's consent
if such position or resolution could reasonably be expected to adversely affect
the Employee (including any other tax position of the Employee unrelated to the
matters covered hereby).
(e) As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Employer hereunder, it is possible that Gross-Up Payments which will not have
been made by the Employer should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder. In the event that the
Employer exhausts its remedies and the Employee thereafter is required to pay to
the Internal Revenue Service an additional amount in respect of any Excise Tax,
the Employer (in the same fashion as set forth in Section 4(b) shall determine
the amount of the Underpayment that has occurred and any such Underpayment shall
promptly be paid by the Employer to or for the benefit of the Employee.
(f) If, after the receipt by Employee of an amount advanced by the
Employer in connection with the contest of an Excise Tax claim, the Employee
becomes entitled to receive any refund with respect to such claim, the Employee
shall promptly pay to the Employer the amount of such refund (together with any
interest paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Employee of an amount advanced by the Employer in connection with
an Excise Tax claim, a determination is made that Employee shall not be entitled
to any refund with respect to such claim and the Employer does not notify the
Employee in
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writing of its intent to contest the denial of such refund prior to the
expiration of 30 days after receiving notice of such determination, such advance
shall be forgiven and shall not be required to be repaid and the amount of such
advance shall be offset, to the extent thereof, by the amount of the Gross-Up
Payment.
SECTION 5. Confidentiality; Non-Disclosure.
(a) (i) Non-Disclosure Obligation. Except as provided in this
Section 5(a), the Employee shall not disclose any Confidential Information of
the Employer or any of its affiliates or subsidiaries to any person, firm,
corporation, association or other entity (other than the Employer, its
subsidiaries, officers or employees, attorneys, accountants, bank lenders,
agents, advisors or representatives thereof) for any reason or purpose
whatsoever (other than in the normal course of business on a need-to-know basis
after the Employer has received assurances that the confidential or proprietary
information shall be kept confidential), nor shall the Employee make use of any
such confidential or proprietary information for his own purposes or for the
benefit of any person, firm, corporation or other entity, except the Employer.
As used in this Section, the term "Confidential Information" means all
information which is or becomes known to the Employee and relates to matters
such as trade secrets, research and development activities, new or prospective
lines of business (including analysis and market research relating to potential
expansion of the Business), books and records, financial data, customer lists,
marketing techniques, financing, credit policies, vendor lists, suppliers,
purchasers, potential business combinations, distribution channels, services,
procedures, pricing information and private processes as they may exist from
time to time; provided that the term Confidential Information shall not include
information that is or becomes generally available to the public (other than as
a result of a disclosure in violation of this Agreement by the Employee or by a
person who received such information from the Employee in violation of this
Agreement).
(ii) Compulsory Disclosures. If the Employee is requested
or (in the opinion of his counsel) required by law or judicial order to disclose
any Confidential Information, the Employee shall provide the Employer with
prompt notice of any such request or requirement so that the Employer may seek
an appropriate protective order or waiver of the Employee's compliance with the
provisions of this Section 5(a). The Employee will not oppose any reasonable
action by, and will cooperate with, the Employer to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the Confidential Information. If, failing the entry of a protective
order or the receipt of a waiver hereunder, the Employee is, in the opinion of
his counsel, compelled by law to disclose a portion of the Confidential
Information, the Employee may disclose to the relevant tribunal without
liability hereunder only that portion of the Confidential Information which
counsel advises the Employee he is legally required to disclose, and each of the
parties hereto agrees to exercise such party's best efforts to obtain assurance
that confidential treatment will be accorded such Confidential Information.
During the Employment Period, and for matters arising from events or
circumstances occurring during the Employment Period, the Employer will provide
for the defense of matters arising under this provision.
(b) Assignment of Inventions. The Employee agrees that he will
promptly and fully disclose to the Employer all inventions, ideas, software,
trade secrets or know-how (whether
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patentable or copyrightable or not) made or conceived by the Employee (either
solely or jointly with others) during the Employment Period and for a period of
six months thereafter, all tangible work product derived therefrom
(collectively, the "Ideas"). The Employee agrees that all such Ideas shall be
and remain the sole and exclusive property of the Employer. On the request of
the Employer, the Employee shall, during and after the term of this Agreement,
without charge to the Employer but at the expense of the Employer, assist the
Employer in any reasonable way to vest in the Employer, title to all such Ideas,
and to obtain any related patents, trademarks or copyrights in all countries
throughout the world. In this regard, the parties shall execute and deliver any
and all documents that the Employer may reasonably request.
SECTION 6. Non-Competition; Non-Solicitation. The Employee
acknowledges and recognizes his possession of Confidential Information and
acknowledges the highly competitive nature of the business of the Employer and
its affiliates and subsidiaries and accordingly agrees that, in consideration of
the premises contained herein, he will not, during the Employment Period and for
one year after the date of termination of the Employment Period, for any reason
whatsoever, either individually or as an officer, director, stockholder, member,
partner, agent, consultant or principal of another business firm, (x) directly
or indirectly engage in North America, or any country in which the Employer or
any of its affiliates or subsidiaries actively engages in business during the
Employment Period, in any competitive business, (y) assist others in engaging in
any competitive business in the manner described in clause (x), or (z) induce
any employee of the Employer or any of its affiliates or subsidiaries to
terminate such person's employment with the Employer or such affiliate or
subsidiary or hire any employee of the Employer or any of its affiliates or
subsidiaries to work with any businesses affiliated with the Employee. The
Employee's ownership of not more than 1% of the outstanding capital stock of any
public corporation shall not in itself be deemed to be engaging in any
competitive business for purposes of this Section 6.
SECTION 7. General Provisions.
(a) Enforceability. It is the desire and intent of the parties
hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, although the Employee
and the Employer consider the restrictions contained in this Agreement to be
reasonable for the purpose of preserving the Employer's goodwill and proprietary
rights, if any particular provision of this Agreement shall be adjudicated to be
invalid or unenforceable, such provision shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of such provision in the
particular jurisdiction in which such adjudication is made. It is expressly
understood and agreed that although the Employer and the Employee consider the
restrictions contained in Section 6 to be reasonable, if a final determination
is made by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is unenforceable against the
Employee, the provisions of this Agreement shall be deemed amended to apply as
to such maximum time and territory and to such maximum extent as such court may
judicially determine or indicate to be enforceable.
-10-
(b) Remedies. The parties acknowledge that the Employer's damages
at law would be an inadequate remedy for the breach by the Employee of any
provision of Section 5 or Section 6, and agree in the event of such breach that
the Employer may obtain temporary and permanent injunctive relief restraining
the Employee from such breach, and, to the extent permissible under the
applicable statutes and rules of procedure, a temporary injunction may be
granted immediately upon the commencement of any such suit. Nothing contained
herein shall be construed as prohibiting the Employer from pursuing any other
remedies available at law or equity for such breach or threatened breach of
Section 5 or Section 6 or for any breach or threatened breach of any other
provision of this Agreement.
(c) Withholding. The Employer shall withhold such amounts from any
compensation or other benefits payable to the Employee under this Agreement on
account of payroll and other taxes as may be required by applicable law or
regulation of any governmental authority.
(d) Employer's Successors. The Employer shall require any
successor or successors (whether direct or indirect and whether by purchase,
lease, merger, consolidation, liquidation or otherwise) to all or substantially
all of the Employer's business and/or assets, by an agreement in substance and
form satisfactory to the Employee, to assume this Agreement and to agree
expressly to perform this Agreement in the same manner and to the same extent as
the Employer would be required to perform it in the absence of a succession. The
Employer's failure to obtain such agreement prior to the effectiveness of a
succession shall be a breach of this Agreement and shall entitle the Employee to
all of the compensation and benefits to which he would have been entitled
hereunder if the Employer had involuntarily terminated his employment without
Cause immediately after such succession become effective. For all purposes under
this Agreement, the term "Employer" shall include any successor or successors to
the Employer's business and/or assets which executes and delivers the assumption
agreement described in the subsection or which becomes bound by this Agreement
by operation of law.
(e) Employee's Successors. This Agreement and all rights of the
Employee hereunder shall inure to the benefit of, and be enforceable by, the
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributee, devisees and legatees.
(f) Indemnity. The Employer hereby agrees to indemnify and hold
the Employee harmless consistent with the Employer's policy against any and all
liabilities, expenses (including attorneys' fees and costs), claims, judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any proceeding arising out of the Employee's employment with the
Employer (whether civil, criminal, administrative or investigative, other than
proceedings by or in the right of the Employer), if with respect to the actions
at issue in the proceeding the Employee acted in good faith and in a manner
Employee reasonably believed to be in, or not opposed to, the best interests of
the Employer, and (with respect to any criminal action) Employee had no reason
to believe Employee's conduct was unlawful. Said indemnification arrangement
shall (i) survive the termination of this Agreement, (ii) apply to any and all
qualifying acts of the Employee which have taken place during any period in
which he was employed by the Employer, irrespective of the date of this
Agreement or the term hereof, including, but not limited to, any and all
qualifying acts as an officer and/or director of any
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affiliate while the Employee is employed by the Employer and (iii) be subject to
any limitations imposed from time to time under applicable law.
(g) Dispute Resolution; Attorney's Fees. The Employer and the
Employee agree that any dispute arising as to the parties' rights and
obligations hereunder shall be resolved by binding arbitration before an
arbitrator to be determined by mutually agreeable means. In such event, each of
the Employer and the Employee shall have the right to full discovery. The
Employer shall bear all costs of the arbitrator in any such proceeding, and if
the arbitration is definitively decided in the Employee's favor, the Employee
shall have the right, in addition to any other relief granted by such
arbitrator, to recover reasonable attorneys' fees; provided, however, that the
Employer shall have the right, in any dispute other than a dispute relating to
the occurrence of a Change in Control or the payment of an amount under Section
3(e)(iii), in addition to any other relief granted by such arbitrator, to
recover reasonable attorneys' fees in the event that a claim brought by the
Employee is definitively decided in the Employer's favor (with the amount of
such fees being limited to those expended defending the claim or claims decided
in favor of the Employer). Any judgment by such arbitrator may be entered into
any court with jurisdiction over the dispute.
(h) Acknowledgment. The Employee acknowledges that he has been
advised by the Employer to seek the advice of independent counsel prior to
reaching agreement with the Employer on any of the terms of this Agreement. The
parties agree that no rule of construction shall apply to this Agreement which
construes ambiguous language in favor of or against any party by reason of that
party's role in drafting the Agreement.
(i) Amendments and Waivers. No modification, amendment or waiver,
of any provision of, or consent required by, this Agreement, nor any consent to
any departure herefrom, shall be effective unless it is in writing and signed by
the parties hereto. Such modification, amendment, waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
(i) Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
personally or sent by registered or certified mail, postage prepaid, return
receipt requested, sent by overnight courier, or sent by facsimile (with
confirmation of receipt), addressed as follows:
If to the Employer:
Xxxxxxx Tire Group, Inc.
00000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxxxx & Xxxxxxx
1330 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
and:
Charlesbank Capital Partners, LLC
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxx and Xxxx X. Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
If to the Employee:
Xxxxxxx X. Xxxxxxx
00000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
or at such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. If such notice
or communication is mailed, such communication shall be deemed to have been
given on the fifth business day following the date on which such communication
is posted.
(j) Descriptive Headings; Certain Interpretations. Descriptive
headings are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement. Except as otherwise expressly
provided in this Agreement: (i) any reference in this Agreement to any
agreement, document or instrument includes all permitted supplements and
amendments; (ii) a reference to a law includes any amendment or modification to
such law and any rules or regulations issued thereunder; (iii) the words
"include," "included" and "including" are not limiting; and (iv) a reference to
a person or entity includes its permitted successors and assigns.
-13-
(k) Counterparts; Entire Agreement. This Agreement may be executed
in any number of counterparts, and each such counterpart hereof shall be deemed
to be an original instrument, but all such counterparts together shall
constitute one agreement. This Agreement contains the entire agreement among the
parties with respect to the transactions contemplated by this Agreement and
supersedes all other or prior written or oral agreements or understandings among
the parties with respect to the Employee's employment by the Employer. The
Existing Severance Agreement is expressly superseded and hereby amended and
restated in its entirety by this Agreement.
(L) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NORTH CAROLINA.
(M) CONSENT TO JURISDICTION. EACH OF THE EMPLOYER AND THE EMPLOYEE
HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NORTH CAROLINA
SITTING IN MECKLENBURG COUNTY AND ALL XXXXX XXXXXX XX XXX XXXXX XX XXXXX
XXXXXXXX SITTING IN MECKLENBURG COUNTY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY, AND THE EMPLOYEE AGREES NOT TO COMMENCE ANY LEGAL PROCEEDING RELATING
THERETO EXCEPT IN SUCH COURTS. EACH OF THE EMPLOYER AND THE EMPLOYEE IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH HE MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH COURTS AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH COURTS HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES HERETO HEREBY
CONSENTS TO SERVICE OF PROCESS BY NOTICE IN THE MANNER SPECIFIED IN SECTION 7(I)
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION IT
MAY NOW OR HEREAFTER HAVE TO SERVICE OF PROCESS IN SUCH MANNER.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
XXXXXXX TIRE GROUP, INC.
By: /s/ J. Xxxxxxx Xxxxxxx
-------------------------------------------
Name: J. Xxxxxxx Xxxxxxx
Title: Executive Vice President
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxxx
