EXHIBIT 10.20
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement"), dated as of July 10,
2000, is entered between Xxxxx X. Xxxxxxx, residing at 00 Xxxxxxx Xxxxxx, Xxxxxx
Xxxxxx, Xxx Xxxx 00000 ("Executive"), and Precision Partners, Inc., a Delaware
corporation (the "Company").
RECITALS
A. The Company and Precision Partners Holding Company, a Delaware
corporation ("PPHC", and together with the Company collectively, "Precision",
and each individually, a "Precision Company"), and their respective Affiliates
are engaged in the business of the contract manufacturing of metal parts,
tooling and assemblies (the "Business").
B. The Company believes that the future growth, profitability and
success of the Business of Precision will be significantly enhanced by the
employment of Executive as the Executive Vice President of Corporate Development
and Operations of each Precision Company during the Employment Term.
C. The Company desires to provide Executive with appropriate
incentives and rewards related to the performance by Executive and the Company
desires to encourage the employment or engagement of Executive in the service of
Precision.
With capitalized terms used herein having the meanings ascribed to
such terms in Section 1.10, the parties agree as follows:
I. TERMS OF EMPLOYMENT
1.1 DUTIES, ETC. (a) During the Employment Term, the Company will
employ Executive as its Executive Vice President of Corporate Development and
Operations and the Company will cause PPHC to appoint Executive as PPHC's
Executive Vice President of Corporate Development and Operations. Executive will
report directly to the President and Chief Executive Officer of the Company and
the President and Chief Executive Officer of PPHC, as the case may be. In such
capacity, Executive will perform such duties and exercise such powers
commensurate with his position as the Executive Vice President of Corporate
Development and Operations of each Precision Company subject to the direction of
the President and Chief Executive Officer of the Company and the President and
Chief Executive Officer of PPHC, as the case may be, including but not limited
to,
(i) Overseeing and managing the operations of Precision and its
Affiliates;
(ii) Assisting the board of directors of the Company (the "Company
Board") and the board of directors of PPHC (the "PPHC Board" and together
with the Company Board, the "Precision Boards") in the development of
corporate strategies to maximize shareholder value of Precision and its
Affiliates;
(iii) Assisting the Precision Boards in the identification and
implementation of acquisitions related to Precision and its Affiliates;
and
(iv) Performing such other responsibilities (commensurate with the
responsibilities customarily ascribed to an Executive Vice President of
Corporate Development and Operations of similarly situated Persons) as may
be assigned by the Precision Boards from time to time.
Without limiting the generality or effect of the foregoing, during the
Employment Term, Executives' titles, responsibilities, reporting relationships
and authority will be at least commensurate with those held by or assigned to
Executive on the Effective Date. From and after the Notification Date through
the effective date of the termination of Executive's employment, Executive will
comply with the Precision Boards' reasonable requests in implementing a prompt
and effective management transition.
(b) OFFICES OF AFFILIATES; PRECISION BOARDS. Upon the mutual
agreement between Executive and the President and Chief Executive Officer of the
Company and the President and Chief Executive Officer of PPHC, as applicable,
Executive will (i) serve as an officer of any Affiliate(s) and (ii) accept any
nomination to serve as a member of the board of directors of the Company, PPHC
or any of their Affiliates, and if elected, Executive will serve in such
capacity.
(c) COMPANY'S LOCATION AND FACILITIES. During the Employment Term,
the Company will provide to Executive use of Company's offices and facilities
together with the services of secretarial and other support staff commensurate
with his position and duties as set forth in Section 1.1(a). The initial
location of the Company's main office will be in Dallas, Texas, with the final
location to be in New Jersey or any other location (the "Location") mutually
agreed upon by the Precision Boards and the President and Chief Executive
Officer of the Company and the President and Chief Executive Officer of PPHC;
PROVIDED that such final Location will not be more than 40 miles from Spring
Lake, New Jersey.
1.2 ACTIVITIES. During the Employment Term, Executive will devote
substantially all of his efforts during working hours to the business of
Precision and its Affiliates and, absent the approval of the Company Board,
Executive will not engage in any business activity other than that required of
him in connection with his duties and responsibilities pursuant to Section
1.1(a), including serving as a director or trustee of any entity other than
Precision or its Affiliates; PROVIDED, HOWEVER, that nothing herein will
prohibit Executive from (a) serving on the boards of directors of the
corporations listed in ANNEX A attached hereto, (b) providing services to
charitable and/or civic organizations, or (c) managing his personal investments;
in each case so long as so doing does not constitute or result in a breach of
any provision of Article II hereof or materially interfere with the discharge by
Executive of his duties hereunder.
1.3 SALARY; BONUS. During the Employment Term, the Company will
pay to Executive an aggregate annual salary of $220,000 which will be subject to
annual review commencing January 1, 2001 ("Salary"). Such Salary will be payable
consistent with the then current payroll practices of the Company. In addition,
Executive will be eligible for an annual cash bonus of up to 65% of his then
current salary based on his performance under a bonus plan
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to be implemented by the Company Board; PROVIDED, HOWEVER, that Executive will
receive a bonus for the period from the Effective Date through and including
December 31, 2000 of at least $34,281 if Executive is continuously employed as
Executive Vice President of Corporate Development and Operations of Precision
from the Effective Date through and including December 31, 2000.
1.4 EMPLOYMENT TERM. Executive's employment hereunder will
commence on July 10, 2000 (the "Effective Date") and will, subject to automatic
extension described below and subject to earlier termination of Executive's
employment in accordance with this Agreement, expire on the second anniversary
hereof (the "Initial Employment Term"). Executive's employment will
automatically be extended for subsequent one-year terms upon expiration of the
Initial Employment Term and each such subsequent one-year term (each such
subsequent term, a "Renewal Period") on the terms set forth in this Agreement,
unless the Company notifies Executive in writing of its determination not to
extend Executive's employment at least 60 calendar days prior to the expiration
of the Initial Employment Term or any Renewal Period (any such notice, a
"Non-Renewal Notice"). The date on which Executive's employment with the Company
terminates is referred to herein as the "Termination Date."
1.5 EQUITY INTERESTS. (a) OPTIONS. As of the Effective Date, the
Company will cause there to be granted to Executive non-qualified options to
purchase 475,000 Investment Units of Class A Equity in Precision Partners,
L.L.C., a Delaware limited liability company ("LLC"), at an exercise price in
cash of approximately $0.3735 per unit. Fifty percent of the options referred to
in this Section 1.5(a) (the "Time-Based Options") for Executive will vest on a
pro rata basis over a four-year time period to the extent of 25% for each
12-month period beginning on the Effective Date, PROVIDED, HOWEVER, that in the
event (x) of a Change in Control, all such Time-Based Options shall
automatically become fully vested, or (y) of termination of Executive's
employment by the Company without Cause or by Executive with Good Reason (as set
forth in Section 1.8(a)(i)), the Time-Based Options shall automatically become
fully vested to the extent of the number of Time-Based Options scheduled to vest
from the Notification Date to the next succeeding anniversary of the Effective
Date. The remaining 50% of Executive's options (the "Performance-Based Options")
will vest pro rata over such four-year time period based upon Precision's
meeting certain financial goals, as determined in advance by the Company Board,
to the extent of (i) 12.5% for the period commencing on the Effective Date
through and including December 31, 2000 upon the reasonably prompt determination
by the Company of Precision's financial performance for such period, (ii) 25%
for the period commencing on January 1, 2001 through and including December 31,
2001 upon the reasonably prompt determination by the Company of Precision's
financial performance for such period, (iii) 25% for the period commencing on
January 1, 2002 through and including December 31, 2002 upon the reasonably
prompt determination by the Company of Precision's financial performance for
such period, (iv) 25% for the period commencing on January 1, 2003 through and
including December 31, 2003 upon the reasonably prompt determination by the
Company of Precision's financial performance for such period, and (v) 12.5% for
the period commencing on January 1, 2004 through and including June 30, 2004
upon the reasonably prompt determination by the Company of Precision's financial
performance for such period. Such Performance-Based Options will not be subject
to accelerated vesting. Upon the termination of Executive for any reason or for
no reason as set forth in Section 1.8, vesting of the options will cease
immediately on the Termination Date except as otherwise provided in the second
sentence of Section 1.5(a)
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and any unexercised but vested options will be exercisable within 60 days after
the Termination Date and will thereafter expire to the extent unexercised.
Notwithstanding anything to the contrary contained herein, all vested and
unvested options will expire on the 10th anniversary of the Effective Date. The
options may not be assigned or transferred in any manner except by will or the
laws of descent or inter vivos gifts to immediate family members or trusts for
immediate family members, and distribution and any assignment or transfer in
violation of this sentence will be null and void. All of the options to be
granted to Executive pursuant to this Section 1.5(a) will be in lieu of
Executive's participation in any bonus plan of Precision (other than the bonus
referred to in Section 1.3).
(b) EQUITY PURCHASE. During the period from July 10, 2000 through
and including June 30, 2001, (i) Executive may from time to time purchase, and
upon Executive's election to purchase the Company will cause there to be sold to
Executive, an aggregate of up to $250,000 of Investment Units in LLC consisting
of equal numbers of Preferred Interests at a purchase price of $0.6265 per unit
and Class A Equity at a purchase price of $0.3735 per unit, and (ii) in the
event that Executive exercises his election to purchase any or all of the
Investment Units he is entitled to purchase pursuant to Section 1.5(b),
Executive may from time to time purchase, and upon Executive's election to
purchase the Company will cause there to be sold to Executive, additional
Investment Units in LLC up to the same aggregate amount as such Investment Units
purchased pursuant to Section 1.5(b), payable by a demand note (the "Demand
Note") made by Executive to LLC or its designee on the following terms and
conditions: (A) interest will accrue on the unpaid amount of the Demand Note at
the per annum rate equal to the per annum rate of interest as reported by the
Wall Street Journal from time to time as the "prime rate" (the "Prime Rate");
(B) interest will accrue at the per annum rate equal to the Prime Rate plus 2%
upon the failure of Executive to pay on demand any unpaid principal amount or
unpaid interest on the Demand Note; and (C) the Demand Note will be full
recourse to the assets of Executive. The consummation of such purchases will be
subject to Executive then being Executive Vice President of Corporate
Development and Operations of Precision as of the date of each such purchase. In
addition, the Company will cause there to be granted to Executive the
opportunity to purchase additional Investment Units in LLC consisting of
Preferred Interests and Class A Equity in connection with future additional
equity investments in LLC in an amount to be determined by the Company Board in
its discretion. The Company will grant or cause there to be granted to
Executive, as the case may be, customary "piggyback" registration rights
(subject to customary underwriter cutback provisions) with respect to his equity
interest in LLC in connection with Public Offerings of Voting Securities of LLC
or a Precision Company in which Precision Partners Investment Fund, L.L.C.
("Precision Investors") participates. The parties understand that Executive will
be entitled to participate (up to 25% of the Voting Securities then owned by
Executive) on a pro rata basis with Precision Investors in any Public Offering
of Voting Securities of LLC or a Precision Company in which Precision Investors
participates.
(c) EQUITY REDEMPTION. Notwithstanding anything to the contrary
contained herein or in the LLC Agreement, subject to Executive complying with
the Precision Boards' reasonable requests in implementing a prompt and effective
management transition,
(i) if the Company terminates Executive's employment without Cause
or Executive terminates his employment with Good Reason as set forth in
Section 1.8(a)(i),
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within 60 days after the Termination Date Executive will sell to LLC or
its designee, and the Company will cause LLC or its designee to purchase
in cash from Executive, his equity interest in LLC at the fair market
value thereof as of the Termination Date (as determined by the management
committee of LLC in its good faith discretion); or
(ii) if the Company provides a Non-Renewal Notice to Executive,
within 60 days after the Termination Date Executive will sell to LLC or
its designee, and the Company will cause LLC or its designee to purchase
in cash from Executive, his equity interest in LLC at the fair market
value thereof as of the Termination Date (as determined by the management
committee of LLC in its good faith discretion).
PROVIDED, HOWEVER, that in the case of Sections 1.5(c)(i) and (ii), if Executive
breaches his obligation to comply with the Precision Boards' reasonable requests
in implementing a prompt and effective management transition, LLC or its
designee will retain for a one-year period after such Termination Date the
right, but not the obligation, to purchase in cash from Executive, and Executive
will sell to LLC or its designee upon notice from LLC or its designee, his
equity interest in LLC at cost; PROVIDED, FURTHER, HOWEVER, subject to other
applicable provisions of this Agreement, if LLC or its designee has not
purchased Executive's equity interest in LLC within 60 days after the
Termination Date, simple interest shall accrue at an annual rate of 8% on such
payment commencing on the 61st day following the Termination Date to the date
such payment is made by LLC or its designee to Executive.
(d) LLC AGREEMENT. The Company will (i) to the extent necessary,
cause the amendment of the LLC Agreement to effect the grant of the options
contemplated by Section 1.5(a) and the issuance of the Investment Units
contemplated by Section 1.5(b) and (ii) will use reasonable best efforts to
effect all other terms and conditions referred to in Section 1.5.
Notwithstanding anything to the contrary contained herein, Section 1.5
constitutes the definitive terms of Executive's equity interest and options in
LLC and will control in the event of any conflict between such definitive terms
and the LLC Agreement.
(e) JOINDER. Executive will execute a joinder to the LLC Agreement
in a form reasonably acceptable to LLC and Executive upon the earlier to occur
of (x) the exercise of any or all of the options set forth in Section 1.5(a) or
(y) the closing of any equity purchase set forth in the first sentence of
Section 1.5(b).
(f) A summary of the capitalization and ownership structure of
LLC, the Company, PPHC and their Affiliates is set forth in EXHIBIT A attached
hereto.
1.6 BENEFITS, ETC. (a) BENEFITS. During the Employment Term,
Executive will be entitled to participate in such pension and other retirement
and medical, term life, disability, dental insurance programs and other
non-equity-based benefits, together with participation in a matching 401(K) plan
if any, as the Company may provide from time to time for other senior executives
of the Company generally. Notwithstanding the foregoing, Executive will not,
during the Employment Term, be entitled to participate in any severance pay or
bonus plan (other than the bonus referred to in Section 1.3) of the Company.
Executive's severance benefits will be solely as set forth in Section 1.8.
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(b) VACATION. During the Employment Term, Executive will be
entitled to four weeks of vacation time each calendar year, except as may be
otherwise agreed upon between Executive and the President and Chief Executive
Officer of the Company, with such vacation time to be prorated monthly for
partial calendar years (ten days for the year 2000). Any vacation not taken will
not be carried over and no vacation or other pay will be due in respect thereof,
including in respect of any period in which the Termination Date occurs.
(c) EXPENSES. Subject to compliance with Precision's policies as
from time to time in effect regarding the incurrence, substantiation and
verification of business expenses, Executive is authorized to incur on behalf of
Precision, and the Company will, or will cause PPHC to, pay, or reimburse
Executive for, all customary and reasonable expenses incurred in connection with
the performance of duties as set forth in Sections 1.1(a).
(d) PREREQUISITES. During the Employment Term, the Company
will provide Executive with an automobile allowance of $800 per month.
1.7 DEDUCTIONS AND WITHHOLDINGS. All amounts payable or which
become payable hereunder will be subject to any deductions and withholdings
required by law.
1.8 TERMINATION. (a) Termination of Employment during the
Employment Term.
(i) TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE WITH
GOOD REASON. The Company, by action of the Company Board, may terminate
Executive's employment hereunder without Cause at any time during the
Employment Term, upon 30 calendar days' written notice to Executive, and
Executive may terminate his employment hereunder with Good Reason at any
time during the Employment Term, upon 30 calendar days' written notice to
the Company, or in the case that Executive terminates his employment for
Good Reason because of a reduction in Executive's Salary as set forth in
clause (ii) of the definition thereof, upon five calendar days written
notice to the Company. In the event Executive's employment is terminated
by action of the Company Board without Cause or Executive terminates his
employment with Good Reason as aforesaid, the Company agrees that, if
Executive executes the release attached hereto as EXHIBIT B (as may be
amended by the Company from time to time prior to its execution as
necessary to comply with applicable law to the extent necessary in the
reasonable judgment of the Company (on the advice of counsel) to make such
release valid, binding and enforceable, the "Release"), commencing
promptly upon the effective date of the Release, the Company will pay to
Executive as consideration for signing the Release an amount equal to
Executive's then current Salary for nine months (the "Release Payment");
PROVIDED, HOWEVER, that in the event that Executive terminates his
employment with Good Reason because of a reduction in Executive's Salary
as set forth in clause (ii) of the definition thereof, Executive's then
current Salary for purposes of calculating the Release Payment will be
Executive's Salary prior to such reduction. The Release Payment will be
payable periodically, consistent with the then current payroll practices
of the Company. Executive agrees that the sum entailed by the Release is
good and valuable consideration for the surrender of rights entailed by
the Release. In addition, in the event Executive is terminated by the
Company without Cause or
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Executive terminates his employment hereunder with Good Reason during the
Employment Term, the Company will (A) pay to Executive accrued but unpaid
Salary through the effective date of such termination, (B) pay to
Executive all unreimbursed expenses incurred in accordance with this
Agreement prior to such termination, which payments in the case of clauses
(A) and (B) will become due and payable within ten calendar days following
the Termination Date, (C) pay to Executive bonus as described in Section
1.3 that is accrued but unpaid prior to such termination, which payments
will become due and payable within ten calendar days after the Company has
made a reasonably prompt determination of Precision's financial
performance up to the Termination Date, (D) provide to Executive such
benefits described in Section 1.6(a) that have accrued prior to the
Termination Date and which are subject to continuance after the
Termination Date in accordance with the terms of such benefits, and (E)
notwithstanding clause (D), provide to Executive medical insurance
coverage that is substantially equivalent to the medical insurance
coverage then provided to him by the Company prior to such termination for
a period of nine months following the Termination Date. Other than (x) as
set forth in Section 1.5 or otherwise in the LLC Agreement, (y) with
respect to any obligations of the Company to indemnify Executive or to
cause PPHC or LLC or any Affiliate to indemnify Executive or (z) as set
forth in Section 1.8(e), and, except as set forth in this subparagraph
(i), the Company will have no additional obligations to Executive
hereunder and the payments to be made in accordance with this Section
1.8(a)(i) will constitute exclusive liquidated damages payable as a result
of the termination of Executive's employment by the Company without Cause
or Executive's termination of his employment for Good Reason.
(ii) TERMINATION BY EXECUTIVE WITHOUT GOOD REASON. Executive may
terminate his employment hereunder during the Employment Term without Good
Reason, provided that Executive first gives to the Company a written
notice of intent to terminate at least 90 calendar days prior to the
effective date of any such termination. In the event Executive terminates
his employment without Good Reason during the Employment Term, the Company
will (A) pay to Executive accrued but unpaid Salary through the effective
date of such termination, (B) pay to Executive all unreimbursed expenses
incurred in accordance with this Agreement prior to such termination,
which payments in the case of clauses (A) and (B) will become due and
payable within ten calendar days following the Termination Date, and (C)
provide to Executive such benefits described in Section 1.6(a) that have
accrued prior to the Termination Date and which are subject to continuance
after the Termination Date in accordance with the terms of such benefits.
Other than (x) as set forth in Section 1.5 or otherwise in the LLC
Agreement, (y) with respect to any obligations of the Company to indemnify
Executive or to cause PPHC or LLC or any Affiliate to indemnify Executive
or (z) as set forth in Section 1.8(e), and, except as provided in this
subparagraph (ii), the Company will have no additional obligations to
Executive after such termination hereunder and the payments to be made in
accordance with this Section 1.8(a)(ii) will constitute exclusive
liquidated damages payable as a result of the termination of Executive's
employment by Executive without Good Reason.
(iii) TERMINATION BY THE COMPANY FOR CAUSE. The Company, by action
of the Company Board, may terminate Executive's employment hereunder for
Cause during the
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Employment Term upon written notice to Executive. In the event
Executive's employment is terminated by action of the Company Board for
Cause during the Employment Term, the Company will (A) pay to Executive
accrued but unpaid Salary through the effective date of such termination,
(B) pay to Executive all unreimbursed expenses incurred in accordance with
this Agreement prior to such termination, which payments in the case of
clauses (A) and (B) will become due and payable within ten calendar days
following the Termination Date, and (C) provide to Executive such benefits
described in Section 1.6(a) that have accrued prior to the Termination
Date and which are subject to continuance after the Termination Date in
accordance with the terms of such benefits. Other than (x) as set forth in
Section 1.5 or otherwise in the LLC Agreement, (y) with respect to any
obligations of the Company to indemnify Executive or to cause PPHC or LLC
or any Affiliate to indemnify Executive or (z) as set forth in Section
1.8(e), and, except as provided in this subparagraph (iii), the Company
will have no additional obligations to Executive after such termination
hereunder and the payments to be made in accordance with this Section
1.8(a)(iii) will constitute exclusive liquidated damages payable as a
result of the termination of Executive's employment by the Company for
Cause.
(iv) TERMINATION BY DEATH OF EXECUTIVE. In the event of Executive's
death, the Company will pay to such Person or Persons as Executive may
designate in writing or, in the absence of such designation, to the estate
of Executive, the sum of (A) accrued but unpaid Salary through the date of
Executive's death, (B) all unreimbursed expenses incurred in accordance
with this Agreement prior to such termination, (C) bonus as described in
Section 1.3 that is accrued but unpaid prior to Executive's death and (D)
an amount of life insurance benefit provided to Executive by the Company
equal to three (3) times Executive's then current Salary. Any such
insurance benefit payment contemplated hereby will be made within ten
calendar days following the insurance payment date under the applicable
policies of insurance and the amounts contemplated by clauses (A) and (B)
will be paid within 45 calendar days following the date of such death and
the amount contemplated by clause (C) will be paid within ten calendar
days after the Company has made a reasonably prompt determination of
Precision's financial performance up to the Termination Date.
Additionally, in the event of Executive's death the Company will provide
to Executive such benefits described in Section 1.6(a) that have accrued
prior to the Termination Date and which are subject to continuance after
the Termination Date in accordance with the terms of such benefits. Other
than (x) as set forth in Section 1.5 or otherwise in the LLC Agreement,
(y) with respect to any obligations of the Company to indemnify Executive
or to cause PPHC or LLC or any Affiliate to indemnify Executive or (z) as
set forth in Section 1.8(e), and, except as provided in this subparagraph
(iv), this Agreement in all other respects will terminate upon the death
of Executive and the payments to be made in accordance with this Section
1.8(a)(iv) will constitute exclusive liquidated damages payable as a
result of the termination of Executive's employment by reason of death.
(v) TERMINATION FOR DISABILITY. In the event Executive's
employment is terminated by action of the Company Board during the Employment
Term because of Executive's Disability, the Company will pay to Executive the
sum of (A) accrued but unpaid Salary at the date of Executive's Disability, (B)
all unreimbursed expenses
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incurred in accordance with this Agreement prior to such termination, (C)
bonus as described in Section 1.3 that is accrued but unpaid prior to
Executive's Disability and (D) an amount of disability insurance benefit
provided to Executive by the Company equal to three (3) times Executives
then current Salary. Any such insurance benefit payment will be made
within ten days of the insurance payment date under the applicable
policies of insurance and the amounts contemplated by clauses (A) and (B)
will be paid within 45 days following the date of Executive's Disability
and the amount contemplated by clause (C) will be paid within ten calendar
days after the Company has made a reasonably prompt determination of
Precision's financial performance up to such Disability. Additionally, in
the event of Executive's Disability the Company will provide to Executive
such benefits described in Section 1.6(a) that have accrued prior to the
Termination Date and which are subject to continuance after the
Termination Date in accordance with the terms of such benefits. Other than
(x) as set forth in Section 1.5 or otherwise in the LLC Agreement, (y)
with respect to any obligations of the Company to indemnify Executive or
to cause PPHC or LLC or any Affiliate to indemnify Executive or (z) as set
forth in Section 1.8(e), and, except as provided in this subparagraph (v),
this Agreement in all other respects will terminate upon the Disability of
Executive and the payments to be made in accordance with this Section
1.8(a)(v) will constitute exclusive liquidated damages payable as a result
of the termination of Executive's employment by reason of Disability. The
Company acknowledges that the Americans and Disability Act ("ADA")
provides certain protections to individuals with disabilities and nothing
in this Section 1.8(a)(v) should be interpreted to permit conduct that
violates the ADA.
(b) NON-RENEWAL NOTICE. Unless otherwise specified in the text of
a Non-Renewal Notice, the delivery by the Company to Executive of a Non-Renewal
Notice in accordance with this Agreement will not constitute the termination of
Executive's employment as contemplated by Sections 1.8(a)(i) or 1.8(a)(iii).
Notwithstanding the foregoing, in the event of the delivery by the Company to
Executive of a Non-Renewal Notice, the Company agrees that, if Executive
executes the Release, commencing promptly upon the effective date of the
Release, the Company will pay to Executive as consideration for signing the
Release, the Release Payment. The Release Payment will be payable periodically,
consistent with the then current payroll practices of the Company. Executive
agrees that the sum entailed by the Release is good and valuable consideration
for the surrender of rights entailed by the Release. In the event of the
delivery by the Company to Executive of a Non-Renewal Notice, the Company will
(A) pay to Executive accrued but unpaid Salary through the Termination Date, (B)
pay to Executive all unreimbursed expenses incurred in accordance with this
Agreement prior to such Termination Date, which payments in the cases of clauses
(A) and (B) will become due and payable within ten calendar days following the
Termination Date, (C) pay to Executive bonus as described in Section 1.3 that is
accrued but unpaid prior to the Termination Date, which payments will become due
and payable within ten calendar days after the Company has made a reasonably
prompt determination of Precision's financial performance up to the Termination
Date, (D) provide to Executive such benefits described in Section 1.6(a) that
have accrued prior to the Termination Date and which are subject to continuance
after the Termination Date in accordance with the terms of such benefits, and
(E) notwithstanding clause (D), provide to Executive medical insurance coverage
that is substantially equivalent to the medical insurance coverage then provided
to him by the Company prior to such delivery of the Non-Renewal Notice for a
period of nine months following the Termination Date. Other than (x) as set
forth in Section 1.5
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or otherwise in the LLC Agreement, (y) with respect to any obligations of the
Company to indemnify Executive or to cause PPHC or LLC or any Affiliate to
indemnify Executive or (z) as set forth in Section 1.8(e), and, except as set
forth in this Section 1.8(b), the Company will have no additional obligations to
Executive hereunder and the payments to be made in accordance with this Section
1.8(b) will constitute exclusive liquidated damages payable as a result of the
non-renewal of Executive's employment by the Company.
(c) MITIGATION. Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and the amount of any Release Payment provided for in this
Agreement shall not be reduced by any cash compensation received by Executive as
a result of employment by or consulting work with another employer.
(e) INSURANCE. During the Employment Term and thereafter, the
Company will, or will cause PPHC to, provide to Executive with respect to his
duties set forth in Sections 1.1(a) and (b), continuous coverage for Executive
under a directors and officers liability insurance on terms that are
commercially reasonable for entities similarly situated to the Company and PPHC,
as the case may be.
1.9 EXCISE TAX GROSS-UP PAYMENTS. (a) AMOUNT OF GROSS-UP PAYMENT.
Anything in this Agreement to the contrary notwithstanding, in the event that it
is determined (as hereinafter provided) that any payment (other than the
Gross-Up Payment provided for in this Section 1.9) or distribution by LLC, the
Company, PPHC or any of their Affiliates to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement or pursuant to or by reason of any other agreement, policy, plan,
program or arrangement, including without limitation the lapse or termination of
any restriction on or the vesting or exercisability of any benefit payable
pursuant to any of the foregoing (a "Payment"), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code") (or any successor provision thereto) by reason of being considered
"contingent on a change in ownership or control" of Precision within the meaning
of Section 280G of the Code (or any successor provision thereto) or to any
similar tax imposed by state or local law, or any interest or penalties with
respect to such tax (such tax or taxes, together with any such interest and
penalties, being hereafter collectively referred to as the "Excise Tax"), then
Executive will be entitled to receive from the Company an additional payment or
payments (collectively, a "Gross-Up Payment"). The Gross-Up Payment will be in
an amount such that, after payment by Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Gross-Up Payment, Executive retains an amount of the
Gross-Up Payment equal to one-half of the Excise Tax imposed upon the Payment.
For purposes of determining the amount of the Gross-Up Payment, Executive will
be considered to pay (x) federal income taxes at the highest rate in effect in
the year in which the Gross-Up Payment will be made and (y) state and local
income taxes at the highest rate in effect in the state or locality in which the
Gross-Up Payment would be subject to state or local tax, net of the maximum
reduction in federal income tax that could be obtained from deduction of such
state and local taxes.
10
(b) DETERMINATION OF EXCISE TAX AND GROSS-UP PAYMENT. All
determinations required to be made under this Section 1.9, including whether an
Excise Tax is payable by Executive and the amount of such Excise Tax and whether
a Gross-Up Payment is required to be paid by the Company to Executive and the
amount of such Gross-Up Payment, if any, will be made by a nationally recognized
accounting firm (the "National Firm") selected and paid for by the Company in
its sole discretion, which National Firm may be the Company's independent public
accounting firm. The federal, state and local income or other tax returns filed
by Executive will be prepared and filed on a consistent basis with the
determination of the National Firm with respect to the Excise Tax payable by
Executive.
(c) Notwithstanding the foregoing, if Executive delivers to the
Company a notice (the "Excise Tax Dispute Notice") that he disagrees with such
National Firm's determination with respect to the Excise Tax payable by
Executive as set forth in the last sentence of Section 1.9(b) (the "Excise Tax
Determination") within 15 days after the National Firm's Excise Tax
Determination, then the following procedures will apply:
(i) Executive (or his designee) and the Company and/or the
National Firm will attempt to agree upon the Excise Tax Determination.
(ii) If no such agreement is reached within 30 days after the
Excise Tax Dispute Notice, then the Excise Tax Determination will be
undertaken by another National Firm (the "Arbitrating Firm") to be
mutually selected by Executive and the Company.
(iii) Executive and the Company will instruct the Arbitrating Firm
to render its determination as soon as practicable thereafter, but in no
event later than 30 days after the Arbitrating Firm is chosen. The
Arbitrating Firm's determination will be conclusive and binding upon each
of Executive and the Company. Nothing herein will be construed to
authorize or permit the Arbitrating Firm to determine any question or
matter whatsoever under or in connection with this Agreement except the
Excise Tax Determination.
(iv) The fees and expenses of the Arbitrating Firm selected
hereunder will be shared equally by Executive and the Company.
(d) CONTESTED AMOUNTS. As a result of the uncertainty in the
application of Section 4999 of the Code and the possibility of similar
uncertainty regarding applicable state or local tax law at the time of any
determination by the National Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by the Company should have been made (an
"Underpayment"), consistent with the calculations required to be made hereunder.
Executive will notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would require
the payment by the Company of a Gross-Up Payment. Such notification will be
given as promptly as practicable but no later than 10 business days after
Executive actually receives notice of such claim and Executive will further
apprise the Company of the nature of such claim and the date on which such claim
is requested to be paid (in each case, to the extent known by Executive).
Executive will not pay such claim prior to the expiration of the 30-calendar-day
period following the date on which he gives such notice to the Company or, if
earlier, the date that any payment of amount with respect to such claim is due.
If the Company notifies Executive in writing prior to the expiration of such
period
11
that it desires to contest such claim, Executive will fully cooperate with the
Company in contesting such claim, and the Company will bear all costs and
expenses of such contest.
1.10 DEFINITIONS. For purposes of this Agreement, the following
terms will have the following meanings when used herein with initial capital
letters:
"ACQUISITION" has the meaning ascribed to such term in Section
2.2(a).
"ADA" has the meaning ascribed to such term in Section 1.8(a)(v).
"AGREEMENT" has the meaning specified in the introductory paragraph
hereof.
"AFFILIATE" means (i) any Person directly or indirectly controlled
by LLC or (ii) any Person engaged in the Business and which is directly or
indirectly controlling or under common control with LLC. For purposes of this
definition, "CONTROL," when used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of any such Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"CONTROLLED" and "CONTROLLING" have the meaning correlative to the foregoing.
"ARBITRATING FIRM" has the meaning ascribed to such term in Section
1.9(c).
"BUSINESS" has the meaning ascribed to such term in Recital A.
"CAUSE" means (i) the material breach by Executive of this
Agreement; (ii) the indictment of Executive of any felony; (iii) fraud,
embezzlement or misappropriation by Executive relating to the Company, PPHC,
their Affiliates or LLC or any of their funds, properties, corporate
opportunities or other assets; (iv) the breach by Executive of any of the terms
of Article II; (v) alcohol or substance abuse; or (vi) an act of moral turpitude
adversely affecting the ability of Executive to perform his duties hereunder.
Notwithstanding anything to the contrary contained herein, Executive's
employment shall not be deemed to have been terminated for Cause unless and
until a majority of the Company Board shall have approved such termination,
after reasonable notice to Executive and an opportunity for Executive, together
with his counsel, to be heard before the Company Board, finding that there has
been Cause to terminate Executive's employment.
"CHANGE IN CONTROL" means the consummation of any transaction (other
than a Public Offering or Management Investment) which results (x) in the
reduction in the percentage of the issued and outstanding Voting Securities of
LLC held in the aggregate by The SKM Equity Fund II, L.P. and SK Investment
Fund, L.P. and any of their respective affiliates on the Effective Date by more
than 70% or (y) an unrelated third party acquiring at least 90% of the assets of
Precision.
"CLASS A EQUITY" has the meaning ascribed to such term in the LLC
Agreement.
"CODE" has the meaning ascribed to such term in Section 1.9(a).
12
"COMPANY" has the meaning ascribed to such term in the introductory
paragraph hereof.
"COMPANY BOARD" has the meaning ascribed to such term in Section
1.1(a)(ii).
"CONSOLIDATION" has the meaning ascribed to such term in Section
2.2(a).
"CONSOLIDATION PERIOD" has the meaning ascribed to such term in
Section 2.2(a).
"CONTRACT MANUFACTURER" has the meaning ascribed to such term in
Section 2.2(a).
"CONTRACT MANUFACTURING ENTITY" has the meaning ascribed to such
term in Section 2.2(a).
"CONFIDENTIAL INFORMATION" has the meaning ascribed to such term in
Section 2.1(a).
"CUSTOMERS" has the meaning ascribed to such term in Section
2.1(a)(i).
"DEMAND NOTE" has the meaning ascribed to such term in Section
1.5(b).
"DISABILITY" means a physical or mental incapacity as a result of
which Executive becomes unable to continue to perform fully his duties, with
"reasonable accommodation," as defined in the Americans with Disability Act and
applicable state laws, hereunder for 90 consecutive calendar days or for shorter
periods aggregating 180 or more days in any 12-month period or a determination
by a physician selected in accordance with this Agreement that Executive will be
unable to return to work and perform his duties on a full-time basis within 90
consecutive calendar days following the date of such determination on account of
mental or physical incapacity. A determination of Disability will be certified
by a medical doctor agreed to by the Company and Executive or, in the event of
Executive's incapacity to designate a doctor, Executive's legal representative.
In the absence of agreement between Precision and Executive, each party will
nominate a medical doctor and the two doctors so nominated will select a third
doctor, who will make the determination as to Disability.
"EFFECTIVE DATE" has the meaning ascribed to such term in Section
1.4.
"EMPLOYMENT TERM" means the Initial Employment Term as extended by
one or more Renewal Periods.
"EXCISE TAX" has the meaning ascribed to such term in Section
1.9(a).
"EXCISE TAX DETERMINATION" has the meaning ascribed to such term in
Section 1.9(c).
"EXCISE TAX DISPUTE NOTICE" has the meaning ascribed to such term in
Section 1.9(c).
13
"EXCLUDED BUSINESSES" has the meaning ascribed to such term in
Section 2.2(a)(i)(B)(x).
"EXECUTIVE" has the meaning ascribed to such term in the
introductory paragraph hereof.
"EXECUTIVE COMMITTEE" means the executive committee of the
applicable Precision Board consisting of directors thereof.
"GOOD REASON" means without Executive's express prior written
consent (i) the material diminution of Executive's positions, titles, authority,
duties, responsibilities or status with Precision; (ii) a reduction by the
Company in Executive's Salary; (iii) any breach to the LLC Agreement that
materially and adversely affects Executive or any other material breach by the
Company of this Agreement; or (iv) the failure of any successor to all or
substantially all of the assets of the Company and its Affiliates to assume all
the obligations of the Company under this Agreement.
"GROSS-UP PAYMENT" has the meaning ascribed to such term in Section
1.9(a).
"INITIAL EMPLOYMENT TERM" has the meaning specified in Section 1.4.
"INVESTMENT UNITS" has the meaning ascribed to such term in the LLC
Agreement.
"LLC" has the meaning ascribed to such term in Section 1.5(a).
"LLC AGREEMENT" means the Limited Liability Company Agreement
of Precision Partners, L.L.C., dated as of September 30, 1998, as may be
amended from time to time.
"MANAGEMENT INVESTMENT" means the offer or sale of securities of
LLC, the Company, PPHC, or any of their respective Affiliates to directors,
members of the management committee, officers, other employees or consultants of
LLC, the Company, PPHC or any of their respective Affiliates (including
directors, members of the management committee, officers, other employees or
consultants of Persons acquired by or to be acquired by LLC, the Company, PPHC
or any of their respective Affiliates) pursuant to any agreement, plan or
arrangement (including stock option plans, other equity participation plans and
the LLC Agreement).
"NATIONAL FIRM" has the meaning ascribed to such term in Section
1.9(b).
"NON-COMPETITION PERIOD" has the meaning ascribed to such term in
Section 2.2(a).
"NON-RENEWAL NOTICE" has the meaning ascribed to such term in
Section 1.4.
"NOTIFICATION DATE" means the date on which (i) the Company notifies
Executive of the termination of his employment under this Agreement or (ii)
Executive notifies the Company of the termination of his employment under this
Agreement, as applicable.
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"OEM" has the meaning ascribed to such term in Section 2.2(a)(F).
"PAYMENT" has the meaning ascribed to such term in Section 1.9(a).
"PERFORMANCE-BASED OPTIONS" has the meaning ascribed to such term in
Section 1.5(a).
"PERSON" means any individual, corporation, partnership, trust,
association or other entity or organization, including a government or political
subdivision or any agency or instrumentality thereof.
"PPHC" has the meaning ascribed to such term in Recital A.
"PPHC BOARD" has the meaning ascribed to such term in Section
1.1(a)(ii).
"PRECISION" has the meaning ascribed to such term in Recital A.
"PRECISION BOARDS" has the meaning ascribed to such term in Section
1.1(a))(ii).
"PRECISION COMPANY" has the meaning ascribed to such term in Recital
A.
"PRECISION INVESTORS" has the meaning ascribed to such term in
Section 1.5(b).
"PRECISION IP" has the meaning ascribed to such term in Section
2.3(a).
"PREFERRED INTEREST" has the meaning ascribed to such term in the
LLC Agreement.
"PREVAILING PARTY" has the meaning ascribed to such item in Section
2.4.
"PRIME RATE" has the meaning ascribed to such term in Section
1.5(b).
"PUBLIC OFFERING" means the offer or sale of securities of LLC, the
Company, PPHC, or any of their respective Affiliates that is registered or
required to be registered under the Securities Act of 1933, as amended, or any
similar law of any other jurisdiction.
"RELEASE" has the meaning ascribed to such term in Section
1.8(a)(i).
"RELEASE PAYMENT" has the meaning ascribed to such term in Section
1.8(a)(i).
"RENEWAL PERIOD" has the meaning ascribed to such term in Section
1.4(a).
"SALARY" has the meaning ascribed to such term in Section 1.3.
"TERMINATION DATE" has the meaning ascribed to such term in Section
1.4(a).
"TIME-BASED OPTIONS" has the meaning ascribed to such term in
Section 1.5(a).
"UNDERPAYMENT" has the meaning ascribed to such term in Section
1.9(d).
15
"VOTING SECURITIES" means, with respect to any Person, securities of
such person (including capital stock and membership interests) entitling the
holders thereof to vote generally to elect the members of the board of directors
or equivalent governing body of such Person.
II. CONFIDENTIALITY; NON-COMPETITION, ETC.
2.1 CONFIDENTIALITY. (a) Executive acknowledges that during the
Employment Term, Executive will be given and will continue to have in connection
with the conduct of the Business, access and exposure to trade secrets and
confidential information in written, oral, electronic and other form regarding
LLC, the Company, PPHC and their Affiliates and their respective businesses,
equipment, products and employees ("Confidential Information"), including but
not limited to:
(i) the identities of each such Person's customers and key
accounts and potential customers and key accounts (hereinafter referred to
collectively as "Customers"), including, without limitation, the identity
of Customers who or which Executive cultivates or maintains while
providing services at Precision using Precision's products, name and
infrastructure, and the identities of contact persons at those Customers;
(ii) the particular preferences, likes, dislikes and needs of those
Customers and contact persons with respect to product types, pricing,
sales calls, timing, sales terms, rental terms, lease terms, service
plans, and other marketing terms and techniques;
(iii) each such Person's business methods, practices, strategies,
forecasts, pricing, and marketing techniques;
(iv) the identities of each such Person's licensors, vendors and
other suppliers and the identities of each such Person's contact persons
at such licensors, vendors and other suppliers; the identities of each
such Person's key sales representatives and personnel and other employees;
(v) advertising and sales materials, research, computer software
and related materials;
(vi) information provided by or on behalf of Xxxxxx & Co., LLC
relating to potential Acquisitions of a Person by LLC, the Company, PPHC
and their Affiliates; and
(vii) other material facts and financial and other business
information concerning or relating to each such Person and its business,
operations, financial condition, results of operations and prospects.
"CONFIDENTIAL INFORMATION" will not include (i) information which is
already in or subsequently enters the public domain, other than as a result of
any direct or indirect action or inaction by Executive in breach of this
Agreement, (ii) information which is already in the possession of Executive
prior to the Effective Date, and (iii) information which is approved for release
by the Precision Boards.
16
(b) Executive will use Confidential Information only for purposes
of carrying out his duties for LLC, the Company, PPHC and their Affiliates, and
not for any other purpose, including, without limitation, not in any way or for
any purpose detrimental to such Persons. During the Employment Term and
thereafter, Executive will not at any time use for himself or others, directly
or indirectly, any such Confidential Information, and, except as required by
law, Executive will not disclose such Confidential Information, directly or
indirectly, to any other Person.
(c) If Executive is requested or required, by subpoena, oral
deposition, interrogatories, request for production of documents, administrative
order or otherwise, to disclose any Confidential Information, then Executive
will provide the Company with prompt notice of any such request so that the
Company (or its designee) may seek, at the Company's expense, an appropriate
protective order. If, in the absence of a protective order or waiver, Executive
is compelled, in the written opinion of Executive's counsel, to disclose any
Confidential Information, then Executive may make such disclosure after notice
to the Company.
(d) All physical property and all notes, memoranda, files,
records, writings, documents and other materials of any and every nature,
written or electronic, which Executive will prepare or receive in the course of
his association with LLC, the Company, PPHC and their Affiliates and which
relate to or are useful in any manner to the Business or any other business now
or hereafter conducted by LLC, the Company, PPHC and their Affiliates, are and
will remain the sole and exclusive property of such Persons. Executive will not
remove from any such Person's premises any such physical property, the original
or any reproduction of any such materials nor the information contained therein,
except for the purposes of carrying out his duties hereunder, and all such
physical property (except for any items of personal property of Executive),
materials and information in his possession or under his custody or control
will, upon the termination of his employment be immediately turned over to the
Company.
2.2 NON-COMPETITION. (a)(i) During the Employment Term and for a
period commencing on the Termination Date and terminating on the second
anniversary of the Termination Date ("Non-Competition Period"), Executive will
not:
(A) promote, participate or engage or have any other
interest (whether acting as owner, purchaser, shareholder, employee,
broker, agent, principal, trustee, corporate officer, director,
consultant or in any other capacity) in any Person which is engaged
in, or a primary purpose of which is to engage in, the Consolidation
(as defined below) of Contract Manufacturers (as defined below);
(B) (x) promote, participate or engage or have any
other interest (whether acting as owner, purchaser, shareholder,
employee, broker, agent, principal, trustee, corporate officer,
director, consultant or in any other capacity) in any Person (all
such Persons, collectively, "Excluded Businesses") which Executive
has visited or with which Executive has had substantial discussions,
in each case, at any time during the Employment Term concerning a
potential Acquisition (as defined below) of such Person by LLC, the
Company PPHC or any of their Affiliate or (y) directly or indirectly
solicit, canvass or
17
approach any Person which is an Excluded Business to endeavor to
cause or effect an Acquisition involving such Person;
(C) directly or indirectly solicit, canvass or
approach any Person who, to the knowledge of Executive after due
inquiry, was provided with products or services by LLC, the Company,
PPHC or any of their Affiliates at any time prior to the Termination
Date or with whom LLC, the Company, PPHC or any of their Affiliates
was involved in discussions regarding the supply of products or
services by LLC, the Company, PPHC or any of their Affiliates as of
the Termination Date, to offer that Person products or services
similar to or derivative of products or services provided by LLC,
the Company, PPHC or any of their Affiliates at any time during the
Non-Competition Period;
(D) directly or indirectly solicit, canvass or
approach any Person who, to the knowledge of Executive after due
inquiry, provided products or services to LLC, the Company, PPHC or
any of their Affiliates at any time prior to the Termination Date or
with whom LLC, the Company, PPHC or any of their Affiliates was
involved in discussions regarding the supply or products or services
to LLC, the Company, PPHC or any of their Affiliates as of the
Termination Date, to endeavor to cause such Person to cease
providing products or services to LLC, the Company, PPHC or any of
their Affiliates;
(E) except for the individuals listed on EXHIBIT C
attached hereto, directly or indirectly solicit or entice away any
director, management committee member, officer or employee of LLC,
the Company, PPHC or any of their Affiliates; and
(F) except for the individuals listed on EXHIBIT C
attached hereto, directly or indirectly employ any director,
management committee member, officer or employee of LLC, the
Company, PPHC or any of their Affiliates, unless such individual has
not been employed by or has not otherwise performed services for
LLC, the Company, PPHC or any of their Affiliates, in each case, for
at least 90 consecutive calendar days.
As used in this Section 2.2(a), (i) "CONSOLIDATION" means during any
consecutive 36-month period within the Consolidation Period, the execution of
letters of intent (which have not been terminated in writing other than as a
result of execution and delivery of definitive documentation and the transaction
contemplated thereby abandoned) relating to, or the consummation of, the
Acquisition of more than two Contract Manufacturers; (ii) "ACQUISITION" means,
with respect to any Person, the acquisition (in any case, whether, directly or
indirectly, by merger, stock purchase, asset purchase, recapitalization or other
similar transaction) of all or any portion of the capital stock, assets (other
than the purchase of inventory or equipment in the ordinary course of
operations) or business of a Person; and (iii) "CONSOLIDATION PERIOD" means the
period beginning 36 months immediately preceding the Termination Date through
and including the last day of the Non-Competition Period.
18
As used in this Agreement, "CONTRACT MANUFACTURER" means a Person
(each a "CONTRACT MANUFACTURING ENTITY") more than 50% of the annual gross sales
of which for the most recent fiscal year of such Contract Manufacturing Entity
is derived from the contract-manufacturing of metal parts, metal tooling and/or
metal assemblies primarily for original equipment manufacturers ("OEM") for use
in such OEM's products; PROVIDED, HOWEVER, that (a) the gross sales of castings,
forgings and non-metal tooling produced by such Contract Manufacturing Entity
will not be deemed to constitute gross sales of contract-manufactured metal
parts, tooling and/or assemblies, and (b) "CONTRACT MANUFACTURER" will not
include a Contract Manufacturing Entity primarily engaged in the assembly of
metal parts unless more than 30% of the number of such parts and/or 30% of the
value of such parts utilized in such assembly during any fiscal year of such
Contract Manufacturing Entity consists of parts manufactured by a Person or
Persons that is or are controlled by such Contract Manufacturing Entity.
(b) For an indefinite period after the Termination Date, Executive
will not use in the conduct of any business activities or for Executive's
personal use (other than on Executive's resume), the name of LLC, the Company,
PPHC or any of their Affiliates or the name "Precision Partners", or any names
confusingly similar to any of the foregoing, in each case, without the prior
written consent of the Company.
(c) The provisions of this Section 2.2 will be modified without
any action on the part of the parties hereto to conform to the law as determined
by the order of any court or other tribunal of competent jurisdiction finding
all or any portion of such provisions to be invalid.
2.3 PATENTS, INVENTIONS AND OTHER INTELLECTUAL PROPERTY. (a) If at
any time during the Employment Term, Executive, whether alone or with any other
Person, makes, discovers or produces any invention, process, development or
design which relates to, affects or, in the opinion of the Company Board, is
capable of being used or adapted for use in or in connection with the Business
or any product, process or intellectual property right of LLC, the Company, PPHC
or any of their Affiliates, (i) the invention, process, development or design
(collectively, "Precision IP") will be the sole property of the Company and (ii)
Executive will promptly disclose Precision IP to the Company.
(b) Executive will, if and when required to do so by the Company
(whether during the Employment Term or thereafter) and at the Company's expense,
(i) apply, or join with Precision in applying, for patents or other protection
in any jurisdiction in the world for any Precision IP; (ii) execute or use
reasonable best efforts to procure to be executed all instruments, and do or use
reasonable best efforts to procure to be done all things, which are necessary
or, in the opinion of the Company, advisable for vesting such patents or other
protection in the name of the Company or any nominee thereof, or subsequently
for renewing and maintaining the same in the name of the Company or its
nominees; and (iii) assist in defending any proceedings relating to, or to any
application for, such patents or other protection.
2.4 SPECIFIC PERFORMANCE. Executive acknowledges that the Company
will suffer an adverse effect in its Business and have no adequate remedy at law
if Executive materially breaches any of the provisions of Section 2.1 or
breaches any of the provisions of
19
Section 2.2. In the event of such a breach, Executive agree that the Company
will have the right, in addition to any other rights it may have, to seek
specific performance (without the need to post a bond or similar collateral) of
either of Sections 2.1 or 2.2. Each party agrees to pay the reasonable
attorneys' fees and expenses of the other party (the "Prevailing Party")
incurred in connection with claims with respect to Sections 2.1 or 2.2 to the
extent that the court rules substantially in favor of the Prevailing Party, as
determined by such court taking into account the circumstances of the case, the
conduct of the parties during the proceeding and the result. This Section 2.4
will not limit the Company's right to such specific performance or injunctive or
other equitable relief in connection with any other provision of this Agreement.
2.5 SURVIVAL. The provisions contained in this Article II will
survive termination of this Agreement.
III. MISCELLANEOUS
3.1 NOTICES. All notices, requests and other communications to any
party hereunder will be in writing (including facsimile transmission), unless
otherwise provided in this Agreement, will be deemed to have been duly given
when delivered in person or by a nationally recognized overnight courier service
or when dispatched during normal business hours by electronic facsimile transfer
(confirmed in writing by mail simultaneously dispatched) to the appropriate
party at the address specified below:
(a) If to Company, to it at:
Precision Partners, L.L.C.
x/x Xxxxxxxx, Xxxx & Xxxxxx
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xx. Xxxxx Xxxxxx
with a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
If to Executive, to:
Xx. Xxxxx X. Xxxxxxx
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
Facsimile No.: (000) 000-0000
20
with a copy to:
Xxxxx, Xxxxxx & Bacine
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
3.2 AMENDMENTS AND WAIVERS; CUMULATIVE REMEDIES. (a) Any provision
of this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder will operate as a waiver thereof nor will any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided will be cumulative and not exclusive of any rights or
remedies provided by law.
3.3 EXPENSES. Except as otherwise expressly provided for herein,
the parties will pay or cause to be paid all of their own fees and expenses
incident to this Agreement and in preparing to consummate and consummating the
transactions contemplated hereby, including the fees and expenses of any broker,
finder, financial advisor, legal advisor or similar person engaged by such
party.
3.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; PROVIDED that Executive may not assign,
delegate or otherwise transfer any of his rights or obligations under this
Agreement without the prior written consent of Company except that such consent
will not be required with respect to transfers as set forth in the next to last
sentence of Section 1.5(a) or for such transfers that occur by operation of law
upon Executive's death or Disability.
3.5 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied will give or be construed to give to any Person, other than
the parties hereto and such permitted assigns any legal or equitable rights
hereunder, PROVIDED that it is expressly acknowledged that LLC, PPHC, and its
Affiliates are intended third party beneficiaries of this Agreement.
3.6 GOVERNING LAW. This Agreement will be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to the conflict of laws rules of such state.
3.7 JURISDICTION. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the
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transactions contemplated thereby may be brought in any court of competent
jurisdiction in the State of New York and each of the parties hereby consents to
the exclusive jurisdiction of such courts (and of the appropriate appellate
courts therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding
in any such court or that any such suit, action or proceeding which is brought
in any such court has been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court. Without limiting
the foregoing, each party agrees that service of process on such party as
provided in Section 3.1 will be deemed effective service of process on such
party.
3.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING,
CLAIM OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT LAW OR IN EQUITY, ARISING
OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
3.9 COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
3.10 HEADINGS. The headings in this Agreement are for convenience
of reference only and will not control or affect the meaning or construction of
any provisions hereof.
3.11 ENTIRE AGREEMENT. This Agreement (including the Exhibits
hereto) and the LLC Agreement constitute the entire agreement among the parties
with respect to the subject matter hereof. This Agreement (including the
Schedules and Exhibits hereto) and the LLC Agreement supersede all prior
agreements and understandings, both oral and written, between the parties with
respect to the subject matter of this Agreement.
3.12 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any Person or circumstance is held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability will not affect any other
provision hereof. If any provision of this Agreement is finally judicially
determined to be invalid, ineffective or unenforceable, the determination will
apply only in the jurisdiction in which such final adjudication is made, and
such provision will be deemed severed from this Agreement for purposes of such
jurisdiction only, but every other provision of this Agreement will remain in
full force and effect, and there will be substituted for any such provision held
invalid, ineffective or unenforceable, a provision of similar import reflecting
the original intent of the parties to the extent permitted under applicable law.
3.13 NO WAIVER. No action or inaction taken or omitted pursuant to
this Agreement will be deemed to constitute a waiver of compliance with any
covenants contained in this Agreement and will not operate or be construed as a
waiver of any subsequent breach, whether of a similar or dissimilar nature.
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3.14 CERTAIN INTERPRETIVE MATTERS. (a) Unless the context otherwise
requires, (i) all references to Sections and Articles are to Sections and
Articles of this Agreement, (ii) each term defined in this Agreement has the
meaning assigned to it, (iii) words in the singular include the plural and vice
versa and (iv) the term "INCLUDING" means "including but not limited to." All
references to $ or dollar amounts will be to lawful currency of the United
States.
(b) No provision of this Agreement will be interpreted in favor
of, or against, any of the parties hereto by reason of the extent to which any
such party or his or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with any prior
draft hereof or thereof.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
PRECISION PARTNERS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Member
EXECUTIVE
/s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
24
EXHIBIT A
See Attached
EXHIBIT B
R E L E A S E
I, ____________, in consideration of and as a precondition to the
agreement by ________________ ("Company") to provide payment to me in the amount
of $_______, (less applicable local, state and federal taxes and other
deductions) for and on behalf of myself, my agents, heirs, executors,
administrators, and assigns, do hereby release and forever discharge Company and
all of its parents, affiliates, subsidiaries, divisions, successors, and
assigns, past and present, and each of them, as well as each of their respective
agents, directors, officers, partners, employees, representatives, insurers,
attorneys, and joint venturers, and each of them (the "Released Parties"), from
any and all claims which are based upon acts or events that occurred on or
before the date on which this Release becomes enforceable, including any and all
claims arising under any federal, state, or local employment laws or
anti-discrimination statutes, which include, but are not limited to, Title VII
of the Civil Rights Acts of 1964 (42 U.S.C. Section 2000e), the Age
Discrimination In Employment Act (29 U.S.C. Sections 621, ET SEQ.) and the
Americans With Disabilities Act (42 U.S.C. Sections 12101, ET SEQ.). The
phrase "any and alL claims" will be interpreted liberally to preclude any
further disputes, litigation, or controversies between myself and any of the
Released Parties based upon events that occurred on or before the effective
date of this Release. The phrase does not cover such disputes based upon (x)
events occurring after the effective date of this Release or (y) obligations
of the Company that survive termination of the Employment Agreement, dated as
of _____ ___, 20__, between myself and the Company.
I am not waiving any rights or claims that may arise out of acts or
events that occur after the date on which I sign this Release.
I have been given at least 21 days to consider whether or not to
sign this Release and have been advised in writing to consult with an attorney
prior to signing it. I understand that I may revoke this Release at any time on
or before the date which is seven calendar days after the date of my signature
on this Release and that, unless previously revoked, the Release will be
effective and enforceable upon the expiration of the seven-day revocation
period. I acknowledge that I was not already entitled to receive the severance
payment described above and that this payment is valuable consideration in
exchange for my waiver of rights and claims in this Release.
I have read this Release and understand all of its terms. I execute
it voluntarily and with full knowledge of its significance.
Signed at ___________, ___________ this ____ day of ___________,
_____.
EXECUTIVE
-----------------------------------
EXHIBIT C
Xxxx X. Xxxx
Xxxxx X. Xxxxxx
ANNEX A
Polaris Associates, Inc.
