Exhibit 10.1
CHANGE IN CONTROL RETENTION BONUS,
NONCOMPETITION AND SEVERANCE AGREEMENT
THIS AGREEMENT is made as of December 18, 1998, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company"), Hilite
Industries Automotive, LP, a Texas limited partnership (the "Partnership"),
and Xxxxxx X. Xxxxx ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility
and the uncertainty and questions it may raise among management, may result
in the departure or distraction of management personnel to the detriment of
the Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication
of key management personnel, including Executive, to their assigned
duties without distraction in the face of potentially disturbing
circumstances arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Executive continuing with
the Company and/or the Partnership prior to any Change In Control (as
hereinafter defined) and willingness to stay with the Company under certain
conditions for a period of time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Executive to assist
in the presentation of the Company to potential buyers in addition to his
current responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be effective as of
the date hereof and shall continue in effect through December 31, 2000;
provided that on January 1, 2000 and each January 1st thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless the Company or Executive shall have given at least ninety (90) days'
prior notice not to extend this Agreement or a Change In Control shall have
occurred prior to such January 1; provided further that if a Change In
Control shall have occurred during the term of this Agreement, this Agreement
shall continue in effect for a period of not less than twenty-four (24) months
beyond the date on which such Change In Control occurred. The termination of
this Agreement, however, shall not affect any rights Executive may have to
payments that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall occur when (and only when): (i) there has occurred
a change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on the date hereof (the
"1934 Act"); (ii) when any "person" (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the 1934 Act), other than the Company, any of
its subsidiaries or an employee stock ownership trust of the Company, becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the securities having the
right to vote on the election of directors ("voting securities") of the
Company then outstanding; (iii) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in clauses
(i), (ii), (iv), (v), (vi) or (vii) of this Section 2) whose election by the
Board or nomination for election by the Company's stockholders was approved by
a vote of at least two-thirds (2/3) of the directors then still in office who
were either directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least seventy-five (75%) percent of the entire Board; (iv) when
a majority of the directors elected at any annual or special meeting of
stockholders (or by written consent in lieu of a meeting) are not individuals
nominated by the Company's incumbent Board; (v) if the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
holders of voting securities of the Company outstanding immediately prior
thereto being the holders of at least eighty (80%) percent of the voting
securities of the surviving entity outstanding immediately after such merger
or consolidation; (vi) if the shareholders of the Company approve a plan
of complete liquidation of the Company; or (vii) if the shareholders of the
Company approve an agreement for the sale or disposition of all or
substantially all of the Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Executive in cash a bonus equal to 200% of Executive's
annual compensation from the Company and any entity in which the Company
directly or indirectly owns a majority of the voting interest for the
calendar year immediately preceding the year in which the Change In Control
occurs, as reflected on Executive's Form W-2 or 1099 for such period
(excluding deductions for 401(k) and medical plan contributions) ("Base
Amount"). Notwithstanding the foregoing, in no event may a bonus be paid
hereunder unless in connection with a Change in Control, the price of the
Company's Common Stock at the time of or in connection with the transaction
giving rise to a Change in Control is equal to the lesser of (a) 15% above
the closing bid price on Nasdaq (or other exchange as appropriate) of the
Company's Common Stock on November 16, 1998 or (b) 15% above the "average
market price" of the Company's Common Stock on the date of the approval by
the Board of the Change in Control. For purposes hereof, the average market
price shall mean the average of the closing bid prices of the Company's
Common Stock on Nasdaq (or other exchange as appropriate) for the 30
trading days immediately prior to the date which is 60 days immediately prior
to the date of approval by the Board of the Change in Control.
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SECTION 4. EMPLOYMENT WITH PARTNERSHIP.
(a) The Employment Agreement by and between the Partnership and
Executive effective as of January 30,1998 (the "Employment Agreement") is
hereby amended to provide that from and after a Change In Control under this
Agreement, Executive's employment with the Partnership shall be at will.
Except as otherwise provided in this Agreement, upon termination of such
employment at will, Executive shall have no further obligation to the
Partnership except as provided in Section 1.7 of the Employment Agreement
(other than the second paragraph of 1.7(c) which shall not continue) and the
Partnership shall have no further obligation to Executive except to pay
Executive (or his estate) any unpaid amount which relates to any period
before such termination of employment.
(b) Executive covenants that upon a Change In Control under this
Agreement for a period of one year after the expiration of Executive's
covenant not to compete pursuant to the Employment Agreement, Executive will
not engage in or participate in any business whose product lines are in
direct competition to the product lines of the Partnership. In consideration
therefore, upon the occurrence of a Change In Control, the Company and/or the
Partnership shall pay Executive in cash an amount equal to 100% of the Base
Amount.
(c) The Company and/or the Partnership shall continue to provide
(or cause to be provide) for a period of three years (including any
applicable COBRA period) after the termination of Executive's employment
following a Change In Control under this Agreement, the welfare benefits
provided by the Company and/or the Partnership to Executive immediately prior
to such termination, but in no event less than any welfare benefit provided
immediately prior to the Change In Control, including but not limited to
health and dental plans, life insurance or other death benefit programs.
These welfare benefits shall be paid solely by the Company and/or the
Partnership and shall either be provided to Executive on a non-taxable basis
or Executive shall be entitled to an additional payment to offset any income
tax obligations incurred with respect to such benefits.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm,
if not reduced, cause an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended on Executive, the amount of such payment shall be
reduced by the minimum amount, if any, that in the opinion of such accounting
firm, is necessary to avoid such excise tax. The determination of the
accounting firm shall be conclusive and binding on the parties.
SECTION 6. MITIGATION. Executive shall not be required to mitigate
the amount of an payment provided for hereunder by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided
for hereunder be reduced by any compensation earned by Executive as the
result of employment by another employer or by retirement benefits.
-3-
SECTION 7. NOTICES. All notices or other communications that are
required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to
the Company or the Partnership shall be given at the Company's then existing
corporate headquarters and shall be directed to the Secretary (or such other
location or person as the Company subsequently shall designate in writing to
Executive). Notice to Executive shall be given at the address set forth on the
signature page hereof (or such other address as Executive subsequently shall
designate in writing to the Company).
SECTION 8. WAIVER. Failure to insist upon strict compliance with any
of the terms, covenants, or conditions hereof shall not be deemed a waiver
of such term, covenant, or condition, nor shall any waive or relinquishment
of such right or power hereunder at any one or more times be deemed a waiver
or relinquishment of such right or power at any other time or times.
SECTION 9. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of
any other provision. In the event that any part of a covenant contained
herein is determined by a court of law to be invalid, a judicially enforceable
provision shall be substituted in its place,. Any covenant so modified shall
be binding upon the parties and shall have the same force and effect as if
originally set forth in this Agreement.
SECTION 10. MODIFICATION. This Agreement may be amended only in writing,
signed by each of the parties hereto.
SECTION 11. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the
provisions thereof.
SECTION 12. SUCCESSORS, BINDING AGREEMENT.
(a) The Company and the Partnership will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company or the
Partnership, as the case may be, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company or the
Partnership would be required to perform it if no such succession had taken
place. As used in this Agreement, "Company" shall mean the Company as herein
before defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise. Similarly, "Partnership" shall mean the Partnership as herein
before defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law, or
otherwise. Prior to a Change In Control, the term "Partnership" shall also
mean any affiliate of the Company to which Executive may be transferred and
the Company and the Partnership shall cause such successor employer to be
considered the "Partnership" bound by the terms of this Agreement and
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this Agreement shall be amended to so provide. Following a Change In Control
neither the term "Company" nor "Partnership" shall not mean any affiliate of
the Company or the Partnership, as the case may be, to which Executive may be
transferred unless Executive shall have previously approved of such transfer
in writing, in which case the Company and the Partnership shall cause such
successor employer to be considered the "Company" bound by the terms of this
Agreement and this Agreement shall be amended to so provide.
(b) This Agreement shall inure to the benefit of and be enforceable
by Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Executive should
die while any amount would still be payable to Executive hereunder if
Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement
to Executive's devisees, legates or other designee or, if there is no such
designee, to Executive's estate
SECTION 13. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at
the election of Executive, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company or the Partnership commences litigation in
connection with this Agreement Executive commences an arbitration proceeding
concerning the same issue or issues, the Company or the Partnership, as the
case may be, shall promptly terminate such litigation and submit to the
jurisdiction of the arbitration proceeding to the extent that it involves
such issue or issues. This Section shall survive the termination of this
Agreement for any reason.
SECTION 14. PAYMENT OF EXPENSES. In the event that any proceeding is
brought by Executive to enforce or interpret Executive's rights hereunder,
Executive shall be entitled to be paid all expenses incurred by Executive
with respect to such proceeding, unless as a part of such proceeding,
the arbitration panel or court of competent jurisdiction determines that the
material assertions made by Executive as a basis for such proceeding were not
made in good faith or were frivolous, in which case each party to the
proceeding shall bear its own costs.
SECTION 15. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with the laws of the State of Texas, without regard
to conflict of law provisions that would defer to the substantive laws of
another jurisdiction.
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SECTION 16. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon a single
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By:/s/ Xxxxxx X. Xxxxx
-----------------------------------------
HILITE INDUSTRIES AUTOMOTIVE, LP
By: HILITE INDUSTRIES (TEXAS), INC.,
its General Partner
By:/s/ Xxxxxx X. Xxxxx
-----------------------------------------
/s/ Xxxxxx X. Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxx
-6-
Exhibit 10.2
CHANGE IN CONTROL RETENTION BONUS,
NONCOMPETITION AND SEVERANCE AGREEMENT
THIS AGREEMENT is made as of December 18, 1998, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company") and Xxxxxx X.
Xxxxx ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility and the
uncertainty and questions it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication
of key management personnel, including Executive, to their assigned
duties without distraction in the face of potentially disturbing
circumstances arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Executive continuing with
the Company prior to any Change In Control (as hereinafter defined) and
willingness to stay with the Company under certain conditions for a period of
time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Executive to assist
in the presentation of the Company to potential buyers in addition to his
current responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be effective as of
the date hereof and shall continue in effect through December 31, 2000;
provided that on January 1, 2000 and each January 1st thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless the Company or Executive shall have given at least ninety (90) days'
prior notice not to extend this Agreement or a Change In Control shall have
occurred prior to such January 1; provided further that if a Change In Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than twenty-four (24) months
beyond the date on which such Change In Control occurred. The termination of
this Agreement, however, shall not affect any rights Executive may have to
payments that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement, a
"Change in Control" shall occur when (and only when): (i) there has occurred
a change in control as the term "control" is defined in Rule 12b-2
promulgated under the Securities Exchange Act of 1934 as in effect on the
date hereof (the "1934 Act"); (ii) when any "person" (as such term is defined
in Sections 3(a)(9) and 13(d)(3) of the 1934 Act), other than the Company,
any of its subsidiaries or an employee stock ownership trust of the Company,
becomes a beneficial owner, directly or indirectly, of securities of the
Company representing twenty-five (25%) percent or more of the securities
having the right to vote on the election of directors ("voting securities") of
the Company then outstanding; (iii) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in
clauses (i), (ii), (iv), (v), (vi) or (vii) of this Section 2) whose election
by the Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then still in
office who were either directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least seventy-five (75%) percent of the entire Board;
(iv) when a majority of the directors elected at any annual or special meeting
of stockholders (or by written consent in lieu of a meeting) are not i
ndividuals nominated by the Company's incumbent Board; (v) if the stockholders
of the Company approve a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result in
the holders of voting securities of the Company outstanding immediately prior
thereto being the holders of at least eighty (80%) percent of the voting
securities of the surviving entity outstanding immediately after such merger
or consolidation; (vi) if the shareholders of the Company approve a plan of
complete liquidation of the Company; or (vii) if the shareholders of the
Company approve an agreement for the sale or disposition of all or
substantially all of the Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Executive in cash a bonus equal to 200% of Executive's
annual compensation from the Company (and any entity in which the Company
directly or indirectly owns a majority of the voting interest) for the
calendar year immediately preceding the year in which the Change In Control
occurs, as reflected on Executive's Form W-2 or 1099 for such period
(excluding deductions for 401(k) and medical plan contributions) ("Base
Amount"). Notwithstanding the foregoing, in no event may a bonus be paid
hereunder unless in connection with a Change in Control, the price of the
Company's Common Stock at the time of or in connection with the transaction
giving rise to a Change in Control is equal to the lesser of (a) 15% above
the closing bid price on Nasdaq (or other exchange as appropriate) of the
Company's Common Stock on November 16, 1998 or (b) 15% above the "average
market price" of the Company's Common Stock on the date of the approval by
the Board of the Change in Control. For purposes hereof, the average market
price shall mean the average of the closing bid prices of the Company's
Common Stock on Nasdaq (or other exchange as appropriate) for the 30
trading days immediately prior to the date which is 60 days immediately prior
to the date of approval by the Board of the Change in Control.
SECTION 4. EMPLOYMENT WITH THE COMPANY.
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(a) Executive's employment with the Company is at will. Except
as otherwise provided in this Agreement, upon termination of such employment
at will, Executive shall have no further obligation to the Company and the
Company shall have no further obligation to Executive except to pay Executive
(or his estate) any unpaid amount which relates to any period before such
termination of employment.
(b) Executive covenants that for a period of one year after
the termination of his employment with the Company following a Change In
Control under this Agreement, Executive will not engage in or participate in
any business whose product lines are in direct competition to the product
lines of the Company. In consideration therefore, upon the occurrence of a
Change In Control, the Company shall pay Executive in cash an amount equal to
100% of the Base Amount.
(c) The Company shall continue to provide (or cause to be
provide) for a period of three years (including any applicable COBRA period)
after the termination of Executive's employment following a Change In Control
under this Agreement, the welfare benefits provided by the Company to
Executive immediately prior to such termination, but in no event less than any
welfare benefit provided immediately prior to the Change In Control, including
but not limited to health and dental plans, life insurance or other death
benefit programs. These welfare benefits shall be paid solely by the Company
and shall either be provided to Executive on a non-taxable basis or Executive
shall be entitled to an additional payment to offset any income tax obligations
incurred with respect to such benefits.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm,
if not reduced, cause an excise tax under Section 4999 of the Internal
Revenue Code of 1986, as amended on Executive, the amount of such payment
shall be reduced by the minimum amount, if any, that in the opinion of such
accounting firm, is necessary to avoid such excise tax. The determination of
the accounting firm shall be conclusive and binding on the parties.
SECTION 6. MITIGATION. Executive shall not be required to mitigate the
amount of an payment provided for hereunder by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for
hereunder be reduced by any compensation earned by Executive as the result
of employment by another employer or by retirement benefits.
SECTION 7. NOTICES. All notices or other communications that
are required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to
the Company shall be given to the Company at its then existing corporate
headquarters and shall be directed to the Secretary (or such other location
or person as the Company subsequently shall designate in writing to Executive).
Notice to Executive shall be given at the address set forth on the signature
page hereof (or such other address as Executive subsequently shall designate
in writing to the Company).
-3-
SECTION 8. WAIVER. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waive or
relinquishment of such right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 9. SEVERABILITY. The invalidity or unenforceability of
any provision hereof shall in no way affect the validity or enforceability of
any other provision. In the event that any part of a covenant contained herein
is determined by a court of law to be invalid, a judicially enforceable
provision shall be substituted in its place,. Any covenant so modified shall
be binding upon the parties and shall have the same force and effect as if
originally set forth in this Agreement.
SECTION 10. MODIFICATION. This Agreement may be amended only
in writing, signed by both parties hereto.
SECTION 11. HEADINGS. The headings in this Agreement are inserted for
convenience only and are not to be considered a construction of the
provisions thereof.
SECTION 12. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company
as herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise. Prior to a Change In Control, the term "Company" shall also
mean any affiliate of the Company to which Executive may be transferred and the
Company shall cause such successor employer to be considered the "Company"
bound by the terms of this Agreement and this Agreement shall be amended to
so provide. Following a Change In Control the term "Company" shall not mean
any affiliate of the Company to which Executive may be transferred unless
Executive shall have previously approved of such transfer in writing, in which
case the Company shall cause such successor employer to be considered the
"Company" bound by the terms of this Agreement and this Agreement shall be
amended to so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisees, legates or other designee or, if there is
-4-
no such designee, to Executive's estate.
SECTION 13. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at
the election of Executive, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company commences litigation in connection with
this Agreement Executive commences an arbitration proceeding concerning the
same issue or issues, the Company shall promptly terminate such litigation
and submit to the jurisdiction of the arbitration proceeding to the extent
that it involves such issue or issues. This Section shall survive the
termination of this Agreement for any reason.
SECTION 14. PAYMENT OF EXPENSES. In the event that any proceeding
is brought by Executive to enforce or interpret Executive's rights
hereunder, Executive shall be entitled to be paid all expenses incurred by
Executive with respect to such proceeding, unless as a part of such proceeding,
the arbitration panel or court of competent jurisdiction determines that the
material assertions made by Executive as a basis for such proceeding were not
made in good faith or were frivolous, in which case each party to the
proceeding shall bear its own costs.
SECTION 15. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, without regard
to conflict of law provisions that would defer to the substantive laws of
another jurisdiction.
SECTION 16. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon a single
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
-5-
Exhibit 10.3
CHANGE IN CONTROL RETENTION BONUS
AND EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 6, 1999, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company"), Hilite
Industries Automotive, LP, a Texas limited partnership (the "Partnership"),
and Xxxxxx X. Xxxxx ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility and
the uncertainty and questions it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of key management personnel, including Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Executive continuing with
the Company and/or the Partnership prior to any Change In Control (as
hereinafter defined) and willingness to stay with the Company under certain
conditions for a period of time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Executive to assist in
the presentation of the Company to potential buyers in addition to his
current responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be effective as of
the date hereof and shall continue in effect through December 31, 2000;
provided that on January 1, 2000 and each January 1st thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless the Company or Executive shall have given at least ninety (90) days'
prior notice not to extend this Agreement or a Change In Control shall have
occurred prior to such January 1; provided further that if a Change In Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than twenty-four (24) months
beyond the date on which such Change In Control occurred. The termination of
this Agreement, however, shall not affect any rights Executive may have to
payments that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement,
a "Change in Control" shall occur when (and only when): (i) there has occurred
a change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on the date hereof (the
"1934 Act"); (ii) when any "person" (as such term is defined in Sections 3(a)
(9) and 13(d)(3) of the 1934 Act), other than the Company, any of its
subsidiaries or an employee stock ownership trust of the Company, becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the securities having the
right to vote on the election of directors ("voting securities") of the
Company then outstanding; (iii) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described
in clauses (i), (ii), (iv), (v), (vi) or (vii) of this Section 2) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who were either directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease
for any reason to constitute at least seventy-five (75%) percent of the entire
Board; (iv) when a majority of the directors elected at any annual or special
meeting of stockholders (or by written consent in lieu of a meeting)
are not individuals nominated by the Company's incumbent Board; (v) if the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the holders of voting securities of the Company outstanding
immediately prior thereto being the holders of at least eighty (80%) percent
of the voting securities of the surviving entity outstanding immediately
after such merger or consolidation; (vi) if the shareholders of the Company
approve a plan of complete liquidation of the Company; or (vii) if the
shareholders of the Company approve an agreement for the sale or disposition
of all or substantially all of the Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Executive in cash a bonus equal to Executive's annual
compensation from the Company (and any entity in which the Company directly or
indirectly owns a majority of the voting interest) for the calendar year
immediately preceding the year in which the Change In Control occurs, as
reflected on Executive's forms W-2 or 1099 for such period (excluding
deductions for 401(k) and medical plan contributions) (the "Base Amount").
Notwithstanding the foregoing, in no event may a bonus be paid hereunder
unless in connection with a Change in Control, the price of the Company's
Common Stock at the time of or in connection with the transaction giving rise
to a Change in Control is equal to the lesser of (a) 15% above the closing
bid price on Nasdaq (or other exchange as appropriate) of the Company's
Common Stock on November 16, 1998 or (b) 15% above the "average market price"
of the Company's Common Stock on the date of the approval by the Board of the
Change in Control. For purposes hereof, the average market price shall mean
the average of the closing bid prices of the Company's Common Stock on Nasdaq
(or other exchange as appropriate) for the 30 trading days immediately prior
to the date which is 60 days immediately prior to the date of approval by the
Board of the Change in Control.
-2-
SECTION 4. EMPLOYMENT FOLLOWING CHANGE IN CONTROL. The Partnership
agrees to employ Executive for a period of two (2) years following a
Change In Control under this Agreement upon the same terms and conditions as
in effect immediately prior to the Change In Control. Upon termination of
Executive's employment within such two-year period for any reason other than
by the Company for Cause or by Executive without Good Reason, the Company
and/or the Partnership shall pay Executive an amount equal to the Base Amount.
For purposes of this Section, termination of employment shall
be considered to be for "Cause", whether it occurred by resignation or
discharge, if the reason for the termination of employment was Executive's
embezzlement, dishonesty, fraud, conviction of a felonious or other charge
involving moral turpitude.
For purposes of this Section, termination of employment shall be
considered to be "Good Reason" if (1) without the express written consent of
Executive, Executive is assigned material duties substantially inconsistent
with Executive's positions, duties, responsibilities or status with the
Partnership as in effect before the Change In Control, or Executive's titles
or offices as in effect immediately prior to the Change In Control are
substantially diminished or any other action is taken by the Partnership or
any of its affiliates which results in a diminution in Executive's position,
authority, or principal duties or responsibilities other than an
insubstantial and inadvertent act that is remedied by the Partnership
promptly after receipt of notice given thereof by Executive, except any such
assignment, action or change resulting from Executive's termination of
employment for Cause, or from Executive's disability as reasonably determined
by the Company or death; PROVIDED, HOWEVER, that notwithstanding the
foregoing, in no event shall a termination of employment under this clause
(1) be considered to be for "Good Reason" if, at the time of the termination,
Executive shall have had a position with a title, level of duties and
responsibilities substantially similar to Executive's title, duties and
responsibilities immediately prior to the Change In Control; (2) the base
compensation of Executive is reduced or the benefit entitlement or bonus
opportunity of Executive as in effect immediately prior to the Change In
Control is substantially reduced; (3) the Partnership requires Executive
without Executive's express written consent to be based anywhere other than
the Partnership's location where Executive is principally employed or another
location that is not more than fifty (50) miles from the location where
Executive is principally employed immediately prior to the Change In Control,
with Executive's business travel obligations being no greater than in effect
immediately prior to the Change In Control; or (4) any failure by the Company
or the Partnership to obtain an express written assumption of this Agreement
from any successor to or assign of the Company or the Partnership, as the
case may be.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm,
if not reduced, cause an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended on Executive, the amount of such payment shall be
reduced by the minimum amount, if any, that in the opinion of such accounting
firm, is necessary to avoid such excise tax. The determination of the
accounting firm shall be conclusive and binding on the parties.
-3-
SECTION 6. MITIGATION. Executive shall not be required to
mitigate the amount of an payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for hereunder be reduced by any compensation earned by Executive as
the result of employment by another employer or by retirement benefits.
SECTION 7. COVENANT NOT TO COMPETE. Executive covenants that,
while he is an employee of the Partnership and for a period of one year after
termination of his employment, however caused, he shall not engage in, or
participate in, any business whose product lines are in direct competition to
the product lines of the Partnership.
SECTION 8. NOTICES. All notices or other communications that
are required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to
the Company or the Partnership shall be given at the Company's then existing
corporate headquarters and shall be directed to the Secretary (or such other
location or person as the Company subsequently shall designate in writing to
Executive). Notice to Executive shall be given at the address set forth on the
signature page hereof (or such other address as Executive subsequently shall
designate in writing to the Company).
SECTION 9. WAIVER. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waive or
relinquishment of such right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 10. SEVERABILITY. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability
of any other provision. In the event that any part of a covenant contained
herein is determined by a court of law to be invalid, a judicially
enforceable provision shall be substituted in its place,. Any covenant so
modified shall be binding upon the parties and shall have the same force and
effect as if originally set forth in this Agreement.
SECTION 11. MODIFICATION. This Agreement may be amended only
in writing, signed by each of the parties hereto.
SECTION 12. HEADINGS. The headings in this Agreement are
inserted for convenience only and are not to be considered a construction of
the provisions thereof.
SECTION 13. SUCCESSORS, BINDING AGREEMENT.
(a) The Company and the Partnership will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of
-4-
the business and/or assets of the Company or the Partnership, as the case may
be, to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company or the Partnership would be required
to perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as herein before defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise. Similarly, "Partnership"
shall mean the Partnership as herein before defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Prior to a Change In Control,
the term "Partnership" shall also mean any affiliate of the Company to which
Executive may be transferred and the Company and the Partnership shall cause
such successor employer to be considered the "Partnership" bound by the terms
of this Agreement and this Agreement shall be amended to so provide.
Following a Change In Control neither the term "Company" nor "Partnership"
shall not mean any affiliate of the Company or the Partnership, as the case
may be, to which Executive may be transferred unless Executive shall have
previously approved of such transfer in writing, in which case the Company
and the Partnership shall cause such successor employer to be considered the
"Company" bound by the terms of this Agreement and this Agreement shall be
amended to so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisees, legates or other designee or, if
there is no such designee, to Executive's estate.
SECTION 14. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at
the election of Executive, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company or the Partnership commences litigation in
connection with this Agreement Executive commences an arbitration proceeding
concerning the same issue or issues, the Company or the Partnership, as the
case may be, shall promptly terminate such litigation and submit to the
jurisdiction of the arbitration proceeding to the extent that it involves
such issue or issues. This Section shall survive the termination of this
Agreement for any reason.
SECTION 15. PAYMENT OF EXPENSES. In the event that any
proceeding is brought by Executive to enforce or interpret Executive's rights
hereunder, Executive shall be entitled to
-5-
be paid all expenses incurred by Executive with respect to such proceeding,
unless as a part of such proceeding, the arbitration panel or court of
competent jurisdiction determines that the material assertions made by
Executive as a basis for such proceeding were not made in good faith or were
frivolous, in which case each party to the proceeding shall bear its own
costs.
SECTION 16. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, without
regard to conflict of law provisions that would defer to the substantive laws
of another jurisdiction.
SECTION 17. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon a single
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
HILITE INDUSTRIES AUTOMOTIVE, LP
By: HILITE INDUSTRIES (TEXAS), INC.,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
/s/ Xxxxxx X. Xxxxx
----------------------------------
Executive
-6-
Exhibit 10.4
CHANGE IN CONTROL RETENTION BONUS
AND EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 5, 1999, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company"), Hilite
Industries Automotive, LP, a Texas limited partnership (the "Partnership"),
and Xxx Xxxxxxxx ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility and
the uncertainty and questions it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of key management personnel, including Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Executive continuing with
the Company and/or the Partnership prior to any Change In Control (as
hereinafter defined) and willingness to stay with the Company under certain
conditions for a period of time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Executive to assist in
the presentation of the Company to potential buyers in addition to his current
responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be effective as of
the date hereof and shall continue in effect through December 31, 2000;
provided that on January 1, 2000 and each January 1st thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless the Company or Executive shall have given at least ninety (90) days'
prior notice not to extend this Agreement or a Change In Control shall have
occurred prior to such January 1; provided further that if a Change In Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than twenty-four (24) months
beyond the date on which such Change In Control occurred. The termination of
this Agreement, however, shall not affect any rights Executive may have to
payments that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement,
a "Change in Control" shall occur when (and only when): (i) there has occurred
a change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on the date hereof (the
"1934 Act"); (ii) when any "person" (as such term is defined in Sections 3(a)
(9) and 13(d)(3) of the 1934 Act), other than the Company, any of its
subsidiaries or an employee stock ownership trust of the Company, becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the securities having the
right to vote on the election of directors ("voting securities") of the
Company then outstanding; (iii) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described in clauses
(i), (ii), (iv), (v), (vi) or (vii) of this Section 2) whose election by the
Board or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office
who were either directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any reason to
constitute at least seventy-five (75%) percent of the entire Board; (iv) when
a majority of the directors elected at any annual or special meeting of
stockholders (or by written consent in lieu of a meeting) are not individuals
nominated by the Company's incumbent Board; (v) if the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
holders of voting securities of the Company outstanding immediately prior
thereto being the holders of at least eighty (80%) percent of the voting
securities of the surviving entity outstanding immediately after such
merger or consolidation; (vi) if the shareholders of the Company approve a
plan of complete liquidation of the Company; or (vii) if the shareholders of
the Company approve an agreement for the sale or disposition of all or
substantially all of the Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Executive in cash a bonus equal to Executive's annual
compensation from the Company (and any entity in which the Company directly or
indirectly owns a majority of the voting interest) for the calendar year
immediately preceding the year in which the Change In Control occurs, as
reflected on Executive's forms W-2 or 1099 for such period (excluding
deductions for 401(k) and medical plan contributions) (the "Base Amount").
Notwithstanding the foregoing, in no event may a bonus be paid hereunder
unless in connection with a Change in Control, the price of the Company's
Common Stock at the time of or in connection with the transaction giving rise
to a Change in Control is equal to the lesser of (a) 15% above the closing
bid price on Nasdaq (or other exchange as appropriate) of the Company's
Common Stock on November 16, 1998 or (b) 15% above the "average market price"
of the Company's Common Stock on the date of the approval by the Board of the
Change in Control. For purposes here of, the average market price shall mean
the average of the closing bid prices of the Company's Common Stock on Nasdaq
(or other exchange as appropriate) for the 30 trading days immediately prior
to the date which is 60 days immediately prior to the date of approval by the
Board of the Change in Control.
-2-
SECTION 4. EMPLOYMENT FOLLOWING CHANGE IN CONTROL. The
Partnership agrees to employ Executive for a period of two (2) years following
a Change In Control under this Agreement upon the same terms and conditions as
in effect immediately prior to the Change In Control. Upon termination of
Executive's employment within such two-year period for any reason other than
by the Company for Cause or by Executive without Good Reason, the Company
and/or the Partnership shall pay Executive an amount equal to the Base Amount.
For purposes of this Section, termination of employment shall
be considered to be for "Cause", whether it occurred by resignation or
discharge, if the reason for the termination of employment was Executive's
embezzlement, dishonesty, fraud, conviction of a felonious or other charge
involving moral turpitude.
For purposes of this Section, termination of employment shall
be considered to be "Good Reason" if (1) without the express written consent
of Executive, Executive is assigned material duties substantially inconsistent
with Executive's positions, duties, responsibilities or status with the
Partnership as in effect before the Change In Control, or Executive's titles
or offices as in effect immediately prior to the Change In Control are
substantially diminished or any other action is taken by the Partnership or
any of its affiliates which results in a diminution in Executive's position,
authority, or principal duties or responsibilities other than an
insubstantial and inadvertent act that is remedied by the Partnership promptly
after receipt of notice given thereof by Executive, except any such assignment
action or change resulting from Executive's termination of employment for
Cause, or from Executive's disability as reasonably determined by the Company
or death; PROVIDED, HOWEVER, that notwithstanding the foregoing, in no event
shall a termination of employment under this clause (1) be considered to be
for "Good Reason" if, at the time of the termination, Executive shall have
had a position with a title, level of duties and responsibilities
substantially similar to Executive's title, duties and responsibilities
immediately prior to the Change In Control; (2) the base compensation of
Executive is reduced or the benefit entitlement or bonus opportunity of
Executive as in effect immediately prior to the Change In Control
is substantially reduced; (3) the Partnership requires Executive without
Executive's express written consent to be based anywhere other than the
Partnership's location where Executive is principally employed or another
location that is not more than fifty (50) miles from the location where
Executive is principally employed immediately prior to the Change In Control,
with Executive's business travel obligations being no greater than in effect
immediately prior to the Change In Control; or (4) any failure by the Company
or the Partnership to obtain an express written assumption of this Agreement
from any successor to or assign of the Company or the Partnership, as the
case may be.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm,
if not reduced, cause an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended on Executive, the amount of such payment shall be
reduced by the minimum amount, if any, that in the opinion of such accounting
firm, is necessary to avoid such excise tax. The determination of the
accounting firm shall be conclusive and binding on the parties.
-3-
SECTION 6. MITIGATION. Executive shall not be required to
mitigate the amount of an payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for hereunder be reduced by any compensation earned by Executive as
the result of employment by another employer or by retirement benefits.
SECTION 7. COVENANT NOT TO COMPETE. Executive covenants that,
while he is an employee of the Partnership and for a period of one year after
termination of his employment, however caused, he shall not engage in, or
participate in, any business whose product lines are in direct competition to
the product lines of the Partnership.
SECTION 8. NOTICES. All notices or other communications that
are required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to
the Company or the Partnership shall be given at the Company's then existing
corporate headquarters and shall be directed to the Secretary (or such other
location or person as the Company subsequently shall designate in writing to
Executive). Notice to Executive shall be given at the address set forth on the
signature page hereof (or such other address as Executive subsequently shall
designate in writing to the Company).
SECTION 9. WAIVER. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waive or
relinquishment of such right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 10. SEVERABILITY. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability
of any other provision. In the event that any part of a covenant contained
herein is determined by a court of law to be invalid, a judicially
enforceable provision shall be substituted in its place,. Any covenant so
modified shall be binding upon the parties and shall have the same force and
effect as if originally set forth in this Agreement.
SECTION 11. MODIFICATION. This Agreement may be amended only
in writing, signed by each of the parties hereto.
SECTION 12. HEADINGS. The headings in this Agreement are
inserted for convenience only and are not to be considered a construction of
the provisions thereof.
SECTION 13. SUCCESSORS, BINDING AGREEMENT.
(a) The Company and the Partnership will require any successor
(direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company
-4-
or the Partnership, as the case may be, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company or the Partnership would be required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise. Similarly, "Partnership" shall mean the
Partnership as herein before defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this Agreement
by operation of law, or otherwise. Prior to a Change In Control, the term
"Partnership" shall also mean any affiliate of the Company to which Executive
may be transferred and the Company and the Partnership shall cause such
successor employer to be considered the "Partnership" bound by the terms of
this Agreement and this Agreement shall be amended to so provide. Following a
Change In Control neither the term "Company" nor "Partnership" shall not mean
any affiliate of the Company or the Partnership, as the case may be, to which
Executive may be transferred unless Executive shall have previously approved
of such transfer in writing, in which case the Company and the Partnership
shall cause such successor employer to be considered the "Company" bound by
the terms of this Agreement and this Agreement shall be amended to so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisees, legates or other designee or, if there is
no such designee, to Executive's estate.
SECTION 14. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at
the election of Executive, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company or the Partnership commences litigation in
connection with this Agreement Executive commences an arbitration proceeding
concerning the same issue or issues, the Company or the Partnership, as the
case may be, shall promptly terminate such litigation and submit to the
jurisdiction of the arbitration proceeding to the extent that it involves
such issue or issues. This Section shall survive the termination of this
Agreement for any reason.
SECTION 15. PAYMENT OF EXPENSES. In the event that any
proceeding is brought by Executive to enforce or interpret Executive's rights
hereunder, Executive shall be entitled to
-5-
be paid all expenses incurred by Executive with respect to such proceeding,
unless as a part of such proceeding, the arbitration panel or court of
competent jurisdiction determines that the material assertions made by
Executive as a basis for such proceeding were not made in good faith or were
frivolous, in which case each party to the proceeding shall bear its own
costs.
SECTION 16. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, without regard
to conflict of law provisions that would defer to the substantive laws of
another jurisdiction.
SECTION 17. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon a single
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
HILITE INDUSTRIES AUTOMOTIVE, LP
By: HILITE INDUSTRIES (TEXAS), INC.,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
/s/ Xxx Xxxxxxxx
----------------------------------
Executive
-6-
Exhibit 10.5
CHANGE IN CONTROL RETENTION BONUS
AND EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 5, 1999, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company"), Hilite
Industries Automotive, LP, a Texas limited partnership (the "Partnership"),
and Xxx Xxxxxx ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility and
the uncertainty and questions it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of key management personnel, including Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Executive continuing with
the Company and/or the Partnership prior to any Change In Control (as
hereinafter defined) and willingness to stay with the Company under certain
conditions for a period of time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Executive to assist in
the presentation of the Company to potential buyers in addition to his current
responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be
effective as of the date hereof and shall continue in effect through December
31, 2000; provided that on January 1, 2000 and each January 1st thereafter,
the term of this Agreement shall automatically be extended for an additional
year unless the Company or Executive shall have given at least ninety (90)
days' prior notice not to extend this Agreement or a Change In Control shall
have occurred prior to such January 1; provided further that if a Change In
Control shall have occurred during the term of this Agreement, this Agreement
shall continue in effect for a period of not less than twenty-four (24) months
beyond the date on which such Change In Control occurred. The termination of
this Agreement, however, shall not affect any rights Executive may have to
payments that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement,
a "Change in Control" shall occur when (and only when): (i) there has occurred
a change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on the date hereof (the
"1934 Act"); (ii) when any "person" (as such term is defined in Sections 3(a)
(9) and 13(d)(3) of the 1934 Act), other than the Company, any of its
subsidiaries or an employee stock ownership trust of the Company, becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the securities having the
right to vote on the election of directors ("voting securities") of the
Company then outstanding; (iii) during any period of two (2) consecutive years
(not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described
in clauses (i), (ii), (iv), (v), (vi) or (vii) of this Section 2) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who were either directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease
for any reason to constitute at least seventy-five (75%) percent of the
entire Board; (iv) when a majority of the directors elected at any annual
or special meeting of stockholders (or by written consent in lieu of a meeting)
are not individuals nominated by the Company's incumbent Board; (v) if the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the holders of voting securities of the Company outstanding
immediately prior thereto being the holders of at least eighty (80%) percent
of the voting securities of the surviving entity outstanding immediately
after such merger or consolidation; (vi) if the shareholders of the Company
approve a plan of complete liquidation of the Company; or (vii) if the
shareholders of the Company approve an agreement for the sale or disposition
of all or substantially all of the Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Executive in cash a bonus equal to Executive's annual
compensation from the Company (and any entity in which the Company directly or
indirectly owns a majority of the voting interest) for the calendar year
immediately preceding the year in which the Change In Control occurs, as
reflected on Executive's forms W-2 or 1099 for such period (excluding
deductions for 401(k) and medical plan contributions) (the "Base Amount").
Notwithstanding the foregoing, in no event may a bonus be paid hereunder
unless in connection with a Change in Control, the price of the Company's
Common Stock at the time of or in connection with the transaction giving rise
to a Change in Control is equal to the lesser of (a) 15% above the closing
bid price on Nasdaq (or other exchange as appropriate) of the Company's
Common Stock on November 16, 1998 or (b) 15% above the "average market price"
of the Company's Common Stock on the date of the approval by the Board of the
Change in Control. For purposes hereof, the average market price shall mean
the average of the closing bid prices of the Company's Common Stock on Nasdaq
(or other exchange as appropriate) for the 30 trading days immediately prior
to the date which is 60 days immediately prior to the date of approval by the
Board of the Change in Control.
-2-
SECTION 4. EMPLOYMENT FOLLOWING CHANGE IN CONTROL. The
Partnership agrees to employ Executive for a period of two (2) years following
a Change In Control under this Agreement upon the same terms and conditions
as in effect immediately prior to the Change In Control. Upon termination of
Executive's employment within such two-year period for any reason other than
by the Company for Cause or by Executive without Good Reason, the Company
and/or the Partnership shall pay Executive an amount equal to the Base Amount.
For purposes of this Section, termination of employment shall
be considered to be for "Cause", whether it occurred by resignation or
discharge, if the reason for the termination of employment was Executive's
embezzlement, dishonesty, fraud, conviction of a felonious or other charge
involving moral turpitude.
For purposes of this Section, termination of employment shall
be considered to be "Good Reason" if (1) without the express written consent
of Executive, Executive is assigned material duties substantially inconsistent
with Executive's positions, duties, responsibilities or status with the
Partnership as in effect before the Change In Control, or Executive's titles
or offices as in effect immediately prior to the Change In Control are
substantially diminished or any other action is taken by the Partnership or
any of its affiliates which results in a diminution in Executive's position,
authority, or principal duties or responsibilities other than an insubstantial
and inadvertent act that is remedied by the Partnership promptly after receipt
of notice given thereof by Executive, except any such assignment, action or
change resulting from Executive's termination of employment for Cause, or
from Executive's disability as reasonably determined by the Company or death;
PROVIDED, HOWEVER, that notwithstanding the foregoing, in no event shall a
termination of employment under this clause (1) be considered to be for "Good
Reason" if, at the time of the termination, Executive shall have had a
position with a title, level of duties and responsibilities substantially
similar to Executive's title, duties and responsibilities immediately prior
to the Change In Control; (2) the base compensation of Executive is reduced
or the benefit entitlement or bonus opportunity of Executive as in effect
immediately prior to the Change In Control is substantially reduced; (3) the
Partnership requires Executive without Executive's express written consent to
be based anywhere other than the Partnership's location where Executive is
principally employed or another location that is not more than fifty (50)
miles from the location where Executive is principally employed immediately
prior to the Change In Control, with Executive's business travel obligations
being no greater than in effect immediately prior to the Change In Control;
or (4) any failure by the Company or the Partnership to obtain an express
written assumption of this Agreement from any successor to or assign of the
Company or the Partnership, as the case may be.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm,
if not reduced, cause an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended on Executive, the amount of such payment shall be
reduced by the minimum amount, if any, that in the opinion of such accounting
firm, is necessary to avoid such excise tax. The determination of the
accounting firm shall be conclusive and binding on the parties.
-3-
SECTION 6. MITIGATION. Executive shall not be required to
mitigate the amount of an payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for hereunder be reduced by any compensation earned by Executive as
the result of employment by another employer or by retirement benefits.
SECTION 7. COVENANT NOT TO COMPETE. Executive covenants that,
while he is an employee of the Partnership and for a period of one year after
termination of his employment, however caused, he shall not engage in, or
participate in, any business whose product lines are in direct competition to
the product lines of the Partnership.
SECTION 8. NOTICES. All notices or other communications that
are required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to
the Company or the Partnership shall be given at the Company's then existing
corporate headquarters and shall be directed to the Secretary (or such other
location or person as the Company subsequently shall designate in writing to
Executive). Notice to Executive shall be given at the address set forth on the
signature page hereof (or such other address as Executive subsequently shall
designate in writing to the Company).
SECTION 9. WAIVER. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waive or
relinquishment of such right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 10. SEVERABILITY. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability
of any other provision. In the event that any part of a covenant contained
herein is determined by a court of law to be invalid, a judicially
enforceable provision shall be substituted in its place,. Any covenant so
modified shall be binding upon the parties and shall have the same force and
effect as if originally set forth in this Agreement.
SECTION 11. MODIFICATION. This Agreement may be amended only
in writing, signed by each of the parties hereto.
SECTION 12. HEADINGS. The headings in this Agreement are
inserted for convenience only and are not to be considered a construction of
the provisions thereof.
SECTION 13. SUCCESSORS, BINDING AGREEMENT.
(a) The Company and the Partnership will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company or
-4-
the Partnership, as the case may be, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company or
the Partnership would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise. Similarly, "Partnership" shall mean the Partnership as
herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise. Prior to a Change In Control, the term "Partnership" shall
also mean any affiliate of the Company to which Executive may be transferred
and the Company and the Partnership shall cause such successor employer to be
considered the "Partnership" bound by the terms of this Agreement and this
Agreement shall be amended to so provide. Following a Change In Control
neither the term "Company" nor "Partnership" shall not mean any
affiliate of the Company or the Partnership, as the case may be, to which
Executive may be transferred unless Executive shall have previously approved
of such transfer in writing, in which case the Company and the Partnership
shall cause such successor employer to be considered the "Company" bound by
the terms of this Agreement and this Agreement shall be amended to so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisees, legates or other designee or, if there is
no such designee, to Executive's estate.
SECTION 14. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at
the election of Executive, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company or the Partnership commences litigation in
connection with this Agreement Executive commences an arbitration proceeding
concerning the same issue or issues, the Company or the Partnership, as the
case may be, shall promptly terminate such litigation and submit to the
jurisdiction of the arbitration proceeding to the extent that it involves
such issue or issues. This Section shall survive the termination of this
Agreement for any reason.
SECTION 15. PAYMENT OF EXPENSES. In the event that any
proceeding is brought by Executive to enforce or interpret Executive's rights
hereunder, Executive shall be entitled to
-5-
be paid all expenses incurred by Executive with respect to such proceeding,
unless as a part of such proceeding, the arbitration panel or court of
competent jurisdiction determines that the material assertions made by
Executive as a basis for such proceeding were not made in good faith or
were frivolous, in which case each party to the proceeding shall bear its
own costs.
SECTION 16. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, without regard
to conflict of law provisions that would defer to the substantive laws of
another jurisdiction.
SECTION 17. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon a single
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
HILITE INDUSTRIES AUTOMOTIVE, LP
By: HILITE INDUSTRIES (TEXAS), INC.,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
/s/ Xxxxxx X. Xxxxxx
----------------------------------
Executive
-6-
Exhibit 10.6
CHANGE IN CONTROL RETENTION BONUS
AND EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of January 5, 1999, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company"), Hilite
Industries Automotive, LP, a Texas limited partnership (the "Partnership"),
and Xxxxxx X. Xxxxxxx ("Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility and
the uncertainty and questions it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of key management personnel, including Executive, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Executive continuing with
the Company and/or the Partnership prior to any Change In Control (as
hereinafter defined) and willingness to stay with the Company under certain
conditions for a period of time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Executive to assist in
the presentation of the Company to potential buyers in addition to his current
responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be
effective as of the date hereof and shall continue in effect through December
31, 2000; provided that on January 1, 2000 and each January 1st thereafter,
the term of this Agreement shall automatically be extended for an additional
year unless the Company or Executive shall have given at least ninety (90) days'
prior notice not to extend this Agreement or a Change In Control shall have
occurred prior to such January 1; provided further that if a Change In Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than twenty-four (24) months beyond
the date on which such Change In Control occurred. The termination of this
Agreement, however, shall not affect any rights Executive may have to payments
that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement,
a "Change in Control" shall occur when (and only when): (i) there has occurred
a change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on the date hereof (the
"1934 Act"); (ii) when any "person" (as such term is defined in Sections 3(a)
(9) and 13(d)(3) of the 1934 Act), other than the Company, any of its
subsidiaries or an employee stock ownership trust of the Company, becomes a
beneficial owner, directly or indirectly, of securities of the Company
representing twenty-five (25%) percent or more of the securities having the
right to vote on the election of directors ("voting securities") of the
Company then outstanding; (iii) during any period of two (2) consecutive
years (not including any period prior to the execution of this Agreement),
individuals who at the beginning of such period constitute the Board, and
any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described
in clauses (i), (ii), (iv), (v), (vi) or (vii) of this Section 2) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then
still in office who were either directors at the beginning of the period or
whose election or nomination for election was previously so approved, cease
for any reason to constitute at least seventy-five (75%) percent of the
entire Board; (iv) when a majority of the directors elected at any annual or
special meeting of stockholders (or by written consent in lieu of a meeting)
are not individuals nominated by the Company's incumbent Board; (v) if the
stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than a merger or consolidation
which would result in the holders of voting securities of the Company
outstanding immediately prior thereto being the holders of at least eighty
(80%) percent of the voting securities of the surviving entity outstanding
immediately after such merger or consolidation; (vi) if the shareholders of
the Company approve a plan of complete liquidation of the Company; or (vii)
if the shareholders of the Company approve an agreement for the sale or
disposition of all or substantially all of the Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Executive in cash a bonus equal to Executive's annual
compensation from the Company (and any entity in which the Company directly or
indirectly owns a majority of the voting interest) for the calendar year
immediately preceding the year in which the Change In Control occurs, as
reflected on Executive's forms W-2 or 1099 for such period (excluding
deductions for 401(k) and medical plan contributions) (the "Base Amount").
Notwithstanding the foregoing, in no event may a bonus be paid hereunder
unless in connection with a Change in Control, the price of the Company's
Common Stock at the time of or in connection with the transaction giving rise
to a Change in Control is equal to the lesser of (a) 15% above the closing
bid price on Nasdaq (or other exchange as appropriate) of the Company's
Common Stock on November 16, 1998 or (b) 15% above the "average market price"
of the Company's Common Stock on the date of the approval by the Board of the
Change in Control. For purposes hereof, the average market price shall mean
the average of the closing bid prices of the Company's Common Stock on Nasdaq
(or other exchange as appropriate) for the 30 trading days immediately prior
to the date which is 60 days immediately prior to the date of approval by the
Board of the Change in Control.
-2-
SECTION 4. EMPLOYMENT FOLLOWING CHANGE IN CONTROL. The
Partnership agrees to employ Executive for a period of two (2) years following
a Change In Control under this Agreement upon the same terms and conditions as
in effect immediately prior to the Change In Control. Upon termination of
Executive's employment within such two-year period for any reason other than by
the Company for Cause or by Executive without Good Reason, the Company and/or
the Partnership shall pay Executive an amount equal to the Base Amount.
For purposes of this Section, termination of employment shall
be considered to be for "Cause", whether it occurred by resignation or
discharge, if the reason for the termination of employment was Executive's
embezzlement, dishonesty, fraud, conviction of a felonious or other charge
involving moral turpitude.
For purposes of this Section, termination of employment shall
be considered to be "Good Reason" if (1) without the express written consent of
Executive, Executive is assigned material duties substantially inconsistent
with Executive's positions, duties, responsibilities or status with the
Partnership as in effect before the Change In Control, or Executive's titles
or offices as in effect immediately prior to the Change In Control are
substantially diminished or any other action is taken by the Partnership or
any of its affiliates which results in a diminution in Executive's position,
authority, or principal duties or responsibilities other than an insubstantial
and inadvertent act that is remedied by the Partnership promptly after
receipt of notice given thereof by Executive, except any such assignment,
action or change resulting from Executive's termination of employment for
Cause, or from Executive's disability as reasonably determined by the
Company or death; PROVIDED, HOWEVER, that notwithstanding the foregoing, in
no event shall a termination of employment under this clause (1) be considered
to be for "Good Reason" if, at the time of the termination, Executive shall
have had a position with a title, level of duties and responsibilities
substantially similar to Executive's title, duties and responsibilities
immediately prior to the Change In Control; (2) the base compensation of
Executive is reduced or the benefit entitlement or bonus opportunity of
Executive as in effect immediately prior to the Change In Control is
substantially reduced; (3) the Partnership requires Executive without
Executive's express written consent to be based anywhere other than the
Partnership's location where Executive is principally employed or another
location that is not more than fifty (50) miles from the location where
Executive is principally employed immediately prior to the Change In Control,
with Executive's business travel obligations being no greater than in effect
immediately prior to the Change In Control; or (4) any failure by the Company
or the Partnership to obtain an express written assumption of this Agreement
from any successor to or assign of the Company or the Partnership, as the
case may be.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm,
if not reduced, cause an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended on Executive, the amount of such payment shall be
reduced by the minimum amount, if any, that in the opinion of such accounting
firm, is necessary to avoid such excise tax. The determination of the
accounting firm shall be conclusive and binding on the parties.
-3-
SECTION 6. MITIGATION. Executive shall not be required to
mitigate the amount of an payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment or benefit provided
for hereunder be reduced by any compensation earned by Executive as the result
of employment by another employer or by retirement benefits.
SECTION 7. COVENANT NOT TO COMPETE. Executive covenants that,
while he is an employee of the Partnership and for a period of one year after
termination of his employment, however caused, he shall not engage in, or
participate in, any business whose product lines are in direct competition to
the product lines of the Partnership.
SECTION 8. NOTICES. All notices or other communications that
are required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to the
Company or the Partnership shall be given at the Company's then existing
corporate headquarters and shall be directed to the Secretary (or such other
location or person as the Company subsequently shall designate in writing to
Executive). Notice to Executive shall be given at the address set forth on the
signature page hereof (or such other address as Executive subsequently shall
designate in writing to the Company).
SECTION 9. WAIVER. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waive or
relinquishment of such right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 10. SEVERABILITY. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability
of any other provision. In the event that any part of a covenant contained
herein is determined by a court of law to be invalid, a judicially enforceable
provision shall be substituted in its place,. Any covenant so modified shall be
binding upon the parties and shall have the same force and effect as if
originally set forth in this Agreement.
SECTION 11. MODIFICATION. This Agreement may be amended only
in writing, signed by each of the parties hereto.
SECTION 12. HEADINGS. The headings in this Agreement are
inserted for convenience only and are not to be considered a construction of
the provisions thereof.
SECTION 13. SUCCESSORS, BINDING AGREEMENT.
(a) The Company and the Partnership will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of
-4-
the business and/or assets of the Company or the Partnership, as the case may
be, to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company or the Partnership would be required to
perform it if no such succession had taken place. As used in this Agreement,
"Company" shall mean the Company as herein before defined and any successor to
its business and/or assets as aforesaid which assumes and agrees to perform
this Agreement by operation of law, or otherwise. Similarly, "Partnership"
shall mean the Partnership as herein before defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Prior to a Change In Control,
the term "Partnership" shall also mean any affiliate of the Company to which
Executive may be transferred and the Company and the Partnership shall cause
such successor employer to be considered the "Partnership" bound by the terms
of this Agreement and this Agreement shall be amended to so provide. Following
a Change In Control neither the term "Company" nor "Partnership" shall not
mean any affiliate of the Company or the Partnership, as the case may be, to
which Executive may be transferred unless Executive shall have previously
approved of such transfer in writing, in which case the Company and the
Partnership shall cause such successor employer to be considered the "Company"
bound by the terms of this Agreement and this Agreement shall be amended to
so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amount would still be payable to Executive
hereunder if Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Executive's devisees, legates or other designee or, if there is
no such designee, to Executive's estate.
SECTION 14. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at the
election of Executive, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company or the Partnership commences litigation in
connection with this Agreement Executive commences an arbitration proceeding
concerning the same issue or issues, the Company or the Partnership, as the
case may be, shall promptly terminate such litigation and submit to the
jurisdiction of the arbitration proceeding to the extent that it involves
such issue or issues. This Section shall survive the termination of this
Agreement for any reason.
SECTION 15. PAYMENT OF EXPENSES. In the event that any
proceeding is brought by Executive to enforce or interpret Executive's rights
hereunder, Executive shall be entitled to
-5-
be paid all expenses incurred by Executive with respect to such proceeding,
unless as a part of such proceeding, the arbitration panel or court of competent
jurisdiction determines that the material assertions made by Executive as a
basis for such proceeding were not made in good faith or were frivolous, in
which case each party to the proceeding shall bear its own costs.
SECTION 16. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, without regard
to conflict of law provisions that would defer to the substantive laws of
another jurisdiction.
SECTION 17. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the
same effect as if the signatures thereto and hereto were upon a single
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
HILITE INDUSTRIES AUTOMOTIVE, LP
By: HILITE INDUSTRIES (TEXAS), INC.,
its General Partner
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
/s/ Xxxxxx X. Xxxxxxx
----------------------------------
Executive
-6-
Exhibit 10.7
CHANGE IN CONTROL RETENTION BONUS
AND EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of December 18, 1998, by and between
Hilite Industries, Inc., a Delaware corporation (the "Company") and Xxxxxxxxxx &
Co., LLC, a Connecticut limited liability company ("Consultant").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that, as is the case with publicly held corporations, the
possibility of a change in control may exist and that such possibility and
the uncertainty and questions it may raise among management, may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders;
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of key management personnel, including Consultant, to their assigned
duties without distraction in the face of potentially disturbing circumstances
arising from any possible change in control of the Company;
WHEREAS, the Company is relying on Consultant continuing relationship
with the Company and/or the Partnership prior to any Change In Control (as
hereinafter defined) and willingness to consult with the Company under certain
conditions for a period of time after any Change In Control; and
WHEREAS, the Board desires to pursue alternative strategies to
improve shareholder value and the Company is relying on Consultant to assist in
the presentation of the Company to potential buyers in addition to his current
responsibilities.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. TERM OF AGREEMENT. This Agreement shall be
effective as of the date hereof and shall continue in effect through December
31, 2000; provided that on January 1, 2000 and each January 1st thereafter, the
term of this Agreement shall automatically be extended for an additional year
unless the Company or Consultant shall have given at least ninety (90) days'
prior notice not to extend this Agreement or a Change In Control shall have
occurred prior to such January 1; provided further that if a Change In Control
shall have occurred during the term of this Agreement, this Agreement shall
continue in effect for a period of not less than twenty-four (24) months beyond
the date on which such Change In Control occurred. The termination of this
Agreement, however, shall not affect any rights Consultant may have to payments
that have accrued prior thereto.
SECTION 2. CHANGE IN CONTROL. For purposes of this Agreement,
a "Change in Control" shall occur when (and only when): (i) there has occurred a
change in control as the term "control" is defined in Rule 12b-2 promulgated
under the Securities Exchange Act of 1934 as in effect on the date hereof (the
"1934 Act"); (ii) when any "person" (as such term is defined in Sections 3(a)(9)
and 13(d)(3) of the 1934 Act), other than the Company, any of its subsidiaries
or an employee stock ownership trust of the Company, becomes a beneficial owner,
directly or indirectly, of securities of the Company representing twenty-five
(25%) percent or more of the securities having the right to vote on the
election of directors ("voting securities") of the Company then outstanding;
(iii) during any period of two (2) consecutive years (not including any period
prior to the execution of this Agreement), individuals who at the beginning
of such period constitute the Board, and any new director (other than a
director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clauses (i), (ii), (iv), (v),
(vi) or (vii) of this Section 2) whose election by the Board or nomination
for election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who were either
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least seventy-five (75%) percent of the entire Board; (iv) when a majority of
the directors elected at any annual or special meeting of stockholders (or by
written consent in lieu of a meeting) are not individuals nominated by the
Company's incumbent Board; (v) if the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
a merger or consolidation which would result in the holders of voting
securities of the Company outstanding immediately prior thereto being the
holders of at least eighty (80%) percent of the voting securities of the
surviving entity outstanding immediately after such merger or consolidation;
(vi) if the shareholders of the Company approve a plan of complete liquidation
of the Company; or (vii) if the shareholders of the Company approve an
agreement for the sale or disposition of all or substantially all of the
Company's assets.
SECTION 3. CHANGE IN CONTROL BONUS. Subject to the provisions
below, upon the occurrence of a Change In Control under this Agreement, the
Company shall pay Consultant in cash a bonus equal to 200% of Consultant's
annual consulting fees from the Company (and any entity in which the Company
directly or indirectly owns a majority of the voting interest) for the
calendar year immediately preceding the year in which the Change In Control
occurs, as reflected on Consultant's Form 10999 for such period (the "Base
Amount"). Notwithstanding the foregoing, in no event may a bonus be paid
hereunder unless in connection with a Change in Control, the price of the
Company's Common Stock at the time of or in connection with the transaction
giving rise to a Change in Control is equal to the lesser of (a) 15% above
the closing bid price on Nasdaq (or other exchange as appropriate) of the
Company's Common Stock on November 16, 1998 or (b) 15% above the "average
market price" of the Company's Common Stock on the date of the approval by
the Board of the Change in Control. For purposes hereof, the average market
price shall mean the average of the closing bid prices of the Company's
Common Stock on Nasdaq (or other exchange as appropriate) for the 30
trading days immediately prior to the date which is 60 days immediately prior to
the date of approval by the Board of the Change in Control.
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SECTION 4. RELATIONSHIP WITH THE COMPANY
a) From and after a Change In Control under this Agreement, the management
agreement by and between the Company and Consultant is hereby amended to
provide that Consultant shall continue to provide consulting services to the
Company as a consultant at will. Except as otherwise provided in this
Agreement, upon termination of such relationship following a Change In
Control, Consultant shall have no further obligation to the Company and the
Company shall have no further obligation to Consultant except to pay
Consultant any unpaid amount which relates to any period before such
termination of the consulting agreement.
b) Consultant covenants that upon a Change In Control under this Agreement
for a period of one year after the termination of Consultant's consulting
agreement with the Company, Consultant will not engage in or participate in
any business whose product lines are in direct competition to the product
lines of the Company. In consideration therefore, upon the occurrence of a
Change In Control, the Company shall pay Consultant in cash an amount equal
to 100% of the Base Amount.
SECTION 5. REDUCTION IN PAYMENT. In the event that any payment
hereunder would, in the opinion of the Company's independent accounting firm, if
not reduced, cause an excise tax under Section 4999 of the Internal Revenue
Code of 1986, as amended on Consultant, the amount of such payment shall be
reduced by the minimum amount, if any, that in the opinion of such accounting
firm, is necessary to avoid such excise tax. The determination of the
accounting firm shall be conclusive and binding on the parties.
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SECTION 6. MITIGATION. Consultant shall not be required to
mitigate the amount of an payment provided for hereunder by seeking other
employment or otherwise, nor shall the amount of any payment or benefit
provided for hereunder be reduced by any compensation earned by Consultant as
the result of employment by another employer or by retirement benefits.
SECTION 7. NOTICES. All notices or other communications that
are required or permitted hereunder shall be in writing deemed to have been
given on the date delivered personally or on the date sent by certified or
registered mail, overnight delivery or by facsimile transmission. Notice to
the Company shall be given at the Company's then existing corporate
headquarters and shall be directed to the Secretary (or such other location
or person as the Company subsequently shall designate in writing to
Consultant). Notice to Consultant shall be given at the address set forth
on the signature page hereof (or such other address as Consultant
subsequently shall designate in writing to the Company).
SECTION 8. WAIVER. Failure to insist upon strict compliance
with any of the terms, covenants, or conditions hereof shall not be deemed a
waiver of such term, covenant, or condition, nor shall any waive or
relinquishment of such right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times.
SECTION 9. SEVERABILITY. The invalidity or unenforceability
of any provision hereof shall in no way affect the validity or enforceability of
any other provision. In the event that any part of a covenant contained herein
is determined by a court of law to be invalid, a judicially enforceable
provision shall be substituted in its place,. Any covenant so modified shall be
binding upon the parties and shall have the same force and effect as if
originally set forth in this Agreement.
SECTION 10. MODIFICATION. This Agreement may be amended only
in writing, signed by each of the parties hereto.
SECTION 11. HEADINGS. The headings in this Agreement are
inserted for convenience only and are not to be considered a construction of
the provisions thereof.
SECTION 12. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, as the case may
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be, to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession had taken place. As used in this Agreement, "Company" shall
mean the Company as herein before defined and any successor to its business
and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Prior to a Change In Control, the
term term "Company" shall also mean any affiliate of the Company to which
Consultant may be transferred and the Company shall cause such successor
employer to be considered the "Company" bound by the terms of this Agreement
and this Agreement shall be amended to so provide. Following a Change
In Control the term "Company" shall not mean any affiliate of the Company
to which Consultant may be transferred unless Consultant shall have previously
approved of such transfer in writing, in which case the Company shall
cause such successor employer to be considered the "Company" bound by the terms
of this Agreement and this Agreement shall be amended to so provide.
(b) This Agreement shall inure to the benefit of and be
enforceable by Consultant's successors and permitted designs.
SECTION 13. RESOLUTION OF DISPUTE, CHOICE OF FORM. Except as
otherwise expressly provided herein, the parties agree that any dispute,
controversy or claim arising out of or relating to this Agreement shall, at the
election of Consultant, be resolved by final and binding arbitration,
enforceable under the Federal Arbitration Act, administered by the American
Arbitration Association under is Commercial Arbitration Rules, and judgment
on the award rendered by the arbitrators may be entered in any court having
jurisdiction thereof. All such disputes, controversies or claims shall be
determined by a panel or three arbitrators selected in accordance with the
rules of the American Arbitration Association and the arbitration shall be
conducted in the City of Dallas, State of Texas. In the event that within
sixty (60) days after the Company or the Partnership commences litigation in
connection with this Agreement Consultant commences an arbitration proceeding
concerning the same issue or issues, the Company shall promptly terminate
such litigation and submit to the jurisdiction of the arbitration proceeding
to the extent that it involves such issue or issues. This Section shall
survive the termination of this Agreement for any reason.
SECTION 14. PAYMENT OF EXPENSES. In the event that any
proceeding is brought by Consultant to enforce or interpret Consultant's rights
hereunder, Consultant shall be entitled to be paid all expenses incurred by
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Consultant with respect to such proceeding, unless as a part of such
proceeding, the arbitration panel or court of competent jurisdiction
determines that the material assertions made by Consultant as a
basis for such proceeding were not made in good faith or were frivolous, in
which case each party to the proceeding shall bear its own costs.
SECTION 15. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with the laws of the State of Texas, without regard
to conflict of law provisions that would defer to the substantive laws of
another jurisdiction.
SECTION 16. COUNTERPARTS. This Agreement may be signed in any
number of counterparts, each of which shall be deemed an original, with the same
effect as if the signatures thereto and hereto were upon a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
HILITE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
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XXXXXXXXXX & CO., LLC
By: /s/ Xxxxx X. Xxxxxxxxxx
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