EMPLOYMENT AGREEMENT
Exhibit
10.1
This EMPLOYMENT AGREEMENT (this
“Agreement”), dated as of December 30, 2008, is made and entered into by and
between XXXXXX INDUSTRIES,
INC., a Tennessee corporation (the “Company”), and XXXXXXX X. XXXXXX (the
“Employee”).
W I T N E S S E T H:
WHEREAS, Employee and the
Company entered into an employment agreement (the “Original Agreement”) as of
July 8, 1997, embodying the terms of Employee’s employment and pursuant to which
Employee has been serving as Chairman of the Board of Directors and Co-Chief
Executive Officer of the Company; and
WHEREAS, this Agreement amends
and restates the Original Agreement as of the Effective Date in order, inter
alia, to evidence formal compliance with Section 409A of the Internal Revenue
Code of 1986, as amended, and the guidance thereunder (such Section, referenced
herein as “Section 409A”; and such code, referenced herein as the
“Code”).
NOW, THEREFORE, in
consideration of these premises, and of the mutual covenants and agreements
hereinafter set forth, the parties agree as follows:
1.
Term. Employee’s
employment under this Agreement shall commence on the date hereof and shall
continue until terminated in accordance with the provisions of Section 4 below (the
“Employment Period”).
2.
Salary
and Benefits.
2.1 During
the Employment Period, for all services rendered by the Employee under this
Agreement, the Company shall pay the Employee a base salary per annum (the “Base
Salary”) that shall be agreed to by the Company and the Employee from time to
time, but which shall in any event be substantially the same as the base salary
of the Co-Chief Executive Officer of the Company or the Chief Executive Officer
of the Company if other than Employee, payable in accordance with the customary
payroll policy of the Company in effect at the time such payment is
made.
2.2 In
addition to the Base Salary, the Employee shall be entitled to participate in
any of the Company’s present and future stock or cash based bonus plans that are
generally available to its senior executives, as such plans may exist or be
changed from time to time at the discretion of the Company.
2.3 The
Employee shall be entitled to such vacation time, fringe benefits, insurance
coverage, and other benefits as the Company generally provides to its executive
officers from time to time.
3.
Duties. The Employee
shall serve the Company as its Chairman of the Board (“Chairman”) and as its
Co-Chief Executive Officer (“CCEO”) (the Employee may cease serving as the CCEO
at his discretion without terminating or otherwise affecting this
Agreement). As Chairman and CCEO, the duties of the Employee shall
include but not be limited to the supervision of the business affairs of the
Company and such other duties as are customarily performed by comparably
situated officers and as may be assigned from time to time by the Company’s
Board of Directors (the “Board”). During the term of this Agreement,
the Employee shall devote his primary time, attention and skill to his duties
hereunder; faithfully and diligently perform such duties and exercise such
powers as may be from time to time assigned to or vested in him by the Board;
obey the directions of the Board; and use his best efforts to promote the
interests of the Company. The Company acknowledges, however, that the
Employee may pursue other business related interests so long as they do not
interfere with the performance of Employee’s duties for the
Company. The Employee may be required in pursuance of his duties
hereunder, to perform services for any company controlling, controlled by or
under common control with the Company (such companies hereinafter collectively
called “Affiliates”) for some period of time and from time to
time. The Employee shall obey all policies of the
Affiliates.
4.
Termination. Unless terminated
in accordance with the following provisions to this Section 4, the
Company shall continue to employ the Employee and the Employee shall continue to
work for the Company, during the Employment Period.
4.1 The
Company may terminate the Employee’s employment at any time for Cause. “Cause”
shall mean (i) willful malfeasance or gross negligence or (ii) knowingly
engaging in wrongful conduct resulting in detriment to the good will of the
Company or damage to the Company’s relationships with its customers, suppliers
or employees. Upon termination pursuant to this Section 4.1, the
Company shall pay the Employee any salary earned and unpaid to the date of
termination, and any outstanding funds advanced by the Company to or on behalf
of the Employee shall become immediately due and payable.
4.2 In
the event the Employee dies or becomes mentally or physically handicapped or
disabled so as to be unable to perform his duties during the Employment Period,
this Agreement shall automatically terminate with no further liability on the
part of the Company.
4.3 This
Agreement may be
terminated by either party upon three (3) years
prior written notice of termination, with or without Cause. If the Company
breaches this Agreement by terminating Employee’s employment without Cause
without notice or prior to the end of the three-year notice period, the Employee
shall be entitled to receive, as damages payable as a result of, and arising
from, a breach of this Agreement, the compensation and benefits set forth in (a)
through (c) below. All compensation payable under (a) through (c)
below shall be subject to the terms of Section 8.10, which may delay the payment
of the compensation for up to 6 months.
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(a) Base
Salary. The Employee will continue to receive his current Base
Salary (subject to withholding of all applicable taxes) through the end of the
thirty-six-month notice period, payable in normal payroll periods, in the same
manner as it was being paid as of the date of termination, and no less
frequently than monthly. For purposes hereof, the Employee’s “current
Base Salary” shall be the highest rate in effect during the twelve-month period
prior to the Employee's termination.
(b) Bonus. The
Employee shall be paid bonus payments from the Company in each month beginning
with the month following the month in which his employment is terminated and
ending with the month in which falls the last day of the thirty-six month notice
period, in an amount for each such month equal to one-twelfth of the average
(“Average
Bonus”) of the bonuses earned by him for the three calendar years
immediately preceding the year in which such termination occurs. Any
bonus amounts that the Employee had previously earned from the Company but which
may not yet have been paid as of the date of termination shall not be affected
by this provision. Employee shall also receive, within 60 days after
the date of his termination, a prorated bonus for any uncompleted fiscal year at
the date of termination equal to the Average Bonus multiplied by the number of
days he worked in such year divided by 365 days.
(c) Health and Life Insurance
Coverage. The Company shall provide Employee (and any spouse
or dependents covered at the time of the Employee’s termination) with medical,
dental, life insurance and other health benefits (pursuant to the same Company
Plans that are medical, dental, life insurance and other health benefit plans
and that are in effect for active employees of the Company), for the remainder
of the thirty-six (36) month notice period following the date of Employee’s
termination of employment. The coverages provided for in this
paragraph shall be applied against and reduce the period for which COBRA will be
provided.
(1) To
the extent that such medical, dental or other health benefit plan coverage is
provided under a self-insured plan maintained by the Company (within the meaning
of Section 105(h) of the Code):
(X) the
charge to Employee for each month of coverage will equal the monthly COBRA
charge established by the Company for such coverage in which the Employee or the
Employee’s spouse or dependents (as applicable) are enrolled from time to time,
based on the coverage generally provided to salaried employees (less the amount
of any administrative charge typically assessed by the Company as part of its
COBRA charge), and Employee will be required to pay such monthly charge in
accordance with the Company’s standard COBRA premium payment requirements;
and
(Y) on
the date of Employee’s termination of employment (subject to delay under
Paragraph 8 below), the Company will pay Employee a lump sum in cash equal, in
the aggregate, to the monthly COBRA charge established by the Company for the
coverage being provided on Employee’s termination date to the Employee and, if
applicable, his spouse and dependents, for each month of coverage in the
36-month period. For this purpose, the Company’s monthly COBRA charge will be
increased by 10% on each January in the projected payment period and such
increased amount shall apply to each successive month in the calendar year in
which the increase became applicable.
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(2) To
the extent that such medical, dental or other health benefit plan coverage is
provided under a fully-insured medical reimbursement plan (within the meaning of
Section 105(h) of the Code), there will be no charge to Employee for such
coverage.
4.4 In
the event of a “Change in Control” (as such term is defined in the Company’s
Stock Option and Incentive Plan), the Employee may terminate this Agreement upon
sixty (60) days notice of termination.
5.
Competition. The Employee
agrees that during the term of this Agreement, the Employee will not directly or
indirectly, whether or not for compensation and whether or not as an employee,
be engaged in any business competing with or which may compete with the business
of the Company (or with any business of any Affiliate for which the Employee
performed services hereunder) within any state, region or locality in which the
Company or such Affiliate is then doing business or marketing its products, as
the business of the Company or such Affiliate may then be constituted and in
which the Employee has been involved. This agreement not to compete
shall be applicable for three (3) years from the date of termination of
employment hereunder by the Employee in breach of this Agreement or by the
Company for Cause, notwithstanding that the Employee shall not be entitled to
any compensation hereunder from and after any such termination.
For purposes of this Agreement, the
Employee shall be deemed to be engaged in such a business if he is an employee,
officer, director, or partner, of any person, partnership, corporation, trust or
other entity which is engaged in such a business or if he directly or indirectly
performs services for such entity or if he or any member of his immediate family
beneficially owns an equity interest, or interest convertible into equity, in
such entity; provided, however, that the foregoing shall not prohibit the
Employee or a member of his immediate family from owning, for the purpose of
passive investment, less than five percent (5%) of any class of securities of a
publicly held corporation.
The Employee acknowledges that his
services to be rendered to the Company in the aforesaid capacity are of a
special and unusual character which have a unique value to the Company, the loss
of which cannot adequately be compensated by damages in an action at
law. In view of (i) the unique value to the Company of the services
of the Employee for which the Company has employed the Employee; and (ii) the
confidential information to be obtained by or disclosed to the Employee as an
employee of the Company; and as a material inducement to the Company to employ
the Employee and to pay to the Employee the compensation for such services to be
rendered for the Company by the Employee, the Employee covenants and agrees the
Company shall be entitled to equitable relief to the full extent available under
the applicable law.
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6.
Confidentiality. The Employee
shall not divulge or communicate to any person (except in performing his duties
under this Agreement) or use for his own purposes trade secrets, confidential
commercial information or any other information, knowledge or data of the
Company or of any of its Affiliates which is not generally known to the public
and shall use his best efforts to prevent the publication or disclosure by any
other person of any such secret, information, knowledge or data. All
documents and objects made, compiled, received, held or used by the Employee
while employed by the Company in connection with the business of the Company
shall be and remain the Company’s property and shall be delivered by the
Employee to the Company upon the termination of the Employee’s employment or at
any earlier time requested by the Company.
7.
Ownership
of Confidential Information. The Employee
hereby agrees that any and all improvements, inventions, discoveries, formulas,
processes, methods, know-how, confidential data, trade secrets and other
proprietary information (collectively “Work Product”) within the scope of any
business of the Company or any Affiliate which the Employee may conceive or make
or has conceived or made during his employment with the Company shall be and are
the sole and exclusive property of the Company, and that the Employee shall,
whenever requested to do so by the Company, at its expense, execute and sign any
and all applications, assignments or other instruments and do all other things
which the Company may deem necessary or appropriate (i) in order to apply for,
obtain, maintain, enforce or defend letters patent of the United States or any
foreign country for any Work Product, or (ii) in order to assign, transfer,
convey or otherwise make available to the Company the sole and exclusive right,
title and interest in and to any Work Product.
8.
Miscellaneous.
8.1 Notice. Any notice or
other communication required or permitted under this Agreement shall be
effective only if it is in writing and delivered personally or sent by
registered or certified mail, postage prepaid, addressed as
follows:
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If
to the Company:
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Xxxxxx
Industries, Inc.
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X.X.
Xxx 000
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0000
Xxxxxxx Xxxxx
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Xxxxxxxx,
Xxxxxxxxx 00000
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Attention: President
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If
to the Employee:
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Xxxxxxx
X. Xxxxxx
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0000
Xxxxxxxx Xxxx
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Xxxxxxxxxx,
Xxxxxxx 00000
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or to
such other address as any party may designate by notice to the others, and shall
be deemed to have been given upon receipt.
8.2 Entire
Agreement. This Agreement
constitutes the entire agreement between the parties hereto with respect to the
Employee’s employment by the Company, and supersedes and is in full substitution
for any and all prior understandings or agreements with respect to the
Employee’s employment.
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8.3 Amendment. This Agreement
may be amended only by an instrument in writing signed by the parties hereto,
and any provision hereof may be waived only by an instrument in writing signed
by the party or parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto to comply with any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either party hereto
of a breach of any provision hereof be taken or held to be a waiver of any
succeeding breach of such provision, or a waiver of the provision itself, or a
waiver of any other provision of this Agreement.
8.4 Binding
Effect. This Agreement is
binding on and is for the benefit of the parties hereto and their respective
successors, heirs, executors, administrators and other legal
representatives. Neither this Agreement nor any right or obligation
hereunder may be assigned by the Employee or the Company, except for assignment
by the Company to any wholly owned subsidiary.
8.5 Severability
and Modification. If any provision
of this Agreement or portion thereof is so broad, in scope or duration, so as to
be unenforceable, such provision or portion thereof shall be interpreted to be
only so broad as is enforceable. In addition, to the extent that any
provision of this Agreement as applied to either party or to any circumstances
shall be adjudged by a court of competent jurisdiction to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement or the validity or enforceability of this Agreement.
8.6 Cost of
Litigation. In the event
there is any litigation between the Company or its successors or assigns and the
Employee or his heirs or representatives concerning or arising out of this
Agreement, the party prevailing in such litigation shall be reimbursed for all
costs and expenses (including, but not limited to, reasonable attorneys’ fees)
incurred in connection with such litigation.
8.7 Interpretation. This Agreement
shall be interpreted, construed and governed by and under the laws of the State
of Tennessee. If any provision of this Agreement is deemed or held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, this Agreement shall be considered divisible and
inoperative as to such provision to the extent it is deemed to be illegal,
invalid or unenforceable, and in all other respects this Agreement shall remain
in full force and effect; provided, however, that if any provision of this
Agreement is deemed or held to be illegal, invalid or unenforceable there shall
be added hereto automatically a provision as similar as possible to such
illegal, invalid or unenforceable provision as shall be legal, valid or
enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of competent
jurisdiction, such provision as so reformed or rewritten shall be binding upon
the Employee and the Company.
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8.8 Counterparts. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.
8.9 No
Conflicting Agreement. The Employee
represents and warrants that he is not party to any agreement, contract or
understanding which would prohibit him from entering into this Agreement or
performing fully his obligations hereunder.
8.10 Section
409A.
(a)
Expense
Reimbursements. To the extent that any expense reimbursement
provided for by this Agreement does not qualify for exclusion from Federal
income taxation, the Company will make the reimbursement only if Employee incurs
the corresponding expense during the term of this Agreement or the period of two
years thereafter and submits the request for reimbursement no later than two
months prior to the last day of the calendar year following the calendar year in
which the expense was incurred so that the Company can make the reimbursement on
or before the last day of the calendar year following the calendar year in which
the expense was incurred; the amount of expenses eligible for such reimbursement
during a calendar year will not affect the amount of expenses eligible for such
reimbursement in another calendar year, and the right to such reimbursement is
not subject to liquidation or exchange for another benefit from the
Company.
(b)
Meaning of
Termination of Employment. Solely as
necessary to comply with Section 409A, for purposes of Section 4, “termination of employment”
or “employment termination” or similar terms shall have the same meaning as
“separation from service” under Section 409A(a)(2)(A)(i) of the
Code.
(c)
Installment
Payments. For purposes of
Section 4.3 with respect to amounts payable in the event of termination of
employment by the Company without Cause, each such payment is a separate payment
within the meaning of the final regulations under Section 409A. Each
such payment that is made within 2-1/2 months following the end of the year that
contains the date of Employee’s termination of employment is intended to be
exempt from Section 409A as a short-term deferral within the meaning of the
final regulations under Section 409A, each such payment that is made later than
2-1/2 months following the end of the year that contains the date of Employee’s
termination of employment is intended to be exempt under the two-times
separation pay exception of Treasury Reg. § 1.409A-1(b)(9)(iii) up to the
limitation on the availability of such exception specified in such regulation,
and each such payment that is made after the two-times separation pay exception
ceases to be available shall be subject to delay in accordance with Section
8.10(d) below.
(d)
Six Month
Delay. This Agreement
will be construed and administered to preserve the exemption from Section 409A
of payments that qualify as a short-term deferral or that qualify for the
two-times separation pay exception. With respect to other amounts
that are subject to Section 409A, it is intended, and this Agreement will be so
construed, that any such amounts payable under this Agreement and the Company’s
and Employee’s exercise of authority or discretion hereunder shall comply with
the provisions of Section 409A and the treasury regulations relating thereto so
as not to subject Employee to the payment of interest and additional tax that
may be imposed under Section 409A. As a result, in the event Employee
is a “specified employee” on the date of Employee’s termination of employment
(with such status determined by the Company in accordance with rules established
by the Company in writing in advance of the “specified employee identification
date” that relates to the date of Employee’s termination of employment, or in
the absence of such rules established by the Company, under the default rules for identifying specified employees
under Section 409A), any payment that is subject to Section 409A, that is
payable to Employee in connection with Employee’s termination of employment,
shall not be paid earlier than six months after such termination of employment
(if Employee dies after the date of Employee’s termination of employment but
before any payment has been made, such remaining payments that were or could
have been delayed will be paid to Employee’s estate without regard to such
six-month delay).
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(e)
Tax
Treatment. This Agreement will be construed and administered
to preserve the exemption from Section 409A of payments that qualify as
short-term deferrals pursuant to Treas. Reg. §1.409A-1(b)(4) or that qualify for
the two-times compensation exemption of Treas. Reg.
§1.409A-1(b)(9)(iii). Employee acknowledges and agrees that the
Company has made no representation to Employee as to the tax treatment of the
compensation and benefits provided pursuant to this Agreement and that Employee
is solely responsible for all taxes due with respect to such compensation and
benefits.
IN WITNESS WHEREOF, the
Company and the Employee have executed this Agreement as of the date first
written above.
| XXXXXX INDUSTRIES, INC. | |||
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By:
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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President
and Co-Chief Executive Officer
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EXECUTIVE
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| /s/ Xxxxxxx X. Xxxxxx | |||
| Xxxxxxx X. Xxxxxx | |||
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