EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), made and entered into as of
May 30, 2007, by and between ▇▇▇▇▇▇ INDUSTRIES, INC., a Delaware corporation,
with its principal office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together with its successors and assigns permitted under
this Agreement, "▇▇▇▇▇▇") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") residing at ▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
WITNESSETH:
WHEREAS, ▇▇▇▇▇▇ has determined that it is in the best interests of ▇▇▇▇▇▇
and its stockholders to employ ▇▇▇▇▇▇ and to set forth in this Agreement the
obligations and duties of both ▇▇▇▇▇▇ and ▇▇▇▇▇▇; and
WHEREAS, ▇▇▇▇▇▇ wishes to assure itself of the services of ▇▇▇▇▇▇ for the
period hereinafter provided, and ▇▇▇▇▇▇ is willing to be employed by ▇▇▇▇▇▇ for
said period, upon the terms and conditions provided in this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, ▇▇▇▇▇▇ and ▇▇▇▇▇▇ (individually a "Party" and
together the "Parties" ) agree as follows:
1. DEFINITIONS.
(a) "Beneficiary" shall mean the person or persons named by ▇▇▇▇▇▇ pursuant
to Section 15 below or, in the event that no such person is named who survives
▇▇▇▇▇▇, his estate.
(b) "Board" shall mean the Board of Directors of ▇▇▇▇▇▇.
(c) "Cause" shall mean:
(i) ▇▇▇▇▇▇'▇ conviction of, or pleading guilty to, a felony or nolo
contender to a charge of any felony or of any lesser crime involving fraud or
moral turpitude;
(ii) willful failure of ▇▇▇▇▇▇ to perform his obligations under this
Agreement, resulting in economic harm to ▇▇▇▇▇▇, which willful failure is not
discontinued within ten (10) days after written notification thereof to ▇▇▇▇▇▇,
or
(iii) a material breach by ▇▇▇▇▇▇ of the provisions of Sections 12 or 13 of
this Agreement; or
(iv) commission of any other act which is done with the intent to harm
▇▇▇▇▇▇ or its shareholders or employees.
Any act or failure to act based upon authority given pursuant to a
resolution adopted by the Board or based upon the written advice of counsel for
▇▇▇▇▇▇ shall be conclusively presumed to be done, or omitted to be done, by
▇▇▇▇▇▇ in good faith and in the best interests of ▇▇▇▇▇▇.
(d) "Change in Control" shall mean the occurrence of any of the following
events:
(i) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities
of ▇▇▇▇▇▇ when such acquisition causes such Person to beneficially own 50.1%
percent or more of the combined voting power of the then outstanding voting
securities of ▇▇▇▇▇▇ entitled to vote generally in the election of directors
(the "Outstanding ▇▇▇▇▇▇ Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not be deemed
to result in a Change of Control: (A) any acquisition directly from ▇▇▇▇▇▇, (B)
any acquisition by ▇▇▇▇▇▇, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by ▇▇▇▇▇▇ or any corporation controlled
by ▇▇▇▇▇▇ or (D) any acquisition pursuant to a transaction that complies with
clauses (A), (B) and (C) of subsection (iii) below; and provided, further, that
if any Person's beneficial ownership of the Outstanding ▇▇▇▇▇▇ Voting Securities
reaches or exceeds 50.1 percent as a result of a transaction described in clause
(A) or (B) above, and such Person subsequently acquires beneficial ownership of
additional voting securities of ▇▇▇▇▇▇, such subsequent acquisition shall be
treated as an acquisition that causes such Person to beneficially own 50.1%
percent or more of the Outstanding ▇▇▇▇▇▇ Voting Securities; or
(ii) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by ▇▇▇▇▇▇'▇
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or subsequently all of the assets of ▇▇▇▇▇▇ or the
acquisition of assets of another entity ("Business Combination"); excluding,
however, such a Business Combination pursuant to which (A) all or substantially
all of the individuals and entities who were the beneficial owners of the
Outstanding ▇▇▇▇▇▇ Voting Securities immediately prior to such Business
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Combination beneficially own, directly or indirectly, more than 60 percent of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination in substantially the same proportions
as their ownership, immediately prior to such Business Combination of the
Outstanding ▇▇▇▇▇▇ Voting Securities, (B) no Person (excluding any employee
benefit plan (or related trust) of ▇▇▇▇▇▇ or such corporation resulting from
such Business Combination) beneficially owns, directly or indirectly, 20 percent
or more of, respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and (C)
at least a majority of the members of the board of directors of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns ▇▇▇▇▇▇ or all or
substantially all of ▇▇▇▇▇▇'▇ assets either directly or through one or more
subsidiaries) were members of the Incumbent Board at the time of the execution
of the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) approval by the stockholders of ▇▇▇▇▇▇ of a complete liquidation or
dissolution of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" shall mean the Compensation Committee of the Board.
(g) "Consulting Period" shall mean the period specified in Section 11 below
during which ▇▇▇▇▇▇ serves as a consultant to ▇▇▇▇▇▇.
(h) "Disability" shall mean the illness or other mental or physical
disability of ▇▇▇▇▇▇, as determined by a physician acceptable to ▇▇▇▇▇▇ and
▇▇▇▇▇▇, resulting in his failure during the Employment Term to perform
substantially his applicable material duties under this Agreement for a period
of six consecutive months.
(i) "Employment Term" shall mean the period specified in Section 2(b)
below.
(j) "Fiscal Year" shall mean the 52-week period beginning on or about
August 1 and ending on or about the next subsequent July 31, or such other
12-month period as may constitute ▇▇▇▇▇▇'▇ fiscal year at any time hereafter.
(k) "Good Reason" shall mean, at any time during the Employment Term, in
each case without ▇▇▇▇▇▇'▇ prior written consent or his acquiescence:
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(i) reduction in his then current Salary; or
(ii) ▇▇▇▇▇▇'▇ failure to pay ▇▇▇▇▇▇ any amounts otherwise vested and due
him under Sections 3 and 4 hereof which breach is not cured within thirty (30)
business days after written notification to ▇▇▇▇▇▇ of such breach; or
(iii) assignment to ▇▇▇▇▇▇ of duties materially incompatible with his then
current title and position of COO or such higher position as may be agreed upon
in writing between the parties, which breach is not cured within thirty (30)
business days after written notification to ▇▇▇▇▇▇ of such breach; or
(iv) relocation of ▇▇▇▇▇▇'▇ principal place of work to a location more than
thirty (30) miles from Lancaster, Pennsylvania.
(l) "Salary" shall mean the annual salary provided for in Section 3 below,
as adjusted from time to time.
(m) "Spouse" shall mean, during the Term of Employment and the Consulting
Period, the woman who as of any relevant date is legally married to ▇▇▇▇▇▇.
(n) "Subsidiary" shall mean any corporation of which ▇▇▇▇▇▇ owns, directly
or indirectly, more than 50 percent of its voting stock.
2. EMPLOYMENT TERM, POSITIONS AND DUTIES.
(a) Employment of ▇▇▇▇▇▇. ▇▇▇▇▇▇ hereby agrees to employ ▇▇▇▇▇▇, and ▇▇▇▇▇▇
hereby accepts employment with ▇▇▇▇▇▇, in the positions and with the duties and
responsibilities set forth below and upon such other terms and conditions as are
hereinafter stated. ▇▇▇▇▇▇ shall render services to ▇▇▇▇▇▇ principally at
▇▇▇▇▇▇'▇ corporate headquarters in Lancaster, Pennsylvania, and shall do such
traveling on behalf of ▇▇▇▇▇▇ as shall be reasonably required in the course of
the performance of his duties hereunder.
(b) Employment Term. The Employment Term shall commence as of June 4, 2007
and shall terminate on July 31, 2010, provided that the Employment Term shall
extend for additional one-year periods on July 31, 2008 and July 31, 2009,
unless this agreement is terminated under the provisions of Section 10 below. In
no event, however, shall the Employment Term extend beyond July 31, 2012.
(c) Titles and Duties. Until the date of termination of his employment
hereunder, ▇▇▇▇▇▇ shall be employed as Chief Operating Officer, reporting to the
Chief Executive Officer. In his capacity as Chief Operating Officer, ▇▇▇▇▇▇
shall have the customary powers, responsibilities and authorities of chief
operating officers of corporations of the size, type and nature of ▇▇▇▇▇▇.
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(d) Time and Effort.
(i) ▇▇▇▇▇▇ agrees to devote his best efforts and abilities, and his full
time and attention, to the affairs of ▇▇▇▇▇▇ in order to carry out his duties
and responsibilities under this Agreement.
(ii) Notwithstanding the foregoing, nothing shall preclude ▇▇▇▇▇▇ from (A)
serving on the boards of a reasonable number of trade associations, charitable
organizations and/or businesses not in competition with ▇▇▇▇▇▇, (B) engaging in
charitable activities and community affairs and (C) managing his personal
investments and affairs; provided, however, that, such activities do not
interfere with the proper performance of his duties and responsibilities
specified in Section 2 (c) above.
3. SALARY.
(a) Initial Salary. ▇▇▇▇▇▇ shall receive from ▇▇▇▇▇▇ a Salary, payable in
accordance with the regular payroll practices of ▇▇▇▇▇▇, at the annual rate of
$350,000.
(b) Cost-of-Living Increase. During the Employment Term ▇▇▇▇▇▇'▇ Salary
shall be increased semiannually by an amount equal to the change in the cost of
living index since the prior semiannual adjustment, as reported in the "Consumer
Price Index, New York and Northeastern New Jersey, All Items, Series ID
CUURA101SA0" published by the United States Department of Labor, Bureau of Labor
Statistics (or, if such index is no longer published, a successor or comparable
index that is published), using July 31, 2007 as the base year of computation.
Such amount shall be calculated and paid to ▇▇▇▇▇▇ in a single sum on or before
the first day of the second month following the applicable calendar half year,
and thereafter his Salary shall be adjusted to include the amount of any such
increase. The first calculation and payment shall be made with respect to the
six month period from and after July 31, 2007. If ▇▇▇▇▇▇'▇ employment shall
terminate during any such six-month period, the cost-of-living increase provided
in this Section 3(b) shall be prorated accordingly.
(c) Salary Increase. Any amount to which ▇▇▇▇▇▇'▇ Salary is increased, as
provided in Section 3(b) above or otherwise, shall not thereafter be reduced
without his consent, and the term "Salary" as used in this Agreement shall refer
to his Salary as thus increased.
4. ANNUAL BONUS.
Not later than one hundred twenty (120) days after the end of the fiscal
year of the Company and each subsequent fiscal year of the Company ending during
the employment term commencing with the fiscal year ending on or about July 31,
2008, the Company shall pay to ▇▇▇▇▇▇, as incentive compensation an amount to be
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determined by the Board of Directors in its discretion. Notwithstanding the
foregoing, the minimum incentive compensation to be paid to ▇▇▇▇▇▇ for the
fiscal year ending on or about July 31, 2008 shall be $300,000.
5. LONG-TERM INCENTIVE.
During the Employment Term, ▇▇▇▇▇▇ shall be eligible for an award under any
long-term incentive compensation plan established by ▇▇▇▇▇▇ for the benefit of
▇▇▇▇▇▇ or, in the absence thereof, under any such plan that may be established
for the benefit of members of the senior management of ▇▇▇▇▇▇.
6. EQUITY GRANTS.
As a condition to his employment, ▇▇▇▇▇▇ shall receive options to purchase
250,000 shares of ▇▇▇▇▇▇'▇ common stock at a price of $15.77 per share, which is
the closing market price of ▇▇▇▇▇▇'▇ common stock on the date prior to execution
of this Agreement. Twenty percent (20%) of the options shall vest upon execution
hereof with the balance vesting at the rate of twenty percent (20%) per year
over the next four (4) years commencing June 1, 2008, so that all options will
be fully vested by June 1, 2011. During the Employment Term, ▇▇▇▇▇▇ shall be
eligible to receive further grants of options to purchase shares of ▇▇▇▇▇▇'▇
stock and awards of shares of ▇▇▇▇▇▇'▇ stock, either or both as determined by
the Committee, under and in accordance with the terms of applicable plans of
▇▇▇▇▇▇ and related option and award agreements.
7. EXPENSE REIMBURSEMENT; CERTAIN OTHER COSTS.
During the Employment Term and any Consulting Period, ▇▇▇▇▇▇ shall be
entitled to prompt reimbursement by ▇▇▇▇▇▇ for all reasonable out-of-pocket
expenses incurred by him in performing services under this Agreement.
8. PERQUISITES.
During the Employment Term and any Consulting Period, ▇▇▇▇▇▇ shall provide
▇▇▇▇▇▇ with the following perquisites:
(a) an office in Lancaster, Pennsylvania with secretarial and other
assistance; and
(b) use of an automobile and reimbursement of related expenses;
(c) reimbursement for relocation expenses to his permanent residence in
Lancaster, Pennsylvania;
(d) reimbursement for temporary living expenses in Lancaster, Pennsylvania
for up to six (6) months from the date of this Agreement.
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9. EMPLOYEE BENEFIT PLANS.
(a) General. During the Employment Term, ▇▇▇▇▇▇ shall be entitled to
participate in all employee benefit plans and programs made available to
▇▇▇▇▇▇'▇ senior executives or to its employees generally, as such plans or
programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit-sharing plans, savings and similar
plans, group life insurance, accidental death and dismemberment insurance,
travel accident insurance, hospitalization insurance, surgical insurance, major
and excess major medical insurance, dental insurance, short-term and long-term
disability insurance, sick leave (including salary continuation arrangements),
holidays, vacation (not less than four weeks in any calendar year) and any other
employee benefit plans or programs that may be sponsored by ▇▇▇▇▇▇ from time to
time, including plans that supplement the above-listed types of plans, whether
funded or unfunded.
(b) Medical Care Reimbursement and Insurance. During the Employment Term
▇▇▇▇▇▇ shall provide ▇▇▇▇▇▇ and his Spouse, with life insurance, hospitalization
insurance, surgical insurance, major and excess major medical insurance and
dental insurance in accordance with the most favorable plans, policies, programs
and practices of ▇▇▇▇▇▇ made available generally to other senior executive
officers of ▇▇▇▇▇▇.
10. TERMINATION OF EMPLOYMENT.
(a) Voluntary Termination and Termination by Mutual Agreement. ▇▇▇▇▇▇ may
terminate his employment voluntarily at any time after July 31, 2010 in the
event of a Change in Control at any time during the Employment Term in
accordance with the provisions of Section 10(f)(ii). The Parties may terminate
this Agreement by mutual written agreement at any time. If they do so, ▇▇▇▇▇▇'▇
entitlements shall be as the Parties mutually agree.
(b) General. Notwithstanding anything to the contrary herein, in the event
of termination of ▇▇▇▇▇▇'▇ employment under this Agreement, he or his
Beneficiary, as the case may be, shall be entitled to receive (in addition to
payments and benefits under, and except as specifically provided in, subsections
(c) through (h) below, as applicable):
(i) his Salary through the date of termination;
(ii) any annual or special bonus awarded but not yet paid to him;
(iii) any other compensation or benefits, including without limitation
long-term incentive compensation described in Section 5 above, benefits under
equity grants and awards described in Section 6 above and employee benefits
under plans described in Section 9 above, that have vested through the date of
termination or to which he may then be entitled in accordance with the
applicable terms and conditions of each grant, award or plan; and
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(iv) reimbursement in accordance with Sections 9(a) and (b) above of any
business and medical expenses incurred by ▇▇▇▇▇▇ or his Spouse, as applicable,
through the date of termination but not yet paid to him.
(c) Termination due to Death. In the event that ▇▇▇▇▇▇'▇ employment is
terminated due to his death, his Beneficiary shall be entitled, in addition to
the compensation and benefits specified in Section 10(b), to his compensation
payable for the remainder of the Consulting Term as set forth in Section 11.
(d) Termination due to Disability. In the event of Disability, ▇▇▇▇▇▇ or
▇▇▇▇▇▇ may terminate ▇▇▇▇▇▇'▇ employment. If ▇▇▇▇▇▇'▇ employment is terminated
due to Disability, he shall be entitled, in addition to the compensation and
benefits specified in Section 10(b), to his compensation payable for the
remainder of the Consulting Term as set forth in Section 11, offset by any
long-term disability insurance benefit that ▇▇▇▇▇▇ may have elected to provide
for him.
(e) Termination by ▇▇▇▇▇▇ for Cause. ▇▇▇▇▇▇ may terminate ▇▇▇▇▇▇'▇
employment hereunder for Cause only upon written notice to ▇▇▇▇▇▇ not less than
fifteen (15) days prior to any intended termination, which notice shall specify
the grounds for such termination in reasonable detail. Cause shall in no event
be deemed to exist except upon a finding reflected in a resolution approved by a
majority of the members of the Board at a meeting of which ▇▇▇▇▇▇ shall have
been given proper notice and at which ▇▇▇▇▇▇ shall have a reasonable opportunity
to present his case.
In the event that ▇▇▇▇▇▇'▇ employment is terminated for Cause, he shall be
entitled only to the compensation and benefits specified in Section 10(b).
(f) Termination Without Cause or by ▇▇▇▇▇▇ for Good Reason.
(i) Termination without Cause shall mean termination of ▇▇▇▇▇▇'▇ employment
by ▇▇▇▇▇▇ and shall exclude termination (A) due to death, Disability or Cause,
(B) by ▇▇▇▇▇▇ voluntarily or (C) by mutual written agreement of ▇▇▇▇▇▇ and
▇▇▇▇▇▇. ▇▇▇▇▇▇ shall provide ▇▇▇▇▇▇ fifteen (15) days' prior written notice of
termination by it without Cause, and ▇▇▇▇▇▇ shall provide ▇▇▇▇▇▇ fifteen (15)
days' prior written notice of his termination for Good Reason.
(ii) In the event of termination by ▇▇▇▇▇▇ of ▇▇▇▇▇▇'▇ employment without
Cause or of termination by ▇▇▇▇▇▇ of his employment for Good Reason, he shall be
entitled, in addition to the compensation and benefits specified in Section
10(b), to:
(A) a lump-sum payment equal to the Salary payable to him for the
remainder of the Employment Term at the rate in effect immediately before
such termination;
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(B) a lump sum payment equal to the annual bonuses for the remainder
of the Employment Term (including a prorated bonus for any partial Fiscal
Year) equal to the average of the annual bonuses awarded to him during the
Agreement, provided that in no event shall such bonus for purposes of this
subparagraph be less than $300,000 for the fiscal year ending on or about
July 31, 2008;
(C) a lump sum payment of $500,000 representing full consideration
under the ten (10) year Consulting Term;
(D) the immediate vesting of all outstanding unvested stock options;
and
(E) continued medical reimbursement for the remainder of the
Employment Term.
(iii) Prior written consent by ▇▇▇▇▇▇ to any of the events described in
Section 1(k) above shall be deemed a waiver by him of his right to terminate for
Good Reason under this Section 10(f) solely by reason of the events set forth in
such waiver.
(g) Voluntary Termination by ▇▇▇▇▇▇ after Change in Control. At any time
after July 31, 2010, and provided there is a Change in Control at any time under
this Agreement, ▇▇▇▇▇▇ shall have the right, upon sixty (60) days' prior written
notice, voluntarily to terminate his employment, in which event his employment
shall cease and he shall be entitled to receive compensation and benefits as if
▇▇▇▇▇▇ had terminated his employment Without Cause, as provided in Section
10(f)(ii).
(h) Change in Control. Notwithstanding anything to the contrary in this
Section 10, termination of ▇▇▇▇▇▇'▇ employment by the Company or its successor
within the one-year period following a Change in Control for any reason other
than For Cause, death or Disability, shall be governed by Section 10(f). In the
event of any such termination, ▇▇▇▇▇▇ shall be entitled to compensation and
benefits in accordance with the provisions of Section 10(f)(ii).
11. CONSULTING PERIOD.
(a) General. Effective upon the end of the Employment Term (but only if the
Employment Term ends by reason of its expiration) or, if earlier, upon
termination of ▇▇▇▇▇▇'▇ employment (i) voluntarily, (ii) by mutual agreement or
(iii) by death or Disability, ▇▇▇▇▇▇ shall become a consultant to ▇▇▇▇▇▇. Unless
earlier terminated, as provided in this Agreement, the Consulting Period shall
continue for ten (10) years.
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(b) Duties and Extent of Services.
(i) During the Consulting Period, ▇▇▇▇▇▇ shall consult with ▇▇▇▇▇▇ and its
senior executive officers regarding its respective businesses and operations.
Such consulting services shall not require more than 50 days in any calendar
year, nor more than one day in any week, it being understood and agreed that
during the Consulting Period ▇▇▇▇▇▇ shall have the right, consistent with the
prohibitions of Sections 12 and 13 below, to engage in full-time or part-time
employment with any business enterprise that is not a competitor of ▇▇▇▇▇▇.
(ii) ▇▇▇▇▇▇'▇ service as a consultant shall only be required at such times
and such places as shall not result in unreasonable inconvenience to him,
recognizing his other business commitments that he may have to accord priority
over the performance of services for ▇▇▇▇▇▇. In order to minimize interference
with ▇▇▇▇▇▇'▇ other commitments, his consulting services may be rendered by
personal consultation at his residence or office wherever maintained, or by
correspondence through mail, telephone, fax or other similar mode of
communication at times, including weekends and evenings, most convenient to him.
(iii) During the Consulting Period, ▇▇▇▇▇▇ shall not be obligated to serve
as a member of the Board or to occupy any office on behalf of ▇▇▇▇▇▇ or any of
its Subsidiaries.
(c) Compensation. During the Consulting Period, ▇▇▇▇▇▇ shall receive from
▇▇▇▇▇▇ each year the annual sum of $100,000, payable on a monthly basis.
(d) Disability or Death. In the event of Disability or death during the
Consulting Period, ▇▇▇▇▇▇, his spouse or his other beneficiary, as the case may
be, shall be entitled to compensation, in accordance with Section 11(c), for the
remainder of the Consulting Period.
12. CONFIDENTIAL INFORMATION.
(a) General.
(i) ▇▇▇▇▇▇ understands and hereby acknowledges that as a result of his
employment with ▇▇▇▇▇▇ he will necessarily become informed of and have access to
certain valuable and confidential information of ▇▇▇▇▇▇ and any of its
Subsidiaries, joint ventures and affiliates, including, without limitation,
inventions, trade secrets, technical information, computer software and
programs, know-how and plans ("Confidential Information"), and that any such
Confidential Information, even though it may be developed or otherwise acquired
by ▇▇▇▇▇▇, is the exclusive property of ▇▇▇▇▇▇ to be held by him in trust solely
for ▇▇▇▇▇▇'▇ benefit.
(ii) Accordingly, ▇▇▇▇▇▇ hereby agrees that, during the Employment Term and
the Consulting Period and subsequent to both, he shall not, and shall not cause
others to, use, reveal, report, publish, transfer or otherwise disclose to any
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person, corporation or other entity any Confidential Information without prior
written consent of the Board, except to (A) responsible officers and employees
of ▇▇▇▇▇▇ or (B) responsible persons who are in a contractual or fiduciary
relationship with ▇▇▇▇▇▇ or who need such information for purposes in the
interest of ▇▇▇▇▇▇. Notwithstanding, the foregoing, the prohibitions of this
clause (ii) shall not apply to any Confidential Information that becomes of
general public knowledge other than from ▇▇▇▇▇▇ or is required to be divulged by
court order or administrative process.
(b) Return of Documents. Upon termination of his Employment Term with
▇▇▇▇▇▇ for any reason or, if applicable, upon expiration of the Consulting
Period, ▇▇▇▇▇▇ shall promptly deliver to ▇▇▇▇▇▇ all plans, drawings, manuals,
letters, notes, notebooks, reports, computer programs and copies thereof and all
other materials, including without limitation those of a secret or confidential
nature, relating to ▇▇▇▇▇▇'▇ business that are then in his possession or
control.
(c) Remedies and Sanctions. In the event that ▇▇▇▇▇▇ is found to be in
violation of Section 12(a) or (b) above, ▇▇▇▇▇▇ shall be entitled to relief as
provided in Section 14 below.
13. NON-COMPETITION/NON-SOLICITATION.
(a) Prohibitions. During the Employment Term and, if applicable, the
Consulting Period, ▇▇▇▇▇▇ shall not, without prior written authorization of the
Board, directly or indirectly, through any other individual or entity:
(i) become on officer or employee of, or render any service to, any direct
competitor of ▇▇▇▇▇▇;
(ii) solicit or induce any customer of ▇▇▇▇▇▇ to cease purchasing goods or
services from ▇▇▇▇▇▇ or to become a customer of any competitor of ▇▇▇▇▇▇; or
(iii) solicit or induce any employee of ▇▇▇▇▇▇ to become employed by any
competitor of ▇▇▇▇▇▇.
(b) Remedies and Sanctions. In the event that ▇▇▇▇▇▇ is found to be in
violation of Section 13(a) above, ▇▇▇▇▇▇ shall be entitled to relief as provided
in Section 14 below.
(c) Exceptions. Notwithstanding anything to the contrary in Section 13(a)
above, its provisions shall not:
(i) apply if ▇▇▇▇▇▇ terminates ▇▇▇▇▇▇'▇ employment without Cause or ▇▇▇▇▇▇
terminates his employment for Good Reason, each as provided in Section 10(f)
above; or
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(ii) be construed as preventing ▇▇▇▇▇▇ from investing his assets in any
business that is not a direct competitor of ▇▇▇▇▇▇.
14. REMEDIES/SANCTIONS.
▇▇▇▇▇▇ acknowledges that the services he is to render under this Agreement
are of a unique and special nature, the loss of which cannot reasonably or
adequately be compensated for in monetary damages, and that irreparable injury
and damage may result to ▇▇▇▇▇▇ in the event of any breach of this Agreement or
default by ▇▇▇▇▇▇. Because of the unique nature of the Confidential Information
and the importance of the prohibitions against competition and solicitation,
▇▇▇▇▇▇ further acknowledges and agrees that ▇▇▇▇▇▇ will suffer irreparable harm
if he fails to comply with his obligations under Section 12(a) or (b) above or
Section 13(a) above and that monetary damages would be inadequate to compensate
▇▇▇▇▇▇ for any such breach. Accordingly, ▇▇▇▇▇▇ agrees that, in addition to any
other remedies available to either Party at law, in equity or otherwise, ▇▇▇▇▇▇
will be entitled to seek injunctive relief or specific performance to enforce
the terms, or prevent or remedy the violation, of any provisions of this
Agreement.
15. BENEFICIARIES/REFERENCES.
▇▇▇▇▇▇ shall be entitled to select (and change, to the extent permitted
under any applicable law) a beneficiary or beneficiaries to receive any
compensation or benefit payable under this Agreement following his death by
giving ▇▇▇▇▇▇ written notice thereof. In the event of ▇▇▇▇▇▇'▇ death, or of a
judicial determination of his incompetence, reference in this Agreement to
▇▇▇▇▇▇ shall be deemed to refer, as appropriate, to his beneficiary, estate or
other legal representative.
16. TAXES.
(a) All payments to ▇▇▇▇▇▇ or his Beneficiary under this Agreement shall be
subject to withholding on account of federal, state and local taxes as required
by law.
(b) 409A Compliance. To the extent necessary to comply with the restriction
in Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (the
"Code") concerning payments to "specified employees," payments hereunder shall
be made on the first business day of the seventh month following the date
▇▇▇▇▇▇'▇ employment terminates.
(c) Excess parachute payments. In the event that either ▇▇▇▇▇▇'▇
independent public accountants or the Internal Revenue Service determines that
any payment, coverage or benefit provided to ▇▇▇▇▇▇ is subject to the excise tax
imposed Section 4999 (or any successor provision) of the Code ("Section 4999"),
▇▇▇▇▇▇ shall pay to ▇▇▇▇▇▇, on the later of the 30th day thereafter (or the
first business day following such 30th day) or the date that the payment is paid
pursuant to Section 16(b) above, in addition to any other payment, coverage or
12
benefit due and owing hereunder, an amount determined by multiplying the rate of
excise tax then imposed by Section 4999 by the amount of the "excess parachute
payment" received by ▇▇▇▇▇▇ (determined without regard to any payments made to
▇▇▇▇▇▇ pursuant to this Section 16 (c) and dividing the product so obtained by
the amount obtained by subtracting the aggregate local, state and Federal income
tax rate applicable to the receipt by ▇▇▇▇▇▇ of the "excess parachute payment"
(taking into account the deductibility for Federal income tax purposes of the
payment of state and local income taxes thereon) from the amount obtained by
subtracting from 1.00 the rate of excise tax then imposed by Section 4999 of the
Code, it being the intention of the parties hereto that ▇▇▇▇▇▇'▇ net after tax
position be identical to that which would have obtained had Sections 280G and
4999 not been part of the Code.
17. INDEMNIFICATION AND LIABILITY INSURANCE.
Nothing herein is intended to limit ▇▇▇▇▇▇'▇ indemnification of ▇▇▇▇▇▇, and
▇▇▇▇▇▇ shall indemnify him to the fullest extent permitted by applicable law
consistent with ▇▇▇▇▇▇'▇ Certificate of Incorporation and By-Laws as in effect
at the beginning of the Employment Term, with respect to any action or failure
to act on his part while he is an officer, director or employee of ▇▇▇▇▇▇ or any
Subsidiary. ▇▇▇▇▇▇ shall cause ▇▇▇▇▇▇ to be covered at all times by directors'
and officers' liability insurance. ▇▇▇▇▇▇ shall continue to indemnify ▇▇▇▇▇▇ as
provided above and maintain such liability insurance coverage for him for at
least three (3) years after the Employment Term for any claims that may be made
against him with respect to his service as an officer of ▇▇▇▇▇▇.
18. EFFECT OF AGREEMENT ON OTHER BENEFITS.
The existence of this Agreement shall not prohibit or restrict ▇▇▇▇▇▇'▇
entitlement to participate fully in compensation, employee benefit and other
plans of ▇▇▇▇▇▇ in which senior executives are eligible to participate.
19. ASSIGNABILITY; BINDING NATURE.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors, heirs (in the case of ▇▇▇▇▇▇) and
assigns. No rights or obligations of ▇▇▇▇▇▇ under this Agreement may be assigned
or transferred by ▇▇▇▇▇▇ except pursuant to (a) a merger or consolidation in
which ▇▇▇▇▇▇ is not the continuing entity or (b) sale or liquidation of all or
substantially all of the assets of ▇▇▇▇▇▇, provided that the surviving entity or
assignee or transferee is the successor to all or substantially all of the
assets of ▇▇▇▇▇▇ and such surviving entity or assignee or transferee assumes the
liabilities, obligations and duties of ▇▇▇▇▇▇ under this Agreement, either
contractually or as a matter of law.
▇▇▇▇▇▇ further agrees that, in the event of a sale of assets or liquidation
as described in the preceding sentence, it shall use reasonable commercial
efforts to have such assignee or transferee expressly agree to assume the
liabilities, obligations and duties of ▇▇▇▇▇▇ hereunder; provided, however, that
notwithstanding such assumption, ▇▇▇▇▇▇ shall remain liable and responsible for
13
fulfillment of the terms and conditions of this Agreement; and provided,
further, that in no event shall such assignment and assumption of this Agreement
adversely affect ▇▇▇▇▇▇'▇ right upon a Change in Control, as provided in Section
10(h) above. No rights or obligations of ▇▇▇▇▇▇ under this Agreement may be
assigned or transferred by him.
20. REPRESENTATIONS.
The Parties respectively represent and warrant that each is fully
authorized and empowered to enter into this Agreement and that the performance
of its or his obligations, as the case may be, under this Agreement will not
violate any agreement between such Party and any other person, firm or
organization. ▇▇▇▇▇▇ represents and warrants that this Agreement has been duly
authorized by all necessary corporate action and is valid, binding and
enforceable in accordance with its terms.
21. ENTIRE AGREEMENT.
Except to the extent otherwise provided herein, this Agreement contains the
entire understanding and agreement between the Parties concerning the subject
matter hereof and supersedes any prior agreements, whether written or oral,
between the Parties concerning the subject matter hereof. Payments and benefits
provided under this Agreement are in lieu of any payments or other benefits
under any severance program or policy of ▇▇▇▇▇▇ to which ▇▇▇▇▇▇ would otherwise
be entitled.
22. AMENDMENT OR WAIVER.
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by both ▇▇▇▇▇▇ and an authorized officer of
▇▇▇▇▇▇. No waiver by either Party of any breach by the other Party of any
condition or provision contained in this Agreement to be performed by such other
Party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Party to be charged with the waiver. No delay by either Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
23. SEVERABILITY.
In the event that any provision or portion of this Agreement shall be
determined to be invalid or unenforceable for any reason, in whole or in part,
the remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect to the fullest extent permitted by law.
24. SURVIVAL.
The respective rights and obligations of the Parties under this Agreement
shall survive any termination of ▇▇▇▇▇▇'▇ employment with ▇▇▇▇▇▇.
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25. GOVERNING LAW/JURISDICTION.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of Delaware, without reference to principles of
conflict of laws.
26. NOTICES.
Any notice given to either Party shall be in writing and shall be deemed to
have been given when delivered either personally, by fax, by overnight delivery
service (such as Federal Express) or sent by certified or registered mail
postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as the Party may
subsequently give notice of.
If to ▇▇▇▇▇▇ or the Board:
▇▇▇▇▇▇ Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇, Chairman
With a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
If to ▇▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Ogletree, Deakins, ▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax No. ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
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27. HEADINGS.
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
28. COUNTERPARTS.
This Agreement may be executed in counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
May 30, 2007.
▇▇▇▇▇▇ INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------
▇▇▇▇▇ ▇▇▇▇
EMPLOYEE
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
16
