EXHIBIT 10.2
AMENDED AND RESTATED CONSULTING AGREEMENT
This AMENDED AND RESTATED CONSULTING AGREEMENT, (the
"Agreement"), is made by and between XXXXXXX INDUSTRIES, INC., a Delaware
corporation having its principal address at 0000 Xxxxxxxxxx Xxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxx 00000 (the "Company"), and XXXXXX XXXX, an
individual residing at Xxxx Xxx Xxxx, (X.X. Xxx 00) Xxxx Xxxxxxx, Xxx Xxxx
00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed with the Company
pursuant to an Amended and Restated Employment Agreement, effective as of
September 17, 1997, and amended as of even date herewith (the "Employment
Agreement"), and the Company desires to retain the Executive to provide
certain consulting services to the Company following termination of his
employment;
WHEREAS, the Company and the Executive are parties to that
certain Consulting Agreement, dated June 21, 2004 (the "Prior Consulting
Agreement"); and
WHEREAS, the Company and the Executive wish to amend and
restate the Prior Consulting Agreement on the terms set forth in this
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Effective Date.
This Agreement shall become effective (the "Effective Date")
upon the termination of Executive's employment as Chairman of the Company,
provided that the Executive's employment has not been terminated by the
Company for Cause or on account of Executive's death or permanent
disability.
2. Appointment as Independent Consultant.
On the Effective Date, Executive shall be appointed as an
independent consultant and advisor to the Company. As an independent
consultant and advisor to the Company, the Executive shall be available
upon reasonable notice given by the Company to consult with and advise the
Company on matters within his expertise and for which he had responsibility
for during his employment with the Company, provided that the Executive
shall not be required to devote more than 20 hours per month to such
consulting services during the first four (4) years of the Consulting
Period (as defined below) and not more than 10 hours per month to such
consulting services during the last two (2) years of the Consulting Period.
Executive shall not be required to render consulting services from any
particular location and shall not be required to travel or be present at
the Company's principal offices.
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3. Consulting Period.
The Executive shall be available to provide the consulting and
advisory services set forth in Section 1 above for a period commencing on
the Effective Date and ending on the sixth (6th) anniversary of the
Effective Date (the "Consulting Period").
4. Consulting Fee and Benefits.
a. As compensation for the Executive's consulting and advisory
services during the Consulting Period, the Company shall pay the Executive
as follows:
(i) for each of the first four (4) years of the Consulting
Period, an annual consulting fee equal to two-thirds of the
Executive's Final Base Compensation, which shall be defined as
the lesser of (i) the Executive's highest annual cash
compensation (consisting of base salary and annual bonus) for
the three-year period from 2005 to 2007 or (ii) $2 million;
(ii) for each of the final two (2) years of the Consulting
Period, an annual consulting fee equal to one-third of the
Final Base Compensation; and
(iii) such consulting fee shall be paid in equal
installments in accordance with the normal payroll practices of
the Company, not less frequently than monthly, except that
compensation for the first six months of the Consulting Period
shall be paid in a lump sum six months and one day following
the Effective Date.
b. The Executive shall be entitled to reimbursement for
reasonable business and travel expenses incurred in the performance of his
duties in accordance with the Company's normal reimbursement practices.
c. For each calendar year during the Consulting Period, the
Company shall pay the Executive an amount equal to the Executive's cost of
obtaining private health insurance coverage having terms, substantially
equivalent to the health coverage provided to executive officers of the
Company as in effect from time to time during the Consulting Period. Such
amounts shall be made on or after January 1 of each calendar year of the
Consulting Period, but in no event later than December 31 of each calendar
year of the Consulting Period.
5. Termination of the Consulting Relationship.
a. The Executive may terminate his consulting and advisory
relationship with the Company hereunder, with or without Good Reason, upon
thirty (30) days' advance written notice to the Company. The Company may
terminate the Executive's consulting and advisory relationship with the
Company hereunder, with or without Cause, upon thirty (30) days' advance
written notice to the Executive.
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b. The Company shall have Cause to terminate the Executive's
consulting and advisory relationship with the Company hereunder upon (i)
the Executive's willful and continued failure to substantially perform his
obligations hereunder, (ii) the engaging by the Executive in willful
misconduct which is demonstrably and materially injurious to the Company,
or (iii) the Executive's conviction of a felony for a crime of moral
turpitude. For purposes of this Section 5.b., no act, or failure to act,
on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interest of the Company. The
Executive's consulting and advisory relationship may not be terminated for
Cause in the case of actions or omissions described in clauses (i) or (ii)
of this Section 5.b. unless the Company shall have given the Executive an
opportunity to cure any such actions or omissions during the 30-day period
after the Executive's receipt of written notice.
c. The Executive shall have Good Reason to terminate his
consulting and advisory relationship with the Company hereunder upon any
breach of this Agreement by the Company, other than an immaterial, isolated
and inadvertent breach which did not occur in bad faith and is cured by the
Company within 10 days of notice thereof from the Executive.
d. Upon the Company's termination of Executive's consulting and
advisory relationship by the Company hereunder for Cause or by the
Executive without Good Reason, neither the Executive nor the Company shall
have any further obligations hereunder.
e. If the Company terminates the Executive's consulting and
advisory relationship hereunder without Cause, or if the Executive
terminates such relationship for Good Reason, the Company shall continue to
pay to the Executive the amounts which would have been payable to the
Executive pursuant to Sections 4(a) and 4(c) of this Agreement for the
remaining term of the Consulting Period had such relationship not been so
terminated, which amounts shall be paid at the same time or times as they
would have been paid had such relationship not been so terminated.
6. Noncompetition.
During the Consulting Period, the Executive shall not, without
the Company's consent, directly or indirectly engage in any Competitive
Activity (as defined below). "Competitive Activity" shall mean the
participation in or becoming an employee, director, officer, consultant,
independent contractor or advisor of or to, or otherwise providing services
to any business, partnership, firm, association, corporation or other
entity which conducts business that is the same as or substantially similar
to and is or would be competitive with the business of the Company at the
time. Nothing herein, however, shall prohibit Executive from acquiring or
holding any issue of stock or securities of any business, individual,
partnership, firm, or corporation (collectively "Entity") which has any
securities listed on a national securities exchange or quoted in the daily
listing of over-the-counter market securities, provided that at any one
time he and members of his immediate family do not own more than five
percent of the voting securities of any such Entity.
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7. Notices.
Any notice or other communication hereunder shall be made in
writing by hand-delivery or telecopier (and, if by telecopier, followed by
a copy either delivered by hand within three days thereafter or sent by
registered first-class mail on the next business day) and shall be deemed
to have been delivered and received when delivered by hand, if personally
delivered, or when transmission is confirmed, if telecopied, as follows:
(a) if to the Executive at the address shown at the beginning of this
Agreement and at the following telecopier numbers: (000) 000-0000 and
(000) 000-0000 or to such other person(s) or address(es) or telecopier
number(s) as the Executive shall have furnished to the Company in writing,
and (b) if to the Company at the address shown at the beginning of this
Agreement and at the following telecopier number: (000) 000-0000,
attention of the Board of Directors, with copies to the Company at the same
address, Attention: General Counsel, and to Xxxxxxx Xxxx & Xxxxxxxxx LLP,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx Xxxxxxxxxx,
Esq., telecopier number (000) 000-0000, or to such other person(s) or
address(es) or telecopier number(s) as such persons or the Company shall
have furnished to the Executive in writing.
8. Certain Additional Payments by the Employer.
a. Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined that any payment, distribution, waiver
of Company rights, acceleration of vesting of any stock options or
restricted stock, or any other payment or benefit in the nature of
compensation to or for the benefit of the Executive, alone or in
combination (whether such payment, distribution, waiver, acceleration or
other benefit is made pursuant to the terms of this Agreement or any other
agreement, plan or arrangement providing payments or benefits in the nature
of compensation to or for the benefit of the Executive, but determined
without regard to any additional payments required under this Section 8) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of
the Code (or any successor provision) or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment (a "Gross-Up Payment") in an amount such that
after payment by the Executive of all taxes with respect to the Gross-Up
Payment (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
b. Subject to the provisions of Section 8(c), all
determinations required to be made under this Section 8, including whether
and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the nationally recognized accounting firm
then auditing the accounts of the Company (the "Accounting Firm") which
shall provide detailed supporting calculations both to the Company and the
Executive within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time as is
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requested by the Company. In the event that the Accounting Firm is
unwilling or unable to perform its obligations pursuant to this Section 8,
the Executive shall appoint another nationally recognized accounting firm
to make the determinations required hereunder (which accounting firm shall
then be referred to hereunder as the Accounting Firm). All fees and
expenses of the Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, determined pursuant to this Section 8, shall be paid by
the Company to the Executive within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm
shall be binding upon the Company and the Executive. The parties hereto
acknowledge that, as a result of the potential uncertainty in the
application of Section 4999 of the Code (or any successor provision) at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that the Company will not have made Gross-Up Payments which should
have been made consistent with the calculations required to be made
hereunder (an "Underpayment"). In the event that the Employer exhausts its
remedies pursuant to Section 8(c) and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine
the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the Company to or for the benefit of the
Executive.
c. The Executive shall notify the Company in writing of any
claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of the Gross-Up Payment. Such notification
shall be given as soon as practicable but no later than 20 business days
after the Executive is informed in writing of such claim and shall apprise
the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which he gives such
notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company
notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
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of such representation and payment of costs and expenses. Without limiting
the foregoing provisions of this Section 8(c), the Company shall control
all proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct the Executive to pay the tax
claimed and xxx for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim and
xxx for a refund, the Company shall advance the amount of such payment to
the Executive, on an interest-free basis, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised
by the Internal Revenue Service or any other taxing authority.
d. If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 8(c), the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject
to the Company's complying with the requirements of Section 8(c)) promptly
pay to the Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company pursuant to
Section 8(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
9. Assignability.
This Agreement shall not be assignable by the Company but shall
be binding upon and inure to the benefit of any successors to all or
substantially all of the business or assets of the Company. The Company
shall require any such successor to expressly assume in writing all
obligations of the Company hereunder. This Agreement shall not be
assignable by the Executive, but it shall inure to the benefit of, the
Executive's heirs, executors, administrators and legal representatives.
10. Entire Agreement.
This Agreement represents the entire agreement with respect to
the subject matter described herein, provided that nothing in this
Agreement shall adversely affect the rights of the parties under the
Employment Agreement.
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11. Waivers, Amendments and Further Agreements.
Neither this Agreement nor any term or condition hereof,
including without limitation the terms and conditions of this Section 11,
may be waived, modified or amended in whole or in part as against the
Company or the Executive except by written instrument executed by each of
the parties expressly stating that it is intended to operate as a waiver,
modification or amendment of this Agreement or the applicable term or
condition hereof. Each of the parties hereto agrees to execute all such
further instruments and documents and to take all such further action as
the other party may reasonably require in order to effectuate the terms and
purposes of this Agreement.
12. Severability.
In case one or more of the provisions contained in this
Agreement shall be or become invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
13. Governing Law.
This Agreement shall be governed by and construed and enforced
in accordance with the law of the State of New York, without regard to the
principles of conflicts of law thereof.
14. Arbitration; Legal Fees.
Any dispute, controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be finally settled by
arbitration by a single arbitrator in accordance with the rules then in
effect of the American Arbitration Association in an arbitration in New
York, New York. Judgment upon an award rendered by the arbitrator may be
entered in any court of competent jurisdiction. To the extent that the
Executive prosecutes or defends, whether by arbitration or through a
judicial proceeding, a dispute, controversy or claim relating to this
Agreement which results in a judgment, award or settlement in the
Executive's favor in any material respect, the Company shall reimburse the
Executive for all reasonable fees and costs (including legal fees) incurred
by the Executive in such successful prosecution or defense.
15. Headings.
The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or
interpretation of this Agreement.
16. Counterparts.
This Agreement may be executed in counterparts each of which
shall be deemed an original but which together shall constitute one and the
same instrument
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IN WITNESS WHEREOF, the parties have executed or caused to be
executed this Agreement as of the date indicated below.
XXXXXXX INDUSTRIES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: Vice President, General
Counsel and Secretary
Date: October 25, 2007
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
Date: October 25, 2007
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