RETIREMENT AND CONSULTING AGREEMENT
RELEASE AND WAIVER OF CLAIMS
THIS AGREEMENT is made and entered into on October 16, 1998,
by and between XXXXXX X. X'XXXXXXXX (who shall be referred to
herein as either "Retiree" or "Consultant") and X'XXXXXXXX
INDUSTRIES HOLDINGS, INC. and its subsidiaries (collectively
"Company").
WHEREAS, Retiree is currently Chief Executive Officer and
Chairman of the Board of Directors of the Company and has
informed the Company that he intends to immediately resign as
Chief Executive Officer of Company but remain an employee until
his successor is appointed and intends to retire from the board
and resign as Chairman immediately upon the appointment of his
successor; and
WHEREAS, Company desires to accept Retiree's resignation;
and
WHEREAS, Company desires to retain Retiree following his
retirement to provide consulting services to Company in the
capacity of an independent contractor as described herein and
Retiree as Consultant desires to provide consulting services to
Company in such capacity; and
WHEREAS, Company and Retiree desire to set forth the terms
and conditions of their agreement.
NOW, THEREFORE, in consideration of the foregoing recitals
and mutual promises set forth below, Company and Retiree agree as
follows:
RETIREMENT AND TERMINATION OF EMPLOYMENT
1. RETIREMENT. Retiree hereby resigns as Chief Executive
Officer of Company, effective immediately. Retiree further
resigns as Chairman of the Board and a director of Company and
his employment as an employee of Company effective as of the date
of the appointment of his successor as Chief Executive Officer of
Company by the Special Selection Committee of the Board of
Directors (the "Retirement Date").
2. COMPENSATION. Prior to the Retirement Date, Retiree shall
continue as an employee of Company and shall receive his salary
and other benefits in effect at the date of his resignation as
Chief Executive Officer of Company. Except for base salary
earned but unpaid at the Retirement Date, Retiree shall not be
eligible to receive any base salary, any bonus or other incentive
compensation or any payment in lieu of fringe benefits,
including, but not limited to, vacation benefits, after the
Retirement Date. Retiree shall as of the Retirement Date be
given title to the Company automobile currently used by him, free
of all encumbrances, but shall receive no further reimbursement
for expenses incurred relating to such automobile following the
Retirement Date. Company shall also as of the Retirement Date
pay for the transfer of stock in the country club currently used
by Retiree to Retiree's name, but country club dues and expenses
incurred following the Retirement Date shall be the
responsibility of Retiree. Retiree may also retain his
cellphone, but all expenses relating thereto incurred following
the Retirement date shall be that of Retiree.
3. OPTIONS. Pursuant to action taken by the Compensation
Committee of the Board of Directors of the Company, Retiree has
been granted stock options to purchase shares of Common Stock of
the Company. The Company hereby agrees that, notwithstanding any
provision in the Company's option plan or other agreement to the
contrary: (i) such options shall be fully vested as of the
Retirement Date and (ii) amends each option agreement to provide
that Retiree shall have a period of the earlier of (x) five (5)
years following the Retirement Date or (y) one (1) year following
Retiree's death to exercise such options (it being acknowledged
that in the event of Retiree's death, Retiree's estate or other
beneficiary shall have the right to exercise such options within
such one (1) year period, as determined under the applicable
plan). It is acknowledged that, pursuant to the Company's
restricted stock plan, all restrictions on outstanding restricted
stock awards in favor of Retiree shall lapse upon execution of
this Agreement.
4. BENEFIT PLANS. Retiree's participation in all benefit plans
maintained by the Company shall terminate at the Retirement Date
or otherwise in accordance with each plan's terms.
Notwithstanding the foregoing, Company shall pay COBRA premiums
for Retiree and his spouse for eighteen (18) months in accordance
with the options elected by Retiree under the health plan from
time to time made available by the Company, and thereafter use
its reasonable best efforts to obtain and pay for a fully insured
policy of health insurance for Retiree and his spouse having
benefits that are reasonably comparable to the benefits provided
by Company's health plan, within the constraints of policies
offered to residents of the state in which Retiree resides, until
Retiree is eligible for Medicare. In the event of Retiree's
death, Company will pay premiums to maintain such health
insurance for Retiree's spouse until she becomes eligible for
Medicare; provided, however, that Company shall not be required
to provide health insurance following the date Retiree is first
entitled to obtain medical insurance provided by a successor
employer. During the Consulting Term, as hereinafter defined,
Company will pay premiums to continue life insurance benefits for
Retiree which are reasonably comparable to life insurance
benefits currently provided to Retiree under the Company's life
insurance program at the Retirement Date.
CONSULTING AGREEMENT
5. TERM. The term of this Consulting Agreement shall begin on
the Retirement Date, and shall terminate on the date Consultant
reaches age sixty-five (65) ("Consulting Term"), unless earlier
terminated hereunder.
6. DUTIES. During the Consulting Term Consultant will provide
consulting, marketing and promotion services with respect to the
Company's manufacturing activities and relations with major
customers (all of which shall be "consulting services") as an
independent contractor to Company as reasonably requested by
persons designated by Company from time to time. Consultant
shall pay his own expenses of providing services hereunder,
including office space, secretarial services, travel,
entertainment and providing his own business cards; provided,
however, that Company will reimburse Consultant for any travel or
entertainment expense in connection with consulting services that
Consultant agrees in his discretion to incur at the specific
request of Company.
7. COMPENSATION. Consultant will receive a fee for consulting
services at the rate of $42,160 per month for a period of
thirty-six (36) consecutive months and thereafter at the rate of
$11,458.33 per month until the end of the Consulting Term. The
fee shall be payable in monthly installments, regardless of the
amount of services actually performed, on the last business day
of each month commencing in the month that the Retirement Date
occurs. The final payment for the last month of the Consulting
Term shall be pro rated and paid on the last day of the
Consulting Term. If Consultant dies prior to reaching the end of
the Consulting Term, payments shall continue as scheduled to
Consultant's estate until the Consulting Term would have expired
but for Consultant's death.
8. TERMINATION.
Company may terminate this Consulting Agreement, and any
payments due hereunder shall cease, at any time in the following
situations:
(a) If Consultant shall engage in misconduct that is so
materially detrimental to the reputation and standing of Company
that Company cannot reasonably continue Consultant's consulting
services;
(b) If Consultant has breached any of the covenants
contained in this Agreement and such breach has not been cured to
the reasonable satisfaction of Company;
(c) Any termination of this Agreement by Company under
paragraph 8(a) or (b) above shall be evidenced by written
notification from Company to Consultant of Company's intent to
terminate such Agreement, and Consultant shall cease providing
services to or on behalf of Company as directed by Company upon
receipt of such notification.
The termination of this Consulting Agreement shall not,
however, affect the rights of Retiree under any stock options
referred to in Section 3 above.
9. SURVIVAL. The obligations contained in Sections 11, 12, 13,
14, 15, 23 and 24 shall survive the termination or expiration of
this Agreement for any reason.
10. ACKNOWLEDGEMENT OF NON-EMPLOYEE STATUS. Consultant
acknowledges that he shall not be an employee of Company
following the Retirement Date, shall thereafter be ineligible for
the following incurred subsequent to such date, except to the
extent otherwise provided herein and to the extent he has
continuation rights or conversion privileges due to his status as
a former employee: group medical and dental expense coverage;
life insurance; accidental death and disability insurance;
workers' compensation coverage; contributions or benefits under
the stock purchase program, savings and profit sharing plan and
deferred compensation plan; automobile allowances (including
mileage reimbursement); entertainment expense reimbursement; meal
expense reimbursement; business gift reimbursement; and all other
employee benefits. Additionally, Consultant acknowledges that
Company will not withhold social security taxes ("FICA"), federal
income taxes, or state and local taxes of any kind from any fee
paid Consultant under this Agreement.
GENERAL PROVISIONS
11. RELEASE OF CLAIMS. Retiree's retirement is voluntary and
has not been required by Company. Effective at the Retirement
Date, in consideration of this Agreement and additional benefits
not required by policies and practices of Company, Retiree, on
behalf of Retiree, Retiree's heirs, executors, successors and
assigns, releases Company, and its then current and former
officers, directors, shareholders, managers, employees,
representatives, related entities, successors and assigns of and
from any and all claims, demands, and causes of action of any
kind or nature, whether known or unknown, suspected or
unsuspected to Retiree, which Retiree then holds or owns or has
at any time before the Retirement Date owned or held against any
of the released persons or entities including, but not limited
to, claims or causes of action for alleged breach of any
contractual obligation, claims of race, sex, age, or disability
discrimination, including discrimination under the Age
Discrimination in Employment Act, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Employee
Retirement Income Security Act, the Americans With Disabilities
Act, the Family and Medical Leave Act, or any other federal,
state or local laws, to the maximum extent allowable by law.
This release shall not include any claims for salary, vacation
pay and fringe benefits that arise from the normal course of
Retiree's employment and that become due and payable prior to the
Retirement Date, and shall also not include any benefits due to
Retiree pursuant to the Company's stock purchase program, savings
and profit sharing plan and deferred compensation plan.
Effective at the Retirement Date, in consideration of this
Agreement, Company, on behalf of Company, its related entities,
and their successors and assigns, releases Retiree, Retiree's
heirs, executors, successors and assigns of and from any and all
claims, demands, and causes of action of any kind or nature,
whether known or unknown, suspected or unsuspected to Company,
which Company then holds or owns or has at any time before the
Retirement Date owned or held against any of the released
persons. This release shall not include any loans to the Retiree
or other amounts due and payable by Retiree, nor shall this
release include any of the Retiree's obligations or duties or the
Company's rights under this Agreement.
This Agreement does not constitute an admission of liability
on the part of Company or Retiree, any and all such liability
hereby being expressly denied, nor does the inclusion of a
release imply that Retiree has asserted any such claim against
Company arising out of his employment or otherwise, or that the
Company has asserted any such claim against Retiree arising out
of his employment or otherwise.
12. COVENANT NOT TO DISCLOSE.
(a) Consultant covenants and agrees that he will not,
during the period of his consultancy with Company or at any time
thereafter, directly or indirectly disclose, communicate or
divulge to any Person (as defined in Section 22 hereof), or use
for the benefit of any Person, any Proprietary Information (as
defined in Section 22 hereof). The restriction contained in the
preceding sentence shall not apply to any Proprietary Information
that (i) is a matter of public knowledge on the date of this
Agreement, (ii) becomes a matter generally known in Company's
industry after the date of this Agreement from another source
which is under no obligation of confidentiality to Company, or
(iii) is acquired from another source which is under no
obligation of confidentiality to Company.
(b) All data, designs, drawings, blueprints, tracings,
sketches, plans, layouts, specifications, models, programs,
cards, tapes, disks, printouts, writings, manuals, guides, notes
and any and all other memoranda, documents or property of the
Company in any form which may be or has been furnished to
Consultant during his employment with Company or his consultancy
hereunder or which was produced, prepared or designed by
Consultant in connection with his employment with Company or his
consultancy hereunder shall be, become and remain the exclusive
property of Company; provided that matters produced, prepared or
designed by Consultant during his consultancy hereunder shall be
covered by the foregoing provision only if such matters either
relate to the current business of the Company, relate to matters
on which Consultant has worked on behalf of the Company, or
utilize confidential or proprietary information of the Company.
Consultant acknowledges that all originals, copies and reprints
in Consultant's possession, custody or control have been
surrendered and/or delivered to Company as of the date he signs
this Agreement. Consultant further agrees that he will return
all originals, copies and reprints that come into Consultant's
possession during his consultancy (i) upon request by Company or
(ii) termination of the consultancy for any reason, whichever
occurs first. Consultant agrees that he shall thereafter make no
further use (except as contemplated hereby), either directly or
indirectly, of any such data, designs, drawings, blueprints,
tracings, sketches, plans, layouts, specifications, models,
programs, cards, tapes, disks, printouts, writings, manuals,
guides, notes or other memoranda or written information.
13. COVENANT NOT TO SOLICIT CUSTOMERS OR EMPLOYEES;
NONCOMPETITION COVENANT.
(a) Consultant covenants and agrees that he will not
directly or indirectly at any time during the period of his
consultancy with Company, whether as employee, owner, partner,
agent, director, officer, consultant or shareholder solicit,
divert or accept business competitive with Company's business as
of the date hereof from or otherwise take away or interfere with
any customer of Company.
(b) Consultant further covenants and agrees that he will
not directly or indirectly at any time during the period of his
consultancy with Company, whether as employee, owner, partner,
agent, director, officer, consultant or shareholder cause the
solicitation or inducement of any person employed by Company on
the date hereof to accept employment in any capacity with
Consultant or any firm, person or entity with whom Consultant is
employed or associated whether as employee, owner, partner,
agent, director, officer, consultant or shareholder.
(c) Consultant further covenants and agrees that he will
not, during the period of his consultancy with Company, directly
or indirectly, whether as employee, owner, partner, agent,
director, officer, consultant, shareholder or in any other
capacity, for his own account or for the benefit of any Person in
any business in competition with Company establish, engage in or
be connected with any Person which competes with Company or
proposes to compete with Company in any business in which Company
is engaged on the date hereof or any new line of business which
Consultant is involved in developing with the Company during the
consultancy. For purposes of this Agreement, "business" shall
mean the business engaged in by Company on the date hereof in the
manufacture and marketing of ready-to-assemble furniture, or any
such new line of business referred to above.
(d) If any provision of the covenants and agreements set
forth in Section 12 or 13 shall be held invalid or unenforceable
because of the scope of the territory or the actions thereby
restricted, or the period of time within which such covenant or
agreement is operative, or for any other reason, it is the intent
of the parties hereto that such provision shall be construed by
limiting and reducing it, or, if necessary, eliminating it so
that the provisions hereof be valid and enforceable to the extent
compatible with applicable law as determined by a court of
competent jurisdiction.
14. PROFESSIONAL AND ETHICAL CONDUCT REQUIRED. The Company
agrees not to make any statements or remarks disparaging the
conduct or character of the Consultant. The Consultant agrees
not to make any statements or remarks disparaging the conduct or
character of Company or its subsidiaries or their agents,
employees, officers, directors, successors or assigns.
Consultant further agrees to assure that all transactions are
handled with confidentiality and honesty. Consultant expressly
acknowledges that Consultant will obey all laws in conducting
consulting services and will be governed by the highest moral and
ethical standards, reflecting these values: integrity, honesty,
loyalty, trust, fairness, and responsibility. Consultant will
constantly analyze Consultant's duties in order to avoid any
action that could be interpreted as a conflict of interest.
Company has informed Consultant that it will suffer serious
damages in the event of violation of this paragraph.
15. NO REPRESENTATIONS REGARDING TAXATION. Retiree
expressly acknowledges that no representations have been made to
him by Company or its legal counsel regarding the tax
implications of any payments made by Company under this
Agreement. Retiree expressly understands that any liability for
federal, state and local income and other withholding taxes
remains with him.
16. PERIOD OF REFLECTION. Retiree has been and is hereby
encouraged to reflect on his rights being released herein and to
consult with independent legal counsel before executing this
Agreement. Retiree has been given twenty-one (21) days from the
date of presentment of this Agreement for such purposes and to
decide whether to enter into this Agreement.
17. PERIOD OF REVOCATION. For a period of seven (7) days
following the execution of this Agreement by Retiree, Retiree may
revoke this Agreement. This Agreement will not become effective
or enforceable until the eighth (8th) day following its execution
by Retiree.
18. SEVERABILITY. The provisions of this Agreement are
severable. If any provision of this Agreement is determined by a
court of competent jurisdiction to be unenforceable, in whole or
in part, the remaining provisions will be enforceable to the
maximum extent permitted by law.
19. APPLICABLE LAW. This Agreement will be construed in
accordance with the laws of the State of Missouri.
20. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement between the parties with respect to the matters
contemplated by this Agreement. Except as otherwise provided in
this Agreement, no change, modification or waiver of any
provision of this Agreement will be valid unless in writing and
signed by both Company and Retiree.
21. PAYMENT OF LEGAL FEES. Company will reimburse up to
$12,000 against legal fees and related expenses incurred by
Retiree in connection with the negotiation and execution of this
Agreement upon presentation of copies reflecting such fees and
expenses.
22. DEFINITIONS.
(a) "Person" means any individual, corporation, firm,
partnership or other business entity.
(b) "Proprietary Information" means all secret,
confidential or proprietary knowledge, information or data with
respect to the conduct or details of the business of Company
including, as applicable but without limitation, methods of
operation, customers and customer lists, products, products under
development as of the date of this Agreement or during the
consultancy, proposed, pending or completed acquisitions or any
company, division, product line or other business unit, prices,
fees, costs, plans, designs, technology, know-how, software,
marketing methods, policies, plans, personnel, suppliers,
competitors, markets or other specialized information or
proprietary matters of Company.
23. COOPERATION IN LITIGATION AND INVESTIGATIONS. Retiree
agrees to cooperate in any investigations conducted by Company
for which Company believes Retiree to be a holder of information
or to have knowledge of relevant facts. Retiree agrees to
participate in interviews and cooperate in Company's efforts to
gather information concerning any allegations of improper or
unlawful conduct or occurrences or other matters investigated by
Company. Retiree also agrees to cooperate with Company and its
counsel in any litigation or anticipated litigation involving
Company, by making himself available for interviews, fact
gathering, and questioning, and for appearing at depositions
and/or trial without the necessity of being served with a
subpoena. To the maximum extent permitted by applicable law,
Retiree shall not assist or facilitate in the prosecution of any
civil claims or litigation against Company, and if requested to
do so, shall promptly notify Company. This Agreement shall not
affect Company's obligations to indemnify current and former
officers and directors pursuant to Article VI of Company's
By-Laws.
24. SPECIFIC REMEDY. Retiree acknowledges and agrees that
if Retiree commits a breach of Sections 12, 13, 14, 15 or 24
Company shall have the right to have the obligations of Retiree
specifically enforced by any court having appropriate
jurisdiction on the grounds that money damages will not provide
an adequate remedy to Company in addition to all other remedies
available to Company. The prevailing party may also recover its
attorneys' fees and expenses in any such action.
25. ARBITRATION. The parties hereby agree that any dispute
arising under this Agreement or any claim for breach or violation
of any provision of this Agreement shall be submitted to
arbitration, pursuant to the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association
("AAA"), to a single arbitrator selected by mutual agreement of
the parties or, if the parties do not mutually agree on the
arbitrator, in accordance with the rules of the AAA. The award
determination of the arbitrator shall be final and binding upon
the parties. Either party shall have the right to bring an
action in any court of competent jurisdiction to enforce this
Section and to enforce any arbitrator's award rendered pursuant
to this Section. The venue for all proceedings in arbitration
under this provision, and for any judicial proceedings related to
the arbitration, shall be in Kansas City, Missouri.
26. TERMINATION. Notwithstanding any other provision
hereof, unless Retiree's resignation as a director and Chairman
of the Board shall have become effective as of the date on which
his successor as Chief Executive Officer of the Company shall
have been appointed, and Retiree shall have reconfirmed in
writing the provisions of this Agreement, including those set
forth in Section 11, the benefits and compensation to which
Retiree is entitled under this Agreement from and after the
Retirement Date (including without limitation such benefits
identified in Xxxxxxxx 0, 0, 0, 0 xxx 00) xxxxx xx forfeited by
Retiree and Retiree shall have no other rights concerning the
termination of his employment.
/s/ Xxxxxx X. X'Xxxxxxxx
Retiree/Consultant
X'XXXXXXXX INDUSTRIES HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Director
