EXHIBIT 10.1
2004 CHANGE IN CONTROL, SEVERANCE
AND NON-COMPETITION AGREEMENT
AGREEMENT, dated as of December 1, 2004 and effective as of December 1,
2004 by and between Wolverine Tube, Inc., a Delaware corporation ("Wolverine" or
"Company"), and Xxxxxx Xxxxx (the "Executive").
W I T N E S S E T H:
WHEREAS, Wolverine recognizes the Executive's expertise in connection with
his employment by Wolverine or its subsidiaries or affiliates (collectively, the
"Company"); and
WHEREAS, the Company desires to provide the Executive with severance
benefits or the opportunity for continued employment in a different position if
the Executive's employment in his current position is terminated for the reasons
set forth herein and the Executive refrains from engaging in certain activities
in the event his employment is terminated, upon the terms and conditions
hereinafter set forth; and
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
1. Termination of Employment
(a) Termination for Cause; Resignation without Good Reason.
(i) If the Executive's employment is terminated by the Company for Cause,
as defined in Section 1(a)(ii) hereof, or if the Executive resigns from his
employment hereunder, other than for Good Reason, as defined in Section
1(a)(iii) hereof, the Executive shall be entitled to only (A) severance benefits
as provided by the Company's general procedures and practices, if any, (B)
payment of the pro rata portion of the Executive's salary through and including
the date of termination or resignation, and (C) such employee benefits as may be
due to the Executive pursuant to the provisions of the benefit plans which
govern the provision of such benefits.
(ii) For purposes of this Agreement, termination for "Cause" shall mean
termination of the Executive's employment by the Company because of (A) the
Executive's conviction for, or plea of guilty or no contest to, a felony or a
crime involving moral turpitude, (B) the Executive's commission of an act of
personal dishonesty in connection with his employment by the Company, (C) a
breach of fiduciary duty in connection with his employment with the Company
which shall include, but not be limited to, (1) investment in any person or
organization with the knowledge that such person or organization has or proposes
to have dealings with the Company, such person or organization competes with the
Company, or the Company is considering an investment in such person or
organization (the reference to "organization" excludes federal credit unions,
publicly owned insurance companies and corporations the stock of which is listed
on a national securities exchange or quoted on NASDAQ if the direct and
beneficial stock ownership of the Executive, including members of his immediate
family, is not more than one percent (1%) of the total outstanding stock of such
corporation); (2) a loan (including a guaranty of a loan) from or to any person
or organization having or proposing any dealings with the Company or in
competition with the Company; (3) participation directly or
indirectly in any transaction involving the Company other than as a director or
as an officer or employee of the Company; (4) acceptance from any person or
organization having or proposing any dealings with the Company or in competition
with the Company of any gratuity, gift, entertainment or favor which exceeds
either nominal value or common courtesies which are generally accepted business
practice; or (5) service as an officer, director, partner or employee of, or
consultant to, any person or organization having or proposing dealings with the
Company or in competition with the Company; (D) the Executive's failure to
execute or follow the written policies of the Company, including, but not
limited to, the Company's policy against discrimination or harassment, (E) the
Executive's refusal to perform the essential functions of the job, following
written notice thereof, or (F) the Executive's admission of liability of, or
finding of liability for, the violation of any "Securities Laws." As used
herein, the term "Securities Laws" means any federal or state law, rule or
regulation governing the issuance or exchange of securities, including without
limitation the Securities Act of 1933, the Securities Exchange Act of 1934 and
the rules and regulations promulgated thereunder. Termination of the Executive's
employment as a result of his death or disability (if such Executive is eligible
for benefits under the Company's long-term disability plan or would be eligible
for such benefits were the Executive a participant in said plan) shall
constitute a termination by the Company with Cause for purposes of this
Agreement.
(iii) For purposes of this Agreement, resignation for "Good Reason" shall
mean the resignation of the Executive within a period of six (6) months after
(A) a reduction in the Executive's benefits or pay in an amount in the aggregate
in excess of five percent (5%) thereof, unless all individuals at the same
managerial level as the Executive experience a similar reduction in benefits or
pay or (B) a substantial adverse alteration occurs in the nature or status of
the Executive's responsibilities from those in effect on the date hereof,
disregarding change in title only.
(iv) The date of termination for Cause shall be the date of receipt by the
Executive of written notice of such termination, or such later date as may be
contained in said notice. The date of resignation without Good Reason shall be
the date of receipt by the Company of a written notice of such resignation.
(b) Termination without Cause; Resignation for Good Reason or after a
Change in Control.
(i) If the Executive's employment is terminated by the Company without
Cause at any time, or if the Executive resigns from his employment for Good
Reason within two (2) years following a Change in Control, the Executive shall
be entitled to receive the benefits described in subparagraphs (A), (B), (C) and
(D) below. If the Executive resigns for Good Reason (unless said resignation is
within two (2) years following a Change in Control, in which event his benefits
are described in the first sentence of this subparagraph), he shall be entitled
to those benefits described in (A), (B) and (C) below only. In any of such
cases, said benefits will only be paid if the Executive executes an Agreement
and General Release, which shall be drafted by the Company, and if the Executive
complies with Section 2 of this Agreement.
(A) The Company shall pay to the Executive either (x) during the two
years immediately following a Change in Control, in the event of (i) termination
by the Company
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without Cause, or (ii) resignation by the Executive for Good Reason, an amount
equal to two (2) years' salary; or (y) at any other time, in the event of (i)
termination by the Company without Cause or (ii) resignation by the Executive
for Good Reason, an amount corresponding to the period of service as follows:
four months' salary if such resignation or termination occurs during the first
year of employment, nine months' salary if such resignation or termination
occurs during the second year of employment and eighteen months' salary if such
resignation or termination occurs after two years of employment (the applicable
time period for which salary is paid is referred to herein as the "Continuation
Period"); in either case to be paid at the rate in effect immediately prior to
the Severance Date (based upon the date of termination or resignation as defined
in Section 1(b)(iv)) plus pay at the same rate for all vacation time accrued
during the calendar year in which the Severance Date occurs. Such payments are
to be made under (x) above at the Executive's option either:
(X) as a lump sum within 30 days after the Severance Date or
such later date as may be necessary to comply with applicable tax or other laws
affecting such timing, or
(Y) as a series of payments in accordance with the Company's
normal payroll procedures following the Severance Date or such later date as may
be necessary to comply with applicable tax or other laws affecting such timing.
An election as to the form of payment under this paragraph (b)(i)(A) by
the Executive shall be made at a time and in a manner prescribed by the Company.
If the Executive does not elect a form of payment, the amount due to the
Executive under this paragraph (b)(i)(A) shall be paid in accordance with clause
(Y) above. Payments under (y) above shall be paid in accordance with clause (Y)
above.
The amount payable to the Executive by the Company under this paragraph
(b)(i)(A) shall be offset by the non-compete and non-solicitation fee as defined
in Section 2(d)(i)of this Agreement.
(B)(I) For the Continuation Period following the Executive's
Severance Date, the Company will arrange to provide the Executive with medical
and disability benefits (the "Employee Benefits") substantially similar to those
that the Executive was receiving or entitled to receive immediately prior to the
Severance Date at no cost to the Executive. Without otherwise limiting the
purposes or effect of Section 1(b), Employee Benefits otherwise receivable by
the Executive pursuant to this Section 1(b)(i)(B)(I) will be reduced or
eliminated to the extent comparable Employee Benefits at substantially similar
cost are actually received by the Executive from another employer during the
Continuation Period following the Executive's Severance Date, and any such
benefits actually received by the Executive shall be reported by the Executive
to the Company. If and to the extent that any benefit described in this Section
1(b)(i)(B)(I) is not or cannot be paid or provided under any policy, plan,
program or arrangement of the Company or any Subsidiary, as the case may be,
then the Company will reimburse the Executive for the costs incurred in
obtaining comparable Employee Benefits coverage.
(B)(II) The Company shall reimburse the Executive for any costs
incurred by the Executive in maintaining life insurance coverage comparable to
that maintained for him
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by the Company under its group life insurance program for the period from the
Severance Date until the earlier to occur of:
(X) the end of the Continuation Period, or
(Y) the date on which the Executive is covered under any other
equivalent group life insurance plan;
(C) in lieu of any benefit otherwise due to him under the Company's
annual bonus plan, the Company shall pay the Executive in a lump sum, an amount
equal to (i) the maximum percentage of annual base salary then payable to the
Executive under the Company's bonus plan but in no event less than forty-five
percent (45%) of his annual base salary multiplied by (ii) the period for which
the Executive is entitled to pay under paragraph (b)(i)(A) above; provided,
however, that in the event that the Severance Date occurs after the first six
(6) months of the Company's then current fiscal year and during the two years
immediately following a Change in Control, the Company shall pay the Executive
an additional amount equal to the actual bonus which would have been paid to the
Executive for said year had he remained employed throughout said year less the
amount of the above-described lump sum paid to him pursuant to this subparagraph
(C) for the first of the years for which he is entitled to be paid under
paragraph (b)(i)(A). The amount payable to the Executive under this paragraph
(b)(i)(C) shall be offset by the non-compete and non-solicitation fee as
provided in Section 2(d)(i) of this Agreement.
(D) the Company shall reimburse the Executive for any reasonable
costs actually incurred by the Executive for outplacement services provided by
an outplacement consultant mutually agreeable to the Executive and the Company
for a period not to exceed six (6) months.
(ii) In the event the Executive refuses to execute or breaches the
Agreement and General Release tendered to the Executive on or about the
Severance Date, or in the event the Executive breaches any of the covenants
contained in Section 2, the Executive acknowledges and agrees that the Company
will cease any payments remaining under Section 1(b)(i) of this Agreement and
that the Executive shall be entitled to no further payments or benefits under
this Agreement.
(iii) The Executive shall have no further right under this Agreement or
otherwise to receive any bonus or other compensation with respect to the year in
which the Severance Date occurs and later years.
(iv) The date of termination of employment without Cause shall be the date
specified in a written notice of termination to the Executive and the date of
resignation for Good Reason shall be the date of receipt by the Company of
written notice of resignation (both such dates hereinafter referred to as the
"Severance Date").
(v) For purposes of this Agreement, "Change in Control" shall mean:
(A) The Company is merged, consolidated or reorganized into or with
another corporation or other legal person, and as a result of such merger,
consolidation or
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reorganization less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such
transaction are held in the aggregate by the holders of Voting Stock (as that
term is hereafter defined) of the Company immediately prior to such transaction;
(B) The Company sells or otherwise transfers all or substantially
all of its assets to another corporation or other legal person, and as a result
of such sale or transfer less than a majority of the combined voting power of
the then-outstanding securities of such corporation or person immediately after
such sale or transfer is held in the aggregate by the holders of Voting Stock of
the Company immediately prior to such sale or transfer;
(C) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), disclosing
that (x) any person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner (as the term
"beneficial owner" is defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of securities representing 15% or
more of the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors of the Company ("Voting Stock"), or
(y) any person has, during any period, increased the number of shares of Voting
Stock beneficially owned by such person by an amount equal to or greater than
15% of the outstanding shares of Voting Stock; provided, however, that transfers
of shares of Voting Stock between a person and the affiliates or associates (as
such terms are defined under Rule 12b-2 or any successor rule or regulation
promulgated under the Exchange Act) of such person shall not be considered in
determining any increase in the number of shares of Voting Stock beneficially
owned by such person;
(D) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
or item therein) that a Change in Control of the Company has occurred or will
occur in the future pursuant to any then-existing contract or transaction; or
(E) If, during any period of two consecutive years, individuals who
at the beginning of any such period constitute the Directors of the Company
cease for any reason to constitute at least a majority thereof; provided,
however, that for purposes of this clause (v) each Director who is first
elected, or first nominated for election by the Company's stockholders, by a
vote of at least two-thirds of the Directors of the Company (or a committee
thereof) then still in office who were Directors of the Company at the beginning
of any such period will be deemed to have been a Director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of Sections (C) or (D) unless
otherwise determined in a specific case by majority vote of the Board, a "Change
in Control" shall not be deemed to have occurred for purposes of Sections (C) or
(D) solely because (1) the Company, (2) an entity in which the Company directly
or indirectly beneficially owns 50% or more of the voting securities (a
"Subsidiary"), or (3) any employee stock ownership plan or any other employee
benefit plan of the Company or any Subsidiary either files or becomes obligated
to file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K
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or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act disclosing beneficial ownership by it of shares of Voting
Stock, whether in excess of 15% or otherwise, or because the Company reports
that a Change in Control of the Company has occurred or will occur in the future
by reason of such beneficial ownership.
(c) Limitation on Benefits. Notwithstanding any other provisions of this
Agreement, in the event that any payment or benefit received or to be received
by Executive in connection with a Change in Control or the termination of the
Executive's employment (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company, any person, entity or
group whose actions result in a Change in Control or any affiliate of the
Company or such person, entity or group) (all such payments and benefits being
hereinafter called "Total Payments") would be subject (in whole or part), to the
excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Excise Tax"), then the cash severance payments under Section 1(b)(i)(A)
and 1(b)(i)(C) of this Agreement shall first be reduced and, thereafter, the
continuation of benefits under Section 1(b)(i)(B) of the Agreement shall be
reduced, to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax, but only if (1) the net amount of such Total
Payments, as so reduced (and after subtracting the net amount of federal, state
and local income taxes on such reduced Total Payments), is greater than or equal
to (2) the net amount of such Total Payments without such reduction (but after
subtracting the net amount of federal, state and local income taxes on such
Total Payments and the amount of Excise Tax to which the Executive would be
subject in respect of such unreduced Total Payments). All determinations under
this Section 1(c) above shall be made by the accounting firm which was,
immediately prior to Change in Control, the Company's independent auditor, which
determination shall be conclusive."
2. Secrecy, Non-Solicitation and Non-Competition.
(a) Secrecy. During the Executive's employment with the Company and for a
period of three (3) years after his termination from the Company for any reason,
the Executive covenants and agrees that he will not, except in performance of
the Executive's obligations to the Company, or with the prior written consent of
the Company pursuant to the authority granted by a resolution of the Board,
directly or indirectly, disclose any secret or confidential information that he
may learn or has learned by reason of his association with the Company or use
any such information. The term "secret or confidential information" includes,
without limitation, information not previously disclosed to the public or to the
trade by the Company's management with respect to the Company's products,
facilities and methods, trade secrets and other intellectual property, systems,
procedures, manuals, confidential reports, products price lists, customer lists,
financial information (including the revenues, costs or profits associated with
any of the Company's products), business plans, prospects, employee or
employees, compensation, or opportunities but shall exclude any information
already in the public domain which has been disclosed to the public during the
normal course of the Company's business.
(b) Customer Protection. During the Executive's employment with the
Company and for a period of two (2) years following the termination of the
Executive's employment for any reason, the Executive covenants and agrees that
he will not solicit or attempt to solicit any business from the Company's
customers, including actively sought prospective customers, with whom the
Executive had Material Contact during his employment, for the purpose of
providing
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products or services competitive with those provided by the Company. Material
Contacts exist between the Executive and each customer or prospective customers
with whom the Company were coordinated or supervised by the Executive, or about
whom the Executive obtained trade secrets or confidential information as a
result of the Executive's association with the Company.
(c) Non-solicitation of Employees. During the Executive's employment and
for a period of one (1) year following the termination of the Executive's
employment for any reason, the Executive covenants and agrees that he shall not
directly or indirectly, on his behalf or on behalf of any person or other
entity; solicit or induce, or attempt to solicit or induce, any person who, on
the date hereof or at anytime during the term of this Agreement, is an employee
of the Company, to terminate his or her employment with the Company, whether
expressed in a written or oral agreement or understanding or is otherwise an
"at-will" employee.
(d) Noncompetition. During the Executive's employment and for a period of
two (2) years following the termination of the Executive's employment for any
reason, the Executive covenants and agrees that he will not, directly or
indirectly, compete against the Company within the United States in the
managerial or executive capacity for another company or entity that designs,
produces, sells, or distributes copper tubing, including, but not limited to,
those companies listed on Appendix A.
In consideration of the promises of Executive contained in this
Agreement, including without limitation in this Paragraph 2(d), the Company
shall pay to the Executive a non-compete and non-solicitation fee of up to one
(1) year's salary and bonus but not to exceed the amounts determined in
accordance with Sections 1(b)(i)(A) and 1(b)(i)(C), and payable in the manner
actually payable by the Company under such sections. The amount otherwise
payable to the Executive under such sections of this Agreement shall be offset
by this non-compete and non-solicitation fee.
(e) Equitable Relief. The Executive acknowledges and agrees that the
services performed by him are special, unique and extraordinary in that, by
reason of the Executive's employment, the Executive may acquire confidential
information and trade secrets concerning the operation of the Company, or that
the Executive may have contact with or obtain knowledge of the Company's
customers or prospects, the use or disclosure of which could cause the Company
substantial loss and damages, which could not be readily calculated and for
which no remedy at law would be adequate. Accordingly, the Executive
acknowledges and agrees that the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining the
Executive from engaging in activities prohibited by this Section 2 or such other
relief as may be required to specifically enforce any of the covenants in this
Section 2. The Executive acknowledges and agrees that the Company shall be
entitled to its attorneys' fees and court costs should the Company pursue legal
action to enforce its rights under this section.
3. Amendment; Waiver. This Agreement may not be modified, amended or waived in
any manner except by an instrument in writing signed by both parties hereto,
provided, however, that any such modification, amendment or waiver on the part
of the Company shall have been previously approved by the Board. The waiver by
either party of compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other
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provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.
4. Withholding. Payments to the Executive of all compensation contemplated under
this Agreement shall be subject to all applicable legal requirements with
respect to the withholding of taxes and similar deductions.
5. Governing Law. All matters affecting this Agreement, including the validity
thereof, are to be governed by, and interpreted and construed in accordance
with, the laws of the State of Alabama applicable to contracts executed in and
to be performed in that State. Nothing in this agreement shall affect the rights
of either party under state or federal laws affecting employment.
6. Notices. Any notice hereunder by either party to the other shall be given in
writing by personal delivery or certified mail, return receipt requested. If
addressed to the Executive, the notice shall be delivered or mailed to the
Executive at the address first set forth below, or if addressed to the Company,
the notice shall be delivered or mailed to 000 Xxxxxxx Xxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxx 00000, or such address as the Company or the Executive may
designate by written notice at any time or from time to time to the other party.
A notice shall be deemed given, if by personal delivery, on the date of such
delivery or, if by certified mail, on the date shown on the applicable return
receipt.
7. Supersedes Previous Agreements. This Agreement supersedes all prior or
contemporaneous negotiations, commitments, agreements and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements and writings will have no further force or effect, and the parties to
any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.
8. Severability. The parties agree that if any part of this Agreement is found
to be illegal or unenforceable, including, but not limited to, the geographic,
temporal, or activity restrictions contained in Section 2, the court should
delete or modify the illegal or unenforceable provision(s) hereby leaving the
remaining or modified provision(s) fully enforceable.
9. Counterparts. This Agreement may be executed by either of the parties hereto
in counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
10. Headings. The headings of sections herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by
its officer pursuant to the authority of its Board, and the Executive has
executed this Agreement, as of the day and year first written above.
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WOLVERINE TUBE, INC.
By: /s/ Xxxxxx Xxxxxxxx
------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President and CEO
EXECUTIVE
Name: /s/ Xxxxxx X. Xxxxx
----------------------------------
Executive's Address:
0000 X. Xxxxxxx Xxx Xxxxx
-----------------------------------
Xxxxxxxx, XX 00000
-----------------------------------
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APPENDIX A
1. Cerro Copper Products Company, Inc.
2. Outokumpu American Brass Company
3. Industrias Nacobre S.A. de C.V.
4. Xxxx Corporation
5. Xxxxxxx Industries, Inc.
6. Xxxxxxx/Kobe Copper Products, Inc.
7. National Copper
8. Xxxxxxx
9. Hitachi, Ltd.
10. Trefimetaux
11. Reading Tube Corporation
12. Elkart Products, Inc.
13. NIBCO
14. High Performance Tube
15. Commercial Metals Company
Reference to the above companies shall incorporate any related companies
thereto, including, but not limited to, all parent companies, subsidiary
companies, majority-owned companies and joint ventures.
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