EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of February 21,
1997 by and between Xxxxxx Xxxxxxxxxxxx, an individual ("Executive"), and
Aftermarket Technology Corp., a Delaware corporation (the "Company").
WHEREAS, the Company desires to retain the services of Executive as
Vice President and General Counsel of the Company and Executive is willing to
provide such services on the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants and conditions contained herein, the Company and Executive agree as
follows:
1. EMPLOYMENT BY THE COMPANY AND TERM.
(a) FULL TIME AND BEST EFFORTS. Subject to the terms set forth
herein, the Company agrees to employ Executive as Vice President and General
Counsel and Executive hereby accepts such employment. During the term of his
employment with the Company, Executive will devote his full time, best efforts
and attention to the performance of his duties hereunder and to the business and
affairs of the Company.
(b) DUTIES. Executive shall serve in an executive capacity and shall
perform such duties as are customarily associated with his then-current title,
consistent with the Bylaws of the Company and as required by the Company's Board
of Directors (the "Board") and the Company's Chief Executive Officer, including
performing duties for such affiliates as the Board may specify.
(c) COMPANY POLICIES. The employment relationship between the
parties shall be governed by the general employment policies and practices of
the Company, including but not limited to those relating to protection of
confidential information and assignment of inventions, except that when the
terms of this Agreement differ from or are in conflict with the Company's
general employment policies or practices, this Agreement shall control.
(d) TERM. The initial term of employment of Executive under this
Agreement shall begin as of the date (the "Effective Date") that Executive
commences full time employment with the Company, which date shall occur not
later than March 31, 1997 and end on the third anniversary of the Effective Date
(such period, the "Initial Term"), subject to the provisions for termination set
forth herein and renewal as provided in Section 1(e).
(e) RENEWAL. Unless the Company shall have given Executive notice
that this Agreement shall not be renewed at least 90 days prior to the end of
the Initial Term, the term of this Agreement shall be automatically extended for
a period of one year, such procedure to be followed in each such successive
period. Each extended term shall continue to be subject to the provisions for
termination set forth herein.
2. COMPENSATION AND BENEFITS.
(a) SALARY. Executive shall receive for services to be rendered
hereunder an annual base salary of $165,000 (the "Base Salary") payable on a
monthly basis, subject to increase at the sole discretion of the Board, and
subject to standard withholdings for taxes and social security and the like.
The Board shall review Executive's salary on an annual basis and may, in its
sole discretion, increase Executive's salary, taking into consideration
Executive's performance and scope of responsibilities.
(b) PARTICIPATION IN BENEFIT PLAN. During the term hereof, Executive
shall be entitled to participate in any group insurance, hospitalization,
medical, dental, health and accident, disability or similar plan or program of
the Company now existing or established hereafter to the extent that he is
eligible under the general provisions thereof. The Company may, in its sole
discretion and from time to time, establish additional senior management benefit
programs as it deems appropriate. Executive understands that (i) any such plans
may be modified or eliminated in the Company's discretion in accordance with
applicable law, and (ii) he is not eligible to participate in the Company's
medical plan until he has been employed by the Company for 90 days. The Company
agrees to reimburse Executive for up to $500 per month of the costs incurred by
Executive to maintain medical health care coverage during the foregoing 90 day
period under the COBRA features of Executive's current medical health care plan.
(c) VACATION. Executive shall be entitled to a period of annual
vacation time equal to that provided to managers of equal position by the
Company's policies and procedures regarding vacation, but in any event not less
than four weeks per year. The days selected for Executive's vacation must be
mutually agreeable to the Company and Executive.
(d) 401(K) PLAN. To the extent legally permitted, Executive shall be
entitled to place a portion of his Base Salary into a 401(K) or other qualified
deferred tax annuity plan of the Company or, if the Company does not have such a
plan, of any such plan of any of the Company's subsidiaries, as may be
designated by Executive. The Company shall make contributions to Executive's
401(K) account consistent with its contribution policy in place from time to
time with respect to senior management generally.
(e) MOVING COSTS.
(i) The Company shall reimburse Executive for his (i) reasonable
costs of up to three trips with his wife to the Chicago area to locate housing
and (ii) household goods transfer costs incurred in connection with moving his
residence from Studio City, California to the Chicago area in accordance with
standard Company policy. All such costs for which Executive is entitled to
reimbursement under this Section 2(e)(i) shall be documented in accordance with
the Company's expense reimbursement policies.
(ii) In addition, Executive will be paid on the Effective Date
cash in the amount of $50,000, subject to standard withholdings for taxes and
social security and the like, to cover all other incidental moving costs,
PROVIDED that if Executive ceases to be employed
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by the Company prior to the first anniversary hereof pursuant to Section 5(a)
or (b), Executive shall be required to repay to the Company such amount in
cash.
3. OPTION AND BONUS PLANS.
(a) PARTICIPATION. During the term hereof, Executive shall be
eligible to participate in any stock option plan and any bonus or incentive plan
of the Company currently made available by the Company to executive employees of
the Company or which may be made available in the future to executive employees
of the Company, subject to and on a basis consistent with the terms, conditions
and administration of any such plan. Executive understands that any such plan
may be modified or eliminated in the Company's discretion in accordance with
applicable law and that the Board shall have discretion to determine the number
and terms of options granted to Executive in the future, if any.
(b) OPTIONS. Executive shall be entitled to receive stock options
("Options") under the Company's 1997 Stock Option Plan to purchase 35,088 shares
of the Company's Common Stock (the "Common Stock"). The Options will be
"incentive stock options" if and to the extent permitted under the Internal
Revenue Code and shall have the following terms:
(i) VESTING. The Options shall vest for so long as Executive
shall be employed under this Agreement as follows: (x) one-third on the first
anniversary of the Effective Date; (y) one-third on the third anniversary of the
Effective Date; and (z) one-third on the fifth anniversary of the Effective
Date.
(ii) EXERCISE PRICE. The Options shall have an exercise price
equal to the fair market value of the Common Stock on the date of grant of the
Options, which grant shall occur not later than thirty (30) days after the
Effective Date..
(iii) DURATION. The Options shall expire ten (10) years from
the Effective Date, subject to the terms of the 1997 Stock Option Plan.
The Common Stock underlying the Options shall be subject to the terms and
conditions of the Stockholders Agreement currently in effect with respect to the
Common Stock, a copy of which has been provided to Executive. Executive agrees
to execute a copy of such Stockholders Agreement concurrently with the execution
hereof.
(c) BONUSES. During each year of the term hereof, Executive shall be
eligible to participate in such Bonus Plan as may be adopted by the Board in its
sole discretion, which discretion shall include discretion as to the terms and
conditions under which Executive may be entitled to receive a bonus thereunder.
The maximum bonus which Executive may earn in any such year may not exceed 50%
of his then annual base salary.
4. REASONABLE BUSINESS EXPENSES AND SUPPORT. Executive shall be
reimbursed for documented and reasonable business expenses in connection with
the performance of his duties hereunder. Executive shall be furnished
reasonable office space, assistance and facilities.
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5. TERMINATION OF EMPLOYMENT. The date on which Executive's employment
by the Company ceases, under any of the following circumstances, shall be
defined herein as the "Termination Date."
(a) TERMINATION FOR CAUSE.
(i) TERMINATION; PAYMENT OF ACCRUED SALARY AND VACATION. The
Board may terminate Executive's employment with the Company at any time for
cause, immediately upon notice to Executive of the circumstances leading to such
termination for cause. In the event that Executive's employment is terminated
for cause, Executive shall receive payment for all accrued salary and vacation
time through the Termination Date, which in this event shall be the date upon
which notice of termination is given. The Company shall have no obligation to
pay severance of any kind nor to make any payment in lieu of notice.
(ii) DEFINITION OF CAUSE. "CAUSE" means the occurrence or
existence of any of the following with respect to Executive, as determined by
the Board at its sole discretion: (a) a material breach by Executive of the
terms of his employment or of his duty not to engage in any transaction that
represents, directly or indirectly, self-dealing with the Company or any of its
affiliates which has not been approved by the Board, if in any such case such
material breach remains uncured after the lapse of 30 days following the date
that the Company has given Executive written notice thereof; (b) the repeated
material breach by Executive of any duty referred to in clause (a) above as to
which at least one written notice has been given pursuant to such clause (a);
(c) any act of dishonesty, misappropriation, embezzlement, intentional fraud or
similar conduct involving the Company or any of its affiliates; (d) the
conviction or the plea of nolo contendere or the equivalent in respect of a
felony involving moral turpitude; (e) any intentional damage of a material
nature to any property of the Company or any of its affiliates; (f) the repeated
non-prescription use of any controlled substance or the repeated use of alcohol
or any other non-controlled substance which, in the reasonable determination of
the Board, in any case described in this clause (f), renders Executive unfit to
serve in his capacity as an officer or employee of the Company or its
affiliates; (g) conduct by Executive which in the reasonable determination of
the Board demonstrates gross unfitness to serve in his capacity as an officer or
employee of the Company or its affiliates; or (h) failure of Executive to
relocate his residence to the Chicago, Illinois metropolitan area by August 31,
1997.
(b) VOLUNTARY TERMINATION. Executive may voluntarily terminate his
employment with the Company at any time upon 45 days prior written notice, after
which no further compensation of any kind or severance payment will be payable
under this Agreement.
(c) TERMINATION UPON DISABILITY. The Company may terminate
Executive's employment in the event Executive suffers a disability that renders
Executive unable, as determined in good faith by the Board, to perform the
essential functions of his position, even with reasonable accommodation, for
four months within any eight-month period. In the event that Executive's
employment is terminated pursuant to this Section 5(c), Executive shall receive
payment for all accrued salary, vacation time and benefits under benefit plans
of the Company through the Termination Date. The Company shall also pay to
Executive a prorated bonus based
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upon the then applicable bonus plan in an amount equal to the bonus that would
otherwise be paid for the fiscal year in which Executive is terminated,
multiplied by a fraction, the numerator of which is the number of days that
Executive was employed during such year, and the denominator of which is 365,
it being understood that such prorated bonus will be payable in accordance with
the normal bonus payment policy of the Company, but in no event later than
April 30 of the year following the fiscal year in which Executive's employment
is terminated. After the Termination Date, which in this event shall be the
date upon which notice of termination is given, no further compensation of any
kind or severance or other payment of any kind will be payable under this
Agreement. All benefits provided under Section 2(b) shall be extended, at
Executive's election and cost, to the extent permitted by the Company's
insurance policies and benefit plans, for one year after Executive's
Termination Date, except as required by law (E.G., COBRA health insurance
continuation election). All other benefits provided by the Company to
Executive under this Agreement or otherwise shall cease as of the Termination
Date.
(d) TERMINATION WITHOUT CAUSE.
(i) TERMINATION PAYMENT DURING THE INITIAL TERM. The Company
may terminate Executive's employment without "cause," as defined above,
immediately upon notice to Executive. In the event Executive's employment is
terminated without "cause," the Company shall pay Executive as severance an
amount equal to 12 months of his then base salary, less standard withholdings
for tax and social security purposes, payable over such 12-month term in monthly
PRO RATA payments commencing as of the Termination Date plus any applicable PRO
RATA earned bonus.
(ii) TERMINATION PERIOD AFTER THE INITIAL TERM. In the event
that the term of this Agreement is extended pursuant to Section 1(e) hereof (an
"Extension Period") and during such Extension Period Executive's employment is
terminated without "cause," as defined above, the Company shall pay Executive as
severance an amount equal to 12 months of his then base salary, less standard
withholdings for tax and social security purposes, payable over such 12-month
term in monthly PRO RATA payments commencing as of the Termination Date.
(iii) FUNDAMENTAL CHANGES. In the event that the Company
makes a substantial change which results in diminution in Executive's duties,
authority, responsibility or compensation without performance or market
justification, he may terminate his employment; PROVIDED, HOWEVER, that
Executive shall provide the Company 15 days' notice prior to any such
termination and the Company shall have until the end of such 15-day period to
cure such diminution. A termination in such circumstances shall be treated as a
Company termination without cause and Executive shall be entitled to the same
severance payments provided in Sections 5(d)(i) and 5(d)(ii), as applicable.
(iv) CONDITIONS TO PAYMENT OF SEVERANCE AMOUNTS. Notwithstanding
the foregoing, the Company's obligation to pay Executive any of the foregoing
severance amounts shall be conditioned upon Executive's continued compliance
with Sections 6, 7 and 8 below during the term of such severance payment period.
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(v) BENEFITS UPON TERMINATION. All benefits provided under
Section 2(b) shall be extended, at the Company's election and cost, to the
extent permitted by the Company's insurance policies and benefit plans, for one
year after Executive's Termination Date, except as required by law (e.g., COBRA
health insurance continuation election).
(e) TERMINATION UPON DEATH. If Executive dies prior to the
expiration of the term of this Agreement, the Company shall (i) continue
coverage of Executive's dependents (if any) under all benefit plans or programs
of the type listed above in Section 2(b) for a period of 12 months, and (ii) pay
to Executive's estate the accrued portion of Executive's salary and vacation
time and benefits that Executive is then entitled to receive under benefit plans
of the Company through the Termination Date, less standard withholdings for tax
and social security purposes. The Company shall have no obligation to make any
other payment, including severance or other compensation, of any kind
(including, without limitation, any bonus or portion thereof that otherwise may
have become due and payable to Executive with respect to the year in which such
Termination Date occurs). All other benefits provided by the Company to
Executive under this Agreement or otherwise shall cease as of the Termination
Date.
6. PROPRIETARY INFORMATION OBLIGATIONS.
During the term of employment under this Agreement, Executive will
have access to and become acquainted with the Company's confidential and
proprietary information, including but not limited to information or plans
regarding the Company's customer relationships, personnel, or sales, marketing,
and financial operations and methods; trade secrets; formulas; devices; secret
inventions; processes; and other compilations of information, records, and
specifications (collectively "Proprietary Information"). Executive shall not
disclose any of the Company's Proprietary Information directly or indirectly, or
use it in any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment for the Company
or as authorized in writing by the Company. All files, records, documents,
computer-recorded information, drawings, specifications, equipment and similar
items relating to the business of the Company, whether prepared by Executive or
otherwise coming into his possession, shall remain the exclusive property of the
Company and shall not be removed from the premises of the Company under any
circumstances whatsoever without the prior written consent of the Company,
except when (and only for the period) necessary to carry out Executive's duties
hereunder, and if removed shall be immediately returned to the Company upon any
termination of his employment and no copies thereof shall be kept by Executive;
PROVIDED, HOWEVER, that Executive shall be entitled to retain documents
reasonably related to his interest as a shareholder and any documents that were
personally owned or acquired.
7. NONINTERFERENCE. While employed by the Company and for a period of
one year thereafter, Executive agrees not to interfere with the business of the
Company by directly or indirectly soliciting, attempting to solicit, inducing,
or otherwise causing any employee of the Company to terminate his or her
employment in order to become an employee, consultant or independent contractor
to or for any other employer.
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8. NONCOMPETITION. Executive agrees that during the term of this
Agreement and for a period of 18 months after the termination hereof, he will
not, without the prior consent of the Company, directly or indirectly, have an
interest in, be employed by, be connected with, or have an interest in, as an
employee, consultant, officer, director, partner, stockholder or joint venturer,
in any person or entity owning, managing, controlling, operating or otherwise
participating or assisting in any business that is similar to or in competition
with the business of the Company (i) during the term of this Agreement, in any
location, and (ii) for the five year period following the termination of this
Agreement, in any state in which the Company was conducting business at the date
of termination of Executive's employment and continues to do so thereafter;
PROVIDED, HOWEVER, that the foregoing shall not prevent Executive from being a
stockholder of less than 1% of the issued and outstanding securities of any
class of a corporation listed on a national securities exchange or designated as
national market system securities on an interdealer quotation system by the
National Association of Securities Dealers, Inc.
9. MISCELLANEOUS.
(a) NOTICES. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of personal delivery (including
personal delivery by telecopy or telex) or the third day after mailing by first
class mail to the recipient at the address indicated below:
To the Company:
Aftermarket Technology Corp.
00000 Xxxxx Xxx Xxxxx
Xxxxx X-000
Xxxxxxx Xxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
To Executive:
Xxxxxx Xxxxxxxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) SEVERABILITY. If any term or provision (or any portion thereof)
of this Agreement is determined by a court to be invalid, illegal or incapable
of being enforced by any rule of law or public policy, all other terms and
provisions (or other portions thereof) of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or provision (or
any portion
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thereof) is invalid, illegal or incapable of being enforced, this Agreement
shall be deemed to be modified so as to effect the original intent of the
parties as closely as possible to the end that the transactions contemplated
hereby and the terms and provisions hereof are fulfilled to the greatest extent
possible.
(c) ENTIRE AGREEMENT. This document, together with the stock option
agreement evidencing the Options, constitutes the final, complete, and exclusive
embodiment of the entire agreement and understanding between the parties related
to the subject matter hereof and supersedes and preempts any prior or
contemporaneous understandings, agreements, or representations by or between the
parties, written or oral.
(d) COUNTERPARTS. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(e) SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and be enforceable by Executive and the Company, and
their respective successors and assigns, except that Executive may not assign
any of his duties hereunder and he may not assign any of his rights hereunder
without the prior written consent of the Company.
(f) ATTORNEYS FEES. If any legal proceeding is necessary to enforce
or interpret the terms of this Agreement, or to recover damages for breach
therefore, the prevailing party shall be entitled to reasonable attorneys' fees,
as well as costs and disbursements, in addition to any other relief to which he
or it may be entitled.
(g) AMENDMENTS. No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties. No amendment
or waiver of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement. Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.
(h) CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of Illinois.
(i) INTERPRETATION. In interpreting this Agreement, all terms shall
be construed in accordance with their fair meaning and not strictly against any
party as the drafter hereof.
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IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first above written.
/s/ Xxxxxx Xxxxxxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxxxxx
AFTERMARKET TECHNOLOGY CORP.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
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