EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of October
7, 1996 by and between Xxxxxxx X. Xxxxx, an individual ("Executive"), and
Aftermarket Technology Corp., a Delaware corporation (the "Company" or "ATC").
WHEREAS, Executive and the Company entered into that certain
Employment Agreement dated July 29, 1994 (the "Prior Agreement");
WHEREAS, Executive and the Company desire to terminate the Prior
Agreement and Executive and the Company desire to enter into this Agreement to
replace the Prior Agreement;
WHEREAS, all things necessary to make this Agreement a valid, binding
and legal instrument have been performed;
NOW, THEREFORE, THIS AGREEMENT WITNESSETH: that in consideration of
the covenants and premises, receipt whereof is hereby acknowledged, Executive
and the Company hereby agree and provide:
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 Chairman of the Board of
Directors 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 officers to whom the Executive reports.
(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 October 7, 1996 and end on December 31, 1998 (the
"Initial Term"), subject to the provisions for termination set forth herein and
renewal as provided in Section 1(e) below.
(e) RENEWAL. The term of this Agreement shall be extendable for one-
year periods at the option of the Company after the end of the Initial Term.
Each extended term shall continue to be subject to the provisions for
termination set forth herein.
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2. COMPENSATION AND BENEFITS.
(a) SALARY. Executive shall receive for services to be rendered
hereunder an annual base salary of Three Hundred Thousand Dollars ($300,000)
(the "Base Salary") payable on a monthly basis, which shall be subject to
increase at the sole discretion of the Board, and subject to standard
withholdings for taxes and social security and the like.
(b) PARTICIPATION IN BENEFIT PLANS. 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. Until such time as the
Company establishes a medical, dental, health and accident or disability plan or
program of its own, Executive shall be entitled to the extent legally permitted
to obtain coverage therefor under, and pursuant to the terms of, any such plans
or programs of the Company's subsidiaries, as may be designated by the
Executive.
(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 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 the Executive.
(e) LIFE INSURANCE. During the term hereof, the Company shall
procure and pay for a $1,000,000 life insurance policy covering Executive, for
the benefit of such beneficiaries as Executive shall designate.
3. BONUS PLANS.
(a) PARTICIPATION. During the term hereof, Executive shall be
entitled to participate in any bonus or incentive plan (a "Bonus 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.
(b) BONUSES. For the fiscal year ending December 31, 1996, Executive
shall receive a bonus equal to the greater of (i) $300,000 if, and only if, ATC
achieves the Management Budget approved by the Board of Directors of ATC (the
"Management Budget") for the full fiscal year and at the end of such fiscal year
Executive is employed pursuant to this Agreement or (ii) $600,000 if, and only
if, ATC achieves at least 15% above the Management Budget for the fiscal year
and at the end of such full fiscal year Executive is employed pursuant to this
Agreement. For all subsequent annual periods, Executive shall receive such cash
bonus as the Board shall determine in its sole discretion based upon the
performance of the Company and its subsidiaries. Such bonuses shall be paid at
such time as the Company pays cash bonuses to its executive employees.
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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.
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, less standard withholdings for tax and social
security purposes, which in this event shall be the date upon which notice of
termination is given. The Company shall have no further 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 a
majority of the disinterested directors of the Board: (a) a material breach by
the Executive 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 a majority of the disinterested directors of the
Board or of the terms of his employment, if in any such case such material
breach remains uncured after the lapse of 30 days following the date that the
Company has given the Executive written notice thereof; (b) the repeated
material breach by the 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 any case described in this
clause (f), the Board reasonably determines renders the Executive unfit to serve
in his capacity as an officer or employee of the Company or its affiliates; or
(g) conduct by the Executive which in the good faith determination of the Board
demonstrates gross unfitness to serve in his capacity as an officer or employee
of the Company or its affiliates.
(b) VOLUNTARY TERMINATION. Executive may voluntarily terminate his
employment with the Company at any time upon ninety (90) 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. Company may terminate Executive's
employment in the event Executive suffers a disability that renders Executive
unable to perform the essential functions of his position, even with reasonable
accommodation, for four (4) months within any eight (8) month period. After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement except that Executive shall receive the accrued portion of any bonus
through the Termination Date, less standard withholdings for tax and social
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security purposes, payable upon such date or over such period of time which is
in accordance with the applicable Bonus Plan.
(d) TERMINATION WITHOUT CAUSE.
(i) TERMINATION PAYMENT DURING THE INITIAL TERM. In the event
Executive's employment is terminated without "cause," as defined above, the
Company shall pay Executive as severance an amount equivalent to his then base
salary for the remaining period of the Initial Term or eighteen (18) months,
whichever period is shorter, less standard withholdings for tax and social
security purposes, payable over such term in monthly PRO RATA payments
commencing as of the Termination Date plus the accrued portion of any bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable upon such date or over such period of time which is
in accordance with the applicable Bonus Plan.
(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 his then base salary for the remaining period of
the Extension Period, less standard withholdings for tax and social security
purposes, payable over the remaining period of the Extension Period in monthly
PRO RATA payments commencing as of the Termination Date plus the accrued portion
of any bonus through the Termination Date, less standard withholdings for tax
and social security purposes, payable upon such date or over such period of time
which is in accordance with the applicable Bonus Plan.
(iii) FUNDAMENTAL CHANGES. In the event that Company makes a
substantial change which results in diminution in the 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 10 days' notice prior to any such
termination and the Company shall have a reasonable period of time to cure. 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 paragraphs 5(d)(i) and (5)(d)(ii), as applicable.
(e) BENEFITS UPON TERMINATION. All benefits provided under paragraph
2(b) and 2(e) hereof shall be extended, at Executive's election and Company's
cost, to the extent permitted by the Company's insurance policies and benefit
plans, for one year after Executive's Termination Date, except (i) as required
by law (e.g., COBRA health insurance continuation election), (ii) in the event
of a termination described in paragraphs 5(a) or (iii) to the extent that
comparable benefits are provided to Executive under any other arrangement with
the Company or its affiliates.
(f) 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 paragraph 2(b) herein for a period of three (3)
months, and (ii) pay to Executive's estate the accrued portion of any bonus
through the Termination Date, less standard withholdings for tax and social
security purposes, payable upon such date or over such period of time which is
in accordance with the applicable Bonus Plan.
6. PROPRIETARY INFORMATION OBLIGATIONS.
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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, 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.
8. NONCOMPETITION. Executive agrees that during the term of this
Agreement and for a period of five (5) years 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 which 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 the 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. TERMINATION OF PRIOR AGREEMENT. Upon execution of this Agreement, the
Prior Agreement shall be terminated and this Agreement shall replace the Prior
Agreement.
10. 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:
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To the Company:
Aftermarket Technology Corp.
c/o Aurora Capital Partners L.P.
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
To Executive:
Xxxxxxx X. Xxxxx
Aftermarket Technology Corp.
00000 Xxxxx Xxx Xxxxx
Xxxxx X-000
Xxxxxxx Xxx, 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 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 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 attorney's fees,
as well as costs and disbursements, in addition to any other relief to which he
or it may be entitled.
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(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 Delaware.
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IN WITNESS WHEREOF, the parties have executed this agreement effective as
of the date it is last executed below by either party.
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XXXXXXX X. XXXXX
AFTERMARKET TECHNOLOGY CORP.
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By:
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Title:
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