SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.29
SECOND
AMENDED AND RESTATED
THIS
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is made and
entered into as of the 10th day of
December, 2009, by and between HearUSA, Inc., a Delaware corporation (the
“Company”), and Xxxxxxx X. Xxxxxxxxxx (“Employee”).
Background:
(a) Employee
has been serving the Company prior to the date hereof pursuant to the terms of
an Amended and Restated Employment Agreement dated effective February 25,
2008.
(b) From
and after December 10, 2009, the Company and Employee wish to continue their
relationship, but pursuant to the terms and conditions provided
herein.
Agreement
In
consideration of the mutual promises hereinafter set forth, IT IS HEREBY AGREED
as follows:
1. Employment. Employee
shall continue to be employed by the Company, with such continued employment to
be under the terms and conditions set forth herein, and Employee hereby accepts
such continued employment upon the terms and conditions set forth
herein. The Amended and Restated Employment Agreement between the
parties dated effective February 25, 2008, is hereby superseded in its
entirety by this Agreement.
2. Term of
Employment. The term of this Agreement shall commence on the
date first set forth above and shall end on the third anniversary of such date
(the “Initial Employment Period”), and shall continue in effect for successive
periods of one year thereafter unless either the Company or Employee gives
written notice of non-renewal at least 90 days prior to the end of the then
current term of this Agreement, or unless sooner terminated as provided in
Section 6, 7 or 8 hereof. No such notice of non-renewal may be
provided prior to January 1, 2012. The Initial Employment Period and
any renewal terms of this Agreement are referred to herein as the “Term of
Employment.”
3. Location of
Employment. Employee will continue to be located at the
Company’s corporate offices in West Palm, Florida.
4. Duties.
(a) Employee
shall serve in a full-time capacity with the title of Chief Executive Officer,
reporting to the Board of Directors of the Company, and the Employee shall have
the authority, duties, responsibilities and status (including office, title and
reporting requirement) associated with the office of Chief Executive Officer
(including those contemplated by the Company’s bylaws).
(b) Employee
shall be authorized by the Board of Directors to employ reasonable discretion in
performing Employee’s responsibilities.
(c) Employee
shall have such further duties and responsibilities, not inconsistent with such
position, as shall be assigned to the Employee by the Board of Directors of the
Company.
(d) Employee
shall devote his full business time and attention and such skill, energy and
best efforts as may be necessary for the faithful performance of duties assigned
to Employee.
5. Compensation.
(a) During
the Term of Employment, the Company shall pay Employee, as compensation for his
services during the Employment Period, a base salary (the “Base Salary”) at a
rate of Four Hundred Twenty Thousand Dollars ($420,000.00) per year, such Base
Salary to be payable in accordance with the Company’s usual payment practices
and to be subject to adjustment from time to time as may be agreed between the
Employee and the Company. Employee shall be entitled to participate
in the Company’s current employee benefit plans, and will in the future be
entitled to participate in any new employee benefit plans that are put in place
for the Company executive officers, provided that any such plans shall be
subject to the approval of the Board of Directors. Additionally,
Employee shall be entitled to such prerogatives of office as are the Company’s
current practice, subject to the right of the Company to revise such
practices.
(b) The
Employee will be eligible to participate in the equity compensation plans of the
Company, including the HearUSA Amended and Restated 2007 Incentive Compensation
Plan, subject to the discretion of the Board of Directors of the
Company.
(c) The
Employee will be eligible to participate in the Company’s cash incentive plan,
the terms of which shall be subject to the discretion of the Board of Directors
of the Company.
(d) All
compensation shall be subject to customary withholding taxes and other
employment taxes as required with respect thereto.
6. Termination of Employment by
the Company by Reason Other Than Change in Control. This
Agreement and Employee’s employment may be terminated by the Company by reason
other than a Change in Control as defined in Section 8 as follows:
(a) At the
election of the Company, upon thirty days’ prior written notice to Employee in
the event Employee becomes disabled and such disability continues for a period
exceeding three (3) consecutive months. In the event of a
disagreement concerning the existence of any such disability, the matter shall
be resolved by a disinterested licensed physician chosen by the
Company.
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(b) At the
election of the Company, for “Cause” immediately upon notice by the Company to
the Employee. “Cause” shall mean:
(i) willful
or prolonged absence from work by the Employee (other than by reason of
disability) or failure, neglect or refusal by the Employee to perform his duties
and responsibilities hereunder;
(ii) material
breach by the Employee of any of the covenants contained in this
Agreement;
(iii) the
Employee’s commission of fraud or dishonesty against the Company, its
subsidiaries, parent, affiliates or their respective officers, directors,
stockholders or employees; conduct intended to injure or having the effect of
injuring the reputation, business or business relationships of the Company, its
subsidiaries, parent or affiliates or their respective officers, directors or
employees;
(iv) upon a
charge by a governmental entity against the Employee of any crime involving
moral turpitude or which could reflect unfavorably upon the Company or upon the
filing of any civil action involving the Employee and a charge of embezzlement,
theft, fraud or other similar act; or
(v) failure
or refusal of Employee to materially comply with the policies, standards and
regulations of the Company as from time to time may be made known to
Employee.
(c) At the
election of the Company, at any time, without Cause immediately upon notice by
the Company to Employee.
(d) Upon
termination of this Agreement by the Company by reason other than a Change in
Control as defined in Section 8, all rights and obligations of the parties
hereunder shall cease, except: (a) if this Agreement and
Employee’s employment are involuntarily terminated without Cause by the Company
prior to the end of the Term of Employment in accordance with Section 6(c)
above; or (b) if the
Company gives written notice of non-renewal of this Agreement pursuant to
Section 2 above and Employee was willing and able to continue performing his
duties under this Agreement, and the Employee’s employment with the Company is
terminated as a result of such non-renewal, then
(i) Employee
shall receive a lump sum of his Base Salary times two and the cash bonus to
which the Employee would have been entitled absent the termination as if all
performance targets had been met, which lump sum shall be paid upon termination
of Employee’s employment or as soon as administratively practicable thereafter,
but in no event later than the fifteenth (15th) day of the third (3rd) month
following the end of the calendar year in which Employee’s employment
terminates,
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(ii) Employee’s
health insurance and life insurance benefits shall continue for a period of 24
months after such termination;
(iii) vesting
of Employee’s unvested options shall be accelerated by 12 months and may be
exercised by Employee for such post-termination period as is prescribed by such
option agreements and related stock plan(s); and
(e) Upon termination of this Agreement under Section 6(a) or
by reason of Employee’s death, Employee shall receive the shares underlying
Employee’s performance-based restricted stock units to which Employee would have
been entitled absent the termination as if all performance criteria for Target
(as defined in the related restricted stock unit grant agreement) had been
achieved for the fiscal year during which the termination occurs, without regard
to any time-vesting requirements otherwise provided for in the restricted stock
unit grant agreement, which shares shall be issued to Employee upon termination
or as soon as administratively practicable
thereafter.
(f) Nothing
contained herein will be construed to prevent Employee from seeking or obtaining
other employment in the event the employment of Employee is terminated by the
Company without Cause. Termination of employment pursuant to this
Section 6 or otherwise shall not terminate or otherwise affect the rights and
obligations of the parties pursuant to Sections 9 through 12 and Section 15
hereof.
7. Termination of Employment by
Employee by Reason Other Than Change in Control. Employee may
terminate his employment with the Company at any time and for any reason, such
termination to be effective immediately upon notice by Employee to the
Company. Termination of employment pursuant to this Section 7 or
otherwise shall not terminate or otherwise affect the rights and obligations of
the parties pursuant to Sections 9 through 12 and Section 15
hereof.
8. Change in
Control. For the purposes of this Agreement,
(a) “Change
in Control” shall mean the effective date of any of the following events
occurring during the term of Employee’s employment: (a) consummation of any
consolidation, merger, statutory share exchange or other business combination as
a result of which persons who were stockholders of the Company immediately prior
to the effective date thereof beneficially own less than 50% of the combined
voting power in the election of directors of the surviving or resulting entity
following the effective date; (b) individuals who, as of the date hereof,
constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority of the Board of Directors of the Company,
provided that any person who is elected as a director subsequent to the date
hereof by a vote of, or upon the recommendation of, at least a majority of the
directors comprising the current Board (other than an individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company) shall be
considered a member of the current Board for these purposes; (c) consummation of
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all of the assets of the Company;
(d) shareholder approval of any plan or proposal for the liquidation or
dissolution of the Company; or (e) acquisition of beneficial ownership by any
“person” or “group” (as such term is used Sections 13(d) and 14(d)(2) of the
Exchange Act) of securities representing twenty percent (20%) or more of the
combined voting power in the election of the Company’s directors, provided such
acquisition has not been approved by at least a majority of the members of the
Board of Directors in office immediately prior to the acquisition.
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(b) “Good
Reason” shall mean, the occurrence of one or more of the following conditions
without the consent of Employee, provided Employee provides notice to the
Company of the existence of the applicable condition(s) within 90 days of the
initial existence of the condition(s) and the Company fails to remedy the
condition(s) within 30 days of receipt of such notice (1) the scope of
Employee’s responsibilities and/or discretion is/are materially diminished; or
(2) the Company requires Employee to relocate his place of employment to a
location greater than 100 miles from the Company’s current corporate
headquarters in Xxxx Xxxx Xxxxx, Xxxxxxx; or (3) Employee’s Base Salary is
reduced by an amount greater than 25% and such reduction is not pursuant to a
Company-wide employee salary reduction plan or program.
(c) If there
is a Change in Control of the Company and (a) this Agreement and
Employee’s employment are involuntarily terminated without Cause by the Company,
or (b) Employee
terminates his employment under this Agreement for Good Reason (as defined
above) within eighteen months of the Change in Control, provided that such Good
Reason arises after the Change in Control, then
(i) Employee
shall receive a lump sum of his Base Salary times three and the cash
bonus to which the Employee would have been entitled absent the termination,
assuming that all performance targets would have been met, which lump sum shall
be paid upon termination of Employee’s employment or as soon as administratively
practicable thereafter, but in no event later than the fifteenth (15th) day of
the third (3rd) month following the end of the calendar year in which the
Employee’s employment terminates;
(ii) Employee’s
health insurance and life insurance benefits shall continue for a period of 36
months after such termination;
(iii) all of
Employee’s unvested options, if any, shall immediately vest and may be exercised
by Employee for such post-termination period as is prescribed by such option
agreements and related stock plan(s);
(iv) all of
the Employee’s performance-based restricted stock, if any, shall immediately
vest and it shall be assumed that all performance-criteria at the Target (as
that term is defined in the related restricted stock grant agreement) level for
the restricted stock had been achieved; and
(v) Employee
shall receive the shares underlying Employee’s performance-based restricted
stock units to which Employee would have been
entitled absent the termination as if all performance criteria for Target (as
defined in the related restricted stock unit grant agreement) had been achieved
for the fiscal year during which the termination occurs, without regard to any
time-vesting requirements otherwise provided for in the restricted stock unit
grant agreement, which shares shall be issued to Employee upon termination or as
soon as administratively practicable thereafter.
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(d) Additional
Limitation.
(i) Anything
in this Agreement to the contrary notwithstanding, in the event that any
compensation, payment or distribution by the Company to or for the benefit of
Employee, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (the “Severance Payments”), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”), the following provisions shall
apply:
(A) If the
Severance Payments, reduced by the sum of (1) the Excise Tax and
(2) the total of the Federal, state and local income and employment taxes
payable by Employee on the amount of the Severance Payments which are in excess
of the Threshold Amount, are greater than or equal to the Threshold Amount,
Employee shall be entitled to the full benefits payable under this
Agreement.
(B) If the
Threshold Amount is less than (x) the Severance Payments, but greater than
(y) the Severance Payments reduced by the sum of (1) the Excise Tax
and (2) the total of the Federal, state, and local income and employment
taxes on the amount of the Severance Payments which are in excess of the
Threshold Amount, then the benefits payable under this Agreement shall be
reduced (but not below zero) to the extent necessary so that the maximum
Severance Payments shall not exceed the Threshold Amount. Such reductions shall
first be made to compensation that is not “deferred compensation” and is not
subject to Code Section 409A before such reductions are made to compensation
that is “deferred compensation” subject to Code Section 409A.
For the
purposes of this Section 8, “Threshold Amount” shall mean three times Employee’s
“base amount” within the meaning of Section 280G(b)(3) of the Code and the
regulations promulgated thereunder less one dollar ($1.00); and “Excise Tax”
shall mean the excise tax imposed by Section 4999 of the Code, and any
interest or penalties incurred by Employee with respect to such excise
tax.
(ii) The
determination as to which of the alternative provisions of Section 8(d)(i) shall
apply to Employee shall be made by a nationally recognized accounting firm
selected by the Company (the “Accounting Firm”), which shall provide detailed
supporting calculations both to the Company and Employee within 15 business days
of the date of termination under this Section 8, if applicable, or at such
earlier time as is reasonably requested by the Company or Employee. For purposes
of determining which of the alternative provisions of Section 8(d)(i) shall
apply, Employee shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation applicable to individuals for the
calendar year in which the determination is to be made, and state and local
income taxes at the highest marginal rates of individual taxation in the state
and locality of Employee’s residence on the date of termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. Any determination by the Accounting Firm shall be
binding upon the Company and Employee.
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9. Third-Party
Confidentiality. Employee acknowledges that the Company has
disclosed that the Company is now, and may be in the future, subject to duties
to third parties to maintain information in confidence and
secrecy. By executing this Agreement, Employee consents to be bound
by any such duty owed by the Company to any third party.
10. Confidentiality; Return of
Property.
(a) Employee
acknowledges that Employee’s work for the Company is expected to bring him into
close contact with various confidential business data of the Company, its
contracting parties, affiliates and customers not readily available to the
public. Accordingly, Employee:
(i) covenants
and agrees that (A) during the Term of Employment, except pursuant to
appropriate safeguards on confidentiality and only in connection with the
business of the Company and (B) after the Term of Employment, on any basis for
any reason, Employee shall not use or disclose to anyone except authorized
personnel of the Company or the Company’s Affiliates (as defined below), whether
or not for his benefit or otherwise, any confidential matters (collectively,
“Confidential Matters”) concerning the Company or its suppliers, consultants,
agents, other contracting parties or customers, whether such customers are
deemed former, current or potential customers (collectively, the “Clients”),
including without limitation all confidential technical information of the
Company, secrets, trade secrets, proprietary software, copyrights, Client lists,
lists of employees, confidential evaluations, mailing lists, details of
consultant contracts, pricing policies, sales data and reports, margins,
operational methods and processes, plans, financial information and other
confidential business affairs, learned by Employee concerning the Company, its
Clients or a third party, including without limitation any subsidiaries,
partners, affiliates, shareholders, employees, lenders, suppliers, consultants,
agents or joint venture partners of the Company (collectively, “Affiliates”);
and
(ii) covenants
and agrees that (A) all confidential memoranda, notes, lists (including, without
limitation, mailing and Client lists), records and other confidential documents,
whether in written, electronic or other form (and all copies thereof) made or
compiled by Employee or made available to him concerning the Company, its
Clients and any Affiliates are the sole property of the Company, and (B) if such
documents are in the possession or control of the Employee, the Employee shall
deliver them, without retaining any copies thereof, to the Company promptly at
the time of the Employee’s termination of employment or at any other time upon
request by the Company.
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(b) Section
10 shall not apply to any information that: (i) is publicly available
or becomes publicly available through no act or fault of Employee; (ii) is made
known to Employee by a third party who did not obtain it directly or indirectly
from the Company; (iii) is independently developed by Employee without use of
the Company’s information as evidenced by credible written records of Employee;
or (iv) is information required to be disclosed by operation of law,
governmental regulation or court order provided that, if Employee determines
that such disclosure might be required, Employee will promptly notify the
Company and provide the Company, to the extent practicable, an opportunity to
seek a protective order or other appropriate remedy to prevent such
disclosure.
(c) Upon the
termination of the Employee’s employment hereunder for any reason, the Employee
shall promptly return to the Company any property owned by the Company or
furnished to the Employee by the Company for use in connection with Employee’s
services hereunder.
11. Noncompetition/Conflicts of
Interest.
(a) The
Employee covenants and agrees that the Employee shall not, directly or
indirectly, as a principal, employee, partner, consultant, agent or otherwise,
compete or assist in a Competitive Activity anywhere in the United States during
the Term of Employment and for a period of two years after the termination of
this Agreement (the “Restricted Period”) without the express prior written
consent of the Company; provided, however, that the running of the Restricted
Period shall be tolled during any period of time in which Employee violates the
provisions of this Section. “Competitive Activity” means the
promotion, marketing or sale of hearing care products and services.
(b) During
the Restricted Period, Employee shall not, directly or indirectly, alone or in
concert with others, solicit or encourage any employee of the Company, or an
employee of any person or entity with which the Company has an agreement through
which the Company and the person or entity are to act in concert with respect to
the business of the Company, to leave their respective employment or hire any
employee of the Company.
12. Acknowledgment Regarding
Restrictions. Employee recognizes and agrees that the
restraints contained in Section 11 are reasonable in view of the Company’s
legitimate interests in protecting its business. Employee further
acknowledges that the limitations contained in Section 11 are reasonable as to
the duration in time, as to geographic scope and as to the nature of the
activities restricted. However, in the event an appropriate court
determines that the provisions of Section 11 are excessively broad as to
duration, geographic scope, prohibited activities or otherwise, the parties
agree that Section 11 may be reduced or curtailed to the extent necessary to
render it enforceable.
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13. Vacation and
Holidays. The Employee shall be entitled to vacation allowance
and holidays in accordance with the policies of the Company as in effect from
time to time for its employees.
14. Non-Waiver of
Rights. The Company’s failure to enforce at any time any of
the provisions of this Agreement or to require at any time performance by the
Employee of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to affect either the validity of this Agreement, or
any part of it, or the right of the Company thereafter to enforce each and every
provision in accordance with the terms of this Agreement.
15. The Company’s Right to
Injunctive Relief. In the event of a breach or threatened
breach of any of Employee’s duties and obligations under the terms and
provisions of Section 10 or Section 11, Employee agrees that the Company shall
be entitled to a temporary restraining order and a preliminary and permanent
injunction to prevent such breach or threatened breach because the harm which
might result to the Company’s business as a result of any noncompliance by
Employee with any of the provisions of Section 10 or Section 11 may be
irreparable. Employee acknowledges that the Company’s entitlement to
injunctive relief shall be in addition to the Company’s entitlement to
damages.
16. Assignments. This
Agreement shall be freely assignable by the Company and shall inure to the
benefit of, and be binding upon, the Company, its successors and assigns and/or
any other corporate entity which shall succeed to the business being operated by
the Company, but, being a contract for personal services, neither this Agreement
nor any rights hereunder are assignable by the Employee.
17. Governing
Law. This Agreement shall be interpreted in accordance with
and governed by the laws of the State of Delaware without regard to its conflict
of law rules.
18. Amendments. No
modification, amendment or waiver of any of the provisions of this Agreement
shall be effective unless in writing and signed by the parties
hereto.
19. Notices. Any
notices to be given by either party hereunder shall be in writing and shall be
deemed to have been duly given if delivered or mailed, certified or registered
mail, postage prepaid, as follows: to the Company at 0000 Xxxxxxxxxx
Xxxxxxx, Xxxx Xxxx Xxxxx, Xxxxxxx 00000, Attention: Board of Directors; and to
Employee at the address set forth beneath his signature below; or to such other
address as may have been furnished to the other party in writing.
20. Entire
Agreement. This Agreement is the entire agreement between the
parties and supersedes any previous oral or written agreement or understanding
between the Company and the Employee with respect to the subject matter
hereof. There are no representations, warranties, promises or
undertakings between the parties relating to the subject matter of this
Agreement other than those set forth herein.
21. Severability. If
any provision of this Agreement shall be determined to be illegal or
unenforceable, the remaining provisions of this Agreement shall remain in full
force and effect, and this Agreement shall be construed as if the illegal or
unenforceable provision were not a part hereof, so long as the remaining
provisions of this Agreement shall be sufficient to carry out the overall intent
of the parties as expressed herein.
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22. Counterparts. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
23. Headings. The
headings in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement.
24. Code Section
409A. If Employee is a “specified employee” (within the
meaning of Code Section 409A) of the Company at the time of his or her
termination of employment with the Company, any amounts that would be paid to
the Employee during the six months following termination of employment shall
instead be paid in a lump-sum on the first day of the seventh month following
termination of employment, except to the extent the delay described in this
Section 24 is not required to avoid any adverse tax consequences under Code
Section 409A.
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
|
HearUSA, Inc. | |
| /s/ Xxxxxx X. Xxxxxxxxx, Chairman | ||
| By: |
Xxxxxx X. Xxxxxxxxx, Chairman
|
|
| Compensation Committee of the | ||
|
Board of Directors
|
||
| EMPLOYEE | ||
| /s/ Xxxxxxx X. Xxxxxxxxxx | ||
| Xxxxxxx X. Xxxxxxxxxx | ||
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