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EXHIBIT 10(U)
EMPLOYMENT AGREEMENT
Employment Agreement dated as of April 10, 1997 between Xxxxxx X. Xxxxxx
(the "Executive") and AM International, Inc., A Delaware corporation (the
"Company") with its principal office at 000 Xxxxxxxx Xxxxx, Xxxxx Xxxxxxxx,
Xxxxxxxx 00000.
WHEREAS, the Company desires to employ the Executive as its President and
Chief Executive Officer, and the Executive desires to accept such employment,
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and covenants contained
herein, the Executive and the Company hereby agree as follows:
ARTICLE I
Employment
Section 1.01. Position; Term; Responsibilities. The Company shall employ
the Executive as its President and Chief Executive Officer effective May 28,
1997 (the "Commencement Date"). Subject to the powers, authorities and
responsibilities vested in the Board of Directors (including any committees
thereof, the "Board") of the Company, the Executive shall have the
responsibility vested by the Company's By-laws in the President and Chief
Executive Officer. The Executive shall also perform such other executive and
administrative duties for the Company and its subsidiaries and affiliates (not
inconsistent with the positions of President and Chief Executive Officer of the
Company) as may from time to time be authorized or directed by the Board. The
Executive agrees to be employed by the Company in all such capacities subject
to all the covenants and conditions hereinafter set forth.
Section 1.02. Duties. During Executive's Employment hereunder, the
Executive shall perform faithfully the duties assigned to him hereunder to the
best of his abilities and devote his full and undivided business time and
attention to the transaction of the Company's business and not engage in any
other business activities except with the approval of the Board. The previous
sentence shall not preclude the Executive from participating in the affairs of
any governmental, educational or other charitable institution so long as the
Board does not determine in good faith that such activities unreasonably
interfere with the business of the Company or the performance by Executive of
his duties hereunder.
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ARTICLE II
Compensation
Section 2.01. Basic Compensation. As compensation for his services
hereunder, the Company shall pay to the Executive a minimum annual salary of
$225,000 (the "Base Salary"), payable in installments in accordance with the
Company's normal payment schedule for senior management of the Company, but
retroactive to April 10, 1997. The Executive's salary may be increased from
time to time above the Base Salary at the discretion of the Board. The
Executive's annual salary in effect from time to time under this Section 2.01
is hereinafter called his "Base Compensation".
Section 2.02. Incentive Compensation. (A) Determination of Amount. In
addition to his Base Compensation, the Company shall pay to the Executive as
incentive compensation ("Incentive Compensation"), in respect of each fiscal
year of the Company, an amount determined and payable in accordance with the
Company's Executive Incentive Compensation Plan or a replacement plan
established by the Board (collectively, an "Incentive Plan"); provided,
however, that the Executive shall be entitled to receive Incentive Compensation
on a pro rata basis in respect of any portion of a fiscal year during which the
Executive's employment is terminated other than as a result of a Voluntary
Termination or a termination by the Company for "Cause", provided that
Executive has been employed for at least one-half of such fiscal year. A
"Voluntary Termination" shall mean the voluntary termination by Executive of
his employment with the Company.
(B) Manner of Payment. Incentive Compensation earned hereunder shall be
determined by the Board pursuant to the relevant Incentive Plan.
Section 2.03. Stock Option; Bonus Stock Award. (A) The Company shall
grant to the Executive, effective on the date of execution of this Agreement, a
nonqualified stock option under the Internal Revenue Code of 1986, as amended
(the "Code"), pursuant to the Company's 1994 Long-Term Incentive Plan (the
"LTIP") to purchase 60, 000 shares of Common Stock at an exercise price equal
to the closing price of the Common Stock on the American Stock Exchange on such
date. The Company shall grant Executive an additional option to purchase
12,000 shares of Common Stock subject to such restrictions as the Company's
Board of Directors or appropriate Committee shall determine on June 11, 1997.
Such stock options shall expire ten years after their respective grant dates,
and shall become exercisable as to 33-1/3% of the shares subject to such
options on each of the first, second and third anniversaries of their
respective grant dates, subject to earlier vesting as provided in the LTIP.
Section 2.04. Severance Benefits. If the Executive is terminated for any
reason other than "Cause," as defined below, or if Executive terminates his
employment for any reason, including death or disability, Executive shall
receive a lump sum payment equal to the greater of
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(i) $349,125, and (ii) an amount equal to Executive's highest annual Base
Compensation at any time after the date hereof. In addition, for a period of
24 months following such termination (the "Severance Period"), Executive shall
be provided medical (including supplemental executive health benefits) dental,
accident, life insurance and long-term disability benefits as are made
available to Executive and his dependents prior to such termination; provided,
that if Executive becomes eligible during the Severance Period to participate
in another group plan by reason of subsequent employment or otherwise, the
Executive's coverage under the Company plans will terminate in accordance with
the transition of coverage provisions in the Company's plans. During such
Severance Period Executive shall also receive at the Company's expense
financial planning services, tax preparation by Xxxxxx Xxxxxxxx LLP,
Outplacement Services at a firm of Executive's choice, subject to Company's
reasonable consent, and a business or athletic club membership.
Section 2.05. Other Employee Benefits. The Executive shall be entitled
to participate in all employee benefit plans and to receive all other fringe
benefits as are from time to time made generally available to the senior
management of the Company; provided that if a severance benefit is payable to
Executive pursuant to Section 2.04 such benefit shall be paid in lieu of any
benefit otherwise payable to Executive pursuant to any Company severance plan
unless such plan expressly provides that payments thereunder will be made in
addition to the severance payments provided hereunder. As of the date hereof,
such plans include a 401(k) plan, an automobile allowance program, an executive
universal life insurance program, membership in a business or athletic club, an
executive long-term disability plan, a supplemental executive health plan, a
supplemental executive retirement plan, and tax preparation and financial
planning programs. In addition, the Executive shall be entitled to take time
off for vacation or illness in accordance with the Company's policies with
respect thereto established from time to time with respect to its senior
management.
Section 2.06. Expense Reimbursements. The Company shall reimburse the
Executive for all proper expenses incurred by him in the performance of his
duties hereunder in accordance with the policies and procedures established by
the Board.
ARTICLE III
Termination of Employment
Section 3.01. Termination. The Company or the Executive may terminate
Executive's employment hereunder at any time for any reason and Executive shall
be entitled only to the benefits set forth herein.
Section 3.02. Death. In the event of the death of the Executive during
the Employment Period, his Designated Successors (as hereinafter defined) shall
be entitled to receive any accrued
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and unpaid compensation under Sections 2.01, 2.02 and 2.04 and any unreimbursed
expenses under Section 2.06.
Section 3.03. Definitions of Terms. "Cause" shall mean embezzlement or
misappropriation of corporate funds, other significant act of dishonesty or
illegality, willful refusal to perform or substantial disregard of the duties
properly assigned pursuant to Article I or significant violation of any
statutory or common law duty of loyalty to the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
unless and until there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire Board of Directors of the Company called and held for the purpose
(after reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board, the Executive engaged in the conduct set forth
above in this section 3.03 and specifying the particulars thereof in reasonable
detail. "Designated Successors" of Executive shall mean the executors,
administrators or other legal representatives of Executive (in such order of
priority) as the Executive may have designated in a written instrument filed
with the Secretary of the Company.
ARTICLE IV
Miscellaneous
Section 4.01. Notices. Any notice or request required or permitted to be
given hereunder shall be sufficient if in writing and delivered personally or
sent by registered mail, postage prepaid and return receipt requested, as
follows: if to the Executive, to his address as set forth in the records of
the Company, and if to the Company, to its address hereinabove set forth, or to
any other address designated by either party by notice similarly given. Such
notice shall be deemed to have been given upon the receipt thereof.
Section 4.02. Arbitration; Enforcement Expenses.
(A) Any controversy or claim arising out of this Agreement, or
breach thereof, shall be settled by arbitration in the Chicago
metropolitan area in accordance with the laws of the State of Illinois by
three disinterested arbitrators, one of whom shall be appointed by the
Company, one by the Executive, and the third of whom shall be appointed
by the first two arbitrators. If the third arbitrator cannot be agreed
upon, the third arbitrator shall be appointed by the Chief Judge of the
United States Court of Appeals for the Seventh Circuit. The arbitration
shall be conducted in accordance with the rules of the American
Arbitration Association, except with respect to the selection of
arbitrators. The arbitrators' determination shall be final and binding
upon all parties and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof.
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(B) The Company shall pay to the Executive all reasonable
out-of-pocket expenses, including reasonable attorneys' fees, court costs
and arbitration costs, incurred by the Executive in connection with any
arbitration proceeding referred to in subsection (A) above brought by
Executive to enforce his rights under this Agreement if Executive is the
prevailing party in such proceeding.
Section 4.03. Assignment and Succession. The rights and obligations of
the Company under this Agreement shall inure to the benefit of and be binding
upon its successors and assigns, and the Executive's rights and obligations
hereunder shall inure to the benefit of and be binding upon his Designated
Successors.
Section 4.04. Headings. The Article, Section paragraph and subparagraph
headings are for convenience of reference only and shall not define or limit
the provisions hereof.
Section 4.05. Applicable Law. this Agreement shall at all times be
governed by and construed, interpreted and enforced in accordance with the laws
of the State of Illinois.
Section 4.06. Entire Agreement. This Agreement represents the entire
agreement among the parties hereto with respect to the employment of the
Executive, except as specifically provided herein, and supersedes all previous
agreements, policies and understandings between the Executive and the Company
with respect to Executive's employment.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by
its duly authorized officer and the Executive has signed this Agreement as of
the day and year first above written.
AM INTERNATIONAL, INC.
By /s/ Xxxxxx X. Xxxxxxx
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Title: Vice President
EXECUTIVE
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
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