EXHIBIT 10.1
BANDAG, INCORPORATED
SEVERANCE AGREEMENT FOR XXXXXX X. XXXXXX
THIS SEVERANCE AGREEMENT ("Agreement") is entered into as of the 4th
day of May, 1999, by and between Bandag, Inc. ("Bandag" or "Company"), an Iowa
corporation, and Xxxxxx X. Xxxxxx ("Employee").
RECITALS
WHEREAS, Employee is and has been an at-will executive employee of
Bandag, and possesses an extensive knowledge of the business and affairs of
Bandag, its proprietary information, trade secrets, policies, methods,
personnel, and problems;
WHEREAS, Employee desires to continue to be employed at-will by
Bandag, and acknowledges that this Agreement provides for severance payments to
which he is not otherwise entitled by any contract or any other legal
obligation;
WHEREAS, the parties agree and acknowledge that this Agreement is not
intended to constitute an employment contract; does not create any employment
rights other than those expressly set forth herein; does not alter or modify
Employee's status as an "at-will" employee of Bandag or the terms and conditions
of his employment except as expressly set forth herein, and does not create any
rights to continued employment or to termination only "for cause"; but rather,
is intended solely to provide for the availability of severance payments to
Employee under the terms and conditions set forth herein in consideration and
exchange for Employee's agreement to be bound by the Non-Competition and
Confidentiality provisions contained in this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the sufficiency of which is acknowledged by each
party, the parties hereto agree as follows:
1. Employee Covenants. Employee covenants and agrees to be bound by the
terms of the Non-Competition and Confidentiality provisions set forth
in paragraph 2, below.
2. Covenant Not to Compete and Confidentiality.
a. Recognizing that Employee will, during the course of Employee's
employment with Company or of any corporation or other entity, at
least a majority of whose voting securities are owned, directly
or indirectly, by the Company (a "Subsidiary"), obtain or acquire
knowledge of Confidential Information, which knowledge would, in
the event Employee were to become employed by or associated with
a competitor of Company, or of any Subsidiary, become available
and provide invaluable benefits to such competitor and cause
irreparable harm to
Company, or any Subsidiary, and in consideration of the severance
payments provided herein, Employee will not, within the
geographic location provided herein, from the date hereof until
twenty-four (24) months following termination of Employee's
employment for any reason, directly or indirectly, as a director,
officer, employee, or as an owner of any equity proprietary
interest in (except for ownership of shares in a publicly traded
company not exceeding five percent (5%) of any class of
outstanding equity securities), or as a consultant or otherwise,
render services to, have any financial interest in, or otherwise
participate in the affairs of, any business ("Competitive
Business") which is, or is planning or organizing to be, engaged
in the manufacture and/or sale of products or the rendering of
services competitive with the products manufactured or sold or
the services rendered by Company or any Subsidiary. The
geographic limitation of the foregoing covenant not to compete
shall extend to any state of the United States in which the
Company or any Subsidiary sold or actively attempted to sell its
products or services within the one (1) year period prior to the
termination of Employee's employment with Company. In the event
that Employee is employed by a Competitive Business which is
engaged in the manufacture or sale of multiple products, this
Section 2 shall apply to only those portions of said Competitive
Business which are directly or indirectly competitive with
Company or any Subsidiary.
b. From the date hereof until twenty-four (24) months following the
termination of Employee's employment, Employee will not, on
behalf of any Competitive Business, be connected in any way with
soliciting or hiring any employees of Company or any Subsidiary
who were subject to Employee's general supervision during
employment by Company, until such employees have not been
employed by Company or any Subsidiary for six (6) months.
c. In addition to all duties of loyalty imposed on Employee by law,
Employee shall maintain Confidential Information (as defined in
subsection (e) below) in strict confidence and secrecy and shall
not at any time after the date hereof, or at any time after
termination of, employment with Company, directly or indirectly,
use or disclose to others any Confidential Information, or use
any Confidential Information for the benefit of any person or
entity (including the Employee) other than Company, without the
prior written consent of Company (except for disclosures to
persons acting on Company's behalf with a need to know such
information provided such persons agree to hold such information
in confidence on terms acceptable to Company, and except for
disclosures that may be required by a court of competent
jurisdiction provided Employee notifies Company a reasonable time
prior to any such disclosure).
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d. "Confidential Information" means Proprietary Ideas (as defined in
subsection (f) below) and other information (excluding
information that is generally known to the public by means other
than disclosure by Employee) related to Company's or any
Subsidiary's business, whether or not in written or printed form,
not generally known in the trade or industry, of which Employee
has become informed during his employment by Company or has or
will become informed during his employment by Company, including
without limitation, product specifications, service
specifications, manufacturing procedures, methods, equipment,
compositions, technology, designing, business plans, marketing
plans, formulae, trade secrets, know-how, research and
development programs, sales methods, customer lists, strategic
plans, mailing lists, sales levels and quantities, customer
usages and requirements, computer programs and other confidential
technical or business information and data.
e. "Proprietary Ideas" means ideas, suggestions, Inventions (as
defined in subsection (g) below) and work relating in any way to
the business and activities of Company, which are or may be
subjects of protection under applicable law concerning patents,
copyrights, trade secrets, trademarks, service marks or other
intellectual property rights.
f. "Inventions" means designs, discoveries, improvements, ideas,
conceptions, works of authorship, know how, innovations,
inventions, enhancements, modifications, methods, techniques,
technological developments and suggestions, whether or not
patentable, copyrightable or susceptible to any other form of
legal protection, including without limitation, products,
processes, machines, tooling, articles, compositions of matter,
promotional and advertising materials, data processing programs
and systems, manufacturing and sales techniques, artwork,
drawings, plans and specifications which either (i) relate to the
business of Company or any Subsidiary as conducted from time to
time, or (ii) relate to Company's or any Subsidiary's actual or
demonstrably anticipated research or development, or (iii) result
from any work performed by Employee for Company.
3. Specific Enforcement; Injunctive Relief. The parties acknowledge that
damages would be an inadequate remedy for any breach of the provisions
of Section 2 by Employee. Therefore, the obligations of Employee under
Section 2 shall be specifically enforceable and Employee agrees that
Bandag shall be entitled to an injunction, restraining order or other
equitable relief from any court of competent jurisdiction, restraining
Employee from committing any violations of the provisions of Section 2
of this Agreement, and should such injunction or decree issue in favor
of Bandag, Bandag shall also be entitled to all costs, expenses, and
fees (including, without limitation, attorneys' fees) incurred
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in connection with such action. Such remedies shall be cumulative and
not exclusive, and shall be in addition to any other remedy Bandag may
have.
4. Certain Remedies on Breach of Covenant Not to Compete and
Confidentiality. In addition to any other remedies available to
Company under applicable law for breach of any of the covenants and
obligations contained in Section 2 hereof, the breach by the Employee
of any of the covenants and obligations contained in Section 2 hereof
shall also result in:
a. the forfeit by the Employee of all options to purchase Class A
Common Stock to the extent unvested as of the date of the breach
and the cancellation of all such options to the extent vested but
not yet exercised by the Employee or his legal representatives as
of the date of breach; and
b. the forfeit by the Employee of all shares of restricted stock
granted by the Company to Employee on and after February 8, 1999
which are unvested as of the date of the breach.
5. Severance Payments. Bandag agrees that if Bandag involuntarily
terminates Employee's employment with Bandag or if Employee
voluntarily terminates his employment with Bandag for good reason as
defined in subparagraph b. below, it will pay Employee a severance
payment equal to the greater of (i) $1,000,000, or (ii) a gross amount
equal to two (2) years of Employee's base salary (subject to all
required federal, state and local payroll withholding). For purposes
of this paragraph "base salary" is defined as the higher of (i)
Employee's base salary on the date of his involuntary termination or
his voluntary termination for good reason or (ii) an "average" of
Employee's annual base salary computed by adding his annual base
salary on the date of such termination to his annual base salary on
December 31st for each of the two years immediately preceding such
termination and dividing the sum by three (3). Bandag will pay
Employee the discretionary severance amount in twenty-four (24) equal
monthly installments payments commencing thirty (30) days after the
date of Employee's involuntary termination, with monthly installment
payments made thereafter on the 1st day of each month for twenty-three
months. For purposes of this paragraph, the date of Employee's
involuntary termination or voluntary termination for good reason is
defined as the last date on which Employee renders services to Bandag.
a. It is understood and agreed to by the parties that, as used in
this paragraph 5, the term "involuntary termination" does not
include the termination of Employee's employment with Bandag due
to death, disability, retirement, quitting or any other type of
voluntary separation, by agreement or otherwise, from Bandag
(except for good reason as defined in subparagraph (b) below).
b. It is understood and agreed to by the parties that, as used in
this paragraph 5, the term "good reason" means only (i) a 15% or
greater
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reduction in the Employee's highest base salary from and after
the date hereof, whether such reduction is made all at once or
cumulatively, or (ii) a materially adverse change, without the
Employee's prior written consent, in the nature or scope of the
Employee's title or responsibilities, or (iii) the relocation of
the Employee's principal place of employment to a location more
than fifty (50) miles from the Employee's principal place of
employment on the date hereof.
c. It is further understood and agreed to by the parties that in the
event Employee engages in any conduct in violation of, or
inconsistent with, his obligations under paragraph 2, in addition
to all other rights and remedies available to Bandag, Bandag's
obligation to make further severance payments under this
Agreement shall be immediately and forever discharged and
released and Employee shall be obligated to reimburse Bandag for
all severance payments theretofore made by Bandag.
d. As a condition precedent to Employee's entitlement to receive
severance payments and to Bandag's obligation to provide such
payments under this Agreement, Employee agrees that, in the event
of his involuntary termination or his voluntary termination for
"good reason," he will execute and be bound by the terms of a
general release of all claims against Bandag ("Release") arising
up to and including the date of his execution of the Release.
Employee understands and agrees that such Release will include,
at a minimum, a release of all claims against Bandag and its
affiliated companies and successors, and its and their officers,
directors, employees, and agents, arising under federal, state
and local anti-discrimination or civil rights laws, as well as
all claims, statutory or common-law, arising out of Employee's
employment with Bandag or its termination.
6. Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the parties pertaining to the subject matter
contained herein and supersedes all prior and contemporaneous
agreements, representations and understandings, whether written or
oral, as to the matters set forth herein, and Employee expressly
releases Bandag from any obligations under such previous agreements,
if any, including without limitation, any rights of Employee under any
previous employment agreement with Company, if any.
7. Modification and Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such a waiver, modification or
discharge is agreed to in writing signed by the parties hereto.
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8. No Other Agreements. No agreements, representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set
forth in this Agreement.
9. Costs of Enforcement. In the event that a court of competent
jurisdiction determines that Employee has breached this Agreement,
Employee shall be liable to Bandag for all of its actual costs
(statutory and nonstatutory), expenses and attorneys' fees, incurred
to enforce this Agreement.
10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Bandag, its successors and assigns, including the
purchaser of all or substantially all of the assets of Bandag, and
Employee and his heirs, executors, administrators and legal
representatives. Employee may not assign this Agreement, in whole or
in any part.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
State of Iowa applicable to contracts made and to be performed therein
between residents thereof.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EMPLOYEE BANDAG, INCORPORATED
/s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxxxx
Its: Vice President, Chief Financial
Officer and Secretary
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