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SEPARATION AGREEMENT
THIS SEPARATION AGREEMENT (the "Agreement"), dated as of December
1,1995, is by and between Xxxxxx X. Xxxxxx ("Xxxxxx") and AMRE, Inc., a
Delaware corporation (the "Company").
RECITALS
X. Xxxxxx is currently employed by the Company, and Xxxxxx and
the Company desire to document their agreement regarding Xxxxxx'x separation
from employment with the Company and Xxxxxx'x resignation from any director or
officer positions with the Company or its affiliates, effective December 1,
1995 (the "Effective Date").
X. Xxxxxx and the Company entered into an Employment Agreement,
dated as of June 1, 1991, as amended by Amendment Number 1 to Employment
Agreement, dated as of August 10, 1993, and by Amendment Number 2 to Employment
Agreement, dated as of April 25, 1994 (as amended, the "Employment Agreement").
X. Xxxxxx executed a promissory note, dated May 1, 1980, payable
to the Company. Such note has been modified, extended, renewed and replaced at
various times, most recently by a note, dated as of April 30, 1994 and due and
payable in full on April 30, 1997 (all such notes collectively referred to as
the "Note"), pursuant to which Xxxxxx agreed to pay to the order of the Company
the original principal amount of $3,200,000, together with interest as set
forth in the Note. As of the Effective Date, Xxxxxx owed the Company $3,200,000
of principal and $905,824.10 of interest, for a balance of $4,105,824.10. In
full satisfaction of the prepayment of the Note, the Company has agreed to
waive a portion of the interest due on the Note and to retire the remaining
balance of the Note in lieu of the payment to Xxxxxx required of the Company
under Section 4(b)(i) of the Employment Agreement.
X. Xxxxxx and the Company entered into a Stock Pledge Agreement,
dated as of January 31, 1995 (the "Pledge Agreement").
X. Xxxxxx and the Company entered into a Stock Option Agreement,
dated as of May 11, 1994 (the "Option Agreement"), pursuant to which Xxxxxx
received options to purchase 550,000 shares of the Company's common stock,
which options are fully vested and shall not lapse or terminate as a result of
this Agreement or the transactions contemplated hereby.
F. The parties acknowledge the costs, hazards, and risks of
leaving any uncertainty as to their relationships and, in part, desire to
provide for an orderly termination of the employment relationship between the
Company and Xxxxxx and to settle in the manner set forth in this Agreement any
claims or controversies which might arise between Xxxxxx and the Company with
respect to Xxxxxx'x employment with the Company, Xxxxxx'x separation from
employment with the Company, any claims pursuant to Section 4(b)(i) of the
Employment Agreement, any claims pursuant to the Note and any claims pursuant
to the Pledge Agreement.
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IT IS THEREFORE AGREED:
1. CONSIDERATION. The parties acknowledge the receipt and
adequacy of the consideration as expressed by the recitations and mutual
covenants in this Agreement, and other good and valuable consideration.
2. RESIGNATION. Xxxxxx hereby resigns from all positions that he
holds as a director, officer or employee with the Company or its affiliates
effective as of 10 a.m. on the Effective Date.
3. NONCOMPETITION. Xxxxxx hereby agrees that, for a period of
five years after the Effective Date, he will not, directly or indirectly, on
his own behalf or as an employee or other agent of or an investor in another
individual, partnership, corporation or other entity (a "Person"), except by
ownership of less than five percent of the equity securities of a Person or as
a sublicensee of the Company as set forth below:
(a) engage in the in-home direct marketing, sale and
installation of siding and related exterior home improvement products,
kitchen cabinet refacing and custom countertops, replacement windows,
exterior coating and all other products which the Company and its
affiliates are currently licensed to sell (collectively, the
"Business") in North America (the "Territory"); provided, that Xxxxxx
may engage in the Business as a sublicensee of the Company subject to
entering into a sublicense agreement in the Company's sole discretion;
(b) directly or indirectly influence or attempt to
influence any customer or potential customer of the Company that is
located in the Territory to purchase goods or services related to the
Business from any Person other than the Company; or
(c) employ or attempt to employ or solicit for any
employment competitive with the Company any individuals who are
employees of the Company at the Effective Time or influence or seek to
influence any such employees to leave the Company's employment.
In consideration of the foregoing covenants, the Company shall pay to
Xxxxxx $500,000, payable in two equal installments of $250,000 on each of
December 1, 1997 and December 1, 1999.
4. NONDISCLOSURE. Xxxxxx acknowledges and agrees that all
customer, prospect and marketing lists, sales data, intellectual property,
proprietary information, trade secrets and manufacturing techniques of the
Company (collectively, but excluding any such items already or hereafter in the
public domain other than as a result of a breach of this provision, the
"Confidential Information") are valuable, special and unique assets and are
owned exclusively by Company. As a consequence of Xxxxxx'x activities as an
employee of the Company, Xxxxxx has had access to and knowledge of the
Confidentiality Information. In light of the competitive nature of the
Business, Xxxxxx agrees, so long as the provisions of Section 3 are in effect,
that the Confidential Information will be treated as confidential and Xxxxxx
will not disclose any
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Confidential Information to any Person or make use of any Confidential
Information for his own purposes or for the benefit of any other Person (other
than the Company).
5. AGREEMENTS WITH RESPECT TO CERTAIN OBLIGATIONS. Xxxxxx and
the Company agree as follows:
(a) In full satisfaction of Xxxxxx'x obligations to the
Company under the Note, as reduced for prepayment, Xxxxxx hereby
agrees to waive the Company's payment of its obligations in the amount
of $3,375,000 to Xxxxxx under Section 4(b)(i) of the Employment
Agreement, and Xxxxxx hereby releases the Company from, and the
Company shall have no further obligations with respect to such
payment.
(b) In full satisfaction of the Company's obligation to
Xxxxxx under Section 4(b)(i) of the Employment Agreement, the Company
hereby agrees to waive payment by Xxxxxx of the balance, as reduced
for prepayment, of the Note, and the Company acknowledges the full and
complete payment in satisfaction of the Note, and the Company hereby
releases Xxxxxx from any and all indebtedness owed by Xxxxxx to the
Company pursuant to the Note. The Company agrees that such
indebtedness owed by Xxxxxx to the Company pursuant to the Note. The
Company agrees that such indebtedness has been paid in full and
canceled and Xxxxxx is hereby released and discharged from all claims
or causes of action of any kind, contingent or otherwise, relating to
or arising out of such indebtedness.
(c) The terms and conditions of Section 4(b)(ii) of the
Employment Agreement shall remain in full force and effect to the
extent permitted or the Company will pay or reimburse the costs of
maintaining such benefits for the period provided therein.
(d) The Company and Xxxxxx hereby terminate the Pledge
Agreement, acknowledge that the Pledge Agreement shall be of no
further force or effect and acknowledge that they shall have no
further rights or obligations pursuant to the Pledge Agreement.
(e) The Company and Xxxxxx hereby agree to terminate that
certain Lease, dated October 11, 1988, between Xxxxxx and Cabinet
Magic, Inc. The parties agree to enter into a new lease to provide
for a term of 10 years commencing January 1, 1996 and for lease
payments of $15,000 per month for the first two years with adjustments
equal to changes in the consumer price index in subsequent years. The
Company will have the option to terminate such lease for a lump sum
cash payment equal to the next 36 monthly installments.
(f) The Company will indemnify and hold harmless Xxxxxx
in respect of acts or omissions as a director or officer occurring up
to and including the Effective Date to the extent provided under the
Company's certificate of incorporation and bylaws in effect on the
Effective Date, and will indemnify and hold harmless Xxxxxx in respect
of any claims, liabilities, obligations or expenses in respect of or
relating to this Agreement and the transactions contemplated hereby.
The Company has advised Xxxxxx that its
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directors' and officers' liability insurance policies are on a claims
incurred basis and that Xxxxxx is a named insured.
6. RELEASES. Xxxxxx and the Company agree as follows:
(a) Xxxxxx hereby releases, discharges and acquits the
Company from any causes of action, claims, demands, debts, liability,
expense or costs of court of any and every character and nature
whatsoever, whether or not previously asserted, whether known or
unknown, either in or arising out of the law of contracts, torts,
property rights, statutes or ordinances as to all wrongful discharge
claims, all tort, intentional tort, negligence, employee benefit
claims and contract claims, any claim for attorneys' fees, costs, or
expenses or any claim arising from any federal, state or local civil
rights and/or employment law (including but not limited to, Title VII
of the Civil Rights Act of 1964, the Texas Commission on Human Rights
Act, The Age Discrimination in Employment Act, and the Americans With
Disabilities Act) and/or wages, bonuses, commissions, at law or in
equity, arising out of any matter at any time up to and including the
date of execution of this Agreement; and any other matter whatsoever,
it being the parties' intention that the scope and breadth of this
release be as broad and extensive as lawfully possible in order to lay
to rest forever any potential controversies concerning any matters
existing or occurring prior to the execution of this Agreement;
provided, however, that Xxxxxx does not intend by this Agreement to
release any rights that he may have arising from the express terms of
this Agreement.
(b) The Company hereby releases, discharges and acquits
Xxxxxx from any causes of action, claims, demands, debts, liability,
expense or costs of court of any and every character and nature
whatsoever, whether or not previously asserted, whether known or
unknown, either in or arising out of the law of contracts, torts,
property rights, statutes or ordinances, all tort, intentional tort,
negligence, reimbursement claims, employee benefit claims and contract
claims, any claim for attorneys' fees, costs, or expenses, at law or
in equity, arising out of any matter at any time up to and including
the date of execution of this Agreement; and any other matter
whatsoever, it being the parties' intention that the scope and breadth
of this release be as broad and extensive as lawfully possible in
order to lay to rest forever any potential controversies concerning
any matters existing or occurring prior to the execution of this
Agreement; provided, however, that the Company does not intend by this
Agreement to release any rights that it may have arising from the
express terms of this Agreement.
7. REGISTRATION RIGHTS.
(a) At any time after the Effective Date, Xxxxxx may make
a written request to the Company requesting that the Company effect
the registration of the shares of common stock issuable upon exercise
of Xxxxxx'x options under the stock Option Agreement, dated May 11,
1994, between the Company and Xxxxxx (the "Registrable Securities") by
filing a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"). After receipt of such a request, and
subject to any previously granted registration rights, the Company
will, as soon as practicable, use its best efforts to effect the
registration of all Registrable Securities that the Company has
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been so requested to register by Xxxxxx for offer or sale on such
appropriate registration form as will be selected by the Company and
will permit the disposition of such Registrable Securities in
accordance with the intended method of disposition thereof.
Notwithstanding anything herein to the contrary the Company may, in
its sole discretion and without the consent of Xxxxxx, postpone the
filing of such a registration statement for any reason for a period of
up to 90 days from the date of its receipt of a request.
(b) If the Company at any time after the Effective Date
proposes to file on its behalf or on behalf of any of its security
holders a registration statement under the Securities Act on any form
(other than a registration statement on Form S-4 or any successor form
unless such form is being used in lieu of, or as the functional
equivalent of, registration rights) for any Common Stock, the Company
will, at each such time, give written notice setting forth the terms
of the proposed offering and such other information as Xxxxxx may
reasonably request to Xxxxxx at least 30 days before the anticipated
initial filing with the Securities and Exchange Commission (the
"Commission") of such registration statement, and offer to include in
such filing such Registrable Securities as Xxxxxx may request. If
Xxxxxx desires to have Registrable Securities registered under this
Section, he will advise the Company in writing within 15 days after
the date of receipt of such notice from the Company, setting forth the
number of such Registrable Securities for which registration is
requested. The Company will thereupon include in such filing the
number of Registrable Securities for which registration is so
requested, and will use its best efforts to effect registration under
the Securities Act of such Registrable Securities. Notwithstanding
anything to the contrary in the prior sentence, if the managing
underwriter or underwriters, if any, of such offering deliver a
written opinion to the Company, with a copy to Xxxxxx, that the
success of the offering would be materially and adversely affected by
the inclusion of the Registrable Securities requested to be included,
then the amount of securities to be offered for the account of Xxxxxx
will be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount recommended
by such managing underwriter or underwriters; provided, however, that
if securities are being offered for the account of other persons as
well as the Company and Xxxxxx, then, with respect to the Registrable
Securities intended to be offered for the account of Xxxxxx, the
proportion by which the amount of Common Stock intended to be offered
for the account of Xxxxxx is reduced will not exceed the proportion by
which the amount of Common Stock intended to be offered by such other
persons (other than the Company) is reduced. The Company shall bear
the costs and expenses of any such registrations, other than
underwriting commissions or broker's fees.
8. PRESS RELEASES. Xxxxxx and the Company agree to issue the
attached press release and to consult with each other before issuing any
additional press releases with respect to this Agreement and the transactions
contemplated by this Agreement and agree not to issue any such additional press
releases prior to such consultation except as may be required by applicable law
or any listing agreement with any national securities exchange.
9. NOTICES. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given on the date of
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service if served personally on the party to whom notice is to be given, or on
the third day after mailing if mailed to the party to whom notice is to be
given properly addressed, certified mail, return receipt requested, postage
prepaid, as follows: if to the Company, to AMRE, Inc., 0000 X. Xxxxxxxx
Xxxxxxx, Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000: Attention: General Counsel; if to
Xxxxxx, at 00 Xxxxxxx, Xxxxxx, Xxxxx 00000.
10. SEVERABILITY. In the event that any provision of this
Agreement shall be held invalid or illegal for any reason, any illegality or
invalidity shall not affect the remaining parts of this Agreement, but this
Agreement shall be construed and enforced as if the illegal or invalid
provision had never been inserted.
11. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Texas.
12. ATTORNEYS' FEES. The Company shall pay Xxxxxx'x reasonable
attorneys' fees in connection with this Agreement and the transactions
contemplated by this Agreement. In the event of any arbitration or litigation
arising out of this Agreement, the prevailing party in such arbitration or
litigation shall be entitled to recover reasonable costs and expenses incurred
in connection with such arbitration or litigation, including, but not limited
to, attorneys' fees.
13. ENTIRE AGREEMENT. Except as set forth herein, this Agreement
constitutes the entire Agreement among the parties with respect to the
transactions contemplated in this Agreement and there are no understandings or
agreements relating to this Agreement that are not fully expressed in this
Agreement.
14. WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed, or modified, and the terms hereof may be waived,
only by a written instrument signed by the parties, or in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in
exercising the right, power or privilege hereunder shall authorize a waiver
thereof.
15. BINDING EFFECT: NO ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties and the respective successors and
permitted assigns and legal representatives. Neither this Agreement nor any
other rights, interest, or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties.
16. ARBITRATION. The parties agree to negotiate in good faith with
respect to any dispute with respect to this Agreement or the transactions
contemplated hereby. If the parties are not successful in resolving the dispute
through such negotiations, then the parties agree that the dispute shall be
settled by arbitration in accordance with the provisions of the Commercial
Arbitration Rules of the American Arbitration Association, and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having
jurisdiction.
17. COUNTERPARTS. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
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18. HEADINGS. The headings in this Agreement are for reference
only, and shall not effect the interpretation of this Agreement.
19. AUTHORIZATION. The Company represents and warrants that the
person executing this Agreement on behalf of the Company is duly authorized to
act for and on behalf of the Company to execute and deliver this Agreement and
that this Agreement is a valid, binding and enforceable agreement of the
Company.
In witness whereof, the parties have signed this Agreement as of
December 1, 1995.
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
AMRE, Inc.
By:/s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
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Title: President & C.E.O.
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