EXECUTIVE COMPENSATION AGREEMENT
THIS AGREEMENT is dated November 21, 1997, between Bontex, Inc., a
Virginia corporation (the "Company"), and Xxxxxxx X. X. Xxxxxxxx (the
"Employee").
1. Employment. The Company employs Xxxxxxx X. X. Xxxxxxxx as
Corporate Comptroller and Secretary of the Company, and the Employee accepts
employment upon the terms and conditions of this Agreement.
2. Definitions. As used in this Agreement, the following
capitalized terms have the indicated meanings unless the context clearly
requires otherwise:
(a) "Applicable Federal Rate" has the meaning ascribed to that
term in Section 1274(d)(1) of the Internal Revenue Code of 1986, as amended.
(b) "Cause" means (i) the Employee's conviction of a felony
during the term of this Agreement; (ii) the Employee's material breach of
this Agreement which remains uncured sixty (60) days after notice by the
Company to the Employee of such material breach; or (iii) the Employee's
dishonesty directly related to the performance of his duties hereunder.
Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for Cause under this Agreement based upon either clause (ii) or
(iii) above, unless and until there shall have been delivered to him a copy
of a resolution, duly adopted by the affirmative vote of not less than a
majority (more than 50%) of the Board of Directors of the Company at a
meeting called and held for the purpose (after reasonable notice to the
Employee and an opportunity for him, together with his counsel, to be heard
before the Board of Directors of the Company), finding that, in the good
faith opinion of the Board, the Employee was guilty of conduct set forth
above in either clause (ii) or (iii) and specifying the particulars thereof
in detail.
(c) "Change in Control" means a change in control occurring
after the date of this Agreement of a nature that would be required to be
reported (assuming such event has not been "previously reported") in response
to Item 1(a) of the Current Report on Form 8-K, as in effect on the date
hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act"); provided that, notwithstanding the
foregoing and without limitation, such a change in control shall be deemed to
have occurred at such time after the date of this Agreement as (i) any Person
(as hereinafter defined) is or becomes the "beneficial owner" (as defined in
Rule 13d-3 or Rule 13d-5 under the Exchange Act as in effect on January 1,
1997), directly or indirectly, of 20% or more of the combined voting power of
the Company's voting securities; (ii) the members of the Company's Board of
Directors on the date of this Agreement (the "Incumbent Board") cease for any
reason to constitute at least the majority of the Board, provided that any
person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote
of at least 75% of the directors comprising the Incumbent Board (either by a
specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without objection to such
nomination) shall be, for purposes of this clause (ii) considered as though
such person were a member of the Incumbent Board; (iii) all or substantially
all of the assets of the Company are sold, transferred or conveyed by any
means, including, but not limited to, direct purchase or merger, if the
transferee is not controlled by the Company, control meaning the ownership of
more than 75% of the combined voting power of such entity's voting
securities; or (iv) the Company is merged or consolidated with another
corporation or entity and as a result of such merger or consolidation less
than 75% of the outstanding voting securities of the surviving or resulting
corporation or entity shall be owned in the aggregate by the former
shareholders of the Company. Notwithstanding anything in the foregoing to
the contrary, no change in control shall be deemed to have occurred for
purposes of this Agreement by virtue of any transaction after the date hereof
(i) which results in the Employee (his heirs, assigns or successors in
interest) or a group of Persons which includes the Employee (his heirs,
assigns or successors in interest), acquiring, directly or indirectly, 20% or
more of the combined voting power of the Company's voting securities; or
(ii) which results in the Company, any subsidiary of the Company or any
profit-sharing plan, employee stock ownership plan or employee benefit plan
of the Company or any of its subsidiaries (or any trustee of or fiduciary
with respect to any such plan acting in such capacity) acquiring, directly or
indirectly, 20% or more of the combined voting power of the Company's voting
securities; or (iii) which results in the heirs, successors or assigns of
Xxxx X. Xxxxxxxx acquiring, directly or indirectly, 20% or more of the
combined voting power of the Company's voting securities.
(d) "Date of Termination" means (i) if the Employee's
employment is to be terminated for Disability (as defined in paragraph 9
below), thirty (30) days after Notice of Termination is given (provided that
in the case of Disability, the Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (ii) if the Employee's employment is to be terminated for Cause, the
date specified in the Notice of Termination, (iii) the date of the Employee's
death, or (iv) if the Employee's employment is to be terminated by the
Company for any reason other than Cause, the date specified in the Notice of
Termination, which in no event shall be a date earlier than ninety (90) days
after the date on which such Notice of Termination is given, unless an
earlier date has been expressly agreed to by the Employee in writing either
in advance of, or after, receiving such Notice of Termination.
(e) "Company" includes any corporation or other entity which is
the surviving or continuing entity in respect of any merger, consolidation or
form of business combination in which the Company ceases to exist.
(f) "Notice of Termination" means a written notice that
indicates the specific termination provision of this Agreement relied upon
and sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Employee's employment under the
provision so indicated.
(g) "Person" has the meaning ascribed to that term in Sections
3(d)(9) and 13(d)(3) of the Exchange Act.
(h) "Retirement" and means the Employee's voluntary termination
of employment after the attainment of age sixty-five (65) or the attainment
of age fifty-five (55) having worked full time for the Company for a period
of ten (10) consecutive employment years.
(i) "Successor" means any Person that succeeds to, or has the
practical ability to control (either immediately or with the passage of time)
the Company's business directly by merger or consolidation, or indirectly by
purchase of the Company's voting securities, all or substantially all of its
assets or otherwise.
3. Term. (a) The term of this Agreement shall begin on the date
hereof and shall terminate on November 30, 2000.
(b) Notwithstanding anything in this Agreement to the contrary,
this Agreement shall continue in effect for at least a period of thirty-six
(36) months beyond the date of a Change in Control of the Company, if one
shall have occurred during any term of this Agreement.
4. Compensation. For all services rendered by the Employee, the
Company shall pay the Employee a base salary of One Hundred Fifteen Thousand
Dollars ($115,000) a year for the first year of this Agreement, payable in
twenty-four (24) equal installments on the 15th and last day of each month.
Salary payments shall be subject to withholding and other applicable taxes.
The base salary herein set forth shall be annually adjusted by the
Compensation Committee of the Board of Directors of the Company, and the
Employee shall receive during the term of this Agreement such bonuses as are
approved by the Board of Directors of the Company and all fringe benefits
offered to Company employees, including medical, dental, hospital, life and
long-term disability insurance coverage. The Company shall not alter or
reduce the compensation or benefits being provided to the Employee as of the
date of this Agreement without prior written consent of the Employee.
5. Services. The Employee shall exert his best efforts and devote
substantially all of his time and attention to the affairs of the Company.
Unless the Employee agrees otherwise, in writing, the Employee shall be the
Corporate Comptroller and Secretary of the Company (the "Positions") and
shall have such responsibilities, duties and authority as are generally
associated with such Positions as may from time to time be assigned to the
Employee by the Board of Directors of the Company.
6. Working Facilities. The Employee shall have a private office at
the Company's plant to which he is assigned, and shall have stenographic and
secretarial help and such other facilities and services as are suitable to
his position and appropriate for the performance of his duties. The office
and other facilities and services to be provided to the Employee shall be of
no less quality than those available to the Employee as of the date of this
Agreement.
7. Reimbursement of Expenses. The Company will reimburse the
Employee for all reasonable and necessary expenses incurred by him in
carrying out his duties under this Agreement, including, without limitation,
travel and lodging expenses. The Employee shall be provided credit and
travel cards comparable to those being used as of the date of this Agreement,
and the Employee shall present to the Company from time to time an itemized
account of such expenses in such form as may be required by the Board of
Directors of the Company.
8. Vacations. The Employee shall be entitled each year to a
vacation of three (3) weeks, and all Company holidays, during which time the
Employee's compensation shall be paid in full.
9. Disability. If the Employee is unable to perform his services by
reason of illness, incapacity or accident for a period of more than six (6)
consecutive months ("Disability"), the Company may terminate the Employee's
employment upon thirty (30) days written notice to the Employee.
10. Payment Upon Termination.
Subject to the provisions of Paragraph 11 below, the following shall
apply in the case of termination of employment:
(a) Termination for Cause. If the Employee's employment is
terminated by the Company for Cause, the Company shall pay the Employee his
full salary through the Date of Termination at the rate in effect at the time
Notice of Termination is given and all other unpaid amounts, if any, to which
the Employee is entitled as of the Date of Termination under any plan or
arrangement of the Company at the time such payments are due.
(b) Termination due to Death. If the Employee dies during the
term of this Agreement, the Company shall pay to the estate of the Employee
the compensation which would otherwise be payable to the Employee up to the
end of the month in which his death occurs. In addition, his estate shall be
paid, as additional compensation hereunder, within forty-five (45) days after
his date of death, an amount equal to six (6) months compensation or the
balance due under this Agreement, whichever is less. The Company shall also
pay, within sixty (60) days after the death of the Employee, $5,000 to the
widow of the Employee, or if he is not then survived by his widow, to the
Employee's surviving children in equal shares, or if there are no such
surviving children, to the estate of the Employee.
(c) Termination Due to Disability. If the Employee's
employment hereunder is terminated under paragraphs 9 because of the
Employee's Disability, the Employee shall be paid, as additional compensation
hereunder, within forty-five (45) days after the Date of Termination, an
amount equal to six (6) months compensation or the balance due under this
Agreement, whichever is less, and the Employee, or in the case of his death,
his spouse, shall continue to receive from the Company health insurance
benefits substantially similar to those being provided to the Employee prior
to the Date of Termination, for a period of six months from the Date of
Termination.
(d) Other Termination. If the Employee's employment is
terminated by the Company for reason other than Cause, Change in Control,
Death or Disability, the Company shall pay the Employee the lump sum payment
equal to the greater of (i) the amount the Employee would be entitled to
under the Company's severance pay policy in effect as of the date of this
Agreement; or (ii) the total salary that the Employee would have earned had
the Employee continued in the Company's employ through the remaining term of
the Agreement, such salary to be at the rate in effect at the time Notice of
Termination is given.
11. Termination Following a Change in Control. Upon termination of
the Employee's employment within thirty-six (36) months following a Change in
Control of the Company, unless such termination is (i) because of the
Employee's death or Retirement, or (ii) by the Company for Cause or
Disability, the Company shall pay to the Employee the benefits provided below
in lieu of those provided in paragraph 10:
(a) The Company shall pay the Employee his full salary (whether
such salary has been paid by the Company or by any of its subsidiaries)
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and all other unpaid amounts, if any, to which the
Employee is entitled as of the Date of Termination under any plan or other
arrangement of the Company, at the time such payments are due;
(b) The Company shall pay to the Employee an amount equal to
2.99 multiplied by the Employee's annualized includable compensation for the
base period, within the meaning of Section 280G(d)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"), provided, however, that if any of such
payment is or will be subject to the excise tax imposed by Section 4999 of
the Code or any similar tax that may hereafter be imposed ("Excise Tax"),
such payment shall be reduced to a smaller amount, even to zero, which
smaller amount shall be the largest amount payable under this paragraph that
would not be subject in whole or in part to the Excise Tax after considering
all other payments to the Employee required to be considered under Sections
4999 or 280G of the Code. Such payment shall be referred to as the
"Severance Payment."
In the event that the Severance Payment is subsequently determined to
be less than the amount actually paid hereunder, the Employee shall repay the
excess to the Company at the time that the proper amount is finally
determined, plus interest on the amount of such repayment at the Applicable
Federal Rate. In the event that the Severance Payment is determined to
exceed the amount actually paid hereunder, the Company shall pay the Employee
such difference plus interest on the amount of such additional payment at the
Applicable Federal Rate at the time that the amount of such difference is
finally determined.
In the event that the amount of the Severance Payment exceeds or is
less than the amount initially paid, such difference shall constitute a loan
by the Company to the Employee, or by the Employee to the Company, as the
case may be, payable on the fifth (5th) day after demand (together with
interest at the Applicable Federal Rate).
The amount of any payment provided for in this subparagraph shall not
be reduced, offset or subject to recovery by the Company or the Company's
Successor by reason of any compensation earned by the Employee as the result
of employment by another employer after the Date of Termination, or
otherwise.
(c) The Company shall also pay to the Employee all legal fees
and related expenses incurred by the Employee in connection with this
Agreement, whether or not the Employee prevails (including, without
limitation, all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any right
or benefit provided by this Agreement).
(d) The Company shall maintain in full force and effect, for
the Employee's continued benefit until the earlier of (i) the death of the
Employee and his spouse; or (ii) the Employee's commencement of full-time
employment with a new employer, all life insurance, medical, health and
accident, and disability plans, programs or arrangements in which the
Employee was entitled to participate immediately prior to the Date of
Termination, provided that the Employee's continued participation is possible
under the general terms and provisions of such plans and programs. In the
event that the Employee's participation in any such plan or program is
barred, the Company shall arrange to provide the Employee with benefits
substantially similar to those which the Employee is entitled to receive
under such plans and programs.
12. Restrictive covenant. (a) For a period of three (3) years from
the date that his employment ends or terminates under this Agreement, the
Employee shall not, directly or indirectly, own, manage, operate, control, be
employed by, participate in, or be connected in any manner with the
ownership, management, operation, or control of any business similar to the
type of business conducted by the Company at the time his employment under
this Agreement ends or terminates.
(b) In the event of the Employee's actual or threatened breach
of this paragraph, the Company shall be entitled to a preliminary restraining
order and injunction restraining the Employee from violating its provisions.
Nothing in this Agreement shall be construed to prohibit the Company from
pursuing any other available remedies for such breach or threatened breach,
including the recovery of damages from the Employee.
(c) The Employee acknowledges and agrees that the Company's
remedy at law for any breach of any of the Employee's obligations hereunder
would be inadequate, and agrees and consents that temporary and permanent
injunctive relief may be granted in any proceeding which may be brought to
enforce any provision hereof, without the necessity of proof of actual
damages.
(d) In the event that any court shall hold that any provision
hereof is too broad or is unreasonable, whether in time, scope, geographic
area or otherwise, it is agreed that such provision shall not be rendered
void, but shall be deemed reformed to be limited to the maximum restriction
which is deemed reasonable by such court under applicable law.
13. Disclosure of information. (a) Employee will not at any time,
either during employment (except pursuant to agreements executed by the
Company) or after employment terminates, directly or indirectly make known or
divulge to any person, firm or corporation the names or addresses of any of
the customers, employees, suppliers or potential customers of the Company or
any other confidential propriety, material or important information of any
kind, nature or description concerning the business of the Company, its
manner of operation, or its plans or data.
(b) The Employee will not, during the period of three (3) years
after the date his employment is terminated or ends, directly or indirectly,
either for himself or for any other person, firm or corporation, solicit,
divert, or take away, or attempt to solicit, divert, or take away, any of the
customers, employees, suppliers or potential customers of the Company.
(c) All books, records, files, forms, reports, memoranda,
papers, accounts and documents relating in any manner to the Company's
business, employees, customers or suppliers, whether prepared or paid for by
the Employee or anyone else, shall be the exclusive property of the Company
and shall be returned immediately to the Company upon termination of
employment or upon the Company's request at any time.
(d) The parties hereby stipulate that each of the foregoing
matters are important, material and confidential, and affect the effective
and successful conduct of the business of the Company and its reputation and
good will, and in the event of the Employee's breach or threatened breach of
this paragraph, the Company shall be entitled to a preliminary restraining
order and temporary and permanent injunctions restraining and enjoining the
Employee from the prohibited activity. In addition to or in lieu of the
above, the Company may pursue all other remedies available to the Company for
such breach or threatened breach, including the recovery of damages from the
Employee.
14. Arbitration. In the event of a dispute arising out of or in
connection with this Agreement, including any questions regarding its
existence, validity, breach or termination, either party may give notice in
writing to the other party informing it of the matter in dispute. If the
parties are unable to resolve the dispute within thirty (30) days of the
notice, then such dispute shall be submitted to arbitration and resolved by a
three-arbitrator panel. The party desiring to submit a matter to arbitration
shall select one qualified disinterested arbitrator and shall notify the
other party in writing of its appointment. Within thirty (30) days after
receipt of notice of the appointment of the initial arbitrator, the remaining
party shall select a qualified disinterested arbitrator and shall notify the
party initiating the arbitration procedure of its selection in writing. The
two arbitrators so selected shall then select a third arbitrator who shall
act as chairman of the arbitration panel which shall determine the dispute.
The arbitrators so appointed shall hold such hearing or hearings as the
arbitrators may determine in order to permit the parties to the dispute to
present such evidence as they may desire. All such arbitration hearings
shall take place in the City of Roanoke, Virginia. The arbitrators shall
decide the issues presented by majority decision. In all other respects the
arbitration proceeding shall be conducted in accordance with the Virginia
Uniform Arbitration Act (the "Arbitration Act"). The award or decision
rendered by the arbitration panel (including an allocation of the costs of
arbitration) shall be final, binding and conclusive, and judgment may be
entered upon such award by any court of competent jurisdiction. The
arbitration provisions of this Agreement shall not prevent any party from
obtaining injunctive relief from a court of competent jurisdiction to enforce
the obligations of the other party hereunder for which such party may require
provisional relief pending a decision on the merits by the arbitration panel.
The arbitration panel shall have authority to award any remedy or relief that
a court of competent jurisdiction could grant in conformity to applicable
law, including the authority to award attorneys' fees or punitive damages.
If either party to this Agreement brings an arbitration or action to enforce
its rights under this Agreement, the prevailing party shall be entitled to
recover its costs and expenses, including, without limitation, reasonable
attorneys' fees and fees of experts incurred in connection with such action,
including any appeal to the arbitrators award or confirmation proceedings
with respect thereto, which may be filed pursuant to the Arbitration Act.
15. Stock Options.
(a) Grant of Option. Employee is hereby granted the option to
purchase up to 20,000 shares of Company common stock under the following
terms and conditions, at a purchase price of $5.63 per share, which is the
market price on the date of the execution of this Agreement:
(i) The options granted hereunder may be exercised,
during the applicable period set forth below, either at once or from time to
time in blocks of not less than 100 shares.
(ii) The grant of options above are exercisable only
during a period which begins with the date of this Agreement and ends on the
ten-year anniversary date of this Agreement, provided, however, that all
unexercised options shall expire thirty (30) days after the termination of
Employee's employment for any reason except death, and provided, further,
that in the event of Employee's death, any options held by him which were
exercisable at the time of his death may be exercised by the person
designated in Employee's will or by the proper legal representative of the
Employee only within one year following Employee's death, but in no event
later than the expiration date of the option. Any option which is not
exercisable at the time of Employee's termination of employment for any
reason, including death, shall expire on the date Employee's employment
terminates. No stock option granted hereunder shall be transferrable by
Employee other than by will or the laws of descent and distribution, and an
option may be exercised during the lifetime of Employee only by him or his
guardian or legal representative.
(b) Restrictions. The options granted hereunder and the shares
of common stock issuable upon exercise of such options have not been
registered under the Securities Act of 1933 ("Securities Act"), or under the
Blue Sky or other securities laws of any state, and cannot be sold or offered
for sale unless subsequently so registered or an exemption from registration
is available. Employee understands that these securities are being issued in
reliance on Section 4(2) of the Securities Act and other available exemptions
from registration under federal and state securities laws and that he may be
required to hold the securities indefinitely. Employee further understands
and agrees that the Company has no obligation to register or qualify the
securities or any portion thereof, either under the Securities Act or any
other law. All certificates representing the securities shall be subject to
stop transfer orders and shall bear an appropriate restrictive legend.
Employee agrees that he will not dispose of any of the securities except in a
manner and fashion which is in total compliance with the law and unless and
until either (i) the Company shall have received an opinion of legal counsel
satisfactory to it that such disposition does not violate the Securities Act
and regulations promulgated thereunder and any applicable state securities
laws or regulations, or (ii) the securities have been validly registered
under the Securities Act and any applicable state Blue Sky or securities
laws.
(c) Miscellaneous Considerations. The number of optioned
shares shall be adjusted from time to time to prevent dilution of Employee's
rights caused by stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, reorganizations,
liquidations and similar matters. An option may be exercised by giving
written notice of exercise to the Company specifying the number of shares to
be purchased and by paying in full in cash the exercise price. Upon
notification of the amount due and prior to, or concurrently with, the
delivery to Employee of a certificate representing any shares purchased
pursuant to the exercise of an Option, Employee shall promptly pay to the
Company any amount necessary to satisfy applicable federal, state or local
tax requirements.
16. Indemnity. The Company shall indemnify the Employee and hold him
harmless for any acts or decisions made by him in good faith while performing
services for the Company and use its best efforts to obtain coverage for the
Employee under any insurance policy now in force or hereinafter obtained
during the term of this Agreement covering the other officers and directors
of the Company against lawsuits. The Company will pay all expenses,
including attorneys' fees, actually and necessarily incurred by the Employee
in connection with the defense of such act, suit or proceeding and in
connection with any appeal thereon, including the costs of court settlements.
17. Notices. Any notice required or desired to be given under this
Agreement shall be deemed given if in writing sent by certified mail to his
residence in the case of the Employee, or to its principal office in the case
of the Company.
18. Waiver of Breach. The waiver by the Company of a breach of any
provision of this Agreement by the Employee shall not operate or be construed
as a waiver of any subsequent breach by the Employee. No waiver shall be
valid unless in writing and signed by an authorized officer of the Company.
19. Assignment. The Employee acknowledges that the services to be
rendered by him are unique and personal. Accordingly, the Employee may not
assign any of his rights or delegate any of his duties or obligations under
this Agreement. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and shall be binding upon the
Successors and assigns of the Company.
20. Entire Agreement. This Agreement contains the entire
understanding of the parties. It may not be changed orally, but only by an
agreement in writing approved by the Board of Directors of the Company and
signed by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. The respective obligations
of, and benefits afforded to the Employee in, paragraphs 10, 11, and 12 shall
survive termination of this Agreement.
21. Governing law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF the parties have executed this Agreement as of
November 30, 1997, pursuant to a resolution of the Board of Directors, duly
convened following timely notice, on the 30th day of September, 1997, and
pursuant to a resolution of the Compensation Committee of the Board of
Directors, duly convened following timely notice, on the 21st day of
November, 1997.
BONTEX, INC.
By s/Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, Chairman
Compensation Committee of the
Board of Directors of Bontex, Inc.
s/Xxxxxxx X. X. Xxxxxxxx
------------------------------------
Xxxxxxx X. X. Xxxxxxxx
