Exhibit 10.3
* Portions of this document, marked with an asterisk "*", have been omitted
pursuant to a request for confidential treatment. The full documents
have been filed separately.
DIVESTMENT INCENTIVE PROGRAM
This Divestment Incentive Program is hereby entered into this 8th day
of September 1998, between AAF-XxXxxx Inc. (hereinafter "the Company") and
Xxxxxxx X. Xxxxxxxxxxx (hereinafter "Employee"), who are collectively referred
to herein as the "Parties."
WHEREAS, the Company's shareholder plans to sell the Company, and the
Company wants to provide an incentive package to certain key employees in
exchange for their agreement to remain employed up to and beyond the sale of the
Company.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration as hereinafter recited, the
receipt and adequacy of which are hereby acknowledged, the parties, intending to
be legally bound, covenant and agree as follows:
1. The Employee agrees to continue his employment with the Company
in his position as Executive Vice President, and to perform his
customary and regular duties, up to and including the effective
date of the sale of the Company (the "Effective Date"). The
Company agrees that it will continue to pay the Employee his
salary at his current monthly rate of $17,681 (Seventeen
Thousand, Six Hundred, Eighty One Dollars). The Employee further
agrees that, if the purchasing company makes a written offer to
the Employee on or prior to the Effective Date of a comparable
position for at least two years along with comparable salary and
benefits in a location not requiring the Employee to relocate,
the Employee will accept that employment and remain employed by
the purchasing company for at least two years after the Effective
Date. An offer or request pursuant to this paragraph 1 is
hereinafter referred to as a "Continued Employment Offer."
2. If the Employee agrees to, and remains, employed as described in
paragraph 1 above, and if he has not breached any of the
provisions of this Agreement (including, without limitation,
sections 4 and 5 hereof) (a "Breach"), he will be eligible to
receive the following additional incentive payments:
(a) If the Employee remains employed up to and including the
Effective Date and the purchasing company does not make a
Continued Employment Offer, the Company agrees to pay the
Employee $424,360, (Four Hundred Twenty Four Thousand
Dollars), which amount is equal to 24 months compensation at
his current rate, as severance pay, less applicable
withholding tax. This severance pay will be considered
earned as of the first business day after the Effective Date
and will be paid to the
Employee within one week after the Effective Date. If the
Employee's employment with the Company is terminated without
cause prior to the expiration of two years from the date of
acceptance of his Continued Employment Offer, this severance
pay will be considered earned as of the first business day
after such termination and will be paid to the Employee
within one week after such termination.
(b) Provided that the Company is sold prior to the Termination
Date of this Agreement, it is the Company's intention to
create a bonus pool (the "Executive Bonus Pool"). The
Employee's share of the Executive Bonus Pool will be a
function both of the Employee's base salary and a
performance factor. Individual payouts will be based on
appraised performance during the sale process by the
Employee's direct supervisor and additional higher levels of
senior management, including the CEO. In addition, potential
payouts, less applicable withholding tax, will be based upon
the selling price and the ultimate equity proceeds received
by the current shareholder as described below:
Employee Equity Proceeds to Shareholder Employee's Potential Share of
Executive Bonus Pool
Xxxxxxx X. Xxxxxxxxxxx * $ 0
$175,030
$288,173
$420,299
$569,304
Interpolation will apply based on actual equity proceeds to
shareholder. In addition, the Potential Bonus amounts listed
above are based on the assumption that the Employee meets or
exceeds the expectations of management during the sale
process and are subject to change.
If the Employee remains employed up to and including the
Effective Date and the purchasing company makes a Continued
Employment Offer, 50% of the Employee's share, if any, of
the Executive Bonus Pool will be paid to the Employee on the
Effective Date and 50% of the Employee's share, if any, of
the Executive Bonus Pool will be paid to the Employee on the
first anniversary of the Effective Date. If the Employee
remains employed up to and including the Effective Date and
the purchasing company does not make a Continued Employment
* Portions of this document have been omitted pursuant to a request for
confidential treatment. The full documents have been filed separately.
Offer, 100% of the Employee's share, if any, of the
Executive Bonus Pool will be paid to the Employee on the
Effective Date.
3. If the Employee's employment with the Company terminates for any
reason (other than a termination without cause) prior to the
Effective Date or, in the event the purchasing company makes a
Continued Employment Offer, or if the Employee commits a Breach,
the Company shall have no obligation to make any payments of any
kind to the Employee, including but not limited to severance
payments or, in certain cases, incentive payments as described
above.
4. The Employee recognizes that the Company's business interests
require a confidential relationship between the Company and the
Employee. Accordingly, THE EMPLOYEE AGREES DURING HIS EMPLOYMENT
WITH THE COMPANY FOR A TWO-YEAR PERIOD THEREAFTER TO KEEP
CONFIDENTIAL AND NOT TO DISCLOSE TO ANYONE ANY CONFIDENTIAL OR
PROPRIETARY INFORMATION OF THE COMPANY, INCLUDING PARTICIPATION
IN THIS DIVESTMENT INCENTIVE PROGRAM.
5. The Parties agree that any breach by the Employee of the
confidentiality provisions in this Agreement will cause
immediate, material and irreparable injury and damage, and that
there is no adequate remedy at law for such breach. In the event
of a breach of the confidentiality provisions of the Agreement,
the Company or its successor shall be entitled immediately to
seek enforcement of this Agreement in a court of competent
jurisdiction by means of a decree of specific performance, and
injunction without the posting of a bond, any other form of
equitable relief, and any other remedy it may have at law or in
equity. In the event that a court holds any provision of this
Agreement to be unenforceable, the parties agree that that
provision shall be reduced to the degree necessary to render it
enforceable without affecting the rest of this Agreement.
6. In the event any dispute arises under this Agreement that is
adjudicated to a final verdict in the Employee's favor by a court
of competent jurisdiction, no further appeal is permitted and the
Employee has complied with paragraph 4 hereof, the Company shall
reimburse the Employee for his reasonable expenses of counsel
incurred in connection with such dispute from the time the
Company is notified of the dispute to its final adjudication.
7. Any other provision of this Agreement notwithstanding, this
Agreement shall terminate and no longer be of any force or effect
(i) immediately if the Company aborts the sale process and, (ii)
in any case if a sale of the
Company has not occurred on or before June 30, 1999 (the
"Termination Date").
8. Each of the parties hereto (a) consents to submit himself or
itself to the personal jurisdiction of any federal court located
in the State of Maryland or any Maryland State court in the event
any dispute arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that he
or it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such
court, and (c) agrees that he or it will not bring any action
relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal
court sitting in the State of Maryland or a Maryland State court.
9. This Agreement supersedes all prior Agreements between the
parties concerning the subject matter hereof, and this Agreement
constitutes the entire Agreement between the parties with respect
to the subject matter hereof. This Agreement may be modified only
by a written instrument signed by the Employee and by the
President of the Company. The validity and construction of this
Agreement and any of its provisions shall be determined under the
laws of the State of Maryland.
10. The Employee acknowledges that he has read this Agreement in its
entirety, understands all of its terms and conditions, that he
has the opportunity to consult with any individuals of his choice
including legal counsel of his choice, that he is entering into
this Agreement of his own free will, without coercion from any
source, and that he agrees to abide by all of the terms and
conditions herein contained.
IN WITNESS HEREOF, the parties have duly executed this Agreement as of
the day and year first written above.
WITNESS: AAF-XxXXXX INC.
__September 8, 1998_____________ By:____/s/ Xxxxxx X. Hunter__________
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
__September 8, 1998_____________ ______/s/ Xxxxxxx X. Christopher_________
Employee
