EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of November 1, 2001, by and between XXXXXXX & XXXXXX PRODUCTS CO., a Delaware
corporation (the "Company"), and XXXXXXX X. XXXX ("Employee").
W I T N E S S E T H
WHEREAS, the Company wishes to retain Employee's services by providing
Employee the compensation and benefits set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties agree as follows:
1. Term of Employment. The Company hereby agrees to employ
Employee, and Employee hereby accepts employment, for a period of 3 years,
commencing November 1, 2001 and ending October 31, 2004, subject to the terms
and conditions of this Agreement. At the end of such initial 3 year term, unless
the Company shall have given Employee 60 days prior written notice of its
intention to terminate this Agreement at the end of the initial term hereof, the
term of this Agreement shall automatically be extended by an additional one year
period. Thereafter, unless the Company shall have given Employee 60 days prior
written notice of its intention to terminate this Agreement at the end of the
term then in effect, the term of this Agreement shall automatically be extended
by an additional one year period.
2. Position of Employment. During the term of this Agreement,
Employee shall be employed in the position of Executive Vice President -- Global
Manufacturing Operations -Carpet & Acoustics Systems and shall perform such
services for the Company and its affiliates as may be assigned to him from time
to time by the Chairman or the Board of Directors of the Company. Employee shall
devote his entire business time and attention to the affairs of the Company and
the performance of his duties hereunder and shall serve the Company diligently
and to the best of his abilities.. The initial location of Employee's employment
hereunder shall be the Company's Division Headquarters in Albemarle, North
Carolina.
Nothing in this Agreement shall prohibit Employee from participating in
civic or community organizations or from making passive investments using his
personal assets so long as such participation and investments do not interfere
with the performance of Employee's duties under this Agreement. In addition,
Employee may, with the prior written approval of the Chairman or the Board of
Directors of the Company, serve as a member of the board of directors of any
business that is not a direct or indirect competitor of the Company and its
affiliates.
3. Compensation.
(a) Base Salary. The Company shall pay to Employee base salary at
an annual rate of not less than $240,000 during the term of his employment
hereunder. Such amount shall be
reviewed annually by the Chairman and Chief Executive Officer of the Company and
may be increased in his sole discretion.
(b) Bonus Plans. During the term of Employee's employment
hereunder, Employee shall be eligible to participate in the Company's annual
Executive Incentive Compensation Plan (the "EIC Plan") in accordance with the
applicable provisions of the EIC Plan. The standard bonus for Employee under the
EIC Plan shall be forty percent (40%) of Employee's base salary.
4. Benefits and Perquisites.
(a) General. Employee shall be entitled to such fringe benefits
and perquisites, and to participate in such pension, profit sharing and benefit
plans as are generally made available to executives of the Company during the
term hereof, including consideration for annual stock option awards, major
medical, extended medical and disability insurance, supplemental retirement
income plan, group term life insurance and appropriate annual holidays, sick
days and vacation time with no fixed schedule. The Company also shall provide a
perquisite allowance in the amount of $20,000 grossed up for income taxes. This
allowance shall be used for the lease/purchase of a company automobile,
automobile insurance and maintenance, country club dues, financial planning or
income tax preparation.
5. Reimbursement of Expenses. The Company shall reimburse
Employee for all reasonable travel, entertainment and other reasonable business
expenses reasonably incurred by Employee in connection with the performance of
his duties hereunder, provided that Employee furnishes to the Company adequate
records or other evidence respecting such expenditures.
6. Termination of Employment. Employee's employment under this
Agreement may be terminated:
(a) by the Company upon Employee's death (which shall be
referred to as a "Death Termination") or Employee's physical or mental
disability for any consecutive six-month period (measured from the
first date on which Employee is absent from work due to such disability
to the same date in the sixth succeeding calendar month, or, if there
is no such date or such date is not a business day, the next succeeding
business day) (which shall be referred to as an "Inability
Termination");
(b) by the Company for Cause, which means (i) fraud or
misappropriation with respect to the business of the Company or
intentional material damage to the property or business of the Company,
(ii) willful failure by Employee to perform his duties and
responsibilities and to carry out his authority, (iii) willful
malfeasance or misfeasance or breach of fiduciary duty or
representation to the Company or its stockholders, (iv) willful failure
to act in accordance with any specific lawful instructions of a
majority of the Board of Directors of the Company, or (v) conviction of
Employee of a felony (which shall be referred to as a "For Cause
Termination");
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(c) by the Company at any time for any reason other than
a For Cause Termination, Death Termination or Inability Termination
(which shall be referred to as a "No Cause Termination");
(d) by Employee at any time for any reason other than a
"Constructive Termination" (as defined below) (which shall be referred
to as a "Voluntary Termination"); or
(e) by Employee within 30 days after the occurrence of
one or more of the following: (i) any reduction in Employee's base
salary, unless such reduction is being made in conjunction with an
across-the-board reduction in the salaries of all senior executives of
the Company in response to adverse economic conditions, (ii) a material
breach of this Agreement by the Company, (iii) a material reduction in
Employee's total compensation and benefits package or (iv) the
Company's giving notice of the non-renewal of this Agreement at the end
of the term then in effect pursuant to Paragraph 1 hereof (which shall
be referred to as a "Constructive Termination"); provided, however, no
event or circumstance described in clause (ii) or (iii) shall give rise
to a "Constructive Termination" for purposes of this Agreement unless
Employee shall have given notice to the Company of Employee's
determination of the occurrence of an event or circumstance described
in clause (ii) or (iii) and such event or circumstance shall be
continuing as of the end of 45 days after the giving of such notice.
For purposes of Paragraph 6(c), no act or failure to act on Employee's part
shall be considered "willful" unless knowingly done or failed to be done by
Employee in bad faith and without the reasonable belief that Employee's action
or omission was in the best interest of the Company.
7. Termination Procedure.
(a) Notice of Termination. Any termination of Employee's
employment by the Company or by Employee under Paragraph 6 hereof shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Paragraph 13. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that indicates the specific termination
provision in this Agreement relied upon and sets forth in reasonable detail the
facts and circumstances providing a basis for termination of Employee's
employment under the provision so indicated.
(b) Termination Date. " Termination Date" shall mean (i) if
Employee's employment is terminated pursuant to Paragraph 6(a) or (b) above, the
date on which a Notice of Termination is given or (ii) if Employee's employment
is terminated pursuant to Paragraph 6(c), (d) or (e) above, 30 days after the
date on which a Notice of Termination is given.
8. Benefits Upon Termination.
(a) Termination as a Result of Death, Inability, Voluntary or For
Cause Termination. If Employee's employment under this Agreement is terminated
prior to the expiration of the term of this Agreement as a result of a Death
Termination, an Inability Termination, a Voluntary
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Termination or a For Cause Termination, the Company shall pay Employee or, if
applicable, Employee's estate or legal representative, (i) Employee's unpaid
base salary under Paragraph 3(a) accrued to the date on which his employment
terminates, (ii) any accrued but unused vacation and (iii) all vested and
accrued benefits earned by Employee under any employee benefit plans and
programs sponsored by the Company in which Employee participates.
(b) Termination as a Result of No Cause Termination or
Constructive Termination. If Employee's employment under this Agreement is
terminated prior to the expiration of the term of this Agreement as a result of
a No Cause Termination or a Constructive Termination, the Company shall pay and
provide to Employee the following benefits:
(i) Employee's unpaid base salary accrued to the
Termination Date and any accrued but unused vacation;
(ii) base salary for 24 months, based on the rate of base
salary in effect immediately preceding the Termination Date;
(iii) an amount equal to Employee's standard annual bonus
under Paragraph 3(b); and
(iv) continued participation in the benefit plans,
programs and arrangements described in Paragraphs 4(a) and (b) during
the severance period described in Paragraph 8(b)(ii) above (other than
the annual executive physical program, long-term disability plan and
supplemental retirement income plan); provided, however, that
participation in such benefit plans, programs and arrangements shall
cease prior to the expiration of the severance period to the extent
Employee actually participates in comparable benefit plans, programs or
arrangements during such period, and Employee shall report any such
participation to the Company.
In addition, all outstanding stock options granted to Employee under
the Company's stock option plans will immediately vest upon a No Cause
Termination or a Constructive Termination prior to the expiration of the term of
this Agreement and will continue to be fully exercisable until the earlier of 90
days after the Termination Date or the original expiration date of said options.
The Company shall also cause Employee to receive all vested and accrued benefits
earned by Employee under all employee benefit plans and programs sponsored by
the Company in which Employee participates.
(c) Method of Payment of Severance Compensation. The amount due to
Employee pursuant to Paragraph 8(b)(ii) above shall be paid on a periodic basis
in accordance with the Company's normal pay practice. The amount due to Employee
pursuant to Paragraph 8(b)(iii) above shall be paid in a lump sum upon the
expiration of the severance period described in Paragraph 8(b)(ii).
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9. Covenants of Employee.
(a) Non-disparagement. Employee shall at all times refrain from
taking any action or making any statements, written or oral, which are intended
to and do disparage the goodwill or reputation of the Company or any of its
subsidiaries or affiliates or any directors or officers thereof or which could
adversely affect the morale of employees of the Company or its subsidiaries.
(b) Non-Competition. Employee shall not Compete (as hereinafter
defined) with the Company or any of its subsidiaries or affiliates in any way
during the term of his employment with the Company and for the 24 month period
following the Date of Termination (the "Restricted Period"). "Compete" means to
engage in any business activity whatsoever related in any manner or fashion to
any business of the Company or any of its subsidiaries or affiliates. Without
limiting the generality of the foregoing, Employee shall not, during the
Restricted Period, directly or indirectly (whether for compensation or
otherwise), alone or as an agent, principal, partner, officer, employee,
trustee, director, shareholder or in any other capacity, own, manage, operate,
join, control or participate in the ownership, management, operation or control
of, or furnish any capital to, or be connected in any manner with, or provide
any services as a consultant for, any business which Competes with the Company
or any of its subsidiaries of affiliates; provided, however, that
notwithstanding the foregoing, nothing contained in the Agreement shall be
deemed to preclude Employee from owning not more than 5% of the publicly traded
securities of any entity which Competes with the Company.
(c) Non-Solicitation. Employee covenants and agrees that he will
not, during the Restricted Period, (i) solicit, employ or otherwise engage as an
employee, independent contractor or otherwise, any person who is or was an
employee of the Company or any of its subsidiaries or affiliates at any time
during the 12 month period immediately preceding Employee's Date of Termination,
(ii) induce or attempt to induce any employee of the Company or any of its
subsidiaries or affiliates to terminate such employment or (iii) interfere with
the relationship of the Company or any of its subsidiaries or affiliates with
any person, including any person who, at any time during the 12 month period
immediately preceding Employee's Date of Termination, was an employee,
contractor, supplier or customer of the Company or any of its subsidiaries or
affiliates.
(d) Confidential Information. Employee understands that in the
performance of services hereunder Employee may obtain knowledge of "confidential
information" (as hereinafter defined) relating to the business of the Company
(or of any of its subsidiaries or affiliates). Employee shall not, without the
prior written consent of the Chairman or the Board of Directors of the Company,
either during Employee's employment by the Company or thereafter, (i) use or
disclose any such confidential information outside the Company (or any of its
subsidiary or affiliated companies) except as otherwise required by law, (ii)
publish any article with respect thereto, (iii) except in the performance of
services hereunder, remove from the premises of the Company, or aid in such
removal, any such confidential information or any property or material related
thereto or (iv) sell, exchange or give away or otherwise dispose of any such
confidential information now or hereafter owned by the Company whether or not
the same shall or may have been originated, discovered or developed by Employee.
It is understood that for purposes of this
Agreement the term "confidential information" shall be construed broadly to
include all information or compilations of information which (i) is, or designed
to be, used in the business of the Company (or any of its subsidiaries or
affiliates) or results from its (or their) research or development activities,
(ii) is private or confidential in that it is not generally known or available
to the public and (iii) gives the Company (or any of its subsidiaries or
affiliates) an opportunity to obtain an advantage over competitors who do not
know or use it.
(e) Return of Materials. Upon the termination of Employee's
employment, Employee shall return to the Company all property of the Company in
or under Employee's possession or control, including without limitation all
tangible "confidential information" described in Paragraph 9(d) above. Such
return shall be made at such place in Troy, Michigan as the Company shall
specify and shall be made within 5 days after Employee's Date of Termination.
(f) Cooperation. During Employee's employment by the Company and
thereafter, Employee shall promptly notify the Company of any threatened,
pending or completed investigation, claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative ("Proceeding"), in which he may
be involved, whether as an actual or potential party or witness or otherwise, or
with respect to which he may receive requests for information, by reason of his
future, present or past association with the Company or any of its subsidiaries
or affiliates. Employee shall cooperate fully with the Company and its
subsidiaries and affiliates in connection with any Proceeding at no expense to
the Company or any of its subsidiaries or affiliates other than the
reimbursement of Employee's reasonable out-of-pocket expenses. Employee shall
not disclose any confidential or privileged information in connection with any
Proceeding without the consent of the Company and shall give prompt notice to
the Company of any request therefor.
(g) Acknowledgement Regarding Covenants. Executive acknowledges
and agrees that the promises and restrictive covenants set forth in this
Paragraph 9 are reasonable and necessary to protect the interest of the Company
and reasonably limited in time, scope and territory. Executive acknowledges
that, given his former position and the information he possesses regarding the
Company and its operations, the business of the Company would be substantially
and materially damaged in the event of any violation of the promises and
covenants herein contained, and the Company shall be entitled (in addition to
any other remedy that may be available to it) to (i) a decree or order for
specific performance of any such promise or covenant and (ii) an injunction
restraining the violation or threatened violation of any such promise or
covenant. The covenants of Employee contain in this Paragraph 9 shall survive
the expiration of this Agreement or the termination of this Agreement by either
party.
10. Release. In consideration of the compensation continuance
available in certain events pursuant to this Agreement, Employee unconditionally
releases and covenants not to xxx the Company and its subsidiaries and
affiliates and directors, officers, employees and stockholders thereof, from any
and all claims, liabilities and obligations of any nature pertaining to
termination of employment other than those explicitly provided for by this
Agreement including, without limitation, any claims arising out of alleged legal
restrictions on the Company's rights to terminate its employees, such as any
implied contract of employment or termination contrary to public policy, and
Employee shall be required to provide written
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confirmation of such release upon his Date of Termination as a condition
precedent to the Company's obligation to provide any severance benefits under
Paragraph 8.
11. Governing Law. The validity, interpretation and performance of
this Agreement shall be governed by the laws of Michigan, regardless of the laws
that might be applied under applicable principles of conflicts of laws.
12. Entire Agreement. This Agreement constitutes the entire
agreement and understanding between the parties hereto with respect to the
matters referred to herein and supersedes all prior agreements and
understandings between the parties hereto with respect to the matters referred
to herein.
13. Notice. Any written notice required to be given by one party
to the other party hereunder shall be deemed effective if mailed by certified or
registered mail:
To the Company: Xxxxxxx & Xxxxxx Products Co.
0000 Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxxx,
Xx. Vice President, Human Resources
To Employee: Xx. Xxxxxxx Xxxx
Xxxxxxx & Xxxxxx Automotive Systems
Carpet & Acoustics Group
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
or such other address as may be stated in notice given under this Paragraph 13.
14. Severability. The invalidity, illegality or enforceability of
any provision of this Agreement in any juisdiction shall not affect the
validity, legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement or
such provision in any other jurisdiction, it being the intent of the parties
hereto that all rights and obligations of the parties hereto under this
Agreement shall be enforceable to the fullest extent permitted by law.
15. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their personal
representatives, and, in the case of the Company, its successors and assigns,
and Paragraph 10 shall also inure to the benefit of the other persons and
entities identified therein; provided, however, that Employee shall not, without
the prior written consent of the Company, transfer, assign, convey, pledge or
encumber this Agreement or any interest under this Agreement. Employee
understands that the assignment of this Agreement or any benefits hereof or
obligations hereunder by the Company to any of its subsidiaries or affiliates or
to any purchaser of all or a substantial portion of the assets of the Company or
of any affiliated company then employing Employee, and the employment of
Employee by such subsidiary or affiliate or by any such purchaser or by any
successor of the Company in a merger
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or consolidation, shall not be deemed a termination of Employee's employment for
purposes of Paragraphs 6, 7 and 8 or otherwise.
16. Amendment. This Agreement may be amended or canceled only by
an instrument in writing duly executed and delivered by each party to this
Agreement.
17. Headings. Headings contained in this Agreement are for or
convenience only and shall not limit this Agreement or affect the interpretation
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
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XXXXXXX X. XXXX
XXXXXXX & XXXXXX PRODUCTS CO.
By:
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Xxxxxxx Xxxxxxx
Xx. Vice President, Human Resources
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