EXHIBIT 10.38
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into by and
between XXXXXX XXXXX ("Xxxxx") and XXXXX & WESSON HOLDING CORP., ("S&W") as of
this 5th day of December, 2003.
RECITALS:
X. Xxxxx was employed by S&W as its President through December 5,
2003. Xxxxx is also the member of the Board of Directors of
S&W as of the date of this Agreement.
B. On November 30, 2003, Xxxxx advised the Audit Committee of the
Board of Directors of S&W that he would resign as President
effective as of December 5, 2003, but will remain as a
director of S&W.
C. S&W has agreed to provide severance payments to Xxxxx through
the end of the 2004 calendar year.
D. The parties desire to document the terms of the severance
agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties, the parties agree
as follows:
AGREEMENT:
1. RESIGNATION BY XXXXX. Xxxxx'x last day of employment with S&W shall be
December 5, 2003 (the "Resignation Date").
2. CONSIDERATION BY S&W. In consideration of Xxxxx'x performance of his
obligations under this Agreement and in satisfaction of all claims and
benefits under any employee benefit plans maintained by S&W, S&W shall
provide Xxxxx with the following consideration.
2.1. Severance Payments. S&W shall pay Xxxxx $240,000, payable in
semi-monthly installments either by check or direct deposit,
beginning on the next regularly scheduled pay period and
continuing through December 31, 2004 (the "Severance Period").
2.2. Benefits. S&W shall continue to provide the following benefits
to Xxxxx during the Severance Period to the extent permissible
under, and in accordance with, the terms and conditions of
such plans or policies: a car allowance of $9,600 per year,
payment of life insurance premiums of [$899] per year and
payment of long term disability premiums of [$7,580.01] per
year. Upon expiration of the Severance Period, S&W shall
assign any life insurance and disability policies to Xxxxx and
grant him the right to continue coverage and make the premium
payments himself.
2.3. Stock Options. As provided in S&W's 2001 Stock Option Plan,
dated May 31, 2001 (the "Option Plan"), Xxxxx may, within
three (3) months following the Resignation Date, purchase any
of the shares to which he was entitled to exercise his option
as of the Resignation Date.
2.4. Office Space. Xxxxx shall immediately relinquish his office
space located at 00000 X. Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000 and remove all personal items
therefrom. However, for as long as Xxxxx serves as a director,
Xxxxx will have the right to maintain an office at S&W's
expense, which office may not exceed the square footage of his
existing office nor exceed the lease payments, on a per square
foot basis, of S&W's offices in
Scottsdale, Arizona. Such office may be located anywhere other
than the building in which S&W presently maintains its
offices. S&W will also pay for a secretary to be shared by
Xxxxx and Xxxxxxxx Xxxxx for as long as Xxxxx and Xxxxxxxx
Xxxxx serve as directors. Further, as long as Xxxxx serves as
a director, he may use all equipment, furniture, computers,
television or any other items of personal property which is
the property of S&W presently located in his office at the
corporate headquarters (collectively, "Company Property").
Company Property shall be returned to S&W no later than 15
days after the later of the Severance Period or when Xx. Xxxxx
is no longer on the Board.
2.5. All payments and benefits under this Section are subject to
applicable federal withholding tax and any other taxes as
required by law. Xxxxx understands that he will receive no
other wage, benefit, or other payment from S&W other than the
consideration described in this Section or future
consideration for service as a director of S&W.
3. VOTING OF SHARES.
At all votes of shareholders of S&W on or before December 31, 2005,
Xxxxx shall not directly or indirectly cause or permit any shares beneficially
owned by Xxxxx to be voted for any person other than the nominees recommended by
the Nominating Committee of the Board of Directors of S&W and nominated by the
Board of Directors in S&W's proxy statements. The foregoing voting obligations
shall not apply if either Xxxxxxxx Xxxxx or Xxxxx are not recommended by the
Nominating Committee to be nominated to stand for election to the Board of
Directors by the shareholders.
4. NON-DISPARAGEMENT.
Neither (i) the officers or directors of S&W and its affiliates nor
(ii) Xxxxx and his affiliates (including Xxxxx'x trust beneficiaries,
representatives, agents, attorneys, dependents, administrators, executors,
heirs, assigns, predecessors and successors-in-interest) shall provide oral or
written information or disparage or in any manner cause harmful remarks or
comments to be disseminated to any third parties regarding the business,
aptitude, skills, practices, procedures, operations, methods, or any other
subject which may have a detrimental impact on the future business prospects or
extant business relationships of the other, except as required by law if called
as a witness in any court proceedings.
4.1. Injunctive Relief. Xxxxx and S&W each acknowledge that the
restrictions contained in this Section 2 are a reasonable and
necessary protection of the immediate interests of each of
them and that any violation of these restrictions would cause
substantial injury to the other. In the event of a breach or
threatened breach by Xxxxx or S&W of these restrictions, S&W
or Xxxxx, as applicable, shall be entitled to apply to any
court of competent jurisdiction for an injunction restraining
the breaching party from such breach or threatened breach;
provided, however, that the right to apply for an injunction
shall not be construed as prohibiting S&W or Xxxxx from
pursuing any other available remedies for such breach or
threatened breach.
5. SUCCESSORS.
This Agreement shall be binding upon Xxxxx and upon his heirs,
administrators, representatives, executors, successors and assigns. This
Agreement shall be binding upon S&W and upon its heirs, administrators,
representatives, executors, successors and assigns.
6. ASSIGNMENT OF PAYMENTS.
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Any right or interest to or in any payments shall be fully assignable
by Xxxxx including but not limited to one or more beneficiaries to receive any
amount that may be payable after his death (and shall remain enforceable by
Xxxxx' estate).
7. GOVERNING LAW.
This Agreement is made and entered into in the State of Arizona and
shall in all respects be interpreted, enforced and governed under the laws of
that state.
8. VENUE.
Xxxxx and S&W hereby irrevocably agree that any legal action or
proceeding arising out of or relating to this Agreement or any actions
contemplated hereby shall be brought in a court of competent jurisdiction
located in the state of Arizona.. Xxxxx and S&W hereby expressly submit to the
personal jurisdiction and venue of such courts for the purposes thereof and
expressly waive any claim of improper venue and any claim that such courts are
an improper forum. Xxxxx and S&W hereby irrevocably consent to the service of
process of any of the aforementioned courts in any suit, action or proceeding.
9. SEVERABILITY.
Should any of the provisions of this Agreement be declared or be
determined by any court to be illegal or invalid, the validity of the remaining
parts, terms or provisions shall not be affected thereby and said illegal or
invalid part, term or provision shall be deemed not to be a part of this
Agreement.
10. SUCCESSORS TO S&W.
Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of S&W and any successor of S&W, including,
without limitation, any corporation or corporations acquiring directly or
indirectly all or substantially all of the assets of S&W whether by merger,
consolidation, sale or otherwise (and such successor shall thereafter be deemed
"S&W" for the purposes of this Agreement), but shall not otherwise be assignable
by S&W.
11. ENTIRE AGREEMENT.
This Agreement sets forth the entire agreement between the parties
thereto and fully supersedes any and all prior agreements, other than the
Indemnification Agreement dated September 8, 2002, the Option Plan and any
applicable stock option agreement, for understandings between the parties
thereto pertaining to the subject matter thereof.
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
XXXXX & WESSON HOLDING CORPORATION
By: /s/ Xxx X. Xxxx
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Its: Chief Executive Officer and Chairman
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of the Board
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