EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 3, 2005 by and between Argan,
Inc. a Delaware corporation (the "Company") and Xxxxxx X. Xxxxxxxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to continue the services of the Executive as
its President and Chief Executive Officer of the Company and the Executive
desires to continue to perform such services for the Company; and
WHEREAS, the Company and the Executive desire to enter into this Agreement
to set forth the terms and conditions of the employment relationship between the
Company and the Executive, all in accordance with the terms and conditions set
forth below;
NOW, THEREFORE, for and in consideration of the premises hereof and the
mutual covenants contained herein, the parties hereto hereby covenant and agree
as follows:
1. Employment. The Company hereby continues the employment of the
Executive as its President and Chief Executive Officer, and the Executive hereby
agrees to continue to function as such for the Company, for the period set forth
in Section 2 hereof, all upon the terms and conditions hereinafter set forth.
2. Term of Employment. (a) Unless (i) earlier terminated as provided in
Section 7 hereof or (ii) renewed as provided in Section 2(b) hereof, the term of
the Executive's employment under this Agreement shall be for a period beginning
on January 3, 2005 and ending on January 3, 2006 (the "Initial Term").
(b) The term of the Executive's employment under this Agreement shall be
automatically renewed for additional one-year terms (each, a "Renewal Term")
upon the expiration of the Initial Term or any Renewal Term unless the Company
or the Executive delivers to the other, at least 90 days prior to the expiration
of the Initial Term or the then current Renewal Term, as the case may be, a
written notice specifying that the term of the Executive's employment will not
be renewed at the end of the Initial Term or such Renewal Term, as the case may
be.
(c) The period from January 3, 2005 until January 3, 2006 or, in the event
that the Executive's employment hereunder is earlier terminated as provided in
Section 7 hereof or renewed as provided in Section 2(b) hereof, such shorter or
longer period, as the case may be, is hereinafter called the "Employment Term".
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3. Duties. The Executive shall be employed as President and Chief
Executive Officer of the Company and shall faithfully and competently perform
such duties as the Board of Directors of the Company shall from time to time
determine, which duties shall be consistent with such position. The Executive
shall perform his duties at the principal offices of the Company, with travel to
such other locations from time to time as the Board of Directors of the Company
may reasonably prescribe. Except as may otherwise be approved in advance by the
Board of Directors of the Company, and except during vacation periods and
personal days and reasonable periods of absence due to sickness, personal injury
or other disability, the Executive shall devote his full time throughout the
Employment Term to the services required of him hereunder. The Executive shall
render his services exclusively to the Company during the Employment Term and
shall use his best efforts, judgment and energy to improve and advance the
business and interests of the Company in a manner consistent with the duties of
his position.
4. Compensation.
(a) Salary. As compensation for the complete and satisfactory performance
by the Executive of the services to be performed by the Executive hereunder
during the Employment Term, the Company shall pay the Executive a base salary at
the annual rate of $150,000 which may be increased (but not reduced) from time
to time in such amounts as the Company may, in its reasonable discretion, deem
to be appropriate (said amount, together with any such increases, being
hereinafter referred to as the "Salary"). Any Salary payable hereunder shall be
paid in regular intervals in accordance with the Company's payroll practices
from time to time in effect. All compensation payable under this Agreement shall
be subject to applicable federal and state withholding tax requirements and
other deductions approved by the Executive.
(b) Bonus Payments. For each calendar year during the Employment Term, the
Executive is eligible to receive an annual bonus in the discretion of the Board
of Directors subject to the satisfaction of such reasonable performance criteria
as shall be established for him with respect to such year.
5. Benefits. During the Employment Term, the Executive shall:
(a) be eligible to participate in executive fringe benefits that may be
provided by the Company for its executive employees in accordance with the
provisions of any such plans, as the same may be in effect from time to time;
(b) be eligible to participate in any medical and health plans or other
executive welfare benefit plans that may be provided by the Company for its
executive employees in accordance with the provisions of any such plans, as the
same may be in effect from time to time;
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(c) be entitled to annual paid vacation in accordance with the Company
policy that may be applicable to executive employees from time to time, such
vacation to be in no event less than two weeks in each calendar year;
(d) be entitled to sick leave and sick pay in accordance with any Company
policy that may be applicable to executive employees from time to time;
(e) be entitled to life insurance coverage (payable to his designated
beneficiary) and long term disability insurance coverage provided by the Company
to executive employees; and
(f) be entitled to reimbursement for all reasonable and necessary
out-of-pocket business expenses incurred by the Executive in the performance of
his duties hereunder in accordance with the Company's policies for executive
employees.
6. Stock Plans and Options. During the Employment Term, the Executive
shall be eligible to participate in any stock option, incentive and similar
plans established by the Company from time to time and at any time and the
Company shall grant to the Executive or cause to be granted to him stock options
and other benefits similar to the options and benefits granted to other
executives subject in all cases to the satisfaction by the Executive of the
terms and conditions of such plans and to the reasonable exercise by the Board
of Directors of any discretion granted to it or them thereunder.
7. Termination: Effect of Termination. (a) The Executive's employment
hereunder shall be terminated upon the occurrence of any of the following:
(i) death of the Executive;
(ii) termination of the Executive's employment hereunder by the
Company because of the Executive's inability to perform his duties on
account of disability or incapacity for a period of one hundred eighty
(180) or more days, whether or not consecutive, occurring within any
period of twelve (12) consecutive months;
(iii) written notice by the Company to the Executive of the
termination of his employment hereunder by the Company at any time "for
cause,"
(iv) written notice by the Executive to the Company of the
termination of the Executive's employment hereunder by the Executive
because of a material diminution of the Executive's duties, authority or
responsibility or a material impairment by action of the Company of his
ability to perform his duties or responsibilities, regardless of whether
such diminution of duties or impairment is accompanied by a change in the
Executive's title of President and Chief Executive Officer;
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(v) written notice by the Executive to the Company of a material
breach by the Company of any provision of this Agreement if such breach
continues for thirty (30) days after written notice thereof to the
Company;
(vi) written notice by the Executive to the Company of the voluntary
termination of the Executive's employment hereunder by the Executive at
any time for any reason whatsoever (including, without limitation,
resignation or retirement) other than a breach of any provision of this
Agreement by the Company (as described in paragraph (v) above) or other
than the occurrence of any event described in clause (iv) above; or
(vii) written notice by the Company to the Executive of the
termination of his employment hereunder by the Company at any time without
cause, including notice of non-renewal of this Agreement.
The following, and only the following, actions, failures or events by or
affecting the Executive shall constitute "cause" for termination within the
meaning of clause (iii) above:
(1) conviction of having committed a felony, (2) acts of dishonesty or moral
turpitude that are materially detrimental to the Company, (3) willful acts or
omissions which the Executive knew were likely to materially damage the business
of the Company or (4) willful and material breach by the Executive of his
obligations under this Agreement.
(b) In the event that the Executive's employment with the Company is
terminated by the Executive pursuant to the clauses (iv), (v) or (vii) above,
then the Company shall pay to the Executive, as severance pay in a single lump
sum payment, an amount equal to 24 months of base salary within thirty (30) days
after the Executive's termination of employment, based on 12 times the
Executive's final full month of salary at the date the Executive's employment so
ceases, without reduction or offset for any other monies which the Executive may
thereafter earn or be paid. Executive shall also be entitled for a period of 24
months from the termination of his employment to the continuation of all
benefits, as provided for in Section 5, excluding sick and vacation time,
subject to any applicable employee co-payments.
(c) In the event that the Executive's employment with the Company
terminates pursuant to clauses (i), (ii), (iii) or (vi) above, then
notwithstanding anything to the contrary expressed or implied herein, except as
required by applicable law and Section 8 hereof, the Company shall not be
obligated to make any payments to the Executive or on his behalf of whatever
kind or nature by reason of the Executive's cessation of employment other than
(i) such amounts, if any, of his Salary as shall have accrued and remained
unpaid as of the date of said cessation and (ii) such other amounts which may be
then otherwise payable to the Executive from the Company's benefit plans or
reimbursement policies, if any.
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8. Change in Control.
(a) In the event of a Change in Control (as hereinafter defined),
Executive shall be entitled to the compensation provided in Section 7(b) hereof
within thirty (30) days after the Change in Control.
(b) Change in Control shall mean (i) any transfer or other transaction
whereby the right to vote more than fifty percent (50%) of the then issued and
outstanding capital stock of (A) the Company or (B) any subsidiary of the
Company to which the Company shall have transferred all or substantially all of
its business, is transferred to any party or affiliated group of parties, (ii)
any merger or consolidation of the Company (or a subsidiary of the Company of
the type described in clause (i)(B) above) with any other business entity, at
the conclusion of which transaction the persons who were holders of all the
voting stock of the Company immediately prior to the transaction hold less than
fifty percent (50%) of the total voting stock of the successor entity
immediately following the transaction, or (iii) any sale, lease, transfer or
other disposition of all or substantially all the assets of the Company (or a
subsidiary of the type described in clause (i)(B) above), or (iv) when, during
any period of 12 consecutive months, the individuals who, at the beginning of
such period, constitute the Company's Board of Directors (the "Incumbent
Directors") cease for any reason other than death to constitute at least a
majority thereof, provided that a director who was not a director at the
beginning of such 12-month period shall be deemed to have satisfied such
12-month requirement (and be an Incumbent Director) if such director was elected
by, or on the recommendation of or with the approval of at least two-thirds of
the directors who then qualified as Incumbent Director either actually (because
they were directors at the beginning of such 12-month period) or by prior
operation of this Section 8(b)(iv).
9. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, successors, legal
representatives and assigns.
10. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or
sent by first class certified or registered mail, postage prepaid, if to the
Company, at the Company's principal place of business, and if to the Executive,
at his home address or addresses as either party shall have designated in
writing to the other party hereto.
11. No Set-Off. The Company will pay promptly when due all sums to be paid
the Executive under this Agreement without abatement, deduction or reduction of
any kind or without any kind of setoff against any such sums; it being the
intention of the parties that all such sums shall continue to be payable in all
events unless the Company's obligation to pay such sums shall be terminated
pursuant to the express provisions of this Agreement.
12. Law Governing. This Agreement shall be governed by and construed in
accordance with the laws of the State of Maryland.
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13. Severability. If any part of this Agreement is held by a court of
competent jurisdiction to be invalid, illegible or incapable of being enforced
in whole or in part by reason of any rule of law or public policy, such part
shall be deemed to be severed from the remainder of this Agreement for the
purpose only of the particular legal proceedings in question and all other
covenants and provisions of this Agreement shall in every other respect continue
in full force and effect and no covenant or provision shall be deemed dependent
upon any other covenant or provision.
14. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power hereunder at any one or more times be deemed a waiver or relinquishment of
such right or power at any other time or times.
15. Entire Agreement; Modifications. This Agreement constitutes the entire
and final expression of the agreement of the parties with respect to the subject
matter hereof and supersedes all prior agreements, oral and written. This
Agreement may be modified or amended only by an instrument in writing signed by
both parties hereto.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ARGAN, INC. EXECUTIVE
By
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Its Xxxxxx X. Xxxxxxxxxx
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