Exhibit 10.40
RESIGNATION AGREEMENT AND GENERAL RELEASE
This Resignation Agreement and General Release ("Agreement") is made
and entered into effect as of this _____ day of May, 1997, by and between
Keystone Automotive Industries, Inc., a California corporation ("the Company")
and Xxxxxx X. Xxxxxx XX, an individual residing in the State of California
("Executive").
RECITALS
A. Executive has served as the Chief Executive Officer of the Company
pursuant to that certain Employment Agreement between Executive and the Company,
effective June 26, 1996 (the "Employment Agreement");
B. Executive as served as a member of the Board of Directors (the
"Board") of the Company and has been designated by the Board as the Company's
Chairman.
C. Pursuant to and in consideration of this Agreement, Executive has
determined to resign all of his respective positions as an officer and director
of the Company, such resignation to be effective as of the date of this
Agreement (the "Deemed Effective Date");
D. The Company wishes to accept Executive's resignation, such resignation
to be deemed to be effective as of the close of the Company's business on the
Deemed Effective Date, to terminate the Employment Agreement as of the Deemed
Effective Date and to provide Executive with certain severance benefits, all as
set forth herein; and
E. As part of this Agreement and in consideration of certain
accommodations provided to Executive by the Company hereunder and other mutual
consideration, and Executive has agreed to release the Company and its
respective directors, officers, employees, agents and assigns from certain
claims and causes of action that Executive may now or hereafter have, whether
known or unknown.
NOW, THEREFORE, IN CONSIDERATION OF the foregoing recitals, which are
incorporated as an integral part of this Agreement, the mutual promises of the
parties and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
AGREEMENT
1. RESIGNATION OF EXECUTIVE. Executive hereby irrevocably resigns
all of his positions as a director and officer of the Company, effective as of
the close of the Company's business on the Deemed Effective Date.
2. SEVERANCE PAYMENT. On the Termination Date, as defined in
Section 14 hereof, the Company shall pay to Executive, in cash or other readily
available funds, the gross sum
of Six Hundred and Seventy-One Thousand Dollars ($671,000), less any amounts
required to be deducted by the Company for federal and state taxes or other
applicable requirements. In addition, the Company agrees to convey to Executive
as of the Termination Date, all of its right, title and interest in the
following assets currently being used by Executive: (i) the 1994 Chevrolet
Suburban, (ii) the 1994 Model 850 Volvo and (iii) certain computer equipment
consisting of an AST laptop computer, docking station, monitor, keyboard and
printer.
3. TERMINATION OF EMPLOYMENT AGREEMENT. The Employment Agreement
shall be terminated as of the Deemed Effective Date, and all obligations of any
party thereunder shall thereby be forever released and discharged, except for
Section 4 of the Employment Agreement which shall remain in full force and
effect according to its terms.
4. HEALTH/OTHER BENEFITS. Executive shall not be entitled to
continue to participate in the Company's health and other benefit programs to
which he is currently entitled, rights of Executive, if any, are compensated for
in the payment provided in Section 2. Thereafter, Executive, if he so elects
and pays all applicable costs and expenses, shall be entitled to receive the
benefits to which he is entitled pursuant to the Consolidated Budget
Reconciliation Act of 1985, as amended ("COBRA").
5. ACCRUED VACATION PAY. Executive agrees that the Company is not
to be obligated to Executive for any accrued but unused vacation pay, rights of
Executive, if any, are compensated for in the payment provided in Section 2.
6. MUTUAL GENERAL RELEASE. In further consideration of the promises
and agreements made hereunder, and except for the Indemnification Agreement,
effective as of June 26, 1996 by and between Executive and the Company (the
"Indemnification Agreement") which is not being released hereunder. Executive
agrees unconditionally and forever to release and discharge the Company and its
respective subsidiaries, affiliates, officers, directors, employees,
representatives, attorneys, agents and assigns, and the Company agrees
unconditionally and forever to release and discharge Executive and his
representatives, attorneys, agents and assigns, from any and all claims,
actions, causes of action, demands, liabilities, rights or damages of any kind
or nature which any of them may now have, or ever have, whether known or
unknown, against the other, including any claims, causes of action or demands of
any nature arising out of or in any way relating to Executive's employment with,
or separation from the Company.
This release specifically includes, but is not limited to, any claims
for discrimination and/or violation of any statutes, rules, regulations or
ordinances, whether federal, state or local, including, but not limited to,
Title VII of the Civil Rights Act of 1964, as amended, age claims under the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefits Protection Act of 1990, Section 1981 of Title 42 of the United States
Code, and the California Fair Employment and Housing Act.
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The parties further agree knowingly to waive the provisions and
protections of Section 1542 of the California Civil Code, which reads:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which, if known by him, must have materially affected his
settlement with the debtor.
Executive represents and agrees that, prior to the execution of this
Agreement, Executive has had the opportunity to discuss the terms of this
Agreement with legal counsel of his choosing. Executive affirms that no promise
or inducement was made to cause him to enter into this Agreement, other than the
severance benefits described herein. Executive further confirms that he has not
relied upon any other statement or representation by anyone other than what is
in this Agreement as a basis for his agreement.
7. NEWS RELEASE. The parties shall cooperate in the preparation of
a news release for dissemination on or prior to the Termination Date; however,
the final determination as to the content of such news release shall be made by
the Company.
8. REIMBURSEMENT OF BUSINESS EXPENSES. Executive shall be entitled
to reimbursement of properly submitted claims for business expenses in
accordance with the Company's policies and practices through the Termination
Date.
9. INDEMNIFICATION. The Indemnification Agreement shall remain in
full force and effect in accordance with the terms and conditions set forth
therein. Upon reasonable notice from the Company, Executive shall make himself
reasonably available to assist and otherwise cooperate with the Company in
connection with any litigation matters involving the Company. If said
cooperation requires Executive to travel outside the San Diego, California area,
the Company agrees to reimburse Executive for his reasonable travel expenses.
10. NON-DISPARAGEMENT. The parties hereby agree that none of them
shall disparage the other in any future statements or communications concerning
Executive and his employment with the Company or otherwise.
11. INQUIRIES BY THIRD PARTIES. The parties hereby agree that they
will consult with one another with respect to appropriate responses to inquiries
from stock exchanges, analysts, the press, customers, governmental authorities
and other third parties regarding Executive's resignation from the Company. The
parties further agree that, except as required by law or regulation, none of
them will respond to such inquiries or make other public statements regarding
these matters (other than the news release referred to in Section 7 hereof)
until such consultation has occurred.
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12. ARBITRATION. Any and all disputes or claims arising out of or in
any way related to Executive's employment with, or separation from the Company,
as well as any and all disputes or claims arising out of or in any way related
to this Agreement, including without limitation, fraud in the inducement of this
Agreement, or relating to the general validity or enforceability of this
Agreement, shall be submitted to final and binding arbitration before a single
arbitrator of the American Arbitration Association in Los Angeles County,
California in accordance with the rules of that body governing commercial
disputes, and the prevailing party shall be entitled to reasonable cost, other
out-of-pocket expenses and attorneys' fees. Judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.
13. GOVERNING LAW. This Agreement shall be construed under the laws
of the State of California, both procedural and substantive, except as may be
required under federal laws and regulations applicable to federally chartered
savings associations or their subsidiaries or affiliates.
14. REVOCATION RIGHT. Executive acknowledges that he has been
advised that he has twenty-one (21) days to consider this Agreement and that he
was informed that he has the right to consult with counsel regarding this
Agreement. To the extent that Executive has taken less than twenty-one (21)
days to consider this Agreement, Executive acknowledges that he has had
sufficient time to consider the Agreement and to consult with counsel and that
he does not desire additional time. This Agreement is revocable by Executive
for a period of seven (7) days following Executive's execution of this
Agreement. The revocation by Executive of this Agreement must be in writing,
must specifically revoke this Agreement, and must be received by the Company
prior to the eighth (8th) day following the execution of this Agreement by
Executive. This Agreement becomes effective, enforceable and irrevocable on the
eighth (8th) day following Executive's execution of this Agreement (the
"Termination Date").
15. BOARD OF DIRECTORS ACTION. The Company represents and warrants
that the resolutions attached hereto as Exhibit 15 have been duly adopted by the
Board of Directors and are, and will be, in full force and effect as of the
Termination Date.
16. REGISTRATION RIGHTS. The Company agrees to use its best efforts
to include up to 1,500,000 shares of its Common Stock owned beneficially by
Executive and those persons set forth on Schedule 1 to this Agreement
("Executive's Shares") in the proposed underwritten public offering currently
being considered by the Company (the "1997 Public Offering"). In connection
with the 1997 Public Offering, and as additional consideration to Executive for
entering into this Agreement, the Company agrees to pay all fees, costs and
expenses of and incidental to registering Executive's Shares for sale; provided,
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however, that the holders of Executive's Shares shall bear their pro rata share
of the underwriting discounts and commissions and shall bear their own legal and
accounting expenses, if any, incurred in reviewing the registration statement
and prospectus. In the event that less than all of Executive's Shares are sold
in the 1997 Public Offering, each of the beneficial holders of Executive's
Shares not sold in said Offering agree to enter into a lock-up agreement with
the underwriters agreeing not to sell any of their remaining shares for such
period after the effective date of the 1997 Public Offering as is being agreed
to by the officers and directors
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of the Company. In the event that less than 1,000,000 of Executive's Shares are
actually sold in the 1997 Public Offering for any reason other than the
beneficial owners of said shares withdrawing the shares from the 1997 Public
Offering, then the Company agrees to register Executive's Shares under the
following terms and conditions:
(a) Whenever the Company proposes to register any of its securities
under the Securities Act of 1933, as amended (the "Securities Act"), and the
registration form to be used therefor may be used for the registration of the
Common Stock of the Company (other than Forms S-8 or S-4 or any successor
thereto), the Company shall give prompt written notice to the Executive of its
intention to effect such a registration and, subject to the terms and conditions
contained in this Agreement, shall include in such registration any unsold
Executives' Shares with respect to which the Company has received a written
request for inclusion therein within twenty (20) days after the Company has
given the notice required by this subsection.
(b) If a registration subject to subsection (a) above is an
underwritten registration, and the managing underwriters advise the Company in
writing that in their opinion the number of shares of Common Stock to be
included in such registration exceeds the number which can be sold in such
offering, the Company shall include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, such number of shares of
Common Stock as the Company is obligated to include pursuant to the Registration
Rights Agreement effective as of December 6, 1996 among the Company and
shareholders of North Star Plating Company, (iii) third, unsold Executive's
Shares for which a written request for inclusion has been timely received; and
(iv) fourth, then other securities requested to be included in such
registration; provided, however, that the Executive shall have the right to
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include any Executive's Shares which are thus excluded from such registration in
the next registration statement of the Company under the Securities Act which
may be used for the registration of the Common Stock of the Company (other than
Forms S-8 or S-4 or any successor thereto), all on the terms and conditions set
forth in this Agreement applicable to the initial exercise by the Executive of
registration rights hereunder.
(c) Except as expressly provided in the proviso to subsection (b)
above, notwithstanding anything to the contrary contained in this Agreement, the
Company shall be required to give notice to the Executive of a registration, and
to include therein Executive's Shares, only with respect to the first
registration of the securities of the Company occurring after the later to occur
of (i) the Termination Date and (ii) the consummation of the 1997 Public
Offering.
(d) The Company shall indemnify, to the extent permitted by law, each
holder of Executive's Shares included in any registration statement pursuant to
subsection (a) above, its officers and directors and each person who controls
such holder (within the meaning of the Securities Act of 1933) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished to the Company in
writing by such
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holder expressly for use therein or by such holder's failure to deliver a copy
of the registration statement or prospectus or any amendments or supplements
thereto after the Company has furnished such holder with a sufficient number of
copies of the same.
(e) Each holder of Executive's Shares included in any registration
statement pursuant to subsection(a) above shall indemnify, to the extent
permitted by law, the Company, its officers and directors and each person who
controls the Company (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, to the extent the same
are caused by or contained in any information furnished to the Company in
writing by such holder expressly for use therein or by such holder's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such holder with a
sufficient number of copies of the same. In connection with an underwritten
offering, such holder shall indemnify the underwriters, their officers and
directors and each person who controls such underwriters (within the meaning of
the Securities Act) to the same extent as provided above with respect to the
indemnification of the Company.
(f) With respect to each inclusion of Executive's Shares in a
registration statement pursuant to subsection (a) above, all fees, costs and
expenses of and incidental to such registration and public offering in
connection therewith shall be borne by the Company; provided, however, that
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holders participating in any such registration shall bear their pro rata share
of the underwriting discount and commissions and shall bear their own legal and
accounting expenses, if any, incurred in reviewing the registration statement or
prospectus.
(g) Any Executive's Shares which are included in an underwritten
registration pursuant to subsection (a) above shall be sold by the holder
thereof pursuant to the terms of the underwriting agreement among the Company,
the managing underwriters and the holders of the securities included in such
registration.
17. ESOP SHARES. The Company agrees to use its best efforts to
distribute all shares of Common Stock beneficially owned by Executive in the
Company's ESOP to Executive as soon as reasonably possible after the Termination
Date.
18. REIMBURSEMENT OF ATTORNEY'S FEES. On the Termination Date,
the Company agrees to pay Executive the sum of Five Thousand ($5,000) Dollars as
reimbursement of Executive's legal fees. The parties hereto agree that all other
costs and expenses shall be paid by the incurring party.
19. MISCELLANEOUS. This Agreement sets forth the entire agreement
between Executive and the Company relating to the subject matter hereof and
supersedes all prior oral or written agreements relating thereto, including,
without limitation, the Employment Agreement. This
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Agreement shall be binding upon all parties' respective heirs, representatives,
successors and assigns. If any portion of this Agreement is found to be illegal
or unenforceable, such action shall not affect the validity or enforceability of
the remaining paragraphs or subparagraphs of this Agreement. No amendments to
this Agreement will be valid unless written and signed by Executive and an
authorized representative of the Company. This Agreement may be executed in one
or more counterparts, all of which, taken together, shall constitute one
original document. The undersigned agree to the terms of this Agreement and
voluntarily enter into it with the intent to be bound thereby.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first written above.
EXECUTIVE: KEYSTONE AUTOMOTIVE INDUSTRIES, INC.
/s/ Xxxxxx X. Xxxxxx XX By: /s/ Xxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxx XX Its: Vice President
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Reviewed and approved as to form
and content as counsel to Executive
this 23rd day of May, 1997.
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Esq.
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