Exhibit 10.2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("this Agreement" or
"this Employment Agreement") is made and entered into as of January 1, 2001 (the
"Effective Date"), by and between Xxxxxx Co., a Pennsylvania corporation (the
"Company"), and Xxxxxx X. Xxxxxxxxxx ("Executive"). The Company and Executive
hereby agree that the pre-existing Employment Agreement between Executive and
the Company, dated as of December 18, 1998 (as amended by Amendment No. 1
thereto as of May 31, 2000), shall be, and hereby is, amended and restated in
its entirety to read as follows:
The Company hereby agrees to employ Executive, and Executive hereby
accepts such employment, on the terms and conditions hereinafter set forth.
1. POSITION.
---------
From the Effective Date until the termination of Executive's employment
hereunder (the "Period of Employment"), Executive shall serve in the capacity
indicated on Schedule 1 hereto, and shall have the normal duties and
responsibilities commensurate with such position. During the Period of
Employment, Executive will (a) during normal business hours, devote his full
time and exclusive attention to, and use his best efforts to advance, the
business and welfare of the Company, and (b) not engage in any other employment
activities for any direct or indirect remuneration without the concurrence of
the Board of Directors of the Company (the "Board"); provided, however, that
Executive may serve on corporate, charitable and community boards so long as
such activities do not unreasonably interfere with the performance of his duties
under this Agreement and provided that any such activities are approved in
advance by the Board, which approval will not be unreasonably withheld.
2. PLACE AND TERM OF EMPLOYMENT.
-----------------------------
(a) Executive's office shall be at the location set forth on Schedule 1
attached hereto.
(b) Subject to Section 6 hereunder, Executive's Period of Employment
shall be through December 31, 2002. This Employment Agreement shall be
automatically renewed for successive one (1) year periods unless either party
gives notice of nonrenewal on or prior to November 30 of the applicable year.
3. COMPENSATION.
-------------
3.1 BASE SALARY. The Company shall pay Executive the per annum base
salary indicated on Schedule 1 attached hereto (the "Base Salary") during the
Period of Employment payable biweekly and otherwise in accordance with the
standard policies of the Company and subject to payroll deductions as may be
necessary or customary in respect of the Company's salaried employees in
general. Executive Base Salary hereunder shall be subject to annual review by
the Board for such increases as the Board in its discretion may determine.
3.2 PERFORMANCE BASED COMPENSATION. In addition to the Base Salary
provided for in Section 3.1 hereof, Executive shall be eligible to receive an
annual cash bonus earned with respect to each calendar year during the Period of
Employment in an amount equal to 70% of the Base Salary in effect at the end of
such calendar year based upon the extent to which Xxxxxx Holding Co. (PA),
Inc.'s ("Holdings") consolidated Earnings Before Interest, Taxes, Depreciation
and Amortization ("EBITDA"), as defined in EXHIBIT 1 hereto, equals or exceeds
the percentages of target annual EBITDA with respect to such calendar year in
accordance with the attached EXHIBIT 3.
The EBITDA target for the fiscal year 2001 is $72 million and for
future years shall be set by Holdings' Board of Directors as part of its annual
budgeting process.
Executive shall also be eligible to receive an additional annual cash
bonus at the discretion of the Board based upon the evaluation of Executive's
performance for each year during the Period of Employment. Bonuses will be
payable no later than March 31 of the respective years following the years with
respect to which they were earned.
4. BENEFITS.
---------
During the Period of Employment, Executive shall be entitled to
participate in all benefit plans and programs maintained by the Company which
are available to its executive officers or employees generally, including any
and all perquisites, provided that, (i) Executive's right to participate in such
plans and programs shall not affect the Company's right to amend or terminate
the general applicability of such plans and programs, and (ii) Executive
acknowledges that he shall have no vested rights under or to participate in any
such plan or program except as expressly provided under the terms thereof. The
Company shall provide the Executive with the benefits described on Exhibit 2
hereto; provided, however, that the benefits so described may be amended or
terminated by the Board.
5. EXPENSES.
---------
Upon presentation of acceptable substantiation therefor, the Company
will pay or reimburse Executive for such reasonable travel, entertainment and
other expenses as he may incur during the Period of Employment in connection
with the performance of his duties hereunder. Federal, state and local income
taxes shall be withheld on all cash and in-kind payments made by the Company to
Executive in accordance with applicable tax laws and regulations. The Company
shall continue to pay Executive's reasonable and documented travel and related
expenses associated with performance of his duties hereunder while maintaining
his home in Xxxxxx, Pennsylvania as his primary residence in accordance with the
practices of the Company in that regard in effect prior to the Effective Date;
provided that such expenses (before the gross-up referred to below) shall not
exceed $35,000 per year. To the extent that the Company's reimbursement or
payment of such travel and related expenses causes Executive to recognize income
for personal income tax purposes, the Company will make Executive whole after
tax through a gross-up payment.
6. TERMINATION OF EMPLOYMENT.
--------------------------
The provisions of this Section 6 shall apply upon termination of
Executive's employment hereunder. In connection with any termination of
Executive's employment hereunder, Executive or his beneficiaries shall be
entitled to receive, pro-rated as appropriate, earned but unpaid Base
Salary, unreimbursed amounts pursuant to Section 5 hereof, and unpaid and
unreimbursed payments and benefits under, and in accordance with the terms of,
applicable benefit plans and programs, said payments being collectively referred
to as "Standard Termination Payments."
6.1 FOR CAUSE OR NOT FOR GOOD REASON. If the Company terminates
Executive's employment for Cause (as hereinafter defined) or if Executive
terminates his employment other than for Good Reason (as defined in Section
6.3), the Company's obligations to compensate Executive shall in all respects
cease as of the date of such termination, except for Standard Termination
Payments. Termination of Executive's employment for "Cause" shall mean
termination by the Company because Executive:
(i) has been convicted of a felony, or has entered a plea of
guilty or NOLO CONTENDERE to a felony;
(ii) has committed an act of fraud involving dishonesty for
personal gain which is materially injurious to the Company;
(iii) has willfully and continually refused to substantially
perform his duties with the Company (other than any such refusal resulting from
his incapacity due to mental illness or physical illness or injury), after a
demand for substantial performance has been delivered to the Executive by the
Board, where such demand specifically identifies the manner in which the Board
believes that the Executive has refused to substantially perform his duties and
the passage of a reasonable period of time for Executive to comply with such
demand; or
(iv) has willfully engaged in gross misconduct materially and
demonstrably injurious to the Company or its subsidiaries.
For purposes of this paragraph, no act or failure to act on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that his
action or omission was in the best interest of the Company or its subsidiaries.
Notwithstanding the foregoing, with respect to termination for Cause arising out
of conduct described in clause (ii), (iii) or (iv) above, a termination shall
not be considered for Cause for purposes of this Agreement unless there shall
have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire Board, at a meeting of the Board called and held
for that purpose (after reasonable notice to the Executive and an opportunity
for the Executive, together with his counsel or other advisors, to be heard at
such meeting), finding that in the good faith opinion of the Board the Executive
had engaged in conduct described in clause (ii), (iii) or (iv) above and
specifying the particulars thereof in detail. Such a finding by the Board of
Directors of the Company is a prerequisite to a termination for Cause pursuant
to clauses (ii), (iii) or (iv) above; PROVIDED, HOWEVER, that such a finding may
be challenged, by appropriate judicial process, on the merits (i.e., that Cause
did not exist) or on the basis that the Board's finding was not made in good
faith (provided that proof that Cause for termination existed shall be a
complete defense to any showing that the Board's findings were not made in good
faith).
If the Executive terminates his employment other than for Good Reason,
the Executive must provide the Company with thirty (30) days written notice
prior to such termination.
6.2 UPON DEATH OR PERMANENT DISABILITY. If Executive's employment is
terminated as a result of death or Permanent Disability (as hereinafter
defined), the Company's obligation to compensate Executive shall in all respects
cease as of the date of such termination, except for Standard Termination
Payments including all applicable disability benefits; provided that, if such
termination occurs after March 31, 2002, Executive (or his estate as applicable)
will also be entitled to receive a lump sum equal to the Severance Amount (as
hereinafter defined). The Company may terminate Executive's employment hereunder
attributable to the "Permanent Disability" of Executive if Executive becomes
physically or mentally incapacitated or disabled so that he is unable to perform
for the Company substantially the same services as he performed prior to
incurring such incapacity or disability (the Company, at its option and expense,
is entitled to retain a physician reasonably acceptable to Executive to confirm
the existence of such incapacity or disability, and the determination of such
physician shall be binding upon the Company and Executive), and such incapacity
or disability exists for an aggregate of six (6) calendar months in any twelve
(12) calendar month period.
6.3 NOT FOR CAUSE OR FOR GOOD REASON.
--------------------------------
(a) If (i) Executive's employment is terminated by the Company
on or prior to March 31, 2002 for a reason other than Cause, Executive's death
or Executive's Permanent Disability, (ii) Executive terminates his employment
for Good Reason (as hereinafter defined) or (iii) Executive's employment is
terminated for any reason after March 31, 2002 other than Executive's death or
Permanent Disability, the Company's obligation to compensate Executive shall in
all respects cease as of the date of such termination, except (a) for Standard
Termination Payments, (b) that the Company will pay to Executive a lump sum
amount equal to the Severance Amount (as defined herein) and (c) that the
Company will, for a period of twelve (12) months following said date of
termination, provide Executive with retirement benefits and welfare (including
any life insurance, hospitalization, medical and disability) benefits,
substantially similar to those provided to Executive as of the date of
termination, provided that such welfare benefits shall be discontinued to the
extent Executive receives similar benefits from subsequent employment. For
purposes of this Agreement, "Good Reason" shall mean (1) except as specifically
provided herein, the assignment to the Executive of duties, or the assignment of
the Executive to a position, constituting a material diminution in the
Executive's role, responsibilities or authority compared with his role,
responsibilities or authority with the Company or its affiliates on the
Effective Date; (2) a reduction by the Company in the Executive's bonus
opportunities or Base Salary as in effect on the Effective Date; (3) unless the
Board approves such reduction or other action, any material reduction in the
level of benefits (including participation in any bonus plan) to which the
Executive is entitled under one or more employee benefit plans on the Effective
Date, or the taking of any action by the Company which would adversely affect
the Executive's accrued benefits under any such employee benefit plans or
deprive the Executive of any material fringe benefit enjoyed by the Executive on
the Effective Date; (4) a demand by the Company to the Executive to relocate to
any place that exceeds a fifty (50) mile radius beyond the location at which the
Executive performed the Executive's duties on the Effective Date; or (5) any
material breach by the Company of any provision of this Agreement.
(b) As used herein, the "Severance Amount" shall mean a lump
sum amount equal to (i) two (2) times the greater of Executive's Base Salary in
effect on the date of such termination or Executive's Base Salary in effect on
the Effective Date; plus (ii) a bonus component equal to two (2) times the
greater of the annual target bonus amount for which Executive is eligible on the
date of such termination or the annual target bonus amount for which Executive
was eligible in the prior year (in either case, for purposes of this clause
only, without regard to EBITDA performance of the Company); less (iii) any bonus
amount paid for the most recently completed year (commencing with 2001) prior to
such termination.
(c) In the event that any change in Executive's duties,
position, role, responsibilities or authority is implemented or proposed to be
implemented by the Company during the term of this Agreement, then: (i) unless
Executive provides written notice to the Company and Chief Executive Officer of
the Company within thirty (30) days of being notified of such change or proposed
change that Executive asserts that such change constitutes a "material
diminution" for purposes of clause (1) of Section 6.3(a), such change shall be
deemed not to be such a "material diminution" and thereafter Executive's duties,
position, role, responsibilities and authority for purposes or such clause (1)
shall be as so changed; and (ii) in the event that Executive provides such
notice in a timely manner and, within thirty (30) days thereafter, the Company,
in its sole discretion, rescinds or alters such change, then for purposes of
such clause (1) the original change shall be disregarded (except to the extent
so altered). Nothing in this Section 6.3 (b) shall limit the Company's right to
contest any assertion that Executive may make with respect to any such change.
6.4 RELEASE AND SATISFACTION. At the time of termination of Executive's
employment, Executive and the Company agree to execute mutual releases whereby
(a) Executive will release, relinquish and forever discharge the Company and any
director, officer, employee, shareholder, controlling person or agent of the
Company from any and all claims, damages, losses, costs, expenses, liabilities
or obligations, whether known or unknown (except as set forth in Section 6.5
hereof other than any such claims, damages losses, costs, expenses, liabilities
or obligations arising under (i) any indemnification arrangement of the Company
with respect to Executive, (ii) any employee benefit plan or program (whether or
not tax-qualified) covering Executive, (iii)
any stock purchase or stock option plan or agreement to which the Company and
Executive are parties (or any document executed in connection therewith) or (iv)
this Agreement, to the extent the Company or any such person has continuing
obligations pursuant to the express provisions hereof following such
termination), which Executive has incurred or suffered or may incur or suffer as
a result of Executive's employment by the Company or the termination of such
employment, and (b) the Company will release, relinquish and forever discharge
Executive and his heirs, successors and assigns from any and all claims,
damages, losses, costs, expenses, liability or obligations, whether known or
unknown (except as set forth in Section 6.5 hereof and other than any such
claims, damages, losses, costs, expenses, liabilities or obligations arising
under any of the arrangements or agreements referred to in clauses (i) through
(iii) in the preceding clause (a) of this Section 6.4 or under this Agreement to
the extent Executive or any such person has continuing obligations pursuant to
the express provisions hereof following such termination), which the Company has
incurred or suffered or may incur or suffer as a result of the Company's
employment of Executive or the termination of such employment.
6.5 EFFECT ON THIS AGREEMENT. The termination of Executive's employment
shall not affect the continuing operation and effect of Sections 6.4 and 7
hereof, nor affect any obligation of the Company to make payments pursuant to
Section 6 hereof, which shall continue in full force and effect upon the Company
and Executive, and its and his heirs, successors and assigns. Nothing in Section
6.1 or 6.4 hereof shall be deemed to operate or shall operate as a release,
settlement or discharge of any liability of Executive to the Company (a) from
any act or omission by Executive enumerated in Section 6.1 which constituted a
reason for termination of Executive's employment for Cause or (b) in connection
with any amount Executive owes to the Company pursuant to a loan or other
advance.
6.6 MITIGATION. Executive shall not be required to mitigate the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise nor will any payments provided for herein be subject to offset in
respect of any claims which the Company may have against Executive and, except
as specifically provided herein, the amount of any payment or benefit provided
for in this Agreement shall not be reduced by any compensation
earned or benefits received by Executive as the result of employment by a future
employer, by offset against any amount claimed to be owed by him to the Company,
or otherwise.
7. NON-COMPETITION; NON-DISCLOSURE OF PROPRIETARY INFORMATION, SURRENDER
---------------------------------------------------------------------
OF RECORDS; INVENTIONS AND PATENTS.
-----------------------------------
7.1 NON-COMPETITION
(a) Executive acknowledges that in the course of his
employment with the Company he will become familiar with the trade secrets and
other confidential information of the Company and its subsidiaries and that his
services will be of special, unique and extraordinary value to the Company.
Therefore, Executive agrees that, during the Period of Employment and for two
(2) years thereafter (the "Noncompete Period"), he shall not directly or
indirectly own, manage, control, participate in, consult with, render services
for, or in any manner engage in any business competing with the businesses of
the Company or any of its subsidiaries (i) which relates to (A) the
manufacturing or sale of climbing equipment or (B) aluminum extrusions or (ii)
which is commenced by the Company or any of its subsidiaries after the Effective
Date and as of the date of termination constitutes or will constitute a material
portion of the Company's overall future business within the United States and
any other geographical area in which the Company or any of its subsidiaries
engage in such businesses. Nothing herein shall prohibit Executive from being a
passive owner of not more than 2% of the outstanding equity of any class of a
corporation or other entity which is publicly traded so long as Executive has no
active participation in the business of such corporation.
(b) During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of the Company or any of its subsidiaries to leave the employ of such
person, or in any way interfere with the employee relationship between the
Company or any of its subsidiaries and any employee thereof, (ii) hire any
person who was an employee of the Company or any subsidiary of the Company at
any time during the Employment Period (other than individuals who have not been
employed by the Company or any subsidiary of the Company for a period of at
least one (1) year prior to employment by Executive directly or indirectly
through another entity), or (iii) induce or attempt to
induce any customer, supplier, licensee or other person having a business
relationship with the Company or any of its subsidiaries (A) which relates to
(x) the manufacturing or sale of climbing equipment or (y) aluminum extrusion or
(B) which is commenced by the Company or any of its subsidiaries after the
Effective Date and as of the date of termination constitutes or will constitute
a material portion of the Company's overall future business to cease doing
business with the Company or such subsidiaries, or interfere materially with the
relationship between any such customer, supplier, licensee or other person
having a business relationship with the Company or any of its subsidiaries.
7.2 PROPRIETARY INFORMATION. Executive agrees that he shall not use for
his own purpose or for the benefit of any person or entity other than the
Company or its shareholders or affiliates, nor otherwise disclose to any
individual or entity at any time while he is employed by the Company or
thereafter any proprietary information of the Company unless such disclosure (a)
has been authorized by the Board, (b) is in the good faith judgment of Executive
required in the course of Executive's employment hereunder, (c) is in the course
of such individual's or entity's employment or retention by the Company, or (d)
is required by law, a court of competent jurisdiction or a governmental or
regulatory agency. For purposes of this Agreement, the term "proprietary
information" shall mean: (a) the name or address of any customer, supplier or
affiliate of the Company or any information concerning the transactions or
relations of any customer, supplier or affiliate of the Company or any of its
shareholders; (b) any information concerning any product, technology or
procedure employed by the Company, but not generally known to its customers,
suppliers or competitors, or under development by or being tested by the
Company, but not at the time offered generally to customers or suppliers; (c)
any information relating to the marketing methods, sales margins, discounts,
rebates, supplier incentives, or the like, the capital structure, or results of
any business plan of the Company; (d) any information contained in the Company's
policies and procedures or employees' manual; (e) any inventions, innovations,
trade secrets or other items covered by Section 7.4 below; and (f) any other
information which the Board has determined by resolution and communicated to
Executive to be confidential or proprietary. However, proprietary information
shall not include any information that is or becomes generally known to the
public other than through actions of Executive in
violation of Sections 7.1, 7.2 or 7.3 hereof or any information which become
available to Executive on a non-confidential basis from a source other then the
Company, its affiliates or their respective employees, provided that such source
is not known to Executive to be subject to any obligation of secrecy to the
Company or its affiliates provided that such information was unsolicited and
that with regard thereto Executive took no action.
7.3 CONFIDENTIALITY AND SURRENDER OF RECORDS. Executive agrees that,
while he is employed by the Company or at any time thereafter, he shall not
except as required by law give any "confidential records" (as hereinafter
defined) to, or permit any inspection or copying of confidential records by, any
individual or entity other than in the course of such individual's or entity's
employment or retention by the Company or as required by law, a court of
competent jurisdiction, or a governmental or regulatory agency, nor shall he
retain any of the same following termination of this employment, without the
prior approval of the Board. For purposes hereof, "confidential records" means
all correspondence, memoranda, files, manuals, financial, operating or marketing
records, magnetic tape, or electronic or other media of any kind which may be in
Executive's possession or under his control or accessible to him which contain
any proprietary information as defined in Section 7.2 above.
7.4 INVENTIONS AND PATENTS. Executive agrees that all inventions,
innovations, trade secrets, patents and processes in any way relating, directly
or indirectly, to the Company's or its subsidiaries' businesses developed by him
alone or in conjunction with others at any time during his employment by the
Company shall belong to the Company. Executive will use his best efforts to
perform all actions reasonably requested by the Executive's Supervisor or the
Board to establish and confirm such ownership by the Company.
7.5 DEFINITION OF COMPANY. For purposes of this Section 7, the term
"Company" shall include Holdings and any and all of its subsidiaries, ventures
or affiliates (including the Company and any and all of its subsidiaries,
ventures or affiliates) whether currently existing or hereafter formed.
7.6 ENFORCEMENT. The parties hereto agree that the duration and area
for which the covenants set forth in Section 7 are to be effective are
reasonable. In the event that any court or
arbitrator determines that the time period or the area, or both of them, are
unreasonable and that any of the covenants are to that extent unenforceable, the
parties hereto agree that such covenants will remain in full force and effect,
first, for the greatest time period, and second, in the greatest geographical
area that would not render them unenforceable. The parties intend that this
Agreement will be deemed to be a series of separate covenants, one for each and
every county of each and every state of the United States of America. Executive
agrees that damages are an inadequate remedy for any breach of the covenants in
this Section 7 and that the Company will, whether or not it is pursuing any
potential remedies at law, be entitled to equitable relief in the form of
preliminary and permanent injunctions without bond or other security upon any
actual or threatened breach of this Agreement.
8. MISCELLANEOUS.
--------------
8.1 NOTICE. Any notice required or permitted to be given hereunder
shall be deemed sufficiently given if sent by registered or certified mail,
postage prepaid, addressed to the addressee at his or its address last provided
the sender in writing by the addressee for purposes of receiving notices
hereunder or, unless or until such address shall be so furnished, to the address
indicated opposite his or its signature to this Agreement. Each party may also
provide notice by sending the other party a facsimile at a number provided by
such other party.
8.2 MODIFICATION AND NO WAIVER OF BREACH. No waiver or modification of
this Agreement shall be binding unless it is in writing signed by the parties
hereto. No waiver by a party of a breach hereof by the other party shall be
deemed to constitute a waiver of a future breach, whether of a similar or
dissimilar nature, except to the extent specifically provided in any written
waiver under this Section 8.2.
8.3 GOVERNING LAW. This Agreement shall be governed by and construed
and interpreted in accordance with the laws of the Commonwealth of Pennsylvania,
and all questions relating to the validity and performance hereof and remedies
hereunder shall be determined in accordance with such law.
8.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same Agreement.
8.5 CAPTIONS. The captions used herein are for ease of reference only
and shall not define or limit the provisions hereof.
8.6 ENTIRE AGREEMENT. This Agreement together with any agreement, plans
or other documents implementing the terms of this Agreement constitute the
entire agreement between the parties hereto relating to the matters encompassed
hereby and supersede any prior oral or written agreements.
8.7 ASSIGNMENT. The rights of the Company under this Agreement may,
without the consent of Executive, be assigned by the Company, in its sole and
unfettered discretion, to any person, firm, corporation or other business entity
which at any time, whether by purchase, merger, or otherwise, directly or
indirectly, acquires all or substantially all of the stock, assets or business
of the Company.
8.8 NON-TRANSFERABILITY OF INTEREST. None of the rights of Executive to
receive any form of compensation payable pursuant to this Agreement shall be
assignable or transferable except through a testamentary disposition or by the
laws of descent and distribution upon the death of Executive. Any attempted
assignment, transfer, conveyance, or other disposition (other than as aforesaid)
of any interest in the rights of Executive to receive any form of compensation
to be made by the Company pursuant to this Agreement shall be void.
8.9 ARBITRATION. Any dispute, claim or controversy arising out of or
relating to this Agreement, or the breach, termination or validity hereof, shall
be finally settled by arbitration in accordance with the then-prevailing
Commercial Arbitration Rules of the American Arbitration Association, as
modified herein ("Rules"). There shall be one arbitrator who shall be jointly
selected by the parties. If the parties have not jointly agreed upon an
arbitrator within twenty days of respondent's receipt of claimant's notice of
intention to arbitrate, either party may request the American Arbitration
Association to furnish the parties with a list of names from which the
parties shall jointly select an arbitrator. If the parties have not agreed upon
an arbitrator within ten days of the transmittal date of the list, then each
party shall have an additional five days in which to strike any names objected
to, number the remaining names in order of preference, and return the list to
the American Arbitration Association, which shall then select an arbitrator in
accordance with Rule 13 of the Rules. The place of arbitration shall be
Pittsburgh, Pennsylvania. By agreeing to arbitration, the parties hereto do not
intend to deprive any court of its jurisdiction to issue a pre-arbitral
injunction, pre-arbitral attachment or other order in aid of arbitration. The
arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. xx.xx.
1-16. Judgment upon the award of the arbitrator may be entered in any court of
competent jurisdiction. Each party shall bear its or his own costs and expenses
in any such arbitration and one-half of the arbitrator's fees and expenses.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first written above.
XXXXXX CO., a Pennsylvania corporation
By:
---------------------------
Name: Xxxxxx X. Xxxxxx
Address for Notices: Title: President and CEO
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
General Counsel
With a copy to:
Investcorp International Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxxxxx X. Xxxxxxx
EXECUTIVE
--------------------------------------
Address for Notices: Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx
0 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
SCHEDULE 1
----------
BONUS AMOUNT
LOCATION AS A PERCENTAGE
TITLE OF OFFICE BASE SALARY OF BASE SALARY
----- --------- ----------- --------------
Chief Operating Officer 00 Xxxxxx Xxxx $300,000 70%
Greenville, PA
EXHIBIT 1
---------
EARNINGS BEFORE INTEREST, TAXES,
DEPRECIATION AND AMORTIZATION
Earnings Before Interest, Taxes, Depreciation and Amortization
("EBITDA") is defined as Consolidated Net Income (loss) of Holdings and its
subsidiaries as it would appear on a statement of income (loss), which shall (i)
exclude or be adjusted otherwise for all acquisitions and additional equity
contributions to the extent such acquisitions and/or equity contributions
materially change target EBITDA for any particular Fiscal Year, (ii) reflect a
reduction for all management and employment bonuses payable with respect to the
Fiscal Year of Holdings prepared in accordance with U.S. GAAP consistently
applied and (iii) be adjusted for any material Board approved amendment to the
capital expenditure plan: plus (minus) the following amounts, to the extent such
amounts are otherwise taken into account in determining EBITDA (prior to
adjustment):
1. Any provision (benefit) for taxes (including franchise taxes)
deducted (added) in calculating such consolidated net income (loss); plus
2. Any interest expense (net of interest income), deducted in
calculating such consolidated net income (loss); plus
3. Amortization expenses deducted in calculating consolidated net
income (loss); plus
4. Depreciation expense deducted in calculating consolidated net income
(loss); plus
5. Management fees paid to Investcorp; plus (minus)
6. Any unusual losses (gains) deducted (added) in calculating
consolidated net income (loss). (Unusual items are intended to include
transactions considered outside the
ordinary course of business. EBITDA will be adjusted to eliminate the effects,
if any, of such transactions, the intent being to calculate EBITDA as if such
transactions had not occurred; plus (minus)
7. Any compensation expense (income) deducted (added) in calculating
consolidated net income (loss) attributable to transactions involving equity
securities of Holdings or its subsidiaries.
The Executive and his representative shall be provided reasonable
opportunity to review the computation of EBITDA and reasonable access to the
data and information supporting much computation, but Holding's Board of
Director's determination shall be conclusive and binding.
EXHIBIT 2
LIST OF CURRENT EMPLOYEE BENEFITS
---------------------------------
Term Life Insurance
Health/Dental Insurance
Long Term Disability Insurance
Accidental Death & Dismemberment Insurance
Travel Insurance
401(k) Savings Plan
Relocation Benefits
Company Car per Policy
Vacation per Policy
Laptop Computer
Cellular Telephone
Internet E-Mail and Web Surfing Account
{Annual Supplemental Physical Reimbursement}
1
EXHIBIT 3
---------
2001 XXXXXX PERCS
VARIABLE PAY BONUS COMPENSATION SYSTEM
EMPLOYEE SUMMARY
OBJECTIVE
---------
The objective of the Xxxxxx Variable Pay Bonus Compensation System is to
motivate associates to achieve exceptional EBITDA performance by providing
substantial financial rewards when such performance is attained.
ELIGIBILITY
-----------
Participating associates shall be approved by the Board of Directors each year.
Participants must hold a position which impacts profitability and strategy,
generally Job Band 5 or currently participating in the Company's variable pay
bonus program. Individuals impacting profitability, in lower grades, may also be
considered.
To be eligible a participant must be employed, designated and otherwise eligible
by June 30th and remain a participant for a minimum of six (6) months. Awards
generally will be prorated for participants who do not participate for a full
year.
At any time during the year, the Board may also designate new participants in
its sole discretion.
Only Board approved associates of the Company or its subsidiaries will be
eligible to participate in the Plan. Once a participant ceases to be an
employee, whether voluntarily or involuntarily, he or she shall automatically
cease to be a participant in the Plan, and shall cease to be entitled to receive
an award unless the participant retires, dies or becomes permanently disabled,
as noted herein. Participants must be employed by the Company at the time the
bonus is paid, unless the participant has retired, becomes permanently disabled
or is deceased (in which case, payment shall be made to the participants
estate).
An associate's participation in the Plan in any prior year(s) does not give the
associate the right to be a participant in the Plan in the current year or in
any subsequent year.
No associate shall be a participant in the Plan during any year in which he or
she is a participant in any other annual incentive plan of the Company or any of
its subsidiaries.
ADMINISTRATION
--------------
The Board shall determine whether awards will be granted. The Board will also
determine which participants will receive an award and the amount of each award,
in its sole discretion. Due consideration will be given to the award guidelines,
performance against financial objectives, individual participant performance
against objectives, the recommendations of the Chief Executive Officer and the
appropriate Executive and Management Leadership Team representative(s) and such
other factors as the Board may deem appropriate, in its sole discretion.
Payments will be made in cash as soon as practical after audited financial
results are available, normally by March 15th of each year, to participants who
are regular full-time employees on the
1
date of payment. Federal, State and/or local taxes or other similar payments
required by law will be withheld with respect to such payments, but no 401(k) or
other similar deductions will be made.
The Board will make bonus payments at a level commensurate with the
Corporation's overall performance, including adjustments consistent with past
bonus and current stock option plans (i.e. accrued costs for acquisitions,
extraordinary expenditures, unbudgeted gains/losses arising from a change in
accounting, etc.) as follows:
EBITDA PERFORMANCE POOL & INDIVIDUAL
TO TARGET % OF TARGET BONUS
--------- -----------------
113.89% 150%
110% 130%
105% 115%
100% 100%
95% 75%
90% 50%
less than 90% 0%
The bonus is calculated by multiplying 50% times the individuals EBITDA Target
bonus percent, times the individuals bonus percent to get the EBITDA portion of
the bonus percentage. Then the Personal Performance Factor ("PPF") portion is
calculated by multiplying 50% times the individuals EBITDA Target bonus percent,
times the individuals bonus percent times their PPF rating. Finally, the two (2)
percentages are added together to get the final bonus percentage.
Under this format, it is possible for individuals to earn awards greater or less
than the formula, however, there shall be a calculated fixed bonus pool for each
year and a cap on each individual target bonus of 150% of the participant's
target bonus percent. In the event that the sum of all individual bonus's exceed
the fixed bonus pool, each individual bonus will be proportionately reduced so
that the total pay out does not exceed the fixed bonus pool. However, additional
funding can be attained if business exceeds budgeted EBITDA and the Company
makes significant progress against strategic objectives as determined by the
Board of Directors.
No person shall have any claim or right to be granted an award under the Plan.
The decisions to pay or not to pay an award, the amount of the award to be paid,
and to whom an award will be paid, shall be made by the Board, in its sole
discretion. The Board may pay an award even when the results would not otherwise
call for an award payment. Likewise, the Board may elect not to pay awards even
when minimum objectives are met.
Any exceptions to the Plan must be approved in writing by the Chief Executive
Officer based on approval of the Board.
Nothing in the Plan or in any action taken hereunder shall affect the Company's
right to terminate at any time and for any reason the employment of any employee
who is a participant in the Plan.
The Plan may be amended, suspended, terminated or reinstated in whole or in part
by the Board of Directors.
2
2001 XXXXXX PERCS VARIABLE PAY
BONUS COMPENSATION SYSTEM
-------------------------
KEY COMPONENTS
--------------
Core Funding Pool
-----------------
Total dollars calculated by summing the total of each individual's
particular target bonus percent multiplied by their base salary
multiplied by EBITDA adjustment factor as indicated in the 2001 EBITDA
Target chart below. Under this format, it is possible for individuals
to earn awards greater or less than the formula; however, there shall
be a calculated fixed bonus pool for each year. In the event that the
sum of all individual bonus's exceed the fixed bonus pool, each
individual bonus will be proportionately reduced so that the total pay
out does not exceed the fixed bonus pool.
2001 EBITDA TARGET
---------------------- ------------------- -------------------------- ----------------- --------------
$ (in millions) % of Target EBITDA Adjustment Factor Potential Total
% of Target Bonus Additional
Funding
---------------------- ------------------- -------------------------- ----------------- --------------
less than $64.8 less than 90% 0% 0% 0%
---------------------- ------------------- -------------------------- ----------------- --------------
$64.8 90% 50% 0% 50%
---------------------- ------------------- -------------------------- ----------------- --------------
$68.4 95% 75% 0% 75%
---------------------- ------------------- -------------------------- ----------------- --------------
$72.0 100% 100% 20% 120%
---------------------- ------------------- -------------------------- ----------------- --------------
$75.6 105% 115% 20% 135%
---------------------- ------------------- -------------------------- ----------------- --------------
$79.2 110% 130% 20% 150%
---------------------- ------------------- -------------------------- ----------------- --------------
$82.0 113.89% 150% 0% 150%
---------------------- ------------------- -------------------------- ----------------- --------------
Potential Additional Funding - Strategic Objectives
---------------------------------------------------
Additional plan funding can be attained if business exceeds budgeted
EBITDA and makes significant progress against strategic objectives as
determined by the Board of Directors.
Strategic Objectives are identified separately.
The Board of Directors, in its sole discretion, can approve additional
funding up to 20% for exceptional financial performance and significant
progress against strategic objectives. Therefore, the total pool could
be funded at 150% of target.
The decisions to pay or not to pay an award, the amount of the award to
be paid, and to whom an award will be paid, shall be made by the Board,
in its sole discretion. The Board may pay an award even when the
results would not otherwise call for an award payment. Likewise, the
Board may elect not to pay awards even when minimum objectives are met.
3
ADMINISTRATION
--------------
Each individual participant in the program will be evaluated and performance
rated to reflect their own attainment of individual goals on a measure of 0 -
1.5 measured in 1/10th increments.
Example:
----------------------- -------------------------------------------------------------------------
Personal Performance
Factor/Modifier
(PPF) Description
----------------------- -------------------------------------------------------------------------
0 Did not attain any individual goals
----------------------- -------------------------------------------------------------------------
.5 Attained some individual goals
----------------------- -------------------------------------------------------------------------
.8 Attained most individual goals
----------------------- -------------------------------------------------------------------------
1.0 Attained all individual goals
----------------------- -------------------------------------------------------------------------
1.2 Exceeded individual goals
----------------------- -------------------------------------------------------------------------
1.5 Outstanding performance, greatly exceeded all individual goals
----------------------- -------------------------------------------------------------------------
Individual bonus payout has two (2) components:
1. 50% of individual's target bonus is based upon Enterprise
Financial Results (EBITDA) which may be adjusted consistent with
past bonus and current stock option plans (i.e. accrued costs for
acquisitions, extraordinary expenditures, unbudgeted gains/losses
arising from a change in accounting, etc.).
2. 50% of individual's bonus is based upon personal factors.
Therefore, a bonus can be "0" if the Company does not meet minimum EBITDA target
(if EBITDA is less than 90%) or up to a maximum of 1.5 times the individual
target if the Company achieves 110% of EBITDA Target and the individual receives
a 1.5 personal performance factor/modifier.
EXAMPLES:
---------
---------------- --------------------------------- -------------------------
Individual Salary Bonus Percent
---------------- --------------------------------- -------------------------
1. $ 50,000 10%
---------------- --------------------------------- -------------------------
2. $ 75,000 15%
---------------- --------------------------------- -------------------------
3. $125,000 20%
---------------- --------------------------------- -------------------------
4. $175,000 50%
---------------- --------------------------------- -------------------------
5. $250,000 70%
---------------- --------------------------------- -------------------------
6. $300,000 95%
---------------- --------------------------------- -------------------------
To calculate the bonus amount, take 75% times the individuals EBITDA Target
bonus percent, times the individuals bonus % to get the EBITDA portion of the
bonus % and for the PPF portion, multiply 25%
4
times the individuals EBITDA Target bonus percent, times the individuals bonus %
times their PPF rating. Add these two (2) percentages together to get the final
bonus percentage. See examples below
5
FOR THE FOLLOWING EXAMPLES, ASSUME THAT THE TOTAL BONUS POOL HAS ADEQUATE
FUNDING EXCEPT FOR EXAMPLE #4.
1) Individual #1 above, assuming the Company reaches 95% of EBITDA and the individuals PPF = .5
EBITDA PPF
Bonus = 50% (75% x 10%) + 50% (75% x 10% x .5)
3.75% + 1.875%
Total Bonus Percentage = 5.625%
[5.625% x $50,000]
Bonus = $2,812.50
2) Individual #2 above, assuming the Company reached 90% of EBITDA and the individuals PPF = .9
EBITDA PPF
Bonus = 50% (50% x 15%) + 50% (50% x 15% x .9)
3.75% + 3.375%
Total Bonus Percentage = 7.125%
[7.125% x $75,000]
Bonus = $5,343.75
3) Individual #3 above, assuming the Company reached 110% of EBITDA and the individuals PPF = 0
EBITDA PPF
Bonus = 50% (130% x 20%) + 50% (130% x 20% x 0)
13.0% + 0%
Total Bonus Percentage = 13.0%
[13.0% x $125,000]
Bonus = $16,250.00
4) Individual #4 above, assuming the Company reached 100% of EBITDA and the individuals PPF = 1.5
EBITDA PPF
Bonus = 50% (100% x 50%) + 50% (100% x 50% x 1.5)
25% + 37.5%
Total Bonus Percentage = 56.25
[62.5% x $175,000]
Total of all bonuses = 110% of total authorized bonus pool, therefore bonuses must be
proportionately reduced by pro-rata. (Ex. If pool = $1,425,647 and total bonuses = $1,568,212,
would need to reduce each individual by 10%)
Bonus = $109,375 less proportionate reduction of $10,937.50
Total Final Bonus = $98,437.50
6
5) Individual #5 above, assuming the Company reached 100% of EBITDA, plus additional 20% and the
individuals PPF = 1.3
EBITDA PPF
Bonus = 50% (120% x 70%) + 50% (120% x 70% x 1.3)
42% + 54.6%
Total Bonus Percentage = 96.6%
[96.6% x $250,000]
Bonus = $241,500
6) Individual #5 above, assuming the Company reached 110% of EBITDA, plus additional 20% and the
individuals PPF = 1.5
EBITDA PPF
Bonus = 50% (150% x 95%) + 50% (150% x 95% x 1.5)
71.25% + 106.875%
Total Bonus Percentage = 178.125%
[Maximum of 142.5% (150% OF 95% TARGET BONUS) x $300,000]
Bonus = $427,500
7
2001 SCHEDULE
-------------
------------------------------------------------------------------------------------------------------------------------------------
ACTUAL EBITDA $ less than $64.8M $64.8M $68.4M $72.0M $75.6M $79.2M
------------------------------------------------------------------------------------------------------------------------------------
ACTUAL EBITDA %
OF TARGET less than 90% 90% 95% 100% 105% 110%
------------------------------------------------------------------------------------------------------------------------------------
% OF TARGET BONUS % 0% 50% 75% 100% 115% 130%
FOR INDIVIDUAL & POOL
------------------------------------------------------------------------------------------------------------------------------------
TARGET BONUS %
OF BASE SALARY Minimum % Maximum % Minimum % Maximum % Minimum % Maximum % Minimum % Maximum % Minimum % Maximum %
------------------------------------------------------------------------------------------------------------------------------------
10% 0 2.50% 6.25% 3.75% 9.38% 5.00% 12.50% 5.75% 14.38% 6.50% 15.00%
------------------------------------------------------------------------------------------------------------------------------------
15% 0 3.75% 9.38% 5.63% 14.06% 7.50% 18.75% 8.63% 21.56% 9.75% 22.50%
------------------------------------------------------------------------------------------------------------------------------------
20% 0 5.00% 12.50% 7.50% 18.75% 10.00% 25.00% 11.50% 28.75% 13.00% 30.00%
------------------------------------------------------------------------------------------------------------------------------------
25% 0 6.25% 15.63% 9.38% 23.44% 12.50% 31.25% 14.38% 35.94% 16.25% 37.50%
------------------------------------------------------------------------------------------------------------------------------------
30% 0 7.50% 18.75% 11.25% 28.13% 15.00% 37.50% 17.25% 43.13% 19.50% 45.00%
------------------------------------------------------------------------------------------------------------------------------------
35% 0 8.75% 21.88% 13.13% 32.81% 17.50% 43.75% 20.13% 50.31% 22.75% 52.50%
------------------------------------------------------------------------------------------------------------------------------------
40% 0 10.00% 25.00% 15.00% 37.50% 20.00% 50.00% 23.00% 57.50% 26.00% 60.00%
------------------------------------------------------------------------------------------------------------------------------------
45% 0 11.25% 28.13% 16.88% 42.19% 22.50% 56.25% 25.88% 64.69% 29.25% 67.50%
------------------------------------------------------------------------------------------------------------------------------------
50% 0 12.50% 31.25% 18.75% 46.88% 25.00% 62.50% 28.75% 71.88% 32.50% 75.00%
------------------------------------------------------------------------------------------------------------------------------------
55% 0 13.75% 34.38% 20.63% 51.56% 27.50% 68.75% 31.63% 79.06% 35.75% 82.50%
------------------------------------------------------------------------------------------------------------------------------------
60% 0 15.00% 37.50% 22.50% 56.25% 30.00% 75.00% 34.50% 86.25% 39.00% 90.00%
------------------------------------------------------------------------------------------------------------------------------------
65% 0 16.25% 40.63% 24.38% 60.94% 32.50% 81.25% 37.38% 93.44% 42.25% 97.50%
------------------------------------------------------------------------------------------------------------------------------------
70% 0 17.50% 43.75% 26.25% 65.63% 35.00% 87.50% 40.25% 100.63% 45.50% 105.00%
------------------------------------------------------------------------------------------------------------------------------------
75% 0 18.75% 46.88% 28.13% 70.31% 37.50% 93.75% 43.13% 107.81% 48.75% 112.50%
------------------------------------------------------------------------------------------------------------------------------------
80% 0 20.00% 50.00% 30.00% 75.00% 40.00% 100.00% 46.00% 115.00% 52.00% 120.00%
------------------------------------------------------------------------------------------------------------------------------------
85% 0 21.25% 53.13% 31.88% 79.69% 42.50% 106.25% 48.88% 122.19% 55.25% 127.50%
------------------------------------------------------------------------------------------------------------------------------------
90% 0 22.50% 56.25% 33.75% 84.38% 45.00% 112.50% 51.75% 129.38% 58.50% 135.00%
------------------------------------------------------------------------------------------------------------------------------------
95% 0 23.75% 59.38% 35.63% 89.06% 47.50% 118.75% 54.63% 136.56% 61.75% 142.50%
------------------------------------------------------------------------------------------------------------------------------------
100% 0 25.00% 62.50% 37.50% 93.75% 50.00% 125.00% 57.50% 143.75% 65.00% 150.00%
------------------------------------------------------------------------------------------------------------------------------------
Note: Maximum percentage is capped to 150% of target bonus percent. This chart
does not show any calculations for the potential additional 20% funding.
2001 Personal Performance Objectives
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Bonus Participant Name: ________________________ Supervisor: ______________________
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
Key Performance Objectives Weight Measurement of Success Results Rating(1) PPF(2)
------------------------------------------------------------------------------------------------------------------------------------
1. %
------------------------------------------------------------------------------------------------------------------------------------
2. %
------------------------------------------------------------------------------------------------------------------------------------
3. %
------------------------------------------------------------------------------------------------------------------------------------
4. %
------------------------------------------------------------------------------------------------------------------------------------
5. %
------------------------------------------------------------------------------------------------------------------------------------
6. %
------------------------------------------------------------------------------------------------------------------------------------
7. %
------------------------------------------------------------------------------------------------------------------------------------
TOTAL 100%
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
ESTABLISHING KEY PERFORMANCE OBJECTIVES: RESULTS:
---------------------------------------- --------
------------------------------------------------------------------------------------------------------------------------------------
(1) This is general guidance for
performance
------------------------------------------------------------------------------------------------------------------------------------
___________________________ _______ rating. You can use any number between _________________________ ______
------------------------------------------------------------------------------------------------------------------------------------
Participant Date 0 - 1.5 in 1/10ths. Participant Date
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
___________________________ _______ 0 - Did not attain any individual goals _________________________ ______
------------------------------------------------------------------------------------------------------------------------------------
Supervisor Date .5 - Attained some individual goals Supervisor Date
------------------------------------------------------------------------------------------------------------------------------------
.8 - Attained most individual goals
------------------------------------------------------------------------------------------------------------------------------------
___________________________ _______ 1.0 - Attained all individual goals _________________________ ______
------------------------------------------------------------------------------------------------------------------------------------
Executive Leadership Team Date 1.2 - Exceeded individual goals Executive Leadership Team Date
------------------------------------------------------------------------------------------------------------------------------------
Representative 1.5 - Outstanding performance, greatly Representative
------------------------------------------------------------------------------------------------------------------------------------
exceeded all individual goals
------------------------------------------------------------------------------------------------------------------------------------
___________________________ ______ _________________________ ______
------------------------------------------------------------------------------------------------------------------------------------
CEO Date (2) Personal Performance Factor/Modifier = CEO Date
------------------------------------------------------------------------------------------------------------------------------------
Performance Rating x Percentage Weight
------------------------------------------------------------------------------------------------------------------------------------
9
