EMPLOYMENT AGREEMENT
THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 1st day of
April, 2008 (the “Effective
Date”), by and between XXXXXX PRODUCTS, INC., a
Pennsylvania corporation (the “Company”), and XXXXXXX X. XXXXXX (the “Executive”).
W I T N E
S S E T H:
WHEREAS,
the Executive is the Chief Executive Officer of the Company; and
WHEREAS,
the Company and the Executive desire to enter into this Agreement to set forth
the terms and conditions of the Executive’s continued employment with the
Company.
NOW,
THEREFORE, in consideration of the covenants and agreements hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT AND
DUTIES
1.1 Employment Period and
Term. The Executive’s Employment Period shall continue until
March 31, 2011, unless further extended or earlier terminated as provided in
this Agreement. On March 31, 2009, and on each anniversary of March
31, 2009, the Employment Period shall automatically be extended for one
additional year, unless further extended or earlier terminated as provided in
this Agreement. The period of time beginning on the Effective Date
and ending on the later of March 31, 2011 or, if the Employment Period has been
automatically extended under the previous sentence, one day before the third
anniversary of the most recent date on which the Employment Period was extended,
shall be referred to herein as the “Term”). (In effect,
the Term is a rolling three year period. The first three-year period
begins on the Effective Date and ends on March 31, 2011; the second three-year
period begins on April 1, 2009 and ends on March 31, 2012, but is effective only
if the Compensation Committee extends the Employment Period through March 31,
2012; and so on.)
1.2 General.
1.2.1 During
the Employment Period, the Executive shall have the title of Chief Executive
Officer of the Company and shall have the authorities, duties and
responsibilities customarily exercised by an individual serving in this position
in a corporation of the size and nature of the Company and such other
authorities, duties and responsibilities as may from time to time be reasonably
delegated to him by the Board of Directors of the Company (the “Board”) that are
consistent with the foregoing. The Executive shall faithfully and
diligently discharge his duties hereunder and use his reasonable efforts to
implement the policies established by the Board from time to
time. During the Employment Period, the Executive shall be the
highest ranking executive of the Company and no other officer will be appointed
with authority over the Executive. The Executive shall report
directly to the Board. Subject to the foregoing, it is recognized
that while the Executive is currently Chairman of the Board, the Board reserves
the right to remove him as such and to appoint another member of the Board as
non-executive Chairman, with the associated authorities, responsibilities and
duties.
1.2.2 The
Executive shall devote all of his business time, attention, knowledge and skills
faithfully, diligently and to the best of his ability, in furtherance of the
business and activities of the Company; provided, however, that nothing in this
Agreement shall preclude the Executive from devoting reasonable periods of time
required for:
(i) serving
as a director or member of a committee of organizations or corporations that do
not, in the good faith determination of the Compensation and Nominating
Committee of the Board (the “Compensation Committee”), compete with the Company
or otherwise create, or could create, in the good faith determination of the
Compensation Committee, a conflict of interest with the business of the
Company;
(ii) delivering
lectures, fulfilling speaking engagements, and any writing or publication
relating to his area of expertise; provided, that any fees, royalties or
honorariums received therefrom shall be promptly turned over to the
Company;
(iii) engaging
in professional organization and program activities;
(iv) managing
his personal passive investments and affairs; and
(v) participating
in charitable or community affairs;
provided
that such activities do not materially, individually or in the aggregate,
interfere with the due performance of his duties and responsibilities under this
Agreement or create a conflict of interest with the business of the Company, as
determined in good faith by the Compensation Committee.
1.3 Reimbursement of
Expenses. During the Employment Period, the Company shall pay
the reasonable expenses incurred by the Executive in the performance of his
duties hereunder, including, without limitation, those incurred in connection
with business related travel or entertainment, or, if such expenses are paid
directly by the Executive, the Company shall promptly reimburse him for such
payments, provided that the Executive properly accounts for such expenses in
accordance with the Company’s business expense reimbursement
policy. To the extent any such reimbursements (and any other
reimbursements of costs and expenses provided for herein) are includable in the
Executive’s gross income for Federal income tax purposes, all such
reimbursements shall be made no later than March 15 of the calendar year next
following the calendar year in which the expenses to be reimbursed are
incurred.
2. COMPENSATION
2.1 Base
Salary. During the Employment Period, the Executive shall be
entitled to receive a base salary at a rate of $514,370.00 per annum, which base
salary shall be payable in accordance with the payroll practices of the Company,
with such increases (but no decreases) as may be determined by the Compensation
Committee from time to time (as increased from time to time, the “Base Salary”).
2.2 Annual
Bonuses. In addition to the Base Salary, the Executive shall
be eligible to receive during the Employment Period annual cash bonuses under
the Company’s Executive Bonus Plan and/or any other cash incentive plan
maintained by the Company, as determined by the Compensation Committee in its
sole discretion within the parameters of such plan(s).
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2.3 Equity Related
Awards. The Executive may receive during the Employment Period
grants of awards under the Company’s Incentive Stock Option Plan and/or any
other equity-related incentive plan maintained by the Company, as determined by
the Compensation Committee in its sole discretion within the parameters of such
plan(s).
2.4 Additional
Compensation. During the Employment Period, in addition to the
foregoing and the benefits and perquisites described in Section 4, the Executive
shall be eligible to receive such other compensation as may from time to time be
awarded him by the Compensation Committee, in its sole discretion.
3. PLACE OF
PERFORMANCE. In connection with his employment by the Company,
the Executive shall be based at the Company’s executive offices, currently
located in Colmar, Pennsylvania.
4. EMPLOYEE BENEFITS AND
PERQUISITES
4.1 Benefit
Plans. During the Employment Period, the Executive shall be
eligible to participate in all employee benefit plans, programs or arrangements
on the terms and conditions, including eligibility, no less favorable than
provided to other senior executives of the Company, which shall be established
or maintained by the Company generally for its employees, or generally made
available to its senior executives; provided, however, that participation in the
Company’s Executive Bonus Plan, Incentive Stock Option Plan and/or other equity
and incentive plans shall be as determined by the Compensation Committee in its
sole discretion, as described in Section 2.
4.2 Vacation. The
Executive shall be entitled to not less than four weeks vacation at full pay for
each calendar year during the Employment Period. Such vacation may be
taken in the Executive’s discretion, and at such time or times as are not
inconsistent with the reasonable business needs of the Company. Any
vacation not used during a calendar year shall be forfeited without compensation
and may not be carried over to any subsequent calendar year.
4.3 Automobile. During
the Employment Period, the Company shall lease for or provide the Executive for
his use, at the Company’s expense, an automobile commensurate with the
Executive’s needs as the Company’s most senior executive officer. The
Company shall be responsible for the cost of insurance, maintenance, gas and
other related operating expenses incurred for such automobile during the
Employment Period. The Executive hereby acknowledges that he will be
subject to taxation for any personal use of the automobile in accordance with
applicable law.
5. TERMINATION OF EMPLOYMENT
PERIOD
5.1 General. The
Employment Period shall end as of the Executive’s termination of employment
hereunder. The Executive’s employment under this Agreement may be
terminated without any breach of this Agreement only on the following
circumstances:
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5.1.1 Death. The
Executive’s employment under this Agreement shall terminate upon his
death.
5.1.2 Disability. If
the Executive suffers a Disability (as defined below), the Company may terminate
the Executive’s employment under this Agreement upon ninety (90) days prior
written notice; provided that the Executive has not returned to full time
performance of his duties during such ninety (90) day period. For
purposes hereof, “Disability” shall mean the Executive’s “disability” under the
Company’s long-term disability plan, if any, otherwise, the Executive’s
inability to perform his duties and responsibilities hereunder, with or without
reasonable accommodation, due to any physical or mental illness or incapacity,
which condition either (i) has continued for a period of 270 days (including
weekends and holidays) in any consecutive 365-day period or (ii) is projected by
the Board in good faith after consulting with a physician selected by the
Company, that the condition is likely to continue for a period of at least nine
(9) consecutive months from its commencement.
5.1.3 Good
Reason. The Executive may terminate his employment under this
Agreement for Good Reason at any time on or prior to the 120th day after the
occurrence of any of the Good Reason events set forth in the following
sentence. For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of the following events without the Executive’s
consent:
(i) a
material diminution of the authorities, duties or responsibilities of the
Executive set forth in Section 1.2 above;
(ii) the
loss of any of the titles of the Executive with the Company set forth in Section
1.2 above;
(iii) a
reduction by the Company in the Executive’s Base Salary;
(iv) a
material change in the Executive’s primary place of employment;
(v) the
failure by the Compensation Committee to nominate or re-nominate the Executive
to serve as Chairman of the Board or as a member of the Board or removal of the
Executive as Chairman of the Board or as a member of the Board (other than as a
result of or due to the Executive’s death or Disability, because of a legal
prohibition under applicable law or regulation, or for “Cause,” as defined in
Section 5.1.5);
(vi) the
assignment to the Executive of duties or responsibilities which are materially
inconsistent with any of his duties and responsibilities set forth in Section
1.2 hereof; or
(vii) a
change in the reporting structure so that the Executive reports to someone other
than solely and directly to the Board;
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provided,
however, that, within ninety (90) days of any such event having occurred, the
Executive shall have provided the Company with written notice that such events
have occurred and afforded the Company thirty (30) days to cure
same.
5.1.4 Without Good
Reason. The Executive may voluntarily terminate his employment
under this Agreement without Good Reason upon written notice by the Executive to
the Board at least sixty (60) days prior to the effective date of such
termination.
5.1.5 Cause. The
Company may terminate the Executive’s employment under this Agreement at any
time for Cause. Termination for “Cause” shall mean termination of the
Executive’s employment because of the occurrence of any of the following as
determined by the Board:
(i) the
willful and continued failure by the Executive to attempt in good faith
substantially to perform his obligations under this Agreement (other than any
such failure resulting from the Executive’s incapacity due to a Disability);
provided, however, that the Company shall have provided the Executive with
written notice that such actions are occurring and, where practical, the
Executive has been afforded at least thirty (30) days to cure same;
(ii) the
indictment of the Executive for, or his conviction of or plea of guilty or nolo
contendere to, a felony or any other crime involving moral turpitude or
dishonesty; or
(iii) the
Executive’s willfully engaging in misconduct in the performance of his duties
for the Company or other than in the performance of his duties for the Company
(including, but not limited to, theft, fraud, embezzlement, and securities law
violations or a violation of the Company’s Code of Conduct or other written
policies) that is materially injurious to the Company, or, in the good faith
determination of the Compensation Committee, is potentially materially injurious
to the Company, monetarily or otherwise.
For
purposes of this Section 5.1.5, no act, or failure to act, on the part of the
Executive shall be considered “willful,” unless done, or omitted to be done, by
him in bad faith and without reasonable belief that his action or omission was
in, or not opposed to, the best interest of the Company (including
reputationally). Prior to any termination for Cause, the Executive
will be given five (5) business days written notice specifying the alleged Cause
event and will be entitled to appear (with counsel) before the Compensation
Committee to present information regarding his views on the Cause event, and
after such hearing, there is at least a majority vote of the Compensation
Committee (other than the Executive) to terminate him for
Cause. After providing the notice in foregoing sentence, the
Compensation may suspend the Executive with full pay and benefits until a final
determination pursuant to this Section has been made.
5.1.6 Without
Cause. The Company may terminate the Executive’s employment
under this Agreement without Cause immediately upon written notice by the
Company to the Executive, other than for death or Disability.
5.2 Notice of
Termination. Any termination of the Executive’s employment by
the Company or by the Executive (other than termination by reason of the
Executive’s death) shall be communicated by written Notice of Termination to the
other party of this Agreement. For purposes of this Agreement, a
“Notice of Termination” shall mean a written notice which shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so
indicated.
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5.3 Date of
Termination. The “Date of Termination” shall mean (a) if
the Executive’s employment is terminated by his death, the date of his death;
(b) if the Executive’s employment is terminated pursuant to Section 5.1.2,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period); (c) if the Executive’s
employment is terminated pursuant to Sections 5.1.3 or 5.1.5, the date specified
in the Notice of Termination after the expiration of any applicable cure
periods; (d) if the Executive’s employment is terminated pursuant to Section
5.1.4, the date specified in the Notice of Termination which shall be at least
sixty (60) days, as applicable, after Notice of Termination is given, or such
earlier date as the Company shall determine, in its sole discretion; and (e) if
the Executive’s employment is terminated pursuant to Section 5.1.6, the date on
which a Notice of Termination is given.
5.4 Compensation Upon
Termination.
5.4.1 Termination for Cause or
without Good Reason. If the Executive’s employment shall
terminate under Section 5.1.4 or Section 5.1.5, but not under circumstances that
would entitle the Executive to payments and benefits under Section 5.4.3, the
Executive shall receive from the Company: (a) any earned but unpaid
Base Salary through the Date of Termination, paid in accordance with the
Company’s standard payroll practices; (b) reimbursement for any unreimbursed
expenses properly incurred and paid in accordance with Section 1.3 through the
Date of Termination; (c) payment for any accrued but unused vacation time in
accordance with Company policy; (d) such vested accrued benefits, and other
payments, if any, as to which the Executive (and his eligible dependents) may be
entitled under, and in accordance with the terms and conditions of, the employee
benefit arrangements, plans and programs of the Company as of the Date of
Termination, ((a) though (d) herein referred to as the “Amounts and Benefits”);
and the Company shall have no further obligation with respect to this Agreement,
except as provided in Sections 7 and 8 of this Agreement.
5.4.2 Termination for Death,
Disability, For Good Reason or Without Cause. If the
Executive’s employment terminates under Sections 5.1.1, 5.1.2, 5.1.3 or 5.1.6,
but not under circumstances that would entitle the Executive to payments and
benefits under Section 5.4.3, then the Company shall pay or provide the
Executive the Amounts and Benefits and, subject to Section 5.4.5:
(i) the
Executive’s Base Salary will continue to be paid until the expiration of the
Term in accordance with the usual payroll practices of the Company;
(ii) in
lieu of annual bonuses, the Executive will receive cash payments each in the
amount of $150,000, on each March 15 during the remainder of the Term;
and
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(iii) for
the remainder of the Term, the Company shall, at its expense, continue on behalf
of the Executive and the Executive’s dependents and beneficiaries any medical,
dental, vision and hospitalization benefits provided to the Executive
immediately prior to the Date of Termination or reimburse Executive for
Executive’s medical, dental, vision and hospitalization related
expenses. The coverage, benefits and reimbursements (including
deductibles and costs) provided hereunder shall be no less favorable to the
Executive and the Executive’s dependents and beneficiaries, than the coverage
and benefits made available immediately prior to the Date of
Termination. The Company’s obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer’s benefit plans, in which case
the Company may reduce the coverage of any benefits it is required to provide
the Executive hereunder as long as the aggregate coverages and benefits of the
combined benefit plans are no less favorable to the Employee than the coverages
and benefits required to be provided hereunder. Notwithstanding the
foregoing, any reimbursements of expenses payable under this Section that are
includible in gross income for Federal income tax purposes shall be paid on or
before the last day of the Executive’s taxable year in which the expense was
incurred.
5.4.3 Termination Following a
Change in Control. If the Executive’s employment terminates
for any reason within twelve (12) months following a “Change in Control,” other
than for death, Disability or Cause, then the Company shall pay or provide the
Executive the Amounts and Benefits and, subject to Section 5.4.5;
(i) the
Executive’s Base Salary will continue to be paid until the expiration of the
Term in accordance with the usual payroll practices of the Company;
(ii) in
lieu of annual bonuses, the Executive will receive cash payments each in the
amount of $150,000, on each March 15 during the remainder of the Term;
and
(iii) for
the remainder of the Term, the Company shall, at its expense, continue on behalf
of the Eligible Employee and the Employee’s dependents and beneficiaries any
medical, dental, vision and hospitalization benefits provided to the Eligible
Employee immediately prior to the Date of Termination or reimburse Executive for
Executive’s medical, dental, vision and hospitalization related
expenses. The coverage, benefits and reimbursements (including
deductibles and costs) provided hereunder shall be no less favorable to the
Executive and the Executive’s dependents and beneficiaries, than the coverage
and benefits made available immediately prior to the Date of
Termination. The Company’s obligation hereunder with respect to the
foregoing benefits shall be limited to the extent that the Executive obtains any
such benefits pursuant to a subsequent employer’s benefit plans, in which case
the Company may reduce the coverage of any benefits it is required to provide
the Executive hereunder as long as the aggregate coverages and benefits of the
combined benefit plans are no less favorable to the Employee than the coverages
and benefits required to be provided hereunder. Notwithstanding the
foregoing, any reimbursements of expenses payable under this Section that are
includible in gross income for Federal income tax purposes shall be paid on or
before the last day of the Executive’s taxable year in which the expense was
incurred.
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(iv) For
purposes of this Agreement, a “Change in Control” means the occurrence of any
one or more of the following events:
(a) any
person or other entity (other than any of the Company’s subsidiaries or any
employee benefit plan sponsored by the Company or any of its subsidiaries)
including any person as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), becomes the beneficial
owner, as defined in Rule 13d-3 under the Exchange Act, directly or
indirectly, of more than fifty percent (50%) of the total combined voting power
of all classes of capital stock of the Company normally entitled to vote for the
election of directors of the Company (the “Voting Stock”);
(b) the
Board and/or the shareholders of the Company approve the sale of all or
substantially all of the property or assets of the Company and such sale
occurs;
(c) the
Board and/or the shareholders of the Company approve a consolidation or merger
of the Company with another entity (other than with any of the Company’s
subsidiaries), the consummation of which would result in the shareholders of the
Company immediately before the occurrence of the consolidation or merger owning,
in the aggregate, less than 50% of the Voting Stock of the surviving entity, and
such consolidation or merger occurs; or
(d) a
change in the board of directors of the Company occurs with the result that the
members of the board on the effective date of this Agreement (the “Incumbent
Directors”) no longer constitute a majority of such board of directors, provided
that any person becoming a director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest or the settlement thereof, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
election or nomination for election was supported by more than half of the then
Incumbent Directors shall be considered an Incumbent Director for purposes
hereof.
5.4.4 No Mitigation or
Offset. The Executive shall not be required to mitigate the
amount of any payment provided for in this Section 5.4 by seeking other
employment or otherwise, and, except as provided in Section 5.4.2(iii) and
5.4.3(iii), the amount of any payment provided for in this Section 5.4 shall not
be reduced by any compensation earned by the Executive as the result of
employment by another employer or business or by profits earned by the Executive
from any other source at any time before and after the Date of
Termination. The Company’s obligation to make any payment pursuant
to, and otherwise to perform its obligations under, this Agreement shall not be
affected by any offset, counterclaim or other right that the Company may have
against the Executive for any reason.
5.4.5 Release. Notwithstanding
any provision to the contrary in this Agreement, the Company’s obligation to pay
or to provide the Executive with the payments and benefits under Sections 5.4.2
or 5.4.3 (other than the Amounts and Benefits), shall be conditioned on the
Executive’s executing and not revoking a waiver and general release in the form
set forth as Exhibit A attached to this Agreement (with such changes therein, if
any, as are legally necessary at the time of execution to make it enforceable as
reasonably determined by the Company).
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6. NEGATIVE COVENANTS OF THE
EXECUTIVE.
6.1 During
the Employment Period and for a period of two years thereafter, the Executive
will not, directly or indirectly:
(i) solicit,
entice, persuade or induce any employee, director, officer, associate,
consultant, agent or independent contractor of the Company and its subsidiaries
and affiliates (collectively, the “Company Group”) to terminate his or her
employment or engagement by the Company Group in order to become employed or
engaged by any person, firm, corporation or other business enterprise other than
a member of the Group, except in furtherance of his responsibility during the
Employment Period; or
(ii) authorize
or assist in the taking of such action by any third party.
For
purposes of this Section 6.1, the terms “employee,” “director,” “officer,”
“associate,” “consultant,” “agent,” and “independent contractor” shall include
any person with such status at any time during the twelve (12) months prior to
the termination of the Executive's employment and for two years following the
Executive's termination of employment. The Executive shall not be
deemed to have violated the provisions of this Section 6.1 by reason of an
isolated act, or failure to act, not taken in bad faith.
6.2 During
the Employment Period and for a period of two years thereafter, the Executive
will not, directly or indirectly, engage, participate, make any financial
investment in, or become employed by or render advisory or other services to or
for any person, firm, corporation or other business enterprise (the “Competing
Enterprise”) which is engaged, directly or indirectly, during the Employment
Period in competition with the Company Group as a supplier of automotive
replacement parts, brake parts and fasteners to the automotive aftermarket or as
a supplier of household hardware and organizational products to mass
merchandisers, or in any other business activities of the Company Group
accounting for more than 10% of its gross sales in the most recently completed
fiscal year or reasonably expected to do so in the current fiscal year, in the
United States and in any foreign jurisdiction in which the Company Group
operates or, at the end of Employment Period, proposes to operate; provided, in
either case, that the competitive businesses of the Competing Enterprise account
for more than 10% of the gross sales of the Competing Enterprise for its most
recently completed fiscal year and the Executive does not work or consult in
such competitive business. The foregoing covenant shall not be
construed to preclude the Executive from making any investments in the
securities of any company, regardless of whether engaged in competition with the
Company Group, to the extent that such securities are actively traded on a
national securities exchange or in the over-the-counter market in the United
States or any foreign securities exchange and, after giving effect to such
investment, the Executive does not beneficially own securities representing more
than 1% of the combined voting power of the voting securities of such
company.
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6.3 During
the Employment Period and thereafter without limit as to time, the Executive
will not (other than in the regular course and in furtherance of the Company
Group’s business) use, divulge, furnish or make available to any person any
knowledge or information with respect to the business or affairs of the Company
Group which is confidential, including, without limitation, “know-how,” trade
secrets, customer and supplier lists, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business
acquisition or disposition plans, new personnel employment plans, methods of
manufacture, technical processes, designs and design projects, inventions and
research projects and financial budgets and forecasts of the Group except (1)
information which at the time is available to others in the business or
generally known to the public other than as a result of disclosure by the
Executive not permitted hereunder, and (2) when required to do so by a court of
competent jurisdiction, by any governmental agency or by any administrative body
or legislative body (including a committee thereof) with purported or apparent
jurisdiction to order the Executive to divulge, disclose or make accessible such
information. All memoranda, notes, lists, records, electronically
stored data, recordings or videotapes and other documents (and all copies
thereof) made or compiled by the Executive or made available to the Executive
(whether during his employment by the Company Group or by any predecessor
thereof) concerning the business of the Company Group or any predecessor thereof
shall be the property of the Company or such other member of the Company Group
and shall be delivered to the Company or such other member of the Company Group
promptly upon the termination of the Employment Period.
6.4 The
Executive acknowledges that all developments, including, without limitation,
inventions, patentable or otherwise, trade secrets, discoveries, improvements,
ideas, writings and works for hire that alone or jointly with others the
Executive may conceive, make, develop or acquire during the period of his
employment by the Company Group and any predecessor thereof (collectively, the
“Developments”), are and shall remain the sole and exclusive property of the
Company Group and the Executive hereby assigns to the Company Group all of his
right, title and interest in all such Developments. The Executive
shall promptly and fully disclose all future Developments to the Board, and, at
any time upon request and at the expense of the Company, shall execute,
acknowledge and deliver to the Company Group all instruments that the Company
Group shall prepare, give evidence, and take all other actions that are
necessary or desirable in the reasonable opinion of the Company’s counsel, to
enable the Company Group to file and prosecute applications for and to acquire,
maintain and enforce all letters patent, trademark registrations or copyrights
covering the Developments in all countries in which the same are deemed
necessary.
6.5 The
Executive acknowledges that the services to be rendered by the Executive are of
a special, unique and extraordinary character and, in connection with such
services, the Executive will have access to confidential information vital to
the Company Group's business and that irreparable injury would be sustained by
the Company Group in the event of his breach of any of the covenants contained
in this Section 6, which injury could not be remedied adequately by the recovery
of damages in an action at law. Accordingly, the Executive agrees
that, upon a breach or threatened breach by him of any of such covenants, the
Company and, to the extent appropriate, any other member of the Company Group
shall be entitled, in addition to and not in lieu of any and all other remedies,
to an injunction to be issued by any court of competent jurisdiction restraining
the commission or continuance of any such breach or threatened breach upon
minimal bond, with or without surety, and that such an injunction will not work
an undue hardship on him.
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6.6 The
provisions of this Section 6 shall survive the termination of this Agreement,
irrespective of the reasons therefor.
6.7 If
any court determines that any of the provisions of this Section 6 is invalid or
unenforceable, the remainder of such provisions shall not thereby be affected
and shall be given full effect without regard to the invalid
provisions. If any court construes any of the provisions of this
Section 6, or any part thereof, to be unreasonable because of the duration of
such provision or the geographic scope thereof, such court shall have the power
to reduce the duration or restrict the geographic scope of such provision and to
enforce such provision as so reduced or restricted.
7. INDEMNIFICATION/ DIRECTORS
AND OFFICERS LIABILITY INSURANCE
During
the Employment Period and thereafter, the Company shall indemnify and hold
harmless the Executive and his heirs and representatives as, and to the extent,
provided in the Company’s charter documents, including, but not limited to, its
By-Laws. During the Employment Period and thereafter, the Company
shall also cover Executive under the Company’s directors’ and officers’
liability insurance on the same basis as it covers other senior executive
officers and directors of the Company.
8. MISCELLANEOUS
8.1 Notices. All
notices or communications hereunder shall be in writing, addressed as follows
(or to such other address as either party may have furnished to the other in
writing by like notice):
| To the Company: | Xxxxxx Products, Inc. | ||
| 0000 Xxxx Xxxxxx Xxxxxx | |||
| Xxxxxx, XX 00000 | |||
| Attention: | Xxxxxx X. Xxxxxxxxx, Esquire | ||
| Vice President, General Counsel and Assistant Secretary | |||
To the
Executive, at the last address for the Executive on the books of the
Company.
Such
addresses may be changed by notice to the Executive.
8.2 Severability. Each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
is held to be prohibited by or invalid under applicable law, such provision will
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
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8.3 Binding Effect;
Benefits. Executive may not delegate his duties or assign his
rights hereunder. No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company other than pursuant to a
merger or consolidation in which the Company is not the continuing entity, or a
sale, liquidation or other disposition of all or substantially all of the assets
of the Company, provided that the assignee or transferee is the successor to all
or substantially all of the assets or businesses of the Company and assumes the
liabilities, obligations and duties of the Company under this Agreement, either
contractually or by operation of law. For the purposes of this
Agreement, the term “Company” shall include the Company and, subject to the
foregoing, any of its successors and assigns. This Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective heirs, legal representatives, successors and permitted
assigns.
8.4 Entire
Agreement. This Agreement, including the Exhibits hereto,
represent the entire agreement of the parties with respect to the subject matter
hereof and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive. This Agreement
(including any of the Exhibits hereto) may be amended at any time by mutual
written agreement of the parties hereto.
8.5 Withholding. The
payment of any amount pursuant to this Agreement shall be subject to applicable
withholding and payroll taxes, and such other deductions as may be required by
applicable law.
8.6 Governing
Law. This Agreement and the performance of the parties
hereunder shall be governed by the internal laws (and not the law of conflicts)
of the Commonwealth of Pennsylvania.
8.7 Arbitration. Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration conducted in Xxxxxxxxxx County,
Pennsylvania under the Employment Arbitration Rules then prevailing of the
American Arbitration Association and such submission shall request the American
Arbitration Association to: (i) appoint an arbitrator experienced and
knowledgeable concerning the matter then in dispute; (ii) require the testimony
to be transcribed; (iii) require the award to be accompanied by findings of
fact and a statement of reasons for the decision; and (iv) request the matter to
be handled by and in accordance with the expedited procedures provided for in
the Commercial Arbitration Rules. The determination of the
arbitrators, which shall be based upon a de novo interpretation of this
Agreement, shall be final and binding and judgment may be entered on the
arbitrators' award in any court having jurisdiction. All costs of the
American Arbitration Association and the arbitrator shall be borne by the
Company, unless the position advanced by the Executive is determined by the
arbitrator to be frivolous in nature. EACH PARTY WAIVES THE RIGHT TO
TRIAL BY JURY.
8.8 Tax
Matters.
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8.8.1 It
is intended that the provisions of this Agreement comply with Section 409A of
Internal Revenue Code of 1986, as amended, and the regulations and guidance
promulgated thereunder (collectively “Code Section 409A”), and all
provisions of this Agreement shall be construed in a manner consistent with the
requirements for avoiding taxes or penalties under Code Section
409A. If any provision of this Agreement (or of any award of
compensation, including equity compensation or benefits) would cause the
Executive to incur any additional tax or interest under Code Section 409A, the
Company shall, upon the specific request of the Executive, use its reasonable
business efforts to in good faith reform such provision to comply with Code
Section 409A; provided, that to the maximum extent practicable, the original
intent and economic benefit to the Executive and the Company of the applicable
provision shall be maintained, but the Company shall have no obligation to make
any changes that could create any additional economic cost or loss of benefit to
the Company. The Company shall timely use its reasonable business
efforts to amend any plan or program in which the Executive participates to
bring it in compliance with Code Section 409A. Notwithstanding the
foregoing, the Company shall have no liability with regard to any failure to
comply with Code Section 409A so long as it has acted in good faith with regard
to compliance therewith.
8.8.2 A
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless such termination
is also a “Separation from Service” within the meaning of Section 409A and, for
purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean such Separation from
Service. If the Executive is deemed on the date of termination of his
employment to be a “specified employee”, within the meaning of that term under
Section 409A(a)(2)(B) of the Code and using the identification methodology
selected by the Company from time to time, or if none, the default methodology,
then with regard to any payment, the providing of any benefit or any
distribution of equity made subject to this Section 8.8.2, to the extent
required to be delayed in compliance with Section 409A(a)(2)(B) of the Code, and
any other payment, the provision of any other benefit or any other distribution
of equity that is required to be delayed in compliance with Section
409A(a)(2)(B) of the Code, such payment, benefit or distribution shall not be
made or provided prior to the earlier of (i) the expiration of the six-month
period measured from the date of the Executive’s Separation from Service or (ii)
the date of the Executive’s death. On the first day of the seventh
month following the date of Executive’s Separation from Service or, if earlier,
on the date of his death, (x) all payments delayed pursuant to this Section
8.8.2 (whether they would have otherwise been payable in a single sum or in
installments in the absence of such delay) shall be paid or reimbursed to the
Executive in a lump sum, and any remaining payments and benefits due under this
Agreement shall be paid or provided in accordance with the normal payment dates
specified for them herein and (y) all distributions of equity delayed pursuant
to this Section 8.8.2 shall be made to the Executive. On any delayed
payment date under this Section 8.8.2, there shall be paid to the Executive or,
if the Executive has died, to his estate, in a single cash lump sum together
with the payment of such delayed payment, interest on the aggregate amount of
such delayed payment at the “Delayed Payment Interest Rate” (as defined below)
computed from the date on which such delayed payment otherwise would have been
made to the Executive until the date paid. For purposes of the
foregoing, the “Delayed Payment Interest Rate” shall mean the short term
Applicable Federal Rate as of the business day immediately preceding the payment
date for the applicable delayed payment.
13
8.8.3 With
regard to any provision herein that provides for reimbursement of costs and
expenses or in-kind benefits, except as permitted by Code Section 409A, (i) the
right to reimbursement or in-kind benefits shall not be subject to liquidation
or exchange for another benefit, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits, provided during any taxable year shall not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other taxable year, provided that the foregoing clause (ii)
shall not be violated with regard to expenses reimbursed under any arrangement
covered by Section 105(b) of the Code solely because such expenses are subject
to a limit related to the period the arrangement is in effect and (iii) such
payments shall be made on or before the last day of the Executive’s taxable year
following the taxable year in which the expense was incurred.
8.8.4 In
the event that there is also an “Excise Tax” imposed with respect to any
payment, or portion of any payment, described in Section 5 of this Agreement,
the Executive will be paid an additional “Tax Gross-Up Payment.” The
Tax Gross-Up Payment shall be in an amount so that, after payment by Executive
of all taxes (including any related interest or penalties) resulting from the
Tax Gross-Up Payment (including any Excise Tax or Federal, state or local income
or employment tax on the Tax Gross-Up Payment), Executive retains an amount of
the Tax Gross-Up Payment equal to the Excise Taxes imposed on Executive as a
result of or in connection with the change in control. The “Excise
Tax” is the excise tax imposed by Section 4999 Code of 1986, as amended, (or any
successor provision) as a payment “contingent on a change in ownership or
control” of the Company (under Section 280G of the Internal Revenue or any
successor provision), any similar tax imposed by state or local law, and any
related interest or penalties.
8.9 Survivorship. Except
as otherwise expressly set forth in this Agreement, upon the expiration of the
Employment Period and the Term, the respective rights and obligations of the
parties shall survive such expiration to the extent necessary to carry out the
intentions of the parties as embodied in this Agreement. This
Agreement shall continue in effect until there are no further rights or
obligations of the parties outstanding hereunder and shall not be terminated by
either party without the express prior written consent of both
parties.
8.10 Counterparts. This
Agreement may be executed in counterparts (including by fax or pdf) which, when
taken together, shall constitute one and the same agreement of the
parties.
8.11 Executive’s
Representations. The Executive acknowledges that before
entering into this Agreement he has received a reasonable period of time to
consider this Agreement and has had sufficient time and an opportunity to
consult with any attorney or other advisor of his choice in connection with this
Agreement and all matters contained herein, and that he has been advised to do
so if he so chooses. The Executive further acknowledges that this
Agreement and all terms hereof are fair, reasonable and are not the result of
any fraud, duress, coercion, pressure or undue influence exercised by the
Company, that he has approved and entered into this Agreement and all of the
terms hereof on his own free will, and that no promises or representations have
been made to him by any person to induce him to enter into this Agreement other
than the express terms set forth herein.
14
8.12 Headings. Paragraph
headings are included in this Agreement for convenience of reference only and
shall not affect the interpretation of the text hereof.
[End of Text - Signature page
follows]
15
Intending
to be legally bound hereby, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the Signing
Date.
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XXXXXX
PRODUCTS, INC.
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By: /s/ Xxxxx X.
Xxxxx
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Name: Xxxxx
X. Xxxxx
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Title: Chair,
Compensation Committee
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EXECUTIVE
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/s/ Xxxxxxx X.
Xxxxxx
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Xxxxxxx
X. Xxxxxx
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16
EXHIBIT
A
General
Release and Waiver
In
consideration for Xxxxxx Products, Inc. providing me with payments
and benefits (subject to taxes and all withholding requirements), set forth in
Section 5.4 of the Employment Agreement between Xxxxxx Products, Inc. and me,
dated March 3, 2008, but not including the Amounts and Benefits (as defined in
such Employment Agreement), I, Xxxxxxx X. Xxxxxx, on behalf of and for the
benefit of myself, my heirs, executors, administrators, representatives,
successors and assigns, agree to the following:
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1)
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I
acknowledge and agree that the above-referenced consideration is
satisfactory and adequate in exchange for my promises and release
contained herein.
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2)
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In
consideration of the above, I hereby agree, for myself, my heirs,
executors, administrators, representatives, successors and assigns (the
“Releasors”), fully and unconditionally to release and discharge
completely and forever Xxxxxx Products, Inc., its parent companies,
shareholders, subsidiaries, divisions and affiliates, and each of its
respective predecessors, successors, heirs and assigns (the “Released
Parties”) from any and all rights and claims that Releasors may have based on
or relating to my employment with Xxxxxx Products, Inc. or the termination
of that employment for any and all reasons. I specifically
release the Released Parties from any rights or claims which I may have
based upon the Age Discrimination in Employment Act or the Older Workers
Benefit Protection Act, which prohibit age discrimination in employment;
Title VII of the Civil Rights Act of 1964, as amended, which prohibits
discrimination in employment based on race, color, creed, national origin
or sex; the Equal Pay Act, which prohibits paying men and women unequal
pay for equal work; the Americans with Disabilities Act of 1990, which
prohibits discrimination against disabled persons; the Employee Retirement
Income Security Act of 1974, which regulates employee benefit plans; the
Pennsylvania Human Relations Act, which prohibits discrimination based on
race, color, religious creed, ancestry, age, sex, national origin or
disability; or any other federal, state or local laws or regulations
prohibiting discrimination or which otherwise regulate employment terms
and conditions. I also release the Released Parties from any
claim for wrongful discharge, unfair treatment, breach of public policy,
express or implied contract, or any other claims arising under common law
which relate in any way to my employment with Xxxxxx Products, Inc. or the
termination thereof. This General Release and Waiver covers
claims that I know about and those that I may not know about
up through the date of this General Release and Waiver. This
General Release and Waiver specifically includes any and all claims for
attorney's fees and costs which are incurred by me for any reason arising
out of or relating to any or all matters covered by this
Agreement.
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This
General Release and Waiver does not waive rights or claims that may arise after
the date this General Release and Waiver is executed.
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3)
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I
hereby confirm that I have not caused or permitted any charge, complaint,
lawsuit
or any other action or proceeding whatsoever to be filed against the
Released Parties
based on my employment or the separation of that employment to
date.
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4)
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I
acknowledge and agree that before entering into this General Release and
Waiver, I have had the opportunity to consult with an attorney of my
choice, and I have been advised to do so if I so choose. I have
entered into this General Release and Waiver voluntarily and knowingly and
without any inducement from Xxxxxx Products, Inc. other than the terms of
this General Release and Waiver. I have read and understand the
terms of this General Release and Waiver before signing
it.
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5)
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I
understand that I have a period of twenty-one (21) days to consider, sign
and return this General Release and Waiver and that I may revoke the
General Release and Waiver by delivering a signed revocation notice to
Xxxxxx Products, Inc. within seven (7)
days of signing and returning this General Release and
Waiver.
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6)
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This
General Release and Waiver will be governed and construed in accordance
with the laws of the Commonwealth of Pennsylvania. No amendment
or modification of the terms of the General Release and Waiver will be
made except by a writing executed by Xxxxxx Products, Inc. and
myself.
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| Dated: April 1, 2008 | /s/ Xxxxxxx X.
Xxxxxx
Xxxxxxx X. Xxxxxx |
2
