EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") dated as of May 1, 1996, is
between Eljer Industries, Inc., a Delaware corporation (the "Company"), and
(Executive) ("Executive").
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In consideration of the mutual covenants set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Employment. Executive shall enter into the employment of the
Company, and the Company shall employ Executive, on the terms and conditions set
forth in this Agreement. During the term of his employment, Executive shall
devote substantially all of his business time and his best efforts, skills, and
abilities to the performance of his duties as stated in this Agreement and to
the furtherance of the Company's business. Executive's job title will be
_________________ of Eljer Industries, Inc., and (his/her) duties will be those
customarily performed by persons acting in such capacity and those designated
by the Chief Executive Officer or the Board of Directors of the Company (the
"Board") consistent with the position of ________________ of Eljer Industries,
Inc.
2. Compensation.
(a) Base Salary. During the term of Executive's employment
with the Company pursuant to this Agreement, the Company shall pay
Executive for his services a monthly base salary of $_________ payable
in equal semimonthly installments in arrears in accordance with the
Company's normal payroll procedures. Executive's base salary will
be reviewed annually and subject to increase at the discretion of the
Board or an authorized committee or representative thereof. The
Company may reduce Executive's base salary only as part of a general
reduction in the compensation of all executive officers of the
Company who have written employment agreements with the Company
(a "General Executive Compensation Reduction"). Executive's
monthly base salary in effect from time to time, exclusive of any
other compensation hereunder, is hereinafter called the "Monthly Base
Salary."
(b) Bonus Plans. Executive will be entitled to participate in
the Company's annual bonus plan for executives and key employees, with
an annual bonus range thereunder of an amount equal to zero to 60% of
Executive's annualized Base Salary and an annual par bonus thereunder
of an amount equal to 40% of Executive's annualized Base Salary. The
"par" bonus is a performance benchmark, and not a guaranteed amount or
a minimum. Executive's receipt of any bonus, and the amount thereof,
will depend upon the achievement of corporate, department, team, or
individual goals set annually by the Compensation Committee of the
Board (the "Compensation Committee"). In addition, Executive will be
considered for participation in any long-term incentive bonus plan of
the Company and, to the extent designated by the Compensation
Committee, will be entitled to participate in any such plan under the
terms of such plan.
(c) Participation in Other Benefit Plans. Executive will also
be entitled to participate in any other pension and profit-sharing
plans, supplemental and excess benefit plans, long-term incentive
compensation plans (other than long-term incentive bonus plans,
addressed in Section 2(b) hereof), and other benefits, plans, or
arrangements provided or available to active salaried employees of the
Company in effect during Executive's
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employment with the Company hereunder (collectively, "Benefit
Plans"). The Benefit Plans currently consist of the Eljer Tax
Reduction Investment Plan, the Salaried Pension Plan for Eljer
Manufacturing, Inc., the Eljer Supplemental Benefit Plan, the Eljer
Excess Benefit Plan, the Eljer Manufacturing, Inc. and Affiliates
Health and Welfare Plan, the Personal Accident and Business Travel
Insurance Plan, the Eljer Industries, Inc. Change in Control
Severance Payment Plan, and the Flexible Benefits Plan.
Executive's participation in any or all of the Benefit Plans will be
subject to the terms and conditions of the Benefit Plans as they may
hereafter be amended or restated (or discontinued) by the Company,
including the satisfaction of all applicable eligibility requirements
and vesting provisions of the Benefit Plans. Executive agrees that the
Company shall have no obligation hereunder to continue any or all of
the Benefit Plans. The Company has provided to Executive, and Executive
hereby acknowledges receipt of, correct and complete written plan
materials distributed to participants or prospective participants in
the current Benefit Plans.
(d) Automobile Allowance. The Company will pay Executive
a quarterly automobile allowance of $__________to be used by Executive
to purchase or lease a vehicle suitable for Executive's use in
rendering services under this Agreement and to compensate for all
expenses to operate, insure, and maintain that vehicle for that
business purpose (the "Automobile Allowance"). The quarterly
amount of the Automobile Allowance will be prorated on a daily
basis for any calendar quarter for which this Agreement is not in
effect for the entire quarter. In addition to the Automobile
Allowance, the Company will pay Executive annually an amount equal to
the federal and any state income tax paid by Executive on the
amount of the Automobile Allowance paid to Executive during the
relevant tax year. Also in addition to the Automobile Allowance,
the Company will reimburse Executive for mileage, at the rate then in
effect under the Company's policies, relating to his business use of
a vehicle.
(e) Vacation. Executive will be entitled to paid vacation in
accordance with the applicable vacation policies, practices, and
procedures of the Company in effect from time to time during the term
of his employment under this Agreement.
(f) Tax Preparation and Financial Planning Services. The
Company will arrange for and provide at its expense preparation
services for Executive's personal federal and (if applicable) state and
local annual income tax returns, commencing with his 1996 annual tax
return due in 1997. In addition, the Company will arrange for and
provide at its expense, a financial planning service to be determined
by the Company.
(g) Annual Physical Examination. The Company will pay
the reasonable cost of an annual comprehensive physical
examination of Executive, commencing in 1996.
(h) Stock Options. During Executive's employment under this
Agreement, Executive will be eligible to participate in the Eljer
Industries, Inc. Long-Term Executive Incentive Compensation Plan (the
"Stock Option Plan") at a level specified by the Compensation Committee
when the Compensation Committee grants options to employees of the
Company and its subsidiaries. The terms of each option granted to
Executive will be governed by the Stock Option Plan and the written
option agreement entered into between the Company and Executive in
accordance with the Stock Option Plan.
(i) Tax Withholding. The Company has the right to deduct from
any compensation payable to Executive under this Agreement social
security (FICA) taxes and all federal, state,
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municipal, or other such taxes or charges as may now be in effect
or that may hereafter be enacted or required.
3. Reimbursable Expenses. Executive shall be entitled to receive
prompt reimbursement from the Company, in accordance with the relevant
policies, practices, and procedures of the Company, for all reasonable
business expenses incurred by Executive in performing his duties under this
Agreement.
4. Term. The term of Executive's employment under this Agreement will
begin on May 1, 1996 and will continue until (but not including) the next May
1st and for successive one-year periods thereafter, unless the Company notifies
Executive in writing to the contrary at least three months before the May 1st
renewal date, in which case Executive's employment will terminate at the end of
that term.
5. Events of Early Termination. Executive's employment under
this Agreement will terminate (notwithstanding the provisions of Section
4 hereof) before the expiration of the then effective term upon the earliest
to occur of the following:
(a) Death. The death of Executive.
(b) Disability. The Disability of Executive. "Disability"
means a permanent and total disability within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended (the "Code"),
that renders Executive unable reasonably to perform his duties
hereunder for six consecutive months. Executive's Disability shall be
determined by the Compensation Committee, in its sole and absolute
discretion, upon receipt of and in reliance on sufficient competent
medical advice from a qualified physician selected by or acceptable to
the Compensation Committee.
(c) Termination by Company. The effective date of the
Company's termination of Executive's employment specified in a written
notice of termination given to Executive, whether for Cause (as defined
in Section 6(a) hereof) or without Cause.
(d) Termination by Executive. The effective date of
Executive's termination of his employment specified in a written notice
of termination given to the Company, whether for Good Reason (as
defined in Section 6(b) hereof) or without Good Reason. Without the
written consent of the Company, the effective date of such employment
cannot be fewer than ten business days after the date on which such
notice is given to the Company.
Upon termination of Executive's employment for any reason described above in
this Section 5, the Company shall pay Executive (or his estate or heirs) the
amount of Base Salary earned but not yet paid through the effective date of
termination (the "Termination Date"), the amount of all bonuses and of all
benefits under applicable bonus plans and Benefit Plans that are earned or
vested and payable to Executive in accordance with the terms of those bonus
plans and Benefit Plans (including all eligibility requirements for such
payments) through the Termination Date, and all reimbursable expenses due to
Employee in accordance with Section 3 hereof. Except as provided in Section 7
hereof, and notwithstanding the provisions of Section 4 hereof, the Company
shall have no obligation to pay any other amount to Executive.
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6. Cause or Good Reason for Termination.
(a) Cause. "Cause" for termination of Executive's employment
under this Agreement by the Company, as determined by the Compensation
Committee, means any of the following:
(i) The willful and continued failure of Executive to
substantially or satisfactorily perform his duties under this
Agreement, other than any such failure resulting from a
Disability, after written demand for performance made by the
Company which identifies the manner in which the Company
believes Executive has not substantially or satisfactorily
performed his duties. The failure of Executive to
substantially or satisfactorily perform will be deemed
"willful and continued" if Executive does not comply with the
Company's demand within a reasonable time, as specified in the
demand or as determined in good faith by the Compensation
Committee.
(ii) The conviction of Executive for committing an act of
fraud, embezzlement, theft, or other act constituting a
felony.
(iii) The willful engagement of Executive in
misconduct, including any violation of Section 8 hereof, that
is demonstrably and materially injurious (monetarily or
otherwise) to the Company. For the purpose of this Section
6(a)(iii), any violation by Executive of Section 8 hereof will
be deemed "willful" if done not in good faith or without
reasonable belief that his conduct (whether an action or an
omission) was in the best interest of the Company.
(b) Good Reason. "Good Reason" for Executive's termination
of his employment under this Agreement means any of the following, without
Executive's written consent and other than in circumstances in which Executive's
employment is subject to termination for Cause:
(i) The Company's assignment of Executive exclusively
to an office or position of lesser authority, status, or
responsibility, or the Company's assignment to Executive
(without a change of office or position) of duties having or
reflecting only materially reduced authority, status, or
responsibility of Executive.
(ii) The Company's reduction of (A) Executive's Base
Salary or the annual or long-term bonus to which Executive may
be entitled or which he has an opportunity to earn under the
terms of any bonus plan of the Company in which he
participates, except as part of a General Executive
Compensation Reduction, or (B) the amount or level at which
Executive participates or may participate in any Benefit Plan,
except as the result of a change in the participation of all
then existing participants or prospective participants in such
Benefit Plan or the discontinuance of such Benefit Plan.
(iii) The Company's permanent reassignment of
Executive's principal job location or office to a place more
than 50 miles from the place of his principal job location or
office on the date of this Agreement.
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7. Severance Payment on Termination Without Cause or for Good Reason.
(a) Termination Events and Payment. If Executive's employment
is terminated either (i) by the Company without Cause before the
expiration of the then effective term of this Agreement or at the end
of the then effective term of this Agreement in accordance with Section
4 hereof, or (ii) by Executive for Good Reason before the expiration of
the then term of this Agreement, then (notwithstanding the provisions
of Section 4 hereof) the Company shall pay or provide Executive (A) an
amount equal to the Executive's Monthly Base Salary in effect on his
Termination Date, unless Executive has been the subject of a General
Executive Compensation Reduction within the last 24 months, in which
case the Executive shall be paid the Executive's Monthly Base Salary in
effect immediately prior to the General Executive Compensation
Reduction, payable for twelve consecutive months after the Termination
Date, (B) the annual par bonus for the calendar year in which the
Termination Date occurs, payable at the same time it would be payable
if Executive's employment had not been terminated, and (C) benefits
under certain of the Benefit Plans, or the economic equivalent thereof,
as described in Attachment I to this Agreement for a period of twelve
months after the Termination Date. Such continuation of payments or
benefits shall not be deemed the continuation of employment for any
purpose, and benefits payable under any Benefit Plan, or the economic
equivalent thereof, will be determined based on the benefits (if any)
that similarly situated employees of the Company would be entitled to
under such Benefit Plan during the twelve-month period following the
Termination Date, as such Benefit Plan may thereafter be amended or
restated (or discontinued) by the Company. In the event of such
termination without Cause or for Good Reason (or for any other reason),
Executive's right to exercise the stock options described in Section
2(h) hereof that have been granted to him (if any) shall be governed
solely by the terms of the Stock Option Plan, as may be in effect at
that time.
(b) Change of Control Payments. If the termination of
Executive's employment referred to in the first sentence of Section
7(a) hereof is the result of or in connection with a change of control,
as defined in the separate Executive Severance Agreement between the
Company and Executive dated _____________ (the "Severance Agreement"),
Section 7(a) shall not be applicable, but shall be superseded in its
entirety by the terms of the Severance Agreement. The rights and
obligations of Executive and the Company under those circumstances
shall be governed solely by the Severance Agreement.
(c) Offset. No severance amount payable hereunder will be
subject to reduction as the result of future compensation earned or
received by Executive (including by self-employment), and Executive
shall have no duty to mitigate his damages.
(d) General Release. The payment or provision of any amounts
or benefits pursuant to Section 7(a) hereof shall be conditioned upon
the Company's receipt of a Settlement Agreement, General Release, and
Covenant Not to Xxx executed and performed by Executive in
substantially the form of Attachment II to this Agreement.
(e) Compliance with Covenants. The payment or provision of any
amounts or benefits pursuant to Section 7(a) hereof shall be
conditioned upon Executive's compliance with his covenants set forth in
Sections 8 and 9 hereof during the time periods specified in those
Sections. Accordingly, the Company may discontinue or reduce the
amounts or benefits pursuant to Section 7(a) hereof if the Company
reasonably believes, or establishes
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by arbitration or any legal or injunctive proceeding described in
Section 11 hereof, that there is or has been any violation by
Executive of Section 8 or Section 9 hereof. Any such discontinuance
or reduction by the Company will not preclude it from seeking any
arbitration award or injunctive relief permitted by Section 11 hereof.
8. Ownership of Company Property. All files, records, documents,
information, data, and similar items relating to the business of the Company,
whether prepared by Executive or otherwise coming into his possession, will
remain the exclusive property of the Company and may not be removed from the
premises of the Company under any circumstances without the prior written
consent of the Board (except in the ordinary course of business during
Executive's employment under this Agreement), and in any event must be promptly
delivered to the Company upon termination or cessation of Executive's employment
with the Company for any reason.
9. Nonsolicitation of Employees. For a period of one year after the
termination or cessation of his employment with the Company for any reason,
Executive shall not, on his own behalf or on behalf of any other person, solicit
any employee of the Company (known by Executive to be such) to leave the
employment of the Company, nor shall he use or disclose to any person any
information obtained while employed by the Company concerning the names and
addresses of the Company's employees. Each reference to the "Company" in this
Section 9 shall be deemed to include each subsidiary and affiliate of the
Company.
10. Severability. The parties hereto intend all provisions of Sections
8 and 9 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of Section 8 or Section 9 hereof is too broad to be enforced as
written, the parties intend that the court reform the provision to such narrower
scope as it determines to be reasonable and enforceable. The existence of any
claim or cause of action of Executive against the Company, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by the Company of any of the covenants of Executive contained in Sections 8 and
9 hereof. If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term hereof, (i)
such provision shall be fully severable, (ii) this Agreement shall be construed
and enforced as if such illegal, invalid, or unenforceable provision never
constituted a part of this Agreement, and (iii) the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid, or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid, or unenforceable provision, there
shall be added as part of this Agreement a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.
11. Dispute Resolution.
(a) Arbitration. The exclusive remedy or method of resolving
all disputes or questions arising out of or relating to this Agreement
or its expiration or termination shall be arbitration held in Dallas,
Texas. Nevertheless, though disputes or questions arising out of or
relating to Section 8 or Section 9 hereof shall be subject to
arbitration, the Company shall not be precluded from also seeking and
obtaining injunctive relief from any court of proper jurisdiction to
enforce or protect its rights under Section 8 or Section 9 hereof. Any
arbitration may be initiated by either party by written notice to the
other party specifying the subject of the requested arbitration and
appointing that party's arbitrator ("Arbitration Notice").
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(b) Arbitrators. Arbitration shall be before three
arbitrators, one to be appointed by the Company, a second to be
appointed by Executive, and a third to be appointed by those two
arbitrators. The third arbitrator shall act as chairman. If (i) the
non-initiating party fails to appoint an arbitrator by written notice
to the initiating party within ten days after the Arbitration Notice is
given, or (ii) the two arbitrators appointed by the parties herein fail
to appoint a third arbitrator within ten days after the date of the
appointment of the second arbitrator, then the American Arbitration
Association in Dallas, Texas, upon application of the initiating party,
shall appoint an arbitrator to fill that position.
(c) Award and Costs. The arbitration proceeding shall be
conducted in accordance with the rules of the American Arbitration
Association. A determination or award made or approved by at least two
of the arbitrators shall be the valid and binding action of the
arbitrators. The costs of arbitration (exclusive of the expense of a
party in obtaining and presenting evidence and attending the
arbitration and of the fees and expense of legal counsel to a party,
all of which shall be borne by that party) shall be borne by the
Company. The arbitration determination or award shall be final and
conclusive on the parties, and judgment upon such award may be entered
and enforced in any court of competent jurisdiction.
12. Miscellaneous.
(a) Notices. Any notice, consent, demand, request, approval,
or other communication to be given under this Agreement by either party
to the other must be in writing and must be either (i) personally
delivered, (ii) mailed by registered or certified mail, postage prepaid
with return receipt requested, (iii) delivered by overnight express
delivery service or same-day or overnight local courier service, or
(iv) delivered by facsimile transmission, in any event to the address
or number set forth below or to such other address or number as may be
designated by either or both of the parties from time to time in
accordance with this Section 12(a):
If to the Company: Eljer Industries, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
Fax No.: (000) 000-0000
With a copy (which
shall not constitute
notice) to: Gardere & Xxxxx, L.L.P.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X.
Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
If to Executive: (Executive)
(Address)
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Notices delivered personally or by overnight express delivery service
or by local courier service shall be deemed given and received as of
actual receipt. Notices mailed as described above shall be deemed given
and received three business days after mailing or upon actual receipt,
whichever is earlier. Notices delivered by facsimile transmission shall
be deemed given and received upon receipt by the sender of the
transmission confirmation.
(b) Entire Agreement. This Agreement, with the Attachments
hereto and the other agreements referred to herein, supersedes any and
all other agreements, either oral or written, between the parties with
respect to the subject matter of this Agreement and contains all of the
covenants and agreements between the parties with respect to the
subject matter of this Agreement.
(c) Modification. Except as stated in the next sentence, no
change or modification of this Agreement will be valid or binding upon
the parties, nor will any waiver of any term or condition be so
binding, unless the change or modification or waiver is in writing and
signed by both parties to this Agreement. The Company may, however,
without the consent or agreement of Executive, change or modify any or
all of the severance benefits described in Attachment I hereto solely
to reflect any (i) additional benefits under any Benefit Plan,
including any Benefit Plan adopted after the date of this Agreement, or
(ii) amendment, restatement, or discontinuance by the Company of any
Benefit Plan; provided, that the Company provides to Executive a copy
of the changed or modified Attachment I hereto.
(d) Governing Law and Venue. This Agreement and the
obligations and undertakings of the parties under this Agreement is
performable in Dallas County, Texas. This Agreement and all matters
related hereto shall be governed by, and construed in accordance with,
the laws of the State of Texas.
(e) Counterparts. This Agreement may be executed in
counterparts, each of which constitutes an original, but all of which
constitute one document.
(f) Gender. Whenever the context requires, words in this
Agreement denoting gender shall include the masculine, feminine, and
neuter.
(g) Estate. If Executive dies during his employment hereunder,
any amounts due him from the Company under this Agreement as of the
date of his death shall be paid to his estate or heirs.
(h) Assignment. The Company shall have the right to assign
this Agreement to its successors or assigns. The terms "successors" and
"assigns" shall include any person that buys all or substantially all
of the Company's assets or all of its stock, or with and into which the
Company merges or consolidates. The rights, duties, and benefits to
Executive hereunder are personal to him, and no such right, duty, or
benefit may be assigned by him.
(i) Binding Effect. This Agreement is binding upon the
parties hereto, together with their respective executors,
administrators, successors, personal representatives, heirs, and
permitted assigns.
(j) Waiver of Breach. Any waiver by the Company or Executive
of a breach of any provision of this Agreement by Executive or the
Company will not operate or be construed as a waiver of any subsequent
breach.
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(k) Certain Defined Terms. As used in this Agreement, (i)
"person" means an individual or any corporation, partnership, trust,
unincorporated association, or other legal entity, whether acting in an
individual, fiduciary, or other capacity, and any government, court, or
other governmental agency, (ii) "include" and "including" shall not
denote or signify any limitation, (iii) "herein," "hereof,"
"hereunder," and similar terms are references to this Agreement as a
whole and not to any particular provision of this Agreement, and (iv)
"business day" means any Monday through Friday other than any such
weekday on which the executive offices of the Company are closed. In
addition, the use herein of "annual" or "monthly" (or similar terms) to
indicate a measurement period shall not itself be deemed to grant
rights to Executive for employment or compensation for such period.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth in the first paragraph.
The Company:
ELJER INDUSTRIES, INC.
By:
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Executive:
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