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EXHIBIT 10.34
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made on June 27, 1996,
effective as of July 1, 1996, between Durakon Industries, Inc., a Michigan
corporation (the "Company"), and Xxxxx X. Xxxxxx ("Xx. Xxxxxx").
RECITALS
A. Xx. Xxxxxx presently serves as the president of the bedliner
operations of the Company.
B. The Company desires to continue to employ Xx. Xxxxxx and to
name Xx. Xxxxxx as president and chief executive officer of the consolidated
Company, and Xx. Xxxxxx desires to serve as president and chief executive
officer of the consolidated Company, pursuant to the terms of this Agreement.
Therefore, the parties agree as follows:
1. DUTIES AND NATURE OF EMPLOYMENT. During the Employment Term (as
defined in Section 2.1 below), Xx. Xxxxxx shall, in accordance with this
Agreement, (a) be employed by the Company as president and chief executive
officer of the consolidated Company, (b) report directly to the Board of
Directors of the Company and (c) devote his working time, attention and best
efforts to the business of the Company. The Company shall use its best efforts
to have Xx. Xxxxxx named as nominee for the office of director of the Company
at each annual meeting of shareholders during the Employment Term (as defined
below).
2. TERM.
2.1 Employment Term. The term of Xx. Xxxxxx'x employment under
this Agreement (the "Employment Term") shall begin on July 1, 1996 and shall
continue until terminated in accordance with Section 2.2 of this Agreement.
Notwithstanding the termination of the Employment Term pursuant to Section 2.2
below, Xx. Xxxxxx'x obligations under Sections 6 and 7 shall, according to
their terms, survive any termination of Xx. Xxxxxx'x employment and Xx. Xxxxxx
and the Company shall in all events be bound by and comply with the provisions
of such applicable Sections at all times after such termination.
2.2 Termination of Employment Term. The Employment Term shall
terminate upon the earliest to occur of the following:
(a) the death of Xx. Xxxxxx, effective as of the date of death;
(b) the substantial disability of Xx. Xxxxxx, as determined by a
competent medical doctor selected by the Board of Directors of the Company, for
a period of 180 days;
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(c) without "Cause", as defined below, upon written notice to Xx.
Xxxxxx by the Company, effective as of the date of such notice;
(d) with "Cause" (defined as gross insubordination, intentional
neglect of principal duties, commission of a felony or breach of duty of
loyalty in connection with his activities relating to the Company after
reasonable advance notice of the alleged "Cause" is given to Xx. Xxxxxx by the
Company, and Xx. Xxxxxx is given a reasonable opportunity to cure or
adequately explain the alleged or perceived "Cause"), upon written notice to
Xx. Xxxxxx by the Company, effective as of the date of such notice;
(e) upon 90 days prior written notice to the Company by Xx.
Xxxxxx, if and within 90 days after the Company breaches any material provision
of this Agreement, after reasonable advance notice of the alleged breach is
given to the Company by Xx. Xxxxxx, and the Company is given a reasonable
opportunity to cure or adequately explain the alleged or perceived breach;
(f) upon 90 days prior written notice to the Company by Xx.
Xxxxxx;
(g) upon Xx. Xxxxxx'x retirement from the employ of the Company
(of which Xx. Xxxxxx shall give the Company at least 90 days prior written
notice); or
(h) upon 90 days prior written notice to the Company by Xx.
Xxxxxx, which notice may only be given by Xx. Xxxxxx if, and prior to the end
of 6 months after, substantially all of the Company's common stock or assets
are sold by the Company to a third party.
2.3 At Will Employment. While Xx. Xxxxxx shall have certain
rights upon the termination of his employment, Xx. Xxxxxx'x employment
hereunder shall be terminable at will, with or without Cause, at any time, and
Xx. Xxxxxx shall have no right to continued employment hereunder.
3. COMPENSATION OF XX. Xxxxxx. As full compensation for the services to
be rendered by Xx. Xxxxxx pursuant to this Agreement, the Company shall pay Xx.
Xxxxxx, during the Employment Term, the following:
(a) An annual salary of $225,000, payable in arrears, semi-monthly
or otherwise in accordance with the Company's regular payroll procedures. Such
salary shall be reviewed by the Compensation Committee of the Board of
Directors of the Company (the "Committee") on an annual basis, and may be
increased (but not decreased) annually, effective January 1 of each year (or
such other date as Xx. Xxxxxx and the Company shall agree), to the extent
determined by the Committee to be appropriate. Xx. Xxxxxx'x annual salary may
also be increased by the Committee, in its discretion, to compensate him for
superior performance.
(b) Xx. Xxxxxx shall be eligible to be paid a bonus, targeted at
50% of his annual base salary, based upon his and the Company's performance of
objectives determined by Xx. Xxxxxx
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and the Committee, as measured by the Committee. Xx. Xxxxxx shall also be
eligible to receive additional bonuses for achieving additional long-term
goals, as awarded by the Committee.
4. FRINGE BENEFITS AND BUSINESS EXPENSES.
4.1 Fringe Benefits.
(a) Xx. Xxxxxx shall be entitled, during the Employment Term, to
receive reimbursement for his monthly dues (but not for initiation fees,
assessments or the like) at Warwick Hills Country Club and to receive those
benefits generally provided to other officers of the Company from time to time.
(b) During the Employment Term, the Company shall provide Xx.
Xxxxxx with a luxury automobile of category and quality similar to that
provided to Xx. Xxxxxx as of the date hereof equipped with a phone.
4.2 Business Expenses. The Company shall pay or reimburse Xx.
Xxxxxx from time to time for all reasonable expenses incurred by Xx. Xxxxxx
during the Employment Term on behalf of the Company, including expenses of
operating his automobile for business purposes; provided that (a) such expenses
must be reasonable business expenses which are incurred by Xx. Xxxxxx in the
normal course of business and (b) Xx. Xxxxxx shall supply to the Company
itemized accounts or receipts in accordance with the Company's usual accounting
procedures.
5. PAYMENTS UPON CERTAIN TERMINATIONS.
5.1 Termination of Employment.
(a) If Xx. Xxxxxx'x employment with the Company terminates for any
reason whatsoever, Xx. Xxxxxx (or, if applicable, his legal representative)
shall be entitled to receive the pro rata portion of Xx. Xxxxxx'x earned but
unpaid salary under Section 3(a) above and benefits under Section 4 above
through the date of termination.
(b) If Xx. Xxxxxx'x employment with the Company terminates
pursuant to Section 2.2(c) or 2.2(e) above, or if Xx. Xxxxxx'x employment
terminates pursuant to Section 2.2(h) and Xx. Xxxxxx is not re-employed by the
Company, by the third party which acquires the assets or the common stock of
the Company or by any affiliate thereof within one year thereafter, Xx. Xxxxxx
shall also be entitled to receive, in addition to any payment under Section
5.1(a), an amount equal to 200% of the annual salary then being paid to Xx.
Xxxxxx by the Company.
(c) If (i) Xx. Xxxxxx'x employment with the Company terminates
pursuant to Section 2.2(g) above on or after July 1, 2003, (ii) Xx. Xxxxxx'x
retirement is with the consent of the Company's Board of Directors and (iii)
Xx. Xxxxxx provides such transitional assistance to his successor as the
Company's Board of Directors requires, performed to the satisfaction of the
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Company's Board of Directors, then Xx. Xxxxxx shall also be entitled to
receive, in addition to any payment under Section 5.1(a), an amount equal to
100% of the annual salary then being paid to Xx. Xxxxxx by the Company.
(d) Notwithstanding anything contained in Section 5.1(b) or in
Section 5.1(c), the Company shall not be obligated to pay to Xx. Xxxxxx under
either Section 5.1(b) or Section 5.1(c) any amount which shall not be
deductible by the Company or which shall subject Xx. Xxxxxx to any excise tax
under I.R.S. rules and regulations applicable to so-called "golden parachute"
payments. If payable, the payment provided for in Section 5.1(b) or in Section
5.1(c) shall be paid to Xx. Xxxxxx in a lump sum within 30 days after the
termination of his employment (or, in the case of termination of employment
pursuant to Section 2.2(h), within 30 days after the expiration of the
one-year nonemployment period referred to in Section 5.1(b)), except that if
the Company is at such time unable to make a distribution to its shareholders
in such amount pursuant to Section 345 of the Michigan Business Corporation
Act (or any successor provision), then the Company shall pay such amount to Xx.
Xxxxxx in equal, consecutive, monthly installments as if Xx. Xxxxxx were still
employed.
(e) Upon the termination of Xx. Xxxxxx'x employment with the
Company pursuant to Section 2.2(b), 2.2(c), 2.2(e), 2.2(g) or 2.2(h) above, Xx.
Xxxxxx shall have the option to purchase from the Company the automobile then
provided to him pursuant to Section 4.1(b) at a price equal to the net book
value thereof on the Company's books or to purchase a new vehicle from the
Company at its cost through an OE vehicle supplier program.
5.2 Limitation of Termination Payments and Withholding of Taxes.
Except as set forth in this Agreement, the termination payments described in
this Section 5 shall be in lieu of any termination or severance payments
required by Company policy or applicable law (including unemployment
compensation) and shall constitute Xx. Xxxxxx'x exclusive rights and remedies
with respect to termination of his employment with the Company. The Company
may withhold from any payments under this Section 5 all applicable federal,
state, city or other taxes required by applicable law to be so withheld.
6. CONFIDENTIALITY, NON-COMPETITION AND CONSIDERATION FOR COVENANTS.
6.1 Confidential Information.
(a) Xx. Xxxxxx shall not, except as required by his duties to the
Company, as authorized by the Board of Directors of the Company or as required
by law, at any time during or after the termination of his employment with the
Company, directly or indirectly use, publish, disseminate, distribute or
otherwise disclose any Confidential Information (as defined below). Xx. Xxxxxx
shall keep all Confidential Information in trust for the use and benefit of the
Company. Xx. Xxxxxx shall take all reasonable steps necessary or reasonably
requested by the Company to ensure that all Confidential Information is kept
confidential for the use and benefit of the Company.
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(b) Upon termination of his employment by the Company or at any
other time the Company may so request, Xx. Xxxxxx shall promptly deliver to the
Company all materials constituting Confidential Information (including all
copies) that are in his possession or under his control and Xx. Xxxxxx shall
not make or retain any copy of or extract from such materials.
(c) For purposes of this Section 6.1, "Confidential Information"
means any proprietary or confidential information of or relating to the Company
that is not generally known in any industry in which the Company is or may
become engaged and which is material to the Company. Xx. Xxxxxx acknowledges
that the Confidential Information of the Company is valuable, special and
unique to the business of the Company and on which such business depends, and
is proprietary to the Company, and that the Company wishes to protect such
Confidential Information by keeping it secret and confidential for the sole use
and benefit of the Company.
6.2 Non-Competition. During Xx. Xxxxxx'x employment by the
Company and for two years thereafter, Xx. Xxxxxx shall not, either directly or
indirectly, through any person or entity:
(a) Engage in any activities or conduct any businesses which are
in competition with the activities engaged in or business conducted by the
Company; or
(b) Hire any person who is then employed by, is a consultant to or
is an agent of the Company or who was employed by, a consultant to or an agent
of the Company at any time during the three months prior to such date, or
encourage, induce or attempt to induce, or aid, assist or abet any other party
or person in encouraging, inducing or attempting to induce, any such employee,
consultant or agent to alter or terminate his or her employment, consultation
or agency with the Company.
(c) Be engaged by, consult with, or invest in, any person or
entity wherever located, which conducts a business in competition with the
business of the Company, except that Xx. Xxxxxx may, at any time, own stock in
a corporation which may be in competition with the Company, whose shares are
listed for trading on a national or regional stock exchange or trade on the
over-the-counter market, provided that Xx. Xxxxxx owns, in the aggregate, fewer
than 5% of the issued and outstanding shares of such corporation.
7. REMEDIES.
7.1 Injunctive Relief. The covenants and obligations contained in
Sections 6.1 and 6.2 above relate to matters which are of a special, unique and
extraordinary character and a violation of any of the terms of such Sections
shall cause irreparable injury to the Company, the amount of which shall be
difficult if not impossible to estimate or determine and which cannot be
adequately compensated. Therefore, the Company shall be entitled to an
injunction, restraining order or other equitable relief from any court of
competent jurisdiction, restraining any violation or threatened violation of
any of such terms by Xx. Xxxxxx and such other persons as the court orders.
7.2 Cumulative Rights and Remedies. Rights and remedies provided
by Section 7.1 above are cumulative and are in addition to any other rights and
remedies the Company may have at law or equity.
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8. STOCK OPTIONS. As of June 27, 1996, subject to approval of the
Company's 1996 Stock Option Plan by the shareholders of the Company at the
Company's 1997 annual meeting of shareholders, Xx. Xxxxxx is being granted
options to purchase 150,000 shares of the Company's common stock, which options
shall vest over four years. During the Employment Term, Xx. Xxxxxx shall be
eligible for such additional stock option grants as may be awarded by the Board
of Directors of the Company or by any authorized committee thereof.
9. MISCELLANEOUS.
9.1 Headings. The descriptive headings of the Sections of this
Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
9.2 Notices. Any notices or other communications required or
permitted hereunder shall be sufficiently given if sent by certified or
registered mail, postage prepaid, addressed to the Company at its principal
executive offices or to Xx. Xxxxxx at his address as shown in the Company's
records. Any such notice or communication shall be deemed to have been given as
of the date so mailed.
9.3 Assignment. Xx. Xxxxxx may not assign, transfer or delegate
his rights or obligations under this Agreement and any attempt to do so shall
be void. Upon any assignment of this Agreement by the Company, the Company
shall obtain the written acknowledgement of the assignee or successor that such
party is bound by this Agreement. This Agreement is binding on and inures to
the benefit of the parties, their successors and assigns and the executors,
administrators and other legal representatives of Xx. Xxxxxx. The Company may
not freely assign this Agreement to other parties, but, instead, may assign
this Agreement only to a successor or related entity, with no disruption in the
business of Company and no material adverse effect upon Xx. Xxxxxx.
9.4 Counterparts. This Agreement may be signed in counterparts.
9.5 Governing Law. This Agreement and any dispute relating to or
arising out of the matters covered by this Agreement shall be governed by the
laws of the State of Michigan (regardless of the laws that might be applicable
under principles of conflicts of law) as to all matters (including validity,
construction, effect and performance). Each party hereto consents to, and
shall submit to, the jurisdiction of the courts of the State of Michigan and of
any Federal court whose district includes Lapeer, Michigan, which shall have
exclusive jurisdiction with respect to any action or proceeding, and process in
any such action or proceeding may be served in the manner provided by Michigan
law for service on foreign corporations or persons.
9.6 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void, unenforceable or against its regulatory policy,
the remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
9.7 Entire Agreement. This Agreement constitutes the entire
Agreement, and supersedes all prior agreements and understandings, written or
oral, among the parties with respect to the subject matter of this Agreement.
This Agreement may not be amended or modified except by agreement in
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writing, signed by the party against whom enforcement of any waiver, amendment,
modification or discharge is sought.
IN WITNESS WHEREOF, this Agreement has been signed on the date first
written above.
DURAKON INDUSTRIES, INC.,
a Michigan corporation
By: /s/ Xxxxxxx Xx. Xxxxxx
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Xxxxxxx Xx. Xxxxxx
Its: Chairman
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
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