EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of March 6,
1998 by and between Xxxxxx X. Xxxxxxxx, a natural person ("Employee"), and
Aftermarket Technology Corp., a Delaware corporation (the "Company").
R E C I T A L S
A. Immediately prior to the date hereof, Employee has been
employed by the OEM Division of Autocraft Industries, Inc., an Oklahoma
corporation ("Former Employer"), which is engaged in, among other thing, (i)
the remanufacture of transmissions and related drivetrain components for Ford
Motor Company and General Motors Corporation, (ii) the remanufacture of
electronic control modules, instrument display clusters, telephones and
radios for certain original equipment manufacturers, (iii) the remanufacture
of engines for certain original equipment manufacturers in Europe, (iv) the
distribution of cellular telephones for AT&T Wireless, and (v) material
recovery services for Ford (the "OEM Business," which term excludes Seller's
operations that (x) participate in Ford's "FAR" program, (y) remanufacture
non-GM transmissions for AC-Delco, or (z) are not part of the OEM Division).
B. Concurrently herewith, subsidiaries of the Company are
purchasing substantially all the assets used in the Business pursuant to that
certain Asset Purchase Agreement dated as of February 10, 1998 among Former
Employer, Xxxx Xxxxx Industries A Limited Partnership and Aftermarket
Technology Corp. (the "Purchase Agreement").
C. The Company desires to retain the services of Employee for the
benefit of the Company and its subsidiaries.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and agreements set forth below, the parties hereto agree as
follows:
1. EMPLOYMENT AND TERM.
(a) FULL TIME AND BEST EFFORTS. Subject to the terms set
forth herein, the Company agrees to employ Employee in a management capacity
and Employee hereby accept such employment. During the term of his
employment, Employee will devote his full time, best efforts and attention to
the performance of his duties hereunder and to the business and affairs of
the Company and its subsidiaries.
(b) DUTIES. Employee shall perform such duties for the
Company and its subsidiaries as are customarily associated with a management
position, consistent with the Bylaws of the Company and as required by the
officer or officers to whom Employee reports.
(c) COMPANY POLICIES. The employment relationship between
the parties shall be governed by the general employment policies and
practices of the Company, including but not limited to those relating to
protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with such employment policies and practices, this
Agreement shall control.
(d) TERM. The initial term of employment of Employee under
this Agreement shall begin as of the date hereof and end on the third
anniversary the date hereof, subject to the provisions for termination
contained in Section 5 and renewal contained in Section 1(e).
(e) RENEWAL. Unless the Company shall have given Employee
notice that this Agreement shall not be renewed at least 30 days prior to the
end of the initial term referred to in Section 1(d), the term of this
Agreement shall be automatically extended for a period of one year, such
procedure to be followed in each such successive period.
2. COMPENSATION AND BENEFITS.
(a) SALARY. Employee shall receive for services to be
rendered hereunder an annual base salary of $275,000, payable on the
Company's regular payroll dates, subject to increase at the discretion of the
Company, and subject to standard withholdings for taxes and social security
and the like. The Company shall review Employee's salary on an annual basis
and may, in its sole discretion, increase Employee's salary.
(b) INCENTIVE PLANS. During the term hereof, Employee shall
be eligible to participate in any annual incentive bonus plan and long-term
incentive plan (including, without limitation, any stock option plan) of the
Company generally available to Company employees of a level comparable to
Employee. Such participation shall be subject to and on a basis consistent
with the terms, conditions and administration of any such plan. Employee
understands that (i) the Company shall have discretion to determine
Employee's level of participation in any such plan and (ii) any such plan may
be modified or eliminated in the Company's sole discretion in accordance with
applicable law and the terms of such plan. For the year ending December 31,
1998, Employee's target bonus shall be 50% of his base salary for the period
from the date hereof to December 31, 1998 and will be paid based on
achievement of financial and personal goals to be established by the Company.
(c) PARTICIPATION IN BENEFIT PLANS. Initially, Employee
shall be entitled to participate in all benefit plans generally available to
Hired OEM Employees (as that term is defined in the Purchase Agreement)
pursuant to Section 7.08 of the Purchase Agreement. Thereafter, during the
term hereof, Employee shall be entitled to participate in any group
insurance, hospitalization, medical, dental, health and accident, disability,
retirement income or similar plan or program of the Company to the extent
that he is eligible under the general provisions thereof. The Company, may,
in its discretion and from time to time, establish additional management
benefit programs as it deems appropriate. Employee understands that any such
plans may be modified or eliminated in the Company's discretion in accordance
with applicable law.
(d) VACATION. Employee will be credited for all vacation
days that he has accrued with Former Employer as of the date hereof and will
be able to utilize them in the same manner as previously permitted by Former
Employer. In addition, after the date hereof
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Employee shall be entitled to a period of annual paid vacation time equal to
the period provided to employees of a comparable level by the Company's
policies and procedures. If the period of annual paid vacation time is
determined based on period of service, Employee's prior service with Former
Employee will be included in determining the period to which Employee is
entitled. The days selected for Employee's vacation must be mutually
agreeable to the Company and Employee.
3. PERQUISITES.
(a) AUTOMOBILE. Employee will continue to be reimbursed for
expenses related to his present company automobile to the same extent that he
has been reimbursed by Former Employer prior to the date hereof. After the
expiration of the lease with respect to such automobile, Employee will be
provided with an automobile if and to the extent that automobiles are
generally available to Company employees of a level comparable to Employee.
(b) OTHER REIMBURSEMENTS. During each calendar year during
the term hereof, Employee will receive reimbursement for expenses incurred
during such year for (i) personal financial/tax planning, (ii) estate
planning (including legal fees) and (iii) club (E.G., country club, health
club, social club) dues; PROVIDED, HOWEVER, that the reimbursable amount for
any such year shall not exceed 2% of Employee's base salary paid during such
year.
4. BUSINESS EXPENSES. Employee shall be reimbursed for
documented and reasonable business expenses in connection with the
performance of his duties hereunder.
5. TERMINATION OF EMPLOYMENT. The date on which Employee's
employment by the Company ceases, under any of the following circumstances,
shall be defined herein as the "Termination Date."
(a) TERMINATION FOR CAUSE.
(i) TERMINATION; PAYMENT OF ACCRUED SALARY AND VACATION.
The Company may terminate Employee's employment at any time for cause,
immediately upon written notice to Employee of the circumstances leading to
such termination for cause. If Employee's employment is terminated for
cause, Employee shall receive payment for all accrued salary and vacation
time through the Termination Date, which in this event shall be the date upon
which notice of termination is given. The Company shall have no obligation
to pay severance of any kind nor to make any payment in lieu of notice if
Employee is terminated for cause.
(ii) DEFINITION OF CAUSE. "CAUSE" means the occurrence
or existence of any of the following with respect to Employee, as determined
by the Company in its sole discretion: (A) a material breach by Employee of
(1) his duty not to engage in any transaction that represents, directly or
indirectly, self-dealing with the Company or any of its Affiliates that has
not been approved by the Company, or (2) the terms of his employment, if in
any such case such material breach remains uncured after the lapse of 30 days
following the date that the Company has given Employee written notice
thereof; (B) the material breach by Employee of any duty referred to in
clause (A) above as to which at least one written notice has been given
pursuant to clause (A); (C) any act of dishonesty, misappropriation,
embezzlement,
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intentional fraud or similar conduct involving the Company or any of its
Affiliates; (D) the conviction or the plea of nolo contendere or the
equivalent in respect of a felony involving moral turpitude; (E) any
intentional damage of a material nature to any property of the Company or any
of its Affiliates; or (F) the repeated non-prescription use of any controlled
substance or the repeated use of alcohol or any other non-controlled
substance that, in the reasonable determination of the Company renders
Employee unfit to serve in his capacity as an employee of the Company or its
Affiliates.
(b) VOLUNTARY TERMINATION. Employee may voluntarily
terminate his employment with the Company at any time upon 30 days' prior
written notice. On the Termination Date, Employee shall receive payment for
all accrued salary and vacation time through the Termination Date, after
which no further compensation of any kind or severance payment will be
payable under this Agreement.
(c) TERMINATION UPON DISABILITY. The Company may terminate
Employee's employment in the event Employee suffers a disability that renders
Employee unable to perform the essential functions of his position, even with
reasonable accommodation in compliance with the Americans with Disabilities
Act, for three consecutive months within any six month period. After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement. The foregoing shall not affect any rights that Employee may have
under applicable workers' compensation laws or any disability plan of the
Company.
(d) TERMINATION WITHOUT CAUSE. The Company may terminate
Employee's employment without "cause" (as defined above) at any time upon 30
days' prior written notice. On the Termination Date, Employee shall receive
payment for all accrued salary and vacation time through the Termination Date
and thereafter the Company shall, subject to Section 5(f), pay Employee as
severance an amount equivalent to 100% of Employee's annual base salary as in
effect immediately prior to the Termination Date, less standard withholdings
for taxes and social security and the like. The severance shall be payable
in equal installments on each of the Company's regular payroll dates during
the 12-month period commencing on the first such payroll date following the
Termination Date.
(e) FUNDAMENTAL CHANGES. If the Company (i) materially
diminishes Employee's duties, authority, responsibility or compensation
without performance justification, or (ii) breaches this Agreement in any
material respect, Employee may terminate his employment PROVIDED that
Employee has given the Company 30 days' written notice prior to such
termination and the Company has not cured such diminution or breach, as the
case may be, by the end of such 30-day period. A termination in such
circumstances shall be treated as a Company termination without cause and
Employee shall be entitled to the severance payments provided in Section 5(d).
(f) EMPLOYEE'S DEATH. If Employee dies, his beneficiaries
shall receive payment for all accrued salary and vacation time through the
date of death, after which no further compensation of any kind or severance
payment will be payable under this Agreement.
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(g) EARNED BONUS. If Employee's employment hereunder is
terminated by the Company or Employee for any reason, Employee shall be
entitled to receive on the Termination Date, in addition to any other
payments called for by this Section 5, his Earned Bonus, if any, less
standard withholdings for taxes and social security and the like. "Earned
Bonus" means any bonus that is payable to Employee with respect to the
calendar year preceding the Termination Date but that has not been paid prior
to the Termination Date.
6. PROPRIETARY INFORMATION OBLIGATIONS. Prior to and/or during
the term of employment under this Agreement, Employee has had and/or will
have access to and has become and/or will become acquainted with the
confidential and proprietary information of the Business and the Company and
its affiliates, including but not limited to confidential and proprietary
information or plans regarding customer relationships; personnel; sales,
marketing, and financial operations and methods; trade secrets; formulas;
devices; secret inventions; processes and other compilations of information,
records, and specifications (collectively "Proprietary Information").
Employee shall not disclose any of the Proprietary Information directly or
indirectly, or use it in any way, either during the term of this Agreement,
or at any time thereafter, except as required in the course of his employment
hereunder or as authorized in writing by the Company. All files, records,
documents, computer-recorded information, drawings, specifications, equipment
and similar items relating to the Business or the Company or its affiliates,
whether prepared by Employee or otherwise coming into his possession prior to
or during the term of this Agreement, shall remain the exclusive property of
the Company and shall not be removed from the premises of the Company or its
affiliate under any circumstances whatsoever without the prior written
consent of the Company, except when (and only for the period) necessary to
carry out Employee's duties hereunder, and if removed shall be immediately
returned upon any termination of his employment and no copies thereof shall
be kept by Employee.
7. NONINTERFERENCE. While employed by the Company and for a
period of three years thereafter, Employee agrees not to interfere with the
Business or the Company or its affiliates by directly or indirectly
soliciting, attempting to solicit, inducing, or otherwise causing any
employee who is an employee of the Company at the time of such solicitation
to terminate his or her employment in order to become an employee, consultant
or independent contractor to or for any other employer.
8. NONCOMPETITION. Employee agrees that during the term of this
Agreement and for a period of 18 months after the termination hereof, he will
not, without the prior consent of the Company, directly or indirectly, have
an interest in, be employed by, be connected with, or have an interest in, as
an employee, consultant, officer, director, partner, stockholder or joint
venturer, any person or entity owning, managing, controlling, operating or
otherwise participating or assisting in any business that is similar to or in
competition with the Business (or any portion thereof) in any state in which
the Company was conducting business on the date on which Employee ceased to
be an employee of the Company; PROVIDED, HOWEVER, that the foregoing shall
not prevent Employee from being a stockholder of less than 1% of the issued
and outstanding securities of any class of a corporation listed on a national
securities exchange or designated as national market system securities on an
interdealer quotation system by the National Association of Securities
Dealers, Inc.
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9. REMEDIES. Employee acknowledges that a breach or threatened
breach by Employee of any the provisions of Sections 6, 7 or 8 will result in
the Business and the Company suffering irreparable harm that cannot be
calculated or fully or adequately compensated by recovery of damages alone.
Accordingly, Employee agrees that the Company shall be entitled to interim,
interlocutory and permanent injunctive relief, specific performance and other
equitable remedies, in addition to any other relief to which the Company may
become entitled should there be such a breach or threatened breach.
10. MISCELLANEOUS.
(a) NOTICES. Any notices provided hereunder must be in
writing and shall be deemed effective upon the earlier of personal delivery
(including personal delivery by telecopy, if a copy is sent by mail as
follows) or the third day after mailing by first class mail to the recipient
at the address indicated below:
To the Company:
Aftermarket Technology Corp.
000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Vice President--Human Resources
Facsimile: (000) 000-0000
To Employee:
Xxxxxx X. Xxxxxxxx
--------------------------
--------------------------
Facsimile: ( ) -
--- --- -----
or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.
(b) SEVERABILITY. If any term or provision (or any portion
thereof) of this Agreement is determined by a court to be invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
terms and provisions (or other portions thereof) of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not materially affected.
Upon such determination that any term or provision (or any portion thereof),
is invalid, illegal or incapable of being enforced, this Agreement shall be
deemed to be modified so as to effect the original intent of the parties as
closely as possible to the end that the transactions contemplated hereby and
the terms and provisions hereof are fulfilled to the greatest extent possible.
(c) ENTIRE AGREEMENT. This Agreement constitutes the final,
complete, and exclusive embodiment of the entire agreement and understanding
between the parties related to the subject matter hereof and supersedes all
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral.
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(d) COUNTERPARTS. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.
(e) SUCCESSORS AND ASSIGNS. This Agreement is intended to
bind and inure to the benefit of and be enforceable by Employee and the
Company, and their respective successors and assigns, except that Employee
may not assign any of his duties hereunder and he may not assign any of his
rights hereunder without the prior written consent of the Company.
(f) ATTORNEY'S FEES. If any legal proceeding is necessary to
enforce or interpret the terms of this Agreement, or to recover damages for
breach therefore, the prevailing party shall be entitled to reasonable
attorney's fees, as well as costs and disbursements, in addition to any other
relief to which he or it may be entitled.
(g) AMENDMENTS; NO WAIVERS. Any provision of this Agreement
may be amended or waived if such amendment or waiver is in writing and
signed, in the case of an amendment, by all parties hereto, and in the case
of a waiver, by the party against whom the waiver is to be effective. No
waiver by a party of any breach of this Agreement shall be deemed to extend
to any prior or subsequent breach or affect in any way any rights arising by
virtue of any prior or subsequent breach. No failure or delay by a party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
(h) GOVERNING LAW. This Agreement shall be construed in
accordance with and governed by the internal laws (without reference to
choice or conflict of laws) of the State of Oklahoma.
(i) CONSTRUCTION. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof. Neither party hereto, nor its respective counsel,
shall be deemed the drafter of this Agreement, and all provisions of this
Agreement shall be construed in accordance with their fair meaning, and not
strictly for or against either party hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the date first above written.
/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
AFTERMARKET TECHNOLOGY CORP.
/s/ Xxxxxx Xxxxxxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxxxxxx, Vice President
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