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Exhibit 10.6
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT by and between APCOA, Inc., a Delaware
corporation (the "Company"), and Xxxxx X. Xxxxxxxxx (the "Executive"), dated as
of the 30th day of March, 1998.
WHEREAS, the Executive is employed as chief executive officer of
Standard Parking, L.P., a Delaware limited partnership ("Standard"); and
WHEREAS, pursuant to that certain Combination Agreement (the
"Transaction Agreement") dated as of January 15, 1998, by and among the
Executive, Xxxxxxx Xxxxxxxxx, Xxxxxx X. Xxxxxxxxx, Xxxxxx Partners, L.P., a
Delaware limited partnership, SP Parking Associates, an Illinois general
partnership, SP Associates, an Illinois general partnership (collectively,
"Standard Owners"), and APCOA, Inc., a Delaware corporation ("APCOA"), the
operations of APCOA and Standard will be combined (the "Transaction"); and
WHEREAS, APCOA desires to ensure that the Company will continue to
receive the benefit of the Executive's services after the Transaction, on the
terms and conditions set forth below in this agreement, and the Executive
desires to render such services;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties hereto hereby agree as follows:
1. Employment Period. The Company shall employ the Executive, and
the Executive shall serve the Company, on the terms and conditions set forth in
this Agreement, for the period beginning on the Closing Date (as defined in the
Transaction Agreement) and ending on the Executive's 65th birthday (the
"Employment Period"), unless such employment is sooner terminated as set forth
below.
2. Position and Duties. During the Employment Period, the Executive
shall serve as the Chief Executive Officer of the Company, responsible for all
day-to-day operations of the Company, including overall supervision and control
of, and responsibility for, the operation and direction of the business, under
the supervision and direction of the Chairman of the Board of Directors of the
Company (the "Board"). In addition, during the Employment Period, the Executive
shall be appointed as a member of the Board and each committee of the Board,
other than such committees that do not customarily include employee directors.
During the Employment Period, all parking business of the Company and its
affiliates will be conducted through, or under the control of, the Company.
During the Employment Period, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive shall devote full
attention and time during normal business hours to the business and affairs of
the Company and, to the extent necessary to discharge the responsibilities
assigned to the Executive under this Agreement, use the Executive's reasonable
best efforts to carry out such responsibilities faithfully. Notwithstanding the
foregoing provisions of this Section 2, during the Employment Period, the
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Executive may engage in activities other than those required under this
Agreement, such as activities involving professional, charitable, educational,
religious and similar types of organizations, speaking engagements, membership
on the boards of directors of other organizations (both public and private, for
profit and not-for-profit), investment activities (including management of the
investments listed on Schedule A hereto (hereinafter, the "Permitted
Investments")) and similar activities, but only to the extent that such other
activities do not materially inhibit or prohibit the performance of the
Executive's duties under this Agreement or violate the provisions of Section 6
of this Agreement.
3. Compensation. (a) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary") of
$600,000, payable in accordance with the normal payroll practices for executives
of the Company as in effect from time to time, but in no event less often than
monthly.
(b) Incentive Stock Options. Within 120 days after the Closing Date,
the Company shall establish a stock option or phantom stock option plan (the
"Option Plan") providing for grants of actual or phantom options with respect to
stock of the Company, pursuant to which it shall grant to the Executive options
with respect to 0.316258 shares of the common stock of the Company, on customary
terms and conditions as provided in the Option Plan. Such options shall be
granted upon the establishment of the Option Plan, with a per-share exercise
price based upon the "Price" as defined in the Stockholders Agreement,
determined as of the date hereof. All such options shall have a term of 10 years
from the date of grant.
(c) Other Benefits. In addition to the foregoing, during the
Employment Period, the Executive shall be entitled to the benefits (the "Listed
Benefits") listed in a letter dated January 15, 1998 from the Executive to the
Chairman of the Board of the Company and countersigned by the Chairman.
4. Termination of Employment. (a) Death or Disability. In the event
of the Executive's death during the Employment Period, the Executive's
employment with the Company shall terminate automatically. The Company, in its
discretion, shall have the right to terminate the Executive's employment because
of the Executive's Disability during the Employment Period. "Disability" means
that (i) the Executive has been unable, after reasonable accommodation by the
Company, for a period of 180 consecutive days, or for periods aggregating 180
business days in any period of twelve months, to perform a material portion of
the Executive's duties under this Agreement, as a result of physical or mental
illness or injury, and (ii) a physician selected by the Company or its insurers
has determined that the Executive's incapacity is total and permanent. A
termination of the Executive's employment by the Company for Disability shall be
communicated to the Executive by written notice, and shall be effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), unless the Executive returns to full-time performance of the
Executive's duties before the Disability Effective Date.
(b) By the Company. In addition to termination for Disability, the
Company may terminate the Executive's employment during the Employment Period
for Cause or without Cause. "Cause" means (i) illegal conduct or gross
misconduct by the Executive of a significant
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nature, that in either case results in material damage to the business or
reputation of the Company, or (ii) any willful and continued failure by the
Executive to perform his duties under this Agreement, which failure is not
remedied within 10 business days after the Company gives written notice thereof
to the Executive. A termination by the Company shall be effective when the
Company gives written notice to the Executive of such termination, or such later
date as may be specified in such notice; provided, that a termination for Cause
described in clause (ii) of the preceding sentence shall not be effective before
the close of the 10th business day after the date on which such notice is given.
(c) Termination by the Executive. The Executive may terminate his
employment voluntarily upon written notice to the Company, which termination
shall be effective upon the giving of such notice. In addition, if any of the
events listed in the next sentence occurs without the consent of the Executive,
the Executive may terminate his employment for "Good Reason" by giving written
notice to the Company within 60 days after the occurrence thereof to that
effect, unless the Company shall have cured such event within 10 business days
after receiving notice thereof. The events referred to in the preceding sentence
are: (i) the relocation of the Executive's principal place of business outside
of the central business district and northern suburbs of Chicago; (ii) a
material reduction in the Executive's responsibilities; (iii) the assignment to
the Executive of duties inconsistent with his position as set forth in Section 2
of this Agreement; (iv) a change in the Executive's title from that required by
Section 2 of this Agreement; (v) a removal of the Executive from the Board or
any committee thereof described in Section 2 (it being understood that an
inability of the Executive to vote or otherwise function as a member of the
Board or any such committee by reason of a conflict of interest shall not be
considered removal from the Board or such committee); (vi) a requirement that
the Executive report to anyone other than the Chairman of the Board; or (vii)
any material breach by the Company of any other term of this Agreement;
provided, that no such event shall be deemed to have occurred as a result of the
engagement by the Company of additional officers, including a Vice Chairman, so
long as such officers report to the Executive or have no responsibility with
respect to the operations of the Company. A termination for Good Reason shall be
effective at the close of business on the tenth business day after the Executive
gives the Company written notice thereof.
(d) Date of Termination. The "Date of Termination" means the date of
the Executive's death, the Disability Effective Date, or the date on which the
termination of the Executive's employment by the Company or the Executive is
effective (as set forth above), as the case may be.
5. Obligations of the Company upon Termination. (a) By the Company
(Other Than for Cause, Death or Disability) or by the Executive for Good Reason.
If, during the Employment Period, the Company terminates the Executive's
employment, other than for Cause, death or Disability, or the Executive
terminates his employment for Good Reason, the Company shall (i) pay the
Executive, promptly after such termination, a lump sum amount equal to the
aggregate Annual Base Salary that he would have received for the remainder of
the Employment Period, reduced to present value using as a discount rate the
"applicable federal rate," as defined in Section 1274(d) of the Internal Revenue
Code of 1986, as amended (the "Code"), and (ii) continue to provide for the same
period welfare benefits to the Executive and/or the Executive's
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family, at least as favorable as those that would have been provided to them
under Section 3(c) of this Agreement if the Executive's employment had continued
until the end of the Employment Period; provided, that during any period when
the Executive is eligible to receive such benefits under another
employer-provided plan, the benefits provided by the Company under this Section
5(a) may be made secondary to those provided under such other plan. The payments
provided pursuant to this Section 5(a) are intended as liquidated damages for a
termination of the Executive's employment by the Company other than for Cause or
Disability and shall be the sole and exclusive remedy therefor.
(b) Disability. In the event the Executive's employment is
terminated by reason of the Executive's Disability during the Employment Period
in accordance with Section 4(a) hereof, the Company shall pay to the Executive
or the Executive's legal representative, as applicable, (i) the Executive's
Annual Base Salary for the duration of the Employment Period in effect on the
Date of Termination, and (ii) any other vested benefits to which the Executive
is entitled, in each case to the extent not yet paid.
(c) Cause; Voluntary Termination. If the Executive's employment is
terminated by the Company for Cause or the Executive voluntarily terminates his
employment during the Employment Period (other than for Good Reason), the
Company shall pay the Executive (i) the Annual Base Salary through the Date of
Termination and (ii) any other vested benefits to which the Executive is
entitled, in each case to the extent not yet paid, and the Company shall have no
further obligations under this Agreement (except as specifically set forth in
Section 5(d) below).
(d) Additional Post-Employment Benefits. In addition to the above
compensation and benefits, following a termination of the Executive's employment
for any reason other than by the Company for Cause, the Executive shall be
entitled to receive from the Company beginning on the Date of Termination in the
case of a voluntary termination by the Executive, and on the Executive's 65th
birthday, in all other cases, and ending on the first to occur of the
Executive's 75th birthday and the Executive's death (such ending date, the
"Cutoff Date"), the following benefits: (i) $200,000 per annum, as adjusted to
reflect the change, if any, in the Consumer Price Index for All Urban Consumers
from the date of this Agreement through the date such payments begin and
annually thereafter; (ii) an executive office and secretarial services at a
mutually convenient location; and (iii) the Listed Benefits. In addition, the
Executive and, following the Executive's death, the Executive's surviving spouse
(if any) shall be entitled to receive medical and dental coverage from the
Company for the remainder of their lives, at a cost to the Company not to exceed
$10,000 (as adjusted pursuant to the next sentence) per year while they are both
alive, and $5,000 per year (as adjusted pursuant to the next sentence) while
only one of them survives. The dollar amounts set forth in the preceding
sentence shall be increased by 10 percent as of each anniversary of the Closing
Date, and the preceding sentence shall be deemed automatically amended
accordingly. If the cost of such medical and dental coverage exceeds such dollar
limits (as so adjusted), the Company shall continue to provide such coverage if
the Executive (or his surviving spouse) so requests and pays the amount of such
excess cost to the Company. In consideration of the foregoing, the Executive
agrees to make himself available from the date of termination of his employment
through the Cutoff Date for such consulting
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services as may reasonably be requested by the Board from time to time, such
services to be of a type consistent with the Executive's expertise and
experience and to be rendered at mutually agreeable times and places, not to
exceed 24 hours per month.
6. Confidential Information; Noncompetition. (a) The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its affiliated
companies and their respective businesses that the Executive obtains or obtained
during the Executive's employment by the Company, Standard or any of their
respective affiliated companies and their respective businesses that is not
public knowledge (other than as a result of the Executive's violation of this
paragraph (a) of Section 6) ("Confidential Information"). The Executive shall
not communicate, divulge or disseminate Confidential Information at any time
during or after the Executive's employment with the Company, except in the
course of the performance of his duties hereunder or with the prior written
consent of the Company or as otherwise required by law or legal process.
(b) During the Noncompetition Period (as defined below), the
Executive shall not, without the prior written consent of the Board, engage in
or become associated with a Competitive Activity. For purposes of this paragraph
(b) of Section 6: (i) the "Noncompetition Period" means the period beginning on
the Closing Date and ending on the Executive's 75th birthday); (ii) a
"Competitive Activity" means any business or other endeavor that engages in
construction, ownership, leasing, design and/or management of parking lots,
parking garages, or other parking facilities or consulting with respect thereto;
and (iii) the Executive shall be considered to have become "associated with a
Competitive Activity" if he becomes directly or indirectly involved as an owner,
employee, officer, director, independent contractor, agent, partner, advisor, or
in any other capacity calling for the rendition of the Executive's personal
services, with any individual, partnership, corporation or other organization
that is engaged in a Competitive Activity. Notwithstanding the foregoing, the
Executive may make and retain investments during the Employment Period in not
more than five percent of the equity of any entity engaged in a Competitive
Activity, if such equity is listed on a national securities exchange or
regularly traded in an over-the-counter market.
(c) (i) Notwithstanding the foregoing, so long as the Executive
complies with this Section 6(c), it shall not be considered a violation of the
provisions of Section 6(b) above for the Executive (x) to own or sell the
Permitted Investments at any time during the Noncompetition Period, or (y) to
own or sell any interest in any other real estate ("Other Real Estate") at any
time after the Employment Period for the remainder of the Noncompetition Period.
The Executive shall provide to the Board reasonable advance written notice of
his disposition of any Permitted Investment and of his acquisition or
disposition of any interest in Other Real Estate. In addition, if any Permitted
Investment or Other Real Estate includes a parking facility (a "Parking
Facility"), then the Executive shall follow the procedures set forth in
subsections (ii) and (iii) below. In the case of a Parking Facility in a
Permitted Investment or in Other Real Estate that, in either case, is managed or
leased by the Company at any time, the Executive shall follow such procedures
with respect to any extension or renewal of any such management agreement or
lease. In the case of a Parking Facility in Other Real Estate that is not being
managed or leased by the
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Company at the time the Executive acquires an interest in the Other Real Estate,
the Executive shall follow such procedures at the time he acquires the interest.
(ii) In the case of any Permitted Investment or Other Real Estate
controlled by the Executive or his Affiliates (as defined in Section 6(d)
below), the Executive shall initiate negotiations with the Company in an attempt
to determine mutually agreeable terms upon which the Company will manage or
lease the Parking Facility, failing which the Company shall have a right of
first refusal with respect to any management agreement or lease that may be
negotiated with any independent third-party parking operator (which right of
first refusal shall be exercised by the Company, if at all, by giving written
notice to the Executive within seven (7) days of the Company's receipt of
written notification from the Executive containing a copy of the proposed
management contract or lease).
(iii) In the case of any Permitted Investment or Other Real Estate
not controlled by Executive, Executive shall use reasonable and good-faith
efforts to cause the controlling person or entity to initiate negotiations with
the Company in an attempt to determine mutually agreeable terms pursuant to
which the Company would manage or lease the Parking Facility.
(iv) In any negotiations pursuant to subsection (ii) or (iii) above,
the Company shall be represented by a neutral expert appointed by the Board.
(v) Notwithstanding anything to the contrary contained herein, it is
agreed that for all purposes of Sections 6(b) and (c), the Theatre District
SelfPark ("TDSP") shall not be considered as either a Permitted Investment or
Other Real Estate, it being the intent of the parties to treat said Parking
Facility as if the Executive had no equity or ownership interest of any kind or
nature whatsoever therein. The parties further agree as follows:
(1) Standard/Tremont Parking Corporation ("Tremont"), an
Illinois corporation that is the lessee and operator of TDSP, and of which
the Executive owns half of the issued and outstanding shares, shall not at
any time be permitted to lease, manage or in any other manner operate any
parking facility other than TDSP.
(2) If at any time during the term of Tremont's lease of TDSP,
Tremont should desire to sublease its interest therein to any third party,
the Executive shall adhere to the procedures set forth in subsections (ii)
or (iii) above, as the case may be, with respect to such intended
sublease.
(3) The Executive shall provide to the Board reasonable
advance written notice of his disposition of all or any portion of his
interest in TDSP or of his acquisition of any additional interest in TDSP.
(d) For purposes of Section 6(c), an "Affiliate" of the Executive
shall mean any member of the Executive's family (including without limitation
his grandparents and all their descendants (whether natural or adoptive) and his
present and former spouses), any trust a principal beneficiary of which is the
Executive or any such member of the Executive's family, and any person that
directly, or through one or more intermediaries, is controlled by the Executive
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and/or one or more of such members of the Executive's family and/or one or more
such trusts; and a person shall be considered to "control" any other person with
respect to which the first person possesses, directly or indirectly, the power
to direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract, by the terms of any trust agreement, or otherwise).
7. Successors. (a) This Agreement is personal to the Executive and,
without the prior written consent of the Company, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would have been required to perform it if no such
succession had taken place. As used in this Agreement, "Company" shall mean both
the Company as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
8. Miscellaneous. (a) This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Illinois without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxx X. Xxxxxxxxx
0000 Xxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
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with a copy to:
Xxxxxxx X. Xxxx
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
If to the Company:
c/x Xxxxxxx Industries, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy Number: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy Number: (000) 000-0000
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 8. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(d) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
(f) The Executive and the Company acknowledge that this Agreement
supersedes any other agreement, whether written or oral, between them concerning
the subject matter hereof, including, but not limited to, the Summary of Terms
of Employment Agreement.
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(g) This Agreement may be executed in several counterparts, each of
which shall be deemed an original, and said counterparts shall constitute but
one and the same instrument.
(h) The Executive shall not be required to mitigate the amount of
any payment provided for in this Agreement by seeking other employment or
otherwise. The Company shall not be entitled to set off against the amounts
payable to the Executive under this Agreement any amounts earned by the
Executive in other employment after termination of his employment with the
Company, or any amounts which might have been earned by the Executive in other
employment had he sought such other employment.
(i) The Company shall indemnify the Executive and hold him harmless
from liability for acts or decisions made by him while performing services for
the Company and its affiliates to the greatest extent permitted by applicable
law, except in the event of the Executive's gross negligence or willful
misconduct. The Company shall use its reasonable efforts to obtain coverage for
the Executive under any insurance obtained during the Employment Period insuring
officers and directors of the Company against any such liability. To the
greatest extent permitted by applicable law, the Company shall, upon receipt of
any undertaking that may be required by applicable law, pay as incurred all
expenses, including reasonable attorneys' fees and costs of court approved
settlements, actually incurred by the Executive in connection with the defense
of or settlement of any action, suit or proceeding and in connection with any
appeal thereon, which has been brought against the Executive by reason of the
Executive's service as an officer, director or agent of the Company or its
affiliates, except in the event of the Executive's gross negligence or willful
misconduct.
(j) In the event that in the opinion of tax counsel selected and
compensated by the Executive ("Executive's Tax Counsel"), a payment or benefit
received or to be received by the Executive following his termination (whether
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Company or any person affiliated with the Company)
(collectively, with the payments provided for in the foregoing provisions of
this Section, the "Post-Termination Payments") would be subject (in whole or
part) to the excise tax (the "Excise Tax") imposed by Section 4999 of the Code,
and (b) as a result of the Excise Tax, the net amount of Post-Termination
Payments retained by the Executive (taking into account the Excise Tax) would be
less than the net amount of Post-Termination Payments retained by the Executive
if the Post-Termination Payments were reduced or eliminated as described in this
Section, then the Post-Termination Payments shall be reduced or eliminated until
no portion of the Post-Termination Payments is subject to the Excise Tax, or the
Post-Termination Payments are reduced to zero. For purposes of this limitation,
(i) no portion of the Post-Termination Payments, the receipt or enjoyment of
which the Executive shall have waived in writing prior to the date of payment,
shall be taken into account, (ii) no portion of the Post-Termination Payments
shall be taken into account which, in the opinion of Executive's Tax Counsel,
does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, (iii) the Post-Termination Payments shall be reduced
only to the extent necessary so that the Post-Termination Payments (other than
those referred to in clauses (i) and (ii)) in their entirety constitute
reasonable compensation for services actually rendered within the meaning of
Section 280G(b)(4) of
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the Code or are otherwise not subject to the Excise Tax, in the opinion of
Executive's Tax Counsel, and (iv) the value of any non-cash benefit and all
referred payments and benefits included in the Post-Termination Payments shall
be determined by the mutual agreement of the Company and the Executive in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.
IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization of its Board of Directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxx
APCOA, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
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SCHEDULE A
Permitted Investments
Ownership interests, direct or indirect, in the following parking facilities:
o Buckingham Plaza Condominium in Chicago
o 00 X. Xxxxxx Xxxxxx and 000 X. Xxxxx Xxxxxx in Chicago
o 0 Xxxx Xxx Xxxxxx in Chicago.
o Xxxxx-Xxxxxxxxx Car Park located at 0000 X. Xxxxx Xxxxxx in Chicago
o 000 Xxxxx XxXxxxx Xxxxxx Self Park and the Theatre District Self Park in
Chicago
o Equity interests as shareholders of Standard/Tremont Parking Corporation, an
Illinois corporation that is the lessee of the Theatre District Self-Park
parking facility in Chicago.
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