EXHIBIT 10.16
EXECUTIVE SEVERANCE AGREEMENT
THIS AGREEMENT is entered into this 29th day of March, 2005, by and
between MSX International, Inc., a Delaware corporation (the "Company"), and
Xxxxxx Xxxxxxxxx ("Executive").
WITNESSETH
WHEREAS, the Company considers the establishment and maintenance of a
sound and vital management to be essential to protecting and enhancing the best
interests of the Company and its stockholders; and
WHEREAS, Executive currently serves as Chief Executive Officer and
President of the Company;
WHEREAS, the Board, as defined herein, has determined that it is in the
best interests of the Company and its stockholders to secure Executive's
continued services and to ensure Executive's continued and undivided dedication
to his duties; and
WHEREAS, the parties hereto desire to set forth the terms relating to,
among other things, payments to Executive upon a termination of the employment
of Executive during the Term (as defined in Section 7) of this Agreement; and
WHEREAS, the Board has authorized the Company to enter into this
Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, the Company and Executive hereby
agree as follows:
1. Definitions: As used in this Agreement, the following terms shall
have the respective meanings set forth below:
(a) "Affiliate" means, with respect to any Person, any other
Person who directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, such Person including,
without limitation, any employee of such Person, The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities or other ownership interests, by contract or
otherwise, and the terms "controlled" and "controlling" have meanings
correlative thereto.
(b) "Board" means the Board of Directors of the Company.
(c) "Cause" means (i) Executive's gross negligence or willful
misconduct which results in material harm to the Company, (ii) failure by
Executive to observe, perform or fulfill any material duties or obligations to
the Company following written notice from the Board describing such failure and
providing for a reasonable opportunity to cure, (iii) Executive's
misappropriation of Company's funds, or (iv) if Executive shall be convicted of
any felony offense or any non-felony offense (for which no appeal is sought or
for which any such appeal is unsuccessful) which, in the reasonable opinion of
the Board, reflects negatively on the moral and ethical values of the Company.
(d) "Date of Termination" means (1) the effective date on
which Executive's employment by the Company terminates as specified in a prior
written notice by the Company or Executive, as the case may be, to the other,
delivered pursuant to Section 9, or (2) if Executive's employment by the Company
terminates by reason of death, the date of death of Executive.
(e) "Good Reason" means the occurrence of any of the following
events without Executive's express written consent:
(1) a breach by the Company of any provision of this
Agreement;
(2) a reduction in Executive's rate of annual base
salary or annual bonus opportunity as in effect immediately prior to
the Date of Termination; or
(3) any requirement that Executive (i) be based
anywhere more than fifty (50) miles from the facility where Executive
is located immediately prior to the Date of Termination or (ii) travel
on Company business to an extent that requires extended, overnight
travel which is substantially greater than the travel obligations of
Executive immediately prior to the Date of Termination.
(f) "Nonqualifying Termination" means a termination of
Executive's employment (1) by the Company for Cause, (2) as a result of
Executive's death, (3) by the Company due to Executive's Permanent Disability or
(4) voluntarily by Executive for any reason other than Good Reason.
(g) "Permanent Disability" means Executive is unable to
perform, in the written opinion of a medical doctor mutually agreed to by the
Company and by Executive or his legal representative (and if the Company and
Executive are unable to agree upon a medical doctor, a third doctor selected by
the doctor selected by the Company and the doctor selected by Executive or his
legal representative), by reason of physical or mental incapacity, his duties or
obligations under this Agreement, for a period of one hundred twenty (120)
consecutive calendar days or a total period of two hundred ten (210) calendar
days in any three hundred sixty (360) calendar day period.
(h) "Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a limited liability company,
a trust, a joint venture, an unincorporated organization, a governmental entity,
or any department, agency or political subdivision thereof, or any other entity.
(i) "Subsidiary" means, with respect to any Person, any
corporation, partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed to
have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be or
control the managing director or general partner of such partnership,
association or other business entity.
2. Payments Upon Termination of Employment. If during the Term (as
defined in Section 7) of this Agreement the employment of Executive shall
terminate, other than by reason of a Nonqualifying Termination, the Company
shall pay to Executive his base salary through the Date of Termination, to the
extent not theretofore paid. In addition, if Executive agrees within one (1)
week after such termination to execute a release, in the same form as attached
hereto as Exhibit A, with respect to all tort and contract claims, as well as
claims brought under all applicable federal, state or local statutes, laws,
regulations or ordinances, then the Company shall pay to Executive (or
Executive's beneficiary or estate) within thirty (30) calendar days after the
Company's receipt of the signed release (and upon the expiration of any
revocation rights in the release), as compensation for services rendered to the
Company, an amount (the "Severance Payment") equal to the sum of:
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(a) Two times Executive's annualized base salary in effect
immediately prior to the Date of Termination; and
(b) Two times Executive's annual bonus, if any, for the fiscal
year prior to when Executive's Date of Termination occurs.
Any amount paid pursuant to this Section 2 shall be in lieu of any
other amount of severance relating to salary or bonus continuation to be
received by Executive upon termination of employment of Executive under any
employment agreement or under any severance plan or policy of the Company during
the Term (as defined in Section 7) of this Agreement. The Company shall pay
Executive the Severance Payment in equal installments over a two (2) year period
consistent with the Company's then-existing payroll schedule.
3. Withholding Taxes. The Company may withhold from all payments due to
Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.
4. Insurance. The Company hereby agrees that, during the Term of this
Agreement, it will maintain (a) life insurance coverage for Executive in an
amount equal to the Severance Payment, and (b) disability insurance coverage for
Executive in an amount equal to the Severance Payment, if obtainable at
reasonable cost to the Company.
5. Confidential Information. Executive agrees that he will not disclose
any Confidential Information of the Company, its Subsidiaries and/or Affiliates
that came into his knowledge during his employment by the Company without the
prior written consent of the Company. "Confidential Information" means any data
or information that the Company treats as confidential, that is valuable to the
Company and that is not known to the public or to vendors or to competitors of
the Company, its Subsidiaries or Affiliates. In the event Executive's employment
with the Company is terminated for any reason during the term of this Agreement,
Employee will promptly deliver to the Company all copies of all materials of any
nature belonging to the Company, its Subsidiaries or Affiliates, and Employee
will not take with him any such materials or reproductions thereof (in whole or
in part) or any proprietary information of the Company, its Subsidiaries or
Affiliates in tangible form.
6. Non-Competition; Non-Solicitation. Executive hereby agrees that in
consideration of Employee's covenants, obligations and agreements in this
Section 6, Employee shall receive from the Company the payments set forth in
Section 2 hereof. Executive acknowledges and recognizes the highly competitive
nature of the Company's business, and that his duties hereunder justify
restricting his further employment following any termination of employment
hereunder; accordingly, Executive agrees that so long as Executive is employed
by the Company, and for a period of one year following the termination of
Executive's employment with the Company for any reason Executive, except when
acting on behalf of or for the benefit of the Company and at the direction of
the Company, will not personally, directly or through subterfuge:
(a) Induce or solicit any employee of the Company (i) to
interfere with the business of the Company, or (ii) to discontinue his or her
employment with the Company;
(b) Induce or solicit any customers, agents or other sources
of distribution of Company business under contract or doing business with the
Company to terminate, reduce, alter or divert business with or from the Company;
or
(c) Compete with the Company, directly or indirectly, or
participate in any manner or capacity as an officer, principal, advisor, agent,
partner, director, stockholder, employee or consultant in any business that
develops or offers, directly or through Affiliates, any type of products or
services that are similar to or competitive in any respect with those offered by
the Company. Ownership by Executive, for investment purposes only, of less than
2% of any class of securities of a corporation if said securities are listed on
a national securities
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exchange or registered under the Securities Exchange Act of 1934, as amended,
shall not constitute a breach of the foregoing covenant. For purposes of this
Section 6, the term "Company" shall include the Company and any Subsidiary or
Affiliate thereof. The provisions of this Section 6 shall apply in all states of
the United States. If for any reason any court of competent jurisdiction shall
find the provisions of this Section 6 unreasonable, the prohibitions herein
contained shall be restricted to such terms as such court determines to be
reasonable. Such restriction shall apply only with respect to the operation of
such provisions in the particular jurisdiction in which such adjudication is
made.
Executive acknowledges and agrees that the covenants, obligations and
agreements of Executive contained in Sections 5 and 6 relate to special, unique
and extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Company irreparable injury
for which adequate remedies are not available at law. Therefore, Executive
agrees that the Company shall be entitled to an injunction, restraining order or
such other equitable relief (without the requirement to post bond unless
required by applicable law) as a court of competent jurisdiction may deem
necessary or appropriate to restrain Executive from committing any violation of
such covenants, obligations or agreements. These injunctive remedies are
cumulative and in addition to any other rights and remedies the Company may
have.
7. Termination of Agreement. This Agreement shall be effective on the
date hereof and shall continue until the first to occur of (a) termination of
Executive's employment as Chief Executive Officer and President of the Company,
or (b) a Nonqualifying Termination. The effective period of this Agreement is
referred to herein as the "Term."
8. Successors; Binding Agreement.
(a) This Agreement shall not be terminated by any merger,
consolidation, share exchange or similar form of corporate reorganization of the
Company or any such type of transaction involving the Company or any Subsidiary
of the Company (a "Business Combination"). In the event of any Business
Combination, the provisions of this Agreement shall be binding upon the
surviving or resulting corporation or the Person to which such assets are
transferred (the "Surviving Company") and such Surviving Company shall be
treated as the Company hereunder.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive shall die and, under the terms of this Agreement, any payment would be
required to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to such
Person or Persons appointed in writing by Executive to receive such amounts or,
if no Person is so appointed, to Executive's estate.
9. Notice.
(a) For purposes of this Agreement, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) business days after
deposit in the United States mail, certified and return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: At the last known address shown in
the Company's personnel records
If to the Company: MSX International, Inc.
000 Xxx Xxxxxxxxx
Xxxxxx Xxxxx, XX 00000
ATTN:
---------------------
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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(b) A written notice of Executive's Date of Termination by the
Company to Executive shall (1) indicate the specific termination provision in
this Agreement relied upon, (2) to the extent applicable, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated and (3)
specify the termination date. The failure by the Company to set forth in such
notice any fact or circumstance which contributes to a showing of Cause shall
not waive any right of the Company hereunder or preclude the Company from
asserting such fact or circumstances in enforcing the Company's rights
hereunder.
10. Full Settlement. Payment by the Company of its obligations
hereunder and performance of the Company's other obligations hereunder shall be
in lieu and in full settlement of all other severance obligations to Executive
under any severance or employment agreement between Executive and the Company,
any Subsidiary of the Company Group and any Affiliate of the Company, excluding
any other benefits specifically provided by the Company to Executive, if any, as
approved by the Board. In no event shall Executive be obligated to seek other
employment or take other action by way of mitigation of the amounts payable to
Executive under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not Executive obtains other employment.
11. Governing Law, Validity. The interpretation, construction and
performance of this agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of Delaware without regard to the
principle of conflicts of laws. The invalidity or unenforceability of any
provision of this agreement shall not affect the validity or enforceability of
any other provision of this agreement, which other provisions shall remain in
full force and effect.
12. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.
13. Miscellaneous. No provision of this Agreement may be modified or
waived unless such modification or waiver is agreed to in writing and signed by
Executive and by a duly authorized officer of the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. Failure by Executive
or the Company to insist upon strict compliance with any provision of this
Agreement or to assert any right Executive or the Company may have hereunder
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement. Except as otherwise specifically provided
herein, the rights of, and benefits payable to, Executive, Executive's estate or
Executive's beneficiaries pursuant to this Agreement are in addition to any
rights of, or benefits payable to, Executive, Executive's estate or Executive's
beneficiaries under any other employee benefit plan or compensation program of
the Company.
14. Scope of Agreement. Nothing in this Agreement shall be deemed to
entitle Executive to continued employment with the Company or its Subsidiaries.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by a duly authorized officer of the Company and Executive has executed
this Agreement as of the day and year first above written.
MSX INTERNATIONAL, INC. EXECUTIVE:
By: /s/ Xxxxxxxxx X. Xxxxxxx /s/ Xxxxxx Xxxxxxxxx
------------------------ --------------------
Name: Xxxxxxxxx X. Xxxxxxx Xxxxxx Xxxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
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EXHIBIT A - RELEASE
THIS RELEASE (the "Release") is entered into by and between MSX
International, Inc., a Delaware corporation (the "Company"), and Xxxxxx
Xxxxxxxxx ("Employee").
WITNESSETH
Employee and the Company are terminating their employment relationship,
effective , , and desire to settle fully and finally all differences between
them that may arise out of or relate to Employee's employment with the Company
and all other claims Employee has or may have through the Effective Date of this
Release; and
NOW, THEREFORE, in consideration of this recital, the agreements,
warranties, and representations contained herein and other good and valuable
consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, the parties to this Release hereby agree as follows:
1. Execution. Employee represents and warrants that he is competent to
enter into this Release, is relying on independent judgment and the opportunity
to seek the advice of legal counsel, and has not been influenced in making this
Release by any representations made by or on behalf of the Company.
2. Specific Consideration. In exchange for the release provided
hereunder and other good and valuable consideration, and upon the execution of
this Release, Employee shall be paid in accordance with that certain Executive
Severance Agreement between Employee and the Company (or the Company's
predecessor) dated March , 2005 ("Severance Agreement"), which payment includes
all amounts, if any, which are owed to Employee pursuant to any agreement, plan
or policy of the Company arising from a termination of the Employee, other than
by reason of a Nonqualifying Termination, as defined in the Severance Agreement,
if such amount has not been previously paid to Employee.
Employee agrees that no further amount is or shall be due or claimed to
be due from the Company and/or from any other person or entity released in
paragraph 3 below except for any post-termination payment amounts owed to
Employee pursuant to employee benefit plans qualified under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), pursuant to the
applicable requirements of Part 6 of Subtitle B of Title I of ERISA and Section
4980B of the Internal Revenue Code of 1986, as amended ("COBRA"), or any
payments to or rights of Employee under the [Insert Company Retirement Plan
and/or Equity Compensation Plan, if any (the "Equity Plan")], or any shareholder
agreement relating to the Company to which Employee is a party.
3. Release. In consideration of the payment provided for in paragraph 2
above and other good and valuable consideration, the receipt, adequacy, and
sufficiency of which are hereby acknowledged, Employee and his heirs, executors,
administrators, agents, assigns, and any other representative or entity acting
on his, her or their behalf; do hereby now and forever unconditionally release,
discharge, acquit and hold harmless the Company, and any of its Affiliates or
related companies, and any and all of its employees, directors, officers,
shareholders, agents, administrators, assigns, and any other representative or
entity acting on its behalf (collectively the "Released Parties"), from any and
all claims, rights, demands, actions, suits, damages, losses, expenses,
liabilities, indebtedness, and causes of action, of whatever kind or nature that
existed from the beginning of time through the date he executes this Release,
regardless of whether known or unknown, and regardless of whether asserted by
Employee to date, other than any rights Employee may have pursuant to any
indemnification of officers provided by the Company and any shareholder
agreement relating to the Company to which Employee is a party.
4. Enforcement. In the event of a default or breach of this Release,
each party may pursue whatever legal or equitable remedies that may be available
to such party to seek judicial enforcement of this Release, whether by
injunction, specific performance, an action for damages or otherwise.
5. Jurisdiction. The laws of the State of Delaware shall govern this
Release, unless pre-empted by any applicable federal law.
6. General. This Release may be signed in counterparts with the same
force and effect as if signed in a single document. No provision of this Release
may be modified or waived except by a written agreement signed by each of the
parties hereto. This Release contains the entire agreement of the parties, and
supersedes any and all prior or contemporaneous understandings, agreements,
representations and/or promises, whether oral or written, which are not
expressly set forth herein or expressly referred to herein.
7. OWBPA Rights. Employee is advised to seek legal counsel regarding
the terms of this Release. Employee acknowledges that he has either sought legal
counsel or has consciously decided not to seek legal counsel regarding the terms
and effect of this Release. Employee acknowledges that this Release releases
only those claims which exist as of the date he executes this Release.
(a) Employee acknowledges that he may take up to a period of
forty-five (45) days from the date of receipt of this Release within which to
consider and sign this Release, but he may also choose to sign and return it
earlier.
(b) Employee acknowledges that he will have seven (7) days
from the date of signing this Release to revoke the Release in writing in its
entirety ("Revocation Period"). Employee acknowledges that the Release will not
become effective or enforceable until the Revocation Period has expired. In the
event the Employee chooses to revoke this Release, within the Revocation Period,
he will:
(i) Revoke the entire Release in a signed writing,
delivered to the following person on or before the seventh
(7th) day after he executed the Release:
-----------------------
-----------------------
(ii) Forfeit all severance payments rights that are
contemplated by this Release.
(c) The Effective Date of this Release shall be the eighth
(8th) day after the date Employee signs the Release, assuming the Employee has
not properly revoked the Release in writing within the Revocation Period.
(d) Employee expressly acknowledges that the payments and the
other consideration that he is receiving under the Release constitute material
consideration for his execution of this Release, and represent valuable
consideration to which he would not otherwise be entitled.
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IN WITNESS WHEREOF, the undersigned have executed this Release on the
date set forth below.
EMPLOYEE:
Subscribed before me this the
day of
--------- ----------, ------- --------------------------------
Signature of Employee
---------------------------- --------------------------------
Notary Public Printed Name of Employee
My commission expires: Date:
---------------------------
---------------------------- MSX INTERNATIONAL, INC.
By:
----------------------------
Name:
Title:
Date:
----------------------------
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