EXHIBIT 10.7
February 23, 2001
Xx. Xxxxxx X. Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
RE: RETIREMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS
Dear Mat:
This Retirement Agreement and Mutual Release of Claims (the
"Agreement") between you and SMC Corporation (the "Company") contains the terms
and conditions of your retirement from your capacity as CEO with the Company and
your continuing role as an employee of the Company. As used in this Agreement,
"the Company" includes all of its related entities, including, without
limitation, all parent, subsidiary, affiliate, predecessor and successor
organizations, and all current or former corporate officers, directors,
employees, shareholders, insurers, attorneys, agents or assigns for all
organizations and corporations referred to in this paragraph.
1. RETIREMENT; APPOINTMENT AS AN EMPLOYEE ADVISOR.
Following your retirement as CEO, you will continue your role as
Chairman of the Board of Directors, further, the Company shall appoint you as an
employee advisor. As an employee advisor, you shall provide advisory services
and such other services to the Company as the Chief Executive Officer or the
President of the Company may from time to time request. You shall serve as an
employee advisor to the Company for so long as you continue to live. You
acknowledge that you will not have any rights, authority or privileges
associated with this title except as provided expressly in this Agreement.
Your position as an employee advisor shall be advisory in nature only,
and you shall have no vote or right to consent on any action taken by the Board
of Directors. As an employee advisor, you shall have no duties or obligations to
the Corporation or its shareholders as a director of the Corporation, whether
pursuant to the Oregon Business Corporation Act or the Investment Company Act of
1940 or otherwise; nor shall you have any rights as a director under the Oregon
Business Corporations Act, the Company's Articles or Bylaws, or otherwise.
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ADVISING COMPENSATION. As an employee advisor providing advisory
services to the Company, you will receive compensation in an amount equal to
$20,000 per year continuing until your death. Additionally, as an employee, your
company paid health benefits will also continue until your death.
2. RETIREMENT BENEFITS.
The following benefits will be provided to you upon your execution of
this Agreement and the expiration of the revocation period identified in
paragraph 8, provided you have not revoked the terms of this Agreement.
2.1 RETIREMENT PAYMENTS. The Company has agreed to pay you retirement
payments in accordance with the following schedule, all subject to the terms and
conditions of this Agreement and applicable tax withholding:
2.1.1 $280,000 on an annualized basis, payable on regular Company
paydays commencing on or about the later of March 1, 2001, or 8 days after you
sign this Agreement and continuing with the last payment to be made on or about
February 1, 2002; and
2.1.2 $220,000 on an annualized basis, payable on regular Company
paydays commencing on or about March 1, 2002, and continuing with the last
payment to be made on or about February 1, 2003; and
2.1.3 $100,000 on an annualized basis, payable on regular Company pay
days commencing on or about March 1, 2003, and continuing until your death.
With the exception of the first installment payment, payment of all
installments of retirement pay identified in subparagraphs 2.1.1, 2.1.2 and
2.1.3 will be made by depositing the same in the United States Mail (or by
direct deposit if you have previously made such arrangements) on regular Company
pay days. Payment of retirement pay shall automatically cease in the event of
your death.
2.2 AUTOMOBILE. Upon your retirement as CEO, the company will transfer
legal title to you of the 1999 Lincoln you are presently driving for company use
for $100.
2.3 COMPUTERS AND ASSOCIATED EQUIPMENT. Upon your retirement, the two
computers and associated equipment currently in your possession, including but
not limited to the docking system (collectively, the "Computers and Associated
Equipment") will become your personal property.
2.4 STOCK OPTIONS. As you will remain an employee, all stock options in
your stock
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option agreements dated October 20, 1994 and February 27, 1998 (the "Option
Agreements") shall not be terminated by reason of your retirement from the
Company. Your options shall otherwise be governed by the terms of the Option
Agreements and the Plan.
2.5 TAX TREATMENT OF BENEFITS. The retirement, advisory employee and
other benefits identified in this paragraph 2 and provided to you under the
terms and conditions of this Agreement (collectively, the "Benefits") are
subject to applicable payroll deductions and tax withholding and may constitute
taxable income to you. YOU ARE RESPONSIBLE FOR ALL TAX OBLIGATIONS AND SHOULD
CONSULT WITH YOUR OWN TAX ADVISOR REGARDING THE TAX TREATMENT OF THE BENEFITS.
3. EFFECT OF AGREEMENT.
Upon your retirement, except as otherwise specified in this Agreement,
you will cease participation in all plans and benefits generally provided to
Company officers and employees and will not receive any other compensation or
employee benefits, including, without limitation, any benefits under any
severance, compensation or other plan, policy or practice maintained by the
Company. You further acknowledge and agree that the Benefits provided to you
under this Agreement are in lieu of, and not in addition to, any Company
severance plan or any other plan, policy or practice that otherwise might be
applicable to you.
4. CONDITIONS FOR RECEIPT OF CONSIDERATION UNDER THIS AGREEMENT.
You will be eligible to receive the pay and benefits described in
paragraph 2 only if you satisfy all of the following conditions:
4.1 ACCEPTANCE PERIOD. You execute this ("Acceptance Period") and you
do not later revoke it during the Acceptance Period.
4.2 COMPANY PROPERTY. Except with respect to the 1999 Lincoln and the
Computers and Associated Equipment and any other equipment you are entitled to
use or keep in accordance with the provisions of paragraphs 1 and 2, you must
return all other Company tangible personal property in your possession
immediately.
4.3 NO BREACH. You do not breach any of the terms of this Agreement.
4.4 ASSISTANCE IN DEFENSE OF LITIGATION OF CLAIMS. If the Company
requests your assistance, you agree to assist in the defense or prosecution of
litigation, claims or administrative proceedings about which you have knowledge,
without additional compensation following your retirement. You will, however, be
reimbursed for reasonable out-of-pocket expenses approved in advance by the
Company. The Company will reasonably accommodate your scheduling needs and will
provide you with reasonable advance notice of a request for such assistance.
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4.5 CONFIDENTIALITY. You agree that you will not use the Company's
confidential information in any manner unless authorized in writing by the
Company or required by court order or similar order of any legally constituted
authority. In addition, you agree to use reasonable good faith efforts to
prevent accidental or negligent loss or release to any unauthorized person of
the confidential information.
5. REMEDIES FOR BREACH.
You acknowledge that if you breach any material term of this Agreement
during or after receiving Benefits under this Agreement, the Company may suffer
irreparable injury. In such an event, the Company may seek an injunction or
other equitable relief enjoining any breach of the above-referenced provisions.
In any action necessary to enforce the provisions of this agreement, the
prevailing party shall be entitled to recover reasonable costs and attorneys'
fees, including costs of appeal.
6. MUTUAL RELEASE OF CLAIMS
6.1 The Company hereby releases and forever discharges you from any
claims, demands, actions, suits, causes of action, debts, accounts or
controversies of any nature whatsoever, known or unknown, arising out of, or in
any way related to, your employment by, or service as a director of, the
Company, including, without limitation, all claims that were asserted or could
have been asserted by the Company, and any and all actions or omissions by you
up to and including the date of this Agreement; PROVIDED, HOWEVER, that this
release shall not apply to any criminal or fraudulent actions taken by you.
6.2 You hereby release and forever discharge the Company from any and
all claims, demands, actions, suits, causes of action, debts, accounts or
controversies of any nature whatsoever, known or unknown, arising out of, or in
any way related to, your employment by, or service as a director of, the Company
or the termination of that employment or service as a director, including,
without limitation, all claims that were asserted or could have been asserted by
you, and any and all actions or omissions by the Company up to and including the
date of this Agreement; PROVIDED, HOWEVER, that this release shall not apply to
any criminal or fraudulent actions taken by the Company.
6.3 The release set forth in subparagraph 6.2 includes, without
limitation, any and all claims under any state, federal or local law or other
authority, including, but not limited to, any claim for additional
compensation in any form, any claim arising under any statutes or regulations
pertaining to wages, conditions of employment or discrimination in
employment, including, without limitation, the Employee Separation Income
Security Act; Title VII of the Civil Rights Act of 1964; the Family and
Medical Leave Act; the Age Discrimination in Employment Act; the Older
Workers' Benefit Protection Act; the Post-Civil War Civil Rights Acts
(42 U.S.C. Section 1981-1988); the Civil Rights Act of 1991, 42 U.S.C.
Section 1981, et seq.; the Equal Pay Act of 1963; the Fair Labor Standards Act;
the Occupational Safety and Health Act of 1970;
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the Rehabilitation Act of 1973; Sections 503 and 504 of the Vocational
Rehabilitation Act of 1973; the Americans with Disabilities Act, 42 U.S.C.
Section 12101, et seq.; the Uniform Services Employment and Reemployment
Rights Act; the Xxxxx-Xxxxx Act; the Xxxxx-Xxxxxx Act; the Contract Work
Hours and Safety Standards Act; Executive Order 11246; ORS Chapters 652, 653,
654 and 659; federal and state securities laws; and any regulations under or
amendments of such authorities. In addition, this release extends to all
claims of any kind under any contract, tort or other common law, equitable or
statutory theories.
7. ADVICE TO CONSULT WITH ATTORNEY.
YOU HAVE BEEN, AND HEREBY ARE, ADVISED TO CONSULT WITH AN ATTORNEY REGARDING
THIS AGREEMENT AND TO CAREFULLY CONSIDER THE TERMS OF THIS AGREEMENT, INCLUDING
THE TERMS REGARDING THE RELEASE OF CLAIMS SET FORTH IN PARAGRAPH 6.
8. OLDER WORKERS' BENEFIT PROTECTION ACT NOTICE.
8.1 In accordance with the Older Workers' Benefit Protection Act, you
acknowledge: you have been advised in writing of your right to consult with an
attorney prior to executing this Agreement (including the release); you have
read this Agreement and understand that you are releasing legal rights; you are
aware of certain rights to which you may be entitled under certain statutes and
laws identified in subparagraph 6.3 of this Agreement; you have had adequate
time to consider this Agreement; and that as consideration for executing this
Agreement (including the release), you have received additional benefits and
compensation of value to which you would not otherwise be entitled.
8.2 This offer shall remain open for your consideration until March 23,
2001. You acknowledge that you received this written offer on February 23, 2001,
and that the offer provides you with an Acceptance Period of at least 21 days
from the date of receipt for your consideration of the offer. You may execute
this Agreement at any time during the Acceptance Period. If you have not
executed this Agreement by the close of business on March 23, 2001, this offer
shall expire. You are free, of course, to accept this offer earlier by executing
this Agreement.
Once you execute this Agreement, you will have 7 days from the date
immediately following the date of your execution of this Agreement in which you
may revoke it, in your sole discretion (Acceptance Period). Notice of revocation
of this Agreement shall be made by you in writing to:
Xxxx Xxxx
Chief Financial Officer
SMC Corporation
00000 Xxxxxx Xxxx
X.X. Xxx 0000
Xxxx, XX 00000
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If you do not exercise your right to revoke this Agreement, it will
become effective on the eighth day following your execution of the Agreement.
You understand that if you do not sign this Agreement on or before the end of
the Acceptance Period, or if you revoke it, you will not be entitled to the
Benefits offered in this Agreement.
9. ENTIRE AGREEMENT.
You acknowledge that no representations have been made to you by the
Company other than those set forth herein.
You acknowledge and agree that this Agreement supersedes and replaces
all remaining obligations, if any, contained in any agreement, promise or offer.
You also acknowledge and agree that the compensation and benefits provided under
this Agreement are in lieu of, and not in addition to, the compensation and
benefits, if any, provided under any other agreement, promise or offer or any
policy, plan or practice maintained by the Company.
If you agree to the terms and conditions of this Agreement, please sign
and return the enclosed copy of this Agreement, on or before March 23, 2001.
Sincerely,
/s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
President and Chief Operating Officer
ACKNOWLEDGMENT AND AGREEMENT:
I have read this Agreement and consulted with my attorney before signing. I
understand that by signing below, I am entering a legal agreement and releasing
legal rights, including any claims I may have against the Company. I have chosen
voluntarily to enter this Agreement after careful consideration.
XXXXXX X. XXXXXX Date 3/6/01
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Xxxxxx X. Xxxxxx
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