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EXHIBIT 10.37
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 11th day
of December, 1997, between GS INDUSTRIES, INC., a Delaware corporation
("Employer") and XXXX X. XXXXX ("Employee").
RECITALS:
Employer and Employee desire to enter into this Agreement for purposes
of setting forth the terms and conditions of Employee's employment with
Employer. This Agreement shall be the definitive employment agreement of
Employee with Employer and, except as specifically provided for herein, the
terms and conditions of this Agreement shall supersede in all respects the terms
and conditions of all previous agreements between Employee and Employer.
NOW, THEREFORE, the parties hereby stipulate and agree as follows:
1. Employer agrees to employ Employee as President and Chief Executive
Officer of Employer effective January 12, 1998 or such earlier date as is
mutually agreed. Employee shall have such powers and perform such duties as may
be determined from time to time by the Board of Directors of Employer consistent
with past practice.
2. Employer agrees to pay Employee an annual base salary of Five
Hundred Fifty Thousand Dollars ($550,000), payable in twelve (12) equal monthly
payments. As a signing bonus and in partial compensation to Employee for the
value of lost options and restricted stock with respect to his former
employment, Employer agrees to pay Employee a one-time payment of Three Hundred
Thirty-Three Thousand Three Hundred Thirty-Four Dollars ($333,334) at the
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time of the execution of this Agreement and, provided Employee's employment by
Employer has not been terminated by Employer for Cause or by Employee without
Good Reason at such times, to pay Employee the sum of Three Hundred Thirty-Three
Thousand Three Hundred Thirty-Three Dollars ($333,333) on January 1, 1999 and on
January 1, 2000. In the event that all or any part of the long term incentive
bonus of Three Hundred Fifty Thousand Dollars ($350,000) payable to Employee by
his former employer in the first quarter of 1998 is not paid to Employee as a
result of his resignation from employment with his former employer or his
employment by Employer, Employer shall pay such unpaid amount to Employee as an
additional sign-on bonus. Employer shall also reimburse Employee for the
reasonable professional fees incurred by Employee in connection with the
negotiation and execution of this Agreement and the employment relationship
between the parties.
3. During the period of Employee's employment under this Agreement,
Employer shall provide Employee with the following benefits and reimbursements:
(a) Upon proof of payment, Employer shall reimburse Employee
in accordance with Employer's policies for all monies advanced in connection
with Employee's employment for expenses incurred by Employee on behalf of
Employer.
(b) Employee shall be entitled to four (4) weeks paid vacation
during each full calendar year and for a prorated amount of vacation for any
partial calendar year. Vacation shall be taken at a time or times mutually
agreeable with Employee and the Board of Directors of Employer. If requirements
of Employer prevent Employee's taking all or any part of such vacation, Employee
may elect to carry forward all unused vacation time (or part thereof) to the
next succeeding calendar year in accordance with Employer's policies.
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(c) Employee shall be entitled to the exclusive use of a late
model luxury automobile to be provided by Employer. All reasonable expenses
incident to the operation of such automobile, including fuel, oil, insurance,
maintenance and repairs, shall be paid by Employer.
(d) Employee is required, as part of his employment, to
entertain for the purpose of promoting the business of Employer. Employer agrees
that business promotion will be facilitated by having Employee maintain
membership in a luncheon club and in a country club. Employee shall be entitled
to paid membership including, but not limited to initiation fees, in a luncheon
club and in a country club selected with the mutual agreement of Employer and
Employee.
(e) Employee shall be entitled to participate in Employer's
health and accident insurance plans, group life insurance plans, travel and
accident plans, major medical plans, pension plan, the long term disability
insurance plan for salaried employees, and such other management employee
benefit plans currently available to newly employed executive employees of
Employer and that may be in effect from time to time subject to the condition
that the Employer shall have the right, in its sole discretion, to terminate,
change, modify or amend such benefit plans.
(f) Employee shall be designated as a participant in the
Amended and Restated GS Industries, Inc. Supplemental Executive Retirement Plan
(the "SERP") dated October 5, 1995, as amended; provided, that Employee's
benefits under the SERP are modified as follows:
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(i) the vesting provision of Section 7.1 of the SERP
is hereby modified with respect to Employee to eliminate forfeiture in the event
that prior to Employee obtaining five (5) Years of Credited Service (as defined
in the SERP) Employer terminates Employee without Cause, Employee terminates
this Agreement for Good Reason or Employee dies; and
(ii) the Normal Retirement Benefit (as defined in the
SERP) shall not exceed 75% of the highest annual base salary paid to Employee by
Employer which limitation shall apply for all purposes of the SERP including but
not limited to in the determination of the Deferred Retirement Benefit; and
(iii) Years of Credited Service shall only include
service on or subsequent to the Commencement Date.
(g) Employee shall be entitled to receive a bonus under
Employer's Annual Incentive Program with an individual multiplier of six (6)
applicable to Employee. Employee shall be entitled to a minimum bonus for 1998
of Four Hundred Fifty Thousand Dollars ($450,000).
(h) Tax planning and preparation during Employee's employment
under this Agreement shall be provided to Employee at Employer's expense by the
Company's audit firm or by an alternative equivalent selected by Employer.
(i) Employer shall provide Employee with reimbursement and
relocation expenses under Employer's Corporate Policy Statement with respect to
such expenses with the following additions:
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(i) Employer shall pay Employee the difference, if
any, by which the gross sale price of Employee's home located at 00000
Xxxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxx is less than the appraised value of such
property as of the date that Employee and his family vacate such property and
permanently relocate to Charlotte and Employee shall transfer title to such
property to Employer or its designee at such time; provided that Employee has
not sold the property prior to such time. If, with the consent of Employer,
Employee sells the property to a third party prior to permanently relocating to
Charlotte for a gross sale price less than the appraisal value, Employer shall
pay Employee the difference between such gross sale price and the appraisal
value; and
(ii) Reimbursement of temporary living and commuting
expenses reasonably incurred by Employee and his immediate family pending his
permanent relocation to Charlotte shall be extended beyond the time period in
the Corporate Policy Statement as reasonably requested by Employee and, the
amount of such reimbursement shall be grossed up to the extent that such
reimbursed expenses are taxable to Employee.
4. If Employee becomes disabled during the period of his employment
under this Agreement such that he is unable to perform the regular duties of his
employment on a full-time basis, he shall continue to receive the annual base
salary and other benefits extended, paid or granted to him hereunder until
either (a) his restoration to active service for Employer, (b) his death, or (c)
twelve (12) months after commencement of the disability, whichever date or event
first occurs. Any dispute between Employer and Employee as to the disability of
Employee shall be determined by a doctor of medicine selected by Employee and
agreed to by Employer.
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5. During the term of this Agreement or any extension thereof, Employee
shall devote his entire time and energy to the furtherance of the businesses of
Employer and shall not work in any advisory or other capacity for any other
individual, firm or corporation without first having obtained the written
consent of Employer thereto.
6. As part of the consideration given by Employee for the
considerations paid to him by Employer, Employee agrees that he will not use,
divulge, publish or otherwise reveal, either directly or indirectly, to any
person, firm or corporation during the term of his employment or for a period of
two (2) years after termination thereof any business or operational know-how or
customer lists with regard to the financial or other affairs of Employer or any
knowledge or information or any facts concerning any formulas, methods,
inventions or devices used by Employer or its affiliated companies and disclosed
to Employee by reason of his employment; provided, that the obligation of
Employee to maintain the confidentiality of business or operational know-how,
formulas, methods, inventions or devices used by Employer or its affiliated
companies and disclosed to Employee by reason of his employment shall continue
indefinitely. Upon termination of employment and at the written request of
Employer, Employee shall turn over to Employer all documents, including customer
lists, books and records, calculations, descriptions, drawings, models and
designs, with Employer and are in any way connected with Employer's business.
7. In further consideration of the salary paid to him by Employer,
Employee agrees that he will promptly communicate, disclose and deliver to
Employer any and all inventions, discoveries and other improvements relating to
equipment, devices, methods, formulas, or processes of any nature whatsoever
which are created or developed by Employee while in the
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employ of Employer ("Discoveries"). To the maximum extent permitted under North
Carolina General Statutes Sections 66-57.1 and 66-57.2 (as the same may be
amended from time to time), such Discoveries and any patent rights, copyrights
and other intellectual property rights relating thereto shall constitute the
sole property of Employer and its successors and assigns. Employer shall have
the right, at its expense, to apply for United States and foreign patents on any
such inventions, discoveries or other improvements in the name of Employee, and
Employee, upon request, shall at once execute all documents relating to he
application for and assignment to Employer of such applications and patents
without further compensation for such assignment.
8. The term of this Agreement shall begin on January 12, 1998 or such
earlier date as is mutually agreed (the "Commencement Date") and shall continue
indefinitely until terminated as provided in this paragraph or until the death
of Employee.
(a) Either party may terminate this Agreement without Cause,
by giving the other party sixty (60) days prior written notice of termination.
(b) If Employer terminates this Agreement without Cause or
Employee terminates this Agreement with Good Reason , Employee shall be entitled
to the following:
(i) a lump sum payment equal to twice the amount of
Employee's annual base salary then in effect;
(ii) a bonus under the Annual Incentive Program for
the calendar year of the termination and a bonus for the ensuing calendar year
payable when bonuses are paid to other employees under the Annual Incentive
Program unless Employer and Employee agree to a lump sum or other settlement of
such benefit;
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(iii) continuation of Employee's other benefits set
forth in paragraph 3 hereof (other than under Employer's qualified pension plan,
section 401(k) plan or similar benefits where continuation of coverage for
Employee is prohibited) for a period of two years from the date of termination;
and
(iv) continued vesting under the Stock Option
Agreement between Employer and Employee of even date herewith and under the SERP
for a period of two (2) years.
Notwithstanding the provision of this paragraph 8(b), if Employer gives
Employee written notice on or before six months prior to fourth anniversary of
the Commencement Date, this paragraph 8(b) shall be modified by adding the words
"prior to the fourth anniversary of the Commencement Date" after the words "Good
Reason"; and (i) the two year time periods set forth in paragraph 6 and
paragraph 10 of this Agreement shall be changed to one year; and (ii) paragraphs
8(c) and (d) below shall become effective. If Employer does not give such
written notice, the foregoing modifications to paragraphs 8(b), 6 and 10 shall
be of no force and effect, and paragraphs 8(c) and 8(d) below shall be of no
force and effect.
(c) If Employer terminates this Agreement without Cause or
Employee terminates this Agreement with Good Reason after the fourth anniversary
of the Commencement Date and prior to the fifth anniversary of the Commencement
Date, Employee shall be entitled to the following:
(i) a lump sum payment equal to twelve months base
salary then in effect plus one month for each full calendar month remaining in
the fifth contract year;
(ii) a bonus under the Annual Incentive Program for
the calendar year of the termination and, if such termination occurs on or
before the 31st day of December of the
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fifth contract year, a bonus under the Annual Incentive Program for the ensuing
calendar year payable when bonuses are paid to other employees under the Annual
Incentive Program unless Employer and Employee agree to a lump sum or other
settlement of such benefit; and
(iii) continuation of employee's other benefits set
forth in paragraph 3 hereof (other than under Employer's qualified pension plan,
Section 401(k) plan or similar benefits where continuation of coverage for
Employee is prohibited) and continued vesting under the Stock Option Agreement
between Employer and Employee of even date herewith and under the SERP for a
period of twelve months plus one month for each full calendar month remaining
in the fifth contract year.
(d) If Employer terminates this Agreement without Cause or
Employee terminates this Agreement with Good Reason at any time after the fifth
anniversary of the Commencement Date, Employee shall be entitled to the
following:
(i) a lump sum payment equal to Employee's annual
base salary then in effect;
(ii) a bonus under the Annual Incentive Program for
the calendar year of the termination payable when bonuses are paid to other
employees under the Annual Incentive Program unless Employer and Employee agree
to a lump sum or other settlement of such benefit; and
(iii) continuation of Employee's other benefits set
forth in paragraph 3 hereof (other than under Employer's qualified pension plan,
Section 401(k) plan or similar benefits where continuation of coverage for
Employee is prohibited) and continued vesting under the SERP for a period of
twelve months.
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(e) Employer may also terminate this Agreement at any time,
without notice, for Cause. "Cause" means (i) after written demand from the Board
of Directors of Employer which reasonably identifies the conduct or obligation
required of Employee and, after a reasonable time for Employee to cure such
demand if curable, (w) the willful failure by Employee to perform duties or
adhere to policies reasonably requested or reasonably prescribed by the Board of
Directors of Employer, (x) the engaging by Employee in conduct which is
materially injurious to Employer or any of its subsidiaries, (y) the willful and
material failure of Employee to comply with the Corporate Policies of Employer
including the requirements of Employer's Code of Business Conduct and its
Antitrust and Trade Regulation Policy, or (z) gross negligence or willful
misconduct by Employee in the performance of his duties which results in, or
causes, harm to the Employer or any of its subsidiaries, (ii) Employee's
conviction of a crime involving fraud or misrepresentation, a gambling-related
offense or a felony or (iii) Employee's abuse of illegal drugs or other
controlled substances or Employee's habitual intoxication.
(f) For purposes of the Agreement, Good Reason shall mean the
occurrence of any of the following prior to Employee's 65th birthday:
(i) a material diminution of Employee's duties and
responsibilities; or
(ii) the failure of Employee to be elected to the
Board of Directors of Employer or the removal of Employee as a Director of
Employer or as Chief Executive Officer of Employer other than for Cause; or
(iii) a reduction in Employee's annual base salary or
a material, adverse change in the benefit plans or programs set forth in
paragraph 3 hereof; or
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(iv) the relocation of Employee's principal place of
employment more than 50 miles from Charlotte, North Carolina; or
(v) a sale or other transfer of a material part of
the business or operations of Employer without the consent of Employee if, at
the time of such sale or transfer, it appears likely that it will have material
adverse effect on Employee's prospects for a bonus under Employer's Annual
Incentive Program unless an equitable adjustment is made in the method of
determining Employee's bonus such that such sale or transfer is not likely to
have a material adverse effect on Employee's bonus prospects; or
(vi) during the thirty (30) day period immediately
following the nine (9) calendar month period subsequent to the calendar month
during which a Change In Control (as defined in the Executive Severance
Agreement referred to in paragraph 9 below) occurs, Employee gives written
notice to Employer that Employee is terminating this Agreement for Good Reason.
In such notice Employee shall specify the date of termination which, unless
otherwise agreed by Employee and Employer, shall not be less than sixty (60)
days nor more than ninety (90) days following the end of the nine calendar month
period. During the notice period, Employee shall continue to receive his full
salary and benefits, provided Employee satisfactorily performs his duties during
the notice period (unless relieved of those duties by Employer).
(g) Anything herein to the contrary notwithstanding, if
Employee becomes disabled during the term of this Agreement, he shall be solely
entitled to the payments provided under paragraph 4 of this Agreement.
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9. Executive Severance Agreement. Employer and Employee have entered
into an Executive Severance Agreement of even date herewith, the terms of which
are incorporated herein. Anything in this Agreement or in the Executive
Severance Agreement to the contrary notwithstanding, any payments made or
benefits provided under the Executive Severance Agreement shall mitigate any
payments or benefits required to be provided under this Agreement and any
payment made or benefits provided under this Agreement shall mitigate any
payments or benefits required to be provided under the Executive Severance
Agreement.
10. For a period of two (2) years after termination of his employment
with Employer, Employee will not accept employment in, or himself carry on, or
provide consulting or other services to a competitive business in the Territory
(defined below), if in such connection he is required to serve, with regard to
products competitive with the material product lines of Employer or any of its
subsidiaries, along the same or similar lines as he was engaged in with
Employer. For the purposes of this Xxxxxxxxx 00, "Xxxxxxxxx" means: (a)
Mecklenburg County, North Carolina; (b) Xxxxxxx County, Missouri; (c)
Mecklenburg County and Xxxxxxx County; (d) the State of Missouri; (e) the State
of North Carolina; (f) the states of North Carolina, South Carolina and
Missouri; (g) the states in the United States east of the Mississippi Rover; (h)
all the states in the continental United States; (i) all of the states in the
United States and (j) all of the countries in the world wherein Employer or its
subsidiaries and affiliated companies have conducted business directly or
through joint ventures with third parties during the twelve (12) month period
immediately prior to the termination of Employee's employment with Employer. For
a period of two (2) years after termination of his employment with Employer,
Employee
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shall not solicit the employment of any person that is an employee of Employer
or any of its subsidiaries or affiliated companies.
11. This contract shall be governed by and construed according to the
laws of the State of North Carolina.
12. The provisions of this Agreement are severable, and the invalidity
or unenforceability of any one or more of the provisions of this Agreement shall
not affect the validity or enforceability of any other provision.
13. Employee has carefully read and considered the provisions of this
Agreement and agrees that the restrictions set forth herein are fair and
reasonably required for Employer's protection.
14. This Agreement shall be binding upon, and shall insure to the
benefit of, the parties and their respective successors, heirs and assigns.
15. The provisions of paragraphs 6, 7, 8, 9, 10 and 17 of this
Agreement shall survive the termination of Employee's employment with Employer
for any reason.
16. A delay or omission of either party to exercise any right or power
arising from any default by the other party shall not impair any right or power
of the non-defaulting party or be construed to be a waiver of any such default.
A waiver by either party of any breach of any of the provisions of this
Agreement shall not operate or be construed as a waiver of any other breach of
the same or any other provision of this Agreement.
17. Any dispute under this Agreement (except for disputes arising under
paragraphs 6, 7 and 10 above) and, anything in the Stock Option Agreement
between Employer and Employee of even date herewith to the contrary
notwithstanding, any dispute under the Stock
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Option Agreement shall be submitted to binding arbitration in Charlotte, North
Carolina pursuant to the rules of the American Arbitration Association. The
decision of the arbitrator(s) shall be final. Except as hereafter provided,
Employer and Employee shall each bear their own attorney's fees and shall share
equally the cost of arbitration. However, if Employee prevails in a challenge by
Employee to Employer's assertion of the existence of Cause for termination or in
a challenge by Employer to Employee's assertion of the existence of Good Reason
for termination, Employee shall be reimbursed by Employer for all reasonable
costs and expenses incurred by Employee in such challenge, including reasonable
attorney's fees.
18. The foregoing constitutes the complete agreement and understanding
between the parties hereto with respect to the subject matter hereof. Any
changes or alterations in this Agreement shall be valid only if set forth in
writing and signed by both parties.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereby execute this Agreement as of the
day and year first above written.
GS INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxxxxxx
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Title: Chairman
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/s/ Xxxx X. Xxxxx
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XXXX X. XXXXX
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