Exhibit 10.1
AMENDED AND RESTATED CONSULTING AGREEMENT
This AMENDED AND RESTATED CONSULTING AGREEMENT,(the "Agreement"), is made
by and between XXXXXXX INDUSTRIES, INC., a Delaware corporation having its
principal address at 0000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxx 00000
(the "Company"), and XXXXXXX X. X'XXXXX, an individual residing at 0000
Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently employed with the Company pursuant to
an Amended and Restated Employment Agreement, effective as of September 17,
1997, amended as of May 12, 2000 (the "Employment Agreement"), and the Company
desires to retain the Executive to provide certain consulting services to the
Company following termination of his employment;
WHEREAS, the Company and the Executive are parties to that certain
Consulting Agreement, dated June 21, 2004 (the "Prior Consulting Agreement");
and
WHEREAS, the Company and the Executive wish to amend and restate the Prior
Consulting Agreement on the terms set forth herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the Executive and the Company hereby agree as follows:
1. Effective Date.
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This Agreement shall become effective (the "Effective Date") on January 1,
2009.
2. Appointment as Independent Consultant.
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On the Effective Date, Executive shall be appointed as an independent
consultant and advisor to the Company. As an independent consultant and advisor
to the Company, the Executive shall be available upon reasonable notice given by
the Company to consult with and advise the Company on matters within his
expertise and for which he had responsibility for during his employment with the
Company, provided that the Executive shall not be required to devote more than
20 hours per month to such consulting services during the first four (4) years
of the Consulting Period (as defined below) and not more than 10 hours per month
to such consulting services during the last two years of the Consulting Period.
Executive shall not be required to render consulting services from any
particular location and shall not be required to travel or be present at the
Company's principal offices.
3. Consulting Period.
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The Executive shall be available to provide the consulting and advisory
services set forth in Section 1 above for a period commencing on the Effective
Date and ending on the sixth anniversary of the Effective Date (the "Consulting
Period").
4. Consulting Fee and Benefits.
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a. As compensation for the Executive's consulting and advisory services
during the Consulting Period, the Company shall pay the Executive as follows:
(i) for each of the first four (4) years of the Consulting
Period, an annual consulting fee equal to two-thirds of the
Executive's Final Base Compensation, which shall be defined as the
lesser of (A) the Executive's highest annual cash compensation
(consisting of base salary and annual bonus) during the last three
years of his employment with the Company or (B) $2 million;
(ii) for each of the final two (2) years of the Consulting
Period, an annual consulting fee equal to one-third of the Final Base
Compensation; and
(iii) such consulting fee shall be paid in equal installments in
accordance with the normal payroll practices of the Company, but not
less frequently than monthly, except that compensation for the first
six months of the Consulting Period shall be paid in a lump sum six
months and one day following the Effective Date.
b. The Executive shall be entitled to reimbursement for reasonable
business and travel expenses incurred in the performance of his duties in
accordance with the Company's normal reimbursement practices. To the extent that
any right to reimbursement of expenses under this Agreement constitutes
nonqualified deferred compensation (within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (the "Code")), such expense
reimbursement shall be made by the Company no later than the last day of the
taxable year following the taxable year in which such expense was incurred by
the Executive.
c. For each calendar year during the Consulting Period, the Company shall
pay the Executive an amount equal to the Executive's cost of obtaining private
health insurance coverage having terms, substantially equivalent to the health
coverage provided to executive officers of the Company as in effect from time to
time during the Consulting Period. Such amounts shall be made on or after
January 1 of each calendar year of the Consulting Period, but in no event later
than December 31 of each calendar year of the Consulting Period.
5. Termination of the Consulting Relationship.
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a. The Executive may terminate his consulting and advisory relationship
with the Company hereunder, with or without Good Reason, upon thirty (30) days'
advance written notice to the Company. The Company may terminate the Executive's
consulting and advisory relationship with the Company hereunder, with or without
Cause, upon thirty (30) days' advance written notice to the Executive.
b. The Company shall have Cause to terminate the Executive's consulting
and advisory relationship with the Company hereunder upon (i) the Executive's
willful and continued failure to substantially perform his obligations
hereunder, (ii) the engaging by the Executive in willful misconduct which is
demonstrably and materially injurious to the Company, or (iii) the Executive's
conviction of a felony for a crime of moral turpitude. For purposes of this
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Section 5.b., no act, or failure to act, on the Executive's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company. The Executive's consulting and advisory relationship
may not be terminated for Cause in the case of actions or omissions described in
clauses (i) or (ii) of this Section 5(b) unless the Company shall have given the
Executive an opportunity to cure any such actions or omissions during the 30-day
period after the Executive's receipt of written notice.
c. The Executive shall have Good Reason to terminate his consulting and
advisory relationship with the Company hereunder upon any breach of this
Agreement by the Company, other than an immaterial, isolated and inadvertent
breach which did not occur in bad faith and is cured by the Company within 10
days of notice thereof from the Executive.
d. Upon the Company's termination of Executive's consulting and advisory
relationship by the Company hereunder for Cause or by the Executive without Good
Reason, neither the Executive nor the Company shall have any further obligations
hereunder.
e. If the Company terminates the Executive's consulting and advisory
relationship hereunder without Cause, or if the Executive terminates such
relationship for Good Reason, the Company shall continue to pay to the Executive
the amounts which would have been payable to the Executive pursuant to Sections
4(a) and 4(c) of this Agreement for the remaining term of the Consulting Period
had such relationship not been so terminated, which amounts shall be paid at the
same time or times as they would have been paid had such relationship not been
so terminated.
6. Noncompetition.
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During the Consulting Period, the Executive shall not, without the
Company's consent, directly or indirectly engage in any Competitive Activity (as
defined below). "Competitive Activity" shall mean the participation in or
becoming an employee, director, officer, consultant, independent contractor or
advisor of or to, or otherwise providing services to any business, partnership,
firm, association, corporation or other entity which conducts business that is
the same as or substantially similar to and is or would be competitive with the
business of the Company at the time. Nothing herein, however, shall prohibit
Executive from acquiring or holding any issue of stock or securities of any
business, individual, partnership, firm, or corporation (collectively "Entity")
which has any securities listed on a national securities exchange or quoted in
the daily listing of over-the- counter market securities, provided that at any
one time he and members of his immediate family do not own more than five
percent of the voting securities of any such Entity.
7. Notices.
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Any notice or other communication hereunder shall be made in writing by
hand-delivery or telecopier (and, if by telecopier, followed by a copy either
delivered by hand within three days thereafter or sent by registered first-
class mail on the next business day) and shall be deemed to have been delivered
and received when delivered by hand, if personally delivered, or when
transmission is confirmed, if telecopied, as follows: (a) if to the Executive at
the address
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shown at the beginning of this Agreement and at the following telecopier number:
(000) 000-0000 or to such other person(s) or address(es) or telecopier number(s)
as the Executive shall have furnished to the Company in writing, and (b) if to
the Company at the address shown at the beginning of this Agreement and at the
following telecopier number: (000) 000-0000, attention of the Board of
Directors, with copies to the Company at the same address, Attention: General
Counsel, and to Xxxxxxx Xxxx & Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxx X. Xxxxx, Esq., telecopier number (000) 000-0000,
or to such other person(s) or address(es) or telecopier number(s) as such
persons or the Company shall have furnished to the Executive in writing.
8. Certain Additional Payments by the Employer.
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a. Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment, distribution, waiver of Company rights,
acceleration of vesting of any stock options or restricted stock, or any other
payment or benefit in the nature of compensation to or for the benefit of the
Executive, alone or in combination (whether such payment, distribution, waiver,
acceleration or other benefit is made pursuant to the terms of this Agreement or
any other agreement, plan or arrangement providing payments or benefits in the
nature of compensation to or for the benefit of the Executive, but determined
without regard to any additional payments required under this Section 8) (a
"Payment") would be subject to the excise tax imposed by Section 4999 of the
Code (or any successor provision) or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes with respect to the Gross-Up Payment (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.
b. Subject to the provisions of Section 8(c), all determinations required
to be made under this Section 8, including whether and when a Gross- Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by the nationally
recognized accounting firm then auditing the accounts of the Company (the
"Accounting Firm") which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is
requested by the Company. In the event that the Accounting Firm is unwilling or
unable to perform its obligations pursuant to this Section 8, the Executive
shall appoint another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred
to hereunder as the Accounting Firm). All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment, determined
pursuant to this Section 8, shall be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm's determination, but in no event
later than the end of the taxable year next following the taxable year in which
the Excise Tax is remitted to the Internal Revenue Service. Any determination by
the Accounting Firm shall be binding upon the Company and the Executive. The
parties hereto acknowledge that, as a result of the potential uncertainty in the
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application of Section 4999 of the Code (or any successor provision) at the time
of the initial determination by the Accounting Firm hereunder, it is possible
that the Company will not have made Gross-Up Payments which should have been
made consistent with the calculations required to be made hereunder (an
"Underpayment"). In the event that the Employer exhausts its remedies pursuant
to Section 8(c) and the Executive thereafter is required to make a payment of
any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.
c. The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than 20 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim,
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to
contest such claim, and
(iv) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of this
Section 8(c), the Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Executive to pay the tax claimed and xxx for a refund or contest the claim
in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and xxx for a refund, the Company shall
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advance the amount of such payment to the Executive, on an interest-free basis,
and shall indemnify and hold the Executive harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
d. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 8(c), the Executive becomes entitled to receive any
refund with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements of Section 8(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8(c), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
9. Assignability.
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This Agreement shall not be assignable by the Company but shall be binding
upon and inure to the benefit of any successors to all or substantially all of
the business or assets of the Company. The Company shall require any such
successor to expressly assume in writing all obligations of the Company
hereunder. This Agreement shall not be assignable by the Executive, but it shall
inure to the benefit of, the Executive's heirs, executors, administrators and
legal representatives.
10. Entire Agreement.
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This Agreement represents the entire agreement with respect to the subject
matter described herein, provided that nothing in this Agreement shall adversely
affect the rights of the parties under the Employment Agreement.
11. Waivers, Amendments and Further Agreements.
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Neither this Agreement nor any term or condition hereof, including without
limitation the terms and conditions of this Section 11, may be waived, modified
or amended in whole or in part as against the Company or the Executive except by
written instrument executed by each of the parties expressly stating that it is
intended to operate as a waiver, modification or amendment of this Agreement or
the applicable term or condition hereof. Each of the parties hereto agrees to
execute all such further instruments and documents and to take all such further
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action as the other party may reasonably require in order to effectuate the
terms and purposes of this Agreement.
12. Severability.
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In case one or more of the provisions contained in this Agreement shall be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
13. Governing Law.
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This Agreement shall be governed by and construed and enforced in
accordance with the law of the State of Tennessee, without regard to the
principles of conflicts of law thereof.
14. Arbitration; Legal Fees.
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Any dispute, controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be finally settled by arbitration by a
single arbitrator in accordance with the rules then in effect of the American
Arbitration Association in an arbitration in Memphis, Tennessee. Judgment upon
an award rendered by the arbitrator may be entered in any court of competent
jurisdiction. To the extent that the Executive prosecutes or defends, whether by
arbitration or through a judicial proceeding, a dispute, controversy or claim
relating to this Agreement which results in a judgment, award or settlement in
the Executive's favor in any material respect, the Company shall reimburse the
Executive for all reasonable fees and costs (including legal fees) incurred by
the Executive in such successful prosecution or defense.
15. Headings.
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The headings in this Agreement are solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
16. Counterparts.
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This Agreement may be executed in counterparts each of which shall be
deemed an original but which together shall constitute one and the same
instrument
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IN WITNESS WHEREOF, the parties have executed or caused to be executed this
Agreement as of the date indicated below.
XXXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Chairman of the Board
Date: September 11, 2008
EXECUTIVE
/s/ Xxxxxxx X. X'Xxxxx
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Xxxxxxx X. X'Xxxxx
Date: September 11, 2008
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