EXHIBIT 10.32
Execution Copy
Employment Agreement
THIS EMPLOYMENT AGREEMENT (the "Agreement"), effective as of March 23, 2001
(the "Effective Date"), by and between Standard Automotive Corporation, a
Delaware corporation (the "Company"), and Xxxxx X. ("Xxx") X'Xxxxxxx, an
individual domiciled in the State of Colorado ("Executive").
Witnesseth
WHEREAS, the operations of the Company are a complex matter requiring
direction and leadership in a variety of areas;
WHEREAS, the Company believes that it would benefit from the application of
Executive's particular and unique skill, experience, and background to the
management and operation of the Company; and
WHEREAS, Executive wishes to commit himself to serve the Company in the
positions set forth herein on the terms herein provided;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein set forth, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by each of the parties hereto, the
Company and Executive hereby agree as follows:
1. Duties/Board Membership. During the Term hereof (as defined in Section 2
hereof), the Company agrees to retain Executive, and Executive agrees to be
retained by the Company, as the President and Chief Executive Officer of the
Company on the terms and conditions provided in this Agreement. Executive will
serve in those positions and will exercise such powers and authority as are
customarily inherent in similar positions in a comparable publicly-held entity,
or as provided by the By-laws of the Company, or as directed by the Company's
Board of Directors (the "Board"). Executive agrees to devote his best efforts
and substantially all of his business time, attention, energy, and skill to
performing his duties to the Company under this Agreement; provided, however,
that nothing in this Agreement prevents Executive from engaging in other
business activities, including but not limited to attending to his personal
investment activities and serving as a member of the boards of directors of
public, private and not-for-profit organizations, to the extent that such
activities do not interfere with the performance of his duties hereunder. The
Company acknowledges that Executive may use its computer and other office
equipment and supplies for these activities. Executive will report directly and
exclusively to the entire Board, and not to an individual director or a
committee or sub-committee of the Board. All individuals holding senior
management positions will report to Executive.
In addition, as soon as practicable after the Effective Date, but in no
event later than April 23, 2001, the Company agrees to nominate, and re-nominate
as necessary, Executive as a member of its Board, which membership will continue
throughout the Term hereof. Notwithstanding the foregoing, Executive agrees that
he will resign from the Board immediately following the termination of his
emp1oyment with the Company for any reason; provided, however, that Executive
will not resign if a majority of the remaining Board members requests that he
stay on.
2. Term. The term of this Agreement will commence as of the Effective Date and,
unless earlier terminated in accordance with the terms of this Agreement, will
extend until March 22, 2003 or to any later renewal or extension date that is
mutually chosen by the parties in writing (the "Term"). Notwithstanding the
foregoing, and subject to the special notice provisions set forth in Section
4(c) hereof in connection with the Company's termination of Executive with
Cause, either party may terminate the Agreement upon providing the other party
with a minimum of 30 days' prior written notice.
3. Compensation and Related Matters.
(a) Base Salary. During the Term of this Agreement, the Company agrees to
pay to Executive a base salary in an aggregate amount of Two Hundred and Sixty
Five Thousand Dollars ($265,000) per calendar year, payable in accordance with
the general policies and procedures for payment of salaries to senior executive
personnel of the Company but in all events payable no less frequently than
monthly. The then applicable amount of yearly base salary payable to Executive
pursuant to the provisions of this Section 3(a) will herein be referred to as
the "Base Salary". The Base Salary payable to Executive pursuant to the
provisions of this Section 3(a) will be subject to periodic review by the Board
(or its compensation committee) based upon periodic review of Executive's
performance conducted on at least an annual basis and may be periodically
increased as a result thereof; provided, however, that the Base Salary payable
to Executive pursuant to the provisions of this Section 3(a) will in no event be
less than the aggregate amount set forth in the first sentence of this
paragraph. In no event may Executive's Base Salary be reduced during the Term
without his express written consent.
(b) Relocation Expenses. The Company will pay, or reimburse Executive on a
tax-adjusted basis for, all expenses related to his relocation from the Denver
metropolitan area to the New York metropolitan area, including but not limited
to the following: lease, utility and incidental payments on Executive's
apartment in Denver through the end of the current term, which expires July 1,
2001; Executive's travel expenses between Denver and New York related to his
relocation efforts; transportation costs related to the movement of Executive's
belongings, automobile and other personal items from Denver to New York and any
storage costs for such items while Executive secures a new residence; temporary
lodging for Executive in New York until he is able to establish a new residence;
and costs related to the hook up of utilities, cable, DSL and telephone and any
other one-time payments necessary to establish Executive's new residence.
Executive agrees to provide the Company with sufficient information and receipts
related to the relocation expenses.
(c) Business Expenses/Legal Fees. Executive will be eligible for
reimbursement by the Company for all ordinary business expenses incurred by
Executive in the performance of his duties hereunder, subject to the Company's
receipt of invoices or similar records as the Chief Financial Officer of the
Company may reasonably request, or pursuant to other substantiation guidelines
to be set forth in a business expense reimbursement policy to be established by
the Company. Pending the adoption of such policy, the approval of the Company's
Chief Financial Officer
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will be required prior to the reimbursement of any business expense incurred by
Executive, and the Board's Audit Committee will resolve any dispute between
Executive and the Chief Financial Officer regarding the reimbursement of any
such expense. In addition, the Company agrees to pay for any reasonable legal
fees and costs incurs in connection with the negotiation and execution of this
Agreement, and the parties' Term Sheet in connection therewith.
(d) Annual Bonuses. Executive will have the right to receive, and the
Company agrees to pay to Executive, a discretionary bonus based on Executive's
performance and/or the Company's performance for each fiscal year. The Board
will evaluate Executive's performance and the Company's performance at the end
of each fiscal year and, in its sole discretion, the Board may provide cash
and/or stock awards to Executive in consideration for that fiscal year's
performance. Notwithstanding the foregoing, the Board will distribute such
discretionary cash and/or stock awards as soon as practicable following the
closure of the fiscal year, in all events, on or before the 90th day immediately
following the end of the fiscal year for which such bonus is attributable. The
parties agree that the Board's approval of such discretionary bonuses will not
be unreasonably withheld. Executive will be entitled to receive a pro rata
distribution of the bonus for the fiscal year during which Executive's
employment with the Company terminates, provided that the reason for such
termination is not Cause.
(e) Restricted Stock Award. In consideration for Executive's agreement to
assume the positions of President and Chief Executive Officer, the Company will
grant to him 100,000 shares of restricted common stock of the Company as of the
date Executive signs this Agreement (the "Execution Date"). 25,000 shares of the
restricted stock will be fully and immediately vested as of the Execution Date.
The remaining 75,000 shares of restricted stock will be held in escrow by the
Company for the benefit of Executive, and such shares will vest in equal
increments of one-third (1/3) as of the following dates: September 22, 2001;
March 22, 2002; and September 22, 2002; provided, however, that Executive must
be employed on such dates in order to vest in those increments. On and after the
Execution Date, Executive will be entitled to all of the rights of a stockholder
with respect to the restricted shares, including the right to vote such shares
and to receive dividends and other distributions payable with respect to such
shares. If Executive forfeits any rights he may have to the unvested restricted
shares he will, on the day following such forfeiture, no longer have any rights
as a stockholder with respect to the forfeited shares or any interest therein,
and Executive will no longer be entitled to receive dividends on such shares.
The Company will issue the restricted stock pursuant to a written award
agreement between the parties as of the Execution Date, which will contain
provisions for immediate and full vesting of all unvested shares as described in
Section 4(a)(5) hereof.
(f) Health Insurance and Other Benefits.
(1) During the Term of this Agreement and subject to the limitations and
affirmative rights set forth in this Section 3(f), Executive and his eligible
dependents will have the right to participate in any life, disability, health,
dental, vision and other benefit plans or programs that have been or are
hereafter adopted or maintained by the Company (or in which the Company
participates) according to the terms of such plan or program with all of the
benefits, rights and privileges as are enjoyed by any other senior executive
officer of the Company. In addition, Executive will be covered by any and all
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policies of directors and officers insurance coverage obtained by the Company or
its Board from time to time for its senior executive officers, the terms of
which will be established by the Board in its sole discretion, and such coverage
for Executive will extend for at least twenty-four (24) months beyond the date
of his termination of employment with the Company.
(2) During the Term of this Agreement and subject to the limitations and
affirmative rights set forth in this Section 3(f), Executive will have the right
to participate in any retirement, pension, or other similar benefit plan or
program that has been or is hereafter adopted by the Company (or in which the
Company participates) according to the terms of such plan or program with all
the benefits, rights and privileges as are enjoyed by any other senior executive
officer of the Company.
(3) If the participation of Executive under a plan described in
subsection (2) above would adversely affect the qualification of a plan intended
to be qualified under the Code, the Company will have the right to exclude
Executive from that plan in return for his participation in (x) a non-qualified
deferred compensation plan or (y) an arrangement providing substantially
comparable benefits under a plan that is either a qualified or non-qualified
plan under the Code at the Company's option.
(4) Notwithstanding anything to the contrary contained herein, the
Company reserves the right to amend or terminate any plan described in this
Section 3(f) for any reason; provided, however, that (i) no such amendment that
would reduce the benefits of Executive will be adopted unless it affects other
senior executive officers across-the-board, and (ii) if any plan amendment or
termination reduces the benefits of Executive, the Company agrees to adopt or
maintain one or more replacement plans that will provide Executive with
reasonably comparable benefits throughout the Term of this Agreement.
(g) Paid Time Off. Executive will be entitled to receive paid holidays, two
(2) weeks of paid vacation and two (2) weeks of paid time off for personal
matters during each twelve (12) month calendar period; provided, however, that
Executive will be entitled to the maximum paid time off granted by the Company
to any other member of senior management if such time exceeds four (4) weeks. In
addition to the foregoing, Executive may be granted leaves of absence with or
without pay for such other reasons as shall be mutually agreed upon by the Board
and Executive. The Company agrees to allow Executive to carryover any unused
vacation or personal time from year to year. All unused time will be paid out to
Executive upon his termination for any reason.
4. Termination and Termination Benefits.
(a) Termination Without Cause. Subject to the notice provisions set forth in
Section 2 and subsection 4(c) hereof, either party may terminate this Agreement
and Executive's services at any time for any reason. In connection with the
termination of this Agreement for any reason other than Cause during the Term of
this Agreement, or the Company's failure to renew this Agreement upon the
expiration of the Term, the Company will pay Executive (and Executive's eligible
dependents with respect to paragraph (4) below) the following:
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(1) all accrued but unpaid amounts of the Base Salary, cash and stock
bonuses, and unused paid vacation and personal time through the effective date
of termination, payable in accordance with the provisions of Sections 3(a), (d)
and (g) above, plus any amounts of unreimbursed relocation expenses or legal
expenses payable pursuant to Sections 3(b) and (c) above (which amounts will be
paid to Executive on a tax-adjusted basis), plus any unreimbursed business
expenses payable pursuant to Section 3(c) above, which amounts will be paid on
or before the earlier of (i) the date required by applicable law or (ii) the
30th day following the effective date of termination;
(2) a termination payment in an amount equal to Executive's then current
annual Base Salary, which will be paid over the 12-month period following
Executive's termination of employment in accordance with general policies and
procedures for the payment of salaries to senior executive personnel of the
Company but in all events payable no less frequently than monthly;
(3) any vested employee benefits or amounts pursuant to Section 3(f)
hereof through the effective date of termination, payable in accordance with the
provisions of any such programs or plans;
(4) the Company-paid health insurance benefits specified in Section
3(f)(1) beginning on the effective date of termination and extending for a
twelve (12) month period of time and, following such period, Executive will be
entitled to all rights afforded to him under the federal Consolidated Omnibus
Budget Reconciliation Act ("COBRA") to purchase continuation coverage of health
insurance benefits for himself and his dependents for the maximum period
permitted by law;
(5) a complete lapse of any remaining forfeiture restrictions on
Executive's restricted stock award pursuant to Section 3(e) hereof and the fall
and immediate vesting in any stock option award or other stock grant pursuant to
Section 3(d) hereof as of the effective date of termination; and
(6) full executive outplacement assistance (including telephone, mail
and other communication costs associated with Executive's job search).
(b) Termination With Cause. The Company may terminate this Agreement with
"Cause," subject to the notice provisions set forth in Section 4(c) below. In
connection with the termination of Executive's services pursuant to this Section
4(b), the Company will pay Executive the following:
(1) all accrued but unpaid amounts of the Base Salary and unused paid
vacation and personal time through the effective date of termination, payable in
accordance with the provisions of Sections 3(a) and (g) above, plus any amounts
of unreimbursed relocation expenses or legal expenses payable pursuant to
Sections 3(b) and (c) above (which amounts will be paid to Executive on a
tax-adjusted basis), plus any unreimbursed business expenses payable pursuant to
Section 3(c)
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above, which amounts will be paid on or before the earlier of (i) the date
required by applicable law or (ii) the 30th day following the effective date of
termination; and
(2) any vested employee benefits or amounts pursuant to Section 3(f)
hereof through the effective date of termination, payable in accordance with the
provisions of any such programs or plans.
(c) "Cause" Defined. For purposes of this Agreement, "Cause" means a
reasonable, good faith finding by a majority of the Board (A) that Executive has
harmed the Company through an act of dishonesty or material conflict of interest
that relates to the performance of Executive's duties hereunder, (B) of
Executive's conviction of a felony involving moral turpitude, fraud or
embezzlement, (C) that Executive's willful failure to perform in any material
respect his duties under this Agreement (other than a failure due to disability)
that results in material harm to the Company, after written notice specifying
the failure and a reasonable opportunity of at least forty-five (45) days to
cure (it being understood that if Executive's failure to perform is not of a
type requiring a single action to fully cure, then Executive may commence the
cure promptly after such written notice and thereafter diligently prosecute such
cure to completion) or (D) of a material and willful breach by Executive of any
of his obligations hereunder and the failure of Executive to cure such breach
within forty-five (45) days after receipt by Executive of a written notice of
the Company specifying in reasonable detail the nature of the breach. The
Company intends that "Cause" must be based only on meaningful and significant
matters and not on matters of minor importance. For purposes of this Section, an
act, or failure to act, on Executive's part shall be considered "willful" only
if 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.
5. Golden Parachute Provision.
(a) Gross Up Payments. Anything in this Agreement to the contrary
notwithstanding, in the event that any payment by or on behalf of the Company to
or for the benefit of Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section) (the "Payments") is determined to be an "excess parachute payment"
pursuant to Code Section 280G or any successor or substitute provision of the
Code, with the effect that Executive is liable for the payment of the excise tax
described in Code Section 4999 or any successor or substitute provision of the
Code, or any interest or penalties are incurred by Executive with respect to
such Payments (such excise tax, together with any such interest and penalties,
arc hereinafter collectively referred to as the "Excise Tax"), then Executive
shall receive an additional payment from the Company (the "Gross-Up Payment") in
an amount such that after payment by Executive of all taxes imposed upon the
Gross-Up Payment, including, without limitation, federal, state, local or other
income taxes, FICA taxes, and additional Excise Tax (and any interest and
penalties imposed with respect to such taxes), Executive retains a portion of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Determination of Gross-Up. Subject to the provisions of paragraph (c)
below, all determinations required to be made under this Section 5, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to utilized in arriving at such determination,
shall be made by the public accounting firm that serves as the Company's
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auditors (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and Executive within 15 business days of the
receipt of notice from the Company or Executive that there have been Payments,
or such earlier time as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the Change of Control, Executive shall designate another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to Executive within five days after the
receipt by the Company and Executive of the Accounting firm's determination. If
the Accounting Firm determines that no Excise Tax is payable by Executive, it
shall furnish Executive with a written opinion that failure to report the Excise
Tax on Executive's applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and Executive, except as
provided in paragraph (c) below.
(c) IRS Claims. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that the Internal Revenue Service or other agency will
claim that a greater Excise Tax is due, and thus a greater amount of Gross-Up
Payment should have been made by the Company than that determined pursuant to
paragraph (a) above (an "Underpayrnent"). In the event that Executive is
required to make a payment of any such Excise Tax, the Accounting Firm shall
determine the amount of the additional Gross-Up Payment due to Executive based
on the Underpayment, and such additional Gross-Up Payment shall be promptly paid
by the Company to or for the benefit of Executive. Executive shall notify the
Company in writing of any claim by the Internal Revenue Service or other agency
that, if successful, would require the payment by the Company of the Gross-Up
Payment or an Underpayment.
6. Idemnification. The Company will to the maximum extent permitted by law, and
in addition to any such rights granted to or available to Executive under the
Company's Articles and By-Laws (but subject to any limitations on
indemnification provided therein), or other resolutions, defend, indemnify and
hold harmless Executive from and against any and all claims made against
Executive concerning or relative to his service, actions, or omissions on behalf
of the Company as an employee, officer, director or agent of the Company. The
Company will, upon Executive's request, promptly advance or pay any amounts for
costs, charges, or expenses (including, without limitation, legal fees and
expenses incurred by counsel retained by Executive) in respect of his right to
indemnification hereunder, subject to a later determination as to Executive's
ultimate right to receive such payment. Executive's right to indemnification
will survive until the expiration of any applicable statute of limitations,
without regard to the earlier termination of Executive's employment hereunder or
of the Term.
7. Prior Agreement. This Agreement supersedes and is in lieu of any and all
other employment or service agreements or arrangements between Executive and the
Company, and any and all such employment or service agreements and arrangements
are hereby terminated and deemed of no further force or effect.
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8. Assignment. Neither this Agreement nor any rights or duties of Executive
hereunder shall be assignable by Executive and any such purported assignment by
him shall be void. The Company may assign all or any of its rights hereunder
provided that substantially all of the assets of the Company are also
transferred to the same party; provided, however, that the Company will remain
primarily liable to Executive to fulfill all of the Company's obligations under
this Agreement and that any such assignee also agrees to be primarily liable to
Executive jointly and severally with the Company to fulfill all of the Company's
obligations under this Agreement as provided in the next section.
9. Successors. This Agreement shall inure to the benefit of and be enforceable
by Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees and the Company's
successors and assigns. If Executive should die while any amounts are still
payable to Executive hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee or other designee or, if there be no such designee,
to Executive's estate. The Company will require any successor or assign (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all the business and/or assets of the Company, as the ease may be,
by agreement in form and substance reasonably satisfactory to Executive,
expressly, absolutely and unconditionally to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession or assignment had taken place. Any
failure of the Company to obtain such agreement prior to the effectiveness of
any such succession or assignment shall be a material breach of this Agreement.
10. Notices. Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if delivered in person or sent by any
national overnight delivery service or by certified mail to the current
residence of Executive or the main business address of the Company (to the
attention of the General Counsel) or to any other address that any party may
designate by notice to the other parties hereto.
11. Amendment. This Agreement may not be changed, modified or amended except in
writing signed by all of the parties hereto.
12. Waiver of Breach. The waiver by any of the parties hereto of the breach of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any part.
13. Severability. The Company and Executive each expressly agree and contract
that it is not the intention of any of the parties hereto to violate any public
policy, statutory or common law, and that if any sentence, paragraph, clause or
combination of the same of this agreement is in violation of the law of any
state where applicable, such sentence, paragraph, clause or combination of the
same shall be void in the jurisdictions where it is unlawful, and the remainder
of such paragraph and this Agreement shall remain binding on the parties to make
the covenants of this Agreement binding only to the extent that it may be
lawfully done under existing applicable laws. In the event that any part of any
covenant of this Agreement is determined by a court of competent jurisdiction to
be overly broad thereby making the covenant unenforceable, the parties
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hereto agree, and it is their desire that such court shall substitute a
judicially enforceable limitation in its place, and that as so modified the
covenant shall be binding upon the parties as if originally set forth herein.
14. Legal Fees. If any dispute or disagreement arising hereunder or related
hereto shall result in legal action between the Company and Executive, Executive
shall be entitled, within 30 days after incurring such fees and disbursements,
to recover from the Company any reasonable expenses for attorney's fees and
disbursements incurred by him in connection with Executive's good faith
maintenance or defense of such action, on an after-tax basis, unless Executive
does not prevail in such action.
15. No Mitigation. The Company waives, releases and remises (x) any obligation
or duty under applicable law or otherwise on the part of Executive to seek or
obtain other engagements or employment or to otherwise mitigate any payments or
damages to which Executive may be entitled to by reason of any operation or
termination of this Agreement; and (y) any right in or claim to any remuneration
or compensation received by Executive pursuant to any engagements or employment
subsequent to the termination of this Agreement
16. Governing Law. This Agreement shall be governed by, and construed,
interpreted and enforced in accordance with the laws of the State of New York,
exclusive of the conflict of laws provisions of the State of New York.
17. Binding Effect. This Agreement shall be binding and legally enforceable
against the parties hereto and their respective heirs, personal representatives,
successors and assigns, as the case may be.
(signature page follows)
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
EXECUTIVE: STANDARD AUTOMOTIVE CORPORATION
/s/ Xxxxx X. X'Xxxxxxx By: /s/ Xxxxxx Xxxxxxxx
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Xxxxx X. X'Xxxxxxx
Execution Date: 4/9/2001 Its: CFO and Secretary
