EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, dated as of the 1/st/ day of August, 2000 (the
"Effective Date") between The Xxxxxxxxx Corporation (the "Company"), and Xxxx X.
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Xxxxxxx, (the "Employee").
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RECITALS
A. The Employee has served as the Company's President since 1998 and as Chief
Operating Officer of the Company since 1996.
B. The Employee has served as President and Chief Executive Officer of Fairchild
Fasteners (a division of Xxxxxxxxx Holding Corp., a Company subsidiary)
("Fairchild Fasteners") since 1995.
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C. The Company and the Employee wish to continue such employment, provided that
it is subject to a written agreement.
NOW, THEREFORE, the parties agree as follows:
1. Employment, Duties and Acceptance
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1.1 Employment by the Company. The Company hereby employs the Employee for
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the Term (as defined in Section 2 below) as President and Chief
Operating Officer of the Company, subject to the reasonable direction
of the Company's Board of Directors (the "Board of Directors").
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1.2 Acceptance of Employment by Employee. The Employee hereby accepts such
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employment. Employee further agrees to serve, at the Company's
reasonable request from time to time, as a director of the Company or
as an officer or director of the any subsidiary of the Company,
without any compensation therefor other than that specified in this
Agreement.
1.3 Vacation. The Employee shall be entitled to annual vacations in
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accordance with the vacation policy of the Company, as in effect from
time to time.
1.4 Travel. The Employee shall be subject to reasonable travel
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requirements as may be necessary or desirable to perform fully his
obligations hereunder.
1.5 Place of Services. Employee may render service and perform his duties
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from such location as he, in his sole discretion, shall determine, and
shall not be required to maintain any residence or be physically
present at any location without his prior consent.
2. Term of Employment. The term of the Employee's employment under this
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Agreement ("Term") shall commence as of August 1, 2000, and shall extend to
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and include the third
(3/rd/) anniversary of such date, unless sooner terminated pursuant to
Section 4 of this Agreement; provided, however, that commencing on August 1,
2001, and on each August 1 thereafter, the Term shall automatically be
extended for one additional year unless, not later than ninety (90) days
preceding such date, the Employee or the Company shall give written notice to
the other party that it does not wish to extend the Term for such additional
period.
3. Compensation.
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3.1 Salary. As full compensation for all services to be rendered pursuant
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to this Agreement, the Company agrees to pay the Employee (or, in the
event the Employee performs services hereunder on behalf of a
subsidiary of the Company, the Company shall cause such subsidiary to
pay the Employee, without duplication and only to the extent not paid
by the Company or any other subsidiary), during the Term, a salary at
the fixed rate of $540,000 per annum, or such greater amount as shall
be approved by the Board of Directors in its sole discretion, less
such deductions as shall be required to be withheld by applicable law
and regulations (the "Base Salary"), payable in accordance with the
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Company's payroll policies in effect from time to time.
3.2 Participation in Benefit Plans. During the Term, the Employee shall
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participate in each of the following (collectively, "Additional
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Compensation Plans"): (i) group life, hospitalization or disability
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insurance plans and health programs, (ii) stock option plans, (iii)
bonus participation or extra compensation plans or other incentive
compensation plans, (iv) auto allowance plan, (v) supplemental
executive retirement plans (SERP), pension plans or profit sharing
plans, (vi) split dollar life insurance plan, and (vii) other so-
called "fringe" benefit plans, formal or informal, which are available
to other employees of the Company and for which he qualifies.
3.3 Expenses. Subject to such policies as may be established from time to
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time by the Board of Directors, the Company shall pay or reimburse the
Employee for all reasonable expenses actually incurred or paid by him
during the Term in the performance of his services under this
Agreement. Employee shall present expense statements, or vouchers, or
such other supporting information as the Company may require as a
condition to expense reimbursement.
4. Termination.
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4.1 Termination Upon Death. If the Employee shall die during the Term,
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this Agreement shall terminate except that the Employee's legal
representatives shall be entitled to receive (in addition to any death
benefits Employee may be entitled to receive under any other plan or
agreement), death benefits at a level and vesting no less favorably
than that which the highest compensated executive of the Company (or
its affiliates), other that the Employee, is eligible or entitled.
4.2 Termination Upon Disability. If, during the Term, the Employee shall
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become physically or mentally disabled, whether totally or partially,
so that he is unable substantially to perform his services hereunder
for (i) a period of nine (9) consecutive
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months, or (ii) for shorter periods aggregating nine (9) months during
any twelve (12) month period, the Company may, at any time after the
last day of the nine (9) consecutive months of disability, or the day
on which the shorter periods of disability shall have equaled an
aggregate of nine (9) months, by written notice to the Employee, but
before the Employee has recovered from such disability, terminate the
Term of the Employee's employment hereunder. Notwithstanding such
disability, the Company (A) shall pay the Employee (in addition to any
disability benefits the Employee may be entitled to receive under any
other plan or arrangement) disability benefits at a level and vesting
no less favorably than that which the highest compensated executive of
the Company (or its affiliates), other than the Employee, is eligible
or entitled, and (B) following the end of the fiscal year in which
such termination shall have occurred, shall pay the Employee (in
addition to any disability benefits the Employee may be entitled to
receive under any other plan or agreement) the full amount which would
have been payable to the Employee and shall provide the Employee all
benefits to which the Employee would have been entitled, but for such
termination, through the end of the fiscal year in which termination
has occurred, under any Additional Compensation Plan.
4.3 Termination by the Company for Cause. In the event of gross neglect by
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the Employee of his duties hereunder, conviction of the Employee of
any felony, or of any lesser crime or offense involving the property
of the Company or any of its subsidiaries or affiliates, willful
misconduct by the Employee in connection with the performance of his
duties hereunder or any other conduct which would constitute a
material breach of the Employee's obligations to the Company, the
Company may at any time by written notice to the Employee terminate
the Term, without any liability to the Company, except the Company (i)
shall pay the Employee all monthly or semimonthly installments of Base
Salary up to an including the date of such termination, and (ii)
following the end of the fiscal year in which such termination shall
have occurred, shall pay the Employee the full amount which would have
been payable to the Employee and shall provide the Employee all
benefits to which the Employee would have been entitled, but for such
termination, through the end of the fiscal year in which termination
has occurred, under any Additional Compensation Plan, but prorated up
to and including the date of such termination.
5. Protection of Confidential Information; Non-Competition.
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5.1 Confidential Information. In view of the fact that the Employee's work
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for the Company will bring him into close contact with many
confidential affairs of the Company not readily available to the
public, and plans for future developments, the Employee agrees:
5.1.1 To keep and retain in the strictest confidence all confidential
matters of the Company, including, without limitation, trade "know
how" secrets, customer lists, pricing policies, operational methods,
technical processes, formulae, inventions and research projects, and
other business affairs of the Company, learned by him heretofore or
hereafter, and not to disclose them to anyone outside of the
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Company, either during or after his employment with the Company,
except in the course of performing his duties hereunder or with the
Company's express written consent;
5.1.2 To execute and fully comply with a confidentiality and rights
agreement or such other similar agreement which may be required by
the Company from time to time, consistent with its policies and
procedures; and
5.1.3 To deliver promptly to the Company on termination of his employment
with the Company, or at any time the Company may so request, all
memoranda, notes, records, reports, manuals, drawings, blueprints
and other documents (and all copies thereof and all information
stored via electronic means whether on computer disks or via any
other means) relating to the Company's business and all property
associated therewith, which he may then possess or have under his
control.
5.2 Non-Competition. During the Term and for a period of not less than one
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(1) year following the termination of such period, or for any period
Employee is receiving severance payments, the Employee shall not in
any state of the United States, or any other foreign country in which
the Company shall then be doing business, directly or indirectly,
enter the employ of, or render any services to, any person, firm or
corporation engaged in any business competitive with the business of
the Company or of any of its subsidiaries or affiliates; he shall not
engage in such business on his own account; and he shall not become
interested in any such business, directly or indirectly, as an
individual, partner, shareholder, director, officer, principal, agent,
lender, employee, trustee, consultant, or any other relationship or
capacity; provided, however, that nothing contained in this Section
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5.2 shall be deemed to prohibit the Employee from acquiring, solely as
an investment, not more than 5% of the shares of capital stock of any
public corporation.
5.3 Remedies of the Company Upon Employee Breach. If the Employee commits
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a breach, or threatens to commit a breach, of any of the provisions of
Sections 5.1 or 5.2 hereof, the Company shall have the following
rights and remedies:
5.3.1 The right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction,
it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company
and that money damages will not provide an adequate remedy to
the Company; and
5.3.2 The right and remedy to require the Employee to account for and
pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively,
"Benefits") derived or received by the Employee as the result
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of any transactions constituting a breach of any of the
provisions of the Sections 5.1 or 5.2, and the Employee hereby
agrees to account for and pay over such Benefits to the
Company.
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Each of the rights and remedies enumerated above shall be independent of
the other, and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under the law or in equity.
5.4 Construction and Enforceability.
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5.4.1 If any of the covenants contained in Section 5.1 or 5.2, or any
part thereof, is hereafter construed to be invalid or
unenforceable, the same shall not affect the remainder of the
covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
5.4.2 If any of the covenants contained in Section 5.1 or 5.2, or any
part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the
parties agree that the court making such determination shall
have the power to reduce the duration and/or area of such
provision and, in its reduced form, said provision shall then
be enforceable.
5.5 Enforceability in Jurisdictions. The parties hereto intend to and
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hereby confer jurisdiction to enforce the covenants contained in
Sections 5.1 and 5.2 upon federal or state courts or the courts of any
foreign jurisdiction within the geographical scope of such covenants.
In the event that the courts of any one or more of such state, federal
or foreign jurisdictions shall hold such covenants wholly
unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of the parties hereto that such determination not bar
or in any way affect the Company's right to the relief provided above
in the courts of any other state, federal or foreign jurisdictions
within the geographical scope of such covenants, as to breaches of
such covenants in such other respective jurisdictions, the above
covenants as they relate to each state and foreign country being for
this purpose, severable into diverse and independent covenants.
6. Inventions and Patents.
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6.1 The Employee agrees that all processes, computer software,
technologies and inventions ("Inventions"), including new
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contributions, improvements, ideas and discoveries, whether patentable
or not, conceived, developed, invented or made by him during the term,
shall belong to the Company provided that such Inventions grew out of
the Employee's work with the Company or any of its subsidiaries or
affiliates, are related in any manner to the business (commercial or
experimental) of the Company or any of its subsidiaries or affiliates
or are conceived or made on the Company's time or with the use of the
Company's facilities or materials. The Employee shall further: (i)
promptly disclose such Inventions to the Company; (ii) assign to the
Company, without additional compensation, all patent and other rights
to such Inventions in the United States and foreign countries; (iii)
sign all papers
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necessary to carry out the foregoing; and (iv) give testimony in
support of his inventorship.
6.2 If any Invention is described in a patent application or is disclosed
to third parties, directly or indirectly, by the Employee within two
years after the termination of his employment by the Company, it is to
be presumed that the Invention was conceived or made during the period
of the Employee's employment by the Company.
6.3 The Employee agrees that he will not assert any rights to any
Invention as having been made or acquired by him prior to the date of
this Agreement, except for Inventions, if any, disclosed to the
Company in writing prior to the date hereof.
7. Intellectual Property. The Company shall be the sole owner of all the
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products and proceeds of the Employee's services hereunder, including, but
not limited to, all materials, ideas, concepts, formats, suggestions,
computer software, developments, arrangements, packages, programs and other
intellectual properties that the Employee may acquire, obtain, develop or
create in connection with and during the term of the Employee's employment
hereunder, free and clear of any claims by the Employee (or anyone claiming
under the Employee) of any kind or character whatsoever (other than the
Employee's right to receive payments hereunder). The Employee shall, at the
request of the Company, execute such assignments, certificates or other
instruments as the Company may from time to time deem necessary or desirable
to evidence, establish, maintain, perfect, protect, enforce or defend its
right, or title and interest in or to any such properties.
8. Indemnification. The Company agrees to hold harmless and indemnify, the
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Employee, if he is made, or threatened to be made, a party to any action or
proceeding, whether civil or criminal, including any action by or in the
right of the Company, by reason of or inuring from the provision of his
services hereunder (other than an action by the Company against the Employee
by reason of breach of this Agreement by the Employee), or by reason of or
inuring from the Employee's acting as a director or executive officer of the
Company, against all judgments, fines, amounts paid in settlement and
reasonable expenses, including attorney's fees, and expenses of experts, to
the fullest extent permitted by law. If permitted by law and the Certificate
of Incorporation and Bylaws of the Company, the Company shall advance to the
Employee all legal and other expenses incurred in defending any threatened or
pending action or proceeding.
9. Change of Control.
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9.1 Defined Terms. As used in this Section 9, the following terms shall
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have the following meanings:
(i) "Change of Control" shall have the meaning set forth in Exhibit A
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hereto.
(ii) "Change of Control Payment" A lump sum payment (payable no later
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than three business days after a Change of Control) in the amount
of 2.99 times the sum of A plus B minus C, where:
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"A" is the Base Salary as of the date immediately preceding such
Change of Control;
"B" is the average of the bonus or bonuses paid to the Employee
by the Company in the five fiscal years of the Company
immediately preceding the year in which the Change of Control
occurs; and
"C" is the portion of the acceleration of payments to the
Employee under stock options which are vested solely due to a
Change of Control which is considered a parachute payment under
Section 280G of the Internal Revenue Code of 1986, as amended
from time to time.
(iii) "Company Change of Control" shall be a Change of Control
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involving the Company.
(iv) "Xxxxxxxxx Fasteners Change of Control" shall be a Change of
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Control involving Xxxxxxxxx Fasteners and not involving the
Company.
9.2 Change Of Control Payment Obligations.
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9.2.1 In the event of a Company Change of Control:
(i) The Term shall immediately end (as of the date of the Change of
Control); and
(ii) The Employee shall receive the Change of Control Payment, and the
Company shall have no further payment obligations under this
Agreement.
9.2.2 In the event of a Xxxxxxxxx Fasteners Change of Control:
(i) The Company may (but shall not be required to) terminate the Term of
this Agreement, in which case the Employee shall receive the Change
of Control Payment and the Company shall have no further payment
obligations under this Agreement; or
(ii) If the Company does not elect to terminate the Term, the Employee
shall receive the Change of Control Payment and this Agreement shall
remain in full force and effect.
9.3 Withholding. All payments hereunder shall be subject to withholding of
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such amounts as shall be required under applicable law.
9.4 Limitation on Payments Pursuant to IRC (S) 280G. In no event shall any
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amounts payable pursuant to this Agreement which are deemed to constitute
"parachute payments" (as defined in Section 280G of the Internal Revenue
Code, as amended by the Tax Reform Act of 1986, and as thereafter amended
(the "Code")), when added to any
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other payments which are deemed to constitute "parachute payments" as
defined in the Code, exceed 2.99 times of the Employee's "base amount"
(as defined in the Code).
10. Notices. All notices, requests, consents and other communications,
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required or permitted to be given hereunder, shall be in writing and
shall be deemed to have been duly given if delivered by registered or
certified mail (notices shall be deemed to have been given on the date
sent), as follows (or to such other address as either party shall
designate by notice in writing to the other in accordance herewith):
If to the Company, to it at: If to the Employee, to him at:
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The Xxxxxxxxx Corporation 00000 Xxxxxxxx Xxxx
00000 Xxxxxxxx Xxxxx, Xxxxx 000 Xxxxxxxxxx, XX 00000
Xxxxxx, XX 00000
11. General.
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11.1 Governing Law. This Agreement shall be governed by and construed and
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enforced in accordance with the laws of the State of Delaware
applicable to agreements made and to be performed entirely in
Delaware, exclusive of its choice of law rules.
11.2 Headings. The article and section headings contained herein are for
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reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.3 Entire Agreement. This Agreement sets forth the entire agreement and
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understanding of the parties relating to the subject matter hereof,
and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof as of the
Effective Date. No representation, promise or inducement has been made
by either party that is not embodied in this Agreement, and neither
party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.
11.4 Assignability; Successors. This Agreement is binding upon and shall
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inure to the benefit of the parties hereto and their respective
successors, and the assigns of the Company. Notwithstanding the
foregoing, neither party shall assign or transfer any rights or
obligations hereunder, except that the Company may assign or transfer
this Agreement to a successor corporation in the event of a merger,
consolidation, or transfer or sale of all or substantially all of the
assets of the Company, provided that no such assignment shall relieve
the Company from liability for its obligations hereunder. Any
purported assignment, other than as provided above, shall be null and
void.
11.5 Modifications; Waivers. This Agreement may be amended, modified,
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superseded, cancelled, renewed or extended and the terms or covenants
hereof may be waived, only by a written instrument executed by both of
the parties hereto, or in the case of a waiver, by the party waiving
compliance. The failure of either party at any time or
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times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver
by either party of the breach of any term or covenant contained in
this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or construed as a further or
continuing waiver of any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.
12. Subsidiaries and Affiliates. As used herein, the term "subsidiary" shall
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mean any corporation or other business entity controlled by the corporation
in question, and the term "affiliate" shall mean and include any
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corporation or other business entity controlling, controlled by or under
common control with the corporation in question.
13. Compensation Committee Approval. Notwithstanding anything to the contrary
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set forth above, this Agreement shall not be effective until such time as
it is approved by the Company's Compensation and Stock Option Committee.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
The Xxxxxxxxx Corporation Officer's Certification
By: ____________________________ The consent of the Compensation
and Stock Option Committee was
obtained on ______________, 2000.
Name:__________________________
By:____________________________
Title: ________________________
________________________
EMPLOYEE
/s/ XXXX X. XXXXXXX
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Xxxx X. Xxxxxxx
Attached: Exhibit A (Definition of Change of Control)
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