AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.7
AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
This
Amended and Restated Employment Agreement (this "Agreement") dated as of
December 29, 2008, is between Xxxxx Xxxxxxxx (the "Executive") and Xxxxx
Industries, Inc., a Delaware corporation (the "Company"). This Agreement amends
and restates the Employment Agreement between the parties dated as of November
6, 2001 (the “Original Employment Agreement”).
W I T N E
S S E T H:
WHEREAS,
the Company employs the Executive as its President and Chief Executive Officer
under terms and conditions as set forth in the Original Employment Agreement;
and
WHEREAS,
the Company and the Executive desire to amend and restate the original
Employment Agreement for the purposes of complying with Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury
Regulations and Internal Revenue Service guidance thereunder;
NOW,
THEREFORE, the parties agree as follows:
1. Employment. The
Company hereby employs the Executive, and the Executive hereby accepts
employment with the Company, upon the terms and subject to the conditions set
forth herein.
2. Term. This Agreement
commenced on November 1, 2001 (the "Effective Date") and shall continue during
the period in which the Executive remains employed by the Company (the "Term").
The Executive shall be considered an at-will employee and his employment may be
terminated by either party subject to the obligations of the parties upon such
termination as may be set forth hereinafter.
3. Position. During the
Term, the Executive shall serve as President and Chief Executive Officer of the
Company.
4. Duties and Reporting
Relationship. The Executive shall have duties and responsibilities
commensurate with his title and status as President and Chief Executive Officer.
He shall at all times be the highest-ranking officer of the Company, reporting
to the Board of Directors of the Company (the "Board"). During the Term, the
Executive shall, on a full time basis, use the Executive's skills and render
services to the best of the Executive's abilities in supervising and conducting
the operations of the Company and, except for his continuing to serve as a
member of the Board of Directors of Champion Enterprises, Inc and on any
committees thereof and as a member of the Board of Directors of Tavant, Inc.,
the Executive shall not engage in any other business activities except with the
prior written approval of the Board or its duly authorized designee. The
Executive agrees to be employed by the Company in such capacity for the Term,
subject to all the covenants and conditions hereinafter set forth.
5. Place of Performance.
The Executive shall perform his duties and conduct his business at the principal
executive offices of the Company, except for required travel on the Company's
business.
6. Salary and Annual
Bonus.
(a) Base Salary. The
Executive's base salary hereunder shall be $1,000,000 a year, payable no less
frequently than monthly and prorated for any partial year of employment. The
Board shall review such base salary at least annually and may increase, but not
decrease, such base salary as it may deem advisable.
(b) Annual Bonus. The
Company shall provide the Executive with an opportunity to earn upon achievement
of target performance goals established by the Compensation Committee of the
Board, an annual bonus of up to one hundred percent (100%) of the Executive's
base salary (the "Target Bonus").
7. Vacation, Holidays and Sick
Leave. During the Term, the Executive shall be entitled to paid vacation,
paid holidays and sick leave in accordance with the Company's standard policies
for its senior executive officers; provided however, that in no event shall the
Executive be entitled to less than four (4) weeks of vacation per
year.
8. Business Expenses.
The Executive shall be reimbursed for all ordinary and necessary business
expenses incurred by the Executive in connection with the Executive's employment
upon timely submission by the Executive of receipts and other documentation as
required by the Internal Revenue Code and in conformance with the Company's
normal procedures. Notwithstanding the foregoing, (i) the reimbursements
provided in any one calendar year shall not affect the amount of reimbursements
provided in any other calendar year; (ii) the reimbursement of an eligible
expense shall be made as soon as practicable but no later than December 31 of
the year following the year in which the expense was incurred; and (iii)
Executive’s rights pursuant to this Section 8 shall not be subject to
liquidation or exchange for another benefit.
9. Pension and Welfare
Benefits. During the Term, the Executive shall be eligible to participate
fully in all health benefits, insurance programs, pension and retirement plans
and other employee benefit and compensation arrangements available to senior
executive officers of the Company generally. In addition, the Executive shall be
entitled to use a new Company paid automobile and the Company will pay
initiation and monthly dues for the Executive at a country club of his choice
which is reasonably acceptable to the Board of Directors of the Company.
Notwithstanding the foregoing, (i) the Company’s payment or reimbursements for
the automobile and country club dues provided in any one calendar year shall not
affect the amount of such payments or reimbursements provided in any other
calendar year; (ii) the reimbursement of an eligible expense shall be made as
soon as practicable but no later than December 31 of the year following the year
in which the expense was incurred; and (iii) Executive’s rights pursuant to this
Section 9 shall not be subject to liquidation or exchange for another
benefit.
10. Relocation Benefits.
The Executive shall be entitled to relocation benefits in accordance with the
Company's relocation policy. In addition and notwithstanding the relocation
policy:
(a) The
Company shall gross-up any portion of such relocation benefits which are taxable
to the Executive for all state, federal and local income taxes based on the
Executive's highest marginal income tax rates, which amount shall be considered
additional relocation benefits;
(b) The
Company will pay for the Executive's temporary living expenses for up to six
months; and
(c) The
Executive will not be obligated to return all relocation benefits unless prior
to the first anniversary of the Effective Date, the Executive voluntarily
terminates his employment with the Company without Good Reason (as defined
below) or is terminated by the Company for Cause (as defined
below).
11. Stock Options. On the
Effective Date, the Company granted to the Executive, pursuant to the terms of
the Company's 2000 Stock Incentive Plan (the "Stock Incentive Plan") and the
Company's 1991 Stock Option Plan (the "Stock Option Plan"), options to purchase
in the aggregate 200,000 shares of common stock of the Company having an
exercise price equal to the fair market value of the Company's common stock as
of the Effective Date, all of which have since become vested. In the event the
Executive's employment is terminated by the Company without Cause (as defined
below) or the Executive resigns with Good Reason (as defined below), then that
portion of any option (including any additional options that may be granted to
the Executive after the Effective Date) that would have vested at the next
anniversary of the Effective Date following the Date of Termination shall be and
become fully vested on the Date of Termination and, notwithstanding any
provision to the contrary in the applicable Stock Option Agreement, any option
held by the Executive to the extent then vested, may be exercised and shall not
expire until the earlier of (A) the expiration of the option term as set forth
in the Stock Option Agreement or (B) the expiration of the severance period set
forth in Section 13(d)(ii). In addition to the grant set forth in this Section,
the Board or the Compensation Committee thereof may grant to the Executive such
other and additional awards under the Stock Incentive Plan (or any successor
plan) as may from time to time be deemed appropriate.
12. Termination of
Employment.
(a) General. The
Executive's employment hereunder may be terminated only under the circumstances
described in this Section 12.
(b) Death or
Disability.
(i) The
Executive's employment hereunder shall automatically terminate upon the death of
the Executive.
(ii) If
the Company determines in good faith that Executive has become Disabled (as
defined below), the Company may terminate the Executive's employment hereunder
for any such incapacity (a "Disability"). Executive shall be Disabled if either
of the following conditions is met: (i) Executive is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months; or
(ii) Executive is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, receiving income
replacement benefits for a period of not less than three months under an
accident and health plan covering employees of the Company.
(c) Termination by the
Company. The Company may terminate the Executive's employment hereunder
at any time, whether or not for Cause. For purposes of this Agreement, "Cause"
shall mean (i) the continuous and willful failure or refusal by the Executive to
perform the Executive's duties hereunder (other than any such failure resulting
from the Executive's incapacity due to physical or mental illness), which has
not ceased within ten (10) days after a written demand for substantial
performance is delivered to the Executive by the Company, which demand
identifies with particularity the manner in which the Company believes that the
Executive has not performed such duties, (ii) the engaging by the Executive in
willful misconduct which is materially injurious to the Company, monetarily or
otherwise (including, but not limited to, conduct which violates Section 16
hereof) or an act of moral turpitude which is materially injurious to the
Company, monetarily or otherwise (including, but not limited to, conduct which
violates Section 16 hereof) or (iii) the conviction of the Executive of, or the
entering of a plea of nolo contendere by, the Executive with respect to a
felony.
For
purposes of this provision, no act or failure to act, on the part of Executive
shall be considered "willful" unless it is done, or omitted to be done, by
Executive in bad faith or without reasonable belief that the Executive's action
or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board of Directors or based upon the advice of counsel for the Company shall be
conclusively presumed to be done, or omitted to be done, by the Executive in
good faith and in the best interests of the Company. The cessation of employment
of the Executive shall not be deemed to be for Cause unless prior to such
termination there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the disinterested membership of the Board of Directors at a meeting of such
Board of Directors called and held for such purpose (after reasonable notice is
provided to the Executive and the Executive is given an opportunity to be heard
before such Board of Directors), finding, that, in the good faith opinion of the
Board of Directors, the Executive is guilty of the conduct described in clause
(i), (ii) or (iii) above.
(d) Termination by the Executive
for Good Reason. The Executive shall be entitled to terminate his
employment hereunder for Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act described
below, such act or failure to act is corrected within the 30-day cure period
described below or unless Executive has otherwise consented thereto in
writing:
(i) any
material diminution in the Executive's authorities or responsibilities
(including reporting responsibilities) or from his status, title, position or
responsibilities (including reporting responsibilities) without the Executive's
express written consent to accept any such change; the assignment to him of any
duties or work responsibilities which are materially inconsistent with such
status, title, position or work responsibilities; or any removal of the
Executive from, or failure to reappoint or reelect him to any of such positions,
except if any such changes are because of Disability, retirement, death or
Cause;
(ii) a
more than 10% reduction by the Company in the Executive's base salary or Target
Bonus as in effect on the date hereof or as the same may be increased from time
to time;
(iii) the
relocation of the Executive's office at which the Executive is to perform the
Executive's duties, to a location more than fifty (50) miles from the location
at which the Executive previously performed the Executive's duties hereunder,
except for required travel on the Company's business;
(iv) the
failure by the Company to comply with any material provision of this Agreement,
which failure has not been cured within thirty (30) days after notice of such
noncompliance has been given by the Executive to the Company; or
(v) any
purported termination of the Executive's employment by the Company which is not
effected pursuant to a Notice of Termination satisfying the requirements of
Section 12(f) below.
Notwithstanding
the foregoing, none of the events described in clauses (i) through (v) of this
Section 12(d) will constitute Good Reason unless the Executive has notified the
Company in writing describing the events which constitute Good Reason (which
notice must be given no later than ninety (90) days after the initial occurrence
of such events) and the Company has failed to cure such events within thirty
(30) days after the Company’s receipt of such written notice. If an
event of Good Reason shall remain uncured within such 30-day cure period, the
Executive may resign for such event of Good Reason within a period of
twenty-three (23) months after the end of such cure period. Absent further
guidance to the contrary, the parties intend, believe and take the position that
a resignation by the Executive for Good Reason as defined above effectively
constitutes an involuntary separation from service within the meaning of Section
409A of the Code and Treas. Reg §1.409A-1(n)(2).
(e) Voluntary
Resignation. Should the Executive wish to resign from his position with
the Company or terminate his employment for other than Good Reason during the
Term, the Executive shall give sixty (60) days written notice to the Company
("Notice Period"), specifying the date as of which his resignation is to become
effective. During the Notice Period, the Executive shall cooperate fully with
the Company in an effort to achieve a smooth transition of the Executive's
duties and responsibilities to such person(s) as may be designated by the
Company. The Company reserves the right to accelerate the Date of Termination by
giving the Executive notice, but the Company shall in that case pay and provide
the Executive with all payments and benefits he would otherwise have been
entitled to (other than disability benefits) had he remained employed through
the end of the Notice Period, including payment of amounts due to the Executive
under Section 6(a) and, to the extent applicable, Section 6(b) for the balance
of the Notice Period. The Company's obligation to continue to employ the
Executive or to continue payment of the amounts described in the preceding
sentence shall cease immediately if: (1) the Executive has not satisfied his
obligations to cooperate fully with a smooth transition or (2) the Company has
grounds to terminate the Executive's employment immediately for Cause.
Conversely, if during the Notice Period the Executive comes to have grounds to
resign with Good Reason (other than the grounds described in Section 12(d)(i)
or, only to the extent related to the matters covered in Section 12(d)(i),
Section 12(d)(iv)), then Executive may, by notice, deem the resignation to be
with Good Reason, in which case the rights and obligations set forth herein for
a Good Reason termination shall govern.
(f) Notice of
Termination. Any purported termination of the Executive's employment by
the Company or by the Executive shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 19. "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(g) Date of Termination.
"Date of Termination" shall mean (i) if the Executive's employment is terminated
because of death, the date of the Executive's death, (ii) if the Executive's
employment is terminated for Disability, the date Notice of Termination is
given, (iii) if the Executive's employment is terminated pursuant to Subsection
(c) or (e) hereof or for any other reason (other than death or Disability, Good
Reason or Cause), the date specified in the Notice of Termination which shall
not be less than sixty (60) days from the date such Notice of Termination is
given, (iv) if the Executive's employment is terminated pursuant to Subsection
(c) for reasons of Cause, immediately upon delivery the Notice of Termination,
and (v) if the Executive's employment is terminated pursuant to Subsection (d)
hereof, the date specified in the Notice of Termination which shall not be less
than thirty (30) days from the date such Notice of Termination is
given.
(h) Change in Control.
For purposes of this Agreement, a Change in Control of the Company shall have
occurred if:
(i) any
"Person" (as defined in Section 3(a)(9) of the Securities Exchange Act of 1934
(the "Exchange Act") as modified and used in Sections 13(d) and 14(d) of the
Exchange Act) other than (1) the Company or any of its subsidiaries, (2) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or any of its subsidiaries, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, (4) any creditor of the
Company (but not any transferee of such creditor even if such transferee shall
also be a creditor) who is issued shares of the Company's common stock in
connection with the implementation of the Company's plan of reorganization which
shall be effective as of the Effective Date, or (5) any corporation owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of the Company's common stock), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than 40% of the combined voting power of the Company's then outstanding voting
securities;
(ii) during
any period of not more than two (2) consecutive years, not including any period
prior to the Effective Date, individuals who at the beginning of such period
constitute the Board, and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii), or (iv) of this Section 12(h)) whose
election by the Board or nomination for election by the Company's stockholders
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (A) a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent entity) 50% or more
of the combined voting power of the voting securities of the Company or such
surviving or parent entity outstanding immediately after such merger or
consolidation or (B) a merger or consolidation in which no person acquires 40%
or more of the combined voting power of the Company's or such surviving or
parent entity's then outstanding securities; or
(iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets or all or substantially all of its and
its subsidiaries' assets, taken as a whole, (or any transaction having a similar
effect).
(i) Return of Property.
When the Executive ceases to be employed by the Company, the Executive will
promptly surrender to the Company all Company property, including without
limitation, all records and other documents belonging to the Company that were
obtained by him or entrusted to him during the course of his employment with the
Company provided, however, that the Executive may retain copies of such
documents as necessary for the Executive's personal records for federal income
tax purposes.
13. Compensation During
Disability, Death or Upon Termination.
(a) If
the Executive's employment is terminated by his death or Disability, the Company
shall pay (i) any base salary due to the Executive under Section 6(a) through
the date of such termination, (ii) any earned but unpaid bonus from any prior
fiscal year of the Company, (iii) all other unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination under any compensation plan
or program of the Company, at the time such payments are due, and (iv) an amount
equal to the Target Bonus he would have received for the fiscal year that ends
on or immediately after the Date of Termination, assuming the Company achieved
the target level for which a bonus is paid under the plan described in Section
6(b), prorated for the period beginning on the first day of the fiscal year in
which occurs the Date of Termination through the Date of
Termination.
(b) If
the Executive's employment is terminated by the Company for Cause or by the
Executive for other than Good Reason, the Company shall pay the Executive (i)
his base salary through the Date of Termination at the rate in effect at the
time Notice of Termination is given, (ii) any earned but unpaid bonus from any
prior fiscal year of the Company, and (iii) all other unpaid amounts, if any, to
which the Executive is entitled as of the Date of Termination under any
compensation plan or program of the Company, at the time such payments are due,
and the Company shall have no further obligations to the Executive under this
Agreement.
(c) If
within one (1) year following a Change in Control, either the Company terminates
the Executive's employment without Cause or the Executive terminates his
employment for Good Reason, then
(i) the
Company shall pay the Executive (I) his base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(II) any earned but unpaid bonus from any prior fiscal year of the Company, and
(III) all other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under any compensation plan or program of the Company,
at the time such payments are due;
(ii) in
lieu of any further salary or other payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay as liquidated
damages to the Executive an aggregate lump sum amount (the “Change in Control
Severance Payment”) equal to the product of (A) the sum of (1) the Executive's
base salary at the rate in effect as of the date the Notice of Termination is
given and (2) the greater of (I) the average of the annual bonuses actually paid
to the Executive by the Company with respect to the two (2) fiscal years which
immediately precede the year in which the Date of Termination occurs (provided
if there was a bonus paid to the Executive with respect only to one fiscal year
that immediately precedes the year in which the Date of Termination occurs, then
such single year's bonus shall be utilized in the calculation pursuant to this
subclause (I)) and (II) the bonus the Executive would earn based on the Target
Bonus applicable for the year of termination and (B) the number two
(2.0);
(iii) the
Company shall pay the Executive an amount equal to the prorated Target Bonus
(prorated in the same manner set forth in Section 13(a) hereof) that would have
been paid for the period beginning on the first day of the fiscal year in which
the Date of Termination occurs;
(iv) the
Company shall continue coverage for the Executive, on the same terms and
conditions as would be applicable if the Executive were an active Employee,
under the Company's life insurance, medical, health and similar welfare benefit
plans (other than group disability benefits) for a period of twenty-four (24)
months after the date of Termination (the “Welfare Benefits Continuation
Period”); provided, however, that if the Executive would not be eligible for
continued coverage under the Company’s group medical plans beyond the applicable
period under Code Section 4980B (COBRA), then during the nineteenth (19th) month
after the Date of Termination, the Company shall pay to the Executive a lump sum
cash payment equal to the applicable monthly premium under COBRA (less the 2%
administrative fee and less the active-employee rate for such coverage),
multiplied by the number of months remaining in the Welfare Benefits
Continuation Period. Benefits otherwise receivable by the Executive pursuant to
this Section 13(c)(iv) shall be reduced to the extent comparable benefits are
actually received by the Executive from a subsequent employer during the Welfare
Benefits Continuation Period, and the Executive shall report to the Company any
such benefits actually received by him. During the Welfare Benefits
Continuation Period, (I) the benefits provided in any one calendar year shall
not affect the amount of benefits provided in any other calendar year (other
than the effect of any overall coverage benefits under the applicable plans);
(II) the reimbursement of an eligible taxable expense shall be made as soon as
practicable but not later than December 31 of the year following the year in
which the expense was incurred; and (III) the Executive’s rights pursuant to
this Section 13(c)(iv) shall not be subject to liquidation or exchange for
another benefit;
(v) all
options, shares of restricted stock, performance shares and any other equity
based awards shall be and become fully vested as of the Date of Termination and,
notwithstanding any provision to the contrary in the applicable Stock Option
Agreement, any such options may be exercised and shall not expire until the
earlier of (I) the expiration of the option term as set forth in the Stock
Option Agreement or (II) the second anniversary of the Date of Termination;
and
(vi) the
payments provided for in this Section 13(c) (other than Section 13(c)(iv)) shall
be made (I) on a date determined by the Company that is within thirty (30) days
following the Date of Termination or (II) if the Executive is a Specified
Employee (as defined in Section 27) on the Date of Termination, on any later
date required by Section 27(c) of this Agreement.
(d) If
either following the first anniversary of or prior to a Change of Control, the
Executive terminates his employment for Good Reason or the Company terminates
the Executive's employment without Cause, then
(i) the
Company shall pay the Executive (I) his base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
(II) any earned but unpaid bonus from any prior fiscal year of the Company, and
(III) all other unpaid amounts, if any, to which the Executive is entitled as of
the Date of Termination under any compensation plan or program of the Company,
at the time such payments are due;
(ii) if
the Date of Termination occurs after December 31, 2008, then in lieu of any
further salary or other payments to the Executive for periods subsequent to the
Date of Termination, the Company shall pay as liquidated damages to the
Executive an aggregate lump sum amount equal to 24 times the Executive’s monthly
base salary at the rate in effect as of the date the Notice of Termination is
given (the “Non-Change in Control Severance Payment”);
(iii) the
Company shall pay the Executive his Target Bonus prorated (in the manner set
forth in Section 13(a) hereof) for the period beginning on the first day of the
fiscal year in which occurs the Date of Termination through the Date of
Termination;
(iv) the
Company shall continue coverage for the Executive, on the same terms and
conditions as would be applicable if the Executive were an active employee,
under the Company's life insurance, medical, health, and similar welfare benefit
plans (other than group disability) for the Welfare Benefits Continuation Period
(as defined in Section 13(c)(iv) above); provided, however, that if the
Executive would not be eligible for continued coverage under the Company’s group
medical plans beyond the applicable period under COBRA, then during the
nineteenth (19th) month
after the Date of Termination, the Company shall pay to the Executive a lump sum
cash payment equal to the applicable monthly premium under COBRA (less the 2%
administrative fee and less the active-employee rate for such coverage),
multiplied by the number of months remaining in the Welfare Benefits
Continuation Period. Benefits otherwise receivable by the Executive
pursuant to this Section 13(d)(iv) shall be reduced to the extent comparable
benefits are actually received by the Executive from a subsequent employer
during the Welfare Benefits Continuation Period, and the Executive shall report
to the Company any such benefits actually received by him. During the
Welfare Benefits Continuation Period, (I) the benefits provided in any one
calendar year shall not affect the amount of benefits provided in any other
calendar year (other than the effect of any overall coverage benefits under the
applicable plans); (II) the reimbursement of an eligible taxable expense shall
be made as soon as practicable but not later than December 31 of the year
following the year in which the expense was incurred; and (III) the Executive’s
rights pursuant to this Section 13(d)(iv) shall not be subject to liquidation or
exchange for another benefit; and
(v) the
payments provided for in this Section 13(d) (other than Sections 13(d)(ii) and
(iv)) shall be made (I) on a date determined by the Company that is within
thirty (30) days following the Date of Termination, or (II) if the Executive is
a Specified Employee (as defined in Section 27 of this Agreement) on the Date of
Termination, on any later date required by Section 27(c).
(e) The
Executive shall not be required to mitigate the amount of any payment or benefit
provided for in this Section 13 by seeking other employment or otherwise, and,
except as provided in Sections 13(c)(iv) and 13(d)(iv) hereof, the amount of any
payment or benefit provided for in this Section 13 shall not be reduced by any
compensation or benefits earned by the Executive as the result of employment by
another employer or by retirement benefits or from any other
source.
(f) Release. Prior to
making any payment pursuant to Sections 13(d)(ii) and 13(d)(iii), the Company
shall have the right to require the Executive to sign, and the Executive hereby
agrees to sign, an agreement to be bound by the terms of Section 16 of this
Agreement and a waiver, in the form attached hereto as Exhibit A, of all claims
the Executive may have (including any claims under the Age Discrimination in
Employment Act). The Company shall have no obligation to make any
payments pursuant to Sections 13(d)(ii) or 13(d)(iii) if the release (if
requested by the Company) has not been signed and the revocation period for such
release has not expired on or before the time for commencement of such payment
as specified in this Agreement.
14. Representations and
Covenants.
(a) The
Company represents and warrants that this Agreement has been authorized by all
necessary corporate action of the Company and is a valid and binding agreement
of the Company enforceable against it in accordance with its terms.
(b) The
Executive represents and warrants that he is not a party to any agreement or
instrument that would prevent him from entering into or performing his duties in
any way under this Agreement. The Executive agrees and covenants that he will
obtain, and submit to, such physical examinations as may be necessary to
facilitate the Company obtaining an insurance policy for its benefit insuring
the life of the Executive.
15. Successors; Binding
Agreement.
(a) This
Agreement is not assignable by the Company except to a successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, provided that
such successor expressly assumes and agrees 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 had taken place.
(b) This
Agreement is a personal contract and the rights and interests of the Executive
hereunder may not be sold, transferred, assigned, pledged, encumbered, or
hypothecated by him, except as otherwise expressly permitted by the provisions
of this Agreement. This Agreement shall inure to the benefit of and be
enforceable by the Executive and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to
him hereunder had the Executive continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to his devisee, legatee or other designee or, if there is no such
designee, to his estate.
16. Confidentiality and
Non-Competition Covenants.
(a) The
Executive covenants and agrees that he will not at any time during or at any
time after the end of the Term, directly or indirectly, use for his own account,
or disclose to any person, firm or corporation, other than authorized officers,
directors and employees of the Company or its subsidiaries, Confidential
Information (as hereinafter defined) that is treated as trade secrets by the
Company and will not at any time during or for five years following the Date of
Termination, directly or indirectly, use for his own account, or disclose to any
person, firm or corporation, other than authorized officers, directors and
employees of the Company or its subsidiaries, any other Confidential
Information. As used herein, "Confidential Information" of the Company means
information of any kind, nature or description which is disclosed to or
otherwise known to the Executive as a direct or indirect consequence of his
association with the Company, which information is not generally known to the
public or in the business in which the Company is engaged or which information
relates to specific opportunities within the scope of the Company's business
which were considered by the Executive or the Company during the term of this
Agreement. Confidential Information that is treated as confidential trade
secrets by the Company shall include, but not be limited to, strategic operating
plans and budgets, policy and procedure manuals, computer programs, financial
forms and information, patient or resident lists and accounts, supplier
information, accounting forms and procedures, personnel policies, information
pertaining to the salaries, positions and performance reviews of the Company's
employees, information on the methods of the Company's operations, research and
data developed by or for the benefit of the Company and information relating to
revenues, costs, profits and the financial condition of the Company.
Confidential Information does not include any information that (i) is generally
known to the public or the business in which the Company engages other than as a
result of unauthorized disclosure by the Executive, (ii) can be discovered,
compiled or ascertained by a third party without substantial burden or expense,
or (iii) was known to the Executive prior to accepting employment with the
Company. During the Term and for a period of two (2) years following the
termination of the Executive's employment, the Executive shall not, directly or
indirectly, solicit or induce any person who is then an employee of the Company
or its subsidiaries to terminate his or her employment by the Company or its
subsidiaries in order to obtain employment by any person, firm or corporation
affiliated with the Executive and the Executive shall not or cause any other
person, firm or corporation affiliated with the Executive to hire any employee
of the Company or its subsidiaries or any other person who was an employee of
the Company or its subsidiaries within the twelve (12) month period prior to the
Executive's Date of Termination.
(b) The
Executive covenants and agrees that any information, materials, ideas,
discoveries, techniques or programs developed or discovered by the Executive in
connection with the performance of his duties hereunder shall remain the sole
and exclusive property of the Company and, to the extent it constitutes
Confidential Information, shall be subject to the covenants contained in the
preceding paragraph.
(c) The
Executive covenants and agrees that during the Term and for a period of one (1)
years following the termination of the Executive's employment, the Executive
shall not, directly or indirectly, own an interest in, operate, join, control,
or participate as a partner, director, principal, officer, or agent of, enter
into the employment of, or act as a consultant to, in any case in which he has
control or supervision over a significant portion of any entity which competes
with the Company and whose principal business is designing, manufacturing and
distributing specialty industrial controls, fluid handling and analytical
instrumentation products. Notwithstanding anything herein to the contrary, the
foregoing provisions of this Section 16(c) shall not prevent the Executive from
acquiring securities representing not more than 5% of the outstanding voting
securities of any publicly held corporation.
(d) Without
limiting the right of the Company to pursue all other legal and equitable
remedies available for violation by the Executive of the covenants contained in
this Section 16, it is expressly agreed by the Executive and the Company that
such other remedies cannot fully compensate the Company for any such violation
and that the Company shall be entitled to injunctive relief, without the
necessity of proving actual monetary loss, to prevent any such violation or any
continuing violation thereof. Each party intends and agrees that if in any
action before any court or agency legally empowered to enforce the covenants
contained in this Section 16, any term, restriction, covenant or promise
contained herein is found to be unreasonable and accordingly unenforceable, then
such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency. The covenants
contained in Section 16 shall survive the conclusion of the Executive's
employment by the Company.
17. Entire Agreement.
This Agreement contains all the understandings between the parties hereto
pertaining to the matters referred to herein, and on the Effective Date shall
supersede all undertakings and agreements, whether oral or in writing,
previously entered into by them with respect thereto. The Executive represents
that, in executing this Agreement, he does not rely and has not relied upon any
representation or statement not set forth herein made by the Company with regard
to the subject matter, bases or effect of this Agreement or
otherwise.
18. Amendment or
Modification. Waiver. No provision of this Agreement may be amended or
waived unless such amendment or waiver is agreed to in writing, signed by the
Executive and by a duly authorized officer of the Company. No waiver by any
party hereto of any breach by another party hereto of any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of a similar or dissimilar condition or provision at the same time, any prior
time or any subsequent time.
19. Notices. Any notice
to be given hereunder shall be in writing and shall be deemed given when
delivered personally, sent by courier or telecopy or registered or certified
mail, postage prepaid, return receipt requested, addressed to the party
concerned at the address indicated below or to such other address as such party
may subsequently give notice of hereunder in writing:
To
Executive
at:
Xxxxx Xxxxxxxx
0000
Xxxxxxxx Xxxx Xxxxx
Xxxxxxxx,
XX 00000
To the
Company
at: Xxxxx
Industries, Inc.
0000
Xxxxxxxxxxxx Xxxxxxx Xxxx
Xxxxx
000
Xxxxxxxx XX 00000
Attn:
Chairman of the Board of Directors
With a
copy
to: General
Counsel
Xxxxx
Industries, Inc.
0000
Xxxxxxxxxxxx Xxxxxxx Xxxx
Xxxxx
000
Xxxxxxxx XX 00000
Any
notice delivered personally or by courier under this Section 19 shall be deemed
given on the date delivered and any notice sent by telecopy or registered or
certified mail, postage prepaid, return receipt requested, shall be deemed given
on the date telecopied or mailed.
20. Severability. If any
provision of this Agreement or the application of any such provision to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid and unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such person or
circumstances other than those to which it is so determined to be invalid and
unenforceable, shall not be affected thereby, and each provision hereof shall be
validated and shall be enforced to the fullest extent permitted by
law.
21. Survivorship. The
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
22. Governing Law: Attorney's
Fees.
(a) This
Agreement will be governed by and construed in accordance with the laws of the
State of Georgia, without regard to its conflicts of laws
principles.
(b) The
prevailing party in any dispute arising out of this Agreement shall be entitled
to be paid its reasonable attorney's fees and litigation expenses incurred in
connection with such dispute from the other party to such dispute. If
the Executive is awarded the right to recover fees and expenses under this
Section 22, the reimbursement of an eligible expense shall be made within ten
business days after delivery of Executive’s written request for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require, but in no event later than March 15 of the year after
the year in which such rights are established.
23. Dispute Resolution.
The Executive and the Company shall not initiate legal proceedings relating in
any way to this Agreement or to the Executive's employment or termination from
employment with the Company until thirty (30) days after the party against whom
the claim is made ("respondent") receives written notice from the claiming party
of the specific nature of any purported claims and the amount of any purported
damages attributable to each such claim. The Executive and the Company further
agree that if respondent submits the claiming party's claim to the CPR Institute
for Dispute Resolution, JAMS/Endispute, or other local dispute resolution
service for nonbinding mediation prior to the expiration of such thirty (30) day
period, the claiming party may not institute legal proceedings against
respondent until the earlier of: (a) the completion of good-faith mediation
efforts or (b) 90 days after the date on which the respondent received written
notice of the claimant's claim(s); provided, however, that nothing in this
Section 23 shall prohibit either party from pursuing injunctive or other
equitable relief against the other party in circumstances in which such relief
is appropriate, prior to, contemporaneous with, or subsequent to invoking or
participating in these dispute resolution processes. In all events, the Company
shall pay the cost of the mediator, regardless of whether the dispute was or was
not resolved or settled through mediation.
24. Headings. All
descriptive headings of sections and paragraphs in this Agreement are intended
solely for convenience, and no provision of this Agreement is to be construed by
reference to the heading of any section or paragraph.
25. Withholdings. All
payments to the Executive under this Agreement shall be reduced by all
applicable withholding required by federal, state or local tax
laws.
26. Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
27. Code Section
409A.
(a) This
Agreement shall be interpreted and administered in a manner so that any amount
or benefit payable hereunder shall be paid or provided in a manner that is
either exempt from or compliant with the requirements Section 409A of the Code
and applicable Internal Revenue Service guidance and Treasury Regulations issued
thereunder (and any applicable transition relief under Section 409A of the
Code).
(b) Notwithstanding
anything in this Agreement to the contrary, to the extent that any amount or
benefit that would constitute non-exempt “deferred compensation” for purposes of
Section 409A of the Code would otherwise be payable or distributable hereunder,
or a different form of payment would be effected, by reason of a Change in
Control or the Executive’s Disability or termination of employment, such amount
or benefit will not be payable or distributable to the Executive, and/or such
different form of payment will not be effected, by reason of such circumstance
unless (i) the circumstances giving rise to such Change in Control, Disability
or termination of employment, as the case, may be, meet any description or
definition of “change in control event”, “disability” or “separation from
service”, as the case may be, in Section 409A of the Code and applicable
regulations (without giving effect to any elective provisions that may be
available under such definition), or (ii) the payment or distribution of such
amount or benefit would be exempt from the application of Section 409A of the
Code by reason of the short-term deferral exemption or
otherwise. This provision does not prohibit the vesting of any amount upon a
Change in Control, Disability or termination of employment, however
defined. If this provision prevents the payment or distribution of
any amount or benefit, such payment or distribution shall be made on the date,
if any, on which an event occurs that constitutes a Section 409A-compliant
“change in control event”, “disability” or “separation from service,” as the
case, may be, or such later date as may be required by Section 27(c)
below.
(c) If
the Date of Termination occurs during a period in which the Executive is a
“Specified Employee” (as defined below), any portion of the Non-Change in
Control Severance Payment or the Change in Control Severance Payment, as the
case may be, or any portion of any other payment under Section 13 hereof, that
is not excluded from Section 409A of the Code by reason of the exemptions in
Treas. Reg. §1.409A-1(b)(4) (short-term deferrals), Treas. Reg. §1.409A-1(b)(9)
(separation pay exemptions) or any other applicable exemption or exclusion,
shall be delayed in order to comply with Section 409A(a)(2)(B)(i) of the Code,
and such payments or benefits shall be paid or distributed to the Executive
during the five-day period commencing on the earlier of: (i) the
expiration of the six-month period measured from the date of the Executive’s
“separation from service”, or (ii) the date of the Executive’s
death. Upon the expiration of the applicable six-month period under
Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to this
Section 27(c) shall be paid to the Executive (or the Executive’s estate, in the
event of the Executive’s death) in a lump sum payment. Any remaining
payments and benefits due under the Agreement shall be paid as otherwise
provided in the Agreement. If any amounts or benefits payable
hereunder could qualify for one or more separation pay exemptions described in
Treas. Reg. §1.409A-1(b)(9), but such payments in the aggregate exceed the
dollar limit permitted for the separation pay exemptions, the Company (acting
through its head of human resources or any other designated officer) shall
determine which portions thereof will be subject to such
exemptions.
For
purposes of this Agreement, the term “Specified Employee” has the meaning given
such term in Code Section 409A and in Treas. Reg. §1.409A-1(i), including Treas.
Reg. §1.409A-1(i)(6) in the case of a corporate transaction described therein),
provided, however, that, as permitted in such regulations, the Company’s
Specified Employees and its application of the six-month delay rule of Code
Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by
the Board or a committee thereof, which shall be applied consistently with
respect to all nonqualified deferred compensation arrangements of the Company,
including this Agreement.
(d) If
the parties hereto determine that any payments or benefits payable under this
Agreement intended to comply with Sections 409A(a)(2), (3) and (4) of the Code
do not comply with Section 409A of the Code, the Executive and the Company agree
to amend this Agreement, or take such other actions as the Executive and the
Company deem reasonably necessary or appropriate, to comply with the
requirements of Section 409A of the Code, the Treasury Regulations thereunder
(and any applicable transition relief) while preserving the economic agreement
of the parties. If any provision of the Agreement would cause such
payments or benefits to fail to so comply, such provision shall not be effective
and shall be null and void with respect to such payments or benefits, and such
provision shall otherwise remain in full force and effect.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first above written.
XXXXX
INDUSTRIES, INC.
BY: /s/ Xxxx
Xxxxxxxx
NAME:
Xxxx Xxxxxxxx
TITLE:
Vice President and Chief Financial Officer
EXECUTIVE
/s/ Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxx
