EMPLOYMENT AGREEMENT OF MICHAEL D. LOCKHART
Exhibit No. 10.8
EMPLOYMENT AGREEMENT
OF XXXXXXX X. XXXXXXXX
OF XXXXXXX X. XXXXXXXX
THIS EMPLOYMENT AGREEMENT dated August 7, 2000, between Xxxxxxxxx Holdings, Inc. (“AHI”) and
Xxxxxxx X. Xxxxxxxx ( “Executive”), and amended on February 26, 2001 (“Original Agreement”), is
hereby further amended and restated effective as of October 27, 2008 (the “Effective Date”), by and
between Xxxxxxxxx World Industries, Inc. (“Company”) and Executive.
W I T N E S S E T H
WHEREAS, the Company, upon its emergence from its Chapter 11 case under the Bankruptcy Code,
assumed the Original Agreement: and
WHEREAS, AHI has liquidated and is no longer a party to the Original Agreement, and the
Company and Executive each desires to amend the Original Agreement to comply with Section 409A of
the Internal Revenue Code of 1986, as amended (“Code”) and to restate the Original Agreement in its
entirety so as to reflect the removal of AHI as a party and other current terms of the Original
Agreement.
NOW, THEREFORE, in consideration of the premises and the respective covenants and agreements
of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Defined Terms. The definitions of capitalized terms used in this Agreement, unless
otherwise defined herein, are provided in the last Section hereof
2. Employment. The Company hereby agrees to employ the Executive, and the Executive
hereby agrees to serve the Company and its subsidiaries and affiliates, on the terms and conditions
set forth herein, during the Term of this Agreement.
3. Term of Agreement. The Term will commence on the Effective Date and shall continue
until August 7, 2009; provided, that, the Term of this Agreement shall automatically be extended
for one (1) additional year on such date and each succeeding August 7 anniversary date unless the
Company shall have given written notice to the Executive at least 180 days prior to August 7, 2009,
or any succeeding anniversary date thereafter to the effect that the Term of this Agreement shall
not be extended. Notwithstanding anything in this Agreement to the contrary, the Company may
terminate this Agreement in the event of Executive’s Disability; provided, that any such
termination shall not, by itself, terminate the Executive’s employment with the Company.
4. Position and Duties. During the Term of this Agreement, the Executive shall serve
as Chairman of the Board and Chief Executive Officer of the Company and as a member of the Board
and shall also serve in any other executive officer position of the Company and its subsidiaries
and affiliates as the Board may reasonably request. The Executive shall be the chief executive
officer of the Company and shall have such duties and responsibilities as are customary for the
Executive’s position and such other duties not inconsistent therewith as the Board may reasonably
assign from time to time. During the Term of this Agreement, excluding any periods of vacation and
sick leave to which the Executive is entitled under the Company’s policies and practices (as the
same may be increased in the future), the Executive shall devote substantially all his working time
and efforts to the business and affairs of the Company and its subsidiaries and affiliates and
shall diligently and faithfully perform his duties to the best of his ability; provided, however,
that the Executive may engage in activities relating to personal matters (including personal
financial matters) and in such corporate, industry, civic and charitable activities, including
membership on corporate and charitable boards of directors or trustees of non-affiliated companies
and organizations, so long as such service does not substantially interfere with the performance of
his duties hereunder or violate his obligations under Section 10 hereof.
5. Compensation and Related Matters.
5.1 Base Salary. The Company shall pay, or cause to be paid, to the Executive an
annual base salary (“Base Salary”) during the Term of this Agreement which shall be at an initial
rate of not less than $980,000 per year. The Base Salary shall be paid in accordance with the
Company’s payroll practices for its senior officers, but not less frequently than monthly, in
arrears. For purposes of this Agreement, “Base Salary” shall include any increases in Base Salary
during the Term of this Agreement. The Base Salary in effect from time to time shall not be
decreased during the Term of this Agreement except in connection with across-the-board salary
reductions similarly affecting all senior officers of the Company and all senior officers of any
person in control of the Company which have been agreed to by the Executive. Compensation of the
Executive by Base Salary payments shall not be deemed exclusive and shall not prevent the Executive
from participating in any other compensation or benefit plan of the Company. The Base Salary
payments (including any increased Base Salary payments) shall not in any way limit or reduce any
other obligation of the Company hereunder, and no other compensation, benefit or payment hereunder
shall in any way limit or reduce the obligation of the Company to pay the Executive’s Base Salary.
5.2 Benefit Plans. During the Term, the Executive and his eligible dependents shall
be entitled to participate in and receive benefits under all “employee benefit plans” (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended from time to
time (“ERISA”)), and employee benefit arrangements in which senior officers of the Company
generally participate, including without limitation, (i) all savings, deferred compensation, profit
sharing and retirement plans, practices, policies and programs and (ii) all welfare benefit plans,
practices, policies and programs
(including all medical, prescription, dental, disability, employee
life insurance, group life insurance, group
hospitalization, health, accidental death and travel accident insurance plans and programs) as
are made generally available to senior officers of the Company, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans, practices, policies
and programs, including provisions which permit such plans, practices, policies and programs to be
modified or terminated, provided, that if the Company reduces the benefits provided under or
terminates any such employee benefit plan, practice, policy or program in which the Executive
participates, the Company shall offer to the Executive participation in another plan or program
that provides the Executive with benefits at least comparable to those that were reduced or
eliminated, and provided, further, that all eligibility requirements under any such plan, practice,
policy or program shall be waived. The Executive shall not be entitled to credit for service at
any prior employer for purposes of the level of benefits to which the Executive is entitled under
any such plan, practice, policy or program. The Executive’s participation in such employee benefit
plans, practices, policies and programs shall be at a level appropriate for the Executive’s
position. Such employee benefit plans, practices, policies and programs, shall include, without
limitation, the plans, programs, policies and practices in which the senior officers of the Company
generally participate on the date of this Agreement. Notwithstanding anything to the contrary in
this Agreement, in the Company’s Retirement Income Plan or in the Company’s Retirement Benefit
Equity Plan, the Executive shall be credited with that amount of service equal to the sum of (i)
two times the service with which he would otherwise be credited for purposes of determining his
retirement benefits under the Retirement Income Plan, plus (ii) the five years granted by the Board
in 2005. To the extent that the Executive’s retirement benefits as so determined are not payable
under the Retirement Income Plan, they shall be paid by the Company under the Retirement Benefit
Equity Plan or otherwise.
5.3 Incentive Compensation.
(a) During the Term of this Agreement, the Executive shall be entitled to participate
in and receive benefits under all annual incentive (bonus) plans and long-term incentive
compensation plans in which other senior officers of the Company generally participate,
including all restricted share, performance restricted share and stock option plans of the
Company. The Executive’s participation in such incentive plans shall be at a level
appropriate for the Executive’s position. Except as otherwise provided in this Agreement,
such incentive compensation shall be subject to and on a basis consistent with the terms,
conditions and overall administration of such plans, including provisions which permit such
plans to be modified or terminated, provided, that if the Company reduces the incentive
compensation opportunities provided under or terminates any such plan in which the Executive
participates, the Company shall offer to the Executive participation in another plan that
provides the Executive with an incentive compensation opportunity at least comparable to
that which was reduced or eliminated. The target performance measures under the Company’s
annual incentive program for each year shall be based on a reasonably achievable level of
operating income or other performance measures established by the Management Development and
Compensation Committee of the Board, adjusted for extraordinary events.
(b) Without limiting the generality of the foregoing Section 5.3(a), (i) during the
Term of this Agreement, the Company shall provide the Executive with an annual cash
incentive opportunity which at target performance levels is at least equal to 125% of the
Executive’s Base Salary, and (ii) beginning in February 2007, the Company shall provide the
Executive with annual long-term incentive awards under the Company’s stock incentive plan or
plans then in effect and available for the issuance of long-term incentive awards to senior
officers of the Company generally, consisting of approximately 40% stock options and 60%
three-year performance restricted share grants (based on the present value of the awards),
with an aggregate present value on the date of grant at least equal to 150% of Executive’s
target annual cash compensation for the year, which is the sum of the Executive’s Base
Salary and annual incentive opportunity at target performance levels. For purposes of the
preceding sentence, the present value of the awards shall be determined applying reasonable
Black Scholes assumptions in the case of stock options and using the market value of the
Common Stock on the date of grant in the case of restricted stock.
(c) Payment of any annual cash incentive opportunities or cash incentive awards shall
be made no later than March 15 of the year following the year in which such opportunity or
award was no longer subject to a substantial risk of forfeiture.
5.4 Other Benefits. The Executive shall participate on the same terms and conditions
as all other senior officers of the Company in all other benefit plans, programs, or arrangements
as may be now or hereafter sponsored or maintained for senior officers of the Company generally and
shall participate on the same terms and conditions as other senior officers generally participate.
5.5 Fringe Benefits. During the Term of this Agreement, the Executive shall be
entitled to receive all perquisites and fringe benefits which the Company makes available to senior
officers of the Company generally. Without limiting the generality of the foregoing, the Executive
shall be entitled to the reasonable use of the Company’s aircraft for personal use, provided such
aircraft is available, and the Company shall pay to the Executive, promptly upon receipt of a
certification from the Executive’s tax preparer, a “gross up” payment in an amount such that after
payment by the Executive of all taxes, including, without limitation, any income taxes imposed upon
such gross-up payment, the Executive retains an amount of such gross-up payment equal to the income
tax imposed with respect to such benefits.
5.6 Expenses. During the Term of this Agreement, the Executive is authorized to
incur, and shall be reimbursed by the Company in accordance with the Company’s reimbursement policy
for all reasonable and customary business-related expenses, including travel, entertainment, gifts
and similar items, incurred by the Executive in connection with his employment hereunder.
5.7 Working Facilities. During the Term of this Agreement, the Company shall furnish
the Executive with offices and working facilities in the Company’s principal executive offices and
shall provide secretarial and other assistance suitable to Executive’s position and adequate for
the performance of his duties hereunder.
5.8 Vacation. During the Term of this Agreement, the Executive shall be entitled to
vacation in accordance with the Company’s current policies and practices, provided that the
Executive shall be entitled to not less than five (5) weeks of vacation during each year of this
Agreement, or such greater period as the Board shall approve, without reduction in salary or other
benefits.
5.9 Annual Review. During the Term of this Agreement, the Board (or the Management
Development and Compensation Committee of the Board) shall in good faith review the Executive’s
total compensation package (including but not limited to the Base Salary provided for in Section
5.1, the benefit plans provided for in Section 5.2 and the short and long-term incentive
compensation opportunity provided for in Section 5.3) at least annually for possible increase,
taking into account, among other things, (i) the performance of the Executive, (ii) the performance
of the Company, and (iii) the overall compensation of executives in similar positions at comparable
companies.
6. Compensation in the Event of Executive’s Disability. During the Term of this
Agreement, during any period that the Executive fails to perform the Executive’s full-time duties
hereunder as a result of incapacity due to physical or mental illness, the Company shall pay, or
cause to be paid, to the Executive his Base Salary at the rate in effect at the commencement of any
such period, together with all compensation and benefits payable to the Executive under the terms
of any compensation or benefit plan, program or arrangement maintained by the Company for the
benefit of the Executive during such period, until this Agreement is terminated by the Company for
Disability; provided, however, that such payments shall be reduced by the sum of the amounts, if
any, payable to the Executive at or prior to the time of any such payment under disability benefit
plans of the Company, which amounts were not previously applied to reduce any such payment.
7. Termination Compensation and Benefits.
7.1 If the Executive’s employment is terminated for any reason during the Term of this
Agreement, the Company shall pay to the Executive (or in accordance with Section 11.2 in the event
of the Executive’s death), (i) the Executive’s Base Salary through the Date of Termination at the
rate in effect immediately prior to the time the Notice of Termination is given, (ii) all
compensation and benefits (other than severance compensation and benefits) payable to the Executive
through the Date of Termination or thereafter under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, including any short-term or
long-term incentive compensation to which the Executive is entitled, by virtue of previous awards,
in accordance with the terms of the plans in which Executive participates, and (iii) any
unreimbursed expenses payable pursuant to Section 5.7 of the Agreement that were incurred before
the Date of Termination.
7.2 In the event the Executive’s employment is terminated by the Executive for Good Reason or
by the Company for any reason other than Cause, death of the Executive or Disability, the Company
shall (i) pay the Executive, in addition to amounts payable under Section 7.1 and 7.4, a lump sum
cash payment to be made within thirty (30) days after the Date of Termination equal to the product
of (A) the sum of (w) the higher of the Base Salary in effect immediately prior to the occurrence
of the event or circumstance upon which the Notice of Termination is based or the Base Salary in
effect immediately prior to the date of the Notice of Termination plus (x) the higher of the annual
cash incentive award that may be earned by the Executive if target performance levels are achieved
in the year in which the Date of Termination occurs or the highest annual incentive award that was
actually paid by the Company to the Executive for any year in the three preceding years, times (B)
the greater of (y) one or (z) a fraction the numerator of which is the number of months (rounded up
to the nearest whole month) remaining in the Term of this Agreement from the Date of Termination
and the denominator of which is 12; and (ii) continue the benefits provided for in Section 5.2 of
this Agreement for the remaining Term of this Agreement, provided that such benefits shall be
discontinued if comparable benefits are obtained from a subsequent employer during the remaining
Term of this Agreement.
7.3 In the event that the Executive’s employment is terminated by the Executive for any reason
other than death, Disability or Good Reason or is terminated by the Company for Cause, the Company
shall pay the Executive any amounts due pursuant to Section 7.1 and 7.4 hereof.
7.4 If the Executive’s employment is terminated for any reason during the Term of this
Agreement, the Company shall pay the Executive’s normal post-termination compensation and benefits
(other than severance compensation and benefits) to the Executive as such payments become due.
Such normal post-termination compensation and benefits (other than severance compensation and
benefits) shall be determined under, and paid in accordance with the Company’s retirement,
insurance and other compensation or benefit plans, programs and arrangements (other than this
Agreement), as applicable.
7.5 (a) Anything in this Agreement to the contrary notwithstanding, in the event it
shall be determined that any payment, benefit, or distribution by the Company or its
affiliates to or for the benefit of the Executive, whether paid or payable or distributed or
distributable pursuant to
the terms of this Agreement or otherwise (a “Payment”), would be
subject to the excise tax
imposed by Section 4999 of the Code, or any interest or penalties with respect to such
excise tax (such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the “Excise Tax”), then the Executive shall be entitled to
receive an additional payment (“Gross-Up Payment”) in an amount such that after payment by
the Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including, without limitation, any income taxes and Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 7.5(c) hereof, all determinations required to
be made under this Section 7.5, including whether a Gross-Up Payment is required the amount
of such Gross-Up Payment and the assumptions to be used in arriving at such determinations,
shall be made by a nationally recognized accounting firm designated by the Company (the
“Accounting Firm”) which shall provide detailed supporting calculations both to the Board
and the Executive within fifteen (15) business days after the Date of Termination and/or
such earlier date(s) as may be requested by the Company or the Executive (each such date and
the Date of Termination shall be referred to as a “Determination Date” for purposes of this
Section 7.5(b) and Section 7.7 hereof). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. The initial Gross-Up Payment, if any, as determined
pursuant to this Section 7.5(b), shall be paid by the Company to the Executive within thirty
(30) days of the receipt of the Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the Executive
with a written opinion that failure to report the Excise Tax on the 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 under this Section 7.5(b) shall be
binding upon the Company and the Executive. 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 Gross-Up Payments which will not have been
made by the Company should have been made (“Underpayment”) consistent with the calculations
required to be made hereunder. In the event that the Company exhausts its remedies pursuant
to Section 7.5(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of an
Underpayment. Such notification shall be given as soon as practicable but no later than ten
(10) business days after the Executive is informed in writing of such claim and shall
apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the expiration of the
thirty (30) day period following the date on which he gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
(i) give the Company any information reasonably requested by the
Company relating to such claim;
(ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company;
(iii) cooperate with the Company in good faith in order to effectively
contest such claim; and
(iv) permit the Company to participate in any proceeding relating to
such claim; provided, however, that the Company shall bear and pay directly
all costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and hold the
Executive harmless, on an after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 7.5(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect
of such claim and may, at its sole option, either direct the Executive to
pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to
pay such claim and xxx for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax, including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with
respect to such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of
the Executive with respect to which such contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company’s
control of the contest shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Section 7.5(c) hereof, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s compliance with the
requirements of Section 7.5(c) hereof) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Company pursuant to Section
7.5(c) hereof, a determination is made that the Executive shall not be entitled to any
refund with respect to such claim and the Company does not notify the Executive in writing
of its intent to contest such denial of refund prior to the expiration of thirty (30) days
after such determination, then such advance shall be forgiven and shall not be required to
be repaid.
7.6 The payments provided for in Section 7.5 hereof (other than Section 7.5(c) and (d)) shall
be made not later than the thirtieth (30th) day following each Determination Date; provided,
however, that if the amounts of such payments cannot be finally determined on or before such day,
the Company shall pay to the Executive on such day an estimate, as determined by the Executive, of
the minimum amount of such payments to which the Executive is clearly entitled and shall pay the
remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in no event later than the
forty-fifth (45th) day after each Determination Date. In the event that the amount of the
estimated payments exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after
demand by the Company (together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code).
7.7 If any cash payment amounts payable to the Executive under this Agreement could reasonably
be expected to result in additional tax pursuant to Section 409A of the Code to the Executive on
account of being a ‘specified employee,’ as such term is defined under Section 409A of the
Code, such cash payment amounts shall be suspended during the six-month period following the
Executive’s date of termination. The Company is entitled to determine whether any cash payment
amounts under this Agreement are to be suspended, and the Company shall have no liability to the
Executive for any such determination or any errors made by the Company in identifying the Executive
as a specified employee. If any cash payment amounts are suspended pursuant to the foregoing, such
amounts shall be made on the earlier of (i) the first business day following the expiration of the
six-month period referred to in the first sentence of this subsection or (ii) the date of the
Executive’s death. Any amounts so suspended shall earn interest thereon, if applicable, calculated
based upon the then prevailing monthly short-term applicable federal rate. If the continuation of
benefits to the Executive under this Agreement could reasonably be expected to result in additional
tax pursuant to Section 409A of the Code, the Company may elect to suspend continuation of the
benefits unless the Executive elects to continue benefits coverage that otherwise would be
suspended under this subsection and to pay the cost of such coverage at the rate generally charged
by the Company (which, in the case of group medical coverage shall be the applicable COBRA cost),
and the Executive shall be reimbursed such cost (reduced by the amount of the Executive’s required
premium contributions) on the first business day of the month following the expiration of the
six-month period referred to above.
8. Termination Procedures.
8.1 Notice of Termination. During the Term of this Agreement, any purported
termination of the Executive’s employment (other than by reason of death) shall be communicated by
written Notice of Termination from one party hereto to the other party hereto in accordance with
Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice
which shall indicate the specific termination provision in this Agreement relied upon and, in the
case of a termination by the Company for Cause or by the Executive for Good Reason, 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. Further, a Notice of Termination for
Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board
which was called and held for the purpose of considering such termination (after reasonable notice
to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be
heard before the Board) finding that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in the definition of Cause herein, and specifying the particulars
thereof in detail.
8.2 Date of Termination. “Date of Termination,” with respect to any purported
termination of the Executive’s employment during the Term of this Agreement, shall mean (i) if the
Executive’s employment is terminated by his death, the date of his death, (ii) if the Executive’s
employment is terminated by the Executive other than for Good Reason, the date specified in the
Notice of Termination (which shall not be less than one hundred eighty (180) days after such Notice
of Termination is given), (iii) if the Executive’s employment is terminated by the Company for
Cause, on the date that the Notice of Termination is sent by the Board in accordance with Section
8.1, and (iv) if the Executive’s employment is terminated for any other reason, the date specified
in the Notice of Termination (which shall not be less than sixty (60) days) after such Notice of
Termination is given.
9. No Mitigation. The Company agrees that, if the Executive’s employment hereunder is
terminated during the Term of this Agreement, the Executive is not required to seek other
employment or to attempt in any way to reduce any amounts payable to the Executive by the Company
hereunder. Further, the amount of any payment or benefit provided for hereunder (other than
pursuant to Section 7.2 or 7.5(d) hereof) shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or otherwise, provided, that
the proviso to Section 7.2(ii) and Section 7.5(d) shall apply.
10. Confidentiality and Noncompetition.
10.1 The Executive shall not, during or after the Term of this Agreement, without the prior
written consent of the Company disclose to any entity or person any information which is treated as
confidential by the Company or any of their subsidiaries or affiliates (each, a “Company Entity”),
and is not generally known or available in to the public, provided, that the Executive may make
disclosures of such confidential information (i) during the Term of this Agreement in the course of
and to the extent required by and consistent with the performance of his duties hereunder, and (ii)
to the extent required by law or legal process.
10.2 Except as permitted by the Company with its prior written consent, the Executive shall
not, during the Executive’s employment with the Company and for the period ending twenty-four (24)
months after the Executive’s employment with the Company terminates for any reason, directly or
indirectly, own, enter into the employ of or render, any services (whether as a consultant or
otherwise) to any person, firm or corporation within the United States or any foreign country in
which the Company is doing or is contemplating doing business on the Date of Termination which is a
competitor of any Company Entity with respect to products which any Company Entity is then
producing or services which any Company Entity is then providing (a “Competitor”), or approach,
canvass, solicit, or otherwise endeavor to entice away from the Company, any customer in respect of
any service or product in any way competitive with the services or products supplied by any Company
Entity to such customer, or solicit the services of, or endeavor to entice away from the Company,
any director, executive officer or employee of the Company; provided, that it shall not be a
violation of this provision for the Executive to be employed by, or render services to, a
Competitor, if the Executive renders those services only with respect to those lines of business of
the Competitor which are not directly competitive with a line of business of any Company Entity or
are located in any country in which the Company does not do business and was not contemplating
doing business on the Date of Termination.
10.3 The Executive acknowledges and agrees that any breach of this Section 10 by the Executive
will result in immediate and irreparable harm to the Company, the amount of which will be extremely
difficult to ascertain, and that the Buyer could not be reasonably or adequately compensated by
damages in an action at law. For these reasons, the Company shall have the right to obtain such
preliminary, temporary or permanent mandatory or restraining injunctions, orders or decrees as may
be necessary to protect the Company against or on account of any breach by the Executive of the
provisions of this Section 10 without proof of any actual damage caused to the Company.
11. Successors; Binding Agreement.
11.1 In addition to any obligations imposed by law upon any successor to the Company, the
Company will require any 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, as the case
may be, to expressly 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 had taken place.
Failure of the Company to obtain such assumption and agreement upon the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive’s employment for Good Reason, except
that, for purposes
of implementing the foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination.
11.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive shall die while any amount would still be payable to the
Executive hereunder (other than amounts which, by their terms, terminate upon the death of the
Executive) if the Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the executors, personal
representatives or administrators of the Executive’s estate.
12. Notices. For the purpose of this Agreement, notices and all other communications
provided for in the Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addressees set forth below, or to such other address as either party
may have furnished to the other in writing in accordance herewith, except that notice of change of
address shall be effective only upon actual receipt:
To the Company:
Xxxxxxxxx World Industries, Inc.
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
X.X. Xxx 0000
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
To the Executive:
At the Executive’s residence address as maintained by the Company in the
regular course of its business for payroll purposes.
13. Miscellaneous. If the Executive, in his capacity as a director, votes for, or in
his capacity as an officer, approves in writing, any action that will adversely affect the
Executive’s rights under this Agreement, such vote or approval shall be deemed to constitute the
Executive’s consent to such action under this Agreement; otherwise, no provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officers as may be specifically designated by the
Board. No waiver by any party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by any party which are not expressly set
forth in this Agreement, provided that nothing contained herein shall be interpreted to amend or
nullify those obligations of the Company and the Executive pursuant to the Change in Control
Agreement and the Indemnification Agreement by and between the Company and the Executive, as the
same may be amended from time to time. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations or warranties,
whether oral or written, by any officer, employee or representative of any party hereto; and any
prior agreement of the parties hereto in respect of the subject matter contained herein is hereby
terminated and canceled, except as otherwise provided in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania, without giving effect to choice of law principles.
All references to sections of the Code shall be deemed also to refer to any successor provisions to
such sections. There shall be withheld from any payments provided for hereunder any amounts
required to be withheld under federal, state or local law and any additional withholding amounts to
which the Executive has agreed. The obligations under this Agreement of the Company or the
Executive which by their nature and terms require satisfaction after the end of the Term shall
survive such event and shall remain binding upon such party.
14. Validity. The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
15. Counterparts. This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original but all of which together will constitute one and the same
instrument.
16. Settlement of Disputes; Arbitration. All claims by the Executive for benefits
under this Agreement shall be in writing and shall be directed to and initially determined by the
Board. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to
the Executive in writing and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within sixty (60) days after notification by the Board
that the Executive’s claim has been denied. To the extent permitted by applicable law and subject
to the right of the Company to seek equitable relief in a court pursuant to Section 10.3, any
further dispute or controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration in Allegheny County, Pennsylvania, in accordance with the rules for the
resolution of employment law disputes of the American Arbitration Association then in effect.
Judgment may be entered on the arbitrator’s award in any court having jurisdiction.
17. Fees and Expenses. The Company shall pay to the Executive all reasonable legal
fees and expenses incurred by the Executive (i) in connection with his pre-signing review of this
Agreement and the related Change in Control Agreement and Indemnification Agreement, and (ii) in
disputing any termination or in seeking in good faith to obtain or enforce any benefit or right
provided by this Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of Section 4999 of the Code to any payment or benefit provided
hereunder; provided, however, the Company shall not be required to pay to the Executive legal fees
and expenses to the extent such legal fees and expenses were incurred in connection with a contest
controlled by the Company pursuant to Section 7.5(c) hereof in connection with which the Company
complied with its obligations under said Section 7.5(d). Such payments shall be made within thirty
(30) business days after delivery of the Executive’s written request for payment accompanied with
such evidence of fees and expenses incurred as the Company reasonably may require.
18. Other Agreements. Simultaneously with the execution of this Agreement, the
Company and the Executive shall enter into a Change in Control Agreement (“Change in Control
Agreement”).
19. Coordination of Benefits. Notwithstanding anything in this Agreement to the
contrary, if the Executive is paid “Severance Payments” under the Change in Control Agreement dated
October 27, 2008 between the Company and the Executive, in connection with a Change in Control (as
defined therein), then this Agreement (including Section 10.2 hereof) shall forthwith terminate and
the Executive shall not be entitled to the payment of any amounts under this Agreement other than
pursuant to Section 7.1 hereof (and any amounts theretofore paid to the Executive pursuant to
Section 7.2 hereof shall be credited against any “Severance Payments” to which the Executive is
entitled under said Change in Control Agreement).
20. Definitions. For purposes of this Agreement, the following terms shall have the
meaning indicated below:
(a) “Base Salary” shall have the meaning stated in Section 5.1 hereof.
(b) “Board” shall mean the Board of Directors of Xxxxxxxxx World Industries,
Inc.
(c) “Cause” for termination by the Company of the Executive’s employment, for
purposes of this Agreement, shall mean (i) the willful and continued failure by the
Executive to substantially perform the Executive’s duties hereunder (other than any such
failure resulting from the Executive’s incapacity due to physical or mental illness or any
such actual or anticipated failure after the issuance of a Notice of Termination for Good
Reason by the Executive pursuant to Section 8.1) after a written demand for substantial
performance is delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially performed
the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company, monetarily or otherwise, including but
not limited to fraud or embezzlement by the Executive, or (iii) the Executive’s conviction
(or entering into a plea bargain admitting guilt) of any felony, or (iv) a material breach
by the Executive of this Agreement, including a violation of Section 10. For purposes of
clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive’s part
shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that the Executive’s act, or failure to act, was in the
best interest of the Company. In the event of a dispute concerning the application of this
provision, no claim by the Company that Cause exists shall be given effect unless the
Company establishes to the Board by clear and convincing evidence that Cause exists.
(d) “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time.
(e) “Common Stock” shall mean the common stock, par value $1.00 per share of
the Company.
(f) “Date of Termination” shall have the meaning stated in Section 8.2 hereof.
(g) “Disability” shall be deemed the reason for the termination of this
Agreement by the Company, if, as a result of the Executive’s incapacity due to physical or
mental illness, the Executive shall have been absent from the full-time performance of the
Executive’s duties hereunder for a period of six (6) consecutive months, the Company shall
have given the Executive Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned to the
full-time performance of the Executive’s duties.
(h) “Excise Tax” shall have the meaning stated in Section 7.5(a) hereof.
(i) “Executive” shall mean the individual named in the first paragraph of this
Agreement.
(j) “Good Reason” for termination by the Executive of the Executive’s
employment shall mean the occurrence (without the Executive’s express written consent), of
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 in paragraphs (i) or (ii) below, such act or
failure to act is corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(i) the assignment to the Executive of any duties inconsistent with the
Executive’s status as an executive officer of the Company or a substantial
alteration in the nature or status of the Executive’s responsibilities
consistent with the title set forth in Section 4, unless the Executive has
indicated to the Company his intention to terminate his employment prior to
the end of the Term, and such assignment or alteration is made by the Board
in good faith in order to facilitate a transition to successor management;
(ii) any material breach of any provision of this Agreement by the
Company;
(iii) the relocation of the Executive’s principal place of employment
to a location more than 250 miles from the Executive’s principal place of
employment (unless such relocation is closer to the Executive’s principal
residence) or the Company’s requiring the Executive to be based anywhere
other than such principal place of employment (or permitted relocation
thereof) except for required travel on the Company’s business to an extent
substantially consistent with the Executive’s present business travel
obligations;
(iv) a reduction by the Company in the Executive’s Base Salary as in
effect on the date hereof or as the same may be increased from time to time
except for across-the-board salary reductions similarly affecting all senior
officers of the Company and all senior officers of any person in control of
the Company; or
(v) the failure by the Company to continue in effect any employee
benefit plan or incentive compensation plan in which the Executive currently
participates which is material to the Executive’s total compensation, unless
such plan or arrangement has been replaced by a new plan on a basis not
materially less favorable, both in terms of the amount or timing of payment
of benefits provided and the level of the Executive’s participation relative
to other participants.
The Executive’s right to terminate the Executive’s employment for Good Reason shall not be
affected by the Executive’s incapacity due to physical or mental illness. The Executive’s
continued employment shall not constitute consent to, or a waiver of rights with respect to,
any act or failure to act constituting Good Reason hereunder.
The Executive’s right to terminate employment for Good Reason shall be subject to the
following conditions: (i) any amounts payable upon a Good Reason termination shall be paid
only if the Executive actually terminates employment within two (2) years following the
initial existence of the Good Reason condition and (ii) the amount, time and form of payment
upon a termination of employment for Good Reason shall be the same as the amount, time and
form of payment payable upon an involuntary termination without Cause. The Executive must
also provide notice to the Company of the Good Reason condition within ninety (90) days of
the initial existence of the condition and the Company must be given at least thirty (30)
days to remedy such situation.
(k) “Gross-Up Payment” shall have the meaning stated in Section 7.6(a) hereof.
(l) “Notice of Termination” shall have the meaning stated in Section 8.1
hereof.
(m) “Original Agreement” shall have the meaning stated in the Recitals hereof.
(n) “Severance Payments” shall mean those payments described in Section 7.2
hereof.
(o) “Term” shall have the meaning stated in Section 3 hereof.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first
above written.
|
XXXXXXXXX WORLD INDUSTRIES, INC. |
||||
| By: | ||||
| Name: | Xxxxxx X. XxXxxxxxx | |||
| Title: | Senior Vice President, Human Resources | |||
|
EXECUTIVE |
||||
| Xxxxxxx X. Xxxxxxxx | ||||
