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EXHIBIT 10.24
SUN COAST INDUSTRIES, INC.
Severance Agreement
This Severance Agreement ("Agreement") is made and effective as of the
8th day of August 1995, by and between Sun Coast Industries, Inc., a Delaware
corporation having its principal place of business in Dallas, Dallas County,
Texas (the "Company"), and X. Xxxxxx Xxxx, an individual currently residing in
Plano, Texas ("Employee").
RECITALS
The Board of Directors of the Company (the "Board") has determined
that it is in the best interest of the Company to assure that the Company will
have the continued dedication of the Employee, notwithstanding the possibility,
threat or occurrence of a Change of Control (as defined below). The Board
believes it is imperative to diminish the inevitable distraction of the
Employee by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control, to encourage the Employee's full attention and
dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide Employee with compensation and
benefit arrangements upon a Change of Control which insures that such
compensation and benefits are competitive with other corporations.
AGREEMENT
Now, therefore, in consideration of Employee's continued employment by
the Company, as well as the promises, covenants and obligations contained
herein, the Company and Employee agree as follows:
1. Payment of Severance Amount. Upon the occurrence of a
Termination Event (as defined in paragraph 2), the Company shall:
(a) pay Employee an amount equal to (i) Employee's Base
Annual Salary (as defined in paragraph 2) multiplied by the Employment
Term Factor (as defined in paragraph 2), (ii) less all principal of
any loans from the Company to Employee, as well as any interest then
due thereon, payable as a lump sum cash payment within 30 days after
the date of the termination constituting such Termination Event (the
"Termination Date"), provided, Employee may elect to have such amount
paid in equal monthly installments over a period not to exceed 13
months;
(b) provide Employee with life, disability and medical
insurance at the level provided at either the date of the Change of
Control (as defined in paragraph 2) or the Termination Date, as
Employee shall in his sole discretion elect by providing written
notice thereof to the Company, for a period of time equal to twelve
(12) months multiplied by the Employment Term Factor (as defined in
paragraph 2) following the Termination Date, or such shorter period
until Employee shall obtain substantially equivalent insurance
coverage from a subsequent employer, if any, in the same manner as if
Employee's employment had not been terminated until the end of such
period. Employee shall immediately notify the Company upon obtaining
any insurance from a
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subsequent employer and shall provide all information required by the
Company regarding such insurance to enable the Company to make a
determination of whether such insurance is substantially equivalent.
(c) for a period of twelve months from and after such
Termination Event, or until such earlier time as the Employee obtains
other employment, provide the Employee with outplacement services of a
firm of Employee's choice.
(d) pay all reasonable legal fees and expenses incurred
by Employee in seeking to obtain or enforce any right or benefit
provided by the Agreement.
2. Definitions.
(a) A "Termination Event" shall be deemed to have
occurred if:
(i) The Company or any successor thereto shall
terminate Employee's employment for any reason other than for
Cause; or
(ii) The Employee shall voluntarily terminate his
employment within one (1) year of a Change of Control for
"Good Reason." For purposes of this Agreement, "Good Reason"
shall mean any of the following (without Employee's express
written consent):
(A) A significant and material change in
the nature or scope of the Employee's duties from
those engaged in immediately prior to the date on
which a Change of Control occurs to duties that are,
taken as a whole, inconsistent with Employee's range
and duration of experience; provided, however, that
Employee's title, scope of responsibility and
authority may be altered (by reason of the creation
of or filling of offices with the Company senior to
Employee's office or otherwise) without constituting
"Good Reason" so long as Employee's new duties are
not inconsistent with his prior experience;
(B) A reduction in Employee's base
salary from that provided to him immediately prior to
the date the Change of Control occurs;
(C) A diminution in Employee's
eligibility to participate in bonus, stock option or
other incentive compensation plans or employee
benefit plans (including medical, dental, life
insurance and long-term disability plans) provided
for executives with comparable duties; and
(D) Any required relocation of Employee
of more than thirty miles from Employee's the current
location (including any required business travel in
excess of the greater of 90 days per year or the
level of business travel of Employee prior to the
most recent Change of Control).
(b) A "Change of Control" shall be deemed to have
occurred if:
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(i) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least fifty-one percent (51%) of the
Board, provided that any person becoming a director subsequent
to the date hereof whose election, or nomination for election
by the Company's stockholders was approved by a vote of at
least a majority of the directors then comprising the
Incumbent Board shall be, for purposes of this Agreement,
considered as though such person were a member of the
Incumbent Board;
(ii) the stockholders of the Company shall approve
a reorganization, merger or consolidation, in each case, with
respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than
fifty percent (50%) of the combined voting power entitled to
vote generally in the election of directors of the
reorganized, merged or consolidated company's then outstanding
voting securities, or of a liquidation or dissolution of the
Company or of the sale of all or substantially all of the
assets of the Company; or
(iii) the stockholders of the Company shall approve
a sale of all or substantially all of the assets of the
Company.
(c) "Employment Term Factor" is equal to (i) the sum of
(a) twelve plus (b) the number of years' service Employee has with the
Company (ii) divided by twelve. In no event will the Employment Term
Factor exceed three (3.0).
(d) "Base Annual Salary" shall, as determined on the
Termination Date, be equal to the greater of (i) Employee's annual
salary on the date of the earliest Change of Control to occur during
the eighteen month period prior to the Termination Date plus any
bonuses or special incentive payments received in the twelve months
prior to such Change of Control or (ii) Employee's annual salary on
the Termination Date plus any bonuses or special incentive payments
received in the prior twelve months.
(e) "Cause" as used herein with respect to termination of
Employee's employment shall mean termination upon (A) the willful and
continued failure by Employee to substantially perform Employee's
duties with the Company (other than any such failure resulting from
Employee's incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to you by the Chief
Executive Officer of the Company or the Board of Directors, which
specifically identifies the manner in which such officer or the Board
of Directors believes that Employee has not substantially performed
Employee's duties, or (B) the willful engaging by Employee in
misconduct which is materially injurious to the Company, monetarily or
otherwise. For purposes of this paragraph, no act, or failure to act,
on Employee's part shall be considered "willful" unless done, or
omitted to be done, by Employee not in good faith and without
reasonable belief that Employee's action or omission was in the best
interest of the Company. Notwithstanding the foregoing, Employee
shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to Employee a copy of a notice of
termination from the Chief Executive Officer of the Company or the
Board of Directors, after reasonable notice to Employee and an
opportunity for Employee, together
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with Employee's counsel, to be heard before the Board of Directors,
finding that, in the good faith opinion of the Board, Employee was
guilty of conduct set forth above in clauses (A) or (B) of the first
sentence of this subparagraph and specifying the particulars thereof
in detail.
3. Parachute Payment Limitations. Any other provision of this
Agreement to the contrary notwithstanding, if the total amount of payments and
benefits to be paid or provided to Employee under this Agreement which are
considered to be "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), when added to any other
such "parachute payments" received by Employee from the Company or from a
member of the Company's affiliated group (as provided in Code Section
280G(d)(5)), whether or not under this Agreement, are in excess of the amount
Employee can receive without causing the Company to lose its deduction with
respect to all or any portion of such total amount on account of Code Section
280G, the amount of payments and benefits to be paid or provided to Employee
under this Agreement which are parachute payments shall be reduced to the
highest amount which will not cause the Company to lose its deduction with
respect to any such payments and benefits on account of Code Section 280G.
4. Notices. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and shall be
deemed to have been duly given when personally delivered or when mailed by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Company to: Sun Coast Industries, Inc.
0000 Xxxxx Xxxxxxxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Chairman of the Board
If to Employee to: X. Xxxxxx Xxxx
0000 Xxxxxxx
Xxxxx, Xxxxx 00000
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices of changes of address shall be
effective only upon receipt.
5. Applicable Law. This contract is entered into under, and
shall be governed for all purposes by, the laws of the State of Texas.
6. Severability. If a court of competent jurisdiction determines
that any provision of this Agreement is invalid or unenforceable, then the
invalidity or unenforceability of that provision shall not affect the validity
or enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
7. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
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8. Withholding of Taxes. Company may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as may be
required pursuant to any law or governmental regulation or ruling.
9. No Employment Agreement. Nothing in this Agreement shall give
employee any rights (or impose any obligations) to continued employment by the
Company or any subsidiary thereof or successor thereto, nor shall it give the
Company any rights (or impose any obligations) with respect to continued
performance of duties by Employee for the Company or any subsidiary thereof or
successor thereto.
10. Assignment.
(a) This Agreement is personal in nature and neither of
the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except
as provided in the remainder of this paragraph 10. Without limiting
the foregoing, Employee's right to receive payments hereunder shall
not be assignable or transferable, whether by pledge, creation of a
security interest or otherwise, other than a transfer by his will or
by the laws of descent or distribution, and in the event of any
attempted assignment or transfer contrary to this paragraph 10 the
Company shall have no liability to pay any amount so attempted to be
assigned or transferred. This Agreement shall inure to the benefit of
and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees
and legatees.
(b) The Company may: (x) as long as it remains obligated
with respect to this Agreement, cause its obligations hereunder to be
performed by a subsidiary or subsidiaries for which Employee performs
services, in whole or in part; (y) assign this Agreement and its
rights hereunder in whole, but not in part, to any corporation with or
into which it may hereafter merge or consolidate or to which it may
transfer all or substantially all of its assets, if said corporation
shall by operation of law or expressly in writing assume all
liabilities of the Company hereunder as fully as if it has been
originally named the Company herein; but may not otherwise assign this
Agreement or its rights hereunder. Subject to the foregoing, this
Agreement shall inure to the benefit of and be enforceable by the
Company's successors and assigns.
11. Modifications. This Agreement shall not be varied, altered,
modified, canceled, changed or in any way amended except by mutual agreement of
the parties in a written instrument executed by the parties hereto or their
legal representatives.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered as of the day and year first above written.
SUN COAST INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman of the Board
EMPLOYEE
/s/ X. Xxxxxx Xxxx
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X. Xxxxxx Xxxx
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