SETTLEMENT AGREEMENT
Exhibit 10.16
This SETTLEMENT AGREEMENT (the “Agreement”) is made as of July 31, 2018 by and among XXXXX MFG. & ELECTRONICS CORP., a New York corporation (“Xxxxx”), THE ARTICLE 6 MARITAL TRUST UNDER THE FIRST AMENDED AND RESTATED XXXXX XXXXXX REVOCABLE TRUST DATED APRIL 2, 2007 (the “Xxxxxx Trust”), and XXXX X. XXXX, XXXXXXX WOOL, XXXXX XXXXXXX, XXXX XXXXXXXX, XXXXXX XXXXXXX, and XXXXX X. XXXX, in their individual capacities (each, a “Director” and collectively, the “Directors”). All of the foregoing are each, a “Party” and collectively, the “Parties.”
Recitals:
X. Xxxxx is a corporation whose common stock is publicly traded on the NYSE American market.
B. The Xxxxxx Trust is a shareholder of Xxxxx, beneficially owning 93,000 shares of the Xxxxx common stock as of the date hereof.
C. The Directors are members of the Board of Directors of Xxxxx.
D. The Xxxxxx Trust has asserted various claims against Xxxxx and the Directors pertaining to matters of corporate governance and director compensation.
E. The Parties have agreed to settle such claims in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing, the Parties hereby agree as follows:
1. Confirmation by Xxxxx. Xxxxx confirms the prior action of its Board of Directors resolving that subsequent to January 31, 2019, non-employee directors shall no longer be eligible to participate in company-sponsored medical health insurance programs, thereby eliminating contributions by Xxxxx for health insurance for the benefit of non-employee directors.
2. Additional Agreements by Xxxxx.
(a) Effective upon the execution and delivery of this Agreement by all of the Parties:
(i) The Retired Director Compensation Program, as most recently amended effective June 2, 2017, in effect for director Xxxxx Xxxxxxx, is terminated;
(ii) The Director Contingent Severance Compensation Program, adopted March 2, 2018, is terminated;
(iii) Xxxxx shall pay to the attorney trust account of Xxxxxxx Xxxxxxx Xxxxxx, on account of attorneys’ fees incurred by the Xxxxxx Trust in connection with the subject matter of this Agreement, $5,000; and
(iv) Xxxxx shall, within the applicable time limit, file with the United States Securities and Exchange Commission (“SEC”), a report on Form 8-K reporting the Parties’ entry into this Agreement.
(b) Xxxxx shall not implement any increase to the compensation paid to non-employee members of its Board of Directors at any time effective from December 31, 2017 through December 31, 2022, except for a single increase in directors’ fees which may be implemented during such period in an amount consistent with past practice
1
.
3. Agreement by the Directors. By the execution of this Agreement:
(i) Xxxxx Xxxxxxx hereby agrees to the termination of his Retired Director Compensation Program and Mandatory Retirement Agreement dated May 10, 2011 with Xxxxx; and
(ii) Each of the other Directors hereby agree to the termination of their respective Director Contingent Severance Compensation Agreements dated March 2, 2018 with Xxxxx.
4. Agreements by the Xxxxxx Trust. The Xxxxxx Trust:
(i) Confirms the withdrawal of a shareholder proposal submitted to Xxxxx under cover of a letter dated May 16, 2018 and the filing with the SEC of a notification of such withdrawal; and
(ii) Agrees that it will neither personally, nor encourage any other shareholder of Xxxxx to, submit a shareholder proposal concerning any matter pertaining to Xxxxx director compensation or director term of service for any meeting of Xxxxx shareholders to be held through the year 2022.
5. Representations and Warranties. Each of Xxxxx and the Xxxxxx Trust represents and warrants that this Agreement has been authorized by all requisite corporate or trust action, as applicable, and has been duly executed and delivered by an authorized person.
6. Release. As used herein “Claims” means the allegations made against Xxxxx and the Directors under cover of a letter of the law firm Xxxxxxx Xxxxxxx Xxxxxx dated June 22, 2018 arising from actions taken by Xxxxx and/or the Directors before that date. The Xxxxxx Trust on behalf of itself and its beneficial owners, hereby releases and forever discharges and holds harmless Xxxxx, the Directors, and each of Xxxxx’x past, present and future employees, stockholders, officers, directors, agents, representatives, and their respective successors and assigns (collectively, the “Released Parties”), jointly and severally, from any and all claims, causes of action, remedies, damages, liabilities, debts, suits, demands, actions, costs, expenses, fees, controversies, set-offs, third party actions or proceedings of whatever kind or nature, whether at law, equity, administrative, arbitration or otherwise, whether known or unknown, foreseen or unforeseen, accrued or unaccrued, suspected or unsuspected, which it may now have, has ever had, or in the future has, against any and each of the Released Parties arising directly or indirectly from or in any way related to the Claims. In furtherance, but not in limitation of the foregoing, the Xxxxxx Trust covenants that it will not file a lawsuit against Xxxxx, the Directors, or any of Xxxxx’x other directors, officers, employees, attorneys or other representatives, asserting claims based upon the same or similar allegations to the Claims.
7. No Admission of Liability. The execution of this Agreement by Xxxxx and the Directors shall not be construed as an admission of any allegation of liability or wrongdoing by any of them.
8. Confidentiality. Except for the filing by Xxxxx of a report on Form 8-K as contemplated by this Agreement, unless written consent is granted, no Party, nor any of their respective attorneys, agents or representatives shall disclose this Agreement or discuss the terms hereof with any third party. However, the information in this Agreement may be communicated to the Parties’ attorneys, and other professional advisors.
9. Knowing and Voluntary Agreement. The Parties represent and acknowledge that they have had a reasonable amount of time to consider this Agreement, have had the opportunity to consult with counsel, and that in executing this Agreement rely entirely upon their own judgment, beliefs and interests and the advice of their counsel, and they do not rely and have not relied upon any representation or statement made by the other Parties, or by any agents, representatives or attorneys of the other Parties, with regard to the subject matter, basis or effect of this Agreement or otherwise, other than as specifically stated in this Agreement. The Parties specifically acknowledge that all agreements and releases contained herein are knowing and voluntary.
2
10. Miscellaneous.
(a) This Agreement shall be binding upon and inure to the benefit of the Parties and their respective legal representatives, agents, successors, assigns, heirs, and executors.
(b) This Agreement contains the entire agreement between the Parties with respect to the subject matter, and supersedes all prior agreements or understandings dealing with the same subject matter.
(c) The validity, effect and performance of this Agreement and the obligations and rights of the Parties shall be determined and governed by the laws of the State of New York.
(d) No modification or amendment of this Agreement will be enforceable unless it is in writing and signed by the Party to be charged.
(e) Any dispute under this Agreement that cannot be resolved by the Parties through good faith negotiations within thirty (30) days of notification by one Party of the commencement of the dispute resolution procedures under this paragraph will, upon the written request of any Party, be exclusively resolved by final and binding arbitration, before a single arbitrator, in accordance with the rules of the American Arbitration Association for commercial disputes. The arbitration shall be conducted in New York, New York, or such other location as shall be agreed upon by the Parties. Judgment upon the award rendered by the arbitrators may be entered by any court having jurisdiction. The Parties to the arbitration proceeding shall share the costs of the arbitration.
(f) This Agreement may be executed in counterparts, all of which together shall constitute a fully-signed agreement.
[Signatures contained on the next page]
3
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
| XXXXX MFG. & ELECTRONICS CORP. | |||
| By: | /s/ Xxxxxxx X. Xxxxxxx, Xx. | ||
| Name | Xxxxxxx X. Xxxxxxx, Xx. | ||
| Title: | President and Chief Executive Officer | ||
| THE ARTICLE 6 MARITAL TRUST UNDER THE FIRST AMENDED AND RESTATED XXXXX XXXXXX REVOCABLE TRUST DATED APRIL 2, 2007 | |||
| By: | /s/ Xxxxx X. Xxxxx | ||
| Name: | Xxxxx X. Xxxxxx | ||
| Title: | Trustee | ||
| /s/ Xxxx X. Xxxx | |||
| Xxxx X. Xxxx, Individually | |||
| /s/ Xxxxxxx X. Xxxx | |||
| Xxxxxxx X. Wool, Individually | |||
| /s/ Xxxxx Xxxxxxx | |||
| Xxxxx Xxxxxxx, Individually | |||
| /s/ Xxxxxx Xxxxxxx | |||
| Xxxxxx Xxxxxxx, Individually | |||
| /s/ Xxxx Xxxxxxxx | |||
| Xxxx Xxxxxxxx, Individually | |||
| /s/ Xxxxx X. Xxxx | |||
| Xxxxx X. Xxxx, Individually | |||
4
