1
Exhibit 10.a.
AMENDED AND RESTATED
RETENTION/SEVERANCE/NON-COMPETITION AGREEMENT
As of __________________, 2000
_________________________
_________________________
_________________________
Dear ____________________:
Recently, Huffy Corporation (the "Company") announced it was exploring
strategic alternatives for the Company with PaineWebber Incorporated which
strategic alternatives could include the sale of the Company pursuant to an
asset and/or stock sale or pursuant to asset or stock sales of the Huffy
Companies (hereinafter defined) (the "Transactions"). The Board of Directors
considers you a key officer of the Company and needs your best efforts, skills
and dedication not only in the event of a Change of Control (hereinafter
defined) of the Company but also in connection with the other types of
Transactions to assure that the best interests of all shareholders are
protected, as determined by the Board of Directors. The Board of Directors
recognizes that the course of action which it decides upon and which you will be
responsible to implement may be contrary to your own personal interests and
needs. In order to assure the availability of your best efforts, skills and
dedication which are required in order to effect the Transactions to obtain the
most beneficial outcome for the shareholders, the Company wishes to amend the
Letter Agreement, dated ________________, as amended by letter agreement dated
September 9, 1997, and to fully restate such Agreement as an amended and
restated retention/severance/non-competition agreement herein (the "Agreement")
in order to retain your services, provide you with income protection in the
event of termination of your employment following a Transaction, and obtain from
you an agreement of non-competition. Specifically, the Company shall be bound,
in consideration of your continued services, as follows:
1. Upon the occurrence of any of the five events (herein called
"Trigger Events") set out in Section 3 below, the Company shall
immediately compute the amount of Severance Payment, as defined in
Section 2 below ("Severance Payment"), and the Company shall
immediately:
(a) acquire and deliver to you a non-assignable irrevocable letter
of credit in an amount equal to the Severance Payment naming you
as a beneficiary ("Letter of Credit"). The Letter of Credit
shall be issued by a major commercial bank (e.g., Bank One, NA),
and shall be redeemable by you upon the terms described herein
for a period of two (2) years following the occurrence of any of
the events described in Section 4(a). If needed, the Company
shall renew
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the Letter of Credit from time to time so that you always have a
current Letter of Credit.
(b) If the Company is unable to cause the Letter of Credit to be
promptly issued, the Company shall immediately pay to an escrow
account at Bank One, NA or a similar financial institution (the
"Escrow Agent") an amount equal to the Severance Payment.
2. (a) As used herein, Severance Payment shall mean an amount equal to
2.99 times your "base amount" as defined in Section 280G(b)(3)
of the Internal Revenue Code of 1986, as amended.
(b) (i) Notwithstanding the foregoing, in the event an independent
nationally recognized public accounting firm (the
"Accounting Firm") shall determine that receipt of all
Payments (as defined below) would subject you to the Excise
Tax, the Severance Payment shall be reduced (but not below
zero) to meet the definition of Reduced Amount. The
Accounting Firm shall make its determination of whether
such a reduction is required within 20 days of a
termination of your employment giving rise to a right to
receive the Severance Payment. The Accounting Firm shall
also make a determination, within 20 days after the
occurrence of any Transaction, whether you will be subject
to the Excise Tax with respect to any Payments other than
the Severance Payments.
(ii) Anything in this Agreement to the contrary notwithstanding,
in the event it shall be determined pursuant to the last
sentence of Section 2(b)(i) above, or as a result of a
proceeding described in Section 2(b)(iii) below, that any
Payment is subject to the Excise Tax, then you shall be
entitled to receive an additional payment from the Company
(the "Gross-Up Payment"), within 5 days after such
determination, in an amount such that, after you pay all
taxes (and any interest or penalties imposed with respect
to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect
thereto) and Excise Tax imposed upon the Gross-Up Payment,
you retain an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
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(iii) You 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 the Gross-Up Payment. Such
notification shall be given as soon as practicable, but no
later than 10 business days after you are informed in
writing of such claim. You shall apprise the Company of the
nature of such claim and the date on which such claim is
requested to be paid. You shall not pay such claim prior to
the expiration of the 30-day period following the date on
which you give 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 you
in writing prior to the expiration of such period that the
Company desires to contest such claim, you 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
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
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 you harmless, on an
after-tax basis, for any Excise Tax or income tax
(including interest and penalties) imposed as a
result of such representation and payment of costs
and expenses. Without limitation on the foregoing
provisions of this Section 2(b)(iii), the Company
shall control all proceedings taken in connection
with such contest, and, at its sole discretion, may
pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim
and may, at its sole discretion, either direct you
to pay the tax claimed and xxx for a refund or
contest the claim in any permissible manner, and you
agree 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,
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however, that, if the Company directs you to pay
such claim and xxx for a refund, the Company shall
advance the amount of such payment to you, on an
interest-free basis, and shall indemnify and hold
you harmless, on an after-tax basis, from any Excise
Tax or income tax (including interest or penalties)
imposed with respect to such advance or with respect
to any imputed income in connection with such
advance; and provided, further, that any extension
of the statute of limitations relating to payment of
taxes for the taxable year 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 the
Gross-Up Payment would be payable hereunder, and you
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.
(v) If, after you receive an amount advanced by the
Company pursuant to Section 2(b)(iii), you become
entitled to receive any refund with respect to such
claim, you shall (subject to the Company's complying
with the requirements of Section 2(b)(iii)) promptly
pay to the Company the amount of such refund
(together with any interest paid or credited thereon
after taxes applicable thereto). If, after you
receive an amount advanced by the Company pursuant
to Section 2(b)(iii), a determination is made that
you are not entitled to any refund with respect to
such claim and the Company does not notify you in
writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven
and shall not be required to be repaid and the
amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to
be paid.
(vi) Notwithstanding any other provision of this
Section 2(b), the Company may, in its sole
discretion, withhold and pay over to the Internal
Revenue Service or any other applicable taxing
authority, for your benefit, all or any portion of
the Gross-Up Payment, and you hereby consent to such
withholding.
(vii) All fees and expenses of the Accounting Firm in
implementing the provisions of this Section 2(b)
shall be borne by the Company. All determinations
made by the Accounting Firm
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under this Section shall be binding upon the Company
and on you.
(viii) Definitions. The following terms shall have
the following meanings for purposes of this Section
2(b)(iii):
"Code" means the Internal Revenue Code of 1986, as
amended.
"Excise Tax" shall mean the excise tax imposed by
Section 4999 of the Code, together with any interest
or penalties imposed with respect to such excise
tax.
A "Payment" shall mean any payment or distribution
in the nature of compensation (within the meaning of
Section 280G(b)(2) of the Code) to you or your
benefit, whether paid or payable pursuant to this
Agreement or otherwise.
"Reduced Amount" shall mean an amount expressed in
Present Value that maximizes the aggregate Present
Value of the Severance Payment without causing any
Payment to be subject to the Excise Tax.
"Present Value" of a Payment shall mean the economic
present value of a Payment as of the date of the
change of control for purposes of Section 280G of
the Code, as determined by the Accounting Firm using
the discount rate required by Section 280G(d)(4) of
the Code.
3. The five Trigger Events are as follows:
(a) Common Stock of the Company has been acquired other than
directly from the Company in exchange for cash or property by
any person who thereby becomes the owner of more than 20% of the
Company's outstanding shares of Common Stock, except if the
acquisition of such Common Stock is the result of an acquisition
by the Company of a business or an entity, such acquisition
having been approved by the Board of Directors and shareholders,
as appropriate, with all or part of the purchase price consisting
of more than 20% of the Company's outstanding shares of Common
Stock; or
(b) Any person has made a tender offer for, or a request for
invitations for tenders of, shares of Common Stock of the
Company; or
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(c) Any person forwards or causes to be forwarded to shareholders of
the Company one or more proxy statements in any period of
twenty-four (24) consecutive months, soliciting proxies to elect
to the Board of Directors of the Company two or more candidates
who were not nominated as candidates in a proxy statement
forwarded to shareholders during such period by the Board of
Directors of the Company.
(d) The execution of an agreement by the Company, the consummation of
which would result in the occurrence of a Change of Control; or
(e) The adoption by the Board of Directors of a resolution that a
Change of Control has occurred.
4. If your employment is terminated, other than for disability,
retirement on or after the date you reach normal retirement age, or
death, within two years (y) by the Company without Cause or (z) by
you for Good Reason after (i) the occurrence of a Change of Control
described in clause (d) of Section 3 or (ii) the execution by the
Company of definitive agreements to dispose of all or substantially
all of the assets or stock of two or more of the Huffy Companies (as
defined below), or (iii) a Change of Control, you shall have the
right to receive the Severance Payment, within 30 days after your
written demand therefor. For these purposes, "Cause" shall mean (A)
your willful and continued failure to perform substantially your
duties as an employee of the Company (other than any such failure
resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to you by the
Board or the Chief Executive Officer of the Company that specifically
identifies the manner in which the Board or the Chief Executive
Officer of the Company believes that you have not substantially
performed your duties, or (B) your willfully engaging in illegal
conduct or gross misconduct that is materially and demonstrably
injurious to the Company. For these purposes, no act, or failure to
act, on your part shall be considered "willful" unless it is done, or
omitted to be done, by you in bad faith and without reasonable belief
that your 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 or upon the
instructions of the Chief Executive Officer of the Company or a
senior officer of the Company or based upon the advice of counsel for
the Company shall be conclusively presumed to be done, or omitted to
be done, by you in good faith and in the best interests of the
Company. The cessation of your employment shall not be deemed to be
for Cause unless and until there shall have been delivered to you a
copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board at a
meeting of the Board called and held for such purpose (after
reasonable notice is provided to you and you are given an
opportunity, together with your counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, you are
guilty of the conduct described above, and specifying the particulars
thereof in detail.
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"Good Reason:" means:
(1) the assignment to you of any duties inconsistent in any
respect with the Executive's position (including status,
offices, titles and reporting requirements, such
reporting requirements to be to the same or comparable
position), authority, duties or responsibilities as
contemplated by Exhibit A, attached hereto and made a
part hereof, or any other diminution in such position,
authority, duties or responsibilities (whether or not
occurring solely as a result of the Company's ceasing to
be a publicly traded entity) or any other act or
omission by the Company which substantially changes the
terms or conditions of your employment, excluding for
this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith and that is remedied by
the Company promptly after receipt of notice thereof
given by the Executive;
(2) any failure by the Company to comply with any of the
provisions of the required compensation set forth on
Exhibit B, attached hereto and made a part hereof, other
than an isolated, insubstantial and inadvertent failure
not occurring in bad faith and that is remedied by the
Company promptly after receipt of notice thereof given
by the Executive;
(3) the Company's requiring you (i) to be based at any
office or location other than as provided in Exhibit A,
(ii) to be based at a location other than the current
principal executive offices of the Company on the day
prior to the Change of Control if you were employed at
such location immediately preceding the Effective Date,
or (iii) to travel on Company business to a
substantially greater extent than required immediately
prior to the Effective Date;
(4) any purported termination by the Company of your
employment otherwise than as expressly permitted by this
Agreement; or
(5) any failure by the Company to comply with and satisfy
Section 11(b) herein.
For purposes of this Section 4, any good faith determination of Good
Reason made by you shall be conclusive. Anything in this Agreement to
the contrary notwithstanding, a termination by you for any reason
pursuant to a notice of termination given during the 30-day period
immediately following the first anniversary of the date of the first
of any of the events described in Section 4(a) below to occur shall
be deemed to be a termination for Good Reason for all purposes of
this Agreement. Your mental or physical incapacity following the
occurrence of an event
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described above in clauses (1) through (5) shall not affect your
ability to terminate employment for Good Reason.
(a) A "Change of Control" is hereby defined to include the occurrence
of any one of the following events:
(i) Any person acquires other than directly from the Company in
exchange for cash or property shares of Common Stock of the
Company in excess of thirty percent (30%) of the Company's
outstanding shares of Common Stock; or
(ii) There is a merger, consolidation or other combination of
the Company with one or more other corporations as a result
of which more than forty-nine percent (49%) of the voting
stock of the merged, consolidated or combined corporation
is held by former shareholders of the corporations (other
than the Company) which are parties to such merger,
consolidation or other combination; or
(iii) Two or more persons, who were not nominated as candidates
for the Board of Directors of the Company in proxy
statements forwarded to shareholders during any period of
twenty-four (24) consecutive months on behalf of the Board
of Directors of the Company, are elected to the Board of
Directors of the Company by the shareholders of the Company
voting in person or by proxy; or
(iv) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of
the Company ("Business Combination") or, if consummation of
such Business Combination is subject, at the time of such
approval by shareholders, to the consent of any government
or governmental agency, the obtaining of such consent
(either explicitly or implicitly by consummation);
excluding, however, such a Business Combination pursuant to
which (i) all or substantially all of the individuals and
entities who were the beneficial owners of the outstanding
Company voting securities immediately prior to such
business Combination beneficially own, directly or
indirectly, more that 60% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case
may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
that as a result of such transaction owns the Company or
all or substantially all of the Company's assets either
directly or through one or more subsidiaries) in
substantially the same proportions as their ownership,
immediately prior to such Business Combination of the
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outstanding Company voting securities, (ii) no Person
(excluding any employee benefit plan (or related trust) of
the Company or such corporation resulting from such
Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination, and (iii) all or
substantially all of the assets of any three of the
following Huffy Companies as currently configured
(specifically, Huffy Bicycle Company, Huffy Sports Company,
Huffy Service First, Inc. and Washington Inventory Service
(the "Huffy Companies") remain owned by the Company after
such Business Combination, provided, however, an event
under this Section 4(a) shall be deemed to have occurred
upon receipt of shareholder approval to the sale of all or
substantially all of the assets of any two of the Huffy
Companies currently owned by Huffy Corporation.
(v) Other than as set forth in Subsection (iv) above, approval
by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(b) If your employment is terminated, voluntarily or involuntarily,
for any reason not specified in the first sentence of this
Section 4, you shall have no right to any Severance Payment under
this Agreement.
(c) The Severance Payment shall be paid to you within 30 days after
your written demand therefor in one lump sum, either by your
drawing upon the Letter of Credit or by payment to you by the
Escrow Agent, as appropriate.
(d) Your right to make a demand for the Severance Payment hereunder
shall terminate upon the expiration or termination of two (2)
years from the date of the last of any of the events described in
Section 4(a) to occur, unless you have become entitled to make
and in fact have made, a demand within that time period.
(e) Subject to Section 2(b) herein, the Severance Payment shall be
recomputed as of the time of the payment set forth in
Section 4(c) and if the recomputed amount is larger, the Company
shall immediately pay you the amount by which the recomputed
severance Payment exceeds the Severance Payment paid in escrow or
secured by the Letter of Credit. In the event you receive a
Severance Payment, you shall not receive a standard Company
severance payment under Company Policy 110, unless in
consideration for a release and waiver executed by you, as
requested by the Company in its sole discretion.
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5. The Company may terminate the Letter of Credit or may withdraw the
amount so deposited with the Escrow Agent pursuant to Section 1 when
and only when (a) two (2) years have expired from the date of the
last of any of the events described in Section 4(a) and no proper
demand has been made during that time or (b) five (5) years have
expired after the most recent event of the kind described in Section
3(a), (b), (c), (d) or (e) above and no event described in
Section 4(a) has occurred or if it did occur, no proper demand has
been made during that time, or (c) your right to a payment under this
Agreement has been forfeited by you, whichever occurs first. If,
before the expiration of such period, there shall occur another event
of the kind described in Section 3(a), (b), (c), (d) or (e) above,
the Company will not be required to make an additional deposit.
6. The Company agrees to pay the charges of the Letter of Credit and of
the Escrow Agent for its services under this Agreement, and the
Company will be entitled to any interest or other income arising from
the amount so deposited by it.
7. The Letter of Credit will be subject to the issuing bank's usual
rules and procedures relating to letter of credit and the Company
will indemnify such bank against any loss or liability for any action
taken by it in good faith in connection with the Letter of Credit.
8. The escrow arrangement will be subject to the Escrow Agent's usual
rules and procedures relating thereto, and the Company will indemnify
the Escrow Agent against any loss or liability for any action taken
by it in good faith in such capacity.
9. In order to effect the Transactions, one or more purchasers may seek
covenants of non-competition and other related covenants from the
Company and you. Any or all of the following covenants by you shall
be assignable by the Company, without your consent or approval, to
any entity that acquires the Company, any of the Huffy Companies, or
any business of any of the Huffy Companies, and/or to any of the
Huffy Companies in connection with the disposition thereof by the
Company (each such acquisition or disposition, an "Assignment
Event"). In the event of any such assignment, references below to the
Company shall be deemed to include references to such assignee (an
"Assignee") except as specifically noted below. In consideration of
the non-competition consideration (hereinafter defined), the Company
and you agree as follows:
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Confidential Information; No-Raid; Non-competition;
(a) You shall hold in a fiduciary capacity for the benefit of the
Company and its subsidiaries and affiliates (the "Affiliated
Companies") all secret or confidential information, knowledge or
data relating to the Company or any of the Affiliated Companies
and their respective businesses (including, without limitation,
any proprietary and not publicly available information concerning
any processes, methods, trade secrets, research, secret data,
costs or names of users or purchasers of their respective
products or services, business methods, operating procedures or
programs or methods of promotion and sale) that you obtain during
your employment by the Company or any of the Affiliated Companies
and that is not public knowledge (other than as a result of your
violation of this Section 9(a) ("Confidential Information"). For
the purposes of this Section 9(a), information shall not be
deemed to be publicly available merely because it is embraced by
general disclosures or because individual features or
combinations thereof are publicly available. You shall not
communicate, divulge or disseminate Confidential Information at
any time during or after your employment with the Company or any
of the Affiliated Companies, except with the prior written
consent of the Company or its successor or assigns, or such
Affiliated Company or its successor or assigns, as applicable,
or as otherwise required by law or legal process. All records,
files, memoranda, reports, customer lists, drawings, plans,
documents and the like that you use, prepare or come into contact
with during the course of your employment shall remain the sole
property of the Company and/or one or more of the Affiliated
Companies, as applicable, and shall be turned over to the Company
or such Affiliated Companies, as applicable, upon termination of
your employment.
(b) You agree that you will not, any time during the Non-Competition
Period (as defined in Section 9(c) below) (the "Non-Competition
Period", without the prior written consent of the Company or the
applicable Affiliated Company, as applicable, directly or
indirectly employ, or solicit the employment of (whether as an
employee, officer, director, agent, consultant or independent
contractor), any person who was or is at any time during the
previous twelve (12) months an employee, representative, officer
or director of the Company or of any of the Affiliated Companies
(except for such employment by the Company or any of the
Affiliated Companies).
(c) During the Non-Competition Period (as defined below) you shall
not, without the prior written consent of the Board, engage in or
become associated with a Competitive Activity. For purposes of
this Section 9(c): (i) the "Non-Competition Period" means (A) the
period during which you are employed by the Company, plus (B) the
period ending on the 24 month anniversary of your date of
termination from the Company; (ii) a "Competitive Activity" means
any business or other endeavor, in any county of any state or any
other country, that was being conducted by the Company or any of
the Huffy
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Companies at any time after the date of this Agreement and before
the termination of your employment; provided, that with respect
to any Assignee, a "Competitive Activity" shall not include any
business or other endeavor that is not acquired by the Assignee
from the Company in the related Assignment Event; and (iii) you
shall be considered to have become "associated with a Competitive
Activity" if you become directly or indirectly involved as an
owner, principal, employee, officer, director, independent
contractor, representative, stockholder, financial backer, agent,
partner, advisor, lender, or in any other individual or
representative capacity with any individual partnership,
corporation or other organization that is engaged in a
Competitive Activity. Notwithstanding the foregoing, you may make
and retain investments during the Employment Period in less than
one percent of the equity of any entity engaged in a Competitive
Activity, if such equity is listed on a national securities
exchange or regularly traded in an over-the-counter market.
(d) In consideration for your agreement to be bound by the
Non-Competition covenant of Section 9(c), the Company shall pay
you the aggregate amount of $__________ (the "Non-Competition
Consideration") in cash in installments (the "Installments") as
follows: In the case of an Assignment Event, you shall receive a
percentage of the Non-Competition Consideration, as follows: if
the Assignment Event consists of the disposition of substantially
all of the assets or stock of one or more Huffy Companies, 10%
times the number of Huffy Companies involved upon consummation of
a such Transaction(s). In addition, upon the occurrence of a
Change of Control, you shall receive 30% of the Non-Competition
Consideration. The balance of the Non-Competition Consideration
(being an amount when aggregated with all prior payments, if any,
hereunder equals 100%) shall be paid in full on the date of the
first to occur of (i) your termination of employment or (ii) the
consummation of the Change of Control; provided, that if you
commit any breach of the Non-Competition covenant in
Section 9(c), then the Company shall have no further obligation
to pay any unpaid Installment, and you shall be required to
return to the Company all Installments that had previously been
paid, together with interest thereon at the applicable federal
rate as defined in Section 1274(d) of the Internal Revenue Code
of 1986, as amended, from the date the Installment was paid to
you through the date you repay it to the Company.
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(e) All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by you, whether alone or jointly
with others, from the date of your initial employment by the
Company and continuing until the end of your employment and any
subsequent period when you are employed by the Company or any of
the Affiliated Companies, relating or pertaining in any way to
your employment with or the business of the Company or any of the
Affiliated Companies, shall be promptly disclosed in writing to
the Company and are hereby transferred to and shall redound to
the benefit of the Company, and shall become and remain its sole
and exclusive property. You agree to execute any assignments to
the Company or its nominee, of your entire right, title and
interest in and to any such discoveries and improvements and to
execute any other instruments and documents requisite or
desirable in applying for and obtaining patents or copyrights, at
the expense of the Company, with respect thereto in the United
States and in all foreign countries, that may be required by the
Company. You further agree, during and after the Employment
Period, to cooperate to the extent and in the manner required by
the Company, in the prosecution or defense of any patent or
copyright claims or any litigation, or other proceeding involving
any trade secrets, processes, discoveries or improvements covered
by this Agreement, but all necessary expenses thereof shall be
paid by the Company.
(f) You acknowledge and agree that: (i) the purpose of the foregoing
covenants, including without limitation the Non-Competition
covenant of Section 9(c), is to protect the goodwill, trade
secrets and other Confidential Information of the Company;
(ii) because of the nature of the business in which the
Company and the Affiliated Companies are engaged and because of
the nature of the Confidential Information to which you have
access, it would be impractical and excessively difficult to
determine the actual damages of the Company and the Affiliated
Companies in the event you breach any of the covenants of this
Section 9; and (iii) remedies at law (such as monetary damages)
for any breach of your obligations under this Section 9 would be
inadequate. You therefore agree and consent that if you commit
any breach of a covenant under this Section 9 or threaten to
commit any such breach, the Company shall have the right (in
addition to, and not in lieu of, any other right or remedy that
may be available to it) to temporary and permanent injunctive
relief from a court of competent jurisdiction, without posting
any bond or other security and without the necessity of proof of
actual damage. With respect to any provision of this Section 9
finally determined by a court of competent jurisdiction to be
unenforceable, you and the Company hereby agree that such court
shall have jurisdiction to reform this Agreement or any provision
hereof so that it is enforceable to the maximum extent permitted
by law, and the parties agree to abide by such court's
determination. If any of the covenants of this Section 9 are
determined to be wholly or partially unenforceable in any
jurisdiction, such determination shall not be a bar to or
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in any way diminish the Company's right to enforce any such
covenant in any jurisdiction.
10. Nothing herein shall be deemed to prohibit either you or the Company
from terminating your employment at any time.
11. As used in this Agreement, "person" shall be deemed to have the same
meaning as when used in Section 13 of the Securities Exchange Act of
1934. As used in this Agreement, "Company" refers not only to Huffy
Corporation but also to its successors by merger or otherwise.
(a) You shall not be required to mitigate the amount of any Severance
Payment paid to you by seeking other employment or otherwise, nor
shall the amount of any Severance Payment be reduced by any
compensation earned by you as the result of employment by another
employer, by retirement benefits, by offset against any amount
claimed to be owed by you to the Company, or otherwise.
(b) The Company will require any successor (whether direct or
indirect, by purchase, merger, share exchange, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and to 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 successor had
taken place. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement and shall entitle you to a
Severance Payment and Non-Competition Consideration from the
Company in the same amount and on the same terms as you would be
entitled to hereunder after the occurrence of any Trigger Event
and one of the events enumerated in Section 4(a) of this
Agreement.
(c) Subject to Section 2(b) herein, after you have the right to
receive the Severance Payment and Non-Competition Consideration,
as provided for in Section 4 above, the Company shall also pay to
you, within thirty (30) days after incurred by you, an amount
equal to all legal fees and expenses incurred in seeking to
obtain or enforce any right or benefit 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 Internal
Revenue Code of 1986, as amended from time to time, to any
payment or benefit provided hereunder up to a maximum of
$500,000.
12. This Agreement cancels and supersedes, as of the date hereof, the
prior agreement between you and the Company, dated _____________.
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13. Notwithstanding anything to the contrary herein, this Agreement shall
be null and void if you have received an alternate retention
agreement for cash incentive pay ("Retention Agreement") in
connection with the sale of the assets or equity of the Huffy Company
of which you are an employee and such sale has been consummated prior
to an event in Section 4(a) having occurred. If an event under
Section 4(a) occurs and you have received a Retention Agreement for
cash incentive pay which is not null and void under the terms of such
Retention Agreement, then all amounts received under the Retention
Package shall reduce dollar for dollar but not below zero all amounts
owed by the Company under Section 2 herein.
In no event shall any payments be made hereunder, which would cause a
breach or Event of Default, as defined in the Loan and Security Agreement by and
among the Company, Affiliated Companies, Congress Financial Corporation and
certain financial institutions, the Credit Agreement by and among the Company,
Affiliated Companies, KeyBank National Association, as agent, and certain
financial institutions and those agreements related thereto and contemplated
thereby dated January 26, 2000. In such event as contemplated in the foregoing
sentence, the provision requiring such payment shall be deemed unenforceable and
of no force and effect, until permitted under such agreements or after the
expiration thereof.
Please indicate your acceptance of this Agreement by signing one copy
of this letter in the space provided below and returning it to me. The other
copy is for your files.
Sincerely,
HUFFY CORPORATION
By ___________________________
AGREED TO AND ACCEPTED this _____ day of ____________________, 2000.
______________________________
