SEPARATION AND RELEASE AGREEMENT
THIS SEPARATION AND RELEASE AGREEMENT (the "Agreement"), dated March
28, 2001, is made in Orlando, Orange County, Florida between Xxxxxx Supply,
Inc., a Florida corporation (the "Company"), and A. Xxxxxxx Xxxx, Jr., a
resident of the State of Florida and a Director and executive officer of the
Company ("Xx. Xxxx").
BACKGROUND INFORMATION
A. Effective August 13, 1973, Xx. Xxxx was employed by the Company and
currently serves as the Company's President and Chief Operating Officer, and
serves as a member of the Company's Board of Directors. Xx. Xxxx does not have a
written employment agreement with the Company.
B. On September 30, 1986, the Company and Xx. Xxxx entered into a
Supplemental Executive Retirement Plan Agreement which was amended and restated
on August 28, 1996 (the "SERP"), a copy of which is attached as Exhibit "A"
hereto.
C. On August 20, 1997, March 15, 1999, and August 18, 1999,
respectively, Xx. Xxxx was granted 10,000, 6,296, and 10,000 shares of
restricted common stock of the Company (the "Restricted Stock") pursuant to
Xxxxxx Supply, Inc. 1997 Executive Stock Plan (the "1997 Stock Plan"). The
Restricted Stock will not vest prior to Xx. Xxxx'x termination of employment
hereunder.
D. Xx. Xxxx has been granted both incentive stock options ("ISO's") and
non-qualified stock options ("NQSO's") pursuant to the 1988 Stock Option Plan,
the 1997 Stock Plan and grant agreements executed by the Company and Xx. Xxxx.
The xxxxx date, expiration date, number of options, and exercise price of such
options are as follows:
Grant Expiration Number of Exercise
Date Date Options Price
----- ---------- --------- --------
05/28/91 Ten Years 38,874 $ 8.417
03/12/96 Ten Years 22,500 $18.667
11/21/97 Ten Years 2,900 $34.000
11/21/97 Ten Years 25,000 $34.000
05/16/00 Ten Years 5,000 $18.750
5/16/00 en Years 17,500 $18.750
E. Xx. Xxxx and the Company have previously entered into The Xxxxxx
Supply, Inc. Management Insurance Plan Agreement (the "Management Insurance
Plan") in order to assist Xx. Xxxx in purchasing a permanent, cash value life
insurance policy on the life of Xx. Xxxx.
F. Xx. Xxxx desires to resign from the employment of the Company on the
terms and conditions set forth below, and the Company desires to accept such
resignation effective immediately, and to grant the additional consideration set
forth below.
G. Both the Company and Xx. Xxxx (collectively, the "Parties",
individually, a "Party") have agreed to release each other from claims that
arose prior to the execution of this Agreement.
AGREEMENT
The Parties acknowledge the accuracy of the foregoing Background
Information and agree as follows:
1. Salary Continuation. The Company shall continue to pay Xx. Xxxx his
regular base salary through and including January 31, 2003 (the "Salary
Continuation Date"). Such compensation shall be subject to federal income tax
and FICA withholding, but Xx. Xxxx shall not be eligible for any other benefits
that normally are available to employees of the Company, except as otherwise
provided herein. In the event of his death, such compensation shall continue to
be payable to Xx. Xxxx'x estate. As of the date of this Agreement Xx. Xxxx shall
resign (i) as President and Chief Operating Officer of the Company, (ii) as a
member of the Company's Board of Directors, (iii) as an officer or director of
any affiliate or subsidiary of the Company, and (iv) from any trade association
of which Xx. Xxxx is a member, officer or director and is in any way associated
with the Company or any business conducted by the Company (including, without
limitation, xxxxxxxxxxx.xxx). Following such resignation Xx. Xxxx shall no
longer have the authority or duties associated with such positions.
2. Supplemental Executive Retirement Pay. In accordance with the
formula set forth in Section 1 of the SERP, the Parties agree that Xx. Xxxx'x
SERP payment shall be $95,550 a year for 15 years, payable in equal monthly
installments of $7,962.50, commencing February 1, 2003 (the "SERP Payments").
Such payments shall be subject to the terms and conditions of the SERP,
including without limitation, Section 1(b) providing for a continuation of
payments after the death of Xx. Xxxx and the termination of such SERP payments
in the event of a breach of the "non-competition" provisions of Section 3
thereof.
In consideration of the additional benefits payable or distributable to
Xx. Xxxx set forth in this Agreement, Xx. Xxxx agrees that payment of the SERP
benefits also will be subject to his compliance with the Non-competition and
Confidentiality provisions set forth in Sections 9 and 10 below.
3. Health Insurance. From the date hereof through the Salary
Continuation Date Xx. Xxxx and his spouse shall continue to be covered under the
Company's group health plan (the "Health Plan") as an employee, the premiums of
which shall be deducted from the amounts he is to receive under Section 1 of
this Agreement. Effective February 1, 2003, Xx. Xxxx and his spouse shall be
covered under the Health Plan as a "retiree" and his spouse ("Retiree Status"),
at no cost to Xx. Xxxx or his spouse (other than any federal income tax cost
associated with such coverage) until Xx. Xxxx'x attainment of age 65; provided,
however, that the Health Plan shall make no more than $250,000 in Retiree Status
payments to or on behalf of Xx. Xxxx, and $100,000 in "Retiree Status" payments
to or on behalf of his spouse, under the terms of the Health Plan. Upon the
termination of the foregoing Retiree Status health coverage, the Company shall
issue a COBRA health care continuation notice to Xx. Xxxx and his spouse, and
they then shall have the right to elect COBRA health care continuation coverage,
at their own cost, in accordance with the terms of the Health Plan and
applicable federal law (i.e., COBRA). Notwithstanding anything to the contrary
contained herein, and unless otherwise required by law, all health benefits
available to Xx. Xxxx and his spouse under the Health Plan (or any other
agreement with the Company) shall cease upon Xx. Xxxx becoming employed with a
subsequent employer.
4. Company Automobile. Upon the revocation date enumerated at the end
of this Agreement (the "Revocation Date"), the Company shall transfer to Xx.
Xxxx as additional compensation, title to his Company vehicle, which is a 2001
Ford Expedition. Such transfer shall be included in Xx. Xxxx'x compensation in
accordance with the Internal Revenue Code and applicable Treasury Regulations.
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5. Management Insurance Plan. On the Revocation Date, the Company shall
deliver to Xx. Xxxx the General American Life Insurance Company policy that is
the subject matter of the Management Insurance Plan (the "Policy").
Notwithstanding Sections 3 and 4 of the Management Insurance Plan, the Company
shall continue to pay the annual premium on the Policy until the earlier of (i)
the date Xx. Xxxx elects to terminate the Policy, (ii) the death of Xx. Xxxx, or
(iii) the payment of fifteen (15) years of premium payment (including those
payments made prior to the termination of Xx. Xxxx'x employment with the
Company). Consistent with Section 3 of the Management Insurance Plan, Xx. Xxxx
shall continue to be responsible for the payment of the lesser of (a) the
current, published term insurance rate of the insurer, or (b) the "P.S. 58" rate
(both expressed as a rate per $1,000 of coverage), multiplied by 50. Such amount
shall be withheld from any SERP Payment due Xx. Xxxx.
6. Restricted Stock. The Parties acknowledge that Xx. Xxxx has been
awarded 10,000, 6,296, and 10,000 shares of Restricted Stock, on August 20,
1997, March 15, 1999, and August 18, 1999, respectively, pursuant to Section 8
of the 1997 Stock Plan. In accordance with Xx. Xxxx'x resignation as descried in
Section 1 of this Agreement, and accordance with the grant agreements executed
in accordance with the grant agreements delivered to Xx. Xxxx under the 1997
Stock Plan, effective on the Revocation Date such Restricted Stock shall be
cancelled and returned to the authorized but unissued capital stock of the
Company.
7. Stock Options. The Parties agree that Item D of the Background
Information above accurately reflects all ISO's and NQSO's that have been
granted to Xx. Xxxx. Notwithstanding the vesting schedules set forth in the
grant agreements for such ISO's and NQSO's, effective as of the Revocation Date,
Xx. Xxxx shall be 100% vested in all such unexercised ISO's and NQSO's. Except
with respect to the vesting for such options, all other terms and conditions of
such options shall remain in effect, including, without limitation, the exercise
prices, terms of the options, and the date(s) by which the options must be
exercised or be forfeited. Xx. Xxxx shall be solely responsible for any income
taxes, alternative minimum taxes, FICA or other federal, state or local taxes
that may result from the exercise of such ISO's and/or NQSO's.
8. Loan of Money. The Company shall lend to Xx. Xxxx the principal sum
of $978,000 pursuant to a promissory note attached hereto as Exhibit "B" (the
"Note"). With respect to the amounts represented by the Note, of such amounts
$100,000 will be attributed as additional consideration for the Non-Competition
provisions of Section 9 of this Agreement. Provided Xx. Xxxx does not violate
the terms of the SERP and Sections 9 and 10 below, one-third of the principal
amount, plus all accrued interest on the Note, shall be forgiven on February 1,
2003, February 1, 2004 and February 1, 2005. The Company shall issue such
form(s) in connection with such forgiveness as may be required by the Internal
Revenue Service. Xx. Xxxx shall be solely responsible for any income, excise and
social security taxes associated with such forgiveness, and shall indemnify and
hold the company harmless from any costs, penalties, damages, taxes, payroll
taxes, interest, losses and/or attorney's fees which the Company may incur in
connection with such forgiveness. The Company may offset such costs, penalties,
damages, taxes, payroll taxes, interest, losses and/or attorney's fees against
future SERP payments made pursuant to Section 2 above.
9. Non-Competition. In consideration of Company's agreement to provide
to Xx. Xxxx the benefits as outlined in this Agreement:
(a) For a period of two (2) years following the Revocation Date (the
"Noncompetition Period"), Xx. Xxxx specifically agrees that Xx. Xxxx shall not,
either directly or indirectly, as a stockholder of any corporation or partner of
any partnership or as an owner, investor, principal, officer, director or agent,
or in any other manner, engage in any business (including any trade association
which relates to any business
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of the Company), within the continental United States (the "Geographic Area"),
which competes in any manner with any business conducted by Company immediately
prior to the Revocation Date.
(b) Xx. Xxxx agrees not to directly or indirectly solicit any of the
Company's employees to work for Xx. Xxxx or for any business which is
competitive with any business conducted by the Company prior to the Revocation
Date, within the Geographic Area and during the Noncompetition Period.
(c) Xx. Xxxx specifically acknowledges that he has had access to
Confidential Information (as hereinafter defined), including without limitation,
prospective and existing customers or customer lists of the Company, including
the most sensitive and confidential information concerning the operations of the
Company. Xx. Xxxx covenants and agrees that during the Noncompetition Period and
within the Geographic Area, except as otherwise approved in writing by the
Company, Xx. Xxxx shall not, directly or indirectly, for himself, or through, on
behalf of, or in conjunction with any person, persons, partnership, association,
corporation, or entity, divert or attempt to divert or solicit any prospective
or existing customer of Company to any competitor by direct or indirect
inducement or otherwise, and shall not disclose any Confidential Information to
any third party.
(d) The periods of time during which Xx. Xxxx is prohibited from
engaging in such business practices pursuant to Subsections 9(a), 9(b) and 9(c)
shall be extended by any length of time during which Xx. Xxxx is in breach of
any of such covenants.
(e) The restrictive covenants contained within this Section 9 are
essential elements of this Agreement, and that, but for the agreement of Xx.
Xxxx to comply with such covenants, the Company would not have entered into this
Agreement.
(f) If any portion of the covenants set forth in this Section 9 are
held by a court of competent jurisdiction to be unreasonable, arbitrary or
against public policy, then such portion of such covenants shall be considered
divisible both as to time and geographical area. The Company and Xx. Xxxx agree
that, if any court of competent jurisdiction determines that the Noncompetition
Period or the Geographic Area applicable to this Agreement is unreasonable,
arbitrary and/or against public policy, then a lesser time period or
geographical area which is determined to be reasonable, non-arbitrary and not
against public policy may be enforced against Xx. Xxxx.
(g) Xx. Xxxx does hereby represent and warrant to the Company and
Xxxxxx:
(i) Xx. Xxxx has had access to and has become knowledgeable
concerning, the trade secrets of Company;
(ii) That this Section 9 is being executed by Xx. Xxxx to protect
the legitimate business interests of Company, including, without limitation the
trade secrets, valuable confidential information that otherwise does not qualify
as trade secrets, and the substantial relationships that the Company has with
existing or prospective customers;
(iii) That the Noncompetition Period and the Geographic Area is
appropriate and reasonable in all respects in light of the nature of the
business of the Company and the legitimate need of the Company to protect its
customer bases and branch locations; and
(iv) That the execution and delivery of this Agreement, the
performance by Xx. Xxxx of the covenants and agreements contained herein, and
the enforcement by Company of the provisions contained herein, will cause no
undue hardship on Xx. Xxxx.
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(h) The Company and Xx. Xxxx agree that the foregoing covenants are
appropriate and reasonable when considered in light of the nature and extent of
the business conducted by the Company.
10. Confidentiality. In addition to such other obligations which Xx.
Xxxx may have to the Company prior to the date of this Agreement, Xx. Xxxx
agrees that for the period beginning with the Revocation Date and continuing
until December 31, 2016 (which is the period the Company is obligated to make
SERP Payments pursuant to Section 2 above), he will not, directly or indirectly
use for his own benefit, or disclose to or use for the benefit of any other
person or entity, any Confidential Information of the Company.
For purposes of this Agreement, "Confidential Information" shall
include, without limitation, confidential or proprietary information of
customers of the Company, vendor information (including without limitation, any
rebate programs) and the Company's proprietary information, marketing
techniques, methods and/or costs of manufacturing, vendor lists, customer lists,
administrative procedures, financial information, computer programs, personnel
information, business plans (strategic or otherwise) and other similar business
information. In the event any such Confidential Information is in tangible form
and in the possession of Xx. Xxxx at his termination of employment, he agrees to
immediately return such Confidential Information to the Company.
In the event of a breach of the foregoing confidentiality provision, in
addition to the remedies provided in the SERP, the Company no longer shall be
obligated to make any payment or provide any benefit provided herein, any
unexercised ISO's and NQSO's shall be forfeited, and no further loan amounts
shall be forgiven pursuant to Section 8 above (and the Company may demand the
immediate repayment of any amounts outstanding under the Note).
11. Remedies.
(a) Xx. Xxxx acknowledges that any violation of Sections 9 or 10 of
this Agreement will result in irreparable injury to the Company for which there
is no adequate remedy at law. Accordingly, if Xx. Xxxx commits a breach, or
threatens to commit a breach of any of the provisions of this Agreement
(including Sections 9 or 10 of this Agreement), the Company shall be entitled to
all available legal and equitable remedies, including without limitation,
temporary and permanent injunctive relief and to the extent permitted by law,
the Company shall not be required to post a surety bond in connection therewith.
The Company also shall be entitled to money damages for any loss suffered or to
be suffered as a consequence of Xx. Xxxx'x breach of this Agreement.
(b) The Company and Xx. Xxxx further agree that in the event Xx. Xxxx
violates the provisions contained in Sections 9 or 10 of this Agreement, and the
Company brings an action against Xx. Xxxx to enforce such provisions, payment of
any compensation or other sums hereunder and the providing of all benefits, may
be suspended, without penalty to the Company, pending the outcome of such
litigation. If a court of competent jurisdiction determines that Xx. Xxxx has
breached the provisions of Section 9 or 10 of this Agreement, Xx. Xxxx'x right
to such then unpaid portion of any compensation due him hereunder shall cease.
However, if a court of competent jurisdiction determines that Xx. Xxxx has not
breached the provisions of either Section 9 or 10 of this Agreement, Xx. Xxxx
shall receive any unpaid portion of such consideration and such other benefits
and payments as Xx. Xxxx shall have otherwise been entitled.
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12. Release of All Claims.
(a) Xx. Xxxx (on his own behalf and on behalf of his heirs, personal
representatives, and any other person who may be entitled to make a claim on his
behalf or through him) hereby releases the Company, its employees, officers,
directors, agents, representatives and shareholders from all claims which are
related to his employment with the Company or the separation of that employment,
including without limitation those arising under Title VII of the Civil Rights
Act of 1964, as amended by the Civil Rights Act of 1991 (42 U.S.C.
ss.ss.200e-200e-17), the Age Discrimination in Employment Act of 1967, as
amended, the Employee Retirement Income Security Act of 1974 (29 U.S.C.
ss.ss.1161-1168), the Consolidated Omnibus Budget Reconciliation Act of 1985,
the Florida Civil Rights Act (chapter 760, Fla. Stat.) and any other federal,
state or local statute, rule or regulation dealing with employment or
discrimination on any basis, including without limitation that of age, sex,
race, national origin, religion, marital status or disability. Xx. Xxxx agrees
that this release includes claims or lawsuits based on theories of contract
(oral, written or implied), tort (including negligence), statute, regulation,
law, ordinance or rule (federal, state or local) or any other common law or
equitable basis of action, whether based on common law or otherwise, which
relate to his employment with the Company or separation of employment from the
Company. Xx. Xxxx further agrees that this release covers and includes all acts
and omissions of the Company and its directors, officers, employees, principals,
shareholders, agents, and representatives from all actions or omissions
mentioned above in this Section.
(b) The Company releases Xx. Xxxx from all claims relating to acts or
omissions of Xx. Xxxx while employed by the Company as an officer or Director of
the Company provided such acts were not illegal and were in the best interests
of the Company, were in accordance with Company policy and were actions which
otherwise would have afforded him the protection of the business judgment rule.
(c) Xx. Xxxx represents that he does not presently have on file, and
has not made in any forum, any complaints, charges, or claims (whether civil,
administrative, or criminal) against the Company. Xx. Xxxx agrees that if, after
signing this Agreement, he thereafter commences, joins in, or in any manner
seeks relief through any suit arising out of, based upon, or relating to any of
the claims released hereunder, or asserts in any manner against the Company any
of the claims released hereunder, Xx. Xxxx shall pay to the Company or the
employee, officer, director, agent, representative, or shareholder, or their
successor in interest, in addition to any other damages caused by him, all
attorneys' fees incurred by any of them in defending or in otherwise responding
to such suit or claim.
13. After-Discovered Claims. The Parties acknowledge that they are
aware that they may hereafter discover claims now unknown or unsuspected, or
facts in addition to, or different from, those that they now believe or know to
be true, with respect to the matters released herein. Nevertheless, it is the
intention of the Parties, through this Agreement, to fully, finally, and forever
settle and generally release all such matters and claims as are described in
Section 12 above. In furtherance of such intention, the general release herein
shall be and remain in effect as a full and complete release of all claims
described in Section 12 above notwithstanding the discovery or existence of any
additional claims or facts.
14. Review Period. Xx. Xxxx understands and agrees that this Agreement
specifically refers to rights or claims that he may have under the Age
Discrimination in Employment Act of 1967, as amended, and that Xx. Xxxx is not
waiving any rights or claims that arise after the Revocation Date. Xx. Xxxx
further acknowledges that he has received additional money for signing this
Agreement, in addition to anything of value to which he is already entitled and
that he has been given at least 21 days within which to consider this Agreement.
He also understands that he may voluntarily accept this Agreement at any time
during the 21-day period. Xx. Xxxx also acknowledges that he has been advised to
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discuss this termination and release with an attorney of his own choice prior to
signing the Agreement.
Xx. Xxxx further understands and agrees that for a period of at least
seven (7) days following his signing of this Agreement, that he may revoke and
cancel this Agreement, and the Agreement shall not become effective or
enforceable until this seven (7) day revocation period has expired. If Xx. Xxxx
should chose to revoke and cancel this Agreement, he must do so in writing and
the revocation and cancellation must be received in hand by the Company within
the seven (7) day revocation period. By signing this Agreement, Xx. Xxxx fully
understands, recognizes and agrees that he is knowingly and voluntarily waiving
any rights he has under the Age Discrimination in Employment Act of 1967, as
amended.
15. Voluntary Acceptance. Having read and understood Section 14 above,
Xx. Xxxx hereby voluntarily accepts this Agreement, subject only to the above
described seven (7) day right of revocation.
16. All Other Agreements Void. Except for the terms of the SERP,
Management Insurance Agreement, 1997 Stock Plan, and all ISO and NQSO grant
agreements, as modified by this Agreement, seven (7) days after the execution of
the Agreement, all agreements, written or oral, between the Parties, shall be
void, and all terms thereof shall be void and unenforceable. The rights and
remedies of the Parties shall be limited to those provided herein. This
Agreement supersedes any prior agreements of the Parties.
17. Assignability and Parties in Interest. The Company may assign any
of its rights or delegate any of its obligations hereunder to a purchaser of the
business of the Company or wholly owned subsidiary of the Company without the
prior written consent of Xx. Xxxx. In all other instances, no party may assign
any of its rights or delegate any of its obligations hereunder without the prior
written consent of the other party. This Agreement binds, inures to the benefit
of and is enforceable by the respective successors and permitted assigns of the
parties and it does not confer any rights on any other persons or entities.
18. Applicable Laws and Venue. This Agreement shall be governed
exclusively by the laws of the United States and the State of Florida. Venue
shall be exclusively in the state or federal trial courts located in Orange
County, Florida.
19. Attorneys Fees. In the event any party hereto institutes litigation
to enforce its rights or remedies under this Agreement, the party prevailing in
such litigation shall be entitled to receive an award from the non-prevailing
party of the prevailing party's reasonable attorneys' fees and costs incurred in
connection with such litigation. The foregoing shall include reasonable
attorneys' fees and costs (including paralegals' fees) incurred at trial, on any
appeal and in any proceeding in bankruptcy.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
constitute but one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
Xxxxxx Supply, Inc.
Attest: By:
------------------------------- ---------------------------------
Xxxxxxxx X. Xxxxxxxxxxx, Secretary Xxxxx X. Xxxxxx, Chairman and CEO
Witness: XX. XXXX:
-------------------------------------- ------------------------------------
Xxxxxxxx X. Xxxxxxxxxxx A. Xxxxxxx Xxxx, Jr.
Revocation Date is April 4, 2001.
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