EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered
into effective as of the 11th day of September, 1998 (the "Effective
Date"), by and between Xxxxxx Industries, Inc., a corporation
organized under the laws of the State of Tennessee, USA (the
"Company"), and Xxxxxxx X. Xxxxxxx (the "Executive").
For and in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this
Agreement, Executive shall be employed by the Company as President and
Chief Executive Officer, and shall perform such duties and functions
for the Company and any company controlling, controlled by or under
common control with the Company (such companies hereinafter
collectively called "Affiliates") as shall be specified from time to
time by the Chairman of the Board; Executive hereby accepts such
employment and agrees to perform such executive duties as may be
assigned to him.
2. DUTIES. Executive shall devote his full business related
time and best efforts to accomplishing such executive duties at such
locations as may be requested by the Chairman of the Board of the
Company. While employed by the Company, Executive shall not serve as
a principal, partner, employee, officer or director of, or consultant
to, any other business or entity conducting business for profit
without the prior written approval of the Chairman of the Board of the
Company. In addition, under no circumstances will Executive have any
financial interest in any competitor of the Company; provided,
however, that Executive may invest in no more than 2% of the
outstanding stock or securities of any competitor whose stock or
securities are traded on a national stock exchange of any country.
3. TERM. The term of this Agreement shall be for a
rolling, three (3) year term commencing on the date hereof, and shall
be deemed automatically (without further action by either the Company
or the Executive) to extend each day for an additional day such that
the remaining term of the Agreement shall continue to be three (3)
years; provided, however, that on Executive's 62nd birthday this
Agreement shall cease to extend automatically and, on such date, the
remaining "term" of this Agreement shall be three (3) years; provided
further, that the Company may, by notice to the Executive, cause this
Agreement to cease to extend automatically and, upon such notice, the
"Term" of this Agreement shall be three (3) years following such
notice; and provided further, that the automatic extension shall not
extend beyond any anniversary of the Effective Date of this Agreement
unless the Company notifies the Executive in writing prior to such
anniversary date that it elects to extend such automatic extension
until the next anniversary date.
4. COMPENSATION AND BENEFITS. As compensation for his
services during the Term of this Agreement, Executive shall be paid
and receive the amounts and benefits set forth in subsections (a),
(b), (c) and (d) below:
(a) BASE SALARY. An annual base salary ("Base Salary") of $200,000
prorated for any partial year of employment. Executive's Base Salary
shall be subject to annual review, commencing as of the first
anniversary of the Effective Date of this Agreement, for adjustments
at such time as the Company conducts salary reviews for its executive
officers generally. Executive's salary shall be payable in accordance
with the Company's regular payroll practices in effect from time to
time for executive officers of the Company.
(b) BONUS. In addition to the Base Salary, the Executive shall
be entitled to participate in any of the Company's present and future
stock or cash based bonus plans that are generally available to its
executive officers, as such plans may exist or be changed from time to
time at the discretion of the Company
(c) OTHER BENEFITS. Executive shall be entitled to vacation
with pay, life insurance, health insurance, fringe benefits, and such
other employee benefits generally made available by the Company to its
executive officers, in accordance with the established plans and
policies of the Company, as in effect from time to time.
(d) STOCK OPTIONS. As of the Effective Date of this Agreement,
Executive is hereby granted 120,000 options under the Xxxxxx
Industries, Inc. Stock Option and Incentive Plan ("Stock Option
Plan"). The exercise price of the options will be the fair market
value of a share of stock on the Effective Date, as determined under
the Stock Option Plan. The terms and conditions of the options will
be set forth in the Stock Option Agreement in accordance with the
Stock Option Plan. This grant of 120,000 stock options is intended to
be the entire grant of stock options to the Executive for the initial
3-year term of this Agreement; provided, however, the Company may, in
its discretion, grant Executive additional options during this initial
3-year period.
5. TERMINATION.
(a) BY EXECUTIVE. Executive may voluntarily terminate his
employment hereunder at any time, to be effective 60 days after
delivery to the Company of his signed, written resignation; Company
may accept said resignation and pay Executive in lieu of waiting for
passage of the notice period.
(b) BY COMPANY. Subject to the terms of this Paragraph and
Paragraph 5(c) below, the Company may terminate Executive's employment
hereunder, in its sole discretion, whether with or without just cause
(as defined in Paragraph 5(b)(ix) below and subject to the notice
periods described therein), at any time upon written notice to
Executive. If, prior to the end of the Term of this Agreement, the
Company terminates Executive's employment without just cause (as
defined in (ix) below), the Executive shall be entitled to receive, as
damages payable as a result of, and arising from, a breach of this
Agreement, the compensation and benefits set forth in (i) through (iv)
below. Except to the extent provided in (viii) below, Executive shall
not be required to mitigate damages by reducing the amounts he is
entitled to receive hereunder by earnings from subsequent employment.
The time periods in (i) through (iii) below shall be the lesser of the
36-month period stated therein or the time period remaining from the
date of Executive's termination to the end of the Term of this
Agreement.
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(i) BASE SALARY. The Executive will continue to receive
his current salary (subject to withholding of all applicable
taxes and any amounts referred to in paragraph (iii) below) for a
period of thirty-six (36) months from his date of termination in
the same manner as it was being paid as of the date of
termination. For purposes hereof, the Executive's "current
salary" shall be the highest rate in effect during the twelve-
month period prior to the Executive's termination.
(ii) BONUS. The Executive shall receive bonus payments from
the Company for the thirty-six (36) months following the month in
which his employment is terminated in an amount for each such
month equal to one-twelfth of the average ("Average Bonus") of
the bonuses earned by him for the three calendar years
immediately preceding the year in which such termination occurs.
Any bonus amounts that the Executive had previously earned from
the Company but which may not yet have been paid as of the date
of termination shall not be affected by this provision.
Executive shall also receive, within 60 days after the date of
his termination) a prorated bonus for any uncompleted fiscal year
at the date of termination equal to the Average Bonus multiplied
by the number of days he worked in such year divided by 365 days.
(iii) HEALTH AND LIFE INSURANCE COVERAGE. Any health
and life insurance benefits coverage (including any executive
medical plan) provided to the Executive at his date of
termination shall be continued by the Company at its expense at
the same level and in the same manner as if his employment had
not terminated (subject to the customary changes in such
coverages if the Executive retires under a Company retirement
plan, reaches age 65 or similar events and subject to Executive's
right to make any changes in such coverages that an active
employee is permitted to make), beginning on the date of such
termination and ending on the date thirty-six (36) months from
the date of such termination. Any additional coverages the
Executive had at termination, including dependent coverage, will
also be continued for such period on the same terms. Any costs
the Executive was paying for such coverages at the time of
termination shall be paid by the Executive by separate check
payable to the Company each month in advance. If the terms of
any benefit plan referred to in this paragraph do not permit
continued participation by the Executive, then the Company will
arrange for other coverage at its expense providing substantially
similar benefits. The coverages provided for in this paragraph
shall be applied against and reduce the period for which COBRA
will be provided.
(iv) STOCK OPTIONS. As of Executive's date of termination,
all outstanding stock options granted to Executive under the
Stock Option and Incentive Plan and any other Company stock
option plan shall become 100% vested and immediately exercisable.
To the extent necessary, the provisions of this paragraph (iv)
shall constitute an amendment of the Executive's stock option
agreements under the Stock Option Plans.
(v) EFFECT OF DEATH. In the event of the Executive's death
after his termination of employment by the Company under this
Paragraph 5(b), the benefits payable under (i) and (ii) of this
Paragraph 5(b) shall continue for a period of twelve (12) months,
or, if shorter, until the end of the Term of this Agreement;
provided, however, such payments will be paid in a lump sum
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payment within 60 days following the Executive's death, to the
Executive's surviving spouse, or, if none, to the Executive's
estate. In addition, in the event of Executive's death, any
dependent coverage in effect under (iii) of this Paragraph 5(b)
shall continue at the Company's expense, for a period of 12
months, or, if shorter, until the end of the Term of this Agreement.
(vi) Executive hereby agrees and acknowledges that if he
voluntarily resigns from his employment, or is terminated for
just cause, prior to the end of the Term of this Agreement, then
he shall be entitled to no payment or compensation whatsoever
from the Company under this Agreement, other than as may be due
him through his last day of employment.
(vii) Notwithstanding any provision of this Agreement to
the contrary, if Executive's employment is terminated (whether by
the Company or by Executive) under circumstances that would
entitle him to receive benefits under his agreement with the
Company providing compensation and benefits for terminations
following a "change in control" of the Company (as defined in
such agreement), then any such termination shall be treated under
this Agreement as a termination by the Company without just cause
and the Executive shall be entitled to the compensation and
benefits set forth in (i) through (iv) above for the time periods
provided in this Paragraph 5(b), and such amounts shall be
treated as damages payable as a result of, and arising from, a
breach of this Agreement.
(viii) If Executive becomes entitled to compensation and
benefits under this Paragraph 5(b) and such payments would be
considered to be severance payments contingent upon a change in
control under Internal Revenue Code Section 280G, Executive shall
be required to mitigate damages (but only with respect to amounts
that would be treated as severance payments under Code Section
280G) by reducing the amount of severance payments he is entitled
to receive by any compensation and benefits he earns from
subsequent employment (but shall not be required to seek such
employment).
(ix) For purposes of this Agreement, the phrase "for just
cause" shall mean: (A) Executive's material fraud, malfeasance,
gross negligence, or willful misconduct with respect to business
affairs of the Company which is directly or materially harmful to
the business or reputation of the Company or any subsidiary of
the Company; (B) Executive's conviction of or failure to contest
prosecution for a felony or a crime involving moral turpitude; or
(C) Executive's material breach of this Agreement. A termination
of Executive for just cause based on clause (A) or (C) of the
preceding sentence shall take effect 30 days after the Executive
receives from Company written notice of intent to terminate and
Company's description of the alleged cause, unless Executive
shall, during such 30-day period, remedy the events or
circumstances constituting cause; provided, however, that such
termination shall take effect immediately upon the giving of
written notice of termination of just cause under any clause if
the Company shall have determined in good faith that such events
or circumstances are not remediable (which determination shall be
stated in such notice).
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(c) BY DEATH OR DISABILITY. If Executive's employment is
terminated due to Executive's death, the Executive's surviving spouse,
or if none, his estate, shall receive the benefits payable under (i)
and (ii) of Paragraph 5(b) above; provided, however, such payments
shall be for a period of 12 months rather than 36 months and such
payments shall be made in a lump sum payment within 60 days of the
Executive's death. In addition, if the Executive's dependents are
eligible to and actually elect to continue under COBRA any coverages
provided under Paragraph 5(b)(iii), the Company shall pay the cost of
such COBRA coverage for a period of 12 months following the date of
Executive's death. If Executive's employment is terminated due to
Executive's disability (as defined in the Company's long-term
disability plan or insurance policy, or if no such plan or policy, as
determined in good faith by the Company), Executive shall be entitled
to the benefits payable or to be provided under (i), (ii), (iii) and
(iv) of Paragraph 5(b); provided, however, the benefits under (i),
(ii) or (iii) of Paragraph 5(b) shall be payable or to be provided for
a period of 24 months. Executive or his estate, as the case may be,
shall not by operation of this paragraph forfeit any rights in which
he is vested at the time of his death or disability.
(d) Upon termination of Executive's employment for any reason
whatsoever (whether voluntary on the part of Executive, for just
cause, or other reasons), the obligations of Executive pursuant to
Paragraphs 6 and 7 hereof shall survive and remain in effect for the
periods described in Paragraph 6.
6. COMPETITION, CONFIDENTIALITY, AND NONSOLICITATION.
Executive agrees to be bound by the terms and conditions of the
Noncompetition Agreement attached hereto as Exhibit "A", which is
hereby made a part of this Agreement.
7. INJUNCTIVE RELIEF. The Executive acknowledges that his
services to be rendered to the Company are of a special and unusual
character which have a unique value to the Company, the loss of which
cannot adequately be compensated by damages in an action at law.
Executive further acknowledges that any breach of the terms of
Paragraph 6, including Exhibit "A", would result in material damage to
the Company, although it might be difficult to establish the monetary
value of the damage. Executive therefore agrees that the Company, in
addition to any other rights and remedies available to it, shall be
entitled to obtain an immediate injunction (whether temporary or
permanent) from any court of appropriate jurisdiction in the event of
any such breach thereof by Executive, or threatened breach which the
Company in good faith believes will or is likely to result in
irreparable harm to the Company. The existence of any claim or cause
of action by Executive against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the
enforcement by the Company of Executive's agreement under this
Paragraph and Paragraph 6 above.
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8. MISCELLANEOUS.
(a) NOTICE. Any notice or other communication required or
permitted under this Agreement shall be effective only if it is in
writing and shall be deemed to have been duly given when delivered
personally or seven days after mailing if mailed first class by
registered or certified mail, postage prepaid, addressed as follows:
If to the Company: Xxxxxx Industries, Inc.
X.X. Xxx 000
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Chairman of the Board
If to the Executive: Xxxxxxx X. Xxxxxxx
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
or to such other address as any party may designate by notice to the
others.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the Executive's
employment by the Company, and supersedes and is in full substitution
for any and all prior understandings or agreements with respect to the
Executive's employment.
(c) AMENDMENT. This Agreement may be amended only by an
instrument in writing signed by the parties hereto, and any provision
hereof may be waived only by an instrument in writing signed by the
party or parties against whom or which enforcement of such waiver is
sought. The failure of either party hereto to comply with any
provision hereof shall in no way affect the full right to require such
performance at any time thereafter, nor shall the waiver by either
party hereto of a breach of any provision hereof be taken or held to
be a waiver of any succeeding breach of such provision, or a waiver of
the provision itself, or a waiver of any other provision of this Agreement.
(d) BINDING EFFECT. This Agreement is binding on and is for the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators and other legal representatives. Neither
this Agreement nor any right or obligation hereunder may be assigned
by the Executive or the Company, except for assignment by the Company
to any wholly owned subsidiary.
(e) SEVERABILITY AND MODIFICATION. If any provision of this
Agreement or portion thereof is so broad, in scope or duration, so as
to be unenforceable, such provision or portion thereof shall be
interpreted to be only so broad as is enforceable. In addition, to
the extent that any provision of this Agreement as applied to either
party or to any circumstances shall be adjudged by a court of
competent jurisdiction to be void or unenforceable, the same shall in
no way affect any other provision of this Agreement or the validity or
enforceability of this Agreement.
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(e) INTERPRETATION. This Agreement shall be interpreted,
construed and governed by and under the laws of the State of
Tennessee. Each party irrevocably (i) consents to the exclusive
jurisdiction and venue of the courts of Xxxxxxxx County, State of
Tennessee and federal courts in the Eastern District of Tennessee, in
any action arising under or relating to this Agreement (including
Exhibit "A" hereto), and (ii) waives any jurisdictional defenses
(including personal jurisdiction and venue) to any such action. If
any provision of this Agreement is deemed or held to be illegal,
invalid, or unenforceable under present or future laws effective
during the term hereof, this Agreement shall be considered divisible
and inoperative as to such provision to the extent it is deemed to be
illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however,
that if any provision of this Agreement is deemed or held to be
illegal, invalid or unenforceable there shall be added hereto
automatically a provision as similar as possible to such illegal,
invalid or unenforceable provision as shall be legal, valid or
enforceable. Further, should any provision contained in this
Agreement ever be reformed or rewritten by any judicial body of
competent jurisdiction, such provision as so reformed or rewritten
shall be binding upon the Executive and the Company.
(g) FAILURE TO ENFORCE. The failure of either party hereto at
any time, or for any period of time, to enforce any of the provisions
of this Agreement shall not be construed as a waiver of such
provision(s) or of the right of such party hereafter to enforce each
and every such provision.
(h) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(i) NO CONFLICTING AGREEMENT. The Executive represents and
warrants that he is not party to any agreement, contract or
understanding which would prohibit him from entering into this
Agreement or performing fully his obligations hereunder.
IN WITNESS WHEREOF, the Company and the Executive have executed
this Agreement as of the date first written above.
EXECUTIVE
/s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxx Xxxxxxx
Its Vice President
EXHIBIT "A"
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into this _____ day of September,
1998, between Xxxxxx Industries, Inc. (the "Company") and Xxxxxxx X. Xxxxxxx
(the "Executive") contemporaneously with and as part of the Employment Agreement
between the parties to which this Noncompetition Agreement is attached.
REASONS FOR THIS NONCOMPETITION AGREEMENT: During Executive's relationship
with the Company Executive has learned, will learn, or has or will have
access to, important proprietary information related to the manufacturing
and distribution of towing and recovery equipment, and towing services
(collectively, the "Company's Business"). Executive acknowledges that the
proprietary customer, operations, financial, and business information that
has been or will be learned or accessible has been and will be developed
through the Company's expenditure of substantial effort, time and money; and
together with relationships developed with customers and employees, could be
used to compete unfairly with the Company. The Company's ability to sell
its products on a competitive basis depends, in part, on its proprietary
information and customer relationships, and the Company would not share this
information, provide training or promote Executive's relationship with
customers if the Company believed that it would be used in competition with
the Company, which non-disclosure would cause Executive's performance and
opportunities to suffer.
In consideration of employment or continued employment and other valuable
consideration, the receipt and sufficiency of which are acknowledged, the
Company and Executive agree:
1. Definitions: - For this Agreement, the following terms shall have the
meaning specified below:
(a) Person: - any individual, corporation, limited liability company,
partnership, joint venture, association, unincorporated organization or
other entity.
(b) Termination Date: - the date of Executive's termination of
employment from the Company, whether such termination is voluntary or
involuntary, whether with or without cause, and whether before or after the
expiration of the Term of the Executive's Employment Agreement.
(c) Customers: - all Persons (i) that Executive solicited or contacted
on behalf of the Company; (ii) whose dealings with the Company were
coordinated or supervised, in whole or in part, by Executive; or (iii) about
whom Executive possessed Confidential Information, in each case during the
one-year period immediately prior to the Executive's Termination Date.
(d) Confidential Information: - information, without regard to form,
relating to the Company's customers, operation, finances, and business that
derives value, actual or potential, from not being generally known to other
Persons, including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations (including compilations of customer
information), programs (including fulfillment and marketing programs),
devices, methods (including fulfillment methods), techniques, processes,
financial data (including sales forecasts), or lists of actual or potential
customers or suppliers (including identifying information about those
customers), whether or not reduced to writing. Confidential Information
includes information disclosed to the Company by third parties that the
Company is obligated to maintain as confidential. Confidential Information
subject to this Agreement may include information that is not a trade secret
under applicable law, but information not constituting a trade secret only
shall be treated as Confidential Information under this Agreement for a two
year period after the Termination Date.
(e) Territory: - the term "Territory" as used in this Agreement means
the continental United States. Executive acknowledges that Executive will
provide services to Company and will have a substantial impact on the
Company's Business throughout the Territory.
(f) Competing Business: - any Person (other than the Company)
providing or offering goods or services identical to or reasonably
substitutable for the Company's Business.
2. Confidential Information: - Executive shall use best efforts to protect
Confidential Information. During or after association with the Company,
Executive will not use or disclose any of the Company's Confidential
Information except in connection with his duties performed in accordance
with his Employment Agreement or except with the prior written consent of
the Chairman of the Board of the Company; provided, however, Executive may
make disclosures required by a valid order or subpoena issued by a court or
administrative agency of competent jurisdiction, in which event Executive
will promptly notify the Company of such order or subpoena to provide the
Company an opportunity to protect its interests.
3. Return of Materials: - On the Termination Date or for any reason or at
any time at the Company's request, Executive will deliver promptly to the
Company all materials, documents, plans, records, notes, or other papers and
any copies in Executive's possession or control relating in any way to the
Company's Business, which at all times shall be the property of the Company.
4. Solicitation of Employees: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit or induce
or in any manner attempt to solicit or induce, any person employed by the
Company to leave such employment, whether or not such employment is pursuant
to a written contract with the Company or at will.
5. Solicitation of Customers: - During employment and for a period of 24
months following his Termination Date, Executive will not solicit Customers
for the purpose of providing or offering products or services identical to
or reasonably substitutable for the Company's Business.
6. Limitations on Post-Termination Competition: - During employment and for
a period of 24 months following his Termination Date, Executive will not,
within the Territory, be employed or engaged by a Competing Business as a
director, executive, officer, manager, consultant or equivalent position.
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7. Notwithstanding any provision of this Agreement to the contrary, if
Executive's employment is terminated (whether by the Company or by
Executive) under circumstances that would entitle him to receive benefits
under his agreement with the Company providing compensation and benefits for
terminations following a "change in control" of the Company (as defined in
such agreement), then the time periods in Paragraphs 5 and 6 above shall be
reduced to 12 months.
8. Disparagement: - Executive shall not at any time make false, misleading
or disparaging statements about the Company, including its products,
management, employees, and customers.
9. Ownership of Confidential Information. The Executive hereby agrees that
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any and all improvements, inventions, discoveries, formulas, processes,
methods, know-how, confidential data, trade secrets and other proprietary
information (collectively "Work Product") within the scope of any business
of the Company or any affiliate which the Executive may conceive or make or
has conceived or made during his employment with the Company shall be and
are the sole and exclusive property of the Company, and that the Executive
shall, whenever requested to do so by the Company, at its expense, execute
and sign any and all applications, assignments or other instruments and do
all other things which the Company may deem necessary or appropriate (i) in
order to apply for, obtain, maintain, enforce or defend letters patent of
the United States or any foreign country for any Work Product, or (ii) in
order to assign, transfer, convey or otherwise make available to the Company
the sole and exclusive right, title and interest in and to any Work Product.
10. Interpretation; Severability: - Rights and restrictions in this
Agreement may be exercised and are applicable only to the extent they do not
violate any applicable laws, and are intended to be limited to the extent
necessary so they will not render this Agreement illegal, invalid, or
unenforceable. If any term shall be held illegal, invalid, or unenforceable
by a court of competent jurisdiction, the remaining terms shall remain in
full force and effect. This Agreement does not in any way limit the
Company's rights under the laws of unfair competition, trade secret,
copyright, patent, trademark or any other applicable laws(s), which are in
addition to rights under this Agreement. The existence of a claim by
Executive, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the Company's enforcement of this Agreement.
