Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT made as of the 27th day of December 2004, by and between WMS
INDUSTRIES INC., a Delaware corporation (the "Corporation"), and XXXXX X.
XXXXXXX ("Executive").
W I T N E S S E T H:
WHEREAS, the Corporation and Executive are parties to an employment
agreement dated as of June 15, 2001 (the "Old Employment Agreement"); and
WHEREAS, the Corporation and Executive desire to terminate the Old
Employment Agreement and enter into a new employment agreement on the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree as follows:
1. Termination of Old Employment Agreement. The Old Employment Agreement
is hereby terminated and of no further force and effect.
2. Employment; Duties. The Corporation hereby employs Executive as an
executive of the Corporation to perform services as President and Chief
Executive Officer and to perform such other supervisory, managerial or executive
duties on behalf of the Corporation and its subsidiaries as the Board of
Directors of the Corporation may from time to time determine. Executive has been
elected as a director of the Corporation. Executive agrees to serve in such
capacity in accordance with the Corporation's by-laws.
3. Acceptance and Loyalty. Executive hereby accepts such employment and
agrees that throughout the period of his employment hereunder, he will devote
his full time, attention, knowledge and skills, faithfully, diligently and to
the best of his ability, in furtherance of the business of the Corporation and
will perform the duties assigned to him pursuant to Section 2 hereof. Executive
shall perform all duties and responsibilities in a professional manner
consistent with the skill, competence and efficiency expected of an executive
employee performing the duties assigned to Executive and subject to the
direction and control of the Board of Directors of the Corporation. Executive
will do such traveling as may be reasonably required of him in the performance
of his obligations hereunder. Executive shall at all times be subject to,
observe and carry out such rules, regulations, policies, directions and
restrictions as the Corporation may from time to time establish. During his
employment hereunder, Executive shall not, without the written approval of the
Board of Directors of the Corporation first had and obtained in each instance,
directly or indirectly, accept employment or compensation from or perform
services of any nature for, any business enterprise other than the Corporation
or any of its subsidiaries. Notwithstanding the foregoing, Executive may render
without compensation investment services to any immediate member of Executive's
family, which shall include the Executive and any trust or account which is
comprised entirely of assets held for the benefit of Executive and/or immediate
members of his family. During Executive's employment hereunder, Executive shall
not be entitled to additional compensation for serving in any office, including
as a director, of the Corporation or any of its subsidiaries to which he may be
elected. Executive represents and warrants that, to his best knowledge, there
are no contractual, licensing or other impediments to the performance of
Executive's services hereunder.
4. Term. The term of Executive's employment hereunder shall commence on
the date hereof (the "Commencement Date") and shall terminate on December 31,
2007 (the "Original Term"); provided, however, that the term of Executive's
employment shall be deemed automatically extended from time to time such that
the term of such employment shall at no time be less than two years (the
"Extended Term"); and provided further, that Executive's services hereunder may
be terminated (i) by either party effective upon expiration of the Original Term
or the Extended Term upon written notice from the terminating party to the other
party dated and received at least two years prior to the respective termination
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date, or (ii) by the Corporation effective on the Disability Effective Date as
defined in Section 13.2 if such termination is by reason of "permanent
disability" as defined in Section 13.2 or effective on the Date of Termination
as defined in Section 13.6 if such termination is for "cause" as defined in
Section 13.3, or (iii) by Executive effective on the Date of Termination as
defined in Section 13.6 if such termination is for "good reason" as defined in
Section 13.4. The Original Term and the Extended Term are hereafter
collectively referred to as the "Term" and each full year of the Term is
hereafter referred to as an "Employment Year." The payments to which Executive
shall be entitled under this Agreement upon termination of Executive's services
for any reason shall be governed by the provisions of Section 13.
5. Compensation and Benefits.
5.1 Base Salary. The Corporation shall pay to Executive a base
salary ("Base Salary") at the rate of seven hundred thousand dollars ($700,000)
per annum for each Employment Year, or such greater amount as the Board of
Directors of the Corporation shall from time to time determine. Base salary
shall be payable in equal installments in accordance with the Corporation's
normal payroll policy and will be reviewed by the Compensation Committee of the
Board of Directors of the Corporation (the "Compensation Committee") at least
once each Employment Year.
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5.2 Annual Bonus. Commencing with the fiscal year of the Corporation
beginning July 1, 2004, and for each fiscal year thereafter during the Term,
Executive shall have the opportunity to earn a bonus ("Annual Bonus") of up to
280% of his base salary pursuant to an annual performance based bonus program to
be established by the Compensation Committee after good faith consultation with
Executive. The determination as to the amounts of Annual Bonus available to
Executive under this program and the performance criteria shall be reviewed
periodically by the Compensation Committee with a view to adjusting the amounts
and criteria in accordance with such factors as the Compensation Committee may
deem appropriate, including the competitive marketplace for comparable
executives.
5.3 Long Term Incentive Program. Commencing with the fiscal year of
the Corporation beginning July 1, 2004, and for each fiscal year thereafter
during the Term, Executive shall have the opportunity to participate in a
long-term performance based incentive program to be established by the
Compensation Committee after good faith consultation with Executive. The
determination as to the amounts of long-term incentive compensation available to
Executive under this program and the performance criteria shall be reviewed
periodically by the Compensation Committee with a view to adjusting the amounts
and criteria in accordance with such factors as the Compensation Committee may
deem appropriate, including the competitive marketplace for comparable
executives.
5.4 Health Insurance, Etc. Executive shall be entitled to
participate, to the extent he is eligible under the terms and conditions
thereof, in any disability, hospitalization, insurance, medical service, or
other health-related employee benefit plan which is generally available to
executive employees of the Corporation and which may be in effect from time to
time during the Term, including the Exec-U-Care insurance program. If the
Corporation changes the terms of any health insurance policies which cover
Executive or members of his family, the Corporation will use reasonable efforts
to provide for such changed policies to cover any pre-existing condition of
Executive or such covered members of his family at the time of such change. The
Corporation shall be under no obligation to institute or continue the existence
of any such generally available employee benefit plan.
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6. Business Expenses; Corporate Aircraft. The Corporation shall reimburse
Executive for all authorized expenses reasonably incurred by him in accordance
with the Corporation's travel and entertainment policies and procedures in
effect during the Term. Executive shall be entitled to fly first class on the
Corporation's business. So long as the Corporation retains its rights to use a
corporate aircraft, Executive will have the right to reasonable use of that
aircraft for corporate purposes. Executive agrees to use the corporate aircraft
for both business and personal purposes if the Chairman of the Board of
Directors of the Corporation determines Executive should do so by reason of a
bona fide business-oriented security concern.
7. Paid Time Off. Executive shall be entitled to 27 days of paid time off
per Employment Year. Paid time off shall not be accumulated from year to year
except as permitted under the Corporation's policies applicable to executive
employees generally.
8. Key Man Life Insurance. The Corporation may purchase and maintain
insurance covering the life of Executive ("Key-man Insurance") in an amount
determined by the Corporation. The Corporation shall be the sole owner and
beneficiary of the Key-man Insurance and may apply to the payment of premiums
thereunder any dividends declared and paid thereon. Executive shall submit
himself from time to time to such physical examinations as the Board of
Directors of the Corporation may deem necessary or desirable in connection with
the purchase and maintenance of the Key-man Insurance.
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9. Non-Competition and Non-Raiding. In consideration of the Corporation's
entering into this Agreement:
9.1 Non-Competition. Executive agrees that during a period from the
Commencement Date until two years after the termination of Executive's
employment hereunder for any reason he will not, directly or indirectly, without
the prior written consent of the Corporation, own, manage, operate, join,
control, participate in, perform any services for, invest in, or otherwise be
connected with, in any manner, whether as an officer, director, employee,
consultant, partner, investor or otherwise, any business entity which is engaged
in the design, importation, manufacture and/or sale of electronic gaming devices
or any business entity which is engaged in any other business in which the
Corporation or any subsidiary of the Corporation is engaged at the end of the
Term or at the time of termination of Executive's employment or, to the
knowledge of Executive, is planning to be engaged within one year after such
termination. Nothing herein contained shall be deemed to prohibit Executive from
investing his funds in securities of a company if the securities of such company
are listed for trading on a national stock exchange or traded in the
over-the-counter market and Executive's holdings therein represent less than
five percent of the total number of shares or principal amount of other
securities of such company outstanding.
9.2 Non-Raiding. Executive agrees that during a period from the
Commencement Date until the greater of (i) two years after the termination of
Executive's employment hereunder for any reason, or (ii) such period of time as
Executive is receiving retirement benefits pursuant to Section 14 hereof, he
will not, directly or indirectly, without the prior written consent of the
Corporation, induce or influence, or seek to induce or influence, any person who
is engaged by the Corporation or any subsidiary of the Corporation as an
employee, agent, independent contractor or otherwise, to terminate his
employment or engagement, nor shall Executive directly or indirectly, through
any other person, firm or corporation, employ or engage, or solicit for
employment or engagement, or advise or recommend to any other person or entity
that such person or entity employ or engage or solicit for employment or
engagement, any person or entity employed or engaged by the Corporation or any
subsidiary of the Corporation.
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9.3 Modification. Executive acknowledges that the provisions of this
Section 9 are reasonable and necessary for the protection of the Corporation. In
the event that any provision of this Section 9, including any sentence, clause
or part hereof, shall be deemed contrary to law or invalid or unenforceable in
any respect by a court of competent jurisdiction, the remaining provisions shall
not be affected, but shall, subject to the discretion of such court, remain in
full force and effect and any invalid and unenforceable provisions shall be
deemed, without further action on the part of the parties hereto, modified,
amended and limited to the extent necessary to render the same valid and
enforceable.
10. Confidentiality Agreement.
10.1 As used herein, the term "Confidential Information" shall mean
any and all information of the Corporation and of its subsidiaries (for purposes
of this paragraph, the Corporation's subsidiaries shall be deemed included
within the meaning of "Corporation"), including, but not limited to, all data,
compilations, programs, devices, strategies, or methods concerning or related to
(i) the Corporation's finances, financial condition, results of operations,
employee relations, amounts of compensation paid to officers and employees and
any other data or information relating to the internal affairs of the
Corporation and its operations; (ii) the terms and conditions (including prices)
of sales and offers of sales of the Corporation's products and services; (iii)
the terms, conditions and current status of the Corporation's agreements and
relationship with any customer or supplier; (iv) the customer and supplier lists
and the identities and business preferences of the Corporation's actual and
prospective customers and suppliers or any employee or agent thereof with whom
the Corporation communicates; (v) the trade secrets, manufacturing and operating
techniques, price data, costs, methods, systems, plans, procedures, formulas,
processes, hardware, software, machines, inventions, designs, drawings, artwork,
blueprints, specifications, tools, skills, ideas, and strategic plans possessed,
developed, accumulated or acquired by the Corporation; (vi) any communications
between the Corporation, its officers, directors, stockholders, or employees,
and any attorney retained by the Corporation for any purpose, or any person
retained or employed by such attorney for the purpose of assisting such attorney
in his or her representation of the Corporation; (vii) any other information and
knowledge with respect to all products developed or in any stage of development
by the Corporation; (viii) the abilities and specialized training or experience
of others who as employees or consultants of the Corporation during the Term
have engaged in the design or development of any such products; and (ix) any
other matter or thing, whether or not recorded on any medium, (a) by which the
Corporation derives actual or potential economic value from such matter or thing
being not generally known to other persons or entities who might obtain economic
value from its disclosure or use, or (b) which gives the Corporation an
opportunity to obtain an advantage over its competitors who do not know or use
the same.
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10.2 Executive acknowledges and agrees that the Corporation is
engaged in highly competitive businesses and has expended, or will expend,
significant sums of money and has invested, or will invest, a substantial amount
of time to develop and maintain the secrecy of the Confidential Information. The
Corporation has thus obtained, or will obtain, a valuable economic asset which
has enabled, or will enable, it to develop an extensive reputation and to
establish long-term business relationships with its suppliers and customers. If
such Confidential Information were disclosed to another person or entity or used
for the benefit of anyone other than the Corporation, the Corporation would
suffer irreparable harm, loss and damage. Accordingly, Executive acknowledges
and agrees that, unless the Confidential Information becomes publicly known
through legitimate origins not involving an act or omission by Executive:
(1) the Confidential Information is, and all times hereafter shall
remain, the sole property of the Corporation;
(2) Executive shall use his best efforts and the utmost diligence to
guard and protect the Confidential Information from disclosure to any
competitor, customer or supplier of the Corporation or any other person,
firm, corporation or other entity;
(3) unless the Corporation gives Executive prior express written
permission, during his employment and thereafter, Executive shall not use
for his own benefit, or divulge to any competitor or customer or any other
person, firm, corporation, or other entity, any of the Confidential
Information which Executive may obtain, learn about, develop or be
entrusted with as a result of Executive's employment by the Corporation;
and
(4) except in the ordinary course of the Corporation's business,
Executive shall not seek or accept any Confidential Information from any
former, present or future employee of the Corporation.
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10.3 Executive also acknowledges and agrees that all documentary and
tangible Confidential Information including, without limitation, such
Confidential Information as Executive has committed to memory, is supplied or
made available by the Corporation to the Executive solely to assist him in
performing his services under this Agreement. Executive further agrees that
after his employment with the Corporation is terminated for any reason:
(1) Executive shall not remove from the property of the Corporation
and shall immediately return to the Corporation, all documentary or
tangible Confidential Information in his possession, custody, or control
and not make or keep any copies, notes, abstracts, summaries, tapes or
other record of any type of Confidential Information; and
(2) Executive shall immediately return to the Corporation any and
all other property of the Corporation in his possession, custody or
control, including, without limitation, any and all keys, security cards,
passes, credit cards and marketing literature.
10.4 In the event that Executive is requested or required (by oral
questions, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process) to
disclose any of the Confidential Information, Executive shall provide the
Corporation with prompt written notice of any such request or requirement so
that, if practical, the Corporation may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this
Agreement. If, in the absence of a protective order or other remedy or the
receipt of a waiver, Executive receives advice of counsel that he is nonetheless
legally compelled to disclose Confidential Information to any tribunal or else
stand liable for contempt or suffer other censure or penalty, Executive may,
without liability hereunder, disclose to such tribunal only that portion of the
Confidential Information which such counsel advises is legally required to be
disclosed, provided that Executive exercises his reasonable efforts to preserve
the confidentiality of the disclosed Confidential Information, including,
without limitation, by cooperating with the Corporation to obtain an appropriate
protective order or other reliable assurance that confidential treatment will be
accorded the disclosed Confidential Information by such tribunal.
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11. Invention Disclosure. Any invention, improvement, design, development
or discovery conceived, developed, created or made by Executive alone or with
others, during the period of his employment hereunder and applicable to the
business of the Corporation or its subsidiaries, whether or not patentable or
registrable, shall become the sole and exclusive property of the Corporation.
Executive hereby assigns to the Corporation, all of his rights to any
"intellectual material" created or developed by him during the course of his
employment. As used herein, "intellectual material" shall include, but shall not
be limited to, ideas, titles, themes, production ideas, methods of presentation,
artistic renderings, sketches, plots, music, lyrics, dialogue, phrases, slogans,
catch words, characters, names and similar literary, dramatic and musical
material, trade names, trademarks and service marks and all copyrightable
expressions in audio visual works, computer software, electronic circuitry and
all mask works for integrated circuits. Executive shall disclose the
intellectual material promptly and completely to the Corporation and shall,
during the period of his employment hereunder and at any time and from time to
time hereafter (a) execute all documents requested by the Corporation for
vesting in the Corporation or any of its subsidiaries the entire, right, title
and interest in and to the same, (b) execute all documents requested by the
Corporation for filing and prosecuting such applications for patents, trademarks
and/or copyrights as the Corporation, in its sole discretion, may desire to
prosecute, and (c) give the Corporation all assistance it reasonably requires,
including the giving of testimony in any suit, action or proceeding, in order to
obtain, maintain and protect the Corporation's right therein and thereto. If any
such assistance is required following the termination of this Agreement, the
Corporation shall reimburse Executive for his time and the reasonable expenses
incurred by him in rendering such assistance. Anything contained in this
paragraph to the contrary notwithstanding, this Section does not apply to an
invention for which no equipment, supplies, facilities, or trade secret
information of the Corporation or its subsidiaries was used and which was
developed entirely on the Executive's own time, unless (d) the invention
relates: (i) to the business of the Corporation or its subsidiaries, or (ii) to
the Corporation's or any of its subsidiaries actual or demonstrably anticipated
research or development, or (e) the invention results from any work performed by
the Executive for the Corporation or its subsidiaries.
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12. Remedies. Executive acknowledges and agrees that the business of the
Corporation is highly competitive and that violation of any of the covenants
provided for in Paragraphs 9, 10 and 11 of this Agreement would cause immediate,
immeasurable and irreparable harm, loss and damage to the Corporation not
adequately compensable by a monetary award. Accordingly, Executive agrees,
without limiting any of the other remedies available to the Corporation, that
any violation of said covenants, or any one of them, may be enjoined or
restrained by any court of competent jurisdiction, and that any temporary
restraining order or emergency, preliminary or final injunctions may be issued
by any court of competent jurisdiction, without notice and without bond. In the
event any proceedings are commenced by the Corporation against Executive for any
actual or threatened violation of any of said covenants the non-prevailing party
in such litigation shall be liable to the prevailing party for, and shall pay
all costs and expenses of any kind, including reasonable attorneys' fees, which
the prevailing party may incur in connection with such proceedings.
13. Termination of Employment.
13.1 Death. Executive's employment shall terminate automatically
upon the death of Executive.
13.2 Disability. If the Corporation determines in good faith that
the permanent disability of Executive has occurred during the Term (pursuant to
the definition of "permanent disability" set forth below), it may give to
Executive written notice in accordance with Section 19 of its intention to
terminate Executive's employment. In such event, Executive's employment with the
Corporation shall terminate effective on the 30th day after receipt of such
notice by Executive (the "Disability Effective Date"), provided that, within the
30 days after such receipt, Executive shall not have returned to full-time
performance of Executive's duties. For purposes of this Agreement, "permanent
disability" shall mean the absence of Executive from Executive's duties with the
Corporation on a full-time basis for 90 consecutive business days, or for six
months in any 12-month period during the Term, as a result of incapacity due to
mental or physical illness which is determined to be total and permanent by a
physician selected by the Corporation or its insurers and acceptable to
Executive or Executive's legal representative.
13.3 Cause. The Corporation may terminate Executive's employment
during the Term for "cause." For purposes of this Agreement, "cause" means (i)
conviction (pursuant to a final or non-appealable judgment) of a felony or any
other crime involving fraud, larceny or dishonesty; (ii) failure and refusal to
follow a reasonable direction of the Board of Directors of the Corporation after
notice in writing of such failure or refusal and a cure period of ten days
thereafter; (iii) commission of any dishonest, willful or grossly negligent act
which has or is reasonably likely to have a material adverse effect on the
Corporation or its customer or trade relationships; or (iv) failure or refusal
to provide accurate and reasonably complete information with respect to
Executive's personal history to the Corporation or to governmental agencies
regulating the business of the Corporation, failure or refusal to reasonably
cooperate with such regulators or failure to obtain necessary regulatory
licensing approvals or clearances because of intentionally inaccurate,
intentionally incomplete or falsified information provided by Executive. It is
understood that poor financial performance of the Corporation shall not in
itself constitute grounds for the termination of Executive for "cause."
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13.4 Good Reason. Executive's employment may be terminated by
Executive for "good reason." For purposes of this Agreement, "good reason" shall
mean (i) a material breach by the Corporation of any material provision of this
Agreement, including Sections 5.2 and 5.3 hereof, after the Executive has
provided the Corporation with notice thereof and a reasonable opportunity to
cure such breach, (ii) Executive is placed in any position of lesser stature
than that of President and Chief Executive Officer of the Corporation or is
assigned duties inconsistent with such position, or is required to report to
anyone other than the Board of Directors of the Corporation; (iii) the
Corporation reduces the amount of compensation to which Executive is entitled
under the terms of this Agreement; (iv) Executive is removed from or not
re-elected to the Board of Directors of the Corporation; or (v) the Corporation
moves its headquarters to a location other than 000 X. Xxxxxxxxxx Xxxx.,
Xxxxxxxx, Xxxxxxxx without Executive's consent so that such headquarters are
located more than 40 miles farther from Executive's current place of residence
than the Corporation's headquarters are presently located.
13.5 Notice of Termination. Any termination by the Corporation for
"cause", or by Executive for "good reason", shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 19 of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than thirty days
after the giving of such notice). The failure by Executive or the Corporation to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of "good reason" or "cause" shall not waive any right
of Executive or the Corporation, respectively, hereunder or preclude Executive
or the Corporation, respectively, from asserting such fact or circumstance in
enforcing Executive's or the Corporation's rights hereunder.
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13.6 Date of Termination. "Date of Termination" means (i) if
Executive's employment is terminated by the Corporation for "cause", or by
Executive for "good reason", the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if Executive's
employment is terminated by the Corporation other than for "cause" or
"disability", except as set forth in Section 13.7(c), the Date of Termination
shall be the date on which the Corporation notifies Executive of such
termination and (iii) if Executive's employment is terminated by reason of death
or "disability", the Date of Termination shall be the date of death of Executive
or the Disability Effective Date, as the case may be.
13.7 Payments as a Result of Termination. (a) If, during the Term,
the Corporation shall terminate Executive's employment other than for "cause",
death or "permanent disability", or Executive shall terminate employment for
"good reason", the Corporation shall pay to Executive
(i) within 30 days after the Date of Termination (A) Executive's
annual Base Salary payable under Section 5.1 through the Date of
Termination to the extent not theretofore paid, and any bonus that had
become payable to Executive with respect to a fiscal year ended prior to
the Date of Termination to the extent not theretofore paid (the "Accrued
Obligations"), (B) an amount equal to three times Executive's Annual Base
Salary; and (C) an amount equal to three times One Year's Annual Bonus.
"One Year's Annual Bonus" means the average annual cash bonus earned by
Executive during the two full fiscal years preceding the Date of
Termination; and
(ii) within 30 days after the Corporation publicly announces its
audited results for the fiscal year in which the Date of Termination
occurs, the product of (x) the Annual Bonus payable under Section 5.2 for
the fiscal year in which the Date of Termination occurs and (y) a
fraction, the numerator of which is the number of days in the applicable
fiscal year through the Date of Termination, and the denominator of which
is 365, less any payments theretofore made to Executive in respect of the
Annual Bonus; and
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(iii) such amounts as are provided in Section 14.
(b) If Executive's employment shall be terminated for "cause"
or the Executive terminates employment without "good reason" during
the Term, Executive's employment under this Agreement shall
terminate without further obligations by the Corporation to
Executive other than the obligation to pay to Executive the Accrued
Obligations and such amounts as are provided in Section 14.
(c) If Executive's employment terminates at the expiration of
the Original Term or the Extended Term, or by reason of death or
permanent disability, Executive's employment under this Agreement
shall terminate without further obligation of the Corporation to
Executive other than (i) the obligation to pay the Accrued
Obligations, (ii) such amounts as are provided in Section 14, and
(iii) if such termination is by reason of death, Executive's Base
Salary shall continue to be paid to his designated beneficiaries for
a period of six months after the date of death.
(d) In addition to any other available legal rights, the
Corporation shall have the right to withhold payment to Executive of
any amounts otherwise payable under this Agreement if, in the
reasonable determination of the Board of Directors of the
Corporation, Executive has committed a felony or engaged in a
dishonest or fraudulent act if such felony or dishonest or
fraudulent act has or is reasonably likely to have a material
adverse affect on the Corporation, its customers, trade relations or
its gaming licenses.
14. Retirement. The Corporation will pay to Executive during the Payment
Period (as defined below), an annual retirement benefit equal to one-half (1/2)
of the annual base salary payable to Executive as of the Retirement Date (as
defined below), but no less than Three Hundred Fifty Thousand Dollars ($350,000)
per annum and not more than Five Hundred Thousand Dollars ($500,000) per annum.
The annual retirement benefit shall be paid in equal monthly installments
beginning on the first day of the first month following Executive's Retirement
Date and on the first day of each month thereafter. In the event that Executive
shall die after his Retirement Date, but before the retirement benefits provided
for herein shall be fully paid, the balance thereof shall thereafter be payable
in monthly installments to his estate. "Retirement Date" shall mean the date of
termination of Employee's employment under this Agreement, for whatever reason.
The "Payment Period" means the period beginning on the Retirement Date and
ending on the expiration of the lesser of (a) ten years, or (b) the number of
years or fractions thereof after March 21, 2000 that Executive is employed by
the Corporation.
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15. Change of Control
15.1 If at any time during the Term, (a) individuals who presently
constitute the Board of Directors of the Corporation, or who have been
recommended for election to the Board by at least two-thirds of the Board
consisting of individuals who are either presently on the Board or are such
recommended successors, cease for any reason to constitute at least a majority
of such Board or (b) both of the following occur (i) any person or entity or
group of affiliated persons or entities who are not the owners of at least 15%
of the outstanding shares of voting securities of the Corporation on the date
hereof acquire more than 25% of the outstanding shares of the Corporation's
voting securities, and (ii) Executive remains employed by the Corporation for a
period of 180 days after the occurrence of the acquisition described in clause
(b)(i), (the events in clause (a) or (b) being hereafter referred to as a
"Change of Control") and Executive gives written notice to the Corporation
within 30 days after conclusion of the 180 day period described in clause
(b)(ii) of his election to terminate his employment hereunder, the Corporation
shall pay to Executive within 15 days after Executive's delivery of such notice,
as severance pay and liquidated damages, in lieu of any other rights or remedies
which might otherwise be available to him under this Agreement, and without
mitigation of any kind or amount, whether or not Executive shall seek or accept
other employment, a lump sum payment equal in amount to (i) the sum of (A) the
annual Base Salary payable to Executive under Section 5.1; and (B) One Year's
Annual Bonus as defined in Section 13.7(a)(i); (ii) multiplied by three. In
addition, the amount of retirement benefits which would be payable to Executive
if he had retired on the date of such Change of Control shall be paid in full in
a lump sum. The health benefits provided for Executive by the Corporation on the
date of Change of Control shall continue to be provided for 18 months thereafter
at the Corporation's expense. The payments provided for in this Section 15.1
shall be paid in full, without discount to present value.
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15.2 If it shall be determined that any amount payable under Section
15.1 by the Corporation to or for the benefit of Executive (a "Base Payment")
would be subject to the excise tax (the "Excise Tax") imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (the "Code"), then Executive shall
be entitled to receive an additional payment (the "Gross-Up Payment") in an
amount such that the net amount retained by Executive, after the calculation and
deduction of any Excise Tax on the Base Payment shall be equal to the Base
Payment, less any federal, state and local income taxes. The Gross-Up Payment
shall be reduced by income or Excise Tax withholding payments made by the
Corporation to any federal, state or local taxing authority with respect to the
Gross-Up Payment that was not deducted from compensation payable to the
Executive. All determinations required to be made under this Section 15.2,
including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment, and the assumptions to be utilized in arriving at such
determination, except as specified above, shall be made by a national recognized
public accounting firm selected by the Corporation (the "Accounting Firm"),
which shall provide detailed supporting calculations both to the Corporation and
Executive within fifteen business days after the receipt of notice from
Executive that there should be a Gross-Up Payment. The determination of tax
liability made by the Accounting Firm shall be subject to review by Executive's
tax advisor, and, if Executive's tax advisor does not agree with the
determination reached by the Accounting Firm, then the Accounting Firm and
Executive's tax advisor shall jointly designate another nationally recognized
public accounting firm, which shall make the determination. All fees and
expenses of the accountants retained by the Corporation or jointly designated
and retained shall be borne by the Corporation. Any determination by a jointly
designated public accounting firm shall be binding upon the Corporation and
Executive.
15.3 In the event of (i) Executive's death; (ii) termination of
Executive's employment by reason of permanent disability as provided in Section
13.2; (iii) the termination of Executive's employment by the Corporation other
than for cause; (iv) the termination of Executive's employment by the
Corporation by Executive for "good reason"; (v) Change of Control of the
Corporation as defined in Section 15.1, or (vi) any person or entity or group of
affiliated persons or entities who are not the owners of at least 15% of the
outstanding shares of voting securities of the Corporation on the date hereof,
acquiring more than 25% of the outstanding shares of the Corporation's voting
securities (each of the events referred to in clauses (i) - (vi) being an
"Accelerated Vesting Event"), all unexpired options to purchase shares of the
Corporation's Common Stock and stock equity grants owned by Executive on the
date of the Accelerated Vesting Event shall, if unvested, vest fully on the date
of the Accelerated Vesting Event notwithstanding any vesting provisions of such
options. All options and stock equity grants hereafter granted by the
Corporation shall provide for accelerated vesting pursuant to this Section 15.3.
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16. Litigation Cooperation. At all times during and subsequent to
Executive's employment by the Corporation Executive shall make himself
available, at the expense of the Corporation, to testify on behalf of the
Corporation or any subsidiary of the corporation in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, and shall
assist the Corporation or any subsidiary in any such action, suit or proceeding
by providing information and meeting and consulting with members of management
of, other representatives of or counsel to the Corporation or such subsidiary,
as reasonably requested.
17. No Disparagement. At all times during and subsequent to Executive's
employment by the Corporation, Executive and the Corporation agree not to make
statements or communications, directly or indirectly, in writing, orally, or
otherwise, or take any other action that may, directly or indirectly, disparage
or be damaging to the Corporation or any of its subsidiaries, or their
respective officers, directors, employers, advisors, business or reputation, or
to Executive's reputation, except as required by law or pursuant to legal
process.
18. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to Executive's employment with the Corporation
and no amendment or modification hereof shall be valid or binding unless made in
writing and signed by the party against whom enforcement thereof is sought.
19. Notices. Any notice required, permitted or desired to be given
pursuant to any of the provisions of this Agreement shall be deemed to have been
sufficiently given or served for all purposes if delivered in person or sent by
telephone facsimile or sent by certified mail, return receipt requested, or sent
by responsible overnight delivery service, postage and fees prepaid, to the
parties hereto at their respective addresses set forth below. Either of the
parties hereto may at any time and from time to time change the address to which
notice shall be sent hereunder by notice to the other party given under this
Section 19. The date of the giving of any notice sent by mail shall be three
business days following the date of the posting of the mail, if delivered in
person, the date delivered in person, if sent by overnight delivery service, the
next business day following delivery to an overnight delivery service or if sent
by telephone facsimile, the date sent by telephone facsimile.
If to the Corporation:
000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Attention: General Counsel
If to the Executive:
000 Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Facsimile: (000) 000-0000
20. Withholding Taxes. All payments made to Executive under this Agreement
shall be subject to applicable payroll taxes and withholding requirements.
21. No Assignment. Neither this Agreement nor the right to receive any
payments hereunder may be assigned by Executive. This Agreement shall be binding
upon Executive, his heirs, executors and administrators and upon the
Corporation, its successors and assigns.
22. No Waiver. No course of dealing nor any delay on the part of the
Corporation in exercising any rights hereunder shall operate as a waiver of any
such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
23. Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the substantive laws of the State of Illinois
applicable to agreements entered into and to be performed entirely therein.
24. Severability. If any clause, paragraph, section or part of this
Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any arbitrator or court of competent jurisdiction, such provision
shall be ineffective but shall not in any way invalidate or affect any other
clause, paragraph, section or part of this Agreement. The parties intend that
all clauses, paragraphs, sections or parts of this Agreement shall be
enforceable to the fullest extent permitted by law.
25. Subsidiary. As used in this Agreement, means any person or entity
controlled directly or indirectly by the Corporation.
26. Counterparts. This Agreement may be executed in one or more
counterparts, each of which counterparts, when taken together, shall constitute
but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
WMS INDUSTRIES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
/s/ Xxxxx X. Xxxxxxx
-------------------------------------
XXXXX X. XXXXXXX
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