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EXHIBIT 10.6
AMENDED AND RESTATED
MANAGEMENT AND OPTION AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement"), dated
as of August 16, 1996, is entered into by and between Harvard Industries, Inc.,
a Florida corporation (the "Company") and Anchor Industries International,
Inc., a Florida corporation ("AII").
WHEREAS, the Company has previously engaged AII to provide the
management services and expertise of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (the "Executive") to
the Company on the terms and subject to the conditions provided for in the
Management and Option Agreement, dated August 16, 1993, by and between the
Company and AII (the "Initial Agreement"), as amended and restated as of August
16, 1994 and August 16, 1995 (as most recently so amended and restated, the
"Prior Agreement");
WHEREAS, AII is willing to continue to provide to the Company
the management services and expertise of the Executive and the Company desires
to continue to retain AII to provide such services; and
WHEREAS, the Company and AII desire to amend and restate the
Prior Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
undertakings herein contained and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties hereto intending to be
legally bound, do hereby amend and restate the Prior Agreement as follows:
1. Term.
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This Agreement is for the period (the "Term") commencing on
the date hereof (the "Effective Date") and terminating on the date (the
"Termination Date") that is the third anniversary of the date that either the
Company or AII shall have notified the other party in writing that the Term
shall terminate.
2. Positions; Duties and Reporting Relationship.
The Company hereby appoints and employs AII to provide the
management services and expertise of the Executive to serve the Company and
manage the operations and business of the Company, and AII hereby accepts the
appointment and employment by the Company upon the terms and subject to the
conditions provided for herein. Except as provided herein, during the Term the
Company agrees that the Executive shall be nominated and appointed to serve as
Chairman of the Board of Directors, Chief Executive Officer and President of
the Company. AII shall cause the Executive to use his skills and render
services to the best of his abilities in supervising, managing and conducting
the operations and business of the Company; provided, however, that the
foregoing shall not prevent the Executive from devoting his time and efforts to
businesses and other affairs which are unrelated to this Agreement, so long as
they do not materially interfere with the performance of his duties hereunder.
In such capacity as Chairman of the Board of Directors, Chief
Executive Officer and President of the Company, the Executive shall have the
executive authority, responsibilities and duties typically held by the Chairman
of the Board of Directors, Chief Executive Officer and President of a
nationally recognized manufacturing and sales corporation. Without in anyway
limiting the foregoing, as part of his duties hereunder, the Executive shall be
responsible for and have general supervisory control over managing the
Company's and its
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subsidiaries' relationship with their (i) lenders and financial advisors, (ii)
principal customers and suppliers and (iii) employees or their bargaining
representatives. In addition, the Executive is hereby authorized and directed
(i) to evaluate and negotiate on behalf of the Company or its subsidiaries,
with the assistance of advisors, all material transactions involving the
Company or its subsidiaries, including, without limitation, joint ventures,
divestitures, acquisitions, mergers or other significant investments or
divestment, and (ii) to implement and plan for the strategic focus of the
Company's and its subsidiaries' marketing, sales and production efforts. AII
shall cause the Executive to perform additional duties as are reasonably
requested by the Board of Directors of the Company, consistent with the
Executive's position and the responsibilities and duties set forth above. AII
and the Executive shall at all times be subject to the authority of the Board
of Directors of the Company and shall report to the Board of Directors of the
Company at regularly scheduled meetings and with reasonable promptness in the
event of any material developments in connection with the business and affairs
of the Company.
3. Compensation; Bonus.
(a) Compensation. During the Term of this
Agreement, the Company shall pay AII $83,333.33 per month in compensation,
payable in equal semi-monthly installments on the first and fifteenth day of
each month.
(b) Bonus. In addition to the compensation
provided for above in Section 3(a), the Company shall pay to AII the bonus
amounts calculated in accordance with this Section 3(b).
(i) For the Company's fiscal year ending
September 30, 1994, the Company shall pay to AII an amount equal to 5%
of the excess, if any, of (A) the Adjusted Operating
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Income (as defined below) of the Company for such fiscal year over (B)
$20 million (up to a maximum of $500,000) plus 10% of the excess, if
any, of (A) the Adjusted Operating Income for such fiscal year over
(B) $30 million.
(ii) Subject to Section 3(d), for the
fiscal year of the Company beginning on October 1, 1994, the Company
shall pay to AII an amount equal to 5% of the excess, if any, of (A)
the Adjusted Operating Income (as defined below) of the Company for
such fiscal year over (B) the lesser of (x) $40 million or (y) the
Adjusted Operating Income of the Company as forecasted in the budget
of the Company for such fiscal year (up to a maximum of $500,000);
plus 10% of the excess, if any, of (A) the Adjusted Operating Income
of the Company for such fiscal year over (B) the lesser of (x) $50
million or (y) $10 million plus the Adjusted Operating Income of the
Company as forecasted in the budget of the Company for such fiscal
year.
(iii) Subject to Section 3(d), for the
fiscal year of the Company beginning on October 1, 1995, the Company
shall pay to AII an amount determined pursuant to the formula set
forth in Section 3(b)(ii) above; provided, however, that the Board of
Directors of the Company shall, no later than December 1, 1995,
prescribe dollar amounts to be used in lieu of each of the dollar
amounts set forth in Section 3(b)(ii) for purposes of determining the
amount payable under this Section 3(b)(iii).
(iv) Subject to Section 3(d), if, for the
fiscal year of the Company beginning on October 1, 1996, the Company's
earnings before interest, taxes, depreciation and amortization
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("EBITDA") equals or exceeds $82 million (the "1996 Budget Amount"),
the Company shall pay to AII a bonus in respect of such fiscal year
equal to the sum of (A) $500,000 plus (B) 5% of the amount, if any, by
which such EBITDA exceeds the 1996 Budget Amount plus (C) an
additional 5% of the amount, if any, by which such EBITDA exceeds the
sum of (x) the 1996 Budget Amount plus (y) $10 million.
"Adjusted Operating Income" means, for any period, Operating
Income (as defined below) for such period adjusted to (i) eliminate the effects
of any changes adopted in generally accepted accounting principles ("GAAP")
subsequent to August 16, 1994, (ii) eliminate the effects of the implementation
of AICPA's Statement of Position 90-7 (Financial Reporting by Entities in
Reorganization Under the U.S. Bankruptcy Code) in connection with the
reorganization of the Company and its subsidiaries, (iii) eliminate the effects
of adoption of Financial Accounting Standard 106 by the Company and its
subsidiaries, (iv) include certain other adjustments, each of which is set
forth in Appendix 6 (the "Adjusted Operating Income Template") to the Company's
plan of reorganization with respect to the Company's bankruptcy case (United
States Bankruptcy Court for the District of Delaware, Case Nos. 91-404 and
91-479 through 91-487), (v) eliminate the effects of any accrued or paid
severance or consulting costs or expense related to the resignation of the
Company's former Chairman, President and Chief Executive Officer and former
In-House Counsel, (vi) eliminate the effect of any bonus which is accrued or
paid pursuant to this Agreement and (vii) eliminate the effect of any increased
or decreased pension, profit sharing or other expense as a result of a change
in prevailing interest rates from those used by the Company in preparing its
annual budget or similar forecasts of Adjusted Operating Income for the fiscal
year ending September 30, 1994.
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"Operating Income" means, for any period, (i) the consolidated
sales, minus (ii) consolidated cost of goods sold, minus (iii) consolidated
selling, general and administrative expenses, other than Bankruptcy Expenses
(as defined in the Company's Certificate of Incorporation in effect on the
Effective Date of the Prior Agreement) and amortization of reorganization
expenses, of the Company and its subsidiaries for such period. Notwithstanding
the foregoing, (i) with respect to the Company's fiscal year ended September
30, 1994, Operating Income shall not reflect any items described in the
preceding sentence attributable to the ESNA division of the Company ("ESNA")
which would have the effect of reducing Operating Income by more than $4
million and (ii) with respect to the Company's fiscal year ended September 30,
1995 and thereafter, Operating Income shall be calculated without regard to the
operations of ESNA if the net effect of such operations would result in an
increase to Operating Income except to the extent that the aggregate amount of
such increases in all such years would, when combined with the loss
attributable to ESNA in the Company's fiscal year ended September 30, 1994,
result in a net loss of less than $4 million (or a net gain). For the
Company's fiscal year ended September 30, 1994 and thereafter, Operating Income
will be derived from such fiscal year's audited consolidated financial
statements opined upon by the Company's independent public accountants prepared
on a basis consistent with the Company's consolidated financial statements for
the one month period ended September 30, 1992 and the fiscal year ended
September 30, 1993. All Operating Income determinations will be (i) prepared
by the Company and its subsidiaries and (ii) to the extent otherwise required
of the Company, reviewed and reported upon by the Company's independent public
accountants no later than 90 days following the end of any such period.
(c) Following the fiscal year ending September
30, 1997, the parties will in good faith nego-
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tiate an agreement or understanding with respect to the bonus compensation that
will be paid by the Company to AII for its performance hereunder for each
fiscal year of the Company after the fiscal year ending September 30, 1997.
The agreement with respect to such bonus compensation shall be based upon the
Adjusted Operating Income of the Company for each such fiscal year, or such
other criteria as the parties shall agree to, and shall be commensurate with
the Executive's duties and responsibilities at the Company and the performance
of the Company.
(d) Cap on Total Compensation and Bonus. For the
fiscal years of the Company ending on September 30, 1995, September 30, 1996
and September 30, 1997, the total cash compensation and bonus paid by the
Company to AII pursuant to Section 3(a) and 3(b) above shall be limited to a
maximum of $2 million, $2.4 million and $2.4 million, respectively. Following
the fiscal year ending September 30, 1997, the parties shall in good faith
negotiate an agreement or understanding with respect to the cap on the total
compensation and bonus to be paid by the Company to AII for AII's performance
hereunder for each fiscal year of the Company after the fiscal year ending
September 30, 1997. Such agreement or understanding with respect to the cap on
total compensation and bonus shall be commensurate with the Executive's duties
and responsibilities at the Company and the performance of the Company,
provided, however, that in no event shall such cap be less than $2.4 million
and provided further that such cap shall be inapplicable in determining the
amount, if any, to be paid under Section 5 hereof.
(e) Divestiture Bonus. Upon the sale by the
Company of one or more of its operating units in a transaction or series of
transactions not constituting a Change in Control, the Company shall pay to AII
such additional compensation as the Compensation Committee of the Board may
determine.
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4. Benefits.
(a) During the Term, the Company shall provide
medical and dental insurance benefits to the Executive and his eligible
dependents on the same terms as such benefits are from time to time provided to
other senior executive officers of the Company; provided that such benefits
shall be provided at no cost to the Executive or his eligible dependents. Upon
the request of AII, the Executive and/or his eligible dependents shall be
entitled to participate in or receive benefits under all of the Company's other
employee benefit plans and arrangements now or hereafter in effect for senior
executive officers, on terms that are no less favorable than those provided to
such other senior executive officers of the Company.
(b) The Company shall purchase and shall maintain
in effect during the Term, a "key-man" life insurance policy or policies on the
life of the Executive in an amount not less than $2 million. Not less than $2
million of the benefit payable under such policy or policies shall be payable
to one or more beneficiaries designated by AII.
(c) For purposes of any benefit plan or
arrangement of the Company in which the Executive participates (including,
without limitation, any agreement between the Company and AII or the Executive
with respect to supplemental pension payments), the Executive shall, for all
purposes thereunder be deemed to have commenced employment with the Company as
of November 1, 1991 (i.e., the date on which he commenced providing services to
▇▇▇▇▇▇▇-▇▇▇▇▇▇, Inc).
5. Termination.
This Agreement, other than Sections 6, 9, 10 and 11 hereof,
shall terminate upon the occurrence of any
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of the events and in accordance with the terms set forth in subsections (a)
through (d) of this Section. In the event of any termination, AII shall be
entitled to receive all compensation and benefits which have accrued but not
been paid prior to the date of such termination.
(a) Voluntary Termination.
Should AII or the Company wish to terminate this
Agreement for any reason during the Term, such party shall give the other party
hereto sixty (60) days prior written notice setting forth the reasons for such
termination and specifying the date as of which such termination is to become
effective; provided, that, if the Company terminates this Agreement pursuant to
this Section 5(a) or AII provides notice, during the period beginning on the
30th day following and ending on the 90th day following the occurrence of a
Change in Control of the Company (as defined in Section 6(e) below), that it
intends to terminate this Agreement, the Company shall (i) pay to AII a lump
sum cash payment equal to (A) the number three (3) multiplied by (B) the sum of
(1) the highest annual compensation in effect under Section 3(a) hereof during
the one-year period preceding the occurrence of the Change in Control and (2)
the average amount earned or paid under Section 3(b) hereof during the three
years preceding the occurrence of the Change in Control and (ii) continue to
provide AII and the Executive with all of the other benefits that AII and the
Executive would otherwise be entitled to pursuant to the terms of this
Agreement, including, without limitation, the Options granted pursuant to
Section 6.
(b) Death or Permanent Disability.
The Company may terminate this Agreement upon the
death of Executive or in the event of the Executive's Permanent Disability (as
defined below), seven (7) days after written notice of the Permanent Dis-
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ability of the Executive is received by the parties hereto. The Executive
shall be deemed to be Permanently Disabled if in the written opinion of a
qualified physician designated by the Company and reasonably acceptable to AII,
for a period of nine consecutive months the Executive will be unable to perform
in a reasonable manner his duties and obligations under this Agreement.
Notwithstanding anything herein to the contrary, in the event this Agreement is
terminated pursuant to this Section 5(b), AII and the Company shall in good
faith determine the appropriate bonus compensation to be paid to AII under
Section 3, based upon the length of time AII has performed hereunder, the
Operating Income at such time and the bonus thresholds and percentages set
forth in Section 3.
(c) For Cause.
This Agreement shall terminate at the option of the
Company, for "Cause" (as defined below) immediately upon receipt by AII of
written notice from the Company setting forth in reasonable detail the grounds
for termination which constitute Cause. For purposes of this Agreement, a
termination shall be for "Cause" if the Executive (i) intentionally commits an
act of fraud, embezzlement or misappropriation involving the Company, (ii) is
convicted by a court of competent jurisdiction of, or enters a plea of guilty
to, any felony involving moral turpitude or dishonesty, or (iii) commits an
act, or fails to commit an act, which amounts to willful or wanton misconduct
or gross negligence and which results in significant harm to the Company.
(d) Bankruptcy.
AII may terminate this Agreement immediately, if the
Company shall make an assignment for the benefit of creditors, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator
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or receiver of the Company or of any substantial part of the assets of the
Company, or shall commence any case or other proceeding relating to the
Company, or any significant subsidiary of the Company, under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any jurisdiction, now or hereafter in effect, or
shall take any action to authorize or in furtherance of any of the foregoing.
6. Options to Purchase Company's Stock.
(a) Grant.
(i) As an inducement for AII entering
into the Initial Agreement, the Company irrevocably granted to AII an option
("Option I") to acquire as the beneficial owner of record that number of shares
of class B common stock, par value $.01 per share (or such other common stock
as the class B common stock may be converted or exchanged into pursuant to the
Company's Certificate of Incorporation, in either case, the "Common Stock"), of
the Company, which when added to all other shares of Common Stock and class A
common stock, par value $.01 per share (the "Class A Common Stock"), of the
Company outstanding on the Effective Date of the Initial Agreement
(collectively, the "Outstanding Shares") (together with all shares of Common
Stock and Class A Common Stock which may be issued upon the exercise or
conversion of all options, warrants, convertible or exchangeable securities or
interests and rights to receive distributions which are outstanding on the
Effective Date of the Initial Agreement (upon merger, sale, liquidation or
otherwise) including the shares of Common Stock subject to Option I) equaled
9.00% of such total.
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(ii) Option II. As an inducement for AII
entering into the Prior Agreement, the Company granted to AII an option (the
"Option II", and, together with Option I, the "Options") to acquire as the
beneficial owner of record 300,000 shares of Common Stock. The grant of Option
II was subject to the approval of the Company's stockholders, which approval
was obtained at the annual meeting of the Company's stockholders next following
the parties entering into the Prior Agreement.
(b) Exercise.
(i) Option I. Option I became
exercisable with respect to 7% of the Outstanding Shares (the "Initial Shares")
on August 16, 1993. With respect to 2% of the Outstanding Shares (the "Second
Shares"), Option I became exercisable on August 16, 1994.
AII, or its designee, became entitled to
purchase the Initial Shares upon exercise of Option I at an exercise price per
share of Common Stock equal to $6 per share, i.e., the greater of (x) $6.00 per
share and (y) the average market price per share of Common Stock for the five
most recent trading days of the Common Stock immediately prior to September 30,
1993. AII, or its designee, shall be entitled to purchase the Second Shares
upon exercise of Option I at an exercise price per share of Common Stock equal
to $13.75, i.e., the average market price per share of Common Stock for the
five most recent trading days of the Common Stock immediately prior to August
16, 1994.
(ii) Option II. Option II shall become
exercisable by AII or its designee at an exercise price per share of Common
Stock equal to $14.00, i.e., the market price per share of Common Stock as of
August 16, 1994, (i) with respect to 100,000 shares of Common Stock, on the
fifteenth trading day on which the market price of Common Stock equals or
exceeds $20 per share
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during the period of 30 trading days immediately prior to August 16, 1995, (ii)
with respect to 100,000 shares of Common Stock, on the fifteenth trading day on
which the market price of Common Stock equals or exceeds $30 per share during
any period of 30 trading days occurring subsequent to August 15, 1995 and prior
to August 16, 1996, and (iii) with respect to 100,000 shares of Common Stock,
on the fifteenth trading day on which the market price of Common Stock equals
or exceeds $40 per share during any period of 30 trading days occurring
subsequent to August 15, 1996 and prior to August 16, 1997. If any portion of
Option II becomes exercisable in accordance with the foregoing, any portion of
Option II that previously failed to become exercisable because the stock price
targets specified above were not achieved during the prescribed time periods
shall also become exercisable at the same time. Notwithstanding the foregoing,
Option II shall become exercisable to the extent it had not previously become
exercisable on August 16, 2002 if, on such date, AII is continuing to provide
services to the Company pursuant to this Agreement or any amendment thereof or
successor thereto. Subject only to the terms of this Section 6, the Options
may be exercised, in whole or in part, at any time.
(iii) The Options may be exercised in
accordance with the terms of this Agreement by written notice thereof signed
and delivered by AII, or its designee, to the Company. Such notice shall state
the number of shares to be purchased and the date of exercise, and shall be
accompanied by payment of the full exercise price in cash or certified or
cashier's check or such other method of payment as is reasonably acceptable to
the Company.
(c) Expiration; Vesting. Options shall expire on
the tenth anniversary of their respective dates of grant.
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(d) Anti-Dilution. In the event of any change in
the Common Stock or Class A Common Stock by reason of any stock dividend or
other distribution (whether in the form of cash, stock, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, spin-off, split-up, combination, repurchase or exchange of
shares or of any similar corporate transaction or event, the Company shall,
with respect to the Options, make such equitable changes in adjustments as it
deems necessary or appropriate in the number of shares, the exercise price,
and/or the kind of shares for which the Options are exercisable, in order to
prevent dilution or enlargement of the rights of AII under this Agreement.
(e) Change in Control. Notwithstanding any other
provision of this Agreement to the contrary, if, while any Options remain
outstanding under this Agreement, a "Change in Control" of the Company (as
defined below) occurs, then all Options granted that are outstanding at the
time of such Change in Control shall become immediately exercisable in full.
For purposes of this Section 6(e), a Change in
Control of the Company shall occur upon the happening of the earliest to occur
of the following:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than (x) the
Company, (y) any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or (z) any corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the
Company (each an "excluded person")), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (not including in the
securities benefi-
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cially owned by such person any securities acquired directly from the
Company or its affiliates) representing 30% or more of the combined
voting power of the Company's then outstanding voting securities;
(ii) during any period of not more than two
consecutive years, individuals who at the beginning of such period
constitute the board of directors of the Company (the "Board"), and
any new director whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election
or nomination for election was previously so approved (other than any
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company), cease for any reason to constitute at least a majority of
the Board;
(iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation,
other than (x) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving or parent entity)
50% or more of the combined voting power of the voting securities of
the Company or such surviving or parent entity outstanding immediately
after such merger or consolidation or (y) a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined) acquired
30% or
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more of the combined voting power of the Company's then outstanding
securities; or
(iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all of the
Company's assets (or any transaction having a similar effect).
7. Expenses, Reimbursement.
The Company shall promptly reimburse AII or the Executive for
all reasonable out-of-pocket costs and expenses incurred by AII or the
Executive in connection with or arising out of Executive's performance under
this Agreement, including, without limitation, out-of-pocket costs and expenses
for travel, transportation, lodging, and business meals. The Company agrees to
promptly pay all fees, costs and expenses (including reasonable attorney's fees
and expenses) of AII or the Executive in connection with negotiating and
entering into this Agreement or in any successful action to defend or enforce
this Agreement or to collect any payments (in the form of cash compensation or
otherwise) from the Company under this Agreement or the securities issuable
hereunder.
8. Representations and Warranties.
(a) The Company represents and warrants that:
(i) The Company is a corporation duly
organized and validly existing under the laws of the state of Florida.
The Company has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement, and the performance of
the Company's obligations under
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this Agreement, including the issuance of the Options to purchase
shares of Common Stock, have been duly authorized by all necessary
corporate action, and on the Effective Date this Agreement shall
constitute the legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms.
(ii) Neither the execution and delivery
of this Agreement or any related documents by the Company, nor the
consummation of the transactions contemplated hereby, will conflict
with, or result in a breach or default of any of the terms, conditions
or provisions of the certificate of incorporation or bylaws (or other
similar governing documents) of the Company or any law or any
regulation, order, writ, injunction, license, franchise or decree of
any court or governmental instrumentality or agency or of any
agreement or instrument to which the Company is a party or by which it
is bound or to which it or its assets is subject, nor result in the
creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of the assets of the Company.
(iii) Upon issuance by the Company of the
shares of Common Stock provided in Section 6 hereof, such shares will
be duly authorized, validly issued, fully paid and nonassessable and
shall be free of all preemptive rights and free of any lien or adverse
claim other than those which may arise from acts or omissions on the
part of AII, or its designee.
(b) AII represents and warrants that:
(i) AII is a corporation duly organized
and validly existing under the laws
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of the state of Florida. AII has all necessary corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement,
and the performance of its obligations under this Agreement have been
duly authorized by all requisite action and this Agreement constitutes
the legal, valid and binding obligation of AII, enforceable against it
in accordance with its terms.
(ii) Neither the execution and delivery
of this Agreement or any related documents by AII, nor the
consummation of the transactions contemplated hereby, will conflict
with, or result in a breach or default of any of the terms, conditions
or provision of AII's certificate of incorporation, by-laws or other
constituent documents or any law or any regulation, order, writ,
injunction, license, franchise or decree of any court or governmental
instrumentality or agency or of any agreement or instrument to which
AII is a party or by which it is bound or to which it or its assets is
subject, nor result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the assets of AII.
9. Covenants.
(a) During the term of the Options, the Company
shall at all times have authorized and reserved for issuance, and will keep
available, solely for issuance hereunder, shares of Common Stock sufficient to
satisfy the Company's obligation to issue shares of Common Stock to AII, or its
designee, as provided in Section 6 hereof.
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(b) Upon the general listing of shares of Common
Stock on any securities exchange or inter-dealer quotation system by the
Company, each of the shares of Common Stock which are issuable upon exercise of
the Options will be listed for trading on such exchange or inter-dealer
quotation system, on a current or when issued basis, following each issuance of
shares of Common Stock upon exercise of the Options provided herein.
(c) In connection with the execution of the Prior
Agreement, the parties hereto entered into an amendment to the Registration
Rights Agreement, dated as of August 16, 1993, by and between the Company and
AII, which Registration Rights Agreement (as so amended) shall remain in full
force and effect in accordance with its terms.
10. Indemnification.
(a) In addition to and without in any way
limiting any other rights the Indemnified Parties (as defined below) may have
under the Certificate of Incorporation or By-Laws (or other similar charter or
governing document) of the Company or any of its subsidiaries, the Delaware
General Corporation Law, any existing contract or otherwise, the Company shall
indemnify and save and hold, AII, the Executive and their affiliates, officers,
directors, security holders, employees, consultants and agents (individually an
"Indemnified Party" and collectively the "Indemnified Parties") harmless from
and against any and all damages, liabilities, losses, costs and expenses
(including, but not limited to, reasonable attorney's fees and expenses)
resulting from, arising out of, or in connection with, this Agreement, the
Prior Agreement or the acceptance or performance of duties or rendering of
services by any of the Indemnified Parties under this Agreement or the Prior
Agreement, except that the Company shall have no liability hereunder in respect
of any act or omission of an Indemnified Party, which act
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or omission is caused by AII or the Executive's willful breach of this
Agreement in any material respect, reckless or gross negligent disregard for
the Company's interests or failure to act in good faith; provided, however,
that no act or omission constituting a good faith exercise of business judgment
shall constitute a material breach of this Agreement, reckless or gross
negligent disregard for the Company's interests. In the event the Company does
not compromise or assume the defense of any indemnifiable claim or action
against an Indemnified Party, the Company shall promptly pay to the Indemnified
Party all costs and expenses incurred or to be incurred by an Indemnified Party
in defending any claim in advance of the final disposition thereof; provided,
however, that if it is ultimately determined by a court of competent
jurisdiction (from whose decision no appeals may be taken or the time for
appeal has lapsed) that the Indemnified Party was not entitled to indemnity
hereunder, then the Indemnified Party shall repay forthwith all amounts so
advanced. The Indemnified Party shall deliver to the Company statements of the
costs and expenses so incurred, or to be incurred, on a monthly basis, and the
Company shall pay to the Indemnified Party the amounts shown on such
statements, within five days after receipt of such statements.
(b) In order for an Indemnified Party to be
entitled to any indemnification provided for under this Agreement in respect
of, arising out of, or involving any suit, action, proceeding, claim, demand or
written notice made by any third party against an Indemnified Party (a "Third
Party Claim"), such Indemnified Party must notify the Company in writing of the
Third Party Claim within thirty days after receipt by such Indemnified Party of
written notice of the Third Party Claim; provided, however, that the failure of
any Indemnified Party to give such notice shall not affect such Indemnified
Party's right to indemnification hereunder except to the extent the Company has
actually been prejudiced or
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damaged thereby. If a Third Party Claim is made against an Indemnified Party,
the Company shall be entitled, if it so chooses, to elect to compromise or
assume the defense thereof by delivering written notice to such effect to the
Indemnified Party within thirty business days, or such shorter period as is
reasonably required, following receipt by the Company of the notice of the
Third Party Claim. Such compromise or defense shall be at the Company's sole
cost and expense, with counsel reasonably selected by the Company. If the
Company elects to compromise or assume the defense of any Third Party Claim, it
may not agree to any settlement or compromise of such claim, other than a
settlement or compromise solely for monetary damages for which the Company
shall be responsible, without the prior written consent of AII. If the Company
elects to compromise or assume the defense of a Third Party Claim, the
Indemnified Party, will cooperate in all reasonable respects with the Company
in connection with such compromise or defense, and shall have the right to
participate in such compromise or defense with counsel selected and paid for by
the Indemnified Party. Except as otherwise provided, regardless of which party
assumes the defense of a Third Party Claim, (i) the Indemnified Party shall not
settle or compromise any Third Party Claim without the consent of the Company,
(ii) the Company shall not unreasonably withhold consent to any settlement or
compromise of such claim and (iii) the Indemnified Party and the Company shall
cooperate in any settlement or compromise of such claim whether by the Company
or the Indemnified Party, as the case may be.
(c) From the Effective Date and at all times
throughout the Term, the Company covenants and agrees to use all commercially
reasonable efforts to maintain Directors and Officers Liability insurance, or
other similar insurance, for the benefit of the Executive, on terms that are
not less favorable than those currently maintained by the Company.
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11. Confidentiality.
During the Term and for three years thereafter, AII will not,
and will not permit any of AII's affiliates to, in any manner, directly or
indirectly, disclose, divulge, discuss or communicate to any person or entity
or use for the benefit of any person or entity other than the Company any
confidential information of the Company, including this Agreement, except as
required in connection with the performance of AII's and the Executive's duties
and responsibilities hereunder, by law or by the rules and regulations of any
stock exchange or inter-dealer quotation network on which the Common Stock is
listed or traded.
During the Term and for three years thereafter, the Company
shall not, and will not permit any of its current or future officers,
directors, employees or affiliates to, in any manner, directly or indirectly,
disclose, divulge, discuss or communicate to any person or entity or use for
the benefit of any person or entity other than the Company, any confidential or
disparaging information relating to AII or the Executive, except as may be
reasonably required by law or by the rules and regulations of any stock
exchange or inter-dealer quotation network on which the Common Stock is listed
or traded.
Since AII or the Company may be irreparably damaged if the
provisions of this Section are not specifically enforced, either party shall be
entitled to an injunction (either preliminary, permanent, or both) restraining
any violation of this Section, or any other appropriate decree of specific
performance. Such remedy shall not be exclusive and shall be in addition to
any other remedy which any party may have including, without limitation,
recovery of damages. The parties hereto acknowledge that the availability of a
damage remedy does not constitute an adequate remedy at law and in no way
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shall be deemed or considered a defense to an application for injunctive relief
against actual or threatened breach of the restrictions contained in this
Section.
12. Amendment or Modification, Waiver.
No provision of this Agreement may be amended or waived unless
such amendment or waiver is agreed to in writing, signed by a duly authorized
representative of AII and the Company. No waiver by any party hereto of any
breach by another party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver of a similar or
dissimilar condition or provision at the same time, any prior time or any
subsequent time.
13. Notices.
Any and all notices or consents required or permitted to be
given under any of the provisions of this Agreement shall be in writing or by
written telecommunication and delivered either by hand delivery or by
registered or certified mail, return receipt requested, to the relevant
addresses set out below, in which event they shall be deemed to have been duly
given upon receipt.
If to AII, at:
Anchor Industries International, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, at:
Harvard Industries, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Attention: Vice President, Finance
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
In either case with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
14. Survival of Agreements.
Except as set forth herein, all agreements, covenants,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and shall continue in full force and effect.
15. Successors and Assigns.
This Agreement may not be assigned by AII without the prior
written consent of the Company, except that it may be freely assigned without
such consent to the Executive or to a corporation or other entity which is
majority owned and controlled by the Executive. This Agreement may not be
assigned by the Company without the prior written consent of AII, other than to
the Company's successor in the case of a merger or consolidation involving the
Company. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
16. Entire Agreement.
This Agreement contains the entire agreement between the
parties hereto with respect to the subject matter hereof; supersedes all prior
written agreements and negotiations and oral understandings, if any, and it may
not be amended, supplemented or discharged except by
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an instrument in writing signed by the parties hereto. Notwithstanding the
foregoing, this Agreement does not supersede the Nonqualified Retirement
Benefit Agreement for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ adopted by the Company effective as of
January 1, 1995.
17. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same agreement.
18. Severability.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
19. Governing Law.
This Agreement will be governed by and construed in accordance
with the laws of the State of Florida, without regard to its conflicts of laws
principles.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective duly authorized
officers as of the date first written above.
ANCHOR INDUSTRIES INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief
Executive Officer
HARVARD INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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