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EXHIBIT 10.11
CHANGE OF OWNERSHIP
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EMPLOYMENT AGREEMENT
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AGREEMENT by and between X. X. Xxxxxxx Limited, Inc., a Michigan
corporation (the "Company") and Xxxxxx X. Xxxxxx (the "Executive"), dated as of
the 1st day of February 1995.
The Board of Directors of the Company (the "Board"), has determined that it
is in the best interest of the Company and its shareholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Section
2) of the Company. The Board believes it is imperative to diminish the
inevitable distraction of the Executive by virtue of the personal uncertainties
and risks created by a pending or threatened Change of Control and to encourage
the Executive's full attention and dedication to the Company currently and in
the event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.
Therefore, in order to accomplish these objectives, the Board has caused the
Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS. (a) The "Effective Date" shall mean the mean the
first date during the Change of Control Period (as defined in Section 1(b)) on
which a Change of Control occurs. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control or (ii) otherwise
arose in connection with or anticipation of the Change of Control, then for all
purposes of this Agreement the "Effective Date, shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary of such date; provided,
however, that commencing on the date one year after the date hereof, and on each
annual anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), the Change of Control
Period shall be automatically extended so as to terminate three years from such
Renewal Date, unless at least 60 days prior to the Renewal Date the Company
shall give notice to the Executive that the Change of Control Period shall not
be so extended.
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2. CHANGE IN CONTROL. (a) As used herein means the first occurrence of
either of the following events: (i) the acquisition, directly or indirectly, by
any individual, corporation, association, trust, unincorporated organization or
other entity (a "Person") of securities of the Company representing an aggregate
of eighty percent (80%) or more of the combined voting power of the Company's
then outstanding securities; or (ii) the acquisition by any Person of all or
substantially all of the assets of the Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").
4. TERMS OF EMPLOYMENT. (a) Position and Duties. (i) During the Employment
Period, (A) the Executive's position including status, offices, titles and
reporting requirements), authority, duties and responsibilities shall be at
least commensurate in all respects with the most significant of those held or
exercised by, or assigned to Executive at any time during the 90-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office which is the headquarters of the
Company and is less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on civic or charitable boards or
committees, (B) deliver lectures, or fulfill speaking engagements and (C) manage
personal investments, so long as such activities do not significantly interfere
with the performance of the Executive's responsibilities as an employee of the
Company in accordance with this agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the
Executive prior to the Effective Date, the continued conduct of such activities
(or the conduct of activities similar in nature and scope thereto) subsequent to
the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) Compensation. (i) Base Salary. During the Employment Period, the
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid on a monthly basis, at least equal to twelve times the highest
monthly base salary paid or payable to the Executive by the Company and its
affiliated companies during the twelve-month period immediately preceding the
month in which the Effective Date occurs. During the Employment Period, the
Annual Base Salary shall be reviewed at least annually and shall be increased at
any time, and from time to time, as shall be substantially consistent with
increases in base salary generally awarded in the ordinary course of business to
other peer executives of the Company and its affiliated companies. Any increase
in Annual Base Salary shall not serve to limit or
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reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term Annual Base
Salary as utilized in this Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term "affiliated companies" shall
include any company controlled by, controlling or under common control with the
Company.
4.1. ANNUAL BONUS PARTICIPATION. In addition to the Annual Base Salary the
Executive shall be entitled to participate in the Company's Senior Management
Bonus Program (the "Bonus Program") or its successor programs. For purposes of
this plan the Annual Target Bonus (as defined in the Bonus Program) will be
$50,000 (fifty thousand dollars) annually. The criteria for evaluation of
performance and bonus award will be in line with criteria set forth in the Bonus
Program, as established or amended by the Company's board of directors from time
to time in its sole discretion. However, in no instances, as long as the
Executive is performing his duties satisfactorily, may the bonus award be below
50% of the target bonus amount or $25,000 (twenty-five thousand dollars).
4.2. VACATION AND INSURANCE BENEFITS. Executive shall be entitled to four
(4) weeks of vacation during each year of his employment by the Company, as well
as insurance coverage, including, without limitation, life, medical, dental, and
disability insurance consistent in each case with the insurance benefits
provided by the Company to other similarly situated senior executives.
4.3. OTHER BENEFITS. Executive shall be entitled to share in any employee
benefits provided by the Company on the same basis as other similarly
situated senior executives, so long as the Company provides or offers such
benefits to such employees.
5. TERMINATION OF EMPLOYMENT. (a) DEATH OR DISABILITY. The Executive's
employment shall terminate automatically upon the Executive's death during the
Employment Period. If the Company's board of directors determines in good faith
that the Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability provided below), the Company may give
to the Executive written notice in accordance with Section 13(b) of its
intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the inability of the
Executive, due to illness, accident or other physical or mental incapacity, to
perform the duties provided for herein for an aggregate of ninety (90) days
during any 180 consecutive day period during the term hereof.
(b) CAUSE. The Company may terminate the Executive's employment during the
Employment Period for Cause. For purposes of this Agreement, "cause" shall mean
(i) repeated violations by Executive of the Executive's obligations under
Section 4(a) (other than as a result of incapacity due to physical or mental
illness) which are demonstrably willful and deliberate on the Executive's part,
which are committed in bad faith or without reasonable belief that such
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violations are in the best interests of the Company and which are not remedied
in a reasonable period of time after receipt of written notice from the Company
specifying such violations or (ii) the conviction of the Executive of a felony
involving moral turpitude.
(c) GOOD REASON. The Executive's employment may be terminated during the
employment the Employment Period by the Executive for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean
(i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a), or any other action by the Company which results in a
diminution in such position, authority, duties or responsibilities that a
reasonable man holding a similar position would find untenable, excluding for
this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with any of the provisions of
Section 4 (b), other than an isolated, insubstantial and inadvertent failure not
occurring in had faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to be based at any office or
location other than that described in Section 4(a) (i) (B);
(iv) any purported termination by the Company of the Executive's employment
otherwise than as expressly permitted by this Agreement; or
(d) NOTICE OF TERMINATION. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 13 (b) 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 the 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 15 days after the giving
of such notice). The failure by the Executive or the Company 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 the Executive or the
Company hereunder or preclude the Executive or the Company from asserting such
fact or circumstance in enforcing the Executive's or the Company's rights
hereunder.
(e) DATE OF TERMINATION. "Date of Termination", means if the Executive's
employment is terminated by the Company for Cause, or by the 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 the Executive's employment is
terminated by the Company other than for Cause or Disability, the Date of
Termination shall be the date on which the Company notifies the
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Executive of such termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the case
may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION. (a) If, during the
Employment Period, the Company shall terminate the Executive's employment other
than for Cause or Disability or the Executive shall terminate employment for
Good Reason;
(i) the Company shall pay to the Executive in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts: (A)
the sum of (1) the Executive's aggregate Annual Base Salary through the end of
the Employment Period, including any portion thereof previously deferred by the
Executive, to the extent not theretofore paid, and (2) any accrued vacation pay,
in each case to the extent not theretofore paid (the sum of the amounts
described in clauses (1) and (2) shall be hereinafter referred to as the
"Accrued Obligations"), and
(ii) for the remainder of the Employment Period, or such longer period as
any plan, program, practice or policy of the Company may provide, the Company
shall continue benefits to the Executive and/or the Executive's family at least
equal to those which would have been provided to them in accordance with the
plans, programs, practices and policies described in Sections 4.2 and 4.3.
(B) DEATH. If the Executive's employment is terminated by reason of the
Executive's death during the Employment Period, this Agreement shall terminate
without further obligations of the Company to the Executive's legal
representatives under this Agreement, other than for payment of Accrued
Obligations (which shall be paid to the Executive's estate or beneficiary, as
applicable, in a lump sum in cash within 30 days of the Date of Termination) and
the timely payment or provision of Other Benefits as provided in Section 4.3.
(C) DISABILITY. If the Executive's employment is terminated by reason of
the Executive's Disability during the Employment Period in accordance with the
terms of Section 5(a), this Agreement shall terminate without further
obligations of the Company to the Executive, other than for payment of Accrued
Obligations (which shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination) and the timely payment or provision of
Other Benefits as provided in Section 4.3.
(D) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's employment shall
be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations of the Company to the Executive other than
the obligation to pay to the Executive Annual Base Salary through the Date of
Termination plus the amount of any compensation previously deferred by the
Executive, in each case to the extent theretofore unpaid. If the Executive
terminates employment during the Employment Period, excluding a termination
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for Good Reason, this Agreement shall terminate without further obligations of
the Company to the Executive, other than for Accrued Obligations and the timely
payment or provision of Other Benefits as provided in Section 4.3. In such case,
all Accrued Obligations shall be paid to the Executive in a lump sum in cash
within 30 days of the Date of Termination.
8. FULL SETTLEMENT: RESOLUTION OF DISPUTES. (a) The Company's obligations
to make payments provided for in this Agreement and otherwise to perform its
obligations pursuant to this Agreement, and otherwise, shall not be affected by
any set-off, counterclaim, recoupment, defense or other claim, right or action
which the Company may have against the Executive or others. In no event shall
the Executive be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to the Executive under any provisions
of this Agreement and such amounts shall not be reduced whether or not the
Executive obtains other employment.
9.0. CONFIDENTIAL INFORMATION/SOLICITATION OF CUSTOMERS - As used herein,
"Confidential Information" means all information relating to the Company's
business of manufacturing specialty friction products (the "Company's business")
which derives economic value, actual or potential, from not being generally
known to other Persons, including, without limitation, technical or nontechnical
data, formula (including cost and/or pricing formulae), compilations, programs,
devices, methods, techniques, processes, financial data, names, addresses,
telephone numbers, contact persons and other identifying information relating to
Customers (as defined below) and potential Customers; compilations and lists of
Customers, and potential Customers; information with respect to the needs and
requirements of various Customers for the Company's products and services,
including the dates on which any contracts held by the Company with such
Customers will terminate and be subject to renewal or on which renewal orders
will be placed by the Customers; rate and price information on products and
services provided by the Company to its Customers; compilations and lists of the
Company's suppliers and other vendors; information with respect to the Company's
relationships with its suppliers and other vendors, including the dates on which
any contracts held by the Company with its suppliers or vendors will terminate
or be subject to renewal; and all business records and personal data relating to
the Company's employees and agents, including compensation arrangements of such
employees and agents with the Company. Notwithstanding the foregoing,
"Confidential Information" does not include: (a) any information that is or
shall become generally known to the industry in the public or the industry in
which the Company conducts business through no fault of Executive, (b) any
information received by Executive in good faith from any other Person who has
the right to disclose such information and who has not received such
information, either directly or indirectly, from the Company, (c) any
information that Executive can demonstrate was within his legitimate possession
prior to the time of his original employment by the Company, or (d) any
information that does not constitute a trade secret under applicable law on or
after the third anniversary of the expiration or termination of Executive's
employment hereunder.
9.1. CUSTOMERS. As used herein, "customers" means all Persons to whom any
employee or agent of the Company has heretofore offered or sold or hereafter
offers or sells any of the Company's products or services, or with whom any such
employee or agent has developed a relationship relating to the Company's
Business.
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9.2. RELATIONSHIP OF THE COMPANY AND EXECUTIVE. Executive acknowledges that
prior to and during the term of this Agreement, the Company has furnished and
will furnish to Executive Confidential Information which could be used by
Executive on behalf of a competitor of the Company to its substantial detriment.
In view of the foregoing, Executive acknowledges and agrees that the restrictive
covenants contained in Sections 9.3 and 9.4 below are reasonabLy necessary to
protect the Company's legitimate business interests and good will.
9.3 COVENANT AGAINST DISCLOSURE OR USE OF CONFIDENTIAL INFORMATION. In
consideration of his employment hereunder and the payment by the Company to
Executive of the compensation described herein, and based, in part, on the
matters stated in Section 9.2 above, Executive agrees that he shall protect the
Company's Confidential Information and shall not disclose to any Person, or
otherwise use, except in connection with his duties performed in accordance with
this Agreement, any Confidential Information; provided, however, that Executive
may make disclosures required by a valid order or subpoena issued by a court or
administrative agency or 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. Executive's obligations under this
Section 9.3 shall survive any expiration or termination of this Agreement.
9.4 COVENANT AGAINST SOLICITATION OF CUSTOMERS. During the term of this
Agreement and for a period of twenty-four (24) months after any termination or
expiration of this Agreement, for any reason, Executive shall not, directly or
indirectly, individually or on behalf of any Person, solicit Executive Customers
(as defined below) for the purpose of providing products or services which are
competitive with the products or services offered by the Company. For purposes
of this provision, the term "Executive Customers" means Customers (I) that were
solicited or served by Executive during the term hereof, (ii) whose dealings
with the Company were coordinated or supervised, in whole or in part, by
Executive, or (iii) with respect to whom Executive obtained Confidential
Information during the one-year period immediately prior to any termination or
expiration of this Agreement.
9.5 REMEDIES. Executive acknowledges that if he breaches or threatens to
breach his covenants and agreements in this Section 9 of this Agreement, his
actions may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach any of the covenants and agreements contained in this Section 9 of this
Agreement, the Company shall be entitled to injunctive relief, in addition to
any other rights or remedies available to the Company.
10. POST-EMPLOYMENT NON-COMPETE AGREEMENT. As an inducement for X. X.
Xxxxxxx Group to enter into this Agreement with the Executive, and in
consideration of other good and valuable consideration, the Executive intending
to be legally bound, hereby confirms, acknowledges and agrees that the
Post-Employment Non-Compete Agreement executed by the Executive on April 5,
1994 and attached hereto as "Attachment A" shall remain in force after a change
in control has occurred and this Agreement becomes effective.
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11. RETURN OF COMPANY DOCUMENTS AND EQUIPMENT. Upon the termination or
expiration of his employment hereunder, Executive agrees to deliver promptly to
the Company any and all Company files, customer lists, catalogs, price lists,
management reports, memoranda, research, Company forms, financial data and
reports, and other documents supplied to or created by him which contain
Confidential Information (including all copies of the foregoing) together with
all of the Company's equipment and other materials in his possession or control.
12. SUCCESSORS. (a) This Agreement is personal to the Executive and without
the prior written consent of the Company shall not be assignable by the
Executive-otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree to perform
this Agreement. As used in this Agreement, "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets an
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
13. MISCELLANEOUS. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan, without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and
shall be (I) given by hand delivery to the other party, (ii) sent by registered
or certified mail, return receipt requested, postage prepaid, (iii) sent by
national express courier service, or (iv) sent by facsimile transmission to the
intended recipient, addressed as follows:
If to the Executive:
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At the most current address of record
designated in the executives personnel file.
If to the Company:
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X.X. Xxxxxxx Limited, Inc.
0000 Xxxxxxx Xxxx
Xxxxx, Xxxx 00000
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or to such other address an either party shall half furnished to the other in
writing in accordance herewith. Notices and other communications shall be deemed
to have been received immediately (if delivered personally or given by confirmed
facsimile) or five days after mailing, or the second day after delivery to a
national express courier service, and in proving the same it shall be sufficient
to show that the envelope containing the notice was duly addressed, stamped and
posted (or that the envelope was delivered to the national express courier
service) or that receipt was confirmed by the recipient (as the case may be).
(c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
(d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withhold pursuant
to any applicable law or regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or either party's failure to assert any
right the Executive or the Company, as the case may be, may have hereunder,
including, without the limitation, , the right of the Executive to terminate
employment for Good Reason pursuant to Section 5 (c) (i) - (iv) , shall not be
deemed to be a waiver of such provision or right or any other provision or right
of this Agreement.
IN WITNESS WHEREOF, the Executive has hereunto set Executive's hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
/s/ Xxxxxx X. Xxxxxx
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X.X. Xxxxxxx Limited, Inc.
By: /s/ Xxxxx X. Xxxxx
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Date: 2/19/95
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Attachment "A" - MLX/X. X. Xxxxxxx Post-Employment Non-Compete Agreement
