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Exhibit 10.1
FORM OF EMPLOYEE PROTECTION AGREEMENT
THIS EMPLOYEE PROTECTION AGREEMENT dated as of July 2, 1997 among
XXXXXX HOLDING CO. (PA), INC., a Pennsylvania corporation (the "Company"), [Name
of Employer], a ___________________ corporation (the "Employer") and
________________ (the "Employee").
W I T N E S S E T H :
WHEREAS, the Company and the Employer recognize that the
possibility of a Change of Control (as hereinafter defined) of the Company
currently exists and that such possibility, and the uncertainty and questions it
may raise among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its shareholders; and
WHEREAS, the Company and the Employer have determined that
appropriate steps should be taken to reinforce and encourage the continued
attention and dedication of the members of the Employer's management; and
WHEREAS, the Company and the Employer desire to induce the
Employee to remain in the employment of the Employer by providing for certain
benefits; and
WHEREAS, the Employee desires to continue to be employed by the
Employer; and
WHEREAS, the Employee is willing to commit to refrain from
competing with the Company and the Employer and to maintain the confidentiality
of the confidential information of the Company and the Employer.
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, agree to the following:
1. DEFINITIONS. The capitalized terms used herein shall have the
meanings ascribed to them below.
"Cause" shall mean (A) the willful and continued failure by
the Employee substantially to perform his/her duties with the Employer (other
than any such failure resulting from his/her incapacity due to physical or
mental illness) as determined by the Board of Directors of the Company, after a
demand for substantial performance is delivered to the Employee by the Employer,
which specifically identifies the manner in which the Employer believes the
Employee has not substantially performed his/her duties, (B) the willful
engaging by the Employee in misconduct which is demonstrably and materially
injurious to the Company or the Employer, monetarily or otherwise, or (C) the
breach of any of the terms of this Agreement by the Employee.
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Notwithstanding the foregoing, the Employee shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to the
Employee by the Employer a copy of a Notice of Termination authorized by the
Chief Executive Officer of the Employer stating that in the good faith opinion
of such Officer the Employee was guilty of conduct set forth above in clauses
(A), (B) or (C) of the first sentence of this paragraph and specifying the
particulars thereof in detail.
"Change of Control" of the Company shall be deemed to have
occurred if (a) any consolidation or merger of the Company is consummated in
which the Company is not the continuing or surviving corporation (or survives
only as a subsidiary of any entity other than a previously wholly-owned
subsidiary of the Company) or pursuant to which shares of the Company's common
stock would be converted into cash, securities or other property, other than a
merger of the Company in which the holders of the Company's common stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger as they had in
the Company's common stock prior to the merger; or (b) the acquisition by any
person or group of persons acting in concert of 50% or more of the outstanding
shares of Class A Stock (including securities exercisable for or convertible
into shares of Class A Stock) of the Company; or (c) any sale, lease, exchange
or other transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company. Substantially all of
the assets shall mean assets equal to fifty-one percent (51%) or more in value
of the assets of the Company and its subsidiaries taken as a whole.
"Confidential Information" shall mean all confidential,
proprietary and sensitive information of, or relating to the Company, its
subsidiaries and affiliates and their respective businesses including, but not
limited to, products, financial condition, manufacturing processes, know-how,
business plans, trade secrets, research programs, customer and supplier lists,
pricing information and strategies, and personnel information, whether in
written or oral form, or in the form of models or other tangible property, or
obtained through observation, and whether or not marked or identified as
confidential.
"Disability" shall mean the Employee's incapacity due to
physical or mental illness, if the Employee shall have been absent from his/her
duties with the Employer on a full-time basis for ninety (90) or more
consecutive days.
"Material Employment Change" shall mean any of the following:
(a) the assignment to the Employee by the Employer of
duties, or the assignment of the Employee to a position,
constituting a material diminution in the Employee's role,
responsibilities or authority compared with his/her role,
responsibilities or authority with the Employer on the date of
this Agreement;
(b) a reduction by the Employer in the Employee's
base salary as in effect on the date hereof or as the same may
be increased from time to time during the term of this
Agreement;
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(c) any material reduction in the level of benefits
(including participation in any bonus plan) to which the
Employee is entitled under one or more employee benefit plans
on the date of this Agreement, or the taking of any action by
the Company or the Employer which would adversely affect the
Employee's accrued benefits under any such employee benefit
plans or deprive the Employee of any material fringe benefit
enjoyed by the Employee on the date of this Agreement;
(d) a request by the Employer to the Employee to
relocate to any place that exceeds a fifty (50) mile radius
beyond the location at which the Employee performed the
Employee's duties on the date of this Agreement;
(e) any material breach by the Employer or the
Company of any provision of this Agreement; or
(f) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the
Company.
"Retirement" shall mean termination in accordance with the
Employer's retirement policy, including early retirement, generally applicable
to its salaried employees.
2. COMPENSATION RELATING TO CHANGE OF CONTROL. Subject to the
Employee's continued observance of his/her obligations hereunder, in the event
that a Change of Control occurs on or before January 2, 1999, the Employer shall
pay to the Employee on the date which is twelve (12) months from the date of the
Change of Control (the "Payment Date"), an amount, in cash equal to the product
of the Employee's highest annual base salary in effect at any time during the
period from the date of this Agreement to the Payment Date, multiplied by _____
(the "Compensation Amount"). Notwithstanding the foregoing, if prior to the
Payment Date the Employee experiences a Material Employment Change or the
Employee is terminated other than for Cause, then the Compensation Amount shall
be paid to the Employee as follows: (a) if a Material Employment Change occurs,
the Compensation Amount shall be paid to the Employee on the later of the date
of the Change of Control or the Material Employment Change, or (b) if the
Employee is terminated other than for Cause, the Compensation Amount shall be
paid to the Employee on the later of the date of the Change of Control or the
termination date.
The Employer shall pay to the Employee all legal fees and
expenses incurred by him/her in seeking to obtain or enforce any right or
benefit provided by this Agreement that the Employer fails to recognize or make
available, provided the Employee is successful in obtaining or enforcing such
right or benefit.
The Employer and the Company hereby jointly and severally,
unconditionally and absolutely guarantee the full and timely payment by the
Employer of the Compensation Amount to the Employee and all other amounts owing
to the Employee hereunder.
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3. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER
CONTRACTUAL RIGHTS.
(a) The Employee shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Employee as the
result of employment by another employer after the Date of Termination.
(b) Except as provided in subsection (c) below, the provisions
of this Agreement, and any payment provided for hereunder, shall not reduce any
amounts otherwise payable, or in any way diminish the Employee's existing rights
(or rights which would accrue solely as a result of the passage of time) under
any employee benefit plan or employment agreement or other contract, plan or
arrangement.
(c) During the term of this Agreement, the provisions hereof
shall supersede the terms and provisions of any existing agreement with the
Employee or policy or practice of the Employer with regard to severance.
4. SUCCESSOR TO THE COMPANY.
(a) This Agreement is binding on the Company's and the
Employer's successors and assigns. Without limiting the foregoing, as a
condition to the Company's voluntary agreement or consent to a Change of
Control, the Company shall use its best efforts to attempt to require any
successor or assign of the Company in such Change of Control to assume and agree
to perform all of the obligations of the Employer and the Company under this
Agreement. Any failure of the Company to obtain such agreement prior to the
effectiveness of any such Change of Control shall be deemed to be a Material
Employment Change.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Employee's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts are still payable to him/her hereunder,
all such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Employee's personal representative,
devisee, legatee, or other designee or, if there be no such designee, to the
Employee's estate.
5. NON-COMPETITION. During the term of the Employee's employment
by the Employer and for a period of two (2) years following termination of the
Employee's employment by the Employer for any reason, the Employee shall not,
without the prior written consent of the Company, (i) compete directly or
indirectly as a partner, owner, director, shareholder, manager, employee or
otherwise with the Company, the Employer or any subsidiary or other affiliate of
the Company, and their respective successors and assigns, in the business of
manufacturing and selling climbing equipment at any location in North America,
(ii) solicit or encourage any of the climbing
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products customers of the Employer or any subsidiary or other affiliate of the
Company to cease doing business with the Employer or any subsidiary or other
affiliate of the Company or (iii) participate, consult with, render testimony or
act in any other capacity in any adversary proceeding against the Company, the
Employer or any of its affiliates with respect to the climbing products
business.
Notwithstanding the foregoing, the Employee is permitted to
own shares (in an amount not in excess of 5%) of any publicly traded entity that
is in competition with the Company, the Employer or any subsidiary or other
affiliate of the Company.
6. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. The Employee
agrees to hold and safeguard in strict confidence all Confidential Information
and agrees that he/she will not, without the prior written consent of the
Company or the Employer, misappropriate or disclose or make available to anyone
for use outside the Company's organization at any time, either during the term
of his/her employment by the Employer or subsequent to such employment, any
Confidential Information. The Employee also agrees to hold in confidence the
fact that he/she entered into this Agreement and the terms hereof, unless the
Employee is required to disclose the existence and terms of this Agreement by
applicable law, rule, regulation or administrative or court order.
7. ARBITRATION. Any claim or controversy arising out of or
relating to this Agreement shall be submitted to binding arbitration, in
accordance with the following procedures:
(a) Any arbitration proceeding shall take place in Pittsburgh,
Pennsylvania and shall be conducted in accordance with the then current
expedited procedures of the commercial arbitration rules of the American
Arbitration Association, except as otherwise specifically provided in this
Section.
(b) The parties shall have 10 days after a notice of
arbitration is given to agree upon an arbitrator to conduct such proceeding. If
the parties fail to so agree within such 10- day period then, within five days
after the end of such 10-day period, each party shall select an arbitrator and,
within 10 days after the end of such five-day period, such two arbitrators shall
select a third arbitrator.
(c) The decision of an arbitrator (or, if there are three
arbitrators, the decision of any two arbitrators) shall be final and binding
upon the parties, and judgment may be entered upon any such decision in any
court having jurisdiction.
(d) Without limiting the provisions of Section 3, all costs
incurred in connection with any arbitration proceeding, including fees and
expenses of counsel and fees paid to the American Arbitration Association and
the arbitrator(s) and the cost of using any facilities for the arbitration
hearings, shall be borne by the non-prevailing party in the proceeding.
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8. TERM. This Agreement shall automatically terminate on January
2, 1999 unless prior thereto a Change of Control shall have occurred.
9. NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company and/or the Employer:
Xxxxxx Holding Co. (PA), Inc.
00 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esquire
If to the Employee:
[To his/her address as it appears on the records of the
Company]
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
10. AMENDMENT, WAIVER. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee, the Company and the Employer. No
waiver by either party hereto at any time of any breach of the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
11. VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
Moreover, in the event any one or more of the provisions herein shall, for any
reason, be held excessively broad as to duration, scope, activity or subject,
such provision shall be construed by limiting and reducing it so as to be
enforceable to the maximum extent permitted by applicable law.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
[NAME OF EMPLOYER]
By:_____________________________
Printed Name:
Title:
XXXXXX HOLDING CO. (PA), INC.
By:_____________________________
Printed Name: Xxxxxx X. Xxxxxx
Title: President and Chief Executive Officer
________________________________
[Employee]
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ATTACHMENT 1
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Xxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
