BANDAG, INCORPORATED AND SUBSIDIARIES
Exhibit 10.2
TIRE DISTRIBUTION SYSTEMS, INC.
SEVERANCE AGREEMENT FOR XXX XXXXXXX XX
THIS SEVERANCE AGREEMENT ("Agreement") is entered into as of the 20th
day of January, 2000, by and between TIRE DISTRIBUTION SYSTEMS, INC., a Delaware
corporation ("TDS") and XXX XXXXXXX XX ("Employee").
R E C I T A L S
WHEREAS, Employee has been a key executive employee of Bandag,
Incorporated ("Bandag"), the ultimate owner of 100% of the issued and
outstanding common stock of TDS, and possesses an extensive knowledge of the
business and affairs of Bandag and TDS, their proprietary information, trade
secrets, policies, methods, personnel, and problems;
WHEREAS, as of the date hereof, Employee has resigned as executive
vice president and chief operating officer of Bandag and is now an at-will key
executive employee of TDS and desires to continue to be employed at-will by TDS,
and acknowledges that this Agreement provides for severance payments from TDS to
which he is not otherwise entitled by any contract or any other legal
obligation;
WHEREAS, as a key executive employee of TDS, Employee acknowledges
that he will obtain extensive knowledge of the business and affairs of Bandag
and TDS, their proprietary information, trade secrets, policies, methods,
personnel and problems;
WHEREAS, the parties agree and acknowledge that this Agreement is not
intended to constitute an employment contract; does not create any employment
rights other than those expressly set forth herein; does not alter or modify
Employee's status as an "at-will" employee of TDS or the terms and conditions of
his employment except as expressly set forth herein, and does not create any
rights to continued employment or to termination only "for cause"; but rather,
is intended solely to provide for the availability of severance payments to
Employee under the terms and conditions set forth herein in consideration and
exchange for Employee's agreement to be bound by the Non-Competition and
Confidentiality provisions contained in this Agreement;
NOW, THEREFORE, in consideration of the covenants and agreements of
the parties herein contained, the sufficiency of which is acknowledged by each
party, the parties hereto agree as follows:
1. Employee Covenants. Employee covenants and agrees to be bound by
the terms of the Non-Competition and Confidentiality provisions set forth in
paragraph 2, below.
2. Covenant Not to Compete and Confidentiality.
(a) Employee has obtained or acquired and will, during the
BANDAG, INCORPORATED AND SUBSIDIARIES
course of Employee's employment with TDS, obtain or acquire, knowledge of
Confidential Information, which knowledge would, in the event Employee were to
become employed by or associated with a competitor of TDS, become available and
provide invaluable benefits to such competitor and cause irreparable harm to
TDS. In consideration of the severance payments provided herein, Employee will
not, within the geographic location provided herein, from the date hereof until
the number of months set forth in the immediately following sentence has elapsed
following termination of Employee's employment with TDS for any reason, directly
or indirectly, as a director, officer, employee, or as an owner of any equity
proprietary interest in (except for ownership of shares in a publicly traded
company not exceeding five percent (5%) of any class of outstanding equity
securities), or as a consultant or otherwise, render services to, have any
financial interest in, or otherwise participate in the affairs of, any business
("Competitive Business") which is, or is planning or organizing to be, engaged
in the manufacture and/or sale of products or the rendering of services
competitive with the products manufactured or sold or the services rendered by
TDS. Employee shall be restricted (as set forth in this Section 2(a)) for
twenty-four (24) months following termination of Employee's employment with TDS,
unless the reason for such termination is the voluntary termination of Employee,
in which event the period of restriction shall be twelve (12) months, provided,
however, that, in the event of Employee's voluntary termination, TDS shall have
the right, exercisable in its sole discretion, to cause such period of
restriction to be twenty-four (24) months (such twenty-four (24) or twelve (12)
month period is hereinafter referred to as the Period of Restriction). TDS may
exercise such right by giving employee written notice of TDS' exercise of such
right as soon as reasonably practicable after the effective date of Employee's
voluntary termination. TDS' right to cause the Period of Restriction to be
twenty-four months shall expire after the first installment payment provided by
Section 4 hereof has been made. The geographic limitation of the foregoing
covenant not to compete shall extend to any state of the United States in which
TDS sold or actively attempted to sell its products or services within the one
(1) year period prior to the termination of Employee's employment with TDS. In
the event that Employee is employed by a Competitive Business which is engaged
in the manufacture or sale of multiple products, this Section 2 shall apply to
only those portions of said Competitive Business which are directly or
indirectly competitive with TDS.
(b) Employee has, during the course of his employment with Bandag and
will, during the course of Employee's employment with TDS, obtain or acquire
knowledge of Confidential Information, which knowledge would, in the event
Employee were to become employed by or associated with a competitor of Bandag or
of any corporation or other entity in which Bandag owns, directly or indirectly,
a majority of such corporation's or other entity's outstanding voting securities
(a "Subsidiary"), become available and provide invaluable benefits to such
competitor and cause irreparable harm to Bandag or any such
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BANDAG, INCORPORATED AND SUBSIDIARIES
Subsidiary. In consideration of the severance payments provided herein, Employee
will not, within the geographic location provided herein, from the date hereof
until the expiration of the applicable Period of Restriction (as provided in
Section 2(a) above) following termination of Employee's employment with TDS or
any Subsidiary for any reason, directly or indirectly, as a director, officer,
employee, or as an owner of any equity proprietary interest in (except for
ownership of shares in a publicly traded company not exceeding five percent (5%)
of any class of outstanding equity securities), or as a consultant or otherwise,
render services to, have any financial interest in, or otherwise participate in
the affairs of, any business ("Competitive Business") which is, or is planning
or organizing to be, engaged in the manufacture and/or sale of products or the
rendering of services competitive with the products manufactured or sold or the
services rendered by Bandag or any Subsidiary. The geographic limitation of the
foregoing covenant not to compete shall extend to any state of the United States
in which Bandag or any Subsidiary sold or actively attempted to sell its
products or services within the one (1) year period prior to the termination of
Employee's employment with TDS. In the event that Employee is employed by a
Competitive Business which is engaged in the manufacture or sale of multiple
products, this Section 2 shall apply to only those portions of said Competitive
Business which are directly or indirectly competitive with Bandag or any
Subsidiary.
(c) From the date hereof until twenty-four (24) months following the
termination of Employee's employment, Employee will not, on behalf of any
Competitive Business, be connected in any way with soliciting or hiring any
employees of Bandag, TDS or any Subsidiary who were subject to Employee's
general supervision during employment by Bandag or TDS, until such employees
have not been employed by Bandag, TDS or any Subsidiary for six (6) months.
(d) In addition to all duties of loyalty imposed on Employee by law,
Employee shall maintain Confidential Information (as defined in subsection (e)
below) in strict confidence and secrecy and shall not at any time after the date
hereof, or at any time after termination of, employment with TDS, directly or
indirectly, use or disclose to others any Confidential Information, or use any
Confidential Information for the benefit of any person or entity (including the
Employee) other than Bandag or TDS, without the prior written consent of TDS or
Bandag, as the case may be (except for disclosures to persons acting on Bandag's
or TDS's behalf with a need to know such information, provided such persons
agree to hold such information in confidence on terms acceptable to Bandag or
TDS, as the case may be, and except for disclosures that may be required by a
court of competent jurisdiction, provided Employee notifies TDS or Bandag, as
the case may be, a reasonable time prior to any such disclosure).
(e) "Confidential Information" means Proprietary Ideas (as defined in
subsection (f) below) and other information (excluding
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BANDAG, INCORPORATED AND SUBSIDIARIES
information that is generally known to the public by means other than disclosure
by Employee) related to Bandag's, TDS's or any Subsidiary's business, whether or
not in written or printed form, not generally known in the trade or industry, of
which Employee has become informed during his employment by Bandag or TDS or has
or will become informed during his employment by TDS, including without
limitation, product specifications, service specifications, manufacturing
procedures, methods, equipment, compositions, technology, designing, business
plans, marketing plans, formulae, trade secrets, know-how, research and
development programs, sales methods, customer lists, strategic plans, mailing
lists, sales levels and quantities, customer usages and requirements, computer
programs and other confidential technical or business information and data.
(f) "Proprietary Ideas" means ideas, suggestions, Inventions (as
defined in subsection (g) below) and work relating in any way to the business
and activities of Bandag or TDS, which are or may be subjects of protection
under applicable law concerning patents, copyrights, trade secrets, trademarks,
service marks or other intellectual property rights.
(g) "Inventions" means designs, discoveries, improvements, ideas,
conceptions, works of authorship, know how, innovations, inventions,
enhancements, modifications, methods, techniques, technological developments and
suggestions, whether or not patentable, copyrightable or susceptible to any
other form of legal protection, including without limitation, products,
processes, machines, tooling, articles, compositions of matter, promotional and
advertising materials, data processing programs and systems, manufacturing and
sales techniques, artwork, drawings, plans and specifications which either (i)
relate to the business of Bandag, TDS or any Subsidiary as conducted from time
to time, or (ii) relate to Bandag's, TDS's or any Subsidiary's actual or
demonstrably anticipated research or development, or (iii) result from any work
performed by Employee for TDS or Bandag, as the case may be.
3. Specific Enforcement; Injunctive Relief. The parties acknowledge
that damages would be an inadequate remedy for any breach of the provisions of
Section 2 by Employee. Therefore, the obligations of Employee under Section 2
shall be specifically enforceable and Employee agrees that TDS or Bandag, as the
case may be, shall be entitled to an injunction, restraining order or other
equitable relief from any court of competent jurisdiction, restraining Employee
from committing any violations of the provisions of Section 2 of this Agreement,
and should such injunction or decree issue in favor of TDS or Bandag, as the
case may be, TDS or Bandag, as the case may be, shall also be entitled to all
costs, expenses, and fees (including, without limitation, attorneys' fees)
incurred in connection with such action. Such remedies shall be cumulative and
not exclusive, and shall be in addition to any other remedy TDS or Bandag, as
the case may be, may have.
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BANDAG, INCORPORATED AND SUBSIDIARIES
4. Severance Payments. TDS agrees that if TDS terminates Employee's
employment with TDS, it will pay Employee a severance payment of $680,000, or if
Employee voluntarily terminates his employment with TDS, it will pay Employee a
severance benefit of $340,000 if the Period of Restriction is twelve (12) months
or a severance benefit of $680,000 if the Period of Restriction is twenty-four
(24) months (subject in all cases to all required federal, state and local
payroll withholding), and payable as set forth herein. TDS will pay Employee the
severance amount in twenty-four (24) or twelve (12) equal monthly installment
payments, depending upon the length of the Period of Restriction, commencing
thirty (30) days after the date of Employee's termination of employment, with
monthly installment payments made thereafter on the 1st day of each month for
twenty-three (23) or eleven (11) months, as the case may be. For purposes of
this paragraph, the date of Employee's termination of employment is defined as
the last date on which Employee renders services to TDS.
(a) It is understood and agreed to by the parties that, as used in
this paragraph 4, the terms "terminates" or "voluntarily terminates" does not
include the termination of Employee's employment with TDS due to death,
disability or retirement.
(b) It is further understood and agreed to by the parties that in the
event Employee engages in any conduct in violation of, or inconsistent with, his
obligations under paragraph 2, in addition to all other rights and remedies
available to TDS or Bandag, as the case may be, TDS's obligation to make further
severance payments under this Agreement shall be immediately and forever
discharged and released and Employee shall be obligated to reimburse TDS for all
severance payments theretofore made by TDS.
(c) As a condition precedent to Employee's entitlement to receive
severance payments and to TDS's obligation to provide such payments under this
Agreement, Employee agrees that, in the event of his termination by TDS or his
voluntary termination, he will execute and be bound by the terms of a general
release of all claims against TDS ("Release") arising up to and including the
date of his execution of the Release. Employee understands and agrees that such
Release will include, at a minimum, a release of all claims against TDS and its
affiliated companies and successors, and its and their officers, directors,
employees, and agents, arising under federal, state and local
anti-discrimination or civil rights laws, as well as all claims, statutory or
common-law, arising out of Employee's employment with TDS or its termination.
5. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties pertaining to the subject matter contained
herein and supersedes all prior and contemporaneous agreements, representations
and understandings, whether written or oral, as to the matters set forth herein.
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BANDAG, INCORPORATED AND SUBSIDIARIES
6. Modification and Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such a waiver, modification or discharge
is agreed to in writing signed by the parties hereto.
7. No Other Agreements. No agreements, representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
8. Costs of Enforcement. In the event that a court of competent
jurisdiction determines that Employee has breached this Agreement, Employee
shall be liable to TDS or Bandag, as the case may be, for all of its actual
costs (statutory and nonstatutory), expenses and attorneys' fees, incurred to
enforce this Agreement.
9. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of TDS and Bandag, their successors and assigns, including
the purchaser of all or substantially all of the assets of TDS or Bandag, as the
case may be, and Employee and his heirs, executors, administrators and legal
representatives. Employee may not assign this Agreement, in whole or in any
part.
10. Bandag as Third Party Beneficiary. TDS and Employee acknowledge
that the provisions in Section 2 as they relate to Bandag or any Subsidiary are
intended for the benefit of Bandag. Accordingly, the parties agree that Bandag
shall be entitled to enforce against Employee the provisions of Section 2 as
they relate to Bandag or any Subsidiary as fully as TDS could enforce against
Employee the provisions of Section 2 as they relate to TDS.
11. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of Iowa
applicable to contracts made and to be performed therein between residents
thereof.
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 shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EMPLOYEE TIRE DISTRIBUTION SERVICES, INC.
/s/ Xxx Xxxxxxx XX By: /s/ Xxxxxx X. Xxxxxxxxxx
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Its: Secretary
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/s/ Xxxxx X. Xxxxxxxxxx /s/ Xxxxx X. Xxxxxxxxxx
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Witness Witness
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