Exhibit 4 (v)
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of the 3rd day of September, 2001 by and
between Newcor, Inc., a corporation incorporated under the laws of Delaware with
a principal place of business at 00000 Xxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxx
00000 (the "Company"), and Xxxxx X. Xxxxx, of 0000 Xxx Xxxx Xxxxxx, Xxxxxx,
Xxxxx, 00000 ("Employee").
WHEREAS the Company and Employee are desirous of setting forth in a
definitive Employment Agreement their respective rights and obligations with
respect to Employee's employment by the Company.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Employee hereby agree as follows:
1. Employment. The Company hereby agrees to employ Employee, and
Employee hereby agrees to accept such employment upon the terms and conditions
hereinafter set forth. Employee represents and warrants to the Company that his
employment by the Company and the performance of his duties as contemplated by
this Agreement do not and will not violate the terms or conditions of any other
agreement or understanding by which Employee is bound or subject and that
Employee knows of no basis for any claim that he is so bound or subject.
2. Term. The term of this Agreement shall commence on September 3, 2001
("Effective Date"), and shall continue for a period of ten (10) years following
such Effective Date unless otherwise terminated as provided in Section 8 hereof;
provided, however, that under certain circumstances, the provisions of Section 9
hereof shall survive termination. Commencing on the tenth anniversary of the
Effective Date and at the conclusion of each ten (10) year period thereafter,
the term of this Agreement shall be automatically extended for an additional ten
(10) year period unless Employee's employment is terminated pursuant to Section
8 hereof.
3. Duties. Employee shall be employed by the Company to serve as the
Company's Chairman of the Board of Directors and Co-Chief Executive officer and
shall perform such duties and tasks as are appropriate for a person in such
position. Employee shall perform his duties hereunder in the Greater Dallas
metropolitan area or at such other location or locations as are mutually agreed
between Employee and the Company. Employee shall have a private office,
secretarial help, and such other facilities and services as are suitable to his
position and appropriate for the performance of his duties.
4. Extent of Service. Employee shall devote most of his working time,
skills, knowledge and abilities to the business and affairs of the Company, its
subsidiaries and affiliates in promotion of their respective interests, and will
not engage in outside business activities which would interfere with the
performance of his duties hereunder. This provision shall not preclude Employee
from continuing his present employment as Chairman of the Board of Directors and
Chief Executive Officer of EXX, Inc., nor shall this provision preclude Employee
from investing his assets in other business activities, provided that such
investment or investments do not significantly detract from Employee's
responsibilities under this Agreement and will not require significant
investments of the Employee's time in the operation of the affairs of the
companies in which such investments are made. Further, this provision shall not
preclude Employee from serving on the Board of Directors of any other
company(s).
5. Compensation.
(a) Salary. As compensation for the services to be rendered by Employee
under this Agreement, the Company shall pay to Employee a minimum
annual salary of five hundred thousand dollars ($500,000) (the "Base
Salary"), less such deductions or amounts as may be required to be
withheld by applicable law or regulations, payable in accordance with
the payroll policy of the Company as from time to time may be in
effect. Employee's Base Salary may be adjusted upward from time to time
in the sole discretion of the Board of Directors of the Company, but in
any event, Employee's Base Salary shall be increased annually by a
percentage equal to the increase of the Consumer Price Index, all
commodities, as reported by the Department of Labor. The base period
for this calculation shall be the 2001 calendar year.
(b) Bonus. In addition to the base salary specified above, Employee shall
receive a bonus. Such bonus shall be paid annually pursuant to an
Executive Incentive Bonus Compensation Plan which, at a minimum, shall
provide that the Employee will receive five (5%) percent of Company's
pretax profit in each fiscal year, except that in the first year
subsequent to the year 2001, that the Company is profitable, the
Employee's minimum bonus shall be one hundred thousand ($100,000.00)
dollars.
(c) Reimbursements for Premiums for Extended Health Care Coverage. In the
event that Employee's employment terminates pursuant to Section 8 of
this Agreement, the Company shall provide health care coverage for a
period of three (3) consecutive years following the date of such
termination. Such health care coverage shall be no less generous than
that under the Company's health care plan (as such plan may exist from
time to time) for Employee, Employee's spouse (if any) and Employee's
dependents (if any). Employee shall pay the applicable COBRA premiums
which are charged to the Company's former employees from time to time;
provided however that the Company agrees to reimburse Employee for such
premiums plus any additional "gross-up" amounts equal to any taxes
(including, without limitation, any income taxes) on such amounts.
6. Fringe Benefits. Employee shall be entitled to participate in any
employee benefit plan maintained by the Company for its employees as of the
Effective Date, including any accident or health insurance plan and any pension
or profit sharing plan subject to the same requirements and limitations as are
applicable to other employees of the Company holding positions comparable to
that held by Employee. At a minimum, the Company will provide, at the Company's
expense, a family medical and dental plan, a life insurance policy comparable to
the policy in effect with the Company as of the Effective Date and a disability
plan to protect Employee's income. In addition, Employee shall be entitled to
three (3) weeks of vacation during each twelve (12) month period hereof.
Employee shall also be covered under the Company's liability insurance policy
for directors and officers under the same terms and conditions that apply to
other directors and officers of the Company.
In addition, Employee shall be entitled to all other fringe benefits
not enumerated specifically in this Agreement which are no less favorable than
those that are provided to management employees of the Company generally from
time to time.
7. Reimbursement of Business Expenses. The Company agrees to reimburse
Employee for other reasonable out-of-pocket expenses incurred in connection with
Company business including, without limitation, travel and accommodations for
all business trips, provided vouchers therefor, or other supporting information
as the Company may reasonably require, are presented to the Company. The Company
agrees to reimburse Employee for all such expenses within ten (10) days of
presentation.
8. Termination.
(a) Death. This Agreement shall automatically terminate in the event of
Employee's death. Upon such termination, the Company shall pay to
Employee's beneficiary, within thirty (30) days of such termination, an
amount equal to or the lesser of ten (10) times Employee's Base Salary
specified in Section 5(a) (as in effect as of the date of such
termination) or the Employee's Base Salary through the balance of the
term of this Agreement, plus an additional amount equal to the greater
of (i) three (3) times Employee's bonus for the previous year or (ii)
the average of Employee's bonus for each of the three (3) years
immediately preceding the date of such termination.
Employee shall have the right to designate a beneficiary to receive the
amounts payable after his death as provided under this Section 8(a).
Such designation shall be in writing, signed by Employee, and delivered
to the Company while Employee is alive.
In the event that Employee does not designate a beneficiary to receive
amounts payable after his death as provided under this Section 8(a),
but if Employee is married as of the date of his death, such amounts
shall be paid to his spouse; provided that if Employee is not married
as of the date of his death, such amounts shall be paid to Employee's
estate.
(b) Disability. This Agreement may be terminated, at the option of the
Company, in the event Employee becomes permanently physically or
mentally disabled, subject to the terms and conditions below:
(i) Disability Defined. Employee shall be deemed permanently
disabled if (a) Employee is unable to provide the Company at
least thirty (30) hours per week of continuous service of the
work time which would be normally be given by him during a
continuous six (6) month period; and if (b) at the expiration
of said six (6) month period insofar as can be reasonably
foreseen. Employee will thereafter be unable to give at least
thirty (30) hours per week of normal effective working time.
(ii) Disability Payments. Until the expiration of the six (6) month
period of disability, Employee shall be entitled to receive
his regularly established salary and bonus, less any monthly
disability income insurance payments.
(iii) Determination as to Disability. In the event the parties
hereto are unable to agree on the existence of a disability or
the date on which the aforesaid six (6) month period of
disability began, the Company and Employee shall each
designate a physician and the two physicians so designated
shall then select a third physician, which third physician
shall then determine whether permanent disability exists
within the meaning of this Agreement and when the disability
commenced if it does exist. The determination of the said
third physician shall bind the parties hereto. For convenience
of determining the rights of the parties under this provision,
a permanent disability shall be deemed to begin on the first
day of the month which immediately follows the date on which
the disability actually occurred, or is judged by the
aforesaid third physician to have occurred. If the said third
physician determines that Employee is not capable of
performing the services required of him hereunder, the Company
shall have the right to require Employee to submit to
additional periodic examinations (not to exceed one per
month), at the Company's expense, by that physician for so
long as Employee purports to be disabled.
(iv) Termination of Disability. The foregoing to the contrary
notwithstanding, in the event the Company terminates the
employment of Employee due to the disability of Employee and
if, after such termination and prior to the normal termination
date of this Agreement (or any extension or renewal hereof)
Employee is judged by the aforesaid third physician to be able
to return to his normal duties, then the Company shall hire
Employee as a consultant to the Company for the balance of the
term of this Agreement (or any extension or renewal hereof),
at Employee's salary as of the date of termination and subject
to all other terms and conditions of this Agreement.
(c) Termination by the Company for Cause. The Company may, upon written
notice to Employee, terminate Employee's employment for proper cause.
Employee shall have no right to receive any compensation or benefit
hereunder on or after the effective date of such termination, except
for compensation then due and payable (or accrued for Employee's
benefit) but remaining unpaid.
As used herein "proper cause" shall mean that Employee has been
convicted of any crime involving larceny, embezzlement, conversion or
any other act involving the misappropriation of Company funds in the
course of his employment.
The Employee shall not be deemed to have been terminated for proper
cause unless and until there has been delivered to the Employee a copy
of a resolution duly adopted by the affirmative vote of not less than
80% of the entire membership of the board of directors of the Company
(excluding the Employee if the Employee is at the time a director of
the Company) at a meeting of the board called and held for the purpose
(after reasonable notice to the Employee), finding that in the good
faith opinion of the board the Employee's conduct constituted proper
cause and specifying the particulars thereof. The date on which such
resolution is given to the Employee shall be the effective date of any
termination pursuant to this section 8(c).
(d) Termination by the Company Without Cause. Employee's employment under
this Agreement may be terminated without cause by the Board of
Directors of the Company upon written notice to Employee. In the event
of such termination without cause, the Company shall pay to Employee,
within thirty (30) days of such termination, an amount equal to or ten
(10) times Employee's Base Salary specified in Section 5(a) (as in
effect as of the date of such termination), plus an additional amount
equal to the greater of (i) three (3) times Employee's bonus for the
previous year or (ii) the average of Employee's bonus for each of the
three (3) years immediately preceding the date of such termination. In
the event of such termination without cause, the covenants of Employee
contained in Section 9 hereof shall be null and void.
(e) The Company's duties to make the payments and to perform the
obligations described in this Agreement shall not be affected or
reduced by any right of set-off, counterclaim, recoupment, defense or
other right which the Company may have against Employee or any other
person. Employee shall not be obligated under any circumstances to seek
other employment by way of mitigation of the amounts or benefits
payable or providable to Employee under this Agreement. The Company
agrees to pay within fifteen (15) days after invoice therefor all
reasonable legal fees and expenses which employee may incur as a result
of any contest (regardless of the outcome thereof) by the Company or
any other person of the validity or enforceability of, or liability of
the Company under, any provision of this Agreement. Any amounts owing
by the Company under this Agreement and not paid or provided when due
(or, if no due date shall be set forth herein, not paid or provided
within five (5) days after written demand therefor) shall bear
interest, compounded quarterly, from such due date to the date when
paid at the rate of 2% plus the rate from time to time announced by
Citibank NA of New York, New York (or any successor institution) as its
"prime" or "base" rate.
(f) Termination by Employee for Good Reason.
(i) Employee, upon at least eighteen (18) months written notice to
the Company, may, in his sole discretion, terminate his
employment with the Company upon the occurrence of any of the
following events:
(A) The Company relocates Employee's principal office out
of the Greater Dallas, Texas area which shall be
defined as within a radius of ten (10) miles from
"Downtown" Dallas; or
(B) There is a "change in control" (as defined below) of
the Company;
(C) There is a ten percent (10%) reduction or a series of
reductions, that in the aggregate, amount to a ten
percent (10%) reduction by the Company of the greater
of (i) Employee's Base Salary in effect as of the
Effective Date or (ii) the Base Salary as may be
increased by the Company from time to time under this
Agreement.
(D) A material breach of this Agreement by the Company.
(ii) Upon such termination, the Company shall pay to Employee,
within thirty (30) days of such termination, an amount equal
to ten (10) times Employee's Base Salary specified in Section
5(a) (as in effect as of the date of such termination), plus
an additional amount equal to the greater of (i) three (3)
times Employee's bonus for the previous year or (ii) the
average of Employee's bonus for each of the three (3) years
immediately preceding the date of such termination.
(iii) For purposes of this Agreement, "change in control" shall
mean:
(A) Any acquisition of more than fifty percent (50%) of
the common stock of the Company by one or more
stockholders of the Company to a nonaffiliated
person, such percentage being determined on an
undiluted basis without regard to options and
warrants then outstanding and unexercised;
(B) Any sale, lease or other disposition (but not a
mortgage or pledge in a bona fide borrowing
transaction) of all or substantially all of the
assets of the Company to a nonaffiliated person;
(C) Any merger or consolidation of the Company with or
into any other nonaffiliated corporation, where more
than fifty percent (50%) of the equity securities of
the surviving or resulting corporation (by value or
voting power) are directly or indirectly controlled
by persons other than the stockholders of the Company
or their affiliates immediately prior to such merger
or consolidation; or
(D) Any merger or consolidation of the Company with or
into any other nonaffiliated corporation, even if
less than fifty percent (50%) of the equity
securities of the surviving or resulting corporation
(by value or voting power) are directly or indirectly
controlled by persons other than the stockholders of
the Company or their affiliates immediately prior to
such merger or consolidation, if the individuals who
constituted the Board of Directors of the Company
immediately before such merger or consolidation, and
any individual becoming a director subsequent to such
date whose election, or nomination for election by
the Company's stockholders, was approved by a vote of
at least three-quarters of the directors who
constituted the Board of Directors of the Company
immediately before such merger or consolidation, for
any reason no longer constitute at least one-half of
the members of the Board of Directors of the
surviving or resulting corporation at any time within
one year after such merger or consolidation.
9. Confidentiality Agreement.
(a) Employee shall not, during the term of his employment hereunder and for
the duration of any unexpired term of this Agreement:
(i) divulge, or cause to be divulged, communicate or cause to be
communicated, publish or cause to be published, or otherwise
disclose or cause to be disclosed to any person, firm,
corporation, association, or entity, any of the Company's
systems, designs, procedures, pricing and marketing
strategies, concepts, technical information, trade secrets,
know-how, customer lists, customer contacts, customer
prospects, fee schedules, business and financial records and
such other information regarded by the Company as confidential
and of a proprietary nature (the "Proprietary Information").
For purposes hereof, the term Proprietary Information shall
not include information which (x) at the time of disclosure to
or by Employee was generally known to the relevant trade so as
to no longer be a protectable trade secret, or (y) was
lawfully received by Employee from a third party who
independently, without prompting or assistance by Employee,
developed or acquired such Proprietary Information and was
under no obligation, express or implied, to the Company with
respect thereto or (z) at the time of disclosure was already
properly in Employee's possession or otherwise known by
Employee.
10. Waiver of Breach. The failure of any party at any time or times to
require the performance of any provision hereof shall in no manner affect the
party's right at a later time to enforce the same. No waiver by any party of the
breach of any term or covenant contained in this Agreement, whether by conduct
or otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the breach
of any other term or covenant contained in this Agreement.
11. Assignment. This Agreement and Employee's rights and obligations
hereunder may not be assigned by Employee. This Agreement may not be assigned by
the Company without Employee's written consent. This Agreement shall be binding
upon and inure to the benefit of the Company and its successors and assigns and
shall be binding upon Employee, his heirs, executors and administrators.
12. Entire Agreement Amendment. This Agreement constitutes the entire
Agreement among the parties with respect to the subject matter hereof and,
unless otherwise provided herein, supersedes all prior agreements or
understandings written or oral in respect thereof. This Agreement may be
amended, modified, superseded, cancelled, renewed, or extended, and the terms or
covenants hereof may be waived only by a written instrument signed by all the
parties hereto, or in the case of a waiver, by the party waiving compliance.
13. Severability. If any provision of this Agreement shall be invalid
or unenforceable to any extent or in any application, then the remainder of this
Agreement and of such term and condition, except to such extent or in such
application, shall not be affected thereby and each and every term and condition
of this Agreement shall be valid and enforced to the fullest extent and in the
broadest application permitted by law.
14. Construction and Interpretation. This Agreement, and all questions
arising in connection therewith, shall be governed by and construed in
accordance with the laws of the State of Michigan. In the event that Employee or
the Company commence litigation against the other party to enforce any provision
of this Agreement, venue shall at all times lie in the United States District
Court for the Eastern District of Michigan.
15. Headings. The section headings contained herein are for convenience
and reference only, and shall be given no effect in the interpretation of any
term or condition of this Agreement.
IN WITNESS WHEREOF the parties have executed this Agreement the day and
year first above written.
NEWCOR, INC. (COMPANY) "EMPLOYEE"
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxx
---------------------------- ---------------------------------
Xxxxx X. Xxxxxx Xxxxx X. Xxxxx
President
