KEY EMPLOYEE EMPLOYMENT AGREEMENT
Exhibit
10.2
May 28,
2005
KEY
EMPLOYEE
EMPLOYMENT
AGREEMENT
THIS KEY
EMPLOYEE EMPLOYMENT AGREEMENT (this “Agreement”), is
executed this 28th day of May, 2005, by and between The York Group, Inc., a
Delaware corporation (the “Company”) and
▇▇▇▇▇ ▇▇▇▇▇▇▇ (“Employee”) and is
to be effective as of the Closing (as defined in the Asset Purchase Agreement,
dated the same date as this Agreement (the “Purchase
Agreement”), among
Milso Industries, Inc., Milso Industries, LLC and SBC Holding Corp.
(collectively, the “Sellers”), the
Shareholders signatory thereto, the Company, Midnight Acquisition Corporation
and ▇▇▇▇▇▇▇▇ International Corporation (“▇▇▇▇▇▇▇▇”)). In
the event that the Purchase Agreement is terminated prior to the Closing or if
the Closing otherwise does not occur, this Agreement shall be of no force or
effect. Capitalized terms used in this Agreement and not otherwise defined have
the meanings ascribed to those terms in the Purchase Agreement.
W I T
N E S S E T H:
WHEREAS,
concurrently with the execution and delivery of this Agreement, the Company is
executing and delivering the Purchase Agreement pursuant to which, upon the
terms and subject to the conditions set forth therein, the Company has agreed to
purchase certain assets and assume certain liabilities and obligations of the
Sellers (the “Transaction”);
WHEREAS,
pursuant to the Transaction, Employee’s employment with Employee’s former
employer is being terminated, and the Company will only consider providing new
employment to Employee if Employee agrees to the terms herein, including the
confidentiality, non-solicitation and non-compete terms;
WHEREAS,
Employee possesses valuable knowledge and skills that will contribute to the
successful operation of the Company’s business;
WHEREAS,
the Company views the Employee as a key and integral person who is vital to the
success of the Company in the future;
WHEREAS,
Employee will derive good and valuable consideration in connection with
Employee’s employment hereunder;
WHEREAS,
the Company desires to procure the services of Employee, and Employee is willing
to be employed by the Company, upon the terms and subject to the conditions
hereinafter set forth;
NOW,
THEREFORE, intending to be legally bound, the Company agrees to employ Employee,
and Employee hereby agrees to be employed by the Company, upon the following
terms and conditions:
ARTICLE
I
EMPLOYMENT
1.01. Office.
Employee is hereby employed, with effect from the Closing, by the Company and
shall perform, for the Company as a whole, duties substantially similar to those
performed for the Business as operated on the date of this Agreement by the
Sellers and such other duties as may be reasonably assigned to him from time to
time by the Company’s board of directors or the Group President, Bronze and York
Casket Division. Throughout the Term, so long as he is employed by the Company,
Employee will be a member of the board of directors of the Company and will be
the President of the Company. In his capacity as President of the Company,
Employee shall have all authority customarily associated with that position,
including exclusive control over operations, hiring and firing of employees,
employee compensation, product pricing, implementation of business strategy and,
subject to the written operating business policies of ▇▇▇▇▇▇▇▇ that are
uniformly applicable to all business segments of ▇▇▇▇▇▇▇▇, decisions to seek
corporate approvals for and to make capital investments; provided that
actions with respect to hiring and firing of employees and employee
compensation, shall be subject to the procedural requirements, such as
background checks, written notices and other administrative human resources
procedures, but not the substantive requirements, such as any prescribed
experience, education level, or operating or production goal requirements, if
any, of the standard written operating business policies of ▇▇▇▇▇▇▇▇ that are
uniformly applicable to all business segments of ▇▇▇▇▇▇▇▇. Employee shall report
to the Group President, Bronze and York Casket Division or his superior, and to
the Company’s board of directors.
1.02. Term. Subject
to provisions of Article II hereof, Employee’s employment hereunder shall
commence as of the Closing, and shall continue until the close of business on
September 30, 2010 (the period during which Employee is employed hereunder being
hereinafter referred to as the “Term”).
1.03. Cash
Compensation. As
consideration for the services that Employee shall render hereunder, Employee
shall be entitled to compensation as follows:
(a) Employee
shall be entitled to annual compensation (“Salary”) equal
to $400,000 (“Base
Salary”) plus
his Allotted Share (as hereinafter defined) of the Compensation Pool (as
hereinafter defined) for each Employment Year (as hereinafter defined) that
remains after payment of the Base Salaries (as defined in the employment
agreement of each Pool Participant) of each Pool Participant (as hereinafter
defined). The Base Salary shall increase each Employment Year by a percentage
equal to the percentage increase in the Consumer Price Index, using the Consumer
Price Index most recently published prior to January 1 of each year during the
Term and comparing it to such index most recently published as of
January 1, 2005. Employee shall be entitled to a bonus (in addition to the
bonus which may be earned pursuant to Section 1.04) of $300,000 per year,
payable in full not later than December 31 of each year beginning December 31,
2006. The additional bonus will be payable (i) for the year ending September 30,
2006, only if the Operating Profit (as defined in the Purchase Agreement) is
$16,000,000 or more, and (ii) for each fiscal year ending September 30, 2007 and
thereafter, only if the Adjusted Operating Profit (as hereinafter defined) for
that Bonus Year (as hereinafter defined) equals or exceeds the applicable
Operating Profit Target (as hereinafter defined) for that Bonus
Year.
(b) During
each Employment Year, Employee’s Salary shall be payable twice per month in
accordance with the Company’s standard pay practices, in an amount equal to 1/24
of the Base Salary plus the product of (x) 1/24 multiplied by (y) the
Compensation Pool multiplied by (z) Employee’s Allotted Share.
(c) For
purposes of this Agreement:
(i) “Allotted
Share” means
the percentage established for each Employment Year by Employee, in his capacity
as President of the Company, or if Employee no longer is President, by ▇▇▇▇▇
▇▇▇▇▇▇▇ provided that he is then employed by the Company (in either case after
consultation with the board of directors of the Company or its designee), or if
Employee is no longer President and ▇▇▇▇▇ ▇▇▇▇▇▇▇ is not then employed by the
Company, the percentage established for the preceding Employment Year; provided
that, subject to subsection (ii) below, if a Pool Participant’s employment
hereunder is terminated, such Pool Participant’s Allotted Share shall be
allocated to the remaining Pool Participants pro rata based upon the Allotted
Share of each.
(ii) “Compensation
Pool” means
an amount in respect of each Employment Year equal to $1,750,000 (increased each
Employment Year by a percentage equal to the percentage increase in the Consumer
Price Index, using the Consumer Price Index most recently published prior to
January 1 of each year during the Term and comparing it to such index most
recently published as of January 1, 2005) less the aggregate of each Pool
Participant’s Base Salary (as defined in the employment agreement of each Pool
Participant). If more than two Pool Participants cease to be employed during the
Term, the next and any succeeding termination of employment of any Pool
Participant shall result in the Compensation Pool being reduced by the amount of
the terminated Pool Participant’s Allotted Share of the Compensation Pool in
effect in the year of termination. Notwithstanding the foregoing, if ▇▇▇▇▇
▇▇▇▇▇▇▇ shall become President of the Company, the Compensation Pool above shall
be reduced by the Base Salary of ▇▇▇▇▇ ▇▇▇▇▇▇▇ in effect immediately prior to
his becoming President.
(iii) “Consumer
Price Index” means
the Consumer Price Index for all urban consumers, as periodically published by
the Bureau of Labor Statistics of the U.S. Department of Labor; or, if that
index no longer is published, the most comparable index subsequently published ,
as agreed in good faith by Buyer and the Shareholders’
Representative.
(iv) “Employment
Year” means
(A) the period beginning on the date of the Closing and ending on the next
December 31 occurring thereafter (the “First
Employment Year”),
(B) each full calendar year during the Term and (C) if the Term does
not end on a December 31, the period beginning on the January 1
immediately preceding the end of the Term and ending on the last day of the
Term.
(v) “Pool
Participants” means
the persons named on Schedule 1.03.
1.04. Performance
Based Bonuses.
(a) Employee
shall be entitled to an annual bonus as follows:
(i) With
respect to each Bonus Year (as hereinafter defined), Employee shall be entitled
to an amount equal to the product of (x) the Bonus Pool (as hereinafter
defined) for such Bonus Year, if any, multiplied by (y) his Bonus Allotted
Share (the “Bonus”).
(ii) The
Bonus, if any, shall be due and payable by the Company no later than December
31st of each Bonus Year.
(iii) For
purposes of this Agreement:
(A) “Adjusted
Operating Profit” means,
for any period, the net income of the Company and its subsidiaries determined in
accordance with GAAP applied consistently with prior periods, excluding
(i) any provision for interest expense or income taxes, (ii) any
adjustments made for purchase accounting purposes resulting from the Transaction
which otherwise would have an impact on Adjusted Operating Profit, including
depreciation or amortization resulting from the re-valuation for purchase
accounting purposes of tangible and intangible assets acquired in the
Transaction and the cost of sales impact related to any re-valuation for
purchase accounting purposes of inventory acquired in the Transaction (but
except as provided below, no such adjustments to the calculation of Adjusted
Operating Profit shall be made in respect of any acquisitions other than the
Transaction), (iii) any non-recurring costs or expenses related to the
integration of the Business with the operations of the Company and (iv) all
other extraordinary, non-recurring items (as determined in good faith with the
agreement of Employee or ▇▇▇▇▇ ▇▇▇▇▇▇▇, if ▇▇▇▇▇ ▇▇▇▇▇▇▇ is then President). In
calculating Adjusted Operating Profit, all administrative and financial services
performed by ▇▇▇▇▇▇▇▇ or its Affiliates for the Company (including without
limitation accounting, accounts receivable processing, accounts payable
processing, payroll processing, human resources and benefits support services,
retirement and pension plan administration), shall be charged as an expense at
an amount not to exceed the cost to the Business as of the date of this
Agreement of any such service. With respect to future acquisitions by the
Company, if either Employee or ▇▇▇▇▇ ▇▇▇▇▇▇▇ is the President of the Company,
unless the President agrees in writing to include those operating results and
the related attributes of the acquisition (such as interest expense, integration
costs and depreciation and amortization charges), they shall be excluded from
the calculation of Adjusted Operating Profit using such methodologies as shall
be agreed in good faith by the President of the Company and ▇▇▇▇▇▇▇▇. If the
Bonus Pool is determined pursuant to Section 1.02(a)(iii)(C)(2) below (because
the Operating Profit is less than $16,000,000), the first $7,500,000 paid from
the Bonus Pool shall be disregarded (and therefore not be a charge against net
income in calculating Adjusted Operating Profit), but amounts subsequently paid
from the Bonus Pool shall be taken into account (and therefore reduce net
income) in the fiscal year for which it is accrued. Under no circumstances shall
any amounts payable as purchase price pursuant to the Purchase Agreement be
treated as charges against net income for purposes of determining Adjusted
Operating Profit. If the Bonus Pool is determined pursuant to Section
1.04(a)(iii)(C)(1) below (because Operating Profit is $16,000,000 or greater),
the first $7,500,000 paid from the Bonus Pool shall be taken into account (and
therefore reduce net income) in the fiscal year for which it is
accrued.
(B) “Bonus
Allotted Share” means
the percentage established for each Bonus Year by Employee, in his capacity as
President of the Company, or if Employee no longer is President, by ▇▇▇▇▇
▇▇▇▇▇▇▇ provided that he is then employed by the Company (in either case after
consultation with the Board of the Company or its designee), or if Employee is
no longer President and ▇▇▇▇▇ ▇▇▇▇▇▇▇ is not then employed by the Company, the
percentage established for the preceding Bonus Year; provided that if a Pool
Participant is not employed by the Company hereunder at the end of a Bonus Year,
such Pool Participant’s Bonus Allotted Share (to the extent not payable to such
Pool Participant pursuant to the provisions of such Pool Participant’s
employment agreement) shall be allocated to the remaining Pool Participants pro
rata based upon the Bonus Allotted Share of each.
(C) The
“Bonus
Pool” for the
applicable Bonus Year shall be determined as follows:
(1) If the
Operating Profit (as defined in the Purchase Agreement) is $16,000,000 or
greater:
(x) with
respect to each of the First Bonus Year, the Second Bonus Year and the Third
Bonus Year, the Bonus Pool shall be $2,500,000, payable only if the Adjusted
Operating Profit for such Bonus Year is equal to or greater than the Operating
Profit Target for such Bonus Year; and
(y) the Bonus
Pool for the Fourth Bonus Year (which amount could be zero) shall equal
$7,500,000 minus the aggregate amount paid by the Company to the Pool
Participants from the Bonus Pools for the First Bonus Year, the Second Bonus
Year and the Third Bonus Year, payable only if the aggregate Adjusted Operating
Profit for the Third Bonus Year and the Fourth Bonus Year is equal to or greater
than the aggregate Operating Profit Target for the Third Bonus Year and the
Fourth Bonus Year; provided,
however, that if
there is no Bonus Pool payable for the Fourth Bonus Year because the above
stated test in this subsection (y) is not met, the Bonus Pool for the
Fourth Bonus Year nevertheless shall be payable in an amount described below,
but only if the aggregate Adjusted Operating Profit for the Fourth Bonus Year is
equal to or greater than the Operating Profit Target for such Bonus Year. The
Bonus Pool in such case shall equal the lesser of (p) $2,500,000 and
(q) $7,500,000 minus the aggregate amount paid by the Company to the Pool
Participants from the Bonus Pools for the First Bonus Year, the Second Bonus
Year and the Third Bonus Year (which amount could be zero).
(2) If the
Operating Profit (as defined in the Purchase Agreement) is less than
$16,000,000:
(x) with
respect to each of the First Bonus Year, the Second Bonus Year and the Third
Bonus Year, the Bonus Pool shall be $3,750,000, payable only if the Adjusted
Operating Profit for such Bonus Year is equal to or greater than the Operating
Profit Target for such Bonus Year; and
(y) the Bonus
Pool for the Fourth Bonus Year (which amount could be zero) shall equal
$15,000,000 minus the aggregate amount paid by the Company to the Pool
Participants from the Bonus Pools for the First Bonus Year, the Second Bonus
Year and the Third Bonus Year, payable only if the aggregate Adjusted Operating
Profit for the Third Bonus Year and the Fourth Bonus Year is equal to or greater
than the aggregate Operating Profit Target for the Third Bonus Year and the
Fourth Bonus Year; provided,
however, that if
there is no Bonus Pool payable for the Fourth Bonus Year because the above
stated test in this subsection (y) is not met, the Bonus Pool for the
Fourth Bonus Year nevertheless shall be payable in an amount described below,
but only if the aggregate Adjusted Operating Profit for the Fourth Bonus Year is
equal to or greater than the Operating Profit Target for such Bonus Year. The
Bonus Pool in such case shall equal the lesser of (p) $3,750,000 and
(q) $15,000,000 minus the aggregate amount paid by the Company to the Pool
Participants from the Bonus Pools for the First Bonus Year, the Second Bonus
Year and the Third Bonus Year (which amount could be zero).
(D) “Bonus
Year” means
each of the following periods:
(1) the
period beginning on October 1, 2006 and ending on September 30, 2007 (the
“First
Bonus Year”);
(2) the
period beginning on October 1, 2007 and ending on September 30, 2008 (the
“Second
Bonus Year”);
(3) the
period beginning on October 1, 2008 and ending on September 30, 2009 (the
“Third
Bonus Year”);
and
(4) the
period beginning on October 1, 2009 and ending on September 30, 2010 (the
“Fourth
Bonus Year”).
(E) “Operating
Profit Target”
means:
(1) with
respect to the First Bonus Year, the product of (x) the sum of $16,000,000
plus the lesser of (aa) $22,000,000 and (bb) the actual York Operating Profit
for the fiscal year October 1, 2005 through September 30, 2006
multiplied by (y) 1.07 (the “First
Year Target”);
(2) with
respect to the Second Bonus Year, an amount equal to the product of (x) the
First Year Target, multiplied by (y) 1.07 (the “Second
Year Target”);
(3) with
respect to the Third Bonus Year, an amount equal to the product of (x) the
Second Year Target, multiplied by (y) 1.07 (the “Third
Year Target”);
and
(4) with
respect to the Fourth Bonus Year, an amount equal to the product of (x) the
Third Year Target, multiplied by (y) 1.07 (the “Fourth
Year Target”).
(F) “York
Operating Profit” means
the Adjusted Operating Profit for the fiscal year ending September 30, 2006
minus the Operating Profit.
(b) Upon the
occurrence of a Bonus Acceleration Event, an amount equal to
(i) $15,000,000 minus (ii) (A) the amount paid by the Buyer under
Section 3.1.1 of the Purchase Agreement plus (B) the aggregate amount
paid by the Company to the Pool Participants from the Bonus Pools prior to such
Bonus Acceleration Event, shall be immediately due and payable to the Pool
Participants employed immediately prior to such Bonus Acceleration Event in
accordance with the Bonus Allotted Share of each. Each of the following shall be
a “Bonus
Acceleration Event”:
(i) If while
Employee or ▇▇▇▇▇ ▇▇▇▇▇▇▇ is President of the Company, his authority, duties or
responsibilities as President are materially diminished or reduced by the
Company for reasons other than a failure of the Company to meet the Performance
Standards (as hereinafter defined); or
(ii) the
employment of Employee or ▇▇▇▇▇ ▇▇▇▇▇▇▇ is terminated (A) by the Company
other than (x) for Cause (as defined in their respective employment
agreements with the Company, each dated the date hereof (each a “▇▇▇▇▇▇▇
Employment Contract”)) or
(y) pursuant to Section 2.01 or 2.02 of the applicable ▇▇▇▇▇▇▇ Employment
Contract, or (B) by Employee or ▇▇▇▇▇ ▇▇▇▇▇▇▇, respectively, for Good
Reason (as defined in the applicable ▇▇▇▇▇▇▇ Employment Contract);
or
(iii) any of
the following shall have occurred: a sale or other disposition of all or
substantially of the assets or operations of the Company; a sale or other
disposition of a material portion of the assets or operations of the Company to
the extent it reasonably could be expected to materially affect the ability to
achieve one or more Operating Profit Targets; (provided, that
such sale or disposition of a material portion of the assets or operations shall
not be considered a Bonus Acceleration Event if prior to such sale or other
disposition ▇▇▇▇▇▇▇▇ provides written notice to Employee and ▇▇▇▇▇ ▇▇▇▇▇▇▇ that
such sale or disposition is intended and seeking confirmation that the sale or
disposition will not constitute a Bonus Acceleration Event for purposes of this
Section 1.04(b), and Employee and ▇▇▇▇▇ ▇▇▇▇▇▇▇ each fails to provide to
▇▇▇▇▇▇▇▇ written notice within fifteen days after receipt of such notice that he
reasonably expects such sale or other disposition to materially affect the
ability to achieve one or more Operating Profit Targets); a direct or indirect
sale of the Company; any “person,” including a “group” (as those terms are used
in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934, as
amended (the “Exchange
Act”), but
excluding ▇▇▇▇▇▇▇▇, any entity controlled by or under common control with
▇▇▇▇▇▇▇▇, any employee benefit plan of ▇▇▇▇▇▇▇▇ or any such entity becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of ▇▇▇▇▇▇▇▇ representing a majority of either (A) the
combined voting power of ▇▇▇▇▇▇▇▇’ then outstanding securities or (B) the shares
of ▇▇▇▇▇▇▇▇’ common stock then outstanding (in either such case other than as a
result of an acquisition of securities directly from ▇▇▇▇▇▇▇▇); or any
consolidation or merger of ▇▇▇▇▇▇▇▇ in which the stockholders of ▇▇▇▇▇▇▇▇
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as that term is defined in Rule
13d-3 under the Exchange Act), directly or indirectly, shares representing in
the aggregate 50% or more of the combined voting power of the securities of the
corporation issuing cash or securities in the consolidation or merger (or of its
ultimate parent corporation, if any); or any sale, lease, exchange or other
transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of ▇▇▇▇▇▇▇▇.
(c) The
“Performance
Standards” shall
be deemed satisfied unless the Company’s Adjusted Operating Profit for any two
consecutive fiscal years beginning not sooner than the fiscal year ending
September 30, 2006 shall have declined by more than 15% per year from the prior
fiscal year’s Adjusted Operating Profit. For this purpose, the Company’s
Adjusted Operating Profit for the fiscal year ending September 30, 2005 shall be
the Adjusted Operating Profit for the Company for that year, calculated to the
extent the Transaction is completed before September 30, 2005 on a pro forma
stand-alone basis as if the Transaction has not occurred, plus the product of
(x) Adjusted Business Operating Profit, multiplied by (y) 1.33.
(i) “Adjusted
Business Operating Profit” means
the net income of the Business for the nine months ending September 30, 2005,
calculated to the extent the Transaction is completed before September 30, 2005
on a pro
forma
stand-alone basis as if the Transaction had not occurred, excluding (i) any
provision for interest expense or income taxes, and (ii) all extraordinary,
non-recurring items (as determined in good faith with the agreement of Employee
or ▇▇▇▇▇ ▇▇▇▇▇▇▇, if such person is then President, and if neither is President,
with the agreement of Employee). If the Transaction is completed before
September 30, 2005, (i) all costs associated with negotiating and implementing
the transactions contemplated by the Purchase Agreement, including business
integration costs shall be excluded from the calculation of Adjusted Business
Operating Profit and (ii) in calculating Adjusted Business Operating Profit, all
administrative and financial services performed by ▇▇▇▇▇▇▇▇ or its Affiliates
for the Company (including without limitation accounting, accounts receivable
processing, accounts payable processing, payroll processing, human resources and
benefits support services, retirement and pension plan administration), shall be
charged as an expense at an amount not to exceed the present cost to the
Business of any such service.
1.05. Employee
Benefits. At all
times during the term of Employee’s employment hereunder, Employee shall
(a) be covered by such major medical, group life, disability insurance,
hospitalization or health benefit plans and qualified or non-qualified
retirement plans as are available generally to executive-level personnel of the
Company (including plans of its parent, ▇▇▇▇▇▇▇▇ International Corporation or
any successor parent entity) and (b) be covered by such vacation, illness,
fringe benefit programs and similar plans and policies contained in the employee
handbook of the Company (or its parent, ▇▇▇▇▇▇▇▇ International Corporation or
any successor parent entity), to the extent Employee is eligible under the terms
thereof.
1.06. Other
Interests.
Employee agrees, during the period of his employment by the Company, to devote
substantially all of his business time, energy and best efforts to the business
and affairs of the Company and its affiliates and not to engage, directly or
indirectly, in any other business or businesses, whether or not similar to that
of the Company, except with the consent of the Board or as set forth on
Schedule 1.06 hereto.
The foregoing notwithstanding, the parties recognize and agree that Employee may
engage in passive personal investment and charitable activities that do not
conflict with the business and affairs of the Company or interfere with
Employee’s performance of his duties hereunder.
1.07. Duty
of Loyalty.
Employee acknowledges and agrees that he owes a fiduciary duty of loyalty to act
at all times in the best interests of the Company, subject to Employee’s ability
to enforce his rights under this Agreement. In keeping with such duty, Employee
shall make full disclosure to the Company of all business opportunities
pertaining to the Company’s business and shall not appropriate for Employee’s
own benefit business opportunities concerning the Company’s
business.
ARTICLE
II
TERMINATION
2.01. Illness,
Incapacity. If
during the term of Employee’s employment hereunder Employee shall be prevented,
in the Company’s reasonable judgment, from effectively performing his duties
hereunder by reason of illness or disability for a consecutive period of 180
days during any twelve month period, then the Company may, by written notice to
Employee, terminate Employee’s employment hereunder. Upon delivery to Employee
of such notice, Employee’s employment and all obligations of the Company under
Article I hereof shall forthwith terminate; provided that the Company shall
immediately pay to Employee an amount equal to all Base Salary and other
benefits earned and accrued and customarily paid under the Company’s standard
policies (but specifically excluding any rights under Section 1.04 hereof, the
entitlement to which shall be governed by such Section) through and including
the date of termination (and reimbursement for any expenses incurred through and
including the date of such termination) and provided,
further, that
Employee shall remain eligible to receive a Bonus pursuant to the terms and
subject to the conditions of Section 1.04 hereof. The obligations of Employee
under Article IV hereof shall continue notwithstanding termination of Employee’s
employment pursuant to this Section 2.01.
2.02. Death. If
Employee dies during the Term, all obligations of the Company hereunder shall
terminate; provided that the Company shall, within five business days of receipt
of notice of Employee’s death, pay to Employee’s estate an amount equal to
(i) all Base Salary and other benefits earned and accrued through and
including the date of termination (and reimbursement for any expenses incurred
through and including the date of Employee’s death). If the death occurs during
a Bonus Year, the Company also shall pay to Employee’s estate, following the end
of the Bonus Year and at the same time as payments are made to other Pool
Participants, an amount equal to the Bonus Allotted Share Employee would have
received if employed throughout the Bonus Year, multiplied by the quotient of
(a) the number of days elapsed in that Bonus Year through and including the
date of death, divided by (b) 365.
2.03. Termination
by the Company for Cause. If the
Company reasonably determines that Employee (a) has engaged to the material
detriment of the Company in gross negligence, gross incompetence or willful
misconduct in the performance of his duties and has failed within a reasonable
period after written notice thereof to correct such conduct, (b) has
repeatedly refused, without proper reason, to perform his duties (including
Employee’s violation of ▇▇▇▇▇▇▇▇’ Code of Conduct for employees) and has failed
within a reasonable period after written notice thereof to correct such conduct,
(c) has committed an act of fraud, embezzlement or willful breach of a
fiduciary duty, in each case to the Company (it being understood that in any
proceeding to interpret or enforce this Agreement, the Company shall bear the
burden of proof in establishing it had the right to terminate Employee pursuant
to this clause (c)), (d) has been convicted of (or pleaded no contest to) a
crime involving fraud or any felony involving moral turpitude, or (e) has
committed a crime of dishonesty or moral turpitude and by reason of publicity
with respect to the same has materially and substantially harmed the Company,
the Company may, by written notice (which notice shall set forth such breach in
reasonable detail) to Employee, terminate Employee’s employment hereunder; the
Company shall promptly pay Employee any compensation accrued but not yet paid
under Section 1.03 hereof through and including the date of such
termination (and reimbursement for expenses incurred through and including the
date of such termination) and, upon such payment, all obligations of the Company
under Article I hereof shall forthwith terminate. The obligations of
Employee under Article IV hereof shall continue notwithstanding termination
of Employee’s employment pursuant to this Section 2.03.
2.04. Termination
by the Company without Cause or by Employee for Good Reason.
Employee’s employment hereunder may be terminated at any time by the Company
without Cause (except for disability or death, which shall be covered by
Sections 2.01 and 2.02 above) by written notice to Employee and Employee
may terminate Employee’s employment with the Company for Good Reason. In the
event of any such termination of employment, (a) the Company shall
immediately pay to Employee (i) an amount equal to all Base Salary and other
benefits earned and accrued and customarily paid under the Company’s standard
policies (but specifically excluding any rights under Section 1.04 hereof, the
entitlement to which shall be governed by such Section) through and including
the date of termination (and reimbursement for any expenses incurred through and
including the date of such termination) and (ii) an amount equal to the
product of (x) Employee’s most recently determined Bonus Allotted Share as
of the date of termination multiplied by (y) $15,000,000 minus (A) the
aggregate amount paid by the Buyer under Section 3.1.1 of the Purchase
Agreement plus (B) the aggregate amount of Bonus Pools previously paid by
the Company pursuant to Section 1.04. The obligations of Employee under Article
IV hereof shall continue notwithstanding termination of Employee’s employment
pursuant to this Section 2.04, but only if and to the extent the Company
(1) notifies Employee within sixty days of the date of termination that the
Company irrevocably commits to make the Subject Payments and to provide the
health-related benefits described in clause (3) below and (2) pays the Employee
an amount equal to his then current Base Salary for and throughout the balance
of the period that would have remained if the Term had Employee’s employment
hereunder not been so terminated, no less frequently than Employee was paid Base
Salary while working for the Company (the “Subject
Payments”) and
(3) for the period that would have remained in the Term had Employee’s
employment hereunder not be so terminated, provides Employee with such
continuing coverage under the health insurance benefit plans and programs
Employee was receiving at the time of such termination of employment. If
termination pursuant to this Section 2.04 occurs at a time when Employee or
▇▇▇▇▇ ▇▇▇▇▇▇▇ is President of the Company, the decision to pay the compensation
and extend the health benefits described in the preceding sentence shall be made
only by the board of directors of the Company or its designee.
For
purposes of this Agreement, “Good
Reason” shall
mean, unless otherwise consented to by Employee, (i) any material reduction
of Employee’s authority, duties and responsibilities, or the assignment to
Employee of duties materially inconsistent with the provisions of Section 1.01
hereof, in either case for reasons other than a failure of the Company to meet
Performance Standards; (ii) a reduction in Base Salary of Employee;
(iii) the relocation of Employee’s office outside of the New York
metropolitan area or (iv) the Company’s material breach of this Agreement
and the failure by the Company to correct such breach within a reasonable period
after written notice thereof by Employee.
2.05. Employee
Termination.
Employee agrees to give the Company sixty days prior written notice of his
voluntary termination of employment with the Company. Following a termination of
employment with the Company by Employee without Good Reason, and effective as of
the date of such termination, any obligations of the Company to Employee
pursuant to Article I hereunder shall cease, other than to provide Employee
with all Base Salary and other benefits earned and accrued and customarily paid
under the Company’s standard policies (but specifically excluding any rights
under Section 1.04 hereof, the entitlement to which shall be governed by such
Section) through and including the date of termination and reimbursement for any
expenses incurred through and including the date of such termination. The
obligations of Employee under Article IV hereof shall continue
notwithstanding termination of Employee’s employment pursuant to this
Section 2.05.
2.06. Deemed
Resignations. Any
termination of Employee’s employment shall constitute an automatic resignation
of Employee as an officer of the Company and each affiliate of the Company, and
an automatic resignation of Employee from the Board (if applicable) and from the
board of directors of any affiliate of the Company and from the board of
directors or similar governing body of any corporation, limited liability
company or other entity in which the Company or any affiliate holds an equity
interest and with respect to which board or similar governing body Employee
serves as the Company’s or such affiliate’s designee or other
representative.
ARTICLE
III
EMPLOYEE’S
ACKNOWLEDGMENTS
As used
in Article III and Sections 4.01, 4.02, 4.05, 4.08 and 4.09, the term
“Company” shall
include The York Group, Inc. and the companies directly or indirectly through
one or more intermediaries controlled by, in control of, or under common control
with, The York Group, Inc.
Employee
recognizes and acknowledges that: (a) in the course of Employee’s
employment by the Sellers, and in the future by the Company, Employee has
acquired and will continue to acquire information which could include, in whole
or in part, information concerning the Company’s sales, sales volume, sales
methods, sales proposals, customers and prospective customers, identity of
customers and prospective customers, identity of key purchasing personnel in the
employ of customers and prospective customers, amount or kind of customers’
purchases from the Company, the Company’s sources of supply, the Company’s
computer programs, system documentation, special hardware, product hardware,
related software development, the Company’s manuals, formulae, processes,
methods, machines, compositions, ideas, improvements, inventions or other
confidential or proprietary information belonging to the Company or relating to
the Company’s affairs (collectively referred to herein as the “Confidential
Information”);
(b) to the extent provided in Article IV hereof, the Confidential
Information is the property of the Company; (c) to the extent provided in
Article IV hereof, the misappropriation or disclosure of the Confidential
Information (other than as directed by the Company) would constitute a breach of
trust and could cause irreparable injury to the Company; and (d) it is
essential to the protection of the Company’s goodwill and to the maintenance of
the Company’s competitive position that, to the extent provided in
Article IV hereof, the Confidential Information be kept secret and that
Employee not disclose the Confidential Information to others (other than as
directed by the Company) or use the Confidential Information to Employee’s own
advantage or the advantage of others. Notwithstanding the foregoing, Employee
will not have any obligation for any disclosure of Confidential Information if
(i) the Company authorizes Employee to disclose such Confidential
Information to third parties by prior written authorization executed by the
Company; (ii) it is or becomes available to the general public in a
publication of general circulation, other than by an act or omission of Employee
or any employee, agent, or other person acting for or on behalf of Employee;
(iii) used in an action or proceeding brought by Employee or the Company in
pursuit of its rights or in exercise of its remedies hereunder or
(iv) required by applicable law or it is ordered to be disclosed by a
court, administrative agency, or other governmental body with jurisdiction over
the parties hereto, provided that, subject to applicable law, Employee will
first have provided the Company with prompt written notice of such required
disclosure and will take reasonable steps to allow the Company to seek a
protective order with respect to the confidentiality of the information required
to be disclosed (Employee will promptly cooperate with and assist the Company in
connection with obtaining such protective order).
Employee
further recognizes and acknowledges that it is essential for the proper
protection of the business of the Company that Employee be restrained to the
extent provided in Article IV hereof (a) from soliciting or inducing
any employee of the Company to leave the employ of the Company, (b) from
hiring or attempting to hire any employee of the Company, (c) from
soliciting the trade of or trading with the customers and suppliers of the
Company for any business purpose other than in connection with Employee’s duties
hereunder, and (d) from competing against the Company for a reasonable
period following the termination of Employee’s employment with the
Company.
ARTICLE
IV
EMPLOYEE’S
COVENANTS AND AGREEMENTS
4.01. Non-Disclosure
of Confidential Information.
Employee agrees to hold and safeguard the Confidential Information in trust for
the Company, its successors and assigns and agrees that he or she shall not,
without the prior written consent of the Company, misappropriate or disclose or
make available to anyone for use outside the Company’s organization at any time,
either during his employment with the Company or subsequent to the termination
of his employment with the Company for any reason, including without limitation
termination by the Company for Cause or without Cause, any of the Confidential
Information, whether or not developed by Employee, except as required in the
performance of Employee’s duties to the Company. Without limitation, Employee
shall not be permitted to remove Confidential Information from Company computer
servers to use for any personal purpose.
Notwithstanding
the above restriction, Employee will not have any obligation for any disclosure
of Confidential Information if (i) the Company authorizes Employee to
disclose such Confidential Information to third parties by prior written
authorization executed by the Company; (ii) it is or becomes available to
the general public in a publication of general circulation, other than by an act
or omission of Employee or any employee, agent, or other person acting for or on
behalf of Employee; (iii) used in an action or proceeding brought by
Employee or the Company in pursuit of its rights or in exercise of its remedies
hereunder or (iv) required by applicable law or it is ordered to be
disclosed by a court, administrative agency, or other governmental body with
jurisdiction over the parties hereto, provided that, subject to applicable law,
Employee will first have provided the Company with prompt written notice of such
required disclosure and will take reasonable steps to allow the Company to seek
a protective order with respect to the confidentiality of the information
required to be disclosed (Employee will promptly cooperate with and assist the
Company in connection with obtaining such protective order).
4.02. Disclosure
of Works and Inventions/Assignment of Patents.
Employee shall disclose promptly to the Company or its nominee any and all
works, inventions, discoveries and improvements authored, conceived or made by
Employee during Term and related to the Company (“Employee
Works”), and
hereby assigns and agrees to assign all his interest therein to the Company or
its nominee. The parties agree that the intent of the foregoing is not to
provide for the Company ownership of personal inventions or materials (like
writings or artwork) created by Employee that do not relate to the Company and
are not created using Company assets. Whenever requested to do so by the
Company, Employee shall execute any and all applications, assignments or other
instruments which the Company shall deem necessary to apply for and obtain
Letters Patent or Copyrights of the United States or any foreign country or to
otherwise protect the Company’s interest in such Employee Works. Such
obligations shall continue beyond the Term with respect to Employee Works
authored, conceived or made by Employee during the Term, and shall be binding
upon Employee’s assigns, executors, administrators and other legal
representatives. Employee agrees that in the event of publication by Employee of
written or graphic materials related to the business or activities of the
Company, the Company will retain and own all rights in said materials, including
right of copyright. The parties agree that the intent of the foregoing is not to
provide for Company ownership of personal inventions or materials (like writings
or artwork) created by the Employee that do not relate to the Company and are
not created using Company assets.
4.03. Business
Opportunities.
Employee agrees to be a loyal employee of the Company. Employee agrees that he
shall not usurp any corporate opportunities of the Company.
4.04. Compliance.
Employee shall be required to adhere to the internal control standards and codes
of conduct as defined by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, established regulatory
standards and published ▇▇▇▇▇▇▇▇’ policies, to the extent applicable by their
terms to Employee.
4.05. Return
of Materials. Upon
the termination of Employee’s employment with the Company for any reason,
including without limitation termination by the Company for Cause or without
Cause, Employee shall promptly deliver to the Company all correspondence,
drawings, blueprints, manuals, letters, notes, notebooks, reports, flowcharts,
programs, proposals and any documents concerning the Company’s customers or
concerning products or processes used by the Company and, without limiting the
foregoing, will promptly deliver to the Company any and all other documents or
materials containing or constituting Confidential Information.
4.06. Restrictions
on Competition.
(a) Employee
covenants and agrees that (i) during the period of Employee’s employment
hereunder, (ii) for three (3) years after the end of the term of this Agreement
under Section 1.02 hereof and (iii) if applicable in accordance with subsections
(b), (c) or (d) below, for an additional period equal to what would have been
the then remaining term of this Agreement had this Agreement not been otherwise
terminated (the “Applicable Term”) plus three (3) years (such total period in
each of subsection (i), (ii) and (iii) above being referred to herein as the
“Non-Compete Period”), Employee shall not engage, directly or indirectly,
whether as principal or as agent, officer, director, employee, consultant,
shareholder, investor, financer or otherwise, alone or in association with any
other person, corporation or other entity, in any Competing Business. For
purposes of this Agreement, the term “Competing Business” shall mean any person,
corporation or other entity which manufactures, markets or sells caskets, urns,
memorials or cremation equipment.
(b) If the
Employee voluntarily ceases employment with the Company, including as set forth
under Section 2.05 hereof, Employee shall remain subject to Section 4.06(a) for
the Non-Compete Period without any further payment due by the Company to
Employee beyond the payments required under Section 2.05.
(c) If
Employee is terminated pursuant to Section 2.04, Employee shall remain subject
to Section 4.06(a) for the Non-Compete Period, to the extent provided
therein.
(d) If
Employee is terminated pursuant to Section 2.01 or Section 2.03, Employee shall
remain subject to Section 4.06(a) for the Non-Compete Period without any further
payment due to Employee by the Company beyond the payments requirements under
Section 2.01 or Section 2.03, as the case may be.
Notwithstanding
the restrictions contained in this Section 4.06, Employee may own, directly
or indirectly, solely as an investment, (A) securities of any such entity
which are traded on any national securities exchange or NASDAQ if Employee
(y) is not a controlling person of, or a member of a group which controls
such entity; and (z) does not, directly or indirectly own 2% or more of any
class of securities of such entity or (B) interests in mutual funds or
similar pooled accounts.
4.07. Non-Solicitation
of Customers and Suppliers.
Employee agrees that while employed hereunder he shall not, directly or
indirectly, solicit the trade of, or trade with, any customer, prospective
customer or supplier of the Company with respect to the manufacture or sale of
caskets, urns, memorials or cremation products for any business purpose other
than for the benefit of the Company. Employee further agrees that following the
termination of Employee’s employment with the Company, to the same extent and
for the same period (if any) that the Employee continues to be subject to the
restrictions of Section 4.06, Employee shall not, directly or indirectly,
solicit the trade of, or trade with, any customers or prospective customers or
suppliers of the Company with respect to the manufacture or sale by the Company
of caskets, urns, memorials or cremation products, or the supplies necessary to
manufacture the same.
4.08. Non-Solicitation
of Employees.
Employee agrees that following termination of Employee’s employment with the
Company, and to the same extent and for the same period (if any) that the
Employee continues to be subject to the restrictions of Section 4.06, Employee
shall not, directly or indirectly, solicit or induce, or attempt to solicit or
induce, any employee of the Company to leave the Company for any reason
whatsoever, or hire any such employee. This Section 4.08 will not prohibit
Employee from engaging in general advertising or solicitation not specifically
targeted at any one or more employees of the Company and shall not prohibit
Employee from hiring any employee of the Company that contacts Employee as a
result of such general advertising or solicitation.
4.09. Non-Disparagement. During
Employee’s employment with the Company and following any termination of
employment with Company, (a) Employee agrees not to disparage, either
orally or in writing, the Company, any of its business, products, services or
practices, or any of their directors, officers, agents, representatives,
stockholders, employees or affiliates and (b) the Company agrees not to,
and agrees to cause its directors, officers, agents, representatives,
stockholders, employees and affiliates not to, disparage Employee, either orally
or in writing.
ARTICLE
V
EMPLOYEE’S
REPRESENTATIONS AND WARRANTIES
5.01. No
Prior Agreements.
Employee represents and warrants that he is not a party to or otherwise subject
to or bound by the terms of any contract, agreement or understanding which in
any manner would limit or otherwise affect his ability to perform his
obligations hereunder, including without limitation any contract, agreement or
understanding containing terms and provisions similar in any manner to those
contained in Article IV hereof. Employee further represents and warrants
that his employment with the Company will not require him to disclose or use any
confidential information belonging to prior employers or other persons or
entities.
5.02. Employee’s
Abilities.
Employee acknowledges that it would cause the Company serious and irreparable
injury and cost if Employee were to use his ability and knowledge in competition
with the Business in breach of the obligations contained in
Article IV.
5.03. Remedies. In the
event of a breach by Employee of the terms of this Agreement, the Company shall
be entitled, if it shall so elect, to institute legal proceedings to obtain
damages for any such breach, or to enforce the specific performance of this
Agreement by Employee and to enjoin Employee from any further violation of this
Agreement and to exercise such remedies cumulatively or in conjunction with all
other rights and remedies provided by law. Employee acknowledges, however, that
the remedies at law for any breach by him of the provisions of this Agreement
may be inadequate and that the Company shall be entitled to injunctive relief
against him in the event of any breach.
ARTICLE
VI
MISCELLANEOUS
6.01. Authorization
to Modify Restrictions. It is
the intention of the parties that the provisions of Article IV hereof shall
be enforceable to the fullest extent permissible under applicable law, but that
the unenforceability (or modification to conform to such law) of any provision
or provisions hereof shall not render unenforceable, or impair, the remainder
thereof. If any provision or provisions hereof shall be deemed invalid or
unenforceable, either in whole or in part, this Agreement shall be deemed
amended to delete or modify, as necessary, the offending provision or provisions
and to alter the bounds thereof in order to render it valid and
enforceable.
6.02. Entire
Agreement. This
Agreement and the Purchase Agreement represent the entire agreement of the
parties with respect to the subject matter hereof and this Agreement may be
amended only by a writing signed by each of them; provided that any such
amendment which affects Section 1.04 hereof shall require the prior written
consent of (i) Employee, in his capacity as President of the Company, or
(ii) if Employee no longer is President, ▇▇▇▇▇ ▇▇▇▇▇▇▇, provided that he is
then employed by the Company, or (iii) if Employee is no longer President
and ▇▇▇▇▇ ▇▇▇▇▇▇▇ is not then employed by the Company, each of the individuals
set forth on Schedule 1.03 hereto
that are then employed by the Company.
6.03. Governing
Law. This
agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the principles of conflict of laws
thereof.
6.04. Jurisdiction
Venue and Service of Process. Each
party (a) agrees that any suit, action or proceeding arising out of or relating
to this Agreement shall be brought solely in the state or federal courts of
Pittsburgh, Pennsylvania or New York, New York; (b) consents to the
exclusive jurisdiction of each such court in any suit, action or proceeding
relating to or arising out of this Agreement; (c) waives any objection that
it may have to the laying of venue in any such suit, action or proceeding in any
such court; and (d) agrees that service of any court paper may be made in
such manner as may be provided under applicable laws or court rules governing
service of process.
6.05. Counterparts,
Section Headings. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute one and the
same instrument. The section headings of this Agreement are for convenience of
reference only and shall not affect the construction or interpretation of any of
the provisions hereof.
Signature
page follows.
16
NYA
735080.3
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this
Agreement to be executed the day and year first above written.
________________________________
▇▇▇▇▇
▇▇▇▇▇▇▇
Address:
________________________________
________________________________
________________________________
THE YORK
GROUP, INC.
By: __________________________
Name:
Title: