EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of September 21, 2005 (the "Effective Date") is by
and between ▇▇▇▇ Corporation, a Delaware corporation ("Company"), and ▇▇▇ ▇.
▇▇▇▇, a Texas resident ("Executive").
WHEREAS, Executive and Company desire to enter into an employment agreement
which sets forth the terms and conditions for Executive's continued, employment
with the Company;
NOW, THEREFORE, in consideration of the foregoing recital and of the mutual
covenants set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Employment; Term. Executive agrees to enter into the continued employment
of the Company, and the Company agrees to employ Executive, on the terms and
conditions set forth in this Agreement. The term of Executive's employment under
this Agreement (the "Term") will commence on the Effective Date and, subject to
its earlier termination as provided in Section 4, will continue through July 31,
2006; provided, however, that the Term will automatically be extended on a
day-by-day basis effective on the three hundred sixty fifth (365th) day prior to
the expiration of the Term (so that the remaining term will always be at least
three hundred sixty five (365) days) until such date as either the Company or
Executive delivers written notice to the other party of the Company's or
Executive's, as the case may be, intention not to extend the Term.
2. Position; Duties.
(a) During the Term (including as it may be extended hereunder), Executive
will serve as the Executive Vice President and Chief Operating Officer of
the Company. It is the intention of the parties that throughout the Term
Executive will serve as a member of the Board of Directors (the "Board") of
the Company. Executive will report directly to the Chief Executive Officer
and will have all authorities, duties and responsibilities customarily
exercised by an individual serving in those positions in a corporation of
the size and nature of the Company and will not be assigned any duties or
responsibilities that are materially inconsistent with, or that materially
impair her ability to discharge, the foregoing duties and responsibilities.
At the request of the Board, Executive will serve as an officer, director
or equivalent position of any subsidiary or affiliate of the Company
provided that (i) Executive is indemnified with respect to such service to
the full extent provided in Section 10 and (ii) such service is not
inconsistent with the duties set forth herein.
(b) During the Term, Executive will devote substantially all of her
business time, efforts, skills and abilities and attention to the business
of the Company; provided, however, that Executive (i) may serve on one
board of directors of a publicly traded corporation, (ii) with the consent
of the Board (which will not be unreasonably withheld), may serve on other
boards of directors of business entities, (iii) may engage in charitable,
educational or community affairs, including serving on the board of
directors of any charitable, educational or community organization and (iv)
may manage her personal investments, provided that such activities do not
materially interfere with the performance of her duties hereunder.
3. Compensation.
(a) Base Salary. During the Term, the Company will pay to Executive an
annual base salary of not less than $650,000 ("Base Salary"), which will be
payable in accordance with the Company's normal payroll procedure for other
senior executives. The Base Salary will be reviewed annually by the Board
and will be subject to upward adjustment, but not downward adjustment
unless the downward adjustment is generally applicable to other senior
executives, at the discretion of the Board (or an authorized Committee or
representative thereof). After any such adjustment, the term "Base Salary"
as utilized in this Agreement will thereafter refer to the adjusted amount.
Without limiting the foregoing, the initial Base Salary shall be
retroactive to August 1, 2005.
(b) Incentive Bonus. During the Term, Executive will be eligible to receive
an annual incentive bonus as determined under the Company's Executive Bonus
Program, established by the Board, in its discretion. The annual target
bonus ("Target Bonus") for Executive will be 80% of Executive's Base Salary
and the maximum annual bonus that Executive will be entitled to receive is
150% of her Base Salary. The annual incentive bonus will be paid to
Executive in accordance with the terms and conditions of the Executive
Bonus Program.
(c) Equity and Long-Incentive Awards. (i) For fiscal year 2006, Executive
will be granted the following equity awards:
(A) As soon as practicable following the Company's annual meeting of
stockholders in November 2005, the Company will grant Executive 15,000
shares of restricted stock, or units with respect thereto, pursuant to
the Company's 2003 Stock Incentive Plan, as amended from time to time
or any successor plan (the "Equity Plan"), with such grant vesting
based upon the attainment of the performance goals attached hereto as
Annex 1 by September 5, 2008.
(B) As soon as practicable following the Company's annual meeting of
stockholders in November 2005, the Company will grant Executive 15,000
shares of restricted stock, or units with respect thereto, pursuant to
the Equity Plan, with such grant vesting, except as otherwise provided
herein, on September 5, 2008, provided that Executive is on such
vesting date, and at all times between the date hereof and the vesting
date, a full-time employee of the Company.
(C) As of September 6, 2005, or such other date proximate thereto as
may be selected by the Company, the Company will grant Executive
pursuant to the Equity Plan a ten-year option to purchase 75,000
shares of the Company's common stock. The exercise price will be the
Fair Market Value (as defined in the Equity Plan) of the common stock
on the date of grant and, except as otherwise provided in Section 5,
the option will vest over four years, with one-fourth (1/4) of the
shares underlying the option vesting on the first, second, third and
fourth anniversaries of the date of grant.
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(ii) For fiscal years 2007 and thereafter, Executive will be entitled
to participate in equity and other long-term incentive award programs of
the Company, including, without limitation, the Equity Plan, on a basis
generally consistent with that of other senior-level executives.
(d) Vacation. Executive will be entitled to a reasonable vacation of not
less than four paid weeks each year of the term of this Agreement.
(e) Executive Perquisites; Benefit; Expenses.
(i) Executive will be entitled to receive executive perquisites and
fringe and other benefits on a basis which is no less favorable than the
basis on which such perquisites and benefits are provided to any other
senior executive (including for this purpose, to the extent applicable,
executive's family) under any of the Company's plans, policies,
arrangements or programs in effect from time to time. Such benefits will
include comprehensive healthcare, dentalcare, life insurance and other
welfare benefit plans that are no less favorable than the plans in force on
the Effective Date.
(ii) The Company will reimburse Executive for such reasonable and
necessary out-of-pocket business expenses as may be incurred by her in the
performance of her duties hereunder. The Company will also reimburse
Executive for, or at Executive's request pay directly on Executive's
behalf, all of the legal fees and other expenses incurred by her in
connection with the negotiation and drafting of this Agreement, such amount
not to exceed $40,000
(f) Supplemental Retirement Plan. Executive will be eligible to participate
in the Company's supplemental retirement plan on terms no less favorable
than those available to other senior executives.
(g) Tax Withholding. The Company has the right to deduct from any
compensation payable to Executive under this Agreement social security
(FICA) taxes and all Federal, state and local income taxes and charges as
are required by applicable law and regulations.
4. Termination. Notwithstanding the provisions of Section 1 hereof, but
subject to the provisions of Section 5 hereof, the Term and Executive's
employment hereunder will terminate upon expiration of the Term or, if earlier,
as follows:
(a) Death or Disability. The Term will terminate upon the death or
Disability of Executive. For purposes of this Agreement, "Disability" means
Executive's inability to perform her duties and responsibilities as
contemplated under this Agreement for a period of more than 120 consecutive
days due to physical, mental or emotional incapacity or impairment. A
determination of Disability will be made by a physician acceptable to both
Executive and the Company; provided that if Executive and the Company
cannot agree as to a physician, each will select a physician and the two
physicians will select a third physician, whose determination as to
Disability will be binding on Executive and the Company. Executive, her
legal representative or any adult member of her immediate family will have
the right to present to the Company and such physician such information and
arguments on her behalf as Executive or they deem appropriate, including
the opinion of her personal physician. Executive's employment will not be
terminated due to Disability until the physician has delivered a written
opinion certifying such Disability and a written notice of termination for
Disability has been delivered by the Company or Executive, as the case may,
to the other party.
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(b) Termination for Cause. The Company may terminate the Term at any time
for "Cause." For purposes of this Agreement, "Cause" means any of the
following:
(i) Executive's conviction of (A) a felony within the meaning of US
Federal or state law or (B) a crime involving moral turpitude under U.S.
Federal or state law;
(ii) Executive's commission of an act constituting fraud, deceit, or
material misrepresentation with respect to the Company;
(iii) Executive's becoming addicted to any alcoholic, controlled or
illegal substance or drug, which addiction materially interferes with the
performance of her duties hereunder;
(iv) Executive's embezzlement of Company assets or funds; or
(v) in carrying out her duties for the Company, Executive engages in
conduct that constitutes willful gross neglect or willful gross misconduct
resulting, in either case, in material economic harm to the Company, unless
Executive believed in good faith that such action or non-action was in, or
not opposed to, the best interests of the Company.
Anything herein to the contrary notwithstanding, Executive may not be
terminated for Cause within the meaning of clauses (b)(v) above unless
written notice stating the basis for termination is provided to Executive
and she is given at least ten days notice to cure the neglect or conduct
that is the basis of such claim and, if Executive fails to cure such
neglect or conduct (or such neglect or conduct is incurable), Executive is
afforded an opportunity to be heard before the full Board (at which
Executive may be accompanied by counsel) and, after such hearing, there is
a majority vote of all members of the Board (other than Executive) to
terminate her employment for Cause which vote is communicated to Executive
in writing.
(c) Termination Without Cause. The Company may terminate the Term at any
time by delivering a written termination notice to Executive.
(d) Termination by Executive. Executive may terminate the Term at any time
by delivering a written termination notice to the Company; provided,
however, that Executive will be deemed to have terminated her employment
for Good Reason if Executive terminates her employment for any of the
following reasons:
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(i) a reduction by the Company in Executive's Base Salary unless such
reduction is generally applicable to other senior executives or the
Company's failure to increase (within 12 months of Executive's last
increase in Base Salary) Executive's then current Base Salary, unless such
failure is the result of (A) a salary freeze uniformly applied to other
senior executives or (B) Executive's failure to meet preestablished and
objective performance criteria;
(ii) a reduction in the annual Target Bonus, equity award or other
short-term or long-term compensation opportunities that are made available
to Executive or a modification of one or more of such programs that
substantially diminishes the value of Executive's awards under the
Company's short-term or long-term incentive plans unless such reduction or
modification is generally applicable to other senior executives of the
Company;
(iii) the Company's principal executive offices are moved to a
location more than fifty (50) miles from its current location or Executive
is required to be based anywhere other than the Company's principal
executive offices;
(iv) the assignment to Executive of duties materially inconsistent
with her position as Executive Vice President and Chief Operating Officer
of the Company or the material diminution in her positions, duties or
authorities as in effect immediately prior to such diminution, or any
interference with her carrying out her duties so that she is unable to
carry out her duties as contemplated on the Effective Date;
(v) the failure of the Company to reappoint or reelect Executive to
the positions of Executive Vice President and chief Operating Officer or
the removal of Executive from any such position;
(vi) a change in the Company's reporting structure so that Executive
no longer reports directly to the Chief Executive Officer or, where
appropriate, the Board;
(vii) a Change in Control (as defined herein) (which will be a
termination event whether or not Executive consented to such Change of
Control), provided that Executive's employment is terminated by the Company
without cause or by the Executive for Good Reason within two years
following a Change of Control;
(viii) a failure of the Company to require any successor to the
Company or to all or substantially all of the business or assets of the
Company to expressly assume the obligations of the Company under this
Agreement; or
(ix) a breach by the Company of a material provision of this Agreement
or any other material plan or program covering Executive.
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I5. Termination Benefits.
(a) General. In the event that the Term is terminated for any reason
(including expiration), in addition to any other payments or benefits owed
to Executive under this Section 5, the Company will pay to Executive, her
estate or her representatives, as the case may be, any accrued, but unpaid
salary, bonuses, expenses or benefits as of the date of termination. In the
event that the Company terminates Executive's employment for Cause or
Executive terminates her employment without Good Reason, then Executive
will not be entitled to any additional payments or benefits under this
Section 5 other than those described in this Section 5(a). In the event of
the expiration of the Term, the only benefits that Executive shall be
entitled to under this Agreement in connection with the expiration are
those provided in this Section 5(a).
(b) Death or Disability. If Executive's employment terminates as a result
of death or Disability, the Company will (i) continue to pay (in accordance
with it's normal payroll procedures) Executive's Base Salary at the time of
termination of her employment due to Disability or death, as the case may
be, to Executive (or her estate or representatives, as the case may be) for
a period of twelve (12) months following Executive's death or Disability,
(ii) provide healthcare, dental and welfare benefits to Executive or
Executive's family, as the case may be, for a period of twelve (12) months
following Executive's death on the same basis as such benefits were
provided during Executive's employment hereunder, (iii) any unvested stock
options, equity awards or other long-term incentive awards will immediately
vest and such stock options and awards will continue to be exercisable for
the remainder of their respective terms and (iv) the Company will pay the
amounts set forth in Section 5(a).
(c) Termination Without Cause or for Good Reason. In the event that (x) the
Company terminates Executive's employment without Cause or (y) Executive
terminates her employment for Good Reason, then, except as provided in
Section 5(d), Executive will be entitled to the following benefits:
(i) Severance Payments. The Company will pay to Executive an amount
equal to two times the sum of (v) the then current Base Salary and (w) the
greater of (I) the Target Bonus for the year of termination or (II) the
average of the immediately preceding two years' annual incentive bonuses
received by Executive;
(ii) Benefits. During the greater of (x) the twenty-four (24) month
period following the date of termination or (y) the number of months,
including fractional months, remaining in the Term, the Company will
continue to provide Executive (and, as applicable, her family) with the
benefits, including but not limited to healthcare, dental and life
insurance, set forth in Section 3(e);
(iii) Equity and Long-Term Incentive Awards. All unvested stock
options and other equity and long-term incentive awards will immediately
vest and all such vested options and awards involving exercise of rights
will continue to be exercisable for the remainder of their respective
terms;
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(iv) SERP. Executive will receive an additional two (2) years of
service and age credit for purposes of determining the benefits payable to
Executive under the SERP; and
(v) Other Amounts. Executive will receive the payments set forth in
Section 5(a).
(d) Change of Control. If (x) within two years following a Change of
Control or (y) following a Potential Change of Control which is followed
within one (1) year by a Change of Control, Executive terminates her
employment with the Company for Good Reason (as hereinafter defined) or the
Company terminates Executive's employment for any reason other than for
Cause, the Company will pay to, and provide for, Executive the payments and
benefits as set forth in Section 5(c), except that:
(i) for purposes of determining the amount that Executive is entitled
to under Section 5(c)(i), the Base Salary and bonus will be the greatest of
each such amount determined on (x) the date of the Potential Change of
Control, (y) the date of the Change of Control or (z) the date of
Executive's termination of employment and the sum of (v) and (w) as
provided for therein will be multiplied by three rather than two;
(ii) the Company will pay to Executive the actuarial value of the SERP
as of the date of termination (determined in accordance with the actuarial
assumptions then applicable to the SERP as certified by the actuary for the
Company) together with interest at the Applicable Federal Rate for
short-term debt for the period from the date of termination to the date of
payment which will be immediately following the date of termination,
subject to the provisions of Section 5(g); and
(iii) Executive will be entitled to the tax-gross up payment provided
for in Section 6.
In addition, upon the occurrence of a Change of Control, all unvested stock
options and other equity and long-term incentive awards will immediately
vest and all such vested options and awards involving exercise of rights
will continue to be exercisable for the remainder of their respective
terms.
(e) Change of Control. For purposes of this Agreement, "Change of Control"
means the earliest to occur of the following:
(i) any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934, becomes a "beneficial owner," as
such term is used in Rule 13d-3 promulgated under that act, of 20% or more
of the Voting Stock of the Company;
(ii) the majority of the Board consists of individuals other than
incumbent directors, which term means the members of the Board on the
Effective Date; provided that any person becoming a director subsequent to
such date whose election or nomination for election was supported by
two-thirds of the directors who then comprised the incumbent directors will
be considered to be an incumbent director;
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(iii) the Company adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or business of the Company
is disposed of pursuant to a merger, consolidation or other transaction
(unless the stockholders of the Company immediately prior to such merger,
consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned. the Voting
Stock of the Company, all of the Voting Stock or other ownership interests
of the entity or entities, if any, that succeed to the business of the
Company); or
(v) the Company combines with another company and is the surviving
corporation but, immediately after the combination, the stockholders of the
Company immediately prior to the combination hold, directly or indirectly,
50% or less of the Voting Stock of the combined company (there being
excluded from the number of shares held by such stockholders, but not from
the Voting Stock of the combined company, any shares received by affiliates
of such, other company in exchange for stock of such other company).
For purposes of the Change of Control definition, "the Company" will include any
entity that succeeds to all or substantially all, of the business of the Company
and "Voting Stock" will mean securities of any class or classes having general
voting power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation.
(f) Potential Change of Control. "Potential Change of Control" means the
earliest to occur of the following events: (i) the Company enters into an
agreement the consummation of which, or the approval by stockholders of
which, would constitute a Change of Control; (ii) proxies for the election
of members of the Board are solicited by any Person other than the Company;
(iii) any Person publicly announces an intention to take or to consider
taking actions which, if consummated, would constitute a Change of Control;
or (iv) any other event occurs which is deemed to be a Potential Change of
Control by the Board and the Board adopts a resolution to the effect that a
Potential Change of Control has occurred.
(g) Section 409A. It is expressly contemplated by the parties that this
Agreement will conform to, and be interpreted to comply with, Section 409A
of the Code. Unless expressly provided otherwise, all of the payments due
to Executive under this Section 5 will, be made within fifteen (15) days
following the date of termination; provided, however, that if, under
Section 409A of the Code, such payments must be delayed to conform with the
applicable tax rules, the Company will defer any such payment until no
later than one day following the first date upon which such payment may be
made without incurring the tax imposed thereunder; provided, further, that
if Executive incurs any additional tax, interest or penalties under Section
409A, the Company will pay Executive an additional amount so that, after
all taxes on such amount, Executive has an amount equal to such additional
tax.
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(h) Payment in Lieu of Benefits. In the event that Executive and/or her
family is entitled to benefits, such as healthcare, under this Section 5,
to the extent that the Company's plans, programs and arrangements do not
permit a continuation of Executive's and/or her family's participation in a
benefit plan, program or arrangement following her termination of
employment, the Company will pay Executive (and/or her family), no less
frequently than quarterly in advance an amount which, after all taxes on
such amount, is sufficient for her and/or her family to purchase equivalent
benefits.
(i) No Offset. In the event of termination of Executive's employment,
Executive will be under no obligation to seek other employment and there
will be no offset against amounts due to her on account of any remuneration
or benefits from any subsequent employment that she may obtain. The
Company's obligations to make any payment pursuant to, or otherwise perform
its obligations under, this Agreement will not be affected by any offset,
counterclaim or other right that the Company may have against her for any
reason. If, following her termination of employment, Executive obtains, or
is entitled to obtain, healthcare, welfare or similar benefits in
connection with any other employment that provide comparable coverage to
Executive as the one or more of the benefits then being provided by the
Company pursuant to Section 5, the Company will be relieved of the
responsibility to provide or pay for duplicate benefits commencing when
such alternative benefits are commenced by another employer to Executive.
(j) Release. As a condition of receiving any amounts pursuant to Section
5(c) or 5(d), or of accelerated vesting of any equity-based or cash-based
award in connection with the termination of Executive's employment,
Executive agrees to execute a release of claims that she has or may have
against the Company relating to, or arising out of her employment
(including the termination of such employment) with the Company; provided,
however, Executive will not release:
(i) claims that Executive may have against the Company for
reimbursement of ordinary and necessary business expenses incurred by her
during the course of her employment;
(ii) claims that arise after the effective date of the release;
(iii) any rights Executive may have to enforce this Agreement;
(iv) any rights or entitlements that Executive has under any
applicable plan, policy, program, or arrangement of, or other agreement
with, the Company; and
(v) claims for which Executive is entitled to be indemnified under the
Company's Certificate of Incorporation or By-laws or under applicable law
or pursuant to the Company's directors' and officer's liability insurance
policies.
In exchange for such release, the Company will provide a release to
Executive releasing claims the Company and any affiliate have or may have
against Executive relating to, or arising out of, Executive's employment
(including the termination of such employment) with the Company; provided,
however, that the Company will not release claims that arise after the date
the release is executed including any right it has to enforce this
Agreement for any breach following the date of such release.
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6. Gross-Up Payment.
(a) In the event it is determined (pursuant to Section 6(b)) or finally
determined (as defined in Section 6(c)) that any payment, distribution,
transfer, or benefit by the Company, or a direct or indirect subsidiary or
affiliate of' the Company, to or for the benefit of Executive or
Executive's dependents, heirs or beneficiaries (whether such payment,
distribution, transfer, benefit or other event occurs pursuant to the terms
of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 6) (each a "Payment" and
collectively the "Payments") is subject to the excise tax imposed by
Section 4999 of the Code, and any successor provision or any comparable
provision of state or local income tax law (collectively, "Section 4999"),
or any interest, penalty or addition to tax is incurred by Executive with
respect to such excise tax (such excise tax, together with a by such
interest, penalty, and addition to tax, hereinafter collectively referred
to as the "Excise Tax"), then, within ten (10) days after such
determination or final determination, as the case may be, the Company will
pay to Executive (or to the applicable taxing authority on Executive's
behalf) an additional cash payment (hereinafter referred to as the
"Gross-Up Payment") equal to an amount such that after payment by Executive
of all taxes, interest, penalties, additions to tax and costs imposed or
incurred with respect to the Gross-Up Payment (including, without
limitation, any income and excise taxes imposed upon the Gross-Up Payment),
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon such Payment or Payments. This provision is intended to put
Executive in the same position as Executive would have been had no Excise
Tax been imposed upon or incurred as a result of any Payment.
(b) Determination of Gross-Up.
(i) Except as provided in Section 6(c), the determination that a
Payment is subject to an Excise Tax will be made in writing by a nationally
recognized public accounting firm mutually agreeable to the Company and
Executive (the "Accounting Firm"). Such determination will include the
amount of the Gross-Up Payment and detailed computations thereof, including
any assumptions used in such computations. Any determination by the
Accounting Firm will be binding on the Company and Executive.
(ii) For purposes of determining the amount of the Gross-Up Payment,
Executive will be deemed to pay Federal income taxes at the highest
marginal rate of Federal individual income taxation in the calendar year in
which the Gross-Up Payment is to be made. Such highest marginal rate will
take into account the loss of itemized deductions by Executive and will
also include Executive's share of the hospital insurance portion of FICA
and state and local income taxes at the highest marginal rate of individual
income taxation in the state and locality of Executive's residence on the
date that the Payment is made, net of the maximum reduction in Federal
income taxes that could be obtained from the deduction of such state and
local taxes.
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(c) IRS Audit.
(i) Executive will notify the Company in writing of any claim by the
Internal Revenue Service (or any successor thereof) or any state or local
taxing authority (individually or collectively, the "Taxing Authority")
that, if successful would require the payment by the Company of a Gross-Up
Payment. Such notification will be given as soon as practicable but no
later than thirty (30) days after Executive receives written notice of such
claim and will apprise the Company of the nature of such claim and the date
on which such claim is requested to be paid; provided, however, that
failure by Executive to give such notice within such 30-day period will not
result in a waiver or forfeiture of any of Executive's rights under this
Section 6 except to the extent of actual damages suffered by the Company as
a result of such failure. Executive will not pay such claim prior to the
expiration of the 15-day period following the date on which Executive gives
such notice to the Company (or such shorter period ending on the date that
any payment of taxes, interest, penalties or additions to tax with respect
to such claim is due). If the Company notifies Executive in writing prior
to the expiration of such 15-day period (regardless of whether such claim
was earlier paid as contemplated by the preceding parenthetical) that it
desires to contest such claim, Executive will:
(1) provide the Company any information reasonably requested by the
Company relating to such claim;
(2) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including,
without limitation, accepting legal representation with respect to
such claim by an attorney selected by the Company;
(3) cooperate with the Company in good faith in order effectively to
contest such claim; and
(4) permit the Company to participate in any proceedings relating to
such claim;
provided, however, that the Company will bear and pay directly all
attorneys fees, costs and expenses (including additional interest,
penalties and additions to tax) incurred in connection with such contest
and will indemnify and hold Executive harmless, on an after-tax basis, for
all taxes (including, without limitation, income and excise taxes),
interest, penalties and additions to tax imposed in relation to such claim
and in relation to the payment of such costs and expenses or
indemnification.
(ii) Without limitation on the foregoing provisions of this Section
6(c), and to the extent its actions do not unreasonably interfere with or
prejudice Executive's disputes with the Taxing Authority as to other
issues, the Company will control all proceedings taken in connection with
such contest as it relates to the Excise Tax being asserted against
Executive and, in its reasonable discretion, may pursue or forego any and
all administrative appeals, proceedings, hearings and conferences with the
Taxing Authority in respect of such claim and may, at its or in their sole
option, either direct Executive to pay the tax, interest or penalties
claimed and ▇▇▇ for a refund or contest the claim in any permissible
manner, and Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction and
in one or more appellate courts, as the Company will determine; provided,
however, that if the Company directs Executive to pay such claim and ▇▇▇
for a refund, the Company will advance an amount equal to such payment to
Executive, on an interest-free basis, and will indemnify and hold Executive
harmless, on an after basis, from all taxes (including, without limitation,
income and excise taxes), interest, penalties and additions to tax imposed
with respect to such advance or with respect to any imputed income with
respect to such advance, as any such amounts are incurred; and, further,
provided, that any extension of the statute of limitations relating to
payment of taxes, interest, penalties or additions to tax for the taxable
year of Executive with respect to which such contested amount is claimed to
be due is limited solely to such contested amount; and, provided, further,
that any settlement of any claim will be reasonably acceptable to
Executive, and the Company's control of the contest will be limited to
issues with respect to which a Gross- Up Payment would be payable
hereunder, and Executive will be entitled to settle or contest, as the case
may be, any other issue.
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(iii) If, after receipt by Executive of an amount advanced by the
Company pursuant to Section 6(c), Executive receives any refund with
respect to such claim, Executive will (subject to the Company's compliance
with the requirements of this Section 6) promptly pay to the Company an
amount equal to such refund (together with any interest paid or credited
thereof after taxes applicable thereto), net of any taxes (including,
without limitation, any income or excise taxes), interest, penalties or
additions to tax and any other costs incurred by Executive in connection
with such advance, after giving effect to such repayment. If, after the
receipt by Executive of an amount advanced by the Company pursuant to
Section 6(c), it is finally determined that Executive is not entitled to
any refund with respect to such claim, then such advance will be forgiven
and will not be required to be repaid and the amount of such advance will
be treated as a Gross-Up Payment and will offset, to the extent thereof,
the amount of any Gross-Up Payment otherwise required to be paid by the
Company.
(iv) For purposes of this Section 6, whether the Excise Tax is
applicable to a Payment will be deemed to be "finally determined" upon the
earliest of: (1) the expiration of the 15-day period referred to in this
Section 6(c) if the Company has not notified Executive that it intends to
contest the underlying claim, (2) the expiration of any period following
which no right of appeal exists, (3) the date upon which a closing
agreement or similar agreement with respect to the claim is executed by
Executive and the Taxing Authority (which agreement may be executed only in
compliance with this section) or (4) the receipt by Executive of notice
from the Company that it no longer seeks to pursue a contest (which will be
deemed received if the Company does not, within 15 days following receipt
of a written inquiry from Executive, affirmatively indicate in writing to
Executive that the Company intends to continue to pursue such contest).
(d) Underpayment and Overpayment. It is possible that no Gross-Up Payment
will initially be made but that a Gross-Up Payment should have been made,
or that a Gross- Up Payment will initially be made in an amount that is
less than what should have been made (either of such events is referred to
as an "Underpayment"). It is also possible that a Gross-Up Payment will
initially be made in an amount that is greater than what should have been
made (an "Overpayment"). The determination of any Underpayment or
Overpayment will be made by the Accounting Firm in accordance with Section
6(b). In the event of an Underpayment, the amount of any such Underpayment
will be paid to Executive as an additional Gross-Up Payment. In the event
of an Overpayment, Executive will promptly pay to the Company the amount of
such Overpayment together with interest on such amount at the applicable
Federal rate provided for in Section 1274(d) of the Code for the period
commencing on the date of the Overpayment to the date of such payment by
Executive to the Company. Executive will make such payment to the Company
as soon as administratively practicable after the Company notifies
Executive of(a) the Accounting Firm's determination that an Overpayment was
made and (b) the amount to be repaid.
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7. Non-Competition. Executive agrees that during the Term and for a period of
eighteen (18) months following the date of the termination of Executive's
employment with the Company (except in the case of termination in connection
with a Change of Control, in which event for a period of twelve (12) months
following such date of termination) or expiration of the Term, Executive,
directly or indirectly, will not compete with the Company as an officer,
director, employee, partner, consultant or otherwise by providing to any entity
that is engaged in a "Competing Business" services substantially similar to the
services currently being provided by Executive to the Company under this
Agreement. For these purposes, a "Competing Business" means any corporation,
partnership or other entity in which the wholesale or retail sale of jewelry in
the United States represents a significant component of the business engaged in
by such corporation, partnership or entity and Executive's position or function
with such business is significantly related to the wholesale or retail sale of
jewelry. If the Company fails to pay or provide any payments or benefits
required under Section 5 following the termination of Executive's employment
with the Company or expiration of the Term, the provisions of this Section 7
will thereafter be of no force and effect and Executive will not be bound
thereby. Notwithstanding the foregoing, Executive may, directly or indirectly,
own, solely as an investment, securities of any person which are publicly traded
on a national or regional stock exchange or on an over-the-counter market if
Executive does not, directly or indirectly, beneficially own two percent (2%) or
more of any class of securities of such person.
8. Nonsolicitation of Employees. For a period of eighteen (18) months
following the termination of her employment with the Company or expiration of
the Term, Executive will not, on her own behalf or on behalf of any other
person, partnership, corporation or other entity, knowingly solicit, cause
anyone else to solicit or induce any employee of the Company or its subsidiaries
or affiliates (the "Company Group") to leave the employ of the Company Group or
a member of the Company Group to be employed by Executive or an entity with
which she is affiliated. During such period, Executive will not knowingly use or
disclose to any other person information obtained while an employee of the
Company concerning the names and. addresses of the Company's employees.
Notwithstanding the foregoing, Executive may respond to unsolicited third-party
inquiries for references regarding an employee of the Company and may provide a
reference on behalf of a former employee of the Company. If the Company fails to
pay or provide any payments or benefits required under Section 5 following the
termination of Executive's employment with the Company or expiration of the
Term, the provisions of this Section 8 will thereafter be of no force and effect
and Executive will not be bound thereby.
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9. Nondisclosure of Trade Secrets; Company Property.
(a) During the Term, Executive will have access to and become familiar with
various trade secrets and proprietary and confidential information of the
Company Group, including, but not limited to, processes, computer programs,
compilations of information, records, sales procedures, customer
requirements, pricing techniques, customer lists, methods of doing business
and other confidential information (collectively, referred to as "Trade
Secrets") which are owned by members of the Company Group and regularly
used in the operation of their business, and as to which the Company and
other members of the Company Group have taken precautionary measures to
prevent dissemination of such information to persons other than directors,
officers and employees who require such information in the performance of
their respective duties for the Company Group. Executive acknowledges and
agrees that the Trade Secrets (1) are secret and not known in the industry;
(2) give the Company and members of the Company Group an advantage over
competitors who do not know or use the Trade Secrets; (3) are of such value
and nature as to make it reasonable and necessary to protect and preserve
the confidentiality and secrecy of the Trade Secrets; and (4) are valuable,
special and unique assets of the Company Group the disclosure of which
could cause substantial injury and loss of profits and goodwill to the
Company or other members of the Company Group. Executive may not use or
disclose any of the Trade Secrets, directly or indirectly, either during
the term of this Agreement, except in the course of performing her duties
under this Agreement, or thereafter. Notwithstanding the foregoing, the
provisions of this Section 9(a) will not apply (i) if such Trade Secrets
have become public knowledge or known to the relevant trade or industry
other than as a result of an unauthorized disclosure by Executive, (ii) if
disclosure is required by law or by any court, arbitrator, mediator or
administrative or legislative body (including any committee thereof) with
apparent jurisdiction to order Executive to disclose or make available such
information, provided, however that Executive will promptly notify the
Company in writing upon receiving a request for such information and, if
the Company requests, reasonably cooperate with the Company at the
Company's expense in seeking a protective order or other appropriate
protection of such information or (iii) with respect to any other
litigation, arbitration or mediation involving this Agreement, including
but not limited to enforcement of this Agreement.
(b) All files, records, documents, information, data and similar items
relating to the business of the Company, whether prepared by Executive or
otherwise received by her in connection with her employment by the Company,
will remain the exclusive property of the Company. Executive will deliver
such material promptly to the Company upon termination of her employment
with the Company or expiration of the Term; provided, however, that nothing
in this Section 9(b) will prevent Executive from retaining a personal home
computer and papers and other materials of a personal nature, including
personal diaries, calendars and personal rolodexes, personal information
relating to her compensation or relating to the reimbursement of expenses,
personal information that she reasonably believes is needed for tax
purposes and copies of the Company's compensatory plans, programs and
agreements relating to her compensation as an employee.
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10. Indemnification.
(a) The Company agrees that if Executive is made a party to, is threatened
to be made a party to, receives any legal process in, or receives any
discovery request or request for information in connection with, any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "Proceeding"), by reason of the fact that she is or was a
director, officer, employee, consultant or agent of the Company, or is or
was serving at the written request of, or on behalf of, the Company as a
director, officer, member, employee, consultant or agent of another
corporation, limited liability corporation, partnership, joint venture,
trust or other entity, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is Executive's alleged
action in an official capacity while serving as a director, officer,
member, employee, consultant or agent of the Company or other entity,
Executive will be indemnified and held harmless by the Company to the
fullest extent permitted or authorized by the Company's certificate of
incorporation or by-laws or, if greater, by applicable law, against any and
all costs, expenses, liabilities and losses (including, without limitation,
attorneys' fees reasonably incurred, judgments, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement and any
reasonable cost and fees incurred in enforcing her rights to
indemnification or contribution) incurred or suffered by Executive in
connection therewith, and such indemnification will continue as to
Executive even though she has ceased to be a director, officer, member,
employee, consultant or agent of the Company or other entity and will inure
to the benefit of Executive's heirs, executors and administrators. The
Company will reimburse Executive for all costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred by her in
connection with any Proceeding within twenty (20) business days after
receipt by the Company of a written request for such reimbursement and
appropriate documentation associated with these expenses. Such request will
include an undertaking by Executive to repay the amount of such advance if
it will ultimately be determined that she is not entitled to be indemnified
against such costs and expenses; provided that the amount of such
obligation to repay, to the extent permitted by law, will be limited to the
after-tax amount of such advance except to the extent that Executive is
able to offset the taxes incurred on the advance by tax benefits, if any,
attributable to a deduction for repayment.
(b) Neither the failure of the Company (including its Board, independent
legal counsel or stockholders) to have made a determination prior to the
commencement of any proceeding concerning payment of amounts claimed by
Executive under Section 10(a) above that indemnification of Executive is
proper because she has met the applicable standard of conduct, nor a
determination by the Company (including its Board, independent legal
counsel or stockholders) that Executive has not met such applicable
standard of conduct, will create a presumption or inference that Executive
has not met the applicable standard of conduct.
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(c) The Company agrees to continue and maintain a directors' and officers'
liability insurance policy covering Executive at a level, and on terms and
conditions, no less favorable to her than the coverage the Company provides
other similarly-situated executives until such time as suits against
Executive are no longer permitted by law.
(d) Nothing in this Section 10 will be construed as reducing or waiving any
right to indemnification, or advancement of expenses, Executive would
otherwise have under the Company's certificate of incorporation or by-laws
or under applicable law.
11. Arbitration - Exclusive Remedy.
(a) Any controversy, dispute or claim arising out of or relating to this
Agreement, any other agreement or arrangement between Executive and the
Company, Executive's employment with the Company, or the termination
thereof (collectively, the "Covered claims") will be resolved by binding
arbitration, to be held in Dallas, Texas. The arbitration will be held
before three arbitrators, one to be appointed by the Company, a second to
be appointed by Executive, and a third to be appointed by those two
arbitrators. The third arbitrator will act as chairman. Any arbitration may
be initiated by either party by written notice ("Arbitration Notice") to
the other party specifying the subject of the requested arbitration and
appointing that party's arbitrator.
(b) If (i) the non-initiating party fails to appoint an arbitrator by
written notice to the initiating party within ten days after the
Arbitration Notice, or (ii) the two arbitrators appointed by the parties
fail to appoint a third arbitrator within ten days after the date of the
appointment of the second arbitrator, then the American Arbitration
Association, upon application of the initiating party, will appoint an
arbitrator to fill that position.
(c) The arbitration proceeding will be conducted in accordance with the
Commercial Arbitration Rules (and not the National Rules for the Resolution
of Employment Disputes) of the American Arbitration Association. A
determination or award made or approved by at least two of the arbitrators
will be the valid and binding action of the arbitrators. Judgment upon any
arbitration award may be entered and enforced in any court of competent
jurisdiction.
(d) The costs of arbitration (including without limitation attorneys' fees
and other charges of counsel) will be borne by the Company and the
Executive (or any of her beneficiaries) in such proportion as the
arbitrators may deem reasonable. Pending the resolution of any Covered
Claim, Executive (and her beneficiaries) will continue to receive all
payments and benefits due under this Agreement or otherwise.
(e) Without limiting the remedies available to the parties and
notwithstanding the foregoing provisions of this Section 11, Executive and
the Company acknowledge that any breach of any of the covenants or
provisions contained in Sections 7 through 9 could result in irreparable
injury to either of the parties hereto for which there might be no adequate
remedy at law, and that, in the event of such a breach or threat thereof,
the non-breaching party will be entitled to obtain a temporary restraining
order, a preliminary injunction or a permanent injunction restraining the
other party hereto from engaging in any activities prohibited by any
covenant or provision in Sections 7 through 9 or such other equitable
relief as may be required to enforce specifically any of the covenants or
provisions of Sections 7 through 9.
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12. Interpretation of Restrictive Covenant; Severability.
(a) The parties hereto intend that the provisions of Sections 7, 8, and 9
hereof to be enforced to the fullest extent permitted by law. Accordingly,
should a court of competent jurisdiction determine that the scope of any
provision of Section 7, 8 or 9 hereof is too broad to be enforced as
written, the parties intend that a court of competent jurisdiction will be
entitled to reform the provision to such narrower scope as it determines to
be reasonable and enforceable.
(b) If any provision of this Agreement or the application thereof is held
invalid, the invalidity will not affect other provisions or applications of
this Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared
to be severable.
13. Assignment. This Agreement is personal in its nature and. neither of the
parties hereto will, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that in the
event of a merger, consolidation, or transfer or sale of all or substantially
all of the assets of the Company with or to any other individual(s) or entity,
this Agreement will, subject to the provisions hereof, be binding upon and inure
to the benefit of such successor and such successor will discharge and perform
all the promises, covenants, duties, and obligations of the Company hereunder,
and such transferee or successor will be required to assume such obligations by
contract (unless such assumption occurs by operation of law).
14. Number and Gender. Where the context requires, the singular will include
the plural, the plural will include the singular, and any gender will include
all other genders.
15. Section Headings. The section headings of, and titles of paragraphs and
subparagraphs contained in, this Agreement are for the purpose of convenience
only, and they neither form a part of this Agreement nor are they to be used in
the construction or interpretation thereof.
16. Entire Agreement. This Agreement embodies the entire agreement of the
parties hereto respecting the matters within its scope. This Agreement
supersedes all prior and contemporaneous agreements of the parties hereto that
directly or indirectly bear upon the subject matter hereof. Any prior
negotiations, correspondence, agreements, proposals or understandings relating
to the subject matter hereof will be deemed to have been merged into this
Agreement, and to the extent inconsistent herewith, such negotiations,
correspondence, agreements, proposals, or understandings will be deemed to be of
no force or effect, There are no representations, warranties, or agreements,
whether express or implied, or oral or written, with respect to the subject
matter hereof, except as expressly set forth herein. In the event of any
inconsistency between the terms of this Agreement and the terms of any other
Company plan, policy, arrangement or agreement with Executive, the provisions
most favorable to Executive will govern.
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17. Modifications. This Agreement may not be amended, modified or changed (in
whole or in part), except by a formal, definitive written agreement expressly
referring to this Agreement, which agreement is executed by both of the parties
hereto.
18. Waiver. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement will operate
as a waiver thereof, nor will any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise of the same or
of any right, remedy, power or privilege, nor will any waiver of any right,
remedy, power or privilege with respect to any occurrence be construed as a
waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver will be effective unless it is in writing and is signed by
the party asserted to have granted such waiver.
19. Provision that Survive Termination. The terms of this Agreement to the
extent necessary to carry out the intentions of the parties underlying their
respective rights and obligations will survive any termination of this Agreement
(including expiration of the Term) and Executive's employment with the Company.
20. Counterparts. This Agreement may be executed in any number of counterparts,
each of which will be deemed an original as against any party whose signature
appears thereon, and all of which together will constitute one and the same
instrument. This Agreement will become binding when one or more counterparts
hereof, individually or taken together, will bear the signatures of all of the
parties reflected hereon as the signatories. Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.
21. Company's Representations. The Company represents and warrants that (i) the
execution, delivery and performance of this Agreement by the Company has been
fully and validly authorized by all necessary corporate action, (ii) the officer
signing this Agreement on behalf of the Company is duly authorized to do so,
(iii) the execution, delivery and performance of this Agreement does not violate
any applicable law, regulation, order, judgment or decree or any agreement, plan
or corporate governance document to which the Company is a party or by which it
is bound and (iv) upon execution and delivery of this agreement by the parties
hereto, it will be a valid, and binding obligation of the Company enforceable
against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally.
22. Governing Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement, as well as the legal relations
hereby created between the parties hereto, will be governed by and construed
under, and interpreted and enforced in accordance with, the laws of the State of
Delaware, notwithstanding any Delaware or other conflict of law provision to the
contrary.
23. Notices. Any notices, consents, demands, requests, approvals and other
communications to be given under this Agreement by either party to the other
must be in writing and must be either (i) personally delivered, (ii) mailed by
registered or certified mail, postage prepaid with return receipt requested,
(iii) delivered by overnight express delivery service or same-day local courier
service, or (iv) delivered by facsimile transmission, to the address set forth
below, or to such other address as may be designated by the parties from time to
time in accordance with this Section 23:
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If to the Company: ▇▇▇▇ Corporation
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Executive: ▇▇. ▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Notices delivered personally or by overnight express delivery service or by
local courier service are deemed given as of actual receipt. Mailed notices are
deemed given three business days after mailing. Notices delivered by facsimile
transmission are deemed given upon receipt by the sender of the transmission
confirmation.
24. Binding Effect. This Agreement is binding upon the parties hereto, together
with their respective executors, administrators, successors, personal
representatives, heirs and permitted assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
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By: /s/ ▇▇▇ ▇. ▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇ ▇▇▇▇▇
Its: Senior Vice President, Human Resources
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