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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Agreement, dated as of July 7, 2000, is by and between CMI
INDUSTRIES, INC., a Delaware corporation (the "Company"), and JOSEPH L. GORGA
(the "Executive").
BACKGROUND STATEMENT
Executive is the President and Chief Executive Officer of the Company.
The parties hereto are parties to an employment agreement dated January 1, 1996
between the Company and Executive, as amended by Amendment No. 1 dated
September, 1997 and by Amendment No. 2 dated March 14, 2000 (collectively, the
"Existing Agreement"). The parties desire to enter into this agreement to
extend, modify and restate the Existing Agreement and to provide for the
continued employment of Executive by the Company.
AGREEMENT
In consideration of the mutual promises set forth below and other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:
1. Restatement. This Agreement supersedes the Existing Agreement
in its entirety, which is hereby terminated, effective as of July 7, 2000 (the
"Effective Date"), and as of the Effective Date neither of the parties shall
have any further rights or obligations thereunder. From and after the Effective
Date, the terms and conditions of the Executive's employment shall be governed
by this Agreement.
2. Employment and Duties.
(a) General. The Company hereby employs Executive as
President and Chief Executive Officer of the Company and Executive
hereby accepts such employment, upon the terms and conditions herein
set forth. In such capacity, Executive shall perform all duties and
services inherent or incident to the position, such duties as may be
delineated by the Company's Bylaws, and such other duties commensurate
with Executive's titles and position as may be assigned to Executive
from time to time by the Board of Directors of the Company. If elected
or appointed, Executive shall also serve as a director or officer of
any of the Company's subsidiaries or affiliated companies and, if
elected, will serve as a member of the Board of Directors or committees
of the Board of Directors of the Company, without further compensation.
(b) Exclusive Services. Throughout the Period (as defined
in paragraph 3 below), except as may from time to time be otherwise
agreed in writing by the Company or unless prevented by ill health,
Executive shall devote his full-time working hours to his duties
hereunder, shall exclusively and faithfully serve the Company, shall in
all respects conform to and comply with the lawful and reasonable
directions and instructions given
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to him by the Board of Directors of the Company, and shall use his best
efforts to promote and serve the interests of the Company.
(c) No Other Employment. Throughout the Period, Executive
shall not render services, directly or indirectly, to any other person
or organization for which he receives compensation without the consent
of the Board of Directors of the Company or otherwise engage in
activities that would interfere significantly with the faithful or
competent performance of his duties hereunder.
3. Term of Employment. The term of Executive's employment under
the terms of this Agreement shall be for an initial period of three (3) years,
commencing on the Effective Date and extending through and including the third
anniversary of the Effective Date (the "Initial Period"), provided, however,
that the term of employment hereunder, if not sooner terminated, shall continue
after the third anniversary of the Effective Date for additional one-year
periods unless at least ninety (90) days prior to the expiration of the then
current term, either the Company or Executive delivers written notice to the
other of its or his desire not to extend the term of Executive's employment
hereunder (the Initial Period, including the extension thereof, if any, is
herein referred to as the "Period," provided, however, that the Period shall
terminate when Executive's employment hereunder terminates).
4. Compensation and Other Benefits. Subject to the provisions of
this Agreement, the Company shall pay and provide the following compensation and
other benefits to Executive during the Period as compensation for services
rendered hereunder. The Company shall be entitled to deduct or withhold all
taxes and charges that the Company may be required to deduct or withhold from
Executive's compensation and benefits.
(a) Base Salary. The Company shall pay to Executive an
annual base salary (the "Base Salary") at the rate of $450,000 per
annum, payable monthly in arrears on the Company's regularly scheduled
payroll dates. The Base Salary will be reviewed not less than annually
by the Compensation Committee of the Board of Directors of the Company
and may be increased, but not decreased.
(b) Incentive Compensation. Executive shall be entitled
to participate in the Company's incentive compensation plan, and in any
revised or substituted plan or other compensation program implemented
by the Company in lieu of the incentive compensation plan currently in
effect.
(c) Employee Benefit Plans. Subject to applicable
eligibility requirements, Executive shall be provided throughout the
Period the opportunity to participate in those pension and welfare
plans, programs and arrangements generally made available to executives
of the Company (including any incentive compensation plan, the
"Plans"). The Company shall have the right to modify or terminate any
Plans or to substitute new Plans.
(d) Vacation and Holiday Pay. Responsibilities
permitting, Executive shall be entitled to four (4) weeks paid vacation
per year, plus paid holidays in accordance with
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the Company's policy. Executive may carry forward and use in the
following year any unused vacation time; provided that vacation time
may not be carried forward more than one year and Executive will not be
entitled to any payment for unused time.
(e) Special Incentive Compensation. In recognition of
Executive's efforts in helping the Company achieve certain strategic
objectives, the Company shall pay to Executive $100,000 within ten (10)
days of the execution and delivery of this Agreement. In addition, the
Company shall pay Executive a $50,000 bonus in the event the Company
sells or otherwise disposes of substantially all of its assets deployed
in the automotive fabrics business of the Chatham Division of the
Company in one or more transactions approved by the Board of Directors
of the Company. For the avoidance of doubt, to be entitled to the full
bonus, substantially all of the assets associated with the woven
fabrics automotive business, the circular knit fabrics automotive
business and the woven velour fabrics automotive business must all be
sold or otherwise disposed of. Notwithstanding the foregoing, the Board
of Directors of the Company shall consider paying and may in its
discretion agree to pay Executive a portion of the bonus upon
completion of the sale of less than substantially all of the
aforementioned assets. Payment of any amount due under this paragraph
shall be made within fifteen (15) days of the completion of such
transaction or transactions regarding such sale or disposition.
5. Expenses. During the Period, the Company shall pay on behalf
of Executive (or reimburse Executive for) reasonable and necessary business
expenses incurred by Executive at the request of, or on behalf of, the Company
in the performance of his duties pursuant to this Agreement. In addition, the
Company will continue to pay or reimburse Executive's club expenses on the basis
heretofore adopted by the parties under the Existing Agreement. Executive shall
file such expense reports with respect thereto as required by the Company's
policies.
6. Termination of Employment.
(a) Resignation by Executive; Termination for Cause.
(i) Except as otherwise provided in paragraph
6(e) below, if prior to the expiration of the Period,
Executive resigns from his employment hereunder or his
employment is terminated by the Company for Cause, as defined
in subparagraph 6(a)(ii) hereof, Executive shall not be
entitled to receive any further compensation under paragraph 4
hereof. Without limiting the generality of the foregoing,
Executive shall not be entitled to receive any compensation
under the Company's incentive compensation plan for the fiscal
year in which the effective date of resignation or termination
for Cause occurs or to participate in any Plans with respect
to future periods after the effective date of such resignation
or termination. However, Executive shall be entitled to
receive the following:
(1) Base Salary to the extent accrued
as of the effective date of such resignation or
termination.
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(2) Vested benefits under any Plan as
of the termination date in accordance with the terms
of such Plan.
(ii) Termination for "Cause" shall mean
termination of Executive's employment with the Company by the
Board of Directors of the Company because of (A) any act or
omission that constitutes a material breach by Executive of
any of his obligations or agreements under this Agreement or
the failure or refusal of Executive to perform any duties
reasonably required hereunder after notification by the Board
of Directors of such breach, failure or refusal and failure of
Executive to correct such breach, failure or refusal within
ten days of such notification (other than by reason of the
incapacity of Executive due to physical or mental illness), or
(B) the committing by Executive of a felony, or (C) the
perpetration by Executive of a dishonest act or common law
fraud against the Company or any of its affiliates, or (D) the
impairment of Executive's capacity or performance due to
alcohol or other substance abuse, or (E) any other act or
omission that is materially detrimental to the financial
condition or business reputation of, or is otherwise
materially injurious to, the Company or any affiliate thereof.
(iii) The effective date of Executive's
resignation under this paragraph 6(a) shall be the earlier of
two weeks after receipt by the Company of written notice of
resignation or the date set forth in such resignation. The
effective date of termination of employment by the Company
under this paragraph 6(a) shall be the date specified in a
written notice of termination (which date shall be no earlier
than the date of furnishing such notice), or if no such date
is specified therein, the date of receipt by Executive of such
written notice of termination.
(b) Termination Without Cause.
(i) Subject to the provisions hereinafter set
forth, if, prior to the expiration of the Period, Executive's
employment is terminated by the Company without Cause,
Executive shall not be entitled to receive any further
compensation under paragraph 4 hereof, but Executive shall be
entitled to receive the following:
(1) Base Salary accrued as of the
termination date.
(2) The greater of the following two
amounts:
(A) An amount equal to the Base
Salary that would have accrued (at the then
current Base Salary rate) over the remainder
of the Period if Executive had not been
terminated, payable over the remainder of
the Period in equal monthly installments on
the Company's regularly scheduled payroll
dates commencing on the first pay period to
occur following the last payment under
clause (1) above; or
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(B) An amount equal to one year's
Base Salary (at the then current Base Salary
rate), payable over one year in equal
monthly installments on the Company's
regularly scheduled payroll dates commencing
on the first pay period to occur following
the last payment under clause (1) above.
(3) The health care and life insurance
benefits coverage provided to Executive at his date
of termination shall be continued at the same level
and in the same manner as if his employment had not
terminated (subject to the customary changes in such
coverages if Executive reaches age 65 or similar
events), beginning on the date of such termination
and ending on the date the last payment is due under
clause (2) above; and any additional coverages
Executive had at termination, including dependent
coverage, will also be continued for such period on
the same terms based on the same proportionate share
of total cost of each such coverage as is being paid
by Executive at the time of such termination.
(4) Any bonus payable under an
incentive compensation or other Plan for the fiscal
year in which the termination is effective, pro rated
based on the number of days from the first day of
such fiscal year to and including the date of
termination. Any pro rated bonus payable hereunder
shall be paid on the applicable date provided for in
the Plan.
(5) Vested benefits under any other
Plan as of the termination date in accordance with
the terms thereof.
(ii) If, following a termination of employment
without Cause, Executive breaches the provisions of paragraph
7 hereof, Executive shall not be eligible, as of the date of
such breach, for the payment of any further benefits under
clauses (2) and (3) of subparagraph 6(b)(i) above, and all
obligations and agreements of the Company to pay such benefits
shall thereupon cease.
(iii) In addition to the amounts provided for in
subparagraph 6(b)(i) above, the Company shall pay to Executive
the amount, if any, which when added to the other amounts
payable to Executive under this subparagraph 6(b), will place
Executive in the same after-tax position as if the excise tax
penalty of Section 4999 of the Internal Revenue Code of 1986,
as amended, or any successor statute of similar import, did
not apply to any of the amounts payable under this paragraph
6(b), including this subparagraph 6(b)(iii). Amounts payable
under this subparagraph 6(b)(iii) shall be paid not less than
14 business days prior to the date Executive must pay any
portion of such excise tax penalty, whether by estimated tax
payment or otherwise.
(c) Death or Disability. If Executive dies prior to the
expiration of the Period, his beneficiary or estate shall be entitled
to receive a pro rata portion of the Base Salary and a pro rata portion
of any incentive compensation bonus, at the rates paid to Executive
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pursuant to subparagraph 3(a) hereof at the date of death, for a period
of 90 days following such date of death. If Executive suffers from a
Permanent Disability (as hereinafter defined) prior to the expiration
of the Period, the Company shall be entitled to terminate this
Agreement by notice and Executive shall be entitled to receive a pro
rata portion of the Base Salary and a pro rata portion of any incentive
compensation bonus, at the rates paid to Executive pursuant to
subparagraph 3(a) hereof at the date of Permanent Disability, for a
period of 180 days following such date of Permanent Disability. Except
as otherwise provided above and except for the right to receive vested
benefits under any Plan in accordance with the terms of such Plan,
Executive shall not be entitled to receive any further compensation
under paragraph 3 hereof after the date of his death or Permanent
Disability. "Permanent Disability" shall mean Executive's permanent
disability as defined in the Company's disability insurance policy then
in effect, or, if there is no insurance policy then in effect, as
defined in the Company's employee disability policy in effect on the
Effective Date.
(d) Expiration of Term. Except as otherwise provided in
this subparagraph 6(d), in the event either Executive or the Company
gives written notice of non-renewal of this Agreement pursuant to
paragraph 3 hereof, following expiration of the Period, Executive shall
not be entitled to receive any further compensation under paragraph 4
hereof and, except as provided in the following sentence, shall not be
entitled to any severance or termination payments. Notwithstanding the
foregoing, during the six-month period following expiration of the
Period while Executive is employed by the Company:
(i) In the event Executive resigns or the
Company terminates Executive with Cause, then subparagraph
6(a) shall apply to such resignation or termination even
though the Period has expired.
(ii) In the event the Company terminates
Executive without Cause, then subparagraph 6(b) shall apply to
such termination even though the Period has expired.
(iii) In the event a "Change of Control" (as
defined below) occurs while Executive is employed by the
Company, then subparagraph 4(e) and subparagraph 6(e) shall
apply even though the Period has expired.
(e) Change of Control.
(i) Notwithstanding the foregoing provisions of
this paragraph 6, if a Change of Control occurs during the
Period (or within six months after the expiration of the
Period while Executive is employed by the Company) and either
(x) the Company terminates Executive's employment with the
Company within one year after the Change of Control other than
for "Good Cause" (as hereinafter defined) or in connection
with his death or Permanent Disability; or (y) Executive
resigns within one year after the Change of Control for "Good
Reason" (as hereinafter defined), then Executive shall not be
entitled to receive any further
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compensation under paragraph 4 hereof, but Executive shall be
entitled to receive the following:
(1) Base Salary accrued as of the
termination date.
(2) An amount equal to two years' Base
Salary (at the then current Base Salary rate),
payable over one year in equal monthly installments
on the Company's regularly scheduled payroll dates
commencing on the first pay period to occur following
the last payment under clause (1). Notwithstanding
the foregoing, (x) in the event the Change of Control
is as described in clause (C) of the definition
thereof, then the amounts payable under this clause
(2) shall be paid in their entirety upon occurrence
of the underlying event that the stockholders voted
in favor of; and (y) in the event Executive shall
have resigned for Good Reason within seven days after
the occurrence of a Change of Control (or in the case
of changes of control based upon a stockholder vote,
the occurrence of the underlying event that the
stockholders voted in favor of), then the amounts
payable under this clause (2) shall be paid in their
entirety upon occurrence of the Change of Control or
the underlying event as the case may be.
(3) The health care and life insurance
benefits coverage provided to Executive at his date
of termination shall be continued for a two year
period at the same level and in the same manner as if
his employment had not terminated (subject to the
customary changes in such coverages if Executive
reaches age 65 or similar events), beginning on the
date of such termination; and any additional
coverages Executive had at termination, including
dependent coverage, will also be continued for such
period on the same terms based on the same
proportionate share of total cost of each such
coverage as is being paid by Executive at the time of
such termination. Notwithstanding the foregoing, (x)
in the event the Change of Control is as described in
clause (C) of the definition thereof, then the
benefits due under this clause (3) shall be fully
funded upon occurrence of the underlying event that
the stockholders voted in favor of; and (y) in the
event Executive shall have resigned for Good Reason
within seven days after the occurrence of a Change of
Control (or in the case of changes of control based
upon a stockholder vote, the occurrence of the
underlying event that the stockholders voted in favor
of), then the benefits due under this clause (3)
shall be fully funded upon occurrence of the Change
of Control or the underlying event as the case may
be.
(4) Except as provided below, any bonus
payable under an incentive compensation or other Plan
for the fiscal year in which the termination is
effective, pro rated based on the number of days from
the first day of such fiscal year to and including
the date of termination. Any pro rated bonus payable
hereunder shall be paid on the applicable date
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provided for in the Plan. In the event Executive
resigns during the first year following a Change of
Control for Good Reason as defined in clause (A) or
(B) of the definition thereof, then the amount of
bonus to be paid under any incentive compensation
Plan then in effect shall be double the maximum
amount to which Executive would be entitled to
thereunder for that year, regardless of whether the
Company achieves the required results required to
earn the maximum payments thereunder, and the bonus
amount shall be payable within seven days of the
termination of employment.
(5) Vested benefits under any other
Plan as of the termination date in accordance with
the terms thereof.
(ii) If, following such a termination or
resignation, Executive breaches the provisions of paragraph 7
hereof, Executive shall not be eligible, as of the date of
such breach, for the payment of any further benefits under
clauses (2) and (3) of subparagraph 6(e)(i) above, and all
obligations and agreements of the Company to pay such benefits
shall thereupon cease.
(iii) In addition to the amounts provided for in
subparagraph 6(e)(i) above, the Company shall pay to Executive
the amount, if any, which when added to the other amounts
payable to Executive under this subparagraph 6(e), will place
Executive in the same after-tax position as if the excise tax
penalty of Section 4999 of the Internal Revenue Code of 1986,
as amended, or any successor statute of similar import, did
not apply to any of the amounts payable under this paragraph
6(e), including this subparagraph 6(e)(iii). Amounts payable
under this subparagraph 6(e)(iii) shall be paid not less than
14 business days prior to the date Executive must pay any
portion of such excise tax penalty, whether by estimated tax
payment or otherwise.
For purposes of this subparagraph, a termination of Executive's employment by
the Company without Good Cause subject to this subparagraph 6(e) shall be deemed
to have occurred even if a Change of Control has not occurred if the termination
without Good Cause occurs at the request of or pursuant to an agreement with a
third party who has taken steps reasonably calculated to effect a Change of
Control, or otherwise in connection with or in anticipation of a Change of
Control. For purposes of this Agreement, the following definitions shall apply:
"Change of Control" shall mean any of the following:
(A) The acquisition by any person, entity or "group,"
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (other than by
any employee benefit plan of the Company which acquires beneficial
ownership of voting securities of the Company) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50% or more of either the then outstanding shares of Common Stock or
the combined voting power of the Company's then outstanding voting
securities entitled to vote
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generally in the election of directors. Notwithstanding the foregoing
provisions of this subparagraph (A), the redemption by the Company
prior to the Effective Date of Common Stock of the Company held by the
"MLCP Investors" (as defined in the Amended and Restated Stockholders
Agreement dated as of February 14, 1992, as amended, among the Company
and other signatories thereto), shall not be deemed a Change in Control
under this subparagraph (A).
(B) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which the shares of the Company's voting stock outstanding immediately
prior to such reorganization, merger or consolidation do not constitute
or become exchanged for or converted into more than 50% of the combined
voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated Company's then outstanding
voting securities.
(C) Approval by the stockholders of the Company of a
liquidation or dissolution of the Company or of the sale of all or a
majority of the revenue producing assets of the Company considered on a
consolidated basis.
(D) Approval by the Board of Directors of the Company of
the sale or disposition of 60% or more of the Company Assets (as
hereinafter defined) in one or more transactions. "Company Assets"
shall mean the revenue producing assets of the Company, considered on a
consolidated basis, as of the Effective Date and any revenue producing
assets acquired by the Company subsequent to the Effective Date. For
all purposes of this subparagraph (D), the Company Assets shall be
determined by reference to the book value of such assets as shown on
the Company's financial statements.
"Good Reason" shall mean:
(A) The assignment to Executive of any duties
inconsistent and in diminution in any respect with Executive's then
current position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities, or any other
action by the Company which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith
and which is remedied by the Company promptly after receipt of notice
thereof given by Executive; or
(B) A reduction in the overall level of Executive's
compensation or benefits; or
(C) The Company's requiring Executive to be based at any
office or location other than the office at which he is based on the
Effective Date, except for travel reasonably required in the
performance of his responsibilities; or
(D) Any purported termination by the Company of
Executive's employment other than for Good Cause; or
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(E) Any failure by the Company to comply with and satisfy
paragraph 10(b) of this Agreement; or
(F) If after the sale or disposition of 60% or more of
the Company Assets in one or more transactions, Net Sales (as
hereinafter defined) are reduced by more than 60%. "Net Sales" shall
mean the quarterly net sales of the Company, considered on a
consolidated basis, as reported in the Company's quarterly report on
Form 10-Q as filed with the Securities and Exchange Commission. The
amount of a reduction in Net Sales shall be determined by comparing Net
Sales for the fiscal quarter ending July 1, 2000 with the Net Sales for
the first full fiscal quarter commencing after the sale or other
disposition of Company Assets.
For purposes of this Agreement, any good faith determination of "Good
Reason" made by Executive shall be conclusive.
"Good Cause" shall mean and be limited to (A) an act or acts of
personal dishonesty taken by Executive and intended to result in substantial
personal enrichment of Executive at the expense of the Company, (B) repeated
violations by Executive of Executive's obligations as an employee of the Company
which are demonstrably willful and deliberate on Executive's part and which are
not remedied in a reasonable period of time after receipt of written notice from
the Company, or (C) the conviction of Executive of a felony.
7. Noncompetition; Noninterference and Nondisclosure.
(a) General. This Agreement is being entered into by
Executive in consideration of the Company's continued employment of
Executive pursuant to this Agreement. Executive expressly acknowledges
that he has and will continue to have special knowledge, contacts and
expertise with respect to the Restricted Business (as defined below),
and that the Company would not employ him, or make the expenditures
necessary to enable Executive to perform the duties incident to his
employment by the Company, without obtaining the covenants and
agreements of Executive set forth in this paragraph 7, which Executive
acknowledges and agrees reflect reasonable restrictions necessary and
appropriate to protect the interests of the Company.
(b) Modification of Definitions. Executive acknowledges
that from time to time Executive and the Company may agree to change
the definition of Restricted Business or Territory (as defined below).
Any such changes will be binding upon Executive.
(c) Noncompetition. Executive acknowledges that as a member of
the Office of the President of the Company and Senior Vice President
and Chief Executive Officer of the Company, he has and will have
executive responsibility for the business and operations of the
Company, throughout the states of Alabama, Arizona, California,
Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Iowa,
Kansas, Louisiana, Massachusetts, Maryland, Michigan, Mississippi,
Missouri, New Jersey, New York,
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North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island,
South Carolina, Tennessee, Texas, Vermont, Virginia and Washington
(hereinafter the "Territory") and that it is reasonable, and necessary,
for the Company to protect itself on such basis. For so long as
Executive is employed by the Company and continuing through the
Restricted Period (as defined below), Executive covenants and agrees
that in the Territory he will not, unless he receives the prior written
consent of the Company, directly or indirectly:
(i) have any interest in (whether as owner,
consultant, officer, director or otherwise) (but excluding an
interest by way of employment only);
(ii) act as agent, broker or distributor for, or
adviser or consultant to; or
(iii) be employed as an executive or hold an
executive position in
any business (without regard to the form in which conducted) which is
engaged, or which he reasonably knows is undertaking to become engaged,
in the Territory in the business of (1) manufacturing and selling
greige woven fabrics; (2) designing, manufacturing or selling wide
elasticized knit fabrics produced in warp knit styles or circular knit
styles for use in, among other things, intimate apparel, foundations,
swimwear, bodywear and other activewear; (3) designing, manufacturing
or selling narrow elasticized fabrics for use in, among other things,
intimate apparel, swimwear and medical uses; (4) designing,
manufacturing or selling upholstery fabrics for use in the
transportation and automotive markets; or (5) designing, manufacturing
or selling blankets, mattress pads, electric mattress pads, fringed
throws, afghans or infant bedding products (collectively, the
"Restricted Business"). For purposes of this Agreement, the Restricted
Period shall mean (x) in the case of a resignation or termination for
Cause subject to paragraphs 6(a) or 6(d)(i) or a termination subject to
paragraph 6(c) (in the case of a Permanent Disability), a period of 24
months after the date of the resignation or termination; (y) in the
case of a resignation or termination subject to paragraphs 6(d)(iii) or
6(e), a period of 12 months after the date of the resignation or
termination; or (z) in the case of a resignation or termination subject
to paragraphs 6(b) or 6(d)(ii), the period during which payments are to
be made to Executive pursuant to subparagraph 6(b)(i)(2) hereof,
without regard to the possible application of subparagraph 6(b)(ii)
hereof. Except as expressly provided in the preceding sentence with
respect to certain resignations and terminations described in paragraph
6(d) hereof, there will be no Restricted Period if the term of this
Agreement expires without renewal pursuant to paragraph 3 hereof.
(d) Noninterference. During the Restricted Period,
Executive shall not, whether for his own account or for the account of
any other individual, partnership, firm, corporation or other business
organization or entity (other than the Company), solicit or endeavor to
entice away from the Company, any subsidiary or affiliate of the
Company known by Executive to be a subsidiary or an affiliate of the
Company (an "Affiliate") or otherwise interfere with the relationship
of the Company or any Affiliate with, any person who is employed by or
associated with the Company or any Affiliate (including, but not
limited to, any independent sales representatives or organizations) or
any person or entity
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who is, or was within the then most recent 12-month period, a customer
or client of the Company or any Affiliate located within the Territory.
(e) Nondisclosure. Executive recognizes that the services
to be performed by him hereunder are special, unique and extraordinary
in that, by reason of his employment, hereunder, he may acquire or has
acquired confidential information and trade secrets concerning the
operations of the Company or its Affiliates, the use or disclosure of
which could cause the Company substantial loss and damages that could
not be readily calculated and for which no remedy at law would be
adequate. Accordingly, Executive covenants and agrees with the Company
that he will not at any time, except in performance of Executive's
obligations to the Company hereunder or with the prior written consent
of the Board of Directors of the Company, directly or indirectly,
disclose any secret or confidential information that he may learn or
has learned by reason of his association with the Company, or any
predecessors to its business, or use any such information to the
detriment of the Company or any of its Affiliates. The term
"confidential information" includes, without limitation, information
not previously disclosed to the public or to the trade (provided that
disclosure to a governmental agency under compulsion or in compliance
with applicable laws, rules or regulations shall not be disclosure to
the public or the trade for purposes of this subsection) with respect
to the Company's or any of its Affiliates' products, manufacturing
processes, facilities and methods, research and development, trade
secrets, know-how and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, cost sheets,
customer lists, marketing plans or strategies, financial information
(including the revenues, costs or profits associated with any of the
Company's or any of its Affiliates' products), business plans,
prospects or opportunities. Executive understands and agrees that the
rights and obligations set forth in this subparagraph 7(e) shall
survive the Restricted Period and Executive's employment hereunder and
shall continue in the case of confidential information constituting a
trade secret, indefinitely, and in the case of other confidential
information, for a period of five years after the date of his
termination of employment.
(f) Exclusive Property. Executive confirms that all
confidential information is and shall remain the exclusive property of
the Company. All business records, papers and documents kept or made by
Executive relating to the business of the Company shall be and remain
the property of the Company. Upon the termination of his employment
with the Company for any reason or upon the request of the Company at
any time, Executive shall promptly deliver to the Company, and shall
not retain copies of, any written materials not previously made
available to the public or records or documents made by Executive or
coming into his possession concerning the business or affairs of the
Company, excluding records relating exclusively to the terms and
conditions of his employment relationship with the Company. Executive
understands and agrees that the rights and obligations set forth in
this subparagraph 7(f) are perpetual and, in any case, shall extend
beyond the Restricted Period and Executive's employment hereunder.
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(g) Stock Ownership. Nothing in this Agreement shall
prohibit Executive from acquiring or holding any voting securities of
any company or other business entity, provided that (i) Executive does
not participate in the operations of any such company, (ii) the voting
securities are listed on a national securities exchange or quoted on
the automated quotation system of the National Association of
Securities Dealers, Inc., and (iii) Executive and members of his
immediate family do not own, at any time during the Restricted Period,
more than 5% of the issued and outstanding voting securities of such
entity.
(h) Modification. It is understood and agreed by the
parties hereto that should any portion, provision or clause of the
foregoing be deemed too broad to permit enforcement to its full extent,
then it shall be enforced to the maximum extent permitted by law, and
Executive hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such
restriction.
(i) Independent. The covenants and agreements set forth
in the foregoing subparagraphs shall be deemed and shall be construed
as separate and independent covenants and agreements, and should any
part or provision of such covenants and agreements be held invalid,
void or unenforceable by any court of competent jurisdiction, such
invalidity, voidness, or unenforceability shall in no way render
invalid, void, or unenforceable any other part or provision thereof or
any separate covenant not declared invalid, void, or unenforceable; and
this Agreement shall in that case be construed as if the void, invalid
or unenforceable provisions were omitted.
8. Intellectual Property.
(a) Communication. Executive shall communicate to the
Company promptly and fully all inventions, discoveries, designs,
processes, improvements, works, documents, brochures, sales literature,
computer software, patents, copyrights, trademarks, trade names and
similar information (hereinafter collectively called "Intellectual
Property") made or conceived by Executive (whether solely by Executive
or jointly with others and whether involving equipment, products,
systems, services or procedures) during the Period (i) that are along
the lines of or are related to the present or prospective business,
work, investigations, or other activity of the Company, (ii) that
result from, are suggested by, or are related to any work that
Executive may do in connection with his employment pursuant to this
Agreement, or (iii) that result in whole or in part from work performed
by Executive during time for which he is paid as an employee or
independent contractor of the Company.
(b) Assistance. Executive shall assist the Company and
its designees during and subsequent to the Period in every proper way
(without charge to the Company, but without expense to Executive) in
obtaining and maintaining, for the benefit of the Company and its
designees, patents and registrations in any and all countries for the
Intellectual Property.
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<PAGE> 14
(c) Assignment. Executive shall assign to the Company all
of Executive's right, title and interest in and to Intellectual
Property to make such Intellectual Property the sole and exclusive
property of the Company or its designees.
(d) Records. Executive shall keep and maintain adequate
and current written records of all Intellectual Property, in the form
of notes, sketches, drawings, samples or reports relating to them,
which records shall be and remain the property of the Company at all
times.
9. Injunctive Relief. Without intending to limit the remedies
available to the Company, Executive acknowledges that a breach of any of the
covenants contained in paragraphs 7 and 8 hereof may result in material
irreparable injury to the Company for which there is no adequate remedy at law,
that it will not be possible to measure damages for such injuries precisely and
that, in the event of such a breach or threat thereof, the Company shall be
entitled to obtain a temporary restraining order and/or a preliminary or
permanent injunction restraining Executive from engaging in activities
prohibited by this Agreement or such other relief as may be required to
specifically enforce any of the covenants in this Agreement.
10. Nonassignability; Binding Agreement.
(a) By Executive. Neither this Agreement nor any right,
duty, obligation or interest hereunder shall be assignable or delegable
by Executive without the Company's prior written consent; provided,
however, that nothing in this paragraph shall preclude Executive from
designating any of his beneficiaries to receive any benefits payable
hereunder upon his death, or the executors, administrators, or other
legal representatives, from assigning any rights hereunder to the
person or persons entitled thereto.
(b) By the Company. Except as provided in the following
sentence, this Agreement nor any of the Company's rights and
obligations hereunder may be assigned, delegated or transferred by it
without Executive's prior written consent. Any business entity
succeeding to substantially all of the business of the Company by
purchase, merger, consolidation, sale of assets or otherwise, shall be
bound by and shall adopt and assume this Agreement and the Company
shall obtain the assumption of this Agreement by such successor.
(c) Binding Effect. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto, any successors to or
assigns of the Company and Executive's heirs and the personal
representatives of Executive's estate.
11. Attorneys' Fees. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which Executive may reasonably
incur as a result of any contest following any Change of Control (regardless of
the outcome thereof) by the Company or others of the validity or enforceability
of, or liability under, any provision of this Agreement or any guarantee of
performance thereof (including any legal fees and expenses incurred as a result
of any contest by Executive about the amount of any payment pursuant to
paragraph 6(e) of this
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<PAGE> 15
Agreement), plus in each case interest at the applicable Federal rate provided
for in Section 7872(f)(2) of the Internal Revenue Code of 1986, as amended.
12. Severability. If the final determination of a court of
competent jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected, that any
term or provision hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired and (b) the invalid or unenforceable
term or provision shall be deemed replaced by a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
13. Amendment; Waiver. This Agreement may not be modified, amended
or waived in any manner except by an instrument in writing signed by both
parties hereto. The waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any other provision of this Agreement, or of any subsequent breach by such
party of a provision of this Agreement.
14. Governing Law. All matters affecting this Agreement, including
the validity thereof, are to be governed by, interpreted and construed in
accordance with the laws of the State of New York.
15. Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, certified mail, return receipt
requested, or overnight or special courier, to the address specified below the
parties' respective signatures or to such other address as may be specified by
notice from time to time by the Company or Executive. A notice shall be deemed
given, if by personal delivery or overnight or special courier, on the date of
such delivery or, if by certified mail, on the date shown on the applicable
return receipt.
16. Supersedes Previous Agreements. This Agreement constitutes the
entire agreement of the parties, and supersedes all prior or contemporaneous
negotiations, commitments, agreements and writings, with respect to the subject
matter hereof.
17. Counterparts. This Agreement may be executed by either of the
parties hereto in counterpart, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.
18. Headings. The headings of paragraphs and subparagraphs herein
are included solely for convenience of reference and shall not control the
meaning or interpretation of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
CMI INDUSTRIES, INC.
By: /s/ James A. Ovenden
------------------------------
James A. Ovenden
Executive Vice President and Chief
Financial Officer
Address:
1301 Gervais Street
Columbia, South Carolina 29201
/s/ Joseph L. Gorga [L.S.]
-----------------------------------
Joseph L. Gorga
Address:
4102 Brambletye Drive
Greensboro, NC 27407
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