EXHIBIT 10.5
SEPARATION AND CONSULTING AGREEMENT
This Separation and Consulting Agreement ("AGREEMENT") is entered into as
of September 24, 2001, by and between ELCOR CORPORATION, a Delaware corporation
("ELCOR"), and RICHARD J. ROSEBERY ("RJR").
WHEREAS, RJR will retire from his employment with ELCOR, and retire from
all positions as an officer or director of ELCOR and each of its subsidiaries,
on the Effective Date (as defined below); and
WHEREAS, the parties wish to provide for an orderly separation and maintain
a transitional relationship to ensure that business continues as normal, and
accordingly, ELCOR and RJR have determined that it is in their respective best
interests to enter into this Agreement on the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the representations, promises and
agreements made herein, and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Retirement. RJR will retire from his employment with ELCOR, and retire from
all positions as an officer or director of ELCOR and each of its subsidiaries,
on October 23, 2001, immediately following the conclusion of ELCOR's Board
meetings (the "Effective Date"). As a result, RJR's employment relationship with
ELCOR MANAGEMENT CORPORATION will formally terminate at 11:59 p.m., Dallas time,
on the Effective Date.
2. Benefits.
(a) COBRA. ELCOR agrees to reimburse RJR for the cost of continuation
coverage for RJR's and his spouse's group health insurance benefits under COBRA
through April 30, 2003, or, if earlier, the date that RJR becomes eligible to
participate in the group health care plan offered by another employer. RJR and
his spouse must complete the appropriate forms to elect COBRA coverage. After
April 30, 2003, RJR may continue at his own expense COBRA continuation coverage
for RJR and his spouse for the additional time, if any, required under COBRA,
but the qualifying event for COBRA continuation coverage purposes will be the
Effective Date.
(b) Country Club Membership. ELCOR will transfer the corporate membership
in Bent Tree Country Club currently utilized by RJR into RJR'S individual name
and will reimburse RJR, up to a maximum of Fifteen Thousand Dollars
($15,000.00), for any required fees charged by Bent Tree Country Club to
accomplish such transfer.
(c) Business Publications. RJR will be entitled to continue to receive all
of the current subscriptions to business publications that he currently receives
through ELCOR until current subscriptions expire.
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(d) Vacation Pay. ELCOR agrees to pay to RJR the cash value of any earned
but unused vacation days he has accrued through the Effective Date, including
without limitation carryover vacation days from prior years, in accordance with
ELCOR's current policy. This payment will be made to RJR on October 31, 2001.
(e) Stock Loans. Upon the effectiveness of RJR'S retirement pursuant to
Section 1, any stock loans from ELCOR to RJR and any accrued interest thereon
that are then outstanding under the Elcor Corporation Stock/Loan Plan will be
forgiven, as, the parties acknowledge, is in accordance with the terms of such
Plan.
(f) Additional Benefits. ELCOR acknowledges and agrees that RJR will
continue to be entitled to any vested benefits under benefit plans maintained
for the benefit of ELCOR employees; provided however, that payment, exercise, or
distribution of such benefits, as the case may be, will be made in accordance
with, and subject to, the terms and conditions of the applicable plan and any
applicable agreement. ELCOR and RJR acknowledge that RJR will be eligible to
receive a bonus under the Elcor Corporation Incentive Cash Bonus Plan ("Bonus
Plan") and a cash payment in an amount equal to the amount that would have been
then eligible for loan under the Elcor Stock/Loan Plan (or award under any
restricted stock or other plan adopted as a successor plan to the Stock/Loan
Plan, if any) for the fiscal period ending June 30, 2001, and the fiscal quarter
ending September 30, 2001, if any are payable under the terms of such plans, but
not for any subsequent period. RJR acknowledges that he will not be entitled to
receive an allocation of any ELCOR employer contributions (other than his
elective deferral contributions) under the ELCOR sponsored Deferred Compensation
Plan, the 401(k) plan or ESOP for the current calendar year through and
including the Effective Date. On October 31, 2001, however, ELCOR will pay RJR a
payment equal to seven percent (7%) of the sum of RJR's salary plus bonuses
under the Bonus Plan, if any, due through the Effective Date as provided herein
for periods included in calendar year 2001, less any withholding required by
law, regulation or governmental administrative rules.
3. Return Of Property.
(a) General. As of the Effective Date, RJR will immediately return to ELCOR
all ELCOR owned or leased property in his possession. Such ELCOR property
includes, but is not limited to, all computer equipment, manuals, reports, maps,
files, memoranda and records, customer lists, samples, credit cards, cardkey
passes, door and file keys, software and other corporate property which RJR
received, prepared, helped prepare or obtained in connection with his employment
by ELCOR; provided, however, that RJR will not be required to return to ELCOR
copies of documents evidencing or relating to agreements between RJR and ELCOR,
copies of employee welfare or benefit plans, medical records or information,
documents and reports in the public domain, business publications, RJR's
personal calendar and personal records not containing business information about
ELCOR or its subsidiaries, books and works of art contained in his office,
business awards, and other personalty as agreed by the parties ("Excluded
Property").
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(b) Copies. RJR represents that he has not retained and will not retain any
copies, duplicates, reproductions or excerpts of any ELCOR property not
constituting Excluded Property, whether in physical or electronic form. In the
event of litigation or overtly threatened litigation involving a party, it or he
will be entitled to obtain from the other party copies of any of the foregoing
returned records or retained records, as the case may be, that are directly or
indirectly relevant to such litigation.
4. Terms of Consulting Engagement.
(a) Services. RJR agrees to provide services to ELCOR in the capacity of a
financial consultant. RJR agrees to promote the best interests of ELCOR and to
take no wrongful, inappropriate or dishonest actions that in any way damage the
public image or reputation of ELCOR or its directors, officers, employees or
affiliates. During the Consulting Term (defined below), RJR will be available
for up to two (2) days (16 hours) in any month to consult with ELCOR or its
subsidiaries on an as-needed basis, so long as such requested time does not
conflict with other reasonable plans or obligations of RJR.
(b) Consulting Term. The term of this Agreement will be from the Effective
Date of the Agreement through and including October 23, 2003 (the "Consulting
Term").
5. Consulting Compensation.
(a) Payments. For his service as a consultant, ELCOR will pay to RJR
forty-seven (47) semi-monthly installments, each in the amount of Seven Thousand
Two Hundred Twenty-one and 20/100 Dollars ($7,221.20), less any withholding
required by law, regulation or governmental administrative rules, whether or not
any consulting services are requested or performed. The above amounts will be
paid to RJR on ELCOR'S regularly scheduled paydays. Payments will begin on
November 15, 2001, and will be made on each of the forty-six (46) subsequent
semi-monthly ELCOR paydays.
(b) Certain RJR Responsibilities. RJR will be solely responsible for all of
his withholding taxes, social security taxes, unemployment taxes, and workers'
compensation insurance premiums, if any, required by law, regulation or
governmental administrative rules.
6. Independent Contractor.
(a) General. In performing consulting services for ELCOR for the Consulting
Term pursuant to this Agreement, RJR will act in the capacity of an independent
contractor with respect to ELCOR and its subsidiaries and not as an employee of
any of them. As such, RJR will accept directions issued by the Chief Executive
Officer of ELCOR (or his or her delegate) pertaining to the goals to be attained
and the results to be achieved, but RJR will be solely responsible for the
manner and hours in which RJR performs services. RJR will determine his own
working hours and
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schedule and will not be subject to the ELCOR'S personnel policies and
procedures.
(b) Events and Programs. In conjunction with his provision of services as a
consultant to ELCOR, RJR will be eligible for participation in selected external
investor relations and/or professional development events and programs, if
approved by ELCOR on a case-by-case basis. In connection with any such approved
events and programs and any directions issued by the Chief Executive Officer of
ELCOR (or his/her delegate), ELCOR will reimburse RJR for his reasonable and
documented out-of-pocket expenses associated with such participation, in
accordance with ELCOR'S standard expense reimbursement policies.
(c) Certain Legal Obligations. After the Effective Date: (i) RJR will not
be eligible to participate in any of ELCOR'S or its subsidiaries' employee
welfare or benefit plans, fringe benefit programs, or insurance arrangements,
except as specifically set forth in this Agreement; (ii) ELCOR will not provide
workers' compensation, disability insurance, Social Security or unemployment
compensation coverage or any other statutory benefit to RJR; (iii) RJR will
comply at his expense with all applicable provisions of workers' compensation
laws, unemployment compensation laws, federal Social Security law, the Fair
Labor Standards Act, federal, state and local income tax laws, and all other
applicable federal, state and local laws, regulations and codes relating to
terms and conditions required to be fulfilled by independent contractors and
consultants; (iv) other than as stated in this Agreement, RJR will be solely
responsible and liable for all expenses, costs, liabilities, assessments,
maintenance, insurance, undertakings and other obligations incurred by RJR; and
(v) RJR will not, in any form or fashion, maintain, hold out, represent, or
imply to any other individual or entity that an employee/employer relationship
exists between ELCOR and RJR.
7. Non-disclosure; Conflict of Interest.
(a) Non-disclosure. During his employment with ELCOR and during the
Consulting Term, RJR has had access to and will continue to have access to,
various trade secrets and proprietary and confidential information of ELCOR and
its affiliates consisting of, but not limited to, processes, computer programs,
compilations of information, records, sales procedures, customer requirements,
pricing techniques, financial and marketing information and research, investor
and analyst information, product specifications, warranty information, customer
lists, methods of doing business, and other confidential information which is
regularly used in the operation of ELCOR's or its affiliates' business, but
which is not within the public domain (collectively, "Trade Secrets"). RJR
acknowledges and agrees that the Trade Secrets are valuable, special and unique
assets of ELCOR or its affiliates, the disclosure of which would cause
substantial injury, damage and loss of profits and goodwill. Accordingly, RJR
agrees that he will not use or disclose, directly or indirectly, any of the
Trade Secrets at any time; provided, however, that RJR may disclose Trade
Secrets to directors, officers, and employees of ELCOR and its affiliates who
have a need to know, and as may be otherwise required in the performance of his
consulting duties under this Agreement or by law or legal process. Furthermore,
RJR acknowledges that his employment by ELCOR has been subject to, and
conditioned upon, his agreement to the terms of an Employee Agreement with ELCOR
dated January 6, 1975 (the "Employee Agreement"). RJR ratifies and affirms his
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obligations under the Employee Agreement, including, but not limited to the
provisions of the Employee Agreement regarding COMPANY PRIVATE INFORMATION (as
defined in the Employee Agreement).
(b) No Conflicts of Interest. For and in consideration of the promise made
by ELCOR pursuant to Section 7(c) and in furtherance of the confidentiality and
other obligations undertaken by RJR under this AGREEMENT, RJR agrees (i) that he
will not directly or indirectly provide Trade Secrets to any party whose
products or services are competitive with the products or services manufactured
or sold, or, to RJR's specific knowledge, under active consideration for
manufacture or sale, by ELCOR or any of its active subsidiaries prior to the
Effective Date, (ii) that he will not provide services to any entity referred to
on Exhibit A, which is incorporated herein by this reference, and (ii) that he
will not provide any services other than financial consulting services to any
entity referred to on Exhibit B, which is incorporated herein by this reference,
except to the extent RJR obtains advance written approval from ELCOR's Chief
Executive Officer (or his/her delegate), which approval will not be unreasonably
withheld. The covenants in this Section 7(b) will continue for two (2) years
from the Effective Date and will be effective only in the territory of North
America, except as to the covenant not to disclose Trade Secrets, which will be
effective worldwide and will continue indefinitely.
(c) Payment. If RJR complies with this Section 7 for the entire Consulting
Term, ELCOR will pay to RJR on October 31, 2003 an amount equal to Seventeen
Thousand Eight Hundred Fifty-nine and 50/100 Dollars ($17,859.50), less any
withholding required by law, regulation or governmental administrative rules.
8. Confidentiality of Agreement.
The parties agree that the terms of this AGREEMENT are mutually
confidential and will only be disclosed to persons specified herein. ELCOR may
disclose the terms of this AGREEMENT to its directors and officers, and to the
extent it determines is required by law or legal process, including without
limitation, applicable securities laws. RJR may disclose the terms of this
AGREEMENT to his immediate family, financial consultants and advisors, lenders,
attorneys and accountants or other tax preparers, but to others only to the
extent compelled by law or legal process. ELCOR and RJR agree that if
disclosures are made to any individual permitted third party, such third party
will be instructed to keep the terms hereof confidential, except to the extent
disclosure is required to comply with law or legal process. Any information
ELCOR discloses in its public filings or other releases will no longer be
considered confidential for purposes of this Section 8.
9. Miscellaneous Provisions.
(a) Notice. Notices and all other communications contemplated by this
Agreement will
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be in writing, will be deemed to have been given when delivered to the
recipient, and will be given by certified mail, FedEx or other courier, in each
case return receipt requested. All notices and communications to ELCOR will be
sent to:
Attn: Vice President, Administration
Elcor Corporation
14643 Dallas Parkway
Suite 1000
Dallas, TX 75254
All notices and communications to RJR will be sent to:
Richard J. Rosebery
5703 Club Oaks Drive
Dallas, TX 75248
All payments by ELCOR to RJR will be made by electronic direct deposit to RJR's
Bank of America account (as designated in the Release Agreement) during normal
banking hours on a date on or before payment is due, with notification to RJR
(which may be sent by fax, electronic mail or regular mail notwithstanding the
above provisions).
The parties may change their respective addresses for notices, and RJR may
change the account to which payments are to be deposited, by written notice to
the other party in accordance with this Section 9(a).
(b) Damages. ELCOR and RJR acknowledge that it would be impossible to
calculate or ascertain accurately and definitely the damages that ELCOR would
sustain from a breach by RJR of Section 7 of this AGREEMENT and that no adequate
remedy at law exists in case of such a breach. Accordingly, in the event of a
breach or threatened breach by RJR of Section 7 of this Agreement, ELCOR will be
entitled to an injunction immediately restraining the activity which violates or
threatens to violate this AGREEMENT. Nothing in this Section 9(b) will be
construed as prohibiting ELCOR from pursuing any other remedies available to
ELCOR for such breach or threatened breach, at law, in equity or under this
AGREEMENT.
(c) Payment Default. If any payment owing to RJR from ELCOR is not paid
within three (3) days of the date due under this Agreement, then such overdue
amount will bear interest at the rate of twelve percent (12%) per annum,
compounded daily, from the date due until paid. If any payment owed to RJR from
ELCOR hereunder or under the Release Agreement of even date between the parties
(the "Release Agreement") is not paid to RJR within thirty (30) days of the date
due, and RJR has given ELCOR at least ten (10) days' notice and opportunity to
cure, then all payments due under this Agreement are accelerated and become due
and payable immediately. This will be cumulative of RJR's other remedies for
such breach.
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(d) Escrow. If ELCOR escrows funds to cover payments under the Executive
Agreements between ELCOR and its officers, then an amount equal to the remaining
payments to be made under this Agreement will be escrowed for the benefit of RJR
to cover ELCOR's payment obligations under this Agreement.
(e) Complete Agreement; Construction. There are no oral promises or
inducements outside of this AGREEMENT, the Release Agreement, the Employee
Agreement, outstanding stock option agreements, and the agreement dated August
31, 2001 between the parties with respect to certain stock options. This
AGREEMENT may only be amended or modified by a written instrument signed by both
of the parties. The section headings contained in this AGREEMENT are inserted
for convenience only and will not affect in any way the meaning or
interpretation of this AGREEMENT. The parties have participated jointly in the
negotiation and drafting of this AGREEMENT. In the event an ambiguity or
question of intent or interpretation arises, this AGREEMENT will be construed as
if drafted jointly by the parties and no presumption or burden of proof will
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this AGREEMENT.
(f) Assignability. ELCOR may assign this AGREEMENT to any of its
affiliates, provided that such assignment will not relieve ELCOR of its
obligations under this AGREEMENT. Except as provided in the previous sentence,
neither party may assign any rights or delegate any responsibilities under this
AGREEMENT without the other party's written consent, which consent will not be
unreasonably withheld. This AGREEMENT will be binding upon and inure to the
benefit of ELCOR and its successors and permitted assigns and RJR and his heirs
and permitted assigns. If RJR should die or become disabled before all benefits
and payments under Sections 2, 5, 6, 7, or 9 have been paid to him, he or his
heirs or personal representative, as the case may be, will remain entitled to
receive the remainder of such payments and benefits to the extent RJR was
entitled to them in accordance with Sections 2, 5, 6, 7 and 9.
(g) Attorney's Fees. In the event of a breach of this Agreement, the
prevailing party in any litigation will be entitled to recover its or his
reasonable attorney's fees incurred to enforce this Agreement.
(h) Severability. The parties intend that all provisions of this AGREEMENT
be enforced to the fullest extent permitted by law. Accordingly, should a court
of competent jurisdiction determine that the scope of any provision of this
AGREEMENT is too broad to be enforced as written, the parties intend that the
court reform the provision to such narrower scope as the court determines to be
reasonable and enforceable. If any provision of this AGREEMENT is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision will be fully severable and this AGREEMENT will
be construed and enforced as if such illegal, invalid, or unenforceable
provision never comprised a part of this AGREEMENT, and the remaining provisions
of this Agreement will remain in full force and effect and will not be affected
by the illegal, invalid or unenforceable provisions or by their severance from
this AGREEMENT.
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(i) Governing Law. THIS AGREEMENT WILL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. IF ANY ACTION IS BROUGHT TO
ENFORCE OR INTERPRET THIS AGREEMENT, VENUE FOR SUCH ACTION WILL BE IN DALLAS
COUNTY, TEXAS.
Each of the parties has fully read and understands the terms of this AGREEMENT,
and has SIGNED AND DELIVERED this Agreement this 24th day of September, 2001.
RJR:
/s/ Richard J. Rosebery
-----------------------------------------
Richard J. Rosebery
ELCOR:
ELCOR CORPORATION
By: /s/ Harold K. Work
-------------------------------------
Harold K. Work,
Chairman of the Board
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EXHIBIT A
to Separation and Consulting Agreement
The following entities and their affiliates are referred to by Section 7(b)(ii)
of the Separation and Consulting Agreement dated September 24, 2001 between
Elcor Corporation and Richard J. Rosebery.
Atlas
BMI
Certainteed
Chomerics
Deep Coat
Ehrler
GAF Building Materials
IKO
Johns Manville
Kiehl Engineering
Malarky
MID Circuit wise, Inc. (a Tyco company)
Nolato/Shieldmate
Owens Corning
Pabco
PF Technologies
Phillips Plastics
Plastic Plate
Savcor
Seleco
Shielding of Electronics, Inc.
Summit Coating Technologies
Tamko
TecStar/Micron
Vision
WL Gore
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EXHIBIT B
to Separation and Consulting Agreement
The following entities and their affiliates are referred to by Section 7(b)(iii)
of the Separation and Consulting Agreement dated September 24, 2001 between
Elcor Corporation and Richard J. Rosebery.
A.L.L. Roofing
ABC Supply
Alcatel
Allied Building Products
Austin Roofers
Beacon
Bradco
Building Supply of NE Wisconsin
Burbank Roofing
Cal Shingle & Shake
Carolina Atlantic Dist.
Dallas Wholesale Building Supply
Dallas/ Ft.Worth Roofing Supply
Eagle
Ericsson
JBW Wholesale
JEH Wholesale
Kyocera
L&W Supply
Motorola
Nokia
Nortel
Northwest Roofing Supply
Pelican Companies
Prime Source
R-Max
Redding Supply
Roofers Supply Inc.
Roofing Center/ Wolf
Roofing Wholesale Co.
Siplast
Spec Roofing Contracting Supply
Sun Microsystems
Sunniland Corp.
Texas Wholesale Building Materials
Washington Cedar Supply
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