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Exhibit 10.19
TERMINATION BENEFITS AGREEMENT
This Termination Benefits Agreement ("Agreement") is entered into as of
the 13th day of December, 1996, by and between Hart & Cooley, Inc., a Delaware
corporation ("Company") and Lawrence B. Lee ("Employee").
WITNESSETH:
WHEREAS, Employee is a key employee of the Company;
WHEREAS, the Company considers that providing Employee with certain
employment termination benefits will operate as an incentive for Employee to
remain employed by the Company during the period that the Company is
negotiating a change in control or ownership of the Company or its parent,
Falcon Building Products, Inc. (Falcon);
WHEREAS, this Agreement is intended to provide benefits only in the event
of a change in control or ownership of the Company or Falcon prior to September
30, 1997 (the "Expiration Date");
NOW THEREFORE, to induce Employee to remain employed by the Company
through the Expiration Date, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the Company and
Employee agree as follows:
1. Definitions.
(a) "Change in Control" shall mean the sale by the
Company or Falcon of all or substantially all of their assets
and business to a person or entity other than a Related Person
or the sale of fifty-one percent (51%) or more of the voting
securities and capital stock of the Company or Falcon to a
person or entity other than a Related Person. "Related
Person" shall mean any person or entity directly or indirectly
owned and controlled by Samuel Zell or Equity Holdings Limited
("EHL").
(b) "Termination Date" shall mean the date of
termination of Employee's employment relationship with the
Company.
(c) "Termination Payments" shall mean any payment or
distribution of compensation or benefits made pursuant to
Section 3 of this Agreement.
(d) "Termination With Cause" shall mean termination
of Employee by the Company for any of the following reasons:
(i) the failure of Employee to render
services to the Company in substantial accordance with
the terms of his employment, which failure amounts to
gross neglect of his duties to the Company;
(ii) any violation of Section 6 of this
Agreement or any employment agreement which Employee may
have with the Company;
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(iii) taking any role in any buy-out of
the Company or Falcon without the approval of the
Company's majority shareholder; or
(iv) Employee's commission of any act of
fraud, theft or embezzlement against the Company.
(e) "Voluntary Termination" shall mean the voluntary
resignation by Employee of his employment with the Company
other than a voluntary resignation following either:
(i) any reduction in compensation
consisting of base salary and incentive bonus;
(ii) a substantial diminution of his
responsibilities; or
(iii) a relocation by the Company of
Employee's place of employment outside a twenty (20)
mile radius of Employee's current place of employment.
2. Termination of Employee. In the event of Employee's
termination of employment with the Company within two (2) years
immediately following the date on which there was a Change in
Control or ownership of the Company or Falcon, the Company shall
provide Employee with the Termination Payments outlined in Section
3, unless the termination is for any of the following reasons:
(a) Termination With Cause;
(b) Voluntary Termination;
(c) The death of the Employee. Nothing in this
section shall affect any entitlement of Employee's heirs to
the benefits of any life insurance plan; or
(d) Termination as a result of Employee's incapacity
(i.e., if in the reasonable opinion of the Company, Employee
is prevented from properly performing his duties by reason of
any physical or mental incapacity for a period of more than
one hundred twenty (120) days, in the aggregate, in any twelve
(12) month period). Nothing in this section shall affect
Employee's rights under any disability plan in which he is a
participant.
3. Termination Payments. In the event that Employee is entitled
to Termination Payments pursuant to the terms of Section 2:
(a) Compensation. The Company shall pay Employee an
amount equal to two (2) years base salary plus par bonus as of
the Termination Date, without giving effect to any reduction
in base salary or incentive bonus prior to the Termination
Date; payable within thirty (30) days of the Termination Date
following the Change in Control.
(b) Employee Benefits:
(i) Vacation. Any accrued vacation pay
due but not yet taken at the Termination Date shall be
paid to Employee within thirty (30) days following the
Termination Date.
(ii) Health Benefits. If Employee
participated in any health benefit plan in effect
immediately prior to the Termination Date, and if
Employee elects
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to continue participating in such plan pursuant
to the terms of said plan and the Comprehensive Omnibus
Budget Reconciliation Act ("COBRA"), the Company shall
pay for the costs of Employee's participation in such
plan from the Termination Date until the earlier of:
(a) the date which is twenty-four (24) months following
the Termination Date; or (b) the date of Employee's
eligibility in any health benefit plan offered by
Employee's new employer, if any. Employee shall notify
the Company in writing within thirty (30) days of any
new employment.
(iii) Retirement And Profit-Sharing Plans.
Notwithstanding anything in this Agreement to the
contrary, Employee's rights in any retirement, pension
or profit-sharing plans offered by the Company shall be
governed by the rules of such plans as well as by
applicable law; provided, however, that on the
Termination Date, Employee shall become fully vested in
all pension and 401(k) account balances.
(iv) Outplacement Assistance. The Company
will provide Employee up to one year of employment
outplacement services with a nationally recognized
executive placement company.
4. At-Will Employment. The Company and Employee have, and will
continue to have, an at-will employment relationship. That is,
either party can terminate the employment relationship for any
reason at any time. Nothing contained in this Agreement shall be
interpreted to amend or alter this at-will employment relationship.
5. Limitation of Payment. Notwithstanding anything in this
Agreement to the contrary, if receipt of the Termination Payments
would subject Employee to tax under Section 4999 of the Internal
Revenue Code of 1986, as amended, the Termination Payments shall be
"grossed up" to an amount that would allow the Employee to receive
the net after-tax amount he would have received but for the
application of said Section 4999.
6. Continuing Obligations. In order to induce the Company to
enter into this Agreement, Employee hereby agrees that all
documents, records, techniques, business secrets and other
information which have come into his possession from time to time
during his continued employment by the Company or which may come
into his possession during his employment hereunder, shall be deemed
to be confidential and proprietary to the Company, and Employee
further agrees to retain in confidence any confidential information
known to him concerning the Company and its respective businesses so
long as such information is not publicly disclosed. Employee
further agrees to cooperate fully as requested from time to time by
the controlling shareholder of the Company, the Company's Board of
Directors, or Company Management in connection with any transaction
involving the possible sale of the Company or Falcon. Employee
further agrees not to speak about a possible sale of the Company or
Falcon with or otherwise respond to requests to or from any third
parties involving the possible sale of the Company or Falcon, unless
specifically authorized to do so by the Company or the controlling
shareholder of the Company. The obligations of Employee under this
Section 6 shall be in addition to, and shall not limit, any other
obligation of Employee to the Company with respect to the matters
set forth herein or otherwise.
7. Assignments and Transfers. Employee agrees that he will not
assign, sell, transfer, delegate or otherwise dispose of, whether
voluntarily or involuntarily, or by operation of law, any rights or
obligations under this Agreement, nor shall Employee's rights be
subject to encumbrance or the claims of creditors. Any purported
assignment shall be null and void. This Agreement shall inure to
the benefit of and be enforceable by Employee's
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personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. This
Agreement shall be binding upon and shall inure to the benefit of
the Company and its successors and assigns, and the Company shall
require any successor or assign to expressly assume and agree to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession or assignment had taken place, except no assumption shall
be required if this Agreement is automatically assumed by operation
of law. The term "the Company" as used herein shall include such
successors and assigns. The term "successors and assigns" as used
herein shall include a corporation or other entity acquiring at
least 51% of the outstanding shares of the Company or Falcon or all
or substantially all of the assets and business of the Company or
Falcon.
8. Notices. For purposes of this Agreement, notices and all
other communications provided for herein shall be in writing and
shall be deemed to have been duly given and received when delivered
or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed to the Company at:
Hart & Cooley, Inc.
500 East Eighth Street
Holland, Michigan 49423
Attn: President
and to Employee at:
Lawrence B. Lee
3155 N. 168th Avenue
Holland, MI 49424
or such address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
9. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of
the State of Michigan.
10. Entire Agreement. The terms of this Agreement are intended
by the parties to be the final expression of their agreement with
respect to Employee's termination benefits and may not be
contradicted by evidence of any prior or contemporaneous Agreement.
11. Amendments; Waivers. This Agreement may not be modified,
amended, or terminated except by an instrument in writing, signed by
Employee and by a duly authorized representative of the Company
other than Employee. No failure to exercise and no delay in
exercising any right, remedy, or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or
power provided herein or by law or in equity.
12. Severability; Enforcement. If any provision of this
Agreement, or the application thereof to any person, place or
circumstance, shall be held by a court of competent jurisdiction to
be invalid, unenforceable, or void, the remainder of this Agreement
and such provisions as applied to other persons, places, and
circumstances shall remain in full force and effect.
13. Arbitration. The parties agree to submit any dispute arising
under this Agreement to arbitration. Arbitration shall be by a
single arbitrator in the Holland, Michigan area
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experienced in the matters at issue selected by the Company and
Employee in accordance with the commercial arbitration rules of the
American Arbitration Association. The decision of the arbitrator
shall be final and binding as to any manner submitted to him under
this Agreement. All costs and expenses incurred in connection with
any such arbitration proceeding shall be borne by the party against
whom the decision is rendered as provided by the arbitrator.
14. Release.
(a) Employee, on behalf of himself, his heirs,
executors, legal representative, successors and assigns,
hereby fully and forever releases and discharges EHL, Falcon,
the Company, and their respective affiliates, subsidiaries,
parents, predecessors and successors, and each of their
officers, directors, trustees, employees, agents and
attorneys, past and present (the "Releasees"), from any and
all claims, demands or causes of action, whether now known or
unknown, which have existed, which do exist, or which may
exist in the future, arising out of or relating in any way to
Employee's employment with the Company, his employment
compensation, his termination of employment or his employment
arrangement, the sale of the stock or assets of the Company or
Falcon and/or any other occurrence up to and including the
effective date of this Agreement, except those claims
statutorily precluded from waiver or release by private
parties and except those alleging breach of this Agreement.
Without in any way limiting the generality of the foregoing
language, this release includes any claims for relief or
causes of action under the Age Discrimination in Employment
Act, as amended, 29 U.S.C. Section 621, et seq., and any other
federal, state or local statute, ordinance or regulation
dealing in any respect with discrimination in employment, and
in addition thereto, any claims under any Company severance
policy, practice or procedure, and any claims, demands or
actions brought on the basis of alleged wrongful or
retaliatory discharge and/or alleged breach of an implied or
explicit, written or oral employment or other contract or
covenant under the common law of any state, including, but not
limited to, Michigan.
(b) Employee further agrees not to directly or
indirectly pursue or initiate any action or legal proceeding
of any kind against the Releasees arising out of or related to
the claims released in Section 15(a) above, or the sale of the
stock or assets of the Company or Falcon and also waives any
right to recover any relief as a result of any such
proceedings initiated on his behalf.
15. Termination Date. This Agreement shall be null and void in the event
that a Change in Control does not occur on or before the Expiration Date.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of the day and year set forth above.
HART & COOLEY, INC., Lawrence B. Lee
a Delaware corporation
/s/ Lawrence B. Lee
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By: /s/ Gus J. Athas signature
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Gus J. Athas
Its: Vice-President
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