EXHIBIT 10.37
EMPLOYMENT
AGREEMENT
AGREEMENT made and
entered into by and between Xerium Technologies, Inc. (the
“Company”), a Delaware corporation and Thomas C.
Johnson (the “Executive”), effective as of the 4
th
day of September,
2008 (the “Effective Date”).
WHEREAS, the Executive has been
employed by the Company; and
WHEREAS, subject to the terms and
conditions hereinafter set forth, the Company wishes to continue to
employ the Executive, in the position of President—Xerium
Asia, and Executive wishes to accept such continued
employment;
NOW, THEREFORE, in consideration of
the foregoing premises and the mutual promises, terms, provisions
and conditions set forth in this Agreement, the parties hereby
agree:
1. Employment . Subject to
the terms and conditions set forth in this Agreement, the Company
hereby offers and the Executive hereby accepts continuation of
employment.
2. Term . The employment of
the Executive by the Company hereunder shall be for the period
commencing on the Effective Date and expiring on the date of the
termination of such employment in accordance with Section 5
hereof. For all purposes of this Agreement, references to
(a) the “Termination Date” shall mean the date
Executive’s employment hereunder shall terminate pursuant to
said Section 5, and (b) references to the
“term” of the Executive’s employment hereunder
shall mean the period commencing on the Effective Date and ending
on the Termination Date. Following the Termination Date, unless
specifically otherwise agreed between Executive and any applicable
party, the Executive shall cease to hold any position (whether as
an officer, director, manager, employee, trustee, fiduciary or
otherwise) with the Company or any of its Subsidiaries or
Affiliates.
3. Capacity and Performance
.
(a) During the term of
Executive’s employment hereunder, the Executive shall serve
the Company as its President—Xerium Asia. In addition, and
without further compensation, the Executive shall serve as a
director and/or officer of one or more of the Company’s
Subsidiaries if so elected or appointed from time to
time.
(b) During the term of
Executive’s employment hereunder, the Executive shall be
employed by the Company on a full-time basis and shall perform such
duties and responsibilities on behalf of the Company and its
Subsidiaries as may be designated from time to time by the Chief
Executive Officer.
(c) During the term of
Executive’s employment hereunder, the Executive shall devote
his full business time to the advancement of the business and
interests of the Company and its Subsidiaries and to the discharge
of his duties and responsibilities hereunder. The Executive shall
not engage in any other business activity or serve in any industry,
trade, professional, governmental or academic position during the
term of this Agreement, except as may be expressly approved in
advance by the Chief Executive Officer in writing.
4. Compensation and Benefits
. During the term of Executive’s employment hereunder as
compensation for all services performed by the
Executive:
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(a) Base Salary . The Company
shall pay the Executive a base salary at the rate of three hundred
thousand dollars ($300,000.) per year effective as of
September 4, 2008, payable in accordance with the payroll
practices of the Company for its executives and subject to increase
from time to time by the Board, in its sole discretion. Such base
salary, as from time to time increased, is hereafter referred to as
the “Base Salary”.
(b) Annual Cash Bonus Plan .
The Executive shall be entitled to participate in any and all
annual cash bonus plans (the “Annual Bonus Plans”) from
time to time in effect for senior executives of the Company
generally. The terms of each Annual Bonus Plan and
Executive’s participation therein shall be determined by the
compensation committee of the Board of Directors of the Company
(the “Board”) (or, if there is no such committee, by
the Board); provided , however , that the Executive
shall be entitled to participate in such plans at a minimum
participation rate of 50% of his Base Salary paid for the
applicable year, with any awards thereunder payable only to the
extent earned pursuant to the terms of the applicable Annual Bonus
Plan and subject to adjustment in accordance with the terms of the
applicable Annual Bonus Plan. Notwithstanding the foregoing, no
award under the Annual Bonus Plans may be granted if the
compensation committee determines that in order for such award to
qualify as performance-based for purposes of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the
“Code”), the Plan must be submitted to and approved, or
resubmitted to and approved, by the stockholders of the Company in
accordance with the requirements of Section 162(m) of the
Code, unless such grant is made contingent upon such approval. The
compensation committee of the Board (or, if there is no such
committee, the Board) may alter, modify, add to or delete any
Annual Bonus Plan at any time as it, in its sole judgment,
determines to be appropriate.
(c) Other Incentive Plans .
The Executive shall be entitled to participate in any and all cash,
equity, bonus and other incentive plans which are not Annual Bonus
Plans (the “Long Term Plans”) from time to time in
effect for senior executives of the Company generally. The terms of
each Long Term Plan and Executive’s participation therein
shall be determined by the compensation committee of the Board (or,
if there is no such committee, by the Board). The compensation
committee of the Board (or, if there is no such committee, the
Board) may alter, modify, add to or delete any Long Term Plan at
any time as it, in its sole judgment, determines to be
appropriate.
(d) Vacations . The Executive
shall be entitled to an annual vacation of three (3) weeks,
with reasonable notice to the Chief Executive Officer and subject
to the reasonable business needs of the Company. Vacation shall
otherwise be governed by the policies of the Company, as in effect
from time to time.
(e) Other Benefits . Subject
to any contribution therefor generally required of executives of
the Company, the Executive shall be entitled to participate in any
and all employee benefit plans from time to time in effect for
executives of the Company generally, except to the extent such
plans are in a category of benefit specifically otherwise provided
to the Executive under this Agreement (e.g., severance pay).
Such participation shall be subject to the terms of the applicable
plan documents and generally applicable Company policies. The Board
may alter, modify, add to or delete employee benefit plans at any
time as it, in its sole judgment, determines to be
appropriate.
(f) Business Expenses . The
Company shall pay or reimburse the Executive for all reasonable and
necessary business expenses incurred or paid by the Executive in
the performance of his duties and responsibilities hereunder,
subject to any maximum annual limit or other restrictions on such
expenses set by the Board and to such reasonable substantiation and
documentation as may be specified by the Company from time to time.
In the case of any reimbursement to which the
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Executive is entitled pursuant to
this Section 4(f) that would constitute deferred compensation
subject to Section 409A of the Code, the following additional
rules shall apply: (i) the reimbursable expense must have been
incurred, except as otherwise expressly provided in this Agreement,
during the term of this Agreement; (ii) the amount of expenses
eligible for reimbursement during any calendar year will not affect
the amount of expenses eligible for reimbursement in any other
calendar year; (iii) the reimbursement shall be made not later
than December 31 of the calendar year following the calendar
year in which the expense was incurred; and (iv) the
Executive’s entitlement to reimbursement shall not be subject
to liquidation or exchange for another benefit.
(g) Payments/Actions by
Company . Wherever it is provided in this Agreement that
payment of any form of compensation or any other action shall be
made by the Company, such payment or action may be made by any
Subsidiary or Affiliate of the Company.
5. Termination of Employment
. The Executive’s employment hereunder shall terminate under
the following circumstances:
(a) Death . In the event of
the Executive’s death during the term of Executive’s
employment hereunder, the Executive’s employment shall
immediately and automatically terminate.
(b) Disability . The Company
may terminate the Executive’s employment hereunder, upon
notice to the Executive, in the event that the Executive becomes
disabled during his employment hereunder. For this purpose,
disability means that the Executive (i) is unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months, or (ii) is, by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last
for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than
three (3) months under an accident and health plan covering
employees of the Company. If any question shall arise as to whether
during any period the Executive is disabled within the meaning of
this Section 5(b), the Executive, at the request of the
Company, shall submit to a medical examination by a physician
selected by the Company to determine whether the Executive is so
disabled and such determination shall for the purposes of this
Agreement be conclusive of the issue. If such question shall arise
and the Executive shall fail to submit to such medical examination,
the Company’s determination of the issue shall be binding on
the Executive.
(c) By the Company for Cause
. The Company may terminate the Executive’s employment
hereunder for Cause at any time upon notice to the Executive
setting forth the nature of such Cause. The following shall
constitute Cause for termination: (i) the Executive’s
conviction of or plea of nolo contendere to a felony or
other crime involving moral turpitude; (ii) the
Executive’s fraud, theft or embezzlement committed with
respect to the Company or its Subsidiaries; (iii) material
breach by the Executive of any of the provisions of Sections 8, 9
or 10 hereof that causes demonstrable harm to the Company or any of
its Subsidiaries; or (iv) the Executive’s willful and
continued failure to perform his material duties to the Company and
its Subsidiaries; provided , however , that the
Company may terminate Executive’s employment hereunder for
“Cause” within the meaning of this clause
(iv) only after the Company has provided written notice to the
Executive of the failure and the Executive shall not have remedied
such failure within 10 business days following the effectiveness of
such notice.
(d) By the Company Other than for
Cause . The Company may terminate the Executive’s
employment hereunder other than for Cause at any time upon notice
to the Executive.
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(e) By the Executive Other Than
for Good Reason . The Executive may terminate his employment
hereunder other than for Good Reason (as defined in
Section 5(f) below) at any time upon the provision of sixty
(60) days written notice to the Company. In the event of
termination of the Executive pursuant to this Section 5(e),
the Board may elect to waive the period of notice or any portion
thereof.
(f) By the Executive for Good
Reason . The Executive may terminate his employment hereunder
for Good Reason upon written notice to the Company setting forth in
reasonable detail the nature of such Good Reason; provided ,
that such written notice must be delivered to the Company within
ninety (90) days of the initial existence of the condition or
circumstance constituting or giving rise to the purported Good
Reason. A termination by the Executive hereunder shall not be
treated as a termination for Good Reason if the Company remedies
the condition or circumstance constituting or giving rise to the
purported Good Reason within thirty (30) days of the receipt
of the Executive’s notice, or if actual termination occurs
more than two years following the initial existence of such
condition or circumstance. The following shall constitute Good
Reason for purposes of this subsection (f): a requirement that the
Executive relocate more than fifty (50) miles from his
then-current principal residence, it being understood that the
Executive may be required to travel frequently and that prolonged
periods spent away from Executive’s principal residence shall
not constitute Good Reason.
6. Compensation upon
Termination.
(a) Death . In the event of a
termination of the Executive’s employment hereunder by reason
of death as contemplated by Section 5(a), the Company shall
pay in a lump sum within thirty (30) days of such termination
to the Executive’s designated beneficiary or, if no
beneficiary has been designated by the Executive, to his estate,
the Base Salary earned but not paid through the Termination
Date.
(b) Disability . In the event
of any termination of Executive’s employment hereunder by
reason of disability as contemplated by Section 5(b), the
Company shall pay to him Base Salary earned but not paid through
the Termination Date and, in addition, shall, subject to any
employee contribution applicable to the Executive on the
Termination Date, continue to contribute to the premium cost of the
Executive’s participation in the Company’s group
medical and dental plans for eighteen (18) months (or such
longer period as may be provided under the employee benefit plans
of the Company), but only if the Executive does not have access at
reasonable cost to substantially equivalent benefits through
another employer, and provided that the Executive is entitled to
continue such participation under applicable law and plan terms. In
the event that there is any limitation on the Company’s
ability to provide, or any disqualification of the
Executive’s eligibility to receive (other than a
disqualification under this Agreement resulting from
Executive’s access at a reasonable cost to substantially
equivalent benefits through another employer) such group medical
and/or dental plan benefits on a tax-favorable basis, the Company
shall provide equivalent coverage through the purchase of
insurance.
(c) By the Company for Cause
. In the event of any termination of Executive’s employment
hereunder by the Company for Cause as contemplated by
Section 5(c), the Company shall have no further obligations to
the Executive under this Agreement other than payment of Base
Salary through the Termination Date and except as specifically
provided in Section 6g).
(d) By the Company Other than for
Cause or by the Executive for Good Reason .
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(i) Not Close in Time to a Change
of Control . In the event of any termination of
Executive’s employment hereunder by the Company pursuant to
Section 5(d) or by the Executive pursuant to
Section 5(f), which termination does not occur within three
(3) months prior to or within two (2) years following a
Change of Control, the Company (A) shall continue to pay the
Executive the Base Salary at the rate in effect on the Termination
Date for one (1) year, and (B) subject to any employee
contribution applicable to the Executive on the Termination Date,
shall continue to contribute to the premium cost of the
Executive’s participation in the Company’s group
medical and dental plans for one (1) year (or such longer
period as may be provided under the employee benefit plans of the
Company), but only if the Executive does not have access at
reasonable cost to substantially equivalent benefits through
another employer, and provided that the Executive is entitled to
continue such participation under applicable law and plan terms. In
the event that there is any limitation on the Company’s
ability to provide, or any disqualification of the
Executive’s eligibility to receive (other than a
disqualification under this Agreement resulting from
Executive’s access at a reasonable cost to substantially
equivalent benefits through another employer) such group medical
and/or dental plan benefits on a tax-favorable basis, the Company
shall provide equivalent coverage through the purchase of
insurance.
(ii) Close in Time to a Change of
Control . In the event of any termination of Executive’s
employment hereunder by the Company pursuant to Section 5(d)
or by the Executive pursuant to Section 5(f), which
termination occurs within three (3) months prior to or within
two (2) years following a Change of Control, the Company
(A) shall continue to pay the Executive the Base Salary at the
rate in effect on the Termination Date for eighteen
(18) months, and (B) subject to any employee contribution
applicable to the Executive on the Termination Date, shall continue
to contribute to the premium cost of the Executive’s
participation in the Company’s group medical and dental plans
for eighteen (18) months (or such longer period as may be
provided under the employee benefit plans of the Company), but only
if the Executive does not have access at reasonable cost to
substantially equivalent benefits through another employer, and
provided that the Executive is entitled to continue such
participation under applicable law and plan terms. In the event
that there is any limitation on the Company’s ability to
provide, or any disqualification of the Executive’s
eligibility to receive (other than a disqualification under this
Agreement resulting from Executive’s access at a reasonable
cost to substantially equivalent benefits through another
employer), such group medical and/or dental plan benefits on a
tax-favorable basis, the Company shall provide equivalent coverage
through the purchase of insurance.
(iii) Conditions . Any
obligation of the Company to the Executive under Sections 6(b) and
6(d) hereof is conditioned upon (A) the Executive signing a
release of claims in the form appended hereto as Attachment
A or such other form as the Company may require (the
“Employee Release”) within twenty-one (21) days
(or such greater period as the Company may specify) following the
date notice of termination of employment is given hereunder and
upon the Executive’s not revoking the Employee Release in a
timely manner thereafter and (B) the Executive’s
continued full performance of his continuing obligations hereunder,
including those under Sections 8, 9 and 10. Base Salary to which
the Executive is entitled under Sections 6(b) and 6(d) hereof shall
be payable in accordance with the normal payroll practices of the
Company in effect on the Termination Date and will begin at the
Company’s next regular payroll period which is at least five
(5) business days following the effective date of the Employee
Release, but shall be retroactive to next business day following
the Termination Date.
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(iv) No reduction . The
continued payments/contributions by the Company that are described
in Sections 6(d)(i) and 6(d)(ii) hereof shall not be reduced by any
income or other compensation received by Executive subsequent to
the termination of his employment.
(e) By the Executive Other Than
for Good Reason . If the Executive shall terminate his
employment pursuant to Section 5(e), the Company shall
continue to pay Executive his Base Salary through the Termination
Date (it being understood that if, in accordance with
Section 5(e), the Board elects to waive the period of notice,
or any portion thereof, the payment of Base Salary under this
Section 6(e) shall continue through the notice period or any
portion thereof so waived).
(f) Delay in Payment Commencement
o
