Exhibit 10.3
EMPLOYMENT
AGREEMENT
AGREEMENT made and entered into in
North Carolina by and between Xerium Technologies, Inc. (the
“Company”), a Delaware corporation with its principal
place of business in Raleigh, North Carolinas and David G. Maffucci
(the “Executive”), effective as of the 8th day of June,
2009 (the “Effective Date”).
WHEREAS, subject to the terms and
conditions hereinafter set forth, the Company wishes to employ the
Executive, in the position of Executive Vice President and Chief
Financial Officer, and Executive wishes to accept such
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
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 Executive Vice President and Chief Financial
Officer. In addition, and without further compensation, the
Executive may serve as a director of the Company and 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, except that Executive
may serve as a director of one for-profit external board. 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:
(a) Base Salary . The Company
shall pay the Executive a base salary at the rate of four hundred
fifteen thousand dollars ($415,000) per year effective as of
June 8, 2009, 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 Incentive Bonus
Plan . The Executive shall be entitled to participate in any
and all annual 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 sixty percent (60%) of his Base Salary
(pro-rated in 2009 based on employment commencement date and at the
rate in effect on December 31, 2009 provided that the
Executive is employed by the Company on the payment date) 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. Nothwithstanding 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.
(i) Fiscal 2009 Bonus
Guarantee . With respect to the Company’s 2009 fiscal
year only, the Executive is guaranteed that his total bonus
compensation earned for such fiscal year (including any awards
granted him under the Annual Bonus
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Plans for the fiscal year) shall not
be less than fifty percent (50%) of the amount calculated in
Section 4(b) above. Any payment due pursuant to this guarantee
that is made pursuant to an award under one or more of the Annual
Bonus Plans shall be payable in accordance with the Incentive
Compensation Plan.
(c) Equity
Participation
(i) On or about the Effective Date,
the Executive will be granted sixty thousand (60,000) shares
of the Company’s common stock valued at the closing price on
the Executive’s employment commencement date.
(ii) On or about the Effective Date,
the Executive will be granted seventy-five thousand
(75,000) Time-Based restricted stock units
(“RSUs”) under the Company’s 2005 Equity
Incentive Plan, subject to any delay resulting from the need to
obtain shareholder approval to increase the size of said Plan and
subject to the Executive signing and returning the Company’s
Time-Based Restricted Stock Agreement. The RSUs so granted will
vest in accordance with the vesting schedule contained in the
Company’s Time-Based Restricted Stock Agreement. In the event
of termination of the Executive’s employment hereunder, in
accordance with Section 5(a) as a result of death or
Section 5(b) as a result of disability, any RSUs granted under
this Section (c)(i) that have not yet vested, but remain
outstanding, shall vest as of the termination date. In the event of
termination of the Executive’s employment hereunder by the
Company other than for Cause in accordance with Section 5(d)
or by the Executive for Good Reason, in accordance with
Section 5(f), any RSUs granted under this Section (c)(i) that
have not yet vested, but remain outstanding, will vest upon the
effectiveness of the Employee Release (as defined in
Section 6(d)(iii) hereof). If the Executive’s employment
terminates other than as provided in the preceding two sentences,
any RSUs granted hereunder which have not yet vested shall be
forfeited. The RSUs granted hereunder shall otherwise be subject to
the terms and conditions of the 2005 Equity Incentive Plan and the
Time-Based Restricted Stock Agreement.
(iii) The Executive will be granted
seventy-five thousand (75,000) RSUs under the Company’s
Long Term Incentive Program of 2008. The Executive shall
participate in such Program for the remainder of the Program,
provided that the Executive’s employment by the Company
hereunder is continuing on the applicable date, subject to any
delay resulting from the need to obtain stockholder approval to
increase the size of said Program and subject to the Executive
signing and timely returning the applicable Restricted Stock
Agreement, as provided below. Fifty percent (50%) of the RSUs
of such grant shall be subject to the Company’s time-based
restricted stock agreement then in effect and the remaining fifty
percent (50%) of such grant shall be subject to the
Company’s performance-based restricted stock agreement then
in effect. The RSUs granted hereunder shall otherwise be subject to
the terms of the Long Term Incentive Program of 2008 and the
applicable Restricted Stock Agreements.
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(iv) In addition to the equity
participation described in Section (c)(i) and (c)(ii) hereunder,
while the Executive’s employment with the Company hereunder
is continuing, the Executive shall be entitled to participate in
such Company equity plans from time to time in effect for senior
executives of the Company generally. The terms of each such 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 itself).
(d) 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.
(e) Vacations . The Executive
shall be entitled to an annual vacation of four (4) 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.
(f) 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.
(g) Certain Prerequisites .
The Company shall provide the Executive while he continues to be
employed by the Company with: (i) a housing allowance of
thirty thousand dollars ($30,000) per year net of taxes;
(ii) participation in the Company’s standard executive
automobile program; and (iii) eligibility to use a
Company-owned country club membership at the TPC in Wakefield,
North Carolina.
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(h) 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 Executive is entitled
pursuant to this Section 4(h) 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.
(i) 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 questions 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.
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(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 ten
(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.
(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.
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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 his 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
.
(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 6(g).
(d) By the Company Other than for
Cause or by the Executive for Good Reason .
(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 occurs after Executive has completed at
least six (6) months of employment with the Company and which
termination does not occur within three (3) months prior to or
within two
