Exhibit 10.6
SEVERANCE AND NON-COMPETITION
AGREEMENT
THIS SEVERANCE AND NON-COMPETITION
AGREEMENT, dated as of July 25, 2008 (the
“Agreement”), is by and between Quixote Corporation, a
Delaware corporation having its principal offices at 35 East
Wacker Drive, Chicago, IL 60601 (“Quixote”), and Joan
R. Riley, an Executive of the Company
(“Executive”).
WHEREAS, the Executive is a key
employee of Quixote who possesses valuable proprietary knowledge of
Quixote, its business and operations and the markets in which
Quixote competes; and
WHEREAS, the Board of Directors of
Quixote (the “Board”) has recognized and continues to
recognize that the Executive’s contribution to the growth and
success of Quixote has been, and is expected to continue to be,
substantial and desires to assure Quixote of the Executive’s
continued employment by assuring her of fair treatment if that
relationship is terminated; and
NOW, THEREFORE, in consideration of
the foregoing, the mutual covenants and conditions contained herein
and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1.
Certain
Defined Terms .
(a)
Good
Reason . “Good
Reason” shall mean either of the events described in
(i) and (ii) of this subsection 1(a) occurring
without the Executive’s written consent. The
Executive’s termination of employment hereunder shall not be
treated as a termination for Good Reason unless (1) the
Executive provides notice to Quixote of the existence of the Good
Reason no later than sixty (60) days after the occurrence of the
event which forms the basis for any termination for Good Reason,
and (2) Quixote fails to remedy the Good Reason within thirty
(30) days after receipt of notice from the Executive of the
existence of the Good Reason (the “Cure Period”), and
(3) the Executive tenders her resignation in writing to
Quixote within fifteen (15) days after end of the Cure
Period:
(i)
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the Executive’s base
compensation and fringe benefits are reduced, in the aggregate, by
20% or more; or
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(ii)
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Quixote fails to obtain the
assumption of the obligation to perform this Agreement by any
successor as contemplated in Section 12 hereof.
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(b)
Cause . Quixote shall have
“Cause” to terminate the Executive’s employment
upon:
(i)
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the willful failure by the
Executive to substantially perform her duties, other than when such
failure resulting from the Executive’s incapacity is due to
physical or mental illness;
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(ii)
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the willful engaging by the
Executive in gross misconduct materially and demonstrably injurious
to Quixote or its subsidiaries; or
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(iii)
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the commission by the
Executive of a crime which is a felony.
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For the purpose of this
subsection (b), no act, or the failure to act, on the
Executive’s part shall be considered “willful”
unless done, or omitted to be done, by her not in good faith and
without reasonable belief that her action or omission was in the
best interest of Quixote or its subsidiaries.
(c)
Disability
. An
Executive’s “Disability” shall occur if the
Executive is absent from her duties as an Executive of Quixote on a
full-time basis for six (6) consecutive months and if she
qualifies for long-term disability under Quixote’s long-term
disability insurance plan.
(d)
Salary
Continuation Period . The “Salary
Continuation Period” shall mean one (1) year from the
date of a Termination of the Executive.
2.
Termination
.
(a)
Termination of
Employment . If the
Executive’s employment (x) is terminated for Good
Reason, or (y) is terminated for a reason other than death,
Disability, Cause or voluntary resignation not constituting a Good
Reason, (a Good Reason termination or termination for a reason
other than death, Disability, Cause or voluntary resignation not
constituting a Good Reason is referred to herein as a
“Termination”), the Executive will be entitled to
receive:
(i)
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Her full base salary through
the date of Termination at the rate in effect at the time
Termination occurs;
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(ii)
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Any reimbursable expenses
which have been incurred but are unpaid;
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(iii)
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Payment for any unexpired
vacation days which have accrued but are unused; and
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(iv)
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Subject to
Section 7(f), payment of the Executive’s base salary,
plus COBRA reimbursement and auto allowance for the Salary
Continuation Period which shall be paid in a lump sum (the
“Separation Benefit”).
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(b)
Release
Agreement . Prior to Executive
obtaining the right to receive, and in exchange for, the Separation
Benefit provided in Section 2(a)(iv), above, Executive
will first enter into and execute, and deliver to Quixote, a
Release Agreement substantially in the form attached hereto as
Exhibit A (the “Release”) upon
Executive’s Termination of employment. Unless the
Release is executed by Executive and delivered to Quixote within
the time period set
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forth in Paragraph 15 of the
Release, Executive will not receive the payments provided in
Section 2(a)(iv) above.
(c)
Termination of
Severance and Non-Competition Agreement . This Severance and
Non-Competition Agreement shall terminate on the tenth anniversary
of this Agreement if the employment of Executive has not been
terminated prior to that date.
3.
Withholding
Taxes; Code Section 409A . All payments made
under this Agreement shall be subject to reduction to reflect all
federal, state, local and other taxes required to be withheld by
applicable law. Notwithstanding anything to the contrary
contained in Section 2, if any payment to the Executive under
Section 2 would constitute a “deferral of
compensation” under Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), (such
compensation does not, for example, qualify for the
“short-term deferral exception” under Section 409A
of the Code) and the Executive is a “specified
employee” (as such phrase is defined in Section 409A of
the Code), the Executive (or the Executive’s beneficiary)
will receive payment of such amounts described in this
Section 3 which would otherwise be payable hereunder during
the first six (6) months following the Executive’s
“separation from service” with Quixote (as such phrase
is defined in Section 409A of the Code) upon the first to
occur of: (i) the date which is first date of the
seventh month after the effective date of the Executive’s
separation from service, or (ii) the date of the
Executive’s death; provided however, Quixote shall
immediately upon Termination pay such amounts described in this
Section 3 into a domestic “rabbi trust” to be held
by a mutually-acceptable bank or other third party until the
Executive is entitled to receive such payments.
4.
Mitigation
. The
Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment provided for in
this Agreement be reduced by any compensation earned by the
Executive as a result of employment by another employer after the
date of Termination, or otherwise.
5.
At-Will
Employment . Notwithstanding this
Agreement, Executive’s relationship with Quixote continues to
be an at-will employment relationship. Quixote or Executive
has the right to terminate Executive’s employment with
Quixote at any time with or without Cause and with or without
notice. Nothing in this Agreement confers upon the Executive
any right to continue in the employ of Quixote, or in any way
limits the rights of Quixote, except as expressly stated herein, to
discharge the Executive at any time for any reason whatsoever, with
or without cause.
6.
Confidential
Information . The Executive shall
at all times hold in a fiduciary capacity for the benefit of
Quixote all secret, confidential or proprietary information,
knowledge or data relating to Quixote and its respective
businesses, which shall have been obtained by the Executive during
the Executive’s employment by Quixote and which shall not be
or become public knowledge including, but not limited to,
information regarding the technology, proprietary methodologies and
products, software, other trade secrets, clients, suppliers,
customers, consultants and agents of Quixote (the
“Confidential Information”). During the
Executive’s employment with Quixote and after Termination of
such employment at any time or for any reason, and regardless of
whether any payments are made to the Executive under this Agreement
as a result of such termination, the Executive shall not, without
the prior written consent of
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Quixote or as may otherwise
be required by law or legal process, communicate or divulge any
Confidential Information to any person other than Quixote and those
designated by it or use any Confidential Information except for the
benefit of Quixote. Immediately upon Termination of the
Executive’s employment with Quixote at any time or for any
reason, the Executive shall return to Quixote all Confidential
Information, including, but not limited to, any and all copies,
reproductions, notes or extracts of Confidential Information.
The terms of this Section 6 shall be in addition to, and not a
replacement of, the provisions of any Executive confidentiality or
inventions agreement with Executive.
7.
Non-Competition
.
(a)
Solicitation
of Employees . During the
Executive’s employment with Quixote and for a period of
twelve (12) months after termination of such employment at any time
and for any reason, and regardless of whether any payments are made
to the Executive under this Agreement as a result of such
Termination, the Executive shall not solicit, participate in or
promote the solicitation of any person who was employed by
Quixote at the time of the Executive’s Termination of
employment with Quixote to leave the employ of Quixote or its
subsidiaries, or, on behalf of herself or any other person, hire,
employ or engage any such person; provided however that the
foregoing restriction shall not prohibit Executive or a firm with
which she is employed or affiliated from (i) publishing and
receiving responses to a general solicitation for employment in a
general circulation newspaper, magazine, website or similar medium,
or (ii) hiring a former employee of Quixote who has not been
employed by Quixote or its subsidiaries for a period of at least
six (6) months. The Executive further agrees that,
during such twelve (12) month period, if a current employee of
Quixote contacts the Executive about prospective employment, the
Executive will inform such employee that she cannot discuss the
matter further without informing Quixote.
(b)
Covenants
During Employment . During the
Executive’s employment, the Executive will not compete with
Quixote anywhere that Quixote conducts its business. In
accordance with this restriction, but without limiting its terms,
during the Executive’s employment, the Executive will
not:
(i)
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Enter into or engage in any
business which competes with the business of Quixote or its
subsidiaries;
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(ii)
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Solicit customers, business,
patronage or orders for, or sell, any products and services in
competition with, or for any business that competes with, the
business of Quixote or its subsidiaries;
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(iii)
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Divert, entice or otherwise
take away any customers, business, patronage or orders of Quixote
or its subsidiaries or attempt to do so; or
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(iv)
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Promote or assist,
financially or otherwise, any person, firm, association,
partnership, corporation or other entity engaged in any business
which competes with the business of Quixote or its
subsidiaries.
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(c)
Covenants
Following Termination . For a period of one
(1) year following the Termination of the Executive’s
employment, the Executive will not:
(i)
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Enter into or engage in any
business which competes with the business of Quixote or its
subsidiaries in any country where Quixote or its subsidiaries are
doing business as of the date of Termination;
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(ii)
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Solicit customers, business,
patronage or orders for, or sell, any products and services in
competition with, or for any business, wherever located, that
competes with the business of Quixote or its subsidiaries in any
country where Quixote or its subsidiaries are doing business as of
the date of Termination;
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(iii)
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Divert, entice or otherwise
take away any customers, business, patronage or orders of Quixote
in any country where Quixote or its subsidiaries are doing business
as of the date of Termination, or attempt to do so; or
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(iv)
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Promote or assist,
financially or otherwise, any person, firm, association,
partnership, corporation or other entity engaged in any business
which competes with Quixote or its subsidiaries in any country
where Quixote is doing business as of the date of
Termination.
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(d)
Indirect
Competition . For the purposes of
Sections 7(b) and 7(c), but without limitation thereof, the
Executive will be in violation thereof if the Executive engages in
any or all of the activities set forth therein directly as an
individual on the Executive’s own account, or indirectly as a
general partner, joint venturer, employee, agent, salesperson,
consultant, officer and/or director of any firm, association,
partnership, corporation or other entity, or as a limited partner,
member or stockholder of any limited partnership, limited liability
company, or corporation in which the Executive or the
Executive’s spouse, child or parent owns, directly or
indirectly, individually or in the aggregate, more than five
percent (5%) of the limited partnership interests, limited
liability company interests or outstanding stock, as the case may
be.
(e)
Application of
Restrictions Respecting Confidential Information, Solicitation and
Competition . The requirements and
obligations of the Executive under Section 7 shall be in
addition to, and not a limitation under, any other requirements and
obligations of the Executive, at law or otherwise.
(f)
Consideration
. The
parties agree that for all purposes of this Agreement and
otherwise, Executive’s continued employment with Quixote and
Quixote’s continued provision of confidential information to
Executive are sufficient consideration for this
Section 7. In addition, to the extent that Quixote has
an obligation to pay the Separation Benefit under the Agreement,
fifty percent (50%) of the Separation Benefit hereunder, or an
aggregate amount equal to fifty percent (50%) of such Separation
Benefit paid hereunder (to the extent the Separation Benefit is
paid in installments), shall be considered the consideration
payable
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