Eric G. Wintemute
Change in Control Severance Agreement
Second Amendment to Change in Control Severance Agreement
EX-10.5 2 dex105.htm EMPLOYMENT AGREEMENT BETWEEN AMERICAN VANGUARD CORP. AND ERIC G. WINTEMUTE
This Employment Agreement (this “Agreement”) is made effective as of January 15, 2008, by and between AMERICAN VANGUARD CORPORATION, a Delaware corporation (referred to herein as “American Vanguard”) and ERIC G. WINTEMUTE (referred to herein as “Executive”).
NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Statement of Work.
(a) Executive is engaged as President and Chief Executive Officer of American Vanguard and its wholly-owned subsidiary AMVAC Chemical Corporation and agrees to perform such duties, services and responsibilities as are consistent with such positions. Executive’s duties, services and responsibilities will be determined by American Vanguard’s Board of Directors (the “Board of Directors”) and will be performed under the overall supervision of, and consistent with, the policies of the Board of Directors. American Vanguard hereby agrees to employ Executive and Executive hereby accepts employment upon the terms and conditions set forth herein.
(b) Executive shall do his utmost to further enhance and develop the best interests and welfare of American Vanguard. Executive shall perform no acts contrary to the best interests of American Vanguard and American Vanguard shall be entitled to all of the benefits, profits or other results arising from or incident to all work, services and advice of Executive.
(c) Executive agrees to fully comply with reasonable rules and procedures as may be promulgated by American Vanguard in its sole and absolute discretion.
2. Period of Employment.
(a) Term. The term of this Agreement (the “Term”) shall commence on January 15, 2008 (the “Effective Date”) and shall continue until terminated pursuant to Section 6.
(b) Policies. American Vanguard shall advise Executive of its general corporate policies and procedures as to travel, entertainment and other expenses, and accounting and internal controls, and Executive shall comply with such policies and procedures. If there are any inconsistencies between the terms of this Agreement and American Vanguard’s stated policies and procedures the terms of this Agreement will prevail.
3. Cash Compensation. From the Effective Date through December 31, 2008, Executive’s annual base salary shall be five hundred twenty seven thousand two hundred fifty three dollars ($527,253.00). Executive’s annual base salary shall be payable in accordance with the Company’s then existing standard payroll schedule, policies and procedures.
Notwithstanding the foregoing, the Board of Directors retains the right, in its sole and absolute discretion, to award salary increases to Executive in excess of the designated minimum.
4. Incentive Compensation.
(a) Cash Incentive Compensation. Executive will receive at the end of each year of employment a bonus in the amount determined by the Board of Directors in its sole and absolute discretion. Executive will be eligible to receive a bonus based upon Executive’s performance against reasonable qualitative and quantitative benchmarks to be established by American Vanguard in its sole discretion.
(b) Equity Compensation. On an annual basis, the Board will decide upon an award of equity to Executive. The form, amount and terms of the award shall be at the Board’s sole discretion.
5. Fringe Benefits. In addition to reimbursable expenses allowable under Section 2(b) above, during the Term, American Vanguard will offer certain employment-related benefits to Executive as follows:
(a) In addition to the payment of salary as described above, during the Term, Executive shall be entitled to all rights and benefits for which Executive may be eligible under any bonus, participation or additional compensation plans, pension or profit-sharing plans, group life, medical, health, dental and/or disability insurance or other benefits American Vanguard may, in its sole discretion, provide for Executive or its employees generally.
(b) During the Term, Executive shall be entitled to four business weeks of vacation time each year without loss of compensation. In the event that Executive is unable to take the total amount of vacation time authorized herein during any year, he shall be paid in cash for the value of such accrued vacation, and such accrual shall be reduced to zero.
(c) Executive will be provided a car allowance of $1,500 per month.
(d) If Executive should die during the Term, American Vanguard agrees to pay the designated beneficiary any amounts (including salary) and continue any benefits due Executive under this Agreement for a period of twelve (12) months after the date of death.
(e) Executive shall be entitled to be reimbursed for reasonable and customary business expenses including those that have been either historically approved or deemed acceptable by the Board.
6. Termination for Certain Causes.
(a) Termination for Cause. Executive may be terminated for cause (as defined in this Section 6(a)) at any time, without prior notice. For these purposes, cause for termination by American Vanguard will include a determination by American Vanguard, acting in good faith based upon actual knowledge at such time, that Executive (i) is or has engaged in a willful or grossly negligent failure to perform duties as an Executive or officer of American Vanguard (other than as a result of incapacity due to disability), (ii) has committed an act of dishonesty, gross carelessness, or other misconduct in connection with his duties under this Agreement, (iii) has committed any act or series of acts without the Board of Directors’ consent which would likely have a direct, substantial and adverse effect on American Vanguard, its business or reputation, (iv) has engaged in habitual misuse of alcohol or any non-prescription drug or intoxicant which has adversely effected the performance of his duties under this Agreement, or (v) conviction in a criminal proceeding against Executive involving a felony (collectively “Cause”). In the event of termination of Executive’s employment for Cause, all rights of Executive (and his spouse and children) under Section 3, 4 and 5 shall cease as of the date of such termination. If termination is “for cause” under this section, the Board of Directors shall, within seven days of such termination provide written notice to Executive of all contractual basis for such termination, and a general statement of the facts allegedly supporting such termination for cause.
(b) Termination Due to Death or Disability. If Executive, due to physical or mental disability or incapacity, is unable substantially to perform his duties hereunder, American Vanguard, at its sole discretion, shall have the right to terminate Executive’s employment hereunder on thirty (30) days’ prior written notice. If Executive is able to and recommences rendering services and performing his duties hereunder within such thirty (30)-day notice period, such notice shall be vitiated. In addition, in the event of Executive’s death or disability, Executive or his personal representatives shall be entitled to receive all earned but unpaid compensation through the date of termination of Executive’s employment (on a prorated basis). In addition, in the event of Executive’s death or disability, Executive of his personal representatives shall be entitled to receive all earned but unpaid compensation up to and including the date of termination of Executive’s employment and one full year thereafter. Nothing in this section shall affect or offset employee’s right to receive payment pursuant to a disability insurance policy or state/federal disability payments. The Company further agrees that as a part of Executive’s compensation hereunder, it shall continue to provide for the term of this Agreement, for Executive’s benefit a disability insurance policy at least equal to that coverage currently in place.
(c) Termination Without Cause. If American Vanguard terminates Executive’s employment without Cause, and not as a result of Executive’s death or disability pursuant to Section 6(b), it shall (i) give Executive written notice thereof and, (ii) provided Executive executes and delivers a full release of claims in a form reasonably acceptable to American Vanguard, it shall pay Executive an amount equal to the product of two (2) multiplied by the average annual cash compensation (i.e., annual base salary plus annual cash incentive bonus) received by the Executive over the two immediately preceding calendar years ; such payment will be made in accordance with American Vanguard’s then existing standard payroll schedule, policies and procedures. It is understood that any severance payment under this paragraph 6(c) shall be in lieu of, and not in addition to any severance payment to which Executive is entitled under the Change-in-Control Severance Agreement dated as of January 1, 2004 between Executive and American Vanguard. If Executive is qualified for payment of severance under the Change-in-Control Severance Agreement, then he shall not be entitled to any severance payment under this paragraph 6(c).
(d) Deferred Compensation. Notwithstanding anything herein to the contrary, the parties intend that no amounts payable under this agreement shall be subject to the provisions of Section 409(a)(1) of the Internal Revenue Code of 1986, as amended, and this Agreement shall be interpreted and administered accordingly.
7. Withholdings. American Vanguard shall deduct and withhold from the compensation payable to Executive hereunder any and all applicable federal, state and local income and employment withholding taxes and any other amounts required to be deducted or withheld by American Vanguard under applicable statutes, regulations, ordinances or orders governing or requiring the withholding or deduction of amounts otherwise payable as compensation or wages to Executive.
8. Disclosures and Assignment of Rights. Executive hereby agrees to promptly disclose to American Vanguard, and Executive hereby, without further compensation, agrees to assign and assigns to American Vanguard or its designee, Executive’s entire right, title, and interest in and to all designs, trademarks, logos, business plans, business models, business names, economic projections, product innovations, discoveries, formulae, processes, manufacturing techniques, trade secrets, customer lists, supplier lists, inventions, research, improvements, ideas, patents, service marks, and copyrightable works (collectively, “Inventions”), including all rights to obtain, register, perfect, and enforce these Inventions, which relate to Executive’s work during the period of Executive’s employment with American Vanguard, whether or not during normal working hours, or which are aided by the use of American Vanguard’s experience, time, material, equipment, or facilities. It is further understood that no rights are hereby conveyed in inventions, if any, made by Executive prior to Executive’s employment with American Vanguard.
9. California Labor Code. Executive understands that California Labor Code Section 2870 provides:
(a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his rights in an invention to his employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:
(1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2) Result from any work performed by the employee for the employer.
(b) To the extent that a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.
10. Notification Pursuant To Labor Code § 2872. Executive understands, and hereby acknowledges having received notice, that this Agreement does not apply to an invention which qualifies fully under the provisions of Labor Code § 2780, which is set forth in Section 9 of this Agreement.
11. Assistance. Executive agrees to perform, during and after Executive’s employment, all acts deemed necessary or desirable by American Vanguard to permit and assist it, at its expense, including execution of documents and assistance or cooperation in legal proceedings, in obtaining and enforcing the full benefits, enjoyments, rights, and title in the items assigned to American Vanguard as set forth in Section 8 above.
12. Conflicts of Interest. Executive recognizes that Executive owes a primary and fiduciary duty to American Vanguard and that Executive shall not have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction of any nature, which is in conflict with the proper and faithful discharge of Executive’s duties as an employee of American Vanguard. Without limiting the generality of the foregoing, Executive agrees that Executive will not, while employed by American Vanguard, directly or indirectly:
(a) Be employed by or receive any compensation from, a customer, supplier or competitor of American Vanguard; or
(b) Have any ownership or financial interest of any nature in a customer, supplier or competitor of American Vanguard, except where such ownership is stock in a corporation and consists of less than one percent (1%) of the outstanding capital stock of such customer, supplier or competitor and where such stock is publicly held and listed on a recognized stock exchange or actively traded in the over-the-counter market except with Board of Director approval; or
(c) Have or participate in any dealings on behalf of American Vanguard with a customer or supplier that employs, or more than five percent (5%) of whose ownership interest is beneficially held by, Executive’s spouse or any brother, sister, parent, child or grandchild of Executive or Executive’s spouse, or any person living in Executive’s household or the spouse of any of the foregoing persons except with Board of Director approval; or
(d) Engage or participate in any activity, business enterprise, business opportunity, employment, occupation, consulting, or other business activity which American Vanguard shall determine in good faith to be, or reasonably planned to be, in competition with American Vanguard or to interfere with Executive’s duties as an employee of American Vanguard; or
(e) Solicit, accept or receive any gift having a value of One Thousand Dollars ($1,000.00) or more, whether in the form of money, service, loan, hospitality (except for ordinary business meals), thing or promise, or in any other form, under circumstances in which it could reasonably be inferred that the gift was intended to influence Executive, in the performance of Executive’s duties on behalf of American Vanguard, or was intended as a reward for any action on Executive’s part on behalf of American Vanguard, unless such fact or activity is fully disclosed in writing to and discussed by the Board of Directors and the Board of Directors approves (and/or ratifies), in writing, of such fact or activity.
13. Information of Others. Executive certifies and acknowledges that Executive will not disclose or utilize in Executive’s work with American Vanguard any secret or confidential information of others (including any prior employers), or any inventions or innovations of Executive’s own which are not included within the scope of this Agreement.
14. Confidential Information. American Vanguard may, from time to time, provide Executive confidential information or trade secrets regarding its business methods, plan, products, pricing, customer lists, and other confidential customer information including, but not limited to, contact names, purchasing authority(ies), product, know-how and/or customer service requirements, buying patterns, and other proprietary information. Executive agrees not to disclose or use any such confidential information concerning American Vanguard or its customer(s) or client(s), however obtained, except in furtherance of American Vanguard’ business, and at its discretion.
Executive agrees that, in addition to those matters specified above, Executive shall not, directly or indirectly, disclose, use, communicate, appropriate or exploit any information, whether of a business or personal nature, of and pertaining to American Vanguard. All information referred to herein is proprietary to American Vanguard and Executive agrees not to disseminate any of the information. Executive shall not speak with or write to the press for the purpose of divulging or disclosing confidential information learned in the context of his employment, including, without limitation, information by, about or concerning American Vanguard, its respective advisors, representatives, independent contractors, employees, vendors, attorneys, friends, agents and licensees.
Executive recognizes and acknowledges that a breach of this Agreement including its covenants, could not reasonably be compensated in damages in an action at law and that American Vanguard shall be entitled to injunctive relief obtainable in a court of competent jurisdiction, which may include but shall not be limited to restraining Executive from rendering any service which would breach this Agreement. However, no remedy conferred by any of the specific provisions of this Agreement (including this Paragraph) is intended to be exclusive of any other remedy, and each and every remedy shall be cumulative and in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute or otherwise. The election of any one or more remedies by American Vanguard shall not constitute a waiver of the right to pursue other available remedies. These obligations shall survive the termination of Executive’s employment.
15. Non-Raiding. Executive will not, either during Executive’s employment or for a period of one (1) year thereafter, either directly or indirectly, hire, solicit, induce or attempt to induce or encourage any of American Vanguard’ employees to leave their employment.
16. Return of Property. Executive agrees that upon request by American Vanguard, and in any event upon termination of employment, Executive shall turn over to American Vanguard all documents, papers or other material in Executive’s possession or under his control which may contain or be derived from confidential information, together with all documents, notes or other work product which is connected with or derived from Executive’s services to American Vanguard, whether or not such material is at the date hereof in Executive’s possession.
17. Enforceability. Should any provision or covenant of this Agreement prove to be invalid or unenforceable, the remaining provisions and covenants hereof shall remain in full force and effect. This Agreement (a) survives Executive’s employment by American Vanguard (except that Sections 1, 2, 3, 4 and 5 shall terminate upon termination of Executive’s employment), (b) does not in any way restrict Executive’s right or the right of American Vanguard to terminate Executive’s employment, (c) inures to the benefit of successors and assigns of American Vanguard, and (d) is binding upon Executive’s heirs and legal representatives.
18. Entire Agreement. This Agreement supersedes all other agreements, either oral or in writing, between the parties hereto with respect to the employment of Executive by American Vanguard and contains all of the covenants and agreements between the parties with respect to such employment. Each party acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by either party, or anyone acting on behalf of either party, that are not embodied in this Agreement and that no other agreement, statement or promise shall be valid or binding. Should any of the terms or conditions of this Agreement conflict with any of the terms and conditions of any of American Vanguard’s Employee Handbook or Manuals, the terms and conditions of this Agreement as to Executive shall govern and control. This Agreement may not be modified or amended unless in writing and signed by both the Board of Directors and Executive.
19. Interpretation. The waiver by American Vanguard of any breach of any provision herein shall not be binding upon American Vanguard unless in writing signed by the Board of Directors, and shall not constitute a continuing waiver or a waiver of any subsequent breach by Executive. No course of conduct or failure or delay in enforcing any provision of this Agreement shall affect the validity, binding effect or enforceability of this Agreement. This Agreement shall be governed by the laws of the State of California. In addition, this Agreement shall be binding upon each party’s heirs, successors, representatives, administrators and assigns. Any provision of this Agreement which creates an obligation of Executive to perform or honor certain covenants or obligations shall survive the dismissal or termination of his employment.
20. Construction. The language in all parts of this Agreement shall in all cases be construed simply, according to its fair meaning, and not strictly for or against any of the parties hereto. Without limitation, there shall be no presumption against any party on the ground that such party was responsible for drafting this Agreement or any part thereof.
21. Arbitration. Except a provided in this Section, any and all disputes between Executive and American Vanguard that arise out of Executive’s employment, including disputes involving the terms of this Agreement, shall be resolved first, through mediation before a mediator of the parties’ mutual choosing. In the event that the parties are unable to resolve such dispute through mediation within 90 days after first notice thereof, then either party may institute legal proceedings before a court seated in Orange County, California. Both parties waive objection to venue before such court. IN ADDITION, THE PARTIES WAIVE THE RIGHT TO A JURY TRIAL FOR ANY MATTER THAT IS BROUGHT BEFORE A COURT HEREUNDER. Notwithstanding anything in the foregoing to the contrary, in the event that a party would be materially adversely affected by submitting a matter to mediation (e.g., in the event of a claim that requires immediate equitable relief), such party may bring such claim before a court without first resorting to mediation.
22. Attorneys’ Fees. In the event that an action or proceeding is brought to enforce this Agreement, the prevailing party in such adjudication shall be entitled to recover its reasonable attorneys’ fees and costs from the non-prevailing party.
23. Headings. The headings contained herein are solely for the purpose of reference, are not part of this Agreement and shall not in any way affect the meaning or interpretation of this Agreement.
24. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
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EX-10.2 3 dex102.htm FORM OF CHANGE OF CONTROL SEVERANCE AGREEMENT
CHANGE OF CONTROL SEVERANCE AGREEMENT
This CHANGE OF CONTROL SEVERANCE AGREEMENT (this “Agreement”), effective as of January 1, 2004 (the “Effective Date”), is entered into by and between American Vanguard Corporation, a Delaware corporation (“American Vanguard”), and (the “Executive”). Capitalized terms used but not defined in the context of this Agreement are defined in Section 8.
WHEREAS, the Executive provides valuable services as an employee of American Vanguard or one of its subsidiaries (as applicable, the “Company”); and
WHEREAS, the Company wishes to provide security to the Executive to induce the Executive to continue to provide services to the Company.
NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained the value of which is hereby acknowledged, the Executive and the Company agree as follows:
1. Company Obligation. Subject to the limitations of this Agreement, if, during the Change of Control Period, the Company shall terminate the Executive’s employment or the Executive shall terminate his employment with the Company for Good Reason (either a “Termination”), the Company shall: (a) pay to the Executive in a single sum within thirty (30) days after the Termination an amount equal to two (2) times the Executive’s Compensation; (b) continue to pay Medical and Hospital Benefits for a period of twenty-four (24) consecutive months beginning with the date of Termination; (c) provide executive level outplacement assistance benefits; and (d) accelerate all of the Executive’s options or rights to acquire securities of the Company that are outstanding immediately prior to the date of a Change of Control, whether or not then exercisable, so that they automatically become immediately exercisable in full thereafter. If the Executive’s employment is terminated with the Company during the Change of Control Period for any reason, excluding a termination for Good Reason, or if the Company shall terminate the Executive’s employment due to Cause, death or the Executive’s disability which renders the Executive unable to perform the essential functions of the position, this Agreement shall terminate without any obligation of the Company to the Executive hereunder. If the Executive is offered employment by a successor to the Company or its business or assets or by its Affiliate or a successor to such Affiliate or its business or assets on terms and conditions that are reasonably comparable to the Executive’s terms and conditions of employment with the Company (including this Agreement), the Company shall not have an obligation hereunder to the Executive. If any payment under this Agreement, either alone or together with any other payment, benefit or transfer of property which the Executive receives or has a right to receive from the Company or its Affiliate (the “Total Payments”), would constitute a nondeductible “excess parachute payment” (as defined in Section 280G of the Internal Revenue Code of 1986, amended (the “Code”)) or nondeductible “employee remuneration” under Section 162(m) of the Code, such payment under this Agreement
shall be reduced to the largest amount as will result in no portion of the payment under this Agreement being such a nondeductible payment under the Code. The Company agrees to undertake such reasonable efforts as it may determine in its sole discretion to prevent any payment under this Agreement from constituting a nondeductible payment, provided the Company is not obligated to incur additional cost in order to make a payment nondeductible. The determination of any reduction under the preceding sentences shall be made by the Company in good faith, and such determination shall be binding on the Executive. The reduction provided by the fifth sentence of this Section 1 shall apply only if, after reduction for any applicable federal excise tax imposed by Section 4999 of the Code and federal income tax imposed by the Code, the total payment accruing to the Executive would be less than the amount of the Total Payments as reduced under said fifth sentence and after reduction for federal income taxes.
2. Executive Obligation. As condition of the Company’s performance of its obligations under Section 1, the Executive shall execute and deliver to the Company a written agreement, in form and substance reasonably satisfactory to the Company, releasing the Company and its representatives, agents and advisors from all past, then-current and future claims and liabilities, whether known or unknown, that the Executive may have.
3. Other Benefits. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any other plan, program, policy, practice, contract or agreement of or with the Company or its Affiliate for which the Executive is a party or may qualify (collectively, the “Other Benefits”), nor shall anything in this Agreement limit or otherwise affect the rights of the Company or the Executive under any Other Benefits. Any amounts payable or rights or benefits furnished to the Executive under any Other Benefits existing at or subsequent to the Termination shall be payable in accordance with the terms of such Other Benefits and without regard to this Agreement, except as explicitly modified by this Agreement; provided, however, that to the extent the amounts payable or rights or benefits furnished to the Executive under such Other Benefits exceed or are more favorable to the Executive than this Agreement, such Other Benefits shall govern and control. Amounts payable or in respect of this Agreement shall not be taken into account with respect to any other employee benefit plan or arrangement.
4. Mitigation. The Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under this Agreement, and the amounts payable under this Agreement shall not be reduced whether or not the Executive obtains other employment. The Company’s obligation to make the payment provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may have against the Executive or others.
(a) This Agreement is personal to the Executive and shall not be assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives, including the Executive’s executor, trustee or administrator.
(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement.
6. Resolution of Disputes. Any dispute related to the interpretation or enforcement of this Agreement shall be enforceable only by arbitration in Orange County, California (or such other metropolitan area to which the Company’s principal executive officers may be relocated if such relocation does not result in Good Reason for the Executive to terminate employment), in accordance with the commercial arbitration rules then in effect of the American Arbitration Association, before a panel of three arbitrators, one of whom shall be selected by the Company, the second of whom shall be selected by the Executive and the third of whom shall be selected by the other two arbitrators. In the absence of the American Arbitration Association, or if for any reason arbitration under the arbitration rules of the American Arbitration Association cannot be initiated, or if one of the parties fails or refuses to select an arbitrator, or if the arbitrators selected by the Company and the Executive cannot agree on the selection of the third arbitrator within seven days after such time as the Company and the Executive have each been notified of the selection of the other’s arbitrator, the necessary arbitrator or arbitrators shall be selected by the presiding judge of the court of general jurisdiction in the metropolitan area where arbitration under this Section would otherwise have been conducted. The arbitrators shall award to the Executive his reasonable legal fees and expenses in connection with any arbitration proceeding hereunder if (i) the arbitration is commenced by the Company and the Company has no reasonable basis for initiating such proceeding, or (ii) the arbitration is commenced by the Executive and the Executive prevails on the Executive’s claim in the arbitration proceeding. The arbitrators shall award to the Company its legal fees and expenses incurred in connection with any arbitration proceeding hereunder if the arbitration proceeding is commenced by the Executive, and the Executive has no reasonable basis for initiating such proceeding. The parties agree that the arbitration panel shall construe this Section 6 to determine whether either party is entitled to recover its cost and fees hereunder. Any award entered by the arbitrators shall be formal, binding and nonappealable and judgment may be entered thereon by any party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of California, without reference to principles of conflict of laws. The headings or captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:
or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notices and communications shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this Agreement such Federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.
(e) The Executive and the Company acknowledge that, except and only as may otherwise be provided under any other written agreement between the
Executive and the Company, if any, the employment of the Executive by the Company is ‘at will” and, may be terminated by either the Executive or the Company at any time. Moreover, if subsequent to the Change of Control Period, the Executive’s employment with the Company terminates, then the Executive shall have no rights under this Agreement.
(f) This Agreement constitutes the entire agreement between the parties hereto and contains all the agreements between such parties with respect to the subject matter hereof. This Agreement supersedes all other agreements, oral or in writing, between the parties hereto with respect to the subject matter hereof.
8. Defined Terms. For purposes of this Agreement, the following whenever used in the capitalized form shall have the meaning set forth below unless the context clearly indicates otherwise.
(a) “Affiliate” means, with respect to any person, any individual, corporation, partnership, association, joint-stock company, trust, unincorporated association or other entity (other than such person) that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with that person.
(b) “Annual Bonus” means the gross, annual bonus payable to the Executive for the fiscal year of the Company ending immediately preceding the Effective Date, but annualized in the event the Executive was not employed for the entire fiscal year with respect to which such bonus was paid.
(c) “Cause” shall means termination because of (1) an act of fraud, embezzlement or theft in connection with the Employee’s duties or in the course of the Employee’s employment, (2) unreasonable neglect or refusal by the Employee to perform his/her duties (other than any such failure resulting from the Employee’s incapacity due to disability), (3) the engaging by the Employee in willful, reckless, or grossly negligent misconduct which is or may be materially injurious to the Company, or (4) the Employee’s conviction of or plea of guilty or nolo contendere to a felony.
(d) “Change of Control” means, and be deemed to have occurred, on the date of the first to occur of any of the following:
(A) upon the vote of the shareholders of the Company (or its Affiliate) approving a merger or consolidation in which the Company’s (or its Affiliate) shareholders immediately prior to the effective time of the merger or consolidation will beneficially own immediately after the effective time of the merger or consolidation securities of the surviving or new corporation having less than 50% of the “voting power” of the surviving or new corporation, including “voting power” exercisable on a contingent or deferred basis as well as immediately exercisable “voting power”;
(B) upon the consummation of a sale, lease, exchange or other transfer or disposition by the Company (or its Affiliate) of all or substantially all of the assets of the Company (or its Affiliate) on a consolidated basis, provided, however, that the mortgage, pledge or hypothecation of all or substantially all of the assets of the Company (or its Affiliate) on a consolidated basis, in connection with a bona fide financing shall not constitute a Change of Control; or
(C) when any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the Securities Exchange Act as in effect on date hereof), directly or indirectly of more than fifty percent (50%) of the common stock of the Company (or its Affiliate).
(e) “Change of Control Period” means the continuous period commencing on the Effective Date and ending on the fifth anniversary of the Effective Date.
(f) “Compensation” means the gross, annual base salary, but excluding the Annual Bonus, paid by the Company (including amounts accrued but not paid) to the Executive in accordance with the generally applied payroll practices of the Company for the completed fiscal year of the Company immediately preceding the Effective Date. Compensation, for purposes of applying the two (2) multiplier in Section 1 of this Agreement, does not include any accrued balances in any other compensation program the Executive participates in. For purposes of this Agreement, any amounts due the Executive under any compensation plan other than base salary, shall be paid out in accordance with the provisions of the specific plan governing those said programs.
(g) “Good Reason” shall mean the occurrence of any of the following events unless, (i) such event occurs with the Executive’s express prior written consent, (ii) the event is an isolated, insubstantial or inadvertent action or failure to act which was not in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by the Executive, (iii) the event occurs in connection with the termination of the Executive’s employment for Cause, disability or death or (iv) the event occurs in connection with the Executive’s voluntary Termination of employment or other than due to the occurrence of one of the following events:
(A) the assignment to the Executive of any duties which are inconsistent with, or are a diminution of, the Executive’s positions, duty, title, office, responsibility and status with the Company, including without limitation, any diminution of the Executive’s position or responsibility in the decision or management processes of the Company, or any removal of the Executive from, or any failure to reelect the Executive to, any of such positions;
(B) a reduction in the Executive’s rate of base salary as in effect on a Change of Control or as the same may be increased from time to time during the term of this Agreement, other than a reduction which is a reduction generally applicable to all senior officers or executives of the Company and its Affiliates, including, without limitation, the Company’s Affiliates and successors after a Change of Control;
(C) any failure either to continue in effect any material benefit or incentive plan or arrangement (including, without limitation, a plan meeting the applicable provisions of Section 401(a) of the Code, group life insurance plan, medical, dental, accident and disability plans) in which the Executive is participating or eligible to participate on the date of a Change of Control or to substitute and continue other plans providing the Executive with substantially similar benefits (all of the foregoing is hereinafter referred to as “Benefit Plans”), or the taking of any action which would substantially and adversely affect the Executive’s participation in or materially reduce the Executive’s benefits or compensation under any such Benefit Plan or deprive the Executive of any material fringe benefit enjoyed by the Executive on the date of a Change of Control;
(D) a relocation of more than 50 miles from the location of the principal executive offices of the Company, or the relocation of the Executive’s principal place of employment for the Company of more than 50 miles, to any place other than the location at which the Executive performed his duties on the date of a Change of Control; or
(E) any failure by any successor or assignee of the Company to continue this Agreement in full force and effect.
If the Executive does not notify the Company and incurs the Termination within 120 days of the date the Executive knew or should have reasonably known of the event giving rise to Good Reason, the Executive shall be deemed to have waived the Executive’s right to a Termination based upon such event or the continuing effect or occurrence of such event.
(h) “Medical and Hospital Benefits” mean the medical and hospital benefits that would have been offered to the Executive and the Executive’s family members if the Executive’s employment had not terminated based on the same terms and conditions applicable to non-terminated similarly situated executives of the Company or its successor and their family members. Notwithstanding anything contained herein to the contrary, (A) any Medical and Hospital Benefits offered in accordance with this Agreement run simultaneously with any rights to health coverage continuation available to the Executive and the Executive’s family under applicable law and this Agreement shall constitute notice to the Executive and the Executive’s eligible family members of any right to elect health continuation coverage under the provisions of Section 4980B of the Code, Section 601 et. al. of the Employee Retirement Income
Security Act of 1974, as amended, (to the extent applicable) following the expiration of the Medical and Hospital Benefits coverage period under this Agreement; and (B) if the Executive or any of the Executive’s family members are covered under a group health plan of another employer, nothing in this Agreement shall obligate a plan maintained by the Company to pay benefits on a primary basis with respect to such person.
IN WITNESS WHEREOF, the parties have executed this Change of Control and Severance Agreement on the date first written above.
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EX-99.1 2 dex991.htm FORM OF AMENDMENT TO THE SEVERANCE AGREEMENT
CHANGE OF CONTROL SEVERANCE AGREEMENT
This Second Amendment to Change of Control Severance Agreement (the “Amendment”) effective as of July 11, 2008, is entered into by and between American Vanguard Corporation, a Delaware corporation (“American Vanguard”) and (the “Executive”).
WHEREAS, the Company and Executive have entered into that certain Change of Control Severance Agreement dated as of January 1, 2004, as amended (the “Agreement”); and
WHEREAS, the Company and Executive wish to amend the Agreement as set forth in this Amendment; and
WHEREAS, capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement, which is incorporated into this Amendment by reference;
NOW THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein and in the Agreement, the value of which is hereby acknowledged, the Executive and the Company agree to amend the Agreement as follows:
1. Section 8. Defined Terms. (e) “Change of Control Period” is deleted in its entirety and replaced with the following:
“Change of Control Period” means the continuous period commencing on the Effective Date and ending on December 31, 2013, provided a Change of Control has occurred during such continuous period.
Except as otherwise expressly amended hereby, the Agreement remains unchanged and in full force and effect.
AMERICAN VANGUARD CORPORATION
As an Individual
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