EXHIBIT 10(ix)
EMPLOYMENT AND NONCOMPETITION AGREEMENT
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This AGREEMENT is made as of September 15, 1997 by and between BRASS EAGLE
INC., a Delaware corporation ("Company"), and E. XXXX XXXXX ("Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ Executive and Executive desires to
be employed by the Company to undertake such responsibilities as are necessary
to assist in running the businesses of the Company, all in accordance with the
provisions of this Agreement; and
WHEREAS, Executive has been an officer and a shareholder of the Company and
has valuable knowledge and experience pertaining to the business of the Company,
and the parties desire to arrange for the continuation of his services to the
Company; and
WHEREAS, as an inducement to the Company extending its employment
arrangement with Executive, the parties also desire to arrange for Executive's
undertaking not to compete with the Company;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:
1. Employment. Commencing as of the date hereof and continuing through
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three (3) years following the date hereof (the "Initial Term"), the Company
hereby employs Executive as President and Chief Executive Officer of the Company
with responsibility for the performance of such executive services and duties as
shall be reasonably assigned to and requested of him by, and subject to the
direction and supervision of, the Board of Directors of the Company. Subject to
the provisions of Section 11 hereof, commencing on September 15, 2000 and the
15th day of each September thereafter, the term of this Agreement shall be
automatically extended for additional one (1) year period(s), on the same terms
and conditions as contained herein, unless either party gives written notice to
the other party of his or its intention not to extend the employment hereunder
at least ninety (90) days prior to September 15 of any year following the
Initial Term of this Agreement (the "Additional Term(s)") (the Initial Term and
the Additional Term(s), if any, are hereinafter referred to as the "Employment
Period"). Executive hereby accepts such employment and agrees that he will
devote his full time and undivided efforts to the business and affairs of the
Company and serve the Company in its business and perform his duties to the best
of his ability.
2. Salary and Bonus. (a) As compensation for his services during the
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Employment Period, Executive shall receive a base annual salary at the rate of
One Hundred Forty Thousand Dollars ($140,000). Effective January 1, 1998, such
base annual salary shall be increased to One Hundred Sixty Thousand Dollars.
The Company will make a good faith effort to adjust Executive's salary to be
consistent with the top quartile of similarly situated executives. Such salary
shall be subject to being increased, but not decreased, based upon such annual
review,
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although any increase shall be at the sole discretion of the Board of Directors
of the Company. Such salary shall be payable in such installments as is
customary for the Company, but no less frequently than in equal monthly
installments. In the event Executive's employment with the Company is
terminated prior to the expiration of the Employment Period pursuant to
subsections (b) or (c) of Section 11 of this Agreement, Executive's accrual of
such salary shall terminate immediately and any unpaid installments of accrued
salary shall be paid at the next installment date. In the event Executive's
employment with the Company is terminated prior to the expiration of the
Employment Period pursuant to subsections (d), (e), (f) or (g) of Section 11 of
this Agreement, such salary shall be payable for either the remainder of the
Employment Period or for one (1) year after the date of Executive's termination,
whichever is greater.
(b) In addition to the base salary referred to in Section 2(a) hereof, and
subject to the discretion of the Company's Board of Directors, Executive will be
eligible to receive bonus compensation as a performance incentive. In order to
be eligible for bonus compensation, Executive must be employed by the Company on
December 31 of the year for which bonus compensation is to be paid. The
compensation will be based on Executive's base annual salary as of December 31,
1997 and will determined with reference to the Company's operating performance,
based on operating income net of bonuses paid and prior to amortization, as
follows:
(i) Annual bonus compensation payable for 1997 shall be equal to a
fixed percentage of Executive's base salary as of December 31, 1997,
according to the following table:
Bonus of Dollar Amount Equal to
Operating Income Percentage of Base Salary
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$5 million 5.0%
$5.1 million 10.0%
$5.2 million 15.0%
$5.3 million 20.0%
$5.4 million 25.0%
$5.5 million 30.0%
$5.7 million 33.3%
(ii) Annual bonus compensation payable for the years 1998 and
thereafter and performance targets established in connection therewith
shall be determined by the Company's Board of Directors based upon the
recommendation of Executive.
(c) In addition to the base salary and bonus compensation referred to in
Sections 2 (a) and (b) hereof, respectively, Executive will be eligible to
receive awards of options to purchase shares of the Company's common stock,
subject to the discretion of the Company's
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Board of Directors, in accordance with the provisions of any incentive or bonus
stock option plan as the Board of Directors may adopt, from time to time.
3. Expenses. The Company shall reimburse Executive for reasonable
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expenses incurred by him or on behalf of the Company with such documentation as
is requested by the Company in order for it to comply with the Internal Revenue
Code and regulations thereunder in connection with the proper deduction of such
expenses. Such reimbursements shall be due and payable upon receipt by the
Company of the related documentation. The Company's obligation to make such
reimbursements shall survive the termination of this Agreement with respect to
unreimbursed expenses incurred prior to such time.
4. Benefits. During the Employment Period, Executive shall be entitled
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to participate in any employee benefit plans which are maintained or established
by the Company for its senior executives generally, subject, however, to all of
the terms and conditions thereof, including any eligibility requirements
therefor. In any event, the Company agrees to provide (i) medical insurance
coverage equal to that provided for other senior executives of the Company; (ii)
life insurance coverage equal to 1.6 times Executive's base salary; and (iii)
participation in the Company's 401(k) plan or other standard retirement plan
maintained by the Company. In the event Executive's employment with the Company
is terminated prior to the expiration of the Employment Period pursuant to
subsections (b) or (c) of Section 11 of this Agreement, Executive's accrual of
such benefits shall immediately cease. In the event Executive's employment with
the Company is terminated prior to the expiration of the Employment Period
pursuant to subsections (d), (e), (f) or (g) of Section 11 of this Agreement,
Executive shall receive such benefits for either the remainder of the Employment
Period or for one (1) year after the date of Executive's termination, whichever
is greater.
5. Vacations. During the Employment Period, Executive shall be entitled
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to four (4) weeks of paid vacation.
6. Nondisclosure. Executive acknowledges that information obtained by him
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relating to the Company and its business constitutes a valuable, special and
unique asset of the Company. Except for information which is already in the
public domain, which is publicly disclosed by persons other than Executive, or
which is required by law to be disclosed, Executive shall at all times during
and after his employment with the Company hold in strictest confidence any and
all confidential information within his knowledge (whether acquired prior to or
during his employment with the Company) concerning the products, processes,
services, business, suppliers and customers of the Company. Such confidential
information includes, without limitation, financial information, sales and
distribution information, price lists, the identity and lists of actual and
potential customers and technical information, all to the extent that such
information is not intended by the Company for public dissemination.
7. Noncompetition. Commencing as of the date hereof and continuing
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through the date of the expiration of the Employment Period, or one (1) year
after the termination of his employment with the Company, whichever is later,
Executive shall not, without the prior written
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consent of the Company, (a) solicit business from or compete with the Company
for the business of any customer of the Company as reflected on the books of the
Company either as of the date hereof or as of the date of Executive's
termination of employment with the Company, provided, however, that this clause
(a) shall not preclude or prevent Executive from soliciting from any such
customer of the Company business for products or services that are not in
competition with the products developed, manufactured, prepared, sold or
distributed or services rendered by the Company or (b) either directly or
indirectly operate or perform any advisory or consulting services for, invest in
(other than stock in a publicly-held corporation which is traded on a recognized
securities exchange or in an established over-the-counter market, provided that
the ownership of such equity interest does not give Executive the right to
control or substantially influence the policy or operational decisions of such
corporation), or otherwise become associated with in any capacity, any company,
partnership, organization, proprietorship or other entity which develops,
manufactures, prepares, sells or distributes products or performs services then
in competition with the products developed, manufactured, prepared, sold or
distributed or services rendered by the Company anywhere in the markets in which
the Company competes at any time during such period.
8. Noninterference. Executive shall not, at any time during the
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Employment Period, or within one (1) year after the termination of his
employment with the Company, whichever is later, without the prior written
consent of the Company, directly or indirectly, induce or attempt to induce any
employee, agent or other representative or associate of the Company to terminate
their relationship with the Company, or in any way directly or indirectly
interfere with such a relationship or any relationship between the Company and
any of its suppliers or customers.
9. Disclosure of Proprietary Information. Executive will promptly
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disclose in writing to the Board each improvement, discovery, idea and invention
relating to the business of the Company made or conceived by Executive, either
alone or in conjunction with others, while employed by the Company during the
Employment Period, or one (1) year after termination of his employment with the
Company, whichever is later, if such improvement, discovery, idea or invention
results from or was suggested by such employment. Executive will not disclose
any such improvement, discovery, idea or invention to any person, except the
Company. Each such improvement, discovery, idea or invention shall be the sole
and exclusive property of, and is hereby assigned to, the Company and at the
request of the Company, Executive will assist and cooperate with the Company and
any person or persons from time to time designated by the Company to obtain for
the Company the grant of any letters patent in the United States and/or any
foreign country, covering any such improvement, discovery, idea or invention,
and will in conjunction therewith execute such applications, statements,
assignments or other documents, furnish such information and data and take all
such other action (including without limitation the giving of testimony) as the
Company may from time to time reasonably request. Should Executive not be an
employee of the Company at the time such cooperation and assistance is rendered,
he shall be reimbursed for all reasonable and related out-of-pocket expenses
incurred by him.
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10. Remedies. Executive acknowledges that Sections 6, 7, 8 and 9 hereof
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were negotiated at arms' length and are required for the fair and reasonable
protection of the Company. In the event of an alleged breach by Executive of
his obligations under Sections 6, 7, 8 and 9, the Company shall give Executive
written notice thereof, and Executive shall have thirty (30) days to cease such
activities to the satisfaction of the Company before the Company may file any
legal action pursuant to this Section 10. Executive and the Company further
acknowledge and agree that a continued breach of any of Executive's obligations
and agreements hereunder will result in irreparable and continuing damage to the
Company for which there will be no adequate remedy at law, and therefore,
Executive and the Company agree that, in the event of any breach of Executive's
obligations and agreements hereunder, the Company and its successors and assigns
shall be entitled to injunctive relief and such other and further relief,
including monetary damages, as is proper in the circumstances. It is further
agreed that the running of the periods provided above in Sections 7, 8 and 9,
respectively, shall be tolled during any period during which Executive shall be
adjudged to be in violation of any of his obligations under such Sections.
11. Termination. This Agreement shall terminate and, except for the
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obligations of the Company set forth in Sections 2, 3 and 4 hereof and the
obligations of Executive set forth in Sections 6, 7, 8 and 9, all of which
obligations of the Company and Executive shall survive such termination, all
rights and obligations of the Company and Executive hereunder shall be
completely void upon the earliest to occur of the following, subject to the
provisions of Sections 2, 3 and 4:
(a) expiration of the Employment Period;
(b) voluntary termination by Executive of his employment with the
Company, a right reserved to Executive hereunder;
(c) discharge by the Company of Executive as a result of (i)
Executive's continuing, repeated , intentional and willful
failure or refusal to perform his duties as required by this
Agreement, including , without limitation, failures or refusals
that, in the Company's view, amount to insubordination or breach
of fiduciary duty or bring the company into disrepute in its
community; or (ii)Executive's (A) conviction of, or plea of no
contest to, any felony( whether or not involving the company)
other than felonies involving traffic offenses, (B) defrauding
the Company or embezzling its funds, or (C) habitual abuse of
alcohol or drugs;
(d) discharge by the Company of Executive without cause;
(e) the death of Executive;
(f) at the election of Executive, the change of control of the
Company or the merger, consolidation or other analogous
reorganization or transaction
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with any other entity or person or the sale, transfer, lease or
other conveyance by the Company of all or any substantial part of
its assets; or
(g) at the election of the Company, the disability of Executive,
which, for purposes hereof, shall mean the inability of Executive
for a continuous period of six (6) months to perform the
essential functions of his position hereunder on an active full
time basis, with or without reasonable accommodations, by reason
of disability or impairment of health. A certificate from a
physician acceptable to both the Company and Executive to the
effect that Executive is or has been disabled and incapable of
performing the essential functions of his position with or
without reasonable accommodations for the Company as previously
performed shall be conclusive of the fact that Executive is
incapable of performing such reasonable services and is or has
been disabled for the purposes of this Agreement.
12. Reformation of Agreement; Severability. In the event that any of
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Sections 6, 7, 8 or 9 shall be found by a court of competent jurisdiction to be
invalid or unenforceable as against public policy, such court shall exercise its
discretion in reforming such provision to the end that Executive shall be
subject to such restrictions and obligations as are reasonable under the
circumstances and enforceable by the Company. In the event that any other
provision or term of this Agreement is found to be void or unenforceable to any
extent for any reason, it is the agreed upon intent of the parties hereto that
all remaining provisions or terms of this Agreement shall remain in full force
and effect to the maximum extent permitted and that this Agreement shall be
enforceable as if such void or unenforceable provision or term had never been a
part hereof.
13. Assignment. This Agreement shall inure to the benefit of, and shall
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be binding upon, the Company, its successors and assigns and upon Executive and
his heirs, estate and personal representatives. Neither the Company nor
Executive shall assign this Agreement without the prior, written consent of the
other party.
14. Arbitration. In the event a dispute concerning the terms and
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operation of this Agreement arises, and if the Company and Executive do not come
to an agreement with respect to such dispute within thirty (30) days after the
notice of any such dispute is provided by either party under Section 15 hereof,
the Company and Executive shall submit the dispute to arbitration in Little
Rock, Arkansas, under the commercial rules of the American Arbitration
Association then in effect. Such arbitration shall be final and binding upon
the parties and enforceable in a court of competent jurisdiction. Judgment on
such arbitration award, from which no appeal or review may be taken, may be
entered in any court having jurisdiction and enforced accordingly.
15. Notice. Any notice required to be given under the terms of this
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Agreement shall be in writing, and mailed to the recipient's last known address
or delivered in person. If sent
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by registered or certified mail with delivery restricted to the addressee, such
notice shall be effective when mailed; otherwise, it shall be effective upon
delivery.
(i) If to the Company, to:
Brass Eagle Inc.
c/o Charter Oak Partners
00 Xxxxxx Xxxxxx, Xxxxxxxx X
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxx
Telecopier: (000) 000-0000
(ii) If to Executive, to:
E. Xxxx Xxxxx
0000X Xxxxx 0xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
16. Entire Agreement; Amendments; Waivers. This Agreement contains the
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entire agreement between the parties with respect to the subject matter hereof.
It may not be changed orally but only by a written agreement signed by Executive
and an officer of the Company specifically designated by the Board of Directors
of the Company to execute such amendment. The terms or covenants of this
Agreement may be waived only by a written instrument specifically referring to
this Agreement and executed by the party waiving compliance. The failure of the
Company at any time or from time to time to require performance of any of
Executive's obligations or agreements under this Agreement shall in no manner
affect the Company's right to enforce any provisions of this Agreement at a
subsequent time; and the waiver by the Company of any right arising out of any
breach shall not be construed as a waiver of any right arising out of any
subsequent breach.
17. Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Arkansas.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BRASS EAGLE INC.
(the "Company")
By: /s/ Xxxxxx Xxxxxxx
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Its: President
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/s/ E. Xxxx Xxxxx
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E. Xxxx Xxxxx
("Executive")
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