EXHIBIT 10.50
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EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is dated as of January 1,
1998, and is entered into by and between Calmar Inc., a Delaware corporation
(the "Corporation"), and Xxxxxxx X. Xxxxx (the "Executive").
R E C I T A L S:
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A. The Corporation and the Executive have heretofore entered into
that certain Employment Agreement dated as of September 1, 1994 which Agreement
expired by its terms on December 31, 1997.
B. The Corporation desires to continue to have the benefit of the
services of the Executive and the Executive desires to continue to render such
services to the Corporation.
C. The Corporation and the Executive desire to set forth the terms
and conditions of the Executive's continued employment with the Corporation in
this Agreement.
A G R E E M E N T:
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NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants and conditions contained herein, the parties agree as follows:
1. Employment. The Corporation hereby continues the Executive's
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employment, and the Executive hereby accepts such continued employment with the
Corporation, on the terms set forth herein. The Executive shall serve as
President and Chief Executive Officer of the Corporation, and shall perform all
the duties that are usual and customary for the offices of President and Chief
Executive Officer, including, without limitation, the performance of all
services and acts necessary or advisable to assist in the management, conduct
and successful operations of the business of the Corporation and such other
usual and customary duties as may be assigned to him from time to time by the
Corporation's Board of Directors (the "Board"), subject always to the policies
set by the Board and the Bylaws of the Corporation.
2. Employment Term. This Agreement shall be for a term commencing
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on January 1, 1998 and automatically terminating on the later of (i) the close
of business on the date on which a Change of Control (as hereinafter defined)
occurs or (ii) May 2, 1998, unless earlier terminated pursuant to the terms
hereof (the "Employment Term").
3. Principal Office. The Executive's principal office and normal
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place of work, subject to reasonable travel, shall be at the executive offices
of the Corporation located in City of Industry, California.
4. Compensation, Expenses and Benefits.
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4.1 Base Salary. The Executive shall receive a base salary
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during the Employment Term at the rate of $301,000 per annum, payable in
accordance with the Corporation's standard payroll procedures.
4.2 Bonus. In addition to the amount set forth in Section 4.1
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hereof, the Executive shall be entitled to a bonus for the Employment Term as
payable under the Corporation's Executive Incentive Compensation Plan based on
the "Target Opportunity Percentage" (as defined in said plan) and prorated for
applicable portion of the Corporation's 1998 fiscal year corresponding to the
period of the Employment Term.
4.3 Expenses. During the Employment Term, the Executive shall
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be reimbursed for his reasonable travel, entertainment, business, meeting and
similar expenditures, incurred for the benefit of the Corporation in accordance
with the policies of the Corporation as adopted by the Board from time to time.
As an additional condition to the reimbursement of such expenses by the
Corporation to the Executive, the Executive shall provide the Corporation with
copies of all available invoices and receipts, and otherwise account to the
Corporation in sufficient detail and with adequate documentation to allow the
Corporation to confirm the business nature of the expenses and claim an income
tax deduction for such paid items, if such items are deductible.
4.4 Additional Benefits.
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(a) During the Employment Term, the Executive shall be entitled
to all rights and benefits under any life, family medical and dental insurance
plans and long-term or permanent disability plans which the Corporation adopts
from time to time for executive officers of the Corporation, subject to any
waiting periods or other qualifications or limitations set forth in such plans.
(b) In addition to, and not in limitation of the benefits
provided under Section 4.4(a) hereof, the Executive shall be entitled to receive
the same type and amount of benefits provided under the Calmar Inc. Retiree
Health Benefit Plan (the "Retiree Health Plan"), in the event that the Executive
satisfies the conditions for eligibility to participate in the Retiree Health
Plan. Notwithstanding anything in the Retiree Plan to the contrary:
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(i) The Executive will be entitled to benefits described in
the preceding sentence before he reaches the age of sixty-five if the Executive
completes five or more years of credited service, as determined under the rules
of the Retiree Health Plan;
(ii) The Company shall have the discretion as to whether the
benefits payable to the Executive under this Section 4.4(b) shall be paid
through the Retiree Health Plan, an individual insurance contract, by self-
funding or otherwise; and
(iii) Benefits shall be payable under clause (ii) above only
if the Executive remains employed by the Company continuously until retirement,
unless the Executive is terminated by the Company without Cause or there occurs
a Change of Control (as hereinafter defined), in which event benefits shall be
payable as if the Executive had completed five or more years of credited service
and retired.
(c) During the Employment Term, the Executive shall be entitled to
four weeks per year of paid vacations, as well as personal and sick days
consistent with the general policy of the Corporation adopted by the Corporation
from time to time for its executive officers.
(d) During the Employment Term, the Executive will participate in
the Corporation's Executive Auto Policy No. 3000 to compensate the Executive for
expenses incurred in connection with the use of an automobile (including,
without limitation, insurance, maintenance and gasoline therefor) in the
performance of the Executive's duties hereunder.
(e) During the Employment Term, the Executive shall have the right
to participate in a Supplemental Executive Retirement Plan ("SERP"). Benefits
shall be payable under the SERP only if the Executive remains employed by the
Corporation continuously until retirement, unless the Executive is terminated by
the Company without Cause or there occurs a Change of Control (as hereinafter
defined), with the benefits payable thereunder to become payable immediately
upon termination. The amount of the annual benefit payable with respect to the
Executive shall be determined in accordance with whichever of the following
payment schedules the Executive elects:
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Amount of Benefit
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Age at Benefit Joint and Survivor
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Commencement Single Life Annuity Annuity
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60 30,000 27,300
61 39,000 35,490
62 48,000 43,680
63 57,000 51,870
64 66,000 60,060
65 or older 75,000 68,250
The Executive's benefit under the SERP shall be offset, on a dollar for dollar
basis, by the benefit payable to the Executive under the Calmar Pension Plan
(the "Pension Plan"). The Executive's election as to the form of the benefit
payable under the SERP shall be the same as the Executive's election as to the
form of the benefit payable under the Pension Plan. If the Executive elects
that his benefit under the Pension Plan be payable in the form of a Single Life
Annuity, the amount of the benefit under the SERP shall be payable in the form
of a Single Life Annuity. On the other hand, if the Executive elects that his
benefit under the Pension Plan be payable in the form of a Joint and Survivor
Annuity, the amount of the benefit under the SERP shall be payable in the form
of a Joint and Survivor Annuity.
5. Termination of Employment.
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5.1 Termination For Cause.
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(a) The Corporation may terminate the employment of the
Executive for Cause (as hereinafter defined) at any time during the Employment
Term by giving written notice thereof to the Executive in accordance with
Section 8.7 hereof. Cause, as used herein, means: (i) fraud, embezzlement, gross
negligence or other illegal or wrongful conduct engaged in by the Executive
materially detrimental to the business or reputation of the Corporation; (ii)
the conviction of the Executive of a felony; (iii) the development or pursuit of
interests by the Executive materially adverse to the Corporation; or (iv) the
intentional imparting by the Executive of material confidential information
relating to the Corporation or any of its businesses to a third party, other
than in the course of performing his duties hereunder.
(b) Upon termination in accordance with this Section 5.1,
the Executive shall be entitled to no further compensation hereunder other than
(i) the base salary provided by Section 4.1 hereof earned hereunder through the
effective date of such termination but not paid previously by the Corporation;
(ii) the reimbursement of expenses provided by Section 4.3 hereof through the
effective date of such termination but not
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reimbursed previously by the Corporation; and (iii) the benefits provided by
Section 4.4 hereof through the effective date of such termination. Such payments
shall be made by the Corporation on the effective date of such termination.
5.2 Voluntary Termination by the Executive.
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(a) The Executive may terminate his employment at any
time during the Employment Term by giving no less than 30 days' prior written
notice to the Corporation in accordance with Section 8.7 hereof.
(b) Upon termination in accordance with this Section 5.2,
the Executive shall be entitled to no further compensation hereunder other than
(i) the base salary provided by Section 4.1 hereof earned hereunder through the
effective date of such termination but not paid previously by the Corporation;
(ii) the reimbursement of expenses provided by Section 4.3 hereof through the
effective date of such termination but not reimbursed previously by the
Corporation; and (iii) the benefits provided by Section 4.4 hereof earned
hereunder through the effective date of such termination. Such payments shall be
made by the Corporation on the effective date of such termination.
5.3 Termination Due to Death or Disability.
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(a) This Agreement shall automatically terminate upon the
death of the Executive. In addition, if any disability or incapacity of the
Executive to perform his duties as the result of any injury, sickness or
physical, mental or emotional condition continues for a period of 90 days in any
12-month period during the Employment Term, or can reasonably be expected to
continue for such period (in either case, a "Disability"), the Corporation may
terminate the Executive's employment by giving 15 days' prior written notice
thereof to the Executive in accordance with Section 8.7 hereof.
(b) Upon termination in accordance with this Section 5.3,
the Executive (or the Executive's estate, as the case may be) shall be entitled
to no further compensation hereunder other than (i) the base salary provided by
Section 4.1 hereof earned hereunder through the date of death but not paid
previously by the Corporation, or in the case of a Disability, through the
effective date of such termination as provided in the notice but not paid
previously by the Corporation; (ii) the bonus provided by Section 4.2 hereof
earned under the Corporation's Incentive Plan, as amended, for the most recently
completed fiscal year of the Corporation prior to the date of death (as
determined pursuant to the Corporation's Incentive Plan, as amended) but not
paid previously by the Corporation, or in the case of a Disability, prior to the
effective date of such termination as provided in the notice (as determined
pursuant to the Corporation's Incentive Plan, as amended) but not paid
previously
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by the Corporation; (iii) the reimbursement of expenses provided by Section 4.3
hereof through the date of death but not reimbursed previously by the
Corporation, or in the case of a Disability, through the effective date of such
termination as provided in the notice but not reimbursed previously by the
Corporation; and (iv) the benefits provided by Section 4.4 hereof through the
date of death, or in the case of a Disability, through the effective date of
such termination as provided in the notice. Such payments shall be made by the
Corporation within 30 days after the date of death of the Executive, or in the
case of a Disability, on the effective date of such termination as provided in
the notice.
5.4 Termination Without Cause by the Corporation.
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(a) The Corporation may terminate the Executive's
employment under this Agreement without Cause at any time during the Employment
Term.
(b) Upon termination in accordance with this Section 5.4,
the Executive shall be entitled to no further compensation hereunder other than
(i) 125 percent of the base salary provided by Section 4.1 hereof payable for
the remaining period of the Employment Term as if the Executive's employment
hereunder was not terminated, provided that in no event shall the amount payable
under this clause (i) be less than the amount of the annual base salary
(including any amounts deferred under the Deferred Compensation Plan) for a 12
month period as provided by Section 4.1; (ii) the bonus provided by Section 4.2
hereof earned under the Corporation's Incentive Plan, as amended, for the most
recently completed fiscal year of the Corporation prior to the effective date of
termination (as determined pursuant to the Corporation's Incentive Plan, as
amended) but not paid previously by the Corporation; (iii) the reimbursement of
expenses provided by Section 4.3 hereof through the effective date of such
termination but not reimbursed previously by the Corporation; and (iv) the
benefits provided by Section 4.4 hereof through the effective date of such
termination. The payments referred to in clause (i) of this Section 5.4(b) shall
be made, at the option of the Executive, either in accordance with the
Corporation's standard payroll procedures for the period during which such
payments are required to be so paid or in one lump sum payment within 15 days
after the effective date of such termination. The payments referred to in
clauses (ii), (iii) and (iv) of this Section 5.4(b) shall be made by the
Corporation on the effective date of such termination.
5.5 Obligation to Mitigate. The Executive shall be obligated
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to make reasonable efforts to mitigate damages or the amount of any payments
provided for under Section 5.4(b) of this Agreement upon termination for any
reason of the Executive's employment by the Corporation by seeking other
employment, and the amount of any payments provided for under this Agreement
upon such termination shall be reduced by any compensation or other remuneration
earned by the Executive as a result of employment by another employer after the
date of termination or otherwise. In addition, the payments
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required pursuant to clause (v) of Section 5.4 terminate at such time as the
Executive becomes eligible for coverage under a group health plan sponsored by a
subsequent employer of the Executive. The Executive shall promptly provide the
Corporation with any payroll stubs, W-2 forms and other evidence of
compensation, remuneration and incentives, as the Corporation may reasonably
request.
6. Rights After a Change of Control.
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(a) Upon and following a Change of Control (as hereinafter
defined) the Executive shall be entitled to the following:
(i) The Executive shall be entitled to continued
use of the 1997 BMW 740i (the "Vehicle") currently leased by the Corporation for
the Executive during the remainder of the current lease term (expiring July
2001). The Corporation shall continue to pay the monthly lease payments and any
other amounts due under the lease as currently paid by the Corporation, but the
Executive's entitlement to participate under the Corporation's Executive Auto
Policy (referred to in Section 4.4(d) above) shall cease upon the Change of
Control. The Executive shall be responsible for maintaining and insuring the
Vehicle in good condition. The Executive shall be entitled to purchase the
Vehicle at any time in accordance with the provisions of the Corporation's
Executive Auto Policy No. 3000.
(ii) The Corporation shall transfer title and
ownership of that certain personal computer (Model IBM 760 ThinkPad and Docking
Station) currently used by the Executive to the Executive without requirement of
any payment.
(iii) The Corporation agrees (to the extent permitted
by applicable law) to continue the participation of the Executive and his
dependants (to the extent currently participating) in the Calmar Executive
Medical Plan (or any successor comparable plan adopted by the Corporation) until
the Executive reaches age 65, with the Corporation paying all premiums and other
costs attributable thereto, except that the Executive shall be responsible for
paying the premiums or other payments as generally required of senior executives
of the Corporation from time to time. In the event that the Corporation shall
fail to maintain the Calmar Executive Medical Plan or any successor comparable
plan, or that the Executive shall be deemed to be ineligible to continue
participation therein for himself and/or his dependants, the Corporation will
pay up to $400 per year to cover the cost of premiums for a similar plan until
the Executive reaches age 65.
(b) "Change of Control", as used herein, means: (i) the
acquisition in one or more transactions of beneficial ownership (within the
meaning of Rule 13d(3) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) by (y) any person or entity (other than FS Equity Partners
II, L.P., a California limited partnership
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("FSEP") and its affiliates) or (z) any group (as defined in Section 13(d) under
the Exchange Act) other than FSEP and its affiliates of any Voting Stock of the
Corporation such that, as a result of such acquisition, such person, entity or
group has the ability to elect, directly or indirectly, a majority of the
members of the Board of Directors of the Corporation, or (ii) the sale of all or
substantially all of the assets of the Corporation (including within such assets
the capital stock of any subsidiary) and its subsidiaries, in a single
transaction or a series of transactions, to any person or persons. "Voting
Stock" as used in this Section 6(b) shall mean all shares having general voting
power to vote in any election of the Board of Directors of the Corporation.
7. Noncompetition and Confidential Information.
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7.1 Noncompetition. As long as the Executive is employed by
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the Corporation, the Executive shall not directly or indirectly (i) engage in;
(ii) own or control any interest in (except as a passive investor of not more
than five percent of the capital stock or publicly traded notes or debentures of
a publicly held company); or (iii) act as a director, officer, manager, employee
trustee, agent, partner, trade venturer, manager, participant, consultant or be
obligated to, or connected in any advisory, business or ownership capacity with
any Person (a "Competitor") that directly or indirectly (A) conducts any
activity in competition with the business of the Corporation, including the
production, promotional and marketing activities of the Corporation or engages
in the distribution of products or services which compete with the business of
the Corporation; (B) provides management, consulting, advisory or similar
services to any Person so engaged, or takes any action to finance, guarantee or
provide any similar assistance to any Person so engaged; or (C) influences or
attempts to influence any Person who is a contracting party with the Corporation
with respect to the action of the Corporation to terminate or amend any written
or oral agreement with the Corporation. For the purposes of this Agreement the
Executive shall be deemed to be indirectly engaging in any business which is a
Competitor if the Executive in any way provides, or facilitates the provision
of, funds, credit enhancements or other financial support to any Competitor
whether or not the Executive thereby obtains an interest in such Competitor.
7.2 Nondisclosure of Confidential Information. Except as
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directed by the Corporation in writing or as required by applicable law, the
Executive shall not at any time during or after the Employment Term, disclose
any confidential information of the Corporation or any of its Affiliates to any
Person whatsoever, examine or make copies of any reports or other documents,
papers, memoranda or extracts, nor utilize for his own benefit or for the
benefit of any other party any such confidential information, and the Executive
shall at all times exercise diligence to maintain any secret or proprietary
character of all confidential information.
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7.3 Survivability. The Executive acknowledges that his
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obligations hereunder shall continue beyond the Employment Term with respect to
any confidential information which came into his possession during the
Employment Term, and these obligations shall be binding upon his assigns,
executors, administrators and other legal representatives.
7.4 Return of Confidential Information. Upon termination of
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the Executive's employment, the Executive shall promptly deliver to the
Corporation all drawings, blueprints, manuals, lists, documentation, tapes,
disks and other storage media, letters, notes, notebooks, reports, flow charts
and all other materials in his possession or under his control relating to the
Corporation's activities and constituting, making use of or referring to any
confidential information, as well as all other property of the Corporation or
its respective clients which is then in the Executive's possession or under the
Executive's control.
8. Miscellaneous.
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8.1 Assignment. The services to be performed by the Executive
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hereunder are personal in nature, and the obligations to perform such services
and the conditions and covenants of this Agreement cannot be delegated by the
Executive. The Corporation may assign (provided that such assignment is with
full recourse), with absolute discretion, any or all of its rights, and
delegate, with absolute discretion, any or all of its obligations, under this
Agreement to any of its affiliates, successors and assigns.
8.2 Waiver and Amendment. No waiver of any term, provision or
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condition of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be or be construed as a further or continuing
waiver of any such term, provision or condition or as a waiver of any other
term, provision or condition of this Agreement. This Agreement may be amended
only by a written agreement signed by the parties hereto.
8.3 Entire Agreement. This Agreement constitutes the entire
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agreement of the parties hereto and supersedes and replaces any and all prior
agreements and understandings, whether oral or written, express or implied,
between the parties with respect to the subject matter herein.
8.4 Severability. Nothing in this Agreement shall be construed
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so as to require the commission of any act contrary to law, and wherever there
may be any conflict between any provision of this Agreement and any statute,
ordinance, regulation, or other Rule of law, the latter shall prevail, but in
such event the provision of this Agreement so affected shall be curtailed and
limited only to the extent necessary to bring it within the
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requirement of such law. In no event shall such illegality or invalidity affect
the remaining parts of this Agreement.
8.5 Captions. The captions of the several sections and
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paragraphs of this Agreement are used for convenience only and shall not be
considered or referred to in resolving questions of interpretation with respect
to this Agreement.
8.6 Applicable Law. This Agreement shall be governed by, and
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construed in accordance with, the laws of the State of California.
8.7 Notices. Except as otherwise provided herein, any notice
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or demand which, by the provisions hereof, is required or which may be given to
or served upon the parties hereto shall be in writing and, if by telegram,
telecopy or telex, shall be deemed to have been validly served, given or
delivered when sent, if by personal delivery, shall be deemed to have been
validly served, given or delivered upon actual delivery and, if mailed, shall be
deemed to have been validly served, given or delivered three business days after
deposit in the United States mails, by first class, as registered or certified
mail, with proper postage prepaid and addressed to the party or parties to be
notified, at the following addresses (or such other address(es) as a party may
designate for itself by like notice):
If to the Corporation:
Calmar Inc.
000 Xxxxx Xxxxxxxx Xxxxxx Xxxx
Xxxx xx Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Mr. C. Xxxxxxx Xxxxxxx
If to the Executive:
Xx. Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxx
Xx Xxxxxx, Xxxxxxxxxx 00000
In each case, with copies to:
Xxxxxxx Xxxxxx & Co. Incorporated
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
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Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxx Xxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0
Xxx Xxxxxxx, Xxxxxxxxxx 00000
8.8 Withholding Taxes. Any and all payments required to be
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made to the Executive under this Agreement shall be subject to the deduction of
any and all applicable federal, state, social security and other taxes the
Corporation is required to withhold from its employees generally.
8.9 Arbitration. Any dispute or controversy arising under
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or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators in the State of
California, County of Los Angeles, in accordance with the rules of the American
Arbitration Association then in effect. The parties hereto expressly authorize
the arbitrators to award attorneys' fees to the prevailing party in the manner
and to the extent that such arbitrators deem appropriate. Judgment may be
entered on the arbitrator's award in any court having jurisdiction. To the
extent necessary to obtain any provisional relief of any dispute or controversy
arising under or in connection with this Agreement, the Corporation and the
Executive expressly consent to the jurisdiction of the State of California,
County of Los Angeles, and consent that any service of process therefor may be
made by personal service upon the Corporation or the Executive wherever each may
be located, or by certified or registered mail directed to the Corporation or
the Executive at each such party's last known address.
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8.10 Counterparts. This Agreement may be executed in two or
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more counterparts, each of which shall be deemed a original, and all of which
together shall constitute a single, original Agreement.
IN WITNESS WHEREOF, this Agreement has been executed by each of
the parties effective as of the day and year first above written.
THE CORPORATION:
CALMAR INC.,
a Delaware corporation
By:
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Name:
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Its:
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THE EXECUTIVE:
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XXXXXXX X. XXXXX
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