1
Exhibit 10.5
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made in Medina, Ohio
and is entered into on this 26th day of April, 1997, and effective as of April
1, 1997, by and between Corrpro Companies, Inc., an Ohio corporation (the
"Company"), and Xxxx X. Xxxxxxx ("Executive").
WITNESSETH:
In consideration of the recitals, the mutual covenants and agreements
contained in this Agreement, and other good and valuable consideration, the
parties agree as follows:
SECTION 1 - TERM AND DUTIES.
--------- ----------------
(a) The Company employs Executive under this Agreement, effective
April 1, 1997 and ending on March 31, 1998 unless sooner
terminated in accordance with the provisions of this
Agreement.
(b) During his employment pursuant to this Agreement, Executive
shall serve as Senior Vice President and Chief Financial
Officer of the Company and shall be responsible for the duties
attendant to such office, which duties will be generally
consistent with his position as an executive officer of the
Company. Executive shall report to the Chief Executive
Officer, shall retain the right to perform the duties of
Senior Vice President and Chief Financial Officer and shall
serve at the direction of the Board of Directors of the
Company.
SECTION 2 - COMPENSATION AND BENEFITS.
--------- --------------------------
(a) During his employment pursuant to this Agreement, Executive
shall receive an annual base salary of one hundred sixty four
thousand Dollars ($ 164,000.00) as compensation for his
services to the Company (the "Base Compensation"), such
compensation to be payable in
1
2
regular installments in accordance with standard Company
policy.
(b) During his employment pursuant to this Agreement, and except
as otherwise expressly provided in this Agreement, Executive
shall be entitled to participate on substantially the same
terms as other Senior Level Executives (all persons with the
title Vice President and above employed by the Company) in all
employee benefit and executive benefit plans, pension plans,
medical benefit plans, group life insurance plans,
hospitalization plans, or other employee welfare plans that
the Company may adopt from time to time during Executive's
employment pursuant to this Agreement, and as such plans may
be modified, amended, terminated, or replaced from time to
time. In addition, Executive shall receive such other
compensation as the Board of Directors of the Company (or a
committee thereof designated by the Board) may from time to
time determine to pay Executive whether in the form of
bonuses, stock options, incentive compensation or otherwise.
(c) During his employment pursuant to this Agreement, and except
as otherwise provided in this Agreement, Executive shall be
entitled to participate on substantially the same terms and
conditions as other Senior Level Executives in all fringe
benefits provided such personnel, including but not limited
to, vacation, sick pay, and company car.
SECTION 3 - TIME COMMITMENT AND PERFORMANCE. Executive shall devote his
best efforts and all of his business time, attention, and skill to the business
and the operations of the Company and shall perform his duties and conduct
himself at all times in a manner consistent with his appointment as Senior Vice
President and Chief Financial Officer of the Company; except, however, Executive
may serve on corporate, civic, or charitable boards or committees provided that
he advises the Board of Directors of the Company of all such service, and
provided, further, that if such service shall require a substantial commitment
(as such term may be defined by the Board from time to time) by Executive, such
service must
2
3
be approved in advance, in writing, by the Board, such approval not to be
unreasonably withheld.
SECTION 4 - COMPETITIVE ACTIVITY. From the effective date of this
Agreement and one (1) year following the later of (i) termination of Executive's
employment with the Company, or (ii) termination of any consulting agreement
which the parties may enter into subsequent to termination of Executive's
employment, Executive will not, directly or indirectly, either for himself or on
behalf of any other corporation, partnership, person, group, or entity:
(a) enter into any contract or agreement, or own, directly or
indirectly, any interest in, or engage in or conduct in any
manner or capacity (whether as shareholder, consultant,
advisor, principal, agent, partner, officer, director,
employee, or otherwise), any business competitive with any
line of business then being conducted or planned to be
conducted by the Company;
(b) attempt to divert or take away, in any manner, the business or
patronage of any customer or potential customer of the Company
or otherwise take from or deprive the Company of any business
opportunity;
(c) attempt to hire or employ, whether as an employee, agent,
independent contractor or otherwise, any employees of the
Company; or
(d) materially interfere, in any manner, with the business, trade,
good will or customers of the Company.
For purposes of this Section 4, there shall be disregarded any interest
of Executive arising solely from the ownership of less than a five percent (5%)
equity interest in a corporation whose stock is regularly traded on any national
securities exchange or regularly traded in the over-the-counter market.
SECTION 5 - PROPRIETARY INFORMATION. During his employment pursuant to
this Agreement and at any time thereafter, Executive shall not disclose, or
cause to be disclosed in any manner, to
3
4
any corporation, partnership, person, group, or entity (other than the Company
or its authorized employees or representatives) or otherwise use for any purpose
other than the Company's business, any trade secrets or confidential or
proprietary information of the Company, including, but not limited to, the
following:
(a) The Company's customer or prospective customer lists;
(b) information concerning the Company's promotional, pricing, or
marketing practices;
(c) the Company's business records; and
(d) the Company's trade secrets and other confidential and
proprietary information.
Upon termination of employment under any circumstances, Executive or
his estate or representatives, shall promptly return to the Company all property
of the Company including any and all electronic devices and related data storage
devices and shall destroy or erase any data which cannot be returned. This
Section 5 shall survive the termination of this Agreement.
SECTION 6 - COMPENSATION DURING DISABILITY. Executive shall receive his
Base Compensation during the first ninety (90) business days of absence due to
Disability (as hereinafter defined) In the event of Executive's Disability and a
determination by the Board of Directors that no reasonable accommodations for
the disability can be made, the Company may terminate Executive's employment
under this Agreement. If the Company terminates Executive's employment under
this Agreement because of Executive's Disability, the Company shall pay to
Executive the amounts, and provide to Executive the benefits, specified in
Section 7 hereof. The amount of benefits to be paid by the Company to Executive
under this Section 6 or under Section 7 shall be reduced by any amount paid or
to be paid pursuant to Company sponsored disability plans. For purposes of this
Agreement, ADisability" shall mean Executive's inability, through physical or
mental illness or accident or other cause, to perform his major and substantial
duties on a full time basis as determined by a physician hired by the Board of
Directors for this purpose (the "Company Physician"). If the physician regularly
attending Executive (the "Executive Physician") disagrees with the
4
5
opinion of the Company Physician, the Company Physician and the Executive
Physician shall choose a third consulting physician (the expense of which shall
be borne by the Company), and the written opinion of the third consulting
physician shall be conclusive as to such disability. In conjunction with this
Section 6, Executive consents to such examination, to furnish any medical
information requested by any examining physician, and to waive any applicable
physician-patient privilege that may arise because of such examination. All
physicians, except the Executive Physician, selected hereunder must be
board-certified in the specialty most closely related to the nature of the
disability alleged to exist.
SECTION 7 - RESIGNATION DUE TO COMPANY FAILING TO HONOR ITS OBLIGATIONS
AND TERMINATION WITHOUT GOOD CAUSE OR DUE TO DISABILITY. Anything to the
contrary contained in this Agreement notwithstanding, (i) if the Company (a)
fails to honor any of its obligations under this Agreement, and if the Company
does not cure the determined failure within thirty (30) days after a
determination of a failure in accordance with the procedures set forth below and
if as a result Executive resigns his employment with the Company or (b) assigns
duties to Executive materially inconsistent with Executive's position,
authority, duties or responsibilities as contemplated by Section 1(b) of this
Agreement which results in a material diminution of the position, authority,
duties or responsibilities of Executive as acknowledged by Section 1(b) and if
as a result Executive resigns his employment with the Company, or (ii) the
Company terminates Executive's employment with the Company under this Agreement
without Good Cause (as defined in Section 8), or (iii) if Executive's employment
terminates by reason of disability as provided for in Section 6 hereof,
Executive shall be entitled to receive and the Company shall pay to Executive
the following:
(a) SALARY. Executive's Base Compensation earned through the date
of resignation or termination and a lump sum payment for any
unused vacation shall be paid on or before the next regularly
scheduled pay-date after the effective date of the resignation
or termination.
5
6
(b) SEVERANCE PAYMENT. A severance payment for a period of one
year shall be paid in twelve (12) equal, consecutive monthly
payments commencing on the first day of the month following
such resignation or termination in the amount (net of any
required withholdings and Disability payment offsets as
provided in Section 6) equal to Executive's Base Compensation.
In the event of Executive's death prior to the receipt of all
twelve (12) payments, the payments shall continue to
Executive's spouse. In the event of the spouse's death, the
payments shall continue in accordance with the terms of
Executive's Will, but in no event will more than a total of
twelve (12) payments be made.
(c) BENEFITS. Following any resignation or termination for which a
payment under Section 7(b) is owing, Executive, or his spouse
and eligible dependents in the event of Executive's death,
shall continue to participate at the expense of the Company
for a period of twelve (12) months following such resignation
or termination in the same or comparable hospital, medical,
accident, disability and life insurance benefits as he
participated in immediately prior to resignation or
termination of his employment unless by law, the terms of any
insurance policy or the terms of the applicable benefit plans,
continued coverage is not permitted; provided, however, that
Executive, or his spouse and eligible dependents in the event
of Executive's death, shall pay any employee cost associated
with such benefits which would otherwise have been paid by
Executive if he had continued his employment. To the extent
that during Executive's employment, any such benefits were
part of a program of benefits for Senior Level Executives of
the Company, generally, then any subsequent modification,
substitution, or termination of any such benefits, generally,
shall also apply to Executive and to the benefits available to
Executive pursuant to this Section 7(c).
(d) EARLY CESSATION OF BENEFITS. All benefits (other than those
with respect to which continuation is required by law) under
Section 7(c) above shall cease upon the death of
6
7
Executive and his spouse.
(e) INCENTIVE PLANS. An amount equal to a full year's
participation in the short-term incentive bonus plan then in
effect as provided for in Section 2 hereof shall be paid to
Executive within the time period prescribed by such plan,
(i.e. the Executive will be paid based upon actual results as
if the Executive had been employed the full twelve months and
had received the full twelve month Base Compensation). In
addition, any payments due Executive under the incentive plans
then in effect as provided for in Section 2 hereof (other than
any short-term incentive bonus plans) in accordance with the
terms of such plans shall be paid to Executive within the time
period prescribed by such plans.
(f) STOCK OPTIONS. To the extent that Executive shall have been
entitled to do so at the termination of his employment, the
Executive shall be entitled to exercise any and all stock
options (the "Options") granted to Executive by the Company at
any time within three (3) months after such termination, but
not beyond the original term of the Option (the "Termination
Period"). In the event that the agreement under which the
Options were granted to Executive (the "Option Agreements") do
not provide for such post termination exercise, the Company
hereby agrees to amend the Option Agreements as of the date of
termination in order to enable Executive to exercise Options
as provided in this Section 7(f). If for any reason, the
Company is unable to amend the Option Agreements as provided
for in this Section 7(f), the Company shall, at the
Executive's request at any time within the Termination Period,
compensate Executive in an amount equal to the excess of the
fair market value of the Common Stock purchasable under the
Option as of the date of such request ( as defined in the
Option Agreement) over the exercise price of such Options.
For purposes of this Section 7, the following procedure shall be used
to determine whether the Company has failed to honor any of its obligations
under this Agreement; (i) Executive shall submit a claim
7
8
to the Company's Board of Directors specifically identifying the nature of the
failure; (ii) within thirty (30) days of receipt of such claim, the Board of
Directors shall determine whether they agree with Executive that a failure has
occurred and shall communicate, in writing, their determination to Executive;
and (iii) if Executive disagrees with the determination of the Board of
Directors, Executive, within ten (10) days of Executives's receipt of such
determination, may submit the claim to arbitration in accordance with the
provisions of Section 16 of this Agreement, and such determination shall be
final and binding upon the Company and Executive.
SECTION 8 - TERMINATION FOR GOOD CAUSE. The Company shall have the
right to terminate Executive's employment with the Company under this Agreement
for Good Cause. As used in this Agreement, the term "Good Cause" shall mean:
(a) personal dishonesty within the course of employment with the
Company which evidences a want of integrity or is a breach of
trust;
(b) persistent failure to abide by reasonable rules and
regulations governing the transaction of business of the
Company as the Company's Board of Directors may from time to
time adopt or approve;
(c) persistent inattention to duties, or the commission of acts
within employment with the Company amounting to gross
negligence or willful misconduct; provided that for purposes
of this Section 8(c), no act or failure to act, on Executive's
part, will be considered "willful" unless done or omitted to
be done by him not in good faith and without reasonable belief
that his action or omission was in furtherance of the
Company's business.
(d) misappropriation of funds or property of the Company or
committing any fraud against the Company or against any other
person or entity in the course of employment with the Company;
8
9
(e) misappropriation of any corporate opportunity, or otherwise
obtaining personal profit from any transaction which is
adverse to the interests of the Company or to the benefits of
which the Company is entitled;
(f) The indictment for the commission of a felony; or
(g) any material violation of the terms of this Agreement.
Termination of employment of Executive pursuant to this Section 8 shall
be made by delivery to Executive of a letter from the Board or Chairman of the
Board generally setting forth a description of the particulars of the conduct
which provides the basis for a termination of Executive for Good Cause. Within
ten (10) business days of Executive's receipt of such letter, Executive shall be
provided an opportunity, together with his counsel, to present and discuss the
matter with the Board. Following such procedures, the Board may, by majority
vote of the full Board terminate the employment of Executive for Good Cause.
In the event that the Company shall terminate Executive's employment
under this Agreement for Good Cause, the Company shall have no further
obligation to Executive under this Agreement except to pay his Base Compensation
and unused vacation earned through the date of termination, on or before the
next regularly scheduled pay date after termination.
SECTION 9 - VOLUNTARY TERMINATION OTHER THAN SECTION 7. Executive may
voluntarily terminate his employment with the Company under this Agreement,
other than as provided in Section 7 hereof, upon not less than ninety (90) days
prior written notice to the Company. In the event that Executive terminates his
employment pursuant to this Section 9, the Company shall have no further
obligation to Executive under this Agreement except to pay his Base Compensation
and unused vacation earned through the date of resignation.
SECTION 10 - TERMINATION UPON DEATH. Executive's employment under this
Agreement
9
10
shall terminate upon the death of Executive. Upon such termination,
Executive's designated beneficiary, or his personal representative shall receive
the payments/benefits described below from the Company:
(a) SALARY. Executive's Base Compensation earned through the date
of termination and a lump sum payment for any unused vacation
shall be paid on or before the next regularly scheduled pay
date after termination.
(b) BONUS. An amount equal to a full year's participation in the
short-term incentive bonus plans then in effect as provided
for in Section 2 hereof shall be paid within the time period
prescribed by such plan.
(c) BENEFITS. Benefits will continue for Executive's spouse and
eligible dependents in accordance with Company policy and as
required by law.
(d) INCENTIVE PLANS. Any payments due Executive under the
incentive plans then in effect as provided for in Section 2
hereof (other than any short-term bonus plans) in accordance
with the terms of such plans shall be paid within the time
period prescribed by such plan.
SECTION 11 - POST TERMINATION CONSULTING AND COOPERATION. For a period
of six (6) months following the termination of Executive's employment under this
Agreement, regardless of whether such termination is by Executive or by the
Company or whether it is with or without Good Cause, Executive, at the sole
discretion of the Company, shall provide the Company and its designated agents,
advisors, and executives with such consultation as the Company may reasonably
require up to a maximum of twenty (20) hours per week. However, Executive shall
have no consulting obligation under this Section 11 if he resigns under
circumstances which entitle him to payments under Section 7 hereof. Company
shall pay Executive an hourly rate of one hundred nine Dollars ($ 109.00) per
hour and reimburse Executive for all reasonable expenses and out-of-pocket costs
incurred in connection with fulfilling his obligations under this Section 11.
The Company shall endeavor to schedule such consulting so that Executive's
obligations under
10
11
this Section 11 to assist Company shall not unreasonably interfere with
Executive's business prospects or responsibilities to a new employer.
SECTION 12 - BREACHES AND REMEDIES. Executive acknowledges and agrees
that in the event that Executive violates the undertakings set forth in Section
4 or 5 hereof, other than in an immaterial fashion, the Company, in addition to
any other rights or remedies to which it may be entitled under law or this
Agreement, shall be entitled to enforce the provisions of Section 4 or 5 by
injunction or other equitable relief.
SECTION 13 - SEVERABILITY. The provisions contained in this Agreement
are severable and in the event any provision shall be held to be invalid,
unenforceable or overbroad, in whole or in part, by a court of competent
jurisdiction, the remainder of such provision and of this Agreement shall not be
affected thereby and shall be given full force and effect.
SECTION 14 - NOTICES. Any notices, requests, demands, or other
communications provided for by this Agreement shall be sufficient if made in
writing delivered personally or if sent by registered or certified mail, return
receipt requested.
SECTION 15 - SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the Company, its successors and assigns, and to
the benefit of Executive, his heirs and legal representatives, except that
Executive's duties to perform future services are expressly agreed to be
personal and not to be assignable or transferable.
SECTION 16 - APPLICABLE LAW, ARBITRATION AND JURISDICTION. This
Agreement shall be governed by and construed under the laws of the State of
Ohio. The parties agree that any dispute arising out of this employment
relationship except for disputes arising under Sections 4 and 5 of this
Agreement shall be settled by arbitration conducted in accordance with the rules
of conciliation and
11
12
arbitration of the American Arbitration Association, such arbitration to be
conducted in Cleveland, Ohio, or at such other location as the parties may
agree. Costs of such arbitration i.e. arbitrator's fees and expenses shall be
borne equally by Executive and the Company. Each party shall be responsible for
its own attorneys fees and other expenses. With respect to disputes arising
under Sections 4 and 5 of this Agreement, Executive and the Company consent and
submit themselves to the jurisdiction of the courts of the State of Ohio.
SECTION 17 - AMENDMENT. This Agreement may be amended only by a written
document signed by both parties.
SECTION 18 - NO WAIVER. No waiver by either party at any time of any
breach by the other party of, or compliance with, any condition or provision of
this Agreement to be performed by the other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
SECTION 19 - HEADINGS. The headings contained in this Agreement are for
reference only and shall not affect the meaning or interpretation of any
provision of this Agreement.
SECTION 20 - PRIOR AGREEMENTS. This Agreement supersedes in all
respects all prior agreements between the parties, whether written or oral,
regarding the subject matter hereof, including, but not limited to, the Original
Employment Agreement.
12
13
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
CORRPRO COMPANIES, INC.
By: /s/ Xxxxxx X. Xxx
---------------------------
Its: President & CEO
---------------------------
"COMPANY"
/s/ Xxxx X. Xxxxxxx
---------------------------
---------------------------
"EXECUTIVE"
13
