EMPLOYMENT AND NONCOMPETITION AGREEMENT - XXXXXXXX
THIS AGREEMENT (the "Agreement") is made and entered into this 19th day of
January, 1998, by and between XXXXXX X. XXXXXXXX ("Employee"), and THERMO-TILT
WINDOW COMPANY, a Delaware corporation (the "Company").
PRELIMINARY STATEMENTS
Prior to the execution of this Agreement the Employee entered into a
Consulting Services Agreement - Xxxxxxxx dated October 22, 1997 (the "Consulting
Agreement") whereby he agreed, among other things, to provide consulting
services to the Company in connection with general business analysis, management
and marketing, business opportunity evaluation and merger/acquisition location
and structuring services.
Prior to the execution of this Agreement the Employee entered into a Stock
Option Agreement - Xxxxxxxx dated October 22, 1997 (the "Consulting Option
Agreement") whereby he was granted nonqualified stock options (the "Consulting
Options") to purchase 25,000 shares of the Company's .001 par value common stock
("Common Stock"). The Consulting Options vest in whole on October 22, 1998, are
exercisable thereafter in whole or in part at an exercise price of $.50 per
share and expire on October 22, 2002. The Consulting Options were granted to
Employee in exchange for services to be rendered by him under the Consulting
Agreement.
Contemporaneously with the execution of this Agreement, the Company will
cause the Employee to be elected a director of the Company, appointed an officer
of the Company with the title of President and hired as an employee of the
Company.
Contemporaneously with the execution of this Agreement, in accordance with
Section 2 of the Consulting Agreement, Employee and the Company mutually agree
to terminate the Consulting Agreement; provided, however, the Consulting
Options under the Consulting Option Agreement, which previously served as
compensation under the Consulting Agreement, shall be reclassified and shall
serve as partial compensation under this Agreement. Employee agrees that the
Consulting Options shall continue to be governed by the Consulting Option
Agreement, as modified by this Agreement.
The Company has agreed to employ Employee on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual promises and
agreements contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
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SECTION 1. EMPLOYMENT.
Subject to the terms hereof, Company hereby agrees to employ Employee, and
Employee hereby accepts such employment as President. Employee shall serve the
Company during the Term (as defined in Section 2.1) of this Agreement, subject
to the direction of the Company's Board of Directors. As President, Employee
shall devote his best efforts and such business time as may be necessary or
appropriate on behalf of the Company:
(i) To serve as the chief executive officer of the Corporation,
whereby Employee shall preside at all meetings of the stockholders and the Board
of Directors and shall have general and active management of the business of the
Company.
(ii) To assist the Company in evaluating potential corporate
opportunities, including merger and acquisition structuring, negotiation and
closing services.
(iii) To provide the Company with a variety of general business
analyses, marketing and management services.
SECTION 2. TERM.
2.1. The term of Employee's employment hereunder shall be from January 19,
1998, through and including January 19, 2000 (the "Term"), unless terminated
prior thereto upon the occurrence of any of the following:
(i) The death or total disability of Employee. As used herein, "total
disability" means any physical or mental condition rendering the Employee
unable, for a total of six (6) months during any twelve month period, to perform
the duties and bear the responsibilities incident to the position referred to in
Section 1 hereof as determined by a physician acceptable to Employee and
Company; or
(ii) Company's termination of Employee's employment hereunder, upon
prior written notice to Employee, for "good cause." For the purposes of this
Agreement, "good cause" for termination of Employee's employment shall exist
only if (a) Employee is convicted of, pleads guilty to, or confesses to any act
of fraud, misappropriation or embezzlement or to any felony, (b) Employee has
engaged in a dishonest or disloyal act resulting in material damage or prejudice
to the Company, (c) Employee has engaged in conduct or activities materially
damaging or prejudicial to the property, business or reputation of the Company,
or (d) Employee otherwise fails to comply with the material terms of this
Agreement; or
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(iii) By the Employee at any time during the Term.
In the event that the Company should elect to terminate Employee for "good
cause" within the meaning of sub-Section (ii)(b), (c) or (d) above, Employee
shall have a period of twenty (20) days after the written notice to cure any
non-compliance set forth therein prior to the time such termination would become
effective.
2.2. If Employee's employment herein is terminated prior to the end of the
Term by the Company for "good cause" pursuant to Section 2.1(ii) or by Employee
pursuant to Section 2.1(iii), Employee's compensation shall be terminated in
accordance with Section 3.5 below.
SECTION 3. COMPENSATION.
3.1. COMPENSATION. Employee agrees that as compensation under this
Agreement, he shall retain the Consulting Stock Options mentioned above and he
shall be granted the stock options referred to in Section 3.2 below. Employee
also agrees to forfeit a salary and all fringe benefits, perquisites, and other
benefits of employment which other employees may receive as a condition of their
employment in lieu of Pine South Capital, LLC, an investment advisory firm
controlled by Employee, receiving a monthly consulting fee of $2,500 per month
(to be reviewed monthly for prospective escalation) and customary financial
consulting fees. Employee shall be paid or reimbursed for all reasonable
expenses incurred in the performance of his duties hereunder.
3.2. OPTIONS. Simultaneously upon execution of this Agreement, the
Company shall grant Employee nonqualified stock options to purchase 50,000
shares of Common Stock (the "Employment Stock Options") at an exercise price of
$2.00 per share, pursuant to a Stock Option Agreement - Xxxxxxxx dated January
19, 1998 (the "Employment Stock Option Agreement").
3.3. OPTION VESTING. The Employment Stock Options shall vest as
follows:
(i) One-half of the Employment Stock Options, representing 25,000
shares of Common Stock, shall vest upon the execution of this Agreement.
(ii) One-half of the Employment Stock Options, representing 25,000
shares of Common Stock, shall vest ratably on a monthly basis commencing on
February 1, 1998, and the first day of each month thereafter through
September 1, 1999, so that options representing 1,250 whole shares of Common
Stock shall vest at the beginning of each such calendar month.
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3.4 OPTION EXERCISEABILITY/EXPIRATION. Once vested, the Employment Stock
Options shall be exercisable in whole or in part at an exercise price of $2.00
per share and shall expire on January 19, 2003.
3.5 TERMINATION OF OPTIONS. In the event Employee's employment is
terminated by the Company for "good cause" pursuant to Section 2.1(ii) or by
Employee pursuant to Section 2.1(iii), any and all Employee Stock Options and
Consulting Stock Options which have not vested as of the termination date shall
immediately terminate and Employee shall lose all rights to such options,
subject to applicable law. Such Employee Stock Options and Consulting Stock
Options which have vested as of the termination date shall be exercisable in
accordance with provisions of the Employee Option Agreement and the Consulting
Option Agreement, as amended, respectively.
SECTION 4. CONFIDENTIAL INFORMATION AND NONCOMPETITION
COVENANT.
4.1. CONFIDENTIAL INFORMATION AND TRADE SECRETS. Employee hereby agrees
that he shall hold in confidence all customer lists, supplier lists, price
lists, financial information, operating manual and forms, plans, notes, computer
programs, systems and software (including, without limitation, documentation and
related source and object codes), and all other knowledge or information of a
confidential or proprietary nature with respect to the business of the Company
(the "Proprietary Information"), and Employee will not disclose, publish or make
use of such knowledge or information during his employment hereunder, except for
purposes of his employment hereunder or as required by law, or upon expiration
of the Term or early termination pursuant to Section 2.1. Upon the expiration
of the Term or early termination pursuant to Section 2.1, Employee shall return
and deliver forthwith to the Company any and all Proprietary Information,
including all copies thereof and shall not retain or remove any secret or
confidential information of any type or description without the express written
consent of the Company.
4.2. NONCOMPETITION. The Company is engaged in the business of designing,
selling and installing state of the art custom vinyl new and replacement thermal
paned windows for the existing home market in the following geographic areas:
Alabama, Illinois, Indiana, Kentucky, Missouri and Tennessee. The Company's
operations and offices are located at 0000 Xxxxx Xxxx and 0000 Xxxxxxxxx Xxxx,
both in Owensboro, Kentucky (the "Owensboro Addresses"). The geographic area
within a 100-mile radius of (i) the Owensboro Addresses and (ii) all other
Company office addresses existing at the time of Employee's termination shall
hereinafter be referred to as the "Territory." Employee acknowledges that the
goodwill of the Company and marketing and support of services and products of
the Company extends throughout
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the Territory. In consideration of the rights granted to Employee hereunder,
Employee hereby agrees that for the period commencing on the date hereof and
ending AT THE LATER OF (i) two (2) years from the date hereof or (ii) one (1)
year after Employee ceases to be employed by the Company (the "Noncompete
Period"), Employee shall not (without the prior written consent of the
Company), in any manner, directly or indirectly,
(i) engage in, have any equity or profit interest in, make any
loan to or for the benefit of, guaranty the repayment of any funds by, or
render services of any executive, advertising, marketing, sales,
administrative, supervisory, engineering, computer program or system
development, maintenance, manufacturing or consulting nature to any business
conducting operations in the Territory which are competitive with the
business activities being directly engaged in by the Company as of the date
on which Employee's employment is terminated; or
(ii) solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, any customer of the Company (including current customers and those
which become customers during the term of the Employment Agreement) for the
purpose of providing services competitive with the Business; or
(iii) solicit to employ, on his own behalf or on behalf of any other
person, firm or corporation, any person who was employed during the Term or any
extended Term hereof and who has not thereafter ceased to be employed by the
Company for a period of at least one year.
Notwithstanding anything contained herein to the contrary, Employee shall
not be prohibited from owning, directly or indirectly, up to 5% of the
outstanding equity interest of any company, which is in competition with the
Company or a Related Company and the stock of which is publicly traded.
4.3. SEVERABILITY. If a judicial determination is made that any of the
provisions of this Section 4 constitutes an unreasonable or otherwise
unenforceable restriction against Employee, the provisions of this Section 4
shall be rendered void only to the extent that such judicial determination finds
such provisions to be unreasonable or otherwise unenforceable. In this regard,
the parties hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory or any
prohibited business activity from the coverage of this Section 4, and to reduce
the duration of the Noncompete Period and to apply the provisions of this
Section 4 to the remaining portion of the Territory or the remaining business
activities not to be severed by such judicial authority and to the duration of
the Noncompete Period as reduced by judicial determination.
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4.4. INJUNCTIVE RELIEF. Employee hereby agrees that any breach or
threatened breach by Employee of Sections 4.1 or 4.2 of this Agreement will
irreparably injure the Company and that any remedy at law for any breach or
threatened breach by Employee of the provisions contained in Sections 4.1 and
4.2 hereof shall be inadequate, and that the Company shall be entitled to
injunctive relief in addition to any other remedy it might have under this
Agreement or at law or in equity. Employee further agrees that the grant of
such injunctive relief and the enforcement of the terms of this Agreement shall
not deprive him of his ability to earn a living.
SECTION 5. MISCELLANEOUS.
5.1. BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon Employee and his executor, administrator, heirs, personal
representative and assigns, and Company and its successors and assigns;
provided, however, that Employee shall not be entitled to assign or delegate any
of his rights or obligations hereunder, other than the Employment Stock Options,
without the prior written consent of Company.
5.2. GOVERNING LAW. This Agreement shall be deemed to be made in, and in
all respects shall be interpreted, construed and governed by and in accordance
with, the laws of the Commonwealth of Kentucky, without regard to conflicts of
laws principles.
5.3. HEADINGS. The section and paragraph heading contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.4. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) sent by
recognized overnight courier, or (iii) sent by registered or certified mail,
return receipt requested, postage prepaid.
If to the Company:
Thermo-Tilt Window Company
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, President
With a copy to:
Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Xx., Esq. (Xxxx)
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If to the Employee:
Xxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof
to the receiving party at the address of such party set forth above, (ii) if
sent by overnight courier, on the next business day following the day such
notice is delivered to the courier service, or (iii) if sent by registered or
certified mail, on the fifth business day following the day such mailing is
sent.
Any party to this Agreement may change his or its address upon written
notice delivered pursuant to this Section.
5.5. ENTIRE AGREEMENT. This Agreement is intended by the parties hereto
to be the final expression of their agreement with respect to the subject matter
hereof and is the complete and exclusive statement of the terms thereof
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be modified only by a written instrument
signed by each of the parties hereto.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Agreement and the Employee has executed this Agreement as of the
date first above written.
EMPLOYEE: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------------
Xxxxxx X. Xxxxxxxx
COMPANY: THERMO-TILT WINDOW COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Xxxxxxx X. Xxxxxx
Title: President
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