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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is made as of April 2, 1996,
between Marketing Specialists Sales Company, a Texas corporation (the
"Company"), and Xxxxxx X. Xxxxxxxx (the "Executive").
PRELIMINARY STATEMENTS
On and subject to the terms and conditions herein provided, the Company
desires to retain the services of the Executive in the capacities and with the
responsibilities and the titles set forth herein in order to ensure the
attention and dedication to the Company of the Executive as a member of the
Company's management, all of which the Company's Board of Directors (the
"Board") believes will be in the best interests of the Company and its
stockholders. The Executive desires to commit himself to so serve the Company.
In order to effect the foregoing, the Company and the Executive wish to enter
into an employment agreement on the terms and conditions set forth herein.
Accordingly, in consideration of these preliminary statements and the respective
covenants and agreements of the parties herein contained, and for other good,
valid and binding consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as
follows:
STATEMENT OF AGREEMENT
1. Employment. The Company hereby agrees to employ the Executive, and the
Executive hereby accepts such employment on the terms and conditions set forth
herein.
2. Term. The employment of the Executive by the Company as provided in
Section 1 shall commence on the date hereof and end on the fifth anniversary
hereof (the "Expiration Date"); provided, however, that upon the Expiration Date
and upon each subsequent anniversary hereof, the Expiration Date shall be
automatically extended for one (1) year unless and until the Board delivers
notice to the Executive that his employment with the Company shall not be
extended, which notice shall be delivered at least one (1) year one plus one
hundred twenty (120) days prior to the then current Expiration Date.
3. Positions and Duties. The Executive shall initially be employed as
Chairman of the Board and Chief Executive Officer and shall thereafter be
employed
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in such executive capacity or capacities as determined by the Board; provided,
however, that during the Executive's employment with the Company during the term
of this Agreement, the Executive's duties shall be commensurate with those per-
formed by a senior executive of the Company. The Executive shall be stationed in
Dallas, Texas, or such other location that, during the term of this Agreement,
may be designated by the Company and approved by the Executive. The Executive
shall report and be responsible to the Board. The Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company and shall, subject to the supervision and control of the Board and
the provisions of the Company's charter and bylaws, manage, supervise and
control such business, and shall faithfully perform his duties on behalf of the
Company.
4. Compensation and Related Matters.
(a) Salary.
(i) During the term of this Agreement, the Company shall pay
to the Executive an annual base salary (the "Base Salary") of three hundred
seventy-two thousand dollars ($372,000), such Base Salary to be paid in
accordance with the Company's normal payroll procedures. The Base Salary shall
be reviewed annually by the Compensation Committee of the Board (which shall
consist of Xxxx Xxxxxx and Xxxxxx X. Xxxxxxxx) and may, at any time after the
first anniversary hereof, be increased or, subject to the terms of Section
4(a)(ii) below, decreased, by the Compensation Committee, in its sole and
exclusive discretion. Notwithstanding the immediately preceding sentence, the
Base Salary shall be increased by the Compensation Committee if, and only if,
business conditions of the Company and the industry in which the Company
operates warrant such increase.
(ii) Prior to the commencement of each fiscal year, the Board
shall adopt a budget (the "Annual Budget") for the operation of the Company for
such fiscal year, which budget shall, among other things, establish a target
EBITDA (as defined in that certain Company and Shareholders Agreement (the
"Shareholders Agreement") dated as of April 2, 1996, by and among the Company,
the Executive, MS Acquisition Limited and the other parties thereto, but
excluding the effects of any acquisitions, unless provided otherwise by the
Board (the "Target EBITDA")). Notwithstanding anything herein to the contrary,
the Base Salary shall not be decreased unless (1) the Company's actual financial
performance during such fiscal year (as such performance is reflected in audited
financial statements prepared by the Company's independent auditor) is less than
the Target EBITDA for such
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fiscal year, and (2) a majority of the members of the Board approves such
decrease. Any decrease in Base Salary shall remain in effect until the
Compensation Committee, in its sole and exclusive discretion, decides to
increase or, subject to this Section 4(a)(ii) (including, without limitation,
the terms of the immediately preceding sentence), decrease such Base Salary. In
no event shall any decrease be applied (x) retroactively to any date prior to
the earlier of the date on which the Compensation Committee declares a decrease
in Base Salary or the Board approves such decrease or (y) on a date earlier than
as of the end of such fiscal year in which the Company's actual financial
performance is less than the Target EBITDA.
(b) Bonus. At the discretion of the Compensation Committee, the
Executive shall be eligible to receive a bonus (the "Bonus"). The amount and
timing of any such Bonus shall be determined by the Compensation Committee in
its sole and exclusive discretion. In connection with the Compensation
Committee's determination of the Bonus, if any, to which the Executive shall be
entitled, the Compensation Committee shall review the Executive's performance
with respect to items (I) through (V) listed on Exhibit A attached hereto and
shall consider such other factors as it, in its sole and exclusive judgment,
shall deem appropriate. The Compensation Committee's determination of the Bonus,
if any, to be paid to the Executive shall be made promptly after completion of
the Company's annual audit, and any Bonus payable pursuant to such determination
shall be paid to the Executive promptly thereafter. The Executive acknowledges
that the determination and payment of any Bonus is a privilege, and not an
absolute right, granted hereunder.
(c) Expenses. During the term of the Executive's employment
hereunder, the Company shall pay or reimburse the Executive for all reasonable
expenses incurred by the Executive in performing his obligations under this
Agreement. Payments or reimbursements of all expenses hereunder will be made
promptly following submission of documentation provided in accordance with the
standard policies and procedures established by the Company.
(d) Other Benefits.
(i) Employee Benefit Plans. During the term of the Executive's
employment hereunder, the Company shall maintain in full force and effect, and
the Executive shall be entitled to continue to participate in, all of the
employee benefit plans and arrangements in effect on the date hereof in which
the executive officers of the Company generally are entitled to participate.
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(ii) Automobile. During the term of the Executive's employment
hereunder, the Company shall provide the Executive with an automobile selected
in accordance with guidelines as determined by the Compensation Committee in its
sole and exclusive discretion.
(iii) Lifetime Right to Insurance After Certain Termination
Events. Except in cases where the Executive's employment has been terminated for
Cause or by death, the Executive shall have the right to continue the health
care benefits afforded him hereunder (once his right to have the Company pay for
such benefits terminates hereunder) by paying to the Company the amounts
attributable from time to time for such benefits.
Any payments or benefits payable to the Executive hereunder in respect of
any fiscal year during which the Executive is employed by the Company for less
than the entire such year shall be treated as provided in the documents
governing such plan or arrangement.
5. Termination. The Executive's employment hereunder may be terminated
without any breach of this Agreement under the following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon
his death.
(b) Disability. If, as a result of the Executive's Disability (as
defined below), the Executive shall be unable to perform his obligations under
this Agreement, the Company may terminate the Executive's employment hereunder.
"Disability", with respect to the Executive, shall have been deemed to occur at
such time as the Executive becomes physically or mentally disabled to such an
extent that (i) he has not been able to perform the significant duties of his
employment for at least six (6) months on a continuous basis, (ii) such
disability cannot be reasonably accommodated, and (iii) in the judgement of a
physician retain by the Board, such disability is reasonably expected to
continue for more than six (6) additional months. In the event the Executive
disagrees with the opinion of the physician retained by the Board, the Executive
shall have the right to seek a second opinion from another physician retained by
the Executive. In the event the two physicians so retained disagree, such
physicians shall jointly nominate a third physician for the purpose of rendering
an opinion with respect to whether the Executive is unable to perform his
obligations under this Agreement, which opinion shall be binding upon the
parties hereto.
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(c) Cause. The Company may terminate the Executive's employment
hereunder for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate the Executive's employment hereunder upon the determination
by the Board, in its sole and exclusive judgment, that any of the following
shall have occurred: (i) the failure by the Executive to perform his duties
hereunder (other than any such failure resulting from the Executive's
Disability), which failure is determined by the Board to be injurious to a
reasonable degree or reasonably likely to be injurious to a reasonable degree to
the business, operations or interests of the Company, (ii) the gross negligence
or willful misconduct (including, but not limited to, an act of moral turpitude)
by the Executive which is injurious to a reasonable degree to the Company
(including, but not limited to, conduct prohibited by Section 7), or (iii)
conviction of a felony, or conduct which, in the reasonable judgement of the
Board, would constitute a felony under the federal laws of the United States of
America or under the laws of any State thereof.
(d) Termination Without Cause. The Company may at any time during
the term hereof terminate the Executive's employment hereunder without Cause in
which event the Executive shall be entitled to receive the compensation
described in Section 6(d) below.
(e) Notice of Termination. Any termination of the Executive's
employment by the Company (other than termination pursuant to Section 5(a)
hereof) shall be communicated by written Notice of Termination to the Executive.
For purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall, except in the case of termination pursuant to Section
5(d) hereof, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated.
(f) "Date of Termination" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if the
Executive's employment is terminated pursuant to Section 5(b) hereof (relating
to Disability), thirty (30) days after Notice of Termination is delivered
(provided that the Executive shall not have returned to the performance of his
duties on a full-time basis during such thirty (30)-day period), (iii) if the
Executive's employment is terminated pursuant to Section 5(c) hereof (relating
to Cause), the date specified in the Notice of Termination (which specified date
shall under no circumstances be earlier than the date that Notice of Termination
is delivered), or (iv) if the Executive's employment is
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terminated pursuant to Section 5(d) hereof (relating to termination without
Cause), the date specified in the Notice of Termination, which shall not be a
date earlier than the date the Notice of Termination is delivered.
6. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to perform his duties
hereunder as a result of Disability, the Executive shall continue to receive his
salary at the rate then in effect for a period of 120 days after the applicable
Date of Termination.
(b) If the Executive's employment is terminated by his death, the
Executive shall continue to receive his salary at the rate then in effect for a
period of 120 days after the applicable Date of Termination.
(c) If the Executive's employment shall be terminated for Cause, the
Executive shall continue to receive his salary at the rate then in effect until
the Date of Termination.
(d) If the Executive's employment shall be terminated without Cause,
the Executive shall continue to be entitled to receive the compensation and
benefits provided for in Section 4 through the Expiration Date; and the benefits
specified in Section 4(d)(iii) above for the period of time set forth therein.
Subject to Section 6(e) below, upon such termination without Cause, the
Executive shall be entitled only to such amounts and shall not be entitled to
any other payments.
(e) The Deferred Compensation Plan, amended as of November 20, 1995
(the "Deferred Compensation Plan") shall remain in full force and effect in
accordance with the terms thereof notwithstanding any termination of Executive's
employment hereunder.
7. Noncompetition; Nondisclosure. (a) (i) Until the Expiration Date
(disregarding any effect thereupon arising out of termination for Cause), and
(ii) during a period of one (1) year following the Expiration Date (disregarding
any effect thereupon arising out of termination for Cause, the "Post Employment
Period"), the Executive agrees that he will not engage in any Competitive
Activity (as defined herein) in the United States of America or its territories
or possessions (the "USA") or outside of the USA reasonably likely to have a
detrimental effect upon the Company's operations; provided, however, that if the
Executive is termi-
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nated for Cause, then the Post Employment Period shall constitute a period of
two (2) years following the Expiration Date. For purposes of this Section 7,
"Competitive Activity" shall mean any activity, without the written consent of
the Board, consisting of:
(1) The Executive's direct or indirect participation (for his own
account or jointly with others) in the management of, or as an employee of,
representative or other agent of, or advisor or consultant to, any other
business operation if such operation (a "Competitive Operation") is then in any
way competing with a principal business operation of the Company;
(2) The Executive's ownership of more than five percent (5%) of the
capital stock of any business entity which is a Competitive Operation; or
(3) The Executive loaning funds for the purpose of establishing or
operating any Competitive Operation, or otherwise giving advice to any
Competitive Operation, or lending or allowing his name or reputation to be used
by any Competitive Operation or otherwise allowing his skill, knowledge or
experience to be so used.
(b) If any court having jurisdiction over the subject matter hereof
shall hold that the period, scope or geographic area of the restrictions set
forth in Section 7(a) hereof is unreasonable or otherwise unenforceable, the
parties hereto agree that the maximum period, scope or geographic area deemed
reasonable by such court shall be substituted for the period, scope or
geographic area described herein. Subject to Section 7(e) hereof, as
consideration for the Executive's satisfaction of the obligations set forth in
Section 7(a) hereof, upon the termination of the Executive's employment with the
Company, the Company shall pay Executive one month's severance pay at the rate
of the Executive's salary then in effect.
(c) The Executive agrees not to use or disclose, either while in the
Company's employ or at any time thereafter, to any person not employed on a
full-time basis by the Company or its affiliates, or not engaged to render
services to the Company or its affiliates, except with the prior written consent
of an officer authorized to act in the matter by the Board, any trade secrets
or other confidential information obtained by him while in the employ of the
Company, provided, however, that this provision shall not preclude the Executive
from the use or disclosure of information known generally to the public or of
information not considered confidential by persons engaged in the business
conducted by the Company or from
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disclosure required by law or court order. The agreement made in this Section 7
shall be in addition to, and not in limitation or derogation of, any obligations
otherwise imposed by law or by separate agreement upon the Executive in respect
of confidential information of the Company.
(d) The parties hereto agree that the precise amount of damages
incurred by the Company in connection with any breach by the Executive of the
obligations set forth in Section 7(a) or Section 7(c) hereof would be difficult,
if not impossible, to calculate with any reasonable certainty. Therefore, the
parties hereto agree to the imposition of liquidated damages for such breach in
accordance with the following formula: for each loss by the Company of an
account between the Company and any of its principals that was in effect
immediately prior to any breach by the Executive of the obligations set forth in
Section 7(a) or Section 7(c) which loss was proximately caused by such breach by
the Executive, the Company shall be entitled to an amount of liquidated damages
equal to the gross brokerage paid to the Company under such lost account for the
twelve (12) month period immediately preceding such breach. The Parties hereto
agree that claim for, or an award of, liquidated damages pursuant to the terms
hereof shall in no way prejudice the Company's right to seek, or otherwise
constitute a waiver of, any equitable relief (including but not limited to
injunctive relief) otherwise available to the Company.
(e) In the event the Executive fails to comply with the obligations
set forth in Section 7(a) or Section 7(c) of this Agreement, in addition to any
remedy available to the Company under the terms hereof in connection with any
such breach, the Company shall have the right to terminate any severance
benefits to which the Executive would otherwise have been entitled to under the
terms of this Agreement.
8. Successors; Binding Agreement. The Company agrees to use commercially
reasonable efforts to require any successor to all or substantially all of the
Company's business and/or assets to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. For purposes of
this Section 8, "all or substantially all of the Company's business or assets"
shall include, but not be limited to, fifty-one percent (51%) or more of the
capital stock of the Company. This Agreement and all rights of the Executive
hereunder shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Except as expressly set forth in this
Section 8, this Agreement shall not otherwise be assignable by either party
hereto.
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9. Notices. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed a follows:
If to the Executive: Xxxxxx X. Xxxxxxxx
00000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
If to the Company: Marketing Specialists Sales Company
0000 Xxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx and
Xxxx Xxxxxx
With copies to each of: Xxxxxxx & Xxxxx L.L.P.
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: J. Xxxxxxx Xxxxxxxx, Esq.
and
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxx X. Xxxxxxxx, P.C.;
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Modification and Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modifica-
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tion or discharge is agreed to in writing and signed by the Executive and such
other officer as may be specifically designated by the Board.
11. No Waiver. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
13. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
14. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement, or otherwise in connection with the Executive's
termination of employment with the Company or its subsidiaries, shall be settled
exclusively by arbitration, conducted before a panel of three arbitrators in
Dallas, Texas (or, if different, the office of the American Arbitration
Association nearest the Executive's principal location), in accordance with the
commercial arbitration rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Company shall be entitled to seek a
restraining order or injunction in any court of competent jurisdiction to
prevent any continuation of any violation of the provisions of Section 7 hereof,
and the Executive hereby consents that such restraining order or injunction may
be granted without the necessity of the Company's posting any bond. The expense
of such arbitration shall be borne equally by the Company and the Executive.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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16. Entire Agreement. This Agreement, the Deferred Compensation Plan, and
the Shareholders Agreement, set forth the entire agreement of the parties hereto
in respect of any subject matter contained herein and supersedes all prior
severance or other agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled.
17. Scope of Covenant. The Executive recognizes the broad scope of the
covenants and other provisions of Section 7 hereof, but expressly agrees that
such scope is reasonable in light of the nature of the Company's business. If
any court or tribunal of competent jurisdiction shall refuse to enforce any or
all of such covenants because they are more extensive (whether as to time,
geographic area, scope of business or otherwise) than it is deemed reasonable,
it is expressly understood and agreed between the parties hereto that such
covenants shall not be void, but that for the purpose of such proceedings and in
such jurisdictions the restrictions contained herein shall be deemed to be
reduced to the extent necessary to permit enforcement of the covenants.
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Signature Page Follows
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
MARKETING SPECIALISTS SALES COMPANY
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
-----------------------------
Title: Chief Executive Officer
----------------------------
EXECUTIVE
/s/ Xxxxxx X. Xxxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxxx
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EXHIBIT "A"
o SALES
o MARKETING
o MERCHANDISING SERVICES
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I. Contribute toward delivering the budgeted $6,150,000 corporate profit
excluding Tennessee and other acquisitions. This objective represents 50%
of your incentive.
II. Work closely with the Chairman to successfully negotiate and execute
acquisitions, mergers, contracts, and strategic alliances. This objective
represents 10% of your incentive.
III. Manage Corporate relationship with financial institutions, legal council,
pension administrators, insurance vendors, real estate agents, etc. This
objective represents 15% of your incentive.
IV. Provide leadership and be a financial resource to company managers. Ensure
accountability of company benefits and financial systems. Build the finest
financial department in our industry. This objective represents 15% of
your incentive.
V. Work closely with the Chairman and Vice Chairman to achieve 1998 Corporate
Strategic Initiatives and be a contributing member of the company
executive committee. This objective represents 10% of your incentive.
