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EXHIBIT 10(h)
EMPLOYMENT AGREEMENT
This agreement made as of this 19th day of October, 1998, by and between
Xxxxxxx Industries, Inc., 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx
("Employer") and Xxxxxxxxx X. Xxxxxxxxxxx, 0 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxxxx
("Employee"), (hereinafter "Agreement").
WHEREAS, Employer, through subsidiaries, is in the business of manufacturing and
distributing cryogenic valves and importing and distributing plumbing supplies;
and
WHEREAS, Employer desires to employ Employee in the position of Chief Executive
Officer, President and Treasurer and Employee desires to be so employed.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein, the parties agree as follows:
1. TERM. This Agreement commences on October 19, 1998. This Agreement shall
continue in effect unless and until it is terminated by Employer or Employee in
accordance with this Agreement.
2. EMPLOYMENT-AT-WILL. Employment with Employer is on an at-will basis.
Employer retains the right to terminate Employee for any reason, or no reason,
at any time. No notice or pay shall be required if termination is for "cause" as
defined in Section 5 below. In the event of termination by Employer, Employer
will pay Employee six (6) months' Salary, as hereinafter defined, at the time of
termination. Employee has the right to terminate employment with Employer at any
time for any reason, or no reason.
3. SCOPE OF DUTIES. Employee shall be employed by Employer as its Chief
Executive Officer, President and Treasurer. Employee will, if so elected, serve
in any other office of Employer and as an officer or director of any subsidiary
or affiliate of Employer without compensation in addition to that provided in
this Agreement. In addition, Employer shall use reasonable efforts to cause
Employee to be elected to its Board of Directors. During the term of employment,
Employee's full working time, attention and best efforts shall be devoted to the
furtherance of the business of Employer. In accordance with the foregoing,
Employee shall not engage in any other business activity, except as may be
approved by the Board of Directors; provided, however, that nothing herein shall
be construed as preventing Employee from:
(a) investing his assets in a manner not otherwise prohibited by this
Agreement, and in such form or manner as shall not require any material services
on his part in the operations or affairs of the companies or other entities in
which such investments are made;
(b) serving on the board of directors of any company, which is not competitive
with Employer, provided that he shall not be required to render any material
services with respect to the operations or affairs of any such company; or
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(c) engaging in religious, charitable, or other community or non-profit
activities which do not impair his ability to fulfill his duties and
responsibilities under this Agreement.
Employee represents that, in the performance of his services for Employer, he
will regularly and typically exercise sound discretion and independent judgment
with respect to the significant matters entrusted to him. Employee agrees to
adhere to applicable Employer policies, procedures and requirements performing
his assigned work. Employee further agrees to exert his best efforts and to
conduct himself in a professional manner at all times. Employer employs Employee
and Employee accepts employment upon the terms and conditions set forth in this
Agreement.
4. COMPENSATION PLAN.
(a) SALARY. A Salary at the rate of One Hundred Forty Thousand ($140,000.00)
Dollars per year shall be paid to Employee by Employer in equal installments at
such intervals as Employer generally pays its officers. For purposes of this
Agreement, the term "Salary" shall mean the annual amount as fixed from time to
time by the Board of Directors, customarily denominated as Salary, before
deductions for income tax, social security tax and other customary withholdings.
Salary shall not include any payment or other benefit which is denominated as or
is in the nature of a bonus, incentive payment, profit sharing payment,
performance share award, stock option, retirement or pension accrual, insurance
benefit, other fringe benefit or expense allowance, whether or not taxable to
Employee as income.
(b) INCENTIVE COMPENSATION. Employee will be paid a bonus of up to twenty-five
percent (25%) of Salary within ninety (90) days following the end of each fiscal
year of Employer commencing with the 1999 fiscal year. The precise amount of
such bonus shall be determined by the Board of Directors based upon its good
faith evaluation of Employee's performance.
(c) INCENTIVE STOCK OPTIONS. Employer shall grant Employee incentive stock
options ("ISO") in the amount of Two Hundred Thousand (200,000) shares of common
stock as of October 19, 1998, pursuant to Employer's 1998 Equity Incentive Plan,
subject to ratification by Employer's stockholders at the next annual meeting of
stockholders. In addition to any previously vested option shares, the ISO shall
automatically vest and be exercisable by Employee to the extent of seventy-five
(75%) percent of the not yet vested option shares upon any Change of Control of
Employer, as defined in Exhibit A. In addition to any previously vested option
shares, the ISO shall also automatically vest and be exercisable by Employee to
the extent of seventy-five (75%) percent of the not yet vested option shares
upon termination by Employer for reasons other than for cause, as defined in
Section 5 of this Agreement. The term of the ISO shall commence on October 19,
1998 and shall continue for ten (10) years with vesting of twenty-five percent
(25%) per year, commencing at the end of the first year of employment. The xxxxx
xxxxx shall be the mean between the bid and asked prices on the date of grant.
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(d) OTHER BENEFITS. Employee shall be entitled to the following
benefits:
Health Insurance: Employer shall contribute $300 per month toward
Employee's Health Insurance for family plan.
Life Insurance: Employer shall provide Life Insurance to
Employee in an amount equal to 75% of Employee's
annual base salary.
Disability Insurance: If Employee shall be entitled to disability
payments as determined by Employer in accordance
with its practice for determining such
eligibility, Employer shall pay Employee his
Salary (in the manner in which it is usually
paid pursuant to Section 4(a) above) for up to
six (6) months of such disability.
401K Plan: Employee may make such contributions to the 401K
Plan as determined by applicable law. Employer
shall contribute 25% of the first $5,000 of
Employee's contributions per year.
Profit Sharing Plan: Employer's contribution if any, to Employer's
Profit Sharing Plan, shall be determined each
year by Employer's Board of Directors.
Employee's share of such Employer contributions
shall be pro rata based on Employee's Salary
plus bonus.
Vacation: Employee shall be entitled to four (4) weeks'
paid vacation per year.
Automobile: Employer shall provide Employee with an
automobile.
Business Expenses: Employer shall, subject to such requirements
with respect to substantiation and documentation
as may be specified by Employer, reimburse
Employee for all reasonable and necessary travel
and other business expenses incurred by Employee
in the performance of his duties.
(e) COMPENSATION IF CHANGE OF CONTROL. If Employer undergoes a Change of
Control (as defined in Exhibit A), which is agreed to by the Board of Directors,
and a VOLUNTARY or involuntary termination of Employee's employment occurs
subsequent to a Change of Control within twenty-four (24) months after the date
on which such Change of Control occurs, Employee shall be entitled to receive an
amount equal to twelve (12) months' Salary at the rate then in effect.
Employee's compensation in the case of Change of Control to which the Board of
Directors does not agree is covered by the presently existing policy of
Employer, which grants five years of Salary to Employee.
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5. TERMINATION FOR CAUSE.
(a) This Agreement may be terminated effective immediately by the Board of
Directors of Employer for cause by written notice to Employee, which shall set
forth the specific nature of the reasons for termination. Only the following
acts or omissions by Employee shall constitute "cause" for such termination: (i)
the commission of a felony related to Employer's affairs; (ii) deliberate
dishonesty significantly detrimental to the best interest of Employer or any
subsidiary thereof; or (iii) willful disloyalty to Employer or refusal or
failure of Employee to obey the proper directions of the Board of Directors.
(b) Employee's obligation with respect to non-competition (as described in
section 6 below) shall continue in full force and effect following termination
without regard to the reason or circumstances of the termination.
6. NON-COMPETITION.
(a) During the term of this Agreement and for a period of twelve (12) months
thereafter, Employee shall not (i) engage directly or indirectly, either
individually or as owner, partner, agent, employee, consultant or otherwise,
except for the account of and on behalf of Employer or its affiliates, in any
activity in competition in any material respect with the business of Employer
("Employer's Business") or its affiliates, or in competition in any material
respect with Employer's Business or that of its affiliates, solicit or otherwise
attempt to establish any business relationships with any persons, firm or
corporation which was, at any time during the term of this Agreement, a customer
or supplier of Employer, wherever located, or (ii) disclose any confidential
information of Employer or its affiliates which is now known to Employee or
which hereafter may become known to Employee as a result of Employee's
employment or association with Employer or use the same in any way other than in
connection with the business of Employer or its affiliates. Employee
acknowledges that Xxxxxx Valve Corp., Xxxx Valve, Bestabell Company, Circle Seal
(Xxxxx) and Cryolab are among Employer's direct primary competitors.
(b) Employee recognizes that these restrictions on competition are reasonable
because of Employer's investment and goodwill in its customer lists and other
proprietary information and its continued efforts and investment in expanding
the scope of its businesses and trading area and Employee's knowledge of
Employer's Business and business plan. However, if any period of time,
geographical area or other terms should be judged unreasonable in any judicial
proceeding, then the period of time, geographical area or other terms shall be
reduced to such extent as may be deemed required so as to be reasonable and
enforceable.
(c) For the purposes of this Agreement, Employer's Business includes
manufacturing and distributing cryogenic valves and importing and distributing
plumbing supplies. Employer's Business includes all component parts, processes
and related customer services whether designed, manufactured or provided by
Employer or obtained from outside sources, and further includes any related
product or business added during the term of this Agreement.
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7. CONFIDENTIAL INFORMATION.
(a) CONFIDENTIAL INFORMATION. Employee recognizes that, by reason of his
employment with Employer, he will be engaged in, have contact with, and gain
knowledge of proprietary information relating to, and concerned with, the actual
or contemplated business operations, products and policies of Employer, its
suppliers, customers and other persons. (For purposes of this Agreement, the
term "proprietary information" includes all trade secrets, customer information,
inventions, discoveries, processes, formulae, records, computer programs or
data, agreements, business and financial systems, plans and policies, prospects
and opportunities discussed or considered by Employer (such as lending
relationships, product development, potential acquisitions or dispositions of
business or facilities) or any information or knowledge which is confidential
and not public.) Accordingly, Employee agrees that:
(i) He will not during his employment by Employer or after its
termination, directly or indirectly disclose to any other person or entity,
or use for his own account, or for other than Employer's business, without
first obtaining the written consent of Employer, any proprietary
information arising out of or obtained in the course of Employee's
employment with Employer. Employee shall at all times keep confidential all
proprietary information belonging to Employer, any clients of Employer or
affiliated or subsidiary companies, and the licensees, clients, customers,
consultants or collaborators of any of them. Employee will in turn not
disclose to Employer any confidential information or material belonging to
others.
(ii) He will retain no copies of, and shall promptly deliver to
Employer at the termination of his employment or at any other time Employer
may request, all memoranda, notes, records, models, sketches, plans or
other documents made or compiled by or delivered to him concerning any
proprietary information of Employer.
(b) INVENTIONS AND PATENTS. Employee agrees that any and all inventions,
discoveries, computer programs, ideas or improvements (the "Inventions") in any
way relating to the business of Employer shall immediately become the sole and
absolute property of Employer and shall be immediately disclosed to Employer for
its sole use and benefit. Employee agrees that, upon request of Employer, he
will at any time, whether or not then in the employ of Employer, sell and assign
all his right, title and interest to such Inventions to Employer, its successors
or assigns, and give Employer the right to have letters patent or copyrights
issued thereon issued in its name, and will give Employer the right to apply for
and obtain patents or copyrights on such Inventions in any and all countries
foreign to the United States as Employer may select.
Employee will at any time, whether or not then in the employ of Employer,
upon the request of Employer and without further remuneration, (i) execute,
acknowledge and deliver to Employer, any document which Employer shall deem
necessary to effect valid assignments to it of all Employee's right, title and
interest in, to and under the Inventions and any licenses and rights to grant
licenses acquired by him, and (ii) execute any document which Employer shall
deem necessary to enable it to file and prosecute applications for copyright or
letters patent of the United States and any foreign country on such Inventions,
and (iii) do all other things (including
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the giving of evidence in suits, interferences, oppositions, revocations and
other proceedings) that Employer shall deem necessary or convenient for
copyrighting, patenting or prosecuting or asserting copyrights or patents for
any and all such Inventions, for the prosecution of applications for the
reissue, renewal and extension of such copyrights or patents and for the
establishing of any fact becoming known to Employee as an incident to his
employment.
8. CONFLICTING AGREEMENTS. Employee represents and warrants that the execution
of this Agreement and the performance of his duties and obligations hereunder
will not breach or be in conflict with any other agreement to which he is a
party or is bound and that he is not now subject to any covenants against
competition or similar covenants which would affect the performance of his
duties hereunder.
9. REMEDIES FOR BREACHES. Employee agrees that any breach of Paragraph 6
regarding non-competition would cause Employer irreparable harm and that money
damages would be an inadequate remedy for any such breach, because damages are
not susceptible to exact measurement in dollars. Therefore, Employer shall be
entitled to injunctive relief (including, but not limited to a temporary
restraining order, preliminary injunction or permanent injunction) to prohibit
such breaches. Employer will also be entitled to costs and attorneys' fees in
the event of a breach of Section 6. This paragraph in no way limits the remedies
Employer has at law or in equity for breaches of any other paragraph of this
Agreement.
10. ASSIGNMENT. Employee's rights, obligations and duties under this Agreement
shall not be assigned by, nor are they assignable by, Employee.
11. NOTICES. Any notice required or permitted to be given under this Agreement
shall be sufficient if it is in writing and if it is sent by registered mail,
return receipt requested to the parties at the addresses specified in the
opening paragraph of this Agreement. Notwithstanding the foregoing, delivery by
hand shall be deemed sufficient for any notices between Employer and Employee.
12. ENTIRE AGREEMENT. This instrument contains the entire Agreement of the
parties. This Agreement supersedes and terminates all prior agreements between
the parties and the parties agree and understand that any such prior agreement
shall not be effective unless contained in a writing expressly identifying it as
a modification and signed by Employee and by an officer of Employer.
13. SEVERABILITY. Each provision of this Agreement shall be considered
severable such that if any one provision or clause conflicts with existing or
future applicable law, or may not be given full effect because of such law, this
shall not affect any other provision of the Agreement which, consistent with
such law, shall remain in full force and effect. All surviving clauses shall be
construed so as to effectuate the purpose and intent of the parties.
14. GOVERNING LAW. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts and any litigation in connection herewith shall be
brought in the state or federal courts of the Commonwealth of Massachusetts.
Employee consents to personal jurisdiction in the Commonwealth of Massachusetts.
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15. WAIVER. No waiver of any provision of this Agreement shall be valid unless
it is in writing and signed by the person against whom it is sought to be
enforced. The failure of any party at any time to insist on strict performance
of any condition, promise, agreement or understanding contained in this
Agreement shall not be construed as a waiver or relinquishment of the right to
insist on strict performance of the same condition, promise, agreement or
understanding at any future time.
16. COUNTERPARTS. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
17. EFFECT OF HEADINGS. Headings are for convenience of reference only and
shall not effect the meaning or construction of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as an instrument
under seal as of the date first written above.
XXXXXXX INDUSTRIES, INC.
By: __________________________ ______________________________
Xxxx X. Xxxx, President Xxxxxxxxx X. Xxxxxxxxxxx
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EXHIBIT A
DEFINITION OF CHANGE OF CONTROL
"Change of Control" shall mean the occurrence of any one of the following
events:
(1) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Act")) BECOMES a "beneficial
owner" (as such term is defined in Rule 13d-3 promulgated under the Act) (other
than Employer, any trustee or other fiduciary holding securities under an
employee benefit plan of Employer, or any Corporation owned, directly or
indirectly, by the stockholders of Employer in substantially the same
proportions as their ownership of stock of Employer), directly or indirectly, of
securities of Employer representing 50% of more of the combined voting power of
Employer's then outstanding securities; or
(2) persons who, as of the date of this Agreement, constituted Employer's Board
of Directors and persons becoming directors of Employer subsequent to the date
of this Agreement whose election was proposed or approved by at least a majority
of the then existing directors cease for any reason, including without
limitation as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board;
(3) the stockholders of Employer approve a merger or consolidation of Employer
with any other corporation or other entity, other than (a) a merger or
consolidation which would result in the voting securities of Employer
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of Employer or such surviving entity outstanding immediately after
such merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of Employer (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of Employer's then outstanding securities; or
(4) the stockholders of Employer approve a plan of complete liquidation of
Employer or an agreement for the sale or disposition by Employer of all or
substantially all of Employer's assets, which plan or agreement is consummated
and closed.
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