EXHIBIT 10
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of the 10th day of
November 1999 between Desa International, Inc. whose principal place of business
is located at 0000 Xxxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxx 00000 (hereinafter
called the "Corporation"), and W. XXXXXXX XXXXX (hereinafter called the
"Employee"), residing at 0000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx 00000 and
0000 Xxxxx Xxxxx'x Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxx
00000.
W I T N E S S E T H
The Corporation, as directed by the Board of Directors,
desires to secure the services of the Employee in an executive capacity for a
period commencing on November 10, 1999 (the "Effective Date"), on the terms and
conditions hereinafter set forth, and the Employee is willing to accept
employment on such terms and conditions.
In consideration of the premises and of the mutual agreements
hereinafter set forth, the parties hereto have agreed and do hereby agree as
follows:
1. Employment. The Corporation hereby employs the Employee in
the capacity of President and Chief Executive Officer (with the duties,
responsibilities and authority as are normal for such offices and as further
defined by the current By-Laws of the Corporation, a copy of which has been
provided to the Employee), reporting only to the Board of Directors of the
Corporation, and the Employee hereby accepts and agrees to serve the
Corporation, its divisions, and subsidiaries, if any, on a full time basis, and
to perform such duties of an executive nature, including any reasonable business
travel incident thereto, as Employee is directed by the Board of Directors to
perform on behalf of the Corporation, for a period commencing on the Effective
Date and ending on the third anniversary of the Effective Date (as the same may
be renewed as provided in the next sentence, the "Employment Period"), unless
earlier terminated in accordance with Section 8 of this Agreement. Unless the
Board of Directors shall give written notice of termination of the Agreement in
person to the
Employee at least six (6) months prior to its termination, this Agreement shall
automatically renew for successive one year terms. Employee shall have such
powers and duties as may be from time to time prescribed by the Board of
Directors. Employee's rights, duties and responsibilities shall be commensurate
with his position. Prior to the close of each fiscal year during the term
hereof, the Board of Directors shall establish and deliver to Employee written
performance goals for the Employee for the succeeding fiscal year (the
"Performance Goals"). Employee's performance of his duties hereunder, including
the determination of whether the Performance Goals have been achieved, shall be
subject to review only by the Board of Directors. Such a review shall be
conducted in good faith at least annually. Employee agrees to serve without
additional compensation, if elected or appointed thereto, in one or more offices
and as a director of the Corporation's parent, Desa Holdings Corporation
("Holdings") and any of the Corporation's subsidiaries, provided, however, that
the Employee shall not be required to serve as an officer or director of any
subsidiary if such service would expose him to adverse financial, legal or other
consequences; and provided, further, that Employee acknowledges that the
Corporation shall not be deemed to be in breach of this Section 1 or of the
final sentence of Section 8 if Employee declines to serve as an officer or
director of any subsidiary.
Employee shall not be required to relocate his residence, and
the corporate headquarters of the Corporation will be moved, on a decision by
the Employee, to a location in the Nashville, Tennessee area selected by the
Employee and reasonably acceptable to the Board of Directors.
2. Employment Service. During the Employment Period, the
Employee shall devote his business time, energy and skill (reasonable vacations
and reasonable absences because of sickness and other personal necessity
excepted) to render services for the Corporation or its divisions and
subsidiaries, if any, and in the promotion of their collective interests. During
the Employment Period, the Employee shall not engage in any other
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business activities, duties, or pursuits which interfere with his employment
hereunder or detrimentally affect the performance of his employment services
hereunder. Upon the reasonable request of the Corporation, the Employee shall
cease any business, activities, duties or pursuits detrimentally affecting the
Employee's performance of his duties hereunder or interfering with his
employment hereunder. This provision shall not be deemed to prohibit the
Employee from engaging in a reasonable amount of activities in trade
associations and professional organizations or participating in private
investments provided such activities do not interfere with Employee's employment
hereunder or materially adversely affect the performance of Employee's duties
hereunder. During the Employment Period and subject to Section 11 hereof, the
Employee shall not own or hold any securities in, or be employed by or render
any consulting or similar services to, any company directly or indirectly
competing with the business of the Corporation or any division or subsidiary
thereof, as such business is constituted on the date of determination, in an
amount which, in the reasonable judgment of the Corporation, would result in a
conflict of interest. For purposes of this Section 2, ownership of less than
five percent (5%) of the issued and outstanding stock of a corporation, the
securities of which are listed upon a national securities exchange or regularly
included in a national list of over-the-counter securities as it may be from
time to time published in a newspaper of general publication, shall not be
deemed to create a conflict of interest.
3. Compensation.
(a) From and after the Effective Date, the Employee shall be
entitled to receive by way of remuneration for his services a salary of not less
than Four Hundred Forty-Five Thousand Dollars ($445,000) per year, payable in
bimonthly installments ("Regular Remuneration"). Salary, bonus and all other
payments to Employee pursuant to the Agreement shall be subject to withholding
and other applicable taxes. Annual increases in Regular Remuneration will be at
the discretion of the Board of Directors of the Corporation; provided, however,
that in the absence of adverse factors, circumstances or information
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relating to Employee's performance of his duties or the Corporation, the general
principle by which the Board will be guided in setting Employee's Regular
Remuneration shall be to achieve general parity with executives having similar
responsibilities for similarly situated businesses. In addition, the Board of
Directors of the Corporation shall review Employee's Regular Remuneration no
less frequently than annually beginning one year after the Effective Date,
taking into account increases in the profitability of the Corporation or
increased responsibilities occasioned by growth in the size and complexity of
the Corporation's business, whether caused by growth in existing business
operations or by acquisition or creation of additional operations, and such
other factors as the Board of Directors deems appropriate, in order to determine
whether Employee's then-effective Regular Remuneration is adequate.
(b) For each fiscal year (and for partial fiscal years under
certain circumstances, as provided hereinbelow) during the Employment Period, a
cash executive bonus pool (the "EBP") will be established for the Employee if
the Corporation achieves (as determined by the Board of Directors) in excess of
90% of the EBITDA target for such year as set forth in the Corporation's annual
management plan, as approved by the Board of Directors (the "Annual EBITDA
Target"). Such bonus pool will equal 0.0% of Employee's Regular Remuneration if
the Corporation has achieved 90% of the Annual EBITDA Target for such year and
will increase on a linear basis at 5.0% of Employee's Regular Remuneration for
each 1% of Annual EBITDA Target in excess of 90%, up to 50% of Employee's
Regular Remuneration if the Corporation has achieved 100% of the Annual EBITDA
Target. If the Corporation has achieved more than 100% of the Annual EBITDA
Target, the bonus pool will increase on a linear basis at 2.5% of Employee's
Regular Remuneration for each 1% of Annual EBITDA Target in excess of 100%.1 The
calculation of the EBP for each full fiscal year shall be determined promptly
after the delivery of the audited, consolidated financial
--------
1 Thus, for example, if in a given year the Corporation's actual EBITDA exceeds
the Annual EBITDA Target by 20%, the Employee's EBP for that year will be 100%
of his Regular Remuneration.
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statements of Holdings, and EBP bonus payments shall be paid as soon as
practicable after such determination. In the event that the Corporation or
Holdings disposes of a material operating subsidiary or division or separately
identifiable business unit, the EBP shall be reviewed by the Board of Directors
and revised to the extent necessary to provide Employee with a bonus plan that
is substantially equivalent in format and provides a substantially equivalent
benefit in light of such disposition. Employee acknowledges that in the event of
such a disposition, the bonus payable under the EBP may decrease. In the event
that the Corporation or Holdings acquires, directly or indirectly, the stock or
substantially all of the assets of another corporation or other entity, or any
division or separately identifiable business unit thereof, the EBP will be
amended by mutual agreement of Employee and the Corporation, as directed by the
Board of Directors, to adjust the EBITDA targets and bonus pool to reflect the
effects of such transaction on the Corporation. With respect to any EBP bonus to
which Employee may be entitled for a portion of a fiscal year pursuant to
Section 7, 8 or 9 below, such EBP for such portion of the fiscal year shall be
determined in the same manner set forth hereinabove as if the Employee had been
employed for the full fiscal year; provided, however, that (i) the applicable
EBITDA target shall be the Corporation's annual management plan for the portion
of such fiscal year as Employee was employed by the Corporation (fiscal year to
date through the month end preceding the Employee's termination of employment),
(ii) the bonus pool will be proportionate to the percentage of the year during
which the Employee was employed by the Corporation, and (iii) for fiscal year
2000 only, the applicable EBITDA target shall be the full fiscal year's target
measured against full fiscal year results (with the bonus pool to be
proportionate as set forth in clause (ii) above). The calculation of the EBP and
payment of any EBP bonus owing on account of a portion of a fiscal year shall be
completed as soon as reasonably practicable after the employment termination
event giving rise thereto.
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(c) In addition to the compensation payable to the Employee
as set forth hereinabove, the Employee shall be entitled to receive certain
stock options, the fundamental terms of such options in respect of the Employee
are outlined on Exhibit A hereto.
4. Expenses and Fringe Benefits.
(a) The Employee shall be reimbursed for the
business-related expenses incurred by the Employee in the performance of his
duties hereunder.
(b) The Employee shall also be entitled to receive the
Fringe Benefits set forth on Exhibit B hereto. The Corporation agrees that,
without the Employee's written consent, it will not make any material changes in
such benefits which would materially adversely affect the Employee's right to
receive or eligibility to participate in such benefit plans or the amounts,
timing or terms of such benefits; provided, however, the Corporation shall not
be in breach of this provision if it institutes an alternative benefits plan or
program with substantially equivalent benefits.
5. Trade Secrets and Confidentiality. The Employee agrees that
he will not at any time, while he is employed by the Corporation or for two (2)
years after termination of such employment, knowingly divulge to any person,
firm or corporation any confidential or privileged information received by him
during the course of his employment, or prior to the date hereof, with regard to
the financial, business or other affairs of the Corporation, its predecessors,
its officers, directors, or stockholders, or any subsidiary, customer or
supplier of the Corporation, and all such information shall be kept confidential
and shall not, in any manner be revealed to anyone except as may otherwise be
required by law and provided further that nothing herein shall be construed to
prohibit the Employee from divulging information in the ordinary course of the
business of the Corporation. The Employee further agrees, while he is employed
by the Corporation or for two (2) years after termination of such employment,
that he will not knowingly divulge to any person, firm or corporation, either
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during the term of this Agreement or thereafter, or make known either directly
or through another, to any person, firm or corporation, any trade secret or
confidential knowledge or privileged procedures of the Corporation except as may
be otherwise required by law and provided further that nothing herein shall be
construed to prohibit the Employee from divulging (i) information in the
ordinary course of the business of the Corporation or (ii) information which was
or has become or hereafter becomes generally available to the public. Any breach
of the terms of this paragraph or of Section 11 hereof shall be a material
breach of this Agreement.
6. Property of the Corporation. The Corporation shall be
entitled to the sole benefit and exclusive ownership of any trademarks, trade
names, marketing or advertising concept or strategy, any design patents, or any
inventions or improvements in plant, machinery, processes, or other things used
in the business of the Corporation that may be developed, made, or discovered by
the Employee while he is in the service of the Corporation, and the Employee
shall do all acts and things necessary or required to give the Corporation the
benefit of this Section. The Employee agrees that he will not use any property
of the Corporation except in furtherance of his duties hereunder.
7. Death or Disability. If the Employee dies during the
Employment Period, all obligations of the Corporation under this Agreement
(other than obligations for accrued Regular Remuneration hereunder) shall cease,
except that the Employee's estate shall be entitled (i) to continue to receive
the Regular Remuneration set forth in Paragraph 3(a) hereof for a period of
twelve (12) months after death, and (ii) to the Employee's EBP bonus for the
portion of the fiscal year prior to his death as determined pursuant to Section
3(c) as and when such bonus is otherwise payable in accordance with such Section
3(c). If during the Employment Period, the Employee shall become physically or
mentally disabled to the extent that he is, in the reasonable opinion of a
recognized medical expert selected by the Corporation, unable to continue the
proper performance of his duties hereunder for a
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continuous period of one hundred eighty (180) days, the Employee's employment
hereunder shall thereupon cease and terminate; provided, that (i) the
Corporation's obligation under Paragraph 3(a) hereof with respect to Regular
Remuneration shall continue in full force and effect for twelve (12) months
after determination of disability (such remuneration to be offset by any amounts
received by the Employee from insurance or other benefits provided by the
Corporation other than pursuant to this Agreement), and (ii) the Employee shall
be entitled to his EBP bonus for the portion of the fiscal year prior to his
termination of employment as determined pursuant to Section 3(c) as and when
such bonus is payable in accordance with Section 3(c).
8. Termination of Services. The Board of Directors of the
Corporation shall have the right on behalf of the Corporation to terminate the
Employee's employment for Cause (as hereinafter defined in clauses (a) and (b)
of this sentence) during the Employment Period (a) immediately upon and the
Corporation shall have no further obligation hereunder after the conviction or
admission of Employee of a felony or a crime involving moral turpitude under the
laws of any state in the United States or the federal laws of the United States,
or fraud, misappropriation or embezzlement of the assets of the Corporation or
any subsidiary thereof; or (b) upon not less than thirty (30) days' written
notice specifying in reasonable detail (i) any failure by Employee to fulfill
his duties and responsibilities set out in Sections 1 and 2 of this Agreement
(other than due to death or disability), or failure to perform in accordance
with the Performance Goals in any material respect as determined by the Board of
Directors, which has not been cured within 60 days after Employee's receipt of
written notice of such failure; or (ii) the intentional or knowing breach by
Employee of his obligations under Sections 5, 6, or 11 of this Agreement. If
Cause as defined in clause (b) of the preceding sentence continues to exist 60
days after written notice, Employee's employment hereunder shall immediately
cease and terminate, and the Corporation shall have no further obligations
hereunder. The Employee may voluntarily leave the employ of the Corporation at
any time,
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but the Corporation shall have no further obligations hereunder. The Board of
Directors of the Corporation shall have the right to terminate the Employee's
employment without Cause at any time, effective immediately. If the Corporation
terminates the Employee's employment without Cause prior to expiration of the
Employment Period, the Corporation shall pay Employee (i) for the remainder of
the Employment Period (but in no event for less than 12 months) Regular
Remuneration which shall continue to be payable in installments in accordance
with Section 3 hereof; (ii) for the remainder of the Employment Period (but in
no event for less than 12 months) all damages for loss of Fringe Benefits or
benefits under any "employee benefit plan" (as defined in Section 3 of ERISA)
sponsored by the Corporation which the Employee would have received if the
Corporation had not terminated the Employee without Cause; provided, however,
that in lieu thereof, the Corporation shall have the right to continue providing
Fringe Benefits (or substantially equivalent benefits) to the Employee for such
period, if reasonably acceptable to Employee; (iii) legal fees and expenses, if
any, incurred as a result of such termination; and (iv) his share of the EBP for
the portion of the fiscal year in which such termination occurs as determined
pursuant to Section 3(c) as and when such bonus is otherwise payable in
accordance with Section 3(c). Employee shall not be required to mitigate the
amount of any payment due him under this Section by seeking employment or
otherwise; provided, however, that compensation and benefits received by
Employee after termination without Cause will offset Employee's termination
benefits and damages payable under this Section 8 on account of such termination
without Cause. The Corporation shall use its best efforts to maintain all
employee benefit plans and programs in which the Employee was entitled to
participate immediately prior to his termination without Cause. If such
participation cannot be maintained with the exercise of the Corporation's best
efforts, Employee shall be entitled to receive an amount necessary to provide
the Employee and his dependents equivalent benefits for the remainder of the
Employment Period. For purposes of this Section, termination without Cause shall
include, but not be limited to: (i)
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any material change in Employee's duties as President and Chief Executive
Officer or assignment of the Employee to duties materially inconsistent with the
position of President and Chief Executive Officer; (ii) any removal of the
Employee from or any failure to re-elect the Employee to any of the positions
indicated in Section 1 hereof; (iii) a reduction in the Employee's salary or
Fringe Benefits, or adverse change in the terms of participation or benefits
under the EBP provided, that no termination without Cause shall be deemed to
have occurred if the Corporation provides benefits that are substantially
equivalent to the Fringe Benefits provided at the time of determination; or (iv)
any breach of this Agreement by the Corporation which is not cured by the
Corporation within thirty (30) days after receiving written notice of such
breach.
9. Change in Control or Sale of the Corporation. If the
Corporation shall undergo a Change in Control (as hereinafter defined) or a Sale
of the Corporation (as hereinafter defined, and, in such event, the Corporation
fails to obtain the assumption of this Agreement by any successor to the
Corporation under Section 14 hereof prior to the date of such succession) during
the Employment Period, Employee shall be entitled to receive for the remainder
of the Employment Period (but in no event for less than 12 months) (i) all
future installments due for Regular Remuneration, which shall continue to be
payable in installments in accordance with Section 3 hereof; (ii) all damages
for loss of Fringe Benefits or benefits pursuant to any employee benefit plan
sponsored by the Corporation which the Employee would have received if there had
been no Change in Control or Sale of the Corporation, and (iii) his
proportionate share of the EBP for the portion of the fiscal year in which such
Change in Control or Sale of the Corporation occurs, as determined according to
Section 3(b). The obligations of the Corporation in the preceding sentence shall
not apply to any Change in Control or Sale of the Corporation in which the
Employee receives a realized return on his personal investment in equity
securities of Holdings (including, without limitation, any such investment made
pursuant to either Section 3(c) or Section 12 hereof) equal to three times the
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cost of such investment. For purposes hereof, a realized return shall mean the
(i) cash, (ii) market value of registered, publicly traded and tradeable
securities not subject to transfer restrictions or restrictions under Rule 144
under the Securities Act of 1933 , as amended, and/or (iii) fair value (as
determined by the Board of Directors of the Corporation acting in good faith) of
all other securities, in each case received by Employee in any Change of Control
or Sale of the Corporation transaction. Employee shall not be required to
perform further duties hereunder and shall not be required to mitigate his
damages in the event a Change in Control or Sale of the Corporation shall occur
during the Employment Period. A Change in Control shall be deemed to have
occurred if: (i) Holdings shall own less than 90% of all the issued and
outstanding voting securities of the Corporation; or (ii) a sale of
substantially all the assets of the Corporation; provided, that no Change in
Control shall be deemed to have occurred in the event that, subsequent to such
transaction, Employee continues to be employed by the successor entity under
terms, conditions and for compensation substantially identical to the terms of
this Agreement. A "Sale of the Corporation" shall be deemed to have occurred if
(i) the "JWC Holders" and their Affiliates, the "Management Holders" and the
"Other Holders" (as such quoted terms are defined in the Desa Holdings
Corporation Amended and Restated Stockholders Agreement dated as of October 9,
1998) (collectively, the "Control Group") shall cease to own of record and
beneficially an amount of Voting Securities of Holdings equal to at least 50% of
the amount of Voting Securities (other than by virtue of sales pursuant to an
initial public offering or a reverse stock split of such Voting Securities) of
Holdings; (ii) any Person or related group (as defined in Rule 13(d) under the
Exchange Act of 1934, as amended (the "Exchange Act")), excluding the Control
Group, shall be or become the "beneficial owner" (as defined in Rules 12(d)-3
and 13(d)-5 under the Exchange Act), directly or indirectly, of a greater
percentage of the outstanding Voting Securities of Holdings than is owned
beneficially by the Control Group and the Control Group no longer has the right
to seat a majority of the directors of Holdings; (iii) all or
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substantially all of the assets of Holdings are sold or otherwise transferred
for value, other than to a lender in a secured transaction and other than in a
transaction following which the Control Group owns of record and beneficially at
least 50% of the Voting Securities of the acquiring Person; or (iv) (in the
event of a merger or consolidation) Holdings is merged or consolidated with or
into another entity and, as a result thereof, the Control Group holds,
beneficially and of record, less than 50% of the Voting Securities of the
surviving entity. As used herein, "Affiliate" means as to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person; provided, that, as to the JWC Holders,
the term Affiliate shall include the partners, officers, directors and employees
of X.X. Childs Associates, L.P., their spouses, children, and other members of
their immediate family and trusts, family limited partnerships and other estate
planning vehicles created for the benefit of such persons. As used in the
preceding sentence, "control" of a Person means the power, directly or
indirectly, either to (i) vote 51% or more of the Voting Securities of such
Person or (ii) direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise. As used herein, "Person" means an
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, any nation or government, any
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, or other entity of whatever nature. As used herein, "Voting
Securities" means common equity securities (or equivalent partnership or joint
venture interests) having the right to vote generally in matters coming before
common equity holders.
10. Coordination of Rights. In the event that Employee suffers
termination of Employment without Cause and a Change in Control or Sale of the
Corporation also occurs, Section 8 shall be disregarded and Section 9 shall
apply.
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11. Covenant Not to Compete; Non-Solicitation, etc.
(a) While employed by the Corporation and for a period of
two years following termination of employment, the Employee will not, directly
or indirectly as an individual or as part of a partnership or other business
association, or otherwise, compete with the business of the Corporation or its
subsidiaries in North America or in any other jurisdiction in which the
Corporation or a subsidiary thereof conducts substantial business, nor will he
enter the employ of, or act as an agent for or as a director, consultant, or
officer of, any person, firm, partnership or corporation engaged in a line of
business in North America or in any other jurisdiction in which the Corporation
or a subsidiary thereof conducts substantial business that is directly or
indirectly in competition with the business of the Corporation or its
subsidiaries as the same is being conducted at such termination of employment.
(b) The Employee further agrees that he will not, at any
time during or within two years after the termination of employment under this
Agreement, however caused, solicit, interfere with, employ, endeavor to entice
away from the Corporation, or any subsidiary of the Corporation, any customer,
supplier or employee.
(c) With respect to any issues as to the enforceability of
the foregoing provisions, the Employee agrees that the foregoing are reasonable
in terms of scope and duration and both parties agree that a court making a
determination on the issue of validity, legality or enforceability of the
foregoing, may modify the duration or scope of the provisions of this Section 11
and/or delete or modify specific words or phrases ("blue penciling"), and in its
reduced or blue-penciled form, the foregoing shall be enforceable and enforced.
The Employee agrees that in the event of a breach of the foregoing provisions of
this Section 11 or the provisions of Section 5, the remedy of damages would be
inadequate and the Corporation may apply to any court of competent jurisdiction
to enjoin any violation, as well as seek all other legal remedies available upon
ten days notice to Employee, provided that
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Employee shall not have cured such breach within 30 days after receiving written
notice of such breach.
12. Stock Purchase. Within 30 days after the Effective Date,
the Employee will acquire shares of common stock of Holdings at a valuation for
such shares of $6.50 per share for an aggregate investment of $3,000,000.
Contemporaneously, the Employee will execute the Desa Holdings Corporation
Amended and Restated Stockholders Agreement dated as of October 9, 1998 as a
"Management Holder" as defined therein. Employee will pay for such stock
purchase on the Effective Date by cash in the amount of $1,500,000 and a
promissory note in principal amount of $1,500,000 (the "Note"). The Note shall
bear interest, payable at maturity, at 8.5% per annum and shall mature nine and
one-half years after the Effective Date; provided, however, that any proceeds
from the sale of any Holdings common stock acquired by Employee pursuant to this
Section 12 shall be applied proportionately to reduce the Note.
13. Non-Waiver of Rights. The failure to enforce at any time
any of the provisions of this Agreement or to require at any time performance by
the other party of any of the provisions hereof shall in no way be construed to
be a waiver of such provisions or to affect the validity of this Agreement, or
any part hereof, or the right of either party thereafter to enforce each and
every provision in accordance with the terms of this Agreement.
14. Invalidity of Provisions. The invalidity or
unenforceability of any particular provision of this Agreement shall not affect
the other provisions hereof, and this Agreement shall be construed in all
respects as if such invalid or unenforceable provisions were omitted.
15. Assignment. This Agreement shall be binding upon and shall
inure to the benefit of the Corporation and any successor to the Corporation
under the provisions of this Agreement. For the purpose of this Agreement the
term "successor" shall mean any person, firm, corporation, or other business
entity which at any time, whether by merger,
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purchase, liquidation or otherwise, shall acquire all or substantially all of
the assets or business of the Corporation. This Agreement is personal to the
Employee and is not assignable by the Employee.
16. Choice of Law. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the State of Delaware.
17. Entire Agreement. This Agreement embodies the entire
agreement of the parties respecting the matters within its scope, superseding
any and all prior agreements or understandings with respect to the subject
hereof and may be modified only in a writing signed by the party against whom
enforcement is sought. The headings contained in this Agreement have been
inserted solely for the convenience of the parties and shall be of no force or
effect in the construction or interpretation of the provisions of this
Agreement.
18. Notices. All notices required or made pursuant to this
Agreement shall be made, and shall be deemed to have been duly given when sent
by, certified mail, return receipt requested, to the addresses set forth above
or such other addresses later designated in writing by either of the parties.
IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed on its behalf by an officer of the Corporation thereunto duly
authorized, and the Employee has hereunto signed this Agreement, all as of the
date first written above.
DESA INTERNATIONAL, INC.
By:/s/ Xxxx X. Xxxxxx
Title: Vice President
EMPLOYEE
/s/ W. Xxxxxxx Xxxxx
W. XXXXXXX XXXXX
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EXHIBIT A
TO EMPLOYMENT AGREEMENT
NON-QUALIFIED STOCK OPTIONS
KEY PROVISIONS
At the Effective Date, Employee will be granted non-qualified options
to acquire, at $6.50 per share, an aggregate number of shares of common stock of
Holdings equal to four percent (4%) of the outstanding common stock and common
stock equivalents of Holdings, on a fully diluted basis. Employee's options
shall be subject to anti-dilution protections for the first $100 million
(measured by gross proceeds) of all issuances and sales by Holdings of
additional equity securities.
The above options will vest 40% on the first anniversary of the
Effective Date, and 20% on each subsequent anniversary of the Effective Date,
until fully vested. Unvested options shall be subject to accelerated vesting in
the case of a Change in Control or Sale of the Corporation.
Each option shall expire, unless earlier exercised or terminated, nine
years and six months from the date of grant.
In the case of termination of Employee's employment for Cause or his
voluntary resignation, his stock options shall terminate at the time of
termination of employment.
In the case of termination of Employee's employment without Cause,
options which have vested at the time of termination of employment shall
terminate on the 91st day after the date of employment termination, and options
which have not vested shall terminate immediately. If Employee's employment is
terminated due to death or disability, options which have vested at the time of
termination/resignation shall terminate on the 181st day after the date of
employment termination or death and may be exercised during such period by the
Employee or his legal representative or estate, as the case may be, and options
which have not vested shall terminate immediately.
EXHIBIT B
TO EMPLOYMENT AGREEMENT
FRINGE BENEFITS FOR EXECUTIVES
The following fringe benefits as they exist and are administered on the
Effective Date of this Agreement:
1. Health and welfare plan coverage as provided to the Corporation's key
executives
2. Vacation (up to 30 days per year)
3. Use of Company Car of Employee's choice
4. Office Facilities and Services, including, but not limited to,
secretarial services, telephone, cellular telephone, computer,
printers, internet connection, subscriptions, and professional
associations
5. Travel and Entertainment
6. Group Life Insurance
7. Disability Insurance
8. Country Club Dues
9. Section 401(k) Plan
