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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of November, 1997, by and between
XXXXXX INDUSTRIES, INC., a Delaware corporation (hereinafter the "Company") and
XXXXXX X. XXXXX, (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and Employee entered into Employment Agreements
dated November 1, 1987, April 1, 1990 and January 1, 1992; and
WHEREAS, the Employment Agreement, dated January 1, 1992 was modified
by Letter Agreements, dated November 30, 1992, June 21, 1993, November 28, 1994
and October 8, 1996; and
WHEREAS, the Company and Employee desire to enter into a new employment
agreement (the "Employment Agreement"), which agreement shall supersede all
prior employment agreements and modifications thereto.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained, the parties hereto agree as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any
employment or consulting agreements, or modifications or amendments thereto,
oral or written, entered into between Employee and the Company or any of its
subsidiaries, prior to the date of this Agreement, including, but not limited
to, (i) the Employment Agreements between Employee and the Company, dated
November 1, 1987, April 1, 1990 and January 1, 1992 and (ii) the modifications
and amendments to the January 1, 1992 Employment Agreement, dated
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November 30, 1992, June 21, 1993, November 28, 1994 and October 8, 1996.
2. TERM AND DUTIES. (a) Subject to earlier termination on the terms and
conditions hereinafter provided, the term of the Employment Agreement shall be
comprised of a period of active employment commencing on November 1, 1997 and
ending on October 31, 2001 and a "consulting period" commencing at the end of
the period of active employment and continuing thereafter to December 31, 2010.
Notwithstanding the foregoing, Employee shall have the right to terminate his
active employment and commence his consulting period at any time during his
active employment.
(b) During the period of active employment, Employee shall be employed
as an executive of the Company. In such capacity, Employee agrees that he shall
serve the Company under the direction of the Chief Executive Officer of the
Company to the best of his ability, shall devote full time during normal
business hours to such employment, shall perform all duties incident to his
offices on behalf of the Company, and shall perform such other duties as may
form time to time be assigned to him by the Chief Executive Officer of the
Company.
(c) Effective with the termination of the period of active employment,
Employee shall cease to be an employee of the Company. However, in recognition
of the continued value to the Company of Employee's extensive knowledge and
expertise, Employee shall serve as a consultant to the Company during the
consulting period. In such capacity, Employee shall consult with the Company and
its respective senior executive officers with respect to its respective
businesses and operations. Such consulting services shall not require more than
fifty (50) days in any one year, it being understood and agreed that during the
consulting period Employee shall have the right to undertake full time or part
time employment with any business enterprise which is not a competitor of the
Company. Employee's services as a consultant to the Company shall be required at
such times and such places as shall result in the least
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inconvenience to Employee, having in mind his other business commitments which
may obligate him to perform services prior to the performance of his services
hereunder. To the end that there shall be a minimum of interference with
Employee's other commitments, his consulting services shall be rendered by
personal consultation at his residence or office wherever maintained, or by
correspondence through mail, telegram or telephone, or other similar modes of
communications at times, including weekends and evenings, most convenient to
him. During the consulting period, Employee shall not be obligated to serve as a
member of the Board of Directors of the Company or to occupy any office on
behalf of the Employer or any of its subsidiaries or affiliates.
3. RENUMERATION. (a) During the period of active employment, Employee
shall receive the following compensation:
(i) The Company shall pay Employee a basic salary in the total
sum of TWO HUNDRED SEVENTY-FIVE THOUSAND ($275,000) DOLLARS per annum
during the term of his active employment with the Company; which salary
shall be paid in weekly installments or in such other manner as shall
be agreed to by the Company and Employee.
(ii) In addition to his salary set forth in Paragraph 3(a)(i)
above, Employee shall receive an increment in an amount equal to the
cumulative cost of living on his base salary as set forth in paragraph
3(a) (i) hereof as reported in the "Consumer Price Index, New York
Northeastern New Jersey, all items", published by the United States
Department of Labor, Bureau of Labor Statistics (using January 1, 1997
as the base date for computation). Such cost of living increment with
respect to the aforesaid salary of Employee shall be made semi-annually
as follows:
A. With respect to the first six months of each calendar year
during the period of
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employment, such increment shall be calculated and payable on or before
the first day of August of such year; and
B. With respect to the last six months of each calendar year
during the period of employment, such increment shall be calculated and
payable on or before the first day of February of the following
calendar year.
If Employee's employment shall terminated during any six month period
referred to in this Paragraph 3(ii), then the cost of living increment provided
for herein shall be prorated accordingly.
(iii) Not later than one hundred twenty (120) days after the
end of the fiscal year of the Company ending July 31, 1998 and for each
subsequent fiscal year of the Company ending during the period of
active employment, the Company shall also pay to Employee, as incentive
compensation, three (3%) percent of the Consolidated Pretax Earnings of
the Company in excess of the Company's Minimum Consolidated Pretax
Earnings, as defined below in this clause (iii), and in no event more
than Employee's annual salary set forth in clause (i) immediately
above. For purposes hereof, the term "Consolidated Pretax Earnings of
the Company" shall mean, with respect to any fiscal year, the
consolidated income if any, of the Company for such fiscal year as set
forth in the audited, consolidated financial statements (the "Financial
Statements") of the Company and its subsidiaries included in its Annual
Report to stockholders for such fiscal year, before deduction of taxes
based on income or of the incentive compensation to be paid to Employee
for such Fiscal year under this Agreement. For the purpose hereof the
term "Minimum Consolidated Pretax Earnings" of the Company shall mean,
with respect to any fiscal year, the amount of Consolidated Pretax
Earnings of the Company equal to ten percent (10%) of (x) the Company's
Stockholders' Equity, as set forth in the Financial
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Statements for the beginning of such fiscal year, plus (y) the proceeds
from the sale or acquisition of the Company's equity securities, less
(z) the purchase price from the acquisition of the Company's equity
securities, on a time-proportioned basis, during such fiscal year.
(b) During the consulting period, Employee shall be entitled to a
consulting fee at the rate of ONE HUNDRED THOUSAND ($100,000) DOLLARS per annum
payable in monthly installments or in such other manner as shall be agreeable to
the Company and Employee.
4. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of active
employment, Employee shall receive all fringe benefits in the nature of health,
medical, life, and/or other insurance, a Company car and related expenses as
received by other officers of the Company.
(b) During the term of this Employment Agreement and consulting period,
the Company shall reimburse Employee for all proper expenses incurred by him,
including disbursements made in the performance of his duties to the Company;
provided, however, that no extraordinary expenses and/or disbursements shall be
incurred by Employee without the prior approval of the Chief Executive Officer
of the Company; and
(c) In the event of the death of Employee during the period of active
employment, the Company shall continue to pay to Employee's widow, or to such
other person or persons as may be designated by Employee in his Will, or to his
estate in the event of Employee's intestacy, the salary and compensation to
which Employee in entitled pursuant to Paragraph 3(a) (i) hereunder for the two
(2) year period from date of death and one-half of such salary for the balance
of the period covered by his active employment, and in the year of death a
payment equal to the pro rata amount for said year of the compensation provided
in Paragraph 3(a)(iii) that Employee may be
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entitled to.
5. NON-COMPETITION. Employee agrees that during the term of this
Employment Agreement he will not directly or indirectly enter into or remain in
the employ of any person, firm or corporation, or engage in or have a financial
interest in any business which is then directly or indirectly competitive to the
business of the Company or is then manufacturing any article or product or
performing any service which is the same as, or similar to, any articles or
products manufactured, or service performed by the Company. In the event of a
breach of this covenant not to compete, the parties acknowledge that the Company
may be irreparably damaged and may not have an adequate remedy at law. The
Company may therefore obtain injunctive relief, without the necessity of posting
a bond, for any breach or threatened breach of this covenant. The parties hereto
further acknowledge that this covenant not to compete is intended to conform
with the laws of the State of New York. Any court of competent jurisdiction is
hereby authorized to expend or contract the restrictions of this covenant not to
compete in order to conform with the laws of New York so that it shall bind the
parties hereto.
Employee further agrees that he will not use the name Xxxxxx
Industries, Inc. or any variation thereof, or otherwise allow any person to use
such name or permit any member of his family to use such name, or authorize the
use of such name as or in the name of any corporation, partnership, firm or
venture which manufactures any article, product, special process or performs any
service which is the same as, or similar or in competition with any article,
product, special process or service manufactured or performed by the Company, or
as in the name of any such article or product.
6. TERMINATION. Employee's employment hereunder may be terminated by
the Company for a material breach of the terms of this Agreement.
7. CONFIDENTIAL INFORMATION. With respect to any patent, invention,
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trademark or copyright hereinafter developed by Employee, Employee shall
promptly notify the Company of any such patent, etc., and shall execute such
documents as the Company may reasonably request in order to evidence the
Company's title to same. In the event Employee determines to develop on his own
time and expense and outside of the Company's facilities any invention,
trademark or copyright not related to the Company's business, he shall notify
the Company in writing of this determination and shall offer the Company an
opportunity to acquire a 50% interest in same upon the Company's agreement to
bear 50% of the costs (exclusive of any payments to Employee) of developing
same. Employee represents and warrants that he does not now own of record or
beneficially and directly or indirectly, any patent, etc.
8. ORDINARY COURSE. Employee shall not, on behalf of the Company, enter
into any contract other than those in the ordinary course of business of the
Company, unless approved by the Board of Directors of the Company.
9. DISABILITY. If during the term of this Employment Agreement,
Employee is unable to serve the Company in accordance with the terms hereof, for
a period of ninety (90) days or any aggregate of six (6) months in any one
calendar year for any reason whatsoever, including, but not limited to, illness
or incapacity, then the Company shall have the right, on ninety (90) days'
written notice, to terminate Employee's employment and consulting services under
this Agreement and, if Employee's employment and consulting services are so
terminated, he shall be entitled to his annual compensation pursuant to
paragraphs 3(a)(i) and 3(b) hereunder for the first year after such notice
period, payable in weekly installments, and thereafter three-fourths of such
compensation (provided that no payment shall be required for any period beyond
October 31, 2001), payable in weekly installments for the balance of the period
covered by this
Agreement.
10. CONSOLIDATION OR MERGER. In the event of any consolidation or
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merger of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to perform all of
the terms and provisions hereof applicable to the Company, and Employee's
obligations hereunder shall continue in favor of such successor corporation.
11. NOTICES. Notice is to be given hereunder to the parties by telegram
or by certified or registered mail, addressed to the respective parties at the
addresses hereinbelow set forth or to such addresses as may be hereinafter
furnished, in writing:
TO: XXXXXX X. XXXXX
000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
TO: XXXXXX INDUSTRIES, INC.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon an
inure to the benefit of the successors and assigns of the Company. Unless
clearly inapplicable, reference herein to the Company shall be deemed to include
such other successor. In addition, this Agreement shall be binding upon and
inure to the benefit of the Employee and his heirs, executors, legal
representatives and assigns, provided, however, that the obligations of Employee
hereunder may not be delegated without the prior written approval of the Board
of Directors of the Company.
13. AMENDMENTS. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
14. CHANGE OF CONTROL. In the event there shall be a change in the
present control of the Company as hereinafter defined, or in any person directly
or indirectly presently
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controlling the Company, as hereinafter defined, Employee shall have the right
to immediately receive as a lump sum payment an amount equal to (i) two (2)
times his "base amount", within the meaning of Section 280G of the Internal
Revenue Code of 1986, as amended (hereinafter "the Code"), reduced by (ii)
$100.00.
For the purpose of this Agreement, a change in control of the
Company, or in any person directly or indirectly controlling the Company, shall
mean:
(a) a change in control as such term is presently
defined in Regulation 240.12b-2 under the Securities Exchange
Act of 1934 ("Exchange Act"); or
(b) if any "person" (as such term is used in Section
13(d) and 14(d) of the Exchange Act) other than the Company or
any "person" who on the date of this Employment Agreement is a
director or officer of the Company, becomes the "beneficial
owner" (as defined in Rule 13(d)-3 under the Exchange Act),
directly or indirectly, of securities of the Company
representing thirty percent (30%) of the voting power of the
Company's then outstanding securities; or
(c) if during any period of two (2) consecutive years
during the term of this Employment Agreement, individuals who
at the beginning of such period
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constitute the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election of
each director who is not a director at the beginning of such
period has been approved in advance by directors representing
at least two-thirds (2/3) of the directors then in office who
were directors at the beginning of the period.
15. GOVERNING LAW. This Employment Agreement is entered into and shall
be construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
XXXXXX INDUSTRIES, INC.
By:____________________________
XXX. X. XXXXX
Chairman
_______________________________
XXXXXX X. XXXXX
Employee
