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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of April 30, 1998, by and
between Racing Champions, Inc., an Illinois corporation (the "Company"), and
Xxxxx X. Xxxxxxxx (the "Employee"). The Company is a wholly owned subsidiary of
Racing Champions Corporation, a Delaware corporation ("Parent"). Certain
capitalized terms used herein are defined in section 10 below.
RECITAL
A. The Company and the Employee desire to terminate any and all prior
agreements, whether oral or written, between the parties and between the
Employee and Parent relating to the Employee's employment.
B. The Company desires to employ the Employee and the Employee is willing
to make his services available to the Company on the terms and conditions set
forth below.
AGREEMENTS
In consideration of the premises and the mutual agreements which follow,
the parties agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company on the terms and subject to
the conditions set forth in this Agreement.
2. Term. The term of the Employee's employment hereunder shall
commence on the date hereof and shall continue until terminated as provided in
section 6 below.
3. Duties. The Employee shall serve as the Vice President -
Marketing of the Company and will, under the direction of the Company's
President, faithfully and to the best of his ability, perform the duties of such
position. The Employee shall be one of the principal executive officers of the
Company and shall, subject to the control of the Company's Board of Directors,
supervise the Company's marketing and new product development activities. The
Employee shall also perform such additional duties and responsibilities which
may from time to time be reasonably assigned or delegated by the President of
the Company. The Employee agrees to devote his entire business time, effort,
skill and attention to the proper discharge of such duties while employed by the
Company.
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4. Compensation. The Employee shall receive a base salary of
$137,500 per year, payable in regular and equal monthly installments (the "Base
Salary"). The Employee's Base Salary shall be reviewed annually by the Board of
Directors of the Company to determine appropriate increases, if any, in such
Base Salary.
5. Fringe Benefits.
(a) Vacation. The Employee shall be entitled to two weeks of
paid vacation annually, increasing to three weeks after three years of
employment by the Company and four weeks after six years of employment by the
Company (including employment by the Company prior to the term of this
Agreement). The Employee and the Company shall mutually determine the time and
intervals of such vacation.
(b) Medical, Health, Dental, Disability and Life Coverage. The
Employee shall be eligible to participate in any medical, health, dental,
disability and life insurance policy in effect for the senior management of the
Company (excluding Xxxxxx Xxxx, Xxxx Xxxxx and Xxxxx Xxxxx) (collectively, the
"Second Tier Management").
(c) Incentive Bonus and Stock Ownership Plans. The Employee
shall be entitled to participate in any incentive bonus or other incentive
compensation plan developed generally for the Second Tier Management of the
Company, on a basis consistent with his position and level of compensation with
the Company. The Employee shall also be entitled to participate in any incentive
stock option plan or other stock ownership plan developed generally for the
Second Tier Management of the Company, on a basis consistent with his position
and level of compensation with the Company.
(d) Automobile. The Company agrees to reimburse the Employee up
to $400.00 per month, as such amount may be increased from time to time
consistent with the Company's reimbursement policy for the Second Tier
Management of the Company to cover Employee's expenses in connection with his
leasing of an automobile. Additionally, the Company will pay for the gas used
for business purposes. All maintenance and insurance expense for the automobile
is the responsibility of the Employee.
(e) Reimbursement for Reasonable Business Expenses. The Company
shall pay or reimburse the Employee for reasonable expenses incurred by him in
connection with the performance of his duties pursuant to this Agreement
including, but not limited to, travel expenses, expenses in connection with
seminars, professional conventions or similar professional functions and other
reasonable business expenses.
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Employee. The Company shall own and shall have the absolute right to name
the beneficiary or beneficiaries of said policy. The Employee agrees to
cooperate fully with the Company in securing said policy, including, but not
limited to submitting himself to any physical examination which may be required
at such reasonable times and places as Company shall specify.
6. Termination.
(a) Termination of the Employment Period. The Employment Period
shall continue until (i) the third anniversary of the date hereof unless the
parties mutually agree to extend the term of this Agreement (such anniversary of
the date hereof or such extended date being referred to herein as the "Expected
Completion Date"), (ii) the Employee's death or Disability, (iii) the Employee
resigns or (iv) the Board of Directors determines that termination of Employee's
employment is in the best interests of the Company.
(b) Definitions.
(i) For purposes of this Agreement, "Disability" shall mean
a physical or mental sickness or any injury which renders the Employee incapable
of performing the services required of him as an employee of the Company and
which does or may be expected to continue for more than six months during any
12-month period. In the event Employee shall be able to perform his usual and
customary duties on behalf of the Company following a period of disability, and
does so perform such duties or such other duties as are prescribed by the Board
of Directors for a period of three continuous months, any subsequent period of
disability shall be regarded as a new period of disability for purposes of this
Agreement. The Company and the Employee shall determine the existence of a
Disability and the date upon which it occurred. In the event of a dispute
regarding whether or when a Disability occurred, the matter shall be referred to
a medical doctor selected by the Company and the Employee. In the event of their
failure to agree upon such a medical doctor, the Company and the Employee shall
each select a medical doctor who together shall select a third medical doctor
who shall make the determination. Such determination shall be conclusive and
binding upon the parties hereto.
(ii) For purposes of this Agreement, "Cause" shall be deemed
to exist if the Employee shall have (1) violated the terms of section 7 or
section 8 of this Agreement; (2) failed to substantially perform his duties to
the reasonable satisfaction of the Board of Directors; provided that so long as
Xxxxxx Xxxx, Xxxx Xxxxx or Xxxxx Xxxxx serves a director of the Company, any
determination pursuant to this clause (2) must be approved by the Requisite
Founder Directors; (3) committed a felony or a crime involving moral turpitude;
(4) engaged in serious misconduct which is demonstrably injurious to the Company
or any of its Subsidiaries; (5) engaged in fraud or
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dishonest with respect to the Company or any of its Subsidiaries or made a
material misrepresentation to the stockholders or directors of the Company; or
(6) committed acts of negligence in the performance of his duties which are
substantially injurious to the Company.
(iii) For purposes of this Agreement, "Good Reason" shall
mean (1) the material diminution of the Employee's duties set forth in section 3
above or (2) the relocation of the offices at which the Employee is principally
employed to a location which is more than 50 miles from the offices at which the
Employee is principally employed as of the date hereof; provided, that travel
necessary for the performance of the Employee's duties set forth in section 3
above shall not determine the location where the Employee is "principally
employed."
(c) Termination for Disability or Death. In the event of
termination for Disability or death, payments of the Employee's Base Salary
shall be made to the Employee, his designated beneficiary or his estate for a
period of six months after the Termination Date in accordance with the normal
payroll practices of the Company. During this period, the Company shall also
reimburse the Employee for amounts paid, if any, to continue medical, dental and
health coverage pursuant to the provisions of the Consolidated Omnibus Budget
Reconciliation Act. During this period, the Company will also continue
Employee's life insurance and disability coverage, to the extent permitted under
applicable policies, and will pay to the Employee the fringe benefits pursuant
to section 5 which have accrued prior to the Termination Date.
(d) Termination by the Company without Cause or by the Employee
for Good Reason. If (i) the Employment Period is terminated by the Company for
any reason other than for Cause, Disability or death, (ii) the Employment Period
is terminated by the Company for what the Company believes is Cause or
Disability, and it is ultimately determined that the Employment Period was
terminated without Cause or Disability or (iii) the Employee resigns for Good
Reason, the Employee shall be entitled to receive, as damages for such a
termination, his Base Salary from the Termination Date to the first anniversary
of the Termination Date. Such payment of Base Salary shall be made in accordance
with the normal payroll practices of the Company. During this period, the
Company shall also reimburse the Employee for amounts paid, if any, to continue
medical, dental and health coverage pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act. During this period, the Company
will also continue Employee's life insurance and disability coverage, to the
extent permitted under applicable policies, and will pay to the Employee the
fringe benefits pursuant to section 5 which have accrued prior to the date of
termination.
(e) Termination by the Company for Cause or by the Employee
Without Good Reason. If the Employment Period is terminated by the Company with
Cause or as a result of the Employee's resignation without Good Reason, the
Employee
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shall not be entitled to receive his Base Salary or any fringe benefits or
bonuses for periods after the Termination Date.
(f) Effect of Termination. The termination of the Employment
Period pursuant to section 6(a) shall not affect the Employee's obligations as
described in sections 7 and 8.
7. Noncompetition and Nonsolicitation. The Employee acknowledges and
agrees that the contacts and relationships of the Company and its Affiliates
with its customers, suppliers, licensors and other business relations are, and
have been, established and maintained at great expense and provide the Company
and its Affiliates with a substantial competitive advantage in conducting their
business. The Employee acknowledges and agrees that by virtue of the Employee's
employment with the Company, the Employee will have unique and extensive
exposure to and personal contact with the Company's customers and licensors, and
that he will be able to establish a unique relationship with those Persons that
will enable him, both during and after employment, to unfairly compete with the
Company and its Affiliates. Furthermore, the parties agree that the terms and
conditions of the following restrictive covenants are reasonable and necessary
for the protection of the business, trade secrets and Confidential Information
(as defined in section 8 below) of the Company and its Affiliates and to prevent
great damage or loss to the Company and its Affiliates as a result of action
taken by the Employee. The Employee acknowledges and agrees that the noncompete
restrictions and nondisclosure of Confidential Information restrictions
contained in this Agreement are reasonable and the consideration provided for
herein is sufficient to fully and adequately compensate the Employee for
agreeing to such restrictions. The Employee acknowledges that he could continue
to actively pursue his career and earn sufficient compensation in the same or
similar business without breaching any of the restrictions contained in this
Agreement. The Employee acknowledges that one business of the Company and its
Affiliates is the design, production (including, without limitation, obtaining
the licenses necessary therefor), marketing and sale of die cast metal replicas
of vehicles and collectible pewter figures.
(a) Noncompetition. The Employee hereby covenants and agrees
that during the Employment Period and for two years thereafter (the "Noncompete
Period"), he shall not, directly or indirectly, either individually or as an
employee, principal, agent, partner, shareholder, owner, trustee, beneficiary,
co-venturer, distributor, consultant, representative or in any other capacity,
participate in, become associated with, provide assistance to, engage in or have
a financial or other interest in any business, activity or enterprise which is
competitive with the Company or any of its Affiliates or any successor or assign
of the Company or any of its Affiliates. The ownership of less than a one
percent interest in a corporation whose shares are traded in a recognized stock
exchange or traded in the over-the-counter market, even though that corporation
may be a competitor of the Company, shall not be deemed financial participation
in a competitor.
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If the final judgment of a court of competent jurisdiction declares that any
term or provision of this section is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to replace any invalid
or unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified. The term "indirectly" as used in this section and
section 8 below is intended to include any acts authorized or directed by or on
behalf of the Employee or any Affiliate of the Employee.
(b) Nonsolicitation. The Employee hereby covenants and agrees
that during the Noncompete Period, he shall not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, owner, trustee,
beneficiary, co-venturer, distributor, consultant or in any other capacity:
(i) canvass, solicit or accept from any Person who is a
customer or licensor of the Company or any of its Affiliates (any such Person is
hereinafter referred to individually as a "Customer," and collectively as the
"Customers") any business which in competition with the business of the Company
or any of its Affiliates or the successors or assigns of the Company or any of
its Affiliates, including, without limitation, the canvassing, soliciting or
accepting of business from any Person which is or was a Customer of the Company
within two years preceding the date hereof or with the Company or any of its
Affiliates during the Noncompete Period;
(ii) advise, request, induce or attempt to induce any of
the Customers, suppliers, or other business contacts of the Company or any of
its Affiliates who currently have or have had business relationships with the
Company within two years preceding the date hereof or with the Company or any of
its Affiliates during the Noncompete Period, to withdraw, curtail or cancel any
of its business or relations with the Company or any of its Affiliates;
(iii) induce or attempt to induce any employee, sales
representative, consultant or other agent of the Company or any of its
Affiliates to terminate his relationship or breach any agreement with the
Company or any of its Affiliates; or
(iv) hire any person who was an employee, sales
representative, consultant or other agent of the Company or any of its
Affiliates at any time during the Noncompete Period.
8. Confidential Information. The Employee acknowledges and agrees
that the customers, business connections, customer lists, procedures,
operations,
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techniques, and other aspects of and information about the business of the
Company and its Affiliates (the "Confidential Information") are established
at great expense and protected as confidential information and provide
the Company and its Affiliates with a substantial competitive advantage
in conducting their business. The Employee further acknowledges and agrees that
by virtue of his past employment with the Company, and by virtue of his
employment with the Company, he has had access to and will have access to, and
has been entrusted with and will be entrusted with, Confidential Information,
and that the Company would suffer great loss and injury if the Employee would
disclose this information or use in a manner not specifically authorized by the
Company. Therefore, the Employee agrees that during the Employment Period and
for five years thereafter, he will not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, owner trustee,
beneficiary, co-venturer distributor, consultant or in any other capacity, use
or disclose or cause to be used or disclosed any Confidential Information,
unless and to the extent that any such information become generally known to
and available for use by the public other than as a result of the Employee's
acts or omissions. The Employee shall deliver to the Company at the termination
of the Employment Period, or at any other time the Company may request, all
memoranda, notes, plans, records, reports, computer tapes, printouts and
software and other documents and data (and copies thereof) relating to the
Confidential Information, Work Product (as defined below) or the business of the
Company or any of its Affiliates which he may then possess or have under his
control. The Employee acknowledges and agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports and
all similar or related information (whether or not patentable) which relate to
the Company's or any of its Affiliate' actual or anticipated business research
and development or existing or future products or services and which are
conceived, developed or made by the Employee while employed by the Company and
its Affiliates ("Work Product") belong to the Company or such Affiliate, as the
case may be.
9. Common Law of Torts and Trade Secrets. The parties agree that
nothing in this Agreement shall be construed to limit or negate the common law
of torts or trade secrets where it provides the Company and its Affiliates with
broader protection than that provided herein.
10. Definition.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person and any
partner of a Person which is a partnership.
"Founder Director" at any time means Xxxxxx Xxxx, Xxxx Xxxxx or Xxxxx
Xxxxx if at such time such individual is a member of the Company's Board of
Directors.
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"Person" means any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization and any governmental entity or any department,
agency or political subdivision thereof.
"Requisite Founder Directors" at any time means (i) if there are three
Founder Directors at such time, any two Founder Directors; (ii) if there are two
Founder Directors at such time, any Founder Director; or (iii) if there is one
Founder Director at such time, such Founder Director.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, association or other
business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
any Person or one or more Subsidiaries of that Person or a combination thereof.
For purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of partnership, association
or other business entity gains or losses or shall be or control any managing
director or general partner of such partnership, association or other business
entity.
11. Specific Performance. The Employee acknowledges and agrees that
irreparable injury to the Company may result in the event the Employee breaches
any covenant or agreement contained in sections 7 and 8 and that the remedy at
law for the breach of any such covenant will be inadequate. Therefore, if the
Employee engages in any act in violation of the provisions of sections 7 and 8,
the Employee agrees that the Company shall be entitled, in addition to such
other remedies and damages as may be available to it by law or under this
Agreement, to injunctive relief to enforce the provisions of sections 7 and 8.
12. Waiver. The failure of either party to insist in any one or more
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
13. Notices. Any notice to be given hereunder shall be deemed
sufficient if addressed in writing and delivered by registered or certified mail
or delivered personally, in the case of the Company, to its principal business
office, and in the case of
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the Employee, to his address appearing on the records of the Company, or to such
other address as he may designate in writing to the Company.
14. Severability. In the event that any provision shall be held to be
invalid or unenforceable for any reason whatsoever, it is agreed such invalidity
or unenforceability shall not affect any other provision of this Agreement and
the remaining covenants, restrictions and provisions hereof shall remain in full
force and effect and any court of competent jurisdiction may so modify the
objectionable provision as to make it valid, reasonable and enforceable.
Furthermore, the parties specifically acknowledge the above covenant not to
compete and covenant not to disclose confidential information are separate and
independent agreements.
15. Complete Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way. Without limiting the generality of the foregoing, this Agreement
supersedes the Employment Agreement, dated as of April 30, 1996, between the
Company and the Employee (together with all amendments thereto, the "Prior
Agreement"). The Prior Agreement is hereby terminated and shall cease to be of
any further force or effect.
16. Amendment. This Agreement may only be amended by an agreement in
writing signed by each of the parties hereto.
17. Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Illinois, regardless of
choice of law requirements.
18. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against the Company, its successors
and assigns and the Employee, his heirs, beneficiaries and legal
representatives. It is agreed that the rights and obligations of the Employee
may not be delegated or assigned.
IN WITNESS WHEREOF, the parties have executed or caused this
Employment Agreement to be executed as of the date first above written.
RACING CHAMPIONS, INC.
By: /s/ Xxxxxx X. Xxxx
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Its: President
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/s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
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