EMPLOYMENT AGREEMENT
BY AND BETWEEN
DIAMOND TRIUMPH AUTO GLASS, INC.
AND
XXXXXXX XXXXX
DATED AS OF
NOVEMBER 17, 2003
This EMPLOYMENT AGREEMENT, dated as of November 17, 2003, by and
between XXXXXXX XXXXX (the "Employee") and DIAMOND TRIUMPH AUTO GLASS, INC., a
Delaware corporation (the "Company"). As used herein, the term "Companies" shall
refer to the Company and its existing and future subsidiaries.
The Company desires to engage Employee to perform services for the
Companies, and Employee desires to perform such services, on the terms and
conditions set forth below:
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Employment, Term.
The Company will employ the Employee in its business, and the
Employee will work for the Company, for a term of one (1) year, commencing as of
November 17, 2003 and ending on November 16, 2004, upon the terms and subject to
the conditions set forth in this Agreement. Such period, including any
extensions or renewals thereof, is referred to herein as the "Employment
Period". The Employee and Company agree that the Employment Period shall be
automatically renewed for an additional one (1) year period unless either the
Employee or the Company provides written notice of their desire to terminate
this Employment Agreement sixty (60) days prior to the expiration of the
Employment Period.
2. Duties.
2.1 During the Employment Period, the Employee shall
serve as the Co-Chairman of the Board, and perform duties of an executive
character consisting of administrative and managerial responsibilities on behalf
of the Companies, and shall perform such other duties on behalf of the Companies
and exercise such authority as may from time to time reasonably be delegated to
the Employee by the Board of Directors of the Company consistent with his
abilities.
2.2 The Employee shall discharge his duties from the
Company's facility in Kingston, Pennsylvania. The Employee shall also engage in
such travel in furtherance of his duties set forth in Section 2.1, as shall be
reasonably requested by the Company.
3. Devotion of Time.
Throughout the Employment Period, the Employee shall: (a)
devote substantially all of his working time to the business and affairs of the
Companies; (b) faithfully and diligently perform his duties in conformity with
the directions of the Company; (c) devote his best efforts, energy and skill to
the services o f the Companies and the promotion of their interests; and not
take part in activities known by the Employee to be detrimental to the best
interests of the Companies.
4. Compensation.
4.1 In consideration for the services to be performed by
the Employee during the Employment Period hereunder, the Company shall
compensate the Employee at a base salary of $320,000.00 per annum (the "Base
Salary"). Such Salary shall be subject to an annual review based on the
Companies' and the Employee's performance.
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4.2 The Employee shall be eligible to receive, with
respect to each year of the Employment Period, a bonus (the "Bonus") as set
forth in Exhibit A hereto (the "Bonus Plan").
5. Reimbursement of Expenses; Additional Benefits.
5.1 The Employee shall receive an automobile allowance
for the use of an automobile owned or leased by him in accordance with the
policies and procedures established by the Company from time to time for
executive employees.
5.2 The Company shall pay directly, or reimburse the
Employee for, all other reasonable and necessary business expenses and
disbursements incurred by the Employee for or on behalf of the Company in the
performance of his duties under this Agreement. For such purposes, the Employee
shall submit to the Company itemized written reports of such expenses in
accordance with the policies and procedures established by the Company from time
to time.
5.3 The Employee shall be entitled to paid vacations
during the Employment Period in accordance with the then prevalent practices of
the Company for its senior executives; provided, however, that Employee shall be
entitled to such paid vacations for not less than four (4) weeks per annum.
5.4 During the Employment Period, the Employee shall be
entitled to participate in, and to receive benefits under, such employee benefit
plans of the Company (including, without limitation, pension, profit sharing,
bonus, group life insurance and group medical insurance plans) as may exist from
time to time for the Company's senior executives.
6. Representations and Warranties of the Employee.
The Employee represents and warrants to the Company that the
Employee is under no contractual or other restriction or obligation which
conflicts with, violates or is inconsistent with the execution of this
Agreement, the performance of his duties hereunder or the other rights of the
Company hereunder.
7. Non-Competition.
During the Employment Period (including any extensions or
renewals thereof), including any unexpired portion thereof, and for a period of
five (5) years thereafter, the Employee shall not, directly or indirectly, own,
manage, operate, join, control, participate in, invest in or otherwise be
connected or associated with, in any manner, including, without limitation, as
an officer, director, employee, distributor, independent contractor, independent
representative, partner, consultant, advisor, agent, proprietor, trustee or
investor, any Competing Business located in any state or region (including
foreign jurisdictions) where any of the Companies currently conduct business or
is considering doing business; provided, however, that ownership of 1% or less
of the stock or other securities of a corporation, the stock of which is listed
on a national securities exchange or is quoted on The Nasdaq Stock Market's
National Market, shall not constitute a breach of this Section 7, so long as the
Employee does not in fact have the power to control, or direct the management
of, or is not otherwise engaged in activities with, such corporation.
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For purposes hereof, the term "Competing Business" shall mean
any business or venture which is engaged, directly or indirectly, in (i)
developing, manufacturing, marketing, selling and/or distributing (including
wholesale distribution) of automobile or truck glass or windshields or other
glass products utilized in vehicles; repairing, replacing or installing
automobile or truck glass or windshields or other glass products utilized in
vehicles; or providing any third party claims or other administrative services
related to repairing, replacing or installing automobile or truck glass or
windshields or other glass products utilized in vehicles; or selling or
installing those kinds of automobile or truck accessories sold by any of the
Companies, (ii) any other business engaged in or actively being developed by any
of the Companies, or (iii) any other business which is substantially similar to
the whole or any significant part of the business conducted by the Companies.
8. No Solicitation.
During the Employment Period (including any extensions or
renewals thereof), including any unexpired portion thereof, and for a period of
five (5) years thereafter, the Employee shall not, directly or indirectly,
including on behalf of, for the benefit or, or in conjunction with, any other
person or entity, (i) solicit, assist, advise, influence, induce or otherwise
encourage in any way, any employee of any of the Companies to terminate its
relationship with any of the Companies for any reason, nor assist any person or
entity in doing so, or employ, engage or otherwise contract with any employee or
former employee of any of the Companies in a Competing Business or any other
business unless such former employee shall not have been employed by any of the
Companies for a period of at least one year, (ii) interfere in any manner with
the relationship between any employee and any of the Companies or (iii) contact,
service or solicit any existing clients, customers or accounts of any of the
Companies on behalf of a Competing Business, either as an individual on his own
account, as an investor, or as an officer, director, partner, joint venturer,
consultant, employee, agent or salesman or any other person or entity.
9. Confidential Information.
9.1 "Confidential Information" shall mean confidential
records and information, including, but not limited to, development, marketing,
purchasing, organizational, strategic, financial, managerial, administrative,
manufacturing, production, distribution and sales information, distribution
methods, data, specifications and processes (including the Transferred Property
as hereinafter defined) presently owned or at any time hereafter developed by
any of the Companies or its agents or consultants or used presently or at any
time hereafter in the course of the business of any of the Companies, that are
not otherwise part of the public domain.
9.2 The Employee hereby sells, transfers and assigns to
the Company, or to any person or entity designated by the Company, all of his
entire right, title and interest in and to all inventions, ideas, methods,
developments, disclosures and improvements (the "Inventions"), whether patented
or unpatented, and copyrightable material, and all trademarks, trade names, all
goodwill associated therewith and all federal and state registrations or
applications thereof, made, adopted or conceived by solely or jointly, in whole
or in part (collectively, the "Transferred Property"), prior to or during the
Employment Period which (i) relate to methods, apparatus, designs, products,
processes or devices sold, leased, used or under construction or development by
any of the Companies or (ii) otherwise relate to or pertain to the business,
products, services, functions or operations of any of the Companies. The
Employee shall make adequate written records of all Inventions, which records
shall be the Company's
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property and shall communicate promptly and disclose to the Company, in such
form as the Company requests, all information, details and data pertaining to
the aforementioned Inventions. Whether during the Employment Period or
thereafter, the Employee shall execute and deliver to the Company such formal
transfers and assignments and such other papers and documents as may be required
of the Employee to permit the Company, or any person or entity designated by the
Company, to file and prosecute patent applications (including, but not limited
to, records, memoranda, or instruments deemed necessary by the Company for the
prosecution of a patent application or the acquisition of letters patent in the
United States, foreign countries or otherwise) and, as to copyrightable
material, to obtain copyrights thereon, and as to trademarks, to record the
transfer of ownership of any federal or state registrations or applications.
9.3 All such Confidential Information is considered
secret and will be disclosed to the Employee in confidence, and the Employee
acknowledges that, as a consequence of his employment and position with the
Company, the Employee may have access to and become acquainted with Confidential
Information. Except in the performance of his duties as an employee of the
Company, the Employee shall not, during the Employment Period and at all times
thereafter, directly or indirectly for any reason whatsoever, disclose or use
any such Confidential Information. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to or
containing Confidential Information, which the Employee has prepared, used or
encountered or shall in the future prepare, use or encounter, shall be and
remain the Company's sole and exclusive property and shall be included in the
Confidential Information. Upon termination of this Agreement, or whenever
requested by the Company, the Employee shall promptly deliver to the Company any
and all of the Confidential Information and copies thereof, not previously
delivered to the Company, that may be in the possession or under the control of
the Employee. The foregoing restrictions shall not apply to the use, divulgence,
disclosure or grant of access to Confidential Information to the extent, but
only to the extent, (i) expressly permitted or required pursuant to any other
written agreement between the Employee and the Company, (ii) such Confidential
Information has been publicly disclosed (not due to a breach by the Employee of
his obligations hereunder, or by breach of any other person, of a fiduciary or
confidential obligation to any of the Companies) or (iii) the Employee is
required to disclose Confidential Information by or to any court of competent
jurisdiction or any governmental or quasi-governmental agency, authority or
instrumentality of competent jurisdiction, provided, however, that the Employee
shall, prior to any such disclosure, immediately notify the Company of such
requirement and provided further, however, that the Company shall have the
right, at its expense, to object to such disclosures and to seek confidential
treatment of any Confidential Information to be so disclosed on such terms as it
shall determine.
10. Acknowledgement; remedies; survival of this Agreement.
10.1 The Employee acknowledges that violation of any of
the covenants and provisions set forth in this Agreement would cause the Company
irreparable damage and agrees that the Company's remedies at law for a breach or
threatened breach of any of the provisions of this Agreement would be inadequate
and, in recognition of this fact, in the event of a breach or threatened breach
by the Employee of any of the provisions of this Agreement, it is agreed that,
in addition to the remedies at law or in equity, the Company shall be entitled,
without the posting of a bond, to equitable relief in the form of specific
performance, a temporary restraining order, temporary or permanent injunction,
or any other equitable remedy which may then be available for the purposes of
restraining the Employee from any actual or threatened breach of such covenants.
Without limiting the generality of the foregoing, if the Employee breaches or
threatens to breach Sections 7, 8, or 9 hereof, such breach or threatened breach
will entitle the Company to enjoin the Employee from disclosing any Confidential
Information to any
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Competing Business, to enjoin any Competing Business from retaining the Employee
or using any such Confidential Information, to enjoin the Employee from engaging
in any activities prohibited by Section 8 thereof and/or to enjoin the Employee
from rendering personal services to or in connection with any Competing
Business. The rights and remedies or the parties hereto are cumulative and shall
not be exclusive, and each such party shall be entitled to pursue all legal and
equitable rights and remedies and to secure performance of the obligations and
duties or the other under this Agreement, and the enforcement of one or more of
such rights and remedies by a party shall in no way preclude such party from
pursuing, at the same time or subsequently, any and all other rights and
remedies available to it.
10.2 The provisions of this Agreement shall survive the
termination of the Employee's employment with the Company.
11. Termination of Employment.
11.1 Termination. The Company may terminate the Employee's
employment for Cause (as hereinafter defined), in which case the provisions of
Section 11.2 shall apply. The Company may also terminate the Employee's
employment in the event of the Employee's death or Disability (as herein
defined), in which case the provisions of Section 11.3 shall apply. The Company
may also terminate the Employee's employment for any other reason by written
notice to the Employee, in which case the provisions of Section 11.4 shall
apply. If the Employee's employment is terminated by reason of the Employee's
resignation, the provisions of Section 11.2 shall apply, provided that no
termination of this Agreement shall relieve the Employee from liability for any
breach of this Agreement or defeat or impair the right of the Company to pursue
such relief as may otherwise be available to it as a result of any breach of
this Agreement or any term, provision or covenant contained herein.
11.2 Termination for Cause; Resignation. Notwithstanding
anything to the contrary contained herein, in the event that the Employee's
employment hereunder is terminated during the Agreement Term (x) by the Company
for Cause or (y) by reason of the Employee's resignation, then the Company shall
pay to the Employee, within thirty (30) days of the date of such termination,
only the Base Salary through such date of termination. For purposes of this
Agreement, "Cause" shall mean (i) conviction of, or plea of nolo contendere (no
contest) to, any crime (whether or not involving the Company) constituting a
felony in the jurisdiction involved; (ii) engaging in any act involving moral
turpitude; (iii) conduct related to the Employee's employment for which either
significant criminal or civil penalties against the Employee or any of the
Companies may be sought; (iv) gross neglect in the performance of the Employee's
duties hereunder; (v) misconduct in the performance of the Employee's duties
hereunder, which misconduct continues after notice thereof is given to the
Employee by the Board of Directors of the Company; (vi) willful failure or
refusal to perform such duties as may be delegated to the Employee commensurate
with the Employee's position, which misconduct continues after notice thereof is
given to the Employee by the Board of Directors of the Company; (vii) material
violation of the Company's policies, including, without limitation, those
relating to sexual harassment, the disclosure or misuse of Confidential
Information (as hereinafter defined), or those set forth in Company manuals or
statements of policy, which violation continues after notice thereof is given to
the Employee by the Board of Directors of the Company; (viii) engaging in any
conduct which is materially injurious or materially damaging to any of the
Companies or the reputation of any of the Companies; or (ix) material breach of
any provision of this Agreement by the Employee.
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11.3 Death or Disability. If, as a result of the
Employee's incapacity due to physical or mental illness, the Employee shall have
been absent from the Employee's duties hereunder for either (i) one hundred and
eighty (180) days within any three hundred sixty five (365) day period, or (ii)
one hundred and twenty (120) consecutive days, and within thirty (30) days after
written notice of termination is given shall not have returned to the
performance of the Employee's duties hereunder on a full time basis, the Company
may terminate the Employee's employment hereunder for "Disability". In the
event, this Agreement is terminated by reason of the Employee's death or
Disability, the Company shall pay to the Employee (i) the Base Salary for a
period of twelve (12) months, but in no event beyond November 16, 2004 unless
Employment Period has been extended then to the end of such current Employment
Period, which Base Salary shall be paid commencing with such date of termination
at the times and in the amounts such Base Salary would have been paid, and (ii)
the amount of any Bonus payable under the Bonus Plan through such date of
termination, which Bonus, if any, shall be payable at the time provided in the
Bonus Plan. During any period that the Employee fails to perform the Employee's
duties hereunder as a result of incapacity due to physical or mental illness (a
"Disability Period"), the Employee shall continue to receive the compensation
and benefits provided by Section 5.4 hereof until the Employee's employment
hereunder is terminated; provided, however, that the amount of compensation and
benefits received by the Employee during the Disability Period shall be reduced
by the aggregate amounts, if any, payable to the Employee pursuant to Section
5.4 hereof or under the Social Security or state disability insurance programs.
11.4 Termination By the Company For Any Other Reason. In
the event that the Employee's employment hereunder is terminated by the Company
during the Employment Period for any reason other than as provided in Sections
11.2 or 11.3 hereof, then the Company shall pay to the Employee, (i) within
thirty (30) days of the date of such termination, the Base Salary through such
date of termination, (ii) the amount of any Bonus payable under the Bonus plan
through such date of termination, which Bonus, if any, shall be payable at the
time provided in the Bonus Plan; and (iii) in lieu of any further compensation,
benefits or other amounts for the balance of the Employment Period, severance
payment equal only to the Base Salary that Executive would have otherwise
received during the period beginning on such date of termination and ending on
the earlier of (i) the scheduled termination date of the Employment Period under
this agreement and (ii) such time as Employee obtains other permanent
employment, which severance pay shall be paid commencing with such date of
termination at the times and in the amounts such Base Salary would have been
paid.
12. Assignment.
This Agreement, as it relates to the employment of the
Employee, is a personal contract and the rights, interests and obligations of
the Employee hereunder may not be sold, transferred, assigned, pledged or
hypothecated. Except as otherwise herein expressly provided, this Agreement
shall be binding upon and inure to the benefit of the Employee and his personal
representatives and shall inure to the benefit of and be binding upon the
Company and its successors and assigns, including without limitation, any
corporation or other entity into which the Company is merged or which acquires
all of the outstanding shares of the Company's capital stock, or all or
substantially all or the assets of the Company. This Agreement may be assigned
by the Company to, any existing or future subsidiary or affiliate of the
Company, any purchaser of all or substantially all of the Company's business or
assets, any successor to the Company or any assignee thereof (whether direct or
indirect, by purchase, merger, consolidation or otherwise).
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13. Notices.
Any notice, request, consent or approval required or permitted
to be given under this Agreement or pursuant to law shall be sufficient if in
writing, and if and when sent by certified or registered mail, return receipt
requested, with postage prepaid, or by a nationally recognized overnight courier
service to the Employee's residence (as reflected in the Company's records or as
otherwise designated by the Employee on thirty (30) days' prior written notice
to the Company) or to the Company's principal executive office, attention:
President (with copies to the General Counsel), as the case may be. All such
notices, requests, consents and approvals shall be effective upon being
deposited in the United States mail or upon delivery to such overnight courier
service. Rejection or other refusal to accept, or the inability to deliver
because of changed address of which no notice was given as provided herein,
shall be deemed to be receipt of the notice, request, consent or approval sent.
(a) if to the Employee:
Xxxxxxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
(b) if to the Company:
Diamond Triumph Auto Glass, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn.: Xxxxxxx Xxxxxx, President
With a copy to:
Green Equity Investors II, L.P.
C/O Xxxxxxx Xxxxx & Partners, L.P.
00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Xxxxxxxx Xxxxxxx
or to such other address as any such party shall designate by written notice to
the other party.
14. Non-waiver.
Neither any course of dealing nor any failure or neglect of
either party hereto in any instance to exercise any right, power or privilege
hereunder or under law shall constitute a waiver of any other right, power or
privilege or of the same right, power or privilege in any other instance. All
waivers by either party hereto must be contained in a written instrument signed
by the party to be charged and, in the case of the Company, by its duly
authorized officer.
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15. Entire Agreement.
This Agreement contains the entire agreement of the parties
relating to the subject matter hereof and supersede all prior agreements and
understandings between them.
16. Severability; Reasonableness of Agreement.
If any term, provision or covenant of this Agreement or part
thereof, or the application thereof to any person, place or circumstance shall
be held to be invalid, unenforceable or void by a court of competent
jurisdiction, the remainder of this Agreement and such term, provision or
covenant shall remain in full force and effect, and any such invalid,
unenforceable or void term, provision or covenant shall be deemed, without
further action on the part of the parties hereto, modified, amended and limited,
and the court shall have the power to modify, amend and limit any such term,
provision or covenant, to the extent necessary to render the same and the
remainder of this Agreement valid, enforceable and lawful. In this regard, the
Employee understands that the provisions of Sections 7, 8, 9, and 10 may limit
his ability to earn a livelihood in a business similar or related to the
business of the Company, but nevertheless agrees and acknowledges that (i) the
provisions of Sections 7, 8, 9, and 10 hereof are reasonable and necessary for
the protection of the Company, and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of the Company and
(ii) such provisions contain reasonable limitations as to the time and the scope
of activity to be restrained. In consideration of the foregoing and in light of
the Employee's education, skills and abilities, the Employee agrees that all
defenses by the Employee to the strict enforcement of such provisions are hereby
waived by the Employee.
17. Headings.
The headings of the sections of this Agreement are provided
for convenience only and are intended to have no effect in construing or
interpreting this Agreement.
18. Governing Law.
This Agreement, including the validity, interpretation,
construction and performance of this Agreement, shall be governed by and
construed in accordance with the internal laws of the State of New York, without
regard to principles of conflicts of law. All actions and proceedings relating
directly or indirectly to this Agreement shall be litigated in any state court
or federal court located in New York, New York. The parties hereto expressly
consent to the jurisdiction of any such court and to venue therein and consent
to the service of process in any such action or proceeding by certified or
registered mailing of the summons and complaint therein directed to the Employee
or the Company at the address as provided in Section 13 hereof.
19. Amendment.
This Agreement may be amended only by a writing which makes
express reference to this Agreement as the subject of such amendment and which
is signed by the Employee and, on behalf of the Company, by its duly authorized
officer.
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20. Costs and Expenses
Each party shall pay all of its own costs and expenses,
including reasonable legal fees, in connection with the execution, delivery,
performance and compliance with this Agreement by such party. If an action or
proceeding is commenced by a party to enforce or interpret any provision of this
Agreement, the non-prevailing party shall promptly reimburse the prevailing
party for the prevailing party's reasonable costs and expenses of such action or
proceeding, including reasonable attorney's fees.
21. Counterparts
This Agreement may be executed in one or more counterparts,
all of which together shall be deemed one original.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.)
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IN WITNESS WHEREOF, the undersigned has duly executed this Agreement as
of the date and year first written above.
DIAMOND TRIUMPH AUTO GLASS, INC.
BY: /s/ Xxxxxxx Xxxxxx
-------------------------------
NAME: XXXXXXX XXXXXX
TITLE: CO-CHAIRMAN
/s/ Xxxxxxx Xxxxx
-------------------------------
XXXXXXX XXXXX
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EXHIBIT A
1. Bonus Awards. The Employee shall be entitled to a
discretionary Performance Bonus based on certain financial criteria as
determined by the Board of Directors in consultation with the Employee.
2. Performance Year. Each calendar year beginning with January 1,
1998 shall be a "Performance Year." If the Employee is employed by the Company
for a part of a Performance Year, he shall receive a bonus equal to the bonus he
would have received had he been employed for the entire Performance Year,
multiplied by a fraction, the numerator of which is the number of days he was
employed by the Company during such Performance Year and the denominator of
which is 365; provided, that if the Employee's employment is terminated prior to
the end of the Performance Year by the Company for Cause or the Employee
resigns, no bonus shall be made for the Performance Year (or part hereof) in
which the Employee's employment was terminated or in which the Employee resigns.
3. Definitions. Capitalized terms not otherwise defined herein
have the meanings set forth in the Employment Agreement dated March 31, 1998
between the Company and the Employee to which this Exhibit A is annexed.
4. EBITDA.
(a) As used herein, "EBITDA" means, for any period, Net
Income for such period, plus, without duplication and to the extent deducted
from revenues in determining Net Income, the sum of (a) the aggregate amount of
interest expense for such period, (b) the aggregate amount of income tax expense
for such period, (c) all amounts attributable to depreciation and amortization
expense for such period, (d) the Fee (as defined in the Second Amended and
Restated Stock Purchase and Sale Agreement dated as of January 15, 1998 by and
among VGMC Corp., Green Equity Investors II, L.P., the Company, Triumph Auto
Glass, Inc., Diamond Auto Glass Works, inc., A Above Average Glass Company By
Diamond, Inc., A-AA Triumph Auto Glass, Inc., Scranton Holdings, Inc.,
Diamond/Triumph Auto Export Sales Co. Inc., A-Auto Glass By Triumph Inc., and
A-Auto Glass Company By Diamond, Inc., Xxxxxxx Xxxxxx and Xxxxxxx Xxxxx; the
"Stock Purchase Agreement") and any fees paid in respect of the Management
Services Agreement dated March 31, 1998 between the Company and Xxxxxxx Xxxxx &
Partners, L.P., (e) subject to the approval of the Board of Directors of the
Company, any extraordinary or non-recurring loss, (f) any loss arising from the
sale of capital assets or arising out of any sale of capital stock of the
Companies, (g) the fees and expenses of legal counsel, investment bankers and
accountants for the Company incurred in connection with the transactions
contemplated by the Stock Purchase Agreement, and (h) any loss arising from an
acquisition of a company which is not approved by Messrs. Xxxxxx and Xxxxx if
such acquired company is engaged in a line of business other than the principal
lines of business (including related extensions thereof) of the Companies as of
the date of this Agreement, and minus, without duplication and to the extent
added to revenues in determining Net Income for such period, (i) subject to the
approval of the Board of Directors of the Company, any extraordinary or
non-recurring gain, (ii) any gain arising from the sale of capital assets or
arising out of any sale of capital stock of any of the Companies, and (iii) any
gain arising from an acquisition of a company which is not approved by Messrs.
Xxxxxx and Xxxxx if such acquired company is engaged in a line of business other
than the principal lines of business (including related extensions thereof) of
the Companies as of the date of this Agreement, all as determined on a
consolidated basis with respect to the Company and its subsidiaries in
accordance with generally accepted accounting principles consistent with past
practice, except as otherwise contemplated by the Stock Purchase Agreement.
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(b) As used herein, "Net Income" means for any period,
net income or loss of the Company and its subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles, provided that there shall be excluded the income or loss
of any person accrued before that date it becomes a subsidiary or is merged into
or consolidated with the Company or any of its subsidiaries or the date that
person's assets are acquired by the Company or any of its subsidiaries.
(c) The final determination of EBITDA with respect to any
Performance Year shall be subject to the affirmative approval (the "Approval) of
the Board of Directors of the Company and the Employee. In the event that the
Approval is not obtained within fourteen (14) days after completion of the
Company's audited financial statements for such Performance Year, the Company's
auditors shall make such determination of EBITDA in respect of such Performance
Year, provided that the Board of Directors of the Company and the Employee shall
determine with respect to the bonus for such Performance Year the amount not in
dispute by reason of such lack of Approval.
5. Time of Payment. Each bonus shall be paid no later than the
fourteenth (14th) day (assuming Approval is obtained or, assuming Approval is
not obtained, as to the undisputed amount), or the thirtieth (30th) day assuming
Approval is not obtained, as to the disputed amount), after completion of the
Companies' audited financial statements for such Performance Year.
6. No Assignments. Employee may not assign a bonus without the
prior written consent of the Board of Directors of the Company. Any attempted
assignment without such consent shall be null and void. For purposes of this
paragraph, any designation of, or payment to, a beneficiary designated to
receive such bonus in the event of the Employee's death, shall not be deemed an
assignment.
7. Unfunded Incentive Compensation Arrangement. The bonus
arrangement provided for herein and in the Employment Agreement is intended to
constitute an unfounded incentive compensation arrangement and nothing contained
in the bonus arrangement provided for herein and in the Employment Agreement
shall create or be construed to create a trust of any kind. All bonuses shall be
paid from the general funds of the Company, and no special or separate fund
shall be established and no segregation of assets shall be made to assure
payment of such awards.
8. Governing Law. The bonus provided for herein and in the
Employment Agreement shall be construed and governed in accordance with the
internal laws of the State of New York, without regard to principles of conflict
of laws.
9. No Right to Specific Assets. There shall not vest in Employee
any right, title, or interest in and to any specific assets of the Company.
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