1
EXHIBIT 10.15
EMPLOYMENT AND
CONFIDENTIALITY AGREEMENT
THIS EMPLOYMENT AND CONFIDENTIALITY AGREEMENT (this "Agreement") is
made February 10, 1998, between SAC ACQUISITION CORP., a Georgia corporation
(the "Company"), and XXXX XXXXXX XXXXXXXXX, a resident of the State of Alabama
("Executive").
BACKGROUND
On the date of this Agreement and pursuant to that certain Stock
Purchase Agreement (the "Stock Purchase Agreement") dated February 10, 1998 by
and among the Company, the Executive, Simcala, Inc., a Delaware corporation (the
"Target"), Charter Oak Partners, Capital One Investors, Xxxxxx X. Xxxx, R. Xxxxx
Xxxxx, and Xxxxxx X. Xxxx, Xx., the Company has agreed to acquire all of the
capital stock of the Target. Executive is an employee of the Target, and,
subject to the consummation of the transactions contemplated under the Stock
Purchase Agreement, the Company desires to cause Target to employ the Executive
in the capacities and on the terms and conditions set forth below. Executive
desires to accept employment on the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, for and in consideration of the employment and
continued employment of Executive by Target, the premises, and the mutual
agreements hereinafter set forth, the parties agree as follows:
1. Definitions. The following terms used herein shall have the
definitions set forth below:
(a) "Affiliate" means any person or entity directly or
indirectly controlling, controlled by, or under common control with another
person.
(b) "Area" means the territorial United States.
(c) "Business" or "Business of the Company" means the business
of the manufacture, production, development, sale, and distribution of silicon
metals.
(d) "Cause" means (i) conduct amounting to fraud or dishonesty
against the Target or any subsidiary or Affiliate of the Target; (ii)
Executive's intentional misconduct or repeated refusal to follow the reasonable
directions of the Board of Directors of the Target, provided an officer of the
Target, upon the direction of the Board of Directors, notifies Executive of the
acts deemed to constitute such intentional misconduct or repeated refusal in
writing and Executive fails to correct such acts (or
2
begins such action as may be necessary to correct such acts and thereafter
diligently pursues the completion thereof) within five (5) business days after
written notice has been given; (iii) repeated absences from work without a
reasonable excuse, (iv) repeated intoxication with alcohol or drugs while on
Target business during regular business hours; (v) a conviction or plea of
guilty or nolo contendere to a felony (other than one arising from the operation
of a motor vehicle or resulting from actions taken (or not taken) by Executive
in good faith in his capacity as an employee or officer of the Target; or (vi) a
breach or violation by the Executive of any material terms of this Agreement or
any other agreement to which Executive and the Target are a party.
(e) "Competing Enterprise" means any person or any business
organization of whatever form, engaged directly or indirectly within the Area in
the Business of the Company.
(f) "Disability" means (i) the inability of Executive to
perform the duties of Executive's employment due to physical or emotional
incapacity or illness, where such inability is expected to be of long-continued
and indefinite duration, or (ii) Executive shall be entitled to (x) disability
retirement benefits under the federal Social Security Act or (y) recover
benefits under any long-term disability plan or policy maintained by the
Company. In the event of a dispute, the determination of Disability shall be
made reasonably by the Board of Directors of the Target and shall be supported
by advice of a physician competent in the area to which such Disability relates.
(g) "Effective Date of Termination" means the later of the
last day on which Executive performs any duties of his employment as a full-time
employee of the Target hereunder or the effective date of the termination of
Executive's employment hereunder specified in any notice of termination of such
employment given by the Target as permitted herein.
(h) "Excluded Information" means any data or information that
is a Trade Secret hereunder (i) that has been voluntarily disclosed to the
public by the Target or any Affiliate thereof or has become generally known to
the public (except where such public disclosure has been made by or through
Executive or by a third person or entity with the knowledge of Executive without
authorization by the Target); (ii) that has been independently developed and
disclosed by parties other than Executive or the Target or any Affiliate thereof
to Executive or to the public generally without a breach of any obligation of
confidentiality by any such person running directly or indirectly to the Target
or any Affiliate thereof; or (iii) that otherwise enters the public domain
through lawful means.
(i) "Subsidiary" means any subsidiary of the Company.
(j) "Trade Secrets" means information which derives economic
value, actual or potential, from not being generally known and not being readily
ascertainable to other persons who can obtain economic value from its disclosure
or use and which is the
- 2 -
3
subject of efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality. Trade Secrets may include either technical or
non-technical data, including without limitation, (i) any useful process,
machine, chemical formula, composition of matter, or other device which (A) is
new or which Executive has a reasonable basis to believe may be new, (B) is
being used or studied by the Target or any Affiliate thereof and is not
described in a printed patent or in any literature already published and
distributed externally by the Target or any Affiliate thereof, and (C) is not
readily ascertainable from inspection of a product of the Target or any
Affiliate thereof; (ii) any engineering, technical, or product specifications
including those features used in any current product of the Target or any
Affiliate thereof or to be used, or the use of which is contemplated, in a
future product of the Target or any Affiliate thereof; (iii) any application,
operating system, communication system, or other computer software (whether in
source or object code) and all flow charts, algorithms, coding sheets, routines,
subroutines, compilers, assemblers, design concepts, test data, documentation,
or manuals related thereto, whether or not copyrighted, patented or patentable,
related to or used in the Business of the Target or any Affiliate thereof; or
(iv) information concerning the customers, suppliers, products, pricing
strategies of the Target or any Affiliate thereof, personnel assignments and
policies of the Target, or matters concerning the financial affairs and
management of the Target or any Affiliate thereof; provided however, that Trade
Secrets shall not include any Excluded Information.
2. Terms of Engagement; Duties
(a) Effective as of the date of the closing of the
transactions contemplated by the Agreement (the "Closing Date"), Target employs
Executive as President and Chief Executive Officer of Target. In such capacity
Executive shall report to the Board of Directors of Target, and shall perform
such duties and responsibilities relating to the Business of Target as may be
assigned or delegated to him from time to time by the Board of Directors of
Target or its designee.
(b) Executive accepts such employment and agrees to:
(i) devote substantially all of Executive's
effort, time, energy, and skill (reasonable
vacations and reasonable absences due to
illness excepted) during regular business
hours to the duties of his employment
hereunder;
(ii) faithfully, loyally, and industriously
perform such duties, subject to the
supervision of the Board of Directors of
Target; and
(iii) diligently follow and implement all lawful
management policies and decisions of Target
that are communicated to Executive.
- 3 -
4
(c) During the Term of this Agreement, Executive shall not
engage (whether or not during normal business hours) in any other business or
professional activity, whether or not such activity is pursued for gain, profit
or other pecuniary advantage; but this shall not be construed as preventing
Executive from (i) investing his personal assets in businesses which do not
compete with the Business of the Company or any Affiliate thereof in such form
or manner as will not require any services on the part of Executive in the
operation or the affairs of the entities in which such investments are made and
in which his participation is solely that of an investor, or (ii) purchasing
securities in any corporation whose securities are regularly traded on a
national securities exchange, provided that such purchase does not result in
Executive collectively owning beneficially at any time five (5%) percent or more
of the voting securities of any Competing Enterprise or any Affiliate thereof.
3. Compensation.
(a) In consideration of the services rendered by Executive
pursuant to this Agreement, Target shall pay to Executive a base salary of Two
Hundred Five Thousand Dollars ($205,000) per annum (the "Base Salary"), which
Base Salary will be reviewed periodically and may be increased by Target from
time to time. The Base Salary shall be paid in accordance with Target's standard
payroll practices in effect from time to time. All amounts payable to Executive
hereunder shall be subject to such deductions and withholdings as are required
by law or by policies of Target.
(b) Executive shall be eligible to receive an annual bonus in
the amount of up to 75% of the Base Salary then being paid to Executive,
pursuant to an executive incentive plan to be established by Target's Board of
Directors. The award and payment of any such bonus, and the amount thereof if
awarded and paid, shall be calculated as follows: fifty (50%) percent of the
award shall be based upon EBITDA of the Target. During the first three years of
the Term, and in the event EBITDA of the Target is equal to or greater than Ten
Million Dollars, such fifty percent amount of the award shall be pro-rated on an
increasing sliding scale from 0% to 100% of this portion between an EBITDA of at
least $9,999,999.00 (whereupon none of the 50% bonus shall be awarded) and a
maximum of $13,000,000.00 (whereupon all of the 50% bonus shall be awarded). In
subsequent years of the Term, the Target's Board of Directors shall determine in
its sole discretion the targeted EBITDA for such fifty (50%) percent portion of
the Bonus. The remaining 50% of the bonus shall be awarded and paid in the sole
discretion of the Board of Directors of Target.
(c) Executive shall also have the right to participate in any
medical, hospitalization, dental, disability income, life or other similar
insurance plans maintained by Target from time to time to the extent that
Executive's position, tenure, salary, age, health and other qualifications make
him eligible to participate, and such other fringe benefits as are currently
provided to Executive under his existing contract with Target.
- 4 -
5
(d) Target shall reimburse Executive for all reasonable
business expenses incurred by Executive in connection with the business of the
Company subject to compliance with the expense reimbursement policies
established by Target and in sufficient detail to comply with Internal Revenue
Service Regulations.
(e) Except for stock incentive awards which may be granted
from time to time to Executive, the remuneration and benefits set forth in this
Section 3 shall be the only compensation payable to Executive with respect to
his employment hereunder, and Executive shall not be entitled to receive any
compensation in addition to that set forth in this Section 3 or under such stock
incentive awards for any services rendered by him in any capacity to Target, the
Company or any Affiliate thereof unless agreed to in writing by the Company,
Target, or such Affiliate thereof.
4. Term and Termination of this Agreement. The term of employment of
Executive (the "Term") pursuant to this Agreement shall commence on the Closing
Date and shall continue for a term of five (5) years from the Closing Date.
(a) Executive's employment hereunder shall be terminated
during the Term upon the death or Disability of Executive.
(b) Executive's employment hereunder may be terminated during
the Term by Target (i) with Cause at any time, and (ii) without Cause upon
thirty (30) days written notice to Executive, provided that Executive shall
immediately cease the performance of his duties hereunder if Target shall so
request following the date of such notice. In the event Executive's employment
is terminated without Cause, whether pursuant to this Agreement or following the
termination or expiration of the Term of this Agreement, Target shall pay to
Executive, as severance pay hereunder, an amount equal to the annual Base Salary
paid to Executive at the Effective Date of Termination, which amount shall be
paid in twelve (12) substantially equal monthly installments (less such
deductions and withholdings as are required by law or the policies of Target)
commencing with the first day of the calendar month next following.
(c) Upon termination of Executive's employment hereunder
pursuant to subsection 4(a) or for Cause pursuant to subsection 4(b), or upon
voluntary termination by Executive of Executive's employment hereunder, Target
shall have no further obligation to Executive or his personal representative
with respect to remuneration due under this Agreement, except for Base Salary
earned but unpaid at the Effective Date of Termination and, in the case of
termination of employment under subsection 4(a), a pro rata portion (based on
the number of days of the fiscal year of Target in which such termination
occurred during which this Agreement was in effect) of the bonus, if any,
payable under Section 3(b) with respect to such fiscal year. Payment of such
bonus, if any, shall be made at such time as similar bonuses are paid to other
executives of Target with respect to such fiscal year.
- 5 -
6
(d) If Executive's employment hereunder is terminated during
the Term by Target without Cause pursuant to subsection 4(b), Target shall have
no obligation to Employee with respect to renumeration due under this Agreement
or such termination other than (i) Base Salary earned but unpaid at the
Effective Date of Termination, and (ii) a pro rata portion (based on the number
of days of the fiscal year of Target in which the Effective Date of Termination
occurred during which this Agreement was in effect) of the bonus, if any,
payable under Section 3(b) with respect to such fiscal year, and (iii) the
severance pay described in subsection 4(b). Payment pursuant to clause (ii) of
the preceding sentence shall be made when such bonuses are paid to other
executive officers receiving bonus payments with respect to such fiscal year.
(e) Notwithstanding anything to the contrary expressed or
implied herein, the covenants and agreements of Executive in Sections 5 and 6 of
this Agreement shall survive the termination of Executive's employment
hereunder.
5. Ownership, Non-Disclosure, and Non-Use of Trade Secrets.
(a) Executive acknowledges and agrees that all Trade Secrets,
and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of the Company and any Affiliate thereof
and that any Trade Secrets produced by Executive during the period of
Executive's employment by the Company shall be considered "work for hire" as
such term is defined in 17 U.S.C. Section 101, the ownership and copyright of
which shall be vested solely in Target. Executive agrees (i) immediately to
disclose to Target all Trade Secrets developed in whole or part by Executive
during the Term of Executive's employment by Target, and (ii) at the request and
expense of Target, to do all things and sign all documents or instruments
reasonably necessary in the opinion of Target to eliminate any ambiguity as to
the rights of Target in such Trade Secrets including, without limitation,
providing to Target Executive's full cooperation in any litigation or other
proceeding to establish, protect, or obtain such rights. Upon request by Target,
and in any event upon termination of Executive's employment by Target for any
reason, Executive shall promptly deliver to Target all property belonging to
Target or any of its Affiliates, including, without limitation, all Trade
Secrets (and all embodiments thereof) then in Executive's custody, control, or
possession.
(b) Executive agrees that all Trade Secrets of Target or any
Affiliate thereof received or developed by Executive as a result of Executive's
employment with Target will be held in trust and strictest confidence, that
Executive will protect such Trade Secrets from disclosure, and that Executive
will make no use of such Trade Secrets,
- 6 -
7
except in connection with Executive's employment hereunder, without Target's
prior written consent. The obligations of confidentiality contained in this
Agreement will apply during Executive's employment by Target and (i) with
respect to all Trade Secrets consisting of scientific or technical data, at any
and all times after expiration or termination (for whatever reason) of such
employment; and (ii) with respect to all other Trade Secrets, for a period of
five (5) years after such expiration or termination, unless a longer period of
protection is provided by law.
6. Non-Compete: Non-Solicitation Covenants.
(a) In consideration of the amounts to be paid to Executive
hereunder, Executive covenants that Executive shall, during the Term of this
Agreement, and (i) for one (1) year following the termination or expiration of
the Term of this Agreement or Executive's employment hereunder, or (ii) for one
(1) year following the termination of Executive's employment with the Target
without Cause (whether such employment is under this Agreement or not), observe
the following separate and independent covenants:
(i) Neither Executive nor any Affiliate will,
without the prior written consent of the
Company, within the Area, either directly or
indirectly, (A) become financially
interested in a Competing Enterprise (other
than as a holder of less than five percent
(5%) of the outstanding voting securities of
any entity whose voting securities are
listed on a national securities exchange or
quoted by the National Association of
Securities Dealers, Inc. National Market
System), or, (B) engage in or be employed by
any Competing Enterprise as an executive or
managerial employee.
(ii) Neither Executive nor any Affiliate will,
without the prior written consent of Target,
either directly or indirectly, on
Executive's own behalf or in the service or
on behalf of others, solicit, divert, or
appropriate, or attempt to solicit, divert,
or appropriate, to any Competing Enterprise
within the Area, any person or entity that
was a customer of Target during the Term of
this Agreement who was solicited or serviced
as such by or under the supervision of
Executive.
(iii) Neither Executive nor any Affiliate will,
without Target's prior written consent,
either directly or indirectly, on
Executive's own behalf or in the service or
on behalf of others, solicit, divert, or
hire away, or attempt to solicit, divert, or
hire away, to any Competing Enterprise, any
person employed by Target or one of its
Affiliates, whether or not such employee is
a full-time or a temporary employee of
Target or such Affiliate and whether or not
such employment is pursuant to written
agreement and whether or not such employment
is at will.
7. Remedies. Executive acknowledges and agrees that Target is engaged
in the Business of Target in and throughout the Area, that by virtue of the
training, duties,
- 7 -
8
and responsibilities attendant with Executive's employment by Target and the
special knowledge of the Business and operations of Target that Executive will
have as a consequence of Executive's employment by Target, great loss and
irreparable damage would be suffered by Target if Executive should breach or
violate any of the terms or provisions of the covenants and agreements set forth
herein, and that by virtue of Executive's senior management position with Target
Executive has been and will be throughout the Term of this Agreement directly
and indirectly involved in servicing the accounts of Target's customer.
Executive further acknowledges and agrees that each such covenant and agreement
is reasonably necessary to protect and preserve the interest of Target.
Therefore, in addition to all the remedies provided at law or in equity,
Executive agrees and consents that Target shall be entitled to a temporary
restraining order and a permanent injunction to prevent a breach or threatened
breach of any of the covenants or agreements of Executive contained herein. The
existence of any claim, demand, action or cause of action of Executive against
Target shall not constitute a defense to the enforcement by Target of any of the
covenants or agreements herein whether predicated upon this Agreement or
otherwise, and shall not constitute a defense to the enforcement by Target of
any of its rights hereunder.
8. General Provisions.
(a) In the event that any one or more of the provisions, or
parts of any provisions, contained in the Agreement shall for any reason be held
to be invalid, illegal, or unenforceable in any respect by a court of competent
jurisdiction, the same shall not invalidate or otherwise affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
Specifically, but without limiting the foregoing in any way, each of the
covenants of the parties to this Agreement contained herein shall be deemed and
shall be construed as a separate and independent covenant and should any part or
provision of any of such covenants be held or declared invalid by any court of
competent jurisdiction, such invalidity shall in no way render invalid or
unenforceable any other part or provision thereof or any other covenant of the
parties not held or declared invalid.
(b) This Agreement and the rights and obligations of Target
hereunder may be assigned by the Company to any Subsidiary or to any successor
to Target, and shall inure to the benefit of, shall be binding upon, and shall
be enforceable by any such assignee, provided that any such assignee shall agree
to assume and be bound by this Agreement. This Agreement and the rights and
obligations of Executive hereunder may not be assigned by Executive.
(c) The waiver by Target of any breach of this Agreement by
Executive shall not be effective unless in writing, and no such waiver shall
operate or be construed as a waiver of the same or another breach on a
subsequent occasion.
(d) This Agreement and the rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
Georgia.
- 8 -
9
(e) This Agreement shall automatically terminate upon the
termination of the Stock Purchase Agreement pursuant to Article 11 thereof. Upon
the termination of this Agreement pursuant to the preceding sentence, this
Agreement shall forthwith become null and void, and no party hereto shall have
any rights, liabilities or obligations hereunder or with respect hereto. This
Agreement embodies the entire agreement of the parties relating to the
employment of Executive by Target. No amendment or modification of this
Agreement shall be valid or binding upon Target or Executive unless made in
writing and signed by the parties. All prior understandings and agreements
relating to the employment of Executive by Target are hereby expressly
terminated, including, without limitation, that certain Employment Agreement
with Executive dated February 9, 1995.
(f) Any notice, request, demand, or other communication
required to be given hereunder shall be made in writing and shall be deemed to
have been fully given if personally delivered or if mailed by overnight delivery
(the date on which such notice, request, demand, or other communication is
received shall be the date of delivery) to the parties at the following
addresses (or at such other addresses as shall be given in writing by any party
to the other party hereto):
If to Executive:
Xxxx Xxxxxx Xxxxxxxxx
000 Xxxx Xxxxxx X.
Xxxxxxxx Xxxxxxx 00000
If to Company:
SAC Acquisition Corp.
c/o CGW Southeast Partners III, L.P.
Suite 210
Twelve Piedmont Center
Xxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
- 9 -
10
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. XxXxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(g) This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and it shall not
be necessary for the same counterpart of this agreement to be signed by all of
the undersigned in order for the agreements set forth herein to be binding upon
all of the undersigned in accordance with the terms hereof.
IN WITNESS WHEREOF, the Company and Executive have each executed and
delivered this Agreement as of the date first above written.
COMPANY:
SAC ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
EXECUTIVE:
/s/ Xxxx Xxxxxx Xxxxxxxxx (SEAL)
--------------------------------------
Xxxx Xxxxxx Xxxxxxxxx
- 10 -
