EXHIBIT 10.7
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of the 23rd day of January, 2003, by and between
BALLANTYNE OF OMAHA, INC., a Delaware corporation, with its principal offices at
0000 XxXxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000 (the "Company"), and
Xxxx X. Xxxxxxx, an individual residing at 00000 Xxxxxxx Xxxxx, Xxxxx, Xxxxxxxx
00000 (the "Executive").
WITNESSETH:
WHEREAS, the Executive has been a key employee of the Company for many
years, and in connection therewith has entered into a number of different
employment agreements with the Company, the latest being an Employment Agreement
made as of January 1, 1997, and amended on October 25, 1999.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:
1. TERMINATION OF PRIOR EMPLOYMENT AGREEMENT.
The employment agreement between the Company and the Executive dated
January 1, 1997, is hereby terminated as of January, 2003, and shall
be of no force and effect thereafter.
2. EMPLOYMENT.
The Company hereby employs the Executive and the Executive hereby
agrees to be employed by the Company under the terms and conditions hereinafter
set forth.
3. DUTIES AND SERVICES.
3.1 The Executive shall serve as President and Chief Executive
Officer of the Company, and shall perform such services as may be assigned to
him from time to time by the Board of Directors.
3.2 The Executive shall devote his full business time and attention
to the business of the Company and to the promotion of the Company's best
interests, subject to vacations, holidays, normal illnesses and a reasonable
amount of time for civic, community and industry affairs.
3.3 The Executive shall undertake such travel as may be necessary
and desirable to promote the business and affairs of the Company, consistent
with Executive's position with the Company and travel obligations prior to the
execution of this Agreement. If the Company shall require Executive to relocate
his residence, the Company shall pay
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(or reimburse Executive for) all reasonable moving expenses incurred by
Executive in connection with such relocation.
4. COMPENSATION.
4.1 BASIC COMPENSATION. For all of the services to be rendered by
the Executive in any capacity hereunder, the Company shall pay the Executive
salary at the annual rate of Two Hundred Fifteen Thousand Dollars ($215,000.00),
and the Company shall review such salary annually as of January 1 during each
subsequent year of this Agreement, but in no event shall the basic compensation
in each subsequent year be less than the aforesaid amount. The compensation paid
hereunder to the Executive shall be paid in accordance with the payroll
practices conducted by the Company and shall be subject to the customary
withholding taxes and other employment taxes as required with respect to
compensation paid by a corporation to an employee.
4.2 ADDITIONAL COMPENSATION. In addition to the basic compensation
set forth at Subsection 4.1 above, the Company shall pay the Executive
additional compensation based upon the following bonus program:
A. The bonus pool will be calculated on profits in excess of a
threshold amount equal to twenty percent (20%) of the Company's
book value at the beginning of the year.
B. The bonus pool will be based on net income before income taxes;
provided, however, that in determining net income for purposes
hereof, all amounts accrued during the year for payment of this
bonus pool and taken as an expense, shall be added back to the
net income figure otherwise determined.
C. The Pool will be calculated at fourteen percent (14%) of
income, as defined above, in excess of the twenty percent (20%)
of equity threshold, as defined above, for any fiscal year.
D. The Chief Executive Officer will determine which employees
shall participate in the pool, and the allocation of the pool
among participants, subject to approval of the Compensation
Committee. The Chief Executive Officer's portion of the pool
may not exceed forty percent (40%) of the total.
E. All questions, differences or disputes with reference to the
computation of the bonus pool, shall be resolved by the public
accounting firm then employed by the corporation to audit its
books for the applicable period involved, and its determination
shall be final and conclusive upon all parties.
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For illustrative purposes only, the following is an example of the
bonus calculation based on return on equity for 1999.
Threshold Percentage 20%
Book Value Beginning of Year 35,623,029
Times: Threshold Percentage 20%
----------
Threshold Amount 7,124,606
Net Income, before Income Taxes 12,933,060
Add Back: Accrued Estimated Bonus
Expense 945,562
----------
Net Income before Profit Share 13,878,622
Less: Threshold 7,124,606
----------
Bonus Earnings 6,754,016
Times: Pool Percentage 14%
----------
Pool Amount 945,562
4.3 COMPUTATION - PAYMENT. Computation of additional compensation
shall be made by the Company within thirty (30) days of the end of each calendar
year, and shall be paid within one (1) month from the date the Company makes
such determination.
4.4 SERVICES FOR LESS THAN A FULL YEAR. Except as provided at
subsection 4.5, with respect to the determination of additional compensation for
any calendar year in which an Executive does not render services hereunder for
the full twelve (12) month period, the Company shall compute the additional
compensation in the same manner as described at Subsection 4.2, for the period
from the commencement of such employment through the last day of the calendar
month preceding termination.
4.5 TERMINATION OF EMPLOYMENT. Upon termination of employment for
any reason, the Executive shall be entitled to receive the basic compensation
accrued but unpaid as of the date of termination. Upon termination of employment
of the Executive by the Company for any reason other than for cause, the
Executive shall also be entitled to receive the additional compensation computed
as set forth above.
5. EXPENSES AND VACATIONS.
5.1 The Company shall reimburse the Executive for all reasonable
and necessary travel and entertainment expenses incurred by the Executive in the
performance of the Executive's duties hereunder upon submission of vouchers and
receipts evidencing such expenses.
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5.2 The Company agrees to furnish an automobile selected by the
Company for use of the Executive. All expenses for the maintenance, insurance
and upkeep of the automobile shall be borne by the Company.
5.3 The Executive shall be entitled to vacation during each twelve
(12) months of employment in accordance with applicable Company policy. All
vacations shall be in addition to recognized national holidays. During all
vacations, the Executive's compensation and other benefits as stated herein
shall continue to be paid in full. Such vacations shall be taken only at times
convenient for the Company.
6. OTHER BENEFITS.
6.1 In addition to the compensation and to the rights provided for
elsewhere in this agreement, the Executive shall be entitled to participate in
each plan of the Company now or hereafter adopted for the benefit of executive
employees of the Company, to the extent permitted by such plans and by
applicable law, including, but not limited to, (a) profit sharing plan, (b)
medical expense insurance program, (c) pension plan, and (d) incentive
compensation plan.
6.2 The Company further agrees to continue the Executive's medical
coverage for Executive and his eligible dependents, at the Company's expense,
until the Executive attains age sixty-five (65), and for the Executive's spouse
until she attains the age of sixty-five (65), even though such events may occur
after this Agreement expires, provided the Executive remains in the employ of
the Company until his voluntary retirement at not less than age sixty-two (62).
After age sixty-five (65), the Executive and his eligible dependents, shall only
be entitled to medical insurance coverage to the extent, if any, that the
Company provides such coverage for other retired senior executives, except that
the Company shall continue to provide medical coverage for the Executive's
spouse until she attains the age of sixty-five (65), provided the Executive
remains in the employ of the Company until his retirement.
7. TERM OF THIS AGREEMENT.
7.1 Except as otherwise hereinafter specifically provided, the term
of this Employment Agreement shall commence on January 23, 2003, and shall be
for a period of three (3) years thereafter.
7.2 Notwithstanding anything to the contrary provided herein,
either the Company or the Executive may give the other written notice at least
one hundred twenty (120) days prior to the end of the term, or any extension or
renewal thereof, of such party's intention to negotiate a new Employment
Agreement commencing at the end of the term or to terminate this contract. In
the event that no such notice is given, the term described in Subsection 7.1
above shall automatically continue for an additional year, and this Subsection
7.2 shall be applicable again within such extension.
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7.3 In the event that this Employment Agreement is not renewed and
the Executive is terminated, the Executive will be entitled to severance
benefits pursuant to the Company's severance policy in existence on the date of
termination, but in no event shall Executive receive less than one (1) week of
severance for each year of employment. In addition, all existing insurance
benefits shall remain in force during the severance period.
7.4 AUTOMATIC EXTENSION IN THE EVENT OF SALE. In the event the
Company shall be sold, either by a sale of assets or corporate stock, the
purchaser shall be required to assume this contract of employment and this
contract shall be automatically extended for a period expiring three (3) years
from the closing date of the sale.
8. TERMINATION PRIOR TO THE END OF TERM.
8.1 TERMINATION DUE TO DEATH OR INCAPACITY. This Agreement shall be
terminated upon the Executive's death or by the Company, at its discretion,
because of the Executive's failure to perform substantially all of the material
duties of his position for a period of at least one hundred eighty (180)
consecutive calendar days due to physical or mental illness or injury.
8.1.1 If the Company elects to terminate this Agreement
because of the Executive's incapacity, it shall send him written notice thereof,
setting forth in reasonable detail the facts and circumstances that provide a
basis for said termination. If the Company and Executive disagree as to
Executive's incapacity, each may appoint a medical doctor to certify his opinion
as to Executive's incapacity, and if his doctor's do not agree as to Executive's
incapacity, then the two doctors will appoint a third medical doctor to certify
his or her opinion as to Executive's incapacity, and the decision of a majority
of the three doctors will prevail. The Company will bear all expenses for this
procedure.
8.1.2 In the event of termination by reason of death, the
Executive's estate shall be paid all accrued sums due and owing under Section 4
above and any benefits provided by the Company under Section 6 above.
8.1.3 In the event of incapacity, Executive shall continue to
receive his full compensation during the one hundred eighty (180) day period
prior to any notice of termination. After that termination, Executive shall be
entitled to any accrued amounts due and owing him under Section 4 above and such
other benefits as may be provided by Section 6 above.
8.2 TERMINATION FOR CAUSE.
8.2.1 The Company may terminate, at any time, the Executive's
employment for cause. The term for "cause" for purposes of this Agreement shall
mean that the Executive did any of the following:
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(a) Acted dishonestly or incompetently or engaged in
willful misconduct in the performance of Executive's
duties;
(b) Breached fiduciary duties owed to the Company;
(c) Intentionally failed to perform reasonably assigned
duties;
(d) Willfully violated any law, rule, or regulation, or
court order (other than minor traffic violations or
similar offenses), or otherwise committed any act which
would have a material adverse impact on the business of
the Company; or
(e) Is in breach of this Agreement and such breach is not
cured by Executive within ten (10) days' written notice
to him.
8.2.2 Executive shall be sent written notice of termination
that specifically sets forth in reasonable detail the facts and circumstances
upon which the Board of Directors believes that the Executive has given the
Company cause for termination of Executive's employment. Said notice shall give
the Executive an opportunity, together with legal counsel, to be heard before
the Board of Directors of the Company. Termination for cause shall be based on a
finding by two-thirds (2/3) of the Board of Directors (not including Executive,
should he be a member of the Board of Directors), and said Board shall specify
its findings concerning said termination in detail. For purposes of this
Subsection, no acts, or failure to act, on the Executive's part will be
considered willful or willfully done unless done, or admitted to be done, by the
Executive in bad faith and without reasonable belief that the Executive's action
or omission was in the best interest of the Company.
8.2.3 Notwithstanding the foregoing, however, any conviction
of the Executive for any criminal act involving any violence, dishonesty, fraud,
or breach of trust or other felonious behavior, shall result in the automatic
termination of Executive's employment, without notice, and without any of the
procedures specified in Subsection 8.2.2 above.
8.2.4 In the event that the Executive is terminated for
cause, then he shall be entitled to receive any accrued compensation that may be
due and owing him under Section 4 above, but no other benefits or compensation
whatsoever.
8.3 TERMINATION BY THE EXECUTIVE FOR BREACH BY THE COMPANY. This
Agreement may be terminated by the Executive in the event that the Company
breaches this Agreement and such breach is not cured by the Company within ten
(10) days after written notice, identifying the said breach or breaches in
detail.
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8.4 DATE OF TERMINATION. For purposes of this Agreement, the date
of the termination of Executive's employment ("Date of Termination") will be:
A. if Executive's employment is terminated by his death, the end
of the month in which his death occurs,
B. if Executive's employment is terminated for incapacity, thirty
(30) days after Notice of Termination is given, or
C. if Executive's employment is terminated by Executive or the
Company for any other reason, the date specified in the Notice
of Termination, which will not be later than thirty (30) days
after the date on which the Notice of Termination is given.
9. EMPLOYMENT BY A SUBSIDIARY.
Either the Company or a Subsidiary may be Executive's legal employer.
For purposes of this Agreement, any reference to Executive's termination of
employment with the Company means termination of employment with the Company and
all Subsidiaries, and does not include a transfer of employment between any of
them. The obligations created under this Agreement are obligations of the
Company. For purposes of this paragraph, a "Subsidiary" means an entity more
than fifty percent (50%) of whose equity interests are owned directly or
indirectly by the Company.
10. RESTRICTIVE COVENANT.
10.1 NEED FOR PROTECTION. Executive acknowledges that, because of
his Senior Executive position with the Company, his knowledge of the affairs of
the Company and his relations with its dealers, distributors and customers are
such that he could do serious damage to the financial welfare of the Company,
should he compete or assist others in competing with the business of the
Company. Consequently, and in consideration of his continued employment with the
Company, and for the benefits he is to receive under this Agreement, and for
other good and valuable consideration, the receipt of which he hereby
acknowledges, the Executive agrees as follows:
10.2 CONFIDENTIAL INFORMATION.
A. NON-DISCLOSURE. Except as the Company may permit or direct in
writing, during the term of this Agreement and thereafter,
Executive agrees that he will never disclose to any person or
entity any confidential or proprietary information, knowledge,
or data of the Company, which he may have obtained while in the
employ of the Company, relating to any customers, customer
lists, methods of distribution, sales, prices, profits, costs,
contracts, inventories,
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suppliers, dealers, distributors, business prospects, business
methods, manufacturing ideas, formulas, plans or techniques,
research, trade secrets, or know how of the Company.
B. RETURN OF RECORDS. All records, documents, software, computer
disks, and any other form of information relating to the
business of the Company, which are or were prepared or created
by Executive, or which may or did come into his possession
during the term of his employment with the Company, including
any and all copies thereof, shall be returned to or, as the
case may be, shall remain in the possession of the Company.
C. FUTURE EMPLOYMENT. Nothing in this section shall limit the
Executive's right to carry the Executive's accumulated career
knowledge and professional skills to any future employment,
subject to the specific limitations of the foregoing provisions
of this section and the respective covenants set forth below.
10.3 COVENANT NOT TO SOLICIT. Executive agrees that he will not, for
a period of one (1) year after his employment with the Company has terminated:
A. directly or indirectly, on behalf of himself or any person or
entity, engage in, or assist any other person or entity to
engage in, the manufacture, assembly, distribution, or sale to
any customer, distributor or dealer of the Company, wherever
located, of said motion picture theater equipment, restaurant
equipment, or any other type of product manufactured, assembled
distributed or sold by the Company, if said customer,
distributor or dealer is one with whom he had contact or on
whose account he worked on during the twelve (12) months prior
to the termination of his employment, or,
B. directly or indirectly request or advise any of the aforesaid
customers, distributors or dealers referred to in Paragraph A.
above, of this subsection, to curtail their business with the
Company or to patronize another business which is in
competition with the Company, or
C. directly or indirectly, on behalf of himself or any other
person or entity, request, advise, or solicit any employee of
the Company to leave that employment in order to engage in, or
assist any other person or entity to engage in, competition
with the Company.
10.4 TERMINATION WITHOUT CAUSE. It is understood and agreed that, in
the event the Company terminates the Executive's employment without cause, prior
to the expiration of the term of employment specified in this Agreement,
Subsection 10.3 shall be applicable and remain in force and effect for the
greater of the remaining term of
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Executive's employment under this Agreement, or one (1) year from the date of
termination, whichever occurs later.
10.5 BREACH OF AGREEMENT BY COMPANY. In the event that the Company
breaches this Agreement, and does not cure said breach after thirty (30) days'
written notice, Subsection 10.3 shall be null and void and of no further force
and effect.
10.6 JUDICIAL MODIFICATION. In the event that any court of law or
equity shall consider or hold any aspect of this section to be unreasonable or
otherwise unenforceable, the parties hereto agree that the aspects of this
section so found may be reduced or modified by appropriate order of the court,
and shall thereafter continue, as so modified, in full force and effect.
10.7 INJUNCTIVE RELIEF. The parties hereto acknowledge that the
remedies at law for breach of this section will be inadequate, and the Company
shall be entitled to injunctive relief for violation thereof; provided, however,
that nothing herein shall be construed as prohibiting the Company from pursuing
any other remedies available for such breach or threatened breach, including the
recovery of damages from the Executive.
11. INVENTIONS AND DISCOVERIES.
The Executive hereby sells, transfers and assigns to the Company or to
any person or entity designated by the Company all of the entire right, title
and interest of the Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable material made or
conceived by the Executive, solely or jointly, during the term hereof which
relate to the products and services provided by the Company or which otherwise
relate or pertain to the business, functions or operations of the Company. The
Executive agrees to communicate promptly and to disclose to the Company, in such
form as the Executive may be required to do so, all information, details and
data pertaining to such inventions. ideas, disclosures and improvements and to
execute and deliver to the Company such formal transfers and assignments and
such other papers and documents as may be required of the Executive to permit
the Company or any person or entity designated by the Company to file and
prosecute the patent applications, and, as to copyrightable material, to obtain
copyrights thereof.
12. MODIFICATION AND WAIVER.
No provision of this Agreement may be modified, waived or discharged
unless that waiver, modification or discharge is agreed to in writing by
Executive and that officer as may be specifically designated by the Board of
Directors of the Company. No waiver by either party at any time of any breach by
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by that other party will be deemed a waiver of similar
or dissimilar provisions or conditions at the time or at any prior or subsequent
time.
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13. CONSTRUCTION.
This Agreement supersedes any oral agreement between Executive and the
Company and any oral representation by the Company to Executive with respect to
the subject matter of this Agreement. The validity, interpretation, construction
and performance of this Agreement will be governed by the laws of the State of
Nebraska.
14. SEVERABILITY.
If any one or more of the provisions of this Agreement, including but
not limited to Section 10 hereof, or any word, phrase, clause, sentence or other
portion of a provision is deemed illegal or unenforceable for any reason, that
provision or portion will be modified or deleted in such a manner as to make
this Agreement as modified legal and enforceable to the fullest extent permitted
under applicable laws. The validity and enforceability of the remaining
provisions or portions will remain in full force and effect.
15. COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each
of which will take effect as an original and all of which will evidence one and
the same agreement.
16. LEGAL FEES.
If the Company breaches this Agreement or if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
Company will reimburse Executive for all legal fees and expenses reasonably
incurred by Executive as a result of that termination (including all those fees
and expenses, if any, incurred in contesting or disputing the termination or in
seeking to obtain or enforce any right or benefit provided by this Agreement,
unless the Company is the prevailing party in such litigation).
17. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, beneficiaries, personal
representatives, successors and assigns.
18. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement will be in writing and will be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage pre-paid, addressed to the respective
addresses set forth on the first page of this
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Agreement, or to that other address as either party may have furnished to the
other in writing in accordance with this Section 10, provided that all notices
to the Company will be directed to the attention of the Secretary of the
Company, and except that notice of change of address will be effective only upon
receipt.
19. REMEDIES OF EXECUTIVE.
In the event that the Executive makes any claim or demand based upon
this Agreement, or the breach thereof, the Executive hereby agrees that the
damages which he may recover shall be limited to the maximum amount of benefits
to which he could possibly be entitled under this Agreement.
20. ENTIRE AGREEMENT.
This Agreement contains the entire agreement of the parties. All prior
arrangements or understandings are merged herein. It may not be changed orally,
but only by an agreement in writing signed by the party against whom enforcement
of any waiver, change, modification, extension or discharge is sought.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
BALLANTYNE OF OMAHA, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Chairman of the Board
/s/ Xxxx X. Xxxxxxx
-----------------------------------
Xxxx X. Xxxxxxx, Executive
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