Exhibit 10.3.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT made as of January 1, 1997, by and between BALLANTYNE OF
OMAHA, INC. (Ballantyne), an Delaware corporation with offices at 0000 XxXxxxxx
Xxxxxx, Xxxxx, Xxxxxxxx 00000 (the "Company"), and Xxxx X. Xxxxxxx an individual
residing at 17116 "S" Street, Xxxxx, Xxxxxxxx 00000 (the "Employee").
W I T N E S S E T H
WHEREAS, the Employee has been a key employee of Ballantyne for many years,
and in connection therewith entered into an employment agreement with Ballantyne
dated October 14, 1991; and an extension agreement with reference thereto on
July 8, 1996;
WHEREAS, the Employee and Ballantyne desire to execute a new employment
agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties intending to be legally bound agree as follows:
1. TERMINATION OF PRIOR EMPLOYMENT AGREEMENT.
The employment agreement between Ballantyne and the Employee, dated
October 15, 1991 and the extension agreement dated July 8, 1996 , are hereby
terminated and shall be of no further force and effect.
2. EMPLOYMENT.
The Company hereby employs the Employee and the Employee hereby agrees
to be employed by the Company upon the terms and conditions hereinafter set
forth. Until March 31, 1997, the Employee shall continue to perform those
duties set forth in the prior agreement dated October 14, 1991. Effective April
1, 1997, the Employee agrees to serve as President and CEO of Ballantyne of
Omaha, Inc., and in such capacity to exercise general direction and control over
its total business operations.
3. DUTIES AND SERVICES.
(a) The Employee shall perform such services as may be assigned
to the Employee by the Chairman or Board of Directors.
(b) The Employee agrees to devote all of the Employee's time and
efforts to the performance of the Employee's duties as an employee of the
Company. The Employee shall not during the term hereof perform any services for
any person, firm or corporation, other than as approved in writing by the
Company. The prohibitions of this section shall apply to indirect activities of
the Employee as well as direct activities, and will accordingly
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prohibit activities of persons with whom the Employee is "affiliated", as that
term is defined under the Securities Act of 1933, as amended, and the Rules and
Regulations thereunder.
(c) The Employee shall undertake such travel as may be necessary or
desirable to promote the business and affairs of the Company.
4. TERM.
(a) Except as otherwise hereinafter specifically provided, the term
of this employment agreement shall be for a period of five years from the date
hereof.
(b) Notwithstanding anything to the contrary provided herein, the
Company or the Employee may give the other 120 days notice prior to the end of
the term, or of any extension or renewal thereof, of such party's intention to
negotiate a new employment arrangement commencing at the end of the term or to
terminate this contract. In the event no such notice is given, the term
described at subparagraph (a) above shall automatically continue for an
additional year, and this subsection (b) shall be applicable again within such
extension.
(c) This Agreement may be terminated by the Company, at its
discretion, upon the Employee's death, inability to perform or incapacity (being
defined as inability to perform normal activities and functions for a period of
180 consecutive days), or for cause. A termination for cause for purposes of
this Agreement shall be that the Employee (I) acted dishonestly or incompetently
or engaged in willful misconduct in the performance of the Employee's duties,
(ii) breached a fiduciary duty to the Company, (iii) intentionally failed to
perform reasonably assigned duties, (iv) willfully violated any law, rule or
regulation (other than minor traffic violations or similar offenses) or any
final cease and desist order, or (v) breached this Agreement and such breach is
not cured by Employee after ten (10) days written notice.
(d) This Agreement may be terminated by the Employee in the event
that Company breaches this Agreement and such breach is not cured by the Company
after 10 days written notice.
(e) In the event the Company shall be sold, either by a sale of
assets or corporate stock, the purchaser shall assume this contract of
employment. If, at the time of such sale, the remaining term of this contract
shall be less than three years, the purchaser shall have the option to extend
the term for a period expiring three years from the closing date of the sale.
The purchaser shall have ninety days from the closing date to exercise this
option. If the purchaser shall fail to exercise this option within such ninety
days, then, upon termination of the term of this contract, Employee shall
continue to be paid the basic compensation as set forth in Paragraph 5 (a) from
the date of termination until the expiration of three years following the
closing date of the sale (the "additional period"). Employee
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shall receive no additional compensation, as described in Paragraph 5 (b) during
such additional period.
5. COMPENSATION.
(a) BASIC COMPENSATION. For all of the services to be rendered
by the Employee in any capacity hereunder, the Company shall pay the Employee
salary at the annual rate of one hundred sixty-five thousand dollars 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 Employee 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.
(b) ADDITIONAL COMPENSATION. In addition to the basic
compensation set forth at Paragraph 5(a) above, the Company shall pay the
Employee additional compensation based upon the following profit sharing
program:
The profit sharing equity threshold shall be based on the equity
as of the beginning of the fiscal year. Such threshold is to be set
at 20% of equity as defined.
The profit sharing pool shall be based on operating income
(income before income taxes, but after management fees, amortization
of goodwill, other costs associated with acquisitions, and interest
from debt incurred with respect to acquisitions of business or of
plant and capital equipment). The pool shall be set at 14%.
The pool shall be calculated as 14% of operating income, as
defined above, in excess of the 20% of the equity threshold, as
defined above, for any fiscal year.
The Employee will determine the allocation of the pool between
participants, subject to approval of the Compensation Committee. The
Employee's portion of the profit sharing pool may not exceed 40% of
the total pool.
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For illustrative purposes only, the following is an example of
the profit sharing calculation based on return on equity for the 1994.
Threshold Percentage 20%
Equity Beginning of Year 7,660,050
Times: Threshold Percentage 20%
Threshold Amount 1,532,010
Operating Income 4,189,121
Add Back: Accrued Estimated Profit
Sharing Expense 445,053
Operating Income before Profit Share 4,634,174
Less: Threshold 1,532,010
Profit Share Earnings 3,102,164
Times: Pool Percentage 14%
Pool Amount 434,302
(c) DEFINITION: PAYMENT. Computation of additional compensation
shall be made by the company within 30 days of the end of each calendar year,
and shall be paid within one month from the date the Company makes such
determination.
(d) SERVICES FOR LESS THAN A FULL YEAR. Except as provided at
subsection (e), with respect to the determination of additional compensation for
any calendar year in which an Employee does not render services hereunder for
the full twelve month period, the Company shall compute the additional
compensation in the same manner as described at subsection (b), for the period
from the commencement of such fiscal period (i.e., January 1) through the last
day of the calendar month preceding termination.
(e) TERMINATION OF EMPLOYMENT. Upon termination of employment for
any reason, the Employee shall be entitled to receive the basic compensation
accrued but unpaid as of the date of termination. Upon termination of
employment of the Employee by the Company for any reason other than for cause,
the Employee shall also be entitled to receive the additional compensation
computed as set forth above. Nothing herein contained shall be construed to
deprive Employee of any other remedy at law or in equity for breach of this
contract by Company if Employee's employment is terminated by the Company
without cause.
(f) DISPUTES. In the event of a dispute in the calculation of
additional compensation by the Company hereunder relating to the calculation of
net sales or pre-tax earnings of the Company, such net sales and pre-tax
earnings shall be determined by the certified public accountant retained by the
Company, and such determination (including any
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allocations with respect to transactions between the Company and its affiliates)
shall be absolute, conclusive and binding upon the Company and the Employee,
except in the event of gross malfeasance or fraud. The company and the Employee
shall each pay one half of the fees and disbursements of such certified public
accountants with respect to such determination.
6. EXPENSES AND VACATIONS.
(a) The Company shall reimburse the Employee for all reasonable and
necessary travel and entertainment expenses incurred by the Employee in the
performance of the Employee's duties hereunder upon submission of vouchers and
receipts evidencing such expenses. In addition, the Company shall provide the
Employee with an automobile to be used in the performance of the Employee's
duties hereunder.
(b) The Employee shall be entitled to vacation during each twelve
months of employment in accordance with applicable Company policy. All
vacations shall be in addition to recognized national holidays. During all
vacations, the Employee's compensation and other benefits as stated herein shall
continue be paid in full. Such vacations shall be taken only at times
convenient for the Company.
7. OTHER BENEFITS. In addition to the compensation and to the rights
provided for elsewhere in this agreement, the Employee 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, (I) profit sharing plan, (ii)
medical expense insurance program, (iii) pension plan, and (iv) incentive
compensation plan.
(a) The Company further agrees to continue the Employee's medical
coverage for Employee and his eligible dependents, at the Company's expense,
until the Employee attains age 65, and for the Employee's spouse until she
attains the age of 65, even though such events may occur after this agreement
expires, provided the Employee remains in the employ of the Company until his
retirement. After age 65, the Employee 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 Employee's spouse
until she attains the age of 65, provided the Employee remains in the employ of
the Company until his retirement.
8. DISCLOSURE OF INFORMATION. The Employee acknowledges that the
Company's trade secrets as they may exist from time to time, including, but not
limited to, the company's list of customers, processes, ideas, plans, programs,
procedures and know-how, are valuable, special and unique assets of the
Company's business, access to and knowledge of which are essential to the
performance of the Employee's duties hereunder. The parties agree that the
Employee will not, during or after the term of the Employee's employment by the
Company,
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disclose such secrets to any person, firm, corporation, association or other
entity or use such secrets for any reason or purpose whatsoever; nor shall the
Employee make use of any such property for the Employee's own purposes or for
the benefit of any person, firm, corporation or other entity (except the
Company) under any circumstances during or after the term of the Employee's
employment. Nothing in this section shall limit the Employe's right to carry
the Employee'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 restrictive covenant elsewhere set forth
herein.
9. RESTRICTIVE COVENANT. The Employee agrees that at the expiration of
this Agreement or at termination for any reason whatsoever, the Employee shall
not, for a period of three years thereafter, engage in any business, as
principal, employee or otherwise, which competes with the Company in the United
States with respect to the manufacture, production, assembling, distribution, or
sale of products which are the same or similar or related to use or function to
those which are manufactured, assembled, sold, or being developed by the Company
at any time during the Employee's employment with the Company, or directly or
indirectly solicit or contact any present or past (one having active contact
within twelve months prior to termination of the Employee's employment)
distributor, dealer, customer, client, employee or consultant of the Company (or
the Company's subsidiaries or affiliates). It is the desire and intent of the
parties that the provision of this section shall be enforced to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought.
The parties hereto recognize and agree that in the event of the breach of
any provision of this covenant, there is not a remedy at law adequate to protect
the rights and interest of the Company set forth herein, and the parties
therefore agree that the Company shall have the right to an injunction enjoining
the Employee from violating the provisions of this section. 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 Employee. In the event that any restriction contained in this
covenant is deemed by any court to be void because it is for an excessive period
of time or restricts the Employee from engaging in a business competing with the
Company in an excessive geographical area, it is agreed by the parties that said
court shall have the right to decrease the time period or geographical area
covered by such restriction to a time period and/or geographical area which is
not excessive.
It is understood and agreed that in the event the Company terminates the
Employee without cause or if the Company breaches this Agreement and does not
cure said breach as provided in paragraph 3(d), the provisions of paragraph 9
are null and void.
10. INVENTIONS AND DISCOVERIES. The Employee 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 Employee in and to all
inventions, ideas, disclosures and
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improvements, whether patented or unpatented, and copyrightable material made or
conceived by the Employee, 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
Employee agrees to communicate promptly and to disclose to the Company in such
form as the Employee 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 Employee 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.
11. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified mail,
return receipt requested, to the Employee's residence, in the case of the
Employee, or to the Company, at the principal offices of Ballantyne of Omaha,
Inc..
12. CONSTRUCTION OF AGREEMENT. This agreement is intended to be
construed and enforced in accordance with the laws of the State of Nebraska, in
the same manner as those executed and performed entirely within the State of
Nebraska, and without regard to or aid of any presumption or other rule
requiring construction against the party drawing or causing this Agreement to be
drawn.
13. COMMENCEMENT OF ACTIONS OF PROCEEDINGS. Any action or proceeding
brought by a party hereto against another and arising out of the Agreement or
any breach thereof, may be commenced by the service of process in the same
manner as a notice may be served under this Agreement.
14. NON-WAIVER. No provision of this Agreement shall be deemed to have
been waived except if such waiver is contained in a notice given to the party
claiming such waiver has occurred and no such waiver shall be deemed to be a
waiver of any other or further similar or dissimilar obligation or liability of
the party in whose favor the waiver was given..
15. ILLEGALITY. If any provision or provisions hereof (or any part
thereof) or the application thereof to any particular facts or circumstances
shall be illegal and unenforceable by reason of any statute or rule of law, the
remaining provisions (or parts thereof) of this Agreement or the applications of
the particular provision or provisions (or parts thereof) to the other facts or
circumstances shall not be affected thereby and shall remain in full force and
effect, it being the intention by this section to make clear the agreement of
the parties that this Agreement shall be enforced insofar as it may be enforced
consistent with law.
16. HEADINGS. The headings of the sections herein are for convenience
only and are part of this Agreement and shall not affect the interpretation
thereof.
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17. 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.
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the successors and assigns of the Company,
whether by merger, consolidation, sale or lease of assets, or otherwise.
19. DEFINITION AND GENDER. All terms used herein shall have their
defined meaning, unless the context clearly indicates otherwise. Pronouns for
defined terms shall be construed as masculine, feminine, or neuter, or in the
singular or plural, as the sense required, and to include any and all successors
and substitutions therefor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
BALLANTYNE OF OMAHA, INC.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Chairman
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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