EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AND NONCOMPETIITION AGREEMENT (this
"Agreement"), dated as of the 1st day of May 1997, by and between WELCOME HOME,
INC., a Delaware corporation ("Company"), and R. XXXXXX XXXXX, an individual
("Executive");
WITNESSETH;
WHEREAS, Company desires to retain the services of Executive
and Executive desires to be retained by Company;
WHEREAS, the continued involvement by Executive in a business
in competition with Company after the termination of Executive's employment with
Company would potentially harm Company's business; and
WHEREAS, as an inducement to Company to employ Executive,
Executive has agreed to be employed and not to compete with Company to the
extent set forth below;
NOW, THERFORE, in consideration of the premises, covenants and
agreements contained herein and the payments by Company to Executive required
below, the parties hereto agree as follows:
1. Employment and Term. Subject to the termination provisions
set forth hereinafter, Company shall employ Executive as the Chief Operating
Officer of Company or in a higher ranking management position with Company for a
period of one year (the "Employment Term") from the date of execution of this
Agreement. In such position, Executive shall report to the Chairman of the Board
of Directors of Company and the Chief Executive Officer or President of Company.
Executive shall diligently, faithfully and competently perform all duties of the
Office of Chief Operating Officer and shall devote as much of his productive
time and abilities to the performance of such duties as is required to
accomplish such duties. Company shall also use its best efforts to cause
Executive to be elected to the Board of Directors of the Company at the next
annual meeting of the stockholders of the Company.
2. Base Salary. During the Employment Term, Company will pay
Executive a base salary ("Base Salary") of Two Hundred Thousand Dollars
($200,000) per annum, payable in equal bi-weekly installments.
3. Incentive Bonus Plan. During the Employment Term, Executive
shall be entitled to participate in an annual incentive bonus plan ("Bonus
Plan") for the fiscal year ending April 30, 1998 with a target bonus payment
amount of a minimum of Fifty Thousand Dollars ($50,000). The Bonus Plan shall be
based upon goals and criteria recommended by the President and Chief Operating
Officer of Company and approved by the Board of Directors of Company. For the
fiscal year ending December 31, 1998, such goals and criteria will be presented
to the Board of Directors within sixty (60) days following the date hereof and
approved within a reasonable time thereafter. Any bonus earned by Executive
under the Bonus Plan shall be paid within thirty (30) days after completion of
Company's financial statements for the period ending December 31, 1998, as
prepared by independent auditors.
4. Stock Option Plan. The parties acknowledge that Company is
currently operating in Chapter 11 under the laws of New York. If and upon
Company's reemergence from bankruptcy, Company will grant Executive an option to
purchase 2.5% of the then outstanding fully-diluted common stock of the Company
(estimated to be 200,000 shares) upon the vesting schedule as set forth
hereinafter. The
Executive must be employed by the Company on each vesting date
in order for such vesting to occur. Such stock option grant shall vest in five
equal amounts on each of the first five anniversaries of the date hereof (i.e.,
one-fifth will vest on the one year anniversary of the date hereof and an
additional one-fifth will vest on each anniversary of the date hereof up to and
including the fifth anniversary of the date hereof, at which time Executive
shall be fully vested in the grant). Such stock options will be forfeited if
Executive's employment with the Company is terminated for cause. The stock
options shall be exercisable beginning on the date any such options are vested.
Such stock options will expire on the tenth anniversary of the date of the grant
of such stock options. The exercise price for all stock options shall be the
then current fair market value of the Company's stock on the date such stock
options are granted. The parties agree that the stock options will be granted
pursuant to a detailed Stock Option Agreement to be executed at the time of
grant.
5. Business Expenses. During the Employment Term, Company
shall reimburse Executive for all ordinary and necessary expenses incurred and
paid by Executive in the course of the performance of Executive's duties
pursuant to this Agreement and consistent with Company's policies in effect from
time to time with respect to travel, entertainment and other business expenses,
and subject to Company's requirements with respect to the manner of reporting
such expenses.
6. Relocation Expenses. Company will pay, or reimburse
Executive, for reasonable relocation expenses in moving Executive's household
furnishings and goods from Raleigh, North Carolina to Wilmington, North
Carolina. Company will reimburse Executive, within ten (10) days of Executive's
relocation, $6,000 to be used to terminate Executive's Raleigh residential lease
and all reasonable and customary closing costs Executive incurs in purchasing a
new residence in the greater Wilmington, North Carolina area. Notwithstanding
anything contained in this Section 6 to the contrary, all relocation expenses to
be paid by Company to Executive pursuant to this Section 6 shall be "grossed up
for income tax purposes," as appropriate, to accomplish a net no cost
reimbursement to Executive.
7. Automobile Allowance. During the Employment Term, Company
will pay Executive an automobile allowance of Six Hundred Dollars ($600.00) per
month.
8. Benefits. During the Employment Term, Company will provide
for Executive's participation in Company's employee benefit programs on the same
basis as other executive officers of Company including, without limitation group
medical, dental and hospitalization insurance, disability insurance, life
insurance and pension and profit sharing plans, all to the extent such plans are
available for other key executives of the Company. Additionally, until Executive
becomes eligible to participate in Company's group medical insurance plan,
Company will reimburse Executive for his monthly COBRA expenses. Executive shall
be entitled to ten (10) paid vacation days during the fiscal year ending April
30, 1998.
9. Termination for Cause and Voluntary Termination. Company
may terminate this Agreement, all of Company's obligations under this Agreement,
and Executive's employment hereunder, for "cause", by written notice to
Executive, upon the occurrence of any one of the following on the part of
Executive (a) fraud, embezzlement, dishonesty, or conviction of a felony; (b)
failure to diligently, faithfully and competently perform any of the directions
of Company's Board of Directors; (c) breach of any of the terms or covenants of
this Agreement: (d) death or disability preventing Executive from performing
Executive's duties under the terms of this Agreement; or (e) upon Executive's
voluntary termination. In the event of termination of this Agreement for
"cause", no sums shall be payable by Company thereafter and Executive shall also
have terminated all other rights under this Agreement,
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including, without limitation, future rights to the grant of stock options.
Sections 11 and 12 shall survive such termination.
10. Liquidation of the Company or Termination without Cause;
Severance Pay. If Company is liquidated, terminates this Agreement without cause
(other than Sections 11 and 12 hereof which shall survive such liquidation or
termination) at a time when Executive is fully willing and able to perform his
duties as defined herein, or if Executive's employment with Company is
terminated by Company due to the Company's bankruptcy of the Company or
substantially all of the assets of the Company are sold to another entity and
this Agreement is not assumed by such entity, then (a) the Company shall be
required to pay to Executive, as "Severance Pay," an amount equal to one year's
Base Salary; (b) Company shall provide Executive six (6) months from the date of
termination of executive out-of placement service with a national firm of
Executive's choice, provided, however, if Executive does not gain similar
employment within such 6-month period and Executive is using his best efforts to
find such employment, then Company shall continue to pay for such out-placement
services on a month to month basis until Executive finds suitable Employment up
to a maximum of an additional six months; and (c) Company will provide or pay
for Executive's COBRA group medical, dental, and hospitalization insurance for
the time remaining on Employment Term.
11. Restrictive Covenants. During Executive's employment with
Company and for a period equal to one year after Executive is no longer employed
by Company, Executive shall not:
(a) directly or indirectly, either individually or
as a principal, partner, agent, employee,
employer, consultant, stockholder, joint
venturer, or investor, or as a director or
officer of any corporation or association, or in
any other manner or capacity whatsoever, engage
in, assist or have any active interest in a
business located anywhere in the United States
or Canada that competes with or is similar in
concept, design, format, or otherwise to the
business conducted by Company on the date hereof
or at any time during the term of this covenant.
Notwithstanding the above, this paragraph shall
not be construed to prohibit Executive from
owning less than three percent (3%) of the
outstanding securities of a corporation which is
publicly traded on a securities exchange or
over-the-counter.
(b) directly or indirectly, either individually, or
as a principal, partner, agent, employee,
employer, consultant, stockholder, joint
venturer, or investor, or as a director or
officer of any corporation or association, or in
any other manner or capacity whatsoever, (i)
divert or attempt to divert from Company any
business with any customer or account with which
Executive had any contact or association, which
was under the supervision of Executive, or the
identity of which was learned by Executive as a
result of Executive's employment with Company,
or (ii) induce any salesperson, distributor,
supplier, vendor, manufacturer, representative,
agent, jobber or other person transacting
business with Company to terminate their
relationship or association with Company, or to
represent, distribute or sell services or
products in competition with services or
products of Company, or (iii) induce or cause
any employee of Company to leave the employ of
Company.
12. Non-Disclosure. Executive shall not at any time or in any
manner, directly or indirectly, use or disclose to any party other than Company
any trade secrets or other Confidential Information (as defined below) learned
or obtained by him while a
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stockholder, officer or director of Company. As used herein, the term
"Confidential Information" means information disclosed to or known by Executive
as a consequence of his position with Company and not generally known in the
industry in which Company is engaged and that in any way relates to Company's
products, processes, services, inventions (whether patentable or not), formulas,
techniques or know-how, including, but not limited to, information relating to
distribution systems and methods, research, development, manufacturing,
purchasing, accounting, engineering, marketing, merchandising and selling.
13. Specific Performance. The parties hereto agree that their
rights hereunder are special and unique and that any violation thereof would not
be adequately compensated by money damages, and each grants the other the right
to specifically enforce (including injunctive relief where appropriate) the
terms of this Agreement.
14. Notices: Any notice, request, consent or communication
(collectively, a "Notice") under this Agreement shall be effective only if it is
in writing and (i) personally delivered, (ii) sent by certified or registered
mail, return receipt requested, postage prepaid, (iii) sent by a nationally
recognized overnight delivery service, with delivery confirmed, or (iv) telexed
or telecopied, with receipt confirmed, addressed as follows:
(a) If to Executive:
R.Xxxxxx Xxxxx
c/o Welcome Home, Inc.
000X Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone # (000) 000-0000
Telecopier # (000) 000-0000
(b) If to Company:
Xxxxxx X. Xxxxx, President
c/o Jordan Industries, Inc.
ArborLake Centre, Suite 550
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telephone # (000) 000-0000
Telecopier # (000) 000-0000
G. Xxxxxx Xxxxxx, Esq.
Xxxxx Xxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telephone # (000) 000-0000
Telecopier # (000) 000-0000
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A notice shall be deemed to have been given as of the date
when (i) personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the
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telex or telecopy is confirmed, as the case may be, unless the sending party has
actual knowledge that a Notice was not received by the intended recipient.
15. Assignment. this Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by Executive.
16. Governing Law: Waiver of Jury Trial. This Agreement shall
be governed by the law of the State of North Carolina as to all matters,
including, but not limited to, matters of validity, construction, effect and
performance, except that no doctrine of choice of law shall be used to apply any
law other than that of North Carolina. IN THE EVENT OF ANY LITIGATION WITH
RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREUNDER ALL OF THE PARTIES HERETO WAIVE ALLRIGHTS TO A TRIAL BY
JURY.
17. Severability. Company and Executive believe the covenants
against competition contained in this Agreement are reasonable and fair in all
respects, and are necessary to protect the interests of Company. However, in
case any one or more of the provisions or parts of a provision contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect in any jurisdiction, such invalidity, illegality or
unenforceability shall not shall not affect any other provision or part of a
provision of this Agreement or any other jurisdiction, but this Agreement shall
be reformed and construed in any such jurisdiction as if such invalid or
unenforceable provision or part of a provision had never been contained herein
and such provision or part shall be reformed so that it would be valid, legal
and enforceable to the maximum extent permitted in such jurisdiction.
18. Neutral Interpretation. This Agreement constitutes the
product of the negotiation of the parties hereto and the enforcement hereof
shall be interpreted in a neutral manner, and not more strongly for or against
any party based upon the source of the draftsmanship hereof.
19. Miscellaneous. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. The section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. This Agreement
embodies the entire agreement and understanding of the parties hereto in respect
of the subject matter contained herein and may not be modified orally, but only
by a writing subscribed by the party charged therewith. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein. This Agreement
supersedes all prior agreements and understandings (whether oral or written)
between the parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have made and entered
into this Agreement the date first herinabove set forth.
COMPANY:
WELCOME HOME, INC.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: President
EXECUTIVE:
/s/ R. Xxxxxx Xxxxx
R. Xxxxxx Xxxxx
LIMITED GUARANTY BY JORDAN INDUSTRIES, INC.
The undersigned, Jordan Industries, Inc., a Delaware corporation, hereby agrees
to guaranty only those obligations of Company as described in Section 10 above
relating to payment of severance pay, certain benefits and out-placement
services.
JORDAN INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: CEO, President
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