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Exhibit 10.15
EMPLOYMENT AGREEMENT
Xxxxxxx & Sylvan Pools Corporation, an Ohio corporation (the "Company")
and Xxxxxx X. Xxxxxx (the "Executive") agree as follows:
1. Employment and Duties.
(a) The Company agrees to employ the Executive, and the
Executive agrees to serve the Company, as the Company's Chief Executive Officer
and Chief Financial Officer. The Executive shall report to the Company's Board
of Directors and shall have such powers and duties as are customarily performed
by Chief Executive and Chief Financial Officers of companies similar in size to
the Company, together with such other duties, consistent with his positions as
set forth above, as may be reasonably requested by the Board of Directors.
(b) On a day-to-day basis, the Executive shall (i) devote
substantially all of his working time to the business and affairs of the
Company, acknowledging that the Executive is also employed as an executive
officer of Essef Corporation ("Essef"). So long as it does not unreasonably
interfere with his employment obligations to the Company hereunder, the
Executive shall be entitled to attend to outside investments, and subject to
prior approval of the Board of Directors, serve as a director of a corporation
which does not compete with the Company (as provided in Section 10 hereof) or as
a director, trustee or officer of or otherwise participate in educational,
welfare, social, religious, charitable and civic organizations, and (ii) use his
good faith efforts to advance the interests of the Company and to improve the
value of the Company to its shareholders.
2. Term. The Company's employment of the Executive shall commence
on September __, 1998 and expire on December 31, 2000. Unless
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terminated as provided in Section 7 hereof, this Agreement shall be extended
automatically as of each December 31 thereafter for one (1) additional year
period with such modified terms as mutually agreed.
3. Compensation.
(a) The Executive's annual base salary ("base salary") during
the term of this Agreement shall be at least Two Hundred Twenty Thousand Dollars
(USD $220,000), such base salary to be reviewed annually by the Compensation
Committee of the Board of Directors or an authorized subcommittee thereof (the
"Committee").
(b) In addition to the base salary, the Company shall pay the
Executive a bonus targeted at sixty (60%) of his base salary for each year
("Target Bonus"), and the Committee shall determine the appropriate target
earnings per share ("Targeted Earnings Per Share") or other performance measure
for bonus purposes. There shall be no cap on bonus potential. Such bonus shall
be determined and paid within thirty (30) days after the Company's audited
financial statements become available.
(c) Initial Options.
(i) concurrent with the sale of shares of the Company
to the public in an initial public offering and subject to the limitation in
(iii) below, the Company hereby agrees to grant to the Executive options (the
"Initial Options") to purchase One Hundred Thousand (100,000) shares of the
Company's common stock (the "Shares") at the price and subject to the following
terms and conditions. The Initial Options shall vest as of the date of sale of
shares in the Company's initial public offering (the "Commencement Date").
(ii) The exercise price per Share for the Initial
Options shall be the offering price to the public in the initial public
offering.
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(iii) Regardless of the fact that the Initial Options
are deemed to vest on the Commencement Date, the Executive may exercise Initial
Options only in the percentages and at the times set forth below:
0% prior to the first anniversary of the Commencement Date;
20% at any time after the first anniversary of the Commencement Date;
40% at any time after the second anniversary of the Commencement Date;
60% at any time after the third anniversary of the Commencement Date;
80% at any time after the fourth anniversary of the Commencement Date;
100% at any time after the fifth anniversary of the Commencement Date;
(d) Taxes. If all or any of the amounts payable to the
Executive under this Agreement (together with all other payments of cash or
property, whether pursuant to this Agreement or otherwise, including, without
limitation, the issuance of shares or options) constitutes "excess parachute
payments" within the meaning of Section 280G of the Code that are subject to the
excise tax imposed by Section 4999 of the Code (or any similar tax or
assessment), the amounts payable hereunder shall be increased to the extent
necessary to place the Executive in the same after-tax position as he would have
been in had no such tax assessment been imposed on any such payment paid or
payable to the Executive under this Agreement or any other payment that the
Executive may receive in connection therewith. The determination of the amount
of any such tax or assessment and the incremental payment required hereby in
connection therewith shall be made by the accounting firm employed by the
Executive within thirty (30) calendar days after such payment and said
incremental payment shall be made within five (5) calendar days after
determination has been made. If, after the date upon which the payment required
by this Section 3(d) has been made, it is determined (pursuant to final
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regulations or published rulings of the Internal Revenue Service, final judgment
of a court of competent jurisdiction, Internal Revenue Service audit assessment,
or otherwise) that the amount of excise or other similar taxes or assessments
payable by the Executive is greater than the amount initially so determined,
then the Company shall pay the Executive an amount equal to the sum of: (i) such
additional excise or other taxes, plus (ii) any interest, fines and penalties
resulting from such underpayment, plus (iii) an amount necessary to reimburse
the Executive for any income, excise or other tax assessment payable by the
Executive with respect to the amounts specified in (i) and (ii) above, and the
reimbursement provided by this clause (iii), in the manner described above in
this Section 3(c). Payment thereof shall be made within five (5) calendar days
after the date of such subsequent determination. If, after the date upon which
the payment required by this Section 3(c) has been made to the Executive, it is
determined that the Executive is entitled to receive a refund of all or part of
such payment, then the Executive shall pay to the Company all amounts received
by the Executive as a refund of any such overpayment of excise or other taxes.
4. Benefits. During the term of this Agreement, the Executive and his
eligible dependents shall be entitled to participate in and receive benefits
under any stock option or profit-sharing plan, health, disability, medical
insurance or other employee welfare or benefit plan or arrangement made
generally available by the Company during the term of this Agreement to its
executives and key management employees.
5. Car. During the term of this Agreement, the Company shall provide
the Executive with an automobile and shall pay for operating expenses incurred
in connection with the use of the automobile, including the costs of insurance,
gas, maintenance and car phone. The costs associated with such automobile may be
allocated between the Company and Essef.
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6. Vacation. The Executive shall be entitled to the number of paid
vacation days in each calendar year determined by the Board from time to time.
7. Disability or Death; Resignation; Termination for Cause; Other
Terminations.
(a) Disability or Death. If the Executive is incapacitated for
a period of six (6) consecutive months so that he cannot perform his duties
hereunder on a full-time basis, then either the Company or the Executive may
give written notice to the other terminating the Executive's employment
effective thirty (30) days thereafter (the "Disability Termination Date"). The
Company shall continue to provide salary, medical coverage, disability and group
life insurance to the Executive for one (1) year after the earlier of the
Disability Termination Date or death. In the event of the Executive's disability
or death any stock options that are not yet exercisable shall immediately become
exercisable. The Executive or his estate may exercise any options held at the
date of death or the Disability Termination Date for one (1) year after such
date. In the event of death or disability, the Company shall pay to the
Executive the prorated portion (through the applicable termination date) of the
Executive's Target Bonus that would have been paid had the Executive been
employed by the Company at the end of the fiscal year in which the applicable
termination date occurred. Such Target Bonus shall be calculated according to
actual Company results for the respective fiscal year and paid at the same time
other Company bonuses are paid. Except as set forth below, if the Executive dies
prior to the termination of his employment or if notice of termination for
disability is given as provided above, the Company's obligations hereunder shall
terminate as of the earlier of the Executive's death or the Disability
Termination Date.
(b) Resignation. If the Executive's employment is terminated
by reason of his voluntary resignation, all of the Company's obligations
hereunder shall terminate as of the termination date. All unexercised options
for shares, if any, then outstanding, both vested and unvested, shall be
automatically forfeited and canceled by the Company.
(c) Termination for Cause. If the Company terminates the
Executive's employment for cause (as defined below), all of the Company's
obligations hereunder shall
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immediately terminate as of the termination date. All unexercised stock options,
both vested and unvested, shall be automatically forfeited and canceled by the
Company. As used herein, "for cause" shall mean (i) gross misconduct by the
Executive that is materially inconsistent with the terms hereof, or (ii)
material failure by the Executive to perform his duties, either of which
continues after written notice thereof and a fifteen (15) day chance to cure or
(iii) the Executive's conviction for committing a felony.
(d) Other Terminations. If the Company terminates the
Executive's employment other than for cause (including failing to extend the
term at the end of any year), both the Company's and the Executive's obligations
hereunder shall immediately terminate as of the termination date; provided,
however, that (i) any stock options that are not yet exercisable shall
immediately become exercisable and the Executive may exercise within one (1)
year from the date the Company delivers notice of termination (the "Termination
Date") any options held by him on the Termination Date and (ii) the Company
shall continue to provide salary and medical, group life and disability
insurance (collectively, "insurance benefits") to the Executive until the later
of December 31, 2000 or one (1) year after the Termination Date. In addition the
Company shall pay the prorated portion (through the Termination Date) of the
Executive's Target Bonus that would have been paid had the Executive been
employed by the Company at the end of the year in which the Termination Date
occurred. Such Target Bonus will be calculated according to actual Company
results for the year and paid at the same time other Company bonuses are paid.
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If (i) the Company materially changes the Executive's duties and
responsibilities as set forth in Section 1 without his consent; or (ii) there
occurs a "change in control" (as hereinafter defined) of the Company, then in
any such event the Executive shall have the right to terminate his employment
with the Company, but such termination shall not be considered a voluntary
resignation or termination of such employment or of this Agreement by the
Executive but rather a discharge of the Executive by the Company without "cause"
under this Section 7(d).
The term "change in control" means the first to occur of the following
events:
(i) when any "person" as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof, including
a "group" as defined in Section 13(d) of the Exchange Act, but
excluding the Company and any employee benefit plan sponsored or
maintained by the Company (including any trustee of such plan acting as
trustee), directly or indirectly, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act, as amended from time to
time), of securities of the Company representing more than fifty
percent (50%) of the combined voting power of the Company's then
outstanding securities; or
(ii) The completion of a transaction requiring shareholder
approval for the acquisition of substantially all of the stock or
assets of the Company by an entity other than the Company or any merger
of the Company into another company and the Company is not the
surviving company.
Notwithstanding anything to the contrary contained in this Agreement, upon the
occurrence of a "change of control" of the Company any stock options granted to
the Executive shall immediately become exercisable by the Executive at any time.
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8. Trade Secrets: Confidential and Proprietary Information. The
Executive shall not at any time or in any manner, either directly or indirectly,
divulge, disclose or communicate to any person, firm, company, corporation or
business in any manner whatsoever any confidential information relating to the
business of the Company, including without limitation, the Company's customer
list, pricing policies, trade secrets, know-how, product designs, strategic
plans and similar types of information. This Section 8 shall be interpreted with
the Executive's role as Chief Executive and Chief Financial Officer and liaison
with the securities markets and the investing public in general in mind. The
foregoing restrictions shall not apply to the extent that such information (a)
is obtainable in the public domain, (b) becomes obtainable in the public domain,
except by reason of the breach by the Executive of the terms hereof, or (c) is
required to be disclosed by rule of law or by order of a court or governmental
body or agency. This Section 8 shall remain in full force and effect for a
period of ten (10) years after expiration or termination of this Agreement for
any reason.
9. Covenant Not to Compete. During the term of this Agreement and for a
period of five (5) years thereafter the Executive will not, without the
Company's prior written consent, directly or indirectly engage in, make any
investment in or have any interest in any business in competition with the
business of the Company; and the Executive will not advise, assist or render
services either directly or indirectly to any person, firm, company, corporation
or business other than the Company with reference to any business in competition
with the business engaged in by the Company during the Executive's employment by
the Company. Notwithstanding the foregoing, the ownership of securities of any
business competing with the Company, if such securities are publicly traded on a
national securities market and constitute less than five percent (5%) of the
outstanding stock thereof, shall not constitute a violation of this provision.
For
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purposes of this Section 9, a business in competition with the Company shall
mean any business engaged in the manufacture, design, installation processing,
sale or distribution of products that are the same as or similar to those of the
Company at any time during the term of this Agreement.
10. Notices. All notices, requests, demands and other communications
made or given in connection with this Agreement shall be in writing and shall be
deemed to have been duly given (a) if delivered, at the time delivered or (b) if
mailed, at the time mailed at any general or branch United States Post Office
enclosed in a registered or certified postage paid envelope addressed to the
address of the respective parties as follows:
To the Company: Xxxxxxx & Sylvan Pools Corporation
000 Xxxx Xxxxx
Xxxxxxx, XX 00000
To the Executive: Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
or to such other addresses as the party to whom notice is to be given may have
previously furnished to the other party in writing in the manner set forth
above, provided that notices of changes of address shall only be effective upon
receipt.
11. Modification and Waivers. No provisions of this Agreement may be
modified or discharged unless such modification or discharge is authorized by
the Board of Directors and is agreed to in writing, signed by the Executive and
by another executive officer of the Company. No waiver by either party hereto of
any breach by the other party hereto or any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
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12. Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto relating to the subject matter hereof, and there are no
written or oral terms or representations made by either party other than those
contained herein.
13. Governing Law. The validity, interpretation, construction,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Ohio.
14. Invalidity. The unenforceability or invalidity of any provision of
this Agreement shall not affect the enforceability or validity of the balance of
the Agreement. In the event that any such provision should be or becomes invalid
for any reason, such provision shall remain effective to the maximum extent
permissible, and the parties shall consult and agree on a legally acceptable
modification giving effect to the commercial objectives of the unenforceable or
invalid provision, and every other provision of this Agreement shall remain in
full force and effect.
15. Successors. This Agreement shall inure to the benefit of, and be
enforceable by, the parties' successors, representatives, executors,
administrators or assignees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
September ___, 1998.
XXXXXXX & SYLVAN POOLS CORPORATION
By:
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Xxxxxx X. Xxxxxx
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