STATE OF NORTH CAROLINA
COUNTY OF BEAUFORT
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of August
24, 1998 (the "Effective Date"), by and among FOUNTAIN POWERBOATS, INC., a
North Carolina business corporation with its corporate headquarters in
Washington, North Carolina ("Fountain"); FOUNTAIN POWERBOAT INDUSTRIES, INC.,
a Nevada business corporation, which is the holding company of Fountain, with
its corporate headquarters in Washington, North Carolina ("FPBI"); and
XXXXXXX X. XXXXXXX ("Employee").
W I T N E S S E T H:
WHEREAS, Fountain is engaged worldwide in the business of designing,
developing, manufacturing, marketing and selling high performance sport and
fishing boats and high performance sport cruisers and yachts, including
specialized instrumentation and related equipment and products (some of which
may be or become patented) for and to various customers and is engaged in
various related business activities (collectively "Fountain's Business"); and,
WHEREAS, Employee has been involved for many years in various aspects of
the maritime and boating industry, with over 20 years of senior level
management experience in global consumer and industrial manufacturing
environments and extensive experience in finance, strategic planning, business
development, marketing, and general management, having previously served as
the Corporate Director of Planning Marine Operations for Brunswick
Corporation; and,
WHEREAS, Employee's experience and knowledge of such matters and his
expertise in the boat manufacturing industry would benefit Fountain in the
operation and development of Fountain's Business; and,
WHEREAS, Fountain desires to employ Employee as Chief Operating Officer
and Executive Vice President of Fountain, effective as of the Effective Date,
and Employee desires to accept employment with Fountain; and,
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WHEREAS, Fountain and Employee have agreed and desire to enter into this
Agreement to set forth the terms and conditions of Employee's employment with
Fountain.
NOW, THEREFORE, in consideration of the premises and mutual promises,
covenants and conditions hereinafter set forth, and for other good and
valuable considerations, the receipt and sufficiency of which hereby are
acknowledged, Fountain and Employee hereby agree as follows:
1. Relationship and Duties.
(a) Employment. Fountain agrees to employ Employee, and Employee
accepts employment with Fountain, upon the terms and conditions stated herein,
subject to the Condition Precedent set forth in Paragraph 18 below. As an
employee of Fountain, Employee will (i) serve as Fountain's and FPBI's Chief
Operating Officer and Executive Vice President and, in such position, shall
report directly to, and shall be subject to the direction of, Fountain's
Chairman, President and Chief Executive Officer; (ii) perform such duties and
exercise such authority as is customary for persons holding such office,
including but not limited to directing, supervising, and managing the
construction, marketing, sale, and servicing of high performance sport and
fishing boats and sport cruisers and yachts; (iii) supervise the development
of Fountain's Business, and promote Fountain and engage in Business
development activities on Fountain's behalf in its market areas; and (iv) have
such other duties and responsibilities consistent with the position of Chief
Operating Officer as shall be assigned to him from time to time by the
Chairman, President and Chief Executive Officer. In connection with the
performance of his duties hereunder, Employee's office and principal
employment location shall be at the principal executive offices of Fountain
near Washington, North Carolina, or at such other place or places as the Board
of Directors shall designate.
(b) Standards of Performance and Conduct. During the Term of
Employment, Employee shall (i) faithfully and diligently discharge his duties
and responsibilities under this Agreement; (ii) perform in a reasonably
competent manner the duties associated with his position with Fountain or
assigned to him by the Chairman, President and Chief Executive Officer; (iii)
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use his best efforts to implement the policies and procedures of Fountain
currently in effect or as established from time to time by Fountain's Board of
Directors; and (iv) devote his full working time, attention, and efforts to
the diligent performance of his duties herein specified and not accept
employment with any other individual, corporation, or other entity, or engage
as a corporate officer or employee in any other venture for profit, which
Fountain's Board of Directors considers to be in conflict with Fountain's best
interests or to be in competition with Fountain's Business, or which may
interfere in any way with Employee's performance of his duties hereunder.
Employee, in the execution of his duties under this Agreement, at
all times and in all material respects, shall comply with any code of conduct
or other personnel policies and procedures adopted by Fountain, as the same
are in effect and as amended or supplemented from time to time, and with all
applicable federal and state statutes and all rules, regulations,
administrative orders, statements of policy and other pronouncements or
standards promulgated thereunder.
2. Term of Employment. Unless sooner terminated as provided in this
Agreement, and subject to the right of either Employee or Fountain to
terminate Employee's employment at any time as provided herein, the initial
term of Employee's employment with Fountain under this Agreement (the "Term of
Employment") shall be for a period of three (3) years commencing on the
Effective Date and ending three years following the Effective Date on August
23, 2001(the "Expiration Date"). At any time during the six (6) months period
prior to the Expiration Date, either Fountain or Employee may give notice to
the other party of a desire to negotiate an extension to the Term of
Employment or to otherwise modify the terms and conditions of this Agreement.
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3. Compensation.
(a) Base Salary. For all services rendered by Employee under this
Agreement as an officer of FPBI and Fountain, and as an employee of Fountain,
Fountain shall pay to Employee a base salary ("Base Salary") at an annual rate
of One Hundred Sixty Thousand Dollars ($160,000) during the Term of
Employment. Base Salary paid under this Agreement shall be payable not less
frequently than monthly in accordance with Fountain's payroll policies and
procedures.
(b) Bonus. Fountain shall pay to Employee an annual bonus equal to
one percent (1%) of Fountain's pre-tax profits from continuing operations
before other bonuses, and computed on the same standard as X. X. Xxxxxxxx,
Xx.'s bonus, which shall be payable within thirty (30) days following the
completion of (i) the annual fiscal year-end audit of Fountain's financial
statements and (ii) Fountain's annual filing on Form 10-K with the Securities
and Exchange Commission for the applicable fiscal year. Such bonus shall be
forfeited if Employee voluntarily resigns pursuant to Paragraph 11(a) below or
is terminated with "Cause" pursuant to Paragraph 11(c) below; in the case of
termination without "Cause" as defined in Paragraph 11 below, the bonus shall
be prorated on a calendar day basis (365 days) for the portion of the then
current fiscal year during which Employee was employed by Fountain.
(c) Incentive Stock Options. Subject to approval by the
shareholders of FPBI within one (1) year of the Effective Date of this
Agreement, FPBI shall grant to Employee incentive stock options to acquire
thirty thousand (30,000) shares of FPBI's common stock at the closing market
price for such stock as quoted on NASDAQ on the Effective Date of this
Agreement ($ ), which options shall vest and become exercisable over a five
(5) year period at the rate of six thousand (6,000) optioned shares per year,
with the first increment of options becoming vested and exercisable on
June 30, 1999, and subsequent increments of options to become vested and
exercisable on June 30 of each successive year. An appropriate adjustment
shall be made by FPBI as to the amount of such incentive stock options
simultaneously with the effectiveness of any stock split, stock dividend, or
other change affecting the number of shares of FPBI's common stock. The
vesting of such options shall be contingent upon Employee's continued
employment, subject to the provisions of Paragraph 11 of this Agreement.
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Options shall become immediately exercisable when vested and must be exercised
within 10 years from the date of grant or shall be forfeited, null and void.
Options granted shall not be assignable or transferable except by will or by
the laws of descent and distribution and, during the lifetime of Employee, may
be exercised only by him. In the event Employee's employment is terminated
pursuant to Paragraph 11 below, such options shall vest and become exercisable
according to the provisions of Paragraph 11. The grant of stock options to
Employee pursuant to this Agreement shall be in addition to any other stock-
based compensation plans of Fountain, if any, in which Employee becomes
eligible to participate.
FPBI, by and through its Chairman and Chief Executive Officer and
the concurrence of its Directors, agrees to present for shareholder
consideration and approval an incentive stock option plan authorizing the
grant of such incentive stock options to Employee, and X. X. Xxxxxxxx, Xx.,
FPBI's Chairman, President and Chief Executive Officer, agrees to vote his
shares of FPBI in favor of said plan.
(d) Annual Performance and Financial Review. Within thirty (30)
days following the completion of (i) the annual fiscal year-end audit of
Fountain's financial statements and (ii) Fountain's annual filing on Form 10-K
with the Securities and Exchange Commission for the applicable fiscal year,
Fountain shall conduct a review of Employee's performance during the past
fiscal year and his financial compensation and benefits, and Fountain shall
make, in its discretion, any such adjustments to such compensation and
benefits as it may deem reasonable and appropriate.
(e) Taxes; Withholdings. All cash compensation payable under this
Agreement shall be subject to applicable withholding taxes and such other
employment taxes as are required by law.
(f) Moving Expenses. Fountain shall reimburse Employee for moving
expenses involved in the relocation of Employee and his family from their
current residence to a location in or near Washington, North Carolina;
provided, however, that such reimbursement of Employee's moving expenses shall
be limited to the actual cost to Employee of packing fees, transportation
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costs, and out-of-pocket expenses, not to exceed an aggregate reimbursement of
Fifteen Thousand Dollars ($15,000); provided, however, that such amount shall
not include reimbursement of the transportation costs to relocate Employee's
currently-owned 32' boat to the Washington, North Carolina area, and Fountain
shall provide additional reimbursement to Employee for such boat relocation
expense. Employee shall provide to Fountain reasonable documentation, in a
form acceptable to Fountain, for all such moving and relocation expenses in
order to obtain reimbursement from Fountain.
(g) Participation in Boat Testing Program. Employee shall be
entitled during the Term of Employment to the reasonable use of a Fountain
boat and to participate in Fountain's Boat Testing Program, subject to
Fountain's normal policies, guidelines and safety procedures for the Program.
4. Leave and Other Benefits. Employee shall be eligible for such
leave and other benefits as are generally available to and which cover
Fountain's executive officers at Employee's job level or classification,
subject to the rules applicable to such plans or programs prevailing from time
to time. Except as otherwise specifically provided herein, Employee's
participation in such plans and programs shall be subject to and in accordance
with the terms and conditions (including eligibility requirements) of such
plans and programs, resolutions of Fountain's Board of Directors establishing
such programs and plans, and Fountain's normal practices and established
policies regarding such plans and programs.
5. Adjustment to Compensation or Benefits. No adjustment to
compensation, nor any addition to or modification or termination of the leave
or other benefits provided to Employee under this Agreement, shall affect the
other provisions of this Agreement.
6. Expenses. Upon presentation to Fountain of expense reports in
sufficiently detailed form to comply with standards for deductibility of
business expenses established from time to time by the Internal Revenue
Service, Fountain will reimburse Employee for all reasonable business expenses
incurred by Employee in connection with performance of his duties hereunder.
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Such expenses will be submitted for reimbursement and paid in accordance with
Fountain's standard policies and procedures for reimbursement of business
expenses.
7. Facilities and Services. Fountain shall furnish Employee with such
facilities and services as are suitable to Employee's position and necessary
for the performance of Employee's duties hereunder. All files, records, and
documents generated, produced, or maintained by Fountain, by Employee, or by
any other employee of Fountain during Employee's employment hereunder shall be
and remain the sole and exclusive property of Fountain.
8. Ownership of Inventions, Etc. Employee promptly and fully shall
disclose and shall assign and transfer to Fountain, its successors and
assigns, the entire right, title, and interest in and to any invention,
product, process, apparatus, improvement, or design, patentable or
unpatentable, invented, discovered, conceived, developed, or originated by
Employee, individually or jointly, during the term of Employee's employment
with Fountain and (i) relating to Fountain's Business or any actual or
anticipated research or development of Fountain (including, without
limitation, the production of any product manufactured, distributed, marketed,
sold, used, or in the process of being developed by Fountain or by any parent
or affiliate of Fountain, or which may be manufactured, distributed, marketed,
sold, or used in competition with any such product) or (ii) resulting from any
work performed by Employee for Fountain (including, without limitation, any
invention, product, process, apparatus, improvement, or design invented,
discovered, conceived, developed, or originated by Employee (A) during
Employee's work time with Fountain or (B) with Fountain's equipment, supplies,
facilities, or trade secret information) (collectively, the "Inventions").
All such Inventions shall be and remain the sole property of Fountain. Such
assignment shall include the right to obtain letters patent or design patents,
in the name of Employee or otherwise, on such Inventions in the United States
or in any foreign countries. Employee agrees to execute all documents and to
make all oaths and declarations necessary for the filing and/or prosecution of
any applications for such letters patent or design patents, or any divisions,
continuations, continuations in part, renewals, or reissues thereof, and to
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execute on request all documents necessary to assign such Inventions to
Fountain. The requirement of disclosure shall apply to all inventions,
products, processes, apparatuses, improvements, and designs, including those
asserted by Employee to be nonassignable hereunder, for the purpose of
determining the rights of Employee and Fountain therein. This paragraph shall
apply only to the extent not prohibited or limited by state or federal law.
9. Noncompetition; Confidentiality. Fountain and Employee acknowledge
that during the course of Employee's employment with Fountain, Employee shall
be given access to and shall develop names, contacts at, and addresses of, the
dealers, customers, and prospective customers for the purposes of furthering
Fountain's Business, and that Employee will be responsible for and will
participate in the development of Fountain's Business (whether through the
conception, invention, or development of any Inventions; through planning,
marketing, customer and prospective customer relations, construction,
distribution, sales, servicing, or management; or otherwise). Fountain and
Employee also acknowledge that Fountain will spend considerable amounts of
time, effort, and corporate resources in providing Employee with knowledge
relating to Fountain's Business, including but not limited to patents,
proposed patents, copyrights, trade secrets, inventions, proprietary
information, designs, specifications, blueprints, project notes, finances,
dealers, customers, customer lists, customer information (including, without
limitation, requirements and preferences) prospective customers, plans,
concepts, ideas, methods, analyses, marketing investigations, strategies,
proposals, surveys, and research, in whatever form, (collectively, the
"Information"), which Information Fountain has a right to regard as
confidential and to protect from disclosure.
To protect Fountain from Employee's use or exploitation of such
Information, and to provide reasonable assurance to Fountain that it safely
may provide Employee with information relating to the dealers, customers, and
prospective customers and with other information relating to Fountain's
Business, Employee covenants and agrees as follows:
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(a) Covenant of Nonsolicitation and Noncompetition. During the term
of his employment with Fountain and for a period of one (1) year following the
termination of such employment for any reason ("Restriction Period"), Employee
shall not directly or indirectly, either for himself or for any other person
or entity, other than on behalf of Fountain, without the prior written consent
of Fountain (which consent may be withheld in Fountain's sole discretion):
(i) solicit or accept any business related or similar to
Fountain's Business from any person or entity who or which was or is a dealer
or customer during Employee's employment with Fountain, or, if Employee's
employment with Fountain has terminated, during the twenty-four (24) months
immediately preceding the termination of Employee's employment with Fountain
(a "Serviced Customer");
(ii) solicit or accept any business related or similar to
Fountain's Business from any person or entity who or which was or is a
prospective dealer or customer (a "Prospective Customer") and (A) in whom or
which Fountain or any of the principals, shareholders, directors, officers, or
employees of Fountain, had or has invested a reasonable amount of time or
company resources in an effort to secure such Prospective Customer's business,
and (B) with whom or which Employee had or has had contact by virtue of his
employment with Fountain, during Employee's employment with Fountain or, if
Employee's employment with Fountain has terminated, during the twenty-four
(24) months immediately preceding the termination of Employee's employment
with Fountain;
(iii) divert or attempt to divert any dealer, customer, or
prospective customer or, if Employee's employment with Fountain has
terminated, divert or attempt to divert any Serviced Customer or Prospective
Customer, to any person or entity competitive with Fountain;
(iv) engage as an owner, partner, shareholder, member,
director, manager, employee, agent, consultant, or otherwise, or assist any
person or entity in any way, in any activity performed in his capacity as an
Employee of Fountain, in any business related or similar to Fountain's
Business; or,
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(v) employ, or seek to employ, any employee of Fountain or
induce any such person to leave Fountain's employment; in any of the following
areas ("Market Area"):
(A) Beaufort County, North Carolina;
(B) Any county of North Carolina contiguous to Beaufort
County in which Fountain engages in Fountain's Business or in which Fountain
has contacted, solicited, or accepted business from a dealer, customer, or
prospective customer;
(C) Any county in North Carolina in which Fountain engages
in Fountain's Business or in which Fountain has contacted, solicited, or
accepted business from a dealer, customer, or prospective customer;
(D) Within a fifty (50)-mile radius of a dealer of
Fountain boats in any other state in the United States or in which Fountain
engages in Fountain's Business or in which Fountain has contacted, solicited,
or accepted business from a dealer, customer or prospective customer;
(E) Within a fifty (50)-mile radius of a dealer of
Fountain boats in any other country or territory or in which Fountain engages
in Fountain's Business or in which Fountain has contacted, solicited, or
accepted business from a dealer, customer, or prospective customer.
By listing the specific geographic areas described above, it is the
intent of the parties to list areas in which Fountain is or is expected to be
engaging in Fountain's Business on its own behalf or through its dealers.
(b) Covenant of Nondisclosure. Employee shall not at any time,
either during the term of his employment with Fountain or at any time
following the termination of his employment with Fountain for any reason:
(i) divulge, disclose, or communicate to any person or entity
the names of, contacts at, or addresses of any Serviced Customers or
Prospective Customers; or,
(ii) divulge, disclose, or communicate to any person or entity
any confidential information of any kind, nature, or description concerning
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any matters affecting or relating to Fountain's Business, including but not
limited to the Information; provided, however, that during the term of his
employment, Employee may disclose such information to dealers, customers,
prospective customers, or fellow employees, for the limited purpose of
performing his job duties, to the extent authorized by Fountain; or,
(iii) use the Information to the detriment of Fountain or
Fountain's Business, or the principals, shareholders, officers, directors, or
employees thereof, particularly in any manner competitive with Fountain or
Fountain's Business, in any unlawful manner, or to interfere with or attempt
to terminate or otherwise adversely affect any business relationship of
Fountain with any Serviced Customer or Prospective Customer.
Employee acknowledges that all books, records, files, forms, lists,
reports, accounts, and any other documentation relating in any manner to the
Serviced Customers and the Prospective Customers, or Fountain's Business,
whether prepared by Employee or anyone else and in whatever form, are the
exclusive property of Fountain and shall be returned immediately to Fountain
upon the termination of Employee's employment for any reason or upon
Fountain's request at any time.
(c) Reasonableness of Restrictions. If any of the restrictions set
forth in this Paragraph 9 shall be declared invalid for any reason whatsoever
by a court of competent jurisdiction, the validity and enforceability of the
remainder of such restrictions shall not thereby be adversely affected.
Employee acknowledges that Fountain has a legitimate economic interest in
those geographic areas which this Paragraph 9 specifically is intended to
protect, and that the Market Area and Restriction Period are limited in scope
to the geographic territory and period of time reasonably necessary to protect
Fountain's economic interest and otherwise are reasonable and proper. In the
event the Restriction Period or any other such time limitation is deemed to be
unreasonable by a court of competent jurisdiction, Employee hereby agrees to
submit to such reduction of the Restriction Period as the court shall deem
reasonable. In the event the Market Area is deemed by a court of competent
jurisdiction to be unreasonable, Employee hereby agrees that the Xxxxxx Xxxx
00
shall be reduced by excluding any separately identifiable and geographically
severable area necessary to make the remaining geographic restriction
reasonable, but this Paragraph 9 shall be enforced as to all other areas
included in the Market Area which are not so excluded.
(d) Remedies for Breach. Employee understands and acknowledges
that a breach or violation by him of any of the covenants contained in
Paragraph 9 shall be deemed a material breach of this Agreement and will cause
substantial, immediate, and irreparable injury to Fountain, and that Fountain
will have no adequate remedy at law for such breach or violation. In the
event of Employee's actual or threatened breach or violation of the covenants
contained in Paragraph 9, Fountain shall be entitled to bring a civil action
seeking, and shall be entitled to, an injunction restraining Employee from
violating or continuing to violate such covenant or from any threatened
violation thereof, or for any other legal or equitable relief relating to the
breach or violation of such covenant. Employee agrees that, if Fountain
institutes any action or proceeding against Employee seeking to enforce any of
such covenants or to recover other relief relating to an actual or threatened
breach or violation of any of such covenants, Employee shall be deemed to have
waived the claim or defense that Fountain has an adequate remedy at law and
shall not urge in any such action or proceeding the claim or defense that such
a remedy at law exists. However, the exercise by Fountain of any such right,
remedy, power, or privilege shall not preclude Fountain or its successors or
assigns from pursuing any other remedy or exercising any other right, power,
or privilege available to it for any such breach or violation, whether at law
or in equity, including the recovery of damages, all of which shall be
cumulative and in addition to all other rights, remedies, powers, or
privileges of Fountain.
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Notwithstanding anything contained herein to the contrary,
Employee agrees that the provisions of Paragraphs 9(b) and 9(c) above and the
remedies provided in this Paragraph 9(d) for a breach by Employee shall be in
addition to, and shall not be deemed to supersede or to otherwise restrict,
limit or impair the rights of Fountain under any state or federal law or
regulation dealing with or providing a remedy for the wrongful disclosure,
misuse or misappropriation of trade secrets or other proprietary or
confidential information.
(e) Survival of Covenants. Employee's covenants and agreements and
Fountain's rights and remedies as provided in this Paragraph 9 shall survive
and remain fully in effect following expiration of the Term of Employment or
any actual termination of Employee's employment with Fountain during the Term
of Employment.
10. Change in Control.
(a) In the event of a termination of Employee's employment in
connection with, or within twenty-four (24) months after, a "Change in
Control" (as defined in Subparagraph (d) below) of Fountain or FPBI, other
than for "Cause" (as defined in Paragraph 11 below), retirement, death or
disability, Employee shall be entitled to receive compensation as set forth in
Paragraph 10(c) below. Said sum shall be payable as provided in
Paragraph 10(e) below.
(b) In addition to any rights Employee might have to terminate this
Agreement as contained in Paragraph 11, Employee shall have the right to
terminate this Agreement upon the occurrence of any of the following events
(the "Termination Events") within twenty-four (24) months following a Change
in Control of Fountain or FPBI:
(i) Employee is assigned any duties and/or responsibilities
that are inconsistent with his position, duties, responsibilities or status at
the time of the Change in Control; or,
(ii) Employee is not paid an annual Base Salary rate at or
above the rate established by the terms of Paragraph 3 of this Agreement; or,
(iii) Employee's life insurance, medical or hospitalization
insurance, disability insurance, stock options, stock purchase plans, deferred
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compensation plans, management retention plans, retirement plans, or similar
plans or benefits, if any, being provided by Fountain or FPBI to Employee as
of the effective date of the Change in Control are reduced in their level,
scope, or coverage, or any such insurance, plans, or benefits are eliminated,
unless such reduction or elimination applies proportionately to all salaried
employees of Fountain or FPBI who participated in such benefits prior to such
Change in Control; or,
(iv) Employee is transferred to a geographic location which is
an unreasonable distance from his current (at the time of the Change of
Control) principal work location, without Employee's express written consent.
A Termination Event shall be deemed to have occurred on the date
such action or event is implemented or takes effect.
(c) In the event that Employee terminates this Agreement pursuant
to this Paragraph 10, Fountain will be obligated to pay or cause to be paid to
Employee an amount equal to the compensation that Employee would have been
entitled to receive hereunder and which remains unpaid at the date of such
termination not to exceed two (2) years of Base Salary at the time of the
Change of Control.
(d) For the purposes of this Agreement, the term "Change in
Control" shall mean any of the following events:
(i) After the Effective Date of this Agreement, any "person"
(as such term is defined in Paragraphs 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended), directly or indirectly, acquires beneficial
ownership of voting stock, or acquires irrevocable proxies or any combination
of voting stock and irrevocable proxies, representing forty-five percent (45%)
or more of any class of voting securities of either Fountain or FPBI, or
acquires control in any manner of the election of a majority of the directors
of either Fountain or FPBI, provided, however, that the provisions of this
subparagraph shall not apply to X. X. Xxxxxxxx, Xx., his estate, his heirs,
members of his family, his testamentary beneficiaries, or any trusts or other
entities created for the benefit of the family of X. X. Xxxxxxxx, Xx.; or,
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(ii) Either Fountain or FPBI consolidates or merges with or
into another corporation, association, or entity, or is otherwise reorganized,
where neither Fountain nor FPBI nor an entity controlled by X. X. Xxxxxxxx,
Xx. having more than forty-five percent (45%) of the vote for directors is the
surviving corporation in such transaction; or,
(iii) All or substantially all of the assets of either Fountain
or FPBI are sold or otherwise transferred to or are acquired by any other
corporation, association, or other person, entity, or group except an entity
controlled by X. X. Xxxxxxxx, Xx. having more than forty-five percent (45%) of
the vote for directors.
Notwithstanding the other provisions of this Paragraph 10, a
transaction or event shall not be considered a Change in Control if, prior to
the consummation or occurrence of such transaction or event, Employee, FPBI,
and Fountain agree in writing that the same shall not be treated as a Change
in Control for purposes of this Agreement.
(e) Such amounts payable pursuant to this Paragraph 10 shall be
paid, at the sole option of Employee, either in one lump sum, discounted at an
appropriate rate of interest, or in equal monthly payments over the remaining
term of the Agreement.
(f) Following a Termination Event which gives rise to Employee's
rights hereunder, Employee shall have one (1) month from the date of
occurrence of the Termination Event to terminate this Agreement pursuant to
this Paragraph 10. Any such termination shall be deemed to have occurred only
upon delivery to Fountain (or to any successor corporation) of written notice
of termination which describes the Change in Control and Termination Event.
If Employee does not so terminate this Agreement within such one month period,
he shall thereafter have no further rights hereunder with respect to that
Termination Event, but shall retain rights hereunder, if any, with respect to
any other Termination Event as to which such period has not expired.
(g) It is the intent of the parties hereto that all payments made
pursuant to this Agreement be deductible by Fountain for federal income tax
purposes and not result in the imposition of an excise tax on Employee.
Notwithstanding anything contained in this Agreement to the contrary, any
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payments to be made to or for the benefit of Employee which are deemed to be
"parachute payments" as that term is defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"), shall be modified or reduced to
the extent deemed to be necessary by Fountain (or of its successor in
interest) to avoid the imposition of excise taxes on Employee under
Section 4999 of the Code and the disallowance of a deduction to Fountain (or
of its successor in interest) under Section 280G of the Code.
11. Termination and Termination Pay.
(a) By Employee. Employee's employment under this Agreement may be
terminated at any time by Employee upon sixty (60) days written notice to
Fountain. Upon such termination, Employee shall be entitled to receive his
normal Base Salary compensation through the effective date of such
termination. Any outstanding vested, unexercised options granted to Employee
pursuant to Paragraph 3 must be exercised by Employee prior to the applicable
expiration date of such options, at which time any remaining unexercised
options shall be forfeited, expired, null and void; and Employee's right to
receive any further options that have not vested as of the termination date
shall immediately be terminated, null, void, and of no further force or
effect.
(b) Death or Retirement. Employee's employment under this
Agreement shall be terminated upon his death during the Term of Employment or
upon the effective date of Employee's retirement with Fountain's consent or
under the terms of Fountain's retirement plan. Upon any such termination,
Employee (or, in the case of Employee's death, his estate) shall be entitled
to receive any compensation Employee shall have earned prior to and through
the month of the date of termination and shall be entitled, through the
applicable expiration date of such options, to exercise any options granted
pursuant to Paragraph 3 that have become fully vested, plus any options
Employee would have received for that year, all as of the termination date.
(c) By Fountain for Cause. Fountain may terminate Employee's
employment at any time during the Term of Employment for "Cause" (as defined
below). Upon any such termination by Fountain under this Paragraph 11(c),
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Employee shall have no further rights under this Agreement (including any
right to receive compensation or other benefits for any period after such
termination) and shall be entitled only to his Base Salary through the
effective date of termination. Any vested, unexercised stock options granted
to Employee pursuant to Paragraph 3 which remain outstanding and in effect and
all unvested stock options shall immediately terminate and be of no further
force or effect as of the effective date of such termination of employment for
Cause.
Notwithstanding anything contained herein to the contrary, before
Fountain may terminate Employee's employment for a Cause described in
Paragraph 11(c)(i) below, Fountain first shall give Employee seven (7)
calendar days written notice of the facts or circumstances constituting such
Cause for termination and if, during such period, Employee shall cure such
Cause to the reasonable satisfaction of Fountain, then Employee's employment
may continue in the discretion of Fountain; provided, however, that, in the
event of any reoccurrence or further occurrence of the same Cause, Fountain
shall have no obligation to give Employee any further or additional notice or
opportunity to cure such Cause prior to the termination of Employee's
employment. Except as specifically provided above, no such notice or
opportunity to cure shall be required in the case of termination of Employee's
employment for any Cause. For purposes of this Paragraph 11(c), Fountain
shall have "Cause" to terminate Employee's employment upon:
(i) A determination by Fountain, in good faith, that Employee
(A) has breached in any material respect any of the terms or conditions of
this Agreement, any Fountain policy, discriminated against any employee,
customer, or other person covered by any anti-discrimination laws,
regulations, or policies; (B) has failed in any material respect to perform or
discharge his duties or responsibilities of employment in the manner provided
herein; or (c) is engaging or has engaged in conduct involving moral
turpitude, willful misconduct, or conduct which is detrimental in any material
respect to the business prospects of Fountain or which has had or likely will
have a material adverse effect on Fountain's Business or reputation;
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(ii) The commission in the course of Employee's employment
with Fountain of an act of fraud, embezzlement, theft, or personal dishonesty
(whether or not such act or charge results in criminal indictment, charges,
prosecution, or conviction);
(iii) The unauthorized use of alcohol by Employee during
working hours or any use of alcohol by Employee during nonworking hours that
adversely affects his job performance, his ability to fulfill the
responsibilities of his position, or the safety of himself or others at the
workplace; or,
(iv) Employee's use of any controlled substance, as defined at
21 U.S.C. 802 and listed on Schedules I through V of 21 U.S.C. 812, as
revised from time to time, or as defined by any other federal or state law or
regulation.
(d) By Fountain without Cause. Fountain and Employee agree that
notwithstanding anything contained herein to the contrary, Employee is an "at
will" employee, and Fountain may terminate Employee's employment at will and
without "Cause" at any time during the Term of Employment. Upon any such
termination by Fountain under this Paragraph 11(d), Employee's rights under
this Agreement (including his right to receive compensation or other benefits
for any period after such termination) shall be limited to the right to
receive nine (9) months of Base Salary only, without any incentive
compensation (except stock options granted in Paragraph 3 above, which shall
become vested and exercisable as set forth below) and with such bonus as may
be calculated and prorated pursuant to Paragraph 3(b) above on a calendar day
basis for the portion of the then current fiscal year during which Employee
was employed by Fountain. Fountain also shall provide outplacement services
to Employee, not to exceed Five Thousand and No/100 Dollars ($5,000.00) during
the twelve (12) months immediately following such termination without Cause,
and such employee benefits, if any, as required by applicable law.
If Employee's employment is terminated without Cause pursuant to
this Paragraph 11(d), Employee shall be entitled to exercise, through the
applicable expiration date of such options, all of his then outstanding
vested, unexercised stock options granted pursuant to Paragraph 3 above, plus
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a prorated portion of the options due to vest at the end of the current fiscal
year, prorated on a calendar day basis of 365 days, for the fiscal year in
which Employee's employment was terminated without "Cause" by Fountain, which
prorated options shall vest and become exercisable immediately and shall
remain exercisable through the applicable expiration date of such options,
after which all of such options shall be forfeited, terminated, null, void and
of no effect.
(e) Except as otherwise provided herein, upon the earlier of the
Expiration Date of the Term of Employment or the effective date of any actual
termination of Employee's employment with Fountain under this Agreement for
any reason, the provisions of this Agreement likewise shall terminate and be
of no further force or effect; provided, however, that Employee's covenants
contained in Paragraph 9 above, and Fountain's obligations for payment of cash
compensation under Paragraphs 11(a), 11(b), 11(c) and 11(d) above, shall
survive and remain in effect in accordance with their terms following the
Expiration Date or any actual termination of Employee's employment.
12. Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding
upon any corporate or other successor of Fountain which shall acquire,
directly or indirectly, by conversion, merger, consolidation, purchase, or
otherwise, all or substantially all of the assets of Fountain.
(b) Fountain is contracting for the unique and personal skills of
Employee. Therefore, Employee shall be precluded from assigning or delegating
his rights or duties hereunder without first obtaining the written consent of
Fountain.
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13. Modification; Waiver; Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the parties hereto. No waiver
by either party hereto, at any time, of any breach by the other party hereto
of, or compliance with, 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. No amendments or additions to this Agreement shall be binding unless in
writing and signed by both parties, except as herein otherwise provided.
14. Applicable Law. The parties hereto agree that without regard to
principles of conflicts of laws, the internal laws of the State of North
Carolina shall govern and control the validity, interpretation, performance,
and enforcement of this Agreement and that any suit or action relating to this
Agreement shall be instituted and prosecuted in the Courts of Beaufort County,
North Carolina, and each party hereto hereby does waive any right or defense
relating to such jurisdiction and venue, except to the extent that federal law
shall be deemed to apply.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
16. Headings. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
17. Notices. Except as otherwise may be provided herein, all notices,
claims, certificates, requests, demands, and other communications hereunder
shall be in writing and shall be deemed to have been duly given when hand
delivered or sent by facsimile transmission by one party to the other, or when
deposited by one party with the United States Postal Service, postage prepaid,
and addressed to the other party as follows:
If to Fountain: If to Employee:
Fountain Powerboats, Inc. Xxxxxxx X. Xxxxxxx
Post Office Drawer 457 __________________
Xxxxxxxxxx, XX 00000 __________________
Attention: X. X. Xxxxxxxx, Xx. (to be determined)
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Such notice shall be deemed to be received upon receipt or refusal, if
delivered by hand, or upon receipt or refusal as evidenced by the return
receipt therefor, if delivered by registered or certified mail.
18. Condition Precedent. This Agreement is subject to the condition
precedent that Employee must obtain from his current or former employer(s) and
deliver to Fountain an appropriate written release or written consent, in a
form satisfactory to Fountain and its attorneys, as to all covenants not to
compete and/or not to solicit that are, or may be, applicable to Employee and
that will, or may be, violated by Employee's employment with Fountain.
19. Entire Agreement. This Agreement contains the entire understanding
and agreement of the parties, and there are no agreements, promises,
warranties, covenants, or undertakings other than those expressly set forth or
referred to herein.
IN WITNESS WHEREOF, Fountain and FPBI each has caused this Agreement
to be executed by its respective duly authorized officer within the authority
duly given by its respective Board of Directors, and Employee has hereunto set
his hand and adopted as his seal the typewritten word "SEAL" appearing beside
his name, all as of the day and year first above written.
FOUNTAIN POWERBOATS, INC.
By:_______________________________
Title:____________________________
FOUNTAIN POWERBOAT INDUSTRIES, INC.
By:_______________________________
Title:____________________________
EMPLOYEE:
Xxxxxxx X. Xxxxxxx (SEAL)
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