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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement") made as of the 17th day of June, 1999,
between TBM Holdings, Inc., a Florida corporation with its principal offices
in Westport, Connecticut (the "Company"), and Xxxxxxx Xxxxxxxx, an individual
residing in Westport, Connecticut (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive is currently an owner and employee of TBM
Consulting Group, Inc., a North Carolina company ("Consulting") that provides
consulting and management services to manufacturing companies;
WHEREAS, the Company desires to retain the services of the Executive
and the Executive desires to be employed by the Company, for the term of this
Agreement upon the terms and conditions hereinafter described;
WHEREAS, Consulting does not object to the Executive's employment by
the Company and agrees to waive any conflicts-of-interest resulting therefrom
or agreements with respect to non-competition.
NOW THEREFORE, the parties agree as follows:
SECTION 1: EMPLOYMENT OF EXECUTIVE: DUTIES AND RESPONSIBILITIES
(1.1) Employment of Executive. The Company shall employ the Executive
and the Executive shall provide services to the Company subject to the terms
and conditions hereof.
(1.2) Term of Employment. The Executive's employment by the Company
hereunder shall be for the period commencing on June 17, 1999 and ending on
June 16, 2003 (as the
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same may be extended hereunder, the "Employment Period"), unless sooner
terminated pursuant to the provisions of Section 3.1 hereof. Thereafter,
unless either party gives notice to the contrary, the Employment Period shall
be automatically extended for a period of one year and shall be subject to
further such automatic extensions; provided, however, that not later than
sixty (60) days prior to the expiration of the Employment Period, either
party may give notice of non-extension to the other, in which case the
Employment Period shall not be extended and will terminate.
(1.3) Offices and Positions of Executive. During the Employment
Period, unless otherwise mutually agreed by the Company and the Executive,
the Executive shall be the President and Chief Operating Officer of the
Company.
(1.4) Duties and Responsibilities. During the Employment Period:
(a) The Executive shall perform customary duties and
responsibilities as are required by the By-laws of the Company together with
such other duties as the Board of Directors of the Company shall reasonably
assign to the Executive from time to time during the Employment Period.
(b) (i) During the period from the inception of this Agreement
until such time as the Company acquires its first manufacturing business in
accordance with the terms of the Business Plan prepared by Executive and
presented to the Company (the "Pre-Acquisition Period"), the Executive shall
spend approximately one-half of his business time to carrying out his duties
as President and Chief Operating Officer of the Company; provided, however,
that Executive shall spend at least 25 hours/week performing his duties for
the Company.
(ii) Thereafter (the "Post-Acquisition Period"), the
Executive shall devote his full business time to carrying out his
responsibilities as President and Chief Operating Officer of the Company
except as otherwise provided herein or as agreed by the parties. The
Executive
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covenants that during the Post-Acquisition Period his activities on behalf of
the Company shall be his primary business activity, involving all of his
working time during business hours, and that he will not be engaged as an
employee of any other business or company. If the initial acquisition is not
of sufficient size to justify full time involvement of the Executive, then
the working hours of the Executive will be adjusted accordingly. If at the
completion of the "Stabilize/Turnaround" phase of the Kaizen Growth Strategy,
the acquired manufacturing company has hired an operating President and Chief
Executive Officer and senior management team satisfactory to the Company's
Board of Directors and the Board of Directors determines that the acquired
manufacturing company is performing in accordance with the Business Plan and
the operating management team is capable of handling the operating and long
term strategic and growth needs of the business without the full time
assistance of the Executive, the Board of Directors may reduce the
Executive's time commitment at that time such that no less than one-half of
his business time will be carrying out the business of the Company and his
base salary will be reduced to 50% of his salary at that time reimbursed pro
rata to Consulting.
(c) The Executive will be able to spend such reasonable time as
is necessary to fulfill his board duties to Consulting and the Xxxxxxxxx Xxxx
Company as is not inconsistent with the foregoing paragraphs.
SECTION 2: COMPENSATION; REIMBURSEMENT; INDEMNIFICATION; BENEFITS
(2.1) Base Salary. During the Pre-Acquisition Period, the Company
shall reimburse Consulting for the Executive's salary in an amount equal to
One Hundred Thirty Thousand Dollars ($130,000) per annum plus 50% of the
Executive's benefits as set forth in Section 2.4 and Incentive Compensation.
During the Post-Acquisition Period, the Company shall pay to the Executive's
aggregate annual base salary (the "Base Salary") in an amount as may be from
time to time determined by the Board of Directors of the Company, but
(subject to the provisions of the next sentence) in no event at a rate of
less than Two Hundred Sixty Thousand Dollars ($260,000.00) per annum. If the
initial acquisition is not of sufficient size to justify the full time
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involvement of the Company, and the Executive's hours have been adjusted,
then his compensation shall be adjusted accordingly.
(2.2) Payment of Base Salary. Except as provided in Section 2.3
hereof, the Company shall pay the Base Salary due the Executive in equal
installments to be paid on at least a monthly basis less appropriate
withholding for federal taxes and deductions, and in accordance with the
policy of the Company as in effect from time to time for the payment of
salary to senior executive personnel.
(2.3) Incentive Compensation. In addition to the payment to the
Executive of the Base Salary and the other payments and benefits available to
the Executive under this Agreement, and except as otherwise provided in this
Section 2.3, as soon as reasonably possible after the last day of each fiscal
year during the term of the Employment Period, the Company's compensation
committee shall determine if to pay to the Executive incentive compensation
(the "Incentive Compensation") and the extent thereof.
(2.4) Other Benefits. The Executive shall be entitled to participate
in such employee benefits as are generally made available by the Company to
its key executive employees and as are more specifically provided in this
Agreement, which may include, without limitation, major medical, disability
coverage, sick pay benefits, vacation pay and participation in any retirement
plan or plans to the extent permitted by the terms thereof; provided,
however, that except as otherwise specifically provided in this Agreement the
Executive shall not be entitled to any performance related or any other
special compensation unless specifically authorized by the Company's Board of
Directors.
(2.5) Insurance.
(a) Keyman Life Insurance. In addition to any other payments or
benefits available to the Executive under this Agreement, during the
Employment Period the Company
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will arrange for the Executive to be covered at all times by, and shall pay
all premiums, on a policy or policies of life insurance on the life of the
Executive in the aggregate amount of Five Million Dollars ($5,000,000.00),
the disposition of the proceeds of which $5,000,000.00 shall be paid to the
Company.
(b) Other Insurance. The Executive shall be entitled to
participate in any Company major medical plan, business travel plan,
disability income plan and any other plan or insurance maintained by the
Company providing hospitalization, medical, disability or other similar
protection to the extent, in the manner, and according to the terms and
conditions applicable to senior executive personnel generally.
(2.6) Vacation. The Executive shall be entitled to a minimum of four
(4) weeks' paid vacation per year.
SECTION 3: TERMINATION OF EMPLOYMENT
(3.1) Termination of Employment Period. The Employment Period shall
terminate as provided in Section 1.2 or may terminate sooner as follows:
(a) Termination on Death. The Employment Period shall terminate
upon the death of the Executive.
(b) Termination by Company.
(i) Termination for Cause. The Company may terminate the
Employment Period for "cause" at any time upon ten (10) days' prior written
notice to the Executive stating the facts constituting such "cause." For the
purpose of this Section 3.1(b) the term "cause" shall mean gross incompetence,
gross negligence, gross insubordination, embezzlement, conviction of a felony
or any crime involving moral turpitude, willful misconduct of a material nature,
or any
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acts of fraud involving the Company or any acts that have a material adverse
effect on the reputation of the Company, by the Executive as determined in
good faith by the Board of Directors of the Company. In any such
determination, Executive shall not participate in the vote with respect
thereto.
(ii) Termination for Incapacity. The Company may
terminate the Employment Period if the Executive shall become mentally or
physically ill, disabled or otherwise incapacitated so as to render him
unable to perform substantially all of his duties hereunder for a period of
six (6) months during any twelve (12) month period by giving the Executive
thirty (30) days' prior written notice, subject to the Americans with
Disabilities Act.
(iii) Termination for Breach of Agreement. The Company may
terminate the Employment Period in the event of a breach by the Executive of the
terms and conditions hereof having a material adverse effect on the Company upon
thirty (30) days' prior written notice to the Executive stating the facts
constituting such breach, provided, however, that the Executive shall have ten
(10) days' after receipt by him of such notice to cure such state of affairs or
facts constituting a breach and thereby continue the Employment Period;
provided, however, that upon a subsequent substantially similar breach hereof by
the Executive, the Employment Period may be terminated by the Company without
affording the Executive an opportunity to cure.
(iv) Termination Without Cause. Exclusive of the
provisions of Sections 3.1(b)(i), (ii) and (iii) above, the Company may
terminate the Employment Period at any time by giving the Executive ninety
(90) days' prior written notice.
(3.2) Payments on Termination.
(a) Upon termination of the Employment Period by the Company for
the reasons stated in Section 3.1(b)(iv) hereof the Company shall continue to
pay to the Executive, for a period of one (1) year subsequent to such
termination, his Base Salary at the rate in effect at the
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time of such termination together with the benefits as are provided for in
Section 2.4 hereof (to the extent permitted under the terms of the plans and
applicable law). The Company shall continue to pay such amounts at the same
intervals as was the practice for the Company during the Employment Period.
(b) Upon any other termination of the Employment Period pursuant
to Section 3.1, the Company shall only be obligated to pay Executive amounts
accrued hereunder through the effective date of termination and Executive
will not be entitled to any severance payments.
(3.3) Change of Control. The Executive shall be entitled to terminate
his employment upon a change of control and shall be entitled to all of the
salary, benefits and other rights provided through this Agreement as though
the termination had been initiated by the Company without cause under Section
3.1(b)(iv) upon the occurrence of any of the following events: (a) the
acquisition after the beginning of the Employment Period in one or more
transactions, of beneficial ownership (within the meaning of Rule 13d-3(a)(1)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
by any person or entity (other than Executive or Chairman) or any group of
persons or entities (other than the Executive) who constitute a group (within
the meaning of Section 13d-5 of the Exchange Act) of any securities of the
Company such that as a result of such acquisition such person or entity or
group beneficially owns (within the meaning of Rule 13d-3(a)(1) under the
Exchange Act) more than 50% of the Company's then outstanding voting
securities entitled to vote on a regular basis for a majority of the Board of
Directors of the Company; or (b) the sale of all or substantially all of the
assets of the Company (including, without limitation, by way of merger,
consolidation, lease or transfer) in a transaction (except for a
sale-leaseback transaction) where the Company or the holders of common stock
of the Company do not receive (i) voting securities representing a majority
of the voting power entitled to vote on a regular basis for the Board of
Directors of the acquiring entity or of an affiliate which controls the
acquiring entity, or (ii) securities representing a majority of the equity
interest in the acquiring entity or of an affiliate that controls the
acquiring entity, if other than a corporation; provided, that if the
Executive becomes entitled to any payments (whether
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hereunder or otherwise) by reason of an event described in Internal Revenue
Code Section 280G (a "Parachute Event") that would constitute "excess
parachute payments" (as defined in Internal Revenue Code Section 280G) if
paid, then the Executive's entitlement to such payments shall be reduced by
such amount as will cause none of such payments to constitute excess
parachute payments, if, and only if, the net amount received by the Executive
by reason of the Parachute Event, after imposition of all applicable taxes
(including taxes under Internal Revenue Code Section 4999), would be greater
after such reduction than if such reduction were not made.
SECTION 4: ADDITIONAL COVENANTS
In consideration of the compensation, benefits and other accommodations
being extended by the Company to Executive in this Agreement, Executive
covenants and agrees with the Company as follows:
(4.1) Nondisclosure; New Developments.
(a) Executive covenants and agrees that except as specifically
required in the performance of his duties hereunder or as required by law,
and as shall be in the best interest of the Company, on and after the date
hereof, he will not disclose to any person or business entity, or use for his
personal benefit, gain or otherwise, any confidential or proprietary
information which he acquires or has acquired during his employment with the
Company, as to the financial position, business methods, systems, customers,
suppliers, techniques, development projects or results thereof, trade
secrets, inventions, knowledge and processes used or developed by the
Company, or any other proprietary or confidential information relating to or
dealing specifically with the Company. Excluded from Executive's obligations
of confidence is any part of such confidential information that can be
demonstrated to have been in the public domain prior to the date of this
Agreement. Upon termination of the Employment Period, Executive agrees to
deliver to the Company any drawings, documents, designs, records or other
written material regarding proprietary information of the Company then in his
possession. The foregoing shall be
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without prejudice to any rights or remedies of the Company under any state
law protecting trade secrets or information.
(b) Any discovery, invention, process, concept, work or
improvement made or discovered by the Executive while employed by the Company
in connection with or in any way affecting or relating to the business of the
Company (as then carried on or under active consideration) or capable of
being used or adapted for use therein or in connection therewith shall
forthwith be disclosed to the Company and shall belong to and be the absolute
property of the Company. The Executive, if and whenever required so to do by
the Company, shall at the expense of the Company apply or join with the
Company in applying for any applicable registration or protection in the
United States and in any other part of the world for any such discovery,
invention, process, concept, work or improvement and shall at the expense of
the Company execute all instruments and do all things necessary for vesting
such registration or protection in the Company absolutely and as sole
beneficial owner or in such other person as the Company may specify.
(4.2) Covenant Not To Compete. Executive covenants and agrees that
during the Employment Period, and for a period of two years following the
termination of the Employment Period, he will not directly or indirectly,
without the prior written consent of the Company, (i) engage directly or
indirectly for his own account or in any commercial capacity as an owner,
officer, director, partner, employee, consultant or representative of another
person or entity, within the continental United States, in any business
competitive with the business conducted by the Company at the time of
termination, or (ii) during the Employment Period and for a period of one (1)
year following the termination of the Executive's employment with the
Company, the Executive shall not solicit for employment, directly or
indirectly, any employee of the Company who was employed with the Company
within the one (1) year period immediately prior to such solicitation or
employment. This Section 4.2 shall not be applicable in the event that (x)
the Employment Period is terminated early by the Company, other than for
cause, or (y) the Employment Period is terminated by the Executive as a
result of material breach by the
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Company of its obligations hereunder. Notwithstanding anything to the
contrary contained herein, following the Executive's termination of
employment hereunder for any reason, the provisions of this Paragraph 4.2
shall not prohibit the Executive's re-employment by Consulting.
(4.3) Injunctive Relief. Executive acknowledges that any violation or
threatened violation of the provisions of Sections 4.1 or 4.2 will cause
irreparable injury to the Company, and the Executive hereby agrees that, in
addition to any other remedies available to Company, the Company shall be
entitled to temporary or permanent injunctive relief in connection with any
such violation or threatened violation.
SECTION 5: GENERAL PROVISIONS
(5.1) Non-Assignability. Neither this Agreement nor any obligation,
right or interest hereunder shall be assignable by the Executive, his
beneficiary or legal representatives without the prior written consent of the
Company; provided however, that nothing in this Section 4.1 shall preclude
the Executive from designating in writing a beneficiary or beneficiaries to
receive any compensation payable to him or any other benefit receivable by
him under this Agreement upon the death or incapacity of the Executive, nor
shall it preclude the executors, administrators or any other legal
representatives of the Executive or his Estate from assigning any rights
hereunder to the person or persons entitled thereto. Neither this Agreement
nor any right or obligation arising hereunder shall be assignable by the
Company, its successors, assigns, beneficiaries or legal representatives
either directly by assignment or by a merger, consolidation sale of assets or
other form of business combination, or disposition, without the prior written
consent of the Executive.
(5.2) Severability. This Agreement shall be deemed severable, and any
part hereof which may be held invalid by a court or other entity of competent
jurisdiction shall be deemed automatically excluded from this Agreement and
the remaining parts shall remain in full force and effect.
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(5.3) Merger. This Agreement contains the entire understanding of the
parties hereto and constitutes the only agreement between the Company and the
Executive regarding the employment of the Executive by the Company. This
Agreement supersedes all prior agreements, either express or implied, between
the parties hereto regarding the employment of the Executive by the Company.
(5.4) Amendment. None of the terms and conditions of this Agreement
shall be amended or modified unless expressly consented to in writing and
signed by each of the parties hereto.
(5.5) Binding Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs, other
legal representatives and permitted successors and assigns, as the case may
be.
(5.6) Governing Law. This Agreement shall be governed by and
construed under the internal laws of the State of Connecticut.
(5.7) Notices. All notices or other communications to be given by the
parties among themselves pursuant to this Agreement shall be in writing, and
shall be deemed to have been duly made if mailed by certified mail, hand
delivered or sent by overnight courier service to the Company at its
principal executive offices and to the Executive at his address as first set
forth above. Any of the parties hereto may change its respective address
upon written notice to the other given in the manner provided in this Section.
(5.8) Waiver. No waiver by any of the parties to this Agreement of
any condition, term or provision of this Agreement shall be deemed to be a
waiver of any preceding or subsequent breach of the same or any other
condition, term or provision hereof.
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(5.9) Arbitration. Except with respect to any injunctive relief
specifically provided for pursuant to this Agreement, any differences,
claims, or matters in dispute arising between the Executive and the Company
out of this Agreement or connected herewith shall be submitted to binding
arbitration under the commercial arbitration rules of the American
Arbitration Association or its successor and the determination of the
arbitrator shall be final and binding on the parties. The decision of the
arbitrator may be entered as a judgment in any court of the State of
Connecticut, or elsewhere.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as at the date and year first above written.
/s/Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
TBM HOLDINGS, INC.
By: /s/Xxxxx Xxxxxx
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Xxxxx Xxxxxx
Its Chief Executive Officer
Agreement and waiver acknowledged
this 17th day of June, 1999.
TBM CONSULTING GROUP, INC.
By: /s/Xxxxx Xxxxxx
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Xxxxx Xxxxxx
President
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