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Exhibit 10.4
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") made
as of the 16th day of January, 1998, by and between DAY INTERNATIONAL, INC., a
Delaware corporation (the "Company") and XXXXXX X. XXXXXXX (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its
President and Chief Executive Officer pursuant to an employment agreement dated
as of October 21, 1997 (the "Prior Agreement");
WHEREAS, the Company is a wholly owned subsidiary of Day
International Group, Inc. (the "Parent");
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of December
18, 1997, as amended, among Greenwich IV, L.L.C., a Delaware limited liability
company, GSD Acquisition Corp., a Delaware corporation ("GSD"), and each of the
other persons named therein (the "Stock Purchase Agreement"), GSD purchased
substantially all the outstanding shares of Parent (the "Acquisition"); and
WHEREAS, the Company desires to secure the continued services of the
Executive, and the Executive desires to continue in the employment of the
Company, following the Acquisition, and in connection therewith, the Company and
the Executive desire to amend and restate the terms and provisions of the Prior
Agreement to, among other things, set forth the terms of such continued
employment;
NOW, THEREFORE, in consideration of the foregoing, and in
consideration of the covenants and agreements set forth herein, the parties
hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ the Executive, and he
agrees to serve the Company, on the terms and subject to the
conditions set forth herein, for a period commencing on the
date hereof (the "Effective Date") and continuing for a period
of five (5) years (the "Term"), unless terminated earlier as
provided herein; provided, however, this Agreement shall be
automatically renewed for successive one (1) year terms
thereafter, unless Company gives Executive at least sixty (60)
days notice of non-renewal prior to the end of said Term.
Should Company not renew at the end of the Term, or any
extension thereof, severance shall be payable to Executive as
set forth in Subsection 8(b)(iii)(C) of this Agreement. This
Agreement will continue to be operational in its entirety in
the event of a sale of the Company's stock, its assets, or any
other change of ownership or directorship.
2. SERVICES. The Executive shall serve in the capacity of
President and Chief Executive Officer of the Company, or in
such other capacity as mutually agreed in writing by the
parties, and shall have the duties and responsibilities
normally carried out by an executive in that capacity, subject
to the supervision and control of the
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Board of Directors of the Company. The Executive shall devote
his best efforts in all of his normal business time (vacations
and other leaves of absence permitted under the policies of
the Company excepted) to the business of the Company and to
faithfully, diligently, honestly and to the utmost of
Executive's ability performing all duties and responsibilities
as may be reasonably designated by the Board of Directors of
the Company from time to time.
3. COMPENSATION. During the Term and any extension thereof, the
Executive shall receive the following compensation:
(a) A base salary (per annum) at the rate set forth in
Exhibit A attached hereto (the "Base Compensation"), or
at a higher rate as may be increased from time to time
by the Board of Directors of the Company payable in
installments in accordance with the practice followed by
the Company for its executives;
(b) Annual executive incentive bonus compensation, which if
the Company performs at 100 percent of its annual plan
target, is at least equal to the amount set forth in
Exhibit A attached hereto, or at a higher rate as may be
increased from time to time by the Board of Directors of
the Company (the "Executive Incentive Bonus
Compensation"), payable not later than the end of the
first calendar quarter of the year following the year in
which earned, in conformity with the Company executive
incentive guidelines in effect on the Effective Date;
and
(c) Employee benefits and perquisites on terms and in
amounts no less favorable to Executive than applicable
under the policies and practices of the Company to its
executives on the Effective Date, including, but not
limited to, life insurance, long and short-term
disability benefits, health and prescription drug
benefits, defined contribution profit sharing, 401(k)
deferral and Company matching, tax and financial
planning, Company provided vehicle and parking,
vacation, and holidays.
4. CONFIDENTIALITY. During the term of Executive's employment
pursuant to this Agreement or any extension thereof, and for a
period of five (5) years after the termination of Executive's
employment with the Company, the Executive shall not (i)
disclose or make accessible to any unauthorized individual
Specialized Knowledge Information (as defined below) which he
shall have obtained during his employment by the Company and
which shall not be generally known or recognized as a standard
industry practice or information within the public domain,
other than by reason of the Executive's breach of this Section
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to the competitive disadvantage of the Company. "Specialized
Knowledge Information", for purposes of this Agreement,
comprises any proprietary or trade secret technical, economic,
financial or marketing information, business plans, customer
lists, sales plans, manufacturing plans, information relating
to product development, management organization
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information, or other information whether patented or not, on
processes, products, research, development, operations,
customers and equipment relating to the Company or its
subsidiaries, or other information designated as confidential
or proprietary that the Company or any of its subsidiaries
receives from suppliers, customers, or others who do business
with the Company or any of its subsidiaries.
5. NON-COMPETITION BY EXECUTIVE. During the Executive's term of
employment pursuant to this Agreement or any extension
thereof, and for a period of two (2) years after the
termination of Executive's employment with the Company (the
"Restriction Period"), the Executive agrees that he will not
accept employment by, or act as a consultant to, or become a
partner, principal or shareholder (other than a holder of less
than 1% of the outstanding voting shares of any publicly held
company) of, any direct competitor of the Company, or any firm
or corporation which, to the knowledge of the Executive,
intends to become such a direct competitor, or otherwise
engage in any business directly competitive with the Company
without first obtaining the written consent of the Company;
provided, however, that in the event the Company elects to
terminate this Agreement for any reason other than Cause (as
defined in Section 8), the Executive shall be released as of
the Termination Date (as defined in Section 8) from the
obligations of this Section 5.
6. NON-SOLICITATION OF EMPLOYEES OR CUSTOMERS. During the
Restriction Period, except in connection with the performance
of Executive's duties hereunder during the Term or any
extension thereof, Executive shall not directly or indirectly:
(a) Induce any employee of the Company or any of its
subsidiaries to terminate employment with such entity,
and shall not directly or indirectly, either
individually or as an owner, agent, employee, consultant
or otherwise, employ or offer to employ any person who
is, or was employed by the Company or any subsidiary
thereof, unless such person shall have ceased to be
employed by such entity for a period of at least six (6)
months.
(b) Solicit or otherwise attempt to establish for himself or
any other person, firm or entity, any business
relationship of a nature that is to the competitive
disadvantage of the Company with a business or
relationship of the Company or any of its subsidiaries,
with any firm, corporation or person which, during the
twelve (12) month period preceding the Termination Date
(as defined in Section 8), was a customer, client, or
distributor of the Company or its subsidiaries;
provided, however, that in the event the Company elects
to terminate this Agreement for any reason other than
Cause (as defined in Section 8), the Executive shall be
released as of the Termination Date from the obligations
of this Subsection 6(b).
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7. ARBITRATION OF CONFIDENTIALITY, COMPETITION, OR
NON-SOLICITATION. The determination that the Executive has
breached Sections 4, 5, or 6 of this Agreement and remedies
for such breach, if any, shall be determined by a neutral
party mutually agreed upon by the Company and the Executive,
and, failing such agreement, by arbitration pursuant to the
rules and procedures of the American Arbitration Association.
8. TERMINATION. The Executive and the Company may each terminate
this Agreement or any extension thereof at any time for any
reason by giving twenty (20) business days' prior written
notice to the other party. The termination shall become
effective upon the expiration of such twenty (20) day period
(the "Termination Date").
(a) If the Executive elects to terminate this Agreement or
any extension thereof, he shall not thereafter be
entitled to receive any payments under this Agreement
except his Base Compensation at the rate in effect on
the Termination Date paid through said Termination Date,
and his Executive Incentive Bonus Compensation, as if
100% of the annual plan target was met, calculated on a
pro-rata basis for the portion of the current annual
bonus period during which he was employed, plus, if
applicable, any Executive Incentive Bonus Compensation
amounts due and payable with respect to the prior year,
plus any accrued and unused vacation.
(b) If the Company elects to terminate this Agreement or any
extension thereof, the Executive shall be entitled to
receive the following compensation:
(i) Executive's Base Compensation at the rate in
effect on the Termination Date paid through said
Termination Date; and
(ii) Executive's Executive Incentive Bonus
Compensation, as if 100% of the annual plan target
was met, calculated on a pro-rata basis for the
portion of the current annual bonus period during
which he was employed, plus, if applicable, any
Executive Incentive Bonus Compensation amounts due
and payable with respect to the prior year, plus
any accrued and unused vacation; and
(iii) Either
(A) In the event that the Company terminates
this Agreement prior to the first
anniversary of the Effective Date, a lump
sum amount equal to the amount of three
(3) times the aggregate of the Executive's
Base Compensation and annual Executive
Incentive Bonus Compensation, as if 100%
of the annual plan target was met, payable
to the Executive as described in Section 3
of this Agreement; or
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(B) In the event that the Company terminates
this Agreement on or after the first
anniversary of the Effective Date, but
before the end of the Term, a lump sum
amount equal to two (2) times the
aggregate of Executive's Base Compensation
and annual Executive Incentive Bonus
Compensation, as if 100% of the annual
plan target was met, payable to the
Executive as described in Section 3 of
this Agreement; or
(C) In the event that the Company terminates
this Agreement or any extension thereof
on or after the end of the Term, a lump
sum amount equal to one (1) times the
aggregate of the Executive's Base
Compensation and Annual Executive Incentive
Bonus Compensation, as if 100% of the
annual plan target was met, payable to the
Executive as described in Section 3 of
this Agreement; and
(iv) Continuation of all benefits and perquisites, as
described in Section 3(c) for a period of one (1)
year, and thereafter, continuation of health and
Section 125 benefits under COBRA provisions, as
prescribed by the Company's group health benefits
plan.
(c) For purposes of Subsection 8(b) above, Executive shall
be deemed to have been terminated by the Company should
any of the following occur following the Effective Date:
(i) Failure to elect, reelect or otherwise maintain
the Executive in the office or position in the
Company which the Executive is currently holding,
or in a position substantially equivalent or
higher to which the Executive has agreed in
writing; or
(ii) Any action effecting a significant change in the
nature or scope of the business or other
activities for which the Executive was or is
responsible, a substantial reduction in any of the
authorities, powers, functions, responsibilities
or duties attached to the position held by the
Executive, or a significant hindrance to the
Executive's ability to perform his duties, any
which situation is not remedied within ten (10)
business days after written notice to the Company
from the Executive; or
(iii) Transfer of the Executive's office out of the
Dayton, Ohio, area; or
(iv) In the event of sale of the Company, either its
assets or capital stock or any other change in
control of the Company, the purchaser or new
directorship of the Company makes any substantial
reduction in the employee benefits package in
effect on the date of such sale.
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(d) Notwithstanding the foregoing, in the event the Company
elects to terminate the Executive for Cause (as defined
below), the Executive shall not thereafter be entitled
to receive any payments under this Agreement other than
his Base Compensation at the rate in effect on the
Termination Date paid through said date, plus any
accrued and unused vacation. For purposes of this
Agreement, "Cause" means:
(i) Executive's wilful and repeated failure to perform
substantially his duties as an employee hereunder,
including without limitation, Executive's wilful
and repeated failure to comply with reasonable and
lawful directives of the Board of Directors of the
Company (as set at any meeting of the Board of
Directors of the Company in accordance with the
Company's bylaws) (provided such directives are
consistent with the Executive's position);
(ii) Executive's conviction of, or the entering of a
plea of guilty or nolo contendere by Executive
to, a crime that constitutes a felony, or any
wilful or material violation by Executive of any
federal, state, or foreign securities laws;
(iii) Any conviction of any other criminal act or act of
material dishonesty, disloyalty or misconduct by
Executive (other than minor traffic offenses and
similar acts) that is materially injurious to the
property, operations, business or reputation of
the Company or any of its subsidiaries;
(iv) Failure to comply with the terms of any equity
plan, arrangement or agreement of the Company,
the Parent or their respective affiliates, in
which Executive is a participant or to which
Executive is a party; or
(v) The wilful and material breach by the Executive of
Sections 4, 5, or 6 of this Agreement.
(e) In the case of any termination of this Agreement or any
extension thereof due to a disability of the Executive
(the Executive is unable to perform the essential
functions of his position due to a disability of the
Executive which qualifies the Executive for disability
benefits under the Company's long term disability
benefits program), this Agreement shall terminate,
however, the payments to the Executive shall be made as
prescribed in Subsection 8(b), and shall not be reduced
or set off against any benefit(s) payable or accrued
under any disability or salary continuation benefits
that Executive is entitled to receive as a result of the
Company's disability benefits program(s) in place at the
time of the payment of the amounts payable under
Subsection 8(b).
(f) Notwithstanding anything to the contrary in this
Agreement, this Agreement shall be terminated by the
death of the Executive, in which case, the Company shall
pay to the estate of the Executive the following
amounts:
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(i) Executive's Base Compensation in effect on the
date of death payable through the date of death;
(ii) Executive's Executive Incentive Bonus
Compensation, as if 100% of the annual plan target
was met, on a pro rata basis for the portion of
the current annual bonus period during which he
was employed, plus, if applicable, any Executive
Incentive Bonus Compensation amounts due and
payable with respect to the prior year, plus any
accrued and unused vacation; and
(iii) Executive's life insurance benefit calculated on a
basis consistent with the employee benefits
described in Section 3(c) as well as any other
benefit afforded an employee of Company terminated
as a result of death.
(g) Any payments to be made to the Executive pursuant to
this Section 8 shall be paid within thirty (30) days of
the Termination Date. Payments paid after said thirty
(30) day period shall bear interest at a rate of 10% per
annum, compounded daily, until payments and interest are
paid in full.
9. WAIVER. The Executive agrees to waive the portion of his
compensation and benefits described in Section 8 that exceeds
299% of his "base amount" within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended,
(the "Code") in the event that payment of such compensation
and benefits is not approved by a vote of shareholders in
accordance with Section 280G(b)(5) of the Code, such vote to
be taken as soon as administratively practicable after the
Parent obtains the requisite consents from its bondholders to
the restructuring contemplated by the Interim Stockholders
Agreement, dated as of January 16, 1998, among Parent, GSD,
Greenwich IV LLC, and the other parties thereto.
10. TERMINATION OF MEMORANDUM OF AGREEMENT FOR SALES COMMISSION:
RELEASE. In consideration of the Company's payment to the
Executive of the sum set forth in Exhibit A attached hereto,
upon the closing of the transactions contemplated by the Stock
Purchase Agreement, the Executive hereby agrees that upon such
payment the Memorandum of Agreement for Sales Commission
dated as of October 15, 1997, between the Company and the
Executive (the "Sales Commission Agreement") shall terminate
in its entirety without any further liability or obligation on
the part of the Company, the Parent, or any of their
respective subsidiaries or affiliates. Further, from and after
the payment referred to in this Section 10, in consideration
of such payment, the Executive, on behalf of himself, his
agents, representatives, assigns, heirs, executors and
administrators (individually and collectively the "Releasor"),
hereby releases and forever discharges the Company, the
Parent, each of their respective subsidiaries and affiliates,
and each of their respective officers, directors, trustees,
employees, agents, representatives, successors and assigns
(individually and collectively the "Releasee") from and
against any and all claims, liabilities, obligations, demands
or causes of action, however denominated, whether known or
unknown, whether at law or equity, and whether or not
previously asserted, that the Releasor has or could have
against the Releasee for any
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sums owed or allegedly owed under the Sales Commission
Agreement or the termination of any alleged breach of the
Sales Commission Agreement.
11. NOTICES. All notices hereunder shall be in writing, and
delivered or mailed by registered or certified mail, return
receipt requested, to the following addresses:
(a) If to the Company, at its offices at:
X.X. Xxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000-0000
Attention: Corporate Secretary
with a copy to each of:
GSD Acquisition Corp.
x/x Xxxxxxxxx Xxxxxx Capital Partners, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, III
and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
(b) and if to the Executive, at the address set forth on the
signature page hereto,
or to such other address as the Company or the Executive may
hereinafter designate to the other in writing for such
purpose.
12. ASSIGNMENT AND SUCCESSORS. (a) This Agreement shall be
assignable by the Company, with the written consent of the
Executive, to any unaffiliated purchaser of substantially all
the assets and liabilities of the Company. Upon any such
assignment, the Company shall be released and fully discharged
from any and all obligations hereunder, and this Agreement
shall bind and run to the benefits of the assignee, which as
successor, shall thereafter be deemed to be the "Company" for
purposes of this Agreement.
(b) The Executive may not assign, pledge or encumber his
interest in this Agreement or any part thereof without
the express written consent of the Company, this
Agreement being personal to the Executive and the
beneficiaries designated by him.
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13. GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Ohio. The parties
agree that any arbitrations or court proceedings with regard
to this Agreement shall be held in Xxxxxxxxxx County, Ohio,
unless otherwise agreed to in writing by the parties.
14. PARTIAL INVALIDITY. If any provision of this Agreement is held
by a court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless
continue in full force and effect without being impaired or
invalidated in any way.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto with respect to the
matters addressed herein, and all prior negotiations,
understandings, representations, and agreements (including,
without limitation, the Prior Agreement), whether oral or
written, of any nature whatsoever, with respect to the terms
and conditions of employment that are the subject matter
hereof are merged herein and are hereby superseded. This
Agreement cannot be changed, modified or terminated unless in
writing and signed by the parties hereto.
16. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which
together shall be deemed to be one in the same instrument.
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IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer, have executed this Agreement on the day and year first above written.
DAY INTERNATIONAL, INC.
By:
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Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
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XXXXXX X. XXXXXXX
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
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EXHIBIT A
Base salary: $200,000/year
Annual executive incentive bonus if the
Company performs at 100% of the annual plan target: $200,000
Sales commission: $4,868,750
