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EXHIBIT 10.6
EXECUTIVE
EMPLOYMENT AGREEMENT
X. XXXXX
This Employment Agreement, is made and entered into as of May 11,
2001, between XXXXX & WESSON CORP., a Delaware corporation (the "Company"), and
XXXXXX X. XXXXX, an individual residing at 0000 X. Xxxxxxxxxx Xxxxx, Xxxxxx, XX
00000 ("Employee").
RECITALS:
A. Employee is and has been the President and a director of
the Company's parent corporation, Saf-T-Hammer Corporation, a Nevada
corporation ("SAF"), and SAF and the Company desire to have the continuing
benefit of Employee's knowledge, experience and services in the operation of
the Company; and
B. Employee's assistance to SAF and Employee's relationship
with the Company was instrumental in consummating SAF's acquisition of the
Company (the "Acquisition"); and
C. The Board of Directors of the Company considers sound and vital
management to be essential to the overall success of the Company and has decided
to employ Employee on the terms and conditions set forth herein.
AGREEMENT
In consideration of the covenants and agreements set forth herein
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following
terms shall have the meanings indicated:
1.1 Company means Xxxxx & Wesson Corp. or any successor
entity.
1.2 Company Board means the Company Board of Directors or the
Board of Directors of any successor entity of Company.
1.3 Effective Date. The Effective Date of this Agreement
is the date first set forth above.
1.4 Good Reason means the occurrence of any of the following
events to which Employee has not expressly agreed to in writing:
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a. A material reduction in Employee's base
salary as in effect on the Effective Date or renewal date of this
Agreement, whichever occurs later;
b. Employee's relocation, without his consent, to any
place other than within fifty (50) miles of Employee's address set
forth above or within twenty-five miles of the Company's principal
executive offices as of the Effective Date, except for required
travel by Employee on the Company's business to an extent
substantially consistent with Employee's business travel obligations
at the Effective Date; provided, however, that, if the Company Board
determines to relocate the Company's principal executive offices,
the Company shall pay all of Employee's reasonable moving and other
relocation expenses, and the Company Board shall make such
adjustments in Employee's salary as it reasonably deems necessary to
reflect the increase or decrease in costs of living in the new
location and Employee shall be obligated to perform his services
generally at such new location and such relocation shall not
constitute "Good Reason" hereunder;
c. The failure of the Company to obtain the
assumption of this Agreement by any successor, assignee,
affiliate, or parent of the Company;
d. Any purported termination of Employee's
employment with the Company, and with any affiliate or parent of
the Company, which is not effected pursuant to thirty (30) days
prior written notice of termination; and
e. Any material breach by the Company of any provision
of this Agreement which is not cured by the Company within thirty
(30) days written notice from Employee specifying the nature of such
breach.
1.5 Termination for Cause means the termination of employment
of Employee by the Company Board because of Employee's personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty
involving personal profit, intentional failure to perform his stated
duties, willful violation of any material law, rule or regulation
resulting in a detriment to the Company or reflecting upon the Company's
integrity (other than traffic infractions or similar offenses) or a
material breach by Employee of any term of this Agreement and failure to
cure such breach within thirty (30) days after receipt of written notice
from the Company specifying the nature of such breach or to pay
compensation to the Company deemed reasonable by the Company if the breach
cannot be cured.
For purposes of this Agreement, Employee's termination of
employment shall not be considered to be a Termination for Cause unless
and until there shall have been delivered to Employee a copy of a
resolution, duly adopted by the affirmative vote of not less than 51% of
the entire membership of the Board at a meeting called and held for that
purpose after reasonable notice to Employee and an opportunity for him,
together with his counsel (if he elects to have counsel represent him), to
be heard, finding that, in
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the good faith opinion of the Board, Employee is guilty of misconduct of
the type described in this paragraph, and specifying the particulars
thereof in detail, which determination shall be subject to a complete and
de novo review as to reasonableness and good faith.
1.6 Total and Permanent Disability means an injury or illness
of Employee that prevents him from performing his customary duties and
which is expected to be of long continued and indefinite duration and that
has caused Employee's absence from service for at least sixty (60) days.
2. EMPLOYMENT. The Company hereby employs the Employee and
the Employee accepts employment on the terms and conditions set forth herein.
2.1 Term The term of this Agreement shall commence on the date
hereof and shall end on the close of business on the day before the second
anniversary of the date of commencement, unless terminated in accordance
with the provisions of Section 3 hereof. On and after the first
anniversary of the date of commencement, the term hereof shall be extended
automatically for an additional one (1) year on each anniversary date
hereof, unless prior to thirty (30) days before any such anniversary date
the Company Board decides to modify the term of, or to terminate in
accordance with the provisions of Section 3 of this Agreement.
2.2 Duties and Responsibilities. Employee shall serve as
President of the Company and be responsible for managing all of the
ongoing operations of the Company, such duties to include, maximizing the
efficiency of operations, reviewing the performance and compensation of
all personnel of the Company, attending meetings from time to time at the
headquarters of the Company of certain officers of the Company and at the
headquarters of SAF of its officers and directors.
2.3 Compensation. During the term of this Agreement and so
long as Employee's employment has not been subject to Termination for
Cause, he shall be entitled to the salary and other employment benefits
provided in this Section 2.3 notwithstanding the level of compensation or
benefits received by similarly situated employees. Employee shall be
entitled to an annual salary of no less than $240,000.00 payable pursuant
to the Company's employment compensation policy as may exist from time to
time, with increases as may be made from time to time in accordance with
the Company's regular salary administration practices as applied to
executive officers of the Company. Employee shall be entitled to
reimbursement for business expenses and automobile or other transportation
allowances on a basis no less favorable to Employee than in accordance
with the policy of the Company on the Effective Date. Except as expressly
set forth herein, Employee shall participate, consistent with past
practices, in any bonuses and awards under the management incentive
program maintained by the Company on the Effective Date. Employee shall
also be entitled to continuing participation, consistent with past
practices, in all other employee benefit plans and practices of the
Company in place on the Effective Date, including, without limitation,
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life, long-term disability and accident insurance, employee savings and
investment plans, stock plans, medical, dental, hospitalization and other
welfare benefit plans, and vacation plans, without any material reduction
in the value of the Company provided benefits. Notwithstanding the
foregoing, Employee agrees that he is not a participant in, is not a
beneficiary under, and has no rights with respect to that certain Xxxxx &
Wesson Corp. Severance Compensation and Extraordinary Bonus Plan (Revised
and Restated July 17, 2000).
2.4 Acquisition Bonus; Hiring Bonus; Non-Compete
Consideration. Upon the execution of this Agreement, Employee shall be
entitled to receive a payment in the amount of $300,000 and a Common Stock
Purchase Warrant to purchase 5,000,000 shares of the common stock of SAF,
substantially in the form attached hereto as Exhibit "A." The foregoing
consideration shall be compensation for Employee's role in the
Acquisition, consideration for the restrictions set forth in Section 4.1,
as well as a "hiring bonus."
3. TERMINATION. Employee's employment under this Agreement
shall terminate upon the occurrence of any one of the following events:
3.1 Total and Permanent Disability. In the event that Employee
suffers Total and Permanent Disability, the Company may terminate
Employee's employment, but shall be obligated to continue Employee's then
regular salary and continue his benefits hereunder for the balance of the
then-existing year term of employment. Employee agrees, in the event of
any dispute under this Section, to submit to a physical examination by a
licensed physician selected by the Company, the cost of such examination
to be paid by the Company, and the decision as to Employee's disability
shall be conclusive and binding upon the Company and Employee. Nothing
contained herein shall be construed to affect Employee's rights under any
disability insurance or similar policy, whether maintained by the Company,
Employee or another party.
3.2 Death. This Agreement shall terminate upon the death of
the Employee and no further liability to Employee or to Employee's estate
hereunder shall remain. Nothing contained herein shall be construed to
affect Employee's rights under any life insurance or similar policy,
whether maintained by the Company, or another party.
3.3 Termination for Cause. The Company may terminate
Employee's employment for cause. The Company shall have no further
obligation to pay salary or benefits hereunder after the date of any
Termination for Cause.
3.4 Good Reason. Employee may terminate Employee's employment
for Good Reason at any time during the term of this Agreement. In the
event Employee terminates his employment for Good Reason, or the Company
terminates Employee's employment "without cause", the Company shall
continue to be liable to Employee for
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the payment of Employee's compensation as set forth in Section 2.3 hereof
for either the balance of the full original term of the Agreement or for a
six-month period, whichever is longer.
4. COVENANT NOT TO COMPETE AND CONFIDENTIALITY.
4.1 Covenant Not to Compete. Employee shall not engage in any
business or perform any service, directly or indirectly, or have any
interest, whether as a proprietor, partner, employee, investor, principal,
agent, consultant, director or officer, in any enterprise which
manufactures guns or gun accessories for commercial purposes in the United
States or which is in competition with the business of the Company (i)
during the term of his employment, or (ii) two (2) years after the
termination of this Agreement; provided, however, that this Covenant Not
to Compete shall not apply if Employee's employment is terminated by the
Company without cause; or by Employee for Good Reason; or if Employee
makes himself available for employment by the Company at the end of the
term of this Agreement upon similar terms and conditions to those
contained herein and the Company thereupon refuses to employ Employee.
Nothing in this Section 4 shall be deemed to prohibit Employee from
purchasing less than five percent (5%) of the outstanding shares of any
corporation whose shares are traded on a national exchange and which, at
the time of purchase, is not engaged in competition with the Company.
If any court shall determine that the duration or geographical
limit of the foregoing restriction is unenforceable, it is the intention
of the parties that the foregoing restriction shall not be terminated but
shall be deemed amended to the extent required to render it valid and
enforceable, such amendment to apply only with respect to the operation of
this Section 4 in the jurisdiction of the court that has made the
adjudication.
4.2 Confidential Information. Employee acknowledges that he
has and will have access to trade secrets and confidential business
information of the Company and SAF throughout the term of this Agreement
and that any such trade secret or confidential information, regardless of
whether Employee alone or with others developed any such trade secret or
confidential information, shall be and shall remain the property of the
Company. During the term of this Agreement and after termination of
employment, Employee shall not, either voluntarily or involuntarily, on
either his own account, as a member of a firm, or on behalf of another
employer or otherwise, directly or indirectly use or reveal to any person,
partnership, corporation or association any trade secret or confidential
information of the Company, its parent, subsidiaries, or affiliates. Such
trade secrets shall include, but shall not be limited to, business plans,
marketing plans or programs, financial information, forecasts,
compensation arrangements, contracts (whether leases, financing
arrangements, or other contracts) customer lists, and business
opportunities. The term "trade secrets" shall not include information
generally available to the public or a governmental agency except such
term "trade secrets" shall include information provided to the Securities
and Exchange Commission or other governmental agency on a confidential
basis. Employee will not make available to any person,
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partnership, limited liability company, corporation or association, or
retain after termination of employment, any Company or SAF policy manuals,
contracts or other written materials.
4.3 Injunctive Relief. Employee acknowledges that the
restrictions contained in this Section 4 are a reasonable and necessary
protection of the immediate interests of the Company and SAF and that any
violation of these restrictions would cause substantial injury to the
Company and SAF. In the event of a breach or threatened breach by Employee
of these restrictions, each of the Company and SAF shall be entitled to
apply to any court of competent jurisdiction for an injunction restraining
Employee from such breach or threatened breach; provided, however, that
the right to apply for an injunction shall not be construed as prohibiting
either the Company or SAF from pursuing any other available remedies for
such breach or threatened breach.
5. BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of Employee, the Company and their respective heirs,
executors, administrators, successors and assigns; provided, however, that
Employee may not assign his rights hereunder without the prior written consent
of the Company and may not assign his obligations hereunder. The Company may
assign either its rights or obligations hereunder to any of its subsidiaries or
affiliated corporation or to any successor to substantially all of the assets or
business of the Company.
6. AMENDMENTS. This Agreement may not be amended, modified or
supplemented in any respect except by a subsequent written agreement executed
by the Company and Employee.
7. MISCELLANEOUS.
7.1 Entire Agreement. This Agreement rescinds and supersedes
any other agreement, whether oral or written, relating to Employee's
employment by the Company and SAF, including without limitation that
certain Employment Agreement between Employee and SAF (the "Prior
Agreement"), and contains the entire understanding between the parties
relative to the employment of Employee, there being no terms, conditions,
warranties, or representations other than those contained or referred to
herein, and no amendment hereto shall be valid unless made in writing and
signed by both of the parties hereto. As of the Effective Date, Employee
shall have no further rights, and the Company no further obligations,
under the Prior Agreement. Without limiting the generality of the
foregoing, Employee expressly acknowledges and agrees that the incentive
bonus set forth in Section 4 thereof is no longer in effect and that all
employee benefits set forth therein have been replaced by such benefits
provided by the Company hereunder.
7.2 Governing Law. This Agreement shall be interpreted
and construed in accordance with the laws of the State of Arizona as
applied to residents of Arizona without regard to conflicts of law
principles.
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7.3 Severability. In the event that any provisions herein
shall be legally unenforceable, the remaining provisions nevertheless
shall be carried into effect.
7.4 Attorneys' Fees. In the event of any litigation between
the parties hereto arising out of the terms, conditions and obligations
expressed in this Agreement, the prevailing party in such litigation shall
be entitled to recover reasonable attorneys' fees incurred in connection
therewith.
7.5 Notices. All notices required or permitted to be given
hereunder shall be deemed given if in writing and delivered personally or
sent by telex, telegram, telecopy, or forwarded by prepaid registered or
certified mail (return receipt requested) to the party or parties at the
following addresses (or at such other addresses as shall be specified by
like notices), and any notice, however given, shall be effective when
received:
To Employee:
Xxxxxx X. Xxxxx
0000 X. Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
To Company:
Xxxxx & Wesson Corp.
c/o SAF-T-HAMMER Corporation
00000 X. Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
7.6 Waiver. The waiver by any party of a breach of any
provision of this Agreement by the other shall not operate or be construed
as a waiver of any subsequent breach of the same provision or any other
provision of this Agreement.
7.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7.8 Headings. The subject headings to the sections in this
Agreement are included for purposes of convenience only and shall not
affect the construction or interpretation of any of its provisions.
7.9 Construction. Each party has had the opportunity to set
forth in this Agreement all matters related to the subject hereof. The
Company and Employee acknowledge the binding legal effect of this
Agreement, that this Agreement has been
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negotiated by the parties hereto and that each party has, to the extent
desired, sought legal counsel related to the terms, conditions and effect
of this Agreement.
7.10 Assistance in Litigation. Employee shall upon reasonable
notice, furnish such information and reasonable assistance to the Company
as it may reasonably require in connection with any litigation in which it
is, or may become, a party either during or after employment.
7.11 Limited Effect of Waiver by Company. Should the Company
waive breach of any provision of this Agreement by the Employee, that
waiver will not operate or be construed as a waiver of further breach by
the Employee.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first hereinabove written.
COMPANY:
XXXXX & WESSON CORP., a Delaware
corporation
By: /s/ Xxxxxxxx X. Xxxxx
----------------------------------------
Its: Executive Vice President
Attest: EMPLOYEE:
/s/ Xxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxx
---------------------- ----------------------------------------
Secretary Xxxxxx X. Xxxxx
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