EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is hereby made and entered into
as of this 12th day of November, 1998, by and between XxXxxxxxx Technologies,
Inc., a Delaware corporation (the "Company"), and Xxxx X. Xxxxxxxxx (the
"Employee").
W I T N E S S E T H
WHEREAS, the Employee is currently employed by the Company as its Chief
Executive Officer;
WHEREAS, the Employee desires to resign from his duties and position as
Chief Executive Officer effective March 1, 1999 (the "Effective Date");
WHEREAS, the Employee possesses an intimate knowledge of the business and
affairs of the Company and its policies, procedures, methods and personnel; and
WHEREAS, the Company desires to secure the services and employment of the
Employee on behalf of the Company in such other capacities as the parties may
determine, and the Employee is willing to render such services on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. EMPLOYMENT TERM. Subject to the terms and conditions of this
Agreement, following his resignation as the Company's Chief Executive Officer,
Employee hereby agrees to remain in the employment of the Company, and the
Company hereby agrees to continue to employ Employee, for the period commencing
on the Effective Date and
ending on February 29, 2004 (the "Employment Term"). The term of this Agreement
shall be coincident with the Employment Term.
2. DUTIES.
(a) During the Employment Term, the Employee shall serve as an employee of
the Company in such capacities, offices or positions as may be mutually agreed
upon between the Company and the Employee. In such capacities, Employee agrees
to perform such duties, services and responsibilities incident to and consistent
with such position(s) as reasonably determined from time to time by the Board of
Directors of the Company (the "Board") and the Company's Chief Executive
Officer, including but not limited to, continuing involvement in such areas as
strategic planning, corporate development, and the colorant business.
(b) The Employee will devote the level of time to his employment that is
specified for the applicable time periods in Schedule A hereto. The Employee
will not, without the prior written approval of the Board, engage in any other
business activity that would reduce the number of such expected hours.
(c) Employee further agrees that, during the period beginning on the
Effective Date and ending on February 28, 2004, he will not accept full time
employment with another employer and will remain available to return to full
time employment with the Company as its Chief Executive Officer, and in such
additional offices or positions as the Employee and the Company may mutually
agree upon. Notwithstanding anything to the contrary in this Agreement whether
express or implied, Employee shall not be obligated to return to full time
employment with the Company after the Effective Date unless Employee and the
Company mutually agree on all of the relevant terms and conditions relating to
such full time employment, including compensation and other benefits. In the
event the parties fail to reach a mutually acceptable agreement regarding any
such requested return to full time
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employment, this Agreement and Employee's employment hereunder shall continue
in accordance with the remaining terms hereof.
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3. COMPENSATION AND CERTAIN BENEFITS.
(a) In consideration of the performance by Employee of his obligations
during the Employment Term, the Company will pay Employee a base annual salary
(the "Salary") at an annual rate set forth for each year during the Employment
Term as follows:
Period Annual Salary
3/1/1999 - 2/29/2000 $350,000.00
3/1/2000 - 2/28/2001 $250,000.00
During each of the remaining periods of the Employment Term, Employee's Salary
shall equal the annual compensation paid by the Company to its non-employee
directors (including, but not limited to, annual retainers, meeting fees, etc.).
Payments under this Section 3(a) shall be made in regular installments in
accordance with the Company's general payroll practices; provided that payments
under the preceding sentence shall be made at the same time or times as the
Company pays such compensation to its non-employee directors.
(b) On the date hereof, the Company will grant to Employee an award of
_____ restricted shares of Common Stock of the Company, pursuant to the
Company's 1996 Incentive Stock Plan (the "Plan"). The terms and conditions of
such restricted stock award shall be more fully set forth in a formal stock
award entered into between the Company and Employee substantially in the form
attached as Exhibit A hereto. Following the Company's fiscal year ending
October 31, 1999, Employee shall be considered an eligible participant in the
Plan and shall be entitled to receive an additional award of restricted shares
of Common Stock for that number of shares, if any, as may be determined by the
Board in its sole discretion.
(c) Employee shall be solely responsible for taxes imposed on him by
reason of any compensation or benefits provided hereunder and the Company shall
be entitled to
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withhold from all such compensation and benefits all applicable taxes required
to be withheld pursuant to federal, state or local law.
4. BENEFITS. In addition to the payments and benefits described above,
during the Employment Term:
(a) The Company shall furnish Employee with, and Employee shall be allowed
full use of, office facilities, automobiles, secretarial and clerical
assistance, and other Company property and services of a quality, nature and to
the extent made available to executive employees, during the first two years of
the Employment term, and to non-employee directors, during the balance of the
Employment Term, of the Company from time to time;
(b) Except as otherwise provided in Section 4(d) hereof, Employee shall be
eligible to participate in any non-discretionary compensation or employee
benefit plans or programs, if any, maintained by the Company from time to time
for its executive employees, including, but not limited to, life, health,
dental, and long-term disability insurance programs, employee stock ownership
plans, 401(k) and other pension programs, and other fringe benefit programs, in
all events subject to the terms of such plans or programs adopted by the
Company;
(c) Employee shall also be eligible to participate in, and to receive
benefits under, any discretionary compensation plans or programs, if any,
maintained by the Company from time to time for its executive employees,
including, but not limited to, stock purchase programs, stock option plans,
bonus plans, or other incentive or deferred compensation plans or programs,
provided that Employee's participation, if any, under any such discretionary
plans or programs shall at all times be determined by the Board in its sole
discretion;
(d) If at any time during the Employment Term Employee is not otherwise
eligible to participate in the Company's group medical or dental plans because
he does not work
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the minimum number of hours specified in the plan for eligibility, and during
periods after the Employment Term (but not beyond the earlier of (i) the deaths
of both he and his spouse or (ii) he and his spouse both attaining age 65),
Employee and his spouse shall be eligible to participate in such plans on the
same basis and at the same cost as former married employees of the Company who
have elected COBRA continuation coverage under Part 6 of Title I of ERISA
(without regard to the time limit in Section 602(2)(A)(i) of ERISA).
(e) The Company shall reimburse Employee for all reasonable out-of-pocket
expenses incurred by Employee in the performance of his duties hereunder in
accordance with the Company's policies from time to time in effect, provided
that Employee presents an itemized statement of such expenditures, which
itemized statement shall comply with the Company's expense reimbursement
procedures.
5. TERMINATION. Notwithstanding anything to the contrary in this
Agreement whether express or implied, Employee's employment with the Company and
the Employment Term shall terminate upon the expiration of the Employment Term
or upon the earlier occurrence of any of the following events:
(a) The death of the Employee.
(b) The voluntary termination of employment by Employee. Employee shall
have the right to terminate this Agreement and the Employment Term at any time
and for any reason upon delivery of prior written notice to the Company not
less than sixty (60) days prior to the effective date of such termination.
Notwithstanding anything to the contrary herein, whether express or implied, in
the event that Employee voluntarily terminates his employment with the Company
at any time following a "Change of Control" of the Company (as defined in the
Grant of Nonqualified Stock Option to Employee from the Company dated November
13, 1997), Employee's employment shall be deemed for all purposes of this
Agreement to have been terminated by the Company without Cause,
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thereby entitling the Executive to the post-termination benefits provided for
under Section 5(f) hereof.
(c) The termination of employment by the Company for Cause. Termination
of employment for "Cause" shall mean termination based on the Employee's breach
of this Agreement, conduct by the Employee that is dishonest, fraudulent or
unlawful, gross negligence, or willful misconduct by the Employee, in any case,
which discredits or materially damages the Company.
(d) The termination of employment by the Company for Disability. In the
event that during the Employment Term Employee shall be unable to perform his
duties under this Agreement for 180 consecutive days during any twelve-month
period due to illness, accident or other incapacity (as determined in good faith
by the Board) or if a physician selected in good faith by the Board (and
consented to by Employee or his personal representative) examines Employee and
advises the Company that it is likely that Employee will be unable to perform
such duties for 180 consecutive days during the succeeding twelve-month period
(a "Disability"), the Company may elect to terminate Employee's employment by
sending written notice of such election to Employee at any time during the
period of such disability.
(e) After any termination of Employee's employment hereunder for any
reason, Employee (or his legal representative) shall be entitled to
receive accrued and unpaid Salary and expense reimbursements due for the period
ending on the effective date of such termination. After termination of
Employee's employment hereunder for any reason, the Company and the Employee
shall have no further obligations hereunder except as otherwise described in
this Section 5(e) and in Sections 4(d), 5(f), 5(g), 6, and 9 hereof.
(f) If the Employee's employment with the Company terminates after the
date hereof for any reason OTHER THAN (i) a termination by the Company for Cause
pursuant to Section 5(c) hereof, or (ii) a voluntary termination by Employee
pursuant to Section 5(b)
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(except as otherwise expressly provided in the last sentence of Section 5(b)
hereof), in addition to the amounts described in the preceding paragraph, the
Company will be obligated to continue to pay Employee an amount equal to
Employee's Salary at the rates set forth in Section 3 hereof, for the period
beginning on the effective date of such termination and ending on February 29,
2004.
(g) In the event of termination of this Agreement for any reason other
than Employee's death or Disability, Employee agrees to cooperate with the
Company and to be reasonably available to the Company with respect to continuing
and/or future matters arising out of the Employee's employment or any other
relationship with the Company, whether such matters are business-related, legal
or otherwise. The provisions of this paragraph shall survive termination of
this Agreement.
6. EXPENSES. The Company will pay or reimburse Employee for all costs and
expenses (including court costs and reasonable attorneys' fees) incurred by
Employee as a result of any claim, action or proceeding arising out of, or
challenging the validity or enforceability of, this Agreement or any provision
hereof.
7. MITIGATION. In the event of a termination of Employee's employment for
any reason, Employee shall not be required to seek other employment; in
addition, no amount payable under Section 6 of this Agreement, if any, following
the termination of Employee's employment with the Company, shall be reduced by
any compensation earned by Employee as a result of employment by another
employer after such termination of employment with the Company.
8. DESIGNATED BENEFICIARY. In the event of the death of Employee while in
the employ of the Company, or at any time thereafter during which amounts remain
payable to Employee under Section 5 hereof, such payments shall thereafter be
made to such person or persons as Employee may specifically designate
(successively or contingently) to receive payments under this Agreement
following Employee's death by filing a written
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beneficiary designation with the Company during Employee's lifetime. Such
beneficiary designation shall be in such form as may be prescribed by the
Company and may be amended from time to time or may be revoked by Employee
pursuant to written instruments filed with the Company during his lifetime.
Beneficiaries designated by Employee may be any natural or legal person or
persons, including a fiduciary, such as a trustee of a trust or the legal
representative of an estate. Unless otherwise provided by the beneficiary
designation filed by Employee, if all of the persons so designated die before
Employee or on the occurrence of a contingency not contemplated in such
beneficiary designation, or if Employee shall have failed to provide such
beneficiary designation, then the amount payable under this Agreement shall be
paid to Employee's estate.
9. EMPLOYEE COVENANTS.
(a) During the Employment Term and for a period of two years thereafter,
the Employee shall not (i) disclose any information likely to be regarded as
confidential and relating to the Company's business, (ii) solicit the Company's
employees to work for a competitor of the Company, or (iii) perform any act
detrimental to the Company or its employees, including, but not limited to,
disparaging the Company, its senior management or its products.
(b) The Employee agrees that any breach or threatened breach of Section
9(a) shall entitle the Company to apply for and to obtain injunctive relief,
which shall be in addition to any and all other rights and remedies available to
the Company at law or in equity.
(c) All of the Employee rights and benefits under this Agreement shall
cease upon any material breach by the Employee of Section 9(a) of this
Agreement.
10. NON-WAIVER OF RIGHTS. The failure to enforce at any time the
provisions of this Agreement or to require at any time performance by the other
party of any of the provisions hereof shall in no way be construed to be a
waiver of such provisions or to
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affect either the validity of this Agreement or any part hereof, or the right of
either party to enforce each and every provision in accordance with its terms.
11. NOTICES. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address below indicated:
NOTICES TO EMPLOYEE:
Xxxx X. Xxxxxxxxx
00000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
NOTICES TO THE COMPANY:
XxXxxxxxx Technologies, Inc.
000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, XX 00000
Attn: Chief Executive Officer
IN EACH CASE WITH A COPY TO:
XxXxxxxxx, Will & Xxxxx
000 X. Xxxxxx
Xxxxxxx, XX 00000-0000
Attn: Xx. Xxxxxx X. Xxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed. Every notice relating to this Agreement shall be in writing and
shall be given by personal delivery or by registered or certified mail, postage
prepaid, return receipt requested.
12. BINDING EFFECT; ASSIGNMENT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors,
personal
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representatives, estates, successors (including, without limitation, by way of
merger) and assigns. Notwithstanding the provisions or the immediately
preceding sentence, the Employee shall not assign all or any portion of this
Agreement without the prior written consent of the Company.
13. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding
of the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements, written or oral, between them as to such subject matter.
This Agreement may not be amended, nor may any provision hereof be modified or
waived, except by an instrument in writing duly signed by the party to be
charged.
14. SEVERABILITY. If any provision of this Agreement, or any application
thereof to any circumstances, is invalid, in whole or in part, such provision or
application shall to that extent be severable and shall not affect other
provisions or applications of this Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Illinois, without reference to
the principles of conflict of laws.
16. MODIFICATIONS AND WAIVERS. No provision of this Agreement may be
modified, altered or amended except by an instrument in writing executed by the
parties hereto. No waiver by either party hereto of any breach by the other
party hereto of any provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions at the time
or at any prior or subsequent time.
17. HEADINGS. The headings contained herein are solely for the purposes
of reference, are not part of this Agreement and shall not in any way affect the
meaning or interpretation of this Agreement.
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18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
[Signature page follows]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
authority of its Board of Directors, and the Employee has hereunto set his hand,
the day and year first above written.
XxXXXXXXX TECHNOLOGIES, INC. XXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxx X. Xxxxxxxxx
---------------------------------------- --------------------------
By: Xxxxxxx X. Xxxxxxx
Title: President and Chief Operating Officer
ACKNOWLEDGED AND AGREED ON BEHALF
OF THE COMPENSATION COMMITTEE
/s/ Xxxxx X. Xxxxxxxxx III
----------------------------------------
By: Xxxxx X. Xxxxxxxxx III
Title: Chairman of the Compensation Committee
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EXHIBIT A
XXXXXXXXX TECHNOLOGIES, INC.
STOCK AWARD AND RESTRICTION AGREEMENT
Pursuant to your employment agreement dated November __, 1998 (the
"Employment Agreement") with XxXxxxxxx Technologies, Inc. (the "Company"), the
Company has agreed to grant you an award of restricted stock under the Company's
1996 Incentive Stock Plan (the "Plan"), as specified below:
GRANTEE: Xxxx X. Xxxxxxxxx
DATE OF GRANT: November __, 1998
NUMBER OF SHARES OF RESTRICTED STOCK GRANTED: _________
THIS DOCUMENT CONSTITUTES PART OF THE PROSPECTUS COVERING SECURITIES THAT HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
THIS AGREEMENT, effective as of the Date of Grant set forth above, is
between XxXxxxxxx Technologies, Inc., a Delaware corporation (the "Company") and
the Grantee named above (the "Grantee"), covering a grant by the Company to the
Grantee of shares of Restricted Stock under the Plan.
1. GRANT OF SHARES. Pursuant to action of the Board of Directors of
the Company and the Compensation Committee of the Board of Directors of the
Company (the "Committee"), and in consideration of valuable service
heretofore rendered by the Grantee to the Company and of the agreements
contained in the Employment Agreement, the Company hereby grants to the
Grantee a Stock Award of shares of common stock, $.01 par value, of the
Company (the "Shares"), subject to the Restrictions set forth in Section 2
and the other terms and conditions of the Plan and this Agreement. The
Shares shall be recorded in the books of the Company and the Company's
transfer agent in the Grantee's name. The Grantee shall have all the rights
of a stockholder with respect to the Shares, including the right to vote and
to receive all dividends or other distributions paid or made with respect to
the Shares. However, any securities of the Company which may be issued
with respect to such Shares by virtue of any stock split, combination, stock
dividend or recapitalization shall be deemed to be "Shares" hereunder and
shall be subject to all the terms and conditions of the Plan and this
Agreement.
2. RESTRICTIONS. The Shares may not be sold, exchanged, assigned,
transferred, pledged or otherwise disposed of, and shall be subject to
forfeiture as set forth in Section 4 below (the "Restrictions") unless and until
such Restrictions shall have lapsed as set forth in Section 3 below.
3. TERMINATION OF RESTRICTIONS. In the event that Grantee's employment
by the Company terminates for any reason other than (i) Cause (as defined in the
Employment Agreement) or (ii) the voluntary termination by Grantee prior to
February 28, 2001, any Restrictions which have not lapsed will lapse
immediately. In the event of a "Change of Control" of the Company (as defined
in the Grant of Nonqualified Stock Option to Grantee from the Company dated
November 13, 1997) any Restrictions which have not lapsed will lapse
immediately. Any Restrictions which have not lapsed by February 29, 2004 will
lapse on that date.
4. FORFEITURE OF SHARES. In the event of the termination of the
Grantee's employment by the Company for Cause or a voluntarily termination by
Grantee prior to February 28, 2001 and prior to a "Change of Control" of the
Company, all of the Shares then subject to the Restrictions shall be forfeited
to the Company by the Grantee, without consideration to the Grantee or Grantee's
executor, administrator, personal representative or heirs ("Representative").
5. DELIVERY OF CERTIFICATES. Certificates representing Shares as to
which the Restrictions have lapsed shall be issued in the name of the Grantee
and delivered by the Company to the Grantee or the Grantee's Representative.
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6. WITHHOLDING TAXES. The lapse of the Restrictions on any Shares
pursuant to Section 3 above shall be conditioned on the Grantee or the Grantee's
Representative having made appropriate arrangements with the Company to provide
for the payment of any taxes required to be withheld by Federal, State or local
law in respect of such lapse.
7. NOTICES. All notices hereunder shall be in writing and shall be
deemed to be given when delivered in person or upon the second day after the
same are deposited in the U.S. Mail, postage prepaid by certified mail,
addressed as follows:
To the Company: XxXxxxxxx Technologies, Inc.
000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxxxxxxxx, XX 00000
To the Grantee or Grantee's Representative at the address of the Grantee
applicable to the notice provisions of Section 11 of the Employment Agreement.
Either party may designate a different address for its receipt of notice by
notice given to the other in accordance with these provisions.
8. TERM OF AGREEMENT. This Agreement shall terminate on the date the
Shares are forfeited pursuant to Section 4, or the date the Restrictions have
lapsed.
9. SUCCESSION. This Agreement shall be binding upon and operate for the
benefit of the Company and its successors and assigns and the Grantee and
Grantee's Representative.
10. CONTINUATION OF EMPLOYMENT. This Agreement shall not confer upon
Grantee any right to continuation of employment by the Company, nor shall this
Agreement interfere in any way with the Company's right to terminate Grantee's
employment at any time.
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11. MISCELLANEOUS.
(a) This Agreement and the rights of Grantee hereunder are subject to
all the terms and conditions of the Plan, as the same may be amended from
time to time, as well as to such rules and regulations as the Committee may
adopt for administration of the Plan. It is expressly understood that the
Committee is authorized to administer, construe, and make all
determinations necessary or appropriate to the administration of the Plan
and this Agreement, all of which shall be binding upon Grantee. Any
inconsistency between this Agreement and the Plan shall be resolved in
favor of the Plan. All terms used herein that are not defined herein but
are defined in the Plan shall have the same meaning as in the Plan.
(b) With the approval of the Board of Directors of the Company, the
Committee may terminate, amend, or modify the Plan; provided, however, that
no such termination, amendment, or modification of the Plan may in any way
adversely affect Grantee's rights under this Agreement.
(c) Grantee agrees to take all steps necessary to comply with all
applicable provisions of Federal and state securities law in exercising
Grantee's rights under this Agreement.
(d) The Plan and this Agreement are not intended to qualify for
treatment under the provisions of the Employee Retirement Income Security
Act of 1974.
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(e) This Agreement shall be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.
(f) To the extent not preempted by Federal law, this Agreement shall
be governed by, and construed in accordance with the laws of the State of
Illinois.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the Date of Grant.
XXXXXXXXX TECHNOLOGIES, INC.
By:
-------------------------
Grantee:
--------------------
Social Security number:
----------
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SCHEDULE A
During the first two years of the Employment Term, Employee shall devote an
average of approximately 30 hours per week to his employment with the Company,
including time spent in his home office and travel time, and will use his
reasonable best efforts during such time to promote the interests of the
Company. During the balance of the Employment Term, Employee shall devote a
reasonable amount of time commensurate with his compensation level, currently
expected to be an average of approximately 25 hours per calendar quarter, to his
employment with the Company.
