EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is effective on October 1, 2001, by and
between Successories, Inc., an Illinois corporation ("Company"); and, Xxxxxx X.
Xxxxxxxx, a resident of Illinois ("Employee").
THE COMPANY AND THE EMPLOYEE HEREBY AGREE, in consideration of the mutual
obligations and covenants set forth below, to the following terms and
conditions:
1 EMPLOYMENT
1.1 The Company employs Employee as Founder and Chairman Emeritus subject
to the terms and conditions specified in this Agreement ("Employment").
1.2 The Employment pursuant to this Agreement shall commence on October 1,
2001 and, subject to the terms and conditions of this Agreement, expire
on September 30, 2004 ("Term of Employment").
1.3 There shall be no extensions of the Term of Employment.
2 PLACE OF EMPLOYMENT
2.1 The Employment shall be at the Company's headquarters in Aurora,
Illinois ("Headquarters").
2.2 The Company shall provide the same office at Headquarters for Employee
as Employee had on October 1, 2001. Provided Employee satisfies the
obligations under Section 3.1, Employee has the option of working from
said office or Employee's home office. Subject to availability and
advance notice by Employee, Company shall attempt to provide a maximum
of twenty (20) hours per month of administrative assistance support
(limited to word processing and reasonable photocopying relating to
Company business, speaking, writing or consulting engagements) to the
Employee between the hours of 9:00 a.m. and 5:00 p.m. (central time)
for business days during the week. There shall be no carry forward or
credit of unused administrative support hours, regardless of whether
such hours were requested by Employee. The Company may, at its
discretion, require Employee to reimburse the Company for any
out-of-pocket expenses it incurs in the course of providing such
administrative support.
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3 DUTIES AND RESPONSIBILITIES
3.1 Employee shall report to and follow the directions of the President of
the Company ("President"). Employee's responsibilities and duties shall
consist of the following: (i) each month design twenty (20) new and
unique word/image combinations that are materially different from one
another with each suitable for inclusion in one of the Company's
existing product line (ii) consult with the Company's Creative Director
on product concepts and product strategies as needed. Employee shall
faithfully and diligently perform these duties and responsibilities.
Notwithstanding any language to the contrary in this Agreement,
Employee shall not make any commitments or incur any liabilities on
behalf of the Company.
3.2 Employee shall remain a board member of the Company for the balance of
his term as a Class III director, provided however, Employee shall
resign as a director in the event of a termination of the Agreement.
Employee shall remain an officer of the Company through the 2002 Annual
Shareholder Meeting, at which point the Board of Directors shall
determine, as with other employees of the Company, whether Employee
shall continue as an officer.
4. EXCLUSIVITY OF SERVICE
4.1 Provided Employee fulfills the duties and responsibilities in section
3, Employee may pursue and retain fees for speaking, writing and
consulting engagements provided: (i) Employee obtains advance written
approval from the President for each consulting engagement, with such
approval not to be unreasonably withheld, conditioned or delayed; (ii)
no engagement shall pertain to the internal operations or to sensitive
issues of the Company; (iii) no single engagement or series of
engagements interferes with Employee's duties and responsibilities
under the Agreement; (iv) Employee shall be responsible for any and all
expenses and obligations incurred from such engagements, save the
administrative assistance support that may be provided by the Company
pursuant to section 2.2; and (v), Employee shall not, with respect to
said engagements or any other activities described in this paragraph 4,
directly or indirectly, act as an agent, servant or Employee of the
Company, make any commitments or incur any liabilities on behalf of
Company, represent to a third party in any medium of communication that
he is an Employee of the Company or is connected with the Company in
any way other than this Agreement.
5. COMPENSATION AND BENEFITS
5.1 Effective as of October 1, 2001, the Company shall pay Employee a base
salary in the gross amount, prior to deductions as indicated in this
paragraph 5.1, of ONE HUNDRED AND FIFTY THOUSAND DOLLARS NO CENTS
($150,000.00) for the first year under the Term of Employment and ONE
HUNDRED AND TWENTY-FIVE THOUSAND DOLLARS AND NO CENTS ($125,000.00) for
each of the two (2) remaining years, payable in arrears on a bi-weekly
basis. The Company may make deductions or withholdings as required by
applicable state and federal law, or as may be or has been consented to
by the Employee.
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5.2 The Employee shall not earn any bonuses, stock options, paid vacation
or any other benefits or remuneration, except as described in
paragraphs 5.3 through 5.5 below.
5.3 The Company shall reimburse the Employee, against receipts or other
satisfactory evidence, for all reasonable business expenses properly
incurred by Employee in the course of fulfilling the duties and
responsibilities assigned to him by the President.
5.4 To the extent offered by the Company to its employees and subject to
the same conditions, the Company shall offer Employee the same medical,
disability, life and dental insurance coverage.
5.5 Unless otherwise required by law or specifically provided for in this
Agreement, the Company shall not provide the Employee with any other
fringe benefits, including but not limited to vacation accrual,
holidays, personal leave, sick leave or family leave.
5.6 The Company shall have the right to offset any compensation due
Employee with any amounts Employee owes the Company, including, but not
limited to, any principal and interest due under that certain Second
Amended and Restated Promissory Note executed by the Employee on
December 9, 1999 in favor of the Company ("Note"), a copy of which is
attached hereto as Exhibit A.
5.7 The principal balance and the outstanding interest balance due on the
Note as of June 30, 2001 is, respectively, NINETY SEVEN THOUSAND SIX
HUNDRED TWENTY FIVE DOLLARS AND NO CENTS ($97,625.00), and THIRTY
THOUSAND SIX HUNDRED FIFTY ONE DOLLARS AND NO CENTS ($30,651.00).
Employee previously transferred honorariums to the Company in fiscal
2001 in the amount of EIGHT THOUSAND FOUR HUNDRED DOLLARS AND NO CENTS
($8,400.00). The Company and Employee have agreed to further reduce the
interest and principal balances on the Note by applying all of
Employee's accrued unused vacation (net of required withholding) which
he has accumulated as of the date of this Agreement, as well as the
previously-transferred honorariums, to the outstanding interest balance
due on the Note as of June 30, 2001 and then to the outstanding
principal balance on the Note as of June 30, 2001, in that order. After
application of these amounts, the accrued unused vacation due the
Employee as of October 1, 2001 shall be ZERO ($0.00). Nothing in this
Agreement shall limit in any way the Company's right to enforce
Employee's obligations under the Note.
6. REASONABLENESS OF RESTRICTIONS
6.1 Employee acknowledges that, before and during the Term of Employment,
Company has and will provide Employee with the use of and access to
trade secrets and confidential information. In turn, Employee
recognizes that, prior to and while performing his duties hereunder he
had and will continue to have access to and come into contact with
trade secrets and confidential information belonging to the Company,
and had and will continue to obtain personal knowledge of and influence
over Company's customers and/or employees. Employee
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therefore agrees that the restrictions contained in Sections 7, 8, and
9 are reasonable and necessary to protect the legitimate business
interests of the Company both during and after the Term of the
Employment.
7. CONFIDENTIALITY
7.1 During the Term of Employment, Employee acknowledges that he will be
afforded access to and become familiar with various Trade Secrets and
Confidential Information of the Company. For purposes of this
Agreement, Trade Secrets and Confidential information includes, without
limitation: The Company's business plans, financial information,
marketing strategies, customer or client lists or requirements,
software and research and proprietary technology information, any such
information relating to clients or customers, market information,
business plans or dealings, financial information and plans, trading
models, market access information, research activities, any document
marked Confidential, any information which Employee has been told is
Confidential, or any information which has been given the Company in
confidence by customers, suppliers, or other persons. Trade Secrets and
Confidential Information does not include any knowledge, skill or
information generally known in the industry or available to the public.
Employee shall neither during the Employment (except in the proper
performance of his duties and with the prior written authorization of
the President) nor at any time (without limit) after the termination
thereof for any reason:
7.1.1 Directly or indirectly use for his own purposes or those of
any other person, company, business entity, or other
organization whatsoever, or,
7.1.2 Directly or indirectly disclose to any person, company,
business entity, or other organization whatsoever, any Trade
Secrets or Confidential Information of the Company.
8 POST-TERMINATION OBLIGATIONS
8.1 NON-COMPETITION.
8.1.1 Employee and Company agree that Company takes many years to
develop contacts with its customers, clients and suppliers,
that the Company intends to remain affiliated with its
customers, clients and suppliers indefinitely, that the
Company invests money in developing those contacts, that
developing their contact is difficult, requires personal
contact and special knowledge; and
8.1.2 Company and Employee agree that Employee may, through the
aforesaid contacts he establishes with the customers, clients
and suppliers of the Company, acquire such a relationship with
them as to enable him/her to cause them to cease or diminish
business with the Company in the event the Employee xxxxxx
his/her relationship with the Company.
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8.2 The Employee hereby agrees that, during his employment by the Company
pursuant to this Agreement and for a period of eighteen (18) months
following the termination of the Employment (the "Restricted Period"),
without regard to the reason for such termination or the length of
Employee's employment with the Company, he will not, directly or
indirectly and in any way, whether as principal or as director,
officer, employee, consultant, agent, partner or stockholder to another
entity (other than by the ownership of a passive investment interest of
not more than 2.5% in a company with publicly traded equity
securities):
8.2.1 own, manage, operate, control, be employed by, participate in,
or be connected in any manner with the ownership, management,
operation, or control of any business activity engaged in any
business activity, directly or indirectly competitive with the
business of the Company;
8.2.2 contact for other than personal reasons, interfere with,
solicit on behalf of another, or attempt to entice away from
the Company (or any affiliate or subsidiary of the Company):
(i) any client or customer of the Company (or any affiliate or
subsidiary of the Company); or, (ii) any contract, agreement
or arrangement that the Company (or any affiliate or
subsidiary of the Company) is actively negotiating with any
other party; or, (iii) any prospective business opportunity
that the Company (or any affiliate or subsidiary of the
Company) has identified.
For purposes of this Paragraph and this Agreement, the parties
agree that "any business activity, directly or indirectly
competitive with the business of the Company" includes
companies that sell, design and/or manufacture motivational
products and/or awards.
8.3 NON-SOLICITATION OF EMPLOYEES.
8.3.1 Employee hereby agrees that during the Restricted Period he
will not either on his own account or in conjunction with or
on behalf of any other person, company, business entity, or
other organization whatsoever directly or indirectly:
8.3.2 induce, solicit, entice or procure any person who is an
employee of the Company to leave such employment, where that
person is: (i) a Company employee on the Termination date; or,
(ii) had been a Company employee in any part of the one (1)
year period immediately preceding the Termination Date;
8.3.3 accept into employment or otherwise engage or use the services
of any person who: (i) is a Company employee on the
Termination Date; or, (ii) had been a Company employee in any
part of the one (1) year period immediately preceding the
Termination Date.
8.3.4 accept or continue employment with any business entity that
does any act described in paragraphs 8.3.2 or 8.3.3.
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9 REMEDIES
9.1 Employee acknowledges and agrees that the restrictions contained in
this Agreement will not prevent or hinder him/her from obtaining
gainful employment or cause him/her any undue hardship and are
reasonable and necessary in order to protect the Company's legitimate
interests and that any violation thereof would result in irreparable
injury to the Company. Employee therefore acknowledges and agrees that
in event of any violation thereof, the Company shall be authorized and
entitled to obtain from any court of competent jurisdiction temporary,
preliminary and permanent injunctive relief as well as other equitable
relief, which rights and remedies shall be cumulative and in addition
to any other rights or remedies to which Company may be entitled,
including the right to damages directly or indirectly sustained by the
Company.
9.2 In the event of any breach or violation of the restrictions contained
in this Agreement, the period therein specified shall xxxxx during the
time of any violation thereof and that portion remaining at the time of
commencement of any violation shall not begin to run until such
violation has been fully and finally cured.
9.3 The costs, including attorney's fees, incurred by the prevailing party
in enforcing this Agreement shall be borne by the other party.
10 INVENTIONS
10.1 Any and all inventions, ideas and improvements ("Inventions") relating
to the Company's business, whether or not patentable, conceived or made
by Employee during the Term of Employment, solely or jointly with
another, whether or not during working hours, shall immediately become
the sole and absolute property of the Company, and shall be immediately
disclosed to the Company by Employee for the Company's sole use,
ownership and benefit. The preceding sentence shall apply to any and
all Inventions conceived or made by Employee during the Restricted
Period which directly or indirectly resulted from any work initiated or
conducted by Employee or the Company during the Term of Employment. For
purposes of this Agreement, "Inventions relating to the Company's
business" shall mean Inventions relating to motivation and recognition.
With regard to Inventions not related to the Company's business
("Non-Related Inventions"), during the Term of Employment Employee
shall immediately disclose the Non-Related Invention to the Company and
if the Company does not decide to pursue said Non-Related Invention
within thirty (30) days of disclosure by Employee, Employee shall
become the sole and absolute owner of said Non-Related Invention.
Further, for either "Power of One" books or Non-Related Inventions by
Employee that are disclosed to and elected to be pursued by the
Company; the parties shall enter into a license agreement on terms and
conditions that are comparable to provisions found in similar license
agreements entered into by the Company as a licensee.
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10.2 Further, during and following termination of employment, without regard
to the reason for such termination and without charge to the Company,
the Employee agrees to assist the Company in every way to obtain and to
vest in the Company full title, ownership, interest and protection of
each such invention, and improvement, and the Employee shall, upon
request of the Company, execute any and all documentation necessary to
effectuate the same, including, without limitation, assignments,
applications and other documentation enabling the Company to obtain a
patent, proprietary right and other protection in the United States and
worldwide.
10.3 The restrictions contained in this paragraph do not apply to any
invention for which no equipment, supplies, facility or trade secret
information of the Company was used and which was developed entirely on
the Employee's own time, unless: (1) the invention relates (a) to the
business of the Company or (b) to the Company's actual demonstratively
anticipated research or development, or (2) the invention results from
any work performed by the Employee for the Company.
11 TERMINATION
11.1 The Company and the Employee agree that this employment relationship is
for a term of three (3) years commencing on the date specified in
paragraph 1.2 of this Agreement.
11.2 On termination of the Employment for whatever reason, the Employee
shall return to the Company in accordance with its instructions all of
the Company's proprietary technology and trading models, records,
software, models, reports, and other documents and any copies thereof
and any other property belonging to the Company which are in the
Employee's possession or under his control. The Employee shall, if so
required by the Company, confirm in writing his compliance with his
obligations under this paragraph.
11.3 The termination of the Employment shall be without prejudice to any
right the Employee or the Company may have in respect of any breach by
the other of any provisions of this Agreement which may have occurred
prior to such termination.
11.4 In the event of termination of the Employment hereunder however
arising, the Employee agrees that he will not at any time after such
termination represent himself as still having any connection with the
Company, except as a former Chairman Emeritus and Founder for the
purpose of communicating with prospective employers or complying with
any applicable statutory requirements.
11.5 Notwithstanding anything to the contrary in this Agreement, the Company
may terminate this Agreement for "just cause" by providing to Employee
written notice of the termination on account of just cause and the
specific grounds thereof. Upon termination of the Employment for just
cause, the Employment will immediately end and the Employee will not be
entitled to receive any further compensation or benefits after that
date except as may be required by law. The term "just cause" means (a)
an act of fraud or dishonesty by the Employee, (b) an act by the
Employee that the Company's Board of Directors reasonably believes
constitutes a felony,
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(c) any material breach or threatened breach by the Employee of any
provision of this Agreement that has not been cured within thirty (30)
days notice, (d) the failure of Employee, after a thirty (30) day
notice to cure, to make timely payments on the Note, according to its
terms, or (e) any activity engaged in by Employee to commit or incur
any liability on behalf of the Company and such activity is not
specifically allowed under this Agreement.
11.6 Notwithstanding anything to the contrary in this Agreement, the
Company's obligations under this Agreement shall cease or terminate
upon the death of Employee or upon the determination that Employee has
a disability that prevents him from performing the essential functions
of his position. Upon the death of the Employee, the Company shall pay
either the surviving spouse or the estate of the Employee the bi-weekly
compensation provided under this Agreement commencing with the first
bi-weekly period after the Employee's date of death and the last
bi-weekly payment ending with the expiration date of the Agreement.
Upon the determination by the Company's Board of Directors that the
Employee has a disability that prevents the Employee from performing
the essential functions of his position, the Company shall pay to
either the Employee, the Employee's guardian or administrator, or the
Employee's estate, the bi-weekly compensation provided under this
Agreement commencing with the first bi-weekly period after the
determination of the existence of a disability and the last bi-weekly
payment ending with the expiration date of the Agreement. For purposes
of this paragraph only, the Employee will be deemed to have such a
"disability" where Employee has suffered a physical or mental illness,
injury, or infirmity that prevents Employee from fulfilling a material
portion of his duties under this Agreement for at least ninety (90)
consecutive days in any rolling 180 day period.
11.7 Notwithstanding anything to the contrary in this Agreement, the Company
may elect not to utilize the Employee's services during the remainder
of the Term of Employment and relieve the Employee of any further
obligation to perform his duties under this Agreement. If the Company
so elects, then the Employee shall not be entitled to an office,
administrative assistance support or otherwise have access to the
Company's premises, but the Company shall pay and will remain obligated
to pay the Employee the remainder of his base salary during the
remainder of the Term of Employment. In such event, Employee may elect
to receive the remainder amount in a lump sum payment on the date of
being relieved of his duties and responsibilities rather than receiving
said amount through the bi-weekly payments over the remainder of the
Term of Employment. Further, Employee will not be required to mitigate
his damages by seeking other alternative employment during the
remainder of the Term of Employment under this Agreement. Moreover,
during the remainder of the Term of Employment, the Company shall pay
all of the Employee's expenses for continued medical insurance coverage
pursuant to COBRA, through the end of the Term of Employment, the end
of the COBRA period, or until Employee becomes eligible for coverage
under another group health insurance policy, whichever occurs earliest.
11.8 Notwithstanding anything to the contrary in this Agreement, the
Employee may terminate the Employment under this Agreement for good
reason in which event the Company shall still have the same obligations
to the Employee as provided in paragraph 5. For purposes of this
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paragraph, "good reason" shall mean a reduction in the Employee's
minimum base salary or (ii) a material reduction in the Employee's
benefits or a material breach of the Company's obligations undertaken
in this Agreement. In the event that the Employee determines to
terminate his Employment for good reason, the Employee shall be
obligated to give notice of termination of sixty (60) days to the
Company, which notice shall identify the reason for such termination,
and the Company shall have a reasonable opportunity to cure any such
defects. Absent such a cure, the Employee shall be entitled to the
remainder of the compensation due under the Term of Employment, payable
at the same times and on the same schedule as such compensation would
have been paid had he not terminated his Employment.
12 SEVERABILITY AND REVISION
12.1 The various provisions and sub-provisions of this Agreement are
severable, and if any provision or sub-provision or identifiable part
thereof is held to be invalid or unenforceable by any court of
competent jurisdiction, then such invalidity or unenforceability shall
not affect the validity or enforceability of the remaining provisions
or sub-provisions or identifiable parts in this Agreement. In the event
that any of the provisions, covenants, warranties or agreements in this
Agreement are deemed by a court to be in any respect an unreasonable
restriction upon Employee or are otherwise invalid, for whatsoever
cause, then the court so holding shall reduce and is so authorized to
reduce, the territory to which it pertains and/or the period of time in
which it operates, or effect any other change to the extent necessary
to render any of the restrictions of this Agreement enforceable.
13 WARRANTY
13.1 Employee represents and warrants that he is not prevented by any other
agreement, arrangement, contract, understanding, Court Order or
otherwise, which in any way directly or indirectly conflicts, is
inconsistent with, or restricts or prohibits him from fully performing
the duties of the Employment, in accordance with the terms and
conditions of this Agreement.
14 NOTICES
14.1 Any notice to be given hereunder may be delivered (a) in the case of
the Company by registered mail, return receipt requested addressed to
its Registered Office and (b) in the case of the Employee, either to
him personally or by registered mail, return receipt requested to his
last known residence address. Notices served by mail shall be deemed
given when they are mailed.
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15 WAIVERS AND AMENDMENTS
15.1 No act, delay, omission, or course of dealing on the part of any party
hereto in exercising any right, power, or remedy hereunder shall
operate as, or be construed as, a waiver thereof or otherwise prejudice
such party's rights, powers, and remedies under this Agreement. This
Agreement may be amended only by a written instrument signed by the
Employee and a duly authorized officer of the Company or the Board of
Directors.
16 PRIOR AGREEMENTS
16.1 This Agreement cancels and is in substitution for all previous letters
of engagement, offer letters, agreements, amendments, addendums, term
sheets and arrangements (whether oral or in writing) relating to the
subject-matter hereof between the Company and the Employee, all of
which shall be deemed to have been terminated by mutual consent, with
the exception of any rights the Employee may have under any stock
option plan or bonus plan previously in existence. This Agreement does
not alter the terms or conditions of the Successories, Inc. Amended and
Restated Stock Option Plan dated April 17, 2001.This Agreement
constitutes the entire terms and conditions of the Employee's
employment and no waiver or modification thereof shall be valid unless
in writing, signed by the parties, and only to the extent therein set
forth.
17 ARBITRATION JURISDICTION AND GOVERNING LAW
17.1 Except for disputes arising under or in connection with Sections 7, 8,
and 9, all disputes arising under or in connection with this Agreement
or concerning in any way the Employee's employment shall be submitted
exclusively to arbitration in DuPage, Illinois under the Rules of the
American Arbitration Association then in effect, and the decision of
the arbitrator shall be final and binding upon the parties. Judgment
upon the award rendered may be entered and enforced in any court having
jurisdiction. The Employee and the Company consent to personal
jurisdiction of any state or federal court sitting in Du Page County,
Illinois, in order to enforce any arbitration judgment or the rights of
Employee or of the Company under Sections 7, 8, and 9 and waive any
objection that such forum is inconvenient. Employee and the Company
hereby consent to service of process in any such action by U.S. mail or
other commercially reasonable means of receipted delivery. The parties
also agree that the party found to be at fault shall reimburse the
other party for all reasonable attorneys' fees that the other party
incurs in pursing their remedies in good faith under this Agreement.
18 GOVERNING LAW
18.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois.
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19 ASSIGNABILITY
19.1 The rights and obligations contained herein shall be binding on and
inure to the benefit of the successors and assigns of the Company. The
Employee may not assign his rights or obligations hereunder without the
express written consent of the Company.
20 HEADINGS; CONSTRUCTION
20.1 The headings contained in this Agreement are inserted for reference and
inserted for reference and convenience only and in no way define,
limit, extend, or describe the scope of this Agreement or the meaning
or construction of any of the provisions hereof. As used herein, unless
the context otherwise requires, the single shall include the plural and
vice versa, words of any gender shall include words of any other
gender, and "or" is used in the inclusive sense.
21 SURVIVAL OF TERMS
21.1 If this Agreement is terminated for any reason, the provisions of
Sections 7, 8, and 9 shall survive and the Employee and the Company, as
the case may be, shall continue to be bound by the terms thereof to the
extent provided therein.
22 EMPLOYEE ACKNOWLEDGMENT AND ADVICE OF COUNSEL
22.1 EMPLOYEE REPRESENTS THAT HE HAS HAD AMPLE OPPORTUNITY TO REVIEW THIS
AGREEMENT AND EMPLOYEE ACKNOWLEDGES THAT HE UNDERSTANDS THAT IT
CONTAINS IMPORTANT CONDITIONS OF THE EMPLOYMENT AND THAT IT EXPLAINS
POSSIBLE CONSEQUENCES, BOTH FINANCIAL AND LEGAL, IF THE EMPLOYEE
BREACHES THE AGREEMENT.
AS WITNESS the hands of a duly authorized officer of the Company and of the
Employee effective the day and year first before written.
EMPLOYEE: COMPANY:
--------------------------- --------------------------
Xxxxxx X. Xxxxxxxx Successories, Inc.
By: Xxxx X. Xxxxxxxx
Its: President and Chief Executive Officer
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