EXHIBIT (C)(7)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT made as of September , 1997, by and between
NPF Acquisition Corporation, a Delaware corporation (the "Company"), and Xxxxx
X. Xxxxx (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board") expects
that the Executive will make substantial contributions to the growth and
prospects of the Company; and
WHEREAS, the Board desires to obtain for the Company the services of
the Executive, and the Executive desires to be employed by the Company, all on
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Employment. The Company will employ the Executive, and the
Executive accepts employment with the Company, upon the terms and conditions set
forth in this Agreement for the period beginning on the date (the "Effective
Date") that the Company acquires control of National Picture & Frame Company, a
Delaware corporation ("Old NPF"), upon completion of a tender offer or otherwise
and ending as provided in paragraph 4 below (the "Employment Period").
2. Position and Duties.
(a) Generally. During the Employment Period, the Executive
will serve as the Vice President and General Manager of the Company and will
have duties, responsibilities and authority that are commensurate with those
that the Executive had while he was employed by the Old NPF prior to the date of
this Agreement, subject to the general authority of the Company's Board of
Directors (the "Board").
(b) Reporting. The Executive will report to the Company's
President and Chief Executive Officer and will perform his duties and
responsibilities to the best of his abilities. The Executive shall devote his
full business time, (except for permitted vacation periods and reasonable
periods of illness or other incapacity) skills and attention to the business of
the Company and its Subsidiaries (as defined below), and except as specifically
approved by the Board, shall not engage in any other business activity or have
any other business affiliation. For purposes of this Agreement, "Subsidiaries"
means any corporation of which the securities having a majority of the voting
power in electing directors are, at the time of determination, owned by the
Company, directly or through one or more other Subsidiaries.
3. Base Salary, Bonus and Benefits.
(a) Base Salary. During the Employment Period, the Company
agrees to pay the Executive, for services rendered hereunder, a base salary at
the annual rate of $212,713 or such higher rate as the Compensation Committee of
the Board may designate in its sole and absolute discretion (the "Base Salary").
The Base Salary shall be payable in equal periodic installments, not less
frequently than monthly, less any sums which may be required to be deducted or
withheld under applicable provision of law. The Base Salary for any partial year
shall be prorated based upon the number of days elapsed in such year.
(b) Expenses. The Company shall pay or reimburse the
Executive for all reasonable expenses actually paid or incurred by the Executive
during the Employment Period in the performance of the Executive's duties under
this Agreement in accordance with the Company's employee business expense
reimbursement policies in effect from time to time.
(c) Bonuses, Etc. The Executive shall be entitled to receive
such bonus compensation (the "Bonus"), and to participate in the Company's
fiscal 1998 and fiscal 1999 bonus plan in effect as of the Effective Date which
shall include the terms set forth on Schedule I (which plan shall govern bonuses
for the 1998 and 1999 fiscal years) and such other profit sharing, stock option,
incentive, and performance award plans and programs, if any, as may from time to
time be determined by the President and Chief Executive Officer or the Board of
Directors.
(d) Benefits. During the Employment Period (and thereafter to
the extent expressly provided herein), the Executive shall be entitled to
participate in all of the Company's employee benefit plans (including vacation
policies for executive officers), which plans shall be commensurate in the
aggregate with such employee benefit plans of Old NPF, applicable to, and to the
same extent as the Company's highest ranking executives, according to the terms
of those plans, except that the Executive shall not be eligible for any
severance payments (other than as provided herein).
(e) Life Insurance. During the Employment Period, the
Executive shall be entitled to (and the Company shall carry) term life insurance
in an amount which is not less than two times the Base Salary then in effect.
(f) Stock Options. The Company will grant to the Executive
options to acquire shares of the Company's Common Stock representing 1.5% of the
outstanding Common Stock on a fully diluted basis as of the Effective Date. The
Options will be granted pursuant to the Company's employee stock option program,
which shall include the terms set forth on Schedule II.
4. Term and Termination.
(a) Duration. Unless renewed by the mutual agreement of the
Company and the Executive, the Employment Period will begin on the Effective
Date and end on April 30, 1999; provided that (i) the Employment Period will
terminate prior to such date upon the Executive's resignation, death or
permanent disability or incapacity (as determined by the Board in its reasonable
and good faith judgment) and (ii) the Employment Period may be terminated by the
Company at any time prior to April 30, 1999 as set forth below for Good Cause
(as defined below) or without Good Cause.
(b) Severance.
(i) Termination Without Good Cause. If the
Employment Period is terminated by the Company without Good Cause prior
to April 30, 1999, the Executive will be entitled to receive his Base
Salary (at the amount in effect as of such termination) through the
first anniversary of such termination, so long as the Executive has not
breached the provisions of paragraphs 5, 6 or 7 hereof. Upon request
from time to time, the Executive will furnish the Company with a true
and complete certification of any such compensation due to or received
by him. For purposes of this Agreement, termination of employment
includes, in addition to actual termination, termination by the
Executive resulting from a substantial diminution of the Executive's
duties or responsibilities compared to the duties and responsibilities
with Old NPF or any requirement to perform the Executive's duties and
responsibilities for the Company at a location more than 50 miles from
the current location of the Company's corporate headquarters (other
than in connection with supervision of manufacturing or sales
operations at remote sites resulting from expansion of the Company's
operations through acquisition or otherwise).
(ii) Termination Upon Death or Resignation. In the
event that the Employment Period terminates pursuant to Section 4(a)(i)
on account of the death of the Executive or such Executive's
resignation, (i) the Company shall pay to the Executive's surviving
spouse or, if none, his estate, a lump-sum amount equal to the sum of
the Executive's earned and unpaid salary through the date of his death,
additional salary in lieu of Executive's accrued and unused vacation,
any earned and unpaid Bonus pursuant to paragraph 3(c), any
unreimbursed business and entertainment expenses in accordance with the
Company's policies, and any unreimbursed employee benefit expenses that
are reimbursable in accordance with the Company's employee benefit
plans, and (ii) death benefits, if any, under the Company's employee
benefit plans shall be paid to the Executive's beneficiaries as
properly designated in writing by the Executive.
(c) Salary Through Termination With Good Cause. If the
Employment Period is terminated by the Company for Good Cause, the Executive
will be entitled to receive only his Base Salary through the date of termination
and any Bonus which has accrued pursuant to paragraph 3(c) on or prior to the
last day of the Employment Period.
(d) Other Rights. All of the Executive's rights to
fringe benefits and bonuses hereunder (if any) accruing after the termination
of the Employment Period will cease upon such termination.
(e) "Good Cause." For purposes of this agreement,
"Good Cause" means:
(i) the commission of a felony or the
commission of a crime involving moral turpitude;
(ii) embezzlement, misappropriation of
property of the Company or any of its Subsidiaries, or any other
act involving dishonesty or fraud with respect to the Company or any
of its Subsidiaries; or
(iii) any other material breach of this Agreement
which is not cured within 15 days after written notice of such breach
to the Executive.
5. Confidential Information. The Executive understands and
acknowledges that during his employment with the Company he will be exposed to
Confidential Information (as defined below) which is proprietary and which
rightfully belongs to the Company. The Executive agrees that he will not use or
cause to be used for his own benefit, either directly or indirectly, or disclose
any of such Confidential Information at any time, either during or after his
employment with the Company, without the Company's prior written consent. The
Executive shall take all reasonable steps to safeguard such Confidential
Information that is within his possession or control and to protect such
information against disclosure, misuse, loss or theft. The Executive's
obligations under this section with respect to any specific Confidential
Information shall cease when that specific Confidential Information becomes
publicly known or when it is disclosed by any person, firm, corporation or
business entity which is not bound by the terms of a confidentiality agreement
with the Company. The term "Confidential Information" shall mean any information
not generally known in the relevant trade or industry, which was obtained from
the Company, or which was learned as a result of the performance of any services
by the Executive on behalf of the Company, and which falls within the following
general categories:
(i) information concerning trade secrets of the
Company;
(ii) information concerning existing or
contemplated products, services, technology, designs,
processes and research or product developments of the Company;
(iii) information concerning business plans, sales or
marketing methods, methods of doing business, customer lists,
customer usages and/or requirements, or supplier information
of the Company; and
(iv) any other confidential information which the
Company may reasonably have the right to protect by patent,
copyright or by keeping it secret and confidential.
"Confidential Information" shall not include general business skills or
non-proprietary business or industry knowledge of the Executive.
6. Inventions and Patents.
(a) Company Business. The Executive understands that the
Company is engaged in a continuous program of research, development, production
and marketing in connection with its business and that, as an essential part of
the Executive's employment with the Company, the Executive may be expected to
make new contributions to and create inventions of value for the Company.
(b) Disclosure of Inventions. During the Employment Period,
the Executive will promptly disclose in confidence to the Company all
inventions, improvements, designs, original works of authorship, formulas,
processes, compositions of matter, computer software programs, databases, mask
works and trade secrets ("Inventions"), whether or not patentable, copyrightable
or protectible as trade secrets, that are made or conceived or first reduced to
practice or created by the Executive, either alone or jointly with others,
during the Employment Period, whether or not in the course of the Executive's
employment or within the scope of the Company's business.
(c) Work for Hire; Assignment of Inventions. The Executive
acknowledges that copyrightable works prepared by the Executive within the scope
of the Executive's employment are "works for hire" under the Federal Copyright
Act and that the Company will be considered the author thereof. The Executive
agrees that all Inventions that (a) are developed using equipment, supplies,
facilities or trade secrets of the Company, (b) result from work performed by
the Executive for the Company, or (c) relate to the Company's business or
current or anticipated research and development, will be the sole and exclusive
property of the Company and are hereby assigned by the Executive to the Company.
(d) Assignment of Other Rights. The Executive hereby
irrevocably transfers and assigns to the Company: (a) all worldwide patents,
patent applications, copyrights, mask works, trade secrets and other
intellectual property rights in any Invention; and (b) any and all Moral Rights
(as defined below) that the Executive may have in or with respect to any
Invention. The Executive also hereby forever waives and agrees never to assert
any and all Moral Rights the Executive may have in or with respect to any
Invention, even after termination of the Employment Period. "Moral Rights" mean
any rights to claim authorship of an Invention, to object to or prevent the
modification of any Invention, or to withdraw from circulation or control the
publication or distribution of any Invention, and any similar right, existing
under judicial or statutory law of any country in the world, or under any
treaty, regardless of whether or not such right is denominated or generally
referred to as a "moral right."
(e) Assistance. The Executive agrees to assist the Company in
every proper way to obtain for the Company and enforce patents, copyrights, mask
work rights, trade secret rights, other intellectual property rights and other
legal protections for the Company's Inventions in any and all countries. The
Executive will execute any documents that the Company may reasonably request for
use in obtaining or enforcing such patents, copyrights, mask work rights, trade
secrets and other legal protections. The Executive appoints the Secretary of the
Company as the Executive's attorney-in-fact to execute documents on the
Executive's behalf for this purpose. The Executive's obligations under this
paragraph will continue beyond the termination of the Employment Period,
provided that the Company will compensate the Executive at a reasonable rate
after such termination for time or expenses actually spent by the Executive at
the Company's request on such assistance.
7. Non-Compete, Non-Solicitation, Non-Interference.
(a) The Executive acknowledges that in the course of his
employment with the Company he will become familiar, and during his employment
with Old NPF prior to the date of this Agreement he has become familiar, with
the Company's and its Subsidiaries' trade secrets and with other Confidential
Information and that his services have been and will be of special, unique and
extraordinary value to the Company and its Subsidiaries. Therefore, the
Executive agrees that, during the Employment Period and for a period of 12
months thereafter (the "Non-Compete Period"), he will not directly or
indirectly, either for himself or any other person, own, manage, control,
participate in, consult with, render services for, permit his name to be used by
or in any manner engage in any business competing with the businesses of the
Company or its Subsidiaries as such businesses exist or are in process on the
date of the termination of the Executive's employment, within any geographical
area in which the Company or its Subsidiaries engage or plan to engage in such
businesses. Nothing herein will prohibit the Executive from being a passive
owner of not more than 2% of the outstanding stock of any class of a corporation
which is publicly traded, so long as the Executive has no active participation
in the business of such corporation.
(b) During the Non-Compete Period, the Executive will not
directly or indirectly through another person (i) induce or attempt to induce
any employee of the Company or any Subsidiary to leave the employ of the Company
or such Subsidiary, or in any way interfere with the relationship between the
Company or any Subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company or any Subsidiary at any time during the Employment
Period, or (iii) induce or attempt to induce any customer, supplier, licensee or
other business relation of the Company or any Subsidiary to cease doing business
with the Company or such Subsidiary, or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any Subsidiary.
(c) During the Non-Compete Period, the Executive agrees not
to take any action that might interfere with or disrupt the Company's business
or its relationships with its customers, suppliers or employees.
8. Enforcement. If, at the time of enforcement of paragraphs 5, 6 or 7
of this Agreement, a court of competent jurisdiction holds that the restrictions
stated herein are unreasonable under circumstances then existing, the parties
hereto agree that the maximum period, scope or geographical area reasonable
under such circumstances will be substituted for the stated period, scope or
area. Because the Executive's services are unique and because the Executive has
access to Confidential Information and Inventions, the parties hereto agree that
money damages would be an inadequate remedy for any breach of paragraphs 5, 6 or
7 of this Agreement. Therefore, in the event of a breach or threatened breach of
paragraphs 5, 6 or 7 of this Agreement, the Company, any of its Subsidiaries or
any of their respective successors or assigns may, in addition to other rights
and remedies existing in their favor, apply to any court of competent
jurisdiction for specific performance or injunctive or other relief in order to
enforce, or prevent any violations of, the provisions hereof (without posting a
bond or other security). The Executive agrees that these restrictions are
reasonable.
9. Investment in the Company. The Executive agrees that, as a
condition to his employment with the Company, the Executive will invest on the
Effective Date $500,000 in the Company, which investment shall be payable either
in cash or with shares of common stock of Old NPF as shall be mutually agreed
between the Company and the Executive, including, if feasible and not
detrimental to the Company, a tax free rollover of options to purchase shares of
common stock of Old NPF into shares of the Company. In connection with this
investment, the Executive agrees to execute a Shareholder's Agreement between
the Company and all of its shareholders.
10. Representations.
(a) The Executive hereby represents and warrants to the
Company that (i) the execution, delivery and performance of this Agreement by
the Executive does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which he is bound, (ii) the Executive is
not a party to or bound by any employment agreement, noncompete agreement or
confidentiality agreement with any other person or entity and (iii) upon the
execution and delivery of this Agreement by the Executive, this Agreement will
be the valid and binding obligation of the Executive, enforceable in accordance
with its terms.
(b) The Company hereby represents and warrants to the
Executive that (i) the execution, delivery and performance of this Agreement by
the Company does not and will not conflict with, breach, violate or cause a
default under any contract, agreement, instrument, order, judgment or decree to
which the Company is a party or by which it is bound and (ii) upon the execution
and delivery of this Agreement by the Company, this Agreement will be the valid
and binding obligation of the Company, enforceable in accordance with its terms.
11. Survival. Paragraphs 5, 6 and 7 will survive and continue
in full force in accordance with their terms notwithstanding any termination
of the Employment Period.
12. Notices. Any notice provided for in this Agreement will
be in writing and will be either personally delivered, sent by reliable
overnight courier, telecopied or mailed by first class mail, return
receipt requested, to the recipient at the address below indicated:
Notices to the Executive:
Xxxxx X. Xxxxx
Address: 000 Xxxxxxx 00 Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
With a copy (which will not constitute Notice to the Executive) to:
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
Notices to the Company:
NPF Acquisition Corporation
x/x Xxxxxxxxx Xxxxxxx, X.X.X.
Xxxxxxxxxx Xxxxx, Xxxx Xxxxx
000 Xxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxx, III
Xx. Xxxx X. Xxxxxx
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
With a copy (which will not constitute Notice to the Company) to:
Hunton & Xxxxxxxx
Riverfront Plaza, East Tower
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxx Xxxxxxxx, Esq.
Telephone Number: (000) 000-0000
Telecopy Number: (000) 000-0000
or such other address or to the attention of such other person as the recipient
party will have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered,
sent, telecopied or mailed.
13. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
14. Complete Agreement. This Agreement, whose documents expressly
referred to herein and other documents of even date herein embody the complete
agreement and understanding among the parties and supersede and preempt any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
15. Counterparts. This Agreement may be executed in
separate counterparts, each of which is deemed to be an original and all of
which taken together constitute one and the same agreement.
16. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by the Executive, the Company and
their respective heirs, successors and assigns, except that the Executive may
not assign his rights or delegate his obligations hereunder without the prior
written consent of the Company.
17. Choice of Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by and construed in
accordance with the domestic laws of the Commonwealth of Virginia, without
giving effect to any choice of law provision or rule (whether of the
Commonwealth of Virginia or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the Commonwealth of
Virginia.
18. Amendment and Waiver. The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and the
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement will affect the validity, binding effect or
enforceability of this Agreement.
19. Other Definitive Provisions.
(a) Paragraph references contained in this Agreement are
references to paragraphs in this Agreement, unless otherwise specified. Each
defined term used in this Agreement has a comparable meaning when used in its
plural or singular form. Each gender-specific term used in this Agreement has a
comparable meaning whether used in a masculine, feminine or gender-neutral form.
(b) Whenever the term "including" (whether or not that term
is followed by the phrase "but not limited to" or "without limitation" or words
of similar effect) is used in this Agreement in connection with a listing of
items within a particular classification, that listing will be interpreted to be
illustrative only and will not be interpreted as a limitation on, or an
exclusive listing of, the items within that classification.
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the date first written above.
NPF ACQUISITION CORPORATION
By: Colonnade Capital, L.L.C., on behalf of
NPF Acquisition Corporation
By: _____________________________
Xxxxx X. Xxxxx, III
Managing Partner
_____________________________________
Xxxxx X. Xxxxx
