Exhibit 10.1
This
EMPLOYMENT AGREEMENT (“Agreement”) is made and dated as of April 25, 2005,
between INTRICON CORPORATION, a Pennsylvania corporation (the “Company”), and
XXXXXXX X. XXXXXXXX(“Executive”).
BACKGROUND
Executive
wishes to be in the employ of the Company in the capacities of Chief Financial Officer,
Treasurer and Secretary on the terms and conditions contained in this Agreement. Executive
will be substantially involved with the Company’s operations and management and will
have trade secrets and other confidential information relating to the Company and its
customers; accordingly, the noncompetition agreement and other restrictive covenants
contained in Section 5 of this Agreement constitute essential elements hereof.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
SECTION 1. CAPACITY AND
DUTIES
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1.1 |
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Employment;
Acceptance of Employment. The Company hereby employs Executive and Executive
hereby agrees to employment by the Company for the period and upon the terms and
conditions hereinafter set forth. |
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(a) |
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Executive
shall serve as Chief Financial Officer, Treasurer and Secretary of the Company.
Executive shall perform such other duties and shall have such authority
consistent with his position as may from time to time be specified by the Board
of Directors of the Company. |
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(b) |
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Executive
shall devote his full working time, energy, skill and best efforts to the
performance of his duties hereunder, in a manner that will comply with the
Company’s rules and policies and will faithfully and diligently further
the business and interests of the Company. Executive shall not be employed by
or participate or engage in or in any manner be a part of the management or
operation of any business enterprise other than the Company and its
subsidiaries without the prior written consent, which consent may be granted or
withheld in the sole discretion, of the Board of Directors of the Company. |
SECTION 2. TERM OF
EMPLOYMENT
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2.1 |
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Term.
The term of Executive’s employment hereunder shall continue until April
24, 2006, as further extended by agreement between Executive and the Board of Directors
of the Company, unless sooner terminated in accordance with the other provisions hereof
(the “Term”). |
SECTION 3. COMPENSATION
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3.1 |
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Basic
Compensation. As compensation for Executive’s services, the Company shall
pay to Executive a salary at an annual rate as shall be established from time to time by
the Board of Directors of the Company or the Compensation Committee of the Board of
Directors of the Company. In no event shall Executive’s salary be less than
$175,000, unless Executive consents to a lesser amount. Executive’s annual salary,
as determined in accordance with this Section 3.1, is hereinafter referred to as his
“Base Salary,” and shall be payable in periodic installments in accordance with
the Company’s regular payroll practices in effect from time to time. |
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3.2 |
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Performance
Bonuses. Executive shall be entitled to receive performance bonuses of up to 50%
of his Base Salary in accordance with the policies and plans of the Company in place from
time to time with respect to the payment of bonuses to executive officers. |
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3.3 |
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Employee
Benefits. During the Term, Executive shall be entitled to participate in
such of the Company’s employee benefit plans and benefit programs, including medical
benefit programs, stock options under the Company’s 2001 Stock Option Plan (“Stock
Option Plan”) or any additional plans or programs, as may from time to time be
provided by the Company for its executive officers. |
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3.4 |
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Vacation.
During the Term, Executive shall be entitled to a paid vacation of 15 business days per
year. |
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3.5 |
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Expense
Reimbursement. The Company shall reimburse Executive for all reasonable expenses
incurred by him in connection with the performance of his duties hereunder in accordance
with its regular reimbursement policies as in effect from time to time. |
SECTION 4. TERMINATION
OF EMPLOYMENT
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4.1 |
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Death
of Executive. If Executive dies during the Term, the Company shall
not thereafter be obligated to make any further payments hereunder to Executive’s
estate, personal representative or beneficiary who acquired the right to such payments by
bequest or inheritance, other than amounts (including salary, bonuses (based on not less
than the previous year’s bonus and prorated to the date of death), expense
reimbursement, etc.) accrued as of the date of Executive’s death. Executive’s
spouse (if any) shall be entitled to continue to receive medical benefits coverage in
accordance with the Company’s policies in effect from time to time through the
remainder of the then-current Term. |
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4.2 |
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Disability
of Executive. If Executive is or has been materially unable for any
reason to perform his duties hereunder for a period of 180 consecutive days or for a
period totaling 180 days in any period of 360 consecutive days, then the Board of
Directors of the Company shall have the right to terminate Executive’s employment
upon 30 days’ prior written notice to Executive at any time during the continuation
of such inability, in which event the Company shall not thereafter be obligated to make
any further payments hereunder other than |
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amounts (including
salary, bonuses (based on not less than the previous year’s bonus and prorated to
the date of termination), expense reimbursement, etc.) accrued under this Agreement as of
the date of such termination. Upon such termination, Executive shall be entitled to
continue to receive medical benefits coverage for Executive and Executive’s spouse
(if any) in accordance with the Company’s policies in effect from time to time
through the remainder of the then-current Term, and shall be entitled to benefits under
the Disability Policies to the extent provided therein. Executive’s disability shall
be determined by the reasonable judgment of the Board of Directors of the Company. |
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4.3 |
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Termination
for Cause. Executive’s employment hereunder shall terminate immediately upon
notice that the Board of Directors of the Company is terminating Executive for Cause (as
defined herein), in which event the Company shall not thereafter be obligated to make any
further payments hereunder other than amounts (including salary, expense reimbursement,
etc., but excluding bonuses) accrued under this Agreement as of the date of such
termination. “Cause” means the following, provided that, in the case of
circumstances described in clauses (iv) through (vi) below, the Company shall have given
written notice thereof to Executive, and Executive shall have failed to remedy the
circumstances as determined in the sole discretion of the Board of Directors of the
Company within 30 days thereafter: |
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(i) |
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fraud
or dishonesty in connection with Executive’s employment or theft,
misappropriation or embezzlement of the Company’s funds; |
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(ii) |
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conviction
of any felony, crime involving fraud or knowing misrepresentation, or of any
other crime (whether or not such felony or crime is connected with his
employment) the effect of which in the judgment of the Board of Directors of
the Company is likely to adversely affect the Company or its affiliates; |
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(iii) |
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material
breach of Executive’s obligations under this Agreement; |
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(iv) |
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repeated
and consistent failure of Executive to be present at work during normal
business hours unless the absence is because of a disability as described in
Section 4.2 herein; |
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(v) |
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willful
violation of any express direction or requirement established by the Board of
Directors of the Company, as determined by a majority of Board of Directors of
the Company; |
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(vi) |
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insubordination,
gross incompetence or misconduct in the performance of, or gross neglect of,
Executive’s duties hereunder, as determined by a majority of Board of
Directors of the Company; or |
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(vii) |
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use
of alcohol or other drugs which interfere with the performance by Executive of
his duties, or use of any illegal drugs or narcotics. |
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4.4 |
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Termination
without Cause. |
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(a) |
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If
Executive’s employment is terminated by the Company prior to the end of
the Term for any reason other than Cause or the death or disability of
Executive: |
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(i) |
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the
Company shall either (A) continue to pay Executive all of the compensation
provided for in Sections 3.1 and 3.2 herein (based on not less than the
previous year’s bonus, if any, and prorated to the end of the Term) during
the remainder of the then-current Term, or (B) if Executive so requests in
writing, pay Executive in a lump sum upon such termination the present value of
the payments that would have been made under clause (A), using a discount rate
of 6 percent per year; |
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(ii) |
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Executive
shall be entitled to receive medical benefits coverage in accordance with the
Company’s policies in effect from time to time through the remainder of
the then-current Term; |
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(iii) |
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Executive
shall be entitled to have transferred to him the Company’s disability
policy on the Executive for Executive’s benefit (if the policy so
permits), and Executive shall assume responsibility for payment of premiums on
such disability policy; and |
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(iv) |
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Executive
shall be entitled to have transferred to him any Company paid life insurance
policies on the Executive for Executive’s benefit (if the policies so
permit) upon payment by the Executive to the Company of any cash surrender
value of such policies, and Executive shall assume responsibility for payment
of premiums on such life insurance policies. |
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(b) |
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Except
for the provisions of this Section 4.4, the Company shall have no further
obligation to Executive hereunder. |
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(c) |
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Notwithstanding
the foregoing, the Company shall not be obligated to make any payments under
this Section 4.4 unless Executive shall have executed and delivered to the
Company a further agreement, to be prepared at the time of Executive’s
termination of employment, that shall provide (i) an unconditional release of
all claims (other than claims under Section 4.4(a)) charges, complaints and
grievances, whether known or unknown to Executive, against the Company or any
of its affiliates, through date of Executive’s termination of employment;
(ii) an undertaking to maintain the confidentiality of such agreement; and
(iii) an undertaking to indemnify the Company if Executive breaches such
agreement. |
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4.5 |
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Voluntary
Termination. In the event Executive’s employment is voluntarily terminated
by Executive, the Company shall not be obligated to make any further payments to
Executive under this Agreement other than amounts (including salary, expense
reimbursement, etc., but excluding bonuses) accrued as of the date of Executive’s
termination. Additionally, the following provisions shall apply in the event of a
voluntary termination by Executive: |
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(i) |
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Executive
shall be entitled to have transferred to him the Company’s |
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disability policy
(if any) on the Executive for Executive’s benefit (if the policy so permits), and
Executive shall assume responsibility for payment of premiums on such disability policy. |
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(ii) |
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Executive
shall be entitled to have transferred to him any Company paid life insurance
policies (if any) on the Executive for Executive’s benefit (if the
policies so permit) upon payment by the Executive to the Company of any cash
surrender value of such policies, and Executive shall assume responsibility for
payment of premiums on such life insurance policies. |
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4.6 |
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Change-of-Control
Agreement. |
The
Company and the Executive have entered into an Agreement Re: Termination Following Change
of Control or Asset Sale, dated the date hereof (the “Change-of-Control
Agreement”). If Executive becomes entitled to any payment by the terms of the
Change-of-Control Agreement, he shall not be entitled to any additional payment under this
Agreement (other than accrued and unpaid bonus, salary and benefits), but the provisions
of Section 4.4(a)(ii) through (iv) or Section 4.5(i) and (ii), as the case may be, will
apply.
If
Executive’s employment is terminated by the Company during the Term for any reason
other than for Cause or if Executive terminates his employment during the Term under
circumstances that would constitute an Involuntary Termination as defined in the
Change-of-Control Agreement, then any stock options granted to Executive by the Company
which have not been exercised by Executive prior to Executive’s termination shall
accelerate and be exercisable in full and may be exercised by Executive or his legal
representative, estate, personal representative or beneficiary who acquired the right to
exercise such options by bequest or inheritance, as the case may be, to the extent
provided by the terms of the Company’s Stock Option Plan or any option agreement.
SECTION 5. RESTRICTIVE
COVENANTS.
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5.1 |
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Confidentiality.
Executive acknowledges a duty of confidentiality owed to the Company and shall not,
at any time during or after his employment by the Company, retain in writing, use,
divulge, furnish, or make accessible to any person or entity, without the express
authorization of the Board of Directors of the Company, any trade secret, private or
confidential information or knowledge of the Company obtained or acquired by him while so
employed. All computer software, address books, rolodexes, business cards, telephone
lists, customer lists, price lists, contract forms, catalogs, books, records, files and
know-how acquired while an employee of the Company are acknowledged to be the property of
the Company and shall not be duplicated, removed from the Company’s possession or
premises or used other than in pursuit of the Company’s business and, upon
termination of employment for any reason, Executive shall deliver to the Company, without
further demand, all copies and summaries thereof (whether in written, electronic or other
form) which are then in his possession or under his control. |
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5.2 |
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Inventions
and Improvements. Executive shall promptly communicate to the |
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Company all
ideas, discoveries, inventions and business opportunities which are or may be useful to
the Company or its business. Executive acknowledges that all such ideas, discoveries,
inventions, and improvements which heretofore have been or are hereafter made, conceived,
or reduced to practice by him at any time during his employment with the Company and
every item of knowledge relating to the Company’s business interests (including
business opportunities) heretofore or hereafter gained by him at any time during his
employment with the Company are the property of the Company, and Executive hereby
irrevocably assigns all such ideas, discoveries, inventions, improvements, and knowledge
to the Company for its sole use and benefit, without additional compensation. The
provisions of this Section 5.2 shall apply whether such ideas, discoveries, inventions,
improvements or knowledge were or are conceived, made or gained by him alone or with
others, whether during or after usual working hours, whether on or off the job, whether
applicable to matters directly or indirectly related to the Company’s business
interests (including potential business interests), and whether or not within the
specific realm of his duties. It shall be conclusively presumed that ideas, discoveries,
inventions, and improvements relating to the Company’s business interests or
potential business interests conceived by Executive during the six month period following
termination of his employment are, for the purposes of this Agreement, conceived prior to
termination of his employment hereunder. Executive shall, upon request of the Company,
but at no expense to Executive, at any time during or after his employment with the
Company, sign all instruments and documents reasonably requested by the Company and
otherwise cooperate with the Company to protect its right to such ideas, discoveries,
inventions, improvements, and knowledge, including applying for, obtaining, and enforcing
patents and copyrights thereon in such countries as the Company shall determine. |
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5.3 |
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Noncompetition.
During the term of Executive’s employment and for one year after any termination
of employment, or, if longer, for so long as Executive is entitled to the payment of
amounts pursuant to Section 4.4(a) herein following a termination by the Company without
Cause or pursuant to the Change-in-Control Agreement, Executive shall not directly or
indirectly: (i) engage, anywhere in any geographic market served by the Company or any of
its subsidiaries in any activity which competes in whole or in part with the products or
activities of the Company at the time of such termination; (ii) be or become a
stockholder, partner, owner, officer, director or employee or agent of, or a consultant
to or give financial or other assistance to, any person or entity engaged in any such
activities; (iii) seek in competition with the business of the Company to procure orders
from or do business with any customer of the Company; (iv) solicit, or contact with a
view to, the engagement or employment by any person or entity of any person who is an
employee of the Company; (v) seek to contract with or engage (in such a way as to
adversely affect or interfere with the business of the Company) any person or entity
which has been contracted with or engaged to manufacture, assemble, supply or deliver
products, goods, materials or services to the Company; or (vi) engage in or participate
in any effort or act to induce any of the customers, associates, consultants, or
employees of the Company to take any action which might be disadvantageous to the
Company; provided, however, that nothing herein shall prohibit Executive and his
affiliates from owning, as passive investors, in the aggregate not more than 5% of the
outstanding publicly traded stock of any corporation so engaged. The duration of Executive’s
covenants set forth in this Section shall be extended by a period of time equal to the
number of days, if any, during which Executive is in violation of the provisions hereof. |
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5.4 |
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Injunctive
and Other Relief. |
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(a) |
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Executive
acknowledges and agrees that the covenants contained herein are fair and
reasonable in light of the consideration paid hereunder, and that damages alone
shall not be an adequate remedy for any breach by Executive of his covenants
contained herein and accordingly expressly agrees that, in addition to any
other remedies which the Company may have, the Company shall be entitled to
injunctive or other equitable relief in any court of competent jurisdiction for
any breach or threatened breach of any such covenants by Executive. Nothing
contained herein shall prevent or delay the Company from seeking, in any court
of competent jurisdiction, specific performance or other equitable remedies in
the event of any breach or intended breach by Executive of any of his
obligations hereunder. |
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(b) |
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Notwithstanding
the equitable relief available to the Company, Executive, in the event of a
breach of his covenants contained in Section 5 herein, understands and agrees
that the uncertainties and delay inherent in the legal process would result in
a continuing breach for some period of time, and therefore, continuing injury
to the Company until and unless the Company can obtain such equitable relief.
Therefore, in addition to such equitable relief, the Company shall be entitled
to monetary damages for any such period of breach until the termination of such
breach, in an amount deemed reasonable to cover all actual and consequential
losses, plus all monies received by Executive as a result of said breach and
all costs and attorneys’ fees incurred by the Company in enforcing this
Agreement. If Executive should use or reveal to any other person or entity any
confidential information, such use or revelation would be considered a
continuing violation on a daily basis, for as long as such confidential
information is made use of by Executive or any such other person or entity. |
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(c) |
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If
any provision of Section 5 herein is determined to be invalid or unenforceable
by reason of its duration or scope, such duration or scope, or both, shall be
deemed to be reduced to a duration or scope to the extent necessary to render
such provision valid and enforceable. In such event, Executive shall negotiate
in good faith to provide the Company with lawful and enforceable protection
that is most nearly equivalent to that found to be invalid or unenforceable. |
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(d) |
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The
existence of any claim or cause of action that Executive or any other person or
entity may have against the Company shall not constitute a defense or bar to
the enforcement of any of the provisions of this Section 5. |
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5.5 |
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Definition
of the "Company." The "Company" as used in this Section 5 includes all affiliates and
subsidiaries of the Company. |
SECTION 6. MISCELLANEOUS
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6.1 |
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Litigation.
At the request of the Company, Executive shall during and after the Term render
reasonable assistance to the Company in connection with any litigation or other
proceeding involving the Company or any of its affiliates. The Company will pay Executive
reasonable compensation as mutually agreed for any such services performed after the
Term. |
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The Company
agrees that during the Term that at all times it shall carry appropriate amounts of
officers and directors liability insurance naming the Executive as an insured party. |
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6.2 |
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Arbitration.
All claims and disputes relating to this Agreement or concerning Executive’s
employment or termination shall be conclusively resolved by arbitration in Philadelphia,
Pennsylvania, under the then existing rules of the American Arbitration Association.
Judgment upon any award rendered may be entered by either party in any court of competent
jurisdiction. The cost of such arbitration shall be borne equally by the parties or as
otherwise directed by the arbitrators. This Section 6.2 shall not limit the right of the
Company to seek judicial relief pursuant to Section 5.4 herein without prior arbitration. |
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6.3 |
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Assignment;
Benefit. This Agreement shall not be assignable by Executive, and shall be
assignable by the Company only to any affiliate or to any person or entity which may
become a successor in interest (by purchase of assets or stock, or by merger, or
otherwise) to the Company in the business or substantially all of the business presently
operated by it. Subject to the foregoing, this Agreement and the rights and obligations
set forth herein shall inure to the benefit of, and be binding upon, the parties hereto
and each of their respective permitted successors, assigns, heirs, executors and
administrators. |
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6.4 |
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Notices. All
notices hereunder shall be in writing and shall be sufficiently given if hand-delivered,
sent by documented overnight delivery service or registered or certified mail, postage
prepaid, return receipt requested or by telegram or telefax (confirmed by U.S. mail),
receipt acknowledged, addressed as set forth below or to such other person and/or at such
other address as may be furnished in writing by any party hereto to the other. Any such
notice shall be deemed to have been given as of the date received, in the case of
personal delivery, or on the date shown on the receipt or confirmation therefor, in all
other cases. Any and all service of process and any other notice in any action, suit or
proceeding-shall be effective against any party if given as provided in this Agreement;
provided that nothing herein shall be deemed to affect the right of any party to serve
process in any other manner permitted by law. |
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(a) |
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If
to the Company:
IntriCon Corporation
Arden Hills Office
0000 Xxx Xxx Xxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telecopy No.: 000-000-0000 |
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(b) |
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If
to Executive:
Xxxxxxx X. Xxxxxxxx
00000 00xx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy No:______________ |
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6.5 |
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Entire
Agreement; Modification; Advice of Counsel. |
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(a) |
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This
Agreement and the Change-of-Control Agreement constitute the entire agreement
between the parties hereto with respect to the matters contemplated herein and
therein and supersede all prior agreements and understandings with respect
thereto. No amendment, modification, or waiver of this Agreement shall be
effective unless in writing. Neither the failure nor any delay on the part of
any party to exercise any right or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right or remedy
preclude any other or further exercise of the same or of any other right or
remedy with respect to such occurrence or with respect to any other occurrence. |
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(b) |
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Executive
acknowledges that he has been afforded an opportunity to consult with his
counsel with respect to this Agreement. |
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6.6 |
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Governing
Law. This Agreement is made pursuant to, and shall be construed and
enforced in accordance with, the laws of the Commonwealth of Pennsylvania and the federal
laws of the United States of America, to the extent applicable, without giving effect to
otherwise applicable principles of conflicts of law. |
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6.7 |
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Headings;
Counterparts. The headings of paragraphs in this Agreement are for convenience
only and shall not affect its interpretation. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an-original and all of which, when
taken together, shall be deemed to constitute the same Agreement. |
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6.8 |
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Further
Assurances. Each of the parties hereto shall execute such further
instruments and take such additional actions as the other party shall reasonably request
in order to effectuate the purposes of this Agreement. |
[Signatures begin on
the next page.]
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IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
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INTRICON CORPORATION
By /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: President and Chief Financial
Officer
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/s/ Xxxxxxx X. Xxxxxxxx
XXXXXXX X. XXXXXXXX |
