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Exhibit 1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered as of
March 12, 1999, by and between FIX-CORP INTERNATIONAL, INC. (the "Company"), a
Delaware Corporation, Hershhorn & Trichon, L.L.C. ("H&T"), a Pennsylvania
limited liability company, and the individual shareholders of the Company whose
names appear as signators below (the "Shareholders").
BACKGROUND
The Company has recently filed a petition under Chapter 11 of the
United States Bankruptcy Code and is operating as a debtor in possession. The
Company desires to employ H&T to provide senior executive employment to the
Company and H&T desires to accept such an assignment on the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and intending to be legally bound, the Company and H&T hereby
agree:
1. ENGAGEMENT. The Company hereby engages H&T and H&T hereby agrees to
perform employment during the Initial and any Renewal Term(as those terms are
defined below) -
2. EMPLOYMENT. H&T will provide the employment of its three members to
perform the following roles for the Company:
(a) Xxxx X. Xxxxxxxxx - Chairman of the Board and Chief Executive
Officer;
(b) Xxxxx X. Xxxxxxx - Executive Vice President;
(c) Xxxxxxxxxxxx X. Xxxxxxxx - Chief Operating Officer.
The members of H&T (the "Executives") will accept such employment with the
Company and will perform and fullfill such duties that are reasonably assigned
to them by the Chief Executive Officer and the Board of Directors of the Company
("the Board"), and will devote their best efforts and attention to the
performance and fulfillment of their duties and to the advancement of the
interests of the Company, subject only to the direction, approval, control and
directives of the Chief Executive Officer and the Board of Directors (the
"Employment"). Nothing contained herein shall be construed, however, to prevent
the Executives from trading in or managing, for their own accounts and benefit,
in stocks, bonds, securities, real-estate, commodities or other forms of
investments
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(subject to law and Company policy with respect to trading in competitive
securities).
3. PLACE OF PERFORMANCE. The Company acknowledges that H&T will perform the
employment from its headquarters in the Philadelphia, Pennsylvania metropolitan
area, except as otherwise required by the Board of Directors. The Company will
furnish H&T with office space, secretarial assistance and such other
administrative facilities and services as are reasonably necessary, sufficient
and satisfactory to H&T for the performance of the employment.
4. TERM. H&T's engagement under this Agreement will commence as of March
12, 1999 (the "Commencement Date") and will, unless sooner terminated in
accordance with the provisions hereof, continue uninterrupted for an initial
three-year term (the "Initial Term"), which will expire on March 31, 2002.
Thereafter, the Initial Term will be automatically renewed for successive
one-year periods (a "Renewal Term") unless terminated by either party upon sixty
(60) days' written notice prior to the end of the Initial or any Renewal Term.
5. COMPENSATION.
(a) BASE ANNUAL WAGE. During the Initial Term, H&T will be paid a base
annual wage of $450,000 (the "Base Wage") which will be payable in equal monthly
installments during the Term. The Base Wage may be increased from time to time
by the Board of Directors as conditions warrant including, but not limited to,
H&T's performance record.
(b) INCENTIVE COMPENSATION. The Board of Directors will establish a
plan (the "Plan") for the purpose of providing incentive compensation to H&T.
The amount of the incentive compensation payable under the Plan will be based on
performance in accordance with the provisions of the Plan as determined by the
Compensation Committee of the Board of Directors. Incentive compensation payable
under this subparagraph will be paid at the normal time for payment of executive
bonuses.
(c) HEALTH INSURANCE AND OTHER BENEFITS. During the Initial and any
Renewal Term, the Company will cause the Executives to receive or be reimbursed
for all employee benefits offered by the Company to its Senior Executives and
key management employees, including, without limitation, all pension, profit
sharing, stock options, retirement, salary continuation, deferred compensation,
disability insurance, hospitalization insurance, major medical insurance,
medical reimbursement, survivor income, life insurance
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and any other benefit plan or arrangement established and maintained by the
Company, subject to the rules and regulations then in effect regarding
participation therein. Unless such change is required by Federal, state, or
local law, the Company will not make any changes in any employee benefit plan or
arrangement that would result in a disproportionately greater reduction in the
rights of, or benefits to, the Executives as compared with any other senior
executive of the Company.
(d) REIMBURSEMENT OF EXPENSES. H&T will be reimbursed for ordinary and
reasonable travel, entertainment and miscellaneous expenses incurred in
connection with the performance of employment, provided that H&T will submit to
the company such statements and other evidence supporting said expenses as the
Company may reasonably require.
6. STOCK OPTIONS.
(a) The Company hereby grants to H&T non-qualified options (the
"Options") to purchase 2,000,000 shares (the "Shares") of the Company common
stock, $.01 par value, which Options may be exercised by H&T if but only if a
management sponsored plan of reorganization is approved in which event the
Options may be exercised at any time during the five years following the data of
this Agreement. subject to the same terms that would apply if the options were
granted under the Company's 1997 Stock Option Plan (the "Stock Option Plan").
(b) The exercise price of the Options will be the closing price of the
Company's common stock as listed in the NASDAQ Bulletin Board Exchange as of
March 12, 1999 ($0.56/share).
(c) If, at any time the Company shall determine to register (other than
a registration statement on Form S-8 or S-4 or similar form) any of its common
stock, the Company will, subject to the further provisions herein set forth,
promptly give written notice thereof to H&T; and include in such registration
statement all the Shares specified in a written request made by H&T within 15
days after the receipt or such written notice tram the Company; provided,
however, that H&T shall have such notice and registration rights only to the
extent that the Company does not have an effective registration statement
covering the shares. Such registration shall provide for the sale of the shares
included therein from time to time during the six months (the "Sale Date") from
the effective date of the Registration Statement, subject to the provisions
hereinafter set forth. All registration, filing, qualification and printing
expenses incurred in connection with the Registration Statement shall be for the
account of the Company,
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provided that all fees and disbursements of counsel retained by H&T with respect
to such Registration Statement and all brokerage or similar commissions or
discounts incurred by H&T in connection with the sale of the Shares shall be for
the account of H&T in connection with the sale of the Shares shall be for the
account of H&T. The Company shall have no obligation to declare the Registration
Statement effective. If the offering included in such Registration Statement is
underwritten, H&T at the election of the underwriter shall either include such
Shares in such underwritten offering, reduce the number of securities registered
or delay his offering in any case upon such terms and conditions as determined
by the underwriter in its sole discretion. If the offering is delayed, the six
month period referred to above shall commence upon the expiration of any such
delay.
(d) Should H&T be terminated for cause before the Options are
exercised, the Options shall expire and thereafter become null and void.
7. TERMINATION FOR CAUSE.
(a) Subject to the provisions of subparagraph (b) below, the Company
may discharge H&T and the Executives for "Cause" (as that term is defined below)
and thereby terminate H&T's engagement under this Agreement.
(b) For purposes of this Agreement, the Company shall have "Cause" to
terminate H&T's engagement if H&T or the Executives, in the reasonable judgment
of the Company, (i) materially breach any of its/their duties or obligations
under this Agreement and has not cured or commenced in good faith to cure such
breech within thirty days after notice; (ii) embezzles or converts to their own
use any funds of the Company or any client or customer of the Company; (iii)
converts to their own use or unreasonably destroys any property or the Company,
without the Company's consent; (iv) is habitually intoxicated or is diagnosed by
an independent medical doctor to be addicted to a controlled substance or any
drug whatsoever.
(c) Notwithstanding the foregoing, H&T shall not be deemed to have been
terminated for Cause unless and until H&T has first received thirty (30) days'
prior written notice from the Company specifying the nature of the Cause alleged
(the "Intent to Dismiss Notice") and H&T and the Executives shall have failed to
cure or commenced in good faith to cure any such breach within thirty days after
the receipt of the intent to Dismiss Notice.
8. TERMINATION WITHOUT CAUSE/FOR GOOD REASON. In the event
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that the Company shall terminate this Agreement without Cause or H&T shall
terminate this Agreement for "Good Reason", as that term is defined in Paragraph
8(c), then the Company shall:
(a) Pay H&T as severance pay the remainder, if any, of the Base Wage
for the first year of the contract term which shall be payable in monthly
installments until such amount is paid in full;
(b) Maintain in full force and effect all employee benefits then being
afforded to H&T's Executives for a period of six (6) months after termination or
for the balance of the first year of the Term, whichever is less. In the event
that H&T's participation in any such benefit plan or program is barred or
otherwise prohibited by law, the Company shall arrange to provide H&T with
benefits substantially similar to those which H&T is entitled to receive under
such plans and programs.
(c) For purposes of this paragraph 8, "Good Reason" means the failure
by the Company to comply with the material provisions of this Agreement which
failure is not cured within thirty (30) days following the giving of written
notice thereof to the Company's Board of Directors ("Notice of Termination for
Good Reason").
9. DISPUTE RESOLUTION. In the event that H&T disputes the Company's
determination that Cause exists for terminating this Agreement, or the Company
disputes H&T's determination that Good Reason exists for termination of this
Agreement, either party disputing such a determination shall serve the other
with written notice of such dispute ("Dispute Notice") within thirty (30) days
after receipt of the Dismissal Notice or Notice of Termination for Good Reason,
as the case may be. Within fifteen (15) days thereafter, H&T or the Company, as
the case may be, shall, in accordance with the Rules of the American
Arbitration Association ("AAA"), file an application with the AAA for
arbitration of the dispute, the costs thereof to be shared equally by H&T and
the Company.
10. [Intentionally omitted].
11. [Intentionally omitted].
12. RESTRICTIVE COVENANT.
(a) During the Term of this Agreement and for a period of six (6)
months following termination of this Agreement pursuant to Paragraphs 7 or 8,
H&T Executives undertake and agree
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that they shall not compete, directly or indirectly or participate as a
director, officer, employee, representative or otherwise, or as stockholder,
partner or joint venture, or have any director or have any direct or indirect
financial interest in any business competing directly with the pallet business
of Company or any of its subsidiaries with any geographical area in which the
business of the Company or its subsidiaries is being conducted during the Term
of the Agreement.
(b) Should the duration, geographical area or range of prescribed
activities contained in subparagraph (a) above be held unreasonable by any court
of competent jurisdiction, then such duration, geographical area or range of
prescribed activities shall be modified to such degree as to make it or them
reasonable and enforceable.
13. TRADE SECRETS. During the Term hereof and after termination or
expiration of this Agreement for any reason, H&T and the Executives shall not
disclose, divulge, copy or otherwise use any trade secret of the Company or its
subsidiaries other than any knowledge or information already known to H&T
prior to this Agreement, it being acknowledged that all such new information
and materials compiled or obtained by or disclosed to H&T while
employed by the Company or its subsidiaries hereunder or otherwise are
confidential and the exclusive property of the Company and its subsidiaries.
14. INJUNCTIVE RELIEF. The parties hereto agree that the remedy at law for
any breach of the provisions of Paragraph 12 will be inadequate and that the
Company or any of its subsidiaries or other successors or assigns shall be
entitled to injunctive relief without bond. Such injunctive relief shall
not be exclusive, but shall be in addition to any other rights and remedies of
the Company or any of its subsidiaries or successors or assigns might have for
such breach.
15. COUNSEL FEES AND INDEMNIFICATION.
(a) In the event that it becomes necessary or desirable for H&T to
retain legal counsel and/or incur other costs and expenses in connection with
the enforcement of any and all their rights under this Agreement, including
participation in any proceeding contesting the validity or enforceability of
this Agreement and any arbitration proceeding pursuant to Paragraph 9, H&T shall
be entitled to recover from the Company their reasonable attorney's fees and
costs and expenses in connection with the enforcement of their rights. No fees
shall be payable if the Company is successful on the merits.
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(b) The Company shall indemnify and hold H&T and the Executives
harmless to the maximum extent permitted by the law against judgments, fines,
amounts paid in settlement and reasonable expenses, including attorneys' fees
incurred by H&T and/or the Executives, in connection with the defense of, or as
a result of, any action or proceeding (or any appeal from any action or
proceeding) in which H&T and/or the Executives is/are made or is/are threatened
to be made a party by reason of any act or omission of H&T and the Executives in
their capacity as an officer, director, or employee of the Company, regardless
of whether such action or proceeding is one brought by or in the right of the
Company, to procure a judgment in its favor. Expenses (including attorneys'
fees) incurred by H&T and the Executives in defending any civil, criminal,
administrative, or investigative action, suit or proceeding shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of H&T and the Executives to
repay such amount if it shall ultimately be determined that they are not
entitled to be indemnified by the Company as authorized in this Paragraph 15(b).
16. MISCELLANEOUS.
(a) NOTICES. Any notice, demand or communication required or permitted
under this Agreement shall be in writing and shall either be hand-delivered to
the other party or mailed to the addresses set forth below by registered or
certified mail, return receipt requested, or sent by overnight express mail or
courier or facsimile to such address, if a party has a facsimile machine. Notice
shall be deemed to have been given and received when so hand-delivered or after
three business days when so deposited in the U.S. Mail, or when transmitted and
received by facsimile or sent by express mail properly addressed to the other
party. The Addresses are:
To H&T and/or the Executives:
Hershhorn & Trichon, LLC
C/o Xxxx X. Xxxxxxxxx
0000 Xxxx Xxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xx. 00000
To the Company:
0000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
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(b) ENFORCEABILITY. If any provision of this Agreement shall be held
invalid or unenforceable, in whole or in part, such provisions shall be deemed
to be modified or restricted to the extent and in the manner necessary to render
the same valid and enforceable or shall be deemed excised from this Agreement,
as the case may require, and this Agreement shall be construed and enforced to
the maximum extent permitted by law as if such provision had been originally
incorporated herein as so modified or restricted, or as if such provision had
not been originally incorporated herein, as the case may be.
(c) BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, including their respective heirs, executors,
successors and assigns, except that this Agreement may not be assigned by H&T.
(d) WAIVER OR BREACH. No waiver by either party of any condition or of
the breach by the other of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any condition, or the breach of any other term or covenant set forth
in this Agreement. Moreover, the failure of this party to exercise any right
hereunder shall not bar the later exercise thereof.
(e) GOVERNING LAW AND INTERPRETATION. This Agreement shall be governed
by the internal laws of the Commonwealth of Pennsylvania. Each of the parties
agrees that he or it, as the case may be, shall deal fairly and in good faith
with the other party in performing, observing and complying with the covenants,
promises, duties, obligations, terms and conditions to be performed, observed or
complied with by him or it, as the case may be, hereunder; and that this
Agreement shall be interpreted, construed and enforced in accordance with the
foregoing covenant notwithstanding any law to the contrary.
(f) HEADINGS. The headings of the various sections and paragraphs have
been included herein for convenience only and shall not be considered in
interpreting this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed and delivered by and through their
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authorized representatives.
FIX-CORP INTERNATIONAL, INC. ATTEST:
By:_________________________________ _____________________________________
[An authorized officer] [SEAL]
HERSHHORN & TRICHON, LLC
By:_________________________________ _____________________________________
Xxxx X. Xxxxxxxxx Witness
Manager
____________________________________ _____________________________________
Xxxx X. Xxxxxxxxx Witness
____________________________________ _____________________________________
Xxxxx X. Xxxxxxx Witness
____________________________________ _____________________________________
Xxxxxxxxxxxx X. Xxxxxxxx Witness
____________________________________ _____________________________________
Xxxx Xxxxxx Witness
____________________________________ _____________________________________
Xxxxxxxx Xxxxxxxxx Witness
____________________________________ _____________________________________
Xxxxxxx XxXxxxx Witness
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____________________________________ _____________________________________
Xxxxxx Press Witness
____________________________________ _____________________________________
Xxxx XxXxxxxxxxx Witness
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