EXECUTIVE EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 15th day of April, 1998,
by and between THERMOVIEW INDUSTRIES, INC. a Nevada corporation ("Employer") and
XXXXXXX X. XXXXXXXX, a resident of the State of Florida ("Executive").
In consideration of the mutual promises, agreements and covenants, and
subject to the terms and conditions contained in this Agreement, the Employer
and Executive, intending to be legally bound, hereby agree as follows:
1. EMPLOYMENT. Employer hereby employs Executive as President and Chief
Executive Officer, and Executive hereby accepts employment by Employer, in
accordance with and subject to the terms and conditions of this Agreement. The
person holding the office of president and chief executive officer on the date
hereof shall resign effective April 15, 1998.
2. DUTIES AND AUTHORITY. During the Employment Period (as hereafter
defined), Executive will occupy the position of President, Chief Executive
Officer, and member of the Board of Directors of Employer. As President and
Chief Executive Officer, Executive shall be in charge of the operations of
Employer and shall have full authority and responsibility, subject to the
general direction and control of Employer's Board of Directors, for formulating
policies and administering the affairs of Employer in all respects, and
otherwise performing such duties as are customarily performed by the President,
Chief Executive Officer and member of the board of directors of a company of
similar size and structure to Employer. In the absence of the Chairman of the
Board, Executive will preside over meetings of the shareholders and Board of
Directors of Employer. Executive agrees to devote his full time, attention and
best efforts to the performance of his duties hereunder.
3. INITIAL TERM; EMPLOYMENT PERIOD. The initial term of employment shall
begin on April 15, 1998 and end on April 15, 2000 (the "Initial Term"), and
Executive's employment shall thereafter be automatically extended for successive
periods of one year each upon the same terms and conditions as set forth herein,
unless this Agreement is sooner terminated as provided herein. For purposes of
this Agreement, the period beginning on April 15, 1998, and ending on the Date
of Termination (as hereafter defined) shall be referred to herein as the
"Employment Period."
4. COMPENSATION. During the Employment Period, Executive will receive
the following compensation:
A. BASE SALARY. A base annual salary of $150,000, payable either
bi-monthly or monthly at the discretion of the Executive.
B. INCENTIVE COMPENSATION. Additional compensation (the "Incentive
Compensation") equal to two percent (2%) of growth (increase) in net income
(before state and federal income and franchise taxes) of Employer (on a
consolidated basis) for each fiscal year (or part thereof) of Employer
during the Employment Period. Net income shall be determined in accordance
with generally accepted accounting principles consistently applied as
determined by the Employer's independent auditors, whose determination of
net income shall be final and binding upon Executive and Employer.
Compensation under this subparagraph shall not be limited as to amount.
The initial Incentive Compensation payment shall be due on March 31, 1999,
and shall be calculated based on the growth in Employer's net income from
April 15, 1998, to December 31, 1998, divided by twelve, multiplied by the
number of months or part thereof from April 15, 1998 through December 31,
1998 (or an earlier Date of Termination). Thereafter, the Incentive
Compensation payment shall be made on March 31 of the year following the
fiscal year for which the growth in net income is being calculated, and for
any fiscal year of Employer in which the Date of Termination occurs prior
to December 31, shall be calculated based on the growth in net income
during the year in which the Date of Termination occurs, divided by twelve,
multiplied by the number of months or part thereof from January 1 of such
year to the Date of Termination. Nothing herein shall be construed as
requiring Executive to make any payment to Employer in the event of a
decrease in net income.
5. STOCK RIGHTS. The Executive shall receive common stock, or rights to
acquire common stock, of Employer as follows:
A. STOCK OPTIONS. Employer shall grant to Executive a stock option
which to the extent permitted under applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code") shall be an incentive stock
option ("ISO"), within the meaning of Section 422 of the Code, to purchase
800,000 shares of the common stock of Employer at an option price of $1.15
per share. The right to acquire up to 400,000 shares pursuant to the
option shall vest six (6) months after the date hereof, and the right to
acquire up to an additional 200,000 shares shall vest on each of twelve
(12) and eighteen (18) months after the date hereof. Executive shall be
eligible for additional stock options during the term hereof
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at the discretion of the Board of Directors of Employer. It is the
intent of Employer and Executive that the option granted hereby is
intended to the extent possible under Section 422 of the Code to be an
incentive stock option for purposes of the Code, and the option price
and other aspects of the grant are structured to effectuate that intent.
Employer agrees to establish a stock option plan to effectuate the ISO
provisions described herein; provided, however, if for any reason the
option granted hereby is determined in whole or in part not to be an
ISO, Executive shall have the right to acquire the shares upon the price
and terms set forth herein as a non-qualified option. The option shall
be subject to the terms and conditions of the stock option plan.
B. EXERCISE. The stock option granted under subparagraph B. above
shall be exercisable during the Employment Period and for 90 days
thereafter (or such longer period as Employer may allow). In the event of
termination for Cause or without Good Reason (both as defined hereafter),
the option may be exercised only to the extent vested on the Date of
Termination. In the event of termination for any other reason, and in the
event of a "Change in Control" (as defined in the Employee's stock option
plan), any portion of the option which has not then vested under the
vesting schedule set forth in subparagraph A. above shall immediately and
fully vest, and shall be exercisable for a period of six months beginning
on the Date of Termination or date of the Change in Control.
6. BENEFITS. During the term of this Agreement, Executive shall receive
the following additional benefits at no cost to the Executive:
A. LIFE INSURANCE. Employer shall use its best effort to obtain and
pay for a whole life insurance policy insuring the life of Executive in the
amount of $150,000, the beneficiary or beneficiaries of which shall be
designated by Executive, and which shall be transferable to Executive
without cost upon the termination of Executive's employment hereunder and
upon Executive's assumption of the obligation to make future premium
payments with respect thereto. Executive represents to Employer that
Executive does not know of any reason why such policy would be rated with a
higher premium than normal based on Executive's age.
B. DISABILITY INSURANCE. Employer shall use its best efforts to
obtain and pay for disability insurance for Executive in the maximum
available amount (but not more than sixty percent (60%) of the Base
Salary), with a maximum monthly benefit payable for life and with a waiting
period of no more than six (6) months, the beneficiary or beneficiaries
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of which shall be designated by Executive, and which policy shall, at
Executive's option, be transferred to Executive upon the termination of his
employment hereunder and upon his assumption of the obligation to make
premium payments with respect thereto. Employer shall pay 100% of Base
Salary for each month during the disability waiting period, but in no event
for more than six (6) months.
C. MEDICAL AND GROUP INSURANCE. Employer shall include Executive
and his dependents in any group medical, dental and hospital or similar
plan of Employer in existence from time to time, is subject to all the
terms and conditions of such plan. Employer will use its best efforts to
obtain individual medical, dental and hospital insurance for Executive if
group coverage is not in existence or unavailable.
D. VACATION. Executive shall be entitled to three (3) weeks of paid
vacation during each year of employment.
E. AUTOMOBILE. Executive shall receive an automobile allowance of
$600 per month.
F. CLUB DUES. Employer shall pay Executive's membership dues for
the Hurstbourne Country Club. Employer shall pay for such other club dues
and membership fees for Executive as are reasonable and customary from time
to time.
G. COMMUNICATIONS AND OTHER EQUIPMENT. Employer shall provide
Executive with, and shall pay all costs of operating and maintaining, a
cellular telephone, notebook and desk top computer facsimile machine, and
such other equipment necessary for Executive to perform his duties.
H. EXPENSE REIMBURSEMENT. Executive shall be entitled to
reimbursement for all reasonable expenses, including travel and
entertainment, incurred by Executive in the performance of his duties.
Executive will maintain records and written receipts as required by federal
and state tax authorities to substantiate expenses as an income tax
deduction for Employer and shall submit vouchers for expenses for which
reimbursement is made.
I. OTHER BENEFITS. Employer shall also provide Executive with no
less than the same type and level of other benefits provided by the
Employer from time to time to its other executive officers, senior
management personnel and board members. These include, but are not limited
to, pension and profit sharing plans, life and health insurance benefits,
stock option and stock purchase plans, stock appreciation rights, and stock
warrants.
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7. NON-COMPETE; CONFIDENTIALITY. In consideration of the employment of
Executive by Employer, Executive agrees as follows:
A. NON-COMPETE. During the Employment Period and for a period of
two years after the Date of Termination, Executive will not, directly or
indirectly, within a fifty mile radius of any office of Employer (or a
consolidated subsidiary) in existence on the Date of Termination, own,
manage, be employed by, work for, consult for, be an officer or director
of, advise, represent, engage in or carry on any business which competes
with the business of the Employer at that time. Nothing herein shall be
construed to prohibit Executive from vesting in not more than five percent
(5%) of the equity securities of a competing business. Provided, however,
that if Executive's employment is terminated without Cause or with Good
Reason, the restrictions contained in this subparagraph A. shall expire one
year from the Date of Termination.
B. NON-DISCLOSURE OF INFORMATION. Executive will not at any time,
during or after the term of this Agreement in any fashion, form, or manner,
either directly or indirectly, divulge, disclose, or communicate to any
person, firm, or corporation, in any manner whatsoever, any information of
any kind, nature, or description concerning any matters affecting or
relating to the business of the Employer, including, but not limited to,
the names of any of its customers or prospective customers or any other
information concerning the business of the Employer, its manner of
operation, its plans, its vendors, its suppliers, its advertising, its
marketing, its methods, its practices, or any other information of any
kind, nature, or description, without regard to whether any or all of the
foregoing matters would otherwise be deemed confidential, material, or
important; provided, however, that this provision shall not prevent
disclosures by Executive to the extent such disclosures are believed by the
Executive, in good faith and acting reasonably, to be in the best interest
of the Employer.
8. TERMINATION OF EMPLOYMENT.
A. DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
Additionally, if the Employer determines in good faith that the Disability
of the Executive has occurred, it may give the Executive written notice of
its intention to terminate the Executive's employment. In the event, the
Executive's employment with the Employer shall terminate effective on the
30th day after receipt of such notice by the Executive (the "Disability
Effective Date"), provided that, within the 30 days after such receipt, the
Executive shall not have returned to full-time performance of
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the Executive's duties. For purposes of this Agreement, "Disability"
shall mean the absence of the Executive from the Executive's duties as a
result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the
Employer or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not
to be withheld unreasonably).
B. CAUSE. The Employer may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this Agreement,
"Cause" shall mean (i) a material breach by the Executive of the
Executive's obligations under paragraph 2 above (other than as a result of
temporary incapacity due to physical or mental illness, or Disability)
which is demonstrably willful and deliberate on the Executive's part, which
is committed in bad faith or without reasonable belief that such breach is
in the best interests of the Employer and which is not remedied in a
reasonable period of time after receipt of written notice from the Employer
specifying such breach or (ii) the conviction of the Executive of a felony;
or (iii) a breach of the Executive's fiduciary duty to the Employer or
willful violation in the course of performing his duties for the Employer
of any law, rule or regulation (other than traffic violation or other minor
offenses) (No act or failure to act on the Executive's part shall be
considered wilful unless done or omitted to be done in bad faith and
without reasonable belief that the action or omission was in the best
interest of the Employer).
C. GOOD REASON. The Executive's employment may be terminated by the
Executive at any time for Good Reason. For purposes of this Agreement,
"Good Reason" shall mean:
(i) the assignment of the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices,
titles and reporting requirement), authority, duties or
responsibilities as contemplated by paragraph 2 or any other action by
the Employer which results in a diminution in such position,
authority, duties or responsibilities, excluding for this purpose an
isolated, unsubstantial and inadvertent action not taken in bad faith
and which is remedied by the Employer promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Employer to comply with any of the provisions
of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied
by the
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Employer promptly after receipt of notice thereof given by the
Executive;
(iii) the Employer's requiring the Executive to be based at any
office or location other than Palm Beach, Florida or Louisville,
Kentucky; or
(iv) a Change in Control.
For purposes of this subparagraph C, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
D. WITHOUT CAUSE. Either Employer or Executive may terminate this
Agreement without cause or reason upon not less than 30. days written
notice to the other, setting forth the effective date of termination.
E. NOTICE OF TERMINATION. Any termination by the Employer for
Cause, or by the Executive for Good Reason, shall be communicated to the
other party by Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to the
extent applicable sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment and (iii) specifies the Date of Termination (as defined below).
The failure by the Executive or the Employer to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Employer
hereunder or preclude the Executive or the Employer from asserting such
fact or circumstance in enforcing the Executive's or the Employer's rights
hereunder.
F. DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date specified in the Notice of Termination
as the Date of Termination (ii) if the Executive's employment is terminated
by reason of death or Disability, the Date of Termination shall be date of
death of the Executive or the Disability Effective Date, as the case may
be; and (iii) if Executive's employment is terminated by either party other
than for death, Disability, Cause or Good Reason, the date set forth in the
notice required under subparagraph D. above as the date of termination is
to be effective.
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9. OBLIGATIONS OF THE EMPLOYER UPON TERMINATION. Upon the termination of
the Executive's employment for any reason, Executive shall be entitled to Base
Salary and all benefits through the Date of Termination, and to exercise then
vested stock options in accordance with paragraph 5.C. above. Upon the
termination of the Executive's employment other than by the Executive without
Good Reason, or by the Employer with Cause, Executive shall in addition be
entitled to exercise the option granted pursuant to paragraph 5.B. above, with
respect to the remaining shares in the manner provided by paragraph 5.C., and to
receive a lump sum payment equal to the greater of: (i) the present value of
Executive's Base Salary for a period of time measured from the Date of
Termination to the end of the Initial Term; or (ii) the present value of two
times the Executive's Base Salary as of the Date of Termination. For purposes
of this Agreement, "present value" shall be determined by using the "Applicable
Federal Rate" for the period corresponding with that period over which the
present value is being determined. If on the Date of Termination the Employer's
stock is not publicly traded, Employer shall repurchase from Executive and
Executive shall sell to Employer all of the stock of Employer then owned by
Executive (whether acquired pursuant to this Agreement or otherwise), or
thereafter acquired in accordance with paragraph 5.C. above, at the fair market
value thereof as of the Date of Termination as determined by independent
appraisal. If the Employer and the Executive cannot agree upon a single
appraiser to conduct the appraisal required hereby, each shall appoint an
appraiser, who shall appoint a third appraiser, and the average of the three
appraisals shall be deemed to be the appraisal value of the stock for purposes
of this paragraph. The appraisal process shall be completed no later than three
months from the Date of Termination. The lump sum payment shall be paid no
later than thirty days after the Date of Termination, and the purchase price for
the Executive's stock shall be paid no later than thirty days after the date the
appraisal is completed, in each case in immediately available United States
funds.
10. MITIGATION OF DAMAGES. Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of self-employment or employment by another employer or
otherwise.
11. TAX EFFECT. If the severance compensation payable under this
Agreement, either alone or together with other payments to the Executive from
the Employer or one of its subsidiaries would constitute a "parachute payment"
(as defined in Section 28OG of the Code), such severance compensation may be
reduced to the largest amount as will result in no portion of the severance
compensation payments hereunder being subject to the excise tax
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imposed by Section 4999 of the Code or being disallowed as deductions to the
Employer under Section 28OG of the Code. The determination of whether any
reduction shall be made in the severance compensation payments hereunder
pursuant to the foregoing provision shall be made by Executive after
consultation with the Employer. The Executive shall be liable for the
payment of income and excise taxes, if any, applicable to him on such
severance compensation.
12. MANDATORY DEDUCTIONS. Any amounts to which Executive is entitled as
compensation, bonus, merit bonus, or any other form of compensation subject to
withholding, shall be subject to usual deduction for appropriate federal, state,
and local income tax obligations of Executive.
13. NOTICES. Any notice provided for in this Agreement shall be given in
writing. Notices shall be effective from the date of receipt, if delivered
personally to the party to whom notice is to be given, or on the second day
after mailing, if mailed by first class mail, postage prepaid. Notices shall be
properly addressed to the parties at their respective addresses set forth below
or to such other address as either party may later specify by notice to the
other:
If to Employer:
Xxxxxx X. Xxxxxxxx
ThermoView Industries, Inc.
0000 Xxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
If to Executive:
Xxxxxxx X. Xxxxxxxx
00000 Xxxxxx Xxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
14. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
supersedes all prior agreements and understandings, oral or written, with
respect to the subject matter hereof. This Agreement may be changed only by an
agreement in writing signed by the party against whom any waiver, change,
amendment or modification is sought.
15. WAIVER. The waiver by one party of a breach of any of the provisions
of this Agreement by the other shall not be construed as a waiver of any
subsequent breach.
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16. ATTORNEY'S FEES. In the event of litigation or other dispute
resolution proceeding involving the interpretation or enforcement of this
Agreement, the prevailing party shall be entitled to recover from the other all
fees, costs and expenses incurred in connection therewith, including attorney, s
fees through appeal.
17. GOVERNING LAW; VENUE. The Agreement shall be construed and enforced
in accordance with the laws of the Commonwealth of Kentucky. Jefferson County,
Kentucky, shall be proper venue for any litigation arising out of this
Agreement.
18. PARAGRAPH HEADINGS. Paragraph headings are for convenience only and
are not intended to expand or restrict the scope or substance of the provisions
of this Agreement.
19. ASSIGNABILITY. The rights and obligations of the Employer under this
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer. This Agreement is a personal employment agreement
and the rights, obligations and interests of the Executive hereunder may not be
sold, assigned, transferred, pledged or hypothecated.
20. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement shall remain in full force and shall in no way be impaired.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to account for more than one such
counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the 15th
day of April, 1998.
EXECUTIVE: /s/ Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
THERMOVIEW INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Vice President - Finance and
Administration
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