EMPLOYMENT AGREEMENT
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AGREEMENT made as of this 1st day of October 1998, by and between XXXXXX
INDUSTRIES, INC., a Delaware corporation (hereinafter called the "Company"), and
XXXXX XXXX residing at 000 Xxxx Xxxx Xxxxx, Xxxxxxxxx XXXXXXXXXXXX 00000
(hereinafter called the "Employee").
WITNESSETH
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WHEREAS, the Employee has been employed by the Company under an Employment
Agreement, dated October 3, 1988, as amended, which agreement was superseded by
a second Employment Agreement between Employee and the Company, dated January 1,
1997; by a third Employment Agreement between Employee and the Company dated as
of November 1, 1997, and the Company desires to enter into a new employment
agreement with Employee which agreement shall supersede all prior employment
agreements; and,
WHEREAS, Employee desires to enter into the new employment agreement with
the Company;
NOW THEREFORE, it is agreed as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
agreements, oral or written, entered into between Employee and the Company prior
to the date of this Agreement, including, but not limited to, the Employment
Agreements between the Employee and the Company, dated October 3, 1988, as
amended and January 1, 1997, and November 1, 1997, respectively.
2. RETENTION OF SERVICES. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
3. TERM. Subject to earlier termination on the terms and conditions
hereinafter provided, the term of this Agreement shall be comprised of a four
(4) year and three (3) month period of employment commencing October 1, 1998 and
ending December 31, 2002 and a five year "consulting period" commencing at the
end of active employment. On each January 1, commencing January 1, 2000, unless
either party provides prior written notice to the other party that it does not
want the term of the Agreement to be extended, the term of the Agreement shall
extend to three (3) years from each January 1.
4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT
(a) During the period of active employment, Employee shall be
employed as an executive of the Company. In such capacity,
Employee agrees that he shall serve the Company under the
direction of the Chief Executive Officer of the Company to the
best of his ability, shall devote full time during normal
business hours to such employment, shall perform all duties
incident to his offices on behalf of the Company, and shall
perform such other duties as may from time to time be assigned to
him by the Chief Executive Officer of the Company.
(b) In the event that this agreement is not renewed, Employee shall
cease to be an employee of the Company. However, in recognition
of the continued value to the Company of Employee's extensive
knowledge and expertise, Employee shall serve as a consultant to
the Company during the consulting period. In such capacity,
Employee shall consult with the Company and its respective senior
executive officers with respect to its respective businesses and
operations. Such consulting services shall not require more than
fifty (50) days in any one year, it being understood and agreed
that during the consulting period Employee shall have the right
to undertake full time or part time employment with any business
enterprise which is not a competitor of the Company. Employee's
services as a consultant to the Company shall be required at such
times and such places as shall result in the least inconvenience
to Employee, having in mind his other business commitments which
may obligate him to perform services prior to the performance of
his services hereunder. To the end that there shall be a minimum
of interference with Employees other commitments, his consulting
services shall be rendered by personal consultation at his
residence or office wherever maintained, or by correspondence
through mail, telegram or telephone, or other similar modes of
communications at times, including weekends and evenings, most
convenient to him. During the consulting period, Employee shall
not be obligated to serve as a member of the Board of Directors
of the Company or to occupy any office on behalf of the Employer
or any of its subsidiaries or affiliates.
5. REMUNERATION
(a) During the period of active employment, Employee shall be
entitled to receive the following compensation for his services:
(i) The Company shall pay to Employee an annual salary at the
rate of THREE HUNDRED TWENTY-FIVE THOUSAND ($325,000)
DOLLARS commencing October 1, 1998, payable in weekly
installments, or in such other manner as shall be agreeable
to the Company and Employee.
(ii) In addition to his salary set forth in Paragraph 5(i) above,
Employee shall receive an increment in an amount equal to
the cumulative cost of living on his base salary as reported
in the "Consumer Price Index, New York Northeastern New
Jersey, all items", published by the United States
Department of Labor, Bureau of Labor Statistics, using
January 1,1998 as the base year for computation. Such cost
of living increment with respect to the aforesaid salary of
Employee shall be made semi-annually as follows:
(A) With respect to the first six months of each calendar
year during the period of employment, such increment
shall be calculated and payable cumulatively on or
before the first day of August of such year; and
(B) With respect to the last six months of each calendar
year during the period of employment, such increment
shall be calculated and payable cumulatively on or
before the first day of February of the following
calendar year.
If Employee's employment shall terminate during any six-month period
referred to in this Paragraph 5 (ii), then the cost of living increment provided
for herein shall be prorated accordingly.
(iii)Not later than one hundred twenty (120) days after the end
of the fiscal year of the Company and each subsequent fiscal
year of the Company ending during the four year and three
month period of employment, the Company shall pay to
Employee, as incentive compensation an amount equal to four
(4%) percent of the Consolidated Pretax Earnings of the
Company in excess of the Company's Minimum Consolidated
Pretax Earnings, as defined below. For purposes hereof, the
term "Consolidated Pretax Earnings" of the Company shall
mean, with respect to any fiscal year, the consolidated
income, if any, of the Company for such fiscal year as set
forth in the audited, consolidated financial statements (the
"Financial Statements") of the Company and its subsidiaries
included in its Annual Report to stockholders for such
fiscal year, before deduction of taxes based on income or of
the incentive compensation to be paid to Employee for such
fiscal year under this Agreement as defined below in this
clause (iii) and in no event more than Employee's annual
salary set forth in clause (i) immediately above.
For purposes hereof the term "Minimum Consolidated Pretax Earnings" of the
Company shall mean, with respect to any fiscal year, the amount of Consolidated
Pretax Earnings of the Company equal to ten percent (10%) of (x) the Company's
Stockholders' Equity, as set forth in the Financial Statements for the beginning
of such fiscal year, plus (y) the proceeds from the sale of the Company's equity
securities, less (z) the purchase price from the acquisition of the Company's
equity securities, on a time-proportioned basis, during such fiscal year.
(b) During the consulting period, Employee shall be entitled to a
consulting fee at the rate of ONE HUNDRED THOUSAND ($100,000)
dollars per annum, paid on a monthly basis.
6. EMPLOYEE BENEFITS - EXPENSES
a) During the period of active employment, Employee shall receive
all fringe benefits in the nature of health, medical, life and/or
other insurance, a Company car and related expenses as received
by other officers of the Company.
b) The Company shall reimburse Employee for all proper expenses
incurred by him, including disbursements made in the performance
of his duties to the Company; provided, however that no
extraordinary expenses and/or disbursements shall be incurred by
Employee without the prior approval of the Chief Executive
Officer or the Board of Directors of the Company.
c) Employee shall be eligible to participate in the Company's stock
option and stock purchase plans and to acquire warrants to
purchase the Company's stock to the extent determined in the sole
discretion of the Compensation Committee of the Company's Board
of Directors.
d) During the period of active employment, Employee shall be
furnished with office space and facilities commensurate with his
position and adequate for the performance of his duties; he shall
be provided with the perquisites customarily associated with the
position of a Senior Executive of the Company; and he shall be
entitled to six weeks regular vacation during each year.
e) In the event of the death of Employee, within 30 days thereafter
the Company shall promptly make a lump sum payment to Employee's
widow, or to such other person or persons as may be designated by
Employee in his Will, or to his estate in the event of Employee's
intestacy, of the salary and compensation to which Employee is
entitled hereunder for the two year period from date of death and
one-half of such salary for the balance of the period covered by
this Agreement, and in the year of death an additional payment
equal to the pro rata amount for said year of the compensation
set forth in paragraph 5 (iii), the Company's contribution to the
401(k), and the pro-rata cost of living increment, which
additional payment shall be made in accordance with paragraph 5
(ii). and thereafter one-half of such compensation Board of
Directors of the Company or a committee thereof.
f) Disability for Employee shall occur if he becomes unable, for
twelve consecutive months or more, due to ill health or other
incapacity to perform the services described above. In that
event, the Company may thereafter, upon at least 90 days written
notice to employee, place him on disability status and terminate
this agreement. If employee is so determined by the Company as
disabled, he shall be entitled to his annual compensation as set
forth in paragraph 5 (i) and 5 (ii) hereof payable in weekly
installments for the first two years after notice of disability,
payable in weekly installments for the balance of the period
covered by this agreement.
7. NON-COMPETITION. Employee agrees that, during term of this Agreement, he
will not, without the prior written approval of the Board of Directors of the
Company, directly or indirectly through any other individual or entity, (a)
become an officer or employee of, or render any services to, any competitor of
the Company, (b) solicit, raid, entice or induce any customer of the Company to
cease purchasing goods or services from the Company or to become a customer of
any competitor of the Company, and Employee will not approach any customer for
any such purpose or authorize the taking of any such actions by any other
individual or entity, or (c) solicit, raid, entice or induce any employee of the
Company to become employed by any competitor of the Company, and Employee will
not approach any such employee for any such purpose or authorize the taking of
any such action by any other individual or entity. However, nothing contained in
this paragraph 7 shall be construed as preventing Employee from investing his
assets in such form or manner as will not require him to become an officer or
employee of, or render any services (including consulting services) to, any
competitor of the Company.
8. TERMINATION FOR CAUSE
a) The Company has been intimately familiar with the ability,
competence and judgment of Employee, which are acknowledged to be
of the highest caliber. Accordingly, the Company and Employee
agree that Employee's services hereunder may be terminated by the
Company only (i) for an act of moral turpitude materially
adversely affecting the financial condition of the Company, or
(ii) breach of the terms of this Agreement which shall materially
adversely affect the financial condition of the Company.
b) If the Company terminates Employee's employment hereunder for any
reason other than as set forth in paragraph 8 (a) hereof,
Employee's compensation shall continue to be paid to him as
provided in paragraph 5 hereunder for the remainder of the term
of this Agreement. Employee shall have no duty to mitigate the
Company's damages hereunder. Therefore, no deduction shall be
made by the Company for any compensation earned by Employee from
other employment or for monies or property otherwise received by
Employee subsequent to such termination of his employment
hereunder. Employee and the Company acknowledge that the
foregoing provisions of this paragraph 8(b) are reasonable and
are based upon the facts and circumstances of the parties at the
time of entering into this Agreement, and with due regard to
future expectations.
9. CONSOLIDATION OR MERGER. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to perform all of
the terms and provisions hereof applicable to the Company, and Employee's
obligations hereunder shall continue in favor of such successor corporation.
10. INDEMNIFICATION. The Company agrees to indemnify the Employee to the
fullest extent permitted by applicable law consistent with the Company's
Certification of Incorporation and By-Laws as in effect on the effective date of
this Agreement with respect to any action or failure to act on his part while he
was an officer, director and/or employee (a) of the Company or any subsidiary
thereof or (b) of any other entity if his service with such entity was at the
request of the Company. This provision shall survive the termination of this
Agreement.
11. NOTICES. Notice is to be given hereunder to the parties by telegram or
by certified or registered mail, addressed to the respective parties at the
addresses herein below set forth or to such addresses as may be hereinafter
furnished, in writing:
TO: Xxxxx Xxxx
000 Xxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
TO: XXXXXX INDUSTRIES, INC.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxx X. Xxxxx, Chairman
12. CHANGE OF CONTROL. In the event there shall be a change in the present
control of the Company as hereinafter defined, or in any person directly or
indirectly presently controlling the Company, as hereinafter defined, Employee
shall have the right, exercisable within six months of his becoming aware of
such event, to terminate his employment. Upon such termination, Employee shall
immediately receive as a lump sum payment an amount equal to (i) three (3) times
his "base amount", within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (hereinafter "the Code"), reduced by (ii) $100.00, but
in no event shall he receive an amount greater than is deductible under Section
280G of the Internal Revenue Code of 1986, as amended, such amount to be
determined by the Company's independent auditors.
For purposes of this Agreement, a change in control of the Company, or in
any person directly or indirectly controlling the Company, shall mean:
a) a change in control as such term is presently defined in Regulation
240.12b-2 under the Securities Exchange Act of 1934 ("Exchange Act");
or
b) if any "person" (as such term is used in Section 13(d) and 14 (d) of
the Exchange Act) other than the Company or any "person" who on the
date of this Agreement is a director or officer of the Company,
becomes the "beneficial owner" (as defined in Rule 13(d)-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing twenty-five (25%) of the voting power of the Company's
then outstanding securities; or
c) if during the term of this Agreement, individuals who at the beginning
of such period constitute the Board of Directors cease for any reason
to constitute at least a majority thereof, unless the election of each
director who is not a director at the beginning of such period has
been approved in advance by directors representing at least two-thirds
(2/3) of the directors then in office who were directors at the
beginning of the period.
13. SUCCESSORS AND ASSIGNS. This agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company. Unless clearly
inapplicable, reference herein to the Company shall be deemed to include such
other successor. In addition, this Agreement shall be binding upon and inure to
the benefits of the Employee and his heirs, executors, legal representatives and
assigns, provided, however, that the obligations of Employee hereunder may not
be delegated without the prior written approval of Directors of the company.
14. AMENDMENTS. This agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
15. GOVERNING LAW. This agreement shall be governed by and construed and
interpreted in accordance with the laws of Delaware, without reference to
principles of conflict of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
XXXXXX INDUSTRIES, INC. XXXXXX INDUSTRIES, INC.
BY: /s/ Xxxxx Xxxxxxxxx BY: /s/ Xxx Xxxxx
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Xxxxx Xxxxxxxxx Xxx Xxxxx, Chairman and CEO
Secretary
BY: /s/ Xxxxx Xxxx
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Xxxxx Xxxx, Employee
