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Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of November 1997, by and between XXXXXX
INDUSTRIES, INC., a Delaware corporation (hereinafter called the "Company"), and
XXX X. XXXXX, residing at 000 Xxxxx Xxxxxxxxx Xxxxx Xxxx Xxxxx, Xx 00000,
(hereinafter called the "Employee").
WITNESSETH
WHEREAS, the Employee was initially employed by the Company under an
Employment Agreement, dated June 11, 1984, as amended, which agreement was
superseded by a second Employment Agreement between Employee and the Company,
dated January 1, 1997; and the Company desires to enter into a new employment
agreement with Employee which agreement shall supersede both 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 PRIOR AGREEMENTS SUPERSEDED.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 June 11, 1984, as amended, and
January 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 three (3) year period of employment commencing November 1, 1997
and ending October 31, 2000.
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4. DUTIES AND EXTENT OF SERVICES DURING PERIOD OF EMPLOYMENT. During
the period of employment, Employee shall be employed as a Senior
Executive of the Company. In such capacity, Employee agrees that he
shall serve the Company under the direction of the Board of
Directors of the Company to the best of his ability, 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 Board of Directors of the Company. Employee shall also
serve in similar capacities of such of the subsidiary corporations
of the Company as may be selected by the Board of Directors and
shall be entitled to such additional compensation therefore as may
be determined by the Board of Directors of the Company.
Notwithstanding the foregoing, it is understood and agreed that the
duties of Employee during the period of employment shall not be
inconsistent with (i) his position and title as Senior Executive of
the Company; or (ii) with those duties ordinarily performed by a
comparable executive officer.
5. REMUNERATION. During the period of 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 SEVENTY-FIVE THOUSAND ($375,000) DOLLARS
commencing November 1, 1997, 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 1,1997 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:
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(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 period of employment, the Company shall
pay to Employee, as incentive compensation an amount equal to five
(5%) percent of the Consolidated Pretax Earnings of the Company in
excess of the Company's Minimum Consolidated Pretax Earnings, 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 "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. For the 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
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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.
6. EMPLOYEE BENEFITS - EXPENSES
a) During the term of this agreement, the Company shall provide,
at its expense $40,000 annually to purchase life insurance,
with Employee having the right to designate the insurer, owner
and beneficiary of such life insurance.
b) 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 three year
period from date of death and one-half of such salary for the
balance of the period covered by this Agreement, (provided
that no payment shall be required for any period beyond
October 31, 2000), 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).
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 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) It is contemplated that, during the period of employment,
Employee may be
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required to incur out-of-pocket expenses in connection with
the performance of his services hereunder, including expenses
incurred for travel and business entertainment. Accordingly,
the Company shall pay, or reimburse Employee, for all
out-of-pocket expenses reasonably incurred by Employee in the
performance of his duties hereunder in accordance with the
usual procedures of the Company. Notwithstanding the
foregoing, the recognition that Employee will be required
during the term of this Agreement to do a considerable amount
of driving in connection with his services hereunder, the
Company shall provide Employee with the use of a suitable
automobile and all expenses incidental throughout the term of
this Agreement, including fuel, repairs, maintenance and
insurance.
f) All benefits to Employee specially provided for herein shall
be in addition to, and shall not diminish, (i) such other
benefits and/or compensation as may hereafter be granted to or
afforded to Employee by the Board of Directors of the Company;
and (ii) any rights which Employee may have or may acquire
under any hospitalization, life insurance, pension,
profit-sharing, incentive compensation or other present or
future employee benefit plan or plans of the Company
g) Employee currently works from offices in Lancaster,
Pennsylvania and from his homes where he has created work
space and his responsibilities do not require regular
attendance at any Company office. These responsibilities
include, among other things, conducting executive recruiting
tasks and visiting customers, investment banks and potential
acquisition candidates in the best interests of the Company.
In recognition of these special employment conditions,
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 (provided that no payment shall be
required for any period beyond October 31, 2000) and
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thereafter one-half of such compensation 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
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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: Xxx X. Xxxxx
000 Xxxxx Xxxxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
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TO: XXXXXX INDUSTRIES, INC.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxx Xxxx, President
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 to immediately
receive as a lump sum payment an amount equal to (i) two (2) 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.
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 thirty
percent (30%) of the voting power of the Company's then
outstanding securities; or
c) if during any period of two (2) consecutive years 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
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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.
BY: ______________________________
XXXXX XXXX, President
BY: ______________________________
XXX X XXXXX, Employee
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