Exhibit 10.1.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of June 11, 2002, by and among Acorn Products,
Inc., a Delaware corporation ("Acorn"), UnionTools, Inc., a Delaware corporation
(the "Employer", and together with Acorn, the "Company"), and A. Xxxxxxx Xxxxx
("Executive").
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment. Employer shall employ Executive, and Executive hereby
accepts employment with Employer, upon the terms and conditions set forth in
this Agreement for the period beginning on the date hereof and ending as
provided in Section 4 hereof (the "Employment Period").
2. Position and Duties.
(a) During the Employment Period, Executive shall serve as the President
and CEO of Employer and shall have the normal duties, responsibilities and
authority implied by such position, subject to the power of the Board of
Directors of Acorn (the "Board") to expand or limit such duties,
responsibilities and authority and to override actions of Executive.
(b) During the Employment Period, Executive shall report to the Board and
shall devote his best efforts and his full business time and attention to the
business and affairs of the Company and its Subsidiaries.
3. Compensation and Benefits.
(a) During the Employment Period, Employer will pay Executive a base salary
(the "Annual Base Salary") of $300,000 per annum, subject to any increases as
approved by the Board. For any fiscal year, Executive shall be eligible for an
annual bonus target of 60% of the Executive's then applicable Annual Base Salary
based upon the achievement by the Company, Employer and their Subsidiaries of
budgetary and other objectives set by the Board.
In addition to the Annual Base Salary and any bonuses payable to Executive
pursuant to this Section 3, Executive shall be entitled to the following
benefits during the Employment Period, unless otherwise modified by the Board:
(i) Split dollar life insurance in an amount not less than $500,000;
(ii) reimbursement for the cost of an annual executive physical
examination by a physician of Executive's choice; and
(iii) reimbursement for the cost of membership at a club of Executive's
choice.
(b) During the Employment Period, the Company shall also reimburse
Executive for all reasonable business expenses incurred by him in the course of
performing his duties and responsibilities under this Agreement which are
consistent with the Company's policies in effect from time to time with respect
to travel, entertainment and other business expenses, subject to the Company's
requirements with respect to reporting and documentation of such expenses.
(c) During Employment Period, the Company shall provide to Executive such
insurance, vacation, sick leave and other like benefits as are provided from
time to time.
(d) All amounts payable to Executive as compensation hereunder shall be
subject to all required withholding by the Company.
4. Termination and Severance. Unless this Agreement is renewed by the
mutual agreement of the Company and Executive, the Employment Period and this
Agreement shall terminate on June 30, 2005, it being understood that as of such
date Executive's employment by the Company shall continue in accordance with and
subject to the terms and conditions set forth in that certain Employee Severance
Agreement dated as of August 31, 1999 between the Company and Executive (the
"1999 Severance Agreement"). Under this Agreement, (i) the Employment Period
shall terminate prior to such date upon Executive's resignation, disability or
incapacity (as determined by the Board in its good faith judgment) or death,
(ii) the Employment Period may be terminated by the Board (as determined by the
Board in its good faith judgment) at any time prior to such date for Cause or
without Cause or (iii) the Employment Period may be terminated by Executive at
any time prior to such date for Good Reason. If Executive's employment is
terminated by Employer other than for Cause or by Executive for Good Reason,
Employer shall pay to Executive: (i) in a lump sum, on the fifth day following
the date of termination of the Executive's employment, an amount equal to the
highest aggregate annual compensation (including salary, bonuses and incentive
payments) includible in gross income paid to the Executive during any one of the
three taxable years preceding the date of the Executive's termination; (ii)
continue to pay Executive's life insurance and medical benefits premiums for the
lesser of one year from the date of termination of the Executive's employment
with the Company or until the Executive accepts subsequent employment; and (iii)
outplacement services expenses of up to $25,000 for up to one year from the date
of termination of the Executive's employment with the Company. In the event of a
termination for Cause, the Company will pay Executive the earned but unpaid
portion of Executive's Annual Salary through the date of termination. Except as
otherwise provided herein, the date of the termination of the Executive's
employment by Employer other than for Cause or by Executive for Good Reason
shall be forty (40) business days or such shorter period as approved by the
Company's Board of Directors after the date written notice of resignation is
tendered by the Executive to the Company or written notice of termination is
tendered by the Company to the Executive, as applicable. Any such notice shall
specify with reason particularity the basis for resignation or termination
hereunder.
(a) For purposes of this Agreement, "Cause" shall mean (i) the Executive's
criminal conviction for fraud, embezzlement, misappropriation of assets or any
other felony
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(excluding traffic violations) or (ii) the continuance of willful
and repeated failures by the Executive to perform the duties assigned to him as
an employee of the Company, which failures have not been cured by the Executive
within thirty (30) days following receipt of a written notice from the Board,
specifying such failure and the action required by the Executive to cure such
breach of his obligations.
(b) For purposes of this Agreement, "Good Reason" shall mean without the
written consent of the Executive, (i) a material adverse change or diminution in
the Executive's duties or responsibilities, offices, reporting responsibilities,
facilities, staff assistance, compensation and benefits or other indicia of the
Executive's position, (ii) material breach by the Company of its duties to the
Executive, including timely payment of compensation, provision of benefits and
reimbursement of expenses, in keeping with past practice or (iii) relocation of
the Executive's personal residence or office pursuant to the relocation of the
Company's executive offices outside a 50 mile radius from 000 Xxxx Xxxxxxxxxx
Xxxx., Xxxxxxxx, Xxxx.
5. Change of Control. If the Executive's employment with the Company is
terminated by either the Executive for Good Reason or by the Company other than
for Cause within either (i) 90 days prior to a Change of Control or (ii) two
years after a Change of Control, in addition to the severance payments provided
in Section 4 above, the Company shall pay to the Executive, in a lump sum, on
the fifth day following the date of termination of the Executive's employment,
an amount equal to two times the highest aggregate annual compensation (which
shall include salary, bonuses and cash inventive payments only) includible in
gross income paid to the Executive during any one of the three taxable years
preceding the date of the Executive's termination.
For purposes of this Section 5, the following terms shall have the
following meanings:
(a) A "Change of Control" shall be deemed to have occurred upon any of the
following events:
(i) the acquisition by any Person (as defined in Section 13(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act")) other
than TCW or Oaktree, of beneficial ownership (as defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except such Person shall be deemed to
have "beneficial ownership" of all securities that such Person has the
right to acquire, whether such right is exercisable immediately or only
after the passage of time) of securities of Acorn (a) have 25% or more of
the total voting power of the then outstanding voting securities of Acorn
and (b) having more voting power than the securities of Acorn beneficially
owned by Oaktree and TCW;
(ii) during any twelve month period, a change in the Board of
Directors of Acorn occurs such that Incumbent Members do not constitute a
majority of the Board of Directors, except as mutually agreed by Executive;
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(iii) a sale of all or substantially all of the assets of Acorn or
Employer; or
(iv) the consummation of a merger or consolidation of Acorn with any
other Person, provided, however, that no Change of Control shall have
occurred pursuant to this clause (iv) if (A) after such merger or
consolidation the voting securities of Acorn prior to such merger or
consolidation continue to represent more than 50% of the combined voting
power of such Person or (B) if such merger or consolidation does not result
in a material change in the beneficial ownership of Acorn's voting
securities.
(b) "Affiliate" of any specified Person (as defined in Section 13(d) of the
Exchange Act) shall mean (i) any other Person, directly or indirectly,
controlling or controlled by or under direct or indirect common control with
such specified Person or (ii) any Person who is a director or officer (a) of
such Person, (b) of any subsidiary of such Person or (c) of any Person described
in clause (i) above. For purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meaning correlative to the foregoing.
(c) "Incumbent Members" shall mean the members of the Board of Directors of
Acorn on the date immediately preceding the commencement of a twelve-month
period, provided that any person becoming a Director during such twelve-month
period whose election or nomination for election was approved by a majority of
the Directors who, on the date of such election or nomination for election,
comprised the Incumbent Members shall be considered one of the Incumbent Members
in respect of such twelve-month period.
(d) "Oaktree" shall mean Oaktree Capital Management, LLC and its
Affiliates, including any partnerships, separate accounts or other entities
managed by Oaktree.
(e) "TCW" shall mean: TCW Special Credits Plus Fund; TCW Special Credits
Fund III; TCW Special Credits Fund IIIb; TCW Special Credits Fund IV; TCW
Special Credits Trust; TCW Special Credits Trust IIIb; TCW Special Credits Trust
IV; TCW Special Credits Trust IVa; TCW Special Credits, as investment manager of
Delaware State Employees' Retirement Fund, Weyerhaeuser Company Pension Trust
and The Common Fund for Bond Investments; and any of their respective
Affiliates.
6. Additional Payment Terms.
(a) No Reduction. The Executive shall not be required to mitigate damages
or the amount of any payments provided for under Section 3 or Section 4 by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under Section 3 or Section 4 be reduced by any compensation earned
or received by the Executive as the result of employment by another employer
after the date of termination or otherwise.
(b) Indemnification. The Company shall indemnify the Executive for all
costs, including reasonable attorneys' fees, incurred by the Executive in
connection with any successful
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action by the Executive to enforce or otherwise determined or ensure compliance
by the Company with the terms of this Agreement.
(c) Certain Additional Payments by the Company. Anything in this Agreement
to the contrary notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the Executive,
whether paid or payable or distributed or distributable pursuant to the terms of
this Agreement (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, or any interest
or penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, collectively, the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (the "Excise Tax Payment") in
an amount equal to the Excise Tax imposed upon the Payment and any additional
payments made pursuant to this Section 6(c).
7. Confidential Information.
(a) Obligation to Maintain Confidentiality. Executive acknowledges that the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and Employer are the property of the Company and Employer. Therefore,
Executive agrees that he will not disclose to any unauthorized Person or use for
his own account any of such information, observations or data without the
Board's prior consent, unless and to the extent that the aforementioned matters
become generally known to and available for use by the public other than as a
result of Executive's acts or omissions. Executive agrees to deliver to the
Company upon termination of his employment, or at any other time the Company may
request in writing, all memoranda, notes, plans, records, reports and other
documents (and copies thereof) relating to the business of the Company and
Employer which he may then possess or have under his control.
(b) Ownership of Property. Executive acknowledges that all inventions,
innovations, improvements, developments, methods, processes, programs, designs,
analyses, drawings, reports, and all similar or related information (whether or
not patentable) that relate to the Company's or Employer's actual business,
research and development, or existing products or services and that are
conceived, developed, contributed to, made, or reduced to practice by Executive
(either solely or jointly with others) while employed by Employer (including any
of the foregoing that constitutes any proprietary information or records) ("Work
Product") belong to the Company and Employer and Executive hereby assigns, and
agrees to assign, all of the above Work Product to the Company and Employer.
Executive shall promptly disclose such Work Product to the Board and perform all
actions reasonably requested by the Board (whether during or after the
Employment Period) to establish and confirm the Company's or Employer's
ownership (including, without limitation, assignments, consents, powers of
attorney, and other instruments).
(c) Third Party Information. Executive understands that the Company and
Employer will receive from third parties confidential or proprietary information
("Third Party Information") subject to a duty on the Company's and Employer's
part to maintain the confidentiality of such information and to use it only for
certain limited purposes. During the Employment Period, and without in any way
limiting the provisions of Section 7(a) above,
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Executive will hold Third Party Information in confidence and will not disclose
to anyone (other than personnel of the Company or Employer who need to know such
information in connection with their work for the Company or Employer) or use,
except in connection with his work for the Company or Employer, Third Party
Information unless authorized by a member of the Board.
(d) Use of Information of Prior Employers. During the Employment Period,
Executive will not improperly use or disclose any confidential information or
trade secrets, if any, of any former employers or any other Person to whom
Executive has an obligation of confidentiality, and will not bring onto the
premises of the Company or Employer any unpublished documents or any property
belonging to any former employer or any other Person to whom Executive has an
obligation of confidentiality unless consented to in writing by the former
employer or Person. Executive will use in the performance of his duties only
information which is (i) generally known and used by Persons with training and
experience comparable to Executive's and that is (x) common knowledge in the
industry or (y) is otherwise legally in the public domain, (ii) is otherwise
provided or developed by the Company or Employer or (iii) in the case of
materials, property or information belonging to any former employer or other
Person to whom Executive has an obligation of confidentiality, approved for such
use in writing by such former employer or Person.
8. Non-Compete, Non-Solicitation.
Executive acknowledges that in the course of his employment with Employer
he will become familiar with the Company's and Employer's trade secrets and with
other confidential information concerning the Company and Employer and that his
services will be of special and unique value to the Company and Employer.
Therefore, Executive agrees that:
(a) Noncompetition. During the Employment Period and for a period of one
year after termination of employment with the Company, whether voluntary or
involuntary or with or without cause (the "Noncompete Period"), he shall not,
directly or indirectly own, manage, control, or in any manner engage in any
business competing with the business of the Company, as such business exists
during the Employment Period on the date of the termination, within the
geographical area in which the Company engage in such business.
(b) Nonsolicitation. During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i) induce any employee of the
Company or Employer to leave the employ of the Company or Employer, or in any
way interfere with the relationship between the Company and any employee
thereof, (ii) hire any person who was an employee of the Company or Employer
within one year prior to the time such employee was hired by Executive, (iii)
induce any customer, supplier, licensee or other business relation of the
Company or Employer to cease doing business with the Company or Employer or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or Employer.
(c) Enforcement. If, at the time of enforcement of Section 7 or this
Section 8, a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
duration, scope or geographical area reasonable under
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such circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum duration, scope and area permitted by law. Because Executive's
services are unique and because Executive has access to confidential
information, the parties hereto agree that money damages would be an inadequate
remedy for any breach of this Agreement. Therefore, in the event a breach of
this Agreement, the Company, Employer, their respective Subsidiaries or
Affiliates or their successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction
for specific performance and/or injunctive or other relief in order to enforce,
or prevent any violations of, the provisions hereof.
9. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, sent by reputable overnight courier
service or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:
Notices to Executive:
A. Xxxxxxx Xxxxx
0000 Xxxxxxxxxx Xx.
Xxx Xxxxxx, XX 00000
Notices to the Company:
Acorn Products, Inc.
000 Xxxx Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000-0000
Attn: Board of Directors
With a copy to:
Porter, Wright, Xxxxxx & Xxxxxx LLP
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.
10. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any action in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
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11. Complete Agreement. This Agreement embodies the complete agreement and
understanding among the parties and, during its term, supersedes and preempts
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
During the term of this Agreement, any inconsistencies between this Agreement
and the 1999 Severance Agreement shall be resolved in accordance with the terms
of this Agreement; it being understood and agreed that the execution of this
Agreement by the parties hereto shall not be deemed to terminate the 1999
Severance Agreement and, subject to this Section 11, such agreement remains in
effect. In addition, this Agreement shall not supercede, preempt or terminate
that certain Indemnification Agreement dated as of March 6, 2001 between the
Company and Executive and such agreement remains in full force and effect.
12. Counterparts. This Agreement may be executed in separate counterparts,
each of which is deemed to be an original and all of which taken together
constitute one and the same agreement.
13. Successors and Assigns. This Agreement is intended to bind and inure to
the benefit of and be enforceable by Executive, the Company and their respective
heirs, successors and assigns, except that Executive may not assign his rights
or delegate his duties or obligations hereunder without the prior written
consent of the Company.
14. Choice of Law. All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
15. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and Executive, and
no course of conduct or course of dealing or failure or delay by any party
hereto in enforcing or exercising any of the provisions of this Agreement shall
affect the validity, binding effect or enforceability of this Agreement or be
deemed to be an implied waiver of any provision of this Agreement.
16. Insurance. The Company may, at its discretion, apply for and procure in
its own name and for its own benefit life and/or disability insurance on
Executive in any amount or amounts considered available. Executive agrees to
cooperate in any medical or other examination, supply any information and
execute and deliver any applications or other instruments in writing as may be
reasonably necessary to obtain and constitute such insurance. Executive hereby
represents that he has no reason to believe that his life is not insurable at
rates now prevailing for healthy men of his age.
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17. Indemnification and Reimbursement of Payments on Behalf of Executive.
Employer and the Company shall be entitled to deduct or withhold from any
amounts owing from Employer or the Company to Executive any federal, state,
local or foreign withholding taxes, excise tax, or employment taxes ("Taxes")
imposed with respect to Executive's compensation or other payments from Employer
or the Company or Executive's ownership interest in the Company (including,
without limitation, wages, bonuses, dividends, the receipt or exercise of equity
options and/or the receipt or vesting of restricted equity).
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
ACORN PRODUCTS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
Its: Chairman
UNIONTOOLS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------
/s/ A. Xxxxxxx Xxxxx
--------------------------------
A. Xxxxxxx Xxxxx
