EMPLOYMENT AGREEMENT
EXHIBIT 10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made this 30th day of March, 2006
by and between X. X. XXXXX CORPORATION, an Ohio corporation having its principal place of business
located at 00000 Xxxxxxxx Xxxx, X.X., Xxxxxxxxxxxx, Xxxx 00000 (the “Company”), and XXXXXX X. XXX
XXXXXX, an individual having an address of 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxxxxxx
00000 (the “Executive”).
WITNESSETH:
WHEREAS, the Company and the Executive are parties to an Executive Employment Contract dated
February 24, 2005 (the “Employment Contract”);
WHEREAS, by its terms the Employment Contract will expire on March 31, 2006; and
WHEREAS, the Company and the Executive desire to enter into this Agreement to provide for the
Executive’s employment with the Company beyond the term of the Employment Contract and on the other
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the parties
expressed in this Agreement and for other good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledged, the parties hereto agree as follows, each intending
to be legally bound hereby:
1. Supercession of Employment Contract; Complete Agreement. This Agreement supersedes
and preempts all prior oral or written agreements, understandings, arrangements and discussions by
and between the Company and the Executive with respect to the employment of the Executive with and
by the Company and the other matters contained herein, including the Employment Contract, and this
Agreement contains the complete agreement and sole and entire understanding between the Company and
the Executive with respect to the subject matter hereof.
2. Term. The term of this Agreement (the “Term”) will begin on April 1, 2006, and
will end on September 30, 2006, at which time this Agreement will automatically terminate. This
Agreement will automatically terminate upon the death of the Executive.
3. Continued Employment After Termination of Service as CEO. The Executive currently
serves as the Chief Executive Officer (“CEO”) of the Company. The Executive acknowledges that the
Company has hired Xxxx X. Xxxxxx as the Company’s President and Chief Operating Officer with the
understanding that Xx. Xxxxxx will succeed the Executive as CEO. The Executive agrees that he
serves as the CEO at the pleasure of the Board of Directors and will vacate such position
immediately upon the request of the Board. After the Executive has stepped down from his position
as CEO, he will remain an employee of the Company through the end of the Term. From the time he
ceases to be the CEO until the end of the Term, the Executive agrees to make himself available upon
the request of the Board of Directors or Xx. Xxxxxx to handle special projects. Once he ceases to
be CEO, the Executive shall not be required to maintain an office in Columbus, Ohio; however, he
agrees to visit Columbus upon the reasonable request of Xx. Xxxxxx.
4. Compensation. Through the end of the Term, the Executive shall continue to receive
a monthly salary of $37,500, paid in accordance with the Company’s payroll practices. The
Executive shall also be entitled to customary benefits provided by the Company to its executives,
such as health insurance, through the end of the Term but acknowledges and agrees that he shall not
participate in any of the Company’s pension or supplemental retirement plans or the Company’s
long-term incentive plan. Any amounts paid to the Executive hereunder shall be subject to
withholdings for federal, state and local taxes.
5. Transaction Success Fee. The following provisions, which are contained in the
Employment Contract, shall remain in full force and effect:
In the event of a sale, merger, consolidation or any other business combination, in one or a
series of related transactions, involving all or a substantial amount of the business, securities
or assets (including related real estate assets) of the Company or any recapitalization of the
Company or any spin-off, split-off or other extraordinary dividend of cash, securities or other
assets to the equity holders of the Company (a “Sale Transaction”) that is consummated during the
Transaction Period (as defined below), the Company shall pay to Executive a Sale Transaction
Success Fee (as defined below). Notwithstanding anything to the contrary set forth herein, the
Executive shall not be entitled to receive more than one Sale Transaction Success Fee.
The Transaction Period shall begin on the date of this Agreement and end on March 31, 2008.
The Sale Transaction Success Fee shall be one (1%) percent of the aggregate amount of
consideration (“Sale Consideration") received or to be received by the Company and/or its
shareholders (treating any shares issuable upon exercise of options, warrants or other rights of
conversion as outstanding), plus the amount of any debt assumed, acquired, remaining outstanding,
retired or defeased or preferred stock redeemed or remaining outstanding in connection with the
Sale Transaction (the “Sale Transaction Success Fee”). Such consideration may include, but is not
limited to, payments in cash, stock, real and personal property, warrants and options, fees, notes,
debentures or other debt assumption or relief of any debt (including guarantees), earn-outs,
royalties, the total amount of non-compete, employment, consulting and lease agreements or
amendments thereto, and all other elements of value exchanged, or to be exchanged, in connection
with the Sale Transaction.
The Sale Transaction Success Fee shall be payable in cash at consummation of a Sale
Transaction. For purposes of this Agreement, a Sale Transaction shall be deemed to have been
consummated upon the earliest of any of the following events to occur: (a) the acquisition of a
majority of the equity securities of the Company calculated on a fully-diluted basis; (b) a merger
or consolidation of the Company or any affiliate of the Company with another person; (c) the
acquisition by another person of assets of the Company representing a majority of the Company’s
book value; or (d) in the case of any other Sale Transaction, the closing thereof.
In the event that the consideration received in a Sale Transaction is paid in whole or in part
in the form of securities or other assets, the value of such securities or other assets, for
purposes of calculating the Sale Transaction Success Fee, shall be the fair market value thereof,
as the parties hereto shall mutually agree, on the day prior to the consummation of the Sale
Transaction; provided, however, that if such consideration includes securities with
an existing public trading market, the value thereof shall be determined by the last sales price
for such securities on the last trading day thereof prior to such consummation. In the event that
all or some portion of the Sale Consideration is related to the future earnings or operations of
the Company, the portion of the Sale Transaction Success Fee relating thereto shall be calculated
and shall be paid at the time the Sale Transaction is consummated (as determined by the preceding
paragraph) based upon the estimated net present value thereof.
This Section 5 shall survive any termination of this Agreement until March 31, 2008, at which
time it will terminate and expire.
6. Director Compensation. Nothing is this Agreement affects the Executive’s status as
a director of the Company. After the end of the Term, the Executive shall be entitled to receive
director fees and any other compensation paid or granted to non-employee directors of the Company
for his service as a director of the Company. Further, after the end of the Term, the Company will
grant to Xx. Xxx Xxxxxx restricted stock units or other equity based awards in the same amount and
on the same terms as those expected to be granted to the Company’s non-employee directors in 2006.
7. Annual Incentive Plan Participation. For the 2006 fiscal year, the Executive shall
have the opportunity to receive a bonus under the Company’s 2006 Annual Incentive Plan (“AIP”) of
7/12 the amount of bonus he would have received under the AIP had he remained CEO through the end
of 2006. This bonus, if any, will be paid in 2007 at the time when bonuses, if earned, are paid to
the other participants in the AIP. The specific amounts of potential bonuses shall be set forth on
a bonus matrix to be agreed upon by the parties.
8. Confidentiality; Non-Competition; Etc.
(a) Confidentiality. The Executive acknowledges that the services which he has
provided and will be providing to and for the Company or its affiliates have given and will give
him access to, and the Executive hereby agrees to hold in a fiduciary capacity for the benefit of
the Company, any and all secret or confidential information, knowledge or data relating to the
Company or any of its affiliated companies, and their respective businesses, which he shall have
been obtained during the course of his employment with the Company and which is not in the public
knowledge (other than by acts of the Executive or his representative in violation of this
Agreement). After the expiration of this Agreement and the employment of the Executive hereunder,
the Executive shall not, without the prior written consent of the Company, or unless required to do
so by order of a court, communicate or divulge any such information, knowledge or data to anyone
other than the Company and those designated by it.
(b) Non-Solicitation. Beginning on the date of this Agreement and continuing until
March 31, 2008 (the “Restricted Period”), the Executive agrees that he will not, directly or
indirectly, individually or on behalf of any other person, firm, corporation or other entity,
knowingly solicit, aid or induce (i) any managerial level employee of the Company or any of its
subsidiaries or affiliates to leave such employment in order to accept employment with, or render
services to or with any other person, firm, corporation or other entity unaffiliated with the
Company or knowingly take any action to materially assist or aid any other person, firm,
corporation or other entity in identifying or hiring any such employee (provided, that the
foregoing shall not be violated by general advertising not targeted at Company employees or by
serving as a reference for an employee with regard to an entity with which the Executive is not
affiliated), or (ii) any customer of the Company or any of its subsidiaries or affiliates to
purchase goods or services sold by the Company or any of its subsidiaries or other affiliates at
any time during the Term from another person, firm, corporation or other entity or assist or aid
any other person or entity in identifying or soliciting any such customer.
(c) Non-Competition. During the Restricted Period, without the prior written consent
of the Board of Directors of the Company, the Executive shall not, directly or indirectly, own,
manage, operate, control, be employed by (whether as an employee, consultant, independent
contractor or otherwise, and whether or not for compensation) or render services to any person,
firm, corporation or other entity, in whatever form, that operates as a wholesaler of one or more
product lines that are directly competitive to one or more of the product lines of the Company or
any of its subsidiaries or other affiliates at any time
during the Term. The geographic scope of the restriction set forth in the immediately
preceding sentence shall include the United States and any other country in which the Company,
including its subsidiaries, markets or sells such competing product line or lines. This section
shall not prevent the Executive from owning not more than one percent (1%) of the total shares of
all classes of stock outstanding of any publicly held entity engaged in such business.
(d) Equitable Relief and Other Remedies. The parties acknowledge and agree that the
other party’s remedies at law for a breach or threatened breach of any of the provisions of this
Section 8 would be inadequate and, in recognition of this fact, the parties agree that, in the
event of such a breach or threatened breach, in addition to any remedies at law, the other party,
without posting any bond, shall be entitled to obtain equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction or any other
equitable remedy which may then be available.
(e) Reasonableness; Reformation. The Executive acknowledges and agrees that the
length of time of the Restricted Period and the geographic area of the restrictions in this section
are reasonable. If it is determined by a court of competent jurisdiction in any state that any
restriction in this Section is excessive in duration or scope or is unreasonable or unenforceable
under the laws of that state, it is the intention of the parties that such restriction may be
modified or amended by the court to render it enforceable to the maximum extent permitted by the
law of that state.
(f) Survival of Provisions. The obligations contained in this section shall survive
the termination or expiration of this Agreement or Executive’s employment with the Company and
shall be fully enforceable thereafter.
9. Miscellaneous.
(a) Headings. The use of headings, captions and numbers in this Agreement is solely
for the convenience of identifying and indexing the various provisions in this Agreement and shall
in no event be considered otherwise in construing or interpreting any provision in this Agreement.
(b) Defined Terms. Capitalized terms used in this Agreement shall have the meanings
ascribed to them at the point where first defined, irrespective of where their use occurs, with the
same effect as if the definitions of such terms were set forth in full and at length every time
such terms are used.
(c) Severability. If any term, covenant, condition or provision of this Agreement, or
the application thereof to any person or circumstance, shall ever be held to be invalid or
unenforceable, then in each such event the remainder of this Agreement or the application of such
term, covenant, condition or provision to any other person or any other circumstance (other than
those as to which it shall be invalid or unenforceable) shall not be thereby affected, and each
term, covenant, condition and provision hereof shall remain valid and enforceable to the fullest
extent permitted by law.
(d) Non-Waiver. Failure by any party to complain of any action, non-action or breach
of any other party shall not constitute a waiver of any aggrieved party’s rights hereunder. Waiver
by any party of any right arising from any breach of any other party shall not constitute a waiver
of any other right arising from a subsequent breach of the same obligation or for any other
default, past, present or future.
(e) Rights Cumulative. All rights, remedies, powers and privileges conferred under
this Agreement shall be cumulative and in addition to, but not restrictive of or in lieu of, those
conferred by law.
(f) Applicable Law. This Agreement shall be governed by, construed under and
interpreted and enforced in accordance with the laws of the State of Ohio, without regard to such
state’s principles of conflicts of laws.
(g) Modification. This Agreement shall not be modified or amended except by an
instrument in writing executed by or on behalf of the Company and the Executive.
(h) Counterparts. This Agreement may be executed in one or more counterparts and by
facsimile, each of which shall be deemed an original, and all of such counterparts together shall
constitute one and the same instrument.
(i) Counsel. Each party hereto warrants and represents that each party has been
afforded the opportunity to be represented by counsel of its choice in connection with the
execution of this Agreement and has had ample opportunity to read, review, and understand the
provisions of this Agreement.
(j) No Construction Against Preparer. No provision of this Agreement shall be
construed against or interpreted to the disadvantage of any party by any court or other
governmental or judicial authority by reason of such party’s having or being deemed to have
prepared or imposed such provision.
IN WITNESS WHEREOF, this Amendment has been duly executed on behalf of the Company and by the
Executive on the date first above written.
| EXECUTIVE: | COMPANY: | |||||||||
| X. X. Xxxxx Corporation | ||||||||||
/s/ Xxxxxx X. Xxx Xxxxxx
|
By: | /s/ Xxxx X. Xxxxxx | ||||||||
Xxxxxx X. Xxx Xxxxxx
|
Xxxx X. Xxxxxx | |||||||||
| President and Chief Operating Officer | ||||||||||
