Exhibit 10.4
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of April 1, 1996, by and between Xxxxxx Products
Company, a Delaware Corporation (the "Company"), and Xxxxxx X. Xxxxx
("Executive").
WITNESSETH:
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WHEREAS, Executive currently serves as Vice President - Operations of
the Company; and
WHEREAS, the Company wishes to retain the services of Executive from
and after the date hereof (the "Effective Date"), and Executive wishes to
continue in the service of the Company from and after the Effective Date, on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Term of Covered Employment. The term of Executive's employment
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covered under this Agreement (the "Term of Covered Employment") shall commence
on the Effective Date and shall end on the third anniversary of the Effective
Date (the "Expiration Date"), unless terminated earlier under Section 5.
2. Employment and Duties. Subject to the terms and conditions
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hereinafter set forth, during the Term of Covered Employment, the Company shall
employ Executive, and Executive shall serve, as Vice President - Operations of
the Company. In such capacity, Executive shall perform the duties the duties
and responsibilities assigned by the Company, and such performance shall be
Executive's principal activity to which she shall devote substantially all of
her working hours. Executive shall report to the Chief Executive Officer of the
Company.
3. Compensation and Benefits.
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3.1 Compensation. For all services to be rendered during the Term of
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Covered Employment, the Company shall pay Executive a salary ("Base Salary") of
$90,000 per annum, payable bi-weekly in arrears. In addition, for each fiscal
year of the Company ending within the Term of Covered Employment, Executive
shall receive a bonus (the "Bonus") in an amount equal to (i) thirty percent
(30%) of the Base Salary if the "base case" objectives (but not the "anticipated
case" objectives) for such fiscal year as specified in the business plan
attached as Appendix A hereto (as the same may be supplemented from time to
time) are met, and (ii) fifty percent (50%) of her Base Salary if the
"anticipated case" objectives for such fiscal year as specified in said business
plan are met. The Bonus shall be paid in a single lump sum no later than 120
days after the end of the fiscal year for which the applicable objectives have
been met.
3.2 Pension and Welfare Plans. During the Term of Covered
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Employment, Executive shall also be eligible to participate in any pension and
welfare plans maintained by the Company for its employees, subject to the
requirements of applicable law.
3.3 Fringe Benefits. During the Term of Covered Employment,
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Executive shall receive any fringe benefits generally provided by the Company to
its employees.
4. Long-Term Incentive Award. In the event a "Triggering Event", as
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hereinafter defined, occurs while Executive is employed by the Company
(including any such employment following the expiration of the Term of Covered
Employment), the Company shall pay Executive, within 90 days after such
Triggering Event, a lump sum amount in cash equal to one-quarter of one percent
(0.25%) of the value of DNL Savannah Holding Corp., a Delaware corporation ("DNL
Holding"), the parent corporation of the Company, or any successor thereto, at
the time of such Triggering Event, minus $125,000. A "Triggering Event" means
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the earliest to occur of (i) an initial public offering of the common stock of
DNL Holding (or any successor thereto), (ii) a sale of substantially all of the
stock or assets of DNL Holding or the Company (or any successor thereto), or
(iii) the fifth anniversary of the Effective Date. For purposes of this Section
4, the value of DNL Holding (or any successor thereto) at the time of the
Triggering Event means (x) if the Triggering Event is the initial public
offering of the common stock of DNL Holding (or any successor thereto), the
value determined on the basis of the price set for the sale of such common stock
to the public in such initial public offering, as established by the managing
underwriters to such public offering, (y) if the Triggering Event is the sale of
substantially all of the stock or assets of DNL Holding or the Company (or any
successor thereto), the price being paid by the acquiror of such stock or
assets, and (z) if the Triggering Event is the fifth anniversary of the
Effective Date, the value established as of such date under a valuation of DNL
Holding (or any successor thereto) conducted by an independent appraiser.
5. Termination of Employment. Notwithstanding any other provision of
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this Agreement, but subject to the notice provisions contained in this Section
5, the Company retains the right to terminate Executive's employment, and
Executive retains the right to resign from employment with the Company, at any
time and for any reason.
5.1 Termination for Cause. The Company may terminate Executive's
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employment with the Company for "Cause" (as hereinafter defined) in the manner
specified in this Section 5.1. In the event that on or after the Effective Date
and prior to the Expiration Date, the Company terminates Executive's employment
with the Company for Cause, the Term of Covered Employment shall end on the date
of such termination (which shall be the date specified in the notice described
in this Section 5.1) and Executive shall be entitled only to any unpaid amount
of Base Salary for her employment with the Company through and including the
date of such termination. In any event, Executive shall not be entitled to
receive any amount of Base Salary with respect to any period following the date
of such termination, or any portion of the Bonus for the fiscal year of the
Company in which such date of termination occurs.
For purposes of this Agreement, termination for "Cause" means
termination by the Company due to Executive's gross dereliction of her duties
under this Agreement, including without limitation, her refusal to follow or
gross neglect of the directions of the Chief Executive Officer of the Company or
any other executive of the Company senior to Executive, or any willful
misconduct by Executive that is materially injurious to the Company, or the
indictment of Executive for a felony involving moral turpitude.
To terminate Executive for Cause, the Company shall give a written
notice of such termination to Executive ("Notice of Termination"), which notice
shall have been authorized by a vote of the majority of the Company's Board of
Directors (the "Board") and shall specify the date of such termination, which
shall no be earlier than the date on which such notice is given to Executive.
Such notice shall be given to Executive no later than 10 days after a member of
the Board (other than Executive) has actual knowledge of the events or
circumstances which purportedly constitute Cause for such termination, and shall
specify the particular act or acts, or failure to act, or other events or
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circumstances constituting Cause for such termination. Executive shall be given
the opportunity within 30 days after receiving such notice to meet with the
Board to explain why Cause for such termination does not exist. Within 15 days
after any such meeting, the Board shall give Executive its final decision
regarding whether Cause exists. If the Board's final decision is that Cause
exists, Executive's employment with the Company shall be terminated under this
Section 5.1 pursuant to the Notice of Termination as of the date of termination
specified in such Notice. If the Board's final decision is that Cause does not
exist, Executive's employment with the Company shall not be terminated under
this Section 5.1.
5.2 Resignation. Executive may resign from employment with the
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Company by giving the Company written notice of such resignation, which notice
shall specify the date of resignation, which shall not be earlier than 30 days
after the date such written notice is given to the Company. In the event of
Executive's resignation on or after the Effective Date and prior to the
Expiration Date, the Term of Covered Employment shall end on the date of
resignation (which shall be the date specified in Executive's notice of
resignation), and Executive shall be entitled only to any unpaid amount of Base
Salary for her employment with the Company through and including such date of
resignation. Executive shall not be entitled to receive any amount of Base
Salary with respect to any period following such date of resignation, or any
portion of the Bonus for the fiscal year of the Company in which such date of
resignation occurs.
5.3 Termination Other Than For Cause. The Company may terminate
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Executive's employment with the Company other than for Cause by giving Executive
written notice of such termination, which notice shall specify the date of such
termination, which shall not be earlier than 30 days after such written notice
is given to Executive. In the event that on or after the Effective Date and
prior to the Expiration Date Executive's employment with the Company is
terminated by the Company other than for Cause, the Term of Covered Employment
shall end upon such specified date of termination and the Company shall pay
Executive, within 15 days after such date of termination, an additional lump sum
amount equal to 150% of one year's Base Salary. Executive shall not be eligible
to participate in any of the Company's employee benefit plans following such
date of termination of employment, except as may be required by applicable law.
5.4 Termination Due to Death or Disability. The Company may
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terminate Executive's employment with the Company due to "Disability", as
hereinafter defined, by giving Executive written notice of such termination,
which notice shall specify the date of such termination, which shall not be
earlier than 30 days after such written notice is given to Executive. If on or
after the Effective Date and prior to the Expiration Date Executive's employment
with the Company is terminated due to Disability, or if during such period
Executive dies, the Term of Covered Employment shall end upon such specified
date of termination or date of death, as applicable, and the Company shall pay
Executive, or her beneficiary or estate, as the case may be, within 15 days
after such date of termination or death, an additional lump sum amount equal to
150% of one year's Base Salary.
For purposes of this Agreement, "Disability" means Executive's
inability to perform her duties under this Agreement for a period of at least
six consecutive months because of medically determinable physical or mental
impairment, as determined by a physician mutually agreeable to Executive and the
Company. If Executive and the Company are unable to agree on such a physician,
each shall appoint one physician and those two physicians shall appoint a third
physician who shall make such a determination.
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6. Non-Competition; Non-Solicitation. While Executive is employed by
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the Company (including any period of such employment following the expiration of
the Term of Covered Employment), and during the period in which Executive is
receiving payment of Base Salary from the Company (regardless of whether or not
Executive is then employed by the Company), Executive shall not directly or
indirectly (i) own, manage, operate, represent, promote, consult for, control or
participate in the ownership, operation, acquisition or management of any
business which manufactures and/or distributes ethnic hair care products or
cosmetics within a 500-mile radius of the Company's headquarters, (ii) solicit
(other than on behalf of the company or any of its affiliates), divert or take
away the business of any customers of the Company or any of it affiliates, or
any prospective customers of the Company or any of its affiliates whose business
the Company or any of its affiliates is actively soliciting, or has actively
solicited, during Executive's employment with the Company with whom Executive
had any material personal contract, or (iii) solicit or induce any employee of
the Company or any of its affiliates to terminate such employee's employment
with the Company or such affiliate. It is expressly acknowledged that a breach
of this covenant may result in irreparable harm to the Company for which there
is no adequate remedy at law and that, therefore, in the event of such a breach,
the Company shall be entitled to obtain injunctive relief restraining Executive
from engaging in activities prohibited by this Section 6 or any other relief as
may be required to specifically enforce this covenant.
7. Confidentiality. While employed by the Company and at all times
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thereafter, Executive shall maintain the confidentiality of all information of
and relating to, and all material of, the Company and its affiliates that have
not been made available to the public (other than by reason of a reach by
Executive of her obligations under this Section 7) and shall not, without the
Company's prior written permission, disclose to any person outside of the
Company and its affiliates any such information or material. Without limiting
the foregoing sentence, such information and material shall include pricing
plans and price policies, business plans, sales forecasts, research and
development, formulas, procedures and the identity of customers and suppliers
and the terms upon which the Company or any of its affiliates deals with them.
Upon termination of employment with the Company, Executive shall return to the
Company all property in her possession, whether or not containing confidential
information, including but not limited to originals and copies of any written
documents, drawings and reports, diskettes and other storage media, belonging to
the Company or any of its affiliates or received from the Company or any of its
affiliates. It is expressly acknowledged that breach of this covenant may
result in irreparable harm to the Company for which there is no adequate remedy
at law and that, therefore, in the event of such a breach, the Company shall be
entitled to obtain injunctive relief restraining Executive from engaging in
activities prohibited by this Section 7 or any other relief as may be required
to specifically enforce this covenant.
8. Taxes. The Company shall be entitled to deduct and withhold from
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all amounts payable under this Agreement all applicable Federal, state and local
taxes which the Company determines are required by law to be deducted and
withheld.
9. Notices. All notices and other communications under this
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Agreement shall be in writing and shall be given by hand delivery to the party
receiving such notice or by certified mail, return receipt requested, postage
prepaid, addressed as follows:
If to Executive: Xxxxxx X. Xxxxx
c/o Carson Products Company
00 X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
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If to Company: Xxxxxx Products Company
00 X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the other party
in writing as the address to send future notices and communications in
accordance herewith. Any notice or communications shall be deemed given when
actually received by the party who is its intended recipient.
10. Severability. If any provision of this Agreement is held to be
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invalid under applicable law, such provision shall be ineffective only to the
extent of such invalidity, and the remaining provisions of this Agreement shall
be unimpaired.
11. Waivers. The waiver by either party of a breach of any provision
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of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of such provision, or as a waiver of any other provision of
this Agreement.
12. Assignability. The Company may assign its rights and obligations
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hereunder to any of its affiliates, or to any successor of the Company;
provided, that this Agreement shall, without further action of the Company,
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automatically be assumed by the surviving entity in any merger transaction or
transactions to which the Company is a party. Executive may not assign any of
her rights, duties, obligations or interests hereunder to any other person
without the prior express written consent of the Board of Directors of the
Company.
13. Entire Agreement. This instrument contains the entire agreement
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of the parties with respect to, and supersedes all prior agreements relating to,
Executive's employment with the Company.
14. Governing Law. This Agreement shall be governed by, and
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construed and enforced under, the laws of the State of Georgia.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Xxxxxx Products Company
By______________________________
Xxxxx Xxxxx
Chairman & CEO
_____________________________
Xxxxxx X. Xxxxx
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Appendix A
Business Plan
Executive Level Bonus Targets for FY 1997
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Anticipated Case Base Case
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Sales $80.3 million $75.5 million
EBIDTA $20.8 million $15.8 million
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XXXXXX PRODUCTS COMPANY
X.X. Xxx 00000
Xxxxxxxx, Xxxxxxx 00000-0000
July 31, 1996
PERSONAL AND CONFIDENTIAL
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Xx. Xxxxxx X. Xxxxx
c/o Carson Products Company
00X Xxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Re: Employment Agreement Modification
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Dear Xxxxxx:
I am pleased to advise you that the Board of Directors of Xxxxxx Products
Company (the "Company") has agreed to modify your employment agreement, dated as
of April 1, 1996, with the Company (the "Employment Agreement") to (i) extend
your term of employment thereunder, (ii) convert your stock-based long-term
incentive opportunity into the right to purchase Class A Common Stock of the
Company, and (iii) effect certain other changes thereto.
Accordingly, the Employment Agreement is hereby modified, effective as of
the dates set forth below, as follows:
1. Effective as of the closing of the Offerings (as that term is defined
in the Form S-1 Registration Statement filed by Xxxxxx, Inc. under the
Securities Act of 1933), Section 1 of the Employment Agreement is hereby amended
by deleting it in its entirety and replacing it with a new Section 1 to read in
its entirety as follows:
"1. Term of Covered Employment. The term of Executive's
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employment covered under this Agreement (the "Term of Covered Employment")
shall commence on the Closing Date end shall end on the third anniversary
of the closing of the Offerings, as that term is defined in the Form
- 2 -
S-1 Registration Statement filed by Xxxxxx, Inc. under the Securities Act
of 1933, (the "Expiration Date"), unless earlier terminated under Section 5
of this Agreement."
2. Effective as of [the date hereof], Section 3.1 of the Employment
Agreement is hereby amended by deleting it in its entirety and replacing it with
a new Section 3.1 to read as follows:
"3.1 Compensation. For all services to be rendered during the
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Term of Covered Employment, the Company shall pay Executive a salary
("Base Salary") of $90,000 per annum, payable bi-weekly in arrears.
In addition, for each fiscal year of the Company ending within the
Term of Covered Employment, Executive shall receive a bonus (the
"Bonus") in an amount equal to (i) thirty percent (30%) of Base Salary
if the "base case" objectives (but not the "anticipated case"
objectives) for that fiscal year, as specified by the Board (as
defined in Section 5.1 of this Agreement), or a committee thereof, are
achieved, or (ii) fifty percent (50%) of Base Salary if the
"anticipated case" objectives for that fiscal year, as specified by
the Board (or a committee thereof) are met. The objectives utilized
in determining the Bonus shall be net revenue growth, net income,
earnings per share and/or stock price growth, each as defined by the
Board (or a committee thereof) in its sole discretion. A lesser
percentage of Base Salary may be paid hereunder if one or more, but
not all, of the targeted objectives for a fiscal year are achieved.
If the "base case" objectives are met, the value of the Bonus, if any,
shall be paid seventy-five percent (75%) in a single lump sum cash
payment and twenty-five percent (25%) in shares of restricted stock of
Xxxxxx, Inc. If the "anticipated case" objectives are met, the value
of the Bonus, if any, shall be paid fifty percent (50%) in a single
lump sum cash payment and fifty percent (50%) in shares of restricted
stock of Xxxxxx, Inc. Such restricted stock shall vest as to one-
third (1/3) of the aggregate number of shares delivered to Executive
on each of the first three anniversaries of the date of payment of the
Bonus (if Executive is employed by the Company on such dates). The
Bonus shall be paid no later than 120 days after the end of the fiscal
year for which the applicable objectives have been met."
3. Effective as of the date hereof, Section 4 of the Employment
Agreement is hereby amended by deleting it in its entirety and replacing it with
a new Section 4 to read as follows:
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"4. Stock Purchase Right. Executive shall have the right to
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acquire 2.6102 shares of Xxxxxx, Inc.'s Class A Common Stock at a per share
purchase price equal to the fair market value per hare of the Class A
Common Stock on the date of purchase, as determined by the Board (as
defined in Section 5.1 of this Agreement). Executive may satisfy the
aggregate purchase price for the shares of the Class A Common Stock by
tendering cash or a promissory note (in the form attached hereto as Exhibit
1). If Executive elects to tender such a promissory note, Executive shall
execute and deliver a pledge agreement, in the form attached hereto as
Exhibit 2, pursuant to which Executive shall pledge the purchased shares of
the Class A Common Stock acquired to Xxxxxx, Inc. to secure payment of such
promissory note. As a condition of any such purchase, Executive shall also
execute and deliver a shareholders agreement, if required by the Company or
Xxxxxx, Inc., and a registration rights agreement (in the form attached
hereto as Exhibit 3)."
4. Effective as of the date hereof, Appendix A to the Employment
Agreement is hereby deleted in its entirety.
5. Except as expressly modified herein, the Employment Agreement
shall remain in full force and effect in accordance with its terms and
provisions as the same are set forth on the date hereof.
Please indicate your acceptance of and agreement to the above
modifications by signing this modification agreement in the space provided
below.
XXXXXX PRODUCTS COMPANY
By:___________________________
Name:
Title:
AGREED TO AND ACCEPTED:
____________________________
Xxxxxx X. Xxxxx
