EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of the 1st
day of November 1996 by and between Xx. Xxxxxx Zinbarg (the "Executive") and Sun
Hill Industries, Inc. (the "Company") (collectively, the Executive and the
Company shall be referred to as the "Parties"). In consideration of the mutual
promises and agreements contained herein, the Parties agree as follows:
1. Purpose. The Company desires to avail itself of the services of the Executive
as its President, Chief Executive Officer and Chief Financial Officer and the
Executive desires to provide such services in accordance with the terms of this
Agreement. The Parties agree that the duties and obligations expected of the
Executive and of the Company are as set forth in this Agreement.
2. Effective Date and Term. This Agreement shall be effective, and its term (the
"Term") shall commence on January 1, 1997 and shall continue through and until
December 31, 2001 (the "Initial Term"), unless terminated sooner as provided by
this Agreement or extended by the Parties. The Term shall be automatically
renewed for successive periods of one year each (the "Renewal Term"), unless
either Party gives to the other written notice of intent not to renew at least
90 days prior to the expiration of the Initial Term or any Renewal Term.
3. Compensation.
A. Base Salary. During the Term the Company shall pay or cause to be paid
to the Executive, in semi-monthly installments, a base salary of
$125,000 per annum (the "Base Salary"). The Base Salary shall be
reviewed annually by the Board and, if appropriate, may be increased.
B. Annual Cash Bonus. At the conclusion of each year during the Term, the
Company shall pay the Executive an annual cash bonus equal to five
percent (5%) of the Company's pre-tax income for such year in excess
of five hundred thousand ($500,000.00) dollars (the "Annual Cash
Bonus").
C. Expenses. The Company shall reimburse the Executive, within thirty
days of voucher, the amount of all travel, hotel, entertainment and
other expenses (properly vouchered) reasonably incurred by the
Executive in furtherance of his duties under this Agreement.
D. Benefits.
(1) Vacation. The Executive shall be entitled to 20 business days of
vacation each year. The Executive shall be entitled to carry any
unused vacation days over to the next calendar year. However, in
no event will Executive's accrued but unused vacation exceed 40
days.
(2) Holidays. The Executive shall be entitled to all holidays
generally provided to other employees of the Company.
(3) Life Insurance / Physical Exams. During the Term, the Company
shall, upon proof of insurability, purchase, or cause to be
purchased, a policy or policies insuring the life of the
Executive payable to the Executive's designated beneficiary(s) at
least equal to that life insurance generally provided other
employees of the Company. In addition, the Company shall, upon
proof of insurability, purchase, or cause to be purchased a key
person life insurance policy insuring the life of the Executive
in the amount of at least $1,000,000 and which policy names the
Company as its beneficiary (hereinafter the "Executive Key Man
Insurance Policy"). In connection with the Company's procurement
of the Executive Key Man Insurance Policy, the Executive agrees
to submit to a physical exam and shall cooperate with the
insurance policy underwriter in connection therewith. Further,
the Company agrees to pay for, and provide, a general physical
examination of the Executive, once annually.
(4) Medical Insurance. During the Term, the Company shall acquire and
pay for, or reimburse, the Executive for, hospitalization,
dental, major medical, or other health insurance for the benefit
of the Executive and his dependents at least equal to that
generally provided other employees under the Company's group
health insurance plan(s).
(5) Sick Leave/Disability. During any period in which the Executive
is absent from work as a result of personal injury, sickness or
other disability, the Board may, by majority vote, appoint an
acting President to serve for the duration of the Executive's
absence. The Company shall, while such period continues or for
180 days, whichever is a shorter period, pay the Executive his
full Base Salary. The Executive will also be entitled to
additional disability benefits at least equal to that which is
generally provided to other employees after the effective date of
this Agreement.
(6) Use of Company Automobile. During the Term, the Executive shall
be entitled to use a Company automobile for both Company business
and personal use. Any and all costs associated with the business
use of such automobile (e.g., insurance, registration, lease
payments, etc.) shall be borne by the Company.
(7) Other Benefits. The Executive shall be entitled to participate in
any pension, retirement or other qualified plans adopted by the
Company for the benefit of its employees, including, but not
limited to the Company's 1996 Employee Consultant Stock Option
Plan and the Company's "Top Heavy" Profit Sharing Plan.
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4. Duties of the Executive.
A. Duties. During the Term, the Executive shall be President, Chief
Executive Officer and Chief Financial Officer of the Company and shall
manage the business of the Company, perform such duties as the Company
may reasonably require and utilize his best efforts to carry into
effect the resolutions and directions of the Company's Board of
Directors.
B. Representation. During the Term, the Executive shall well and
faithfully serve the Company and use his best efforts to promote the
interests of the Company. The Executive shall at all times give the
Company the full benefit of his knowledge, expertise, technical skill
and ingenuity in the performance of his duties and the exercise of his
powers and authority as President and Chief Executive Officer.
C. Time Devoted by Executive. The Executive agrees to devote
substantially all his time and attention during business hours and
such additional time and attention as may reasonably be required to
perform his duties hereunder.
5. Restrictions on the Executive.
A. Non-Disclosure of Confidential Information. Other than in the proper
performance of his duties hereunder, the Executive shall not, both
during and after the Term, voluntarily divulge to any person, firm or
company, and, shall during the Term, endeavor to prevent the
publication or disclosure of any confidential information concerning
the business accounts or finances of the Company, or concerning any of
the secrets, research, product development, dealings, transactions or
affairs of the Company which have come to his knowledge prior to the
Term or which may come to his knowledge during the Term.
B. Inventions. The Executive hereby transfers and assigns, without
compensation, to the Company or to any person, or entity designated by
the Company, all of the entire right, title and interest of the
Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable
material, made or conceived by the Executive, solely or jointly, or in
whole or in part, both prior to and during the Term hereof which (1)
relate to methods, apparatus, designs, products, processes or devices
sold, leased, or under construction or development by the Company; (2)
otherwise relate to or pertain to the business, functions or
operations of the Company; or (3) arise (wholly or partly) from the
efforts of the Executive in performing the duties required by this
Agreement during the Term hereof. The Executive shall communicate
promptly and disclose to the Company, in such form as the Company
requests, all information, details, and data pertaining to the
aforementioned inventions, ideas, disclosures and improvements; and,
whether during the Term hereof or thereafter, the Executive shall
execute and deliver to the Company such documents as may be required
of the Executive to permit the Company or any person or entity
designated by the Company to file and prosecute applicable patent,
trademark and service xxxx applications covering any of such
inventions, ideas, disclosures or
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improvements and, as to such inventions, ideas, disclosures or
improvements as constitute copyrightable material, to obtain copyright
thereof and, in addition, assign existing patents, copyrights,
trademarks and service marks registered in his own name. Any invention
by the Executive otherwise covered by (1), (2), or (3) of this
subsection 5B within six months following the conclusion of the Term
shall be deemed to fall within the provisions of this subsection.
C. Covenants.
(1) Non-Competition. During the Term, and thereafter as specifically
provided herein, the Executive may not directly or indirectly
engage in, or have any interest in any business (whether as
employee, officer, director, agent, creditor, consultant, or
otherwise) that competes directly with the business of the
Company anywhere in North America, provided, however, that
Executive may own, directly or indirectly for his own benefit,
not more than an aggregate of five percent (5%) of the issued and
outstanding shares of any class of equity securities issued by a
corporation that competes with the Company and which shares are
publicly traded.
(2) Non-Solicitation. During the Term, and thereafter as specifically
provided herein, the Executive shall not, except in the normal
course of business of the Company, either personally, by his
agent or by letters, circulars or advertisements, and whether for
himself or on behalf of any other person, company or firm,
directly or indirectly solicit orders for goods of a type similar
to those being developed or dealt with by the Company during the
Term, or for services similar to those being provided during the
Term by the Company to any person, company or firm, who at any
time within the year prior to the end of the Term was a customer
or affiliate of the Company.
(3) Breach. The Executive agrees that any breach by him of any
covenant set forth in this Section 5, whether during or following
the Term, may cause irreparable harm to the Company and that
monetary damages alone may not provide full and adequate
compensation for a breach or threatened breach; therefore, the
Company shall be entitled to injunctive relief for any breach or
threatened breach thereof, in addition to other damages.
6. Termination.
A. Non-Renewal. The provisions of this subsection 6A apply if the
Term is not renewed pursuant to the provisions of Section 2.
(1) If the Company has given notice of non-renewal, the Company
shall pay the Executive an amount equal to his then existing
Base Salary for two (2) years commencing with the day
following the final day of the Term; provided, however, that
this obligation shall be mitigated by fifty percent
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(50%) of the earned income actually received by or for the
account of the Executive during such two (2) year period. At
the conclusion of the Term, all other Company obligations to
the Executive as to salary and benefits shall cease.
(2) If the Executive has given notice of non-renewal, all
Company obligations to the Executive as to salary and
benefits shall cease at the conclusion of the Term.
(3) If the Executive elects not to renew the Term pursuant to
Section 2 of this Agreement for the 2002 or 2003 calendar
years, the provisions of subsection 5C shall apply for one
year following the conclusion of the Term. If the Executive
elects not to renew the Term pursuant to Section 2 of this
Agreement beyond the 2003 calendar year or if the Company
elects not to renew the Term pursuant to Section 2 of this
Agreement beyond the 2003 calendar year, the provisions of
subsection 5C shall not apply after the conclusion of the
Term.
B. Termination for Cause by the Company.
(1) This Agreement and the Term may be terminated prior to its
expiration "for cause" by the Company pursuant to the
provisions of this subsection 6B. If the Board determines
that "cause" exists for termination of the Executive's
employment, written notice thereof must be given to the
Executive describing the state of affairs or facts deemed by
the Board to constitute such cause. The Executive shall have
45 days after receipt of such notice to cure the reason
constituting cause and if he does so, the Term shall not be
terminated for the cause specified in the notice. During
such 45 day period, the Term shall continue and the
Executive shall continue to receive his full Base Salary,
Annual Cash Bonus, expenses and benefits pursuant to this
Agreement. If such cause is not cured to the Board's
reasonable satisfaction within such 45 day period, the
Executive may then be immediately terminated by a majority
vote of the Board excluding the Executive if the Executive
is then a member of the Board. For purposes of this
Agreement, the words "for cause" or "cause" shall be limited
to: (a) actions on the part of the Executive which
constitute gross negligence or willful misconduct in the
performance or non-performance of the Executive's duties
that have the effect of materially injuring the reputation,
business or business relationships of the Company; or (b)
the conviction of the Executive (including a conviction on a
nolo contendere plea) of any felony, or of any crime or
offense which involves property or money of the Company or
moral turpitude; or (c) Executive's incarceration following
any conviction which restricts or limits the ability of the
Executive to provide his duties hereunder; or (d) a material
breach of this Agreement by the Executive so long as such
material breach is not caused by the Company. The duties,
powers and authority of the Executive may also, on a
majority vote of the Board excluding the Executive if the
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Executive is then a member of the Board, be suspended for a
reasonable period of time, but with a continuation of the
Executive's full Base Salary, Annual Cash Bonus, expenses
and benefits pursuant to this Agreement, while a
determination is made as to whether cause for termination
exists.
(2) In the event the Term is terminated by the Company for
cause, the provisions of subsection 5C shall continue to
apply for one full year after the termination of the Term.
(3) In the event the Term is terminated by the Company for
cause, the Executive's entire right to salary and benefits
hereunder shall cease upon such termination.
C. Termination Without Cause by the Company.
(1) The Company shall have the right to terminate the Term
without cause on 180 days' advance written notice to the
Executive.
(2) In the event the Term is terminated pursuant to subsection
6C(1), the Company shall pay the Executive his then existing
Base Salary for three (3) full years commencing with the day
following the termination date of the Term.
(3) In the event the Term is terminated pursuant to subsection
6C(1), each of the provisions of subsection 5C shall not
apply after the conclusion of the Term.
D. Resignation by the Executive.
(1) The Executive shall have the right to terminate the Term, by
way of resignation, upon 90 days' written notice to the
Company.
(2) In the event the Term is terminated pursuant to subsection
6D(1), the provisions of subsection 5C shall continue to
apply for one year after the conclusion of the Term.
(3) In the event the Term is terminated pursuant to subsection
6D(1), the Executive's entire right to salary and benefits
hereunder shall cease at the conclusion of the Term.
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E. Termination Upon Change in Control.
(1) For the purposes of this Agreement, a "Change in Control"
shall mean any of the following events:
(a) At any time following the conclusion of the Company's
initial public offering of shares of its Common Stock
and/or other securities for sale (hereinafter, the "IPO
Transaction"), an acquisition (other than directly from
the Company) of any voting securities of the Company
(the "Voting Securities") by any "Person" (as the term
"person" is used for purposes of Section 13(d) or 14(d)
of the Securities Exchange Act of 1934, as amended,
(the "1934 Act")) immediately after which such Person
has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 0000 Xxx) of 45% or more of
the combined voting power of the Company's then
outstanding voting securities; provided, however, that
in determining whether a Change in Control has
occurred, voting securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a
Change in Control.
A "Non-Control Acquisition" shall mean an acquisition
by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (x) the Company or (y) any
corporation or other Person of which a majority of its
voting power or its equity securities or equity
interest is owned directly or indirectly by the Company
(a "Subsidiary"), (ii) the Company or any Subsidiary,
or (iii) any Person in connection with a Non-Control
Transaction;
(b) The individuals who, as of November 1, 1996 were
members of the Board (the "Incumbent Board"), cease for
any reason to constitute at least 66 2/3% of the Board;
provided, however, that if the election, or nomination
for election by the Company's stockholders, of any new
director was approved by a vote of at least 66 2/3% of
the Incumbent Board, such new director shall be
considered as a member of the Incumbent Board; provided
further, however, that no individual shall be
considered a member of the Incumbent Board if such
individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 0000
Xxx) or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
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(c) Approval of the Company's shareholders of: (1) a
merger, consolidation or reorganization involving the
Company, unless (i) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly immediately
following such merger, consolidation or reorganization,
at least 66 2/3% of the combined voting power of the
outstanding voting securities of the corporation
resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their ownership of
the voting securities immediately before such merger,
consolidation or reorganization, (ii) the individuals
who were members of the Incumbent Board immediately
prior to the execution of the agreement providing for
such merger, consolidation or reorganization constitute
at least 66 2/3% of the members of the board of
directors of the Surviving Corporation, (iii) there was
no Person (other than the Company, any Subsidiary, the
Executive, any officer or director or any employee
benefit plan (or any trust forming a part thereof)
maintained by the Company) who (A) immediately prior to
such merger, consolidation or reorganization had
Beneficial Ownership of 15% or more of the then
outstanding voting securities of the Company and (B)
immediately following such merger, consolidation or
reorganization, no Person (other than the Company, any
Subsidiary, the Executive, any officer or director or
any employee benefit plan (or any trust forming a part
thereof) maintained by the Company) had or will have
Beneficial Ownership of 15% or more of the then
outstanding voting securities of the Surviving
Corporation's then outstanding voting securities (a
transaction described in clauses (i) through (iii)
shall herein be referred to as a "Non-Control
Transaction"); (2) a complete liquidation or
dissolution of the Company; or (3) an agreement for the
sale or other disposition of all or substantially all
of the assets of the Company to any Person (other than
a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person
(the "Subject Person") acquired Beneficial ownership of
more than the permitted amount of the outstanding
voting securities as a result of the acquisition of
Voting Securities by the Company which, by reducing the
number of Voting Securities outstanding, increases the
proportional number of shares Benefically Owned by the
Subject Person, provided that if a Change in Control
would occur (but for the operation of this sentence) as
a result of the acquisition of Voting Securities by the
Company, and after such share acquisition, the Subject
Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the
then
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outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.
(2) The Executive shall have the right to terminate this
Agreement, for any reason, on 90 days' written notice to the
Company in the event of a Change in Control; provided,
however, that such termination right must be exercised by
the Executive within one year following such Change in
Control.
(3) In the event the Term is terminated pursuant to subsection
6E(2), the Company shall pay the Executive his then existing
Base Salary for two (2) years in one lump sum payment within
10 days of the termination date of the Term.
(4) In the event the Term is terminated pursuant to subsection
6E(2), the provisions of subsection 5C shall not apply after
the termination date of the Term.
(5) Anything to the contrary in this Agreement notwithstanding,
in the event the Company terminates the Term for cause
within one year of a Change in Control, the Company shall
pay the Executive his then existing Base Salary for two (2)
years in one lump sum payment within 10 days of the final
day of the Term. In such event, the provisions of subsection
5C shall not apply after the termination date of the Term.
In the event the Company terminates the Term for any reason other
than for cause within one year of a Change in Control, the
provisions of subsection 5(C) shall not apply.
F. Termination for Disability.
(1) Should the Executive be absent from work as a result of
personal injury, sickness or other disability as provided
for in subsection 3C(5) for any continuous period of time
exceeding 180 days, the Term may be terminated by the
Company, upon written notice given to the Executive, because
of the Executive's disability.
(2) In the event the Term is terminated pursuant to subsection
6F(1), then, following such Termination, the Executive shall
continue to be entitled to benefits pursuant to Subsections
3E(3),(4) and (6) for one (1) year after the conclusion of
the Term.
(3) In the event the Term is terminated pursuant to subsection
6F(1), the provisions of subsection 5C shall not apply after
the conclusion of the Term.
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G. Termination Upon Death. If not earlier terminated, the Term shall
terminate upon the death of the Executive and the Company shall
have no further obligation to the Executive or his estate except
to pay the Executive's estate any Base Salary, Annual Cash Bonus
accrued but remaining unpaid prior to his death, any expenses
accrued but remaining unpaid prior to his death, and any benefits
accrued but remaining unpaid prior to his death.
H. Termination For Not Being Re-Elected to Board of Directors. In
the event that the Executive shall not be re-elected to the
Company's Board of Directors at any annual or special meeting of
stockholders held for the election of directors occurring during
the Term, then the Executive may terminate this Agreement upon
fifteen (15) prior days' notice thereof. In the event that the
Term is terminated pursuant to this subsection 6H, then the
provisions of subsection 5C shall not apply and the Company shall
be obligated to pay the Executive his Base Salary for the
remainder of the Term as though he had not exercised his right of
termination under this subsection 6H.
7. Miscellaneous.
A. Notices. Any notice to be given hereunder shall either be
delivered personally and/or sent by first class certified mail
and regular mail. The address for service on the Company shall be
its principal executive office address, and the address for
service on the Executive shall be his last known place of
residence. A notice shall be deemed to have been served as
follows:
(1) if personally delivered, at the time of delivery; and/or
(2) if posted, at the expiration of 48 hours (10 days if
international) after the envelope containing the same was
delivered into the custody of the postal authorities.
B. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective heirs,
personal representatives, successors and assigns, provided that
neither Party shall assign any of its rights or privileges
hereunder without the prior written consent of the other Party.
C. Severability. Should any part or provision of this Agreement be
held unenforceable by a court of competent jurisdiction, the
validity of the remaining parts or provisions shall not be
affected by such holding, unless such enforceability
substantially impairs the benefit of the remaining portions of
the Agreement.
D. Waiver. No failure or delay on the part of either Party in the
exercise of any right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such right or privilege preclude other or further exercise
thereof or of any other right of privilege.
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E. Captions. The captions used in this Agreement are for convenience
only and are not to be used in interpreting the obligations of
the Parties under this Agreement.
F. Choice of Law. The validity, construction and performance of this
Agreement and the transactions to which it relates shall be
governed by the laws of the State of Connecticut without regard
to choice of laws provisions.
G. Entire Agreement. This Agreement embodies the entire
understanding of the Parties as it relates to the subject matter
contained herein and as such, supersedes any prior agreement or
understanding between the Parties relating the terms of
employment of the Executive. No amendment or modification of this
Agreement shall be valid or binding upon the Parties unless in
writing executed by the Parties.
IN WITNESS WHEREOF, the Parties hereto confirm their agreement to the
foregoing and set forth their hands and seal, respectively, as of the date first
above stated.
SUN HILL INDUSTRIES, INC.
Corporate Seal:
__________________ By /s/ Xxxxx Xxxxxxxxx
Attest: ----------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
/s/ Xxxxxx Xxxxxxx
----------------------
Xxxxxx Xxxxxxx
