Exhibit 10.2
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into by and between The Knockout Group,
Inc., a Delaware corporation (the "Company"), and Xxxx Xxxxxxx, the undersigned
individual ("Executive") as of the 1st day of October, 2003.
RECITAL
The Company and Executive desire to enter into an Employment Agreement setting
forth the terms and conditions of Executive's employment with the Company.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the Company and Executive agree as follows:
1. Employment.
(a) Term. The Company hereby employs Executive to serve as Chief Executive
Officer ("CEO") and President of the Company. Executive's employment by the
Company will begin on October 1, 2003 and continue until October 1, 2009
("Initial Term"), subject to the terms and conditions contained herein. The
Company and Executive may extend this Agreement for successive three-year terms
by mutual agreement, and the party seeking to extend the Agreement for a
successive term must give the other party notice of intent to extend the
Agreement at least 90 days prior to the expiration of the Initial Term or
successive term.
(b) Duties and Responsibilities. Executive will report to the Company's Board of
Directors. Within the limitations established by the Bylaws of the Company, the
Executive shall have each and all of the duties and responsibilities of the CEO
and President positions and such other duties on behalf of the Company as may
reasonably be assigned from time to time by the Company's Board of Directors.
Executive will be elected or appointed to the Company's Board of Directors and
to the positions of CEO and President. In his sole discretion, Executive may
terminate this Agreement upon sixty (60) days written notice if Executive is
removed from such offices or is not reelected or reappointed at appropriate
times; provided, however, that the Company may elect another individual to serve
as President, so long as Executive continues to hold the positions of CEO and
director.
(c) Location. The location at which Executive shall perform services for the
Company shall be the principal business offices of the Company, currently
located at 000 X. Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx, 00000. The Company will
furnish Executive with a private office, secretary and any other facilities and
services that are adequate for the performance of Executive's duties and
suitable to Executive's position.
2. Compensation.
(a) Commencement of Compensation. Executive acknowledges receipt of payment in
the amount of Twenty-Five Thousand Dollars ($25,000.00), and Company
acknowledges it is indebted to Executive in the amount of Five Thousand Dollars
($5,000.00), which, when received by Executive, will constitute payment in full
for services performed for the Company as a consultant from April 9, 2003
through September 30, 2003. Executive and Company agree that Executive's
compensation as provided herein shall commence on October 1, 2003.
(b) Base Salary. Executive shall be paid a base salary ("Base Salary") at the
starting annual rate of One Hundred Eighty Thousand Dollars ($180,000.00).
Effective December 1, 2004 Executive's salary shall be increased to Two Hundred
Forty Thousand Dollars ($240,000) annually. On December 1, 2004 and each year of
employment thereafter, Executive's Base Salary will be increased by six percent
(6%) of the Base Salary in effect for the prior year. In addition, Executive
shall receive such additional compensation as may be provided by the Company's
compensation policy in effect from time to time and/or as provided by resolution
of the Board of Directors. Throughout the Initial Term and successive terms,
Employee shall have a base salary equal to or higher than any other employee of
the Company.
(c) Payment. Payment of all compensation to Executive hereunder shall be made in
accordance with the relevant Company policies in effect from time to time,
including normal payroll practices, and shall be subject to all applicable
employment and withholding taxes.
(d) Bonus. Executive shall also be entitled to an annual bonus, in an amount to
be determined at the discretion of the Board of Directors; provided, however,
that at the beginning of each fiscal year, the Board of Directors shall approve
revenue forecasts and at the end of each fiscal year in which such revenue
forecasts have been met or exceeded by the Company, Executive shall receive a
bonus in respect to such year in an amount not less than twenty-five percent
(25%) of Executive's Base Salary for such year (the "Minimum Bonus"). With
respect to any year for which the Board of Directors fails to approve revenue
forecasts, Executive shall receive the Minimum Bonus.
(e) Executive shall not participate in any vote of the Board of Directors
regarding his compensation.
3. Other Employment Benefits.
(a) Business Expenses. Upon submission of itemized expense statements in the
manner specified by the Company, Executive shall be entitled to reimbursement
for reasonable travel and other reasonable business expenses duly incurred by
Executive in the performance of his duties under this Agreement, which
reimbursement shall be paid to Executive no later than thirty (30) days
following receipt by the Company of such expense statements.
(b) Benefit Plans. Executive shall be entitled to: (i) participate in the
Company's medical and dental plans, disability insurance plans and retirement
plans pursuant to their terms and conditions; (ii) be covered, subject to
underwriting, by a term life insurance policy insuring Executive's life in an
amount no less than five hundred thousand dollars ($500,000.00), benefits to be
payable to such beneficiary or beneficiaries as Executive shall designate; (iii)
be reimbursed, up to five thousand dollars ($5,000.00) per year, for Executive's
expenditures on health and wellness products and services not otherwise covered
by the Company's benefit plans; and participate in any other benefit plan
offered by the Company to its employees during the term of this Agreement.
Nothing in this Agreement shall preclude the Company from terminating or
amending any employee benefit plan or program from time to time; provided,
however, that the provisions contained in subsections (ii) and (iii) of this
Section 3(b) shall not be terminated or amended without the consent of
Executive.
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(c) Vacation. Executive shall be entitled to five (5) weeks of vacation each
year of full employment, exclusive of legal holidays, as long as the scheduling
of Executive's vacation does not interfere with the Company's normal business
operations. If Executive does not use all his vacation time in any one year, the
unused portion may be carried into subsequent years.
(d) Automotive Reimbursement. Executive shall be entitled to reimbursement of up
to one thousand dollars ($1,000.00) per month for expenses and costs associated
with ownership or lease of a vehicle for business and personal use, including
cost of fuel, maintenance and repair.
(e) No Other Benefits. Subject to Section 3(b), Executive understands and
acknowledges that the compensation specified in Sections 2 and 3 of this
Agreement shall be in lieu of any and all other compensation, benefits and
plans.
4. Executive's Business Activities. Executive shall devote the substantial
portion of his entire business time, attention and energy to the business and
affairs of the Company, which shall not be less than forty (40) hours per week.
Executive may serve as a member of the Board of Directors of other organizations
that do not compete with the Company, and may participate in other professional,
civic, governmental organizations and activities that do not materially affect
his ability to carry out his duties hereunder. Company recognizes that Executive
is the majority owner of Artistic Communications Center (ACC) and has certain
business obligations related to his position with ACC.
5. Termination of Employment.
(a) For Cause. Notwithstanding anything herein to the contrary, the Company may
terminate Executive's employment hereunder for cause for any one of the
following reasons: willful misconduct, embezzlement, knowing violation of the
criminal law, dishonesty, or fraud with regard to the Company or its business.
Upon termination of Executive's employment with the Company for cause, the
Company shall be under no further obligation to Executive for salary or bonus,
except to pay all accrued but unpaid base salary, accrued bonus (if any) and
accrued vacation to the date of termination thereof; such payment shall be made
to Executive no later than ninety (90) days following termination, subject to
appropriate adjustments and offsets, if any, and further subject to applicable
state law.
(b) Without Cause. The Company may terminate Executive's employment hereunder at
any time without cause, provided, however, that Executive shall be entitled to
severance pay in the amount of his Base Salary at the time of termination times
the period remaining of the Initial Term or any renewal thereof then in effect
or twelve months Base Salary, whichever is greater, (the "Severance Period"), in
addition to accrued but unpaid Base Salary, accrued bonus and accrued vacation,
less deductions required by law (collectively, the "Severance AMOUNT") but if,
and only if, Executive executes a valid and comprehensive release of any and all
wrongful termination claims that the Executive may have against the Company in a
form provided by the Company. The Company shall pay the Severance Amount to
Executive in a lump sum payment no later than thirty (30) days following
termination of Executive's employment. During the Severance Period, Executive
shall be subject to the provisions of Section 9(b) of this Agreement.
(c) Termination for Good Reason. If Executive terminates his employment with the
Company for Good Reason (as hereinafter defined), he shall be entitled to the
Severance Amount , subject to the provisions of Section 5(b). For purposes of
this Agreement, "Good Reason" shall mean any of the following: (i) relocation of
the Company's executive offices more than forty miles from the current location,
without Executive's concurrence; (ii) any material breach by the Company of this
Agreement; or (iii) any significant change in the Executive's duties and
responsibilities, other than the election of a President, as provided in Section
1(b) hereof.
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(d) Cooperation. After notice of termination, Executive shall cooperate with the
Company, as reasonably requested by the Company, to effect a transition of
Executive's responsibilities and to ensure that the Company is aware of all
matters being handled by Executive.
6. Disability of Executive. The Company may terminate this Agreement if
Executive shall permanently be prevented from properly performing his essential
duties hereunder with reasonable accommodation by reason of illness or other
physical or mental incapacity for a period of more than one hundred twenty (120)
consecutive days. Upon such termination, Executive shall be entitled to continue
to receive Base Salary and bonus, in the amounts in effect at the time of
termination, for a period of twelve (12) months following termination, but if,
and only if, Executive executes a valid and comprehensive release of any and all
wrongful termination claims that the Executive may have against the Company in a
form provided by the Company.
7. Death of Executive. In the event of the death of Executive, the Company's
obligations hereunder shall automatically cease and terminate; provided,
however, that within sixty (60) days the Company shall pay to Executive's heirs
or personal representatives Executive's Base Salary, bonus and vacation accrued
to the date of death.
8. Confidential Information. The Executive recognizes and acknowledges that the
Company's trade secrets and proprietary information and processes ("Confidential
Information"), as they may exist from time to time, are valuable, special and
unique assets of the Company's business, access to and knowledge of which are
essential to the performance of the Executive's duties hereunder. During the
term of Executive's employment and for a period of five (5) years after the
termination of his employment with the Company, the Executive will not disclose
such Confidential Information, in whole or in part, to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever,
nor shall the Executive make use of any such Confidential Information for his
own purposes or for the benefit of any person, firm, corporation or other entity
(except the Company) under any circumstances during or after the term of his
employment. Confidential Information does not include information that the
Executive can demonstrate: (a) was in the Executive's possession prior to the
earlier of (i) the date that the Executive commenced discussions with the
Company or (ii) the date that it was furnished to the Executive under the terms
of this Agreement; provided, however, that the source of that information was
not known by the Executive to be bound by a confidentiality agreement with or
other continuing, legal or fiduciary obligation of confidentiality to Company;
(b) is now, or hereafter becomes to date, through no act or failure to act on
the part of the Executive, generally known to the public; (c) is rightfully
obtained by the Executive from a third party, without breach known to the
Executive of any obligation to Company; or (d) is independently developed by the
Executive without use of or reference to the Confidential Information.
9. Exclusive Employment/Covenant Not to Compete.
(a) During the period of his employment with the Company, Executive will not
enter into any agreement which conflicts with his duties or obligations to the
Company.
(b) During the period of his employment with the Company and for one (1) year
after the later of termination of his employment, termination of the Severance
Period, if any, or termination of disability payments pursuant to Section 6, if
any, Executive will not (i) engage in any business activity competitive with the
Company (as defined herein) or any Affiliate (as defined in Section 10 herein),
(ii) plan or organize any business activity competitive with the Company or any
Affiliate, (iii) hire, employ or endeavor to employ any person who is then or
was at any time during the previous twelve (12) months an employee, consultant,
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stockholder or agent of the Company, (iv) participate or engage directly or
indirectly in the development, sale or marketing of products or services
(including but not limited to cleaning products) which compete with the
Company's products either currently sold to Customers or under development by
the Company in the United States or any foreign jurisdiction in which the
Company or any Affiliate conducts business or has conducted business, or (vi)
directly or indirectly interfere with, disrupt or attempt to disrupt the
relationship, contractual or otherwise, between the Company and any Customer,
supplier, consultant, independent contractor, agent, licensor or employee of the
Company. A business activity competitive with the Company shall include engaging
in any present or contemplated business then engaged in by the Company or any
Affiliate, including business reasonably contemplated by the Company or any
Affiliate, in any capacity whatsoever (whether or not for compensation), and
including, but not limited to, as a proprietor, investor (representing more than
one percent (1%) equity interest) or stockholder, director, officer, employee,
consultant, independent contractor, co-venturer, financier, employer, agent,
representative or otherwise for any person other than the Company or any
Affiliate and/or participating or engaging directly or indirectly in the same or
any similar business as that of the Company or any of the Company's Affiliates
in the United States or any foreign jurisdiction in which the Company or any
Affiliate conducts business or has conducted business. For the purposes of this
Section 9, "Customer" shall mean any corporation, joint venture, partnership,
individual or other legal entity for which the Company or the Company's
Affiliates has previously performed services or provided products, is in the
process of performing services or providing products, or to which the Company or
its Affiliates has submitted, or has considered submitting, a bid to perform
services or provide products.
(c) Notwithstanding any other provision of this Section 9, following termination
of Executive's employment, termination of the Severance Period, if any, or
termination of disability payments pursuant to Section 6, if any, (for purposes
of this Section 9(c), collectively referred to as the "Termination Date"), the
Company may continue Executive's non-compete obligations as set forth in Section
9(b) herein beyond the initial one (1) year requirement by electing to continue
to pay Executive's Base Salary as of the Termination Date, without interruption,
following the Termination Date; provided, however, that the Company must make
such election within thirty (30) days following the Termination Date by
delivering to Executive a written notice ("Notice") of its exercise of this
election. If the Company fails to give Executive the Notice within the required
thirty (30) day period after the Termination Date, the Company's right to make
such election shall terminate and be of no further force and effect. If the
Company makes such election and at any time thereafter ceases to pay Executive
his Base Salary, Executive's non-compete obligations set forth in Section 9(b)
herein shall expire on the later of (i) the date that is one year after the
Termination Date or (ii) the date on which such payment by the Company to
Executive ceases.
(d) Executive has carefully read and considered the provisions contained in
Section 9 hereof and, having done so, agrees that the restrictions set forth
therein (including, but not limited to, the time period of restriction and the
geographical areas of restriction) are fair and reasonable and are reasonably
required for the protection of the interests of the Company, its officers,
directors, shareholders and other employees.
(e) In the event that, notwithstanding the foregoing, any part of the covenants
set forth in Section 9 hereof shall be held to be invalid or unenforceable, the
remaining parts thereof shall nevertheless continue to be valid and enforceable
as though the invalid or unenforceable parts had not been included therein. In
the event that any provisions of Section 9 relating to time period and/or areas
of restriction shall be declared by a court or other tribunal of competent
jurisdiction to exceed the maximum time period or areas such court deems
reasonable and enforceable, the agreed upon time period and/or areas of
restriction shall be deemed to become and thereafter be the maximum time period
and /or areas which such court or other tribunal deems reasonable and
enforceable.
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10. Assignment and Transfer. Executive's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise, and any
purported assignment, transfer or delegation thereof shall be void. The Company
may assign this Agreement: (a) to an Affiliate so long as such Affiliate assumes
the Company's obligations hereunder; provided that no such assignment shall
discharge the Company of its obligations herein, or (b) in connection with a
merger or consolidation involving the Company or a sale of substantially all its
assets to the surviving corporation or purchaser as the case may be, so long as
such assignee assumes the Company's obligations thereunder. "Affiliate" shall
mean any individual or entity ("Person") which, directly or indirectly, is in
control of, is controlled by, or is under common control with, the Company. For
purpose of this definition, "control" means the power to directly or indirectly,
(i) vote 10% or more of the securities having ordinary voting power for the
election of directors of such Person or (ii) direct or cause the direction of
the management and policies of such Person, whether by contract or otherwise.
11. No Inconsistent Obligations. Executive is aware of no obligations, legal or
otherwise, inconsistent with the terms of this Agreement or with his undertaking
employment with the Company. Executive will not disclose to the Company, or use,
or induce the Company to use, any proprietary information or trade secrets of
others. Executive represents and warrants that he or she has returned all
property and confidential information belonging to all prior employers.
12. Binding Arbitration.
(a) Any dispute arising out of the terms of this Agreement shall be settled by
arbitration in Xxxx County, Illinois, in accordance with the rules of the
American Arbitration Association. Arbitration shall be brought upon the written
notice of one party to the other of a demand for arbitration, including a
recitation of the claim or dispute for which arbitration is sought. Such claim
or dispute shall be submitted to a panel of three Arbitrators in accordance with
the rules then in effect of the American Arbitration Association. Each of the
parties shall choose one Arbitrator and the two Arbitrators so chosen shall
together choose a third Arbitrator. If the Arbitrators fail to select a third
Arbitrator, then the third Arbitrator shall be designated by the American
Arbitration Association. If either party fails to designate an Arbitrator, then
the claim or dispute shall be submitted to arbitration before a panel of three
Arbitrators chosen by the American Arbitration Association.
(b) The Arbitrators shall promptly obtain such information regarding the matter
as they deem advisable, and shall promptly render a decision by majority vote.
The Arbitrators shall render a written award, which shall be delivered to the
parties. Any such award shall be a conclusive determination of the matter and
shall be binding upon the parties and their successors in interest, if any, and
shall not be contested by any party. Judgment upon any arbitration award may be
entered and enforced in any court of competent jurisdiction.
(c) IT IS UNDERSTOOD THAT THE PARTIES HEREBY WAIVE ANY RIGHT TO A JURY TRIAL OR
A TRIAL IN COURT. The parties understand that the rules applicable to
arbitrations and the rights of parties in arbitrations differ from the rules and
rights applicable in court.
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(d) At the time of rendering the award, the Arbitrators shall establish their
fees and expenses in connection therewith. Such fees and expenses shall be
allocable by the Arbitrators in their award, or, if no payment obligation is
determined by the Arbitrator, shall be equally divided between the parties. The
Arbitrators shall have the right, in addition to any other relief permitted at
law or in equity, to award counsel fees to any party and to grant temporary or
permanent injunctive relief.
(e) Each party to this Agreement will perform all acts, including the execution
and delivery of further documents, as the Arbitrators determine are necessary or
desirable to confirm and carry out the terms of the award rendered
13. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois without regard to conflict of
law principles.
(b) Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto and supersedes any prior or
contemporaneous written or oral agreements, representations and warranties
between them respecting the subject matter hereof.
(c) Amendment. This Agreement may be amended only by a writing signed by
Executive and by a duly authorized representative of the Company.
(d) Severability. If any term, provision, covenant or condition of this
Agreement, or the application thereof to any person, place or circumstance,
shall be held to be invalid, unenforceable or void, the remainder of this
Agreement and such term, provision, covenant or condition as applied to other
persons, places and circumstances shall remain in full force and effect.
(e) Construction. The headings and captions of this Agreement are provided for
convenience only and are intended to have no effect in construing or
interpreting this Agreement. The language in all parts of this Agreement shall
be in all cases construed according to its fair meaning and not strictly for or
against the Company or Executive.
(f) Rights Cumulative. The rights and remedies provided by this Agreement are
cumulative, and the exercise of any right or remedy by either party hereto (or
by its successor), whether pursuant to this Agreement, to any other agreement,
or to law, shall not preclude or waive its right to exercise any or all other
rights and remedies.
(g) Nonwaiver. No failure or neglect of either party hereto in any instance to
exercise any right, power or privilege hereunder or under law shall constitute a
waiver of any other right, power or privilege or of the same right, power or
privilege in any other instance. All waivers by either party hereto must be
contained in a written instrument signed by the party to be charged and, in the
case of the Company, by an officer of the Company (other than Executive) or
other person duly authorized by the Company.
(h) Notices. Any notice, request, consent or approval required or permitted to
be given under this Agreement or pursuant to law shall be sufficient if in
writing, and if and when sent by certified or registered mail, with postage
prepaid, to Executive's residence (as noted in the Company's records), or to the
Company's principal office, as the case may be.
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(i) Assistance in Litigation. Executive shall, during and after termination of
employment, upon reasonable notice, furnish such information and proper
assistance to the Company as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is, or may become a party; provided, however, that such assistance
following termination shall be furnished at mutually agreeable times and for
mutually agreeable compensation.
(j) Insurance. The Company may, at its election and for its benefit, in addition
to the life insurance benefit set forth in Section 3(b)(ii) herein, insure the
Executive against accidental loss or death and the Executive shall submit to
such physical examination and supply such information as may be required in
connection therewith.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date set forth below.
THE KNOCKOUT GROUP, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------
EXECUTIVE:
/s/ Xxxx Xxxxxxx
--------------------------
Xxxx Xxxxxxx
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