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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of this
8th day of October, 1997, by and between Young Innovations, Inc., a
Missouri corporation ("Employer") and Xxxxxx X. Xxxxxxx ("Employee").
WHEREAS, Employer wishes to employ Employee, and Employee wishes to be
employed by Employer, and the parties wish to set forth the terms of such
employment in writing in this Agreement;
NOW THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein set forth, Employer hereby employs Employee, and Employee
hereby accepts such employment, upon the following terms:
1. Term of Employment.
Unless terminated earlier as set forth in Section 4, the initial term of
Employee's employment shall be 15 months beginning as of October 1, 1997 (the
"Effective Date"). Thereafter, the term of Employee's employment will
automatically be extended for successive one year terms expiring December 31
unless either party notifies the other party at least 60 days before the
expiration of the initial term, or any subsequent term, that it does not wish
to extend this Agreement; but if such notice is given, Employee's employment
will terminate without further notice at the close of business on the last day
of the then current term.
2. Duties of Employee.
(a) Employee shall diligently and faithfully serve Employer as its Senior
Vice President and Chief Operating Officer, reporting to Employer's Chief
Executive Officer. Employee shall perform such further duties and services
upon special projects related or associated with the business and affairs of
Employer as may from time to time be assigned to him by Employer's Chief
Executive Officer or Board of Directors ("Board"), and shall devote his full
productive time, energies, attention and best efforts to the performance of the
services required by such duties (except as provided in paragraph 2(c)), and
shall diligently support and promote Employer's business, with the objective
that Employer will be operated in an efficient, sound and profitable manner.
(b) Employee agrees to serve, if elected or appointed, as a director of
Employer and/or as a director or officer of one or more affiliates of Employer.
Such duties shall be deemed to be part of Employee's duties for Employer, and
Employee shall not be entitled to additional compensation for serving in any
such capacity beyond that provided in this Agreement.
(c) It is understood that Employee shall be allowed to pursue certain prior
commitments, not significantly detracting from his obligations under paragraph
2(a), as approved by Employer.
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3. Compensation and Benefits.
(a) Salary. Employee shall receive an initial base salary ("Base Salary")
of $180,000 per year, which shall be payable in accordance with, and shall be
subject to change from time to time in accordance with, Employer's executive
payroll and compensation policies and procedures. However, the Base Salary
shall not be less than $180,000 per year.
(b) Stock Option. Effective on the Effective Date, Employer shall issue to
Employee an option to acquire up to 60,000 shares of Employer's common stock
(the "Option"). The Option shall be issued pursuant to Employer's proposed
1997 Stock Option Plan (the "Option Plan"), a draft copy of which Employee
hereby acknowledges having received. If for any reason the Option Plan is not
adopted or is not approved by Employer's shareholders, the Option will be
granted on terms comparable to those of the Option Plan. The Option shall
contain the following specific provisions:
Date and Duration of Option. The Option shall be issued as of and
subject to the occurrence of the pricing date (the "Pricing Date") of
Employer's currently proposed initial public offering (the "IPO"), and shall
expire, to the extent not exercised, ten years after the Pricing Date,
subject to possible earlier termination as set forth in the Option Plan.
Exercisability of Option. The Option shall be immediately exercisable
as to 15,000 shares, and shall become exercisable as to an additional
15,000 shares on January 1 of each of the years 1999, 2000 and 2001, so that
it shall be exercisable as to all Option Shares on January 1, 2001. However,
if there is a Change in Control prior to the expiration date of the Option
the Option shall become immediately exercisable, to the extent it was not
previously exercisable, as to all Option Shares.
Exercise Price. The exercise price of the Option shall be equal to the
offering price to the public of the shares offered in the IPO.
Type of Option. The Option shall be an incentive stock option ("ISO") if
and to the extent permitted under the Option Plan and related Federal tax
laws and regulations. To the extent the aggregate fair market value of the
underlying Option Shares, measured at the time of grant, as to which the
Option first becomes exercisable in any calendar year exceeds $100,000, the
portion of the option that exceeds such limitation will be a nonqualified
stock option.
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(c) Fringe Benefits. Employee shall be entitled to participate in such
retirement and other employee benefit plans as Employer may adopt for its
employees or its senior executives generally, and shall receive such other
fringe benefits and executive perquisites which are afforded by Employer from
time to time to its senior executives or which are otherwise agreed upon
between Employee and the Board.
(d) Business Expenses. Employee shall be entitled to reimbursement of his
expenses reasonably incurred in the promotion and conduct of Employer's
business, subject to the oversight of Employer's Chief Executive Officer and to
any limitations or policies applicable to Employer's executives generally, and
subject to compliance with such substantiation and record-keeping requirements
as may be required from time to time to support the deductibility of such
expenses for Federal income tax purposes.
4. Termination of Employment.
(a) Termination in Certain Events by Either Party. Employee's employment
may be terminated by either party if:
(i) the closing of the sale of the shares offered in the IPO has not
occurred by November 30, 1997, or
(ii) the Company has not executed a definitive agreement for, or
consummated, the acquisition of an entity with at least $8 million of
revenues by March 31, 1998,
and the terminating party gives written notice of termination to the other
party within 30 days after the occurrence of such event.
(b) Termination by Employer for Cause. Except as provided in paragraph
4(a), during the term of this Agreement Employee's employment may be terminated
by Employer without breach of this Agreement only for "Cause," which with
respect to a termination by Employer means only:
(i) conviction (including a plea of nolo contendere) of a felony or any
other crime involving moral turpitude, unethical business conduct, or
dishonesty involving the Company or persons having business dealings with the
Company, or
(ii) any dishonest or unethical conduct which in the judgment of a
majority of the Board (with Employee not voting) may reasonably be
expected to materially adversely affect Employer's business, or
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(iii) any material breach of Employee's covenants set forth in this
Agreement which is not cured within ten (10) days after Employee is notified
of such breach by Employer, or
(iv) Employee's inability or refusal, for any reason, to fully perform
his duties under this Agreement for a period of ninety (90) consecutive
calendar days or for a total of thirty (30) business days in any six (6)
month period.
(c) Termination by Employee for Cause. Except as provided in paragraph
4(a), during the term of this Agreement Employee may voluntarily terminate his
employment without breach of this Agreement only for "Cause," which with
respect to a termination by Employee means only:
(i) the cessation of Employer's normal business operations other than
in connection with the orderly liquidation of Employer's business, or
(ii) Employer's failure to pay Employee his compensation under this
Agreement generally in a timely manner, or
(iii) any other material violation of Employer's covenants set forth in
this Agreement which is not cured within ten (10) days after Employer is
notified of such violation by Employee.
(d) Effect of Termination by Employer for Cause or by Employee Without
Cause. If Employee's employment is terminated by Employer for Cause as set
forth in paragraph 4(b), or if Employee terminates his employment for any
reason other than for Cause as set forth in paragraph 4(c), then all further
obligations of Employer under this Agreement shall automatically terminate,
except for Base Salary and fringe benefits accrued through the effective date
of termination and such other benefits as may be provided by law.
(e) Effect of Termination by Death of Employee. In the event of Employee's
death, all further obligations of Employer under this Agreement shall
automatically terminate, except that Employer shall pay to such person as may
have been designated by Employee in a writing filed with Employer as the
beneficiary under this Agreement or, if no such designation has been made, to
any person designated by Employee in a writing filed with Employer as
Employee's beneficiary under Employer's retirement plans or, if no such
designation has been made, then to the personal representative of Employee's
estate, the Base Salary and fringe benefits accrued through the effective date
of termination and such other benefits as may be provided by law.
(f) Limitation on Liability of Employer for Other Terminations. If
Employee's employment is terminated by Employer for any reason other than Cause
as set forth in paragraph 4(b), or if Employee terminates his employment for
Cause as set forth in paragraph 4(c), then Employer's liability to Employee, in
damages or otherwise, on account of such termination shall be limited to (i)
Employee's Base Salary for the remainder of the then current employment term
plus, if the termination is within 30 days of the end of the current term and
Employer has not given notice of non-renewal pursuant to Section 1, Employee's
Base Salary for the following one-year term, plus (ii) the value of any fringe
benefits which would have accrued through the end of the current term, or if
the termination is within 30 days of the end of
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the current term and Employer has not given notice of non-renewal pursuant to
Section 1, the following term, plus (iii) such other benefits as may be
provided by law.
(g) Other Rights Not Affected. The enumeration of certain rights or
liabilities of the parties effective upon termination of Employee's employment
shall not affect any rights or remedies of a party at law or in equity for any
breach of this Agreement by the other party. In addition, upon any termination
of Employee's employment, including by reason of Employee's death, Employer may
accelerate, offset and withhold from any amounts due to Employee or his
beneficiary or personal representative any indebtedness of Employee to Employer
existing at the effective date of termination.
5. Covenants Relating to Confidential Information.
(a) Duty Not to Disclose Confidential Information. Employee covenants to use
his best efforts and exercise utmost diligence to protect and guard Employer's
trade secrets, know-how, methods, resources, financial models, business
procedures and processes, customer lists, records, computer information and all
other confidential information relating to Employer's business (hereinafter
individually and collectively referred to as "Confidential Information"). Both
during Employee's employment by Employer and thereafter, Employee shall not,
directly or indirectly, use for Employee's benefit or for the benefit of any
other person or entity, or disclose to any other person or entity, any
Confidential Information, whether or not acquired, learned, obtained or
developed by Employee alone or in conjunction with others, except as such
disclosure or use may be required in connection with Employee's employment by
Employer or may be expressly consented to in writing by Employer. Employee's
obligations under this paragraph shall terminate upon termination of Employee's
employment as to any Confidential Information which:
(i) was known to Employee prior to the commencement of his employment
(and not merely prior to the Effective Date), or
(ii) is now generally known to the public, or hereafter becomes
generally known to the public otherwise than through a breach of this
Agreement, but in such latter event only as of the date such Confidential
Information becomes generally known to the public and without terminating any
liability of Employee to Employer for unauthorized disclosure prior to such
date, or
(iii) is made available to Employee by a third party not under any
duty of confidentiality with respect to such Confidential Information.
(b) Delivery of Tangible Information. Employee shall deliver promptly to
Employer at the termination of his employment or at any other time Employer may
reasonably request, without retaining any copies, notes or excerpts thereof,
all work sheets, memoranda, diaries, notes, records, computer printouts,
computer storage media, address books, files and any other documents made or
compiled or otherwise obtained by, or delivered or made available to, Employee
as a result of Employee's employment and containing, or relating directly or
indirectly to, any Confidential Information.
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(c) Each of the foregoing obligations of Employee in this paragraph shall
also apply with respect to Confidential Information of customers and others
with whom the Company has a business relationship, learned or acquired by
Employee during the course of his or her employment by the Company.
(d) Upon termination of Employee's employment, Employee agrees not to notify
any customer of the Company of Employee's termination until the Company has
discussed with said customer plans for transferring the handling of such
customer's orders or other business to other personnel of the Company, and
Employee further agrees to cooperate with the Company to the end that all
customers of the Company with whom Employee has had a business relationship may
be retained by the Company.
6. Non-Inducement Covenant.
Employee hereby expressly covenants and agrees that during the period of
Employee's employment with the Company and for a period of two (2) years after
the termination of such employment (irrespective of whether such termination
shall be voluntary or involuntary on the part of Employee), Employee shall not
without the express written consent of the Company directly or indirectly, in
Employee's own behalf or on behalf of any other person or entity, hire or
solicit for hire any employee of the Company, or induce any person employed by
the Company to leave the employ of the Company for any reason.
7. Intellectual Property.
Employee hereby agrees that all right, title, and interest in and to any
inventions (whether or not they are patentable) and copyrightable works of
authorship that Employee has made, whether solely or jointly, during his
employment by Employer or that Employee makes, whether solely or jointly, while
an employee of Employer, and which are either within the scope of Employee's
employment or are made at Employer's specific request, including but not
limited to the financial models and similar intellectual property currently
being used by Employer and any modifications or enhancements thereof, shall
belong exclusively to Employer; and Employee agrees to assign and hereby does
assign all right, title and interest in and to such inventions and works of
authorship to Employer and agrees to execute such further assignments and other
documents as Employer may reasonably require in order to secure and enforce
Employer's rights therein.
8. Disclosure.
Each party hereby authorizes the other to disclose the existence of this
Agreement and the restrictive covenants set forth herein to third parties,
including but not necessarily limited to prospective employers of Employee,
without incurring any liability for so acting.
9. Review and Consultation.
Employee acknowledges that he has had a opportunity to review this Agreement
and consult with his legal and financial advisers prior to signing this
Agreement.
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10. Miscellaneous.
(a) Notices. All notices and communications hereunder shall be in writing,
and shall be deemed to be duly given if either actually received by the party
entitled thereto (in the case of Employer, by its Chief Executive Officer) or
two business days after its deposit in the United States mail, registered or
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to Employee: Xxxxxx X. Xxxxxxx
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If to Employer: Young Innovations, Inc.
00000 Xxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Chief Executive Officer
Either party may change its designated address for receipt of notices by giving
written notice thereof to the other party.
(b) Entire Agreement; Modification and Waiver. This Agreement constitutes
the full and complete understanding and agreement of the parties with respect
to Employee's employment by Employer, supersedes all prior written or oral
understandings and agreements with respect thereto, and cannot be amended or
terminated orally. Any amendment shall be binding against Employer only if
approved by a majority of the Board, with Employee not voting. Unless
otherwise expressly stated in writing, any waiver of any provision of this
Agreement shall not constitute a waiver of any other provision; nor shall a
waiver of any breach of any covenant of this Agreement constitute a waiver of
any succeeding or continuing breach of the same, or any other, covenant.
(c) Remedies of Employer Upon Breach of Agreement. Employee acknowledges
that irreparable harm would be sustained by Employer if Employee breaches the
covenants set forth in this Agreement, and Employee therefore agrees that
without prejudice to any other rights or remedies which Employer may have under
this Agreement or at law or in equity, Employer shall be entitled to apply to
any court of competent jurisdiction for, and to obtain, injunctive relief
against Employee in order to prevent any breach or threatened breach of such
covenant. Employee hereby acknowledges that Employer's business is national in
scope and therefore expressly agrees that the limitation of the covenants in
this Agreement to a specific geographical area within the United States would
not adequately protect the Company.
(d) Severability of Certain Provisions. It is the intention of the parties
that the confidentiality and non-competition covenants in this Agreement are
intended to restrict Employee's activities only to the extent necessary for the
protection of the legitimate business interests of Employer, and the parties
specifically covenant that if any of the foregoing provisions are held to be
too broad for such purpose the Court having power to make such adjudication is
authorized to modify or interpret such provisions to the end that such
restrictions, as modified,
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shall be reasonable and valid; and that if any of the foregoing provisions
shall be held to be invalid or unenforceable, the same shall be deemed to be
severable and shall not defeat the remaining provisions.
(e) Binding Effect of Agreement. This Agreement shall be binding upon
Employee and, except as regards personal services, upon Employee's heirs,
personal representatives, executors and administrators, and shall inure to the
benefit of Employer and its successors and assigns. Employee expressly
consents to the assignment of this Agreement to any successor to all or
substantially all of Employer's business, and agrees to perform the duties and
services required of him herein for any such successor assignee.
(f) Governing Law; Situs of Suit. This Agreement shall be governed by, and
interpreted in accordance with, the internal laws of the State of Missouri.
Employee agrees that he may be sued, and hereby waives any right to contest
jurisdiction or venue, in the Circuit Court of St. Louis County, Missouri or
the United States District Court for the Eastern District of Missouri, which
courts, except in the case of proceedings under paragraph 12(c), shall be the
exclusive forums in any proceedings by either party concerning this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
Employee: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Employer: YOUNG INNOVATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: President and CEO
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