EMPLOYMENT AGREEMENT
(Xxxxx X. Xxxxxx)
THIS AGREEMENT (this "Agreement") is entered into as of this
9th day of August, 1999 by and between Xxxxx X. Xxxxxx (the "Executive") and
American Safety Razor Company, a Delaware corporation (the "Company").
WHEREAS, the Company has entered into an Agreement and Plan of
Merger, dated as of February 12, 1999, by and among the Company, RSA Holdings
Corp. of Delaware ("Holdings"), and RSA Acquisition Corp. ("Acquisition") which
contemplates the Merger of Acquisition with and into the Company (the "Merger")
and is to be capitalized as of the closing of such Merger; and
WHEREAS, the Company desires to obtain the benefit of the
experience, supervision and services of the Executive in connection with the
Merger and thereafter and desires to employ the Executive upon the terms and
conditions hereinafter set forth, and the Executive is willing and able to
accept such employment on such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Executive agree as follows:
1. Employment Duties. From and after the date of the Merger, the
Company shall employ the Executive, and the Executive agrees to serve and accept
employment, for the Term (as hereinafter defined), as President and Chief
Executive Officer of the Company, subject to the direction and control of the
Board of Directors of the Company (the "Board"), and, in connection therewith,
to reside in the United States and to oversee and direct the operations of the
Company and to perform such other duties consistent with the responsibilities of
a President and Chief Executive Officer. During the Term, the Executive shall
devote all of his time, energy, experience and talents during regular business
hours, and as otherwise reasonably necessary, to such employment, shall devote
his best efforts to advance the interests of the Company and shall not engage in
any other business activities of a material nature, as an employee, director,
consultant or in any other capacity, whether or not he receives any compensation
therefor, without the prior written consent of the Board.
2. Term of Employment. The Term of the Executive's employment hereunder
shall commence on the date of the Merger and continue until December 31, 2003
(the "Term"), unless sooner terminated pursuant to this Agreement.
3. Compensation; Reimbursement. Commencing on the date of the Merger, the
Company shall pay or provide to the Executive as follows, in full satisfaction
for his services provided pursuant hereto:
(a) Base Salary. A base salary payable in equal monthly
installments at the rate of $400,000 per annum during the Term ("Base
Salary"). The Board will annually review the Base Salary payable to the
Executive hereunder beginning in 2000. Necessary withholding taxes,
FICA contributions and the like shall be deducted from such Base
Salary.
(b) Cash Bonus. For each fiscal year a cash bonus pool will be
established for the Executive if the Company achieves (as determined by
the Board) 90% or more of the EBITDA target for such year as set forth
in the Company's annual budget as approved by the Board (the "Annual
EBITDA Target"). Such bonus pool will equal 0% of Executive's Base
Salary if the Company has achieved 90% of the Annual EBITDA Target for
such year and will increase on a linear basis to 75% of Executives Base
Salary (the "Plan Bonus") if the company has achieved 100% of the
Annual EBITDA Target. If the Company achieves in excess of 100% of the
Annual EBITDA Target, the Plan Bonus will be increased by 3.5% for each
1.0% of performance above the Annual EBITDA Target (e.g. if 110% of the
Annual EBITDA Target is achieved, the bonus pool will equal 101.25% of
Executives Base Salary. For each fiscal year, two-thirds of such cash
bonus pool, calculated as aforesaid, shall be paid to the Executive as
bonus compensation. Payment of the remaining one-third shall be subject
to the discretion of the Compensation Committee of the Board based on
the Company's having achieved certain pre-set operating objectives for
each such fiscal year.
(c) Perquisites. The Company shall lease, for the benefit and
use of the Executive, an automobile of the Executive's choice, with all
insurance and other expenses relating thereto, the cost thereof in the
range of $800 per month.
(d) Benefits. Such health, life, disability, vacation,
pension, sick leave and other benefits as are generally made available
by the Company to its executive employees.
(e) Stock Options. In addition to the compensation payable to
the Executive as set forth hereinabove, the Executive shall be entitled
to receive certain stock options pursuant to one or more executive or
employee stock option plans to be adopted by Holdings.
4. Termination. Unless this Agreement terminates at the expiration of the
Term, this Agreement may be terminated as follows:
4.1 Upon Death. If the Executive dies during the Term, this
Agreement shall automatically terminate as of the close of business on the date
of his death, and the Executive's legal representatives shall be entitled to
receive, and the Company shall pay or cause to be paid, the Executive's Base
Salary in monthly installments for one year following such termination.
4.2 Upon Disability. If during the Term the Executive shall
become physically or mentally disabled, whether totally or partially, either
permanently or so that the Executive is unable substantially and competently to
perform his duties hereunder for a period of ninety (90) consecutive days or for
ninety (90) days during any six (6) month period during the Term, the Company
may terminate the Executive's employment hereunder. In the case of such
termination, the Company shall (i) pay to the Executive the Executive's Base
Salary in monthly installments for one year following such termination, and (ii)
provide health insurance coverage to the Executive and his covered dependents
for one year from the date thereof.
4.3 For Cause. This Agreement may be terminated at any time by
the Company, effective immediately upon written notice to the Executive and a
reasonable opportunity to cure (except in the case of matters which the Board of
Directors determines in good faith are not able to be cured), for Cause and all
of the Executive's rights to payments (other than payment for services already
rendered) and any other benefits otherwise due hereunder shall cease
immediately. The Company shall have "Cause" for termination of the Executive if
any of the following has occurred:
(a) Executive's continued failure, whether willful,
intentional or negligent, after written notice to perform
substantially his duties hereunder (other than as a result of a
Disability);
(b) dishonesty in the performance of Executive's duties
hereunder;
(c) an act or acts on Executive's part constituting a felony
under the laws of the United States or any state thereof;
(d) any other willful act or omission on Executive's part
which is materially injurious to the financial condition or
business reputation of the Company or any of its subsidiaries; or
(e) the Executive has breached any provision or covenant
contained in this Agreement, including, without limitation, the
covenants contained in Section 5 hereof.
4.4 Without Cause. The Company shall have the right to
terminate the employment of the Executive without Cause at any time upon thirty
(30) days' written notice, and upon such termination the Executive shall have
the right to receive (i) the Executive's Base Salary in monthly installments for
one year following Executive's termination, and (ii) health insurance coverage
for himself and his covered dependents for one year from the date of
termination. Notwithstanding the foregoing, if during the period in which
benefits continue according to the preceding sentence, the Executive finds other
employment, the continuation of his health insurance coverage hereunder shall
cease if his subsequent employer provides such coverage. It is further
acknowledged and agreed by the parties that the actual damages to the Executive
in the event of termination under this Section 4.4 would be difficult if not
impossible to ascertain, and, therefore, the parties agree that the salary and
benefit continuation provisions set forth hereinabove shall be the Executive's
sole and exclusive remedy in the case of termination under this Section 4.4 and
shall, as liquidated damages or severance pay or both, be considered for all
purposes in lieu of any other rights or remedies, at law or in equity, which the
Executive may have in the case of such termination. It is acknowledged and
agreed that termination of this Agreement upon expiration of the Term hereof
shall not be deemed to constitute a termination without Cause for purposes of
this Agreement, any other agreement to which the Company and the Executive are
parties, or for any other purpose.
4.5 Resignation Without Good Reason. The Executive shall have
the right to terminate this Agreement upon sixty (60) days' written notice to
the Company, and upon such termination all of the Executive's rights to payment
(other than payment for services already rendered) and any other benefits
otherwise due hereunder shall cease immediately.
4.6 Resignation For Good Reason. The Executive shall have the
right to terminate this Agreement at any time, effective upon thirty (30) days'
written notice to the Company, for Good Reason, and upon such termination, the
Executive shall have the right to receive from the Company the Executive's Base
Salary in monthly installments for one year and health care coverage for himself
and his covered dependents for one year from the date of termination.
Notwithstanding the foregoing, if within such one-year period after termination,
the Executive finds other employment, (i) his Base Salary due for the one-year
period after termination shall be reduced by the amount of his base compensation
in his new employment, and (ii) the continuation of his health insurance
coverage hereunder shall cease. The Executive shall have "Good Reason" for
termination of this Agreement if, other than for Cause, any of the following has
occurred:
(a) the Executive's Base Salary or Cash Bonus opportunity as
defined in Section 3b have been reduced other than in connection with
an across-the-board reduction of executive compensation imposed by the
Board of Directors in response to negative financial results or other
adverse circumstances affecting the Company;
(b) the Company has reduced or reassigned, in any material
respect, the duties of the Executive hereunder as President and Chief
Executive Officer; or
(c) the Company changes the place of employment of the Executive
to a location which is over fifty miles from Cedar Knolls, NJ.
4.7 Termination upon Change of Control. Notwithstanding any
provision in this Agreement to the contrary, if the Executive is terminated by
the Company without Cause upon a Change in Control (as hereinafter defined),
then the provisions of this Section 4.7 shall apply and the Executive shall not
receive any payments or benefits, except as provided herein. If the Executive is
given the opportunity (regardless of whether he exercises such opportunity in
whole, part or not at all) to sell or dispose of, on the same terms as afforded
other selling equity holders, and in the same transaction or transactions, all
but not less than all of the shares of common stock (including any vested
options to purchase common stock) then held by him in the Company: (i) if the
Return Hurdle (as hereinafter defined) has been satisfied, then the Company
shall have no obligation to pay any salary and/or benefits set forth in this
Section 4, and (ii) if the Return Hurdle has not been satisfied, then the
Executive shall be treated hereunder as if he resigned his employment with the
Company for Good Reason pursuant to Section 4.6 hereof.
For purposes hereof:
A "Change in Control" shall be deemed to have occurred if (i) any
person, or any two or more persons acting as a group, and all
affiliates of such person or persons (a "Group"), who prior to such
time owned less than fifty percent (50%) of the then outstanding
capital stock of Holdings, shall acquire such additional shares of
Holding's capital stock in one or more transactions or series of
transactions, and after such transaction or transactions such person or
group and affiliates beneficially own fifty percent (50%) or more of
Holding's outstanding capital stock, (ii) the Company shall sell all or
substantially all of its assets to any Group which, immediately prior
to the time of such transaction, owned less than fifty percent (50%) of
the then outstanding capital stock of Holdings, or (iii) Holdings or
the Company shall merge with or consolidate into any Group which,
immediately prior to the time of such transaction, owned less than
fifty percent (50%) of the then outstanding capital stock of Holdings,
and shall not be the surviving corporation of such merger on
consolidation.
The "Return Hurdle" shall be satisfied if in any Change in Control the
Executive receives a realized return on his investment in equity
securities of Holdings equal to two times the cost of such investment.
For purposes hereof, a realized return shall mean the (i) cash, (ii)
market value of registered, publicly traded and tradable securities not
subject to transfer restrictions or restrictions under Rule 144 of the
Securities Act of 1933, as amended, and/or (iii) fair value (as
determined by the Board of Directors of the Company acting in good
faith) of all other securities, in each case received (or, in the case
of a recapitalization transaction, retained) by Executive in any Change
in Control.
5. Protection of Confidential Information; Non-Competition.
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5.1 Acknowledgment. The Executive agrees and acknowledges that
in the course of rendering services to the Company and its clients and customers
he will have access to and become acquainted with confidential information about
the professional, business and financial affairs of the Company. The Executive
acknowledges that the Company is engaged in a highly competitive business and
the success of the Company in the marketplace depends upon its good will and
reputation for quality and dependability. The Executive agrees and acknowledges
that reasonable limits on his ability to engage in activities competitive with
the Company are warranted to protect its substantial investment in developing
and maintaining its status in the marketplace, reputation and good will. The
Executive recognizes that in order to guard the legitimate interests of the
Company it is necessary for it to protect all confidential information. The
existence of any claim or cause of action by Executive against the Company shall
not constitute and shall not be asserted as a defense to the enforcement by the
Company of this Agreement. The Executive further agrees that his obligations
under Sections 5.2 and 5.3 shall be absolute and unconditional.
5.2 Confidential Information. During and at all times after
the Term, the Executive shall keep secret all confidential matters and materials
of the Company (including subsidiaries or affiliates), including, without
limitation, know-how, trade secrets, mail order and customer lists, pricing
policies, operational methods, any information relating to the Company's
(including any subsidiaries or affiliates) products, processes, customers and
services and other business and financial affairs of the Company (collectively,
the "Confidential Information"), to which he has had or may have access and
shall not disclose such Confidential Information to any person other than the
Company, its authorized employees and such other persons to whom the Executive
has been instructed to make disclosure by the Board, in each case only to the
extent required in the course of the Executive's service to the Company or as
otherwise expressly required in connection with court process. "Confidential
Information" shall not include any information which is in the public domain
during the period of service of the Executive, provided such information is not
in the public domain as a consequence of disclosure by the Executive in
violation of this Agreement.
5.3 Non-Competition and Non-Solicitation. In consideration of
the Company's obligations hereunder, during the period of the Executive's
employment (for purposes of this Section 5.3, the "Employment Period"), and for
a period of one (1) year thereafter, the Executive shall not, in any capacity,
whether for his own account or for any other person or organization, directly or
indirectly, (i) within the United States and Canada (a) own, operate, manage, or
control, or (b) serve as an officer, director, partner, employee, agent,
consultant, advisor or developer or in any similar capacity to, or (c) have any
financial interest in, or aid or assist anyone else in the conduct of, any
person or enterprise which competes directly with any product line of the
Company which is material to the business of the Company or call upon, solicit,
divert, take away or attempt to solicit any of the customers or suppliers or any
other business contacts of the Company; or (ii) for the lesser of (x) three (3)
years after the end of the Employment Period and (y) one year after a Change of
Control has occurred, solicit, hire, offer to hire, entice away or in any manner
persuade or attempt to persuade any officer, employee or agent of the Company
(including any subsidiaries or affiliates thereof) to discontinue his or her
relationship with the Company or such subsidiaries or affiliates.
5.4 Modification. The parties agree and acknowledge that the
duration, scope and geographic area of the covenants described in this Section 5
are fair, reasonable and necessary in order to protect the good will and other
legitimate interests of the Company, that adequate consideration has been
received by the Executive for such obligations, and that these obligations do
not prevent the Executive from earning a livelihood. If, however, for any reason
any court of competent jurisdiction determines that the restrictions in this
Section 5 are not reasonable, that consideration is inadequate or that the
Executive has been prevented unlawfully from earning a livelihood, such
restrictions shall be interpreted, modified or rewritten to include as much of
the duration, scope and geographic area identified in this Section 5 as will
render such restrictions valid and enforceable.
5.5 Remedies for Breach. The Company and the Executive agree
that the restrictive covenants contained in this Agreement are severable and
separate, and the unenforceability of any specific covenant herein shall not
affect the validity of any other covenant set forth herein. In the event that a
court of competent jurisdiction should determine that the time or territorial
restrictions are unreasonable in their scope, then, and in that event, the court
shall insert reasonable limitations and enforce the restriction in accordance
therewith. The Executive acknowledges that the Company will suffer irreparable
harm as a result of a breach of such restrictive covenants by the Executive for
which an adequate monetary remedy does not exist and a remedy at law may prove
to be inadequate. Accordingly, in the event of any actual or threatened breach
by the Executive of any provision of this Agreement, the Company shall, in
addition to any other remedies permitted by law, be entitled to obtain remedies
in equity, including, without limitation, specific performance, injunctive
relief, a temporary restraining order, and/or a permanent injunction in any
court of competent jurisdiction, to prevent or otherwise restrain a breach of
Sections 5.2 and 5.3, without the necessity of proving damages, posting a bond
or other security, and to recover any and all costs and expenses, including
reasonable counsel fees, incurred in enforcing this Agreement against the
Executive, and the Executive hereby consents to the entry of such relief against
him and agrees not to contest such entry. Such relief shall be in addition to
and not in substitution of any other remedies available to the Company. The
existence of any claim or cause of action of the Executive against the Company,
whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of said covenants. The Executive shall
not defend on the basis that there is an adequate remedy at law.
6. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given (a) when delivered
personally, (b) upon confirmation of receipt when such notice or other
communication is sent by facsimile or telex, (c) one day after delivery to an
overnight delivery courier, or (d) on the fifth day following the date of
deposit in the United States mail if sent first class, postage prepaid, by
registered or certified mail. The addresses for such notices shall be as
follows:
(a) For notices and communications to the Company
American Safety Razor Company
000 Xxxxx Xxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Chief Financial Officer
with a copy to:
X.X. Childs Associates, Inc.
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxx
(b) For notices and communications to the Executive, to the
address set forth below his signature hereto.
Any party hereto may, by notice to the other, change its address for receipt of
notices hereunder.
7. General.
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7.1 Governing Law. This Agreement shall be governed by, and
enforced in accordance with, the laws of the State of Delaware applicable to
agreements made and to be performed entirely within such state.
7.2 Amendment: Waiver. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by a written instrument executed by both of the parties hereto or,
in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
either party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
7.3 Successors and Assigns. This Agreement shall be binding
upon the Executive, without regard to the duration of his employment by the
Company or reasons for the cessation of such employment, and inure to the
benefit of his administrators, executors, heirs and assigns, although the
obligations of the Executive are personal and may be performed only by him. This
Agreement shall also be binding upon and inure to the benefit of the Company and
its subsidiaries, successors and assigns, including any corporation with which
or into which the Company or its successors may be merged or which may succeed
to its assets or business.
7.4 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be considered to have the force and effect of
an original.
7.5 Attorneys' Fees. Each arty shall bear the costs of any legal and other
fees and expenses which may be incurred in respect of enforcing its respective
rights under this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as an
instrument under seal as of the date first above written.
AMERICAN SAFETY RAZOR COMPANY
By: /s/Xxxx Xxxxxx
--------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
EXECUTIVE:
/s/Xxxxx X. Xxxxxx
XXXXX X. XXXXXX
Address:
00 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
