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EXHIBIT 10.20
EXECUTIVE
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter the "Agreement") dated October
27, 1995 by and among XXXXXXXX HOLDINGS, INC., a Delaware corporation ("HHI"),
XXXXXXXX CORPORATION, a Delaware corporation ("HC") (HHI and HC being
collectively referred to herein as the "Corporation"), and XXXXXX X. XXXXX (the
Executive").
WHEREAS, the Executive has heretofore served as the Chairman and Chief
Executive Officer of HHI and its subsidiary, HC;
WHEREAS, pursuant to the Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of October 27, 1995, among the Corporation, the
Executive, the other Existing Stockholders (as defined therein) and the
Purchasers named therein, the Purchasers have acquired control of the
Corporation;
WHEREAS, it is a condition to the consummation of the transactions
referred to in the stock Purchase Agreement that the Executive and the
Corporation enter into this Agreement; and
WHEREAS, the parties wish to set forth the terms of the employment of
the Executive;
NOW, THEREFORE, it is agreed as follows:
1. Employment. Subject to the terms and conditions of this
Agreement, during the Term (as defined below) the Corporation will employ the
Executive, and the Executive will be employed exclusively by the Corporation
and its Subsidiaries. The Executive will hold the offices of President and
Chief Executive Officer of HHI and HC and such additional offices as the Board
of Directors of HHI (the "Board") may from time to time determine. The
Executive will devote substantially all of his business efforts to the
Corporation and the Subsidiaries. The Executive shall be the senior executive
officer of HHI and HC and shall report directly to the Board. All employees,
consultants and all other persons working for the Corporation and the
Subsidiaries shall report directly or indirectly to the Executive. The
Executive shall, subject to the control of the Board, have full authority to
conduct and operate the business of the Corporation and the Subsidiaries as
enterprises independent of the corporate affiliates of the Corporation. The
Executive agrees to travel from time to time and to render his services in
other locations in which the Corporation does business consistent with its
reasonable business needs.
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2. Term. Unless sooner terminated pursuant to this Agreement, the
initial term of the Executive's employment shall be from the date of this
Agreement and shall end on October 31, 1998. Such initial term shall be
extended for successive terms of one year each unless either party advises the
other, at least 90 days prior to the end of the initial term or annual
extension, as the case may be, that it will not agree to extend this Agreement.
The initial term, as so extended, is referred to in this Agreement as the
"Term."
3. Compensation.
(a) During the Term, the Corporation will pay the
Executive a salary (the "Base Salary") at the annual rate (pro-rated for
portions of any year) of $340,000.
(b) With respect to each fiscal year during the Term
commencing with the 1996 fiscal year of the Corporation, the Executive shall be
entitled to a cash bonus equal to not less than 50% of the Base Salary if the
Company achieves the targets set forth in the Xxxxxxxx Corporation Incentive
Plan, as adopted and approved by the Board.
4. Employee Benefits.
(a) During the Term, the Executive shall be entitled to
participate in such retirement, profit sharing and pension plans and life and
other insurance programs, as well as other benefits programs, which are
available to senior executive employees of the Corporation who are similarly
situated, subject to Corporation's policies with respect to all of such
benefits or insurance programs or plans; provided, however, that except as
expressly set forth herein, the Corporation shall not be obligated to institute
or maintain any particular benefit or insurance program or plan or aspect
thereof.
(b) The Executive shall be entitled to four weeks
vacation per annum during the Term, to be scheduled at mutually agreeable times
and to be taken in accordance with the Corporation's policies.
(c) The Executive shall be granted options to purchase
22% of the shares of the Common Stock, par value $.01 ("Common Stock"), covered
by the Company's 1995 Stock Option Plan, which options shall vest, and all
other rights of the Executive shall be, pursuant to a stock option agreement
substantially in the form attached as Exhibit A (the "Stock Option Agreement").
(d) The Corporation shall reimburse the Executive or pay
all reasonable travel and entertainment expenses undertaken on behalf of the
Corporation, which shall include an allowance for business automobile usage of
$500 per month and club dues of $250 per month.
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5. Death: Disability.
(a) Death. The Term shall immediately terminate upon the
Executive's death; provided, that the obligations of the Company upon the
Executive's death shall be as set forth in Section 6(c)(i)(x).
(b) Disability. If during the Term of this Agreement the
Executive becomes unable (as reasonably determined by the Board) to
substantially perform his services as a result of his permanent or temporary,
total or partial physical or mental disability ("Disability"): (i) the Base
Salary otherwise payable during the Disability Period (as herein defined) shall
nevertheless be payable on the terms set forth herein to the Executive as a
disability benefit ("Disability Benefit") but shall be reduced by disability
insurance proceeds pursuant to any benefit plan of the Corporation and as
provided in Section 4(a) or pursuant to any individual disability policy and
which are actually received by the Executive during the Disability Period with
respect to such Disability; and (ii) the Corporation shall not have the right
(notwithstanding any other provision of this Agreement to the contrary) to
terminate this Agreement due to such Disability prior to the expiration of the
Disability Period. As used herein, the term "Disability Period" shall mean the
period commencing on the first day of the calendar month following the month
during which such Disability occurs and ending on the first to occur of the
following: (i) the expiration of this Agreement; (ii) if the Disability is
continuous throughout the six consecutive months following the month during
which the Disability occurs, then the last day of such sixth consecutive
calendar month; and (iii) if the Disability is intermittent and shall exist
throughout any 12 calendar months following the month during which the
Disability occurs, then the last day of such 12th calendar month. The
Corporation shall have the right to terminate the Term at the expiration of the
Disability Period if and only if the disability of the Executive is then
continuing. Upon such termination, the obligation of the Company shall be as
set forth in Section 6(c)(i)(y).
6. Other Termination.
(a) Termination by the Corporation. The Corporation shall
have the right, at its election, to terminate the Executive's employment under
this Agreement by written notice to the Executive for "Cause" (as defined
below). As used herein, Cause shall be deemed to exist as where (i) the Board
shall have notified the Executive in writing of its reasonable determination
that he is not substantially performing the primary duties of his office; (ii)
the Executive shall have been convicted of a felony under state or federal
criminal law involving theft, fraud or moral turpitude; (iii) the Executive
shall have engaged in gross negligence or willful misconduct injurious to the
Corporation; or (iv) the Executive shall have materially breached any of his
covenants under this Agreement or any other agreement with the Corporation. The
Corporation may terminate this Agreement only if the Corporation shall have
given written notice to the Executive specifying the claimed Cause, and in the
case of (i) and (iv) above, in case the Executive fails to correct (if
correctable) the claimed breach within 30 days after the receipt of the
applicable notice or such longer time as may be reasonably required by the
nature of the claimed breach.
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(b) Termination by the Executive. The Executive shall have the
right, at his election, to terminate this Agreement for "Good Reason" by
written notice to the Corporation to that effect. Good Reason shall mean any of
the following (without the Executive's consent): (i) the taking of any action
by the Board or its designees (unless the Board has determined that the
Executive is not substantially performing the primary duties of his then
current office, after 30 days' notice and failure to correct by the Executive
as provided in Section 6(a)) in a manner that has the effect of significantly
divesting the Executive's authority with respect to his subordinates or
materially interferes with the exercise of the Executive's authority to manage
and supervise the business and operations of the Corporation; (ii) any
relocation of the Corporation's executive offices to a location outside of the
Cleveland, Ohio, Pittsburgh, Pennsylvania or New York, New York metropolitan
areas, except for required travel in connection with the Corporation's
business; and (iii) any failure to pay the Executive his compensation under
Section 3 when due pursuant to the terms of this Agreement. The Executive may
terminate this Agreement only if the Executive shall have given written notice
to the Corporation specifying the claimed Good Reason, and the Corporation
fails to correct (if correctable) the claimed breach within 30 days after the
receipt of the applicable notice or such longer time as may be reasonably
required by the nature of the claimed breach (or, if the failure to perform is
a failure to pay monies when due under the terms of this Agreement) within 10
days with respect to the Corporation.
(c) Effect of Termination.
(i) Upon termination of the Executive's employment under
this Agreement by reason of the causes described below, the following shall be
applicable to sums otherwise due to the Executive, notwithstanding anything to
the contrary herein:
(w) should this Agreement be terminated by the
Corporation for Cause or by the Executive for any reason, other than for Good
Reason, the Executive shall have no right to any further compensation beyond
the date of termination of the Agreement;
(x) should this Agreement be terminated by
reason of the Executive's Death, the Executive's Base Salary shall accrue and
be paid through the date of Death and for the six months immediately
thereafter; and any bonus payment due for the calendar year in which Death
occurred shall be prorated to reflect only that portion of the year during
which the Executive performed services;
(y) should this Agreement be terminated by
reason of Disability pursuant to Section 5(b), any bonus payment for the
calendar year in which Disability occurred shall be prorated to reflect only
that portion of the year prior to the end of the Disability Period; and
(z) should this Agreement be terminated by the
Corporation without Cause, or by the Executive for Good Reason, the Executive
shall be entitled to receive his Base Salary after such termination for one
year or for the remainder of the term of this Agreement, whichever is greater.
Notwithstanding the foregoing, if the Executive
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becomes employed after such termination, (A) if the Executive is employed by an
entity other than a Competitive Business (as defined in Section 9), all
compensation actually earned by the Executive during the period referred to in
the foregoing sentence shall reduce the amounts which the Corporation would be
required to pay under the preceding sentence, and (B) if the Executive is
employed by an entity which is a Competitive Business, then the Corporation
shall have no obligation to pay any amounts due under the preceding sentence
in respect of the period from and after the date on which he commences such
employment.
(ii) In the event of termination of the
Executive's employment under this Agreement, whether by the Corporation or the
Executive, or pursuant to the expiration of this Agreement in accordance with
Section 2, the Executive shall resign all offices and directorships held with
the Corporation and its subsidiaries and affiliates.
(iii) In all cases of termination, whether by the
Corporation or the Executive, or pursuant to the expiration of this Agreement,
the Corporation will reimburse the Executive for all out-of-pocket expenses
with respect to which employees of the Corporation are generally entitled to
reimbursement through the date of termination. All payments shall be made for
purposes of this Section 6(c) at the time they would have been made if this
Agreement has not been terminated.
(d) Change in Control. If the Corporation sells all or
substantially all of its assets to a third party (other than to an Affiliate
(as defined in the Agreement of Merger)), or if the Corporation merges or
consolidates with any entity (other than an Affiliate) and as a result thereof
is not the surviving entity, the Executive may, by notice to the Corporation,
terminate the term of this Agreement, whereupon the Term shall terminate and
the Executive shall be relieved of his obligations (other than his obligations
under Section 7, 8 and 10) and the Executive shall forfeit all rights to
receive any amounts of his Base Salary that become payable after the date
thereof and any bonus accrued after the date thereof.
7. Mitigation. The Company acknowledges that upon any termination
of the Executive's employment, the Executive shall not have any obligation to
seek or obtain other employment in any position to mitigate any damages to
which the Executive may be entitled by reason of any termination of this
Agreement (whether by the Corporation without Cause or otherwise). If, however,
the Executive does obtain other employment of any nature and in any location,
the total compensation actually earned by the Executive during the remaining
Term for his performance of such engagements or employment shall reduce any
amounts which the Corporation would otherwise be required to pay to the
Executive under this Agreement.
8. Return of Property and Nondisclosure. Upon termination or
expiration of his employment, the Executive will promptly deliver to the
Corporation all data, lists, information, memoranda, documents and all other
property belonging to the Corporation or containing "Confidential Information"
or "Trade Secrets" of the Corporation (both as defined below), including, among
other things, that which relates to services performed by the Executive for the
Corporation, or was created or obtained by the Executive while performing
services for the Corporation or by virtue of the Executive's relationship with
the
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Corporation. Except as required in order to perform his obligations under this
Agreement, the Executive shall not, without the express prior written consent
of the Corporation, disclose or divulge to any other person or entity, or use
or modify for use, directly or indirectly, in any way, for any person or entity
any of the Corporation's Confidential Information or Trade Secrets at any time
(during or after the Executive's employment) during which data or information
continues to constitute Confidential Information or a Trade Secret. For
purposes of this Agreement, "Confidential Information" of the Corporation shall
mean any valuable, competitively sensitive data and information related to the
Corporation's business other than Trade Secrets that are not generally known by
or readily available to the Corporation's competitors. "Trade Secrets" shall
mean information or data of the Corporation including, but not limited to,
technical or non-technical data, financial information, programs, devices,
methods, techniques, drawings, processes, financial plans, product plans, or
lists of actual or potential customers or suppliers that: (a) derive economic
value, actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain economic
value from their disclosure or use; and (b) are the subject of efforts that are
reasonable under the circumstances to maintain their secrecy. To the extent
that the foregoing definition is inconsistent with a definition of "trade
secret" mandated under applicable law, the latter definition shall govern for
purposes of interpreting the Executive's obligations under this Agreement.
Except for disclosure required by law or to permit enforcement of this
Agreement, the terms of this Agreement shall be deemed Confidential Information
of the Corporation and shall not be discussed or disclosed by Executive with
any person other than Executive's spouse, attorney or accountant, provided that
such discussions or disclosures shall be conditioned upon the agreement of the
person to whom the terms are disclosed to maintain the confidentiality of such
terms.
9. Noncompetition. The Executive acknowledges that he has
substantial experience and expertise in children's residential outdoor play
products and the playball business and that, as such, the services to be
performed by him are of a special, unique, unusual, extraordinary and
intellectual character. The Executive further acknowledges that the nature of
the services, position and expertise of the Executive are such that he is
capable of competing with the Corporation. In consideration of this Employment
Agreement and the Stock Option Agreement, the Executive shall not, without the
prior written consent Of the nonmanagement members of the Board of Directors of
the Corporation, during the "Restricted Period" (as defined below) (a) directly
or indirectly enter into the employ of or render any advice or services,
whether or not for compensation, to any "Person" (as defined below) engaged in
any "Competitive Business" (as defined below), (b) directly or indirectly
engage in any Competitive Business, (c) directly or indirectly become
interested, whether or not for compensation, in any Competitive Business as an
individual,, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity or, in the case of any such company whose securities are traded on a
national securities exchange in the United States or otherwise or in the over-
the-counter market, acquire, directly or indirectly, an interest in excess of
one percent (1%) of the outstanding capital stock of such company. For purposes
of this Section, "Restricted Period" shall mean while the Executive is employed
by the Corporation and for a period of one year thereafter; provided, that if
the Corporation terminates the employment of the Executive without Cause or if
the Executive terminates his employment for Good Reason,
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the Restricted Period shall extend only so long as the Corporation is required
to pay the Executive pursuant to Section 6(c)(i)(z). For purposes of this
Section, any "Competitive Business" shall mean any business entity which is
engaged in the businesses in which the Company engages during the Restricted
Period, sells or markets its products in the United States, and derives or
plans to derive a material portion of its revenues from such products. For
purposes of the preceding sentence, sales of 50% of its total revenues or in
excess of $5,000,000 in dollar volume shall be deemed to be material. For
purposes of this Section, "Person" shall mean any corporation, partnership,
trust, individual or any other entity. In the event that any provision of this
Section is considered by a court of competent jurisdiction to be excessive in
its duration, in the area to which it applies or in any other respect, it shall
be considered modified and valid for such duration, for such area and in such
other respects as such court may determine reasonable under the circumstances.
10. Nonsolicitation. While he is employed by the Corporation, and
for a period of two years thereafter, the Executive will not, directly or
indirectly, without the prior written consent of the Corporation, solicit or
attempt to solicit any employee, consultant, contractor or other personnel of
the Corporation to terminate, alter or lessen that party's affiliation with the
Corporation or to violate the terms of any agreement or understanding with the
Corporation.
11. Specific Remedies. In the event of the violation or threatened
violation by the Executive of any of the covenants or provisions of Sections 9
or 10 hereof, the Corporation shall have (i) the right and remedy of specific
enforcement and performance of Sections 9 and 10, including injunctive relief,
it being acknowledged and agreed that any such violation or threatened
violation will cause irreparable injury to the Corporation and that monetary
damages will not provide an adequate remedy to the Corporation, and (ii) rights
to any and all damages available as a matter of law.
12. Notices. Any notices required to be given hereunder shall be
in writing and shall be deemed given when personally delivered, telexed or sent
certified mail, return receipt requested, or sent via express air delivery
service, to the parties at the addresses set forth below, or at such other
address as a party shall have given notice thereof to the other party:
Executive:
Xxxxxx Xxxxx
00 Xx. Xxxxx Xxxxxxx
Xxxx Xxxxx Xxxxxxx, XX 00000
Corporation:
Xxxxxxxx Holdings, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Secretary
with a copy to:
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Hicks, Muse, Xxxx & Xxxxx Incorporated
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
13. General.
(a) This Agreement shall be governed by and construed
under the laws and decisions of the State of New York with respect to contracts
and agreements which are entirely made and entered into therein.
(b) This Agreement contains the entire understanding of
the parties hereto with respect to the subject matter hereof and supersedes all
previous written and oral agreements between the parties with respect to the
subject matter set forth herein.
(c) This Agreement may not be modified or amended except
by a writing signed by both of the parties hereto.
(d) Any provision of this Agreement that is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this section, be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provision of this Agreement invalid, illegal or unenforceable in any other
jurisdiction. If the covenant should be deemed invalid, illegal or
unenforceable because its scope is considered excessive, such covenant shall be
modified so that the scope of the covenant is reduced only to the minimum
extent necessary to render the modified covenant valid, legal and enforceable.
(e) The following provisions of this Agreement shall
survive its expiration or termination for any reason: Sections 7, 8, 9, 10, 11,
12 and 13.
(f) This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
(g) The headings and titles to the paragraphs of this
Agreement are inserted for convenience only and shall not be deemed a part of
or affect the construction or interpretation of any provisions hereof.
(h) All references to Sections shall, unless otherwise
specified, be to Sections of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
XXXXXXXX HOLDINGS, INC.
By: /s/ XXXX XXXXXXX
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Name: Xxxx Xxxxxxx
Title: Vice President
XXXXXXXX CORPORATION
By: /s/ XXXX XXXXXXX
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Name: Xxxx Xxxxxxx
Title: Vice President
/s/ XXXXXX X. XXXXX
---------------------------------
Xxxxxx X. Xxxxx
