EXHIBIT 10.4
SEVERANCE AND NONCOMPETITION AGREEMENT
THIS SEVERANCE AND NONCOMPETTION AGREEMENT is entered into and effective
as of July 27, 2005, among, ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio
corporation ("ADLT"), and XXXXX X. XXXXXXX ("EMPLOYEE");
WITNESSETH:
WHEREAS, ADLT and Employee desire to reach agreement on compensation, if
any, which will be due Employee at the time of Employee's termination of service
ADLT or any of its affiliates; and
WHEREAS, ADLT requires, as a condition of such agreement and Employee's
continued employment by ADLT, an agreement with respect to certain competitive
activities following Employee's termination of service,
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. SEVERANCE PAYMENTS.
Subject to the provisions of this Agreement, upon Employee's Termination,
other than a Termination for "cause" or a Termination resulting from
Employee's resignation without "good reason," each as defined below,
Employee shall be entitled to receive severance payments equal to
Employee's then-current base salary for the one-year period commencing on
the effective date of such Termination, payable in the same amounts and at
the same intervals as such base salary would have otherwise been paid if
such Termination had not occurred.
2. OTHER BENEFITS.
During the term of any severance payments pursuant to Section 1 of this
Agreement, Employee shall be entitled to such medical and hospitalization
benefits, as are provided executive officers of ADLT and its subsidiaries
and at the same cost, if any, charged to such executive officers.
3. CERTAIN DEFINITIONS.
(a) For purposes hereof, the term "Termination" shall mean the cessation
of employment of Employee by ADLT or any of its affiliates.
(b) For purposes hereof, the term "cause" shall mean:
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(i) Employee's committing an act constituting a misdemeanor
involving fraud, dishonesty, or theft or a felony;
(ii) Employee's engaging in habitual or repeated alcohol or drug
abuse;
(iii) Employee's disregarding the instructions of the Board of
Directors of ADLT;
(iv) Employee's neglecting duties (other than by reason of
disability or death), with five (5) business days notice to
cure;
(v) Employee shall fail to devote his full business time to his
employment and perform diligently such duties as are, or may
be, required by the Board of Directors of ADLT or their
designee consistent with Employee's duties and authority at
the date of this Agreement or such other duties as may be
mutually agreed, with five (5) business days notice to cure;
provided such duties are within the bounds of reasonableness
and acceptable business standards;
(vi) Employee shall, without the prior written approval of the
Board of Directors of ADLT, directly or indirectly, render
services of a business, professional or commercial nature to
any other person or firm, whether for compensation or
otherwise, other than in the performance of duties naturally
inherent in the businesses of ADLT or any subsidiary or
affiliate of ADLT, with five (5) business days notice to cure;
provided, however, Employee may continue to render services to
and participate in philanthropic and charitable causes, in
each case, in a manner and to the extent consistent with his
past practice;
(vii) Employee shall fail to comply with all policies and procedures
of ADLT, including but not limited to, all terms and
conditions set forth in any employee handbook and any other
memoranda pertaining to ADLT's policies, procedures, rules and
regulations, with five (5) business days notice to cure; or
(viii) Employee's willful misconduct or gross negligence.
(c) For purposes hereof, the term "good reason" shall mean, without the
express written consent of Employee, a material reduction of
Employee's duties, authority, compensation, benefits or
responsibilities.
(d) In the event of Employee's death or permanent disability (as defined
herein below), Employee's service shall be deemed terminated for
cause and Employee or his estate, as the case may be, shall be
entitled to no further salary or other compensation provided for
herein except as to that portion of any unpaid salary accrued or
earned by Employee up to and including the date of death or
permanent disability, and any benefits under any insurance policies
or other plans.
(e) "Permanent disability" means the inability of Employee to perform
satisfactorily his usual or customary occupation for a period of 120
days in the aggregate out of 150 consecutive days as a result of a
physical or mental illness or other disability which in the written
opinion of a physician of recognized ability and reputation, is
likely to continue for a significant period of time.
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4. COVENANTS REGARDING NON-COMPETITION AND CONFIDENTIAL INFORMATION.
(a) Non-Competition.
(i) Recognizing that Employee will have been involved as an
executive officer of ADLT and that ADLT and its affiliates,
are engaged in the supply of products and/or services in every
state of the United States and internationally, therefore,
upon Termination, whether such Termination is initiated by
ADLT or Employee, for any reason, he agrees that he will not,
for a period of ONE (1) YEAR immediately following such
Termination, engage, in the United States or in any country
where ADLT or any of its subsidiaries or affiliates conduct
business, either directly or indirectly on behalf of himself
or on behalf of an another, as an employee, consultant,
director, partner or shareholder (other than with respect to
holding up to one percent (1%) of a publicly traded
corporation) of any corporation, limited liability company,
partnership or other business entity, in any business of the
type and character or in competition with the business carried
on by ADLT or any of its subsidiaries or affiliates (as
conducted on the date of such Termination).
(ii) Employee will not, for a period of ONE (1) YEAR immediately
following the Termination, whether such Termination is
initiated by ADLT or Employee, either directly or indirectly
or on behalf of another, as an employee, consultant, director,
partner or shareholder (other than with respect to holding up
to one percent (1%) of a publicly traded corporation) of any
corporation, limited liability company, partnership or other
business entity, recruit, hire or otherwise entice any
employee(s) of ADLT or its subsidiaries or affiliates, to
terminate his or her employment with ADLT or to accept
employment with anyone or any entity other than ADLT.
(iii) Employee will not, for a period of ONE (1) YEAR immediately
following the Termination, whether such Termination is
initiated by ADLT or Employee, either directly or indirectly
or on behalf of another, as an employee, consultant, director,
partner or shareholder (other than with respect to holding up
to one percent (1%) of a publicly traded corporation) of any
corporation, limited liability company, partnership or other
business entity, solicit, do business with or employ any
current or former employee of ADLT, or any of its subsidiaries
or affiliates, or any customer or client of ADLT in connection
with any business of the type and character or in competition
with the business carried on by ADLT or any of its
subsidiaries or affiliates (as conducted on the date of the
Termination).
(iv) Employee will not, directly or indirectly, disclose, divulge,
discuss or copy to or for any person or entity, or otherwise
use or suffer to be used in any manner or for any purpose,
except for the benefit of ADLT or any of its subsidiaries or
affiliates, any ideas, methods, customer lists or other
customer
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information, business plans, product research or engineering
data or other trade secrets, intellectual property, or any
other confidential or proprietary information of ADLT or any
of its subsidiaries or affiliates, it being acknowledged by
Employee that all such information regarding the business of
ADLT or its subsidiaries or affiliates conceived, suggested,
developed, compiled or obtained by or furnished to Employee
while Employee shall have been employed by or associated with
ADLT or its subsidiaries or affiliates is confidential
information and ADLT's or its subsidiaries' or affiliates'
exclusive property. Employee's obligations under this Section
4(a)(iv) will not apply to any information which (A) is known
to the public other than as a result of Employee's acts or
omissions, (B) is approved for release, in writing, by ADLT,
(C) was available, or becomes available, to Employee on a
non-confidential basis independent of its disclosure to
Employee by ADLT, but only if the source of such information
is not bound by the provisions of this Agreement or otherwise
prohibited by a contractual, legal or fiduciary obligation
from disclosing Confidential Information to Employee or
Employee's Representatives or (D) Employee is required, in the
opinion of legal counsel, to disclose by law, regulation, or
governmental or court order, provided that ADLT is given, to
the extent that it is practicable, reasonable advance notice
of any court proceeding and an opportunity to contest
disclosure or obtain an appropriate protective order, at no
cost to Employee but with Employee's reasonable cooperation.
The Employee shall have the burden of proof as to whether any
of the foregoing exceptions apply to any disclosure or
proposed disclosure of Confidential Information.
(b) Employee expressly agrees and understands that the remedy at law for
any breach by him of this Section 4 will be inadequate and that the
damages flowing from such breach are not readily susceptible to
being measured in monetary terms. Accordingly, it is acknowledged
that upon adequate proof of Employee's violation of any legally
enforceable provision of this Section 4, ADLT shall be entitled to
immediate injunctive relief and may obtain a temporary order
restraining any threatened or further breach. Nothing in this
Section 4 shall be deemed to limit ADLT's remedies at law or in
equity for any breach by Employee of any of the provisions of this
Section 4 which may be pursued or availed of by ADLT or any of its
affiliates including but not limited to ADLT. Employee and ADLT have
carefully read and considered the provisions of this Section 7 and,
having done so, agree that the restrictions set forth are fair and
reasonable and are reasonably required for the protection of the
interests of ADLT. In the event that any provision of this Section 4
shall be held to be unenforceable because of the duration of such
provision or area covered thereby, Employee and ADLT expressly agree
that any court making such determination shall have the power to
reduce the duration and/or area of such provision and, in its
reduced form, said provision shall then be enforceable.
(b) In the event Employee shall violate any legally enforceable
provision of this Section 4 as to which there is a specific time
period during which he is prohibited from taking
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certain actions or from engaging in certain activities as set forth
in such provision then, in such event, such violation shall toll the
running of such time period from the date of such violation until
such violation shall cease.
5. SEVERABLE PROVISIONS.
The provisions of this Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions and any partially unenforceable
provision to the extent enforceable in any jurisdiction shall,
nevertheless, be binding and enforceable.
6. ARBITRATION.
Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration by a single arbitrator
in the City of Solon, State of Ohio, in accordance with the Rules of the
American Arbitration Association, and judgment upon the award rendered by
the Arbitrator may be entered in any court having jurisdiction thereof.
The Arbitrator shall be deemed to possess the powers to issue mandatory
orders and restraining orders in connection with such arbitration;
provided, however, that nothing in this Section 6 shall be construed so as
to deny ADLT the right and power to seek and obtain injunctive relief in a
court of equity for any breach or threatened breach of Employee of any of
his covenants contained in Section 4 hereof.
7. WAIVER.
The failure of either party to enforce any provision or provisions of this
Agreement shall not in any way be construed as a waiver of any such
provision or provisions as to any future violations thereof, nor prevent
that party thereafter from enforcing each and every other provision of
this Agreement. The rights granted the parties herein are cumulative and
the waiver of any single remedy shall not constitute a waiver of such
party's right to assert all other legal remedies available to it under the
circumstances.
8. MISCELLANEOUS.
This Agreement supersedes all prior agreements and understandings between
the parties and may not be modified or terminated orally. No modification,
termination or attempted waiver shall be valid unless in writing and
signed by the party against whom the same it is sought to be enforced,.
9. GOVERNING LAW.
This Agreement shall be governed by and construed according to the laws of
the State of Ohio.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
WITNESS: ADVANCED LIGHTING
TECHNOLOGIES, INC.
By: _________________________________ By: /s/ Xxxx Xxxxxxxx
----------------------------
Name: _______________________________ Name: Xxxx Xxxxxxxx
Its: Chief Operating Officer
By: _________________________________ /s/ Xxxxx X. Xxxxxxx
--------------------------------
Name: _______________________________ XXXXX X. XXXXXXX
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