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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
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XXXX X. XXXXXX,
aka X. X. XXXXXX
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into on
this 1st day of July, 1994, by and between XXXXXX, INC., a Delaware corporation
("Buyer") and XXXX X. XXXXXX, aka X. X. XXXXXX, a resident of Salem, Indiana
("Xxxxxx") .
WHEREAS, Xxxxxx is currently employed by Xxxxxx, Inc., an Indiana
corporation ("Company") as its President and is a member of its Board of
Directors;
WHEREAS, Company, Xxxxxx and Buyer have entered into an Asset Purchase
Agreement, dated May 16, 1994 (the "Asset Agreement"), providing for the
purchase by Buyer of substantially all of the assets of Company, except its
cash;
WHEREAS, Xxxxxx has unique talents and experiences which are of value to
Buyer;
WHEREAS, Xxxxxx is willing to continue in his employment with Buyer
following consummation of the Asset Agreement on the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration for the foregoing, and of the mutual
covenants set forth herein, Buyer and Xxxxxx agree as follows:
1. EMPLOYMENT. Buyer hereby employs Xxxxxx, and Xxxxxx agrees to be
employed by Buyer, in the position set forth in paragraph 3 below, for a period
of three years commencing on the Closing of the Asset Agreement, and terminating
at the close of business of Buyer on the date following the third anniversary of
the Closing. The period during which Xxxxxx is employed hereunder is hereinafter
referred to as the "Employment Period."
2. COMPENSATION.
(a) BASE SALARY. Buyer shall pay Xxxxxx a salary at the rate of
$150,000 per year for each year of the Employment Period (the "Base Salary").
Buyer shall pay the Base Salary to Xxxxxx in equal installments on the Buyer's
normal pay periods.
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(b) BONUS. Xxxxxx shall earn an annual bonus (the "Annual Bonus") for
calendar years 1994, 1995 and 1996. Buyer shall pay to Xxxxxx additional
compensation in an amount equal to 25% of the amount by which Buyer's earnings
before interest, income taxes, depreciation, amortization for the applicable
calendar year exceed $1,400,000. (For purposes of this bonus calculation, home
office administration charges of Buyer or its affiliates, except direct expenses
approved in advance by Xxxxxx, shall be excluded). During 1994, such amount of
$1,400,000 shall be adjusted to reflect the commencement of Xxxxxx'x employment
pursuant to paragraph 1. For example, if Xxxxxx'x employment commences July 1,
1994, the amount serving as the basis for the 1994 bonus shall be 6/12 of
$1,400,000. Buyer shall pay the Annual Bonus to Xxxxxx within 30 days after
completion of the year end audit or review of Buyer's financial statements for
the preceding calendar year by the independent certified public accountant of
Buyer (the "Financial Statements"), but in no event shall the Annual Bonus be
paid later than April 1 of each year. Buyer shall deliver copies of the
Financial Statements to Xxxxxx.
(c) XXXXXX HEALTH INSURANCE. During the Employment Period, Xxxxxx
shall receive health insurance benefits equivalent to those he is currently
receiving as an employee of Company. Xxxxxx shall also have the right to
participate, subject to any applicable eligibility requirements, in any Buyer
benefit program offered to executive employees by Buyer, including, if any,
Buyer's 401(k) plan, disability insurance and life insurance programs.
(d) VACATION. Xxxxxx shall be entitled to four weeks of paid vacation
during each year of the Employment Period. Unused paid vacation leave may not be
carried over to subsequent years.
(e) BUSINESS EXPENSES. During the Employment Period, Buyer shall
reimburse Xxxxxx for all reasonable and necessary business expenses incurred by
Xxxxxx on behalf of Buyer upon Xxxxxx'x submission of a written report that
details the nature and amount of such expenses consistent with Internal Revenue
Service requirements that will permit Buyer to deduct such expenses (or a
percentage thereof) on Buyer's federal income tax return as other than
compensation.
(f) AUTOMOBILE. During the Employment Period, Xxxxxx shall provide a
vehicle comparable to the Oldsmobile stationwagon he presently is provided with
and such vehicle shall be replaced when deemed necessary by Xxxxxx in his
reasonable discretion.
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3. POSITION, DUTIES AND AUTHORITY.
(a) POSITION AND DUTIES. Xxxxxx shall, during the Employment Period,
serve as President of Buyer, reporting and responsible to the Chairman of the
Board and the Board of Directors. As President during the Employment Period,
Xxxxxx shall perform such duties and responsibilities as the Chairman of the
Board shall request from time to time with respect to the business of the Buyer,
including but not limited to the following: (i) managing the policy, strategy
and day-to-day operations of the business; (ii) cooperating with the Chairman of
the board in the identification, hiring and promotion of key management; (iii)
promptly furnishing accurate written reports, data, analyses or information
pertaining to the Buyer as may be required, from time to time, as determined
either by the Chairman of the Board or the Board of Directors; (iv) observing
and complying with such standards and procedures as may, from time to time, be
established by the Chairman of the Board; and (iv) performing such duties or
functions as are customarily assigned to the President of a company. During the
Employment Period, Xxxxxx shall expend substantially all of his working time for
the Buyer and shall perform the services hereunder to the best of his ability
and skill and in such a manner as to promote the best interest of Buyer.
4. TERM AS PRESIDENT.
(a) Term of Employment. Xxxxxx'x term as President shall end with the
earliest to occur of:
(i) the death of Xxxxxx;
(ii) the discharge of Xxxxxx "For Cause" in accordance with
paragraph 4(b) below;
(iii) the discharge of Xxxxxx because of a "Permanent Disability"
in accordance with paragraph 4(c) below;
(iv) the voluntary resignation of Xxxxxx, after first having
given 90 days' prior written notice to Buyer; or
(v) the expiration of the original three year term hereof.
(b) Termination for Cause. "For Cause" shall mean any one or more of
the following:
(i) Xxxxxx'x engaging in fraud, embezzlement, misappropriation of
funds or like conduct against Buyer;
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(ii) Xxxxxx'x conviction (or plea of nolo contendere) on a felony
charge;
(iii) Xxxxxx'x material violation of any provision of this
Agreement;
(iv) Xxxxxx'x violation of any federal, state or local law,
regulation or ordinance relating to personal conduct in the workplace,
such as laws, regulations or ordinances pertaining to discrimination
or harassment;
(v) Xxxxxx'x breach of the representations and warranties set
forth in paragraph 7; or
(vi) Xxxxxx'x breach of obligations set forth in paragraphs (a)
through (f) in paragraph 6.
(c) TERMINATION FOR DISABILITY. Buyer may terminate Xxxxxx as
President hereunder at any time because of a "Permanent Disability," which shall
mean a physical or mental incapacity that has prevented or will prevent Xxxxxx
from exercising the powers or performing the duties assigned to him hereunder
for a continuous period of three months.
(d) PAYMENTS AND BENEFITS UPON TERMINATION. In the event of
termination as President, pursuant to (c) above because of a Permanent
Disability which prevents Xxxxxx from rendering full-time services, he shall,
nevertheless, continue as a consultant for Buyer. In the event of termination as
President for Permanent Disability, Buyer shall continue to pay Xxxxxx'x Base
Salary and Annual Bonus as consulting fees for the balance of the Employment
Period. In the event of termination for any other reason, Buyer shall continue
to pay Xxxxxx'x Base Salary and Annual Bonus as severance pay for the balance of
the Employment Period. In addition, Buyer shall continue to provide and/or pay
for the then existing health care coverage to Xxxxxx and/or his wife for the
balance of the Employment Period.
5. RESIGNATION. In the event of the voluntary resignation of Xxxxxx, his
right to Base Salary and Annual Bonus shall terminate, and Xxxxxx shall remain
bound by the provisions of paragraph 6.
6. PROPRIETARY RIGHTS.
(a) TRADE SECRETS. Xxxxxx acknowledges that as a result of his
employment hereunder, he will be making use of, acquiring and/or adding to
confidential information of a special and unique nature relating to such matters
as Buyer's trade secrets, systems, procedures, manuals, confidential
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reports, formulae, designs, application methods, parts lists, supplier lists,
customer lists, price lists and other financial information, drawings, business
records, and other information which has not been published or disseminated or
otherwise become a matter of general public knowledge ("Trade Secrets"), and as
an inducement to Buyer to enter into this Agreement, Xxxxxx promises not to use
or disclose, directly or indirectly, any Trade Secrets to any person either
during or after the Employment Period, except to other employees of Buyer as
necessary in the regular course of his employment, or except as otherwise
expressly authorized by Buyer.
(b) CONFIDENTIALITY. Xxxxxx promises that all knowledge and
information that he may acquire from Buyer, or from Employees or consultants of
Buyer regarding the Trade Secrets and other confidential information shall for
all time and for all purposes be regarded as strictly confidential and held in
trust and solely for the benefit and use of Buyer and shall not, without the
written permission of Buyer, be directly or indirectly disclosed by Xxxxxx to
any person other than to the proper and duly authorized Employees of Buyer.
(c) DISCOVERIES OF XXXXXX. On behalf of Xxxxxx, his heirs and
representatives, Xxxxxx promises to promptly communicate and fully disclose to
Buyer and upon request shall, without additional compensation, assign and
execute all papers necessary to assign to Buyer or its nominees, free of
encumbrance or restrictions, all inventions, ideas, designs, discoveries and
improvements which pertain or relate to the business of Buyer, whether
patentable or not, conceived or originated by Xxxxxx solely or jointly with
others, at the expense of Buyer, or at the facilities of Buyer, or at the
request of Buyer, or in the course of Xxxxxx'x employment, or based on knowledge
or information obtained during the course of Xxxxxx'x employment by Buyer
whether or not conceived during regular working hours. This provision relates to
any matters conceived partially or fully during the term of this Agreement and
within five years thereafter. All such assignments shall include the patent
rights in this and all foreign countries. All such inventions, ideas, designs,
discoveries and improvements shall be the exclusive property of Buyer. Xxxxxx
shall assist Buyer in obtaining patents on all such inventions, ideas, designs,
discoveries and improvements deemed patentable by Buyer and shall execute all
documents and do all things necessary to obtain letters patent, vest Buyer with
full and exclusive title thereto, and protect the same against infringement by
others.
(d) INTELLECTUAL PROPERTY OF XXXXXX. As a matter of record, Xxxxxx
lists below a complete list of all inventions, ideas, design, discoveries and
improvements, patented or unpatented, which Xxxxxx has made or conceived prior
to the commencement of Xxxxxx'x employment by Buyer, it being understood that
the inventions, ideas, designs,
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discoveries and improvements so listed are excluded from this Agreement: none.
(e) PROPERTY OF BUYER. Xxxxxx recognizes further that all records,
drawings, data, computer programs, samples, models and all other tangible
materials or copies or extracts thereof touching Buyer's operations,
investigations or business, whether or not Trade Secrets, made or received by
Xxxxxx during his Employment Period, are and shall be the property of Buyer
exclusively, and without additional consideration, Xxxxxx promises to keep the
same at all times in Buyer's custody and subject to Buyer's control and to
surrender the same at the termination of his employment if not before. All
files, records, documents, drawings, specifications, equipment and information
with respect to suppliers to Buyer and customers of Buyer, and similar items
relating to the business of Buyer, whether prepared by Xxxxxx or otherwise
coming into Buyer's possession, shall remain the exclusive property of Buyer.
Xxxxxx further agrees that he will not make or retain any copies of any of the
foregoing and that he will so represent to Buyer upon termination of his
employment hereunder.
(f) NON-COMPETITION. Xxxxxx agrees that during the Employment Period
and the four years next following the termination of the Employment Period, he
will not directly or indirectly or by acting in concert with others, whether as
an owner, employee, partner, shareholder, officer, licensor, licensee, trustee,
principal, consultant, agent, individually or in any other capacity, engage in
the business of the manufacture or sale of, or attempt to manufacture or sell,
products or services similar in kind or similar in purpose to those products or
services manufactured or sold by Buyer, to any customer of Buyer or to any
person, firm or corporation in competition with Buyer within the State of Ohio,
Indiana or any state in which Buyer has an office or facility, or any state in
which Buyer does business at the expiration of the Employment Period, nor employ
or attempt to employ or solicit for any employment competitive with Buyer, any
of Buyer's Employees.
Xxxxxx agrees that during his employment he will undertake no
planning for or organization of any business activity competitive with the work
he performs as an Xxxxxx of Buyer, nor will he combine or conspire with other
Employees of Buyer for the purpose of organizing any such competitive business
activity.
If Xxxxxx violates this restrictive covenant and Buyer brings
legal action for injunctive or other relief, Buyer shall not, as a result of the
time involved in obtaining the relief, be deprived of the benefit of the full
period of the restrictive covenant. Accordingly, the restrictive covenant shall
be deemed to have the duration specified in this paragraph 6(f), computed from
the date the relief is granted, but reduced by the time between the period
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when the restriction began to run and the date of the first violation of the
covenant by Xxxxxx.
If any court shall determine that the duration or geographical
limit of any restriction contained in this paragraph is unenforceable, it is the
intention of the parties that the restrictive covenants set forth herein shall
not thereby be permitted to be terminated but rather shall be deemed amended to
the extent required to render it valid and enforceable. Such amendment shall
apply only with respect to the operation of this paragraph in the jurisdiction
of the court that has made the adjudication.
(g) INJUNCTIVE RELIEF. Xxxxxx hereby consents and agrees that for any
threatened or actual violation of any provisions of this paragraph 6 of this
Agreement, a restraining order and/or an injunction may issue against Xxxxxx,
without the necessity of proving actual damage or the posting of a bond, in
addition to any other rights Buyer may have.
7. REPRESENTATIONS OF XXXXXX. Xxxxxx represents and warrants, on behalf of
himself, his immediate family and any person, firm or corporation in which he
has a substantial interest, that:
(a) They do not, and will not during the Employment Period, have any
direct or indirect ownership interest in any entity with which Buyer has a
business relationship or competes with Buyer, except that the ownership of
investments at no time exceeding 1% of the issued and outstanding capital
stock of a publicly-held corporation shall not constitute a breach of this
representation and warranty; and
(b) The execution of this Agreement or his employment by Buyer, will
not break any agreement or covenant entered into by Xxxxxx that is
currently in effect.
8. ACKNOWLEDGMENTS. Xxxxxx hereby acknowledges that: (i) he has carefully
read all of the terms of this Agreement and that such terms have been fully
explained to him; (ii) he understands the consequences of each and every term of
this Agreement; (iii) he has had sufficient time and opportunity to consult with
his own legal advisor prior to signing this Agreement and that Buyer has
encouraged him to seek and he has had the benefit of legal counsel of his choice
prior to signing this Agreement; (iv) he specifically understands that by
signing this Agreement he is giving up certain rights he otherwise may have had,
and that he is agreeing to limit his freedom to engage in certain employment
during and after the term of this Agreement.
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9. SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, and, except as otherwise provided herein, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
10. REMEDIES CUMULATIVE. All remedies specified herein or otherwise
available shall be cumulative and in addition to any and every other remedy
provided hereunder or now or hereafter available.
11. NOTICES. All notices and other communications hereunder shall be sent
by registered or certified mail as follows:
If to Buyer: Xxxxxx, Inc.
(a Delaware corporation)
000 Xxxxxx Xxxxxx
Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000
With a copy to: Xxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxx
00xx Xxxxx, Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
If to Xxxxxx: Xxxx X. Xxxxxx,
aka, X. X. Xxxxxx
Xxx 000, X.X.X., #0
Xxxxx, Xxxxxxx 00000
With a copy to: Xxxx X. Xxxxx, Esq.
Andrews, Harrell, Mann,
Xxxxxxx, & Xxxxx
Xxxxxx Xxxxx, Xxxxx 000
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000-0000
12. ASSIGNMENT. This Agreement is a personal services contract and it is
expressly agreed that the rights and interests of Xxxxxx and Buyer hereunder may
not be sold, transferred, assigned, pledged or hypothecated; provided, however,
that Buyer may, in its sole discretion, elect to pay any and all monetary
obligations arising out of or related to this Agreement from any entity related
to or affiliated with Buyer.
13. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their heirs, representatives, successors and
permitted assigns.
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14. GOVERNING LAW AND JURISDICTION. This Agreement is governed by, and
shall be construed and enforced in accordance with, the law (other than the law
of conflicts) of the State of Indiana. Buyer may enforce any claim arising out
of or relating to this Agreement, in any federal court having subject matter
jurisdiction and located in Indianapolis, Indiana or any state court having
subject matter jurisdiction and located in Washington County, Indiana. For the
purpose of any action or proceeding instituted with respect to any such claim,
Xxxxxx and Buyer hereby irrevocably submit to the jurisdiction of such courts
and irrevocably consent to the service of process out of such courts by mailing
a copy thereof, by registered mail, postage prepaid, to Xxxxxx and/or Buyer, as
the case may be, and agree that such service, to the fullest extent permitted by
law, (i) shall be deemed in every respect effective service of process upon
Xxxxxx and/or Buyer in any such suit, action or proceeding, and (ii) shall be
taken and held to be valid personal service upon and personal delivery to Xxxxxx
or Buyer. Nothing herein contained shall affect the right of any party to serve
process in any other manner permitted by law or preclude any party from bringing
an action or proceeding in respect hereof in any other country, state or place
having jurisdiction over such action. Xxxxxx and Buyer irrevocably waive, to the
fullest extent permitted by law, any objection which it or he has or may have to
the laying of the venue of any such suit, action or proceeding brought in any
such court located in Indianapolis, Indiana, and any claim that any such suit,
action or proceeding brought in such a court has been brought in an inconvenient
forum.
15. CAPTIONS. The captions in this Agreement are included for convenience
only and shall not in any way affect the interpretation or construction of any
provision hereof.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and the same
agreement.
17. AMENDMENT; WAIVER. This Agreement may not be amended or modified other
than by a writing signed by each of the parties hereto. No waiver or failure to
act with respect to any breach or default hereunder shall be deemed to be a
waiver with respect to any subsequent breach or default, whether of a similar or
different nature.
18. ACTIVITIES. The Company has been advised by Consultant that Son engages
in activities that may compete or be considered to compete with the Company; it
is understood and agreed that no actions or activities of Son shall be deemed a
breach of this Agreement, unless such activities result from the use of Trade
Secrets or confidential information from the Company.
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19. INDEMNIFICATION.
(a) To the maximum extent permitted under the Delaware General
Corporation Law, Buyer shall indemnify Xxxxxx if he is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Buyer) by reason of the fact that he is or
was a director, officer, employee or agent of Buyer, or is or was serving at the
request of Buyer as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding.
(b) To the maximum extent permitted under the Delaware General
Corporation Law, Buyer shall indemnify Xxxxxx if he is a party or is threatened
to be made a party to any threatened, pending or completed action or suit by or
in the right of Buyer to procure a judgment in its favor by reason of the fact
that such person is or was a director, officer, employee or agent of Buyer, or
is or was serving at the request of Buyer as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection with the defense or settlement of such
action or suit.
20. ENTIRE AGREEMENT. This Agreement supersedes all prior agreements and
understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
"BUYER"
XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Its: Chairman
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/s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx, aka X. X. Xxxxxx
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