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EXHIBIT 10.1
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IMAGE INDUSTRIES, INC.
EMPLOYMENT CONTRACT
AGREEMENT dated as of the 30th day of July, 1993, by and between IMAGE
INDUSTRIES, INC., a Delaware corporation (hereinafter called the "Company"), and
XXXXX X. XXXXXX (hereinafter called the "Employee").
R E C I T A L S:
WHEREAS, the Company and the Employee are parties to that certain
Amended and Restated Employment Contract dated as of March 30, 1991 (the
"Existing Employment Agreement") whereby the Employee is employed as the
Chairman of the Board and Sales Manager of the Company; and
WHEREAS, the Company desires to retain the services of Employee in his
current capacity and as President of the Company's Image Carpets division
pursuant to the terms hereof in connection with the proposed public offering of
the Company's common stock.
NOW, THEREFORE, for and in consideration of the employment of Employee
by the Company, the above premises and the mutual covenants hereinafter set
forth, and other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. EMPLOYMENT. The Company hereby employs the Employee as its Chairman
of the Board and as President of the Company's Image Carpets division, and the
Employee hereby accepts such
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employment under and subject to the terms and conditions hereinafter set forth.
2. DUTIES. During the Term hereof (as defined below), the Employee
shall faithfully perform such duties as may be assigned to him from time to time
by the Board of Directors of the Company (the "Board") which are attendant to
the position of Chairman of the Board, and President of the Company's Image
Carpets division, and shall report to the President. The Employee shall devote
his full time and best efforts to the performance of his duties hereunder, to
the exclusion of all other business activities; provided that the Employee may
manage his own passive investments so long as such management does not interfere
materially with the performance of his services hereunder. The Employee shall,
upon request of the Company, serve on the Board for no additional consideration.
3. COMPENSATION. In consideration of the services rendered by the
Employee under this Agreement, the Company shall pay the Employee compensation
as follows:
(a) Base Salary. A base salary of not less than Two
Hundred Thousand Dollars ($200,000.00) per Year (the "Base
Salary"). For purposes hereof, a "Year" shall mean the
Company's fiscal year, which is the fifty-two (52) week period
beginning approximately July 1 and ending approximately June
30. The Employee's Base Salary shall be paid on a bi-weekly
basis, in arrears, and shall be reviewed by the Compensation
Committee of the Board
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annually at the end of each Year, but no such annual review
shall cause the Base Salary to be reduced to less than
$200,000 per Year; and
(b) Incentive Compensation. In addition to the Base
Salary, the Company may pay the Employee an annual bonus, as
determined by the Compensation Committee
of the Board from time to time.
4. SEVERANCE BENEFITS. The Employee shall be entitled to severance
benefits, as follows:
4.1 Termination of Employment.
(a) Termination Without Cause. If at any time during
the Term hereof, the employment of the Employee is terminated
by the Company without Cause as defined under and pursuant to
Section 7.4 hereof, and provided that Employee is not
thereafter rehired by the Company for a period of at least
three (3) years, then, within thirty (30) days after the date
of termination, the Company shall pay, subject to all
applicable deductions and withholdings, to the Employee the
sum of (i) all accrued but unpaid Base Salary through the date
of termination; (ii) the Base Salary which would be payable
through the remainder of the Term, but in no event less than
one Year's Base Salary as then in effect; (iii) a bonus in an
amount equal to the average of the amount of the bonus paid to
Employee for the two (2) immediately preceding Years; and (iv)
the value of all accrued and unused
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vacation time based on the per diem amount of the Base Salary
(the "Severance Payment"). In addition, in such event (A) the
Company shall continue the Employee's group health insurance,
if available, and all other fringe benefits listed on Schedule
1 at the Company's expense for a period of six (6) months from
the date of termination of employment, and will make available
to Employee COBRA coverage after such six (6) month period as
provided by law; and (B) all stock options granted by the
Company to Employee which are not vested on the date of
termination but which would vest if Employee remained in the
employ of the Company through the Year of termi nation shall
automatically become fully vested (the "Severance Benefits").
If Employee is rehired by the Company within three (3) years
of termination without Cause, then he shall repay to the
Company the Severance Payment.
(b) Voluntary Termination. In the event that the
Employee voluntarily terminates his employment pursuant to
Section 7.4 hereof at any time, or the Company termi nates his
employment for Cause pursuant to Section 7.3 hereof at any
time, during the Term, then the Company shall have no
obligation to pay the Severance Payment or provide the
Severance Benefits to the Employee except as provided in
Section 4.2 hereof.
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(c) Termination Payment. Notwithstanding anything to
the contrary contained herein, in the event the Employee
voluntarily terminates his employment or his employment is
terminated by the Company for any reason, with or without
Cause, at any time after March 31, 1994, or in the event of
his death, disability or termination of employment by the
Company, without Cause, at any time during the Term, the
Company shall pay the Employee or his personal representative
or estate, as applicable, and in addition to the Severance
Payment and Severance Benefit, if applicable, the sum of One
Hundred Seventy-Five Thousand Dollars ($175,000), payable in
twelve (12) consecutive monthly payments, the first eleven
(11) of which shall be in the amount of $14,583.33, and the
last of which shall be in the amount of $14,583.37, payable in
arrears on the last day of the month, commencing on the last
day of the month in which the Employee's employment
terminates.
(d) Termination Upon Death or Disability. If during
the Term hereof the employment of Employee is terminated upon
the death of Employee pursuant to Section 7.1 or upon the
permanent disability of the Employee pursuant to Section 7.2,
then, within thirty (30) days of the date of termination, the
Company shall pay, subject to all applicable deductions and
withholdings, to Employee the sum of (i) all accrued but
unpaid Base
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Salary through the date of termination; (ii) the then current
Base Salary for an additional six (6) month period; (iii) a
bonus in an amount equal to the average of the amount of the
bonus paid to Employee for the two (2) immediately preceding
Years; and (iv) the value of all accrued and unused vacation
time based on the per diem amount of the Base Salary. In
addition, in such event (except in the case of death of
Employee), (A) the Company shall continue the Employee's group
health insurance, if available, and all other benefits listed
on Schedule 1 at the Company's expense for a period of six (6)
months from the date of termination of employment, and will
make available to Employee COBRA coverage after such six (6)
months period as provided by law; and (B) all stock options
granted by the Company to Employee which are not vested on the
date of termination but which would vest if Employee remained
in the employ of the Company through the Year of termination
shall auto matically become fully vested.
4.2 Change in Control. In the event of a Change in Control
(as defined below) during the Term, and termination of the employment of the
Employee occurs within twelve (12) months after such Change in Control for any
reason other than for Cause, including voluntary termination by the Employee,
and provided that the Employee is not thereafter rehired by the Company for a
period of at least three (3) years, the Company shall pay to Employee
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within thirty (30) days of the date of termination the amount of the annual Base
Salary as then in effect, less deductions and withholdings, irrespective of
whether Employee's employment was terminated by Employee or the Company or by
death or disability, and shall provide all Severance Benefits as described in
Section 4.1(a) above. If the Employee is rehired by the Company within said
three (3) year period, then the Employee shall repay to the Company the amount
of the annual Base Salary paid to Employee under this Section 4.2.
For purposes hereof, a "Change in Control" shall mean any
transaction or series of related transactions pursuant to which either:
(a) all or substantially all of the assets of the
Company shall have been sold or transferred to an unaffiliated
third party; or
(b) the acquisition, directly or indirectly, by any
"person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) within any
twelve (12) month period of securities of the Company
representing an aggregate of fifty percent (50%) or more of
the combined voting power of the Company's then outstanding
securities; or
(c) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the
Board, cease for any reason to constitute at least a majority
thereof, unless each new director was
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nominated by the directors then still in office who were
directors at the beginning of the period; or
(d) consummation of (i) a merger, consolidation or
other business combination of the Company with any other
"person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) or affiliate
thereof, other than a merger, consolidation or business
combination which would result in the out standing common
stock of the Company immediately prior thereto continuing to
represent (either by remaining outstanding or by being
converted into common stock of the surviving entity or a
parent or affiliate thereof) at least fifty percent (50%) of
the outstanding common stock of the Company or such surviving
entity or parent or affiliate thereof outstanding immediately
after such merger, consolidation or business combination, or
(ii) a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets;
provided that an offering and sale to the public by the Company of any equity
securities pursuant to an effective registration state ment under the Securities
Act of 1933, as amended (other than in connection with a merger), shall not be
deemed to be a "Change in Control."
5. OTHER BENEFITS. During the Term, Employee shall be entitled to the
current fringe benefits set forth in Schedule 1
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hereto and such other fringe benefits as are made available generally to other
senior executive employees of the Company as may be approved by the Board from
time to time, including the following:
5.1 Paid Vacation. The Employee shall be entitled to paid
vacations in accordance with the Company's practices with respect to vacations
for senior executive employees as from time to time established by the Board,
but no less than three (3) weeks per Year.
5.2 Insurance Benefits. During the Term of this Agree ment the
Employee shall be provided accident and health, dis ability, and life insurance
as the Company may from time to time make available to its senior executive
employees, and shall pay all premiums for the same (including dependent health
insurance) for the benefit of Employee, such benefits to be substantially
similar to those provided to Employee as of the date hereof. The Company may, at
its option and for its benefit, also purchase so-called key man insurance upon
the life of the Employee in such amounts as it deems necessary or appropriate,
and the Employee agrees to submit to such physical examinations for the same as
may be required.
5.3 Expenses. The Company shall reimburse the Employee for all
reasonable expenses of types authorized by the Board and incurred in connection
with the Company's business affairs. The Employee shall comply with such
limitations and reporting require ments with respect to expenses as the Board
may establish from time to time.
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6. TERM. The term of employment under this Agreement (the "Term") shall
begin on the date of execution by the Company of an Underwriting Agreement in
connection with its initial public offering which occurs within ninety (90) days
of the date hereof, and shall continue for a period of three (3) years
thereafter, unless sooner terminated as provided in Section 7. In the event that
such public offering is not closed within ninety (90) days of the date hereof,
this Agreement shall be of no force and effect, but the Existing Employment
Agreement shall continue in full force and effect. Expiration of the Term and
failure to execute a new Employment Agreement by the Company or Employee shall
not be deemed termination without Cause, and in such event Employee shall not be
subject to the restrictions contained in Section 9 hereof.
7. TERMINATION.
7.1 Death. In the event of the death of the Employee during
the Term, his employment by the Company shall be deemed to terminate at the end
of the calendar month in which his death occurs and, except as set forth in
Sections 4.1(c) and (d), all payments and benefits under this Agreement shall
then cease.
7.2 Permanent Disability. In the event of the dis ability of
the employee for a period in excess of 180 consecutive days as determined by a
qualified physician chosen by the Company, such that the Employee is unable to
perform his services hereunder substantially as performed previously, his
employment by the Company shall be deemed to terminate at the end of the
calendar month which includes the last day of such 180-day period, and
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except as set forth in Sections 4.1 (c) and (d), all payments and benefits shall
then cease.
7.3 For Cause. The employment of the Employee by the
Company may be terminated by the Company (by a decision of a
majority of the Board of Directors) for "Cause" if:
(a) the Employee has engaged in willful and
intentional misconduct with respect to the Company, or grossly
neglected his duties to the Company, and in either case, after
written notice of the same, specifying in reasonable detail
the alleged misconduct or neglect, if the Employee fails to
correct or desist from the alleged misconduct or neglect
within thirty (30) days after such notice; or
(b) the Employee has engaged in a willful act
which constitutes a fraud or a felony and which results in a
direct injury to the Company; or
(c) the Employee shall have been convicted of or
pleaded guilty to a felony or crime involving moral
turpitude;
then the Company may terminate Employee's employment immediately by written
notice. In the event of termination under this Section 7.3, except as set forth
in Section 4.1(c) hereof, all payments and benefits under this Agreement shall
cease effective with termina tion of employment. Termination of employment for
any reason, other than termination without Cause within twelve (12) months of
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a Change in Control, shall constitute cause for removal of Employee from the
Company's Board of Directors.
7.4 Termination Without Cause. This Agreement may be
terminated by either party without Cause on not less than ninety
(90) days' prior written notice to the other party.
8. PROPRIETARY INFORMATION; INVENTIONS IN THE FIELD.
8.1 Proprietary Information. In the course of his service to
the Company, the Employee may have access to confiden tial specifications,
know-how, strategic or technical data, processes, business documents or
information, marketing data, marketing research data, product research and
development data and manufacturing techniques, confidential customer lists and
sources of supply and trade secrets, all of which are confidential and may be
proprietary, owned or used by the Company. Such information shall hereinafter be
called "Proprietary Information" and shall include any and all items enumerated
in the preceding sentence and coming within the scope of the Company's business
as to which the Employee may have access, whether conceived or developed by
others or by the Employee alone or with others during the period of his service
to the Company, whether or not conceived or developed during regular working
hours. Proprietary Information shall not include any records, data, or
information which are in the public domain during the period of service by the
Employee provided the same are not in the public domain as a consequence of
disclosure directly or indirectly by the Employee in violation of this Agree
ment.
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8.2 Fiduciary Obligations. Proprietary Information is of
critical importance to the Company and a violation of this Agreement would
seriously and irreparably impair and damage the Company's business and the
Employee shall keep all Proprietary Information in a fiduciary capacity for the
sole benefit of the Company.
8.3 Non-Disclosure. The Employee shall not during the Term of
this Agreement or for a period of five (5) years thereafter use for his own
benefit, or disclose, directly or indirectly, any Proprietary Information to any
person other than the Company or authorized employees thereof at the time of
such disclosure, or such other persons to whom the Employee has been
specifically instructed to make disclosure by an officer of the Company, and in
all such cases only to the extent required in the course of the Employee's
service to the Company. At the termination of his employment, the Employee shall
deliver to the Company all notes, letters, documents and records which may
contain Proprietary Information which are then in his possession or control and
shall not retain or use any copies or summaries thereof.
8.4 Patent Assignment. The Employee agrees to assign and
transfer to the Company or its designee, without any separate remuneration or
compensation, his entire right, title and interest in and to all Inventions in
the Field (as hereinafter defined), together with all United States and foreign
rights with respect thereto, and at the Company's expense to execute and deliver
all appropriate patent applications for securing United States and
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foreign patents and Inventions in the Field and to perform all lawful acts,
including giving testimony, and to execute and deliver all such instruments that
may be necessary or proper to vest all such Inventions in the Field and patents
with respect thereto in the Company, and to assist the Company in the
prosecution or defense of any interference which may be declared involving any
of said patent applications or patents. For the purposes of this Agreement, the
words "Inventions in the Field" shall include any discovery, process, design,
development, improvement, application, technique, or invention, whether
patentable or not and whether reduced to practice or not, conceived or made by
the Employee, individually or jointly with others (whether on or off the
Company's premises or during or after normal working hours) while in the employ
of the Company or within one year after termination of the Employee's employment
by the Company, and which was or is directly or indirectly related to the
business of the Company, or which resulted or results from or was suggested by
any work performed by any employee or agent thereof during the Term.
9. PROTECTIVE COVENANTS. Employee acknowledges that he is a key
executive whose specialized skills, abilities and contacts are important to the
success of the Company, and agrees that he shall faithfully and strictly adhere
to the following covenants:
9.1 In the event Employee voluntarily terminates his
employment during the Term or his employment is terminated by the Company for
"Cause," the Employee covenants and agrees that he shall not, within one year
after the date of such termination of
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employment, within the State of Georgia, directly or indirectly own, operate or
serve as an employee or consultant in a capacity similar to that in which
Employee served the Company, for any business, person or entity whatsoever which
is engaged in the manufacture or sale of carpet or the recycling of
post-consumer polyethylene terephthalate materials that are competitive with
those sold or manufactured by the Company.
9.2 In the event Employee voluntarily terminates his
employment during the Term or his employment is terminated by the Company for
"Cause," the Employee covenants and agrees that he shall not, within one year
after the date of such termination of employment, solicit, divert or
appropriate, or attempt to solicit, divert or appropriate, directly or by
assisting others, any business from any of the Company's customers, including
actively-sought prospective customers, with whom Employee had material contact
during the last eighteen (18) months of his employment, for purposes of
providing products or services that are competitive with those provided by the
Company.
9.3 In the event Employee voluntarily terminates his
employment during the Term or his employment is terminated by the Company for
"Cause," the Employee covenants and agrees that he shall not, within one year
after the date of such termination of employment, divert, solicit, recruit or
hire, or attempt to divert, solicit, recruit or hire, directly or by assisting
others, any other employee of the Company or any person who within the preceding
twelve (12) months has been an employee of the Company,
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whether or not such employee is a full-time employee or a temporary employee of
the Company and regardless of whether such employment is pursuant to written
agreement, for a determined period, or at will.
10. REMEDIES. It is specifically understood and agreed that any breach
of the provisions of Sections 8 and 9 of this Agreement is likely to result in
irreparable injury to the Company and that the remedy at law alone will be an
inadequate remedy for such breach, and that in addition to any other remedy it
may have, the Company shall be entitled to enforce the specific performance of
this Agreement by the Employee and to seek both temporary and permanent
injunctive relief (to the extent permitted by law) without the necessity of
proving actual damages.
11. NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and, if mailed by prepaid
first class mail or certified mail, return receipt requested, at any time other
than during a general discontinuance of postal service due to strike, lockout or
other wise, shall be deemed to have been received on the earlier of the date
shown on the receipt or three (3) business days after the postmarked date
thereof and, if telexed or telecopied, shall be followed forthwith by letter and
shall be deemed to have been received on the next business day following
dispatch and acknowledgement of receipt by the recipient's telex or telecopy
machine. In addition, notices hereunder may be delivered by hand, in which event
the notice shall be deemed effective when delivered,
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or by overnight courier, in which event the notice shall be deemed to have been
received on the next business day following delivery to such courier. All
notices and other communications under this Agreement shall be given to the
parties hereto at the following addresses:
(i) If to the Company:
Image Carpets, Inc.
Xxxxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Copy to:
G. Xxxxxx Xxxxxxx, Esquire
Parker, Johnson, Xxxx & Dunlevie
Suite 700
1275 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000
(ii) If to the Employee:
Xxxxx X. Xxxxxx
0000 Xxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
unless and until notice of another or different address shall be given as
provided herein. All notices shall be effective upon delivery or, if mailed, on
the third business day after being mailed.
12. MISCELLANEOUS.
12.1 Modification. This Agreement constitutes the entire
agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral,
including without limitation the Prior Employment Agreement. This Agreement may
not be amended or revised except by a writing signed by the parties.
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12.2 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns, including any corporation with which or into which the Company or
its successor may be merged or which may succeed to its assets or business,
although the obliga tions of the Employee are personal and may be performed only
by him.
12.3 Captions. Captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope of
substance of any provision of this Agreement.
12.4 Severability. In case 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, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provision were limited
or modified, consistent with its general intent, to the extent necessary so that
it shall be valid, legal and enforceable, or if it shall not be possible to so
limit or modify such invalid, illegal or unenforceable provision, this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein, and all other provisions hereof shall be and remain
unimpaired and in full force and effect.
12.5 Governing Law. This Agreement shall be construed
under and governed by the laws of the State of Georgia.
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12.6 Arbitration. Either party hereto may demand arbitration
of a claim or dispute arising hereunder by delivery of a written demand to the
other party within sixty (60) days after the claim arises, which demand shall
include the name of an arbitrator appointed by such party, together with a
statement of the matter in controversy. Within twenty (20) days after the
receipt of such demand, the other party shall appoint its arbitrator, and the
two arbitrators so chosen shall, within ten (10) days thereafter, select a third
arbitrator, or in the absence of agreement, the third arbitrator shall be
appointed by the Arbitration Committee of the American Arbitration Association.
A decision rendered by a majority of the arbitrators shall be final and binding
on the parties, and judgment on such award may be entered in accordance with the
applicable law in any court having jurisdiction thereof. All arbitration costs
and expenses shall be borne by the losing party. Any such arbitration shall be
held in Xxxxx County, Georgia, unless otherwise agreed by the parties.
Within ninety (90) days of the selection of the third
arbitrator (or such later date as the arbitrators determine as necessary to make
such determination), the arbitrators shall determine whether the Base Salary and
benefits provided hereunder should be continued to be paid to Employee during
the pendency of the arbitration based upon the merit of and the reasonableness
of the position of the Employee; provided that said Base Salary and benefits
shall be continued until the date of such determination and thereafter if so
determined by the arbitrators. In the event
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the arbitrator determines that such salary and benefits should not have been
paid to Employee, Employee shall pay the full amount of such salary and the cost
of such benefits to the Company within thirty (30) days of such decision.
12.7 Restrictive Covenant. It is the intention of the parties
that if any restrictive covenant in this Agreement is determined by a court of
competent jurisdiction to be overly broad, then the court should enforce such
covenant to the maximum extent permitted by law as to scope, geographic area and
duration.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
THE COMPANY:
IMAGE INDUSTRIES, INC.
BY:/s/ H. Xxxx Xxxxxxx
---------------------------------
H. XXXX XXXXXXX, President
EMPLOYEE:
/s/ Xxxxx X. Xxxxxx
---------------------------------
XXXXX X. XXXXXX
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SCHEDULE 1
The Company will provide the following fringe benefits to the Employee:
1. A Company automobile comparable to the present
automobile, together with the costs of operating and
maintaining same.
2. Country club membership and dues at a country club of
Employee's choice within the general area of the
Company's principal facility.
3. Dependent medical insurance coverage at the Company's
expense.
4. Preparation of the Employee's federal and state tax
returns by the Company's independent auditors.
5. Personal life and disability insurance providing benefits
not less than that currently provided for Employee.
6. Annual physical at the expense of the Company.
7. Sick leave, including salary continuation, for a period
of time equal to the waiting period under the Company's
disability policy.