EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated as of December 1, 2004
between CSS Industries, Inc., a Delaware corporation ("CSS") and Xxxxxxx X.
Xxxxxx ("Executive").
WHEREAS, CSS and the Executive are desirous of memorializing the terms
and conditions of the Executive's continued employment by CSS during the term of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
1. Employment. CSS agrees to employ the Executive and the Executive
accepts such employment and agrees to perform such Executive's duties and
responsibilities hereunder, in accordance with the terms and conditions
hereinafter set forth.
1.1 Employment Term. The term of this Agreement (the
"Employment Term") shall commence as of the date hereof and shall continue for a
term of three years, unless terminated prior thereto in accordance with a
provision of Section 7 of this Agreement. If the Executive remains an employee
of CSS beyond the expiration of the Employment Term, the Executive specifically
acknowledges that his status will thereupon be that of an employee-at-will.
1.2. Duties and Responsibilities.
(a) During the Employment Term, the Executive shall
serve as Vice President - Chief Information Officer and shall perform all duties
and accept all responsibilities consistent with such office as may from time to
time be assigned to him by the Chief Executive Officer or Board of Directors
("Board") of CSS. In connection with the performance of such duties and
responsibilities, the Executive will report to the Chief Executive Officer of
CSS.
(b) The Executive represents to CSS that the
Executive is not subject or a party to any employment agreement, non-competition
covenant, non-disclosure agreement or any other agreement, covenant,
understanding or restriction of any nature whatsoever which would prohibit the
Executive from entering into this Agreement and performing fully the Executive's
duties and responsibilities hereunder, or which would in any manner, directly or
indirectly, limit or affect the performance of the duties and responsibilities
of the Executive described in Subsection 1.2(a) above.
(c) The Executive agrees to at all times comply in
all material respects with policies and procedures adopted by CSS for its
employees, including, without limitation, procedures and policies relating to
conflicts of interest.
1.3 Extent of Service. During the Employment Term, the
Executive agrees to use the Executive's best efforts to carry out the duties and
responsibilities described in Section 1.2 hereof and to devote his full time,
attention and energy to such duties and responsibilities. The Executive agrees
not to become engaged in any other business activity other than passive
investments without the prior approval of the Human Resources Committee (the
"Committee") of the CSS Board.
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1.4 Base Compensation.
(a) For the services rendered by the Executive
pursuant to this Agreement, CSS shall pay the Executive a salary of $230,000 for
each twelve months of the Employment Term ("Base Salary"), plus such additional
amounts, if any, from and after April 2005, as may be approved by the Committee,
less withholding taxes and other withholdings required by law and other
deductions agreed to by the Executive. Such Base Salary less applicable
deductions shall be payable in installments at such times as CSS customarily
pays its other officers.
(b) During the Employment Term: the Executive shall
be entitled to four weeks of paid vacation and shall be entitled to participate
in other fringe benefit programs as CSS makes available to executives holding
similar positions, including by way of illustration and not of limitation,
participation in CSS' 401K Profit Sharing Plan; however, the Executive has
confirmed that he does not intend to participate in either the medical or dental
insurance related programs available to CSS employees as long as these benefits
are available to him from his spouse's group insurance plan (other than COBRA
based).
(c) The Executive shall be responsible for the
payment of all federal, state and local taxes in respect of the payments to be
made and benefits to be provided under this Agreement or otherwise to the extent
imposed upon the Executive by applicable law.
1.5 Incentive Compensation. In addition to the Base Salary and
other compensation described in Section 1.4, the Executive shall also be
eligible to participate in CSS' annual bonus program relating to the fiscal year
ending March 31, 2005 and thereafter at a level of up to 60% of Base Salary in
accordance with criteria annually approved by the Committee, which criteria is
based, in material part, upon the achievement of certain financial and
qualitative objectives. Anything of the foregoing to the contrary
notwithstanding, the Executive's annual bonus relating to the fiscal year ending
March 31, 2005 shall be paid on a pro rata basis. Furthermore, upon commencement
of the Employment Term, the undersigned will recommend to the Committee that a
grant of a Stock Option to acquire 25,000 shares of the Company's Common Stock
be made to the Executive, which grant shall in all respects be subject to and in
accordance with the provisions of the CSS 2004 Equity Compensation Plan
("Plan"). Thereafter during the Employment Term, the Executive will be
considered for further Plan option grants by the Committee on not less than an
annual basis and a recommendation will be made to the Committee that such grant
be at a so-called "Grant Level" of 150%.
1.6 Employment Situs and Reimbursements. During the Employment
Term, the Executive will not be required to relocate from the Philadelphia, PA
SMSA without the Executive's consent.
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2. Developments. All developments, including inventions, whether
patentable or otherwise, trade secrets, discoveries, improvements, ideas and
writings which either directly or indirectly relate to or may be useful in the
Business (the "Developments") which the Executive, either individually or in
conjunction with any other person or persons, shall conceive, make, develop,
acquire or acquire knowledge of during the Employment Term or at any time
thereafter during which the Executive is employed by CSS, shall become the sole
and exclusive property of CSS. The Executive assigns, transfers and conveys, and
agrees to assign, transfer and convey to CSS, all of his right, title and
interest in and to any and all such Developments and to disclose to the extent
practicable all such Developments to the CSS Board. At any time and from time to
time, upon the request and at the expense of CSS, the Employee will execute and
deliver any and all instruments, documents and papers, give evidence and do any
and all other acts which, in the opinion of counsel for CSS, are or may be
necessary or desirable to document such transfer or to enable CSS to file and
prosecute applications for and to acquire, maintain and enforce any and all
intellectual property rights with respect to any such Developments or to obtain
any extension, validation, re-issue, continuance or renewal of any such
intellectual property rights. CSS will be responsible for the preparation of any
such instruments, documents and papers and for the prosecution of any such
proceedings and will reimburse the Executive for all reasonable expenses
incurred by the Executive in compliance with the provisions of this Section.
3. Confidential Information. The Executive recognizes and acknowledges
that by reason of employment by and service to CSS, the Executive has had and
will continue to have (both during the Employment Term and at any time
thereafter during which he is employed by CSS), access to confidential
information of CSS, and its affiliates, including, without limitation,
information and knowledge pertaining to products and services offered,
inventions, innovations, designs, ideas, plans, trade secrets, proprietary
information, computer systems and software, packaging, advertising, distribution
and sales methods and systems, sales and profit figures, customer and client
lists, and relationships between CSS and its affiliates and dealers,
distributors, wholesalers, customers, clients, suppliers and others who have
business dealings with CSS and such affiliates ("Confidential Information"). The
Executive acknowledges that such Confidential Information is a valuable and
unique asset of CSS and covenants that the Executive will not, either during or
at any time after the Employment Term, disclose any such Confidential
Information to any person for any reason whatsoever (except as his duties
described herein may require) without the prior written consent of the
Committee, unless such information is in the public domain through no fault of
Executive or except as may be required by law.
4. Non-Competition.
(a) During the period of the later to occur of the expiration
of the Employment Term or the period of the Executive's employment with CSS, and
for a period of one year thereafter, the Executive will not, without the prior
written consent of the Committee, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise with or use
or permit the Executive's name to be used in connection with, any business or
enterprise engaged within any portion of the United States or Canada
(collectively, the "Territory") (whether or not such business is physically
located within the Territory) that is engaged in the creation, design,
manufacture, distribution or sale of any products that are the same or of a
similar type then manufactured by CSS or by any of its affiliates during the
Employment Term (the "Business"). It is recognized by the Executive that the
Business and the Executive's connection therewith is or will be involved in
activity throughout the Territory, and that more limited geographical
limitations on this non-competition covenant (and the non-solicitation covenant
set forth in Section 5 hereof) are therefore not appropriate.
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(b) The foregoing restriction shall not be construed to
prohibit the ownership by the Executive of not more than five percent (5%) of
any class of securities of any corporation which is engaged in any of the
foregoing businesses having a class of securities registered pursuant to the
Securities Act of 1933, provided that such ownership represents a passive
investment and that neither the Executive nor any group of persons including the
Executive in any way, either directly or indirectly, manages or exercises
control of any such corporation, guarantees any of its financial obligations,
otherwise takes any part in business, other than exercising his rights as a
shareholder, or seeks to do any of the foregoing.
5. No Solicitation. For a period of one year following the date that
Executive's employment with CSS is terminated by either party, the Executive
agrees not to, either directly or indirectly, (i) call on or solicit with
respect to the Business any person, firm, corporation or other entity who or
which at the time of termination was, or within two years prior thereto had
been, a customer of CSS or any of its affiliates or (ii) solicit the employment
of any person who was employed by CSS or by any of its affiliates on a full or
part-time basis at any time during the course of the Executive's employment with
CSS, unless prior to such solicitation of employment, such person's employment
with CSS or any of its affiliates was terminated.
6. Equitable Relief.
(a) The Executive acknowledges that the restrictions contained
in Sections 2, 3, 4 and 5 hereof are reasonable and necessary to protect the
legitimate interests of CSS and its affiliates, that CSS would not have entered
into this Agreement, in the absence of such restrictions, and that any violation
of any provision of those Sections will result in irreparable injury to CSS. The
Executive represents that the Executive's experience and capabilities are such
that the restrictions contained in Sections 3 and 4 hereof will not prevent the
Executive from obtaining employment or otherwise earning a living at the same
general level of economic benefit as is anticipated by this Agreement. THE
EXECUTIVE FURTHER REPRESENTS AND ACKNOWLEDGES THAT (I) THE EXECUTIVE HAS BEEN
ADVISED BY CSS TO CONSULT THE EXECUTIVE'S OWN LEGAL COUNSEL IN RESPECT OF THIS
AGREEMENT, (II) THAT THE EXECUTIVE HAS HAD FULL OPPORTUNITY, PRIOR TO EXECUTION
OF THIS AGREEMENT, TO REVIEW THOROUGHLY THIS AGREEMENT WITH THE EXECUTIVE'S
COUNSEL, AND (III) THE EXECUTIVE HAS READ AND FULLY UNDERSTANDS THE TERMS AND
PROVISIONS OF THIS AGREEMENT.
(b) The Executive agrees that CSS shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as any other remedies provided by law arising from any
violation of Sections 2, 3, 4 and 5 hereof, which rights shall be cumulative and
in addition to any other rights or remedies to which CSS may be entitled. In the
event that any of the provisions of Sections 2, 3, 4 and 5 hereof should ever be
adjudicated to exceed the time, geographic, product or service, or other
limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, product or service, or other limitations permitted by applicable
law.
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(c) The Executive and CSS irrevocably and unconditionally (i)
agree that any suit, action or other legal proceeding arising out of Sections 2,
3, 4 and 5 of this Agreement, including without limitation, any action commenced
by CSS for preliminary or permanent injunctive relief or other equitable relief,
may be brought in the United States District Court for the Eastern District of
Pennsylvania, or if such court does not have jurisdiction or will not accept
jurisdiction, in any court of general jurisdiction in Philadelphia County,
Pennsylvania, (ii) consents to the non-exclusive jurisdiction of any such court
in any such suit, action or proceeding, and (iii) waives any objection to the
laying of venue of any such suit, action or proceeding in any such court. The
Executive and CSS also irrevocably and unconditionally consent to the service of
any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 12 hereof.
(d) The Executive agrees that CSS may provide a copy of
Sections 2, 3, 4 and 5 of this Agreement to any business or enterprise (i) which
the Executive may directly or indirectly own, manage, operate, finance, join,
participate in the ownership, management, operation, financing, control or
control of, or (ii) with which the Executive may be connected with as an
officer, director, employee, partner, principal, agent, representative,
consultant or otherwise, or in connection with which the Executive may use or
permit the Executive's name to be used.
7. Termination. This Agreement shall terminate prior to the expiration
of the Employment Term upon the occurrence of any one of the following events:
7.1. Disability. In the event that Executive is unable fully
to perform the duties and responsibilities set forth in Section 1.2 of this
Agreement by reason of illness, injury or incapacity for one hundred eighty
consecutive days, during which time the Executive shall continue to be
compensated as provided in Section 1.4 hereof (less any payments due the
Executive under disability benefit programs, including Social Security
disability, worker's compensation, and disability retirement benefits), this
Agreement may be terminated by CSS and CSS shall have no further liability or
obligation to the Executive for compensation hereunder; provided, however, that
Executive will be entitled to receive the payments prescribed under any
disability benefit plan which may be in effect for employees of CSS and in which
the Executive participated. The Executive agrees, in the event of any dispute
under this Section 7.1, to submit to a physical examination by a physician
selected by CSS, who is licensed in the Commonwealth of Pennsylvania.
7.2. Death. In the event that the Executive dies during the
Employment Term, CSS shall pay to the Executive's executors, legal
representatives or administrators an amount equal to the installment of Base
Salary set forth in Subsection 1.4 (a) hereof for the month in which the
Executive dies and applicable incentive compensation, if any, referred to in
Section 1.5 hereof in respect of the last fiscal year ended prior to the date of
the Executive's death to the extent earned, but not yet paid. Thereafter CSS
shall have no further liability or obligation hereunder to the Executive's
executors, legal representatives, administrators, heirs or assigns or any other
person claiming under or through the Executive; provided, however that the
Executive's estate or designated beneficiaries shall be entitled to receive the
payments prescribed for such recipients under any death benefit plan which may
be in effect for employees of CSS in which the Executive participated.
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7.3. Cause. Nothing in this Agreement shall be construed to
prevent its termination by CSS at any time for "cause". For purposes of this
Agreement, "cause" shall mean the failure of the Executive to perform or observe
any of the terms or provisions of this Agreement, a failure to comply with a
lawful directive of the Chief Executive Officer of CSS or the CSS Board,
conviction of a crime involving moral turpitude or substance abuse or the
willful engaging by the Executive in misconduct injurious to CSS or any of its
affiliates. In the event of termination for cause, CSS shall pay the Executive
an amount equal to the installment of Base Salary due until the date of
termination and any reimbursable expenses then due the Executive and shall have
no further liability or obligation to the Executive for compensation hereunder.
Such termination shall be effected by notice thereof transmitted to the
Executive in a manner permitted by the notice provisions of Section 12 hereof
and shall be effective as of the date of transmittal of such notice.
7.4. Without Cause by CSS. CSS may also terminate this
Agreement at and for CSS' sole convenience and in its sole discretion and
without specifying any cause. In such event, and contingent upon (i) receipt by
CSS of a valid and fully effective release (in form and substance reasonably
satisfactory to CSS) of all claims of any nature which the Executive might have
at such time against CSS and its affiliates and their respective officers,
directors and agents excepting therefrom only any payments due the Executive
from CSS pursuant to this Section 7.4, and (ii) the resignation of the Executive
from all positions of any nature which Executive may then have held with CSS and
its affiliates, CSS shall continue to pay Executive until the end of the
Employment Term the Base Salary set forth in Subsection 1.4(a) hereof in the
installments provided therein, together with payment of any incentive
compensation described in Section 1.5 to the extent such incentive compensation
related to CSS' then last fiscal year which had been earned by the Executive,
but not yet paid. Notwithstanding anything of the foregoing to the contrary, the
gross amount of any compensation that the Executive becomes entitled to receive
from employment by another or self-employment during the period that the
Executive continues to receive compensation from CSS pursuant hereto shall
constitute an offset and credit against any obligation of payment by CSS
pursuant to this Section 7.4. The Executive agrees to promptly advise CSS from
time to time of his entitlement to any such compensation.
8. Survival. Notwithstanding the termination of this Agreement by CSS
by reason of either the Executive's disability under Section 7.1, for cause
under Section 7.3, without cause under Section 7.4, the Executive's obligations
under Sections 2, 3, 4 and 5 hereof shall survive and remain in full force and
effect for the periods therein provided, and the provisions for equitable relief
against the Executive in Section 6 hereof shall continue in force along with the
provisions of Sections 8 through 17 hereof. Any payment obligation of CSS set
forth in Sections 1 and 7 hereof shall survive the termination of this Agreement
and remain in full force and effect.
9. Arbitration. Except as otherwise provided in Section 6(c) with
respect to injunctive relief, all disputes between the parties hereto pertaining
to this Agreement shall be settled by arbitration before one arbitrator pursuant
to the Employment Arbitration Rules of the American Arbitration Association in
Philadelphia, Pennsylvania; provided, however, that any award pursuant to such
arbitration shall be accompanied by a written opinion of the arbitrator giving
the reasons for the award. The award rendered by the arbitrator shall be
conclusive and binding upon the parties hereto. Nothing herein shall prevent the
parties from settling any dispute by mutual agreement at any time. Each party
shall pay his or its own expenses of arbitration and shall equally share the
expenses of the arbitrator.
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10. Premises At 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX. The Executive has
advised CSS that Xernon Technology Solutions, LLC, a limited liability company
of which the Executive owns all of the equity ("Tenant") is tenant under lease
dated November 11, 2003 ("Lease") of Premises designated Suite 1510 ("Premises")
in the building known as 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX. The current Lease
term expires December 31, 2008; however, this term may be prematurely terminated
by the Tenant on December 31, 2006 by giving not less than 120 days written
notice to the landlord and paying the landlord $3,600. It is agreed that the
Executive will cause the Tenant to seek the consent of the landlord under the
Lease to an assignment of the Lease to CSS in accordance with the provisions of
Section 17 thereof. CSS will either pay directly or reimburse the Executive for
the $200.00 fee payable to the landlord simultaneous with the request for
consent. Commencing the Employment Term and ending on the date that the
assignment of the Lease has occurred, CSS will either pay directly or reimburse
the Tenant for the rent payable to the landlord of the Premises pursuant to
Section 4 of the Lease and for the utilities utilized in the Premises during
such period. During the Employment Term, the Executive shall continue to utilize
the Premises until such time as an office at 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx,
XX is ready for occupancy by the Executive.
11. Governing Law. This Agreement shall be governed by and interpreted
under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.
12. Notices. All notices and other communications required or permitted
hereunder or necessary or convenient in connection herewith shall be in writing
and shall be deemed to have been given either when hand delivered, or if not
hand delivered, either mailed by registered or certified mail postage prepaid,
or sent by electronic facsimile transmission (with a hard copy sent by a
nationally recognized overnight courier or registered mail), or sent by a
nationally recognized overnight courier, as follows (provided that notice of
change of address shall be deemed given only when received):
If to CSS, to:
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx X. X. Xxxxxxx, President
Telecopy: 000-000-0000
If to the Executive, to:
000 Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Telecopy: 000-000-0000
or to such other names or addresses as CSS or the Executive, as the case may be,
shall designate by notice to each other person entitled to receive notices in
the manner specified in this Section.
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13. Entire Agreement; Contents of Agreement.
(a) Except as otherwise set forth herein, this Agreement
supersedes all prior agreements and sets forth the entire understanding among
the parties hereto with respect to the subject matter hereof and cannot be
changed, modified, extended or terminated except upon written amendment executed
by the Executive and approved by the Committee and executed on behalf of CSS by
a duly authorized officer. The Executive and CSS acknowledge that the effect of
this provision is that no oral modifications of any nature whatsoever to this
Agreement shall be permitted.
(b) The Executive and CSS acknowledge that from time to time,
CSS may establish, maintain and distribute employee manuals or handbooks or
personnel policy manuals, and representatives of CSS may make written or oral
statements relating to personnel policies and procedures. Such manuals,
handbooks and statements are intended only for general guidance. No policies,
procedures or statements of any nature by or on behalf of CSS (whether written
or oral, and whether or not contained in any employee manual or handbook or
personnel policy manual), and no acts or practices of any nature, shall be
construed to modify this Agreement or to create express or implied obligations
of any nature by either CSS to the Executive.
14. Assignment. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the respective
heirs, executors, administrators, legal representatives, successors and assigns
of the parties hereto, including without limitation any buyer of all or
substantially all of the assets of CSS, except that the duties and
responsibilities of the Executive hereunder are of a personal nature and shall
not be assignable or delegated in whole or in part by the Executive.
15. Severability. If any provision of this Agreement or application
thereof to anyone or under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provision or application of this Agreement which can be given
effect without the invalid or unenforceable provision or application in any
other jurisdiction.
16. Remedies Cumulative; No Waiver. No remedy conferred upon a party by
this Agreement is intended to be exclusive of any other remedy, and each and
every such remedy shall be cumulative and shall be in addition to any other
remedy given hereunder or now or hereafter existing at law or in equity. No
delay or omission by a party in exercising any right, remedy or power hereunder
or existing at law or in equity shall be construed as a waiver thereof, and any
such right, remedy or power may be exercised by a party from time to time and as
often as may be deemed expedient or necessary by such party in its sole
discretion.
17. Miscellaneous. All section headings are for convenience only. This
Agreement may be executed in several counterparts, each of which is an original.
It shall not be necessary in making proof of this Agreement or any counterpart
hereof to produce or account for any of the other counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this Employment
Agreement as of the date first above written.
CSS Industries, Inc.
By:____________________________________
Xxxxx X. X. Xxxxxxx, President and
Chief Executive Officer
________________________________________
Xxxxxxx X. Xxxxxx
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