EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of this 8th day of January, 1998 by and between DOOR HOLDINGS, INC., a
Delaware corporation (the "Buyer"), and XXXXX XXXXX, an employee of the Buyer
(the "Employee").
RECITALS:
WHEREAS, as of the date hereof, Buyer is purchasing, pursuant to a
Stock Purchase Agreement among, Buyer, X.X. Xxxxx Company, Inc., an Alabama
corporation ("Xxxxx"), Total Trim, Inc., an Alabama corporation and X.X. Xxxxx,
dated December 12, 1997, all the outstanding capital stock of Xxxxx (the
"Stock");
WHEREAS, Xxxxx is in the business of prehanging interior and exterior
door units primarily for multi-family housing communities and distributing
ancillary products for the building materials industry such as locks, windows,
mirrors, wire shelving, bathroom accessories and other complementary specialty
items (the "Business");
WHEREAS, Employee is a stockholder and employee of Xxxxx;
WHEREAS, Buyer desires to retain Employee to render services to Buyer
following its purchase of the Stock and the Employee desires to render such
services;
WHEREAS, in order to fully protect the Buyer's confidential
information and the goodwill of the Business which the Buyer has acquired by
virtue of the stock purchase described above and to ensure that the Buyer enjoys
the benefits of such goodwill and Business, the Buyer and the Employee desire to
provide for Employee's agreement not to compete with the Buyer for a period of
five (5) years from the date hereof as specified herein;
WHEREAS, the execution of this Agreement is a condition to, and a
material inducement of, the Buyer's consummation of the stock purchase as set
forth in the Stock Purchase Agreement; and
WHEREAS, the Buyer and the Employee desire to set forth herein the
terms and conditions on which the Buyer will employ the Employee, and the
Employee will accept employment with the Buyer, including the terms of
Employee's agreement not to compete.
NOW, THEREFORE, in consideration of the mutual promises, agreements
and mutual covenants set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending legally to be bound, hereby agree as follows:
1. EMPLOYMENT. The Buyer hereby employs the Employee, and the
Employee hereby accepts employment with the Buyer, upon the terms and subject to
the conditions set forth in this Agreement.
2. POSITION AND DUTIES. The Employee shall be employed as the
President and Chief Executive Officer of the Buyer. The Employee shall also
serve in such additional capacities as may be assigned to him from time to time
by the Board of Directors of the Buyer (the "Board"). The Employee shall devote
substantially all of his business time, attention, skill and best efforts to the
diligent performance of his duties hereunder. Subject to the authority of the
Board, the Employee shall be responsible for the day to day general management,
administration and operation of all present and future business of the Buyer and
its subsidiaries, if any, including, without limitation, as set forth in the
By-laws of the Buyer. Employee acknowledges that the performance of his job
duties will involve him in managing all aspects of the Buyer's operational
efforts. On all matters not delegated to the Employee, the Employee shall
report to the Board.
3. TERM. The term of employment hereunder shall commence as of
the date hereof (the "Commencement Date") and shall continue through and
including December 31, 2001 (the "Initial Term") unless earlier terminated in
accordance with the provisions hereof. This Agreement shall be renewable for
successive one (1) year terms following the Initial Term, unless either party
provides notice of intent not to renew to the other party at least thirty (30)
days prior to the end of the then existing term. Notwithstanding the above, the
covenants set forth in Section 6 hereof shall survive for a period of five (5)
years from the date hereof notwithstanding any termination of employment
hereunder including any termination pursuant to this Section 3 upon the
expiration of the Initial Term or any renewal term.
4. COMPENSATION. As compensation for all services rendered by the
Employee under this Agreement, the Buyer shall pay the Employee compensation as
follows:
(a) ANNUAL COMPENSATION. For all services rendered by the
Employee during his employment under this Agreement, beginning on the
Commencement Date, the Buyer shall pay the Employee an annual salary in an
amount not less than $150,000, payable in substantially equal [monthly]
installments on the first day of each month. The Employee's annual salary
shall be subject to annual review on or before February 1 of each year by
the Board for possible merit increases, in the Board's sole discretion.
Any merit increases would be effective February 1st of each year.
(b) BENEFITS. Except as set forth on SCHEDULE A attached
hereto, the Employee shall be entitled to participate in those perquisites
and benefits generally available to senior level employees of the Buyer in
accordance with the Buyer's regular policies. In addition, the Employee
shall be entitled to those rights and benefits described in SCHEDULE A
attached hereto, which is hereby incorporated herein and made a part of
this Agreement.
(c) TAXES AND WITHHOLDINGS. All taxes and governmentally
required withholdings shall be deducted from any amount paid by the Buyer
to the Employee hereunder in conformity with applicable laws.
(d) STOCK OPTIONS. The Employee shall also be eligible to
receive grants of options to purchase shares of common stock of the Buyer
in accordance with the Option Plan attached hereto.
5. CONFIDENTIALITY. The Employee acknowledges and agrees that the
Trade Secrets (as defined below) and the Confidential Information (as defined
below) of the Buyer and its parent and subsidiaries and all physical embodiments
thereof (collectively referred to as the "Proprietary Information") are
valuable, special and unique assets of the Business and have been developed by
Xxxxx and will continue to be developed by Buyer following its purchase of the
Business at considerable time and expense. Employee further acknowledges that
access to such Proprietary Information is essential to performance of Employee's
duties and responsibilities under this Agreement. Therefore, in order to obtain
access to such Proprietary Information, Employee agrees that except with respect
to those duties assigned to him by the Buyer, Employee shall hold in strictest
confidence all Proprietary Information and will not reproduce, use, distribute,
disclose, publish or otherwise disseminate any Proprietary Information, in whole
or in part, and will take no action causing, or fail to take any action
necessary to prevent causing, any Proprietary Information to lose its character
as Proprietary Information, nor wilfully make use of such information for
Employee's own purposes or for the benefits of any person, firm, corporation,
association or other entity (except the Buyer) under any circumstances, except
that Employee may disclose such Proprietary Information pursuant to a court
order, subpoena or other legal process, provided that, at least ten (10) days in
advance of any legal disclosure, the Employee shall furnish the Buyer with a
copy of the judicial or administrative order requiring that such information be
disclosed together with a written description of the information to be disclosed
(which description shall be in sufficient detail to allow the Buyer and its
affiliates to determine the nature and scope of the information proposed to be
disclosed), and the Employee covenants and agrees to cooperate with the Buyer
and its affiliates to deliver the minimum amount of information necessary to
comply with such order.
For purposes of this Agreement, the term "Trade Secrets" means
information, including but not limited to, any technical or nontechnical data,
formula, pattern, compilation, program, device, method, technique, drawing,
process, financial data, financial plan, product plan, list of actual or
potential customers or suppliers, or other information similar to any of the
foregoing, which derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can derive economic value from its disclosure or use. For
purposes of this Agreement, the term "Trade Secrets" does not include
information that Employee can show by competent proof (i) was known to Employee
and reduced to writing prior to disclosure by the Buyer or by Xxxxx (but only if
Employee promptly notifies the Buyer of Employee's prior knowledge); (ii) was
generally known to the public at the time the Buyer or Xxxxx disclosed the
information to Employee; (iii) became generally known to the public after
disclosure to the Employee through no act or omission of Employee; or (iv) was
disclosed to Employee by a third party having a bona fide right both to possess
the information and to disclose the information to Employee.
The term "Confidential Information" means any data or information of
the Buyer, other than Trade Secrets, regarding the Business or Buyer's policies
and operations which is valuable to the Buyer and not generally known to
competitors of the Buyer. For purposes of this Agreement, the term
"Confidential Information" does not include information that Employee can show
by competent proof (i) was known to Employee and reduced to writing prior to
disclosure by the Buyer or Xxxxx (but only if Employee promptly notifies the
Buyer of Employee's prior knowledge); (ii) was generally known to the public at
the time Buyer or Xxxxx disclosed the information to Employee; (iii) became
generally known to the public after disclosure to the Employee through no act or
omission of Employee; or (iv) was disclosed to Employee by a third party having
a bona fide right both to possess the information and to disclose the
information to Employee.
The provisions of this Section 5 will apply to Trade Secrets for so
long as such information remains a Trade Secret and to Confidential Information
during Employee's employment with the Buyer and for a period of three (3) years
following any termination of Employee's employment with the Buyer for whatever
reason.
6. COVENANT NOT TO COMPETE.
(a) AGREEMENT NOT TO COMPETE. In order to fully protect the
Buyer's Confidential Information and the goodwill of the Business purchased by
Buyer on the date hereof, and to ensure that Buyer enjoys the benefits of that
Business, for a
period of five (5) years following the date of this Agreement (the
"Non-competition Period"), whether or not Employee's employment by the Buyer
terminates prior to the expiration of such five (5) year period (provided that
this covenant shall apply for one year following termination without cause
pursuant to Section 10 hereof regardless of the date of termination), Employee
shall not, except as authorized in writing by Buyer, directly or indirectly, be
employed by, render services to, assist, participate in the affairs of, invest
in, or otherwise be connected with, any person or enterprise which person or
enterprise is engaged in, or is planning to engage in, and shall not personally
engage in, any business that is in any respect competitive with the Business,
with respect to any products or services of the Business, within the continental
United States; provided that Employee may hold investments representing a less
than 5% interest in any publicly held entity competing with Buyer. In
furtherance of such covenant not to compete, Employee hereby acknowledges that
Xxxxx currently does business, and following the stock purchase described
herein, the Buyer shall continue to do business throughout the United States and
that in his capacity as President of Xxxxx and as President and Chief Executive
Officer of the Buyer his responsibilities have involved and will continue to
involve the conduct of business throughout the United States.
(b) NON-SOLICITATION. The Employee agrees that for a period
of five (5) years following the date of this Agreement he will not, and will not
assist any of his affiliates to, directly or indirectly, recruit or otherwise
solicit or induce any present or future employee, customer, subscriber or
supplier of Buyer or any of its subsidiaries to terminate its employment or
arrangement with Buyer or any of its subsidiaries, otherwise change its
relationship with the Buyer or any of its subsidiaries, or establish any
relationship with the Employee or any of his affiliates for any business purpose
deemed materially competitive with the Business.
(c) REMEDIES. The parties recognize, acknowledge and agree
that (i) any breach or threatened breach of the provisions of this Section 6
shall cause irreparable harm and injury to Buyer and that money damages alone
will not provide an adequate remedy for such breach or threatened breach, (ii)
the duration, scope and geographical application of this Section 6 are fair and
reasonable under the circumstances of the Business, and are reasonably required
to protect the legitimate business interests of Buyer and the goodwill of the
Business purchased by Buyer, (iii) the restrictions contained in this Section 6
will not prevent the Employee from earning or seeking a livelihood, and (iv) the
restrictions contained in this Section 6 shall apply in all areas where such
application is permitted by law. Accordingly, the Employee agrees that Buyer
shall be entitled to have the provisions of this Section 6 specifically enforced
by any court having jurisdiction, and that such a court may issue a temporary
restraining order, preliminary injunction or other appropriate equitable relief,
without having to prove the inadequacy of available remedies at law, having to
post any bond or any other undertaking. In addition, Buyer shall be entitled to
avail itself of all such
other actions and remedies available to it or any of its affiliates under law or
in equity and shall be entitled to such damages as it sustains by reason of such
breach or threatened breach. It is the express desire and intent of the parties
that the provisions of this Section 6 be enforced to the full extent possible.
(d) SEVERABILITY. In light of the fact that the covenants
set forth in Section 6 are reasonably required to protect the legitimate
interests of Buyer as a purchaser of the assets of the Business, if any
provision of Section 6(a) hereof is held to be unenforceable because of the
duration of such provision, the area covered thereby or the scope of the
activity restrained, the parties hereby expressly agree that the court making
such determination shall have the power to reduce the duration and/or areas of
such provision and/or the scope of the activity to be restrained contained in
such provision and, in its reduced form, such provision shall then be
enforceable. The parties hereto intend and agree that the covenants contained
in Section 6(a) shall be construed as a series of separate covenants, one for
each municipality, community or county included within the area designated by
Section 6(a). Except for geographic coverage, the terms and conditions of each
such separate covenant shall be deemed identical to the covenant contained in
Section 6(a). Furthermore, if any court shall refuse to enforce any of the
separate covenants deemed included in Section 6(a), then such unenforceable
covenant shall be deemed eliminated from the provisions hereof to the extent
necessary to permit the remaining separate covenants to be enforced in
accordance with their terms. The prevailing party in any action arising out of
a dispute in respect of any provision of this Section 6 shall be entitled to
recover from the non-prevailing party reasonable attorneys' fees and costs and
disbursements incurred in connection with the prosecution or defense, as the
case may be, of any such action.
7. RESPONSIBILITIES UPON TERMINATION. Upon the termination of his
employment by the Buyer for whatever reason and irrespective of whether or not
such termination is voluntary on his part:
(a) The Employee shall advise the Buyer of the identity of
his new employer within ten (10) days after accepting new employment and
further agrees to keep the Buyer so advised of any change in employment
during the Non-competition Period;
(b) The Buyer in its sole discretion may notify any new
employer of the Employee that he has an obligation not to compete with the
Buyer during the Non-competition Period;
(c) The Employee shall deliver to the Buyer immediately upon
termination of his employment all Proprietary Information and all other
records, forms, contracts, memoranda, work papers, customer data and any
other proprietary documents of the Buyer which have come into his
possession by reason of his employment with the Buyer, whether or not
containing Trade Secrets or Confidential Information, and any other
documents necessary for the consistent operation by the Buyer of its
business, irrespective of whether or not any of said documents were
prepared for him, and he shall not retain memoranda in respect of or copies
of any of said documents; and
(d) The Employee shall participate in an exit interview with
the Buyer.
8. SEPARATE AGREEMENTS. The covenants of the Employee contained
in Sections 5, 6 and 7 of this Agreement shall be construed as separate
agreements independent of any other agreement, claim, or cause of action of the
Employee against the Buyer, whether predicated on this Agreement or otherwise.
The covenants contained in this Agreement are necessary to protect the
legitimate business interests of the Buyer.
9. TERMINATION FOR CAUSE. The Buyer shall have the right at any
time to terminate the employment of the Employee for cause by delivering to him
a written notice specifying such cause, subject to Employee's right to appear
before the Board of Directors, with appropriate counsel, to discuss such notice
prior to the effective date of such termination. If the Buyer exercises such
right, the Buyer's obligation under this Agreement to make any further payments
to the Employee shall thereupon cease and terminate. This Section 9 of this
Agreement in no way limits the Buyer's right to terminate Employee's employment
without cause pursuant to Section 10 of this Agreement. As used herein, the
term "cause" shall include:
(a) misappropriating any funds or any material property of
the Buyer;
(b) obtaining or attempting to obtain any material personal
profit from any transaction, other than as contemplated by this Agreement,
in which the Employee has an interest which is adverse to the interest of
the Buyer unless the Buyer shall first give its written consent to such
transaction;
(c) (i) neglecting or refusing to perform the duties
contemplated by this Agreement, (ii) the willful taking of actions which
directly impair the Employee's ability to perform his duties contemplated
by this Agreement; (iii) breaching any term of this Agreement; or (iv)
taking any action detrimental to the Buyer's goodwill or damaging to the
Buyer's relationships with its customers, suppliers or employees; provided
that such neglect or refusal, action or breach shall have continued for a
period of
twenty (20) days following written notice thereof;
(d) being convicted of or pleading guilty or NOLO CONTENDERE
to any crime or offense constituting a felony under applicable law or any
crime or offense involving fraud or moral turpitude;
(e) acting or refraining from acting in respect of any of
the duties contemplated by this Agreement and the Board determines in good
faith that such action or inaction constituted gross negligence or a
willful act of malfeasance or misfeasance; or
(f) any material intentional failure to comply with laws or
governmental regulations applicable to Buyer or the conduct of Buyer's
business.
10. TERMINATION WITHOUT CAUSE. The Buyer shall have the right at
any time to terminate the employment of the Employee and this Agreement without
cause effective upon thirty (30) days prior written notice to the Employee.
Upon termination of this Agreement pursuant to this Section 10, the Employee
shall be entitled to receive, in full settlement and discharge of the Buyer's
obligation to the Employee, (i) a lump sum amount equal to all compensation
accrued and unpaid as of the date of termination; and (ii) in equal semi-monthly
installments an amount equal to the compensation to which Employee would have
been entitled under Section 4(a) for a period of one (1) year if this Agreement
had not been terminated. Upon such termination, the covenant not to compete set
forth in Section 6 hereof shall apply to Employee for one year as set forth in
Section 6 above.
11. TERMINATION UPON DEATH OR DISABILITY. The Buyer may terminate
the employment of the Employee and this Agreement effective upon notice to the
Employee (or his heirs or legal representatives, as the case may be) if the
Employee either dies or is incapacitated or disabled by accident, sickness or
otherwise and has been rendered mentally or physically incapable with or without
reasonable accommodation of performing the services and duties required to be
performed by him under this Agreement for a period of at least ninety (90)
consecutive days or one-hundred and twenty (120) days within any twelve (12)
month period. Upon termination of this Agreement pursuant to this Section 11,
the Employee (or his heirs or legal representatives, as the case may be) shall
be entitled to receive, in full settlement and discharge of the Buyer's
obligation to the Employee, a lump sum amount equal to all compensation accrued
and unpaid as of the date of termination.
12. TERMINATION BY THE EMPLOYEE. The Employee may terminate this
Agreement and his services under this Agreement in his discretion at any time
upon sixty (60) days prior written notice to the Buyer. Upon termination of
this Agreement
pursuant to this Section 12, the Employee shall be entitled to receive, in full
settlement and discharge of the Buyer's obligation to the Employee, a lump sum
amount equal to all compensation accrued and unpaid as of the date of
termination.
13. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
this Agreement, and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
14. MISCELLANEOUS.
(a) COUNTERPARTS. This Agreement may be executed in several
counterparts each of which is an original. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
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.
(b) CONTENTS OF AGREEMENT; PARTIES IN INTEREST, ETC. This
Agreement sets forth the entire understanding of the parties. Any previous
agreements or understandings between the parties regarding the subject
matter hereof are merged into and superseded by this Agreement. All
representations, warranties, covenants, terms, conditions and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective heirs, legal representatives, successors and
permitted assigns of the Buyer and the Employee. Neither this Agreement
nor any rights, interests or obligations hereunder may be assigned by any
party without the prior written consent of the other party hereto.
(c) ALABAMA LAW TO GOVERN. THIS AGREEMENT IS BEING
DELIVERED AND IS IN INTENDED TO BE PERFORMED IN THE STATE OF ALABAMA AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS THEREOF WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.
(d) SECTION HEADINGS. The section headings herein have been
inserted for convenience of reference only and shall in no way modify or
restrict any of the terms or provisions hereof.
(e) NOTICES. All notices, requests, demands and other
communications which are required or permitted hereunder shall be
sufficient if given in writing and delivered personally or by registered or
certified mail, postage prepaid, by a nationally recognized overnight
courier service, or by facsimile transmission (with a copy simultaneously
sent by registered or certified mail, postage prepaid), as follows (or to
such other address as shall be set forth in a notice given in the same
manner):
(1) If to the Buyer, to:
Door Holdings, Inc.
c/o Ardshiel, Inc.
000 Xxxx Xxxxxx - Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
Copies to:
Xxxx Xxxxxxxx Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxx X. Xxxxx, Esq.
(2) If to the Employee, to:
Xxxxx Xxxxx
----------------------
----------------------
(f) MODIFICATION AND WAIVER. Any of the terms or conditions
of this Agreement may be waived in writing at any time by the party which
is entitled to the benefits thereof, and this Agreement may be modified or
amended at any time by the Buyer and the Employee. No supplement,
modification or amendment of this Agreement shall be binding unless
executed in writing by each of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof nor shall such waiver constitute a continuing
waiver.
(g) THIRD PARTY BENEFICIARIES. Except as otherwise
expressly set forth herein, no individual or entity shall be a third-party
beneficiary of the representations, warranties, covenants and agreements
made by any party hereto.
(h) MEDIATION. The Buyer and the Employee shall mediate any
claim or controversy arising out of or relating to this Agreement or any
breach thereof if either of them requests mediation and gives written
notice to the other (the "Mediation Notice"). Any notice given pursuant to
the preceding sentence shall include a brief statement of the claim or
controversy. If the Buyer and the Employee do not resolve the claim or
controversy within five (5) days after the date of the Mediation Notice,
the Buyer and the Employee shall then use reasonable efforts to agree upon
an independent mediator. If the Buyer and the Employee do not agree upon
an independent mediator within ten (10) days after the date of the
Mediation Notice, either party may request that JAMS/Endispute ("JAMS"), or
a similar mediation service of a similar national scope if JAMS no longer
then exists, appoint an independent mediator. The Buyer and the Employee
shall share the costs of mediation equally and shall pay such costs in
advance upon the request of the mediator or any party. Within ten (10)
days after selection of the mediator, the mediator shall set the mediation.
If the Buyer and the Employee do not resolve the dispute within thirty (30)
days after the date of the Mediation Notice, the dispute shall be decided
by arbitration as set forth in Section 14(i) hereof.
(i) ARBITRATION. Any claim or controversy arising out of or
relating to this Agreement or any breach thereof shall be settled by
arbitration if such claim or controversy is not settled pursuant to Section
14(h) hereof. The venue for any such arbitration shall be Atlanta,
Georgia, or such other location as the parties may mutually agree. Except
as expressly set forth herein, all arbitration proceedings under this
Section 14(i) shall be undertaken in accordance with the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") then
in force. Only individuals who are (i) lawyers engaged full-time in the
practice of law and (ii) on the AAA register of arbitrators shall be
selected as an arbitrator. There shall be one arbitrator who shall be
chosen in accordance with the rules of the AAA. Within twenty (20) days of
the conclusion of the arbitration hearing, the arbitrator shall prepare
written findings of fact and conclusions of law. Judgment on the written
award may be entered and enforced in any court of competent jurisdiction.
It is mutually agreed that the written decision of the arbitrator shall be
valid, binding, final and non-appealable; provided however, that the
parties hereto agree that the arbitrator shall not be empowered to award
punitive damages against any
party to such arbitration. The arbitrator shall require the non-prevailing
party to pay the arbitrator's full fees and expenses or, if in the
arbitrator's opinion there is no prevailing party, the arbitrator's fees
and expenses will be borne equally by the parties thereto. In the event
action is brought to enforce the provisions of this Agreement pursuant to
this Section 14(i), the non-prevailing parties shall be required to pay the
reasonable attorneys' fees and expenses of the prevailing parties, except
that if in the opinion of the court or arbitrator deciding such action
there is no prevailing party, each party shall pay its own attorneys' fees
and expenses.
IN WITNESS WHEREOF, the parties hereto have executed or have caused
this Agreement to be duly executed as of the date first above written.
EMPLOYEE
-----------------------------------
Xxxxx Xxxxx
EMPLOYER/BUYER
Attest: DOOR HOLDINGS, INC.
By:
----------------------------- --------------------------------
Name:
------------------------------
Its:
-------------------------------
SCHEDULE A
Except as otherwise provided herein, the
capitalized terms in this Schedule shall have the same meaning as such terms
have in the Employment Agreement of which this Schedule is a part.
Bonus Plan: The Employee will be entitled to receive a
bonus based on the Company achieving certain
EBITDA goals. If the Company achieve's 90% of the
EBITDA budget in a given year, then Employee shall
be entitled to a bonus equal to 25% of Employee's
base salary. For every percentage point above 90%
(rounded to the nearest whole percent) of the
EBITDA budget in a given year, the Employee shall
be entitled to an additional $1,000 in
compensation. Additionally, Employee shall be
entitled to a bonus equal to 5% of the excess over
the EBITDA budget in a given year, with a maximum
bonus equal to 150% of the Employee's salary. The
table below summarizes key aspects of the plan.
1998 Budget Actual Bonus
% of Budget EBITDA EBITDA Amount
-------------------------------------------------------------------------------
90% $4,521,000 $4,068,900 $37,500
-------------------------------------------------------------------------------
92% $4,521,000 $4,159,320 $39,500
-------------------------------------------------------------------------------
94% $4,521,000 $4,249,740 $41,500
-------------------------------------------------------------------------------
100% $4,521,000 $4,521,000 $47,500
-------------------------------------------------------------------------------
110% $4,521,000 $4,973,100 $70,105
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1999 Budget Actual Bonus
% of Budget EBITDA EBITDA Amount
-------------------------------------------------------------------------------
90% $4,958,000 $4,462,200 $37,500
-------------------------------------------------------------------------------
92% $4,958,000 $4,561,360 $39,500
-------------------------------------------------------------------------------
94% $4,958,000 $4,660,520 $41,500
-------------------------------------------------------------------------------
100% $4,958,000 $4,958,000 $47,500
-------------------------------------------------------------------------------
110% $4,958,000 $5,453,800 $72,290
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2000 Budget Actual Bonus
% of Budget EBITDA EBITDA Amount
-------------------------------------------------------------------------------
90% $5,434,000 $4,890,600 $37,500
-------------------------------------------------------------------------------
92% $5,434,000 $4,999,280 $39,500
-------------------------------------------------------------------------------
94% $5,434,000 $5,107,960 $41,500
-------------------------------------------------------------------------------
100% $5,434,000 $5,434,000 $47,500
-------------------------------------------------------------------------------
110% $5,434,000 $5,977,400 $74,670
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2001 Budget Actual Bonus
% of Budget EBITDA EBITDA Amount
-------------------------------------------------------------------------------
90% $5,841,000 $5,256,900 $37,500
-------------------------------------------------------------------------------
92% $5,841,000 $5,373,720 $39,500
-------------------------------------------------------------------------------
94% $5,841,000 $5,490,540 $41,500
-------------------------------------------------------------------------------
100% $5,841,000 $5,841,000 $47,500
-------------------------------------------------------------------------------
110% $5,841,000 $6,425,100 $76,705
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2002 Budget Actual Bonus
% of Budget EBITDA EBITDA Amount
-------------------------------------------------------------------------------
90% $6,280,000 $5,652,000 $37,500
-------------------------------------------------------------------------------
92% $6,280,000 $5,777,600 $39,500
-------------------------------------------------------------------------------
94% $6,280,000 $5,903,200 $41,500
-------------------------------------------------------------------------------
100% $6,280,000 $6,280,000 $47,500
-------------------------------------------------------------------------------
110% $6,280,000 $6,908,000 $78,900
-------------------------------------------------------------------------------
As used herein, EBITDA means earnings from
operations before interest, taxes, depreciation,
amortization and extraordinary gains or losses of
the Company and all of its subsidiaries on a
consolidated basis.
The bonus amount will be calculated and paid
within ten (10) business days after preparation of
the Company's final year-end audited financial
statements prepared in respect of the relevant
year.
Benefit Plans: The Employee will be entitled to participate in
various benefit plans which the Board will establish for executive
management.
Purchased Common Stock: The Employee agrees to purchase shares of common
stock of Buyer equal in value to $550,000, at the Founder's Per
Share Cost pursuant to a contribution to Buyer of stock of Xxxxx
with an aggregate value of $550,000. For purposes of this SCHEDULE
A, Founder's Per Share Cost means the price per share paid by the
investors for the common stock of Buyer purchased under the
Subscription Agreement dated as of ____________ ___, 1997 among
Buyer and such investors.
Restricted Common Stock: Employee will receive as of the date of this
Agreement shares of common stock (subject to certain restrictions)
equal to 2.5% of the total common stock of Buyer (calculated as of the
closing of the
acquisition of Xxxxx and subject to dilution in the future) at a
price of $.01 per share. These shares will be subject to forfeiture
in a variety of events and may be sold only upon the happening of a
Value Event.
Stock Options: In addition to the common stock of Buyer referred
to above, the Employee will be entitled to participate in a stock
option plan.
Options to purchase common stock of Buyer will, by
contract, be granted to the Employee as set forth
below. Options will be deemed fully vested upon
the occurrence of a Value Event (as defined
below). For purposes hereof, a Value Event shall
be deemed to have occurred at such time as (i)
Buyer sells common stock in an offering registered
with the Securities and Exchange Commission which
results in a Change of Control; (ii) Buyer is
merged or consolidated with another corporation in
a merger in which the surviving corporation has
freely tradeable common stock; or (iii)
substantially all of the assets of Buyer and its
subsidiaries, if any, taken as a whole, are sold
or otherwise transferred.
15% Options: The Employee will receive options to purchase an
additional 2.5% of the total common stock of Buyer (calculated as of
the closing of the acquisition of Xxxxx and subject to dilution in
the future) at the strike price equal to the Founder's Cost which
escalates 15% annually.
These options vest over three (3) years in
accordance with the following schedule:
VESTING SCHEDULE
Anniversary of
the Closing Date
----------------
1st 33 1/3% of shares
2nd 33 1/3% of shares
3rd 33 1/3% of shares
Total 100% of shares
30% Options: The Employee will receive options to purchase an
additional 5.0% of the total common stock of Buyer (calculated as of
the closing of the acquisition of Xxxxx and subject to dilution in the
future) at the strike price equal to the Founder's Cost which
escalates 30% annually.
These options vest over three (3) years in accordance
with the following schedule:
VESTING SCHEDULE
---------------------------------------------------
Anniversary of
the Closing Date
----------------
1st 33 1/3% of shares
2nd 33 1/3% of shares
3rd 33 1/3% of shares
Total 100% of shares
Termination: In the event that Employee is terminated "for
cause" or resigns, all unexercised options shall lapse and expire, and
all restricted stock shall be forfeited, immediately. In the event
that the Employee is no longer employed by Buyer because of the
Employee's death or disability or because of termination other than
"for cause," all of the Employee's options shall immediately vest and
become exercisable and then expire after thirty (30) days. With
regard to the restricted stock, in the event that the Employee is no
longer employed by Buyer because of the Employee's death or disability
or because of termination other than "for cause," such stock will
continue to be held by Employee (or his beneficiaries, heirs or
designees) and shall only be transferable upon the occurrence of a
Value Event.
Stock Buyback Provisions: Buyer will have the right (and the obligation
under certain circumstances) to repurchase any common stock of Buyer
the Employee now owns or hereafter acquires as set forth in the
Management Contribution and Subscription Agreement.
Subscription Agreement: The Employee and Buyer will enter into a
Management Contribution and Subscription Agreement.
Insurance: In the event of the disability of the Employee,
the Employee shall have the right to purchase from the Company or
Buyer, as the case may be, the key man life insurance policy relating
to him in exchange for the cash surrender value of such policy.
