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Exhibit 10.5
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (the "Agreement") made
as of the 16th day of January, 1998, by and between DAY INTERNATIONAL, INC., a
Delaware corporation (the "Company") and XXXXX X. XXXXXXXX (the "Executive").
WHEREAS, the Executive is currently employed by the Company as its
Vice President and Chief Financial Officer pursuant to an employment agreement
dated as of October 21, 1997 (the "Prior Agreement");
WHEREAS, the Company is a wholly owned subsidiary of Day
International Group, Inc. (the "Parent");
WHEREAS, pursuant to a Stock Purchase Agreement, dated as of December
18, 1997, as amended, among Greenwich IV, L.L.C., a Delaware limited liability
company, GSD Acquisition Corp., a Delaware corporation ("GSD"), and each of the
other persons named therein (the "Stock Purchase Agreement"), GSD purchased
substantially all the outstanding shares of Parent (the "Acquisition"); and
WHEREAS, the Company desires to secure the continued services of the
Executive, and the Executive desires to continue in the employment of the
Company, following the Acquisition, and in connection therewith, the Company and
the Executive desire to amend and restate the terms and provisions of the Prior
Agreement to, among other things, set forth the terms of such continued
employment;
NOW, THEREFORE, in consideration of the foregoing, and in
consideration of the covenants and agreements set forth herein, the parties
hereto agree as follows:
1. EMPLOYMENT. The Company agrees to employ the Executive,
and he agrees to serve the Company, on the terms and
subject to the conditions set forth herein, for a period
commencing on the date hereof (the "Effective Date") and
continuing for a period of five (5) years (the "Term"),
unless terminated earlier as provided herein; provided,
however, this Agreement shall be automatically renewed for
successive one (1) year terms thereafter, unless Company
gives Executive at least sixty (60) days notice of
non-renewal prior to the end of said Term. Should Company
not renew at the end of the Term, or any extension
thereof, severance shall be payable to Executive as set
forth in Subsection 8(b)(iii)(C) of this Agreement. This
Agreement will continue to be operational in its entirety
in the event of a sale of the Company's stock, its assets,
or any other change of ownership or directorship.
2. SERVICES. The Executive shall serve in the capacity of
Vice President and Chief Financial Officer of the Company,
or in such other capacity as mutually agreed in writing by
the parties, and shall have the duties and
responsibilities normally carried out by an executive in
that capacity, subject to the supervision and control of
the
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President and the Board of Directors of the Company. The
Executive shall devote his best efforts in all of his
normal business time (vacations and other leaves of
absence permitted under the policies of the Company
excepted) to the business of the Company and to
faithfully, diligently, honestly and to the utmost of
Executive's ability performing all duties and
responsibilities as may be reasonably designated by the
President and the Board of Directors of the Company from
time to time.
3. COMPENSATION. During the Term and any extension thereof,
the Executive shall receive the following compensation:
(a) A base salary (per annum) at the rate set forth
in Exhibit A attached hereto (the "Base
Compensation"), or at a higher rate as may be
increased from time to time by the Board of
Directors of the Company payable in
installments in accordance with the practice
followed by the Company for its executives;
(b) Annual executive incentive bonus compensation,
which if the Company performs at 100 percent of
its annual plan target, is at least equal to
the amount set forth in Exhibit A attached
hereto, or at a higher rate as may be increased
from time to time by the Board of Directors of
the Company (the "Executive Incentive Bonus
Compensation"), payable not later than the end
of the first calendar quarter of the year
following the year in which earned, in
conformity with the Company executive incentive
guidelines in effect on the Effective Date; and
(c) Employee benefits and perquisites on terms and
in amounts no less favorable to Executive than
applicable under the policies and practices of
the Company to its executives on the Effective
Date, including, but not limited to, life
insurance, long and short-term disability
benefits, health and prescription drug
benefits, defined contribution profit sharing,
401(k) deferral and Company matching, tax and
financial planning, Company provided vehicle
and parking, vacation, and holidays.
4. CONFIDENTIALITY. During the term of Executive's employment
pursuant to this Agreement or any extension thereof, and
for a period of five (5) years after the termination of
Executive's employment with the Company, the Executive
shall not (i) disclose or make accessible to any
unauthorized individual Specialized Knowledge Information
(as defined below) which he shall have obtained during his
employment by the Company and which shall not be generally
known or recognized as a standard industry practice or
information within the public domain, other than by reason
of the Executive's breach of this Section 4; or (ii) make
use of any Specialized Knowledge Information to the
competitive disadvantage of the Company. "Specialized
Knowledge Information", for purposes of this Agreement,
comprises any proprietary or trade secret technical,
economic, financial or marketing information, business
plans, customer lists, sales plans, manufacturing plans,
information relating to product development, management
organization
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information, or other information whether patented or not,
on processes, products, research, development, operations,
customers and equipment relating to the Company or its
subsidiaries, or other information designated as
confidential or proprietary that the Company or any of its
subsidiaries receives from suppliers, customers, or others
who do business with the Company or any of its
subsidiaries.
5. NON-COMPETITION BY EXECUTIVE. During the Executive's term
of employment pursuant to this Agreement or any extension
thereof, and for a period of two (2) years after the
termination of Executive's employment with the Company
(the "Restriction Period"), the Executive agrees that he
will not accept employment by, or act as a consultant to,
or become a partner, principal or shareholder (other than
a holder of less than 1% of the outstanding voting shares
of any publicly held company) of, any direct competitor of
the Company, or any firm or corporation which, to the
knowledge of the Executive, intends to become such a
direct competitor, or otherwise engage in any business
directly competitive with the Company without first
obtaining the written consent of the Company; provided,
however, that in the event the Company elects to terminate
this Agreement for any reason other than Cause (as defined
in Section 8), the Executive shall be released as of the
Termination Date (as defined in Section 8) from the
obligations of this Section 5.
6. NON-SOLICITATION OF EMPLOYEES OR CUSTOMERS. During the
Restriction Period, except in connection with the
performance of Executive's duties hereunder during the
Term or any extension thereof, Executive shall not
directly or indirectly:
(a) Induce any employee of the Company or any of
its subsidiaries to terminate employment with
such entity, and shall not directly or
indirectly, either individually or as an owner,
agent, employee, consultant or otherwise,
employ or offer to employ any person who is, or
was employed by the Company or any subsidiary
thereof, unless such person shall have ceased
to be employed by such entity for a period of
at least six (6) months.
(b) Solicit or otherwise attempt to establish for
himself or any other person, firm or entity,
any business relationship of a nature that is
to the competitive disadvantage of the Company
with a business or relationship of the Company
or any of its subsidiaries, with any firm,
corporation or person which, during the twelve
(12) month period preceding the Termination
Date (as defined in Section 8), was a customer,
client, or distributor of the Company or its
subsidiaries; provided, however, that in the
event the Company elects to terminate this
Agreement for any reason other than Cause (as
defined in Section 8), the Executive shall be
released as of the Termination Date from the
obligations of this Subsection 6(b).
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7. ARBITRATION OF CONFIDENTIALITY, COMPETITION, OR
NON-SOLICITATION. The determination that the Executive has
breached Sections 4, 5, or 6 of this Agreement and
remedies for such breach, if any, shall be determined by a
neutral party mutually agreed upon by the Company and the
Executive, and, failing such agreement, by arbitration
pursuant to the rules and procedures of the American
Arbitration Association.
8. TERMINATION. The Executive and the Company may each
terminate this Agreement or any extension thereof at any
time for any reason by giving twenty (20) business days'
prior written notice to the other party. The termination
shall become effective upon the expiration of such twenty
(20) day period (the "Termination Date").
(a) If the Executive elects to terminate this
Agreement or any extension thereof, he shall
not thereafter be entitled to receive any
payments under this Agreement except his Base
Compensation at the rate in effect on the
Termination Date paid through said Termination
Date, and his Executive Incentive Bonus
Compensation, as if 100% of the annual plan
target was met, calculated on a pro-rata basis
for the portion of the current annual bonus
period during which he was employed, plus, if
applicable, any Executive Incentive Bonus
Compensation amounts due and payable with
respect to the prior year, plus any accrued and
unused vacation.
(b) If the Company elects to terminate this
Agreement or any extension thereof, the
Executive shall be entitled to receive the
following compensation:
(i) Executive's Base Compensation at the
rate in effect on the Termination
Date paid through said Termination
Date; and
(ii) Executive's Executive Incentive
Bonus Compensation, as if 100% of
the annual plan target was met,
calculated on a pro-rata basis for
the portion of the current annual
bonus period during which he was
employed, plus, if applicable, any
Executive Incentive Bonus
Compensation amounts due and payable
with respect to the prior year, plus
any accrued and unused vacation; and
(iii)Either
(A) In the event that the
Company terminates this
Agreement prior to the
first anniversary of the
Effective Date, a lump
sum amount equal to the
amount of three (3) times
the aggregate of the
Executive's Base
Compensation and annual
Executive Incentive Bonus
Compensation, as if 100%
of the annual plan target
was met, payable to the
Executive as described in
Section 3 of this
Agreement; or
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(B) In the event that the Company terminates this
Agreement on or after the first anniversary of
the Effective Date, but before the end of the
Term, a lump sum amount equal to two (2) times
the aggregate of Executive's Base Compensation
and annual Executive Incentive Bonus
Compensation, as if 100% of the annual plan
target was met, payable to the Executive as
described in Section 3 of this Agreement; or
(C) In the event that the Company terminates this
Agreement or any extension thereof on or after
the end of the Term, a lump sum amount equal to
one (1) times the aggregate of the Executive's
Base Compensation and Annual Executive
Incentive Bonus Compensation, as if 100% of the
annual plan target was met, payable to the
Executive as described in Section 3 of this
Agreement; and
(iv) Continuation of all benefits and perquisites, as described
in Section 3(c) for a period of one (1) year, and
thereafter, continuation of health and Section 125
benefits under COBRA provisions, as prescribed by the
Company's group health benefits plan.
(c) For purposes of Subsection 8(b) above, Executive shall be deemed to
have been terminated by the Company should any of the following occur
following the Effective Date:
(i) Failure to elect, reelect or otherwise maintain the
Executive in the office or position in the Company which
the Executive is currently holding, or in a position
substantially equivalent or higher to which the Executive
has agreed in writing; or
(ii) Any action effecting a significant change in the nature or
scope of the business or other activities for which the
Executive was or is responsible, a substantial reduction
in any of the authorities, powers, functions,
responsibilities or duties attached to the position held
by the Executive, or a significant hindrance to the
Executive's ability to perform his duties, any which
situation is not remedied within ten (10) business days
after written notice to the Company from the Executive; or
(iii) Transfer of the Executive's office out of the Dayton,
Ohio, area; or
(iv) In the event of sale of the Company, either its assets or
capital stock or any other change in control of the
Company, the purchaser or new directorship of the Company
makes any substantial reduction in the employee benefits
package in effect on the date of such sale.
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(d) Notwithstanding the foregoing, in the event the Company elects to
terminate the Executive for Cause (as defined below), the Executive
shall not thereafter be entitled to receive any payments under this
Agreement other than his Base Compensation at the rate in effect on
the Termination Date paid through said date, plus any accrued and
unused vacation. For purposes of this Agreement, "Cause" means:
(i) Executive's wilful and repeated failure to perform
substantially his duties as an employee hereunder,
including without limitation, Executive's wilful and
repeated failure to comply with reasonable and lawful
directives of the Board of Directors of the Company (as
set at any meeting of the Board of Directors of the
Company in accordance with the Company's bylaws) or
Executive's supervisory personnel (provided such
directives are consistent with the Executive's position);
(ii) Executive's conviction of, or the entering of a plea of
guilty or nolo contendere by Executive to, a crime that
constitutes a felony, or any wilful or material violation
by Executive of any federal, state, or foreign securities
laws;
(iii) Any conviction of any other criminal act or act of
material dishonesty, disloyalty or misconduct by Executive
(other than minor traffic offenses and similar acts) that
is materially injurious to the property, operations,
business or reputation of the Company or any of its
subsidiaries;
(iv) Failure to comply with the terms of any equity plan,
arrangement or agreement of the Company, the Parent or
their respective affiliates, in which Executive is a
participant or to which Executive is a party; or
(v) The wilful and material breach by the Executive of
Sections 4, 5, or 6 of this Agreement.
(e) In the case of any termination of this Agreement or any extension
thereof due to a disability of the Executive (the Executive is unable
to perform the essential functions of his position due to a
disability of the Executive which qualifies the Executive for
disability benefits under the Company's long term disability benefits
program), this Agreement shall terminate, however, the payments to
the Executive shall be made as prescribed in Subsection 8(b), and
shall not be reduced or set off against any benefit(s) payable or
accrued under any disability or salary continuation benefits that
Executive is entitled to receive as a result of the Company's
disability benefits program(s) in place at the time of the payment of
the amounts payable under Subsection 8(b).
(f) Notwithstanding anything to the contrary in this Agreement, this
Agreement shall be terminated by the death of the Executive, in which
case, the Company shall pay to the estate of the Executive the
following amounts:
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(i) Executive's Base Compensation in effect on the
date of death payable through the date of
death;
(ii) Executive's Executive Incentive Bonus
Compensation, as if 100% of the annual plan
target was met, on a pro rata basis for the
portion of the current annual bonus period
during which he was employed, plus, if
applicable, any Executive Incentive Bonus
Compensation amounts due and payable with
respect to the prior year, plus any accrued and
unused vacation; and
(iii) Executive's life insurance benefit calculated
on a basis consistent with the employee
benefits described in Section 3(c) as well as
any other benefit afforded an employee of
Company terminated as a result of death.
(g) Any payments to be made to the Executive pursuant to this
Section 8 shall be paid within thirty (30) days of the
Termination Date. Payments paid after said thirty (30) day
period shall bear interest at a rate of 10% per annum,
compounded daily, until payments and interest are paid in
full.
9. WAIVER. The Executive agrees to waive the portion of his compensation
and benefits described in Section 8 that exceeds 299% of his "base
amount" within the meaning of Section 280G(b)(3) of the Internal
Revenue Code of 1986, as amended, (the "Code") in the event that
payment of such compensation and benefits is not approved by a vote
of shareholders in accordance with Section 280G(b)(5) of the Code,
such vote to be taken as soon as administratively practicable after
the Parent obtains the requisite consents from its bondholders to the
restructuring contemplated by the Interim Stockholders Agreement,
dated as of January 16, 1998, among Parent, GSD, Greenwich IV LLC,
and the other parties thereto.
10. TERMINATION OF MEMORANDUM OF AGREEMENT FOR SALES COMMISSION: RELEASE.
In consideration of the Company's payment to the Executive of the sum
set forth in Exhibit A attached hereto, upon the closing of the
transactions contemplated by the Stock Purchase Agreement, the
Executive hereby agrees that upon such payment the Memorandum of
Agreement for Sales Commission dated as of October 15, 1997, between
the Company and the Executive (the "Sales Commission Agreement")
shall terminate in its entirety without any further liability or
obligation on the part of the Company, the Parent, or any of their
respective subsidiaries or affiliates. Further, from and after the
payment referred to in this Section 10, in consideration of such
payment, the Executive, on behalf of himself, his agents,
representatives, assigns, heirs, executors and administrators
(individually and collectively the "Releasor"), hereby releases and
forever discharges the Company, the Parent, each of their respective
subsidiaries and affiliates, and each of their respective officers,
directors, trustees, employees, agents, representatives, successors
and assigns (individually and collectively the "Releasee") from and
against any and all claims, liabilities, obligations, demands or
causes of action, however denominated, whether known or unknown,
whether at law or equity, and whether or not previously asserted,
that the Releasor has or could have against the Releasee for any
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sums owed or allegedly owed under the Sales Commission Agreement or
the termination of any alleged breach of the Sales Commission
Agreement.
11. NOTICES. All notices hereunder shall be in writing, and delivered or
mailed by registered or certified mail, return receipt requested, to
the following addresses:
(a) If to the Company, at its offices at:
X.X. Xxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxx, Xxxx 00000-0000
Attention: Corporate Secretary
with a copy to each of:
GSD Acquisition Corp.
x/x Xxxxxxxxx Xxxxxx Capital Partners, Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, III
and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
(b) and if to the Executive, at the address set forth on the
signature page hereto,
or to such other address as the Company or the Executive may
hereinafter designate to the other in writing for such purpose.
12. ASSIGNMENT AND SUCCESSORS. (a) This Agreement shall be assignable by
the Company, with the written consent of the Executive, to any
unaffiliated purchaser of substantially all the assets and
liabilities of the Company. Upon any such assignment, the Company
shall be released and fully discharged from any and all obligations
hereunder, and this Agreement shall bind and run to the benefits of
the assignee, which as successor, shall thereafter be deemed to be
the "Company" for purposes of this Agreement.
(b) The Executive may not assign, pledge or encumber his
interest in this Agreement or any part thereof without the
express written consent of the Company, this Agreement
being personal to the Executive and the beneficiaries
designated by him.
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13. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Ohio. The parties agree that any
arbitrations or court proceedings with regard to this Agreement shall
be held in Xxxxxxxxxx County, Ohio, unless otherwise agreed to in
writing by the parties.
14. PARTIAL INVALIDITY. If any provision of this Agreement is held by a
court of competent jurisdiction to be invalid, void, or
unenforceable, the remaining provisions shall nevertheless continue
in full force and effect without being impaired or invalidated in any
way.
15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters addressed
herein, and all prior negotiations, understandings, representations,
and agreements (including, without limitation, the Prior Agreement),
whether oral or written, of any nature whatsoever, with respect to
the terms and conditions of employment that are the subject matter
hereof are merged herein and are hereby superseded. This Agreement
cannot be changed, modified or terminated unless in writing and
signed by the parties hereto.
16. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall be
deemed to be one in the same instrument.
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IN WITNESS WHEREOF, the Executive and the Company, by a duly authorized
officer, have executed this Agreement on the day and year first above written.
DAY INTERNATIONAL, INC.
By:
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Name: Xxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
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XXXXX X. XXXXXXXX
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
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EXHIBIT A
Base Salary: $105,000/year
Annual executive incentive bonus if the
Company performs at 100% of the annual plan target: $55,000
Sales commission: $2,434,375
