EXHIBIT 10.5
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of November 1,
1999, by and between Flour City International, Inc., a Nevada corporation ("FCI"
or "Employer"), and Xxxxxxx X. Xxxx ("Executive"), pursuant to the terms and
conditions set forth herein.
RECITALS
A. Executive is a certified public accountant duly licensed under the laws
of the State of California, and is a partner in the accountancy firm of
Xxxxxxxx, Xxxxxxxx & XxXxxxx.
B. Employer is a publicly traded company that engages in the design,
engineering, manufacturing and installation of custom curtain wall systems for
the construction industry.
C. Executive is currently a member on the Board of Directors of Employer
and, consequently, Employer knows of Executive and has offered the position
described in this Agreement to Executive.
D. Based on the offer of employment from Employer and upon the mutual
execution of this Agreement, Executive will resign from Xxxxxxxx, Xxxxxxxx &
XxXxxxx, and will notify his clients of his decision to join Employer.
AGREEMENT
In consideration of the foregoing Recitals and for other good and valuable
consideration, the receipt and sufficiency of which the parties hereby
acknowledge, Employer and Executive agree as follows:
1. EMPLOYMENT. Employer hereby agrees to employ Executive and Executive
hereby accepts employment with Employer on the terms and conditions hereinafter
set forth.
2. EFFECTIVE DATE AND TERM. The Effective Date of this Agreement is
November 1, 1999. Executive shall be considered an employee "at will". It is
expressly understood that either Employer or Executive may terminate this
Agreement upon giving ninety (90) days written notice to the other party.
Such notice shall not be required for terminations by Employer under Sections
6.a. and 6.b. In the event of Executive's voluntary resignation, this
Agreement shall terminate and all compensation and other benefits shall cease
to accrue upon such resignation. Upon termination for any other reason,
including termination for cause, Executive shall be entitled to receive the
salary in accordance with Section 6.e. below.
3. POSITION AND GENERAL DUTIES.
1. Executive shall serve as Executive Vice President of FCI and shall
continue to serve as a member of the Board of Directors of FCI. In his
capacity as Executive Vice President of FCI, Executive shall report to the
Chief Executive Officer ("CEO") and/or President of FCI and shall do and
perform all services, acts, or things necessary or advisable to manage and
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conduct the business of the Employer as directed by the CEO of FCI, subject at
all times to the policies set by the Employer's Board of Directors (the
"Board"), and to the consent of the Board when required by the terms of this
Agreement. Executive's primary responsibilities will be to expand FCI's
business, assist senior management in expanding FCI's business in the United
States and internationally and monitoring the profitability of FCI's operation,
work closely with the investment bankers and public relations consultants in
improving FCI's relationship with them, and assisting the Chief Financial
Officer ("CFO") of FCI in connection with budgeting, account reconciliation and
financial reporting issues.
2. Executive shall not, without specific approval of the Employer's Board
or the CEO, do or contract to do any of the following:
1. Hire or fire any employees of FCI, or any corporation owned in
whole or in part by FCI;
2. Borrow on behalf of the Employer;
3. Purchase capital equipment or unilaterally obligate FCI to pay
for amounts in excess of the amounts budgeted for expenditure by
the Board or CEO; and
4. Sell any capital asset of the Employer.
During his employment hereunder, Executive shall, subject to the direction
and supervision of the CEO and/or President of FCI, devote his full business
time, best efforts and business judgment, skill and knowledge to the advancement
of Employer's interests and to the discharge of his duties and responsibilities
hereunder. He shall not engage in any other substantial business activity,
except as may be approved by the Board or as set forth in Section 3.c. below.
c. Executive may devote no more than a monthly average of sixteen (16)
hours in counseling the clients and partners of Executive's former accountancy
practice during the initial six-month period and will be reduced to an as-needed
basis thereafter.
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4. COMPENSATION. The compensation payable to Executive under this Agreement
shall be as follows:
a. SALARY. For all services rendered by Executive under this Agreement,
Employer shall pay Executive an annual salary of One Hundred Fifty Thousand
Dollars ($150,000.00), subject to increase from time to time beginning January
1, 2001 as determined by the Board in accordance with the usual practice of
Employer with respect to an annual review of compensation for its senior
executives; provided, however, that Executive's salary shall be increased
annually beginning January 1 that this Agreement remains in force commencing
with January 1, 2001 by a percentage amount equal to at least the percentage
increase during the immediate twelve months in the Consumer Price Index (All
items) for all urban Consumers for the San Francisco, California area, as
published by the Bureau of Labor Statistics. Executive's salary shall be payable
in periodic installments in accordance with Employer's usual practice for its
senior executives.
b. [Reserved]
5. BENEFITS.
a. ANNUAL VACATION. Executive shall be entitled to three (3) weeks
vacation time each year without loss of compensation. In the event that
Executive is unable for any reason to take the total amount of vacation time
authorized during any year, he may accrue no more than one week of that time and
add it to vacation time for the following year. If any accrued vacation time
carried forward from the prior year is not used during the following year, it
shall be forfeited.
b. ILLNESS.
(i) Executive shall be entitled to ten (10) days per year as
sick leave with full pay; and
(ii) In the event of catastrophic illness which prevents
Executive from performing his duties under this Agreement
for a period of more than thirty (30) days, Employer shall
pay provide short term disability payments in the form of
salary continuation (but without bonus) as provided in
Section 7.
c. MEDICAL AND DISABILITY COVERAGE. Employer agrees to include
Executive, his spouse, and those of his children who qualify
as his dependents under Section 152 of the Internal Revenue
code of 1986 (hereinafter "Executive's Family") in the
coverage of its medical and disability insurance, including
medical, dental, vision, accidental death and dismemberment,
and long term disability coverage. Employer further agrees to
reimburse Executive for all medical and dental expenses
incurred by Executive and Executive's Family, provided
however, that
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those reimbursements shall be limited to the expenses, or
portions thereof, not covered by insurance.
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e. PENSION PLAN. Executive shall have the right to participate in
employer's existing 401(k) plan and any other pension or profit sharing plan(s)
which are currently in place or which may be established subsequent to this
Agreement.
f. UMBRELLA LIABILITY INSURANCE. Employer agrees to include Executive
in the coverage of its umbrella liability insurance policy. The face amount of
this policy shall not be less than Two Million Dollars ($2,000,000.00).
g. USE OF AUTOMOBILE.
(i) The Employer shall provide Executive with the use of
an automobile of Executive's choice, provided that
the monthly cost of leasing such automobile shall not
exceed Seven Hundred Dollars ($700.00). The
automobile provided hereunder shall at no time be
older than four (4) years or, if older than four (4)
years, shall not cause excessive operating costs;
(ii) The Employer shall pay all initial funding for the
leasing or financing and all operating expenses of
the automobile; and
(iii) The Employer shall procure and maintain an automobile
liability insurance policy on the automobile, with
coverage including Executive and Executive's Family
in the minimum amounts of One Million Dollars
($1,000,000.00) for bodily injury and death to any
one person in any one accident, and One Million
Dollars ($1,000,000.00) for property damage in any
one accident.
h. BUSINESS EXPENSES.
(i) USE OF CREDIT CARD. All business expenses reasonably
incurred by Executive in promoting the business of
Employer, including expenditures for entertainment,
gifts, and travel, are to be paid for, insofar as
possible, by the use of credit cards, with a credit
limit of $4,000, in the name of Employer which will
be furnished to Executive;
(ii) REIMBURSEMENT OF OTHER BUSINESS EXPENSES.
(a) Employer shall promptly reimburse Executive for
all other reasonable business expenses incurred
by Executive in connection with the business of
Employer, including all travel expenses.
(b) Each such expenditure shall be reimbursable
only if it is of a nature qualifying it as a
proper deduction on the federal and state
income tax return of Employer.
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(c) Each such expenditure shall be reimbursable
only if Executive furnishes to employer
adequate records and other documentary evidence
required by federal and state statutes and
regulations issued by the appropriate taxing
authorities for the substantiation of each such
expenditure as an income tax deduction.
(iii) REPAYMENT OF DISALLOWED EXPENSES. In the event that
any expenses paid for Executive for any reimbursement
of expenses paid to Executive shall, on audit or
other examination of Employer's income tax returns,
be determined not to be allowable deductions from
Employer's gross income, and in the further event
that this determination shall be acceded to be
employer or made final by the appropriate federal or
state taxing authority or a final judgment of a court
of competent jurisdiction, and no appeal is taken
from the judgment or the applicable period for filing
notice of appeal has expired, Executive shall repay
to Employer the full amount of the disallowed
expenses.
i. PROFESSIONAL EXPENSES.
(i) PROFESSIONAL LICENSES. Employer shall pay all fees
and costs associated with the continued maintenance
of Executive's existing professional licenses
including all license fees and the costs for
Executive to complete any continuing education
necessary for maintaining Executive's professional
license(s). Employer shall also allow Executive time
off with pay as necessary for Executive to complete
such continuing education up to a maximum of 5 days
per year;
(ii) PROFESSIONAL ORGANIZATIONS. Employer shall pay all
reasonable dues and fees incurred by Executive for
membership in professional organizations and shall
allow Executive reasonable time to attend meetings
and participate in the activities of such
organizations without loss of any salary or other
benefit; and
(iii) NONPROFIT ORGANIZATIONS. Employer shall pay all
reasonable dues and fees incurred by Executive for
membership in non-profit organizations as approved by
the CEO and/or President and shall allow Executive
reasonable time to attend meetings and participate in
the activities of such organizations without loss of
any salary or other benefit.
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j. STOCK PURCHASE OPTION.
(i) STOCK OPTION PLAN. Executive shall have full rights
to participate in Employer's existing stock option
plan with the right of purchase of seventy-five
thousand (75,000) shares of corporate shares in FCI
in accordance with the terms of such plan and the
vesting schedule attached hereto as EXHIBIT "A" and
incorporated herein by reference.
k. FAMILY TRAVEL. Since Executive will be asked to spend approximately
30% of his time traveling on behalf of FCI and Executive has two
young children, Employer agrees to allow Executive to take his
wife and children on certain business trips provided the actual
cost thereof does not exceed Five Thousand Dollars ($5,000.00)
per year. To the extent the actual cost of family travel does not
exceed Five Thousand Dollars ($5,000) for any one year of
employment, the unused portion, if any, may be carried forward to
any future years.
6. TERMINATION AND TERMINATION BENEFITS. Executive's employment hereunder
shall terminate under the following circumstances:
a. DEATH. In the event of Executive's death during Executive's
employment hereunder, Executive's employment shall terminate on the date of his
death; provided, however, that Employer shall continue to pay an amount equal to
Executive's salary to Executive's beneficiary designated in writing to Employer
prior to his death (or to his estate, if he fails to make such designation) for
a period of three (3) months after the date of Executive's death, at the salary
rate in effect on the date of his death, said payments to be made on the same
periodic dates as salary payments would have been made to Executive had he not
died.
b. TERMINATION BY EMPLOYER FOR CAUSE. Executive's employment hereunder
may be terminated without further liability on the part of Employer effective
immediately by a majority vote of all the members of the Board of Employer for
cause by written notice to Executive setting forth in reasonable detail the
nature of such cause. Only the following shall constitute "cause" for such
termination:
(i) Deliberate dishonesty of Executive with respect to
Employer or any subsidiary of affiliate thereof;
(ii) Conviction of Executive of a felonious crime
involving moral turpitude; or
(iii) Gross and willful failure to perform a substantial
portion of his duties and responsibilities hereunder,
which failure continues for more than thirty days
after written notice given to Executive pursuant to a
majority vote of all of the members of the Board of
Employer, such vote to set forth in reasonable detail
the nature of such failure.
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(iv) Failure of FCI to generate net earnings greater than
$0 before interest, taxes, depreciation and
amortization for four consecutive quarters.
c. TERMINATION BY EXECUTIVE. Executive's employment hereunder may be
terminated effective immediately by Executive by written notice to the Board of
Employer in the event of the following without causing Executive to loose the
termination benefits described in subsection (e) below, which benefits otherwise
are not available if the Executive terminates this Agreement:
(1) Failure of such Board to elect Executive to the
office Vice President or to continue Executive in
such office or failure by the shareholders of FCI to
elect Executive to the Board or to continue Executive
in such office; or
(2) Failure by Employer to comply with the provisions of
Section 4(a) or material breach by Employer of any
other provision of this Agreement.
d. TERMINATION BY EMPLOYER WITHOUT CAUSE. Executive's employment with
Employer may be terminated without cause by a majority of all of the members of
the Board of Employer on written notice to Executive.
e. CERTAIN TERMINATION BENEFITS. Unless otherwise specifically provided
in this Agreement or otherwise required by law, all compensation and benefits
payable to Executive under this Agreement shall terminate on the date of
termination of Executive's employment hereunder. Notwithstanding the foregoing,
Executive shall be entitled to the following benefits in the event of
termination under Section 6. c. and d.:
1. Employer shall continue to pay an amount equal to Executive's
salary to Executive during a period (the "Severance Period")
which shall extend for a period of three (3) months after the
date of Executive's termination, at the salary rate in effect on
the date of his termination, said payments to be made on the same
periodic dates as salary payments would have been made to
Executive had his employment not been terminated. Executive shall
have the right to purchase up to 30,000 shares of corporate
shares of FCI at two dollars ($2) per share. Such right shall be
fully vested upon termination;
2. Notwithstanding anything to the contrary contained herein, in the
event Xxxx Xxxx is removed as the Chairman of FCI or his stock
ownership percentage in FCI becomes thirty-five percent (35%) or
less (or another person or group holds more stock than Xxxx Xxxx)
and in either such case, Executive is terminated for any reason,
the Severance Period shall become eighteen (18) months. All
unvested shares shall become vested immediately upon termination;
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3. Until the earlier of the end of the Severance Period or the time
when Executive shall have obtained other employment, Executive
shall continue to receive all benefits described in Section 5 c.
through k. above existing on the date of termination. For
purposes of application of such benefits Executive shall be
treated as if he had remained in the employ of Employer, with a
total annual salary at the rate in effect on the date of
termination; and
4. If, in spite of the provision of Section 6 e.(3) above, benefits
or service credits under any benefit plan shall not be payable or
provided under any such plan to Executive, or to Executive's
dependents, beneficiaries or estate, because Executive is no
longer deemed to be an employee of Employer, Employer shall pay
or provide for payment of such benefits and service credits for
such benefits to Executive, or to Executive's dependents,
beneficiaries or estate.
f. SET-OFF. Employer shall not be entitled to any credits, set-offs or
other reduction to the salary and benefits received pursuant to Section
6 of this Agreement.
7. DISABILITY. If, due to physical or mental illness, Executive shall be
disabled so as to be unable to perform substantially all of his duties and
responsibilities hereunder, Employer, acting through its Board, may designate
another executive to act in his place during the period of such disability.
Notwithstanding any such designation, Executive shall continue to receive his
full salary and benefits under Section 4 of this Agreement for the period of his
disability, but in no event for more than 12 months or until he becomes eligible
for disability income under employer's disability income plan, if any, and shall
continue to participate in Employer's benefit plans and to receive other
benefits as specified in Section 4 under the Expiration Date. If any questions
shall arise as to whether during any period Executive was disabled so as to be
unable to perform substantially all of his duties and responsibilities hereunder
due to physical or mental illness. Executive may, and at the request of Employer
will, submit to employer a certification in reasonable detail by a physician
selected by Executive or his guardian to whom Employer has no reasonable
objection as to whether Executive was so disabled and such certification shall
for the purposes of this Agreement be conclusive of the issue. If such questions
shall arise and Executive shall fail to submit such certification, Employer's
determination of such issue shall be binding on Executive.
8. CONFIDENTIAL INFORMATION, INVENTIONS AND NONCOMPETITION.
a. DEFINITIONS.
(1) PROPRIETARY INFORMATION. As used in this Agreement,
"Proprietary Information" means information which FCI
possesses or to which FCI has rights which has
commercial value. Proprietary Information includes,
by way of example and without limitation, trade
secrets, product ideas, designs, configurations,
processes, techniques, formulas, software,
improvements, inventions, data, know-how,
copyrightable materials, marketing plans and
strategies, sales and financial reports and
forecasts,
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and customer lists. Proprietary Information includes
information developed by Executive in the course of
Executive's employment by FCI otherwise relating to
Inventions which belong to FCI under Section 8(d)
below, as well as other information to which
Executive may have access in connection with
Executive's employment;
(2) INVENTIONS AND DEVELOPMENTS. As used in the
Agreement, "Inventions and Developments" means any
and all inventions, developments, creative works and
useful ideas of any description whatsoever, whether
or not patentable. Inventions and Developments
include, by way of example and without limitation,
discoveries and improvements which consist of or
relate to any form of Proprietary Information;
(3) COMPANY-RELATED INVENTIONS AND DEVELOPMENTS. For
purposes of this Agreement, "Company-Related
Inventions and Developments" means all Inventions and
Developments which either (A) relate at the time of
conception or development to the actual or
demonstrably anticipated business of FCI or to its
actual or demonstrably anticipated research and
development; (B) result from or relate to any work
performed for FCI , whether or not during normal
business hours; (C) are developed on FCI time; or (D)
are developed through the use of FCI's Proprietary
Information, equipment and software, or other
facilities or resources; and
(4) EMPLOYER. For purposes of this Section 8, all
references to the "Company" will be deemed to include
FCI and its direct or indirect subsidiaries and
affiliates.
b. CONFIDENTIALITY. Executive understands and agrees that Executive's
employment creates a relationship of confidence and trust between Executive and
FCI with respect to (i) all Proprietary Information, and (ii) the confidential
information of others with which the Company has a business relationship. The
information referred to in clauses (i) and (ii) of the preceding sentence is
referred to in this Agreement, collectively, as "Confidential Information." At
all times, both during Executive's employment with the Company and after its
termination, Executive will keep in confidence and trust all such Confidential
Information, and will not use or disclose any such Confidential Information
without the written consent of the Company, except as may be necessary in the
ordinary course of performing Executive's duties to the Company. The
restrictions set forth in this Section 8(b) will not apply to information which
is generally know to the public or in the trade, unless such knowledge results
from an unauthorized disclosure by Executive, but this exception will not affect
the application of any other provision of this Agreement to such information in
accordance with the terms of such provision.
c. DOCUMENTS, RECORDS, ETC. All documents, records, apparatus,
equipment and other physical property, whether or not pertaining to Proprietary
Information, which are furnished to Executive by the Company or are produced by
Executive in connection with Executive's employment will be and remain the sale
property of the Company. Executive will return to the
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Company all such materials and property as and when requested by the Company. In
any event, Executive will return all such materials and property immediately
upon termination of Executive's employment for any reason. Executive will not
retain with Executive any such material or property or any copies thereof after
such termination.
d. AFFILIATED ENTITIES. Executive agrees that unless otherwise provided
herein the provisions of this Section 8 shall inure to the benefit of affiliated
entities of the Company.
e. SURVIVAL. The provisions of this Section 8 shall survive any
termination of Executive's employment with the Company.
9. DEFINITION OF "PERSON". For purposes of this Agreement, the term
"Person" shall mean an individual, a corporation, an association, a partnership,
an estate, a trust and any other entity or organization.
10. WITHHOLDING. All payments made by Employer under this Agreement shall
be net of any tax or other amounts required to be withheld by Employer under
applicable law.
11. TERMINATION OF PRIOR AGREEMENTS; INTEGRATION. Employer and Executive
hereby terminate all prior agreements between them with respect to the subject
matter hereof and agree that any such agreements shall be of no further force
and effect. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements
between the parties with respect to such subject matter.
12. ASSIGNMENT; SUCCESSORS AND ASSIGNS, ETC. Neither Employer nor Executive
may make any assignment of this Agreement or any interest herein, by operation
of law or otherwise, without the prior written consent of the other party and
without such consent any attempted transfer or assignment shall be null and of
no effect; provided, however, that Employer may assign its rights under this
Agreement without the consent of executive in the event employer shall hereafter
effect a reorganization, consolidate with or merge into any other Person, or
transfer all or substantially all of its properties or assets to any other
Person. This Agreement shall inure to the benefit of and be binding upon
Employer and Executive, their respective successors, executors, administrators,
heirs and permitted assigns. In the event of Executive's death prior to the
completion by Employer of all payments due him under this Agreement, Employer
shall continue such payments to Executive's beneficiary designated in writing to
Employer prior to his death (or to his estate, if he fails to make such
designation).
13. INDEMNITY. In addition to any obligations of Employer under the law,
Employer shall defend, indemnify and hold Executive harmless from and against
any and all demands, claims, liabilities, judgments, damages, causes of action,
costs and expenses (including reasonable attorneys' fees, consultant and expert
witness fees and other litigation costs) relating to or arising from Executive's
employment with Employer.
14. ENFORCEABILITY. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to
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which it is so declared illegal or unenforceable, shall not be affected thereby,
and each portion and provision of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
15. WAIVER. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation to be deemed a waiver of any
subsequent breach.
16. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to Executive
at the last address Executive has filed in writing with Employer or, in the case
of Employer, at its main office, attention of the Board.
To the Employer: Flour City International, Inc.
000 Xxxxxxxxx Xxxxx, Xxxxx 0
Xxxxxxx Xxxx, XX 00000
ATTENTION: Mr. Xxxx Xxxx
Chief Executive Officer
Telecopy: _______________
To Executive: Xxxxxxx X. Xxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Telecopy: ________________
17. AMENDMENT. This agreement may be amended or modified only by a written
instrument signed by Executive and by a duly authorized representative of
Employer.
18. GOVERNING LAW. This is a California contract and shall be construed
under and be governed in all respects by the laws of the State of
California.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which shall be considered one and the same Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by Employer, by its duly authorized officer, and by Executive, as of the date
first above written.
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FLOUR CITY INTERNATIONAL, INC.
By:_/s/Xxxx X. Xxxx
Its: CEO
By:________________________________
Its:_________________________________
By: /s/ Xxxxxxx K. Xxxx
XXXXXXX X. XXXX
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