EXHIBIT 10.3.4
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of April 1, 1997, by and between BALLANTYNE OF
OMAHA, INC., a Delaware corporation, with offices at 0000 XxXxxxxx Xxxxxx,
Xxxxx, Xxxxxxxx 00000 (the "Company"), and XXXXXXX XXXX, an individual
residing at 000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxxxxx 00000 (the
"Employee").
WITNESSETH
WHEREAS, the Employee is joining the Company as a key employee pursuant
to the Company's purchase of substantially all of these assets of
Xenotech, Inc. under that certain Asset Purchase Agreement dated April 8,
1997 (hereinafter the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, Employee and Company have
agreed to enter into an Employment Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties intending to be legally bound agree as follows:
1. EMPLOYMENT
Company hereby employs Employee as Vice President in charge of the
new Xenotech division of the Company, and Employee hereby agrees to be
employed by Company in such capacity, upon the terms and conditions
hereinafter set forth.
2. DUTIES AND SERVICES
(a) Employee shall perform such services as may be assigned to
Employee by the Vice Chairman, the Board of Directors, or the President of
the Company.
(b) Employee agrees to devote all of Employee's time and efforts to
the performance of Employee's duties as an employee of the Company. The
Employee shall not during the term hereof perform any services for any
person, firm or corporation, other than as approved in writing by Company.
The prohibitions of this section shall apply to indirect activities of
Employee as well as direct activities, and will accordingly prohibit
activities of persons with whom Employee is "affiliated," as that term is
defined under the Securities Act of 1933, as amended, and the Rules and
Regulations thereunder.
(c) Employee shall undertake such travel as may be necessary or
desirable to promote the business and affairs of Company.
3. TERM
(a) Except as otherwise hereinafter specifically provided, the term
of this Employment Agreement shall be for a period of five (5) years
commencing as of April 1, 1997.
(b) Notwithstanding anything to the contrary provided herein, the
Company or the Employee may give the other 120 days' notice prior to the end
of the term, or of any extension or renewal thereof, of such party's
intention to negotiate a new employment arrangement commencing at the end of
the term or to terminate this contract. In the event no such notice is given,
the term described as subparagraph (a) above shall automatically continue for
an additional year, and this subsection (b) shall be applicable again within
such extension.
(c) This Agreement may be terminated by Company, at its discretion,
upon Employee's death, inability to perform or incapacity (being defined as
inability to perform normal activities and functions for a period of 180
consecutive days), or for cause. A termination for cause for purposes of this
Agreement shall be that Employee (i) acted dishonestly or in a grossly
incompetent manner or engaged in willful misconduct in the performance of
Employee's duties, (ii) breached a fiduciary duty to Company, (iii)
intentionally failed to perform reasonably assigned duties which are
materially important in connection with his employment and/or the business of
the Company, (iv) willfully violated any law, rule or regulation (other than
minor traffic violations or similar offenses) or any final cease and desist
order, or (v) breached this Agreement and such breach is not cured by
Employee after ten (10) days' written notice.
(d) This Agreement may be terminated by Employee in the event that
Company breaches this Agreement and such breach is not cured by Company after
ten (10) days' written notice.
4. COMPENSATION
(a) BASIC COMPENSATION. For all of the services to be rendered by
Employee in any capacity hereunder, Company shall pay Employee a salary at
the annual rate of One Hundred Sixty Thousand Dollars ($160,000), and Company
shall review such salary annually as of January 1 during each subsequent year
of this Agreement but in no event shall the basic compensation in each
subsequent year be less than the aforesaid amount. The compensation paid
hereunder to Employee shall be paid in accordance with the payroll practices
conducted by Company and shall be subject to the customary withholding taxes
and other employment taxes as required with respect to compensation paid by a
corporation to an employee.
(b) ADDITIONAL COMPENSATION. In addition to the basic compensation
set forth at Paragraph 4(a) above, Company shall pay Employee additional
compensation based upon the following Bonus Plan:
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(1) Employee shall be paid an annual bonus which shall be equal
to a percentage of the "annual sales" of the Xenotech division of Company
during each fiscal year of the Company, or portion thereof, during which
Employee is employed by Company; provided, however, that such bonus shall
be payable for a fiscal year only if the net income before taxes of the
Xenotech division for such year, computed without regard to this bonus,
is at least 5 percent of the annual sales for such year.
(2) For purposes of this provision, "annual sales" of the
Xenotech division of Company shall mean all gross revenues of Company
during a fiscal year thereof which were derived from the Xenotech
division, including equipment lease and consignment income and sales of
Xenotech lighting equipment.
(3) The amount of annual additional compensation to be paid to
Employee under this Bonus Plan shall be based upon the following scale:
Xenotech Division Applicable Bonus
Annual Sales Ranges Percentage
------------------- ----------------
$3,000,000.00 - 1.50
$3,999,999.99
$4,000,000.00 - 1.60
$4,499,999.99
$4,500,000.00 - 1.70
$4,999,999.99
$5,000,000.00 - 1.80
$5,499,999.99
$5,500,000.00 - 1.90
$5,999,999.99
$6,000,000.00 2.00
and above
(c) DEFINITION OF PAYMENT. Computation of additional compensation
shall be made by Company within thirty (30) days of the end of each calendar
year, and shall be paid within one (1) month from the date Company makes such
determination.
(d) COMPUTATION PERIOD FOR ADDITIONAL COMPENSATION. Except as
provided as subsection (e), with respect to the determination of additional
compensation for any calendar year in which Employee does not render services
hereunder for the full twelve (12) month period, Company shall compute the
additional compensation in the same manner as described at subsection (b),
for the period from the commencement of such fiscal period
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(i.e. January 1) or the date upon which Employee's services hereunder shall
commence, whichever is later, through the last day of the calendar month
preceding termination or the last day of the fiscal year, whichever is
earlier.
(e) TERMINATION OF EMPLOYMENT. Upon termination of employment for
any reason, Employee shall be entitled to receive the basic compensation
accrued but unpaid as of the date of termination. In addition, Employee shall
continue to be paid at the rate of Fifty Thousand Dollars ($50,000) per year
for the remainder of the initial five (5) year term of this Agreement. Upon
termination of employment of Employee by Company for any reason other than for
cause, Employee shall also be entitled to receive the additional compensation
computed as set forth above. Nothing herein contained shall be construed to
deprive Employee of any other remedy at law or in equity for breach of this
contract by Company if Employee's employment is terminated by Company without
cause. In the event Employee's employment with Company is terminated for cause,
Employee shall forfeit all accrued and unpaid additional compensation as
determined in subsection (b) herein.
(f) DISPUTES. In the event of a dispute in the calculation of
additional compensation by Company hereunder relating to the calculation of
net sales or pre-tax earnings of Company, such net sales and pre-tax earnings
shall be determined by the certified public accountant retained by Company,
and such determination (including any allocations with respect to
transactions between Company and its affiliates) shall be absolute,
conclusive and binding upon Company and Employee, except in the event of
gross malfeasance or fraud.
(g) ESCROW AGREEMENT. Part of Employee's compensation hereunder
shall be subject to the terms and conditions of an Escrow Agreement between
the parties hereto, executed simultaneously herewith, the terms and
conditions of which are incorporated herein by this reference.
5. EXPENSES AND VACATIONS
(a) Company shall reimburse Employee for all reasonable and
necessary travel and entertainment expenses incurred by Employee in the
performance of Employee's duties hereunder upon submission of vouchers and
receipts evidencing such expenses. In addition, Company shall provide
Employee with an automobile to be used in the performance of Employee's
duties hereunder.
(b) Employee shall be entitled to vacation during each twelve (12)
months of employment in accordance with applicable Company policy. All
vacations shall be in addition to recognized national holidays. During all
vacations, Employee's compensation and other benefits as stated herein shall
continue to be paid in full. Such vacations shall be taken only at times
convenient for Company.
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6. OTHER BENEFITS
In addition to the compensation and to the rights provided for
elsewhere in this Agreement, Employee shall be entitled to participate in
each plan of Company now or hereafter adopted for the benefit of employees of
Company, to the extent permitted by such plans and by applicable law,
including, but not limited to: (i) 401(k) profit-sharing plan, (ii) medical
expense insurance program, and (iii) pension plan. Employee is specifically
excluded from participation in the Company's key employees' profit-sharing
plan.
7. DISCLOSURE OF INFORMATION. Employee acknowledges that Company's
trade secrets as they may exist from time to time, including, but not limited
to, Company's list of customers, processes, ideas, plans, programs,
procedures and know-how, are valuable, special and unique assets of Company's
business, access to and knowledge of which are essential to the performance
of Employee's duties hereunder. The parties agree that Employee will not,
during or after the term of Employee's employment by Company, disclose such
secrets to any person, firm, corporation, association or other entity or use
such secrets for any reason or purpose whatsoever; nor shall Employee make
use of any such property for Employee's own purposes or for the benefit of
any person, firm, corporation or other entity (except Company) under any
circumstances during or after the term of Employee's employment. Nothing in
this section shall limit Employee's right to carry Employee's accumulated
career knowledge and professional skills to any future employment, subject to
the specific limitations of the foregoing provisions of this section and the
restrictive covenant elsewhere set forth herein.
8. RESTRICTIVE COVENANT. Employee agrees that at the expiration of this
Agreement or at termination for any reason whatsoever, Employee shall not,
for a period of three (3) years thereafter, or a date which is five (5) years
after the date of this Agreement, whichever is later, without Company's prior
written consent, directly or indirectly, own, manage, operate, join, control,
be employed by, or participate in the ownership, management, operation or
control of, or assist any other person, firm, or corporation as an employee
or otherwise, in the ownership, management, operation or control, financial
or otherwise, of any business or organization anywhere in the world which,
directly or indirectly, competes with the lighting business of the Company or
its affiliated or subsidiary companies; and shall not, directly or
indirectly, by himself or through others, make, manufacture, assemble, sell,
distribute or otherwise deal in lighting products similar to those
manufactured, assembled, sold or distributed by Company. It is the desire and
intent of the parties that the provision of this section shall be enforced to
the fullest extent permissible under the laws and public policies applied in
each jurisdiction in which enforcement is sought.
The parties hereto recognize and agree that in the event of the breach
of any provision of this covenant, there is not a remedy at law adequate to
protect the rights and interest of Company set forth herein, and the
parties therefore agree that Company shall have the right to an injunction
enjoining Employee from violating the provisions of this section. Nothing
herein shall be construed as prohibiting Company from pursuing any other
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remedies available for such breach or threatened breach, including the recovery
of damages from Employee. In the event that any restriction contained in this
covenant is deemed by any court to be void because it is for an excessive
period of time or restricts Employee from engaging in a business competing
with Company in an excessive geographical area, it is agreed by the parties
that said court shall have the right to decrease the time period or
geographical area covered by such restriction to a time period and/or
geographical area which is not excessive.
It is understood and agreed that in the event Company terminates
Employee without cause or if Company breaches this Agreement and does not
cure said breach as provided in Paragraph 3(d), the provisions of Paragraph 8
are null and void.
9. INVENTIONS AND DISCOVERIES. Employee hereby sells, transfers and
assigns to Company or to any person or entity designated by Company all of
the entire right, title and interest of Employee in and to all inventions,
ideas, disclosures and improvements, whether patented or unpatented, and
copyrightable material made or conceived by Employee, solely or jointly,
during the term hereof which relate to the products and services provided by
Company or which otherwise relate or pertain to the business, functions or
operations of Company. Employee agrees to communicate promptly and to
disclose to Company in such form as Employee may be required to do so all
information, details and data pertaining to such inventions, ideas,
disclosures and improvements and to execute and deliver to Company such
formal transfers and assignments and such other papers and documents as may
be required of Employee to permit Company or any person or entity designated
by Company to file and prosecute the patent applications and, as to
copyrightable material, to obtain copyrights thereof.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified mail,
return receipt requested, to Employee's residence, in the case of Employee,
or to Company, at the principal offices of Ballantyne of Omaha, Inc.
11. CONSTRUCTION OF AGREEMENT. This Agreement is intended to be
construed and enforced in accordance with the laws of the State of
California, in the same manner as those executed and performed entirely
within the State of California, and without regard to or aid of any
presumption or other rule requiring construction against the party drawing or
causing this Agreement to be drawn.
12. COMMENCEMENT OF ACTIONS OR PROCEEDINGS. Any action or proceeding
brought by a party hereto against another and arising out of the Agreement or
any breach thereof, may be commenced by the service of process in the same
manner as a notice may be served under this Agreement.
13. NON-WAIVER. No provision of this Agreement shall be deemed to have
been waived except if such waiver is contained in a notice given to the party
claiming such waiver
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has occurred and no such waiver shall be deemed to be a waiver of any other
or further similar or dissimilar obligation or liability of the party in
whose favor the waiver was given.
14. ILLEGALITY. If any provision or provisions hereof (or any part
thereof) or the application thereof to any particular facts or circumstances
shall be illegal and unenforceable by reason of any statute or rule of law,
the remaining provisions (or parts thereof) of this Agreement or the
applications of the particular provision or provisions (or parts thereof) to
the other facts or circumstances shall not be affected thereby and shall
remain in full force and effect, it being the intention by this section to
make clear the agreement of the parties that this Agreement shall be enforced
insofar as it may be enforced consistent with law.
15. HEADINGS. The headings of the sections herein are for convenience
only and are part of this Agreement and shall not affect the interpretation
thereof.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement of
the parties. All prior arrangements or understandings are merged herein. It
may not be changed orally, but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension
or discharge is sought.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
shall inure to the benefit of, the successors and assigns of Company, whether
by merger, consolidation, sale or lease of assets, or otherwise.
18. DEFINITION AND GENDER. All terms used herein shall have their
defined meaning, unless the context clearly indicates otherwise. Pronouns for
defined terms shall be construed as masculine, feminine, or neuter, or in the
singular or plural, as the sense required, and to include any and all
successors and substitutions therefor.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date and year first above written.
"Employee" "Company"
BALLANTYNE OF OMAHA, INC.
/s/ Xxxxxxx Xxxx By /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------- ---------------------------------
Xxxxxxx Xxxx Xxxxxx X. Xxxxxxxxxx
Vice Chairman
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