EXHIBIT 10.23
EMPLOYMENT AGREEMENT
AGREEMENT entered into effective as of the 25th day of June 2001, by
and between NUCO2 INC., a Florida corporation having its principal office at
0000 XX Xxxxxx Xxxxx, Xxxxxx, Xxxxxxx 00000 (hereinafter referred to as the
"Corporation"), and XXXXXX X. XXXXXXX, currently residing at 0 Xxxxxxx Xxxxx,
Xxxxxxxx Xxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as the "Executive").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Corporation desires to employ the Executive and the
Executive desires to be employed by the Corporation upon the terms and subject
to the conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, it is agreed as
follows:
ARTICLE 1 - EMPLOYMENT TERMS AND DUTIES
1.1 The Corporation hereby agrees to employ the Executive and the
Executive agrees to provide services for the Corporation as its Executive Vice
President, Operations. The Executive shall serve as and perform the duties of
Executive Vice President, Operations of the Corporation during the Term (defined
hereinafter) of this Agreement.
1.2 The Executive agrees to devote his full business time during
regular business hours to working for the Corporation and performing such duties
as shall from time to time be assigned to him by the Board of Directors of the
Corporation or the Chief Executive Officer of the Corporation consistent with
his position as Executive Vice President, Operations. During the Term of his
employment hereunder, the Executive shall have no interest in, or perform any
services during regular business hours for any other company, whether or not
such company is competitive with the Corporation, except that this prohibition
shall not be deemed to apply to passive investments in businesses not
competitive with the business of the Corporation or to investments of 5% or less
of the outstanding stock of public companies whose stock is traded on a national
securities exchange or in the over-the-counter market. For purposes of this
Paragraph l.2, a "passive investment" shall be deemed to mean investment in a
business which does not require or result in the participation of the Executive
in the management or operations of such business except during times other than
regular business hours and which does not interfere with his duties and
responsibilities to the Corporation. Nothing contained herein shall limit the
right of the Executive to make speeches, write articles or participate in public
debate and discussions in and by means of any medium of communication or serve
as a director or trustee of any non-competing corporation or organization,
provided that such activities are not inconsistent with the Executive's
obligations hereunder.
1.3 Consistent with the Executive's aforesaid duties the Executive
shall, at all times during the Term hereof, be subject to the supervision and
direction of the Board of Directors of the Corporation and the Chief Executive
Officer with respect to his duties, responsibilities and the exercise of his
powers.
1.4 The services of the Executive hereunder shall be rendered
primarily at the Corporation's principal executive office currently in Stuart,
Florida; provided, however, that the Executive shall make such trips outside of
Stuart, Florida as shall be reasonably necessary in connection with the
Executive's duties hereunder.
1.5 The term of the Executive's employment hereunder shall commence
upon the date of this Agreement (with the understanding that prior to commencing
his duties at the principal office of the Corporation he will (a) perform his
duties outside of the principal office of the Corporation and shall no later
than July 23, 2001 commence his duties at the principal office of the
Corporation and (b) in lieu of the Base Salary (defined hereinafter) otherwise
payable for such period, be paid $1,000) and such employment shall continue,
except as otherwise provided herein, through June 30, 2005 (the "Term").
ARTICLE 2 - COMPENSATION
2.1 The Corporation shall pay to the Executive during the Term of
his employment by the Corporation and the Executive shall accept as his entire
compensation for his services hereunder:
(a) A base salary ("Base Salary") at the rate of $175,000 per annum,
payable in accordance with the Corporation's regular payment schedule for its
employees. The Base Salary will be reviewed annually and may be increased from
time to time by the Board of Directors or Chief Executive Officer of the
Corporation.
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(b) Effective as of the date of this Agreement, the Corporation
shall grant to the Executive stock options (the "Options") pursuant to the
Corporation's 1995 Stock Option Plan (of which the maximum amount allowed by
United States tax law shall be considered as incentive stock options) to
purchase up to One Hundred Twenty Thousand (120,000) shares of the Corporation's
common stock, $.001 par value ("Common Stock"), with one-fifth of such Options
vesting on June 25, 2001, an additional one-fifth of such Options vesting on
June 25, 2002, an additional one-fifth of such Options vesting on June 25, 2003,
an additional one-fifth of such Options vesting on June 25, 2004, and the
remaining one-fifth of such Options vesting on June 25, 2005, provided that such
Options shall vest only so long as the Executive continues to be employed by the
Corporation. The exercise price for such Options shall be equal to the closing
price of the Common Stock on the Nasdaq National Market on the date hereof.
(c) During the Term of this Agreement and subject to the provisions
hereof, the Executive shall be entitled, commencing with respect to fiscal year
ending June 30, 2002 (and on each June 30 thereafter during the Term of this
Agreement), to an annual bonus based upon the relative performance of the
Corporation and the Executive for the applicable fiscal year. The bonus may be
comprised of options to purchase shares of the Common Stock of the Corporation
and cash payments, the relative amounts of which will be determined in good
faith by the Chief Executive Officer, in his sole discretion, and approved by
the Corporation's Board of Directors. The Corporation achieving its projected
EBITDA and other operating and financial criteria as projected in the
Corporation's business plan established by its Board of Directors for the
applicable fiscal year shall be the major consideration in determining the
amount of the annual bonus. The annual cash bonus will have a target of forty
(40%) percent of Base Salary based on the full achievement of its projected
EBITDA and other operating and financial criteria as projected in the
Corporation's business plan approved by the Board of Directors and the Executive
meeting individual achievement goals recommended by the Executive and approved
by the Chief Executive Officer.
(d) The Corporation will reimburse the Executive for his necessary
and reasonable out-of-pocket expenses incurred in the course of his employment
and in connection with his duties hereunder.
(e) The Corporation will provide the Executive with medical
insurance coverage under the Corporation's group medical insurance policy and
the Executive shall be entitled to participate in all other health, welfare,
retirement, disability, and other benefit plans, if any, available to employees
and senior executives of the Corporation (collectively, the "Benefit Plans").
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(f) The Executive shall be entitled to paid vacation and/or sick
days during each twelve (12) month period during the term of this Agreement of
the same duration as provided to other executive officers of the Corporation,
but in no event shall he receive less than four (4) weeks paid vacation per
year.
(g) In connection with the Executive's move to the Stuart, Florida
area, the Corporation shall pay the Executive's (a) reasonable moving expenses,
(b) sales commission on his current residence, (c) other direct closing costs
and (d) temporary housing costs for a period not to exceed four (4) months,
provided that the aggregate of such costs does not exceed $30,000. Any sums paid
pursuant to this Paragraph 2.1(g) by the Corporation shall be grossed up to
eliminate the cost to the Executive of income taxes, if any, paid on such sums
received.
ARTICLE 3 - TERMINATION
3.1 Except as otherwise provided herein, the Term of the employment
of the Executive shall terminate:
(a) automatically upon the death of the Executive;
(b) at the option of the Corporation, upon written notice thereof to
the Executive, in the event that the Executive shall become permanently
incapacitated (as hereinafter defined);
(c) at the option of the Corporation, upon thirty (30) days' prior
written notice thereof to the Executive specifying the basis thereof, in the
event of a material breach by the Executive with respect to (i), (ii) and (iii)
below, which is not cured by the Executive within thirty (30) days after the
Executive is provided with such written notice, or in the event that the
Executive shall, during the Term of this Agreement, (i) engage in any criminal
conduct constituting a felony and criminal charges are brought against the
Executive by a governmental authority, (ii) knowingly and willfully fail or
refuse to perform his duties and responsibilities in a manner consistent with
his position to the reasonable satisfaction of the Board of Directors of the
Corporation, and (iii) knowingly and willfully engage in activities which would
constitute a material breach of any term of this Agreement, or any applicable
policies, rules or regulations of the Corporation or result in a material injury
to the business condition, financial or otherwise, results of operation or
prospects of the Corporation, as determined in good faith by the Board of
Directors of the Corporation. For purposes of this Agreement, termination
pursuant to this Paragraph 3.1(c) shall be deemed a termination "for cause".
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For purposes of this Agreement, the Executive shall be deemed
permanently incapacitated in the event that the Executive shall, by reason of
his physical or mental disability, fail to substantially perform his usual and
regular duties for the Corporation for a consecutive period of four (4) months
or for six (6) months in the aggregate in any eighteen (18) month period;
provided, however, that the Executive shall not be deemed permanently
incapacitated unless and until a physician, duly licensed to practice medicine
and reasonably acceptable to the Corporation and the Executive, shall certify in
writing to the Corporation that the nature of the Executive's disability is such
that it will continue as a substantial impediment to the Executive's ability to
substantially perform his duties hereunder.
(d) At the option of the Corporation without cause within its sole
and complete discretion upon thirty (30) days' prior written notice.
3.2 Notwithstanding anything to the contrary contained herein:
(a) In the event that the Executive shall die during the Term of
this Agreement, the Corporation shall, in lieu of any other compensation payable
hereunder, pay to the beneficiaries theretofore designated in writing by the
Executive (or to the Executive's estate if no such beneficiaries shall have been
designated), a sum equal to one hundred percent (100%) of the compensation
payable to the Executive during the twelve (12) month period immediately
preceding the Executive's death, payable in twelve (12) equal monthly
installments, without interest, commencing one month following such death. The
Executive's estate shall retain all stock options vested prior to his death, if
any. To the extent that the Corporation receives the proceeds on any life
insurance on the life of the Executive (as provided in Paragraph 3.2(d)) such
proceeds shall be paid, promptly after receipt, to the beneficiaries theretofore
designated in writing by the Executive (or the Executive's estate if no such
beneficiaries shall have been designated) to fund the obligations under this
Paragraph 3.2(a) and shall reduce such obligations on a dollar for dollar basis.
The balance, if any, due the Executive under this Paragraph 3.2(a) shall
thereafter be paid in twelve (12) equal monthly installments, without interest,
commencing one month following the Executive's death.
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(b) In the event that the employment of the Executive shall be
terminated by reason of the Executive becoming permanently incapacitated, then,
as additional consideration for his past services to the Corporation, he shall
receive one hundred percent (100%) of his then current annual Base Salary, in
equal monthly installments, without interest, for a period of twelve (12) months
from the date of such termination. Such payments shall be in addition to all
income disability benefits, if any, which the Executive may receive from
policies provided by or through the Corporation, including state-required short
term disability. The Executive or, if applicable, his estate shall retain all
stock options vested prior to his disability, if any.
(c) In the event of a termination of the Executive's employment "for
cause" as defined in Paragraph 3.1(c) above, the Executive shall not be entitled
to (i) any payments other than such compensation as shall have been earned by
him prior to the date of such termination and not paid as of the date of such
termination, or (ii) any bonus pursuant to Paragraph 2.1(c). Any and all stock
options granted to the Executive prior to the date of such termination shall
terminate and shall no longer vest. Nothing herein, however, shall alter or
impede the Executive's ability to exercise stock options properly vested as of
such termination date in accordance with the terms of the stock option agreement
in respect of such options.
(d) In the event that the Corporation shall desire to fund the death
benefits payable under Paragraph 3.2(a) above with a policy or policies of
insurance on the life of the Executive or the disability benefits payable under
Paragraph 3.2(b) above with a disability policy, the Executive shall cooperate
with the Corporation in obtaining such insurance policy(ies) and shall submit to
such medical examinations and execute such documents as may be required in
connection with the obtaining of such insurance.
(e) In the event the Executive's employment is terminated at the
discretion of the Corporation pursuant to Paragraph 3.1(d), he will be paid one
(1) year's current Base Salary in equal quarterly installments during the one
(1) year following the termination of employment and shall retain all stock
options which vested prior to the termination of his employment.
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(f) In the event of any termination of the Executive's employment
pursuant to this Article 3 other than "for cause" as defined in Paragraph
3.1(c), the Executive and/or his dependents and beneficiaries shall continue to
participate during the applicable period of salary continuation in all medical
insurance and related benefits provided by the Corporation on the same basis as
prior to the date of his termination.
ARTICLE 4 - RESTRICTIVE COVENANTS
4.1 Confidential Information.
The Executive acknowledges that, because of his duties and his
position of trust under this Agreement, he will become familiar with trade
secrets and other confidential information (including, but not limited to,
operating methods and procedures, secret lists of actual and potential sources
of supply, customers and employees, costs, profits, markets, sales and plans for
future developments) which are valuable assets and property rights of the
Corporation and not publicly known and Executive acknowledges that public
disclosure of such trade secrets and other confidential information will have an
adverse effect on the Corporation and its business. Except in connection with
the performance of his duties for the Corporation, the Executive agrees that he
will not, during or at any time after the Term of this Agreement, either
directly or indirectly, disclose to any person, entity, firm or corporation such
trade secrets or other confidential information, including, but not limited to,
any facts concerning the systems, methods, secret lists, procedures or plans
developed or used by the Corporation, and not to release, use, or disclose the
same except with the prior written consent of the Corporation. The Executive
agrees to retain all such trade secrets and other confidential information in a
fiduciary capacity for the sole benefit of the Corporation, its successors and
assigns. All records, files, memorandums, reports, price lists, customer lists,
secret lists, documents, equipment, systems, methods, procedures and plans, and
the like, relating to the business of the Corporation, which the Executive shall
use or prepare or come into contact with, shall remain the sole property of the
Corporation. Upon termination of his employment by the Corporation or at any
time that the Corporation may so request, the Executive will surrender to the
Corporation all non-public papers, notes, reports, plans and other documents
(and all copies thereof) relating to the business of the Corporation which he
may then possess or have under his control.
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4.2 Non-Compete. The Executive acknowledges that (i) the services to
be performed by him under this Agreement are of a special, unique, extraordinary
and intellectual character; (ii) the Executive possesses substantial technical
and managerial expertise and skill with respect to the Corporation's business;
(iii) the Corporation's business is national in scope and its products and
services are marketed throughout the nation; (iv) the Corporation competes with
other businesses that are or could be located in any part of the nation; (v) the
covenants and obligations of Executive under this Paragraph 4.2 are material
inducement and condition to the Corporation's entering into this Agreement and
performing its obligations hereunder; and (vi) the provisions of this Paragraph
4.2 are reasonable and necessary to protect the Corporation's business.
In consideration of the acknowledgments by the Executive, and in
consideration of the compensation and benefits to be paid or provided to
Executive by the Corporation, the Executive covenants that he will not, during
the Term and for a period of two (2) years following the expiration or earlier
termination of this Agreement, without the prior written consent of the
Corporation, directly or indirectly:
(a) knowingly solicit any business, in the same product or
business line or one that is closely related to that in which the Executive was
engaged during his employment, for or from, or become associated with, as
principal, agent, employee, consultant, or in any other capacity, any person
who, or entity which, at the time of, or during the twelve (12) months
immediately preceding such expiration or termination was in direct competition
with the Corporation;
(b) become a principal, agent, employee, consultant, or
otherwise become associated with any person or entity which is engaged in direct
or indirect competition (i.e., doing indirectly through others what the
Executive could not do directly) with the Corporation.
4.3 Enforcement. The provisions of Article 4 of this Agreement are
of a unique nature and of extraordinary value and of such a character that a
material breach of the provisions of either Paragraphs 4.1 or 4.2 of this
Agreement by the Executive will result in irreparable damage and injury to the
Corporation for which the Corporation will not have any adequate remedy at law.
Therefore, in the event that the Executive commits or threatens to commit any
such breach, the Corporation will have (a) the right and remedy to have the
provisions of Paragraphs 4.1 and 4.2 of this Agreement specifically enforced by
any court having equity jurisdiction, it being agreed that in any proceeding for
an injunction, and upon any motion for a temporary or permanent injunction, the
Executive's ability to answer in damages shall not be a bar or interposed as a
defense to the granting of such injunction and (b) the right and remedy to
require the Executive to account for and to pay over to the Corporation all
compensation, profits, monies, accruals, increments and other benefits
(hereinafter referred to collectively as the "Benefits") derived or received by
him as a result of any transactions constituting a breach of any of the
provisions of Paragraphs 4.1 and 4.2 of this Agreement, and the Executive hereby
agrees to account for and pay over such Benefits to the Corporation. Each of the
rights and remedies enumerated in (a) and (b) above shall be independent of the
other, and shall be severally enforceable, and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Corporation under law or in equity.
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If any covenant in this Article 4 is held to be unreasonable,
arbitrary, or against public policy, such covenant will be considered to be
divisible with respect to scope, time and geographic area, and such lesser
scope, time, or geographic area, or all of them, as the court of competent
jurisdiction may determine to be reasonable, not arbitrary, and not against
public policy, will be effective, binding, and enforceable against the
Executive. The undertakings of Article 4 shall survive the termination or
cancellation of the Agreement or of the Executive's termination.
ARTICLE 5 - SEVERANCE - CHANGE OF CONTROL
5.1 Severance Compensation. If prior to the expiration of the Term
of this Agreement, there is a Change of Control (defined in Paragraph 5.2 below)
and thereafter the Executive should resign his employment for Good Reason (as
defined in Paragraph 5.3 below), the Executive shall be entitled to the
following Severance compensation:
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(a) Continuation of all benefits, including without limitation
medical, dental and life insurance for one year following the date of
termination, or until the date on which the Executive first becomes eligible for
insurance coverage of a similar nature provided by a firm that employs him
following termination of employment by the Corporation, whichever occurs first.
(b) Immediate vesting of any granted but unvested options to
purchase Common Stock of the Corporation held by the Executive.
(c) An amount equal to one (1) times current annual cash
compensation to be paid within sixty (60) days of termination of employment.
5.2 Change of Control.
For the purposes of this Agreement, a Change of Control means
(i) the direct or indirect sale, lease, exchange or other transfer of all or
substantially all (50% or more) of the assets of the Corporation to any person
or entity or group of persons or entities acting in concert as a partnership or
other group (a "Group of Persons"), (ii) the merger, consolidation or other
business combination of the Corporation with or into another corporation with
the effect that the shareholders of the Corporation, as the case may be,
immediately following the merger, consolidation or other business combination,
hold 50% or less of the combined voting power of the then outstanding securities
of the surviving corporation of such merger, consolidation or other business
combination ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors, (iii) the
replacement of a majority of the Corporation's Board of Directors in any given
year as compared to the directors who constituted the Corporation's Board at the
beginning of such year, and such replacement shall not have been approved by the
Corporation's Board of Directors, as the case may be, as constituted at the
beginning of such year, or (iv) a person or Group of Persons shall, as a result
of a tender or exchange offer, open market purchases, privately negotiated
purchases or otherwise, have become the beneficial owner (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of securities
of the Corporation representing 50% or more of the combined voting power of the
then outstanding securities of such corporation ordinarily (and apart from
rights accruing under special circumstances) having the right to vote in the
election of directors.
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5.3 Good Reason. The Executive shall have Good Reason for
terminating his employment with the Corporation under this Agreement if one or
more of the following occurs:
(a) an involuntary change in the Executive's status or position
with the Corporation which constitutes a demotion from the Executive's then
current status or position and a material change in the nature or scope of
powers, authority or duties inherent in such position;
(b) layoff or involuntary termination of the Executive's
employment, except in connection with the termination of the Executive's
employment for Cause or as a result of the non-renewal of this Agreement or of
the Executive's disability or death;
(c) a reduction by the Corporation in the Executive's
compensation;
(d) any action or inaction by the Corporation that would
adversely affect the Executive's continued participation in any Benefit Plan on
at least as favorable basis as was the case at the time of such action or
inaction, or that would materially reduce the Executive's benefits in the future
under the Benefit Plan or deprive him of any material benefits that he then
enjoyed, except to the extent that such action or inaction by the Corporation
(i) is also taken or not taken, as the case may be, in respect of all employees
generally, (ii) is required by the terms of any Benefit Plan as in effect
immediately before such action or inaction; or (iii) is necessary to comply with
applicable law or to preserve the qualification of any Benefit Plan under
section 401(a) of the Internal Revenue Code; or
(e) a material change of the principal work location.
ARTICLE 6 - MISCELLANEOUS
6.1 Severability. In the event that any provision, or any portion of
any provision, of this Agreement shall be held to be void or unenforceable, the
remaining provisions of this Agreement, and the remaining portion of any
provision found void or unenforceable in part only, shall continue in full force
and effect.
6.2 Representations and Warranties by the Executive. The Executive
represents and warrants that he has made no commitment of any kind whatsoever
inconsistent with the provisions of this Agreement and that he is under no
disability of any kind to enter into this Agreement and to perform all of his
obligations hereunder.
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6.3 Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the parties and their respective successors and permitted
assigns. This Agreement being personal to the Executive, cannot be assigned by
him. This Agreement may be assigned by the Corporation in the event and in
connection with a merger, consolidation or sale of all or substantially all of
the assets of the Corporation provided that the assignee agrees in writing to
assume all of the obligations of the Corporation under this Agreement, that such
assignment shall not relieve the Corporation of its obligations hereunder and
that such assignment is not otherwise inconsistent with the provisions of
Paragraph 5. Prompt written notice of such assignment shall be provided by the
Corporation to the Executive.
6.4 Jurisdictional Consent. Any dispute or controversy between the
parties relating to or arising out of this Agreement or any amendment or
modification hereof shall be determined by the Supreme Court, County of Xxxxxx,
State of Florida. The service of any notice, process, motion or other document
in connection with an action under this Agreement, may be effectuated by either
personal service upon a party or by certified mail duly addressed to him at his
address set forth on Page 1 hereof.
6.5 Notices. Any notice or communication required or permitted to be
given hereunder shall be deemed duly given if delivered personally or sent by
registered or certified mail, return receipt requested, to the address of the
intended recipient as herein set forth or to such other address as a party may
theretofore have specified in writing to the other. Any notice or communication
intended for the Corporation shall be addressed to the attention of its Board of
Directors.
6.6 Waiver. A waiver of any breach or violation of any term,
provision, agreement, covenant, or condition herein contained shall not be
deemed to be a continuing waiver or a waiver of any future or past breach or
violation.
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6.7 Entire Agreement/Governing Law. This Agreement constitutes the
entire agreement and understanding between the Corporation and the Executive
relating to the latter's employment, supersedes any prior agreement between the
parties relating to such matter, shall be governed by and construed in
accordance with the laws of the State of Florida and may not be changed,
terminated or discharged orally.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
as of the day and year first above written.
NUCO2 INC.
By: /s/ Xxxxxxx X. XxXxxxxxxx
-------------------------
Name: Xxxxxxx XxXxxxxxxx
Title: President and CEO
/s/ Xxxxxx X. Xxxxxxx
----------------------------
XXXXXX X. XXXXXXX
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