EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of January 29, 1996 by and
between Xxxx Xxxxxxxx ("Employee") and Xxxx Products, Inc. (the "Company").
R E C I T A L S:
A. The Company desires to employ Employee as an executive officer of the
Company and Employee desires to be so employed by the Company, all on the terms
and subject to the conditions set forth herein.
B. The Company desires to bind Employee to certain restrictive covenants
and Employee agrees to be so bound, all on the terms and subject to the
conditions set forth herein.
A G R E E M E N T :
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. TERM. Subject to the terms and conditions set forth herein and unless
sooner terminated as hereinafter provided, the Company shall employ Employee and
Employee agrees to serve as an employee of the Company from the date hereof to
and including December 31, 2000 (the "Employment Term"). Upon the expiration of
the Employment Term, the Company and Employee may agree to continue Employee's
employment with the Company upon terms and conditions to be mutually agreed upon
by the parties hereto. The Employment Term and any renewal term thereof are
collectively referred to herein as the "Term".
2. EMPLOYMENT DUTIES. During the Term, Employee shall serve as the
Vice President of Business Development of the Company. Employee shall
faithfully, diligently and competently perform such duties and
responsibilities as are commensurate with his position with the Company,
including such services, duties and responsibilities as may from time to time
be assigned to him by the Board of Directors of the Company (the "Board").
Employee agrees to devote his business time (as directed by the Company),
attention and energies to the performance of his duties hereunder and in
furtherance of the Company's best interests.
3. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings: (i) "Actual Company Sales" means the actual
sales by the Company of Products (net of returns, allowances and discounts)
during each calendar year of the Employment Term, as determined from the
Company's internal accounting records; (ii) "Actual TCP Sales" means the actual
aggregate sales (net of returns, allowances and discounts) by TCP, any entity
which owns or controls over 50% of the outstanding securities of TCP (the
"Parent"), the Company and all other Subsidiaries of TCP or the Parent during
calendar years 1998, 1999 and 2000, as determined from each such entities'
internal accounting records; (iii) "Base Company
Sales" means the target net sales of Products by the Company during each
calendar year of the Employment Term as set forth on EXHIBIT A attached
hereto; (iv) "Base TCP Sales" means the target net sales by Parent, TCP and
TCP's and the Parent's Subsidiaries (including the Company) during calendar
years 1998, 1999 and 2000 as set forth on EXHIBIT B attached hereto;
(v)"Products" means the products set forth on EXHIBIT C attached hereto; (vi)
"Subsidiary" means any corporation or other organization, whether
incorporated or unincorporated, of which at least seventy-five percent (75%)
of the voting securities or other voting interests are owned or controlled,
directly or indirectly, by any such person; and (vii) "TCP" means Total
Control Products, Inc., the parent of the Company. For purposes of
determining Actual TCP Sales, (a) only TCP's or its Parent's pro rata portion
of the sales (based upon ownership amounts) of any subsidiary of TCP or the
Parent shall be included into the calculation of Actual TCP Sales; and (b)
only the Parent's net sales multiplied by its pro rata ownership interest of
TCP shall be included in the calculation of Actual TCP Sales. Additionally,
for purposes of this Agreement, "Fair Market Value" shall mean the fair
market value of each share of TCP Stock (as defined below) based upon the
value of TCP as a going concern (but without regard to a minority discount or
lack of marketability of TCP Stock) divided by the aggregate number of shares
of TCP Stock outstanding as of the determination date of Fair Market Value
and prior to giving effect to the transaction giving rise to such
calculation, all on a fully diluted basis. The Fair Market Value shall be
determined by the mutual agreement of Employee and TCP. If Employee and TCP
are unable to agree upon the Fair Market Value within twenty (20) days after
the date giving rise to the calculation of Fair Market Value, the Fair Market
Value shall be determined by a qualified third party mutually agreed upon by
Employee and TCP. If Employee and TCP are unable to agree on the selection
of a qualified third party to determine the Fair Market Value within ten days
after the expiration of the twenty day period referred to above, each of
Employee and TCP shall select their own valuation advisor within ten days
after the expiration of such ten day period, who shall then agree upon a
qualified third party to perform the valuation, and the valuation by such
third party shall be binding on Employee and TCP. In the event that either
Employee or TCP fail to appoint a valuation advisor within the time period
specified above, the other party may instruct its valuation advisor to
complete the valuation and the results of that valuation shall be binding on
both parties. TCP shall cooperate with the valuation advisor undertaking the
valuation pursuant to this Agreement and shall provide the valuation advisor
access to all necessary information and personnel upon reasonable advance
notice during normal business hours.
4. COMPENSATION. Subject to the conditions contained herein, as
compensation for the services to be performed and the duties and
responsibilities to be assumed by Employee during the Employment Term, the
Company shall pay to Employee a salary (the "Salary") in an amount equal to
$200,000 per annum. The Salary shall be payable to Employee in accordance with
the Company's ordinary payment practices for salaried employees.
Notwithstanding the foregoing, Employee shall only be entitled to a pro rata
portion of his Salary for any partial calendar year during the Employment Term.
5. BONUS. If in any calendar year during the Employment Term, Actual
Company Sales is greater than 125% of Base Company Sales for such calendar year,
Employee shall be entitled to participate in TCP's executive bonus plan on the
same terms as the participation of
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other executives of TCP; provided, however, that for purposes of such
participation, Employee's Salary shall be deemed to be equal to $120,000 (the
"Bonus").
6. CONTINGENT CONSIDERATION. For calendar years 1998, 1999 and 2000,
except to the extent as otherwise provided herein,, to the extent that Actual
TCP Sales during such calendar year exceeds Base TCP Sales for such calendar
year, the Company shall pay Employee an amount equal to one and one-quarter
percent (1.25%) of such excess ("Contingent Consideration"). Fifty Percent
(50%) of the Contingent Consideration otherwise payable to Employee shall be
payable in shares of Common Stock, no par value per share, of TCP ("TCP Stock")
based upon the Fair Market Value of each share of TCP Stock.
7. PAYMENT OF BONUS AND CONTINGENT CONSIDERATION. As soon as practicable
after the close of the Company's books for each calendar year during the
Employment Term, but in any event, no later than 90 days after the end of such
calendar year, the Company will determine the final aggregate amount of the
Bonus and the Contingent Consideration, if any, for such preceding calendar year
based upon the Company's internal accounting records, and shall notify Employee
in writing of the amount of each Contingent Consideration and Bonus, if any (the
"Compensation Notice"). Employee may, within forty-five (45) days after
receipt of the Compensation Notice, deliver the Company written notice (the
"Dispute Notice") identifying any dispute that Employee may have with respect to
the amounts set forth in the Compensation Notice. If a Dispute Notice is not
delivered by Employee to the Company within such forty-five day period, the
amount of the Contingent Consideration and Bonus, if any, set forth in the
Compensation Notice shall be final and binding on the parties hereto. Within
fifteen (15) days following the Company's receipt of a Dispute Notice, the
Company and Employee shall in good faith attempt to agree upon the Contingent
Consideration and Bonus, if any, for such calendar year. If the Company and
Employee cannot agree to the amount of the Contingent Consideration and Bonus,
if any, for such calendar year, they shall jointly submit their dispute to the
Cincinnati, Ohio office of Coopers & Xxxxxxx (the "Arbiter") for final
determination, whose determination shall be made within ninety (90) days of the
date the dispute is submitted to the Arbiter. The fees and expenses of the
Arbiter shall be shared equally between Employee and the Company. The Arbiter's
determination as to the amount of Contingent Consideration and Bonus for such
calendar year shall be final and binding on the parties hereto. The Bonus and
Contingent Consideration awarded to Employee in respect of any particular
calendar year shall be paid to Employee within fifteen days of the final
determination of the Contingent Consideration and Bonus, if any, without
interest. In connection with the determination of the Contingent
Consideration, Employer and TCP shall give Employee and the Arbiter, as
applicable, reasonable access to the portion of its books and records which are
relevant to the calculation of the Contingent Consideration during normal
business hours upon reasonable advance notice.
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8. BENEFITS.
(a) During the Term, Employee shall be entitled to participate in
such employee benefit plans and programs as are maintained by the Company,
to the extent that his position, tenure, compensation, age, health and
other qualifications make him eligible to participate. The Company does
not promise the adoption or continuance of any particular plan or program
during the Term, and Employee's (and his dependents') participation in any
such plan or program shall be subject to the provisions, rules, regulations
and laws applicable thereto.
(b) During the Term, Employee shall be entitled to such other fringe
benefits as are provided to employees of the Company with comparable
positions, tenure and compensation as Employee.
9. REIMBURSEMENT OF EXPENSES. During the Term, Employee shall be
entitled to prompt reimbursement for ordinary, necessary and reasonable
out-of-pocket trade or business expenses which Employee incurs in connection
with performing his duties under this Agreement. Employee shall also receive a
$700 per month car allowance for so long as certain of the officers of TCP
receive such an allowance. The reimbursement of all such expenses shall be made
upon presentation of evidence reasonably satisfactory to the Company of the
amounts and nature of such expenses and shall be subject to the reasonable
approval of the Board.
10. RESTRICTIVE COVENANTS. Employee acknowledges and agrees that (a)
through his continuing services to the Company, he will learn valuable trade
secrets and other proprietary information relating to the Company's business;
(b) Employee's services to the Company are unique in nature; (c) the Company's
business is international in scope; and (d) the Company would be irreparably
damaged if Employee was to provide services to any person or entity in violation
of the restrictions contained in this Agreement. Accordingly, as an inducement
to the Company to enter into this Agreement, Employee agrees that while he is
either employed by the Company or receiving any payments from the Company
pursuant to the terms of this Agreement (such period being referred to herein as
the "Restricted Period"), Employee shall not, directly or indirectly, either for
himself or for any other person or entity, without the prior written consent of
the Company:
(a) anywhere in the world, engage or participate in, or assist,
advise or be connected with (including as an employee, owner, partner,
shareholder, member, manager, officer, director, advisor, consultant, agent
or (without limitation by the specific enumeration of the foregoing)
otherwise), or permit his name to be used by or render services for, any
person or entity engaged in, or making plans to engage in, a business which
competes in any manner with the business conducted or proposed to be
conducted by the Company and any of its Affiliates (a "Competing
Business");
(b) take any action which might divert from the Company or any of its
Affiliates (as defined herein) any opportunity (each, an "Opportunity")
which would be
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within the scope of the Company's or such Affiliate's then business and
shall offer each Opportunity to the Company, which the Company may, in
its sole discretion, decide to pursue or not;
(c) solicit, attempt to solicit, aid in the solicitation of or accept
any orders from any person or entity who is or has been a customer of the
Company or its Affiliates, at any time during the period beginning one year
prior to the date hereof through the Restrictive Period, to purchase
products or services from any person or entity which products or services
could have been supplied or performed, as the case may be, by the Company
or its Affiliates (other than from the Company or its Affiliates);
(d) solicit, attempt to solicit or aid in the solicitation of any
person or entity who is or has been a customer, supplier, licensor,
licensee or person or entity having any other business relationship with
the Company or any of its Affiliates, at any time during the period
beginning one year prior to the date hereof through the Restrictive Period,
to cease doing business with or alter its business relationship with the
Company or its Affiliates; or
(e) solicit or hire any person or entity who is a director, officer,
employee, independent contractor or agent of the Company or any of its
Affiliates to perform services in competition with the Company or its
Affiliates for any person or entity other than the Company or its
Affiliates or to terminate his or her employment with the Company or its
Affiliates.
As used herein, an "Affiliate" shall mean and include any person or entity
which controls a party, which such party controls or which is under common
control with such party, and with respect to the Company, the term "Affiliate"
shall specifically include TCP. "Control" means the power, direct or indirect,
to direct or cause the direction of the management and policies of a person or
entity through voting securities, contract or otherwise.
11. DISCLOSURE OF CONFIDENTIAL INFORMATION. Employee recognizes that he
will occupy a position of trust and confidence with the Company as to
Confidential Information (as herein defined) pertaining to the Company and its
Affiliates. As an inducement for the Company to enter into this Agreement,
Employee therefore agrees that:
(a) during the Term and for a period of two years thereafter,
Employee and each Affiliate of Employee shall hold in the strictest
confidence and shall not, other than as required by law, without the prior
written consent of the Company, use for his own benefit or that of any
third party or disclose to any person, firm or corporation (except the
Company, an Affiliate of the Company or employees of the Company and its
Affiliates) any Confidential Information. For purposes of this Agreement,
intending that the term shall be broadly construed to include anything
protectible as a trade secret under applicable law, "Confidential
Information" shall mean all information, and all documents and other
tangible items which record information relating to or useful in connection
with
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the Company's business (including the business of any of the Company's
Affiliates), which at the time or times concerned is protectible as a trade
secret under applicable law, and which has been or is from time to time
disclosed to or known by Employee. Notwithstanding the foregoing, the term
"Confidential Information shall not include any information that becomes
generally known to and available for use by the public or in the trade,
other than as a result of Employee's acts or omissions to act.
(b) Employee and each Affiliate of Employee (and if deceased, their
personal representatives) shall promptly following a request therefor from
the Company return to the Company, without retaining copies, all tangible
items which are or which contain Confidential Information. Employee shall
also surrender all computer print-outs, laboratory books, floppy disks and
other such media for storing software and information, work papers, files,
client lists, telephone and/or address books, rolodex cards, internal
memoranda, appointment books, calendars, keys and other tangible things
entrusted to Employee by the Company or authored in whole or in part by
Employee within the scope of his duties to the Company or its predecessor,
even if such things do not contain Confidential Information; and
(c) at the request of the Company made at any time or from time to
time hereafter, Employee and each Affiliate of Employee (and if deceased,
their personal representatives) shall make, execute and deliver all
applications, papers, assignments, conveyances, instruments or other
documents and shall perform or cause to be performed such other lawful acts
as the Company may reasonably deem necessary or desirable to implement any
of the provisions of this Agreement, and shall give testimony and cooperate
with the Company, its Affiliates or their respective representatives in any
controversy or legal proceedings involving the Company, its Affiliates or
their respective representatives with respect to any Confidential
Information.
12. INVENTIONS. Employee acknowledges that in his capacity as an
executive of the Company, he may be involved in (i) the conception or making of
improvements, discoveries, inventions or the like (whether patentable or
unpatentable and whether or not reduced to practice), (ii) the authorship of
copyrightable works or (iii) the development of trade secrets relating to the
Company. Employee acknowledges that all such intellectual property is the
exclusive property of the Company. Employee hereby waives any rights he may
have in or to such intellectual property, and Employee hereby assigns to the
Company all right, title and interest in and to such intellectual property. At
the Company's request and at no expense to Employee, Employee shall execute and
deliver all such papers, including, without limitation, any assignment
documents, and shall provide such cooperation as may be necessary or desirable,
or as the Company may reasonably request, in order to enable the Company to
secure and exercise its rights to such intellectual property.
13. SPECIFIC PERFORMANCE. Employee agrees that any violation by him of
Sections 10, 11 or 12 of this Agreement would be highly injurious to the Company
and its Affiliates and would cause irreparable harm to the Company and its
Affiliates. By reason of the foregoing, Employee
6
consents and agrees that if he violates any provision of Sections 10, 11 or
12 of this Agreement, the Company and its Affiliates shall be entitled, in
addition to any other rights and remedies that they may have, to apply to any
court of competent jurisdiction for specific performance and/or injunctive or
other relief in order to enforce, or prevent any continuing violation of, the
provisions of such section. In the event Employee breaches a covenant
contained in this Agreement, the Restricted Period applicable to Employee
with respect to such breached covenant shall be extended for the period of
such breach. Employee also recognizes that the territorial, time and scope
limitations set forth in Sections 10 and 11 are reasonable and are properly
required for the protection of the Company and its Affiliates and in the
event that any such territorial, time or scope limitation is deemed to be
unreasonable by a court of competent jurisdiction, the Company and Employee
agree, and Employee submits, to the reduction of any or all of said
territorial, time or scope limitations to such an area, period or scope as
said court shall deem reasonable under the circumstances. Employee
represents, warrants and acknowledges that he has available to him sufficient
other means of support so that observance of the covenants contained in
Sections 10, 11 and 12 shall not deprive him of his ability to earn a
livelihood or support his dependents.
14. TERMINATION FOR CAUSE. During the Term, Employee's employment with
the Company may be terminated by the Board "for cause", which shall include (a)
Employee's conviction for, or plea of nolo contendere to, a felony or a crime
involving moral turpitude (excluding, minor traffic violations); (b) Employee's
commission of an act which involves personal dishonesty or fraud involving
personal profit in connection with Employee's employment with the Company; (c)
Employee's commission of an act which involves willful misconduct or gross
negligence on the part of Employee in the conduct of his duties hereunder; (d)
Employee's material breach of the provisions of Sections 10, 11 or 12 of this
Agreement; or (e) Employee's failure to cure any material breach of any other
material provision of this Agreement within ten (10) days after Employee's
receipt of written notice of such breach.
15. TERMINATION FOR GOOD REASON. During the Employment Term, Employee may
terminate his employment with the Company "for good reason". For purposes of
this Agreement, termination "for good reason" shall mean termination due to (a)
a substantial change in Employee's title, position and/or responsibilities with
the Company; or (b) a forced relocation of Employee by the Company to a location
not within 50 miles of the Cincinnati metropolitan area.
16. DEATH OR DISABILITY.
(a) This Agreement shall terminate upon Employee's death.
(b) If Employee becomes permanently disabled (determined as provided
below) during the Term, his employment with the Company shall terminate as
of the date such permanent disability is determined. Employee shall be
considered to be permanently disabled for purposes of this Agreement if he
is unable by reason of accident or illness (including mental illness) to
perform the material duties of his regular position with the Company and is
(i) not expected to recover from his disability within a period of six (6)
months from the commencement of the disability; or (ii) not expected to be
able to
7
perform his material duties of his regular position with the
Company for a period of six (6) months in any consecutive twelve (12) month
period as a result of the same disability. If at any time Employee claims
or is claimed to be permanently disabled, a physician acceptable to both
Employee, or his personal representative, and the Company (which
acceptances shall not be unreasonably withheld) shall be retained by the
Company and shall examine Employee. Employee shall cooperate fully with
the physician. If the physician determines that Employee is permanently
disabled, the physician shall deliver to the Company a certificate
certifying both that Employee is permanently disabled and the date upon
which the condition of permanent disability commenced. The determination
of the physician shall be conclusive.
17. EFFECT OF TERMINATION.
(a) Upon the termination of Employee's employment hereunder (i) by the
Company for any reason other than for cause; or (ii) by the Employee for good
reason, Employee shall be entitled to receive his Salary, Bonus and Contingent
Consideration (pursuant to this Agreement and that certain Merger Agreement (the
"Merger Agreement") dated as of the date hereof among Employee, the Company, TCP
and certain other parties) through the remainder of the Employment Term on the
same terms and at the same times as provided herein and the Merger Agreement, as
the case may be.
(b) Upon the termination of Employee's employment hereunder (i) by Employee
for any reason (other than for good reason) at any time after the one year
anniversary from the date hereof (the "Anniversary Date"); or (ii) by the
Company at any time during the Employment Term for cause, Employee shall be
entitled to receive, in Employee's sole discretion, either (x) the Bonus and
Contingent Consideration (to be paid to Employee either pursuant to this
Agreement or pursuant to the terms of the Merger Agreement) though the remainder
of the Employment Term, to be paid to Employee on the same terms and at the same
times as provided herein and in the Merger Agreement, plus the lesser of (A) the
Salary through the remainder of the Employment Term, to be paid to Employee on
the same terms and at the same times as provided herein; or (B) an amount equal
to $200,000 to be paid by the Company to Employee within ____ days of the
termination date of Employee's employment hereunder; or (y) the Salary through
the remainder of the Employment Term to be paid to Employee on the same terms
and at the same times as provided herein. If Employee, in his sole discretion,
elects to receive the consideration set forth in 17(b)(y) above, Employee shall
forfeit all rights to receive Bonus and Contingent Consideration accruing after
the date of termination either pursuant to this Agreement or the Merger
Agreement.
(c) In the event Employee terminates his employment for any reason on or
prior to the Anniversary Date (other than for good reason), the Company's
obligations under this Agreement shall cease and Employee shall forfeit all his
rights to receive any Contingent Consideration under the Merger Agreement and
any compensation or benefits under this Agreement, including any Bonus and/or
Contingent Consideration, except that Employee shall be entitled to his Salary
and benefits for services already performed as of the date of termination of
this Agreement.
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Notwithstanding anything to the contrary contained herein, if at any time
Employee's employment with the Company is terminated for any reason
whatsoever (other than by Employee for good reason), and at the time of such
termination, the Company had grounds to terminate Employee's employment
hereunder for cause, the Company can elect, in its sole discretion, to
terminate Employee's employment hereunder for cause, in which case, Employee
would only be entitled to the compensation set forth in Section 17(b) and not
the compensation set forth in Section 17(a).
18. MISCELLANEOUS.
(a) All notices required or permitted to be given hereunder shall be
in writing and shall be deemed given (i) when delivered in person at the
time of such delivery or by telecopy with receipt of transmission
indicating the date and time (provided, however, that notice delivered by
telecopy shall only be effective if such notice is also delivered by hand
or deposited in the United States mail, postage prepaid, registered or
certified mail, on or before two (2) business days after its delivery by
telecopy), (ii) when received if given by a nationally recognized overnight
courier service or (iii) two (2) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail,
addressed as follows:
if to Employee:
Xxxx Xxxxxxxx
_________________
_________________
with a copy to:
Xxxx, Stettinius & Hollister
1800 Star Bank Center
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
Attention: Xxxx Xxxxxxx
Fax: (000) 000-0000
If to the Company:
Total Control Products, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxx, President
Fax: (000) 000-0000
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with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
and/or at such other addresses and/or to such other addressees as may be
designated by notice given in accordance with the provisions hereof.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, successors and permitted
assigns. As to Employee, this Agreement is a personal service contract and
shall not be assignable by Employee, but all obligations and agreements of
Employee hereunder shall be binding upon and enforceable against Employee
and Employee's personal representatives, heirs, legatees and devices.
(c) The parties adopt the Recitals to this Agreement and agree and
affirm that construction of this Agreement shall be guided thereby. This
Agreement contains all of the agreements between the parties with respect
to the subject matter hereof. This Agreement supersedes all other
agreements, oral or written, between the parties hereto with respect to the
subject matter hereof.
(d) No change or modification of this Agreement shall be valid unless
the same shall be in writing and signed by all of the parties hereto. No
waiver of any provisions of this Agreement shall be valid unless in writing
and signed by the waiving party. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a
continuing waiver, unless so provided in the waiver.
(e) If any provisions of this Agreement (or portions thereof) shall,
for any reason, be invalid or unenforceable, such provisions (or portions
thereof) shall be ineffective only to the extent of such invalidity or
unenforceability, and the remaining provisions of this Agreement (or
portions thereof) shall nevertheless be valid, enforceable and of full
force and effect.
(f) The section or paragraph headings or titles herein are for
convenience of reference only and shall not be deemed a part of this
Agreement.
(g) This Agreement may be executed in multiple counterparts, each of
which shall be deemed to be an original and all of which taken together
shall constitute a single instrument.
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(h) Notwithstanding anything to the contrary contained herein,
Employee's rights and obligations under Sections 10, 11, 12 and 13 shall
survive the expiration or termination of this Agreement for the periods
specified in such sections.
(i) This Agreement shall be governed and controlled as to validity,
enforcement, interpretation, construction, effect and in all other respects
by the laws of the State of Ohio applicable to contracts made in that State
(other than any conflict of laws rule which might result in the application
of the laws of any other jurisdiction).
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
/s/ Xxxx Xxxxxxxx
-------------------------------
Xxxx Xxxxxxxx
THE COMPANY:
XXXX PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
----------------------------
Title: Vice President
-------------------------
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AMENDMENT
Reference is hereby made to that certain Employment Agreement (the
"Agreement") dated as of January 29, 1996 between Xxxx Products, Inc.
("Employer") and Xxxx Xxxxxxxx ("Employee"). Capitalized terms used herein
and not otherwise defined herein, shall have the meanings ascribed to them in
the Agreement.
Notwithstanding anything to the contrary contained in the Agreement, (a)
at any time after the date hereof, Employer may, in its sole discretion,
elect to pay the following amount to Employee (50% of which shall be paid in
shares of TCP Stock as provided in Section 6 of the Agreement) in full
satisfaction of all Contingent Consideration for calendar years 1998, 1999
and 2000 otherwise owed to Employee during the Employment Term pursuant to
the terms of the Agreement and this amendment to the Agreement (the
"Amendment"): (i) if such payment is made at any time prior to the payment of
Contingent Consideration for calendar year 1998, an amount equal to
$2,000,000; (ii) if such payment is made at any time prior to the payment of
Contingent Consideration for calendar year 1999 but after the payment for
calendar year 1998, an amount equal to $1,666,667; and (iii) if such payment
is made at any time prior to the payment of Contingent Consideration for
calendar year 2000 but after the payment for calendar year 1999, an amount
equal to $1,000,000 ("Termination Payment"); and (b) if at any time after the
date hereof, an Asset Sale (as hereinafter defined) occurs, or the
shareholders of TCP as of the date hereof fail to own, either directly or
indirectly, at least 50% of the outstanding TCP Stock (other than as a result
of a public sale of shares of TCP Stock) or TCP fails to own, either directly
or indirectly, over 50% of the outstanding stock of Employer (other than as a
result of a merger by Employer with and into TCP) (each, a "Triggering
Event"), then Employer shall either (i) pay the Termination Payment to
Employee in cash (with no portion being paid in shares of TCP Stock) in full
satisfaction of all Contingent Consideration otherwise owed to Employee
during the Employment Term pursuant to the terms of the Agreement and this
Amendment; or (ii) pay Employee the Contingent Consideration otherwise due
and payable to Employee pursuant to the terms of the Agreement and this
Amendment in cash (with no portion being paid in shares of TCP Stock) subject
to the following: (A) if the Triggering Event occurs at any time prior to the
payment of Contingent Consideration for calendar year 1998, Employer shall
guaranty a minimum payment of Contingent Consideration in an aggregate amount
of $1,000,000 during the Employment Term, but the aggregate amount of
Contingent Consideration payable to Employee during the Employment Term shall
not exceed $3,375,000; (B) if the Triggering Event occurs at any time prior
to the payment of Contingent Consideration for calendar year 1999 but after
the payment for calendar year 1998, Employer shall guaranty a minimum payment
of Contingent Consideration in an aggregate amount of $812,500 during the
remainder of the Employment Term, but the aggregate amount of Contingent
Consideration payable to Employee during the remainder of the Employment Term
shall not exceed $2,562,500; and (C) if the Triggering Event occurs at any
time prior to the payment of Contingent Consideration for calendar year 2000
but after the payment for calendar year 1999, Employer shall guaranty a
minimum payment of Contingent Consideration in an aggregate amount of
$500,000 during the remainder of the Employment Term, but the aggregate
amount of Contingent Consideration payable to Employee during the remainder
of the Employment Term shall not exceed $1,437,500.
Upon the sale of any product line, division or equity interest (each, a
"Sold Product Line") by Employer to any third party where the Sold Product
Line or sales therefrom would have been included in the calculation of Actual
TCP Sales and where such sale would not constitute a sale of all or
substantially all of Employer's assets, for the calendar year in which any
such sale occurs and for each succeeding calendar year during the Employment
Term, Actual TCP Sales shall be computed as if such sale did not occur and
the future sales for the Sold Product Line shall be projected for the
remainder of the Employment Term at the same rate of growth as Employer's
sales growth for such Sold Product Line for the calendar year in the year
prior to such sale.
Neither TCP nor Employer shall not be entitled to sell all or
substantially all of its assets (each, an "Asset Sale") unless the purchaser
in such Asset Sale agrees to assume in writing the terms of the Agreement and
this Amendment. Notwithstanding the foregoing, if a Triggering Event occurs
and (a) if Actual TCP Sales for the calendar year prior to the consummation
of the Triggering Event is greater than $35,000,000, then each of the amounts
of Contingent Consideration and Termination Payments set forth above shall
remain the same; (b) if Actual TCP Sales for the calendar year prior to the
consummation of the Triggering Event is less than or equal to $35,000,000 but
greater than $25,000,000, then each of the amounts of Contingent
Consideration and Termination Payments set forth above shall be reduced by an
amount equal to the applicable amount set forth above multiplied by the
following fraction: the numerator of which is $35,000,000 minus Actual TCP
Sales for the calendar year prior to the consummation of the Triggering Event
and the denominator of which is $10,000,000; (c) if Actual TCP Sales for the
calendar year prior to the consummation of the Triggering Event is less than
or equal to $25,000,000, then Employee shall not be entitled to any
additional Contingent Consideration after the date of the Asset Sale; and (d)
any Termination Payment or Contingent Consideration paid or payable to
Employee after a Triggering Event shall be paid in cash (with no portion paid
in shares of TCP Stock).
Dated: as of January 29, 1996
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
XXXX PRODUCTS, INC.
By: /s/ Xxxxxxxx Xxxx
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Xxxx Xxxx, Vice President
