EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT entered into and effective as of December 10,
2003, among, ADVANCED LIGHTING TECHNOLOGIES, INC., an Ohio corporation ("ADLT"),
and XXXXX XXXXXXXXXXXX ("EMPLOYEE");
WITNESSETH:
WHEREAS, ADLT and Employee desire to terminate any and all prior
agreements, whether oral or written, between the parties and between Employee
and ADLT relating to Employee's employment; and
WHEREAS, ADLT and Employee desire to enter into an Employment Agreement
as set forth herein below to ADLT of the services of Employee as President of
APL Engineered Materials, Inc., an Illinois corporation and affiliate of ADLT
("APL") and to set forth the rights and duties of the parties hereto,
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. TERMINATION OF PRIOR AGREEMENTS. ADLT and Employee hereby terminate any
and all prior agreements, whether oral or written, between the parties
relating to Employee's employment, provided, however that any existing
agreement between Employee and ADLT or any subsidiary of ADLT regarding
non-competition, non-solicitation or confidentiality or ownership of
intellectual property rights shall continue in full force and effect as
supplemented by this Employment Agreement.
2. EMPLOYMENT.
(a) ADLT hereby employs Employee, and Employee hereby accepts
employment, upon the terms and conditions hereinafter set
forth.
(b) During the term of this Employment Agreement, (for purposes
hereof, all references to the term of this Employment
Agreement shall be deemed to include all renewals or
extensions hereof, if any), Employee shall devote his full
business time to his employment and shall perform diligently
such duties as are, or may be, required by the Board of
Directors of ADLT or their designee, which duties shall be
within the bounds of reasonableness and acceptable business
standards and ethics.
(c) During the term of this Employment Agreement, Employee shall
not, without the prior written consent of ADLT, which shall
not be unreasonably withheld, directly or indirectly, render
services of a business, professional or commercial nature to
any other person or firm, whether for compensation or
otherwise, other than in the performance of duties naturally
inherent in the businesses of APL, ADLT or any subsidiary or
affiliate of ADLT; provided, however, Employee may continue to
render services to and participate in philanthropic and
charitable causes, in each case, in a manner and to the extent
consistent with his past practice.
(d) During the term of this Employment Agreement, Employee shall
comply with all policies and procedures of ADLT, including but
not limited to, all terms and conditions set forth in any
employee handbook and any other memoranda pertaining to ADLT's
policies, procedures, rules and regulations. Failure to comply
with all such policies and procedures shall be grounds for
disciplinary action, including termination for "cause"
pursuant to Section 6(a) of this Employment Agreement.
3. TERM AND POSITION.
(a) Subject to the termination provisions contained herein, the
term of this Employment Agreement shall commence as of
DECEMBER 10, 2003 and shall continue for a term of THREE (3)
YEARS from such date, subject, however, to the provisions of
Section 6.
(b) Employee shall serve as President of APL, and in such offices
or positions with ADLT as shall be agreed upon by Employee and
the Board of Directors of ADLT, as the case may be, without,
however, any change in Employee's compensation (but such
offices or positions shall be consistent with the office and
position stated herein).
(c) The principal business office of Employee shall be in Solon,
Ohio.
4. COMPENSATION.
(a) Subject to the provisions of this Employment Agreement, for
all services which Employee may render to ADLT during the term
of this Employment Agreement, Employee shall receive a salary
at the rate of ONE HUNDRED NINETY THOUSAND DOLLARS ($190,000)
per annum for the first year of this Employment Agreement,
which shall be payable in equal, consecutive biweekly
installments.
(b) Employees will receive options at the commencement of the term
of this Employment Agreement as set forth on EXHIBIT A.
(c) Provided that Employee satisfactorily performs his services
under this Employment Agreement, Employee shall be eligible
for salary increases from time to time as determined by the
Compensation Committee of ADLT.
(d) Provided that Employee has satisfactorily performed his
services under this Employment Agreement, Employee shall be
eligible for bonuses from time to time as described on EXHIBIT
A.
5. OTHER BENEFITS.
During the term of this Employment Agreement, Employee shall be
entitled to such vacation privileges, life insurance, medical and
hospitalization benefits, and such other benefits as are typically
provided to other executive officers of ADLT and its subsidiaries in
comparable positions; provided, however, that such benefits shall be
comparable to those benefits provided by ADLT in ADLT's fiscal year
ended June 30, 2003.
6. TERMINATION AND FURTHER COMPENSATION.
(a) The employment of Employee under this Employment Agreement,
for the term thereof, may be terminated by the Board of
Directors of ADLT for cause at any time. For purposes hereof,
the term "cause" shall mean:
(i) Employee's committing an act constituting a
misdemeanor involving fraud, dishonesty, or theft or
a felony;
(ii) Employee's engaging in habitual or repeated alcohol
or drug abuse;
(iii) Employee's disregarding the instructions of the Board
of Directors, President or Chief Executive Officer of
ADLT;
(iv) Employee's neglecting duties (other than by reason of
disability or death), with five (5) business days
notice to cure;
(v) Employee's willful misconduct or gross negligence; or
(vi) Employee's material breach of this Employment
Agreement, in whole or in part, with five (5) days
notice to cure.
Any termination by reason of the foregoing shall not be in
limitation of any other right or remedy ADLT may have under
this Employment Agreement or otherwise.
(b) In the event of (i) termination of the Employment Agreement
for any of the reasons set forth in Subparagraph (a) of this
Section 6, or (ii) if Employee shall voluntarily terminate his
employment hereunder prior to the end of the term of this
Employment Agreement, then in either event Employee shall be
entitled to no further salary, bonus or other benefits under
this Employment Agreement, except as to that portion of any
unpaid salary and other benefits accrued and earned by him
hereunder up to and including the effective date of such
termination. In the event the Employee voluntarily terminates
this Employment Agreement, Employee shall provide 30 days'
prior written notice to ADLT of such voluntary termination.
(c) In the event that ADLT terminates Employee's employment
without "cause" (as defined herein above) or Employee
terminates employment with "good reason" (as defined below)
prior to the end of the term of this Employment Agreement,
then, in addition to any salary and bonus amounts and medical
benefits due to Employee for the remainder of the term or
renewal term of this Employment Agreement, as the case may be,
Employee shall be entitled to an immediate payment equal to
three (3) months salary upon the terms and as set forth
herein; provided however, notwithstanding continuation salary
following such termination, bonus amounts shall
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be paid or payable with respect only to fiscal years of ADLT
commencing prior to such termination. Such salary, bonus and
benefits shall be paid in accordance with ADLT's normal
payment practices. At the conclusion of the term of this
Employment Agreement, all salary, medical and other benefits
as set forth herein shall cease. Employee shall have no other
rights and remedies except as set forth in this Section 6. For
purposes hereof, the term "good reason" shall mean (i) without
the express written consent of Employee, a material reduction
of Employee's duties, authority, compensation, benefits or
responsibilities or (ii) a material breach of this Employment
Agreement by ADLT.
(d) In the event of Employee's death or permanent disability (as
defined herein below) occurring during the term of this
Employment Agreement, this Employment Agreement shall be
deemed terminated for cause and Employee or his estate, as the
case may be, shall be entitled to no further salary or other
compensation provided for herein except as to that portion of
any unpaid salary accrued or earned by Employee hereunder up
to and including the date of death or permanent disability,
and any benefits under any insurance policies or other plans.
(e) "Permanent disability" means the inability of Employee to
perform satisfactorily his usual or customary occupation for a
period of 120 days in the aggregate out of 150 consecutive
days as a result of a physical or mental illness or other
disability which in the written opinion of a physician of
recognized ability and reputation, is likely to continue for a
significant period of time.
(f) In the event this Employment Agreement is terminated with
cause, before the end of the term, ADLT may, in its sole
discretion, notify Employee that ADLT intends to continue to
pay all compensation, benefits and monies due under the terms
of the Employment Agreement for the remainder of the term. In
such event, and provided ADLT continues to make such payments,
Employee shall continue to be bound by the terms of the
non-competition provisions in Section 7 hereof, during the
remainder of the term and for a period of one (1) year
immediately following the stated term of the Agreement.
(g) "Change of Control" as used in this Agreement means such time
as (i) (a) a "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended [the "Exchange Act"]) becomes the ultimate
"beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of more than 35% of the total voting power of
ADLT on a fully diluted basis and (b) such ownership
represents a greater percentage of the total voting power of
the voting stock of ADLT, on a fully diluted basis, than may
then be voted by (I) Saratoga Lighting Holdings LLC or any
person, directly or indirectly, controlling, controlled by or
under common control with Saratoga Lighting Holdings LLC (the
"Saratoga Group"), (II) any "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act) that includes
a member of the Saratoga Group, if members of the Saratoga
Group "beneficially own" (within the meaning of Rule 13d-3
under the Exchange Act) voting stock of ADLT representing a
majority of the voting power of the voting stock owned by such
group (the "Existing
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Stockholders") and (III) the five individuals who were the
most highly compensated officers or employees of ADLT and its
subsidiaries, taken as a whole, for the most recently ended
fiscal year of ADLT (the "Executive Managers") on such date;
provided however, that a Change of Control shall not be deemed
to have occurred by reason of the fact that one or more of the
Executive Managers become the beneficial owners of more than
35% of the total voting power of ADLT on a fully diluted
basis; or (ii) individuals who on the date of this Agreement
(or within 120 days thereafter as contemplated by ADLT's plan
of reorganization) constitute the Board of Directors (together
with any new or successor directors whose election by the
Board of Directors or whose nomination by the Board of
Directors for election by ADLT's stockholders was approved by
a vote of at least two-thirds of the members of the Board of
Directors on the date of their election or nomination) cease
for any reason to constitute a majority of the members of the
Board of Directors then in office.
7. COVENANTS REGARDING NON-COMPETITION AND CONFIDENTIAL INFORMATION.
(a) Non-Competition.
(i) Recognizing that Employee will have been involved as
an executive officer of APL and that ADLT and its
affiliates, are engaged in the supply of products
and/or services in every state of the United States
and internationally, therefore, upon termination of
his employment by ADLT or its subsidiaries, whether
such termination is initiated by ADLT or Employee and
whether at the expiration of the term of this
Employment Agreement or otherwise, for any reason, he
agrees that he will not, for a period of ONE (1) YEAR
immediately following such termination, engage, in
the United States or in any country where ADLT or any
of its subsidiaries or affiliates conduct business,
either directly or indirectly on behalf of himself or
on behalf of an another, as an employee, consultant,
director, partner or shareholder (other than with
respect to holding up to one percent (1%) of a
publicly traded corporation) of any corporation,
limited liability company, partnership or other
business entity, in any business of the type and
character or in competition with the business carried
on by ADLT or any of its subsidiaries or affiliates
(as conducted on the date Employee ceases to be
employed by ADLT in any capacity).
(ii) Employee will not, for a period of ONE (1) YEAR
immediately following the termination of his
employment by ADLT or its subsidiaries, whether such
termination is initiated by ADLT or Employee and
whether at the expiration of the term of this
Employment Agreement or otherwise, either directly or
indirectly or on behalf of another, as an employee,
consultant, director, partner or shareholder (other
than with respect to holding up to one percent (1%)
of a publicly traded corporation) of any corporation,
limited liability company, partnership or other
business entity, recruit, hire or otherwise entice
any employee(s) of ADLT or its subsidiaries or
affiliates, to terminate his or
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her employment with ADLT or to accept employment with
anyone or any entity other than ADLT.
(iii) Employee will not, for a period of ONE (1) YEAR
immediately following the termination of his
employment by ADLT or its subsidiaries, whether such
termination is initiated by ADLT or Employee and
whether at the expiration of the term of this
Employment Agreement or otherwise, either directly or
indirectly or on behalf of another, as an employee,
consultant, director, partner or shareholder (other
than with respect to holding up to one percent (1%)
of a publicly traded corporation) of any corporation,
limited liability company, partnership or other
business entity, solicit, do business with or employ
any current or former employee of ADLT, or any of its
subsidiaries or affiliates, or any customer or client
of ADLT in connection with any business of the type
and character or in competition with the business
carried on by ADLT or any of its subsidiaries or
affiliates (as conducted on the date Employee ceases
to be employed by ADLT in any capacity)
(iv) Employee will not, directly or indirectly, disclose,
divulge, discuss or copy to or for any person or
entity, or otherwise use or suffer to be used in any
manner or for any purpose, except for the benefit of
ADLT or any of its subsidiaries or affiliates, any
ideas, methods, customer lists or other customer
information, business plans, product research or
engineering data or other trade secrets, intellectual
property, or any other confidential or proprietary
information of ADLT or any of its subsidiaries or
affiliates, it being acknowledged by Employee that
all such information regarding the business of ADLT
or its subsidiaries or affiliates conceived,
suggested, developed, compiled or obtained by or
furnished to Employee while Employee shall have been
employed by or associated with ADLT or its
subsidiaries or affiliates is confidential
information and ADLT's or its subsidiaries' or
affiliates' exclusive property. Employee's
obligations under this Section 7(a)(iv) will not
apply to any information which (A) is known to the
public other than as a result of Employee's acts or
omissions, (B) is approved for release, in writing,
by ADLT, (C) is disclosed to Employee by a third
party without restriction, or (D) Employee is legally
required to disclose.
(b) Employee expressly agrees and understands that the remedy at
law for any breach by him of this Section 7 will be inadequate
and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly,
it is acknowledged that upon adequate proof of Employee's
violation of any legally enforceable provision of this Section
7, ADLT shall be entitled to immediate injunctive relief and
may obtain a temporary order restraining any threatened or
further breach. Nothing in this Section 7 shall be deemed to
limit ADLT's remedies at law or in equity for any breach by
Employee of any of the provisions of this Section 7 which may
be pursued or availed of by ADLT or any of its affiliates
including but not limited to ADLT.
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(c) In the event Employee shall violate any legally enforceable
provision of this Section 7 as to which there is a specific
time period during which he is prohibited from taking certain
actions or from engaging in certain activities as set forth in
such provision then, in such event, such violation shall toll
the running of such time period from the date of such
violation until such violation shall cease.
8. RENEWAL.
This Employment Agreement shall be automatically renewed for successive
one (1) year periods, notwithstanding whether the initial terms of this
Agreement was for a term other than one (1) year, unless and until ADLT
or Employee delivers written notice to the other party of its intent to
terminate this Employment Agreement upon completion of the current
term. In the event Employee or ADLT desires to terminate this
Employment Agreement upon completion of the current term, such
terminating party must deliver written notice to the other party not
later than three (3) months prior to the end of the term (or any
successive term) of this Employment Agreement.
9. SEVERABLE PROVISIONS.
The provisions of this Employment Agreement are severable and if any
one or more provisions may be determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions and any
partially unenforceable provision to the extent enforceable in any
jurisdiction shall, nevertheless, be binding and enforceable.
10. ARBITRATION.
Any controversy or claim arising out of or relating to this Employment
Agreement, or the breach thereof, shall be settled by arbitration by a
single arbitrator in the City of Solon, State of Ohio, in accordance
with the Rules of the American Arbitration Association, and judgment
upon the award rendered by the Arbitrator may be entered in any court
having jurisdiction thereof. The Arbitrator shall be deemed to possess
the powers to issue mandatory orders and restraining orders in
connection with such arbitration; provided, however, that nothing in
this Section 10 shall be construed so as to deny ADLT the right and
power to seek and obtain injunctive relief in a court of equity for any
breach or threatened breach of Employee of any of his covenants
contained in Section 7 hereof.
11. NOTICES
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(a) Each notice, request, demand or other communication ("NOTICE")
by either party to the other party pursuant to this Employment
Agreement shall be in writing and shall be personally
delivered or sent by U.S. certified mail, return receipt
requested, postage prepaid, or by nationally recognized
overnight commercial courier, charges prepaid, or by facsimile
transmission (but each such Notice sent by facsimile
transmission shall be confirmed by sending a copy thereof to
the other party by U.S. mail or commercial courier as provided
herein no later than the following business day), addressed to
the address of the receiving party or to such other address as
such party shall have communicated to the other party in
accordance with this Section. Any Notice hereunder shall be
deemed to have been given and received on the date when
personally delivered, on the date of sending when sent by
facsimile, on the third business day following the date of
sending when sent by mail or on the first business day
following the date of sending when sent by commercial courier.
(b) If a Notice is to ADLT, then such Notice shall be addressed to
Advanced Lighting Technologies, Inc., 00000 Xxxxxx Xxxx,
Xxxxx, Xxxx, attention of the Board of Directors.
(c) If a Notice is to Employee, then such Notice shall be
addressed to Employee at his home address last known on the
payroll records of ADLT.
12. WAIVER.
The failure of either party to enforce any provision or provisions of
this Employment Agreement shall not in any way be construed as a waiver
of any such provision or provisions as to any future violations
thereof, nor prevent that party thereafter from enforcing each and
every other provision of this Employment Agreement. The rights granted
the parties herein are cumulative and the waiver of any single remedy
shall not constitute a waiver of such party's right to assert all other
legal remedies available to it under the circumstances.
13. MISCELLANEOUS.
This Employment Agreement supersedes all prior agreements and
understandings between the parties and may not be modified or
terminated orally. No modification, termination or attempted waiver
shall be valid unless in writing and signed by the party against whom
the same it is sought to be enforced.
14. GOVERNING LAW.
This Employment Agreement shall be governed by and construed according
to the laws of the State of Ohio.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement
on the day and year first set forth above.
WITNESS: ADVANCED LIGHTING
TECHNOLOGIES, INC.
By: /s/ Xxxx Xxx Xxxxxx By: /s/ Xxxxxxxxxxx Xxxxxx
-------------------------------- -------------------------------
Name: Xxxx Xxx Xxxxxx Name: Xxxxxxxxxxx Xxxxxx
Its: Vice President
By: /s/ Xxxxx X. Xxxx /s/ Xxxxx X. Xxxxxxxxxxxx
-------------------------------- -----------------------------------
Name: Xxxxx X. Xxxx XXXXX X. XXXXXXXXXXXX
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EXHIBIT A
(BONUS AND OPTIONS)
EMPLOYEE: Xxxxx X. Xxxxxxxxxxxx
BASE SALARY: $190,000.00
I. BONUS SCALE:
Employee shall be eligible for a bonus, as a percentage of Employee's base
salary, contingent upon ADLT's achieving certain financial targets (Base, Goal
and Superior) measured in terms of ADLT's Adjusted EBITDA (after accruing the
applicable bonus) for each fiscal year pursuant to the following scale:
FY 2004 (7/1/03-6/30/04) EBITDA (ADJUSTED) * BONUS (% OF BASE SALARY)
-------------------------------------------------------------------------------------------------
No Bonus Below $23,500,000.00 --
-------------------------------------------------------------------------------------------------
Base $23,500,000.00 25%
-------------------------------------------------------------------------------------------------
Goal $25,000,000.00 50%
-------------------------------------------------------------------------------------------------
Superior $27,000,000.00 75%
-------------------------------------------------------------------------------------------------
FY 2005 (7/1/04-6/30/05) EBITDA (ADJUSTED)** BONUS (% OF BASE SALARY)
-------------------------------------------------------------------------------------------------
No Bonus Below 112.50% of the higher of (a) --
FY 2004 EBITDA (Adjusted) or (b)
$24,000,000
-------------------------------------------------------------------------------------------------
Base 112.50% of the higher of (a) FY 2004 25%
EBITDA (Adjusted) or (b) $24,000,000
-------------------------------------------------------------------------------------------------
Goal 120.00% of the higher of (a) FY 2004 50%
EBITDA (Adjusted) or (b) $24,000,000
-------------------------------------------------------------------------------------------------
Superior 130.00% of the higher of (a) FY 2004 75%
EBITDA (Adjusted) or (b) $24,000,000
-------------------------------------------------------------------------------------------------
* Bonus increase in FY 2004 will be on a sliding scale whereby the percentage of
base salary bonus will increase proportionally based on the amount by which ADLT
exceeds one financial target but falls short of a higher financial target. For
example: If the ADLT has an adjusted EBITDA in FY 2004 of $26,000,000.00 (which
amount is the midpoint between the Goal and Superior targets) then Employee
would be entitled to a bonus of 62.5% (50% + an additional 12.5%).
**Bonus in FY 2005 is based on the percentage increase over the final adjusted
EBITDA for FY 2004. The bonus will be increased on a sliding scale whereby the
percentage of base salary will increase proportionally based on the amount by
which the adjusted EBITDA for FY 2005 exceeds the adjusted EBITDA for FY 2004.
For example: If the adjusted EBITDA for FY 2004 is $24,000,000.00 and the
adjusted EBITDA for FY 2005 is $27,600,000.00 (an increase of 15%) then the
Employee shall be entitled to a bonus of 25% for hitting the Base target plus an
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additional 8.3% for exceeding the Base target by 2.5% (3.33% for each 1%
increase until the Goal target is met) for a total bonus equal to 33.3 % (25%
+8.3%) of Employee's base salary.
II. OPTIONS:
Employee shall participate in the ADLT equity compensation plan to the extent of
1.5 % of the equity stock of ADLT on the date of this Agreement, which shall
vest in four (4) equal increments on the anniversary dates of the grant date.
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