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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and effective as of July 6, 1998
("Effective Date"), by and between Xxxxxx X. Xxxxxx ("Employee"), residing at
0000 XX 000xx Xxxxxx, Xxxxx, Xxxxxxx 00000, and XXXXXXX, INC., an Ohio
corporation ("Employer"), with its principal place of business at 0000 Xxxx
Xxxxxxx Xxxxxx, Xxxxxx, Xxxx 00000-0000.
WHEREAS, Employee possesses certain unique skills and experience which Employer
deems desirable in its business; and
WHEREAS, Employer believes that the employment of Employee is important to its
success; and
WHEREAS, Employee wishes to join Employer as its Chief Executive Officer and
President.
NOW, THEREFORE, in consideration of the mutual covenants and promises of the
parties hereto, and for good and valuable consideration, the sufficiency of
which is hereby acknowledged, Employer and Employee agree as follows:
SECTION I. EMPLOYMENT. A. Upon approval of its Board of Directors, Employer
hereby agrees to employ Employee as its Chief Executive Officer and President,
as described in Employer's Amended and Restated Code of Regulations, as in
effect on the Effective Date, and in such other duties, capacities, and
responsibilities as the Board of Directors may, from time to time, assign to
Employee, and Employee accepts such employment with Employer, subject to the
terms and conditions set forth in this Agreement; provided, however, that all
such duties and responsibilities assigned by the Board to Employee shall be
consistent with the offices of Chief Executive Officer and President, or a
higher level office or offices, unless Employee shall consent to duties and
responsibilities at a lower level. Employee is expected to be elected an
"executive officer" of Employer by the Board of Directors of Employer, and to
remain so during the term of his employment.
B. Employee will report directly to Employer's Board of Directors. Employee will
have all of the duties and responsibilities set forth for the offices of Chief
Executive Officer and President under law, Article III of Employer's Amended and
Restated Code of Regulations, this Agreement, and other duties and
responsibilities as determined from time to time by Employer's Board of
Directors. It is expressly acknowledged by the parties hereto that Article III,
Section 2 of Employer's Amended and Restated Code of Regulations provides, in
part, that the Chairman of the Board of Directors, "shall advise and direct the
Chief Executive Officer, the President, and other officers of the Corporation on
matters of general policy . . ." This Agreement contemplates that, during its
term, Employee shall have full responsibility for all matters affecting all
other employees of Employer, including the other officers, without interference
by the Chairman, and that while the Chairman may "advise" Employee on matters
related to Employer's business, Employee shall take "direction" from, and report
to, the full Board of Directors.
SECTION II. TERM OF EMPLOYMENT. A. This Agreement, and the employment under it,
shall commence on the day and date first written above and continue for three
years thereafter, unless earlier terminated under the provisions set forth
herein.
B. 1. Following an initial term of three years ("Initial Term"), upon
the third anniversary of the Effective Date and each anniversary
thereafter, this Agreement shall be automatically renewed for
successive one-year terms. After the Initial Term, either party may
give 60 days advance written notice to the other party of its intent to
permit this Agreement to expire at its next anniversary date. If such
notice is given by Employee, then the provisions of Sec-
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tions X, XI, and XII shall continue in full force and effect. If such
notice is given by Employer, then the provisions of Section X shall
expire upon the expiration of the Agreement, and shall be of no further
force or effect.
2. If Employer terminates Employee during the Initial Term, for any
reason, then Employer shall be required to pay to Employee any amounts
due under this Agreement through its Initial Term; provided, however,
that no payments under this paragraph shall be required if the
termination of Employee is for Cause (as defined hereinafter), and that
additional payments may be due to Employee pursuant to section II.B.3.
below.
3. If Employee is terminated by Employer during the Initial Term, for
any reason other than Cause or other than as the direct or indirect
result of a Business Combination, then Employer shall be required to
pay to Employee any amounts due under this Agreement for the greater
of: (i) the balance of its Initial Term, or (ii) 18 months following
Employee's termination, even if such 18-month period extends beyond the
Initial Term of this Agreement. If Employee is terminated during the
Initial Term of this Agreement as the direct or indirect result of a
business combination ("Business Combination"), as defined in Employer's
Amended and Restated Articles of Incorporation, Article 11.A.1., then
Employer shall be required to pay to Employee any amounts due under
this Agreement for the greater of: (i) the balance of its Initial Term,
or (ii) 24 months following Employee's termination, even if such
24-month period extends beyond the Initial Term of this Agreement. If
Employee is terminated for Cause, the provisions of Section IX shall
govern his compensation.
4. This Agreement may be voluntarily terminated at any time by
Employee, including at an anniversary date pursuant to section II.B.1.;
provided, however, that without regard to any other provision of this
Agreement, no further amounts or benefits are accrued or earned under
this Agreement after such voluntary termination. Any amounts or
benefits that are accrued and unpaid at the date of such voluntary
termination, whether pursuant to this Agreement or under Employer's
policies and practices applicable to corporate officers generally,
shall be paid to Employee as soon as practicable following such
termination. In the event Employee terminates under this Section
II.B.4., the provisions of Sections X, XI, and XII shall continue in
full force and effect following such termination.
SECTION III. DUTIES OF EMPLOYEE. Employee will serve Employer faithfully and to
the best of his ability, under the direction of the Board of Directors of
Employer. Employee will devote all of his time, energy, and skill during regular
business hours to such employment. Employee shall perform such services and act
in such executive capacity as the Board of Directors shall direct.
SECTION IV. COMPENSATION. A. Employee's salary shall be paid at an annual rate
of not less than $400,000, from the day and date first written above, and shall
not be reduced below such rate during the term of this Agreement.
B. Employer shall pay Employee's salary in accordance with the pay practices of
Employer, as applied to all corporate officers, subject to all applicable
statutory and elective withholding taxes and deductions.
C. Employee shall participate in the Xxxxxxx, Inc. Executive Compensation Plan,
as amended from time to time, and any other compensation plans or arrangements
provided to Employer's corporate officers.
D. Within two weeks following the execution of this Agreement by both parties,
Employer shall pay to Employee a $25,000 "signing bonus."
SECTION V. FAILURE TO PAY EMPLOYEE. The failure of Employer to pay Employee's
compensation as provided in Section IV may be deemed a breach of this Agreement,
and unless such breach is cured within ten days after written notice to
Employer, Employee may, in his sole discretion, terminate this Agreement,
including the provisions of Sections X, XI, and XII, by giving written notice to
Employer under the provisions set forth herein.
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SECTION VI. STOCK OPTIONS. Employer shall grant to Employee stock options to
purchase a total of 200,000 shares of the common stock of Employer, in
accordance with the terms of the Xxxxxxx, Inc. 1993 Stock Incentive Plan, as
amended ("Plan"). Such options shall be granted at the rate of 50,000 as soon as
possible after the Effective Date, and 50,000 each on the first anniversary,
second anniversary, and third anniversary of this Agreement, until a total of
200,000 options have been granted; provided, however, that no grants shall be
made under this Section VI following a termination of this Agreement, regardless
of whether such termination is with or without Cause, and provided further that
any grants made prior to such termination shall remain in place subject to the
provisions of the Plan. Each grant of options shall be at the then-current price
of Employer's stock at the date of grant, as calculated under the terms of the
Plan.
In the event a Business Combination occurs and this Agreement is in full force
and effect and has not been terminated by either party, then, on the date of
such Business Combination, Employer shall grant to Employee any of the 200,000
stock options that have not yet been granted pursuant to the schedule set forth
in the second sentence of this section. For example, if such Business
Combination occurred 18 months after the Effective Date, options on 100,000
shares would have been granted to Employee pursuant to the preceding paragraph,
and the remaining 100,000 options would be delivered pursuant to this paragraph.
The parties acknowledge that the Plan provides for vesting of stock option
grants, and for accelerated vesting upon a change in control, as defined in the
Plan, and that such provisions will govern grants made under this Section VI.
SECTION VII. REIMBURSEMENT OF EXPENSES. Employer shall reimburse Employee for
reasonable out-of-pocket expenses which Employee may incur in connection with
his services for Employer rendered under this Agreement, upon presentation by
Employee of appropriate vouchers to Employer, in accordance with Employer's
travel and reimbursement policies applicable to its corporate officers.
SECTION VIII. RULES AND REGULATIONS OF EMPLOYER. Employee hereby agrees to abide
by, and observe, the written policies, rules, regulations, and restrictions
imposed on employees and corporate officers of Employer, as amended from time to
time, and as provided to Employee, as well as those set forth in this Agreement.
Violation of any such policies, rules, or regulations may be cause for Employer
invoking the provisions of Section IX of this Agreement.
SECTION IX. TERMINATION. A. If Employee shall fail or be unable to perform the
services required by this Agreement because of any physical or mental infirmity,
and such failure or inability shall continue for three consecutive months, or
for six months during any twelve-consecutive-month period, Employer shall have
the right to terminate this Agreement 90 days after delivering written notice of
the termination to Employee; provided, however, that Employee shall continue to
receive his full compensation to the next anniversary of the Effective Date,
notwithstanding any such infirmity. The provisions of Sections X, XI and XII
shall continue in full force and effect notwithstanding the termination of this
Agreement under this section, but if after recovery from such infirmity as
evidenced by a medical certificate from a physician of Employer's choosing,
Employer does not choose to hire Employee in the executive capacity described in
Section I above, the provisions of Sections X, XI and XII, if still in effect,
shall thereupon terminate.
B. The Board of Directors of Employer may terminate Employee, by giving written
notice to Employee of such termination, at any time with or without Cause (as
defined below); provided, however, that if such termination is for any reason
other than for Cause, the provisions of this Agreement, including the
compensation arrangements set forth in Section IV, shall continue as set forth
in Section II. If the Board terminates Employee for any reason other than Cause,
then such termination shall not be effective until the tenth calendar day
following the delivery of written notice of such termination, pursuant to the
notice provisions herein.
C. The Board of Directors of Employer may terminate Employee for "Cause." Cause
is defined as one or more of the following acts or conditions taken by or
created by Employee:
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1. Commission by Employee of a felony or any crime involving moral
turpitude; commission by Employee of any act that exposes Employer, or
any of its officers or directors, to any criminal liability for such
act of Employee; or any gross negligence or neglect or willful
misconduct in the performance of Employee's duties that results in any
detriment to Employer or its officers or directors.
2. The death of Employee during the term of this Agreement; provided,
however, that Employer shall pay to Employee's estate any amounts that
are owed to Employee under this Agreement at the date of death, but
Employee's compensation, as set forth in Section IV.A. shall terminate
on his death.
In the event that Employer proposes to invoke the provisions of subsection C.1.
above, the Board of Directors shall provide written notice to Employee setting
forth the specific reasons for the proposed termination, and shall permit
Employee a thirty-day period in which to address and resolve the points raised
in such notice. In the event such points are not resolved to the reasonable
satisfaction of the Board of Directors of Employer, then Employee shall be given
written notice of his termination for Cause and this Agreement shall terminate
as of the date of the written notice of such termination to Employee; provided,
however, that Employer shall be liable to Employee for any amounts owed to
Employee through the date of such termination for Cause, that the provisions of
Sections X through XII shall survive such termination for Cause, and that no
further payments will be made to Employee under Section IV subsequent to
termination for Cause.
SECTION X. NONCOMPETITION AFTER TERMINATION. A. Employee agrees that in addition
to any other limitation, for the longer of: (i) six months after termination of
his employment with Employer, except a termination caused by Employer in
violation of the terms of this Agreement, or (ii) the period of time any
payments are being made under this Agreement, and unless otherwise specified, he
will not directly or indirectly engage in, or in any manner be connected with or
employed by any person, firm, entity, or corporation engaged in the retail sale
of products similar to those sold by Employer within a radius of 50 air miles of
any facility of Employer, its affiliates or subsidiaries, or any facility that
Employer has publicly announced its intention to open.
B. Notwithstanding anything in subparagraph A. above, if Employer terminates
Employee without Cause, the period of Noncompetition, as set forth in
subparagraph A. above, shall be from the date of termination through the earlier
of: (1) the date this Agreement would otherwise expire under the provisions of
Section II, or (2) the date on which the Employer violates any other term of
this Agreement.
SECTION XI. SOLICITATION AFTER Termination. Except as set forth in Section II of
this Agreement, Employee agrees that in addition to any other limitation, for a
period of two years after the termination of his employment with Employer,
except a termination caused by Employer in violation of the terms of this
Agreement, and unless otherwise specified, he will not, on behalf of himself or
on behalf of any other person, firm, entity, or corporation, call on any of the
employees of Employer, or any of its affiliates or subsidiaries, for the purpose
of recruiting such employees to employment with Employee, his then-current
employer, or affiliates of his then-current employer. Further, Employee agrees
that, for such two-year period, if any employee of Employer contacts Employee
about employment with Employee, his then-current employer, or any of its
affiliates or subsidiaries, Employee shall contact Employer prior to employing
the prospective employee, and shall permit Employer to discuss the matter with
the prospective employee.
SECTION XII. USE OF CONFIDENTIAL INFORMATION. Except as set forth in Section II
of this Agreement, Employee agrees that in addition to any other limitation, for
the longer of: (i) six months after termination of his employment with Employer,
except a termination caused by Employer in violation of the terms of this
Agreement, or (ii) the period of time any payments are being made pursuant to
Sections II.B.2. or 3. of this Agreement, he will not communicate, deliver, or
suffer the delivery to any person, firm, entity, or corporation any written or
tangible information or material obtained from Employer, and its subsidiaries
and affiliates, including material in electronic format or media, including but
not limited to: customer lists, retail prices or plans, advertising plans,
vendor product pricing, training or selling manuals or materials, or real estate
leases. For six months following Employee's termination for any reason, Employee
will not communicate, deliver, or suffer the delivery to any
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person, firm, entity, or corporation any confidential knowledge or trade secrets
which he might from time to time acquire with respect to the business of the
Employer, or its affiliates or subsidiaries.
Employee acknowledges that Employer has other confidentiality rules set forth in
its employee handbook, and other rules imposed by NATM Buying Corp., which also
apply to Employee. Except as specifically provided elsewhere herein, this
Section XII shall survive the expiration or termination of this Agreement.
SECTION XIII. INJUNCTIVE RELIEF. Employee acknowledges that the services to be
rendered under this Agreement are of a unique, special, and extraordinary
character which would be difficult or impossible for Employer to replace, so
Employee agrees that, in the event of a violation of any of the provisions of
this Agreement, Employer shall, in addition to any other rights and remedies
available under this Agreement, at law or otherwise, be entitled to an
injunction to be issued by any court or courts of competent jurisdiction
enjoining and restraining Employee from committing any violation of this
Agreement.
SECTION XIV. COMMUNICATIONS TO EMPLOYER; CONFLICTS. From the time this Agreement
commences until its termination, Employee shall communicate and channel to
Employer all knowledge, business, and any other matters of information which
could concern or be in any way beneficial to the business of Employer, whether
acquired by Employee before or during the term of this Agreement; provided,
however, that nothing in this Agreement shall be construed as requiring such
communications when the information is lawfully protected from disclosure as a
trade secret of a third party. Any such information communicated to Employer
shall be and remain the property of Employer, notwithstanding the subsequent
termination or expiration of this Agreement. Employee acknowledges and agrees
that Employer has certain policies regarding conflicts of interest, as applied
to corporate officers generally, and hereby agrees to scrupulously follow such
policies.
SECTION XV. TERMINATION BY EMPLOYEE. If Employer shall cease conducting its
business; take any action looking toward its dissolution or liquidation; make an
assignment for the benefit of its creditors; admit in writing its inability to
pay its debts as they become due; file a voluntary, or be the subject of an
involuntary, petition in bankruptcy; or be the subject of any state or federal
insolvency proceeding of any kind, then Employee may, in his sole discretion, by
written notice to Employer, voluntarily terminate his employment, pursuant to
section II.B.4. of this Agreement. If this section XV becomes effective and if
Employer ceases to operate or exist as a result of such event(s), the provisions
of Sections X through XII shall thereupon terminate.
SECTION XVI. BINDING EFFECT; MISCELLANEOUS. A. This Agreement shall be binding
on and shall inure to the benefit of any successor or successors of Employer and
the personal representatives of Employee. This Agreement is personal in nature,
and may not be assigned or transferred by Employee without the prior written
consent of Employer, and any purported assignment or transfer by Employee
without such consent is invalid and is not binding on Employer. This Agreement
may be assigned by Employer to any subsidiary that it directly or indirectly
controls, any affiliated corporation or entity under the direct or indirect
control of Employer, or any parent corporation or entity that directly or
indirectly controls Employer, and to any corporation or entity that may control
Employer as the direct or indirect result of a Business Combination, without the
consent of Employee. Any other assignment or transfer of this Agreement by
Employer shall require the written consent of Employee, and any such purported
transfer or assignment shall be without force or effect and shall not be binding
on Employee unless and until such consent is delivered.
B. This Agreement constitutes the entire Agreement between the parties hereto,
and supersedes all prior discussions, drafts, negotiations, proposals, and
agreements between the parties, whether written or oral. This Agreement may not
be amended except by a written instrument executed by the parties hereto.
C. If any provision of this Agreement is ultimately determined to be invalid or
unenforceable, by a final non-appealable ruling of a court of competent
jurisdiction, the remaining provisions of this Agreement shall not be affected
by such determination, shall remain in full force and effect, and shall be
construed in manner most likely to carry out the original intent of the parties.
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D. This Agreement may be executed in any number of counterparts, each of which
shall be an original, and all of which, taken together, constitute one single,
binding, enforceable agreement.
E. Any notice given, or required to be given, under this Agreement, shall be
deemed to have been duly given and deemed received: (1) three business days
after deposit in the United States Mail, by first-class, certified, postage
prepaid, return receipt requested; (2) one business day after delivery to a
nationally recognized courier service; or (3) three hours after delivery by fax
followed by telephone confirmation of receipt. The parties may change their
addresses at any time by giving written notice to the other party to this
Agreement in the manner set forth herein.
F. Employee may engage competent, independent counsel to review this Agreement
on his behalf, and, if he does so, Employer will reimburse the reasonable fees
and expenses of such counsel, up to a maximum of $500.
G. During its term, this Agreement contemplates that Employee will serve as
Chief Executive Officer and President of the Company. As such, it is essential
that he maintain a high level of open, direct communication with the Company's
Board of Directors and vice versa. In the event Employee believes that any
person or entity has interfered with such communication or his relationship with
the Board, or breached the express terms, or the spirit, of this Agreement,
Employee may bring such breach or breaches to the attention of the full Board of
Directors, for review and resolution in accordance with the terms of this
Agreement and good business practice.
SECTION XVII. LAW TO GOVERN CONTRACT; ARBITRATION. This Agreement shall be
governed by the laws of the State of Ohio. In the event of a dispute arising out
of, or relating to, this Agreement, the party raising the dispute shall provide
written notice of such dispute to the other party. If such dispute is not
resolved by the parties within 45 days following such notice, then the parties
hereby agree to submit the dispute to binding arbitration. The parties hereby
agree to abide by, respect, and conduct themselves in accordance with the final
decision of the arbitrators.
Such arbitration shall be conducted by, and under the rules of, the American
Arbitration Association, and shall be governed by the Federal Arbitration Act, 9
U.S.C. Section 1-16, to the exclusion of state laws to the extent inconsistent
therewith, and judgement upon the award may be entered in any court having
jurisdiction to do so. The arbitration shall be conducted by three arbitrators,
one of whom shall be appointed by each of the parties hereto, and the third
shall be appointed by the first two arbitrators. The arbitration shall be
conducted in Xxxxxxxxxx County, Ohio. The arbitrators are not empowered to award
damages beyond compensatory damages. Each of the parties hereto shall bear its
own costs associated with the arbitration, including professional fees and
out-of-pocket expenses, and each shall bear one half of the costs and fees of
the arbitration itself, except that the arbitrators may award or tax the costs
and fees of the arbitration itself as part of their award. THIS SECTION XVII
OVERRIDES THE PARTIES' RIGHT TO A TRIAL AND A JURY TRIAL, AND THERE IS NO RIGHT
TO APPEAL THE DECISION OF THE ARBITRATORS.
SECTION XVIII. RELOCATION. No later than July 31, 1999, Employee shall relocate
his principal residence within Xxxxxxxxxx County, Ohio, or one of its contiguous
counties, and shall maintain his principal residence within such counties for
the term of this Agreement. In order to facilitate such relocation, Employer
will pay or reimburse the following expenses:
A. Reasonable, actual out-of-pocket cost of relocating Employee,
his family, and personal possessions from the greater Miami,
Florida area to the greater Dayton, Ohio area.
B. Reasonable, out-of-pocket temporary living expenses for
Employee and his family in the greater Dayton, Ohio area until
the earlier of: (i) the Employee's purchase of a principal
residence in the greater Dayton, Ohio area, or (ii) December
31, 1998.
C. A "bridge loan" of $150,000 from Employer to Employee to
facilitate Employee's purchase of a principal residence in the
greater Dayton, Ohio area. Such loan is to be without
interest; without payments until its maturity; evidenced by a
promissory note; and secured by valid, enforceable second
mortgages on the Employee's residences in Miami, Florida and
the greater Dayton, Ohio area, suitable for recording. Such
loan will be made upon the purchase of the Employee's
residence in the greater Dayton, Ohio area. Such loan
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will mature upon the earlier of: (i) the sale of the
Employee's existing residence in Miami, Florida, or (ii) July
31, 1999.
D. Employer will reimburse the cost of the principal and interest
payments on Employee's existing first mortgage on his Miami,
Florida residence of $2,800.44 per month, commencing upon the
Effective Date, and ending on the earlier of: (i) the sale of
Employee's existing residence in Miami, Florida, or (ii) July
31, 1999.
E. Employer will reimburse the actual out-of-pocket real estate
commissions paid by Employee upon the sale of his Miami,
Florida residence, up to a maximum of $35,000, reduced by the
amount of the signing bonus set forth in Section IV.D. herein.
F. The provisions of paragraphs A, B, D, and E of this section
will be incorporated into a more detailed agreement between
Employer and Employee, consistent with Employer's standard
moving expense policies.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and date first stated above.
XXXXXXX, INC., by
/s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, its
Executive Vice President
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
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