Exhibit 10.21
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made as of the 23rd day
of April, 1999, by and between Foilmark, Inc., a Delaware corporation (the
"Company"), Foilmark Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of the Company ("Foilmark Sub"), and Xxxxxx X. Xxxx
(hereinafter, the "Employee").
RECITALS
WHEREAS, the Company and Employee have entered into that certain
Employment Agreement between HoloPak Technologies, Inc., a Delaware corporation
("HoloPak"), and the Employee, dated as of May 18, 1998 (the "Original
Employment Agreement");
WHEREAS, HoloPak, the Company and Foilmark Sub are parties to the
Agreement and Plan of Merger, dated as of November 17, 1998 (the "Merger
Agreement"), whereby HoloPak will be merged with and into Foilmark Sub (the
"Merger"), with Foilmark Sub as the surviving corporation in the Merger (the
"Surviving Corporation");
WHEREAS, Employee and HoloPak mutually agree that the Original
Employment Agreement shall terminate immediately prior to the effective time of
the Merger, and concurrently that the Company shall employ Employee as of the
effective time of the Merger; and
WHEREAS, as a condition precedent to the Merger Agreement, the Company
has agreed to employ Employee under the terms and conditions set forth below.
WITNESSETH
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. EMPLOYMENT
The Company hereby employs the Employee in a senior executive position
of the Company as Vice President of Operations, East Brunswick, New Jersey, and
Employee hereby accepts such employment. During the term of employment under
this Agreement (the "Employment Term"), the Employee shall perform such duties
as are requested from time to time by the Board of Directors of the Company or
the Chief Executive Officer of the Company.
2. PERFORMANCE
During the Employment Term, the Employee shall devote his entire
business efforts to the performance of his duties thereunder.
3. TERM
Unless otherwise terminated in accordance with Section 5 or 6 hereof,
the Employment Term of this Agreement shall be for an initial one year
commencing on the date hereof, and continuing thereafter for successive one-year
renewal terms.
4. COMPENSATION FOR EMPLOYMENT
(a) The basic annual compensation of the Employee for his employment
services to the Company and to all of its affiliated companies during the
Employment Term shall be $145,000 (the "Salary"), which the Company shall pay to
the Employee in accordance with the normal payroll policy and in compliance with
federal and state law. The Company may adjust the Salary upward on an annual
basis, but the Salary shall not be decreased.
(b) Commencing on the date hereof (the "Bonus Starting Date") and
continuing during the Employment Term, the Company shall pay the Employee a
bonus in accordance with this paragraph 4(b). For each fiscal year during the
Employment Term, the Board of Directors, in its sole discretion, shall establish
a budget for operating income for foil and holography or such other profit
parameters as approved by the Compensation Committee of the Company in
accordance with generally accepted accounting principles consistently applied
("GAAP") subject to approval by the Compensation Committee of the Company the
Employee's bonus will vary as a percentage of Salary in relation to the
percentage achievement of that budget as follows:
Percentage of Percentage of Salary Earned
Bonus Attained As Bonus
-------------- ---------------------------
less than 80% 0%
80% 10%
90% 20%
100% 30%
110% 40%
120% and above 50%
For a percentage of budget achievement between the benchmarks, the percentage of
the Salary shall be linearly interpolated, provided that no bonus shall be paid
for achievement less than 80% of budget and the maximum bonus shall be 50% of
Salary in any event. In the case of a partial fiscal year, the Company shall
adjust the bonus to correspond to the Company's budget and the Salary for the
portion of the applicable fiscal year that shall be included in the Employment
Term. Notwithstanding the foregoing, the Employee's initial bonus period (the
"Initial Bonus Period") shall be the period starting with the Bonus Starting
Date and ending with the Company's fiscal year, and the Company shall use its
budget for that period (a copy of which the Company has provided to the
Employee) to determine the Employee's eligibility for a bonus, and then apply
the applicable bonus percentage to that portion of the Employee's annual Salary
that relates to the Initial Bonus Period. The Employee's second bonus period
shall be the period beginning with the Company's fiscal year and ending with the
Company's second fiscal year, and the Company shall prepare a budget for that
period and determine the Employee's eligibility for a bonus in the manner
described for the Initial Bonus Period. The bonus program shall continue with
each extension of the Employment Term as defined in paragraph 3 hereof, with the
bonus periods corresponding to the Company's fiscal year. Bonuses shall continue
to be calculated as described in this paragraph.
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(c) During the Employment Term, the Company shall also provide the
Employee with those fringe benefits specified on Exhibit A (the "Fringe
Benefits"). The Company shall also reimburse the Employee for any reasonable
business expenses incurred on the Company's behalf in connection with the
performance of his services during the Employment Term.
(d) HoloPak has granted to the Employee under its Non-Qualified Stock
Option Plan (the "HoloPak Plan"), options to purchase shares of Common Stock
("Options"). Pursuant to and in accordance with Section 3.4 of the Merger
Agreement, at the effective time of the Merger, the Options shall be converted
into and become rights with respect to shares of common stock of Foilmark, and
Foilmark shall assume each Option.
(e) As of the effective date of the Merger, the Company shall grant to
the Employee under its 1995 Amended and Restated Employee Stock Option Plan (the
"Plan") options ("Options") to purchase shares of 10,000 shares of Company
common stock, $.01 par value, at an exercise price and pursuant to the vesting
schedule set forth in the Plan.
(f) The Employee will be eligible to participate in the Plan and,
therefore, will be eligible for grants of stock options in addition to the
Options referred to above. The administrator of the Plan, which is currently the
Compensation Committee of the Board of Directors, will determine, from time to
time, whether any such additional Options shall be granted to the Employee and
the exercise price, vesting schedule and other terms of any such additional
options that may be granted.
(g) The Company's commitment to grant additional Options is subject to
the Company's obtaining approval of such items by the Board of Directors of the
Company.
5. TERMINATION WITHOUT COMPENSATION
(a) PARTIAL OR TOTAL DISABILITY. If the Employee is unable to perform
his duties and responsibilities hereunder to the full extent required by reason
of non-employment related illness, injury or incapacity for six months (during
which time he shall continue to be compensated hereunder), the Company may
terminate the Employment Term, and the Company shall not have any further
liability or obligation to the Employee hereunder except for any unpaid Salary,
any unpaid bonus earned by Employee pursuant to Section 4(b) hereof for the
bonus period in which termination of employment occurs, adjusted pro rata based
upon the portion of such bonus period in which the Employee was actually
employed by the Company hereunder and any Fringe Benefits accrued to the date of
termination, provided, however, that Employee reserves any rights that he may
have against the Company with respect to any claims for damages and/or benefits
under any Workers' Compensation Act, or otherwise, arising out of injuries,
illness or incapacity incurred as a result of his employment with the Company
(an "Employment Injury"). In the event of any dispute under this Section 5(a),
the Employee shall submit to a physical examination by a licensed physician
mutually satisfactory to the Company and the Employee, the cost of such
examination to be paid by the Company, and the determination of such physician
shall be determinative. If, after termination due to disability as provided
herein, the Employee obtains, at his sole expense, medical certification from a
licensed physician reasonably satisfactory to the Company that such disability
has ended, the Company shall offer to employ the Employee pursuant to the terms
of this Agreement for the remainder of the initial term or any renewal term in
effect at the time of termination, except that the Company shall not be required
to re-employ the Employee at the same officer position if the Company shall have
elected another person to such position during the period of the Employee's
disability and such other person continues in such position at the time of the
Employee's return to employment.
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(b) DEATH. If the Employee dies, this Employment Agreement (except for
the provisions of Sections 6, 10 and 11 hereof) shall terminate, and thereafter
the Company shall not have any further liability or obligation to the Employee,
his executors, administrators, heirs, assigns or any other person claiming under
or through him except for unpaid Salary, any unpaid bonus earned by Employee
pursuant to Section 4(b) hereof for the bonus period in which Employee's death
occurs, adjusted pro rata based upon the portion of such bonus period in which
the Employee was actually employed by the Company hereunder and any Fringe
Benefits, accrued to the date of his death.
(c) CAUSE. The Company may terminate the Employee's employment for
"cause" by giving the Employee 60 days' written notice of the termination date
and thereafter the Company shall not have any further liability or obligation to
the Employee. For the purposes of this Agreement, "cause" shall mean the failure
of the Employee to observe or perform (other than by reason of illness, injury,
or incapacity) any of the material terms or provisions of this Agreement,
dishonesty, willful misconduct, material neglect of the Company's business,
conviction of a felony or other crime involving moral turpitude,
misappropriation of funds or habitual insobriety. Any such willful misconduct or
material neglect shall constitute "cause" only if the action (or omission) at
issued shall be continuing 30 days after the Company gives the Employee written
notice of such willful misconduct or material neglect constituting "cause".
6. TERMINATION WITH COMPENSATION
(a) NON-RENEWAL OF TERM. The Employment Term may be terminated by
either party hereto as of the end of the initial term or any renewal term then
in effect by giving written notice of the intention to terminate the Employment
Term at least 90 days prior to the proposed termination date. If the Company
terminates the Employment Term under such circumstances, the Company shall
provide the Employee with the Termination Compensation specified in Section
6(c).
(b) WITHOUT CAUSE. During the initial one-year term, the Company shall
have the right to terminate the Employment Term without cause at any time by
giving the Employee 60 days' written notice of the termination date. Under such
circumstances, the Company shall provide the Employee with the Termination
Compensation specified in Section 6(c).
(c) TERMINATION COMPENSATION. The "Termination Compensation" shall
consist of payment of the Employee's Salary under Section 4(a) hereof, at the
level in effect at the date of termination, for 12 months (with continuing
benefits during the 12 months, excluding car allowance). The Employee will be
able to purchase medical benefits through the Company at a rate equal to the
Company's total cost to provide such benefits to an employee, through age 65.
The Employee shall not be entitled to any Termination Compensation under this
Section 6 unless the Employee executes and delivers to the Company after a
notice of termination a release in a form satisfactory to the Company in its
sole discretion by which the Employee releases the Company and its affiliates,
and the Company so releases the Employee, from any obligations and liabilities
of any type whatsoever, except for the Company's obligation to provide the
Salary specified in this Section 6, any unpaid bonus earned by Employee pursuant
to Section 4(b) hereof for the bonus period in which termination of employment
occurs, adjusted pro rata based upon the portion of such bonus period in which
the Employee was actually employed by the Company hereunder and any liability
for any Employment Injury. The parties hereto acknowledge that the Salary to be
provided under this Section 6 is to be provided in consideration for the
above-specified release.
(d) EXCLUSIVITY. Upon any termination by the Company under Section 6(a)
or Section 6(c), the
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Company shall not have any obligation to the Employee, his executors,
administrators, heirs or assigns or any other person claiming under or through
him other than to provide the Termination Compensation under the terms and
conditions of Section 6(c) and any other obligation that the Company may have
for any Employment Injury.
7. AGREEMENT NOT TO COMPETE.
(a) During the Non-Competition Period (defined below), the Employee
shall not, within the Restricted Area (defined below) directly or indirectly, in
any capacity, without the express written consent of the Chief Executive Officer
of the Company, render his services, engage in any business activity or have a
financial interest, in any business (other than as the holder of not more than
one percent of the total outstanding stock of any publicly-held company) that is
competitive with any of those business activities in which the Company, the
Surviving Corporation, Foilmark Manufacturing Corporation, Transfer Print Foils,
Inc., Alubec Industries, Inc, or any subsidiary of any of the foregoing or any
person, partnership, association, corporation or other entity controlled by any
or all of them (collectively, the "Foilmark Parties") shall have been engaged
during his employment by the Company, nor shall the Employee assist any person
or entity that is engaged in such business, including by making Foilmark
Information (defined below) available to any such person or entity. In addition,
the Employee shall not directly or indirectly solicit or otherwise encourage any
of the employees of any Foilmark Party to terminate his employment with the
applicable Foilmark Party. Notwithstanding the above, the Employee may become
employed or consult in the areas of adhesive coating, extrusion coating,
silicone coating, laminating, printing, paper or film manufacturing upon
termination of his employment, except to the extent that the Company can prove
such subsequent employment is in direct competition with a Foilmark Party. As
used herein, the "Restricted Area" means, the (i) United States of America and
(ii) Canada. If a court determines that the foregoing restrictions are too broad
or otherwise unreasonable under applicable law, including with respect to time
and space, the court is hereby requested and authorized by the parties hereto to
review the foregoing restriction to include the maximum restrictions allowable
under applicable law. The "Non-Competition Period" means the period during which
the Employee is employed hereunder. In addition, (A) in the case of termination
of employment pursuant to Section 6 hereof, the "Non-Competition Period" shall
be extended from the date of such termination of employment for a period equal
to the greater of (x) the period in which any payment of compensation (except
for an employment related injury) is made to Employee pursuant to this Agreement
and (y) one year, or (B) in the case of termination of employment pursuant to
Section 5 hereof, the "Non-Competition Period" shall be extended from the date
of such termination of employment for a period of one year.
(b) The terms of this Section 7 shall apply to the Employee and any
Person controlled by the Employee, including any relative of the Employee, to
the same extent as if they were parties hereto, and the Employee shall take
whatever actions may be necessary to cause any such Persons or entities to
adhere to the terms of this Section 7.
8. INVENTIONS, DESIGNS AND PRODUCT DEVELOPMENTS
All inventions, innovations, designs, ideas and product developments
(collectively, the "Developments"), developed or conceived by the Employee,
solely or jointly with others, whether or not patentable or copyrightable, at
any time during the Employment Term and that relate to the actual or planned
business activities of any Foilmark Party and all of Employee's right, title and
interest therein, shall be the
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exclusive property of the applicable Foilmark Party. The Employee hereby
assigns, transfers and conveys to any applicable Foilmark Party all of his
right, title and interest in and to any and all such Developments. As requested
from time to time by the Board, the Employee shall disclose fully, as soon as
practicable and in writing, all Developments to the Chief Executive Officer of
the Company. At any time and from time to time, upon the request of any of the
Board, the Employee shall execute and deliver to the Company any and all
instruments, documents and papers, give evidence and do any and all other acts
that, in the opinion of counsel for the Company, are or may be necessary or
desirable to document such transfer or to enable any applicable Foilmark Party
to file and prosecute applications for and to acquire, maintain and enforce any
and all patents, trademark registrations or copyrights under United States or
foreign law with respect to any such Developments or to obtain any extension,
validation, reissue, continuance or renewal of any such patent, trademark or
copyright. The applicable Foilmark Party will be responsible for the preparation
of any such instruments, documents and papers and for the prosecution of any
such proceedings and will reimburse the Employee for all reasonable expenses by
him in compliance with the provisions of this Section.
9. CONFIDENTIAL INFORMATION
(a) The Employee has had and will have possession of or access to
confidential information relating to the business of one or more Foilmark
Parties, including writings, equipment, processes, drawings, reports, manuals,
invention records, financial information, business plans, customer lists, the
identity of or other facts relating to prospective customers, inventory lists,
arrangements with suppliers and customers, computer programs, or other material
embodying trade secrets, customer or product information or technical or
business information of certain Foilmark Parties. All such information, other
than any information that is in the public domain through no act or omission of
the Employee or which he is authorized to disclose, or that the Employee had in
his possession prior to his employment with the Company, is referred to
collectively as the "Foilmark Information." During and after the Employment Term
the Employee shall not knowingly, willfully or intentionally (i) use or exploit
in any manner the Foilmark Information for himself or any Person other than a
Foilmark Party, (ii) remove any Foilmark Information, or any reproduction
thereof, from the possession or control of any Foilmark Party or (iii) treat
Foilmark Information other than in a confidential manner.
(b) All Foilmark Information developed, created or maintained by the
Employee, alone or with others employed by the Company, and all Foilmark
Information maintained by the Employee thereafter, shall remain at all times the
exclusive property of the applicable Foilmark Party. The Employee shall return
to the Company all Foilmark Information, and reproductions thereof, whether
prepared by him or others, that are in his possession immediately upon request
and in any event upon the completion of his employment by the Company.
10. REMEDIES
The Employee expressly acknowledges that the remedy at law for any
breach of Sections 7, 8 or 9 will be inadequate and that upon any breach or
threatened breach, the Company (or Foilmark Party) shall be entitled as a matter
of right to injunctive relief in any court of competent jurisdiction, in equity
or otherwise, and to enforce the specific performance of the Employee's
obligations under these provisions without the necessity of proving the actual
damage or the inadequacy of a legal remedy. Subject to the remainder of this
Section 10, the rights conferred upon the Company (and any Foilmark Party) by
the preceding sentence shall
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not be exclusive of, but shall be in addition to, any other rights or remedies
which the Company may have at law, in equity or otherwise.
11. SURVIVAL
Notwithstanding the termination of the Employment Term pursuant to
Section 5 or 6, the obligations of the Employee under Sections 7, 8 and 9 shall
survive and remain in full force and effect and the Company shall be entitled to
relief against the Employee pursuant to the provisions of Section 10 hereof.
12. GENERAL
(a) GOVERNING LAW. The terms of this Agreement shall be governed by the
laws of the State of New Jersey.
(b) INTERPRETATION. Unless the context of this Agreement clearly
requires otherwise, (i) references to the plural include the singular, and to
the singular include the plural, (ii) "or" has the inclusive meaning frequently
identified with the phrase "and/or" and (iii) "including" has the inclusive
meaning frequently identified with the phrase "but not limited to." The section
and other headings contained in this Agreement are for reference purposes only
and shall not control or affect the construction of this Agreement or the
interpretation thereof in any respect. Section, subsection, schedule and exhibit
references are to this Agreement unless otherwise specified. Each accounting
term used herein that is not specifically defined herein shall have the meaning
given to it under GAAP.
(c) BINDING EFFECT. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit and be enforceable by the
respective heirs, representatives, successors (including any successor as a
result of a merger or similar reorganization) and assigns of the parties hereto,
except that the duties and responsibilities of the Employee hereunder are of a
personal nature and shall not be assignable in whole or in part by the Employee.
Any Foilmark Party other than the Company is a third party beneficiary of this
Agreement and may enforce the provisions of this Agreement that pertain to such
Foilmark Party, including Sections 7, 8 and 9, to the same extent as if a party
hereto.
(d) NOTICES. All notices required to be given under this Agreement
shall be in writing and shall be deemed to have been given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, or when sent by Federal Express or other overnight
delivery service, addressed as follows (or to such other address that a party
may provide from time to time by notice to the other parties):
TO EMPLOYEE:
Xx. X.X. Xxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000
TO THE COMPANY:
Foilmark, Inc.
0 Xxxxxxx Xxxx Xxxxx
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Xxxxxxxxxxx, XX 00000
Attention: President
(e) ENTIRE AGREEMENT; TERMINATION OF PRIOR AGREEMENTS; MODIFICATION.
This Agreement (including Exhibit A hereto) constitute the entire agreement of
the parties hereto with respect to the subject matter hereof. This Agreement may
not be modified or amended in any way except in writing by the parties hereto.
(f) WAIVER. No waiver of any breach of this Agreement shall be
construed to be a waiver as to succeeding breaches.
(g) SEVERABILITY. If any provision of this Agreement or application
thereof to anyone under any circumstances is adjudicated to be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect any other provisions or applications of this Agreement which can be given
effect without the invalid or unenforceable provision or application and shall
not invalidate or rend unenforceable such provision in any other jurisdiction.
(h) COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures hereto were upon the same instrument.
(i) TERMINATION OF ORIGINAL EMPLOYMENT AGREEMENT. Employee and Foilmark
Sub agree that the Original Employment Agreement, and that certain Employment
Agreement, dated as of May 18, 1998, between the Company and Employee (the "May
Employment Agreement"), have each been terminated without any further force and
effect, effective immediately prior to the effective time of the Merger. In
consideration for entering into this Agreement, the sufficiency of which is
hereby acknowledged, Employee hereby concurrently waives all rights that he may
have under the Original Employment Agreement and the May Employment Agreement,
including, but not limited to, any right that he may have to Termination
Compensation (as such term is defined in the Original Employment Agreement)
under the Original Employment Agreement and the May Employment Agreement arising
out of or as a result of such termination of the Original Employment Agreement
and the May Employment Agreement.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have hereunto duly executed this Agreement the day and year first written above.
FOILMARK, INC.
By: /s/
------------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: President & Chief Executive Officer
FOILMARK ACQUISITION CORPORATION
By: /s/
------------------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: President
/s/
------------------------------------------
Xxxxxx X. Xxxx
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EXHIBIT A
FRINGE BENEFITS
1. TYPICAL OFFICE BENEFITS: Inclusion in the benefit plans generally given
to executive officers of the Company from time to time, life and
disability insurance, and participation in any of the Company's profit
sharing and pension plans. In addition, the Company shall waive the
waiting period for participation in the profit sharing and 401(k) plans
to the extent permitted by law to allow Employee to participate in such
plans at the earliest possible dates.
2. VACATION: Each one-year period of employment under this Agreement will
entitle Employee to a total of four weeks paid vacation in such year.
3. AUTOMOBILE ALLOWANCE: A monthly allowance for a car and insurance, and
gas and maintenance expenses, as allowed and consistent with those
given to executive officers of the Company.
