EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into on this
29th day of October, 1998, BETWEEN:
(1) Successories, Inc., an Illinois corporation ("the
Company"); and,
(2) Xxxx X. Xxxxxxxx, a resident of Illinois ("the
Employee").
THE COMPANY AND THE EMPLOYEE HEREBY AGREE, in consideration of
the mutual obligations and covenants set forth below, to the
following terms and conditions:
1. Employment
1.1 The Company shall employ the Employee as President &
Chief Operating Officer subject to the terms and conditions
specified in this Employment Agreement ("the Employment").
1.2 The Employee shall also be appointed a Director of the
Company for an initial term that expires at the Company's annual
shareholder meeting in 2001.
1.3 The Employment pursuant to this Employment Agreement
shall commence on November 30, 1998 and continue for a term of three
(3) years ("the Term of Employment").
1.4 Unless either party to this Employment Agreement, at
least one year prior to the conclusion of the Term of Employment,
provides written notice to the other party that it wishes not to
renew this Employment Agreement, then the Term of Employment will be
automatically extended for one additional year. There is no limit
on the number of extensions of the Term of Employment that may occur
pursuant to this section.
2. Commencement and Place of Employment
The Company hereby employs the Employee as its President &
Chief Operating Officer effective on the date specified above, and
the Employee hereby accepts such employment on the terms and
conditions set forth in this Employment Agreement. The Employment
shall be in Aurora, Illinois.
3. Duties
The Employee shall faithfully and diligently perform the
duties and responsibilities assigned to him by the Company, provided
that such duties are commensurate with the Employee's titles.
4. Exclusivity of Service
While employed by the Company, the Employee shall devote all
of his time, attention, and energies to the Company's business;
provided that it shall not be a violation of this Agreement for the
Employee to (i) serve on corporate, civic or charitable boards or
committees, (ii) deliver lectures and fulfill speaking engagements
or (iii) manage personal investments, so long as such activities
under clauses (i), (ii) and (iii) do not interfere, in any material
respect, with the Employee's responsibilities hereunder.
5. Compensation and Benefits
5.1 Effective as of November 30, 1998, the Company shall pay
the Employee a minimum base salary of TWO HUNDRED TWENTY-FIVE
THOUSAND DOLLARS ($225,000) per year, payable in arrears on a
monthly basis. The Company may make deductions or withholdings as
required by applicable State and Federal law, or as may be or has
been consented to by the Employee. The minimum base salary shall be
adjusted on an annual basis (but not reduced below the minimum base
salary set forth above in this paragraph) by the Company for
purposes of the second, third, and, if applicable, any succeeding
year of the Employment due to its extension.
5.2 The Employee shall also be eligible to receive a bonus
on an annual basis in an amount of up to ONE HUNDRED THOUSAND
DOLLARS ($100,000) per year. Within thirty (30) days after the
commencement of the Company's fiscal years, the Employee and the
Company's Board of Directors shall agree in writing upon the
specific performance standards and criteria that will be used to
determine how the bonus is actually earned. In addition, the
Employee and the Company's Board of Directors will also agree at
that time as to the amount of the actual bonus opportunity of the
Employee for the forthcoming fiscal year.
5.3 The Company shall also reimburse the Employee, against
receipts or other satisfactory evidence, all reasonable business
expenses properly incurred by him in the course of the Employment
and in accordance with the Company's rules relating to reimbursement
of expenses.
5.4 The Company shall also provide the Employee with paid
vacation in accordance with the Company's policies, but in no event
less than twenty (20) days per annum, to be taken at such time as is
mutually agreed between the Employee and the Company. The Employee
will not forfeit any paid vacation days that are not taken in any
year.
5.5 The Company shall also afford the Employee certain
fringe benefits and perquisites at least equal to those made
available by the Company to its other senior executive employees,
and in accordance with the terms of such plans and policies,
including but not limited to entitlement to holidays, personal
leave, sick leave, family leave, medical insurance, disability
insurance, dental insurance, and life insurance. The Company shall
reimburse the Employee for the cost of premiums paid by him to
obtain health insurance coverage from his former employer under
COBRA during any applicable waiting period or preexisting condition
limitation period under the Company's medical benefit plans.
5.6 The Employee shall also be entitled to receive options
to be granted under the Company's stock option plan as determined by
the Compensation Committee of the Board of Directors.
Notwithstanding anything in the foregoing to the contrary, the
Employee shall be granted 100,000 stock options on his first day of
employment pursuant to Stock Option Agreements attached hereto as
Exhibits A and B. The Employee shall also, upon attainment of
certain performance goals agreed upon between the Employee and the
Board of Directors, be eligible to receive a grant of 25,000 options
on the first anniversary and second anniversary, respectively, of
the effective date of this Employment Agreement.
5.7 The Company shall reimburse the Employee for reasonable
life insurance premiums incurred by the Employee to purchase and
maintain during the Term of Employment an individual term life
insurance policy on the Employee's life with a $500,000 death
benefit, with the beneficiary(ies) on such policy to be selected in
the sole discretion of the Employee.
5.8 The Company shall reimburse the Employee for reasonable
disability insurance premiums incurred by the Employee to purchase
and maintain during the Term of Employment a supplemental individual
long term disability policy with respect to the Employee that would
pay a maximum disability benefit of $325,000 per year (after giving
effect to the Company's disability insurance policy that covers the
Employee and which is referenced in Section 5.5).
6. Reasonableness of Restrictions
The Employee acknowledges that, during the term of Employment,
the Company will provide the Employee with the use of and access to
trade secrets and confidential information. In turn, the Employee
recognizes that, while performing his duties hereunder he will have
access to and come into contact with trade secrets and confidential
information belonging to the Company and will obtain personal
knowledge of and influence over its customers and/or employees. The
Employee therefore agrees that the restrictions contained in
Sections 7, 8, and 9 are reasonable and necessary to protect the
legitimate business interests of the Company both during and after
the termination of the Employment.
7. Confidentiality
7.1 The Employee shall neither during the Employment (except
in the proper performance of his duties) nor at any time (without
limit) after the termination thereof directly or indirectly:
7.1.1 use for his own purposes or those of any other
person, company, business entity, or other organization whatsoever,
or
7.1.2 disclose to any person, company, business entity,
or other organization whatsoever,
any trade secrets or confidential information relating or belonging
to the Company, including but not limited to any such information
relating to clients or customers, client or customer lists or
requirements, market information, business plans or dealings,
financial information and plans, trading models, market access
information, research activities, any document marked Confidential,
or any information which the Employee has been told is Confidential,
or any information which has been given the Company in confidence by
customers, suppliers, or other persons.
8. Trade Secrets
8.1 During the term of this Employment Agreement, the
Employee acknowledges that he will be afforded access to and become
familiar with various trade secrets of the Company, including, but
not necessarily be limited to the following: the Company's business
plans, financial information, marketing strategies, customer or
client lists, software and research and proprietary technology
information. The Employee acknowledges that these trade secrets are
owned and shall continue to be owned solely by the Company and that
they contain specialized and confidential information not generally
known in the industry and which constitute the Company's trade
secrets. The Employee recognizes and acknowledges that it is
essential to the Company to protect this trade secret information.
8.2 The Employee further represents to the Company that, as
an inducement for his employment, the Employee will hold this
information in trust and confidence for the Company's sole benefit
and use during the Employment and after the Employment terminates
the Employee agrees not to use this information for any purpose
whatsoever or to divulge this information to any person other than
the Company without express written authorization unless such
information shall no longer constitute trade secret information
other than as a result of conduct of the Employee in violation of
this Section 8.2.
9. Post-Termination Obligations
9.1 Non-Competition. The Employee hereby agrees that,
during his employment by the Company pursuant to this Employment
Agreement and for a period of one (1) year following the termination
of the Employment under this Employment Agreement, he will not,
directly or indirectly and in any way, whether as principal or as
director, officer, employee, consultant, agent, partner or
stockholder to another entity (other than by the ownership of a
passive investment interest of not more than 2.5% in a company with
publicly traded equity securities):
9.1.1 own, manage, operate, control, be employed by,
participate in, or be connected in any manner with the ownership,
management, operation, or control of any business competing with any
business of the Company in the one (1) year immediately preceding
such termination;
9.1.2 contact, interfere with, solicit on behalf of
another, or attempt to entice away from the Company (or any
affiliate or subsidiary of the Company):
(i) any client or customer of the Company (or
any affiliate or subsidiary of the Company); or
(ii) any contract, agreement or arrangement that
the Company (or any affiliate or subsidiary of the Company) is
actively negotiating with any other party; or
(iii) any prospective business opportunity that
the Company (or any affiliate or Subsidiary of the Company) has
identified, unless the Company has declined to pursue such
opportunity.
9.2 Non-Solicitation of Employees. The Employee hereby
agrees that he will not, for a period of one (1) year immediately
following the termination of his employment, howsoever arising,
either on his own account or in conjunction with or on behalf of any
other person, company, business entity, or other organization
whatsoever directly or indirectly:
9.2.1 induce, solicit, entice or procure any person who
is an employee of the Company to leave such employment, where that
person is:
(i) is a Company Employee on the Termination
Date; or
(ii) had been a Company Employee in any part of
the one (1) year period immediately preceding the Termination Date;
or
9.2.2 accept into employment or otherwise engage or use
the services of any person who:
(i) is a Company Employee on the Termination
Date; or
(ii) had been a Company Employee in any part of
the one (1) year period immediately preceding the Termination Date;
provided, however, that this Section 9.2.2 shall not apply to any
Company Employee who is terminated without cause by the Company.
10. Termination
10.1 The Company and the Employee agree that this employment
relationship is for a term of three (3) years commencing on the date
specified in paragraph 1.3 of this Employment Agreement.
10.2 On termination of the Employment for whatever reason,
the Employee shall return to the Company in accordance with its
instructions all of the Company's proprietary technology and trading
models, records, software, models, reports, and other documents and
any copies thereof and any other property belonging to the Company
which are in the Employee's possession or under his control. The
Employee shall, if so required by the Company, confirm in writing
his compliance with his obligations under this paragraph.
10.3 The termination of the Employment shall be without
prejudice to any right the Employee or the Company may have in
respect of any breach by the other of any provisions of this
Employment Agreement which may have occurred prior to such
termination.
10.4 In the event of termination of the Employment hereunder
however arising, the Employee agrees that he will not at any time
after such termination represent himself as still having any
connection with the Company, except as a former employee for the
purpose of communicating with prospective employers or complying
with any applicable statutory requirements.
10.5 Notwithstanding anything to the contrary in this
Employment Agreement, the Company may terminate this Employment
Agreement for "just cause" by providing to the Employee written
notice of the termination on account of just cause and the specific
grounds thereof. Upon termination of the Employment for just cause,
the Employment will immediately end and the Employee will not be
entitled to receive any further compensation after that date except
as may be required by law. The term "just cause" means (a) an act
of fraud or dishonesty by the Employee that results directly or
indirectly in gain or personal enrichment of the Employee at the
Company's expense, (b) an act by the Employee that the Company's
Board of Directors reasonably believes constitutes a felony, or (c)
any material breach by the Employee of any provision of this
Employment Agreement that has not been cured by the Employee within
30 days of written notice of such a breach from the Company.
10.6 Notwithstanding anything to the contrary in this
Employment Agreement, the Company's obligations under this
Employment Agreement shall cease or terminate upon the death of the
Employee or upon the determination that the Employee has a
disability. Upon the death of the Employee, the Company shall pay
the surviving spouse (if any) of the Employee six (6) months of the
then current base salary of the Employee and any other compensation
or pro rata bonus due the Employee; if there is no surviving spouse,
the Company shall pay those sums to the estate of the Employee. For
purposes of this paragraph only, the Employee will be deemed to have
a "disability" only where the Employee has suffered a physical or
mental illness, injury, or infirmity that prevents the Employee from
fulfilling all of his material duties under this Employment
Agreement for at least ninety (90) consecutive days and the
Company's Board of Directors has determined in good faith and with
the advice of the Employee's physician (or other relevant medical
professional), that the Employee's illness, injury, or infirmity is
more than likely to continue indefinitely. In these circumstances,
after a determination has been made in good faith by the Company's
Board of Directors that the Employee has a disability, the Company
shall pay to the Employee, the Employee's guardian or administrator,
or the Employee's estate, the then current base salary provided
under this Employment Agreement commencing with the first month
after the determination of the existence of a disability and until
the expiration of the Employment Agreement or for a period of six
(6) months, whichever is lesser.
10.7 Notwithstanding anything to the contrary in this
Employment Agreement, the Company may, in connection with the notice
of non-renewal delivered to the Employee pursuant to paragraph 1.4,
elect not to utilize the Employee's services during the remainder of
the Term of Employment and relieve the Employee of any further
obligation to perform his duties under this Employment Agreement.
If the Company so elects, then the Employee shall cease to occupy
his office or otherwise have access to the Company's premises, but
the Employee shall continue to have access to a Company-provided
voice mail box for a period of six (6) months following his
termination of employment, and the Company shall pay and will remain
obligated to pay the Employee the remainder of his base salary,
bonus and all other benefits during the remainder of the Term of
Employment. In such event, the Employee will not be required to
mitigate his damages by seeking other alternative employment during
the remainder of the Term of Employment under this Employment
Agreement.
10.8 Notwithstanding anything to the contrary in this
Employment Agreement, the Employee may terminate the Employment
under this Employment Agreement for good reason in which event the
Company shall still have the same obligations to the Employee as
provided in paragraph 5. For purposes of this paragraph, "good
reason" shall mean: (a) without the Employee's express written
consent, the assignment to the Employee of any duties inconsistent
with his title, position, duties, responsibilities, and status with
the Company prior to a Change in Control as hereinafter defined, or
a change in his reporting responsibilities, title, or office as in
effect after a Change in Control, or any removal of the Employee
from or any failure to reelect him to any such positions, except in
connection with the termination of the Employment for just cause,
disability, or as a result of his death; (b) (i) a reduction in the
Employee's minimum base salary or (ii) a reduction in the Employee's
benefits or material breach of the Company's obligations undertaken
in this Employment Agreement; (c) subsequent to a Change in Control
of the Company, the failure by the Company to obtain the assumption
of the obligation to perform this
Employment Agreement by any successor; or (d) subsequent to a
Change in Control of the Company, any purported termination of the
Employee's Employment which is not effected pursuant to a notice of
termination satisfying the requirements of paragraphs 1.4 or 10
hereof. For purposes of this Section 10.8, the term "Change in
Control" means the occurrence of one or more of the following: (i)
without prior approval of the Board of Directors, a single entity or
group of affiliated entities acquires more than 50% of the Company's
outstanding stock, (ii) the Company is involved in a merger or a
sale of all or substantially all of its assets so that its
shareholders before the merger or sale own less than 50% of the
voting power of the surviving or acquiring corporation, (iii) a
liquidation or dissolution of the Company occurs, (iv) a change in
the majority of the Board of Directors occurs during any twenty-four
(24) month period without the approval of a majority of the
directors in office at the beginning of such period. In the event
that the Employee determines to terminate his Employment for good
reason, and the reason for termination is an alleged violation of
subsections (a) and/or (b)(ii) above, the Employee shall be
obligated to give notice of termination of thirty (30) days to the
Company, which notice shall identify the reason for such
termination, and the Company shall have a reasonable opportunity to
cure any such alleged defects. In the event of any termination by
the Employee for "good reason," the Employee shall be entitled to
the remainder of the base salary due under the Term of Employment.
11. Severability
The various provisions and sub-provisions of this Employment
Agreement are severable, and if any provision or sub-provision or
identifiable part thereof is held to be invalid or unenforceable by
any court of competent jurisdiction, then such invalidity or
unenforceability shall not affect the validity or enforceability of
the remaining provisions or sub-provisions or identifiable parts in
this Employment Agreement.
12. Warranty
The Employee represents and warrants that he is not prevented
by any other Employment Agreement, arrangement, contract,
understanding, Court Order or otherwise, which in any way directly
or indirectly conflicts, is inconsistent with, or restricts or
prohibits him from fully performing the duties of the Employment, in
accordance with the terms and conditions of this Employment
Agreement.
13. Notices
Any notice to be given hereunder may be delivered (a) in the
case of the Company by first class mail addressed to its Registered
Office and (b) in the case of the Employee, either to him personally
or by first class mail to his last known residence address. Notices
served by mail shall be deemed given 3 days after the date on which
they are mailed.
14. Waivers and Amendments
No act, delay, omission, or course of dealing on the part of
any party hereto in exercising any right, power, or remedy hereunder
shall operate as, or be construed as, a waiver thereof or otherwise
prejudice such party's rights, powers, and remedies under this
Employment Agreement. This Employment Agreement may be amended only
by a written instrument signed by the Employee and a duly authorized
officer of the Company or the Board of Directors.
15. Prior Agreements
This Employment Agreement cancels and is in substitution for
all previous letters of engagement, offer letters, agreements, and
arrangements (whether oral or in writing) relating to the subject-
matter hereof between the Company and the Employee, all of which
shall he deemed to have been terminated by mutual consent, with the
exception of any rights the Employee may have under any stock option
plan or bonus plan previously in existence. This Employment
Agreement constitutes the entire terms and conditions of the
Employee's employment and no waiver or modification thereof shall be
valid unless in writing, signed by the parties, and only to the
extent therein set forth.
16. Arbitration Jurisdiction and Governing Law
Except for disputes arising under or in connection with
Sections 7, 8, and 9, all disputes arising under or in connection
with this Employment Agreement or concerning in any way the
Employee's employment shall be submitted exclusively to arbitration
in Chicago, Illinois under the Rules of the American Arbitration
Association then in effect, and the decision of the arbitrator shall
be final and binding upon the parties. Judgment upon the award
rendered may be entered and enforced in any court having
jurisdiction. The Employee and the Company consent to personal
jurisdiction of any state or federal court sitting in Du Page
County, Illinois, in order to enforce any arbitration judgment or
the rights of the Employee or of the Company under Sections 7, 8,
and 9 and waive any objection that such forum is inconvenient. The
Employee and the Company hereby consent to service of process in any
such action by U.S. mail or other commercially reasonable means of
receipted delivery. The parties also agree that the party found to
be at fault shall reimburse the other party for all reasonable
attorneys' fees that the other party incurs in pursing their
remedies in good faith under this Employment Agreement.
17. Governing Law
This Employment Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois.
18. Assignability
The rights and obligations contained herein shall be binding
on and inure to the benefit of the successors and assigns of the
Company. The Employee may not assign his rights or obligations
hereunder without the express written consent of the Company.
19. Headings; Construction
The headings contained in this Employment Agreement are
inserted for reference and convenience only and in no way define,
limit, extend, or describe the scope of this Employment Agreement or
the meaning or construction of any of the provisions hereof. As used
herein, unless the context otherwise requires, the single shall
include the plural and vice versa, words of any gender shall include
words of any other gender, and "or" is used in the inclusive sense.
20. Survival of Terms
If this Employment Agreement is terminated for any reason, the
provisions of Sections 7, 8, and 9 shall survive and the Employee
and the Company, as the case may be, shall continue to be bound by
the terms thereof to the extent provided therein.
21. Employee Acknowledgment and Advice of Counsel
THE EMPLOYEE REPRESENTS THAT HE HAS HAD AMPLE OPPORTUNITY TO
REIEW THIS AGREEMENT AND THE EMPLOYEE ACKNOWLEDGES THAT HE
UNDERSTANDS THAT IT CONTAINS IMPORTANT CONDITIONS OF THE EMPLOYMENT
AND THAT IT EXPLAINS POSSIBLE CONSEQUENCES, BOTH FINANCIAL AND
LEGAL, IF THE EMPLOYEE BREACHES THE AGREEMENT.
AS WITNESS the hands of a duly authorized officer of the
Company and of the Employee the day and year first before written.
SIGNED by ____________________ ) /s/ Xxx Xxxxxxxx
For and on behalf of Successories, Inc. Chairman
October 29, 1998
Date
SIGNED by Xxxx X. Xxxxxxxx ) /s/ Xxxx X. Xxxxxxxx
)
October 29, 1998
Date
