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Exhibit 10.6
EMPLOYMENT AGREEMENT
AGREEMENT made as of this 1st day of November, 1997, by and between XXXXXX
INDUSTRIES, INC., a Delaware corporation (hereinafter the "Company") and XXXXXX
X. XXXXX, (hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and Employee entered into Employment Agreements dated
November 1, 1987, April 1, 1990 and January 1, 1992; and
WHEREAS, the Employment Agreement, dated January 1, 1992 was modified by
Letter Agreements, dated November 30, 1992, June 21, 1993, November 28, 1994 and
October 8, 1996; and
WHEREAS, the Company and Employee desire to enter into a new employment
agreement (the "Employment Agreement"), which agreement shall supersede all
prior employment agreements and modifications thereto.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained, the parties hereto agree as follows:
1. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes any employment
or consulting agreements, or modifications or amendments thereto, oral or
written, entered into between Employee and the Company or any of its
subsidiaries, prior to the date of
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this Agreement, including, but not limited to, (i) the Employment Agreements
between Employee and the Company, dated November 1, 1987, April 1, 1990 and
January 1, 1992 and (ii) the modifications and amendments to the January 1, 1992
Employment Agreement, dated November 30, 1992, June 21, 1993, November 28, 1994
and October 8, 1996.
2. TERM AND DUTIES. (a) Subject to earlier termination on the terms and
conditions hereinafter provided, the term of the Employment Agreement shall be
comprised of a four year period commencing on November 1, 1997 and ending on
October 31, 2001 and a "consulting period" commencing at the end of such four
year period and continuing thereafter for a period of nine years.
(b) During the four year period of active employment, Employee shall be
employed as an executive of the Company. In such capacity, Employee agrees that
he shall serve the Company under the direction of the Chief Executive Officer of
the Company to the best of his ability, shall devote full time during normal
business hours to such employment, shall perform all duties incident to his
offices on behalf of the Company, and shall perform such other duties as may
form time to time be assigned to him by the Chief Executive Officer of the
Company.
(c) Effective with the termination of the four year period of active
employment, Employee shall cease to be an employee of the Company. However, in
recognition of the continued value to the Company of Employee's extensive
knowledge and expertise, Employee shall serve as a consultant to the Company
during the consulting period. In such capacity, Employee shall consult with the
Company and its respective senior executive officers with
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respect to its respective businesses and operations. Such consulting services
shall not require more than fifty (50) days in any one year, it being understood
and agreed that during the consulting period Employee shall have the right to
undertake full time or part time employment with any business enterprise which
is not a competitor of the Company. Employee's services as a consultant to the
Company shall be required at such times and such places as shall result in the
least inconvenience to Employee, having in mind his other business commitments
which may obligate him to perform services prior to the performance of his
services hereunder. To the end that there shall be a minimum of interference
with Employee's other commitments, his consulting services shall be rendered by
personal consultation at his residence or office wherever maintained, or by
correspondence through mail, telegram or telephone, or other similar modes of
communications at times, including weekends and evenings, most convenient to
him. During the consulting period, Employee shall not be obligated to serve as a
member of the Board of Directors of the Company or to occupy any office on
behalf of the Employer or any of its subsidiaries or affiliates.
3. RENUMERATION. (a) During the four year period of active employment,
Employee shall receive the following compensation:
(i) The Company shall pay Employee a basic salary in the total sum
of TWO HUNDRED SEVENTY-FIVE THOUSAND ($275,000) DOLLARS per annum during
the full four year term of his active employment with the Company; which
salary shall be paid in weekly installments or in such other manner as
shall be agreed to by the Company and Employee.
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(ii) In addition to his salary set forth in Paragraph 3(a)(i) above,
Employee shall receive an increment in an amount equal to the cumulative
cost of living on his base salary as set forth in paragraph 3(a) (i)
hereof as reported in the "Consumer Price Index, New York Northeastern New
Jersey, all items", published by the United States Department of Labor,
Bureau of Labor Statistics (using January 1, 1997 as the base date for
computation). Such cost of living increment with respect to the aforesaid
salary of Employee shall be made semi-annually as follows:
A. With respect to the first six months of each calendar year during
the period of employment, such increment shall be calculated and payable
on or before the first day of August of such year; and
B. With respect to the last six months of each calendar year during
the period of employment, such increment shall be calculated and payable
on or before the first day of February of the following calendar year.
If Employee's employment shall terminated during any six month period
referred to in this Paragraph 3(ii), then the cost of living increment provided
for herein shall be prorated accordingly.
(iii) Not later than one hundred twenty (120) days after the end of
the fiscal year of the Company ending July 31, 1998 and for each
subsequent fiscal year of the Company ending during the four year period
of active employment, the Company shall also pay to Employee, as incentive
compensation, three (3%) percent of the Consolidated Pretax
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Earnings of the Company in excess of the Company's Minimum Consolidated
Pretax Earnings, as defined below in this clause (iii), and in no event
more than Employee's annual salary set forth in clause (i) immediately
above. For purposes hereof, the term "Consolidated Pretax Earnings of the
Company" shall mean, with respect to any fiscal year, the consolidated
income if any, of the Company for such fiscal year as set forth in the
audited, consolidated financial statements (the "Financial Statements") of
the Company and its subsidiaries included in its Annual Report to
stockholders for such fiscal year, before deduction of taxes based on
income or of the incentive compensation to be paid to Employee for such
Fiscal year under this Agreement. For the purpose hereof the term "Minimum
Consolidated Pretax Earnings" of the Company shall mean, with respect to
any fiscal year, the amount of Consolidated Pretax Earnings of the Company
equal to ten percent (10%) of (x) the Company's Stockholders' Equity, as
set forth in the Financial Statements for the beginning of such fiscal
year, plus (y) the proceeds from the sale or acquisition of the Company's
equity securities, less (z) the purchase price from the acquisition of the
Company's equity securities, on a time-proportioned basis, during such
fiscal year.
(b) During the consulting period, Employee shall be entitled to a
consulting fee at the rate of ONE HUNDRED THOUSAND ($100,000) DOLLARS per
annum payable in monthly installments or in such other manner as shall be
agreeable to the Company and Employee.
4. EMPLOYEE BENEFITS; EXPENSES. (a) During the period of active
employment, Employee shall receive all fringe benefits in the nature of health,
medical, life,
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and/or other insurance, a Company car and related expenses as received by other
officers of the Company.
(b) During the term of this Employment Agreement and consulting period,
the Company shall reimburse Employee for all proper expenses incurred by him,
including disbursements made in the performance of his duties to the Company;
provided, however, that no extraordinary expenses and/or disbursements shall be
incurred by Employee without the prior approval of the Chief Executive Officer
of the Company; and
(c) In the event of the death of Employee during the four year period of
active employment, the Company shall continue to pay to Employee's widow, or to
such other person or persons as may be designated by Employee in his Will, or to
his estate in the event of Employee's intestacy, the salary and compensation to
which Employee in entitled pursuant to Paragraph 3(a) (i) hereunder for the two
(2) year period from date of death and one-half of such salary for the balance
of the four year period covered by his active employment (provided that no
payment shall be required for any period beyond October 31, 2001), and in the
year of death a payment equal to the pro rata amount for said year of the
compensation provided in Paragraph 3(a)(iii) that Employee may be entitled to.
5. NON-COMPETITION. Employee agrees that during the term of this
Employment Agreement he will not directly or indirectly enter into or remain in
the employ of any person, firm or corporation, or engage in or have a financial
interest in any business which is then directly or indirectly competitive to the
business of the Company or is then manufacturing
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any article or product or performing any service which is the same as, or
similar to, any articles or products manufactured, or service performed by the
Company. In the event of a breach of this covenant not to compete, the parties
acknowledge that the Company may be irreparably damaged and may not have an
adequate remedy at law. The Company may therefore obtain injunctive relief,
without the necessity of posting a bond, for any breach or threatened breach of
this covenant. The parties hereto further acknowledge that this covenant not to
compete is intended to conform with the laws of the State of New York. Any court
of competent jurisdiction is hereby authorized to expend or contract the
restrictions of this covenant not to compete in order to conform with the laws
of New York so that it shall bind the parties hereto.
Employee further agrees that he will not use the name Xxxxxx Industries,
Inc. or any variation thereof, or otherwise allow any person to use such name or
permit any member of his family to use such name, or authorize the use of such
name as or in the name of any corporation, partnership, firm or venture which
manufactures any article, product, special process or performs any service which
is the same as, or similar or in competition with any article, product, special
process or service manufactured or performed by the Company, or as in the name
of any such article or product.
6. TERMINATION. Employee's employment hereunder may be terminated by the
Company for a material breach of the terms of this Agreement.
7. CONFIDENTIAL INFORMATION. With respect to any patent, invention,
trademark or copyright hereinafter developed by Employee, Employee shall
promptly notify the
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Company of any such patent, etc., and shall execute such documents as the
Company may reasonably request in order to evidence the Company's title to same.
In the event Employee determines to develop on his own time and expense and
outside of the Company's facilities any invention, trademark or copyright not
related to the Company's business, he shall notify the Company in writing of
this determination and shall offer the Company an opportunity to acquire a 50%
interest in same upon the Company's agreement to bear 50% of the costs
(exclusive of any payments to Employee) of developing same. Employee represents
and warrants that he does not now own of record or beneficially and directly or
indirectly, any patent, etc.
8. ORDINARY COURSE. Employee shall not, on behalf of the Company, enter
into any contract other than those in the ordinary course of business of the
Company, unless approved by the Board of Directors of the Company.
9. DISABILITY. If during the term of this Employment Agreement, Employee
is unable to serve the Company in accordance with the terms hereof, for a period
of ninety (90) days or any aggregate of six (6) months in any one calendar year
for any reason whatsoever, including, but not limited to, illness or incapacity,
then the Company shall have the right, on ninety (90) days' written notice, to
terminate Employee's employment and consulting services under this Agreement
and, if Employee's employment and consulting services are so terminated, he
shall be entitled to his annual compensation pursuant to paragraphs 3(a)(i) and
3(b) hereunder for the first year after such notice period, payable in weekly
installments, and thereafter three-fourths of such compensation (provided that
no payment shall be required for any period beyond October 31, 2001), payable in
weekly installments for the balance of the period covered by this
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Agreement.
10. CONSOLIDATION OR MERGER. In the event of any consolidation or merger
of the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation during the term of this Agreement, such successor
corporation shall assume this Agreement and become obligated to perform all of
the terms and provisions hereof applicable to the Company, and Employee's
obligations hereunder shall continue in favor of such successor corporation.
11. NOTICES. Notice is to be given hereunder to the parties by telegram or
by certified or registered mail, addressed to the respective parties at the
addresses hereinbelow set forth or to such addresses as may be hereinafter
furnished, in writing:
TO: XXXXXX X. XXXXX
000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
TO: HERELY INDUSTRIES, INC.
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
12. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon an inure
to the benefit of the successors and assigns of the Company. Unless clearly
inapplicable, reference herein to the Company shall be deemed to include such
other successor. In addition, this Agreement shall be binding upon and inure to
the benefit of the Employee and his heirs, executors, legal representatives and
assigns, provided, however, that the obligations of Employee hereunder may not
be delegated without the prior written approval of the Board of Directors of
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the Company.
13. AMENDMENTS. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
14. CHANGE OF CONTROL. In the event there shall be a change in the present
control of the Company as hereinafter defined, or in any person directly or
indirectly presently controlling the Company, as hereinafter defined, Employee
shall have the right to immediately receive as a lump sum payment an amount
equal to (i) two (2) times his "base amount", within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (hereinafter "the Code"),
reduced by (ii) $100.00.
For the purpose of this Agreement, a change in control of the
Company, or in any person directly or indirectly controlling the Company, shall
mean:
(a) a change in control as such term is presently defined in
Regulation 240.12b-2 under the Securities Exchange Act of 1934
("Exchange Act"); or
(b) if any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) other than the Company or any "person"
who on the date of this Employment Agreement is a director or
officer of the Company, becomes the "beneficial owner" (as defined
in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing thirty percent (30%) of the
voting power of the Company's then outstanding securities; or
(c) if during any period of two (2) consecutive years during
the term of this Employment Agreement, individuals who at the
beginning of such period
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constitute the Board of Directors cease for any reason to constitute
at least a majority thereof, unless the election of each director
who is not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds
(2/3) of the directors then in office who were directors at the
beginning of the period.
15. GOVERNING LAW. This Employment Agreement is entered into and shall be
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
HERELY INDUSTRIES, INC.
By:____________________________
XXX. X. XXXXX
Chairman
_______________________________
XXXXXX X. XXXXX
Employee
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