EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
as of March 12, 2004, between RTW, INC., a Minnesota corporation (the
"Company"), and XXXXXXX X. XXXXXX ("Employee").
The Company and Employee are desirous of setting forth the terms and
conditions of the employment by the Company of Employee.
In consideration of the mutual covenants and agreements herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties intending to be legally
bound do hereby agree as follows:
1. TERM. The Company agrees to employ Employee and Employee agrees to
serve the Company for a term beginning on the date hereof and terminating on
March 31, 2005 (the "Expiration Date") unless and until terminated in accordance
with the terms of this Agreement (the "Original Term"). Upon the expiration of
the Original Term of this Agreement, and on each successive anniversary
thereafter, the term of employment under this Agreement will be extended for one
(1) additional year, unless at least 30 days prior to any such anniversary,
either Employee or the Company delivers to the other written notice of the
notifying party's desire not to extend the term of employment. Notice by the
Company of its desire not to extend the term of employment as provided in this
Section will constitute Termination without Cause and entitle Employee to the
benefits of Section 9 below.
2. SERVICES TO BE RENDERED BY EMPLOYEE. Employee agrees to serve the
Company as President and Chief Executive Officer and, in addition, at no
additional compensation, be elected as a member of the Board of Directors of
RTW, Inc., and in such other directorships, Board committee memberships and
offices of the Company and its subsidiaries to which Employee may from time to
time be elected or appointed by the Chairman of the Board. Employee will perform
such duties and exercise such powers as from time to time may be assigned to him
consistent with his position, knowledge and experience, either orally or in
writing, by the Board of Directors of the Company and shall carry out his duties
under the ultimate general direction and control of the Board of Directors. In
his capacity as President and Chief Executive Officer, Employee will perform all
reasonable acts customarily associated with such position, or necessary or
desirable to protect and advance the best interests of the Company, together
with such other reasonable duties as may be determined and assigned to him by
the Board of Directors. Employee will perform such acts and carry out such
duties, and will in all other respects serve the Company, faithfully and to the
best of his ability.
3. TIME TO BE DEVOTED BY EMPLOYEE. Employee agrees to devote
substantially all of his business time, attention, efforts and abilities to the
business of the Company and to use his best efforts to promote the interests of
the Company. Employee confirms that he has no business interests of any kind
that will require a significant portion of his business time. Employee may
attend, however, to personal business and investments, engage in charitable
activities and community affairs, and serve on a reasonable number of corporate,
educational and civic boards so long as those activities do not interfere with
Employee's duties under this Agreement, and in the case of service on any other
corporate boards, Employee obtains prior approval from the Board of Directors.
4. COMPENSATION PAYABLE TO EMPLOYEE. As compensation for all of
Employee's services (including services as director, Board committee member and
officer of the Company and its subsidiaries) during the term of employment
hereunder, the Company will pay to Employee a base salary at the rate of Two
Hundred Fifty Thousand Dollars ($250,000) per annum (the "Annual Salary"),
payable in semi-monthly installments, which base salary will be pro-rated for
any partial years. The Board of Directors will review the base salary annually,
along with other corporate officers. Employee will participate with other
corporate officers in any incentive compensation plan as may be adopted by the
Board of Directors from time to time.
5. EXPENSES. During the term of employment, the Company will reimburse
Employee for reasonable travel and other expenses incurred in performing his
duties according to Company policies then in effect. Payments to Employee under
this paragraph will be made after the Employee presents expense vouchers in such
detail as the Company may from time to time reasonably require.
6. BENEFITS. Employee's benefits will be the same as provided for any
other executive officer of the Company. In addition, the Company will, at the
Company's expense, maintain directors and officers' liability insurance coverage
during the term of this Agreement with minimum limits of $5,000,000, unless the
cost thereof is not economically feasible as determined by the Board of
Directors.
7. STOCK OPTION(S).
7.1. Grant. The Company hereby grants Employee ten-year stock
options to purchase up to 100,000 shares of the Company's Common Stock (the
"Option(s)"). This is a one-time grant given in consideration for the Employee
taking the position as CEO. The per share price to be paid by Employee upon
exercise of the Option(s) is the closing price of the Company's Common Stock, as
reported by NASDAQ, on the date this agreement is executed. The Option(s) will
be incentive stock options to the extent allowed by the Internal Revenue Code.
7.2. Vesting. The Option(s) will become exercisable in five
(5) equal installments of 20,000 shares of the Company's Common Stock ("Option
Installment") as follows: (i) the first Option Installment is immediately
exercisable as of the date this agreement is executed, and (ii) four (4)
additional Option Installments of 20,000 shares will vest on each of December
17, 2004, December 17, 2005, December 17, 2006 and December 17, 2007, if the
Employee is still employed by the Company on such dates.
7.3. Exercise Period. The Option(s) will become void and
expire as to all unexercised Option shares on December 17, 2013.
7.4. Additional Terms. The remaining terms of the Option(s)
are as set forth in the Option Agreement(s) dated this date.
8. TERMINATION.
8.1. General. This Agreement and Employee's employment may be
terminated as set forth in Section 8.2. In the event of termination of
employment for any of the following reasons, Employee must resign as a director
and officer of the Company and any of its subsidiaries at or prior to the
effective Date of Termination.
8.2. Events of Termination. The Agreement may be terminated as
follows:
(i) By Employee, upon 30 days prior written
notice to the Company;
(ii) By Employee for Good Reason (as defined in
Section 8.4 (iii) of this Agreement) upon 30
days prior written notice to the Company;
(iii) By the Company for Cause (as defined in this
Agreement), immediately upon written notice
to Employee.
(iv) By the Company for any reason (without
cause) and at any time, upon 30 days prior
written notice to Employee.
(v) By the Company at any time in the event of
Employee's Disability (as defined in this
Agreement.)
8.3. Death. This Agreement will automatically terminate upon
Employee's death.
8.4. Definitions. For purposes of this Agreement, the
following terms have the meanings set forth below:
(i) Disability. "Disability" means that if, in
the reasonable judgment of the Board of
Directors, the Employee's incapacity due to
physical or mental illness, or otherwise,
keeps him from performing satisfactorily all
of his duties hereunder on a substantially
full-time basis for a period of three (3)
months during the term of this agreement.
(ii) Cause. The Company will have "Cause" to
terminate Employee's employment hereunder
upon Employee's:
(A) refusal or neglect to perform and
discharge his duties and
responsibilities hereunder;
(B) gross misconduct that is injurious
to the Company;
(C) fraud, embezzlement or other act of
dishonesty of Employee with respect
to the Company;
(D) conviction of, or plea of guilty or
nolo contendere entered by Employee
to, a felony or crime involving
moral turpitude or which conviction
or plea is likely to have a
material adverse effect upon the
Company or upon Executive's ability
to perform his duties hereunder;
(E) willful or prolonged absence from
work by Employee (other than by
reason of disability due to
physical or mental illness); or
(F) willful commission of acts or
making of false statements by
Employee which reflect adversely,
in material respects, upon the
Company or its business, customers
or other employees.
(iii) Good Reason. "Good Reason" means the
Company, without express written consent,
(A) materially reduces Employee's
principal duties, responsibilities,
or authority as President and Chief
Executive Officer, including
requiring Employee to report to any
person or body other than the Board
of Directors of the Company;
(B) reduces Employee's annual base
compensation as described in
Section 4; or
(C) materially breaches this Agreement.
The occurrence of an event described in this
subparagraph 8.4(iii) will not constitute
Good Reason unless, within 60 days thereof
Employee provides the Company written notice
stating that an event of Good Reason has
occurred and describing that event, and the
Company does not correct the same, if the
same is correctable, within 30 days.
(iv) Date of Termination. The term "Date of
Termination" means the earlier of:
(A) the Expiration Date, or
(B) if Employee's employment is
terminated by his death, the date
of his death, or
(C) if Employee's employment is
terminated for any other reason, the
date on which notice of termination
is given either to Employee by the
Company or to the Company by
Employee unless another date is
specified in the Notice of
Termination.
9. CONSEQUENCES OF TERMINATION.
9.1. Termination for Cause; Voluntary Resignation without Good
Reason. If employment is terminated by the Company for Cause or by Employee
without Good Reason, then Employee will be paid his base salary to the date of
termination and the unpaid portion of any bonus or incentive amount earned for
the fiscal year ending prior to the termination of employment which Employee is
entitled to receive under the terms of the annual incentive plan as well as any
pro-rata bonus or incentive amount through the date of termination. Employee
will not be entitled to receive any base salary or fringe benefits for any
period after the date of termination, except for the right to receive benefits
which have become vested under any benefit plan or to which Employee is entitled
as a matter of law.
9.2. Termination without Cause; Resignation for Good Reason.
If the Company terminates employment without Cause or does not extend the term
of employment, or if Employee resigns employment for Good Reason, then:
(i) For a period of nine (9) months after the
effective date of the termination of
employment;
(A) The Company will continue to pay
Employee's then current base salary
in accordance with the Company's
normal payroll practice; and
(B) The Company will pay the unpaid
portion of any bonus or incentive
amount earned by Employee for the
fiscal year ending prior to the
termination of employment which
Employee is entitled to receive
under the terms of the applicable
incentive plan as well as any
pro-rata bonus or incentive amount
through the date of termination.
(C) Employee will be entitled to
continued participation in the
health care coverage, and life
insurance benefit plans of the
Company, as in effect on the date
of termination. The Company will
continue to pay its share of the
health care and life insurance
premiums for this coverage, and
Employee shall pay his share of the
cost associated with that coverage
as if he were still actively
employed by the Company. If
Employee cannot be covered under
any of the Company's group plans or
policies, the Company will
reimburse Employee for his full
cost of obtaining comparable
alternative or individual coverage
elsewhere, less any contribution
that Employee would have been
required to make under the
Company's group plans or policies.
If, during the aforesaid 9-month
period, Employee is employed by a
third party and becomes eligible
for any health care coverage
provided by that third party, the
Company will not, thereafter, be
obligated to provide Employee with
the insurance benefits described in
this clause (C). This 9-month
coverage shall run concurrently
with COBRA and thereafter Employee
shall be responsible for the full
cost of any such coverage for which
he may be entitled by law.
(ii) The Company will pay Employee $25,000 for
out-placement and job search services.
9.3. Termination in the Event of Death or Disability. If
employment terminates due to Employee's Death or if the Company terminates
employment due to a Disability, then:
(i) The Company will continue to pay base salary
to Employee's estate or to Employee for the
remainder of the month in which the death
occurs or in which employment is terminated
due to Disability, together with the unpaid
portion of any bonus or incentive amount
earned by Employee for the fiscal year
ending prior to the termination of
employment which he is entitled to receive
under the terms of the applicable incentive
plan as well as any pro-rata bonus or
incentive amount through the date of
termination; and in the event of termination
due to Disability, Employee will continue to
receive, during that month, all of the
fringe benefits then being paid or provided
to him; and
(ii) Employee will be entitled to receive all
Disability and other benefits, such as
continued health coverage or life insurance
proceeds, provided in accordance with the
terms and condition of the health care
coverage, life insurance, disability, or
other employee benefit plans of the Company
and applicable law.
10. CONFIDENTIALITY. Employee agrees while in the employ of the Company
(otherwise than in the performance of his duties hereunder) and thereafter not
to, directly or indirectly, make use of, or divulge to any person, firm,
corporation, entity or business organization, and to use his best efforts to
prevent the publication or disclosure of, any confidential or proprietary
information concerning the business, accounts or finances of, or any of the
methods of doing business used by, the Company or its affiliates or of the
dealings, transactions or affairs of the Company or its affiliates or any of
their respective customers which have or which may have come to is knowledge
during his employment by the Company.
11. NOTICES. All notices under this Agreement shall be in writing and
shall be effective either (i) when delivered in person at the address set forth
below, or (ii) three (3) business days after deposit in a sealed envelope in the
United States Mail, postage prepaid, by registered or certified mail, return
receipt requested, addressed to the recipient as set forth below, whichever is
earlier.
All notices to the
Company shall be sent to:
RTW, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Chairman of the Board
All notices to
Employee shall be sent to:
Xx. Xxxxxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Such addresses may be changed by notice given in accordance
with this Section 11.
12. MISCELLANEOUS. This Agreement may not be changed nor may any
provision hereof be waived except by an instrument in writing duly signed by the
party to be charged. This Agreement shall be interpreted, governed and
controlled by the internal laws of the State of Minnesota, without reference to
principles of conflict of law. This Agreement shall terminate in the event of
the liquidation and winding up of the business of the Company but shall continue
in effect in the event of the merger or sale of the Company into or to another
entity or the transfer of substantially all of the assets of the Company to
another entity. The provisions of Section 10 hereof shall survive any
termination of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, this Agreement has been executed as of the
day and year first above written.
COMPANY: EMPLOYEE:
RTW, INC.
By: /s/ Xxxx X. Xxxxxxxx /s/ Xxxxxxx X. Xxxxxx
---------------------------- ----------------------------------
Xxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxx
Chairman of the Board President and CEO
