EMPLOYMENT AND NONCOMPETITION AGREEMENT - XXXXXXXX
THIS AGREEMENT (the "Agreement") is made and entered into this 13th day of
January, 1998, by and between XXXXXXX X. XXXXXXXX ("Employee"), and THERMO-TILT
WINDOW COMPANY, a Delaware corporation (the "Company").
PRELIMINARY STATEMENTS
Prior to the execution of this Agreement the Employee entered into a
Consulting Services Agreement - Xxxxxxxx dated October 22, 1997 (the "Consulting
Agreement") whereby he agreed, among other things, to provide consulting
services to the Company in connection with general business analysis, management
and marketing, business opportunity evaluation and merger/acquisition location
and structuring services.
Prior to the execution of this Agreement the Employee entered into a Stock
Option Agreement - Xxxxxxxx dated October 22, 1997 (the "Consulting Option
Agreement") whereby he was granted nonqualified stock options (the "Consulting
Options") to purchase 25,000 shares of the Company's .001 par value common stock
("Common Stock"). The Consulting Options vest in whole on October 22, 1998, are
exercisable thereafter in whole or in part at an exercise price of $.50 per
share and expire on October 22, 2002. The Consulting Options were granted to
Employee in exchange for services to be rendered by him under the Consulting
Agreement.
Contemporaneously with the execution of this Agreement, the Company will
cause the Employee to be elected a director of the Company, appointed an officer
of the Company with the title of Vice President-Acquisitions and hired as an
employee of the Company.
Contemporaneously with the execution of this Agreement, in accordance with
Section 2 of the Consulting Agreement, Employee and the Company mutually agree
to terminate the Consulting Agreement; provided, however, the Consulting
Options under the Consulting Option Agreement, which previously served as
compensation under the Consulting Agreement, shall be reclassified and shall
serve as partial compensation under this Agreement. The Company agrees that the
Consulting Option Agreement is modified to allow Employee to put the Consulting
Options back to the Company at a put price of $1.00 per share at any time after
October 22, 1998, and prior to October 22, 2002. Employee agrees that the
Consulting Options shall continue to be governed by the Consulting Option
Agreement, as modified by this Agreement.
The Company has agreed to employ Employee on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and mutual promises and
agreements contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
SECTION 1. EMPLOYMENT.
Subject to the terms hereof, Company hereby agrees to employ Employee, and
Employee hereby accepts such employment. Employee shall serve the Company
during the Term (as defined in Section 2.1) of this Agreement, subject to the
direction of the Company's Board of Directors. Employee shall devote his best
efforts and such business time as may be necessary or appropriate to complete
twenty (20) acquisitions on behalf of the Company. Specifically, Employee shall
devote his business time and best efforts:
(i) To assist the Company in evaluating potential merger or
acquisition opportunities, including merger and acquisition structuring,
negotiation and closing services.
(ii) To provide the Company with a variety of general business
analyses, marketing and management services.
SECTION 2. TERM.
2.1. The term of Employee's employment hereunder shall be from December
15, 1997, through and including December 14, 1999, or the completion of twenty
(20) acquisitions by the Company, which ever shall first occur (the "Term"),
unless terminated prior thereto upon the occurrence of any of the following:
(i) The death or total disability of Employee. As used herein,
"total disability" means any physical or mental condition rendering the Employee
unable, for a total of six (6) months during any twelve month period, to perform
the duties and bear the responsibilities incident to the position referred to in
Section 1 hereof as determined by a physician acceptable to Employee and
Company; or
(ii) Company's termination of Employee's employment hereunder, upon
prior written notice to Employee, for "good cause." For the purposes of this
Agreement, "good cause" for termination of Employee's employment shall exist
only if (a) Employee is convicted of, pleads guilty to, or confesses to any act
of fraud, misappropriation or embezzlement or to any felony, (b) Employee has
engaged in a dishonest or disloyal act resulting in material damage or prejudice
to the Company, (c) Employee has engaged in conduct or activities materially
damaging or prejudicial to the property, business or reputation of the Company,
or (d) Employee otherwise fails to comply with the material terms of this
Agreement; or
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(iii) By the Employee at any time during the Term.
In the event that the Company should elect to terminate Employee for "good
cause" within the meaning of sub-Section (ii)(b), (c) or (d) above, Employee
shall have a period of twenty (20) days after the written notice to cure any
non-compliance set forth therein prior to the time such termination would become
effective.
2.2. If Employee's employment herein is terminated prior to the end of the
Term by the Company for "good cause" pursuant to Section 2.1(ii) or by Employee
pursuant to Section 2.1(iii), Employee's compensation shall be terminated in
accordance with Section 3.5 below.
SECTION 3. COMPENSATION.
3.1. COMPENSATION. Employee agrees that as sole compensation under this
Agreement, he shall retain the Consulting Stock Options mentioned above and he
shall be granted the stock options referred to in Section 3.2 below. Employee
agrees to forfeit a salary and all fringe benefits, perquisites, and other
benefits of employment which other employees may receive as a condition of their
employment. Employee shall be paid or reimbursed for all reasonable expenses
incurred in the performance of his duties hereunder.
3.2. OPTIONS. Simultaneously upon execution of this Agreement, the
Company shall grant Employee nonqualified stock options to purchase 500,000
shares of Common Stock (the "Employment Stock Options") at an exercise price of
$2.00 per share, pursuant to a Stock Option Agreement - Xxxxxxxx dated December
15, 1997 (the "Employment Stock Option Agreement").
3.3. OPTION VESTING. The Employment Stock Options shall vest as
follows:
(i) One-half of the Employment Stock Options, representing 250,000
shares of Common Stock, shall vest upon the execution of this Agreement.
(ii) One-half of the Employment Stock Options, representing
250,000 shares of Common Stock, shall vest ratably on a monthly basis commencing
on February 1, 1998, and the first day of each month thereafter through November
1, 1998, so that options representing 25,000 whole shares of Common Stock shall
vest at the beginning of each such calendar month.
3.4 OPTION EXERCISEABILITY/EXPIRATION. Once vested, the Employment
Stock Options shall be exercisable in whole or in part at an exercise price of
$2.00 per share and shall expire on December 15, 2002.
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3.5 TERMINATION OF OPTIONS. In the event Employee's employment is
terminated by the Company for "good cause" pursuant to Section 2.1(ii) or by
Employee pursuant to Section 2.1(iii), any and all Employee Stock Options and
Consulting Stock Options which have not vested as of the termination date shall
immediately terminate and Employee shall lose all rights to such options,
subject to applicable law. Such Employee Stock Options and Consulting Stock
Options which have vested as of the termination date shall be exercisable in
accordance with provisions of the Employee Option Agreement and the Consulting
Option Agreement, as amended, respectively.
SECTION 4. CONFIDENTIAL INFORMATION AND NONCOMPETITION COVENANT.
4.1. CONFIDENTIAL INFORMATION AND TRADE SECRETS. Employee hereby agrees
that he shall hold in confidence all customer lists, supplier lists, price
lists, financial information, operating manual and forms, plans, notes, computer
programs, systems and software (including, without limitation, documentation and
related source and object codes), and all other knowledge or information of a
confidential or proprietary nature with respect to the business of the Company
(the "Proprietary Information"), and Employee will not disclose, publish or make
use of such knowledge or information during his employment hereunder, except for
purposes of his employment hereunder or as required by law, or upon expiration
of the Term or early termination pursuant to Section 2.1. Upon the expiration
of the Term or early termination pursuant to Section 2.1, Employee shall return
and deliver forthwith to the Company any and all Proprietary Information,
including all copies thereof and shall not retain or remove any secret or
confidential information of any type or description without the express written
consent of the Company.
4.2. NONCOMPETITION. The Company is engaged in the business of
designing, selling and installing state of the art custom vinyl new and
replacement thermal paned windows for the existing home market in the
following geographic areas: Alabama, Illinois, Indiana, Kentucky, Missouri
and Tennessee. The Company's operations and offices are located at 0000 Xxxxx
Xxxx and 0000 Xxxxxxxxx Xxxx, both in Owensboro, Kentucky (the "Owensboro
Addresses"). The geographic area within a 100-mile radius of (i) the
Owensboro Addresses and (ii) all other Company office addresses existing at
the time of Employee's termination shall hereinafter be referred to as the
"Territory." Employee acknowledges that the goodwill of the Company and
marketing and support of services and products of the Company extends
throughout the Territory. In consideration of the rights granted to Employee
hereunder, Employee hereby agrees that for the period commencing on the date
hereof and ending AT THE LATER OF (i) two (2) years from the date hereof or
(ii) one (1) year after
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Employee ceases to be employed by the Company (the "Noncompete Period"),
Employee shall not (without the prior written consent of the Company), in any
manner, directly or indirectly,
(i) engage in, have any equity or profit interest in, make any
loan to or for the benefit of, guaranty the repayment of any funds by, or render
services of any executive, advertising, marketing, sales, administrative,
supervisory, engineering, computer program or system development, maintenance,
manufacturing or consulting nature to any business conducting operations in the
Territory which are competitive with the business activities being directly
engaged in by the Company as of the date on which Employee's employment is
terminated; or
(ii) solicit, divert or appropriate, or attempt to solicit, divert
or appropriate, any customer of the Company (including current customers and
those which become customers during the term of the Employment Agreement) for
the purpose of providing services competitive with the Business; or
(iii) solicit to employ, on his own behalf or on behalf of any
other person, firm or corporation, any person who was employed during the Term
or any extended Term hereof and who has not thereafter ceased to be employed by
the Company for a period of at least one year.
Notwithstanding anything contained herein to the contrary, Employee shall
not be prohibited from owning, directly or indirectly, up to 5% of the
outstanding equity interest of any company, which is in competition with the
Company or a Related Company and the stock of which is publicly traded.
4.3. SEVERABILITY. If a judicial determination is made that any of the
provisions of this Section 4 constitutes an unreasonable or otherwise
unenforceable restriction against Employee, the provisions of this Section 4
shall be rendered void only to the extent that such judicial determination finds
such provisions to be unreasonable or otherwise unenforceable. In this regard,
the parties hereto hereby agree that any judicial authority construing this
Agreement shall be empowered to sever any portion of the Territory or any
prohibited business activity from the coverage of this Section 4, and to reduce
the duration of the Noncompete Period and to apply the provisions of this
Section 4 to the remaining portion of the Territory or the remaining business
activities not to be severed by such judicial authority and to the duration of
the Noncompete Period as reduced by judicial determination.
4.4. INJUNCTIVE RELIEF. Employee hereby agrees that any breach or
threatened breach by Employee of Sections 4.1 or 4.2 of this Agreement will
irreparably injure the Company and that any remedy at law for any breach or
threatened breach by Employee of
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the provisions contained in Sections 4.1 and 4.2 hereof shall be inadequate,
and that the Company shall be entitled to injunctive relief in addition to
any other remedy it might have under this Agreement or at law or in equity.
Employee further agrees that the grant of such injunctive relief and the
enforcement of the terms of this Agreement shall not deprive him of his
ability to earn a living.
SECTION 5. MISCELLANEOUS.
5.1. BINDING EFFECT. This Agreement shall inure to the benefit of and
shall be binding upon Employee and his executor, administrator, heirs, personal
representative and assigns, and Company and its successors and assigns;
provided, however, that Employee shall not be entitled to assign or delegate any
of his rights or obligations hereunder, other than the Employment Stock Options,
without the prior written consent of Company.
5.2. GOVERNING LAW. This Agreement shall be deemed to be made in, and
in all respects shall be interpreted, construed and governed by and in
accordance with, the laws of the Commonwealth of Kentucky, without regard to
conflicts of laws principles.
5.3. HEADINGS. The section and paragraph heading contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.4. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) sent by
recognized overnight courier, or (iii) sent by registered or certified mail,
return receipt requested, postage prepaid.
If to the Company:
Thermo-Tilt Window Company
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, President
With a copy to:
Xxxxxx & Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxxxxx, Xx., Esq. (Xxxx)
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If to the Employee:
Xxxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
With a copy to:
Xxxxxx & Xxxxxxxx
000 X. Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
All notices, requests, consents and other communications hereunder shall be
deemed to have been given (i) if by hand, at the time of the delivery thereof to
the receiving party at the address of such party set forth above, (ii) if sent
by overnight courier, on the next business day following the day such notice is
delivered to the courier service, or (iii) if sent by registered or certified
mail, on the fifth business day following the day such mailing is sent.
Any party to this Agreement may change his or its address upon written
notice delivered pursuant to this Section.
5.5. ENTIRE AGREEMENT. This Agreement is intended by the parties hereto
to be the final expression of their agreement with respect to the subject matter
hereof and is the complete and exclusive statement of the terms thereof
notwithstanding any representations, statements or agreements to the contrary
heretofore made. This Agreement may be modified only by a written instrument
signed by each of the parties hereto.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Agreement and the Employee has executed this Agreement as of the
date first above written.
EMPLOYEE: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxxx
COMPANY: THERMO-TILT WINDOW COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Xxxxxxx X. Xxxxxx
Title: President
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