EMPLOYMENT AGREEMENT
Xxxxxx X. Xxxxxx
This Agreement, is made and dated as of April 1, 1998, by and between Xxxxx
Steam Corporation, a New Mexico corporation ("Employer"), and Xxxxxx X. Xxxxxx,
a resident of Miami County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employee has been employed by Employer and has made valuable
contributions to the profitability and financial strength of Employer;
WHEREAS, Employer desires to encourage Employee to continue to make
valuable contributions to Employer's business operations and not to seek or
accept employment elsewhere;
WHEREAS, Employee desires to be assured of a secure reasonable and
commensurate compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of Employee
on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of a change of control of
Employer;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it has developed over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of these premises, the mutual
covenants and undertakings herein contained and the continued employment of
Employee by Employer, each intending to be legally bound, covenant and agree as
follows:
1. Upon the terms and subject to the conditions set forth in
this Agreement, Employer employs Employee as Employer's
Chairman or another position commensurate with Employee's
experience and ability, and Employee accepts such employment.
2. Employee agrees to serve as Employer's Chairman or such other
position, and to perform such duties in that office as may be
prescribed by the Employer's Bylaws and as may reasonably be
assigned to him by Employer's Board of Directors and those
generally associated with the office held by Employee as
determined by the Board of Directors from time to time.
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Employer shall not, without the written consent of Employee,
relocate or transfer Employee to a location more than 30 miles
from his current employment location. While employed by
Employer, Employee shall devote his business time and efforts
to Employer's business and the business of its subsidiaries.
Employer shall not require Employee to work on a full-time
basis. Subject to special requirements of Employer's business
that may arise from time to time, Employee shall not generally
be required to devote more than 10 hours per week to
Employer's business.
3. The term of this Agreement shall be for an initial term of
five (5) years commencing on April 1, 1998 (the "Effective
Date"), (such term shall herein be referred to as the "Term").
4. Employee shall receive an annual salary of $12,000 ("Base
Compensation"), payable at regular intervals in accordance
with Employer's normal payroll practices now or hereafter in
effect. Employer may consider and declare from time to time
increases in the salary it pays Employee and thereby increase
his Base Compensation.
5. So long as Employee is employed by Employer pursuant to this
Agreement, he shall be included as a participant in all
present and future employee benefit, retirement, and
compensation plans generally available to employees of
Employer, consistent with his Base Compensation and his
position with Employer, including, without limitation, any
401(k) plan, stock incentive plan, employee stock purchase or
ownership plan, bonus plan, and group life and disability
insurance plans. Employer shall continue to provide Employee
with an automobile for his personal and business use,
consistent with past practice.
6. So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall receive reimbursement, either
directly or through use of an Employer credit card, from
Employer for all reasonable business expenses incurred in the
course of his employment by Employer, upon submission to
Employer of written vouchers and statements for reimbursement.
So long as Employee is employed by Employer pursuant to the
terms of this Agreement, Employer shall continue in effect
vacation policies applicable to Employee no less favorable
from his point of view than those written vacation policies in
effect on the date hereof. So long as Employee is employed by
Employer pursuant to this Agreement, Employee shall be
entitled to office space and working conditions no less
favorable than those in effect for him on the date hereof.
7. Employee's employment with the Employer may be terminated
prior to the expiration of the Term as follows:
(A) The Employer may immediately upon written notice
terminate Employee for cause. "Cause" shall be
defined as (i) personal dishonesty, (ii) willful
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misconduct, (iii) breach of fiduciary duty involving
personal profit, (iv) intentional failure to perform
stated duties, (v) conviction of a violation of any
law, rule, or regulation (other than traffic
violations or similar offenses) or cease-and-desist
order, (vi) moral turpitude reflecting adversely on
the reputation of the Employer, or (vii) any material
breach of any term, condition or covenant of this
Agreement. The Employer shall have no further
liability to Employee under this Agreement for any
period subsequent to the termination for Cause.
(B) Either party may terminate this Agreement during the
Term without Cause, upon thirty (30) days prior
written notice to the other party. If the Employer
terminates the Employee without Cause (as defined
above):
(i) Compensation provided for herein (including
Base Compensation) shall continue to be
paid, and Employee shall continue to
participate in the employee benefit,
retirement, and compensation plans and other
perquisites as provided in Sections 5 and 6
hereof, through the date of termination
specified in the notice of termination; and
any benefits payable under insurance,
health, retirement and bonus plans as a
result of Employee's participation in such
plans through such date shall be paid when
due under those plans;
(ii) In addition, the Employer shall pay the
Employee as severance compensation monthly
payments equal to Employee's Base
Compensation for the full remainder of the
Term plus, if a Change of Control has
occurred, any unpaid installments of any
transaction bonus due under Section 9 at the
time such installments would otherwise
become due; and
(iii) In addition, for the full remainder of the
Term following termination, Employer will
maintain in full force and effect for the
continued benefit of Employee and his
dependents each employee medical and life
benefit plan (as such term is defined in the
Employee Retirement Income Security Act of
1974, as amended) in which Employee was
entitled to participate immediately prior to
the date of his termination, unless an
essentially equivalent benefit is provided
by another source. If the terms of any
employee medical and life benefit plan of
Employer or applicable laws do not permit
continued participation by Employee,
Employer will arrange to provide to
Employee, to the extent Employee is
eligible, a benefit substantially similar to
the benefit he was entitled to receive under
such plan at the end of the period of
coverage. Employee acknowledges that such
replacement coverage may consist of a
combination of Medicare and Medicare
Supplement
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coverage, that such coverage may not provide
as complete coverage for prescription
medication, for example, and may depend,
among other things, upon timely elections on
the part of Employee and/or his spouse, and
Employee's eligibility for such coverage.
The right of Employee, if any, to continued
coverage under the health and medical
insurance plans of Employer pursuant to
Section 4980B of the Internal Revenue Code
of 1986, as amended (the "Code") shall
commence upon the expiration of such period;
and
(iv) On the date of termination, Employer shall
transfer and convey to Employee the
automobile then being provided for
Employee's use under Section 5.
(C) Employee's employment with Employer shall terminate
in the event of Employee's death or disability. For
purposes hereof, "disability" shall be defined as
Employee's inability by reason of illness or other
physical or mental incapacity to perform the duties
required by his employment for a consecutive 180 day
period, provided that notice of any termination by
Employer because of Employee's "disability" shall
have been given to Employee prior to the full
resumption by him of the performance of such duties.
8. To induce Employer to enter into this Agreement, Employee
hereby agrees as follows:
(A) Unless otherwise required to do so by law, including
the order of a court or governmental agency, Employee
shall not divulge or furnish any trade secrets (as
defined in IND. CODEss.24-2-3-2) of Employer or any
confidential information acquired by him while
employed by Employer concerning the policies, plans,
procedures or customers of Employer to any person,
firm, corporation or other entity , other than
Employer or upon its written request, or use any such
trade secrets or confidential information directly or
indirectly for Employee's own benefit or for the
benefit of any person, firm, corporation or other
entity other then Employer, because such trade
secrets and confidential information are confidential
and shall at all times remain the property of
Employer.
(B) For a period of twelve (12) months after termination
of Employee's employment with Employer for any
reason, Employee shall not (a) compete, directly or
indirectly, in any state or province of the U.S. or
Canada where Employer has a sales representative or
sold products within the 12 months prior to
Employee's termination, with the business of Employer
as conducted during the term of this Agreement (which
business shall include the manufacture or sale of any
products manufactured or sold by Employer during the
12 months prior to Employee's termination), or have
any significant
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interest (including any interest or association,
including but not limited to, that of owner, part
owner, partner, shareholder, director, officer,
employee, agent, consultant, lender or advisor) in
any person, firm or entity which competes with
Employer's business in the area described above (each
such person, firm or entity is referred to as
"Competitor"); (b) solicit or accept business for or
on behalf of any Competitor; or (c) solicit, induce
or persuade, or attempt to solicit, induce or
persuade, any person to work for or provide services
to or provide financial assistance to, any
Competitor.
(C) If Employee's employment by Employer is terminated
for any reason, Employee will turn over immediately
thereafter to Employer all business correspondence,
letters, papers, reports, customers' lists, financial
statements, records, drawings, credit reports, credit
cards, or other confidential information or documents
of Employer or its affiliates in the possession or
control of Employee, all of which writings are and
will continue to be the sole and exclusive property
of Employer or its affiliates.
(D) Employee acknowledges that the covenants of this
Section 8 are reasonable in scope and duration and
reasonably necessary and appropriate to protect the
goodwill and other appropriate interests of Employer
following Employee's termination and that any
violation of such covenants by Employee would result
in irreparable harm to Employer, for which any remedy
at law would be inadequate. In addition to any other
remedy to which it may be entitled, Employer shall be
entitled to equitable relief, including specific
performance, for any violation of Section 8.
(E) Employee shall, and hereby authorizes Employer to,
inform any successor or prospective employer of
Employee of the terms of this Section 8. Any such
disclosure by Employer and any effort by Employer to
seek Employee's compliance with this covenant, even
if such effort shall require that Employee perform
different duties for such successor employer or delay
his employment by such employer, is hereby expressly
authorized by Employee and shall not be deemed a
violation of any "blacklisting" or similar law.
9. If there is a Change of Control of Employer as defined below,
Employee shall be paid a transaction bonus in the amount of
$50,000 payable immediately following the Change of Control,
unless Employee shall, prior to the Change of Control, deliver
to Employee an irrevocable written election to defer such
payment and determining the amounts and times (not more
frequently than monthly and not later than the end of the
Term) for deferred payment. In the case of deferral, Employer
shall pay the transaction bonus on the basis of Employee's
deferral election. Such transaction bonus shall not, however,
be paid if Employer's Board of Directors shall have determined
on a reasonable basis and in good faith (prior to such Change
of Control)
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that Employee has failed to comply with the Bonus Conditions.
"Bonus Conditions" means:
(A) Employee has cooperated fully with Employer and its
advisors and, to the extent directed by Employer, any
party who is engaged or may engage in negotiations
with Employer, regarding any proposed transaction
involving Employer or its shareholders;
(B) Employee shall not have engaged in any activity
intended to discourage any such interested party from
engaging in any such transaction or disparaging the
Employer, its condition, assets or prospects, in the
eyes of any such party;
(C) Employee shall have continued to perform his duties
for Employer with at least the same level of
diligence and performance as characterized Employee's
performance prior to the Effective Date; and
(D) Employee shall not be in breach of any provision of
this Agreement.
Disclosure or statements made by Employee in good faith in response to
appropriate requests from third parties or instructions by Employer that
Employee reasonably believes to be truthful shall not violate the Bonus
Conditions.
For purposes of this Agreement, a "Change of Control" shall mean the occurrence
of any of the following: (i) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger of consolidation), in one or a series
of related transactions, of all or substantially all of the assets of Employer
and it subsidiaries taken as a whole to any "person" (as such term is used in
Section 13(d)(3) of the Exchange Act), (ii) the consummation of any transaction
(including, without limitation, any merger of consolidation) the result of which
is that any "person" as defined above, becomes the beneficial owner (as such
term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly
or indirectly, of more than 50% of the voting stock of Employer or (iii) the
first day on which a majority of the members of the Board of Directors of
Employer are not Continuing Directors. Notwithstanding the foregoing, a "Change
of Control" shall not occur and no transaction bonus will be payable if the
person that acquires assets or stock of Employer under part (i) or (ii) of the
foregoing definition, is an Employer sponsored employee stock ownership plan, H.
Xxxxx XxXxx, a management group led by H. Xxxxx XxXxx or a person whose
participation in such transaction was supported or sponsored by such management
group. "Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Employer who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination.
10. Any termination of Employee's employment with Employer as
contemplated by Section 7 hereof, except in the circumstances
of Employee's death, shall be
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communicated by written "Notice of Termination" by the
terminating party to the other party hereto. Any "Notice of
Termination" pursuant to Section 7 based on Cause shall set
forth in reasonable detail the facts and circumstances claimed
to provide a basis for such termination.
11. If a dispute arises regarding the termination of Employee
pursuant to Section 7 hereof or as to the interpretation or
enforcement of this Agreement, said dispute shall be resolved
by binding arbitration in Indianapolis, Indiana determined in
accordance with the rules of the American Arbitration
Association. Notwithstanding the foregoing, Employer shall be
entitled to seek any remedy in a proceeding at law or in
equity in any court having jurisdiction for any breach of
Section 8.
12. Should Employee die after termination of his employment with
Employer while any amounts are payable to him hereunder, this
Agreement shall inure to the benefit of and ben enforceable by
Employee's executors, administrators, heirs, distributees,
devisees and legatees and all amounts payable hereunder shall
be paid in accordance with the terms of this Agreement to
Employee's devisee, legatee or other designee or, if there is
no such designee, to his estate.
13. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and
shall be deemed to have been given when delivered or mailed by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to Employee: Xxxxxx X. Xxxxxx
000 Xxxx Xxxxx Xxxxxx
Xxxx, XX 00000
If to Employer: Xxxxx Steam Corporation
X.X. Xxx 00
Xxxx, Xxxxxxx 00000
Attn: President
or to such address as either party hereto may have furnished
to the other party in writing in accordance herewith, except
that notices of change of address shall be effective only upon
receipt.
14. The validity, interpretation, and performance of this
Agreement shall be governed by the laws of the State of
Indiana, regardless of the principles of conflicts of laws.
15. Employer shall require any successor (whether direct or
indirect, by purchase, merger, or consolidation or otherwise)
to all or substantially all of the business or assets of
Employer, by agreement in form and substance reasonably
satisfactory to Employee
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to expressly assume and agree to perform this Agreement in the
same manner and same extent that Employer would be required to
perform it if no such succession had taken place. As used in
this Agreement, "Employer" shall mean Employer as hereinbefore
defined and any successor to its business or assets as
aforesaid.
16. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is
agreed to in writing signed by Employee and Employer. No
waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other
party shall be deemed a waiver of dissimilar provisions or
conditions at the same or any prior subsequent time. No
agreements or representation, oral or otherwise, express or
implied, with respect to the subject matter hereof have been
made by either party which are not set forth expressly in this
Agreement.
17. The invalidity or unenforceability of any provisions of this
Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in
full fore and effect. This is the entire agreement between
Employer and Employee concerning the subject matter hereof and
all prior agreements, written or oral, are superseded.
18. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
19. This Agreement is personal in nature and neither party hereto
shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as
provided in Section 12 and Section 15 above. Without limiting
the foregoing, Employee's right to receive compensation
hereunder shall not be assignable or transferable, whether by
pledge, creation of a security interest or otherwise, other
than a transfer by his will or by the laws of descent or
distribution as set forth in Section 12 hereof, and in the
event of any attempted assignment or transfer contrary to this
paragraph, Employer shall have no liability to pay any amounts
so attempted to be assigned or transferred.
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IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the date first written above.
"Employer"
Xxxxx Steam Corporation
By: /s/ Xxxxx XxXxx
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Its: President
"Employee"
/s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
