EXECUTION COPY
EXECUTIVE EMPLOYMENT AND
NON-COMPETITION AGREEMENT
AGREEMENT, dated as of the 25th day of November, 1997, by and between
Xxxxxx Products Corp., a Massachusetts corporation (the "Company"), and Xxxxxxx
Xxxxxxxxxx, a resident of Brookline, Massachusetts (the "Executive").
WHEREAS, the Company desires to engage the full-time services of the
Executive and the Executive desires to be so employed by the Company;
WHEREAS, the Company desires to be assured that the unique and expert
services of the Executive will be available solely to the Company on such
full-time basis, and that the Executive is willing and able to render such
services on the terms and conditions hereinafter set forth; and
WHEREAS, the Company desires to be assured that the confidential
information and good will of the Company will be preserved for the exclusive
benefit of the Company;
NOW, THEREFORE, in consideration of such employment and the mutual
covenants and promises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Executive agree as follows:
Section 1. Employment. The Company hereby employs the Executive as its
Chief Operating Officer, and the Executive hereby accepts such employment under
and subject to the terms and conditions hereinafter set forth. The Executive
further agrees to serve as a member of the Board of Directors (the "Board") of
the Company if elected or appointed to such office in accordance with the
Company's By-Laws.
Section 2. Term. Unless sooner terminated as provided in Section 7, the
term of employment under this Agreement shall begin on the date hereof and shall
conclude on December 31, 2000 (the "Term"). This Agreement shall be renewed for
additional consecutive one year terms ("Renewal Terms") unless either party
shall give to the other written notice not less than sixty (60) days prior to
the end of the Term or any Renewal Term that it or he does not wish to renew
this Agreement.
Section 3. Duties. The Executive shall perform services in a managerial
capacity subject to the general supervision of the Board. The Executive hereby
agrees to devote his full business time and best efforts to the faithful
performance of such duties and to the promotion and forwarding of the business
and affairs of the Company for the Term or any Renewal Term.
Section 4. Salary Compensation. In consideration of the services
rendered by the Executive under this Agreement, the Company shall pay the
Executive a base salary (the "Base Salary") at the rate of Two Hundred Fifty
Thousand Dollars ($250,000) per calendar year. The Base Salary shall be paid in
such installments and at such times as the Company pays its
regularly salaried executive employees, and the Board may review the Base Salary
annually in a manner consistent with the Company's policies and may change the
Base Salary from time to time in its sole discretion.
Section 5. Bonus Compensation. The Executive shall be entitled to
receive a bonus for fiscal 1997 as described on Exhibit A attached hereto. For
years after 1997, the Executive shall be entitled to receive an annual
performance bonus equal to up to 50% of the Base Salary, based on achievement of
certain performance criteria as more fully set forth on Exhibit A hereto. In the
sole discretion of the Board, the Executive may be granted a performance bonus
in excess of 50% of the Base Salary if the targets set forth on Exhibit A are
surpassed. The bonuses described in this Section 5 shall be payable within ten
(10) business days following the Company's receipt of its audited financial
statements for the previous year (it being acknowledged that such bonuses will
be determined based on such audited financial statements).
Section 6. Benefits. In addition to the compensation detailed in
Section 4 and 5 of this Agreement and those benefits listed on Exhibit B hereto,
the Executive shall be entitled to the following additional benefits:
Section 6.01. Paid Vacation. The Executive shall be entitled to
vacation according to Company policy, such vacation to extend for such periods
and shall be taken at such intervals as shall be appropriate and consistent with
the proper performance of the Executive's duties hereunder.
Section 6.02. Insurance Coverage. During the Term or Renewal Terms, the
Company shall provide the Executive with group health and life insurance
protection to the same extent that it makes such protection available to its
other executive employees.
Section 6.03. Automobile. In recognition of the necessity of the use of
an automobile for the efficient and expeditious performance of the Executive's
duties and obligations on behalf of the Company, the Company, at its cost, shall
supply to the Executive for such use an automobile of such make and model and
upon such terms and conditions as the Board shall determine from time to time.
Section 6.04. Reimbursement of Expenses. The Company shall reimburse
the Executive for all reasonable expenses actually incurred by the Executive in
connection with the business affairs of the Company and the performance of his
duties hereunder. The Executive shall comply with such reasonable limitations
and reporting requirements with respect to such expenses as the Board may
establish from time to time.
Section 7. Termination. This Agreement shall be terminated at the end
of the Term or any Renewal Term, or earlier as follows:
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Section 7.01. Death. This Agreement shall terminate upon the death of
the Executive, except that the compensation provided in Section 4 shall continue
through the end of the month in which the Executive's death occurs.
Section 7.02. Permanent Disability. In the event of any physical or
mental disability of the Executive rendering the Executive unable to perform his
duties hereunder for a period of at least one hundred twenty (120) consecutive
days and the further determination that the disability is permanent with regard
to the Executive's ability to return to work in his full capacity, this
Agreement shall terminate automatically. Any determination of disability shall
be made by the Board in consultation with a qualified physician or physicians
selected by the Board and reasonably acceptable to the Executive. The failure of
the Executive to submit to a reasonable examination by such physician or
physicians shall act as an estoppel to any objection by the Executive to the
determination of disability by the Board.
Section 7.03. By The Company For Cause. The employment of the Executive
may be terminated by the Company for Cause (as defined below) at any time
effective upon written notice to the Executive. For purposes hereof, the term
"Cause" shall mean that the Board has determined that any one or more of the
following has occurred:
(a) The Executive shall have been convicted of, or shall have
pleaded guilty or nolo contendere to, any felony (other than a
conviction arising solely under a statutory provision imposing criminal
liability on Executive on a per se basis due to the position held by
Executive, so long as any act or omission of Executive with respect to
such matter was not taken or omitted in contravention of any applicable
policy or directive of the Board;
(b) The Executive shall have willfully failed or refused to
perform his duties hereunder (other than as a result of illness or
disability) and such failure or refusal shall have continued for a
period of ten (10) days following written notice from the Board, it
being understood that the Company's failure to achieve its business
plan or projections shall not itself be considered a failure or refusal
to perform duties;
(c) the Executive shall have breached any provision of Section
9 or 10 hereof; or
(d) the Executive shall have committed any fraud,
embezzlement, misappropriation of funds, breach of fiduciary duty or
other act of dishonesty against the Company.
Section 7.04. By the Company without Cause. The Company may terminate
the Executive's employment at any time without Cause effective upon written
notice to the Executive.
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Section 7.05. By the Executive Voluntarily. The Executive may terminate
this Agreement at any time effective upon at least sixty (60) days' prior
written notice to the Company.
Section 7.06. By the Executive for Good Reason. The Executive may
terminate this Agreement effective upon written notice to the Company for Good
Reason. Any such termination shall be treated as a termination by the Company
without Cause. For this purpose, the term "Good Reason" shall mean: (i) the
assignment to the Executive of any duties inconsistent in any substantial
respect with the Executive's position, authority or responsibilities as
contemplated by Section 1 of this Agreement; (ii) a change of more than forty
(40) miles in the location of the Company's offices where the Executive is
located; or (iii) any material reduction in any of the benefits described in
Sections 4, 5 or 6 of this Agreement.
Section 8. Termination Payments and Benefits.
Section 8.01. Voluntary Termination, Termination For Cause. Upon any
termination of this Agreement: (1) voluntarily by the Executive or (2) by the
Company for Cause as provided in Section 7.03, all payments, salary and other
benefits hereunder shall cease at the effective date of termination.
Section 8.02. Termination without Cause, For Good Reason. In the event
that this Agreement is terminated by the Company without Cause or by the
Executive for Good Reason, the Executive shall receive as a termination
settlement an amount equal to twelve (12) month's salary as is in effect at the
effective date of termination (the "Termination Payment"), pursuant to the
Company's normal payroll practices. In addition, the Executive shall receive
that portion of the performance bonus payable pursuant to Section 5 hereof equal
to that percentage of the calendar year during with the Executive was employed
by the Company, payable when such bonus would otherwise normally be paid by the
Company. In addition to the Termination Payment, the Executive shall continue to
receive the insurance benefits described in Section 6.02 for a period of twelve
(12) months following the effective date of termination. The Executive shall
have no obligation to mitigate the amount of the Termination Payment provided
for herein by seeking other employment or otherwise.
Section 8.03. Termination due to Permanent Disability. In the event
that this Agreement is terminated due to the Permanent Disability of the
Executive, the Executive shall receive the Termination Payment; provided,
however, that the Termination Payment by the Company shall be reduced by the
amount of any disability insurance payments made to the Executive pursuant to
insurance provided under Section 6.02 above.
Section 8.04. Public Statement of Termination. In the event the
Executive's employment terminates for any reason, the Company and the Executive
shall agree upon a public statement pertaining to the Executive's termination of
employment, and the terms of said statement shall not be subject to subsequent
modification by either party unless required by law; provided,
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however, that in the event the Company and the Executive are unable in good
faith to agree on such a statement, the Company may make public statements as
are necessary to comply with the law.
Section 8.05. No Other Benefits. Except as specifically provided in
this Section 8, the Executive shall not be entitled to any compensation,
severance or other benefits from the Company or any of its subsidiaries or
affiliates upon the termination of this Agreement for any reason whatsoever.
Section 9. Proprietary Information; Inventions in the Field.
Section 9.01. Proprietary Information. In the course of his service to
the Company, the Executive will have access to confidential specifications,
know-how, strategic or technical data, marketing research data, product research
and development data, manufacturing techniques, confidential customer lists,
sources of supply and trade secrets, all of which are confidential and may be
proprietary and are owned or used by the Company, or any of its subsidiaries or
affiliates. Such information shall hereinafter be called "Proprietary
Information" and shall include any and all items enumerated in the preceding
sentence and coming within the scope of the business of the Company or any of
its subsidiaries or affiliates as to which the Executive may have access,
whether conceived or developed by others or by the Executive alone or with
others during the period of his service to the Company, whether or not conceived
or developed during regular working hours. Proprietary Information shall not
include any records, data or information which are in the public domain during
the period of service by the Executive provided the same are not in the public
domain as a consequence of disclosure directly or indirectly by the Executive in
violation of this Agreement.
Section 9.02. Fiduciary Obligations. The Executive agrees that
Proprietary Information is of critical importance to the Company and a violation
of this Section 9.02 and Section 9.03 would seriously and irreparably impair and
damage the Company's business. The Executive agrees that he shall keep all
Proprietary Information in a fiduciary capacity for the sole benefit of the
Company.
Section 9.03. Non-Use and Non-Disclosure. The Executive shall not
during the Term, any Renewal Term or at any time thereafter (a) disclose,
directly or indirectly, any Proprietary Information to any person other than the
Company or authorized employees thereof at the time of such disclosure, or such
other persons to whom the Executive has been specifically instructed to make
disclosure by the Board and in all such cases only to the extent required in the
course of the Executive's service to the Company or (b) use any Proprietary
Information, directly or indirectly, for his own benefit or for the benefit of
any other person or entity. At the termination of his employment, the Executive
shall deliver to the Company all notes, letters, documents and records which may
contain Proprietary Information which are then in his possession or control and
shall destroy any and all copies and summaries thereof.
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Section 9.04. Assignment of Inventions. The Executive agrees to assign
and transfer to the Company or its designee, without any separate remuneration
or compensation, his entire right, title and interest in and to all Inventions
in the Field (as defined below), together with all United States and foreign
rights with respect thereto, and at the Company's expense to execute and deliver
all appropriate patent and copyright applications for securing United States and
foreign patents and copyrights on Inventions in the Field and to perform all
lawful acts, including giving testimony, and to execute and deliver all such
instruments that may be necessary or proper to vest all such Inventions in the
Field and patents and copyrights with respect thereto in the Company, and to
assist the Company in the prosecution or defense of any interference which may
be declared involving any of said patent applications, patents, copyright
applications or copyrights. For the purposes of this Agreement, the words
"Inventions in the Field" shall include any discovery, process, design,
development, improvement, application, technique, or invention, whether
patentable or copyrightable or not and whether reduced to practice or not,
conceived or made by the Executive, individually or jointly with others (whether
on or off the Company's premises or during or after normal working hours) while
in the employ of the Company, and which was or is directly or indirectly related
to the business of the Company or any of its subsidiaries or affiliates, or
which resulted or results from or was suggested by any work performed by any
employee or agent thereof during the Term or any Renewal Term or for one year
after termination of this Agreement for any reason.
Section 10. Restrictions on Activities of the Executive
Section 10.01. Acknowledgments. The Executive agrees that he is being
employed hereunder in a key management capacity with the Company and that the
Company is engaged in a highly competitive business and that the success of the
Company's business in the marketplace depends upon its goodwill and reputation
for quality and dependability. The Executive further agrees that reasonable
limits may be placed on his ability to compete against the Company as provided
herein so as to protect and preserve the legitimate business interests and good
will of the Company.
Section 10.02. General Restrictions.
(a) During the Term and any Renewal Term and for the
Non-Competition Period (as defined below), the Executive will not (anywhere in
the world where the Company or any of its subsidiaries or affiliates then
conducts business) engage or participate in, directly or indirectly, as
principal, agent, employee, employer, consultant, investor or partner, or assist
in the management of, or own any stock or any other ownership interest in, any
business which is Competitive with the Company (as defined below). For purposes
of this Agreement, a business shall be considered "Competitive with the Company"
only if it designs, manufactures and markets home comfort and lighting
appliances. Notwithstanding the foregoing, the Executive may own, directly or
indirectly, less than 1% of the capital stock of any public corporation.
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(b) For purposes of this Agreement, the "Non-Competition
Period" shall mean the longer of (i) December 31, 2000 and (ii) a period of
twelve (12) consecutive months after the Executive's employment terminates.
Section 10.03. Employees, Customers and Suppliers.
(a) During the Term, any Renewal Term and the Non-Solicitation
Period (as defined below), the Executive will not solicit, or attempt to
solicit, any officer, director, consultant, executive or employee of the Company
or any of its subsidiaries or affiliates to leave his or her engagement with the
Company or such subsidiary or affiliate nor will he call upon, solicit, divert
or attempt to solicit or divert from the Company or any of its affiliates or
subsidiaries any of their customers or suppliers, or potential customers or
suppliers, of whose names he was aware during the term of his employment with
the Company; provided, however, that nothing in this Section 10.04 shall be
deemed to prohibit the Executive from calling upon or soliciting a customer or
supplier during the Non-Solicitation Period if such action relates solely to a
business which is not Competitive with the Company.
(b) For purposes of this Agreement, the "Non-Solicitation
Period" shall mean the longer of (i) December 31, 2000 and (ii) a period of
twenty-four (24) consecutive months after the Executive's employment terminates.
Section 10.04. THE EXECUTIVE REPRESENTS AND WARRANTS THAT THE
KNOWLEDGE, SKILLS AND ABILITIES HE POSSESSES AT THE TIME OF COMMENCEMENT OF
EMPLOYMENT HEREUNDER ARE SUFFICIENT TO PERMIT HIM, IN THE EVENT OF TERMINATION
OF HIS EMPLOYMENT HEREUNDER, TO EARN A LIVELIHOOD SATISFACTORY TO HIMSELF
WITHOUT VIOLATING ANY PROVISION OF SECTION 9 OR 10 HEREOF, FOR EXAMPLE, BY USING
SUCH KNOWLEDGE, SKILLS AND ABILITIES, OR SOME OF THEM, IN THE SERVICE OF A
NON-COMPETITOR. THE EXECUTIVE FURTHER REPRESENTS AND WARRANTS THAT HIS ABILITY
SO TO EARN A LIVELIHOOD SATISFACTORY TO HIMSELF DOES NOT DEPEND UPON HIS ABILITY
TO OBTAIN COMPENSATION FOR HIS SERVICES AT, OR IN EXCESS OF, THE LEVEL AT WHICH
HE IS COMPENSATED BY THE COMPANY.
Section 11. Remedies. It is specifically understood and agreed that any
breach of the provisions of Section 9 or 10 of this Agreement is likely to
result in irreparable injury to the Company and that the remedy at law alone
will be an inadequate remedy for such breach, and that in addition to any other
remedy it may have, the Company shall be entitled to enforce the specific
performance of this Agreement by the Executive and to seek both temporary and
permanent injunctive relief (to the extent permitted by law) without the
necessity of proving actual damages.
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Section 12. Severable Provisions. The provisions of this Agreement are
severable and the invalidity of any one or more provisions shall not affect the
validity of any other provision. In the event that a court of competent
jurisdiction shall determine that any provision of this Agreement or the
application thereof is unenforceable in whole or in part because of the duration
or scope thereof, the parties hereto agree that said court in making such
determination shall have the power to reduce the duration and scope of such
provision to the extent necessary to make it enforceable, and that the Agreement
in its reduced form shall be valid and enforceable to the full extent permitted
by law.
Section 13. Notices. All notices hereunder, to be effective, shall be
in writing and shall be delivered by hand or mailed by certified mail, postage
and fees prepaid, as follows:
If to the Company: Xxxxxx Products Corp.
000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, XX 00000
Attn: President
If to the Executive: 00 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
or to such other address as a party may notify the other pursuant to a notice
given in accordance with this Section 13.
Section 14. Miscellaneous.
Section 14.01. Modification. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof,
superseding all prior understandings and agreements, whether written or oral.
This Agreement may not be amended or revised except by a writing signed by the
parties.
Section 14.02. Assignment and Transfer. This Agreement shall not be
terminated by the merger or consolidation of the Company with any corporate or
other entity or by the transfer of all or substantially all of the assets of the
Company to any other person, corporation, firm or entity. The provisions of this
Agreement shall be binding on and shall inure to the benefit of any such
successor in interest to the Company. Neither this Agreement nor any of the
rights, duties or obligations of the Executive shall be assignable by the
Executive, nor shall any of the payments required or permitted to be made to the
Executive by this Agreement be encumbered, transferred or in any way
anticipated.
Section 14.03. Captions. Captions herein have been inserted solely for
convenience of reference and in no way define, limit or describe the scope or
substance of any provision of this Agreement.
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Section 14.04. Governing Law. This Agreement shall be construed under
and enforced in accordance with the laws of the Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a sealed instrument as of the day and year first above written.
XXXXXX PRODUCTS CORP.
By: /s/ Jordan X. Xxxx
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Jordan X. Xxxx, President
/s/ Xxxxxxx Xxxxxxxxxx
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Xxxxxxx Xxxxxxxxxx
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EXHIBIT A
PERFORMANCE BONUS CRITERIA
For 1997 only, the Executive shall be entitled to a bonus equal to 2%
of the pre-tax profit of the "Xxxxxx Group" for 1997[, such pre-tax profit shall
be calculated without giving effect to the transaction.]
For years following 1997, the Executive shall be entitled to an annual
bonus ranging between 15% and 50% of the Executive's Base Salary for such year,
based on the achievement by the Company of between 90% and 100% of certain
operating targets, which will be determined by the Board.
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EXHIBIT B
BENEFITS
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