Exhibit 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 5,
1998 is made and entered into by and between SWING-N-SLIDE CORP., a
Delaware corporation (the "Company"), located at 0000 Xxxxxxxx Xxxxx,
Xxxxxxxxxx, XX 00000 and XXXXXXXX X. XXXXXXX (the "Executive"), residing
at 00000 Xxxxxxxxx Xxxxxxx, Xxxxx Xxxxxx, XX 00000.
The Company desires to employ the Executive under the terms and
conditions set forth in this Agreement, and the Executive desires to
accept such employment subject to the terms and conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants set forth herein, the parties agree as follows:
1. Employment and Duties
1.1 Subject to the terms and conditions of this Agreement, the
Company hereby agrees to employ the Executive to serve as the President
and Chief Executive Officer of the Company. The Executive shall be
elected to the Board of Directors effective as of the Commencement Date
(as defined below). The Company shall use its best efforts to retain the
Executive on the Board of Directors during the Term (as defined below) and
any extensions thereof. During or prior to December, 1998, the Board of
Directors shall review the Executive's performance and shall consider
appointing him to the position of Chairman of the Board.
1.2 The Executive shall report directly to the Board of Directors of
the Company. The Executive shall perform the duties, and assume the
responsibilities and obligations, contemplated by the title referred to in
Section 1.1, and shall perform such other duties and undertake such other
responsibilities and obligations, consistent with his position, as the
Board of Directors shall determine from time to time.
1.3 The Executive shall (i) devote his full business time and
attention and best efforts to the business and affairs of the Company and
its affiliates, (ii) use his best efforts to promote the further the
interests of the Company, and (iii) faithfully and diligently perform his
responsibilities and duties hereunder.
1.4 The Executive shall not, without the prior written consent of
the Company, render services, whether or not compensated, to any other
person or as an employee, independent contractor or otherwise; provided,
however, that nothing herein shall prevent or restrict the Executive from
(a) rendering services to charitable, civic or other not-for-profit
organizations or managing his personal and family interests in such a
manner as shall not materially interfere with Executive's performance of
his duties under this Agreement; or (b) serving on the Board of Directors
of a corporation not in competition with the Company, with the consent of
the Company which shall not be unreasonably withheld; or (c) accepting
speaking engagements which do not materially interfere with the normal
performance of the Executive's duties.
1.5 The Executive shall comply with all employment policies and
practices of the Company as announced in writing from time to time,
provided that none of such policies conflict with any provision of this
Agreement, as the same may be modified from time to time.
2. Term of Agreement
2.1 The term of employment shall be deemed to commence on January 5,
1998 (the "Commencement Date"). The Executive shall not be deemed an
employee of the Company for any purpose until the Commencement Date.
2.2 Unless extended by mutual consent or as provided in Section 2.3
below, this Agreement shall terminate on the third (3rd) anniversary of
the Commencement Date (such three-year period being hereinafter referred
to as the "Initial Term").
2.3 Following the initial expiration date of the Initial Term, this
Agreement shall be deemed extended from year to year ("Extension Year")
unless, no later than six (6) months prior to the end of the Term (or any
Extension Year) the Company shall have notified the Executive in writing
that it doe snot elect to extend the Term past its then expiration date.
The expression "Term" as used herein shall mean the Initial Term and all
Extension Years during which this Agreement remains in effect.
3. Compensation
3.1 Annual Base Salary. During the Term, the Company shall pay to
the Executive an Annual Base Salary of Three Hundred Thousand
Dollars ($300,000), payable in equal installments in arrears in accordance
with the Company's customary payroll practices. The Company will review
the Executive's performance within 45 days after the end of each fiscal
year of the Term, and will increase the Executive's Annual Base Salary for
the then-current year by up to ten percent (10%) of the previous year's
Annual Base Salary, based upon (a) a three-level good-excellent-outstanding
set of criteria, and (b) a good faith evaluation by the Board of Directors
of the Executive's performance in such previous year.
3.2 Incentive Bonus. In addition to the Annual Base Salary, the
Company will pay to the Executive, with respect to each fiscal year, a
two-tiered Incentive Bonus computed in accordance with the following
provisions of this Section 3.2.
3.2.1 First Tier Bonus
(a) First Year
(i) If the EBITDA of the Company for the fiscal year ending
December 31, 1998 at least equals or exceeds EBITDA for the fiscal year
ending December 31, 1997, the First Tier Bonus shall be the sum of
(A) First Portion:
(1) a fraction, the numerator of which is the
percentage by which the Company's EBITDA for such year exceeds the
Company's EBITDA for 1997 (but not exceeding 30%) and the denominator of
which is ten percent (10%), and
(ii) forty percent (40%) of the Executive's Adjusted Annual Base
Salary (as defined below); plus
(B) Second Portion: An additional bonus of up to 10% of
Adjusted Annual Base Salary, based upon a sliding scale of achievement of
personal goals as established by the Board of Directors in consultation
with the Executive no later than March 1, 1998.
(b) Years After First Year. The First Tier Bonus for all years
after 1998 shall be the sum of
(A) First Portion: an amount (not exceeding 120% of
Adjusted Annual Base Salary) which is the product of
(1) a fraction, the numerator of which is the
percentage by which the Company's EBITDA for such year exceeds the
Company's EBITDA for the prior year and the denominator of which shall be
the Target EBITDA Growth Rate for such year and
(ii) forty percent (40%) of the Executive's Adjusted
Annual Base Salary (as defined below); plus
(B) Second Portion: An additional bonus of up to 10% of
Adjusted Annual Base Salary, based upon a sliding scale of achievement of
personal goals as established by the Board of Directors in consultation
with the Executive no later than first day of each such year.
(c) "Adjusted Annual Base Salary" means the greater of
(i) $325,000 and (ii) the Executive's actual Annual Base Salary.
(d) The "Target EBITDA Growth Rate" shall be established by the
Board of Directors in consultation with the Executive no later than
January 1 of each fiscal year after the first fiscal year.
3.2.2 Second Tier Bonus
(a) On or before the commencement of each fiscal year during
the Term, the Board of Directors, in consultation with the Executive,
shall establish the Company's Operating Budget for each fiscal quarter of
the then-current fiscal year.
(b) The Second Tier Bonus shall be twelve and one-half
percent (12 and 1/2%) of the Adjusted Base Salary for each quarter at the
end of which the Company's Cumulative EBITDA Budget from the beginning of
such year through the end of such quarter has been attained.
3.2.3 Certain Adjustments for EBITDA (a) The
calculation of EBITDA for the purpose of calculating all bonus and
termination payments for Executive shall exclude any charge incurred for
(i) as to the First Tier Bonus for the year 1998, the aggregate
amount by which the actual payroll expense in 1998 attributable to
the Executive (including Annual Base Salary as the same may be
adjusted from time to time and all bonus compensation) chargeable to
current expense exceeds the actual payroll expense (other than
severance payments) attributable to the chief executive officer in
1997,
(ii) executive search fees and legal fees incurred by the
Company in 1998 in respect of the future hire of the senior GameTime
division officer,
(iii) The aggregate amount by which the actual payroll
expense of the senior GameTime officer exceeds the budgeted payroll
expense in 1998, and
(iv) the expense of paying, plus any increase over 1997 in
accruals or reserves with respect to, any legal settlements or legal
judgments entered against the Company respecting any legal claims
made or lawsuits in process as of the Effective Date hereof.
3.2.4 Minimum First Year Bonus. Notwithstanding the results
of the calculations prescribed by the previous sections of this
Section 3.2, the Executive shall be paid a minimum bonus of one hundred
seventy-five thousand dollars ($175,000) in respect of the 1998 fiscal
year.
3.3 Calculation of Bonuses. The Company, within 75 days after the
close of each fiscal year with respect to the First Tier Bonus, and within
sixty (60) days after the end of the first three calendar quarters and
75 days after the end of the fourth calendar quarter with respect to the
Second Tier Bonus, shall deliver to the Executive a statement ("Bonus
Statement"), prepared by the Company's internal accounting staff and
reviewed by the Company's regularly employed accountants, setting forth
(a) in the case of the First Tier Bonus a comparison of the target EBITDA
and the Company's actual EBITDA for such fiscal year, prepared on a
consistent basis; (b) in the case of the Second Tier Bonus a comparison of
the line items comprising the Quarterly Projected Cumulative Budget for
each quarter of the fiscal year with the amounts actually attained by the
Company for such line items (resulting in a comparison of projected and
actual EBITDA for each such quarter); and (c) a calculation of the First
Tier and Second Tier Bonuses earned by the Executive.
3.4 Payment of Bonuses. First Tier and Second Tier Bonuses will be
paid within thirty (30) days after delivery to the Executive of the
applicable Bonus Statement.
3.5 Stock Options.
3.5.1 Grant of Option. The Executive is hereby granted,
effective as of the Commencement Date, options (the "Options") to purchase
three hundred seventy-five thousand (375,000) shares of the Company's
common stock, $.01 par value ("Shares"). The Options shall be divided
into three levels (the second and third levels being hereinafter sometimes
referred to as "Cliff Vesting Options") as follows:
Level One 175,000 shares
Level Two 150,000 shares
Level Three 50,000 shares
3.5.2 Exercise Price. The exercise price as to all of the
Shares covered by the Options shall be the closing price of the Company's
common stock on the American Stock Exchange on the last trading date prior
to the Commencement Date.
3.5.3 Vesting Schedule. The Options shall vest and become
exercisable in accordance with the following schedule:
Level One . . . 25,000 Shares on the Commencement Date;
50,000 Shares on each of the first and second
anniversaries of the Commencement Date; and
50,000 Shares on January 2, 2001
Level Two . . . On the first date that the average of the
closing trade prices of the Shares on the
American Stock Exchange (or NASDAQ or such
other primary market or exchange on which the
Company's common stock may be listed or
traded) for the fifteen (15) consecutive
trading days ending on such date shall have
been $6.50 or higher
Level Three . . On the first date that the average of the
closing trade prices of the Shares on the
American Stock Exchange (or NASDAQ or such
other primary market or exchange on which the
Company's common stock may be listed or
traded) for the fifteen (15) consecutive
trading days ending on such date shall have
been $11.00 or higher
3.5.4 Expiration. The Options, to the extent not exercised
or not terminated pursuant to other provisions of this Agreement or of the
Plan, shall expire on the tenth (10th) anniversary of the Commencement
Date.
3.5.5 Option Plan.
(a) Options (other than those described as "Non-Plan Options"
under subsection 3.5.6) will be issued pursuant to Section 8 of the
Company's 1996 Incentive Stock Plan (the "Option Plan").
(b) Options issued pursuant to the Option Plan shall be issued
thereunder so as to constitute incentive stock options under Section 422
of the Internal Revenue Code and Regulations thereunder to the maximum
extent that such Options may be so qualified.
(c) Options issued pursuant to the Option Plan which can not be
so qualified under said Section 422 shall be separately issued as
non-qualified stock options.
(d) The provisions of Section 14 of the Option Plan (Change of
Control) shall not be applicable to Options issued pursuant to the Option
Plan under this Agreement.
3.5.6 Options Not Issued Pursuant to Option Plan. Options
with respect to twenty-five thousand (25,000) shares in Level One which
vest on the first anniversary of the Commencement Date (Non-Plan Options)
shall be separately issued and shall not be deemed issued pursuant to the
Option Plan or subject to its provisions.
3.5.7 Effect of Certain Termination Events. Upon the
termination of Executive's employment:
(a) by the Company for Cause or voluntarily by the Executive,
the Options, to the extent not yet vested pursuant to Section 3.5.3, shall
terminate immediately and shall no longer be exercisable, and vested
Options shall be exercisable only for a period of three (3) months
following the Termination Date (as defined in Section 5.7);
(b) by the Company without Cause, either
(i) in the absence of a Change in Control (as defined in
Section 5.7), or
(ii) within thirty (30) days prior to a Change of Control or
within 180 days after a Change of Control, then:
(A) all of the Options which are not Cliff Vesting Options
shall vest and, in addition,
(B) if on any date within sixty (60) days after such
termination the average closing price of the Shares on the
American Stock Exchange (or NASDAQ or such other primary market
or exchange on which the Company's common stock may be listed or
traded) for the ten (10) consecutive trading days ending on such
date shall have attained the price required for vesting Level
Two Options (or Level Two and Three Options) then the Options at
the level or levels as to which such price has been attained
shall also vest, and
(C) all of the Options which vest pursuant to this
subsection (b) shall be exercisable for a period of three months
following the Termination Date, or in the case of Options not
qualified under Section 422 of the Internal Revenue Code,
one (1) year following the termination date.
(c) by reason of the Executive's death or the occurrence of a
Disability Date (as defined in Section 5.7),
(i) prior to the first anniversary of the Commencement Date,
all of the unvested Options shall expire;
(ii) on or after the first anniversary of the Commencement Date,
(A) all of the unvested Options that are not Cliff Vesting
options shall vest, shall be immediately exercisable and shall
terminate to the extent not exercised on or prior to the first
anniversary of the earlier of the date of death or the
Disability Date; and, in addition
(B) if on any date within sixty (60) days after such
termination the average closing price of the Shares on the
American Stock Exchange (or NASDAQ or such other primary market
or exchange on which the Company's common stock may be listed or
traded) for the ten (10) consecutive trading days ending on such
date shall have attained the price required for vesting Level
Two Options (or Level Two and Three Options) then the Options at
the level or levels as to which such price has been attained
shall also vest.
(C) all of the Options which vest pursuant to this
subsection (c) (Death or Disability) shall be exercisable for a
period of one (1) year following the Termination Date.
3.5.8 Non-Transferability. The Options shall not be sold,
transferred or assigned by the Executive, shall be immediately null and
void if transferred by operation of law, and may be exercised during the
lifetime of the Executive only by him.
3.5.9 Conflict with Plan or Other Option Instruments. In
the event that, with respect to Options issued pursuant to the Option
Plan, any provision of the Option Plan or of any option award,
certificate, agreement or other instrument or document evidencing options
granted hereunder is in conflict with the foregoing provisions of this
Section 3.5, the provisions of this Section shall prevail.
3.5.10 Other Plans. The Executive shall be entitled to
participate in additional Company stock option plans or other equity plans
or programs, if any, in which executives of the Company are eligible to
participate generally as may be determined by the Board of Directors.
4. Benefits; Expenses
4.1 Benefit Plans. The Executive shall be entitled to participate
in all of the benefit plans and programs available to the Company's senior
executives of the Company, as such plans or programs may be in effect from
time to time. The Company may, in its sole and absolute discretion,
determine to amend, revise, replace or terminate any such plans or
programs at any time. In addition, the Company shall reimburse the
Executive for his cost of maintaining his current health insurance
programs under COBRA with his current employer during the waiting period
for enrollment under the Company's health plans.
4.2 Vacation. During the Tern, the Executive shall be entitled to
four (4) weeks of paid vacation per year and all other paid holidays given
to employees of the Company. Such vacation shall be cumulative and may be
carried over to ensuing years, but shall be taken with commercially
reasonable notice to the Company and shall be scheduled to minimize
conflict with the Company's reasonable business needs.
4.3 Business Expenses. The Company, upon presentation by the
Executive of appropriate documentation, shall reimburse the Executive for
all reasonable and necessary business expenses incurred by Executive in
connection with the performance of his duties under this Agreement,
including reasonable accommodation expenses during travel required in
connection with the performance of Executive's duties, and subject to
Company's written policies with respect thereto as in effect from time to
time. The Company shall provide Executive with a corporate credit card,
which Executive shall use solely for purposes of performing his duties
under this Agreement and not for personal use.
4.4 Use of Automobile. The Company shall lease and make available
to the Executive, during the Term, an automobile of a model of his
selection reasonably acceptable to the Company. The Company shall pay for
all expenses associates with the use and enjoyment of the automobile.
4.5 Relocation Expenses. The Executive agrees to relocate from his
home in Apple Valley, Minnesota in accordance with the policies of the
Compensation Committee applicable to the Chief Executive Officer.
4.6 Temporary Living Expenses. The Company shall reimburse
Executive for temporary residence expenses in accordance with the policies
of the Compensation Committee applicable to the Chief Executive Officer.
4.7 Bridge Loan. In order to facilitate the Executive's purchase of
a new residence in the vicinity of the corporate headquarters, the Company
will facilitate a bridge loan in the amount of the net proceeds payable to
Executive under an executed contract for the sale of his Apple Valley,
Minnesota home (but limited to the equity required to be invested by the
Executive in a new residence) to be repaid out of the proceeds of the sale
of such home. The Company will reimburse the Executive for any interest
costs associated with such loan.
4.8 Life Insurance. The Company will reimburse Executive for the
standard rate premium for a term life insurance policy having a face
amount of three times Executive's Annual Base Salary, with such additional
travel and accident benefits as may be standard with the Company's life
insurance policies provided to senior executives.
4.9 Country Club Membership. Promptly following the Commencement
Date the Company will reimburse the Executive for a husband and wife
membership in a reasonably appropriate country club.
4.10 Professional Services. The Company will reimburse the Executive
(a) for his reasonable legal services in connection with the negotiation
of this Agreement, and (b) up to $3,000 annually for professional
assistance in the preparation of his income tax returns.
4.11 Supplemental Benefit Plan Study. The Company will retain a
consulting firm recommended by the Executive and approved by the Board of
Directors, for the purpose of studying and recommending to the Board one
or more executive supplemental pension, profit sharing or retirement
plans. The implementation of any such plan shall require approval of the
Board of Directors.
4.12 Qualified Retirement Plans. The Company shall make
contributions to an account for Executive in such "employee pension
benefits plans" (within the meaning of Section 3(2) of ERISA) as the
Company shall maintain from time to time, all in accordance with Company
policies applicable generally to its employees and subject to such
restrictions and limitations as may be necessary and appropriate for such
plans to remain in compliance with all applicable laws and regulations.
4.13 Tax Gross-Up Payments. If any reimbursement or payment made to
or for the benefit of the Executive pursuant to this Section 4 ("Section 4
Payment"), would be subject to any federal, state or local income tax (the
"Income Tax"), the Company shall pay to the Executive an additional
payment (the "Gross-Up Amount") such that, upon receipt thereof, the sum
of (a) all Section 4 Payments less (b) any Income Tax on the Section 4
Payments and any Income Tax upon the Gross-up Amount, shall be equal to
the aggregate of the Section 4 Payments. The Gross-up Amount shall (a) be
calculated based upon the highest combined federal, state and local
marginal income tax rate applicable to the Executive and (b) shall be paid
on or before April 1 of each year or partial year of Executive's
employment in respect of which Section 4 Payments are made.
5. Termination Payments
5.1 General. This Agreement may be terminated by the Company, at
any time, with or without Cause (as defined below).
5.2 Termination Without Cause. If this Agreement is terminated by
the Company without Cause (which shall include the circumstances described
in Sections 5.7.5) the Executive shall be entitled to receive the payments
specified in the following subsections of this Section 5.2.
5.2.1 his Annual Base Salary through the Termination Date
(as defined in Section 5.7), pro rated to the Termination Date,
5.2.2 any cash bonus previously awarded but not yet paid,
5.2.3 reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due in respect
thereof,
5.2.4 any benefits available to the Executive under the
terms of the benefit plans and programs in which the Executive is a
participant on the Termination Date,
5.2.5 salary continuance commencing on the first day of the
month following the month in which the Termination Date occurs, at the
rate of the Annual Base Salary in effect on the Termination Date, for the
following periods:
(a) if the Termination Date occurs at any time prior to
expiration of eighteen (18) months after the Commencement Date,
twenty-four (24) months, and
(b) if such Termination Date occurs after the first
eighteen (18) months following the Commencement Date,
(i) if the Company's Cumulative EBITDA exceeds 115% of the
Cumulative Budgeted EBITDA, twenty-four (24) months;
(ii) if the Company's Cumulative EBITDA is at least 95% and
up to and including 115% of Budgeted Projected EBITDA,
eighteen (18) months;
(iii) if the Company's Cumulative EBITDA is less than
95% of Cumulative Budgeted EBITDA, twelve (12) months.
5.2.6 bonus replacement payments as follows:
(a) if the Termination Date occurs during the first
eighteen (18) months of the Term, twice the sum of any cash bonuses
applicable to the 1998 calendar year, computed in the case of each
such bonus as the greater of any applicable minimum bonus for
calendar year 1998 or such bonus pro-rated to the Termination Date
based on the computation formulas herein.
(b) if such Termination Date occurs after the first
eighteen (18) months of the Term;
(i) if the Company's Cumulative EBITDA equals or exceeds
115% of Cumulative Budgeted EBITDA (both such terms as defined
in subsection (v) below), an amount equal to two hundred
percent (200%) of the sum of the First and Second Tier bonuses
actually paid to the Executive in respect of the year prior to
the year in which the Termination Date occurs;
(ii) if the Company's Cumulative EBITDA is at least 95% and
up to and including 115% of Cumulative Budgeted EBITDA, an
amount equal to one hundred fifty percent (150%) of the sum of
the First and Second Tier bonuses actually paid to the Executive
in respect of the year prior to the year in which the
Termination Date occurs;
(iii) if the Company's Cumulative EBITDA is less than
95% of Cumulative Budgeted EBITDA, an amount equal to one
hundred percent (100%) of the sum of the First and Second Tier
bonuses actually paid to the Executive in respect of the year
prior to the year in which the Termination Date occurs; and
(iv) the bonus replacement amount shall be payable in equal
monthly installments over the same period for which salary
continuation payments are made pursuant to subsection 5.2.6 are
made.
(v) For purposes hereof "Cumulative EBITDA" and
"Cumulative Budgeted EBITDA" means each such EBITDA (adjusted
as required under section 3.2.3) computed from the beginning of
the year prior to the year in which the Termination Date occurs
through the end of the fiscal quarter prior to the quarter in
which the Termination Date occurs, without regard to any
retroactive downwards adjustment made to Budgeted EBITDA for any
period.
5.3 Termination with Cause. If this Agreement is terminated by the
Company with Cause (as defined below), then the Executive shall be
entitled to receive:
5.3.1 his Annual Base Salary to the Termination Date,
pro rated to the Termination date,
5.3.2 reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due in respect
thereof,
5.3.3 any benefits available to the Executive under the
terms of the benefit plans and programs in which Executive is a
participant on the Termination Date.
5.4 Voluntary Termination. The Executive agrees to provide services
to the Company as provided herein for the duration of the term (as the
same may be extended in accordance herewith). However, if this Agreement
is terminated by the Executive voluntarily, then the Executive shall be
entitled to receive:
5.4.1 his Annual Base Salary to the Termination Date, pro
rated to the Termination Date,
5.4.2 reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due in respect
thereof,
5.4.3 any benefits available to the Executive under the
terms of the benefit plans and programs in which Executive is a
participant on the Termination Date and
5.4.4 any cash bonuses awarded in respect of a year prior to
the year in which the Termination Date occurs but not yet paid.
5.5 Death or Disability of Executive. A Termination Date shall
occur without any further action, upon the death of the Executive or upon
the Executive's Disability Date. In the event of the death or the
occurrence of a Disability Date, the Company shall pay to Executive,or the
Executive's estate or personal representative.
5.5.1 his Annual Base Salary through the end of the month in
which the Termination Date occurs by reason of death or disability,
5.5.2 salary continuation payments based on his Annual Base
Salary then in effect, for a period of 12 months commencing in the first
day of the month following the month in which the Termination Date occurs,
5.5.3 any cash bonuses to the extent the same would have
been earned in the calendar year in which the Termination Date occurs,
based on the computation formulas herein had Executive continued to be
employed for the balance of such year and pro rated from the beginning of
the year to the Termination Date,
5.5.4 reimbursement for expenses required to be reimbursed
in accordance with Section 4 (but not yet reimbursed) and the Gross-up
Payment due in respect thereof, and
5.5.5 subject to applicable law, any benefits available to
the immediate family of a deceased Executive under the terms of the
benefit plans and programs in which Executive is a participant on the date
of death.
5.6 Change of Control.
5.6.1 The Executive shall be entitled to resign following a
Change in Control of the Company (as defined below).
5.6.2 If such resignation results in a Termination Date
which occurs:
(a) within 180 days or after 210 days after the Change of
Control, the Executive shall be deemed to have resigned voluntarily
and shall be entitled to receive the amounts specified under
section 5.4 (Voluntary Termination); and
(b) at any time (i) within 180 days after the Change of Control
if the successor to the Company does not at the closing agree to
assume all obligations and to provide all benefits under this
Agreement, or (ii) if the successor does so assume this Agreement,
after 180 days but not more than 210 days after the Change of
Control, the Executive shall be entitled to receive:
(i) salary continuance at the rate of the Annual Base
Salary in effect on the Termination Date, payable over a period
of twenty-four (24) months commencing on the first day of the
month following the month in which the Executive's the
Termination Date occurs,
(ii) an amount, which
(A) if such Termination Date occurs on or before
December 31, 1998 shall be equal to twice the sum of any
cash bonuses applicable to the 1998 calendar year, computed
in the case of each such bonus as the greater of any
applicable minimum bonus for calendar year 1998 or such
bonus pro-rated to the Termination Date based on the
computation formulas herein, or
(B) if such Termination Date occurs after
December 31, 1998, shall be equal to twice the aggregate of
the First Tier and Second Tier bonuses paid to the
Executive in respect of the fiscal year ended immediately
prior to the year in which such resignation is effective,
in either event payable in equal monthly installments over
a period of twenty-four (24) months commencing on the first
day of the month following the month in which the
Termination Date occurs,
(iii) any cash bonus previously awarded but not yet
paid,
(iv) reimbursement for expenses incurred in accordance with
Section 4 (but not yet reimbursed) and the Gross-up Payment due
in respect thereof, and
(v) any benefits available to the Executive under the
terms of the benefit plans and programs in which the Executive
is a participant on the Termination Date,
5.6.3 If the Company terminates Executive's employment
without Cause within 30 days prior to a Change of Control, or if the
Company or its successor (as the case may be) terminates Executive's
employment without Cause within 180 days after the Change of Control,
Executive shall be entitled to receive the payments set forth in
Section 5.6.2(b) herein).
5.7 Definitions
5.7.1 "Cause" shall mean:
(i) indictment or conviction of the Executive for any felony or
other crime involving moral turpitude, fraud or misrepresentation,
(ii) the Executive engaging (alone or with others) in any other
illegal conduct that is materially detrimental to the business or
reputation of the Company,
(iii) the repeated refusal, failure or neglect by the
Executive to perform any material duties under the terms of this
Agreement for reasons other than onset of a disability; provided that
such refusal, failure or neglect shall constitute "Cause" only if the
Board of Directors gives Executive written notice specifically
describing such refusal or neglect, and Executive either fails
promptly to cure the same if the same is reasonably curable, or
Executive thereafter repeats such refusal, failure or neglect,
(iv) the termination by the Company of this Agreement for Cause
shall be without prejudice to any claim which the Company may have,
at law or in equity, arising out of or in connection with the events
giving rise to such termination.
5.7.2 A "Change of Control" shall be deemed to have occurred
if any of the following shall occur:
(i) any person or group (as such terms are used in Securities
Exchange Commission Rule 13d-5(b) and Section 13(d) of the Securities
Exchange Act of 1934 (the "Exchange Act"), as amended (other than a
trustee or other fiduciary holding securities under an employee
benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly of securities of the Company representing 50%
or more of the combined voting power of the Company's then
outstanding securities (excluding from such 50% calculation
Greengrass Holdings, a Delaware general partnership, GreenGrass
Capital LLC, a Delaware limited liability company ("Capital"), or any
member of Capital or their respective affiliates (the "Permitted
Holders") and any such securities that were sold to such person or
group by the Executive or any other officer of the Company where
(a) the securities were acquired by the Executive or officer upon
exercise of the Option, and (b) the sale by the Executive or any
other such officer was not on a blind basis to unknown or
undesignated purchasers); or
(ii) during any period of twenty-four consecutive months,
beginning on the Commencement Date, individuals who at the beginning
of such period constitute the Board of Directors of the Company
and/or any new director whose election was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors on the Commencement Date or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a two-thirds (2/3) majority thereof; or
(iii) there is a change in the composition of the majority
of the Board of Directors, or Executive is removed from the Board of
Directors, within twelve (12) months following shareholder
transactions subject to reporting pursuant to Regulation 13D under
the Exchange Act, if any Schedule 13D filed in connection therewith
indicates that the purpose of such transaction includes any plans or
proposals of the type required to be disclosed by paragraphs (a),
(b), (c) or (h) of Item 4 of Schedule 13D.
(iv) the shareholders of the Company approve a merger or
consolidation of the Company with any other entity other than a
Permitted Holder, or a disposition of a material portion of the
assets of the Company, other than a merger or consolidation, other
than to a Permitted Holder, which would result in the stockholders
holding the voting securities of the Company outstanding immediately
prior thereto continuing to represent at least 51% of the combined
voting power of the voting securities of the Company or the entity
surviving such transaction outstanding immediately after such merger
or consolidation.
The date on which a Change of Control shall be deemed to have occurred is
the date on which the last act or event occurs which is necessary to give
effect to any of the events described in subsection (1) through (iv)
above.
5.7.3 A "Disability Date" shall be deemed to have occurred
on the 60th day following the first day on which the Executive is unable
substantially to perform his duties because of a disability which is
expected to be permanent or to last for an indefinite duration, as
determined by a physician mutually acceptable to Executive and the
Company; and
5.7.4 "Termination Date" means (a) the Executive's last day
of employment on or following the date upon which written notice of
termination is delivered to him by the Company, as the same shall be
stated in such notice; (b) the Executive's last day of employment on or
following the date upon which the Executive delivers written notice of
resignation to the Company (including a resignation deemed a termination
without Cause under Section 5.7.5); (c) the Disability Date; or (d) the
date of the Executive's death.
5.7.5 Certain Circumstances Treated as Termination Without
Cause. The following events or circumstances shall constitute a
termination of the Executive without Cause for all purposes of this
Agreement:
(a) the resignation by the Executive delivered within 60 days
after (a) his removal from the Board of Directors, or (b) the failure
of the Company's stockholders to reelect the Executive to the Board
of Directors; and/or
(b) the expiration of this Agreement without further extension
either at the end of its Initial Term, or at the end of any Extension
Year ending on or before December 31, 2003.
6. Confidential Information
6.1 The term "Confidential Information" shall mean and include
6.1.1 any and all confidential, proprietary, secret or
non-public information related in any way to the business or operations,
present or future, of the Company or any customer of the Company (as such
term is hereinafter defined) of the Company, which is now, or in the
future shall become, known to Executive as a result of his relationship
with the Company; and
6.1.2 without limitation of the foregoing, any intellectual
property rights acquired or developed by the Company, whether or not
patentable or copyrightable, including all business plans, know-how,
technical information, inventions, designs, equipment, configurations,
ideas, concepts, processes, procedures, operations, research and
development plans, computer software, specifications, documentation, trade
secrets, technology (including the expression of any of the foregoing in
notes, formulas, test procedures and results, reports, memoranda or other
written materials, software or other materials of whatsoever nature)
pricing information, business, operational and marketing plans.
Notwithstanding the above, Confidential Information shall not include such
information as Executive can establish by written documentation:
(a) to have become known to the general public without fault on
the part of the Executive;
(b) to have been received by the Executive at any time from a
source other than the Company, its agents, representatives or
employees, lawfully having possession of such information without an
obligation of confidentiality; or
(c) to have been in the public domain or been part of a printed
publication available to the public.
6.2 The Executive acknowledges that the Confidential Information was
and in the future may have been acquired and/or developed by the Company
at great expense, may be a special, valuable and unique asset of the
Company, and represents the sole exclusive property of the Company. The
Executive in the course of his employment with the Company will obtain,
Confidential Information and personal knowledge of and influence over
clients of the Company. The Executive acknowledges that any wrongful use
or disclosure of any Confidential Information would greatly damage the
Company, causing it irreparable harm and injury. The Executive covenants
and agrees that, at all times during the Term and for a period of two
years thereafter, he shall not, directly or indirectly, publish, divulge
or disclose, in whole or in part, or suffer the use by any third party,
for his own benefit or the benefit of any other person, any Confidential
Information, other than:
(i) in the due course of performing his duties on behalf of the
Company, but then only to officers or others acting on behalf of the
Company or any client, where the duties of such person require such
disclosure; or
(ii) as may be required by law.
6.3 The Executive acknowledges and agrees that all copies (in any
form whatsoever) of all memoranda, documents, data, records, notes and
other written information in his possession or under his control, which
contain or pertain to any Confidential Information, shall at all times be
the sole and exclusive property of the Company. In the event Executive's
employment terminates for any reason, Executive shall promptly deliver to
the Company all copies of all such materials.
7. Non-Competition
7.1 During the Term and for an additional period ending
eighteen (18) months after the termination of his employment the Executive
will not control, manage, operate, be employed or engaged by, or otherwise
participate or engage in business as, or own any interest in, directly or
indirectly, any individual proprietorship, partnership, corporation, joint
venture, trust or any other form of business entity (whether as an
individual proprietor, partner, shareholder, joint venturer, trustee or in
any other manner whatsoever) if such entity is engaged anywhere in the
world in the manufacture and/or sale or furnishing of products and/or
services of the type and character manufactured, sold or furnished by the
Company, provided, however, that nothing contained in this clause shall be
deemed to prohibit the Executive from owning less than 2% of the shares of
a publicly held corporation engaged in any such business.
7.2 During the Term, and for one (1) year after his termination of
employment hereunder, the Executive will not, directly or indirectly
employ or attempt to employ or assist anyone else to employ any person who
is then or at any time during the preceding year was in the Company's
employ.
8. Specific Performance; Injunctive Relief, Reformation of
Restrictions
8.1 The Executive acknowledges that the services to be rendered by
Executive are of a special, unique, extraordinary and intellectual
character, (ii) that Executive will develop a personal acquaintanceship
and relationship with many of the Company's customers, as well as an
intimate knowledge of those customer's requirements, (iii) that the
Company's relationships with established customers are likely to be placed
in Executive's hands and (iv) that Executive's position with the Company
places him in a position of utmost confidence and trust with respect to
the clients and executives of the Company. Executive also acknowledges
that the Company's marketing efforts are targeted not only to existing and
potential customers in the United States but throughout the entire world
and accordingly, it is reasonable that the restrictive covenants set forth
above are not limited by specific geographic area but by the location of
the Company's clients.
8.2 The parties recognize, acknowledge and agree that, if the
Executive commits a breach or the Company has reasonable evidence that the
Executive is about to commit a breach, of any of the provisions of
Sections 6 or 7 above, the Company will suffer irreparable harm and
injury, and money damages will not provide an adequate remedy to the
Company. Accordingly, the Executive agrees that, in any such event, the
Company shall be entitled to have the provisions of this Agreement
specifically enforced by any court having jurisdiction, without being
required to post a bond or other security and without having to provide
the inadequacy of the available remedies at law. In addition,the Company
shall be entitled to avail itself of all such other actions and remedies
available to it under law or in equity and shall be entitled to such
damages as it sustains by reason of such breach. The Company agrees to
notify the Executive within seven (7) days after the discovery of any
breach or anticipated breach of any of the provisions of Sections 6 or 7
above.
8.3 The parties acknowledge that the type and periods of restriction
imposed on the Executive pursuant to the provisions of Sections 6 and 7
above are fair and reasonable, and are reasonably required for the
protection of the Company and the goodwill associated with the business of
the Company. It is the express desire and intent of the parties that the
provisions of Sections 6 and 7 be enforced to the fullest extent
permissible. If any of the covenants in Sections 6 or 7 above, or any
part thereof, is hereafter constructed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which
shall be given full effect, without regard to the invalid portions. If
any of the covenants contained in Sections 6 or 7, or any part thereof, is
held to be unenforceable because of the duration of such provision or the
area covered thereby, the parties hereby expressly agree that the court
making such determination shall have the power to reduce the duration of
such provision and/or areas to which any such provision shall apply, and,
in its reduced or limited form, said provision shall then be enforceable.
The parties hereto intend to and hereby confer jurisdiction to enforce the
covenants contained in Sections 6 and 7 above upon the courts of any state
within the geographical scope of such covenants.
8.4 If the courts of any one or more of such states shall hold any
of the previous covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the parties hereto that such
determination not bar or in any way affect the Company's rights to the
relief provided above in the courts of any other states within the
geographical scope of such covenants, as to breaches of such covenants in
such other respective jurisdictions, the above covenants as they relate to
each state being, for this purpose, severable into diverse and independent
covenants.
8.5 The prevailing party in any action arising out of a dispute in
respect of any provision of this Section shall be entitled to recover
reasonable attorneys' fees and costs and disbursements incurred in
connection with the prosecution or defense, as the case may be, of any
such action.
9. Intellectual Property
9.1 During the Term, the Executive shall disclose to the Company all
business ideas, inventions and business plans developed by him during such
Term which relate directly or indirectly to the Company's business or any
of its affiliates, including without limitation any process, operation,
product or improvement which may be patentable or copyrightable. The
Executive agrees that all of the foregoing will be the sole and exclusive
property of the Company and that he will at the Company's request and cost
do whatever is necessary to secure the rights thereto, by patent,
copyright or otherwise, to the Company.
10. Life Insurance
The Executive agrees that the Company shall have the right to
obtain life insurance on the Executive's life, at the Company's sole
expense and with the Company as the sole beneficiary thereof. The
Executive shall (a) cooperate fully with the Company in obtaining such
life insurance, (b) sign any necessary consents, applications and other
related forms or documents, and (c) take any reasonably required medical
examinations. The Executive does not represent that he is insurable.
11. Representations
11.1 By Executive. The Executive hereby represents to the Company
that the execution and delivery of this Agreement by him, and the
performance of his obligations hereunder are not in violation of, and do
not conflict with or constitute a default under any agreement by which he
is bound or any order, decree or judgment to which he is subject; that
this Agreement constitutes the valid and binding obligation of Executive
and that he is not a party to or bound by any agreement, understanding or
arrangement which would prevent him from carrying out the terms of this
Agreement or subject the Company to liability for employing the Executive
pursuant to the terms hereof.
11.2 By Company.
11.2.1 Corporate Authority, etc. The Company represents and
warrants that it has all requisite corporate power and authority to enter
into and perform its obligations pursuant to the terms of this Agreement.
The execution and delivery of this Agreement by the Company and the
performance by the Company of the transactions contemplated herein have
been duly and validly authorized by the Board of Directors of the Company
and the Stockholders and this Agreement has been duly and validly
authorized by all necessary corporate action. This Agreement is a legal,
valid and binding obligation of the Company.
11.2.2 Litigation. The Company is not a party to any
material legal proceedings other than the claim described in Appendix A
hereto and claims as to which the Company is insured.
12. Indemnification and Insurance
12.1 Indemnity. The Company hereby agrees to hold harmless and
indemnify the Executive to the full extent authorized or permitted by the
provisions of Delaware law authorizing or permitting such indemnification
currently prevailing or that are adopted after the date hereof.
12.2 Maintenance of Insurance
12.2.1 The Company represents that it presently has in full
force and effect a Directors and Officers Insurance Policy (the "Policy")
providing coverage in the amount of $7,500,000. A copy thereof has been
provided to the Executive.
12.2.2 Subject only to the provisions of the following
subsection 12.2.3, the Company hereby agrees that, so long as the
Executive shall continue to serve as a director or officer of the Company
(or shall continue at the request of the Company to serve as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise), and thereafter so long as the
Executive shall be subject to any possible claim or threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of fact that the Executive was
a director or officer of the Company (or served in any of said other
capacities), the Company will make all commercially reasonable efforts to
purchase and maintain in effect for the benefit of the Executive one or
more valid, binding and enforceable policies of Directors and Officers
Insurance providing, in all material respects, coverage at least
comparable to that presently provided pursuant to the Policy.
12.2.3 The Company shall not be required to maintain said
Policy in effect if said insurance is not reasonably available or if, in
the commercially reasonable business judgment of the then directors of the
Company, either (i) the premium cost for such insurance is substantially
disproportionate to the amount of coverage or (ii) the coverage provided
by such insurance is so limited by exclusions that there is insufficient
benefit from such insurance.
12.2.4 In the event the Company does not purchase and
maintain in effect said policy or policies pursuant to the provisions of
Section 12.2.3 above, the Company agrees to hold harmless and indemnity
the Executive to the full extent of the coverage which would otherwise
have been provided for the benefit of the Executive if the policy or
policies were then in effect.
12.3 Additional Indemnity. Subject only to the exclusions set forth
in Section 12.4 hereof, the Company hereby further agrees to hold harmless
and indemnity the Executive against any and all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the Executive in connection with any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (including an action by
or in the right of Corporation), to which the Executive is, was or at any
time becomes a party, or is threatened to be made a party, by reason of
the fact that the Executive is, was or at any time becomes a director,
officer, employee or agent of Corporation, or is or was serving or at any
time serves at the request of the Company as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise.
12.4 Limitation on Additional Indemnity. No indemnity pursuant to
Section 12.3 below shall be paid by the Company:
12.4.1 except to the extent the aggregate of losses to be
indemnified thereunder exceeds the amount of such losses for which the
Executive is indemnified either pursuant to Sections 12.1 or 12.2 hereof
or pursuant to any policy or policies purchased and maintained by the
Company;
12.4.2 in respect of remuneration paid to the Executive if
and to the extent it shall be determined by a final judgment or other
final adjudication that such remuneration was in violation of law;
12.4.3 on account of any suit in which final judgment is
rendered against the Executive for an accounting or profits made from the
purchase or sale by the Executive of securities of the Company pursuant to
the provisions of Section 16(b) of the Exchange Act or similar provisions
of any federal, state or local statutory law or regulation;
12.4.4 on account of the Executive's conduct that is finally
adjudged to have been knowingly fraudulent, deliberately dishonest or
willful misconduct; or
12.4.5 if a decision by a court having jurisdiction in the
matter shall finally determine that such indemnification is not unlawful.
12.5 Continuation of Indemnity. All agreements and obligations of
the Company contained herein shall continue during the period the
Executive is a director, officer, employee or agent of the Company (or is
serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise) and shall continue thereafter so long as Executive shall be
subject to any possible claim or threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that the Executive was a director or
officer of the Company or serving in any other capacity referred to
herein.
13. Miscellaneous
13.1 Entire Agreement. This Agreement (which includes the Exhibits
annexed hereto) sets forth the entire understanding between the parties
hereto as to the subject matter of this Agreement and merge and supersede
all prior agreements, commitments, representations, writings and
discussions between the parties with respect to such subject matter. This
Agreement may be terminated, altered, modified or changed only by a
written instrument signed by both parties hereto.
13.2 Subsequent Performance. The provisions of this Agreement which
by their terms call for performance subsequent to termination of this
Agreement or termination of the Executive's employment hereunder
(including without limitation the provisions of Sections 5, 6, 7 and 8
hereof), shall survive such termination.
13.3 Notices. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally,
sent by facsimile transmission or sent by certified, registered or express
mail (including any private carrier guaranteeing overnight delivery),
postage or delivery charges prepaid,or sent by private overnight carrier.
Any such notice shall be deemed delivered (a) when so delivered personally
or sent by confirmed facsimile transmission (provided that a manually
signed copy thereof is delivered by any of the other means provided herein
initiated no later than the next following business day), (b) on the date
of delivery if sent by express or private carrier, or (c) if delivered by
certified or registered mail, five (5) business days after the date of
deposit in the United States mail, in all cases addressed to the recipient
at the address of such recipient set forth at the head of this Agreement
or at such other address of which such recipient shall have given notice
to the other in the manner herein provided.
13.4 Governing Law. This Agreement shall be deemed to be a contract
made under the internal laws of the State of Wisconsin, without regard to
the principles of the conflict of laws thereof.
13.5 Unenforceability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
13.6 Counterparts. This Agreement may be executed in any number of
counterparts, and any party hereto may execute any such counterpart, each
of which when executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the
same instrument. This Agreement shall become binding when one or more
counterparts taken together shall have been executed and delivered (which
deliveries may be by telefax) by the parties.
IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement on the date first above written.
SWING-N-SLIDE
By: /s/Xxxxxxx X. Xxxxxx /s/ Xxxxxxxx X. Xxxxxxx
Chairman Xxxxxxxx X. Xxxxxxx
