EXHIBIT 10.18
June 28, 1999
Xx. Xxxx Xxxxxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Dear Xxxx:
This letter is intended to set forth the terms and conditions under
which ARTRA Group Incorporated is offering to employ you as its President and
Chief Executive Officer, effective as of June 28, 1999. Please be advised that
the undersigned has full authority to execute this agreement on behalf of and to
bind ARTRA without any further action of ARTRA's Board of Directors.
Parties: ARTRA Group Incorporated ("ARTRA") and Xxxx Xxxxxxxxxx
(identified herein as "you"). Both ARTRA and you recognize
that ARTRA intends to undergo certain transactions that will
result in the corporate reorganization of ARTRA, with the
result being that ARTRA will be a wholly-owned subsidiary of
Entrade, Inc. ("Entrade"). It is the intention of both ARTRA
and you that you will be the President and Chief Executive
Officer of Entrade. All references herein to "ARTRA" shall,
after consummation of the intended corporate reorganization,
be deemed to refer to Entrade.
Position: Your position will be President and Chief Executive Officer,
reporting to the ARTRA Board of Directors.
Compensation: Your base salary ("base salary") for the remainder of 1999
will be at a rate not less than $250,000 per year, payable in
accordance with ARTRA's usual payroll policies, and in no
event will your base salary be less than $250,000 per year
during the term of this agreement. You will be entitled to
receive such increases in your base salary as you and the
ARTRA Board of Directors may agree.
Stock Options: You will be granted (a) an option to acquire 200,000
shares of the Common Stock of ARTRA (the "First Option"), at
$10.00 per share, and (b) an option to acquire 100,000 shares
of the Common Stock of ARTRA, at $12.875 per share (the
"Second Option"). The terms and conditions of both options
shall be in accordance with the Stock Option Plan of ARTRA, as
amended. The expiration date of the options will be ten years
from the grant date. The options subject to the First Option
shall be fully vested as of the grant date and will be
immediately exercisable as to all 200,000 shares of Common A
Stock on the grant date. The options subject to the Second
Option shall be fully vested as of June 28, 2000, and will be
thereafter be fully exercisable as to all 100,000 shares of
Common A Stock on the grant date. The options subject to the
First Options, and after June 28, 2000, the options subject to
the Second Option, (i) shall not be subject to forfeiture for
any reason and (ii) may be exercised at any time prior to the
expiration date of the option, whether or not you remain in
the employ of the Company. The options shall constitute
non-qualified options, pursuant to the Internal Revenue Code
of 1986, as amended (the "Code"). The Company shall take all
steps necessary to ensure that the foregoing options qualify
for the exemption provided in Rule 16b-3 promulgated pursuant
to the 1934 Act, and all shares of stock issuable upon
exercise of the options are to be registered under the 1933
Act so that such shares do not constitute "restricted
securities" under Rule 144 promulgated pursuant to the 1933
Act. Subject, with respect to the Second Option only, the sole
condition that you remain employed pursuant to this agreement
through June 28, 2000, all obligations of the Company under
this Paragraph are absolute and unconditional, will survive
your death or disability, and will survive the termination of
your employment with the Company for any reason (whether such
termination is during or after the term of your employment).
ARTRA agrees that, in the event that its currently-announced
acquisition of xxxxxxx.xxx does not close prior to January 1,
2000, it will reprice the foregoing options to a strike price
equal to the average closing price of ARTRA Common Stock on
the New York Stock Exchange (or any other public market for
such Common Stock if it is not then listed on the New York
Stock Exchange) for the twenty days immediately following the
earlier to occur of (a) the date when ARTRA announces that it
is not proceeding with the acquisition of xxxxxxx.xxx or (b)
December 31, 1999.
Lost Compensation ARTRA acknowledges that in accepting ARTRA
employment at this Reimbursement: time, you will be forfeiting
substantial compensation to which you would otherwise be
entitled. To recompense you for such compensation, ARTRA shall
pay you a bonus of no less than $100,000 before the end of
1999. The obligations of the Company under this Paragraph are
absolute
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and unconditional, will survive your death or disability, and
will survive the termination of your employment with the
Company for any reason (whether such termination is during or
after the term of your employment).
Automotive You will be provided with a car allowance at a reimbursement
Allowance: rate of no less than $600 per month.
Reimbursement of The Company will reimburse you for all business-related
Business expenses that you incur in connection with the performance of
Expenses: your responsibilities to ARTRA.
Other Benefits: You will be eligible to participate in all ARTRA
employee benefit plans including group health, dental,
pension, long-term disability, short-term disability, 40l(k),
and life insurance.
Additional Bonus: While you are in the employ of the Company, you will be
such additional bonus awards as determined from time to time
by the Company's Board of Directors.
Additional While you are in the employ of the Company, you will be
Options: granted such additional stock option awards as determined from
time to time by the Company's Board of Directors.
Board Nomination: You will continue to serve on the Board of
Directors of ARTRA and such other subsidiaries and affiliates
of ARTRA as you deem appropriate for the performance of your
duties.
Term: The initial term of your employment shall commence as of June
28, 1999, and ending June 27, 2002 (the "Initial Term").
Unless sooner terminated pursuant to the terms hereof,
commencing on June 28, 2001, and on each anniversary
thereafter the term of your employment shall automatically be
extended for one additional year ("extended term") unless, not
later than ninety (90) days preceding such date, you or ARTRA
shall give written notice to the other that you or it does not
wish to extend the term of employment for such additional one
year period.
Termination: If at any time during the Initial Term, ARTRA should terminate
your employment for reasons other than Cause (hereinafter
defined) or if you terminate your employment for Good Reason
(hereinafter defined), you or your estate will be entitled
post-termination to a continuation of your base salary, as its
then current rate, through and until the later of (i) the end
of the Initial Term, or (ii) a period of eighteen (18) months
from the date of the notice of termination (which date shall
be deemed and hereafter
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referred to as the "effective date of termination").
If ARTRA elects not to renew the term of your employment for
any additional one year period for any reason other than
Cause, or if your employment shall be terminated during any
extended term either by ARTRA for any reason other than Cause
or by you for Good Reason, you shall be entitled to receive as
severance a lump sum amount equal to the sum of your base
salary for a period of eighteen (18) months at the effective
date of termination.
Upon any termination described in this Section, you will be
entitled to continue to participate in all of the employee
benefit plans and programs in which you were participating
prior to the termination of your employment until the later of
(i) the end of the Initial Term, or (ii) the date eighteen
(18) months after the effective date of termination.
ChangeofControl: In the event of a "Change in Control" (hereinafter defined),
you shall be entitled to receive a lump-sum payment equal to
your base salary, as its then current rate for a period of
thirty-five (35) months. For purposes of this Agreement, a
"Change of Control" shall be deemed to have occurred if (a)
any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act")),
who is not a member of ARTRA as of the date of this Agreement
is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the 1934 Act), directly or indirectly, of securities of
ARTRA representing more than fifty percent (50%) of the
combined voting power of ARTRA's then outstanding securities;
or (b) the Managers or members of ARTRA approve a merger or
consolidation of ARTRA with any other entity, other than (i) a
merger or consolidation which would result in the voting
securities of ARTRA outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving
entity) at least eighty percent (80%) of the combined voting
power of the voting securities of ARTRA or such surviving
entity outstanding immediately after such merger or
consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of ARTRA (or a similar
transaction in which no "person" who is not a member of ARTRA
as of the date of this Agreement acquires more than fifty
percent (50%) of the combined voting power of ARTRA's then
outstanding securities); or (c) the Managers or members of
ARTRA approve a plan of complete liquidation of ARTRA or ARTRA
enters into an agreement for the sale or other disposition of
all or substantially all of ARTRA's assets or otherwise
disposes of such assets.
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Duties: As President and Chief Executive Officer, you shall perform
such duties that are consistent with your position as you
shall be directed to perform by the Board of Directors. In
addition, you shall have the discretion to perform such other
duties that are required by the laws of the jurisdictions in
which ARTRA operates or by the contracts and agreements to
which ARTRA is subject.
You acknowledge that your office will require your full-time
efforts and attention, and that you shall not, during the
Initial Term or any extension, engage in any other business
activity, whether or not such other business activity is for
your own behalf or for any other person, firm, corporation or
other entity (together, a "Person") and whether or not such
other Person is in competition with ARTRA. Notwithstanding the
foregoing, you shall be allowed to manage and oversee passive
investments in noncompeting businesses, provided that such
management and oversight does not interfere with the
performance of your duties for ARTRA.
Cause: Your employment may be terminated at any time for Cause, which
is hereby defined as (i) conduct, at any time, which has
involved criminal dishonesty, conviction of any felony, or
conviction of any lesser crime or offense involving the
property of ARTRA, or any of its subsidiaries or affiliates,
misappropriation of any money or other assets or properties of
ARTRA, or that of its subsidiaries or affiliates, (ii) willful
violation of specific and lawful written directions from the
ARTRA's Board of Directors that are consistent with your
duties described above, or (iii) chronic alcoholism or drug
addiction.
Good Reason: Good Reason includes any of the following:
i. Failure by ARTRA to perform its obligations under
this agreement, unless the same is promptly remedied to your
reasonable satisfaction;
ii. Failure by the Board of Directors at any time to
elect you to, or your removal at any time from, the office of
President or the office of Chief Executive Officer;
iii. Failure to ensure your appointment or election
as a member of the board of directors of ARTRA throughout the
term of your employment and such other subsidiaries and
affiliates of ARTRA as and when you deem appropriate for the
performance of your duties;
iv. Diminution that you reasonably determine to be
material in
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your duties with ARTRA, or interference that you reasonably
determine to be material and unreasonable in the performance
of your duties with ARTRA, or assignment to you of duties
that you reasonably determine to be inconsistent with the
position of President and Chief Executive Officer of ARTRA,
unless the same is promptly remedied to your reasonable
satisfaction;
v. Change in Control of ARTRA, except for the
currently contemplated corporate reorganization pursuant to
which ARTRA will become the wholly-owned subsidiary of
Entrade;
vi. Sale or other transfer of all or any substantial
part of ARTRA's assets, except for the currently contemplated
corporate reorganization pursuant to which ARTRA will become
the wholly-owned subsidiary of Entrade;
vii. If after January 1, 2000, ARTRA has failed to
consummate at least one of the currently-announced
acquisitions of xxxxxxx.xxx and Nationwide prior to January 1,
2000, and a material adverse change has occurred in ARTRA's
business prospects or balance sheet; or
viii. Your death or disability.
Governing Law: Our understandings shall be governed by the laws of the State
of Illinois, exclusive of its choice of law provisions.
Indemnification: ARTRA will indemnify you to the fullest extent permitted by
law, and will advance to you defense costs to the fullest
extent permitted by law, in connection with any and all
actions, suits and proceedings to which you may at any time be
made or threatened to be made a party by reason of (i) the
commencement of your employment with ARTRA or the fact that
you are or were at any time serving or designated to serve as
a director, officer or employee of ARTRA or any of its
subsidiaries or affiliated entities or in any other capacity
at the request or on behalf of ARTRA or any of its
subsidiaries or affiliated entities or by reason, (ii) any act
or nonact on your part in connection therewith, or (iii) the
termination of your employment with Bagcraft Packaging. The
obligations of ARTRA under this Paragraph are absolute and
unconditional, will survive your death or disability, and will
survive the termination of your employment with ARTRA for any
reason (whether such termination is during your term of
employment or after the expiration of the term of your
employment).
Attorneys' fees: You will be entitled to recover from ARTRA all attorneys' fees
and other
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costs and expenses in connection with enforcing this agreement
against ARTRA and its successors.
Binding Effect: This Agreement supersedes all prior negotiations and
represents the entire Agreement of the parties, and our
signatures hereon will bind us hereto. This Agreement inures
to the benefit of ARTRA, its successors and assigns and will
be binding upon, and enforceable against, ARTRA and its
successors, including any successor by merger or consolidation
and any entity or entities that acquire all or substantially
all of ARTRA's assets, and, unless ARTRA makes other
arrangements satisfactory to you for the performance of its
obligations under this Agreement, ARTRA will obtain the
express written assumption of this Agreement by each of its
successors. This Agreement will inure to the benefit of, and
be enforceable by, you and your heirs, legatees, executors,
and personal representatives and, to the extent that they are
entitled to receive any compensation, benefit, payment or
reimbursement under any provision of this Agreement, your
spouse and any other beneficiaries; provided, however, that,
after your acceptance of this Agreement, you will have the
right at any time to amend, modify or terminate this Agreement
and any provision hereof (including any provision of this
Agreement granting any rights to your spouse or any other
beneficiary) without the consent or approval of your spouse or
any other beneficiary.
If the foregoing is acceptable to you, please sign and return a copy to
me.
Very truly yours,
/s/ Xxxxx Xxxxxx
--------------------
Xxxxx Xxxxxx
President
Accepted:
/s/ Xxxx Xxxxxxxxxx
-----------------------
Xxxx Xxxxxxxxxx
Dated: June 28, 1999
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