EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is entered into this 12th day
of December 2004 (the "Effective Date") by and between The Knockout Group, inc,
a Delaware Limited Liability Company ("Employer"), and Xxxxx Xxxxxx
("Executive").
WHEREAS, Employer desires to employ Executive, and Executive is willing to
be employed by Employer, in accordance with the terms and conditions hereof,
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
Employer and Executive agree as follows:
1. Employment. Employer hereby employs Executive to render services as
Chief Financial Officer of Employer. In this position, the Chairman & CEO of
Employer shall be the Executive's direct report. It shall be a breach of this
agreement for the executive to be designated any other position than the CFO. It
shall not be a breach of this Agreement for the Chairman of the Employer to
designate another to act as Executive's direct report.
2. Duties.
(a) During the term of Executive's employment with Employer,
Executive shall perform such duties as may be assigned by the Chairman of
Employer or on behalf of the Chairman of Employer, which duties shall be
consistent with Executive's position as Chief Financial Officer of Employer.
Such duties shall be performed primarily out of Employer's offices located in
Northlake, Illinois except Executive acknowledges that the nature of his duties
hereunder may also require reasonable periods of travel. Executive shall be
responsible for the overall financial administration of Employer's business.
Executive shall devote Executive's entire working time, best efforts and full
attention to the business of Employer, and shall perform all duties in a
professional ethical and businesslike manner. Notwithstanding the foregoing,
Executive may engage in charitable, civic, fraternal or trade activities
provided the same do not unreasonably interfere or conflict with Executive's
employment by Employer.
(b) Executive shall, at the reasonable request of Employer, travel
on behalf of Employer and meet with customers and business associates of
Employer consistent with Executive's responsibilities and/or in order to further
develop the business of Employer or to secure capital or financing for the
development and/or expansion of the business.
(c) Executive further warrants and represents that by accepting
employment with Employer that he is not (i) breaching any other agreement with
any third party, including but not limited to any former employer, or (ii) in
any other way restricted in or limited from fulfilling the terms of this
Agreement.
3. Term. Executive shall begin his employment on August 1, 2004 as the
"Acting" Chief Financial Officer ("Beginning Employment Xxxx") and shall occupy
that position for six (6) weeks ("Initial Acting Employment Period").
Thereafter, Executive shall be employed as the official Chief Financial Officer
("Official Employment Period"). This Agreement shall expire on the third
anniversary date of the Official Employment Period subject to the terms and
conditions herein ("Period of Employment"). No further notice of expiration
shall be required; provided, however, that the Parties may, by mutual written
agreement, agree to extend this Agreement at the end of the Period of Employment
or to renegotiate a new agreement.
4. Compensation and Benefits. During the term of Executive's employment
with Employer, Employer shall pay (less applicable withholdings) Executive, and
Executive shall accept from Employer as full compensation for Executive's
services hereunder, compensation and benefits as follows:
(a) Initial Acting Employment Period Base Salary: During the Initial
Acting Employment Period, Executive shall be paid a set rate of Thirty Thousand
Dollars ($30,000.00) less applicable withholdings, in three equal installments.
(b) Official Employment Period Base Salary: Upon becoming the
Official Chief Financial Officer and the commencement of the Official Employment
Period, Employer will pay Executive a base salary of Eight Thousand Three
Hundred and Thirty Three Dollars and Thirty-Three Cents ($8,333.33)
semi-monthly, less appropriate withholdings, which equals an annualized gross
base salary of Two Hundred Thousand Dollars ($200,000.00) (the "Base Salary").
(c) Relocation Expenses: Employer will pay Executive Fifteen
Thousand Dollars ($15,000.00) as relocation expenses thirty (30) days after
Executive relocates to Illinois
(d) Capital Incentive Bonus. If Employer raises Eight Million
Dollars in Capital by January 31, 2005, Employer guarantees Executive a capital
incentive bonus of One Hundred Thousand Dollars, of which Fifty Thousand shall
be paid at the completion of the raise and the remaining Fifty shall be paid by
July 1, 2005.
(e) Performance Bonus. Executive to receive annual performance bonus
consistent the company's cash incentive plan, but with a target bonus of not
less than 50% of base salary, based on the achievement of certain performance
criteria
(f) Executive Benefits. Executive shall participate in and be
covered (to the extent any plan is offered generally to executives of Employer)
by each health insurance, accident insurance, disability insurance,
hospitalization and any other employee benefit plan of Employer made available
currently, or generally from and after the date hereof, to Employer's
executives on the same basis as shall he available generally to such other
executives. The Company shall provide Executive with a life insurance policy in
an amount equal to $1.9 million Dollars. Executive shall also be entitled to a
$5,000 annual cash amount for health and related expenses
(g) Vacation. Executive shall be entitled lo take three weeks of
paid vacation each calendar year for which he remains employed; provided,
however, that in the year 2004, Executive shall be entitled to one weeks'
vacation. Executive agrees to schedule such vacation after consultation with the
Chairman of Employer. Executive may not carry over vacation from year to year.
Upon termination of Executive's employment under this Agreement, Executive shall
be paid for any unused vacation.
(h) Reimbursement of Expenses. Employer shall reimburse Executive
for all reasonable out-of-pocket expenses paid or incurred by Executive in the
course of Executive's employment, utilizing procedures and forms for that
purpose and consistent with Employer policy and guidelines as established from
time to time.
(i) Stock Grant & Options. Employee shall be granted 21.724 shares
of The Knockout Group common stock. (ii)The stock shall be subject to the Voting
Trust Agreement, attached hereto as Exhibit B, as it may be amended or restated
from time to time.
5. Termination. Anything in this Agreement to the contrary
notwithstanding, Employer shall have the following rights with respect to
termination of Executive's employment:
(a) Disability. Employer may terminate Executive's employment under
this Agreement at any time during the term of this Agreement if Executive shall
become unable to fulfill his duties under this Agreement, as measured by
Employer's usual business activities, by reasons of medically determinable
physical and/or mental disability determined in accordance
with the procedures described below; provided, however, that the termination may
become effective no sooner than ninety (90) days after a determination of
disability.
If in the opinion of Employer or Executive, Executive is unable to perform
his duties as Chief Financial Officer of Employer as the result of a disability,
then the following shall occur:
(i) Employer or Executive, as the case may be, shall promptly
so notify (by dated written notice) the insurance company that provides
Employer's long-term disability plan and request a determination as to whether
Executive is disabled pursuant to the terms of Employer's long term disability
plan;
(ii) The matter of Executive's disability shall be resolved
and Executive and Employer shall abide by the decision of the insurance company
or carrier. In such case, the Chairman of Employer may elect to offer Executive
an alternative employment or contractor position with Employer under the terms
and conditions that the Chairman of Employer may determine; and
(iii) Notwithstanding the foregoing, disability (A) shall
exclude any present physical condition of Executive unless such physical
condition prevents Executive from performing his duties as Chief Financial
Officer of Employer; and (B) shall be limited to conditions tha! prevent
Executive from performing his duties as Chief Financial Officer of Employer.
(b) Cause Within The First Eighteen Months. The Employer shall have
the right to terminate Executive only for Cause within the first eighteen (18)
months of Executive's Official Employment Period. "Cause" shall mean for
purposes of this Agreement, if:
(1) Executive dies;
(ii) Executive has been convicted of or has entered a plea of
guilty or nolo contendere to (A) a felony, (B) to any crime punishable by
incarceration for a period of one (1) year or longer or (C) to any crime
involving moral turpitude offensive to the conscience which becomes public
and/or causes embarrassment to the Employer;
(iii) There has been a theft, embezzlement or other willful
and material misappropriation of funds or other assets by Executive, whether
from Employer or any other person, corporation or entity;
(iv) Executive has committed a willful act of dishonesty
relating to or affecting his job or duties in a material way;
(v) Executive has willfully failed or refused in material
respect to follow reasonable written policies or directives established by, or
at the direction of, the Chairman of Employer and provided to Executive, or
Executive has willfully failed to attend to material duties or obligations of
his office, which failure or refusal continues for thirty (30) days following
delivery of written demand from, or at the direction of, the Chairman of the
Employer for performance by Executive identifying the manner in which Executive
has failed to follow such policies or directives or to perform such duties;
(vi) Executive has engaged in any willful, intentional, or
grossly negligent act having the effect of materially injuring the business or
reputation of Employer or any of its affiliates; or
(vii) Executive has committed a material breach of this
Agreement.
(c) Termination For Any Reason After First Eighteen Months of
Official Employment Period. After the first eighteen (18) months of the Official
Employment Period, Employer shall have the right to terminate Executive for any
reason, with or without cause or notice.
6. Compensation Upon Termination.
(a) If Executive's employment with Employer is terminated pursuant
to Section 5 (a) hereof, Executive shall not be entitled to receive any
compensation or benefits after the effective date of termination, except for any
Base Salary earned and payable as of said effective date. This provision
excludes any short or long term disability payments as may be available to
Executive pursuant to Section 5(a) of this Agreement.
(b) If Executive's employment with Employer is terminated pursuant
to Section S(b) hereof. Executive shall be entitled to receive his Base Salary
through the entire Period of Employment. In addition, he will accrue and be
immediately vested in (50)% percent of the Options. Executive shall have no
further rights to any other payments or benefits of any kind whatsoever.
(c) If Executive's employment with Employer is terminated pursuant
to Section 5(c) hereof, Executive shall be entitled to receive his Base Salary
through the entire Period of Employment or for 12months, whichever is greater.
In addition, ali benefits will immediately accrue and vest including any
unvested options at the time of termination. Executive shall have no further
rights to any other payments or benefits of any kind whatsoever.
7. Miscellaneous Provisions.
(a) Integration and Modification. No modification, amendment or
waiver of this Agreement nor consent to any departure by Executive from any of
the terms or conditions thereof, shall be effective unless it shall be in
writing and signed by the Chairman of Employer or the Chairman's designee. Any
such waiver or consent shall be effective only hi the specific instance and for
the purpose for which given. No consent to or demand on the Executive in any
case shall, of itself, entitle Executive to any other or further notice or
demand in similar or other circumstances. This Agreement sets forth the entire
agreement and understanding between Employer and Executive and supersedes all
prior agreements and understandings relating to the subject matter hereof.
(b) Assignment. This Agreement shall be binding upon and enforceable
by Executive and shall inure to the benefit of Executive's executors,
administrators, heirs, successors, devisees and legal representatives and
Employer and any successor or assignee of Employer, but neither this Agreement
nor any rights or payments arising hereunder may be assigned, pledged, or
transferred (except upon death) by Executive.
(r) Notice. All notices required to be given under the terms of the
Agreement, or which either of the parties desires to give hereunder, shall be in
writing and delivered personally or be sent by registered mail or certified
mail, postage prepaid, return receipt requested, addressed as follows: If to
Employer to:
Xxxx Xxxxxxx
Chairman & CEO
The Knockout Group LLC
000 X.Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
With a copy to:
Xxxxx & XxXxxxxx 1 Prudential
Plaza, Suite 3500 130 X.Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Tf to Executive:
Xxxxx Xxxxxx 44IE.
Erie #4810 Chicago,
II 60611
Any party may change the address to which notice is to be sent to it or him by
notice in writing to the other party as provided above.
(d) Governing Law. This Agreement shall be subject to and governed
by the laws of the State of Illinois. Any judicial proceeding brought against
any of the parties to this Agreement on any dispute arising out of this
Agreement or any matter related hereto shall be brought in the courts of the
State of Illinois, and in the United States District Court for the ______, and,
by execution and delivery of this Agreement, each of the signatories to this
Agreement accepts for himself, herself or itself the jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement.
(e) Bluelining/Severabilitv. If any provision(s) of this Agreement
shall be found invalid or unenforceable, in whole or in part, then such
provision(s) shall be deemed to be modified or restricted to the extent and in
the manner necessary to render the same valid and enforceable, or shall be
deemed excised from this Agreement, as the case may require, and this Agreement
shall be construed and enforced to the maximum extent permitted by law, as if
such provision(s) and had been originally incorporated herein as modified or
restricted, or as if such provision(s) had not been originally incorporated
herein as the case may be.
(f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original.
(g) Headings. The captions and section headings in this Agreement
are not part of any of the provisions hereof, are merely for the purpose of
reference, and shall have no force or effect for any purpose whatsoever,
including the construction of the provisions of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
Effective Date first above written.
THE KNOCKOUT GROUP, Inc.
By: /s/ Xxxx Xxxxxxx
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XXXX XXXXXXX
EMPLOYEE
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
