EXHIBIT 10
EXECUTIVE EMPLOYMENT CONTRACT
THIS EXECUTIVE EMPLOYMENT CONTRACT (this "Agreement") is made on this 24th
day of February, 2005, by and between X. X. XXXXX CORPORATION, an Ohio
corporation having a principal place of business located at 00000 Xxxxxxxx Xxxx,
X.X., Xxxxxxxxxxxx, Xxxx 00000 (the "Company"), and XXXXXX X. XXX XXXXXX, an
individual having an address of 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000 (the "Executive").
WITNESSETH:
WHEREAS, the Executive has been employed by the Company since March 10,
2004 in the position of interim President and interim Chief Executive Officer,
and the Company and the Executive are currently parties to that certain
Executive Employment Contract dated March 10, 2004, as amended (the "Original
Employment Contract"), which expires on March 9, 2005;
WHEREAS, the Company desires by this Agreement to provide for the
continued employment of the Executive by the Company as the President and Chief
Executive Officer of the Company ("the Position") in accordance with the terms
and conditions hereof;
WHEREAS, the Executive desires to continue his employment with the Company
in the Position upon the terms and conditions set forth herein;
WHEREAS, except as otherwise expressly provided herein, the Company and
the Executive desire for this Agreement to supersede the Original Employment
Contract in its entirety;
NOW, THEREFORE, in consideration of the mutual covenants of the parties
expressed in this Agreement, the parties hereto make the following agreement,
intending to be legally bound hereby:
1. EMPLOYMENT.
(a) Term. The Company hereby agrees to continue the Executive in its
employ and Executive hereby agrees to remain in the employ of the Company in
accordance with the terms and conditions hereof, for the period commencing on
the date hereof and ending on March 31, 2006, unless sooner terminated as
hereinafter set forth (the "Term"). During the Term, the Executive shall serve
as the President and Chief Executive Officer of the Company. The Executive's
principal office shall be located in Central Ohio. During the Term, the
Executive shall report to the Board of Directors of the Company by reporting
directly to the specified Director(s) as the point(s) of contact for the Board
of Directors. The initially specified Directors are Xxxxxx Xxxx and Xxxxxx
Xxxxxxxx.
(b) Original Employment Contract Superseded. Upon the execution of this
Agreement by the Company and the Executive, this Agreement shall supersede the
Original Employment Contract in its entirety and the Original Employment
Contract shall be of no further force or effect except that the Executive shall
be entitled to receive the cash bonus provided in Paragraph 3(d) of the Original
Employment Contract upon satisfaction of the requirements set forth therein.
2. DUTIES AND RESPONSIBILITIES OF THE POSITION.
(a) The Executive will be primarily responsible for the operations of the
Company including, but not limited to, production, sourcing, planning,
distribution, marketing and sales. In addition, the Executive shall oversee the
functional departments within the Company, such as finance, communications,
information technology and other administrative staff, and all such departments
shall report directly to the Executive.
(b) In connection with the performance of his duties and responsibilities,
the Executive shall have the authority and the power to hire, reassign and fire
employees, professionals and consultants and shall have the authority to
re-align the reporting relationships within the Company, subject to prior Board
approval for actions affecting senior executives. Board approval is required to:
(i) engage or make changes to the terms of any engagement by the Company of The
Meridian Group or any other firm in which the Executive has an interest or
affiliation; (ii) make any decision in regard to the Company's independent
auditors; (iii) enter into any engagement involving material expenditures; and
(iv) carry out programs or actions that require specific Board approval under
applicable law or an established Board policy as communicated to Executive.
(c) Further, in connection with the performance of his duties and
responsibilities, the Executive shall have the right to receive any and all
notices of, and to attend, any and all meetings of the Board of Directors of the
Company and each of its committees, except for certain matters for which the
Board or the committee may specifically ask the Executive to excuse himself,
and, in addition thereto, to receive true and correct copies of the minutes of
all such meetings.
(d) The Executive agrees to devote reasonable attention and time during
normal business hours to the business and affairs of the Company and, to the
extent necessary to discharge his duties and responsibilities to the Company, to
use the Executive's reasonable best efforts to perform faithfully and
efficiently such duties and responsibilities. Notwithstanding the foregoing,
during the Term the Executive shall be permitted, as he may determine in his
discretion, to spend up to 25% of his working time on matters related to The
Meridian Group so long as such service to The Meridian Group does not adversely
impair the ability of the Executive to perform his duties under this Agreement
in any material respect.
3. COMPENSATION. The terms of the Executive's total compensation during
the Term shall be as follows:
(a) Base Salary: The Executive shall be paid by the Company a base salary
of THIRTY-SEVEN THOUSAND FIVE HUNDRED AND NO/100 DOLLARS ($37,500.00) per month
(the "Base Salary") for the Term.
(b) Options: In addition to the Base Salary, the Executive shall be
granted a non-qualified option for 100,000 of the Company's common shares at a
price per share equal to the closing price per common share on the date the
option is granted (the "Option"). The option shall be granted in 2005 at the
time that options are granted by the Company to members of its management, but
in any event the option shall be granted no later than March 15, 2005. The
Option shall vest in full on the earlier of (1) December 31, 2005, if Executive
is employed by the Company on that day, (2) the date on which the Company
terminates Executive's employment for any reason other than for Cause (as
defined below), (3) the date on which Executive terminates his employment for
Good Reason (as defined below), or (4) the date of a Sale Transaction of the
Company (as defined in Paragraph 4 below). Unless earlier terminated in
connection with a Sale Transaction or the termination of employment, the Option,
if it becomes vested, shall be
exercisable by the Executive, at his sole discretion, for a period of three
years from the date of grant. The Option will be granted pursuant to the
Company's 2002 Stock Incentive Plan and shall be on the same general terms and
conditions and the same form of option award agreement as options previously
granted to the Executive under such plan.
(c) Benefit Plans: The Executive shall be entitled to participate in any
and all benefit plans made available to other senior executive officers of the
Company (other than plans that have been frozen or terminated).
(d) Cash Bonus: For the 2005 fiscal year, the Executive shall be entitled
to participate in the Company's Annual Incentive Plan ("AIP"), as the same is
adopted by the Board of Directors at a range of 20% to 80% of his annualized
Base Salary of FOUR HUNDRED AND FIFTY THOUSAND AND NO/100 DOLLARS ($450,000),
with the level of 40% being the target if the Annual Operating Plan is achieved.
If the Executive is employed by the Company on December 31, 2005, and provided
that no bonus is paid or payable to the Executive under the AIP as described in
the first sentence of this Paragraph 3(d), the Executive shall nevertheless
receive a bonus payment of NINETY THOUSAND AND NO/100 DOLLARS ($90,000.00). If
the Executive is terminated by the Company without Cause or if he terminates his
employment for Good Reason prior to payment of the 2005 bonus, if any, under the
AIP, the Executive shall be entitled to receive the bonus payment that he would
have received pursuant to this Paragraph 3(d) had he remained an employee of the
Company through December 31, 2005.
4. TRANSACTION SUCCESS FEE. In the event of a sale, merger, consolidation
or any other business combination, in one or a series of related transactions,
involving all or a substantial amount of the business, securities or assets
(including related real estate assets) of the Company or any recapitalization of
the Company or any spin-off, split-off or other extraordinary dividend of cash,
securities or other assets to the equity holders of the Company (a "Sale
Transaction") that is consummated during the Transaction Period (as defined
below), the Company shall pay to Executive a Sale Transaction Success Fee (as
defined below). Notwithstanding anything to the contrary set forth herein, the
Executive shall not be entitled to receive more than one Sale Transaction
Success Fee.
The Transaction Period shall begin on the date of this Agreement and end
on March 31, 2008 unless during the Term Executive terminates his employment
with the Company other than for Good Reason, or Executive is terminated for
Cause, in which event the Transition Period shall end on September 10, 2006.
The Sale Transaction Success Fee shall be one (1%) percent of the
aggregate amount of consideration ("Sale Consideration") received or to be
received by the Company and/or its shareholders (treating any shares issuable
upon exercise of options, warrants or other rights of conversion as
outstanding), plus the amount of any debt assumed, acquired, remaining
outstanding, retired or defeased or preferred stock redeemed or remaining
outstanding in connection with the Sale Transaction (the "Sale Transaction
Success Fee"). Such consideration may include, but is not limited to, payments
in cash, stock, real and personal property, warrants and options, fees, notes,
debentures or other debt assumption or relief of any debt (including
guarantees), earn-outs, royalties, the total amount of non-compete, employment,
consulting and lease agreements or amendments thereto, and all other elements of
value exchanged, or to be exchanged, in connection with the Sale Transaction.
The Sale Transaction Success Fee shall be payable in cash at consummation
of a Sale Transaction. For purposes of this Agreement, a Sale Transaction shall
be deemed to have been consummated upon the earliest of any of the following
events to occur: (a) the acquisition of a majority of the equity securities of
the Company calculated on a fully-diluted basis; (b) a merger or consolidation
of
the Company or any affiliate of the Company with another person; (c) the
acquisition by another person of assets of the Company representing a majority
of the Company's book value; or (d) in the case of any other Sale Transaction,
the closing thereof.
In the event that the consideration received in a Sale Transaction is paid
in whole or in part in the form of securities or other assets, the value of such
securities or other assets, for purposes of calculating the Sale Transaction
Success Fee, shall be the fair market value thereof, as the parties hereto shall
mutually agree, on the day prior to the consummation of the Sale Transaction;
provided, however, that if such consideration includes securities with an
existing public trading market, the value thereof shall be determined by the
last sales price for such securities on the last trading day thereof prior to
such consummation. In the event that all or some portion of the Sale
Consideration is related to the future earnings or operations of the Company,
the portion of the Sale Transaction Success Fee relating thereto shall be
calculated and shall be paid at the time the Sale Transaction is consummated (as
determined by the preceding paragraph) based upon the estimated net present
value thereof.
This Section 4 shall survive any termination of this Agreement.
5. BUSINESS EXPENSES. The Company shall reimburse the Executive promptly
and in full for any and all business expenses incurred by the Executive by
reason of temporary living arrangements in Columbus, Ohio, any and all
reasonable, ordinary and necessary travel, entertainment and any and all other
expenses in accordance with Company policy applicable to senior executives.
6. TERMINATION OF EMPLOYMENT. This Agreement and the employment of the
Executive hereunder may be terminated under the following conditions:
(a) Mutual Consent: By the mutual consent of the Company and the
Executive.
(b) For Cause: The Company may terminate this Agreement and the
employment of the Executive hereunder for "Cause". For the purposes of
this Agreement, the following events shall constitute "Cause":
(i) gross negligence materially detrimental to the Company;
(ii) conviction of, or a plea of guilt/nolo contendere to, a
felony or a crime involving dishonesty;
(iii) willful and continued failure of the Executive to
perform the duties or responsibilities of the Position
and such failure continues for thirty (30) days after
the Executive's receipt of written notice from the
Company setting forth the specifics of such failure,
unless such failure is the result of ill health or
physical or mental disability; or
(iv) intentional misconduct of the Executive which is
materially and demonstrably injurious to the Company.
(c) Good Reason. This Agreement and the employment of the Executive
hereunder may be terminated by the Executive for "Good Reason". For the
purposes of this Agreement, the term "Good Reason" shall mean:
(i) (A) The assignment to the Executive of any duty or
responsibility without the Executive's consent that is inconsistent in any
material respect with the Position,
authority, duties or responsibilities as contemplated in Paragraph 2
above, or (B) any other action by the Company without the Executive's
consent which results in a material diminution in the Position, authority,
duties or responsibilities, which in case of (A) or (B) continues for ten
(10) days after written notice of such action from the Executive to the
Company;
(ii) Any reduction, directly or indirectly, in the
Executive's Base Salary or in the Option or any benefit
plans described in Paragraph 3 above (other than frozen
or terminated plans or any reduction that impacts all
participants or that results pursuant to the terms of
the Option or any such benefit plan);
(iii) Any other failure by the Company to comply with any
term, condition or provision of this Agreement which
continues for ten (10) days after written notice of such
failure from the Executive to the Company.
(d) Death or Disability: This Agreement and the employment of the
Executive hereunder shall terminate automatically upon the death of the
Executive. Further, the Company may terminate this Agreement and the
employment of the Executive hereunder after having established the
Executive's Disability (as defined below), upon not less than thirty (30)
days' prior written notice of such termination; provided, however, that
during such thirty (30) days, the Executive shall not have returned to the
full time performance of the duties and responsibilities of the Position.
For the purposes of this Agreement, the term "Disability" shall mean a
disability which is determined to be total and permanent by a physician
selected by the Company and reasonably acceptable to the Executive or the
Executive's legal representative.
(e) Automatic Termination. This Agreement and the employment of the
Executive hereunder shall terminate upon the expiration of the Term,
unless renewed or extended in a writing signed by the Company and the
Executive.
7. SEVERANCE PAY. (a) In the event that this Agreement and the employment
of the Executive hereunder is terminated by the Company prior to the expiration
of the Term for any reason other than for Cause, or (b) if the Executive
terminates this Agreement and his employment hereunder at any time during the
Term for Good Reason, then, in either such event, the Executive shall be
entitled in lieu of any other payments or benefits owing hereunder (other than
the potential right to a Sale Transaction Success Fee under Paragraph 4) to a
one time lump sum severance payment equal to the Base Salary multiplied by the
number of months remaining in the Term.
8. CONFIDENTIAL INFORMATION. The Executive acknowledges that the services
which he will be providing to and for the Company or its affiliates has given
and will give him access to secret and confidential information, and the
Executive hereby agrees to hold in a fiduciary capacity for the benefit of the
Company any and all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during his
employment with the Company and which shall not be public knowledge (other than
by acts of the Executive or his representative in violation of this Agreement).
After the expiration or earlier termination of this Agreement and the employment
of the Executive hereunder, the Executive shall not, without prior written
consent of the Company, or unless required to do so by order of a court,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. In no event shall an asserted
violation of the provisions of this paragraph
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.
9. INDEMNIFICATION. The Executive shall be indemnified to the same extent
as the most favorable indemnification provided by the Company to any other
officers or directors. The Company hereby agrees to defend, to the extent
permitted by law, any and all suits, actions, causes of action or claims brought
against the Executive and/or his representatives, agents, attorneys, insurers,
heirs, executors, administrators, beneficiaries, successors and assigns for or
on account of any injuries, damages or costs alleged to have been caused by,
through, or in connection with the employment of the Executive or the
performance of the duties or responsibilities of the Position by the Executive
as contemplated in this Agreement including, but not limited to, any suits,
actions, causes of action or claims brought by or on behalf of any shareholder
or stakeholder, and further hereby agrees to indemnify and hold harmless, to the
extent permitted by law, the Executive, his representatives, agents, attorneys,
insurers, heirs, executors, administrators, beneficiaries, successors and
assigns from and against any and all claims, damages, demands, actions, causes
of action, suits, debts due, sums of money, accounts, interest, costs and
expenses of whatever kind and nature including, but without limitation,
attorneys' fees and other expenses caused by and/or arising from or relating to
the employment of the Executive or the performance of the duties or
responsibilities of the Position by the Executive as contemplated in this
Agreement. The Company shall include Executive as a covered person under all
director and officer liability policies maintained by Company and shall use its
best commercial efforts to maintain such coverage for a period of two (2) years
after Executive's termination of employment hereunder.
10. MISCELLANEOUS.
(a) Notices. Whenever any notice, demand or request is required or
permitted under this Agreement, such notice, demand or request shall be in
writing and shall be: (i) delivered by hand; (ii) sent by United States
certified mail, postage prepaid, return receipt requested; or (iii) be sent by
nationally recognized commercial courier for next business day delivery, to the
addresses set forth below, or to such other addresses as are specified by
written notice given in accordance herewith. All notices, demands or requests
delivered by hand shall be deemed given upon the date so delivered; those given
by mailing as hereinabove provided shall be deemed given on the date of deposit
in the United States mail; and those given by commercial courier as hereinabove
provided shall be deemed given on the date of deposit with the commercial
courier. Nonetheless, the time period, if any, in which a response to any
notice, demand or request must be given shall commence to run from the date of
receipt of the notice, demand or request by the addressee thereof. Any notice,
demand or request not received because of changed address of which no notice was
given as hereinabove provided or because of refusal to accept delivery shall be
deemed received by the party to whom addressed on the date of hand delivery, on
the first calendar day after deposit with commercial courier, or on the third
(3rd) calendar day following deposit in the United States mail, as the case may
be.
IF TO EXECUTIVE: XX. XXXXXX X. XXX XXXXXX
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
WITH COPY TO: Xxxxxx Xxxxxxx Xxxxxx & Xxxxxxx, LLC
U.S. Steel Tower
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: X. Xxxx May, Esq.
IF TO COMPANY: X. X. XXXXX CORPORATION
00000 Xxxxxxxx Xxxx, X.X.
Xxxxxxxxxxxx, XX 00000
Attention: Lead Director
WITH COPY TO: Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
Suite 2000, Atrium Two, 000 Xxxx Xxxxxx Xxxxxx
X. X. Xxx 0000
Xxxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxxxx, Esq.
(b) Binding Agreement. This Agreement shall be binding upon and
enforceable by, and shall inure to the benefit of, the Executive and his heirs,
executors, personal or legal representatives, administrators, successors and
assigns.
(c) Headings. The use of headings, captions and numbers in this Agreement
is solely for the convenience of identifying and indexing the various provisions
in this Agreement and shall in no event be considered otherwise in construing or
interpreting any provision in this Agreement.
(d) Defined Terms. Capitalized terms used in this Agreement shall have the
meanings ascribed to them at the point where first defined, irrespective of
where their use occurs, with the same effect as if the definitions of such terms
were set forth in full and at length every time such terms are used.
(e) Pronouns. Wherever appropriate in this Agreement, personal pronouns
shall be deemed to include the other genders and the singular to include the
plural.
(f) Severability. If any term, covenant, condition or provision of this
Agreement, or the application thereof to any person or circumstance, shall ever
be held to be invalid or unenforceable, then in each such event the remainder of
this Agreement or the application of such term, covenant, condition or provision
to any other person or any other circumstance (other than those as to which it
shall be invalid or unenforceable) shall not be thereby affected, and each term,
covenant, condition and provision hereof shall remain valid and enforceable to
the fullest extent permitted by law.
(g) Non-Waiver. Failure by any party to complain of any action, non-action
or breach of any other party shall not constitute a waiver of any aggrieved
party's rights hereunder. Waiver by any party of any right arising from any
breach of any other party shall not constitute a waiver of any other right
arising from a subsequent breach of the same obligation or for any other
default, past, present or future.
(h) Rights Cumulative. All rights, remedies, powers and privileges
conferred under this Agreement shall be cumulative and in addition to, but not
restrictive of or in lieu of, those conferred by law.
(i) Dates. If any date set forth in this Agreement shall fall on, or any
time period set forth in this Agreement shall expire on, a day which is a
Saturday, Sunday, federal or state holiday, or other non-business day, such date
shall automatically be extended to, and the expiration of such time period shall
automatically to be extended to, the next day which is not a Saturday, Sunday,
federal or state holiday or other non-business day. The final day of any time
period under this Agreement or any deadline under this Agreement shall be the
specified day or date, and shall include the period of time through and
including such specified day or date.
(j) Applicable Law. This Agreement shall be governed by, construed under
and interpreted and enforced in accordance with the laws of the State of Ohio,
without regard to such state's principles of conflicts of laws.
(k) Entire Agreement; Modification. This Agreement supersedes all prior
discussions and agreements by and between the Company and the Executive with
respect to the employment of the Executive with and by the Company and other
matters contained herein, including the Original Employment Contract, and this
Agreement contains the sole and entire understanding between the Company and the
Executive with respect thereto. This Agreement shall not be modified or amended
except by an instrument in writing executed by or on behalf of the Company and
the Executive.
(l) Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile, each of which shall be deemed an original, and
all of such counterparts together shall constitute one and the same instrument.
(m) Counsel. Each party hereto warrants and represents that each party has
been afforded the opportunity to be represented by counsel of its choice in
connection with the execution of this Agreement and has had ample opportunity to
read, review, and understand the provisions of this Agreement.
(n) No Construction Against Preparer. No provision of this Agreement shall
be construed against or interpreted to the disadvantage of any party by any
court or other governmental or judicial authority by reason of such party's
having or being deemed to have prepared or imposed such provision.
IN WITNESS WHEREOF, this Agreement has been duly executed on behalf of the
Company by an officer duly authorized in the premises and by the Executive on
the date first above written.
COMPANY:
WITNESS: X. X. XXXXX CORPORATION
/s/ Xxxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------ ------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President-Finance and
Chief Financial Officer
EXECUTIVE:
WITNESS:
/s/ Xxxxxx Xxxxxx /s/ Xxxxxx X. Xxx Xxxxxx
------------------------ -------------------------------------------
XXXXXX X. XXX XXXXXX