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(TELEX COMMUNICATIONS INC.)
Exhibit 10(g)
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made and entered into
this 26 day of August, 1998 by and between Xxx X. Xxxxxxx ("Executive") and
TELEX COMMUNICATIONS GROUP, INC., a Delaware corporation ("Group"). For purposes
of this Agreement, and TELEX COMMUNICATIONS, INC., a Delaware corporation shall
be referred to herein as the "Company" and, Group and the Company together shall
be referred to as the "Employer".
1. Employment.
Subject to the Group's Board of Directors (the "Board") approval of
this Agreement, for the period set forth in paragraph 2 below (the "Period of
Employment"), and upon the other terms and conditions set forth in this
Agreement: (i) Group hereby employs Executive, and Executive hereby accepts
employment with Group, as Group's Chief Executive Officer; (ii) the Company
hereby employs Executive, and Executive hereby accepts employment with the
Company, as the Company's Chief Executive Officer; and (iii) Executive shall be
elected to Group's Board of Directors and Group shall cause Executive to be
elected to the Company's Board of Directors.
Executive hereby represents, warrants and covenants that (i) his
performance of the terms of this Agreement and as an employee of the Company
does not and will not breach any agreement to which he is a party or by which,
he may be bound, (ii) he has not and will not enter into any agreement that
conflicts with the terms and conditions of this Agreement, (iii) he is not
restricted from being employed by the Company or entering into this Agreement,
(iv) he has not brought and will not bring to the Company or use in the
performance of his responsibilities at the Company any materials or documents of
a former employer which are not generally available to the public, unless
Executive has obtained written consent from the former employer for his
possession and use, and (v) he is not subject to any order, judgment or decree
of any kind which would prevent him from entering into this Agreement or
performing fully the Executive's obligations hereunder.
2. Period of Employment.
The Period of Employment shall commence on the earlier of the date
that is 30 days after the date the Board approves this Agreement or the date
that Group's current
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Chief Executive Officer terminates employment with the Group (the "Commencement
Date") and, subject only to the provisions of Paragraphs 9, 10 and 11 below,
shall continue until year-end 1999, after which time it will be renewed
annually, unless terminated by the Group or the Executive by written notice of
the decision not to renew for any such additional annual period.
3. The Position.
During the Period of Employment Executive shall serve as the
principal executive officer of both the Company and Group, reporting directly to
and only to the Board of the Company and Group, respectively, and shall have the
duties and responsibilities appropriate to such offices.
4. Duties.
Throughout the Period of Employment, Executive agrees to devote
Executive's full time and undivided attention during normal business hours to
the business and affairs of Employer and, in particular, to performance of all
the duties and responsibilities as Chief Executive Officer Group, except for
reasonable vacations and except for illness; but nothing in this Agreement shall
preclude Executive from devoting reasonable periods required for:
a. serving as a director, trustee, or member of a committee of any
organization involving no conflict of interest with the interests of
Employer or in direct competition with Employer;
b. engaging in charitable and community activities; and
c. managing Executive's personal investments;
provided that such activities do not, individually or together, interfere with
the regular performance of Executive's duties and responsibilities under this
Agreement and do not in any way conflict with Employer's interests.
5. Compensation.
For all services to be rendered by Executive pursuant to this
Agreement during the Period of Employment to the Company or Group:
a. Base Salary. Executive shall be paid as compensation a base
annual salary of $300,000 payable at the same intervals at which the Company's
executives are paid, but in no event less frequently than monthly, plus any
increase in base salary as determined by the Board of Directors of the Company;
b. Annual Bonus. Executive will receive an annual bonus of $300,000
for each of calendar years 1998 and 1999 (pro rated in the case of any partial
period within the Period of Employment). For each calendar year in the Period of
Employment (pro rated in
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the case of partial years in the Period of Employment), Executive shall be paid
an annual bonus of $300,000 (the "Target Bonus") if the Group's Consolidated
EBITDA (as defined below) equals or exceeds the target for such calendar year
set forth on Annex A hereto. If the Group's Consolidated EBITDA for a year is
80% of the target Consolidated EBITDA for such year, Executive shall be paid an
annual bonus equal to 25% of the Target Bonus. The annual bonus shall be pro
rated for Consolidated EBITDA results between 80% and 100% of the applicable
target. No annual bonus will be payable for a year in which the Consolidated
EBITDA is less than 80% of the applicable target.
c. Performance Bonus.
i. If the Group's Consolidated EBITDA for a calendar year ending
within the Period of Employment equals or exceeds $65,000,000, Executive
will receive a special one-time bonus of $1,000,000. The bonus provided
for in this clause (ii) will not again be payable if the Group's
Consolidated EBITDA equals or exceeds $65,000,000 for any subsequent
calendar year.
ii. If the Group's Consolidated EBITDA for a calendar year ending
within the Period of Employment equals or exceeds the Target (as defined
below) for such year, Executive will receive a special bonus of $500,000,
and, for each whole $5,000,000 of additional Consolidated EBITDA above
such Target, Executive will receive an additional $500,000. For these
purposes, the "Target" shall initially mean $70,000,000. If any bonus is
payable with respect to any calendar year pursuant to this clause (ii),
the Target with respect to any subsequent year shall be increased by
$5,000,000 whole increments for each $500,000 paid to Executive.*
iii. For purposes of this Section 5, "Consolidated EBITDA" shall
have the meaning given in the Credit Agreement, dated as of May 6, 1997,
among GST Acquisition Corp., a Delaware corporation and a predecessor of
Group, Xxxxxx Xxxxxxx Senior Funding, Inc., as documentation agent, The
Chase Manhattan Bank, a New York banking corporation, as administrative
agent, and the other parties thereto, as amended on as of January 30,
1998, and as may be further amended from time to time except that "special
bonuses" shall not include bonuses payable under Section 5(c).
iv. In the event that Group or any of its subsidiaries consummates a
significant acquisition, disposition or other corporate transaction or
series of transactions that, in the judgement of the Board, would
reasonably be expected to impact the consolidated earnings of Group and
its subsidiaries, the Consolidated EBITDA figures set forth in clauses (i)
and (ii) may be
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* By way of illustration, if the Company's Consolidated EBITDA for a Fiscal
Year is $82,000,000, and the Target for such Fiscal Year is $70,000,000,
Executive would receive a bonus pursuant to clause (ii) of $1,000,000, and
the Target for the subsequent Fiscal Year would be increased to
$80,000,000.
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appropriately adjusted by the Board to reflect such transaction or series
of transactions.
d. The bonus provided for in this paragraph (b) or (c) with respect
to a calendar year shall be payable, if at all, reasonably promptly following
the receipt by the Board of the audited financial statements of Group for such
calendar year; provided that if the Group's audited financial statements are not
prepared on a calendar year basis, any such bonus shall be payable reasonable
promptly following the receipt by the Board of the unaudited financial
statements, certified by the Group's chief financial officer, for the portion of
the Group's fiscal year within such calendar year that is not included in the
Group's audited financial statements.
e. Any increase in base salary or in annual incentive awards or
other compensation shall in no way diminish any other obligations of Employer
under this Agreement.
6. Provisions for Perquisites.
During the Period of Employment, Executive shall be entitled to
perquisites including an appropriate office, secretarial and clerical staff, and
fringe benefits accorded generally to executive officers of Employer pursuant to
their policies, as well as to reimbursement, upon proper accounting, of
reasonable expenses and disbursements incurred by Executive in the course of
Executive's duties.
7. Employment Benefit Plans.
a. Executive, Executive's dependents and beneficiaries, including,
without limitation, any beneficiary of a joint and survivor annuity or other
optional method of payment applicable to the payment of benefits under the
defined benefit or other pension plans of Employer, or any successor plans,
shall be entitled to all payments and benefits and service credit for benefits
during the Period of Employment to which officers of Employer, their dependents,
and beneficiaries are entitled as the result of their employment under the terms
of employee benefit plans and practices of Employer. Executive, and Executive's
dependents, shall also be entitled to participate in, be covered by and receive
benefits under, Employer's long-term disability, medical, dental, health,
welfare, accidental death and dismemberment, and life insurance plans, other
present or equivalent successor plans and practices of Employer, for which
officers, their dependents, and beneficiaries are eligible, if any, and its
401(k) Plan. Executive, his spouse and his dependents shall also be entitled to
all payments or other benefits under any such plan or practice subsequent to the
Period of Employment as a result of participation in such plan or practice
during the Period of Employment, as provided in such plans.
b. Nothing in this Agreement shall preclude Employer from amending
or terminating any employee benefit plan or practice.
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8. Stock Options.
Group shall grant to Executive options (the "Options") to purchase
250,000 shares of the Group's common stock, par value $.01 per share. The
Options shall be granted under the Group's Amended and Restated Stock Option
Plan (the "Stock Option Plan"), to be adopted by Group, a copy of which has been
provided to Executive and shall be of the type designated as "Exit Options"
under the Stock Option Plan. The Options shall be subject to the terms and
conditions of the Stock Option Plan.
9. Effect of Death.
If Executive dies during the Period of Employment, the legal
representative of Executive shall be entitled to (i) the base salary provided
for in paragraph 5(a) above for the month in which Executive's death shall have
occurred and the following month plus all accrued and unpaid vacation, at the
rate being paid at the time of death and (ii) a pro rata portion of any bonus
which would have been payable under paragraph 5(b) above for the year in which
Executive's death occurs payable on the date such bonus would otherwise have
been payable. The Period of Employment shall be deemed to have ended as of the
close of business on the last day of the month following the month in which
death shall have occurred but without prejudice to any payments otherwise due in
respect of Executive's death.
10. Effect of Disability.
a. In the event of the Disability of Executive during the Period of
Employment, Executive shall be entitled to (i) all compensation, benefits and
perquisites hereunder through the effective date of his termination of
employment, (ii) an amount equal to the base salary provided for in paragraph
5(a) above, at the rate being paid at the time of the commencement of
Disability, for the period of such Disability plus six (6) months from the end
of the period that establishes such Disability, as described in paragraph 10(c)
below and (ii) a pro rata portion of any bonus which would have been payable
under paragraph 5(b) above for the year in which Executive's Disability occurs
payable on the date such bonus would otherwise have been payable. The Period of
Employment shall be deemed to have ended as of the last day of the period that
establishes Disability.
b. The amount of any payments due under paragraph 10(a)(i) shall be
reduced by any payments to which Executive may be entitled for the same period
because of disability under any disability plan or insurance of Employer or as
the result of workers' compensation or non-occupational disability payments.
c. The term "Disability", as used in this Agreement, shall mean an
illness or accident occurring during the Period of Employment which prevents
Executive from performing Executive's duties under this Agreement for a period
in excess of 270 days (whether or not consecutive) or 180 consecutive days, as
the case may be, in any twelve-month period during the Period of Employment. The
Period of Employment shall be deemed to have ended as of the close of business
on the last day of such period (either the 270th or 180th day, as the case may
be) but without prejudice to any payments due
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Executive in respect of disability under paragraph 11(a) or otherwise due to
Executive or Executive's legal representative or beneficiary and without
prejudice to continue any medical insurance coverage, subject to the terms of
the plan or applicable law.
11. Provision Upon Termination
a. Either Group or the Company may terminate the Period of
Employment and Executive's employment at any time during the Period of
Employment (i) for any reason upon thirty (30) days' written notice to Executive
and (ii) immediately for Cause, as defined in paragraph 12(c) below. Executive
may terminate his employment hereunder at any time during the Period of
Employment upon sixty (60) days' written notice to the Company. If Executive's
employment is terminated by either party, Employer shall pay Executive all
compensation, benefits and perquisites accrued hereunder through the effective
date of his termination of employment.
b. For the purpose of paragraph 11(a) above and any other provision
of this Agreement, termination of Executive's employment shall be deemed to have
been for "Cause" only (i) if termination of Executive's employment shall have
been the result of an act or acts of fraud, theft, or embezzlement on the part
of Executive which, if convicted, would constitute a felony, or (ii) if
termination of Executive's employment results from Executive's refusal to
perform the duties appropriate to Executive's position or a material breach by
Executive of Paragraphs 13, 14 or 15 of this Agreement and Executive has been
given written notice by the Board with respect to such refusal or such material
breach and Executive continues to refuse unreasonably the performance of the
duties specified or to materially breach the provisions of Paragraphs 13, 14 or
15 of this Agreement.
12. Resignation.
If Executive's employment hereunder terminates (except due to his
death), Executive agrees to resign effective immediately upon termination of the
Period of Employment all positions as an officer or director of Group or the
Company. If Executive fails to deliver such resignation, the Boards of Directors
of Employer may deem Executive to have resigned pursuant to this paragraph 12
effective upon the termination of his employment.
13. Non-Disclosure.
Executive shall not at any time after the date hereof divulge,
provide, or make assessable to anyone, other than in connection with the
business of the Company, any knowledge or information with respect to
confidential or secret processes, inventions, discoveries, improvements,
formulae, plans, materials, devises, materials, devices or ideas or other
know-how, whether patentable or not, with respect to any confidential or secret
aspects of the Company's business (including without limitation customer lists,
supplier lists and pricing arrangements with customers or suppliers or any
similar lists, arrangements or understandings, marketing plans, sales plans,
manufacturing plans, management organization information, data and other
information relating to members of the Board of Directors of Group and the
Company, management and GSCP), operating
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policies or manuals, business plans, financial records, packaging designs or
other financial, commercial, business or technical information relating to the
Employer or any of their subsidiaries or information designated as confidential
or proprietary that the Employer or any of their subsidiaries may receive
belonging to suppliers, customers or others who do business with the Employer or
any of their subsidiaries (collectively, "Confidential Information"); provided,
however, that Executive may disclose such information (i) at the request of any
governmental regulatory authority or in connection with an examination of
Executive by any such authority, (ii) pursuant to subpoena or other court
process, (iii) when required to do so in accordance with the provisions of any
applicable law or regulation, or (iv) if such information has otherwise been
made generally available to the public other than by reason of Executive's
breach of this paragraph 13. Upon the expiration of the Period of Employment or
upon termination of Executive's employment, Executive or his legal
representative shall promptly deliver to the Company all property relating to
the business of the Company, including all Confidential Information, and all
copies thereof that are in the possession or control of Executive.
14. Inventions.
Executive shall promptly disclose to the Company all processes,
trademarks, inventions, improvements and discoveries related to the business of
the Company (collectively, "Developments") conceived or developed by him or with
others during the Period of Employment, if such Developments were conceived or
developed during the Company's business hours or through the use of the
Company's resources. All such Developments shall be the sole and exclusive
property of the Company. Executive, upon the request of and at the Company's
expense, shall assist the Company in obtaining patents thereon and execute all
documents and other instruments necessary or proper to obtain letters patent and
to vest the Company with full title thereto.
15. Post-Employment Activities
a. Covenant Not to Compete. Following termination of Executive's
employment by the Company or Group for Cause or by Executive for any reason,
Executive shall not compete, directly or indirectly, in any area of the
continental United States, with the business conducted by the Company or any of
its subsidiaries, whether as an employee, director, agent, principal,
stockholder or limited partner owning more than 5% of any class of securities or
equity of a corporation, association or partnership, or by maintaining any other
type of interest in or affiliation with or providing any assistance whatsoever
to, any other person, firm, corporation or entity in any business located or
doing business within the continental United States which at the time of
Executive's affiliation therewith is in direct competition with any facet of the
business then being conducted by the Company or any of its subsidiaries, for a
one-year period beginning on the date of Executive's departure and terminating
on the first anniversary of the date of his departure (the "Non-Compete
Period").
b. Non-Solicitation of Employees. During (i) Executive's employment
with the Company or any of its subsidiaries or Affiliates and (ii) for a
two-year period beginning on the date of Executive's departure and terminating
on the second anniversary of the date of
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his departure, Executive shall not directly or indirectly induce any employee of
the Company or any of its subsidiaries to terminate employment with such entity,
and shall not directly or indirectly, either individually or as owner, agent,
employee, consultant or otherwise, employ or offer employment to any person who
is or was employed by the Company or any of its subsidiaries, unless such person
shall have ceased to be employed by such entity for a period of at least six
months.
c. Non-Solicitation of Customers and Suppliers. During (i)
Executive's employment with the Company or Group and (ii) the Non-Compete
Period, Executive shall not, directly or indirectly, interfere with the business
relationship of the Company or any of its subsidiaries, with any customer or
supplier, or prospective customer or supplier, with respect to which Executive
has had access to Confidential Information or with which Executive dealt in
connection with Executive's duties for Group, the Company or any of its
subsidiaries.
d. Injunctive Relief with Respect to Covenants. Executive
acknowledges that irreparable damage would result to Group and the Company if
the provisions of paragraphs 13, 14 and 15(a) through (c) were not specifically
enforced, and agrees that Group and the Company shall be entitled to any
appropriate legal, equitable or other remedy, including injunctive relief, a
restraining order or other equitable relief (without the requirement to post
bond) with respect to any failure of Executive to comply with the provisions of
such sections.
e. Severability; Reformation. In the event that one or more of the
provisions of this paragraph 15 shall become invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event any
provision of paragraph 13 or 15(a) through (c) is not enforceable in accordance
with its terms, such paragraph shall be reformed to make such paragraph
enforceable in a manner which provides the Company or any of its subsidiaries
the maximum rights permitted at law.
f. Waiver. Waiver by Group, the Company or any of its subsidiaries
of any breach or default by Executive of any of the terms of paragraphs 13, 14
or 15(a) through (c) shall not operate as a waiver of any other breach or
default, whether similar to or different from the breach or default waived. No
waiver of any provision of paragraph 13, 14 or 15(a) through (c) shall be
implied from any course of dealing between the Company or any of its
subsidiaries and Executive or from any failure by the Company or any of its
subsidiaries to assert its rights hereunder on any occasion or series of
occasions.
16. Insurance.
The Company shall have the right at its own cost and expense to
apply for and to secure in its own name, or otherwise, life, health or accident
insurance or any or all of them covering Executive, and Executive agrees to
submit to usual and customary medical examination and otherwise to cooperate
with the Company in connection with the procurement of any such insurance and
any claims thereunder.
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17. Notices.
All notices, requests and other communications pursuant to this
Agreement shall be in writing and shall be deemed to have been given if
delivered in person or by courier, the date delivered, and if sent by telegraph,
telex, facsimile transmission, the date sent, or if mailed by registered or
certified mail, postage prepaid, the date mailed, if sent, delivered or mailed
to the parties at the following addresses:
If to Executive:
Xxx X. Xxxxxxx
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
If to the Employer:
Telex Communications, Inc.
0000 Xxxxxxx Xxxxxx X.
Xxxxxxxxxxx, XX 00000
Attention: General Counsel
With a copy to:
Greenwich Street Capital Partners, Inc.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxx X. Xxxxx
Any party may, by written notice to the other, change the address to
which notices to such party are to be delivered, sent or mailed.
18. No Trust Created.
Nothing contained in this Agreement and no action taken pursuant to
the provisions of this Agreement shall create or be construed to create a trust
fund of any kind. Any funds which may be set aside or provided for in this
Agreement shall continue for all purposes to be a part of the general funds of
Employer and no person other than Employer shall by virtue of the provisions of
this Agreement have any interest in such funds. To the extent that any person
acquires a right to receive payments from Employer under this Agreement, such
right shall be no greater than the right of any unsecured general creditor of
Employer.
19. Successor In Interest.
This Agreement and the rights and obligations hereunder shall be
binding upon and inure to the benefit of the parties hereto and their respective
legal representatives, and shall also bind and inure to the benefit of any
successor of Employer by merger or
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consolidation or any purchaser or assignee of all or substantially all of its
assets, but, except to any such successor, purchaser, or assignee of Employer,
neither this Agreement nor any rights or benefits hereunder may be assigned by
either party hereto.
20. Full Discharge of Company Obligations.
The amounts payable to Executive pursuant to paragraph 9, 10 and 11
following termination of his employment shall be in full and complete
satisfaction of Executive's rights under this Agreement but shall not affect
Executive's rights under any other agreement with Group or the Company. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, upon Executive's receipt of such amounts, the Employer
shall be released and discharged from any and all liability to Executive in
connection with this Agreement or otherwise in connection with Executive's
employment with the Employer and their subsidiaries.
21. Arbitration of Disputes.
The parties agree that any controversy or claim arising out of or
relating to this Agreement, or any dispute arising out of the interpretation or
application of this Agreement, which the parties hereto are unable to resolve,
shall be finally resolved and settled exclusively by arbitration in New York,
New York by a single arbitrator under the American Arbitration Association's
Commercial Arbitration Rules then obtaining and in accordance with the
substantive laws of the State of New York. If the parties cannot agree upon an
arbitrator out of the panel, then for the sole purpose of selecting an
arbitrator, each party (the Company and Group shall be considered collectively
one party) shall choose its own independent representative and those independent
representatives shall in turn choose the single arbitrator within thirty (30)
days of the date of the selection of the first independent representative. The
parties severally recognize and consent to the jurisdiction over each of them by
the courts of the State of New York. The legal expenses of Executive shall be
reimbursed to Executive if an award is rendered in favor of Executive.
22. Governing Laws.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York.
23. Entire Agreement.
This Agreement shall constitute the entire agreement between the
parties superseding all prior agreements, and may not be modified or amended and
no waiver shall be effective unless by written document signed by both parties
hereto; provided, however, that any increase in base salary, as provided in
paragraph 5 hereof, shall become an
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amendment to this Agreement when approved by the Board of Directors of the
Company and recorded in the approved minutes of such meeting.
IN WITNESS WHEREOF, the parties execute this Employment Agreement as
of the date first above written.
EXECUTIVE: TELEX COMMUNICATIONS
GROUP, INC.
/s/ Xxx Xxxxxxx By: /s/ Xxxxx Xxxxx
---------------------------------- -------------------------------------
Xxx Xxxxxxx Xxxxx Xxxxx
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Annex A
Calendar Year Consolidated EBITDA Targets
Year Consolidated EBITDA
---- -------------------
2000 86,900,000
2001 98,400,000
2002 109,700,000
