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EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 30,
1996, by and between Racing Champions, Inc., an Illinois corporation (the
"Company"), and Xxxx Xxxxxxxxx (the "Employee").
RECITAL
The Company desires to employ the Employee and the Employee is willing to
make his services available to the Company on the terms and conditions set
forth below. Certain capitalized terms used herein are defined in Section 10
below.
AGREEMENTS
In consideration of the premises and the mutual agreements which follow,
the parties agree as follows:
1. Employment. The Company hereby employs the Employee and the Employee
hereby accepts employment with the Company on the terms and subject to the
conditions set forth in this Agreement.
2. Term. The term of the Employee's employment hereunder shall commence
on the date hereof and shall continue until terminated as provided in section 6
below.
3. Duties. The Employee shall serve as the Vice President-Finance and
Operations of the Company and will, under the direction of the Company's
President, faithfully and to the best of his ability, perform the duties of
such position. The Employee shall be one of the principal executive officers
of the Company and shall, subject to the control of the Company's board of
directors (the "Board of Directors"), supervise the accounting, financing and
operating functions of the Company. The Employee shall also perform such
additional duties and responsibilities which may from time to time be
reasonably assigned or delegated by the President of the Company. The Employee
agrees to devote his entire business time, effort skill and attention to the
proper discharge of such duties while employed by the Company.
4. Compensation. The Employee shall receive a base salary of $150,000
per year, payable in regular and equal monthly installments (the "Base
Salary"). The Employee's Base Salary shall be reviewed annually by the Board
of Directors of the Company to determine appropriate increases, if any, in such
Base Salary.
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5. Fringe Benefits.
(a) Vacation. The Employee shall be entitled to two weeks of paid
vacation annually, increasing to three weeks after three years of employment by
the Company and four weeks after six years of employment by the Company
(including employment by the Company prior to the term of this Agreement). The
Employee and the Company shall mutually determine the time and intervals of
such vacation.
(b) Medical, Health, Dental, Disability and Life Coverage. The
Employee shall be eligible to participate in any medical, health, dental,
disability and life insurance policy in effect for senior management of the
Company (excluding Xxxxxx Xxxx, Xxxx Xxxxx and Xxxxx Xxxxx) (collectively, the
"Second Tier Management").
(c) Incentive Bonus and Stock Ownership Plans. The Employee shall
be entitled to participate in any incentive bonus or other incentive
compensation plan developed generally for the Second Tier Management of the
Company (including the Racing Champions, Inc. 1996 Key Employees Performance
Compensation Plan (the "1996 Bonus Plan")), on a basis consistent with his
position and level of compensation with the Company. The Employee shall also
be entitled to participate in any incentive stock option plan or other stock
ownership plan developed generally for the Second Tier Management of the
Company, on a basis consistent with his position and level of compensation with
the Company (including the Collectible Champions, Inc. 1996 Employee Stock
Option Plan).
(d) Automobile. The Company agrees to reimburse the Employee up to
$400.00 per month, as such amount may be increased from time to time consistent
with the Company's reimbursement policy for Second Tier Management of the
Company to cover Employee's expenses in connection with his leasing of an
automobile. Additionally, the Company will pay for the gas used for business
purposes. All maintenance and insurance expense for the automobile is the
responsibility of the Employee.
(e) Reimbursement for Reasonable Business Expenses. The Company
shall pay or reimburse the Employee for reasonable expenses incurred by him in
connection with the performance of his duties pursuant to this Agreement
including, but not limited to, travel expenses, expenses in connection with
seminars, professional conventions or similar professional functions and other
reasonable business expenses.
(f) Key Man Insurance. The parties agree that the Company has the
option to purchase one or more key man life insurance policies upon the life of
the Employee. The Company shall own and shall have the absolute right to name
the beneficiary or beneficiaries of said policy. The Employee agrees to
cooperate fully with the Company in securing said policy, including, but not
limited to, submitting himself to any physical examination which may be
required at such reasonable times and places as Company shall specify.
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6. Termination.
(a) Termination of the Employment Period. The Employment Period
shall continue until (i) the second anniversary of the date hereof unless the
parties mutually agree to extend the term of this Agreement (such anniversary
of the date hereof or such extended date being referred to herein as the
"Expected Completion Date"), (ii) the Employee's death or Disability, (iii) the
Employee resigns or (iv) the Board of Directors determines that termination of
Employee's employment is in the best interests of the Company.
(b) Definitions.
(i) For purposes of this Agreement, "Disability" shall mean a
physical or mental sickness or any injury which renders the Employee
incapable of performing the services required of him as an employee of the
Company and which does or may be expected to continue for more than six (6)
months during any 12-month period. In the event Employee shall be able to
perform his usual and customary duties on behalf of the Company following a
period of disability, and does so perform such duties, or such other duties
as are prescribed by the Board of Directors or the President of the Company,
for a period of three continuous months, any subsequent period of disability
shall be regarded as a new period of disability for purposes of this
Agreement. The Company and the Employee shall determine the existence of a
Disability and the date upon which it occurred. In the event of a dispute
regarding whether or when a Disability occurred, the matter shall be
referred to a medical doctor selected by the Company and the Employee. In
the event of their failure to agree upon such a medical doctor, the Company
and the Employee shall each select a medical doctor who together shall
select a third medical doctor who shall make the determination. Such
determination shall be conclusive and binding upon the parties hereto.
(ii) For purposes of this Agreement, "Cause" shall be deemed to
exist if the Employee shall have (1) violated the terms of sections 7 or 8
of this Agreement; (2) failed to substantially perform his duties to the
reasonable satisfaction of the Board of Directors; provided that so long as
Xxxxxx Xxxx, Xxxx Xxxxx or Xxxxx Xxxxx serves as a director of the Company,
any determination pursuant to this clause (2) must be approved by the
Requisite Founder Directors; (3) committed a felony or a crime involving
moral turpitude; (4) engaged in serious misconduct which is demonstrably
injurious to the Company or any of its Subsidiaries; (5) engaged in fraud or
dishonesty with respect to the Company or any of its Subsidiaries or made a
material misrepresentation to the stockholders or directors of the Company;
or (6) committed acts of negligence in the performance of his duties which
are substantially injurious to the Company.
(iii) For purposes of this Agreement, "Good Reason" shall mean (1)
the material diminution of the Employee's duties set forth in Section 3
above or (2) the relocation of the offices at which the Employee is
principally employed to a location which is more than 50 miles from the
offices at which the Employee is principally employed as of the date hereof;
provided, that travel necessary for the performance of the Employee's duties
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set forth in Section 3 above shall not determine the location where the
Employee is "principally employed."
(c) Termination for Disability or Death. In the event of
termination for Disability or death, payments of the Employee's Base Salary
shall be made to the Employee, his designated beneficiary or his estate for a
period of six (6) months after the Termination Date in accordance with the
normal payroll practices of the Company. During this period, the Company shall
also reimburse the Employee for amounts paid, if any, to continue medical,
dental and health coverage pursuant to the provisions of the Consolidated
Omnibus Budget Reconciliation Act. During this period, the Company will also
continue Employee's life insurance and disability coverage, to the extent
permitted under applicable policies, and will pay to the Employee the fringe
benefits pursuant to section 5 which have accrued prior to the Termination
Date.
(d) Termination by the Company without Cause or by the Employee for
Good Reason. If (i) the Employment Period is terminated by the Company for any
reason other than for Cause, Disability or death, (ii) if the Employment Period
is terminated by the Company for what the Company believes is Cause or
Disability, and it is ultimately determined that the Employment Period was
terminated without Cause or Disability or (iii) the Employee resigns for Good
Reason, the Employee shall be entitled to receive, as damages for such a
termination, his Base Salary from the Termination Date to the first anniversary
of the Termination Date; provided that if the Employment Period is terminated
by the Company without Cause and the Requisite Founder Directors, if any, do
not approve such decision, the Employee shall be entitled to receive his Base
Salary from the Termination Date to the later of (A) the Expected Completion
Date and (B) the first anniversary of the Termination Date. Such payment of
Base Salary shall be made in accordance with the normal payroll practices of
the Company. During this period, the Company shall also reimburse the Employee
for amounts paid, if any, to continue medical, dental and health coverage
pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation
Act. During this period, the Company will also continue Employee's life
insurance and disability coverage, to the extent permitted under applicable
policies, and will pay to the Employee the fringe benefits pursuant to section
5 which have accrued prior to the date of termination.
(e) Termination by the Company for Cause or by the Employee without
Good Reason. If the Employment Period is terminated by the Company with Cause
or as a result of the Employee's resignation without Good Reason, the Employee
shall not be entitled to receive his Base Salary or any fringe benefits or
bonuses (except as specifically provided in the 1996 Bonus Plan) for periods
after the Termination Date.
(f) Effect of Termination. The termination of the Employment Period
pursuant to section 6(a) shall not affect the Employee's obligations as
described in sections 7 and 8.
7. Noncompetition and Nonsolicitation. The Employee acknowledges and
agrees that the contacts and relationships of the Company and its Subsidiaries
with its customers, suppliers, licensors and other business relations are, and
have been, established and maintained at great expense and provide the Company
and its Subsidiaries with a substantial competitive
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advantage in conducting their business. The Employee acknowledges and agrees
that by virtue of the Employee's employment with the Company, the Employee will
have unique and extensive exposure to and personal contact with the Company's
customers and licensors, and that he will be able to establish a unique
relationship with those Persons that will enable him, both during and after
employment, to unfairly compete with the Company and its Subsidiaries.
Furthermore, the parties agree that the terms and conditions of the following
restrictive covenants are reasonable and necessary for the protection of the
business, trade secrets and Confidential Information (as defined in section 8
below) of the Company and its Subsidiaries and to prevent great damage or loss
to the Company and its Subsidiaries as a result of action taken by the
Employee. The Employee acknowledges and agrees that the noncompete
restrictions and nondisclosure of Confidential Information restrictions
contained in this Agreement are reasonable and the consideration provided for
herein is sufficient to fully and adequately compensate the Employee for
agreeing to such restrictions. The Employee acknowledges that he could
continue to actively pursue his career and earn sufficient compensation in the
same or similar business without breaching any of the restrictions contained in
this Agreement. The Employee acknowledges that one business of the Company and
its Subsidiaries is the design, production (including, without limitation, the
obtention of the licenses necessary therefor), marketing and sale of die cast
metal replicas of vehicles.
(a) Noncompetition. The Employee hereby covenants and agrees that
during the Employment Period and for two (2) years thereafter (the "Noncompete
Period"), he shall not, directly or indirectly, either individually or as an
employee, principal, agent, partner, shareholder, owner, trustee, beneficiary,
co-venturer, distributor, consultant, representative or in any other capacity,
participate in, become associated with, provide assistance to, engage in or
have a financial or other interest in any business, activity or enterprise
which is competitive with the Company or any of its Subsidiaries or any
successor or assign of the Company or any of its Subsidiaries. The ownership
of less than a one percent interest in a corporation whose shares are traded in
a recognized stock exchange or traded in the over-the-counter market, even
though that corporation may be a competitor of the Company, shall not be deemed
financial participation in a competitor. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this section is
invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. The term "indirectly" as
used in this section and section 8 below is intended to include any acts
authorized or directed by or on behalf of the Employee or any Affiliate of the
Employee.
(b) Nonsolicitation. The Employee hereby covenants and agrees that
during the Noncompete Period, he shall not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, owner, trustee,
beneficiary, co-venturer, distributor, consultant or in any other capacity:
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(i) canvass, solicit or accept from any Person who is a customer
or licensor of the Company or any of its Subsidiaries (any such Person is
hereinafter referred to individually as a "Customer," and collectively as
the "Customers") any business which in competition with the business of the
Company or any of its Subsidiaries or the successors or assigns of the
Company or any of its Subsidiaries, including, without limitation, the
canvassing, soliciting or accepting of business from any Person which is or
was a Customer of the Company within two years preceding the date hereof or
with the Company or any of its Subsidiaries during the Noncompete Period;
(ii) advise, request, induce or attempt to induce any of the
Customers, suppliers, or other business contacts of the Company or any of
its Subsidiaries who currently have or have had business relationships with
the the Company within two years preceding the date hereof or with the
Company or any of its Subsidiaries during the Noncompete Period, to
withdraw, curtail or cancel any of its business or relations with the
Company or any of its Subsidiaries;
(iii) induce or attempt to induce any employee, sales
representative, consultant or other agent of the Company or any of its
Subsidiaries to terminate his relationship or breach any agreement with the
Company or any of its Subsidiaries; or
(iv) hire any person who was an employee, sales representative,
consultant or other agent of the Company or any of its Subsidiaries at any
time during the Noncompete Period.
8. Confidential Information. The Employee acknowledges and agrees that
the customers, business connections, customer lists, procedures, operations,
techniques, and other aspects of and information about the business of the
Company and its Subsidiaries (the "Confidential Information") are established
at great expense and protected as confidential information and provide the
Company and its Subsidiaries with a substantial competitive advantage in
conducting their business. The Employee further acknowledges and agrees that
by virtue of his past employment with the Company, and by virtue of his
employment with the Company, he has had access to and will have access to, and
has been entrusted with and will be entrusted with, Confidential Information,
and that the Company would suffer great loss and injury if the Employee would
disclose this information or use in a manner not specifically authorized by the
Company. Therefore, the Employee agrees that during the Employment Period and
for five (5) years thereafter, he will not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, owner, trustee,
beneficiary, co-venturer, distributor, consultant or in any other capacity, use
or disclose, or cause to be used or disclosed, any Confidential Information,
unless and to the extent that any such information become generally known to
and available for use by the public other than as a result of the Employee's
acts or omissions. The Employee shall deliver to the Company at the
termination of the Employment Period, or at any other time the Company may
request, all memoranda, notes, plans, records, reports, computer tapes,
printouts and software and other documents and data (and copies thereof)
relating to the Confidential Information, Work Product (as defined below) or
the business of the Company or any Subsidiary which he may then possess or have
under his control.
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The Employee acknowledges and agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports
and all similar or related information (whether or not patentable) which
relate to the Company's or any of its Subsidiaries' actual or anticipated
business, research and development or existing or future products or
services and which are conceived, developed or made by the Employee while
employed by the Company and its Subsidiaries ("Work Product") belong to the
Company or such Subsidiary, as the case may be.
9. Common Law of Torts and Trade Secrets. The parties agree that nothing
in this Agreement shall be construed to limit or negate the common law of torts
or trade secrets where it provides the Company and its Subsidiaries with
broader protection than that provided herein.
10. Definitions.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person and any
partner of a Person which is a partnership.
"Founder Director" at any time means Xxxxxx Xxxx, Xxxx Xxxxx or Xxxxx
Xxxxx if at such time such individual is a member of the Board.
"Person" means any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization and any governmental entity or any department,
agency or political subdivision thereof.
"Requisite Founder Directors" at any time means (i) if there are three
Founder Directors at such time, any two Founder Directors, (ii) if there are
two Founder Directors at such time, any Founder Director or (iii) if there is
one Founder Directors at such time, such Founder Director.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed
to have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be
or control any managing director or general partner of such partnership,
association or other business entity.
11. Specific Performance. The Employee acknowledges and agrees that
irreparable injury to the Company may result in the event the Employee breaches
any covenant or agreement contained in sections 7 and 8 and that the remedy at
law for the breach of any such
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covenant will be inadequate. Therefore, if the Employee engages in any act in
violation of the provisions of sections 7 and 8, the Employee agrees that the
Company shall be entitled, in addition to such other remedies and damages as
may be available to it by law or under this Agreement, to injunctive relief to
enforce the provisions of sections 7 and 8.
12. Waiver. The failure of either party to insist in any one or more
instances, upon performance of the terms or conditions of this Agreement shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term, covenant or condition.
13. Notices. Any notice to be given hereunder shall be deemed
sufficient if addressed in writing, and delivered by registered or certified
mail or delivered personally, in the case of the Company, to its principal
business office, and in the case of the Employee, to his address appearing on
the records of the Company, or to such other address as he may designate in
writing to the Company.
14. Severability. In the event that any provision shall be held to be
invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable and
enforceable. Furthermore, the parties specifically acknowledge the above
covenant not to compete and covenant not to disclose confidential information
are separate and independent agreements.
15. Complete Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way. Without limiting the generality of the foregoing, this
Agreement supersedes the Employment Agreement, dated as of December 20, 1994,
between the Company and the Employee (together with all amendments thereto, the
"Prior Agreement"). The Prior Agreement is hereby terminated and shall cease
to be of any further force or effect.
16. Amendment. This Agreement may only be amended by an agreement in
writing signed by each of the parties hereto.
17. Governing Law. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of Illinois, regardless of
choice of law requirements. The parties hereby consent to the jurisdiction of
the state courts of the State of Illinois and of any federal court in the venue
of Illinois for the purpose of any suit, action or proceeding arising out of or
related to this Agreement, and expressly waive any and all objections they may
have as to venue in any of such courts.
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18. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against the Company, its successors
and assigns and the Employee, his heirs, beneficiaries and legal
representatives. It is agreed that the rights and obligations of the Employee
may not be delegated or assigned.
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IN WITNESS WHEREOF, the parties have executed or caused this Employment
Agreement to be executed as of the date first above written.
RACING CHAMPIONS, INC.
By: /s/ Xxxxxx X. Xxxx
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Its: Vice President
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/s/ Xxxxxx X. Xxxxxxxxx
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Xxxx Xxxxxxxxx