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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
dated as of August 5, 1997 between VALLEY
INDUSTRIES, LLC, a Delaware limited
liability company (the "Company"), and
ROGER T. MORGAN (the "Executive").
Reference is made to the Asset, Purchase Agreement dated as of
the date hereof (as amended, the "Asset Purchase Agreement"), among the
Company, Valley Industries, Inc., a Delaware corporation ("Valley"), and
certain affiliates of Valley. Pursuant to the Asset Purchase Agreement, the
Company is, among other things, acquiring substantially all of the assets of
Valley.
The Company desires to enter into this Agreement in order to
assure itself of the continued service of the Executive following the Closing
(as such term is defined in the Asset Purchase Agreement), and the Executive
desires to accept employment with the Company, upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
obligations hereinafter set forth, the parties agree as follows:
Section 1. Employment. The Company hereby employs the Executive, and the
Executive hereby accepts employment by the Company, upon the terms and
conditions hereinafter set forth.
Section 2. Term. The employment of the Executive hereunder shall be for a
period commencing on the date hereof (the "Commencement Date") and ending on
August 5, 2000 (the "Initial Term") or such earlier date upon which the
employment of the Executive shall terminate in accordance with the provisions
hereof. Unless terminated earlier in accordance with the provisions hereof, at
the end of the Initial Term and at the end of each term thereafter, the
employment of the Executive hereunder shall automatically renew for successive
one-year periods unless the Company or the Executive shall give the other
written notice of its desire not to renew the term or the Initial Term no later
than six months prior to the termination of the then current term. The period
commencing on the Commencement Date and ending on the date of termination of
the Executive's employment hereunder shall be called the "Term of Employment"
for the Executive, and the date on which the Executive's employment hereunder
shall terminate shall be called the "Termination Date."
Section 3. Duties. During the Term of Employment, the Executive shall be
employed as the President and Chief Executive Officer of the Company and shall
perform such duties as are consistent therewith as the respective Boards of
Directors of the Company and AAS Holdings, LLC, a Delaware limited liability
company ("Holdings") (each, a "Board" and together, the "Boards") or their
respective designees shall designate. The Executive shall use his best efforts
to perform well and faithfully the foregoing duties and responsibilities.
Section 4. Time to be Devoted to Employment. During the Term of
Employment, the Executive shall devote all of his business time,
attention and energies to the business of the Company and its subsidiaries
(except for vacations to which he is entitled pursuant to Section
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6(b)) and periods of illness or incapacity). During the Term of Employment,
the Executive shall not engage in any business activity which, in the
reasonable judgment of either of the Boards, conflicts with the duties of
the Executive hereunder, whether or not such activity is pursued for gain,
profit or other pecuniary advantage.
Section 5. Compensation.
(a) The Company (or at the Company's option, any subsidiary or
affiliate thereof) shall pay to the Executive an annual base salary (the "Base
Salary") during the Term of Employment of not less than $250,000, payable in
such installments (but not less often than monthly) as is generally the
policy of the Company with respect to its executive officers, which Base Salary
shall be subject to such increases as the Company's Board, in its sole
discretion, may from time to time determine. The Executive's performance shall
be reviewed at least annually by the Boards.
(b) During the Term of Employment, the Executive shall be eligible
to participate in a bonus plan in the range which will provide the Executive
with an annual cash bonus of 50%-70% of the Base Salary subject to the
achievement by the Company of performance goals established by Holdings'
Board in its sole discretion, provided, however, that the Executive shall be
eligible to receive an annual cash bonus of 20.8% - 29.2% of the Base Salary
for the fiscal year ending December 31, 1997, subject to the achievement of
such performance goals.
Section 6. Business Expenses; Benefits.
(a) The Company (or, at the Company's option, any subsidiary or
raffiliate thereof) shall reimburse the Executive, in accordance with the
practice from time to time for executive officers of the Company, for all
reasonable and necessary expenses and other disbursements incurred by the
Executive for or on behalf of the Company in the performance of the Executive's
duties hereunder. The Executive shall provide such appropriate documentation of
expenses and disbursements as may from time to time be required by the Company.
(b) During the Term of Employment, the Executive shall be entitled
to five weeks vacation per year.
(c) During the Term of Employment, the Company shall continue to
provide the Executive with the group health, life and disability insurance
benefits, and retirement plan benefits that were provided by the Company to the
Executive prior to the Closing. In the event that the Executive completes the
Term of Employment hereunder and is terminated (other than due to a Termination
for Cause), the Company shall, so long as it is permitted to provide benefits
to non-employees pursuant to its existing employee benefits plans, continue to
provide the Executive with his and his existing spouse's medical benefits on
substantially the same terms as provided during the Term of Employment until
each such person reaches the age of 65 ; provided that the Executive shall
reimburse the Company for its provision of such benefits in an amount no less
than the maximum amount that the Executive and/or his spouse would have to pay
for such benefits pursuant to the Congressional Omnibus Budget Reconciliation
Act of 1985, as may be amended from time to time.
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(d) During the Term of Employment, the Company shall continue to
reimburse the Executive for his membership expenses at the Great Oaks Country
Club.
(e) During the Term of Employment, the Company shall continue to
reimburse the Executive for his reasonable automobile expenses up to seven
hundred dollars ($700) per month.
Section 7. Involuntary Termination.
(a) If the Executive is incapacitated or disabled (such condition being
hereinafter referred to as a "Disability") in a manner that would qualify the
Executive for benefits under the disability policy of the Company (the
"Disability Policy"), the Term of Employment and the employment of the
Executive under this Agreement shall cease (such termination, as well as a
termination under Section 7(b), being hereinafter referred to as an
"Involuntary Termination") and the Executive shall be entitled to receive the
benefits payable under the Disability Policy.
(b) If the Executive dies during the Term of Employment, the Term of
Employment and the Executive's employment hereunder shall cease as of the date
of the Executive's death.
Section 8. Termination For Cause. The Company may terminate the Term of
Employment and the employment of the Executive hereunder at any time for Cause
(as hereinafter defined) (such termination being referred to herein as a
"Termination For Cause") by giving the Executive written notice of such
termination, effective immediately upon the giving of such notice to the
Executive. As used in this Agreement, "Cause" means the Executive's (a)
commission of an act (i) constituting a felony or (ii) involving fraud, theft
or dishonesty which is not a felony and which materially adversely affects the
Company or could reasonably be expected to materially adversely affect the
Company, (b) repeated failure to be reasonably available to perform his duties,
which, if curable, shall not have been cured within 10 business days of written
notice thereof from the Company, (c) repeated failure to follow the lawful
directions of the Boards, which, if curable, shall not have been cured within
10 business days of written notice thereof from the Company, (d) material
breach of any agreement with the Company (including any noncompete provisions
of this or any agreement between the Executive and the Company) which, if
curable, shall not have been cured within 10 business days of written notice
thereof from the Company, or (e) resignation.
Section 9. Termination Without Cause. The Company may terminate the Term
of Employment and the employment of the Executive hereunder without Cause (such
termination being hereinafter referred to as a "Termination Without Cause") by
giving the Executive written notice of such termination, which notice shall be
effective on the date specified therein but not earlier than the date on which
such notice is given.
Section 10. Effect of Termination.
(a) Upon the termination of the Term of Employment and the Executive's
employment hereunder due to an Involuntary Termination or Termination for
Cause, neither the Executive nor his beneficiary or estate shall have any
further rights or claims against the Company under this Agreement, except to
receive (i) the unpaid portion, if any, of the Base
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Salary provided for in Section 5(a), computed on a pro rata basis to
the Termination Date (based on the actual number of days elapsed over the
actual number of days of the year in which such termination occurs), (ii) any
unpaid accrued benefits of the Executive, and (iii) reimbursement for any
expenses for which the Executive shall not have been reimbursed as provided in
Section 6(a).
(b) Upon the termination of the Executive's employment hereunder due
to a Termination Without Cause, neither the Executive nor his beneficiary or
estate shall have any further rights or claims against the Company under this
Agreement except the right to receive (i) the amounts set forth in Section
10(a), (ii) the prorated portion of any bonus earned by the Executive in such
year under any Company incentive compensation plan in which the Executive
participates, (iii) the Base Salary through the date which is twelve (12)
months from the Termination Date, payable in such installments over the
applicable period as the base salary is generally paid to the Executive and
(iv) the costs to the Executive under COBRA to receive insurance coverage from
the Company during the period commencing on the Termination Date through the
date which is the earlier to occur of (1) the first anniversary of the
Termination Date and (2) the day prior to the date on which the Executive shall
be included in any insurance program provided by any other employer. The
Executive shall have no duty to mitigate the Company's obligations under this
Section 10(b).
Section 11. Insurance. The Company may, for its own benefit, in its sole
discretion, maintain "key-man" life and disability insurance policies covering
the Executive. The Executive will cooperate with the Company and provide such
information or other assistance as the Company may reasonably request in
connection with the Company's obtaining and maintaining such policies.
Section 12. Disclosure of Information. The Executive shall not, at any
time during the Term of Employment or thereafter, disclose to any person, firm,
corporation or other business entity, except as required by law, any non-public
information (including, without limitation, non-public information obtained
prior to the date hereof) concerning the business, clients or affairs of the
Company or any subsidiary or affiliate thereof for any reason or purpose
whatsoever, nor shall the Executive make use of any of such non-public
information for his own purpose or for the benefit of any person, firm,
corporation or other business entity except the Company or any subsidiary or
affiliate thereof. Upon the termination of the Term of Employment, the
executive shall return to the Company all property of the Company or any
subsidiary or affiliate thereof then in the possession of the Executive and all
books, records, computer tapes or discs and all other material containing
non-public information concerning the business, clients or affairs of the
Company or any subsidiary or affiliate thereof.
Section 13. Right to Inventions. The Executive shall promptly disclose,
grant and assign to the Company for its sole use and benefit any and
all marks, designs, logos, inventions, improvements, technical information and
suggestions relating in any way to the business conducted by the Company, which
he may develop or which may be acquired by the Executive during the Term of
Employment (whether or not during usual working hours), together with all
trademarks, patent applications, letters patent, copyrights and reissues
thereof that may at any time be granted for or upon any such mark, design,
logo, invention, improvement or technical information. In connection
therewith:
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(i) the Executive shall without charge, but at the expense of the
Company, promptly at all times hereafter execute and deliver such
applications, assignments, descriptions and other instruments as may be
necessary or proper in the opinion of the Company to vest title to any
such marks, designs, logos, inventions, improvements, technical
information, trademarks, patent applications, patents, copyrights or
reissues thereof in the Company and to enable it to obtain and maintain
the entire right and title thereto throughout the world;
(ii) the Executive shall render to the Company at its expense
(including a reasonable payment for the time involved in case he is not
then in its employ based on his last per diem earnings) all such
assistance as it may require in the prosecution of applications for said
trademarks, patents, copyrights or reissues thereof, in the prosecution
or defense of interferences which may be declared involving any said
trademarks, applications, patents or copyrights and in any litigation in
which the Company may be involved relating to any such trademarks,
patents, inventions, improvements or technical information; and
(iii) for the avoidance of doubt, the foregoing provisions shall
be deemed to include an assignment of future copyright in accordance with
Section 37 of the Copyright Act of 1986 and any amendment or re-enactment
thereof.
Section 14. Restrictive Covenant.
(a) The Company is in the business of designing, engineering
manufacturing, selling and distributing towing products including trailer
hitches, trailer bells, bell mounts, couples, tow bars and brush guards (the
"Business"). The Executive acknowledges and recognizes that the Business has
been conducted, and substantial sales of its products have been made,
throughout the United States, and the Executive further acknowledges and
recognizes the highly competitive nature of the industry in which the Business
is involved. Accordingly, in consideration of the premises contained herein,
the consideration to be received hereunder, stock options to be granted to the
Executive and in consideration of and as an inducement to the Company to
consummate the transactions contemplated by the Purchase Agreement, the
Executive shall not during the Non-Competition Period (as defined below) (i)
directly or indirectly engage, whether or not such engagement shall be as a
partner, stockholder, affiliate or other participant, in any Competitive
Business (as defined below), or represent in any way any Competitive Business,
whether or not such engagement or representation shall be for profit, (ii)
interfere with, disrupt or attempt to disrupt the relationship, contractual or
otherwise, between the Company and any other person or entity, including,
without limitation, any customer, supplier or employee of the Company, (iii)
induce any employee of the Company or the Business to terminate his employment
with the Company or the Business or to engage in any Competitive Business in
any manner described in the foregoing clause (i) (as well as an officer or
director of any Competitive Business), or (iv) affirmatively assist or induce
any other person or entity to engage in any Competitive Business in any manner
described in the foregoing clause (i) (as well as an officer or director of any
Competitive Business). Anything contained in this Section 14 to the contrary
notwithstanding, an investment by the Executive in any entity in which the
Executive and his affiliates exercise no operational or strategic control and
which constitutes less than 2% of the capital of such entity shall not
constitute a breach of this Section 14.
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(b) As used herein, "Non-Competition Period" shall mean the period
commencing on the date hereof and terminating on the fifth anniversary of the
Termination Date; provided, however, that if the Term of Employment shall have
been terminated pursuant to Section 9, then "Non-Competition Period" shall mean
the period commencing on the date hereof and terminating on the later of (i)
the second anniversary of the Termination Date and (ii) the end of the period
following the Termination Date which is equal to the period of the Term of
Employment (assuming that the Term of Employment shall not exceed five years
for purposes of this clause (ii)); and "Competitive Business" shall mean any
business in any State of the United States or anywhere outside the United
States engaged in designing, engineering, manufacturing, selling or
distributing systems or components thereof (such as trailer hitches, trailer
balls , ball mounts, couplers, tow bars and two brushes) intended to facilitate
towing.
(c) The Executive understands that the foregoing restrictions may limit
his ability to earn a livelihood in a business similar to the business of the
Company or any subsidiary or affiliate thereof, but he nevertheless believes
that he has received and will receive sufficient consideration and other
benefits as an employee of the Company and as otherwise provided hereunder and
pursuant to other agreements between the Company and the Executive to justify
clearly such restrictions which, in any event (given his education, skills and
ability), the Executive does not believe would prevent him from earning a
living.
Section 15. Enforcement; Severability; Etc. It is the desire and intent
of the parties that the provisions of this Agreement shall be enforced to the
fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. Accordingly, if any particular
provision of this Agreement shall be adjudicated to be invalid or
unenforceable, such provision shall be deemed amended to delete therefrom the
portion thus adjudicated to be invalid or unenforceable, such deletion to apply
only with respect to the operation of such provision in the particular
jurisdiction in which such adjudication is made.
Section 16. Remedies. The Executive acknowledges and understands that the
provisions of this Agreement are of a special and unique nature, the loss of
which cannot be adequately compensated for in damages by an action at law, and
that the breach or threatened breach of the provisions of this Agreement would
cause the Company irreparable harm. In the event of a breach or threatened
breach by the Executive of the provisions of this Agreement, the Company shall
be entitled to an injunction restraining him from such breach. Nothing
contained in this Agreement shall be construed as prohibiting the Company from
or limiting the Company in pursuing any other remedies available for any breach
or threatened breach of this Agreement.
Section 17. Notices. All notices, claims, certificates, requests, demands
and other communications hereunder shall be in writing and shall be
deemed to have been duly given and delivered if personally delivered or if sent
by nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
if to the Company, to:
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Valley Industries, LLC
32501 Dequindre Road
Madison Heights, Michigan 48071
Telecopier: (810) 588-0027;
with copies to:
AAS Holdings, LLC
12900 Hall Road
Suite 200
Sterling Heights, Michigan 48313
Attention: Chief Executive Officer
Telecopier: (810) 997-6839
with copies to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attention: John J. Suydam, Esq.
Telecopier: (212) 408-2420;
if to the Executive, to:
Roger T. Morgan
3496 Summit Ridge
Rochester Hills, Michigan 48306
Telecopier: (810) 373-6949
with copies to:
David A. Widlak
P.O. Box 482
Washington, Michigan 48094
Telecopier: (810) 786-3933
or to such other address as the party to whom notice is to be given may
have furnished to the other party or parties in writing in accordance herewith.
Any such notice or communication shall be deemed to have been received (a) in
the case of personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the
date when sent, (c) in the case of telecopy transmission, when received, and
(d) in the case of mailing, on the third business day following that on which
the piece of mail containing such communication is posted.
Section 18. Binding Agreement; Benefit. Subject to Section 23, the
provisions of this Agreement will be binding upon, and will inure to the
benefit of, the respective heirs, legal representatives, successors and assigns
of the parties.
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Section 19. Governing Law. This Agreement will be governed by, and
construed and enforced in accordance with, the laws of the State of New York
(without giving effect to principles of conflicts of laws).
Section 20. Waiver of Breach. The waiver by either party of a breach of
any provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other breach.
Section 21. Entire Agreement; Amendments. This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements or understandings between the parties with
respect thereto. This Agreement may be amended only by an agreement in writing
signed by the parties.
Section 22. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 23. Assignment. This Agreement is personal in its nature and the
parties shall not, without the consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder; provided, however, that the
Company may assign this Agreement to any of its subsidiaries and affiliates.
Section 24. Counterparts. This Agreement may be executed in counterparts,
and each such counterpart shall be deemed to be an original instrument, but all
such counterparts together shall constitute but one agreement.
Section 25. Gender. Any reference to the masculine gender shall be deemed
to include the feminine and neuter genders unless the context otherwise
requires.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the date first written above.
VALLEY INDUSTRIES, LLC
By:_____________________________
Name:
Title:
________________________________
ROGER T. MORGAN
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