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Exhibit 10(b)
EMPLOYMENT AGREEMENT
AGREEMENT, dated the 9th day of October, 1996 (the "EMPLOYMENT
AGREEMENT"), by and between AMSCAN HOLDINGS, INC. a Delaware corporation (the
"EMPLOYER" or "COMPANY") and Xxxxxx X. Xxxxxxxxxx (the "EMPLOYEE").
WHEREAS, the Employee has been employed by Amscan, Inc. ("Amscan") a
New York corporation prior to the Effective Date of this Agreement, pursuant to
an Agreement dated November 27, 1991, by and between the Employee and Amscan, as
supplemented and amended to the date hereof (the "PRIOR AGREEMENT"); and
WHEREAS, the Employer is presently planning a public offering of its
securities, and wishes to retain the services of the Employee following the
consummation of such offering;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the parties agree, effective at and only upon the closing of
the proposed initial public offering of common stock of the Employer ("IPO") on
or before June 30, 1997 (the date of such closing being referred to herein as
the "EFFECTIVE DATE"), as follows:
I. Employment.
A. The Company hereby employs the Employee, and Employee hereby agrees
to serve, as President of the Company, for the term and upon the conditions and
provisions of this Employment Agreement.
B. Upon the commencement of this Employment Agreement, as provided in
paragraph III A, the Prior Agreement and all other employment arrangements in
connection with the Employee's employment by Amscan shall be terminated, except
that Employee shall receive the unpaid bonus due Employee pursuant to Section 5
of the Prior Agreement through the Effective Date, (which unpaid bonus will be
either (i) the pro-rata bonus for 1996 if the Effective Date is in 1996 or (ii)
the full bonus for 1996 plus the pro-rata bonus for 1997 if the Effective Date
is in 1997). The said unpaid bonus shall be paid to the Employee on the day
before the Underwriting Agreement for the IPO is executed by the Underwriters,
and the bonus shall be estimated and paid if the amount has not been finally
determined. The Employee shall have no obligations to refund the amount so paid.
If the estimated amount of said bonus shall be less than the amount of said
bonus, as finally determined, the Company shall pay Employee the difference
between the finally
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determined bonus and the estimated bonus within ninety days of the Effective
Date.
II. Employee's Duties.
A. During the term of this Employment Agreement, the Employer will
employ the Employee as President of the Company. The Employee shall supervise
and administer the general business of the Company and its subsidiaries,
including, but not limited to, marketing, sales, manufacturing and other
executive functions and to perform such other executive duties as may be
assigned to him from time to time by the Board of Directors of the Company or
its Chairman of its Board.
B. The Employee shall serve without additional remuneration as (i) a
director of the Employer, if elected by Employer's stockholders; (ii) a member
of any committee of the Board of the Employer, as determined by the Board; and
(iii) a director and/or officer of one or more of the Employer's subsidiaries,
if appointed to such position by the Employer or the applicable board of
directors.
C. During the term of this Employment Agreement, Employee shall devote
the time, skill and efforts to the affairs of the Employer and its subsidiaries
as reasonably necessary to permit the faithful and diligent performance of his
duties hereunder, as President of the Employer.
III. Term.
A. This Employment Agreement shall commence on the day following the
Effective Date and continue for a period of three (3) years thereafter (the
"TERM"), unless terminated earlier in accordance with the provisions of this
Employment Agreement. Notwithstanding the foregoing, the Employee's employment
hereunder shall terminate upon the occurrence of any of the following events:
1. the mutual agreement, in writing, at any time, by the
Employer and Employee to terminate such employment;
2. the death of the Employee;
3. the termination of the Employee's employment by the
Employer, for "CAUSE" as defined hereinafter;
4. the unilateral cessation or discontinuance by the
Employee of his working for or employment by the
Employer.
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B. For the purposes of this Employment Agreement, "CAUSE" shall mean
(i) the commission by the Employee of any crime or an intentional act of fraud
against the Employer; (ii) any act of gross negligence or willful misconduct on
the part of the Employee with respect to his duties under this Employment
Agreement; (iii) any act of willful disobedience on the part of the Employee in
violation of specific and reasonable directions of the Board. A violation under
any Motor Vehicle Law or Code shall not be included in the definition of Cause.
C. Upon termination of the Employee's employment hereunder, whether at
the end of the Term or any extended term or in the event of earlier termination
as provided herein, the Employee shall have no further rights under this
Employment Agreement, except as expressly herein set forth. Nothing contained
herein shall be deemed to preclude the Employer from enforcing any remedies
available to it at law or equity in consequence of a breach by the Employee of
his obligations to the Employer or available to the Employer under the
provisions of this Employment Agreement, including without limitation the
enforcement of any restrictive covenants hereunder to the extent herein
provided.
IV. Compensation.
A. During the Term, the Employer agrees to pay to the Employee the
following base yearly salaries:
1. The base yearly salary shall be $210,282 for the 1996
calendar year and $220,796 for the 1997 calendar
year.
2. For each full calendar year, commencing January 1,
1998 the base yearly salary will be increased by 5%
of the base yearly salary of the preceding calendar
year.
B. Employee's base yearly salary shall be payable in regular
intervals in accordance with the Company's customary payroll practices in
effect during the Term.
C. All compensation shall be subject to such withholding of any
federal, state or local taxes as may be required by law with respect to
these payments.
D. In the event of the termination of the Employee's employment
before the end of a calendar year, the base yearly salary for the year of
termination shall be pro-rated to the date of termination.
E. Bonuses may be paid by the Company to the Employee in such
amounts and in such manner as the Company's Board of Directors may, in its
sole discretion, determine.
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V. Fringe Benefits.
As additional consideration for the services of the Employee under this
Employment Agreement, the Employer shall provide to the Employee all fringe
benefits provided by the Employer to its other executives, including automobile
allowance, paid vacation, holiday and sick leave, medical insurance for the
Employee, with spouse and dependent children fully paid for by the Employer, and
group life insurance, and participation in pension and/or profit sharing plans,
in the same manner and to the same extent as such fringe benefits shall be
available to such other executives of the Employer.
VI. Business Expenses.
The Employer acknowledges that the Employee may necessarily incur, for
the benefit of the Company and in furtherance of the Company's business, various
expenses including, but not limited to, travel, entertainment and promotion
expenses. The Employer, at its options, shall either pay such necessary expenses
directly, advance sums to be used for payment of such necessary expenses or on
submission by the Employee of receipts and an itemized account of such
expenditures, reimburse the Employee for such necessary expenses actually
incurred by him.
VII. Stock-Options.
Employer currently intends to adopt a stock option plan for the benefit
of its employees (such plan, whether adopted by Employer is referred to herein
as the "OPTION PLAN"). Following adoption of the Option Plan, Employee will be
entitled to participate on the same basis and at the same time as other
executive officers and key senior management personnel of the Employer in any
options awarded to such personnel as a group, provided, however, that the
foregoing provision shall not apply with respect to any grants of options
pursuant to the Option Plan which are made prior to or within 30 days following
the closing of the initial public offering of common stock of the Employer. Such
stock option plan shall include a provision for the pro-rata vesting within no
more than five (5) years.
VIII. Restrictive Covenants.
The Employee acknowledges that his employment with Employer has
brought and will bring him into close contact with trade secrets, proprietary
information and other confidential material and assets of the Employer and other
information not readily available to the public, the disclosure of which to
third parties would have a material adverse effect on the Employer's business
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operations. In recognition of the foregoing, the Employee covenants and agrees
that:
A. During the Term and during any extended term, whether or not the
Employee's employment is terminated before the end of the particular term, and
upon termination of the Employee's employment for a period of three (3) years
following such termination, he will not, directly or indirectly, as proprietor,
partner, shareholder (other than as a less than five percent shareholder in a
publicly held company), officer, director, employee or consultant, or in any
other capacity, for his own benefit or for or with any other person or entity,
engage in or perform services in any business or activity involved in or related
to the business in which the Employer or any of its Affiliates, as herein
defined, is now engaged or any other business in which the Employer or any of
its Affiliates may hereafter become engaged during the Term in any trading area
in which the Employer may be engaged in business or trade. The Employee
acknowledges that the Employer now carries on its business in many trading areas
throughout the world.
B. Employee will not, at any time, without the prior written consent of
the Employer, furnish or disclose to any person who is not then an officer,
employee or agent of the Employer, (i) any trade secret of the Employer, or (ii)
any documents, records, plans, models, customer lists or other tangible property
of the Employer, regardless of its form, which may come into his possession,
custody or control in consequence of his employment.
C. In addition to a right to accounting by the Employer and/or damages
and/or any other relief to which the Employer may be entitled as a result of the
Employee's breach hereof the Employer will be entitled to injunctive relief
restraining any such breach or threatened breach, or the continuation of such
breach, by the Employee, provided however, that if a court of competent
jurisdiction shall determine that this covenant shall be enforceable only if
limited to a shorter period of time or to a smaller geographical area than is
herein expressly provided, or otherwise limited, then and in such event, this
covenant shall be deemed to be limited to the extent so determined to be
enforceable, in the same manner and to the same extent as if such limitation
were expressly provided herein.
D. The rights hereunder of the Employer against the Employee
may be assigned by the Employer and may be enforced by any successors or assigns
of the Employer.
"AFFILIATES" shall mean any entity controlling, controlled by or under
common control with the Company, including, without limitation, Amscan, Inc. J
Twist USA, Amscan Canada, Amscan Sweden, Amscan England, Amscan Australia,
Amscan Germany, Deco Manufacturing and the Perfect Party.
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IX. Enforcement.
In the event of any litigation arising out of or related to the
Employment Agreement, in addition to any other relief to which it is entitled,
the prevailing party shall be entitled to receive reimbursement from the losing
party for the prevailing party's legal fees and expenses in connection with such
litigation.
X. Notices.
Any notices, requests, consents and other communications, required or
permitted to be given hereunder, shall be in writing, and shall be deemed to
have been duly given if delivered personally or sent by certified mail, return
receipt requested, to the party to be notified at his or its address set forth
below or at such other address as the party to be notified may have otherwise
designated, by notice in writing, with copies to their respective attorneys as
set forth below:
To Employer: Amscan Holdings, Inc.
00 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attn: Board of Directors
with a copy to: Xxxxxxx & Xxxxxxxxx, LLP
Attn: Xxx Xxxxxxxxx, Esq.
Xxx Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
To Employee: Xx. Xxxxxx X. Xxxxxxxxxx
00 Xxxxx Xxxxx
Xxxxxxx, XX 00000
with a copy to: Orloff, Lowenbach, Xxxxxxxxx &
Xxxxxx, P.A.
Att: Xxxxx X. Xxxxxxx, Esq.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
XI. Amendments.
No amendments or additions to this Employment Agreement shall be
binding unless in writing and signed by both parties.
XII. Governing Law.
This Employment Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of
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New York.
XIII. Paragraph Headings.
The paragraph headings used in this Employment Agreement are
included solely for convenience and shall not affect or be used in connection
with the interpretation of this Employment Agreement.
XIV. Entire Agreement.
This Employment Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, between the parties, except as specifically provided herein.
XV. Successors and Assigns.
This Employment Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by the Employee. This Employment
Agreement shall be binding on any successor to the Employer, whether by merger,
acquisition of substantially all of the Employer's assets or otherwise, as fully
as if such successor were a signatory hereto, and the Employer shall cause such
successor to, and such successor shall, expressly assume the Employer's
obligations hereunder. The term "EMPLOYER" as used in this Employment Agreement,
shall include all such successors.
IN WITNESS WHEREOF, the parties have duly executed this Employment
Agreement as of the day and year first above written.
Amscan Holdings, Inc. (Employer)
By: /s/ XXXX XXXXXXXXXXX
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Xxxx Xxxxxxxxxxx,
President
/s/ XXXXXX X. XXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxx (Employee)
