EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of the day of October, 1998, by and between
MIKE'S ORIGINAL, INC., a Delaware corporation (hereinafter the "Company"), and
XXX XXXXXXXXX an individual residing at 00 Xxxx Xxxxx, Xxxxxxx, XX 00000
(hereinafter called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee desire to enter into an Employment
Agreement relating to the Company's employment of the Employee;
WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between the Company and the Employee
relating to such employment.
NOW, THEREFORE, it is agreed as follows:
1. Retention of Services. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
2. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, and further subject to certain provisions hereof which
survive the term hereof, the term of this Agreement shall be comprised of a five
(5) year period of employment commencing ____________________ ("Effective Date")
and terminating ______________ on ________. The Company, at its sole option, may
elect to renew the Agreement for an additional five (5) year period by providing
written notice of such election to employee prior to expiration of the initial
term of the Agreement.
3. Duties and Extent of Services During Period of Employment.
(a) During the term of Employee's employment, Employee shall be employed as
President of the Company. In such capacity, Employee agrees that he shall serve
the Company under the direction of the Board of Directors of the Company to the
best of his ability, shall devote his full-time efforts to the execution of his
duties for the Company, shall perform all duties incident to his offices on
behalf of the Company, and shall perform such other duties as may from time to
time be assigned to him by the Board of Directors of the Company consistent with
his executive position. Employee shall also serve in similar capacities of such
of the subsidiary corporations of the Company as may be selected by the Board of
Directors. Notwithstanding the foregoing, it is understood and agreed that
during the term hereof Employee shall be responsible for the operations of the
Company and that the duties of Employee during the period of active employment
shall not be inconsistent therewith or with those duties ordinarily performed by
an executive. The Company shall not require Employee to be employed in any
location other than the New York Metropolitan area unless he consents in writing
to such location.
(b) During the term of Employee's employment, the Company shall use
reasonable efforts to cause the appointment or election of Employee to the
Company's Board of Directors.
4. Remuneration. During the period of employment, Employee shall be
entitled to receive the following compensation for his services:
(a) The Company shall pay to Employee a base salary at the rate of $126,000
per annum, payable in equal weekly installments, or in such other manner as
shall be agreeable to the Company and Employee. On each anniversary of the
Effective Date during the term of Employee's employment with the Company,
Employee shall be entitled to a minimum salary increase equal to five percent
(5%) of his salary in the immediately proceeding one-year period. In the event
the Company elects to renew this Agreement with Employee after the expiration of
the initial five (5) year term, Employee shall be entitled to a minimum salary
increase on the fifth anniversary of the Effective Date equal to ten percent
(10%) of his salary in the immediately preceding one-year period.
(b) The Company shall grant to Employee 200,000 shares of the Company's
Common Stock (prior to any reverse split) which shall vest as follows: 100,000
shares on January 15, 1999 and 100,000 shares on January 15, 2000. The Employee
shall have "Piggy Back" Registration Rights for the shares (other than under an
S-8 or S-4) unless the Underwriter deems that such rights are not in the best
interests of the underwriting. In the event of a termination of this Agreement
by the Company without cause then all of the aforesaid shares shall immediately
vest. In the event of a default by the employee under this Agreement, then all
shares not previously vested shall be returned to the Company.
(c) At the end of each full fiscal year of the Company during the term of
this Agreement, the Company shall pay to Employee a bonus equal to two percent
(2%) of the pre-tax profits of the Company. In addition, upon the closing of
each acquisition by the Company of a business located by the Employee with a
purchase price equal to or less than $750,000.00, the Company shall grant
Employee fully vested options to purchase 25,000 shares of the Company's common
stock at the closing price of such stock on the date of the grant. In addition,
the Company shall grant Employee additional fully vested options upon the
closing of each acquisition of a business located by the Employee with a
purchase price exceeding $750,000, with the number of such additional options
granted to be determined by multiplying the portion of the purchase price
exceeding $750,000.00 by a fraction, the numerator of which shall be 25,000 and
the denominator of which shall be 750,000. In no event, however, shall the total
number of options to purchase the Company's shares granted to Employee for any
acquisition exceed 50,000. All such options that remain unexercised on the tenth
anniversary of the date of grant shall expire on such date.
5. Employee Benefits; Expenses.
(a) During the period of employment, Employee shall be eligible to
participate in stock option plans, stock purchase plans or other employee
incentive plans of the Company to the extent such plans exist and to the same
extent as the Company's other executives as determined in the sole discretion of
the Board of Directors of the Company or a committee thereof.
(b) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of the an executive of the Company; and he shall be
entitled to regular vacations during each year of four (4) weeks in the
aggregate. The Company shall not pay Employee any additional compensation for
any vacation time not used by Employee nor shall vacation time accrued in any
calendar year be usable in any other calendar year.
(c) It is contemplated that during the period of employment, Employee
may be required to incur out-of-pocket expenses in connection with the
performance of his services hereunder, including expenses incurred for travel
and business entertainment. Accordingly, the Company shall reimburse Employee
for all reasonable out-of-pocket expenses incurred by Employee in the
performance of his duties hereunder upon submission of reasonable documentation
therefore in accordance with the Company's policies. Notwithstanding and in
addition to the foregoing, in recognition that Employee will be required during
the term of this Agreement to do a considerable amount of driving in connection
with his services hereunder, the Company shall also provide Employee with an
automobile allowance of $520.00 per month, with annual increases of five percent
(5%) per year, and shall reimburse the Employee for all expenses relating to
gasoline, tolls and automobile insurance on a monthly basis upon submission of
receipts, throughout the term of this Agreement. In addition to the foregoing,
the Company shall provide Employee with a special discretionary expense account
equal to One Thousand Five Hundred Dollars ($1,500.00) per month for
entertainment and other expenses related to the conduct and advancement of the
Company's business upon receipt of Employee's monthly invoice for such amount.
In the event that, at the expiration of any automobile lease, Employee is
assessed an excess mileage charge, the Company shall reimburse Employee for such
charge.
(d) All benefits to Employee specifically provided for herein shall be
in addition to, and shall not diminish, (i) such other benefits and/or
compensation as may hereafter be granted to or afforded to Employee by the Board
of Directors of the Company, or (ii) any rights which Employee may have or may
acquire under any hospitalization, life insurance, pension, profit sharing,
incentive compensation or other present or future employee benefit plan or plans
of the Company.
(e) In the event of the death of Employee during the course of his
employment hereunder, the Company shall (i) pay Employee's widow the proceeds of
any life insurance policy maintained by the Company that names her as a
beneficiary, or (ii) continue to pay to Employee's widow, or to such other
person or persons as may be designated by Employee in his Will, or to his Estate
in the event of Employee's intestacy, one-half (<<) of the base salary
(excluding bonuses, expenses, stock options and all benefits) to which Employee
is entitled pursuant to paragraph 4(a) hereunder for a period of one year from
the date of death. The Company and Employee shall determine within sixty (60)
days of the Effective Date whether adequate insurance on the life of Employee is
available at a reasonable premium.
6. Disability. If Employee, during the period of employment, becomes unable
for three consecutive months or more, or any 180 days in any twelve-month
period, due to ill health or other physical or mental incapacity, to perform his
services hereunder, the Company may thereafter, upon at least 45 days' written
notice to Employee, place him on disability status. After such action by the
Company, Employee shall continue to receive one-third (1/3) of the last base
salary paid to Employee under Section 4(a) hereof until the end of the period of
employment or until his disability ends.
7. Confidential Information.
(a) In the course of Employee's employment by the Company, Employee
will have access to and possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any Company
employee, representative or agent to divulge or communicate to any person or
entity (other than to a person or entity bound by confidentiality obligations
similar to those contained herein and other than as necessary in performing
Employee's duties hereunder) or use to the detriment of the Company or for the
benefit of any other person or entity, any of such confidential or proprietary
data or information or make or remove any copies thereof, whether or not marked
or otherwise identified as "confidential" or "secret." Employee shall take all
reasonable precautions in handling the confidential or proprietary data or
information within the Company to a strict need-to-know basis and shall comply
with any and all security systems and measures adopted from time to time by the
Company to protect the confidentiality of confidential or proprietary data or
information.
(b) The term "confidential or proprietary data or information" as used
in this Agreement shall mean information not generally available to the public,
including, without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
(c) Employee will at all times promptly disclose to the Company in
such form and manner as the Company may reasonably require, any inventions,
improvements or procedural or methodological innovations, programs, methods,
forms, systems, services, designs, marketing ideas, products or processes
(whether or not capable of being trademarked, copyrighted or patented) conceived
or developed or created by Employee during or in connection with Employee's
employment hereunder and which relate to the business of the Company
("Intellectual Property"). Employee agrees that all such Intellectual Property
shall be the sole property of the Company. Employee further agrees that Employee
will execute such instruments and perform such acts as may reasonably be
requested by the Company to transfer to and perfect in the Company all legally
protectable rights in such Intellectual Property.
(d) All written materials, records and documents made by Employee or
coming into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including, but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
(e) The provisions of this Section 7 shall survive the termination of
this Employment Agreement.
8. Non-Competition.
(a) During the term of this Agreement (subject to clause (b) of this
Section 8, the "Restricted Period"), the Employee shall not, without the written
consent of the Company, directly or indirectly:
(i) become associated with, render services to, invest in,
represent, advise or otherwise participate in as an officer, employee, director,
stockholder, partner, promoter, agent of, consultant for or otherwise, any
business anywhere which is competitive with the business in which the Company is
engaged or plans to be engaged at the time Employees' employment by the Company
ceased; provided, however, that nothing contained herein will prevent Employee
from owning less than five percent (5%) of any class of equity or debt
securities listed on a national securities exchange or traded in any established
over-the-counter securities market, so long as such involvement with the issuer
of any such securities is solely that of a passive investor;
(ii) for his own account or for the account of any other person or
entity (A) interfere with the Company's relationship with any of its suppliers,
customers, representatives or agents or (B) transact any business with any
customer or supplier of the Company which transacts or has transacted business
with the Company at any time during the term of this Agreement; or
(iii) employ or otherwise engage, or solicit, entice or induce on
behalf of himself or any other person or entity, the services, retention or
employment of any person who has been an employee, sales representative,
consultant to or agent of the Company within one year of the date of the last
date of such person or entity's employment with the Company.
(b) In the event that the Employee's employment hereunder is
terminated by Employee for any reason or is terminated by the Company with
cause, or the term of Employee's employment expires and is not renewed by the
Company, the covenant contained in Section 8(a) hereof shall extend for a period
of two (2) years beyond the termination of the Employee's employment but shall
be limited in geographic scope to the area within one hundred (100) miles of any
of the Company's or its affiliates' business locations.
(c) The parties hereto intend that the covenants contained in this
Section 8 shall be deemed a series of separate covenants for each country,
state, county and city. If, in any judicial proceeding, a court shall refuse to
enforce all the separate covenants deemed included in this Section 8 because,
taken together, they cover too extensive a geographic area, the parties intend
that those of such covenants (taken in order of the cities, counties, states and
countries therein which are lease populous) which if eliminated would permit the
remaining separate covenants to be enforced in such proceeding shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 8.
(d) With respect to the covenants contained in Sections 7 and 8 of
this Agreement, Employee agrees that any remedy at law for any breach or
threatened or attempted breach of such covenants may be inadequate and that the
Company shall be entitled to specific performance or any other mode of
injunctive and/or other equitable relief to enforce its rights hereunder or any
other relief a court might award without the necessity of showing any actual
damage or irreparable harm or the posting of any bond or furnishing of other
security.
(e) Notwithstanding the foregoing, the provisions of this Paragraph 8
shall be null and void in the event the Company defaults on any of its
obligations to Seller pursuant to the Asset Purchase Agreement dated as of July
20, 1998.
9. Termination.
(a) The Company and Employee agree that Employee's services hereunder
may be terminated for "cause" by the Company only (i) for an act of fraud or
embezzlement adversely affecting the financial interest of the Company, (ii) in
the event that the Company places Employee on disability status pursuant to
Section 6 hereof more than once during the term hereof, (iii) in the event of a
conviction of the Employee for any felony, (iv) in the event of material breach
by the Employee of this Agreement if such breach remains uncured thirty (30)
days after the Company provides notice of such breach to Employee, (v) in the
event of any willful breach by the Employee of this Agreement if such breach
remains uncured fifteen (15) days after the Company provides notice of such
breach to Employee, or (vi) in the event Employee fails to devote his full time
and efforts to the execution of his duties for the Company, except that
Employee's administration of the business of Tri/K Realty Corp. and Silver Crown
Realty Corp. as real estate investment companies as they exist as of the
Effective Date shall not be deemed a breach of this obligation.
(b) If the Company terminates Employee's employment hereunder for any
reason other than for "cause" as set forth in Section 9(a) hereof, Employee's
compensation shall be paid to him as provided hereunder for the lesser of the
(i) remainder of the term of this Agreement or (ii) six (6) months. If the
Company terminates Employee's employment hereunder for "cause" as set forth in
Section 9(a) hereof, Employee shall not be entitled to receive any further
compensation hereunder which has not already been earned pursuant to the terms
hereof. Employee and the Company acknowledge that the foregoing provisions of
this paragraph 9(b) are reasonable and are based upon the facts and
circumstances of the parties at the time of entering into this Agreement, and
with due regard to future expectations.
(c) All unexercised stock options granted Employee shall expire on the
date Employee ceases to be employed by the Company if the Company terminates
Employee with cause or Employee terminates his employment with the Company.
10. Consolidation or Merger. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
11. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at
_______________________________________, or such other address as the Company
may hereafter designate, with a copy to
_______________________________________________________________________________.
Any notice to be given to Employee hereunder shall be delivered or mailed by
certified or registered mail to him at 00 Xxxx Xxxxx, Xxxxxxx, XX 00000 or such
other address as he may hereafter designate.
12. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal representatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors of
the Company.
13. Amendments. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
14. Prior Agreements Superseded. This Agreement supersedes any employment
or consulting agreements, oral or written, entered into between Employee and the
Company prior to the date of this Agreement.
15. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.
16. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person, firm, corporation
or other entity in order to enter into and perform his obligations under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
MIKE'S ORIGINAL, INC.
By: ____________________________
Name:_________________________
Title: _______________________
________________________________
Xxx Xxxxxxxxx
