Exhibit 10.1
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated as of May 8, 2000
is entered into between Specialty Catalog Corp., a Delaware corporation (the
"Employer" or the "Company") and Xxxxxx Xxxxxxxxx (the "Executive").
W I T N E S S E T H :
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WHEREAS, the Company desires to employ the Executive and to be assured
of his services on the terms and conditions hereinafter set forth; and
WHEREAS, the Executive is willing to accept such employment on such
terms and conditions.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, the Company and the Executive hereby
agree as follows:
1. Employment, Duties and Acceptance.
a. Employment, Duties. The Company hereby employs the Executive for the
Term (as defined in Section 2 below) as follows: (i) effective on the date
hereof, as President and Chief Operating Officer of the Company until Executive
becomes Chief Executive Officer in accordance with the following clause (ii);
and (ii) effective on the earlier of (x) June 30, 2000 or (y) the resignation or
termination of employment of the current Chief Executive Officer of the Company,
without further actions or deeds, as the Chief Executive Officer of the Company,
in each case subject to the supervision and direction of the Board of Directors
of the Company. The Executive shall have such duties, responsibilities and
authority as are customarily required of and given to a Chief Executive Officer
and such other duties and responsibilities commensurate with such position as
the Board of Directors of the Company ("Board") shall determine from time to
time. Such duties, responsibilities and authority shall include, without
limitation, responsibility for the management, operation, strategic direction,
financial structure and overall conduct of the business of the Company. The
Executive shall have the right to veto the hiring by the Company of any
employees at the level of vice-president or higher. The Executive shall report
directly to the Board.
b. Acceptance. The Executive hereby accepts such employment and agrees to
render the services described above. During the Term, the Executive agrees to
serve the Employer faithfully and to the best of the Executive's ability, to
devote all of the Executive's business time, energy and skill to such
employment, and to use the Executive's best efforts, skill and ability to
promote the Employer's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer of the
Employer and of any subsidiary or affiliate of the Employer, without any
compensation therefor other than that specified in this Agreement, if elected or
appointed to any such position by the Board of Directors of the Employer, or of
any subsidiary or affiliate, as the case may be. The Company agrees to maintain
a Directors and Officer's Liability ("D&O") Policy in the face amount of
$5,000,000, covering the Executive for the Term of this Agreement.
c. Location. Executive shall be perform his duties primarily at the
offices of the Employer in the South Easton/Boston, Massachusetts area, as the
Board of Directors may determine, subject to reasonable travel requirements
outside of this area on behalf of the Employer.
2. Term of Employment.
The term of this Agreement shall commence effective as of May 8, 2000 (the
"Commencement Date") and terminate on May 7, 2002 (the "Initial Term"), subject
to earlier termination pursuant to the provisions of Section 4 hereof.
Notwithstanding the foregoing, upon the termination of the Initial Term, this
Agreement shall automatically renew for successive one year periods unless
either party gives the other written notice of its election not to renew at
least 90 days before the expiration of the Initial Term or any renewal period.
The Initial Term and any renewal period is collectively referred to as the
"Term."
3. Compensation; Benefits.
a. Base Salary. The Company shall pay to the Executive for all services to
be performed hereunder and performance of all of his obligations hereunder,
including the Executive's compliance with the covenants contained herein, an
annual salary of $300,000 ("Base Salary"), payable in accordance with the
Company's normal salary payment schedule, as the same may be amended from time
to time. Except as specifically provided herein, such salary shall be the
Executive's total compensation and is inclusive of compensation received or
receivable by the Executive in respect of any other office or employment in, or
service to, the Company. The Base Salary may be increased but not decreased at
any time by the Board of Directors in their sole discretion. The Board shall
review the salary of the Executive and consider an appropriate increase in
January 2001, and in each subsequent year during the Term.
b. Incentive Compensation. In addition to the Base Salary described in
Paragraph 3(a) above, if the Company meets certain targets described below, the
Executive shall be entitled to receive, in cash, incentive compensation as
described below.
(i) Year 2000 Bonus. During the Company's fiscal year ending December
30, 2000 ("Year 2000"), the Executive shall be entitled to
incentive compensation payment predicated upon the Company
achieving both (i) EBITDA of $6.3 million and (ii) EPS of 53
cents, each in respect of Year 2000. The Executive shall earn
incentive compensation payable hereunder in respect of Year 2000
equal to the percentage of his annual Base Salary (which shall
not be prorated for purposes of determining incentive
compensation) set forth in Exhibit 1, but only so long as the
Company achieves EPS of 53 cents or more in respect of Year 2000.
(ii) Year 2001 Bonus. During the Company's fiscal year ending December
29, 2001 (the "Year 2001"), Executive's entitlement to incentive
compensation for any fiscal year of the Company shall be
predicated upon the successful accomplishment of annual,
business-related performance goals for the Company established by
the Board of Directors of the Company in the Company's annual
budget or plan, as approved by the Board of Directors of the
Company (each such annual budget or plan being referred to, for
the relevant year, as the "Plan"). For such year, the Executive
shall earn incentive compensation equal to the percentage of
Executive's annual Base Salary set forth in Exhibit 2. The
incentive compensation payable hereunder in respect of any period
constituting less than an entire fiscal year (a "Partial Year")
shall be prorated for the Partial Year and determined in the
manner set forth in Section 4(e)(v)(C) hereof.
(iii) Certain Adjustments. In the event that the Company shall acquire
one or more additional businesses during any year, the parties
acknowledge that the Plan must be adjusted, either upward or
downward, to set the formula so that the Executive may be
compensated for improvements in performance after giving effect
to the pertinent transaction. Similar adjustments shall be
necessitated by one or more dispositions of businesses by the
Company or other corporate events such as stock splits and stock
dividends. Therefore, the Plan shall be appropriately adjusted,
in light of the facts and circumstances of the particular
situation, for acquisitions and dispositions by the Company of
businesses or other corporate events that will have an effect on
the calculation of EBITDA or EPS of the Company. In the event
that the Executive and the Company shall dispute the computation
of the calculation of the incentive compensation or appropriate
adjustments to the Plan for acquisitions, dispositions or other
corporate events, such dispute shall be resolved in the manner
described in (iv) below.
(iv) The determination of incentive compensation for any year during
the Term shall be made by the accountants then auditing the books
and records of the Company as soon as may be practicable after
the end of such year but no later than ninety (90) days after
such year end. Upon the determination of such incentive
compensation, the accountants shall deliver a copy of such
determination to the Company's Chief Financial Officer and the
Executive and, unless either the Company or the Executive
notifies the other party that it in good faith objects to such
computation within ten (10) business days thereafter, such
computation shall be binding and conclusive upon the Company and
the Executive. In the event that a party objects to such
computation, the Executive and the Company shall endeavor to
resolve such dispute, but failing same, and on the request of
either the Company or the Executive the dispute shall be
submitted for resolution to a national accounting firm as the
Company and the Executive may agree upon. The decision of such
accounting firm shall be rendered within thirty (30) days and
shall be final and binding on the parties. The fees and expenses
of such accounting firm shall be borne one-half by the Executive
and one-half by the Company. The incentive compensation shall be
payable by the Company within thirty days after the determination
of the amount thereof has become final and binding on the
parties.
(v) For purposes of this Agreement:
(A) "EBITDA" for any period shall mean the aggregate earnings of
the Company, on a consolidated basis, for the relevant
period, before interest, taxes, depreciation and
amortization, all as determined in accordance with generally
accepted accounting principles applied on a basis consistent
with the manner in which such principles have heretofore
been applied by the independent public accountants of the
Corporation, except that: (i) gains and losses on
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acquisitions and dispositions of capital assets outside the
ordinary course of business shall not be taken into account;
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(ii) extraordinary items of income, gain, loss or expense
(as so characterized by generally accepted accounting
principles applied on a consistent basis) shall not be taken
into account; except as may be described below; (iii) any
expenses relating to the terminated transaction with Xxxxx
Associates, Inc., shall be taken into account; (iv) any
expenses relating to salary, incentive compensation,
relocation and other transaction expenses payable to the
Executive shall be taken into account; and (v) any expenses
(severance or otherwise) payable to the Company's current
Chief Executive Officer in connection with his departure
from the Company, to the extent accrued on the Company's
financial statements as of March 31, 2000, shall be taken
into account.
(B) EPS for any period shall mean the Company's earnings per
basic common share, on a consolidated fully-diluted basis,
for the relevant period all as determined in accordance with
generally accepted accounting principles applied on a basis
consistent with the manner in which such principles have
heretofore been applied by
the independent public accountants of the Corporation,
except that: (i) gains and losses on acquisitions and
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dispositions of capital assets outside the ordinary course
of business shall not be taken into account; (ii)
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extraordinary items of income, gain, loss or expense (as so
characterized by generally accepted accounting principles
applied on a consistent basis) shall not be taken into
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account, except as may be described below; (iii) any
expenses relating to the terminated transaction with Xxxxx
Associates, Inc., shall be taken into account; (iv) any
expenses relating to salary, incentive compensation,
relocation and other transaction expenses payable to the
Executive shall be taken into account; and (v) any expenses
(severance or otherwise) payable to the Company's current
Chief Executive Officer in connection with his departure
from the Company, to the extent accrued on the Company's
financial statements as of March 31, 2000, shall be taken
into account.
(C) After Year 2001, the Executive and the Company may mutually
agree in writing to restructure the terms of Executive's
incentive compensation entitlement hereunder.
c. Vacation. The Executive shall be entitled to four (4) weeks paid
vacation to be taken at such time or times as Executive and Employer may
reasonably determine.
d. Fringe Benefits. During the Term, the Executive shall be entitled to
all benefits for which the Executive shall be eligible under any qualified
pension plan, 401(k) plan, sick leave, group medical insurance or other so-
called "fringe" benefit plans which the Employer provides to its employees
generally, together with executive benefits for the Executive, as from time to
time in effect for officers of the Employer generally, subject in all respects
to the terms, conditions and qualifications of such plans. During the Term, a
Company-owned computer will be installed in Executive's home and the Company
shall pay for monthly Internet access with respect to such computer.
e. Options. The Company shall grant to the Executive options to purchase
250,000 shares of common stock of the Company, at a price which shall equal the
Fair Market Value (as defined in the Company's 2000 Stock Incentive Plan) of the
shares on the Commencement Date. Such options shall be subject to the terms of
the Company's 2000 Plan approved on April 11, 2000 by the Board of Directors and
the standard form of stock option agreement to be used for employees under the
2000 Plan. The Executive shall be eligible for additional option grants under
the Company's 2000 Stock Incentive Plan (or any successor plans) commensurate
with his title and position with the Company. In addition, the Company has
recommended to the Company's Option Committee (the "Option Committee") and the
Option Committee has agreed that the Executive shall receive a grant of options
to purchase 250,000 shares of common stock of the Company, at a price which
shall equal the Fair Market Value (as defined in the applicable stock option
plan) of the shares on the date of grant, at the first meeting of the Option
Committee after the end of the first fiscal year of the Company in which the
Company's gross revenues exceed $120,000,000. All options granted to the
Executive shall, to the maximum extent permitted by law, be classified as
incentive stock options. Such options shall vest in three equal installments as
follows: on the first anniversary of the date of grant, on the second
anniversary of the date of grant, and on the third anniversary of the date of
grant. In the event that the Executive's employment is terminated by the Company
without cause or by the Executive for Good Reason, any options that have not
vested as of the date of such termination shall become immediately exercisable
by the Executive on the termination date, and shall be exercisable for a period
of five years after the termination date (or, if earlier, through the expiration
date of such options). In the event of a corporate transaction described in
Section 18.1 of the 2000 Stock Incentive Plan, any options that have not vested
shall become fully vested prior to the consummation of such transaction. In the
event that the Executive's employment is terminated by reason of the Executive's
death or disability (as such term is defined in Section 4(a) hereof), any
options, upon vesting in accordance herewith, shall each be exercisable until
the earlier of (i) 6:00 p.m., Boston time, on
the fifth anniversary of the date of death or disability, (ii) the expiration
date of such option or (iii) the occurrence of any other event under the terms
of the relevant plan or option agreement that would accelerate the termination
date of such option.
In the event that the Executive's employment is terminated for "cause,"
any options shall be exercisable until the earlier of (i) 6:00 p.m., Boston
time, on the thirtieth (30th ) day following the termination date and (ii) the
expiration date of such option.
f. Relocation Expenses.
(i) The Company shall reimburse the Executive for certain
expenses which he actually and necessarily incurs in
connection with relocating his personal residence from New
York to the Boston area up, to a maximum of $150,000, as
follows:
(A) for all direct moving expenses (as such terms are
defined in Section 217 of the Internal Revenue
Code) and for reasonable brokerage commissions, if
any, incurred in connection with the sale of
Executive's home in New York; and
(B) for any State or Federal Income Tax incurred on
the sale of the Executive's residence in New York
(which taxes shall be equal to the Executive's
taxable gain realized on such sale multiplied by
the highest tax rate in effect under the Internal
Revenue Code or applicable State tax law with
respect to such income); and
(C) for temporary lodging and other miscellaneous
expenses incurred prior to occupancy of his new
residence but only until September 1, 2000.
(ii) Such relocation expenses shall be reimbursed in accordance
with the Company's reimbursement policies and guidelines.
(iii) If the Executive is terminated for cause, or if the
Executive voluntarily terminates the Agreement without Good
Reason prior to expiration of the Initial Term, he shall
repay the amounts paid to him or on his behalf by the
Company under subparagraph (i) above as follows:
(A) if such termination occurs prior to the first
anniversary of the Commencement Date, 50% of reimbursed
relocation expenses;
(B) if such termination occurs on or after the first
anniversary of the Commencement Date and prior to the
eighteenth (18th) month after the Commencement Date,
25% of the reimbursed relocation expenses;
g. Reimbursement of Business Expenses. During the Term of this
Agreement, upon submission of proper invoices, receipts or other supporting
documentation satisfactory to the Company, the Executive shall be reimbursed by
the Company for all reasonable business expenses actually and necessarily
incurred by the Executive on behalf of the Company in connection with the
performance of services under this Agreement.
h. Life Insurance. The Company shall obtain and maintain in full force
and effect at all times during the Term a term life insurance policy on the life
of Executive, which will provide a death benefit
to Executive's designee (or, if none, Executive's estate) of Five Hundred
Thousand Dollars ($500,000.00).
i. Legal Fees. The Company shall pay all reasonable attorneys' fees
incurred by the Executive in connection with the negotiation, preparation and
execution of this Agreement, not to exceed $5,000.
j. House Loan. The Company shall lend to Executive up to $150,000 for
use by Executive in connection with the purchase of a house in the South
Easton/Boston, Massachusetts area. Such loan, which shall be evidenced by
Executive's promissory note, shall bear interest at the rate paid by the Company
for borrowed money from its commercial lenders from time to time, which interest
shall be payable quarterly. The principal amount, together with accrued and
unpaid interest thereon, shall be payable on the earlier of the third
anniversary date of the loan or the date which is thirty days after the date of
termination of Executive's employment for any reason.
4. Termination. This Agreement shall terminate prior to the termination date
set forth in Section 2 hereof upon the following terms and conditions:
a. Death or Permanent Disability. If the Executive dies or becomes
permanently disabled, this Agreement shall terminate effective at the end of the
calendar month during which his death occurs or when his disability is deemed to
have become permanent. If the Executive is unable to substantially perform all
of his normal duties for the Company in the usual and customary fashion because
of illness or incapacity (whether physical or mental) for 90 or more days
(whether or not consecutive) out of any Three Hundred Sixty Five (365)
consecutive days, his disability shall be deemed to have become permanent.
b. Cause. If the Board of Directors of the Company vote to terminate the
Executive's employment for cause, this Agreement shall terminate and the
Executive shall be removed from office effective on the date specified by such
directors. For purposes of this Agreement, termination of the Executive's
employment shall be deemed for cause if such termination is the result of:
(i) the Executive's misappropriation of the Company's funds or
property, or fraud on the part of the Executive;
(ii) the Executive's conviction of, or plea of guilty or no contest
to, any felony under the laws of the United States or any State
or political subdivision thereof;
(iii) a knowing misrepresentation of a material fact made by the
Executive to the Company's Board of Directors;
(iv) a material breach of this Agreement by the Executive, provided
that the Executive has first been given written notice
describing such breach in reasonable detail, and within fifteen
(15) days he has not remedied the same;
(v) Executive uses illegal drugs or chronically abuses legal drugs
or alcohol during business hours or conducts business under the
undue influence of drugs or alcohol or his abuse of drugs or
alcohol adversely affects his ability to perform his duties,
which Executive shall not have cured after reasonable notice and
a reasonable opportunity to cure;
(vi) engaging in an act of sexual harassment or discrimination
prohibited by the laws of the United States or a state in which
the Company's offices are located or in which
the Company conducts business which undermines or is detrimental
to the Company, or any other conduct taken or omitted in bad
faith which is significantly detrimental to the Company; or
(vii) any other action or omission constituting gross negligence or
willful misconduct by the Executive, in the performance of his
duties hereunder.
c. Good Reason Termination. The Executive may terminate his employment for
"Good Reason" at any time during the Term by written notice to the Company given
not more than fifteen (15) days after the occurrence of the event constituting
"Good Reason." Such notice shall state an effective date no earlier than fifteen
(15) days after the date it is given. The Company shall have fifteen days (15)
from the receipt of such notice within which to cure or dispute in good faith
the reasons set forth in such notice. If not timely cured or disputed in good
faith, termination by Executive of his employment for "Good Reason" shall be
treated as termination by the Company without cause. For purposes hereof, "Good
Reason" shall mean:
(i) the assignment to Executive of any duties inconsistent with
Executive's position (including status), authority or material
responsibilities, or the removal of Executive's authority or
material responsibilities;
(ii) the failure by the Company to make any payment when due hereunder
or to comply with any of the other material provisions of this
Agreement;
(iii) the sale of substantially all of the Company's assets or a
"change of control" (as defined in the Company's 1996 Stock
Incentive Plan, as amended) of the Company shall have occurred;
and
(iv) failure by the Company to obtain approval of the 2000 Stock
Incentive Plan by its shareholders.
d. Termination Without Cause. The Company may terminate the Executive's
employment under this Agreement without "cause" (as defined above) at any time
during the Term by ten (10) days' advance written notice to the Executive.
e. Termination Payments, Etc. In the event that the Executive's employment
terminates under the circumstances described herein, the Executive shall be
entitled to receive, subject to applicable withholding taxes, the following
amounts:
(i) Upon a termination of employment due to the Executive's death
pursuant to Section 4(a) hereof, the Executive's estate shall be
entitled to such benefits as are provided pursuant to Section
3(d) hereof for a period of one year from the date of death or
the period remaining in the Term, whichever ends sooner.
(ii) Upon a termination of employment due to the Executive's permanent
disability pursuant to Section 4(a) hereof, the Executive shall
(A) receive the Base Salary for a period of one year from the
date such permanent disability is determined pursuant to Section
4(a) hereof or the period remaining in the Term, whichever ends
sooner, payable in accordance with Section 3(a) hereof (less any
amounts of disability income paid to the Executive pursuant to
any disability insurance policy maintained by the Company); and
(B) be entitled to such other benefits as are provided pursuant
to Sections 3(d) and (h) hereof for a period of one year from the
date such permanent disability is determined pursuant to Section
4(a) hereof or the period remaining in the Term, whichever ends
sooner.
(iii) In addition to the amounts set forth in (i) and (ii) above, if
the Executive's employment is terminated by reason of the
Executive's death or disability during the term, Executive shall
be entitled to payment of the sum of (i) any Base Salary through
the date of termination, as well as any earned bonus for any
calendar year or pro-rated portion of such year through the date
of termination, that theretofore had not been paid and (ii) any
other compensation earned through the date of termination but not
yet paid or delivered to the Executive ("Accrued Obligations"),
which shall be paid or made to the Executive or his estate or
beneficiary, as applicable.
(iv) Upon a termination of employment by the Company for "cause"
pursuant to Section 4(b) hereof, the Executive shall receive only
the Base Salary through the date of such termination, payable in
accordance with Section 3(a) hereof.
(v) Upon a termination of employment during the Term by the Company
without cause or by the Executive for Good Reason, the Term shall
terminate on the date of such termination and the Company's
remaining obligations to the Executive shall be as follows: (A)
Accrued Obligations; (B) payment to the Executive within thirty
(30) days of the date of termination of a lump sum equal to the
Executive's Base Salary for the remainder of the Term; and (C)
any earned bonus for the pro-rated portion of the calendar year
in which Executive's employment is terminated through the date of
termination, to the extent and in the manner accrued on the
Company's financial statements.
(vi) Upon a voluntary termination of employment by the Executive for
any reason other than Good Reason, the Executive shall only
receive the Base Salary through the date of such termination,
payable in accordance with Section 3(a) hereof.
f. No Mitigation; Offset. In the event of any termination of employment
under Sections 4(c) or 4(d) hereof, the Executive shall be under no obligation
to seek other employment.
g. Nature of Payments. Any amounts due under this Section 4 are in the
nature of severance payments considered to be reasonable by the Company and are
not in the nature of a penalty.
5. Protection of Confidential Information; Non-Competition.
a. Confidentiality. In view of the fact that the Executive's work
for the Employer will bring the Executive into close contact with confidential
affairs, information and plans for future developments of the Employer not
readily available to the public, as well as access to certain trade secrets
pertaining to the business of the Employer, all of which Executive acknowledges
are proprietary to and the exclusive property of the Company, the Executive
agrees:
(i) To keep and retain in the strictest confidence all confidential
matters of the Employer, including, without limitation, "know
how", trade secrets, unpatented inventions, technology, software,
clinical trials, test results, policies, operational methods,
technical processes, formulae, inventions, research projects,
evaluations, reports, business plans, financial information,
customer lists, suppliers and other business
affairs of the Employer, learned by the Executive including,
but not limited to all information relating to functional
imaging as a medical industrial commercial or commercial
diagnostic or investigational tool and any confidential
information concerning any of the financial arrangements,
financial positions, competitive status, customer or
suppliers matters, internal organizational matters,
technical capabilities, or other business affairs of or
relating to the Company (collectively, "Confidential
Information") known to or learned by the Executive hereafter
and, except to the minimum extent required by law or legal
process, and not to disclose or use such Confidential
Information to or for the benefit of anyone other than
Executive's, consultants and representatives of the Company
on a "need to know" basis, either during or after
termination of the Executive's employment with the Company,
for any reason, except in the course of performing the
Executive's duties hereunder or with the Company's express
written consent; and
(ii) To deliver promptly to the Company on termination of the
Executive's employment, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents, and all copies
thereof, including computer programs, discs, software,
firmware, etc., relating to the Company's business,
operations and financial condition, and all property
associated therewith, which the Executive may then possess
or have under the Executive's control.
b. Covenants Not to Compete.
(i) Executive covenants to and with Company that during
employment by Company and for one year following the
termination of employment, for any reason, Executive will
not, directly or indirectly, either as a principal, agent,
employee, employer, stockholder, or co-partner, or in any
other individual or representative capacity:
(A) engage in or carry on any business which is in
competition with the business now or hereinafter
conducted by the Company during the Term ("Business")
in the Territory (as hereinafter defined), provided,
however, that such covenant not to compete shall not
apply solely in the event that the Company defaults in
making any payment required to be paid to Executive
hereunder which amount is not paid or disputed in good
faith by the Company within fifteen (15) days after
notice of non-payment is given by the Executive.
Nothing contained in this Section 5, whether express or
implied, shall prevent the Executive from being a
holder of two percent (2%) or less for the purposes of
passive investment only of marketable securities then
being quoted on a recognized national stock exchange or
traded on the National Market System of the NASDAQ.
Notwithstanding anything to the contrary contained in
this Section 5, nothing contained in this Section 5 is
intended, nor shall be deemed, to restrict the
Executive from using his free time to continue or
otherwise engage in charitable and other not for profit
professional activities. "Territory" shall mean the
United States of America, the United Kingdom, or any
place else worldwide in which any aspect of the
Business is then conducted;
(B) solicit any past, present, or other customers during
the Term, of the Company or its affiliates
("Customers") for business in any way relating to any
aspect of the Business;
(C) request, directly or indirectly, that any Customers or
other persons sharing a business relationship with the
Company or any of its affiliates, curtail or cancel
their business with the Company or any of its
affiliates, or otherwise take action which might be to
the disadvantage of the Company or any of its
affiliates; or
(D) induce or actively attempt to influence any other
employee or consultant of the Company or any of its
affiliates to terminate such other employee's or
consultant's employment or consultancy with the Company
or any of its affiliates.
(ii) If the Executive violates any of the restrictions contained
in Section 5(a) hereof, the restrictive period provided for
in such Section shall be increased by the period of time
from the commencement of any such violation until the time
such violation shall be cured by the Executive to the
satisfaction of the Company.
(iii) The Executive acknowledges that the foregoing restrictions
are reasonable under the circumstances of his employment and
the Business and will not prevent him from earning a living.
c. Remedies. If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5(a) or 5(b) hereof, the Employer
shall have the following rights and remedies:
(i) Executive understands and agrees that Company shall suffer
irreparable harm in the event that Executive breaches any of
Executive's obligations under Sections 5(a) and 5(b) of this
Agreement and that monetary damages shall be inadequate to
compensate Company for such breach. Accordingly, Executive
agrees that, in the event of a breach or threatened breach
by Executive of any of the provisions of this Agreement, the
Company shall be entitled to a temporary restraining order,
preliminary injunction and permanent injunction in order to
prevent or restrain any such breach by Executive.
(ii) The Company shall be entitled to seek all other monetary
damages to which it is entitled under the law in connection
with any transactions constituting a breach of any of the
provisions of Sections 5(a) or 5(b). Each of the rights and
remedies enumerated above shall be independent of the other,
and shall be severally enforceable, and all of such rights
and remedies shall be in addition to, and not in lieu of,
any other rights and remedies available to the Employer
under law or in equity.
(iii) If any of the covenants contained in Sections 5(a) or 5(b),
or any part thereof, hereafter are construed to be invalid
or unenforceable, the same shall not affect the remainder of
the covenant or covenants, which shall be given full effect,
without regard to the invalid portions, to the maximum
extent possible to carry out the intent of the parties.
(iv) If any of the covenants contained in Sections 5(a) or 5(b),
or any part thereof, are held to be unenforceable because of
the duration of such provision or the area covered thereby,
the parties agree that the court making such determination
shall have the power to reduce the duration and/or area of
such provision and, in its reduced form, said provision
shall then be enforceable.
(v) In the event that any action, suit or other proceeding in
law or in equity is brought to enforce the covenants
contained in Sections 5(a) and 5(b) or to obtain money
damages for the breach thereof, and such action results in
the award of a judgment for money damages or in the granting
of any injunction in favor of the Employer, all expenses
(including reasonable attorneys' fees) of the Employer in
such action, suit or other proceeding shall (on demand of
the Employer) be paid by the Executive. In the event the
Employer fails to obtain a judgment for money damages or an
injunction in favor of the Employer, all expenses (including
reasonable attorneys' fees) of the Executive in such action,
suit or other proceeding shall (on demand of the Executive)
be paid by the Employer.
d. Representation of Executive. The Executive represents and warrants
that he is not party to, or bound by, any agreement or commitment, or subject to
any restriction, including, but not limited to agreements related to previous
employment containing confidentiality or non-compete covenants, which in the
future may have a possibility of adversely affecting the business of the Company
or the performance by the Executive of his duties under this Agreement.
6. Inventions and Patents.
a. Covered Inventions. The Executive agrees that all processes,
technologies and inventions, including new contributions, improvements, ideas
and discoveries, of any type nature, description or purpose, the extent that
same relate to the Business, whether patentable or not, conceived, developed,
invented or made or improved by him prior to or during the Term, (collectively,
"Covered Inventions"), whether during or outside normal business hours, whether
or not on the Company's premises, whether or not requested or financed by the
Company, shall immediately be communicated by the Executive to the Company and
shall belong to the Company. The Executive shall further (a) promptly disclose
such Covered Inventions to the Company; (b) assign to the Company, without
additional compensation, all patent and other rights to such Covered Inventions
for the United States and foreign countries; and (c) sign all papers necessary
to carry out the foregoing. If any Covered Invention is described in a patent
application or is disclosed to third parties, directly or indirectly, by the
Executive within one (1) year after the termination of the Executive's
engagement, it is to be presumed that the Invention was conceived or made during
the Term.
b. Execution of Documents. The Executive shall at any time, whether
during or after the term of this Agreement, at the request of the Company,
execute all documents and do all acts and things as the Company may reasonably
request in connection with the obtaining of Patents in the United States of
America or elsewhere for Covered Inventions on behalf of the Company.
7. Intellectual Property.
The Company shall be the sole owner of all the products and proceeds of the
Executive's services hereunder, including, but not limited to, all inventions
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create during the Term related to the Business, free
and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever. The Executive shall, at the
request of the Company, execute such assignments, certificates or other
instruments as the Company may from time to time deem necessary or desirable to
evidence, establish, maintain, perfect, protect, enforce or defend its right,
title or interest in or to any such properties.
8. Indemnification.
The Company hereby undertakes and agrees to indemnify and hold Executive
harmless, to the fullest extent permitted under applicable law, from, against
and in respect of any and all loss, liability, cost, expense or damage (and any
and all actions, suits, proceedings, claims, demands, assessments, judgments,
costs and expenses, including, without limitation, legal fees and expenses,
incident to any of the foregoing) suffered or incurred by Executive arising out
of in connection with(a) his performance of his duties with or for the Company,
(b) his holding any office, title or capacity with the Company at any time, or
(c) by reason of any act or omission of the Company; provided that Executive did
not act in bad faith or in a manner he reasonably believed to be opposed to the
best interests of the Company.
9. General.
a. Notices. All 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, sent by facsimile
transmission with confirmation, overnight courier or mailed first class, postage
prepaid, by registered or certified mail (notices mailed shall be deemed to have
been given on the date mailed), as follows (or to such other address as either
party shall designate by notice in writing to the other in accordance herewith):
If to the Employer, to: If to the Employee, to:
Specialty Catalog Corp. Xxxxxx Xxxxxxxxx
00 Xxxxxxx Xxxxx c/o Specialty Catalog Corp.
Xxxxx Xxxxxx, XX 00000 00 Xxxxxxx Xxxxx
Att'n: Xxxxxx XxXxxx, CFO Xxxxx Xxxxxx, XX 00000
Fax: 000-000-0000 Fax: 000-000-0000
With a copy to: With a copy to:
Xxxx Xxxxxxx, P.C.
1350 Avenue of the Americas Xxxxx X. Xxxxxx, Esq.
Xxx Xxxx, Xxx Xxxx 00000 Xxxxxxxxx Xxxxxxxx Xxxxx & Xxxxx LLP
Att'n: Xxxxxxx X. Xxxxxxx, Esq. 000 Xxxx Xxxxxx
Fax: 000-000-0000 Xxx Xxxx, Xxx Xxxx 00000
Tel: 000 000-0000
Fax: 000 000-0000
b. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely in Delaware.
c. Headings. The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
d. Entire Agreement. This Agreement may be executed by facsimile
signatures in one or more counterparts, each of which shall be deemed an
original. This 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, relating to the
subject matter hereof. No representation, promise or inducement has been made by
either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so
set forth.
e. Assignment. This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or (ii) to
third parties in connection with any sale, transfer or other disposition of its
business or assets, except as would result in a change in control of the
Company; and the obligations of the parties hereunder shall be binding on their
successors, heirs or assigns.
f. Amendment. This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be waived,
only by a written instrument executed by both of the parties hereto, or in the
case of a waiver, by the party waiving compliance. The failure of either party
at any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.
g. Survival. The provisions of Paragraphs 5, 6, 7 and 8 shall survive the
expiration or termination of this Agreement for any reason, and shall remain in
full force and effect.
In Witness Whereof, the parties have executed this Employment Agreement as
of the date first above written.
Specialty Catalog Corp.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Director
The Executive:
/s/ Xxxxxx Xxxxxxxxx
--------------------
Xxxxxx Xxxxxxxxx
EXHIBIT 1
---------
Year 2000 Incentive Compensation
For Year 2000 incentive compensation shall be determined as follows:
Percentage Of Annual Base Salary To Be
Year 2000 EBITDA Awarded As Incentive Compensation
---------------- ---------------------------------
$6.3 million to $6.7 million 25.0% (Resulting in a bonus of
$75,000)
$6.8 million 30.0% (Resulting in a bonus of
$90,000)
$6.9 million 35.0% (Resulting in a bonus of
$105,000)
$7.0 million 40.0% (Resulting in a bonus of
$120,000)
$7.1 million 45.0% (Resulting in a bonus of
$135,000)
$7.2 million or greater 50.0% (Resulting in a bonus of
$150,000)
$7.2 million to $8.0 million 75.0% (Resulting in a bonus of
$225,000)
$8.0 million or over 100.0% (Resulting in a bonus of
$300,000)
In the event that the Company's EBITDA is greater than $6.7 million but
falls between any of the amounts set forth in the left column, then the
percentage of annual Base Salary to be awarded as an incentive compensation
shall be prorated between the immediately lower and immediately higher entries
in the right column. For example, if EBITDA is exactly $6.85 million, or halfway
between $6.8 million and $6.9 million in the left column, then the incentive
compensation would be exactly halfway between the corresponding percentages in
the right column, or 32.5% of annual Base Salary.
EXHIBIT 2
---------
Year 2001 Incentive Compensation
For periods commencing Year 2001
Corporation's Actual EBITDA Percentage Of Base Salary To Be
As A Percentage of Plan EBITDA Awarded As Incentive Compensation
------------------------------ ---------------------------------
90% 10.0%
100% 25.0%
110% 50.0%
120% 75.0%
130% and above 100.0%
In the event that the Company's actual EBITDA as a percentage of Plan
EBITDA is greater than 90% but falls between any of the percentages set forth in
the left column, then the percentage of Base Salary to be awarded as incentive
compensation shall be prorated between the immediately lower and immediately
higher entries in the right column. For example, if actual EBITDA is exactly 95%
of Plan EBITDA, or halfway between 90% and 100% in the left column, then the
incentive compensation would be exactly halfway between the corresponding
percentages in the right column, or 17.5% of Base Salary.
