EMPLOYMENT AGREEMENT
dated as of August 30, 2001 by and between
Contact Sports, Inc.
a New York Corporation, with its address at
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx (the "Company")
and
Xxx Xxxxxxxx (the "Employee")
(the "Agreement")
RECITALS:
A. The Company desires to secure the services of Employee, and
Employee desires to furnish services to the Company, on the terms
and conditions set forth in this Agreement.
B. Employee and the Company acknowledge that the Company is a
wholly owned subsidiary of Alfa International Corp., a publicly
held New Jersey corporation ("Alfa").
AGREEMENT:
In consideration of the mutual promises contained in this
Agreement and other good and valuable consideration, the receipt
and sufficiency of which the parties acknowledge, the parties agree
as follows:
1. Employment Term. The Company agrees to employ Employee,
and Employee agrees to enter the Company's employment, for the
period beginning September 1, 2001 (the "Commencement Date") up to
and including December 31, 2006 (the "Employment Term"). Employee
may terminate this Agreement at any time after two years after the
Commencement Date by giving the Company at least sixty days prior
written notice. Provided that "Net Sales" (as hereinafter defined)
is not at least equal to $1 million for the Company's fiscal year
ended 2003, then the Company may at its option, terminate this
Agreement at any time thereafter by giving the Employee at least
sixty days prior written notice.
2. Office and Duties. During the Employment Term, the Company
shall employ Employee and Employee shall serve as the Company's
President & Chief Operating Officer, as a director of the Company
and as a director of Alfa. In such capacities, Employee shall
exercise all rights and powers of those offices as set forth in the
Company's and Alfa's Articles of Incorporation and Bylaws. Employee
also shall perform such other duties and exercise such powers as
the Company's Chairman or Board of Directors may reasonably
require. It is understood by Employee that the Company is presently
in its start-up development stage and as such Employee will, for
the foreseeable future, be called upon to perform, and Employee
hereby agrees to perform, any and all such reasonable duties
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required of him (e.g. sales, marketing, product development,
production, etc.) that would not normally be associated with an
employee holding his title.
3. Sole Employment. During the Employment Term Employee
agrees that his employment by the Company as set forth herein shall
be his sole employment and he shall not perform any advisory, or in
any other capacity, work for any other individual, firm or company,
other than the Company, without the prior written consent of the
Company. Notwithstanding the foregoing sentence, the Company hereby
consents (a) to the Employee performing independent consulting work
for others, provided such work is not for a competitor of the
Company and further provided such work is performed during the
weekends and, (b) to the Employee being a passive investor in a
retail store in Brooklyn, NY to be known as "The Contact Sports
Store" provided that any such involvement in the Contact Sports
Store does not interfere in any way with the Employee's duties
hereunder to the Company. Except as noted in the foregoing
sentence, Employee shall devote all of his business time and
attention to the Company's business and affairs during the
Employment Term.
4. Compensation.
4.1 Salary. In consideration of the services to be
rendered by Employee, the Company agrees to pay Employee, and
Employee agrees to accept, an annual salary of $75,000 during each
year of the Employment Term. On every other anniversary of the
first day of the Employment Term, the compensation committee of
Alfa's Board of Directors shall review the Company's and the
Employee's performance and shall, in its sole discretion, determine
if an increase in Employee's compensation arrangement is warranted
at that time. In no year shall the Company decrease Employee's
salary prevailing at the end of the preceding year. The Company
shall pay Employee's salary in accordance with the Company's
regular payroll practices. Employee acknowledges and agrees that
for the convenience of the Company, he will initially be on the
Alfa payroll until the Company establishes its own internal
accounting procedures after which he will be transferred to the
Company's payroll.
4.2 Sales Commissions. For each of the Company's fiscal
years beginning after December 31, 2001 that fall, in whole or in
part, within the Employment Term, the Company shall pay Employee
sales commissions equal to one percent (1%) of the Company's total
net sales, if any, as determined in accordance with generally
accepted accounting principles, ("Net Sales") in such fiscal year,
subject only to the limitations set forth in paragraph 4.4 below.
4.3 Bonus For each of the Company's fiscal years
beginning after December 31, 2001 that fall, in whole or in part,
within the Employment Term, the Company shall pay Employee an
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annual bonus equal to five percent (5%) of the Company's earnings
before taxes ("EBT"),if any, as determined in accordance with
generally accepted accounting principles in such fiscal year,
subject only to the limitation set forth in paragraph 4.4 below.
4.4 Limitations; Payments. No sales commission shall be
paid to Employee on any sale for which the Company has not been
paid by the customer. If the Company should compromise with any
customer and accept less than payment in full for any invoiced
amount then the corresponding sales commission shall be
proportionately reduced, except that if such compromise results in
a reduction equal to or greater than twenty five percent (25%) of
the invoice value, then no sales commission shall be paid on such
invoice. The total combined amount of sales commissions and bonus
paid to Employee in any fiscal year is referred to herein as
"Incentive Pay". Incentive Pay may not exceed $1 million in any
fiscal year. If in any fiscal year the calculations used to derive
Incentive Pay shall equal a number greater than $1 million, then in
any such fiscal year, Incentive Pay shall equal $1 million. Within
60 days after the end of each month, the Company shall, subject to
the limitations of this paragraph 4.4, pay the sales commissions on
paid sales as accrued on the records of the Company as of the end
of the month for which such commissions are being paid. Within ten
days after receipt by Alfa from its auditors of its fiscal year end
certified financial statements, the Company shall, subject to the
limitations of this paragraph 4.4, pay Employee the bonus as called
for in Section 4.3 hereof. If the Employee's employment by the
Company ends prior to the expiration of the Employment Term then
Incentive Pay shall be adjusted proportionately to the last day of
such employment.
4.5 Stock Options. The board of directors of Alfa has
approved the adoption of the "Alfa International Corp. 2001 Stock
Option Plan (the "Plan"). In order to become effective the adoption
of the Plan must be approved by the shareholders of Alfa. Alfa will
call a meeting of its shareholders within the next six months for
the purpose of, among other things, adopting the Plan. Subject to
adoption of the Plan as aforesaid, Employee shall, in accordance
with the terms and conditions of the Plan, have the option to
purchase up to 50,000 shares of Alfa's $0.01 par value common stock
(the "Alfa Common Stock") during each of the first five years of
the Employment Term, at an exercise price equal to $0.25 per share.
Employee's right to purchase the aforesaid Alfa Common Stock shall
be governed by the terms and conditions of the Plan, all of which
are incorporated herein by reference.
4.6 Stock Grant / Signing Bonus. Concurrent with the
signing of this Agreement Employee shall be granted 200,000 shares
of Alfa Common Stock (the "Stock Grant").
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5. Employee Benefits.
5.1 Insurance. During the Employment Term, the Company
shall, in accordance with the then prevailing Company policy,
provide Employee with health, disability and life insurance
coverage under its group policies, if and when such group policies
come into effect.
5.2 Other Benefits. The Company shall provide Employee
with any pension plan that the Company offers any of its executives
at any time during the Employment Term. The Company shall offer
such pension plan to Employee on the most favorable terms and under
the most favorable conditions as such plan is offered to any other
Company executive.
6. Expenses. The Company agrees to pay, or reimburse Employee
for, all travel, entertainment and other business expenses incurred
or expended by Employee in performing his duties and
responsibilities on behalf of the Company under this Agreement.
Employee agrees to provide proof of the expenses for which he seeks
reimbursement in accordance with the Company's present expense
reporting policies.
7. Vacations. Employee shall be entitled to and shall accrue
vacation time at the rate of four weeks per year of the Employment
Term. Employee's vacation time shall accumulate from year to year.
8. Termination of Employment / Agreement.
8.1 Cause The Company may terminate Employee's
employment for cause upon thirty days written notice if (i)
Employee is convicted, by a court of competent and final
jurisdiction, of any crime which constitutes a felony in the
jurisdiction involved, (ii) Employee commits any act of fraud
against or breaches a fiduciary obligation to the Company, (iii)
Employee shall incur any liability on the Company's behalf not in
the ordinary course of the Company's business (iv) the
representation contained in paragraph 10 of this Agreement is false
or (v) Employee fails or refuses in any respect to perform his
duties under this Agreement. If, for any reason, the Company
terminates Employee's employment without cause, Employee shall be
entitled to receive the salary provided for in paragraph 4.1, the
Incentive Pay described in paragraphs 4.2, 4.3 and 4.4, the Stock
Options described in paragraph 4.5 and the benefits (to the full
extent not disallowed by the terms of their contracts) described in
paragraph 5 until the end of the Employment Term.
8.2 Death or Permanent Disability. If, during the
Employment Term, Employee shall die or become permanently disabled
(as defined in sub paragraph 8.3) his Employment under this
Agreement shall terminate. In the event of Employee's death during
the Employment Term and in addition to any payments to Employee's
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beneficiary or estate made with respect to any insurance contracts
entered under the terms of this Agreement, the Company shall pay
the personal representative of Employee's estate the salary and
Incentive Pay provided for in Paragraphs 4.1 through 4.4 through
the end of the month after the month in which Employee's death
occurs. Thereafter this Agreement will automatically terminate.
8.3 Disability. If, during the Employment Term, Employee
shall become physically or mentally disabled so as to be unable to
perform any of his material duties hereunder, he shall nonetheless
continue to receive his full salary (but not his Incentive Pay) for
a period of three months or any part thereof for any continuous
disability, less any amounts received by him from any disability
insurance policy then in effect for his benefit. At any time
subsequent to the expiration of such three-month period, the
Company may cancel this Agreement upon ten days written notice to
the Employee.
No disability shall be deemed to exist until after the
Employee shall have been unable to perform any of his duties
hereunder for a period of thirty consecutive days, but if such
disability continues for sixty consecutive days, then the same
shall be deemed to have existed from the first day of such
disability.
If the Employee shall have been disabled and shall have
returned to work after the end of such disability, any new
disability commencing within ninety days of the termination of the
prior disability shall be deemed a continuation of the prior
disability, and the period of all such disabilities shall be added
together to determine the rights of the Employee and the Company
hereunder.
At the end of any temporary disability, Employee shall return
to work and this Agreement shall continue as though such disability
had not occurred, except where specifically provided to the
contrary herein. During any period of disability, Employee shall
not receive any allowance for expenses.
9. Non-Competition Covenant. For a period of one year after
the termination (for any reason whatsoever) or expiration of this
Agreement, Employee shall not, directly or indirectly, solicit or
service any accounts, customers, vendors, suppliers or other
persons or entities with which Employee or the Company has done
business, negotiated or otherwise had business dealings, at any
time during the three years prior to such termination or expiration
date. In the event of Employee's actual or threatened breach of
provisions of this paragraph, the Company shall be entitled to any
injunction restraining Employee therefrom. Nothing contained herein
shall be construed as prohibiting the Company from pursuing any
other available remedies for such breach or threatened breach,
including recovery of damages from Employee.
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10. Representation. Employee, in order to induce the Company
to enter into and perform this Agreement, hereby represents and
warrants to the Company that he is not a party to any contract,
agreement or understanding which prevents or prohibits, or with
notice or the passage of time or both, would prevent or prohibit
Employee from entering into this Agreement or fully performing all
of his obligations hereunder or which would be breached thereby.
11. Miscellaneous.
11.1 Assignment. This Agreement shall inure to the
benefit of and shall be binding upon the heirs and personal
representative of Employee and shall inure to the benefit of and be
binding upon the Company and its successors and assigns. Neither
party may assign, transfer, pledge, encumber, hypothecate or
otherwise dispose of this Agreement or any of its or his rights
hereunder without the prior written consent of the other party, and
any such attempt to assign, transfer, pledge, encumber or
hypothecate without such consent shall be null and void.
11.2 Governing Law. This Agreement is executed and
delivered in New York. The laws of the state of New York shall
govern its validity, interpretation and enforcement.
11.3 Attorney's Fees. If a dispute arises from this
Agreement, the prevailing party shall be entitled to collect its
reasonable costs and expenses, including reasonable attorneys'
fees, from the losing party.
11.4 Complete Agreement. This Agreement supersedes any
and all prior agreements and understandings, whether written or
verbal, between the parties with respect to the Company's
employment of Employee and constitutes the complete understanding
between the parties with respect to the Company's employment of
Employee. No statement, representation, warranty or covenant made
by either party with respect to Employee's employment will be
binding unless expressly set forth in this Agreement. This
Agreement may not be altered, modified or amended except by written
instrument signed by each of the parties. Recitals A, B and C set
forth in the beginning of this Agreement are incorporated herein as
if set forth in the body of this Agreement.
11.5 Counterparts. The parties may execute this
Agreement in counterparts, each of which shall constitute an
original, but all of which together shall constitute one and the
same instrument.
11.6 Headings. The paragraph headings of this Agreement
are for convenience of reference only and shall not expand, modify,
limit or define the text of this Agreement.
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11.7 Notices. Any notice or other communication required
or made under this Agreement shall be in writing and shall be
delivered personally, or sent by registered, certified or express
mail, postage prepaid, and shall be deemed given when so delivered
personally, or, if mailed, two days after the date of mailing, to
the recipient at the following address (or to such other address as
the recipient may designate by giving written notice):
To Employee: Xxx Xxxxxxxx
000-00 000xx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
To the Company: Contact Sports, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX
Att: Chairman
11.8 Severability. In the event that any one or more of
the provisions of this Agreement shall be deemed to be invalid,
illegal or unenforceable in any respect, in whole or in part, the
validity, legality and enforceability of the remainder of the
provisions of this Agreement shall not in any way be affected.
11.9 Waivers. A written waiver, or successive written
waivers, by either party of any breach or default by the other
party of any of the terms and provisions of this Agreement, shall
not operate as a waiver, or custom of waiver, of any other breach
or default, whether similar to or different from the breach or
default waived. No waiver shall be effective unless in writing and
signed by the party to be charged.
Contact Sports, Inc., Employee
a New York corporation
By_________________________ By:________________________
Xxxxx X. Xxxxxx Xxx Xxxxxxxx
Chairman & CEO
Alfa International Corp.
a New Jersey corporation
By__________________________
Xxxxx X. Xxxxxx
President
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