EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT is made as of April 12, 1999 between FAMOUS FIXINS, INC., a
New York corporation with offices at 000 Xxxx 00xx Xxxxxx, Xxxxx 00000, Xxx
Xxxx, Xxx Xxxx 00000 ("Employer"), and XXXXX XXXXX, an individual residing in
New York, New York ("Employee").
WITNESSETH:
WHEREAS, Employer desires to retain the services of Employee and
Employee desires to be employed by Employer upon the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee
hereby agrees to serve, as President and Chief Executive Officer of Employer,
for the Term of Employment (as defined in Section 2). Employee agrees to
perform such services as are customary for such office. Employee further
agrees to use Employee's best efforts to promote the interest of Employer and
to devote Employee's full business time and energies during normal business
hours to the business and affairs of Employer during the Term of Employment.
2. TERM OF EMPLOYMENT. The employment hereunder shall commence as
of April 12, 1999 and shall continue for a term of five (5) years (the "Term
of Employment"), unless earlier terminated: (a) upon death of Employee; (b)
at the option of Employer upon 30 days' prior written notice to Employee, in
the event Employee, by reason of physical injury or illness, is unable to
materially perform his duties hereunder for a continuous period of 120 days
and has no expectation of returning to work within a reasonable time
thereafter; or (c) upon the discharge of Employee by the Board of Directors
of Employer for "cause" (as defined in Section 10 hereof). The Term of
Employment may be renewed for an additional five years commencing five years
after the execution of this Agreement, upon written notice of the Board of
Directors of Employer given at any time in the first eight months of the
fifth year of the Term of Employment, subject to acceptance thereof by
Employee.
3. COMPENSATION.
A. Base Salary. As compensation for the services to be
provided hereunder and in consideration of Employee's agreement not to
compete as set forth in Section 4, during the Term of Employment, Employer
shall pay Employee an annual salary of one hundred and fifty thousand dollars
($150,000) with adjustments of not less than the change in the Consumer Price
Index, or such greater annual salary as may be established by Employer's
Board of Directors, which shall be payable in appropriate installments to
conform with the regular payroll dates for salaried personnel of Employer.
Commencing in the third year of this Agreement, Employee's base annual salary
shall be increased, each fiscal quarter, to equal at least one percent of the
Company's earnings before interest, taxes, depreciation and amortization
("EBITDA") in the most recent fiscal year.
B. Incentive Earnings Bonus. In addition to any bonus to be
determined by the Board of Directors, Employee is eligible for certain
incentive bonuses contingent upon certain corporate earnings milestones.
Employee is hereby granted five year options to purchase up to 1,500,000
shares of the Company's common stock, par value $.001 per share. These
options will vest upon the achievement of certain corporate earnings
milestones as set forth herein. Options to purchase 600,000 shares at $.30
per share shall vest following the first fiscal year end in which the Company
obtains four or more new celebrity, Company, entity or athlete licenses
similar in stature and structure to the eight licenses the Company presently
has (the "Licenses") or in which the Company's EBITDA exceeds $300,000;
additional options to purchase 300,000 additional shares at $.30 per share
shall vest following the first fiscal year end in which the Company obtains a
further three new Licenses or more or in which the Company's EBITDA exceeds
$500,000; additional options to purchase 300,000 additional shares at $.30
per share shall vest following the first fiscal year end in which the Company
obtains a further three new Licenses or more or in which the Company's EBITDA
exceeds $700,000; and additional options to purchase 300,000 additional
shares at $.30 per share shall vest following the first fiscal year end in
which the Company obtains a further three new Licenses or more or in which
the Company's EBITDA exceeds $1,000,000. These options are cumulative and
are subject to anti-dilution rights. If any milestones are achieved in the
same year, all such options shall vest at the time such milestone is
achieved.
C. Bonus. Employee shall, during the term of this Agreement,
be entitled to an annual performance bonus equal to up to fifty percent (50%)
of Employee's base salary, as defined in Section 3.A, or such other amount as
the Board of Directors may determine. Additionally, Employee shall be
entitled to such other bonuses as the Board of Directors shall determine from
time to time.
D. Other Benefits. Employee shall be entitled to the
following fringe benefits, perquisites, and other benefits of employment
during the Term of Employment: (i) medical and dental insurance under such
group medical and dental insurance policies as Employer may provide to its
employees; (ii) sick days in accordance with Employer's policy regarding
officers; (iii) up to six (6) weeks vacation in each year fully worked; (iv)
participation in Employer's 401(k) plan or such other plan as Employer may
adopt; (v) participation in Employer's employee stock option plan when and if
established; and (vi) Employer shall also during the term hereof and for one
year thereafter provide and pay for a fifteen year (15-year) term life
insurance policy on the life of Employee, subject to Employee's reasonable
insurability, with a face amount of benefit of $1,000,000 with the
beneficiary thereof to be Employee's estate, or as otherwise directed by
Employee. Employee shall have the option to maintain such insurance at his
own expense one year after the end of the term hereof, if such term is not
renewed. In addition to the foregoing, Employee shall also be entitled to
any benefits, perquisites and other benefits to the extent that the Board of
Directors determines such benefits are to be made available to Employer's
employees in general.
E. Payment Upon Early Termination. In the event of early
termination of employment for any reason specified in Section 10 hereof,
Employer shall no longer be obligated to make any payments of compensation to
Employee or Employee's estate under this Agreement except as provided for
herein. However, any salary or bonus earned and/or vested for prior periods,
but not yet paid, shall be paid by Employer to Employee or Employee's estate.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY; CONFIDENTIALITY.
A. Covenant Not to Compete and Solicit. During the Term of
Employment, Employee will not, within any jurisdiction in which Employer or
any affiliate conducts its business operations, or in any way materially
competing with Employer, directly or indirectly, own, manage, operate,
control, be employed by or participate in the ownership, management,
operation or control of, or be connected in any manner with, any business of
the type or character engaged in or competitive with that conducted by
Employer. The decision of Employer's Board of Directors as to what
constitutes a competing business shall be final and binding upon Employee,
and such decision shall be made in good faith. For these purposes, ownership
by Employee or any affiliate of Employee of securities of a public company
not in excess of one percent (1%) of any class of such securities shall not
be considered to be competition with Employer.
For a period of three (3) years after termination of
Employee's employment with Employer, Employee further agrees to refrain from
interfering with the employment relationship between Employer and its other
employees by soliciting any of such individuals to participate in independent
business ventures and agrees to refrain from soliciting business from any
client or prospective client (as disclosed in a list to be provided to
Employee by Employer at the time he ceases to be employed, which list shall
be binding upon Employee) of Employer's for Employee's benefit or for any
other entity.
It is the desire and intent of the parties that if any
provisions of this Section 4(A) shall be adjudicated to be invalid or
unenforceable, this Section 4(A) shall be deemed amended to delete therefrom
such provisions or portion adjudicated to be invalid or unenforceable, such
amendment to apply only with respect to the operation of this paragraph in
the particular jurisdiction in which such adjudication is made.
B. Intellectual Property. During the Term of Employment,
Employee will disclose to Employer all ideas, inventions and business plans
developed by Employee during such period which relates directly or indirectly
to the business of Employer or affiliates, including without limitation any
process, operation, product or improvement which may be patentable or
copyrightable. Employee agrees that such will be the property of Employer
and that Employee will, at Employer's request and cost, do whatever is
necessary to secure the rights thereto by patent, copyright or otherwise to
Employer.
C. Confidentiality. Employee agrees to not divulge to anyone
(other than Employer or any other persons employed or designated by Employer)
any knowledge or information of any type whatsoever of a confidential nature
relating to the business of Employer or any of its subsidiaries or
affiliates, including without limitation all types of trade secrets (unless
readily ascertainable from public or published information or trade sources).
Employee further agrees not to disclose, publish or make use of any such
knowledge or information of a confidential nature without prior written
consent of Employer.
5. CHANGE OF CONTROL. Employee shall have the right to terminate
the employment agreement in the event of a "change in control" of Employer.
"Change of control" is defined to be any of the following: (i) a change in
the ownership or management of Employer that would be required to be reported
in response to certain provisions of the Securities Exchange Act of 1934;
(ii) an acquisition (other than directly from Employer) by a person or entity
(excluding Employer) of 25% or more of the Employer's common stock or the
Employer's then outstanding voting securities; (iii) a change in a majority
of the current Board of Directors (the "Incumbent Board") (excluding any
persons approved by a vote of at least a majority of the Incumbent Board
other than in connection with an actual or threatened proxy contest); (iv)
consummation of a reorganization, merger, consolidation or sale of all or
substantially all of the Company's assets (collectively, a "Transaction")
other than a Transaction in which all or substantially all of the
shareholders of Employer prior to such transaction own, in the same
proportion, more than 50% of the voting power of the entity resulting from
the Transaction, at least a majority of the board of directors of the
resulting entity were members of the Incumbent Board, and after which no
person (other than the resulting entity and certain affiliates) beneficially
owns 25% or more of the voting power of the resulting entity, except to the
extent such ownership existed prior to the Transaction; or (v) the approval
by the Employer's stockholders of a complete liquidation or dissolution of
Employer. Upon a change in control, Employee shall be entitled to a lump sum
payment, payable within one month of termination, equal to two hundred and
ninety percent (290%) of Employee's "base amount", as defined in Section
28OG(3) of the Code.
6. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for reasonable travel and other expenses incurred in connection
with Employee's services to Employer pursuant to and during the Term of
Employment upon a basis consistent with the policies established or announced
by Employer.
7. AUTOMOBILE. Employer presently provides Employee with an
automobile, including related maintenance, repairs, insurance, and other
costs, for the exclusive use of Employee, under a lease, due to expire in
2001. Employer agrees to continue to said lease, make all necessary payments
and related expenses to said automobile, and prior to the expiration of the
lease, Employer shall obtain a new lease for a similar new car.
Employer recognizes Employee's need for an automobile for
business purposes. Employer, therefore, upon the expiration of the
aforementioned automobile lease, shall provide Employee with an automobile,
including related maintenance, repairs, insurance, and other costs. The
automobile will be selected by Employee, and the automobile and related costs
shall be comparable to those which Employer presently provides Employee.
8. DEATH BENEFITS. If Employee dies during the Term of Employment,
Employer shall pay to Employee's estate the compensation that would otherwise
be payable to Employee for twelve months following the month in which his
death occurs. In addition, Employer shall pay $100,000, in a lump sum, to
the Employee's widow, or, if he is not then survived by his widow, to the
Employee's surviving children in equal shares, or, if there are no surviving
children, to the Employee's estate.
9. BREACH BY EMPLOYEE. Both parties recognize that the services to
be rendered under this Agreement by Employee are special, unique and
extraordinary in character, and that in the event of a breach by Employee of
the terms and conditions of this Agreement to be performed by Employee, or in
the event Employee performs services during the Term of Employment for any
person, firm, corporation or other entity engaged in a competing line of
business with Employer, or otherwise breaches this Agreement, Employer shall
be entitled, if it so elects, to institute proceedings and to prosecute them
in any court of competent jurisdiction, either in law or in equity, to obtain
damages for any breach of this Agreement, or to enforce the specific
performance thereof by Employee, or to enjoin Employee from performing
services for any such other person, firm, corporation or other entity.
10. TERMINATION FOR CAUSE. Employer may terminate Employee for cause
upon thirty days' prior written notice to Employee. For purposes of this
Agreement, an event or occurrence constituting "cause" shall mean:
A. Employee's willful failure or refusal after notice thereof,
to perform specific directives of Employer's Board of Directors, when such
directives are consistent with the scope and nature of Employee's duties and
responsibilities as set forth in Section 1 and elsewhere herein and such
failure or refusal is: (i) not corrected within a reasonable time after
receipt of written notice is sent by Employer's Board of Directors after
resolution authorizing such notice; (ii) the direct material cause of
material damages to the Employer; and (iii) within the ability and power of
Employee to materially perform such directive as to render such failure or
refusal willful;
B. Employee's conviction of a felony or of any crime involving
moral turpitude, fraud or misrepresentation and final resolution of all
appeals therefrom;
C. Any final court determination of gross or wilful conduct of
Employee resulting in substantial loss to Employer, substantial damage to
Employer's reputation or any material theft from Employer;
D. Other than by reason of physical injury or illness, a final
court determination of Employee's material failure to perform the duties and
responsibilities under this Agreement causing material damage to Employer; or
E. Any final court determination of any material breach (not
covered by any of the clauses (A) through (D)) of any of the provisions of
this Agreement, causing material damage to Employer, and such breach was not
cured within ten days after written notice thereof to Employee by Employer.
11. ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interests of Employee herein
may not be sold, transferred, assigned, pledged or hypothecated by Employee.
The rights and obligations of Employer hereunder shall be binding upon and
run in favor of the successors and assigns of Employer. In the event of any
attempted assignment or transfer of rights hereunder contrary to the
provisions hereof, Employer shall have no further liability for payments
hereunder. Employee specifically consents to assignment of this Agreement by
Employer pursuant to any reorganization or business combination that Employer
may effect hereafter.
12. GOVERNING LAW; CAPTIONS. This Agreement contains the entire
agreement between the parties and shall be governed by the laws of the State
of New York. It may not be changed orally, but only by agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought, and consented to in writing by the Board
of Directors of Employer. Section headings are for convenience or reference
only and shall not be considered a part of this Agreement.
13. PRIOR AGREEMENTS. This Agreement supersedes and terminates all
prior agreements between Employer and Employee relating to the subject matter
herein addressed.
14. NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficiently given if delivered in person to Employer by
delivery to its Chairman of the Board of Directors or sent by telex, telecopy
or by registered or certified mail, postage prepaid, addressed as follows:
if to Employee, to:
Xxxxx Xxxxx
000 Xxxx 00xx Xxxxxx, #0X
Xxx Xxxx, Xxx Xxxx 00000
if to Employer, to:
Famous Fixins, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Law Offices of Xxx Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement, on and as of the date and
year first above written.
FAMOUS FIXINS, INC.
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx, Executive Vice President, Director
EMPLOYEE
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
