EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT, made as of the 26th day of June, 1996, by and between DIPLOMAT
AMBASSADOR INC., a Delaware corporation with offices at 0000 Xxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 ("Employer"), and XXXXXXX XXXXXXX, an
individual residing at ________________________, New Jersey _______
("Employee").
W I T N E S S E T H:
WHEREAS, Employer is engaged in the optical business, including but not
limited to the design, manufacture, importing, and sale of eyewear (the
"Business"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
Employer is purchasing substantially all of the assets of Windsor Optical, Inc.
(Windsor"), which also is engaged in the Business; and
WHEREAS, Employee is an executive officer and shareholder of Windsor, is
intimately familiar with Windsor's day to day operations, and is acquainted with
Windsor's customers; and
WHEREAS, in connection with the purchase by Employer of Windsor's assets,
and as a material inducement to Employer to purchase such assets, Employee and
Employer have agreed that Employee shall become an employee of Employer on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereby agree as follows:
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1. EMPLOYMENT.
(a) Employer hereby engages Employee as Executive Vice President of
Employer. Employee hereby accepts such employment, undertakes to perform the
duties and services incident to the position of Executive Vice President of
Employer, and such further duties of a similar nature as may be reasonably
required of him by the Board of Directors of Employer, and represents that he is
free to enter into and perform this Agreement and that he will not thereby be in
violation of any agreement or obligation to any other person or entity. In
performing his duties hereunder, Employee shall at all times be subject to the
supervision of the Chairman of the Board, President, and Chief Executive Officer
of Employer and to the authority and control of the Board of Directors of
Employer.
(b) Employee shall devote his full business time, energies, attention
and best efforts to the performance of his duties and services hereunder and to
the promotion of the business and interests of Employer. During the term
hereof, Employee shall not, without the prior written consent of Employer,
accept or undertake any other employment. Nothing set forth in this Agreement
shall be deemed to prohibit Employee from investing his assets in any business
entity, other than a private company in competition with Employer, or from
spending time on charitable or community activities, so long as such activity
does not interfere with the performance of his duties as a full-time employee of
Employer.
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2. COMPENSATION.
(a) Employer shall pay to Employee for all of his duties,
obligations, and services hereunder, a base salary at the rate of $105,000.00
per year for the period commencing on the date of this Agreement and ending
December 31, 1996; a base salary of $110,000.00 for the twelve (12) month period
ending December 31, 1997; a base salary of $115,000.00 for the twelve (12) month
period ending December 31, 1998; and a base salary of $120,000.00 for the twelve
(12) month period ending December 31, 1999. Thereafter, Employer shall pay to
Employee such base salary as Employer and Employee may agree upon prior to the
renewal of the term of this Agreement under Section 7.
(b) Employee shall be eligible to receive such amounts, if any, as
may be awarded to Employee by Employer, in its sole discretion, in recognition
of the character and extent of Employee's performance and contributions to
Employer and the performance of Employer; provided, that, in the event that
Employer grants bonuses to Xxxx Xxxxxxx or Xxxxx Xxxxxxx, or both of them,
Employee shall be entitled to a minimum bonus in an amount equal to five percent
(5%) of the total amount of bonuses granted to Xxxx Xxxxxxx and Xxxxx Xxxxxxx.
A determination regarding bonuses shall be made at least once each calendar
year, and any bonus granted to Employee shall be paid at the same time as
bonuses granted for the same period are paid to other employees of Employer.
(c) Employer shall provide Employee with life, health and disability
benefits in accordance with company group insurance
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programs for executive employees in effect from time to time during the term of
this Agreement, and such other benefits as may be required by this Agreement.
(d) Employer at its options shall either provide Employee with an
automobile chosen by Employee for his use or pay an allowance for an automobile
to Employee, provided that the cost of such automobile to Employer, or the
amount of such allowance, shall not exceed $465.00 per month. In addition,
Employer at its option shall either reimburse Employee for amounts paid by
Employee to insure such automobile, or obtain and maintain corporate insurance
covering such automobile.
(e) Employee shall be entitled to paid vacations in accordance with
Employer's policies for executives with respect thereto, as established by the
Board of Directors of Employer from time to time.
(f) Employee shall be entitled to receive reimbursement for all
reasonable expenses incurred by him in the performance of his duties and
services hereunder, upon presentation to Employer of records sufficient to
permit Employer to deduct such expenses for Federal and state income tax
purposes; provided, that a reasonable maximum amount of reimbursable expenses
may from time to time be fixed in advance by the Board of Directors.
3. PHANTOM STOCK.
(a) For purposes of this Section 3, the term "Sale of Diplomat" shall
mean one of the following transactions, but only if the parties who owned the
outstanding common stock of Employer
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prior to the consummation of such transaction own less than 51% of the
outstanding capital stock of the entity that owns Employer's assets immediately
after the consummation of such transaction: (i) the sale of the outstanding
capital stock of Employer, (ii) the sale of substantially all of the assets of
Employer in a transaction not in the ordinary course of business, or (iii) any
transaction or series of transactions which has a similar effect.
(b) In the event of the Sale of Diplomat, as that term is defined in
Section 3(a), Employer shall pay or cause to be paid to Employee a portion of
the proceeds of the Sale of Diplomat, or the cash value thereof, as if Employee
owned 5% of the stock of Employer issued and outstanding on the date of this
Agreement (adjusted as hereinafter set forth) on the date of the closing of such
transaction.
(c) In the event that a registration statement is filed under the
Securities Act of 1933 for Employer's common stock, and the stock registered
under such registration statement is subsequently offered for sale to the
public, Employee shall have the right to receive from Employer, immediately
prior to such offering of such stock to the public, 5% of the stock of Employer
issued and outstanding on the date of the Agreement, adjusted as hereinafter set
forth.
(d) The number of shares upon which Employee's rights are based
pursuant to this Section 3 shall be appropriately and equitably adjusted to
reflect stock splits, stock dividends, and similar changes in Employer's
outstanding common stock after the
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date of this Agreement to preserve the benefit of Employee's bargain as set
forth in this Section 3. Nothing set forth in this Section shall be deemed to
require that the adjustment provided for herein be made in the event of the
issuance of capital stock by Employer for fair consideration in connection of
Employer with or into another entity, or any similar transaction.
(e) In the event that, before or after the expiration of the term of
this Agreement, Employee engages in criminal conduct in the course of his
employment or other relationship with Employer; or engages or engaged in
fraudulent conduct in connection with the purchase of Windsor by Employer or in
his dealings with Employer before or after the date of this Agreement; or
breaches his obligations under Section 4 or 5 of this agreement, Employer shall
have the option to void the rights granted by Employer to Employee under this
Section 3 by written notice to Employee, and such rights shall be forfeited and
canceled as of the date of this Agreement, as if they had never been granted,
immediately upon the giving of such notice by Employer.
(f) In the event that Employee's employment with Employer, under this
Agreement or otherwise, terminates for any reason, Employee shall sell to
Employer, and Employer shall purchase from Employee, the rights granted by
Employer to Employee under this Section 3 for a purchase price equal to the net
book value per share of such rights, which value shall be determined by
reference to Employer's certified financial statements for the
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fiscal year preceding the year during which such termination occurs.
Notwithstanding the foregoing, however, in the event that Employer terminates
Employee's employment without cause, and a Sale of Diplomat or a public offering
of stock described in Section 3(c) is consummated within ninety (90) days after
the date of such termination, the purchase price for the rights granted by
Employer to Employee under this Section 3 shall be fair market value as
determined in an arbitration proceeding in Essex County, New Jersey by an
arbitrator who is a retired judge selected by the assignment judge of Essex
County, New Jersey. The decision of such arbitration shall be final and binding
on Employer and Employee, and may be entered as a judgment in any court of
appropriate subject matter jurisdiction. This Section shall not apply if
Employee's rights granted under this Section 3 are voided under Section 3(e).
4. TRADE SECRETS AND DOCUMENTS.
(a) For purposes of this Agreement, the term "Trade Secrets" shall
mean the shipping information of Employer, including but not limited to freight
rates; the methods and processes of assembling and distributing Employer's
products, including those in the process of development; Employer's pricing,
customer lists and credit terms and counter-trade arrangements, including those
in the process of completion; Employer's methods and results of the research;
the names of Employer's customers and the products of
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Employer used by each such customer; and any other confidential information or
data relating to Employer's business which is not publicly known.
(b) Employee agrees that he will not, either during his employment by
Employer or at any time after cessation of such employment, impart or disclose
and Trade Secrets to any person, form or corporation other than Employer, or use
any Trade Secrets, directly or indirectly, for his own benefit or for the
benefit of any person, form or corporation other than Employer.
(c) Employee agrees that all memoranda, notes, records, reports, manuals,
charts, formulae, specifications, lists and other documents made, compiled,
received, held, or used by Employee while employed by Employer, concerning any
phase of Employer's business or its Trade Secrets, including without limitation
such items stored on computer-readable media, and all copies thereof, shall be
Employer's property and shall be delivered by Employee to Employer on
termination of Employee's employment or at an earlier time on the request of
Employer.
5. NONCOMPETITION.
(a) For purposes of this Agreement, the term "Customer" shall mean
any person or entity to which Employer has sold goods or provided services
during the two (2) year period prior to the date that Employee's employment with
Employer terminates.
(b) Subject to the provision of Section 5(c), Employee convenants and
agrees that, so long as he is employed by Employer in any capacity whatsoever,
and for a period of one (1) year following
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the termination of his employment with Employer for any reason whatsoever,
Employee shall not, directly or indirectly, individually or in concert with
others or as stockholder, director, officer, partner, member, principal, agent,
employer, employee, or consultant, or in any other individual or representative
capacity:
(i) Call on, solicit, serve, or cater to, or attempt to call on,
solicit, serve, or cater to, any Customer for the purpose of rendering any
service or selling any product competitive with, or usable for substantially the
same purpose as, any service or product provided, manufactured or sold or in the
process of development by Employer; or
(ii) Engage in the business of Employer and/or in the sale or in the
marketing or sale of any service or product competitive with, or usable for
substantially the same purpose as, any service or product provided, manufactured
or sold or in the process of development by Employer.
(c) The provisions of Section 5 (b) shall not apply after the
termination of Employee's employment with Employer if (i) such termination
resulted from the termination of this Agreement by Employer without cause in
breach of the provisions hereof, or (ii) such termination resulted for the
non-renewal of this Agreement by Employer in circumstances where employer would
not have had the right to terminate this Agreement prior to the expiration of
its term, or (iii) such termination resulted from the termination of this
Agreement by Employee under Section 7 (c) of this Agreement, or (iv) such
termination resulted from the non-renewal of this
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Agreement by Employee after Employer refused to pay Employee during the upcoming
renewal term a base salary equal to or greater that Employee's base salary for
the term that was about to expire.
(d) Employee agrees that, so long as he is employed by Employer and
for a period of two (2) years thereafter, he will not directly or indirectly at
any time solicit or induce other employees of Employer to terminate their
agreements or employment with Employer.
6. CONTINUING EFFECT AND ENFORCEMENT OF CERTAIN PROVISIONS.
(a) Employee hereby acknowledges that, except as otherwise expressly
set forth in this Agreement, his obligations under Sections 3(f), 4, and 5 will
continue in effect, notwithstanding the termination of his employment with
Employer, and will be binding on his heirs, legal representatives, and assigns.
(b) Employee hereby agrees that monetary damages alone will not
adequately compensate Employer in the event of a breach by Employee of his
obligations contained in Section 3(f), 4 or 5. Therefore, Employee agrees that,
in additional to any other remedies available to it, Employer shall be entitled
to interim restraints and permanent injunctive relief for the enforcement of the
provisions of Section 3(f), 4 or 5, and to an accounting and payment over of all
amounts received by Employee as a result of his breach of his obligations under
Section 3(f), 4 or 5.
(c) It is the intention of the parties hereto that the provisions of
Sections 3(f), 4 and 5 be construed and interpreted
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so as to afford the full measure of protection provided for therein. Except as
otherwise expressly set forth herein, no claim or cause of action that Employee
may have against Employer, whether predicted on his employment relationship with
Employer or otherwise, will constitute a defense to the enforcement by Employer
of Employees' agreements set forth in Section 3(f), 4 and 5.
7. TERM AND TERMINATION.
(a) the initial term of this Agreement shall commence on the date
hereof and shall terminate on December 21, 1999. Thereafter, the term of this
Agreement shall automatically renew for additional terms of one (1) year each,
unless this Agreement is sooner terminated under Section 7 (b) or upon written
notice given by either party to the other not less than ninety (90) days prior
to the expiration of the initial or any subsequent term. In addition, this
Agreement shall terminate automatically in the event of the death of Employee.
(b) Employer shall have the right to terminate this Agreement
immediately upon giving written notice to Employee upon the occurrence of any of
the following events:
(i) Due to physical or mental impairment, Employee is unable to
perform substantially all of his duties and services hereunder for any period of
ninety (90) consecutive days or for shorter periods aggregating more than one
hundred twenty (120) days during any twelve (12) month period.
(ii) Employee breaches the provisions of Section 4 or 5 of this
Agreement.
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(iii) Employee breaches any material provision of this
Agreement, other than Section 4 or 5, and such breach is not remedied within
fifteen (15) days after written notice thereof is given to employee by
Employer.
(iv) Employee engages in willful misconduct that demonstrably
adversely affects the operation reputation of Employer, or Employee willfully
fail or refuses to perform substantially all of the duties provided for herein.
(c) In the event of the termination of this agreement in
accordance with the foregoing provisions, Employer shall upon such termination
be released from all further obligations to Employee hereunder, except that it
shall be liable to Employee (i) for such salary under Section 2(a) as shall have
been due and unpaid prior thereto, (ii) for the performance of its obligations
under Section 3(f) and, (iii) in addition, if this Agreement terminated due to
Employee's death or disability, for such death or disability benefits as
Employee may be entitled to receive hereunder.
(d) Employee shall have the right to terminate this Agreement
immediately upon giving written notice to Employer upon the occurrence of any of
the following events:
(i) Employer breaches any material provision of this
Agreement and such breach is not remedied within fifteen (15) days after written
notice thereof is given to Employer by Employee.
(ii) Employer, acting willfully and in bad faith, makes
material and adverse changes to Employee's working conditions and
responsibilities for the purpose of inducing Employee to
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terminate his employment with Employer.
8. MISCELLANEOUS.
(a) All notices required or permitted to be given hereunder shall be
in writing and shall be duly given if delivered to the other party personally,
or sent to the other party by certified mail (return receipt requested),
addressed to the other party at the address first set forth above or to such
other address as any party may designate by a similar notice, and deposited in
the U.S. mail, and shall be deemed to have been given s of the date so
personally delivered or mailed, or, if given by any other means, at the time
delivered.
(b) This Agreement shall be binding upon and enure to the benefit of
the parties hereto, the executors, administrators and legal representatives of
Employee and the successors and assigns of Employer. the provisions of this
Agreement shall not be construed as conferring and are not intended to confer
any rights on any other persons. Neither this Agreement nor any rights or
obligations hereunder may be assigned or delegated by Employee.
(c) In the event that any provision of this Agreement shall be
determined in any jurisdiction to be unenforceable, such determination shall not
be deemed to affect the enforceability of any other provision of this Agreement.
the parties agree that any court making such a determination is hereby requested
and empowered to modify such unenforceable provision and to substitute therefor
such limitation or provision of maximum scope as the court then deems reasonable
and judicially enforceable, and the parties
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further agree that such substitute provision shall be enforceable in said
jurisdiction as if set forth initially in this Agreement. Any such substitute
provision shall be applicable only in the jurisdiction in which the original
provision was determined to be unenforceable.
(d) this Agreement constitutes the entire agreement and understanding
of the parties relating to the subject matter hereof, and supersedes and cancels
all prior agreements relation thereto. this Agreement may not be modified or
amended except by a writing signed by the party sought to be charged therewith.
No waiver by any party of any of his or its rights or remedies on any one
occasion shall bar such party from exercising any of his or its rights or
remedies on any subsequent occasion, and no such waiver shall be binding unless
make in writing and signed by the party making the waiver.
(e) This Agreement shall be governed by , and construed and enforced
in accordance with, the laws of the State of New Jersey, but without giving
effect to any New Jersey choice of law provisions that might otherwise make the
law of a different jurisdiction control or apply.
(f) EMPLOYEE HEREBY ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT IN
ITS ENTIRETY, AND FULLY UNDERSTANDS ALL OF THE
BALANCE OF PAGE INTENTIONALLY LEFT BLANK
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PROVISIONS CONTAINED HEREIN. EMPLOYEE FURTHER ACKNOWLEDGES THAT HE HAS HAD
SUFFICIENT TIME TO REVIEW THIS AGREEMENT, AND IS SIGNING IT WITH FULL KNOWLEDGE
OF THE CONSEQUENCES OF THE RESTRICTIONS CONTAINED IN SECTIONS 4 AND 5.
IN WITNESS WHEREOF, the parties, intending to be legally bound hereby, have
duly executed this Agreement as of the date first above written.
WITNESS: DIPLOMAT AMBASSADOR, INC.
By: /s/ X. Xxxxxxx
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/s/ Xxxxxxx Xxxxxxx
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XXXXXXX XXXXXXX
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