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EXHIBIT 10.6
EMPLOYMENT AGREEMENT
AGREEMENT made as of the 1st day of January, l997, by and between Xxxx
Xxxxxxxxxx, residing at 0000 Xxxxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000
(hereinafter referred to as the "Employee") and Rollerball International Inc., a
Delaware corporation with principal offices located at 0000 Xxxxxx Xxxx, Xxxxx
0000, Xxx Xxxxxxx, XX 00000 (hereinafter referred to as the "Company").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the manufacture and distribution of
inline skates and accessories and related business enterprises; and
WHEREAS, the Company employs and desires to continue the employment of
the Employee for the purpose of securing to the Company the experience, ability
and services of the Employee; and
WHEREAS, the Employee desires to continue his present employment with
the Company, pursuant to the terms and conditions herein set forth, superseding
all prior agreements between the Company, its subsidiaries and/or predecessors
and Employee;
NOW, THEREFORE, it is mutually agreed by and between the parties hereto
as follows:
ARTICLE I
EMPLOYMENT
Subject to and upon the terms and conditions of this Agreement, the
Company hereby employs and agrees to continue the employment of the Employee,
and the Employee hereby accepts such continued employment in his capacity as
President and Chief Executive Officer. In this capacity, Employee will report to
the Board of Directors.
ARTICLE II
DUTIES
(A) The Employee shall, during the term of his employment with the
Company, perform such services and duties of an executive nature in connection
with the business, affairs and operations of the Company, and its subsidiaries,
as may be reasonably and in good faith assigned or delegated to him from time to
time by or under the authority of the Board of Directors of the
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Company and consistent with the position of President and Chief Executive
Officer.
(B) The Employee agrees to use his best efforts in the promotion and
advancement of the Company and its welfare and business. Employee agrees to
devote his primary professional time to the business of the Company as Employee
deems reasonably necessary; provided, however, that the Company acknowledges
that Employee shall be entitled to pursue unrelated personal business ventures
that do not materially conflict with the performance of Employee's duties to the
Company.
(C) Employee shall be based in the West Hollywood, California area, and
shall undertake such occasional travel, within or without the United States as
is or may be reasonably necessary in the interests of the Company.
ARTICLE III
COMPENSATION
(A) Commencing with the commencement date hereof, the Company shall pay
to Employee a salary at the rate of $160,000 per annum for the first l2 months
that this Agreement shall be in effect, $185,000 per annum for the second l2
month period, $210,000 per annum for the third 12 month period, and $235,000 per
annum for the fourth l2 month period (payable in equal weekly installments or
pursuant to such regular pay periods adopted by the Company) (the "Base
Salary").
(B) Employee shall be entitled to receive a bonus (the "Bonus") during
each year of this Agreement, determined as follows:
The amount to be paid as a Bonus shall be determined as of
each December 31 based upon the fiscal year end and shall be equal to 7% percent
of the net profit of the Company as determined by the Company's independent
auditors no later than 90 days following the end of the Company's fiscal year
without giving effect to loss carryforwards or non-cash items and giving effect
to and including revenues received by the Company during the fiscal year and
which revenues may have otherwise been excluded in computing net profit by
reason of any revenue recognition rules otherwise utilized in the application of
generally accepted accounting principles (the "Net Profit") plus 10% of the Net
Profits over the minimum profit amount (the "Minimum Profit Amount"); the
Company achieves the following Minimum Profit Amount. The Minimum Profit amount
is:
Fiscal Year Amount
1997 0
1998 750,000
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Fiscal Year Amount
1999 1,650,000
2000 2,400,000
In the event the Net Profit of the Company, as determined for fiscal years 1998,
1999 and 2000 is less than the Minimum Profit Amount for such years, no bonus
shall be paid by the Company to the Employee pursuant to this subparagraph (B).
Such determination, for Bonus purposes only, shall be made in accordance with
generally accepted accounting principles, as modified by these resolutions.
(C) Employee may receive such other additional compensation as may be
determined from time to time by the Board of Directors. Nothing herein shall be
deemed or construed to require the Board to award any bonus or additional
compensation.
(D) The Company shall deduct from Employee's compensation all federal,
state and local taxes which it may now or may hereafter be required to deduct.
ARTICLE IV
BENEFITS
(A) During the term hereof, (i) the Company shall provide Employee with
Blue Cross/Blue Shield or equivalent health insurance benefits and major medical
insurance; (ii) Employee shall be reimbursed by the Company upon presentation of
appropriate vouchers for all business expenses incurred by the Employee on
behalf of the Company; (iii) the Company shall provide the Employee with an
automobile suitable for his position and reimburse reasonable automobile
expenses including repairs, maintenance, gasoline charges, mobile phone etc.
(B) In the event the Company wishes to obtain Key Man life insurance on
the life of Employee, Employee agrees to cooperate with the Company in
completing any applications necessary to obtain such insurance and promptly
submit to such physical examinations and furnish such information as any
proposed insurance carrier may request.
(C) The Company will obtain and maintain during the full term hereof
and at its sole cost and expense a policy of life insurance on the life of
Employee in the face amount of $500,000 payable to a beneficiary named and
designated by Employee. Upon the conclusion of this Agreement, all right, title
and interest in the policy shall be transferred to the Employee, and the
Employee shall be responsible for any premiums due after such transfer.
(D) For each year of the term hereof, Employee shall be entitled to
four weeks paid vacation.
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ARTICLE V
NON-DISCLOSURE
The Employee shall not, at any time during or after the termination of
his employment hereunder except when acting on behalf of and with the
authorization of the Company, make use of or disclose to any person,
corporation, or other entity, for any purpose whatsoever, any trade secret or
other confidential information concerning the Company's business, finances,
methods, operations, marketing information, research and development, customers,
pricing and information relating to proposed expansion of the Company or the
Company's business plans (collectively referred to as the "Proprietary
Information"). For the purposes of this Agreement, trade secrets and
confidential information shall mean information disclosed to the Employee or
known by him as a consequence of his employment by the Company, whether or not
pursuant to this Agreement, and not generally known in the industry, concerning
the business, finances, methods, operations, marketing information, research and
development, customers, pricing and information relating to proposed expansion
of the Company or the Company's business plans. The Employee acknowledges that
trade secrets and other items of confidential information, as they may exist
from time to time, are valuable and unique assets of the Company, and that
disclosure of any such information would cause substantial injury to the
Company.
ARTICLE VI
RESTRICTIVE COVENANT
(A) In the event of the voluntary termination of employment with the
Company or Employee's discharge in accordance with Article IX paragraph (C),
Employee agrees that he will not, for a period of one year following such
termination, directly or indirectly enter into or become associated with or
engage in any other business (whether as a partner, officer, director,
shareholder, employee, consultant, or otherwise), which business is primarily
involved in the manufacture, development and/or distribution of inline skates
and related accessories in the same geographical areas of operation of the
Company; or solicit any employee of the Company to leave the employ of the
Company or accept employment with another person or entity.
(B) If any court or tribunal shall hold that the duration of
non-competition or any other restriction contained in this paragraph is
unenforceable, it is our intention that same shall not thereby be terminated but
shall be deemed amended to delete therefrom such provision or portion
adjudicated to be invalid or unenforceable or in the alternative such judicially
substituted term may be substituted therefor.
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ARTICLE VII
TERM
This Agreement shall be for a term commencing on the date first set
forth above and terminating December 31, 2000, unless sooner terminated pursuant
to the terms hereof, and renewable as provided for herein, for one additional
period of one year. The Company agrees to notify Employee in writing of its
intent to negotiate an extension of this Agreement six months prior to the
expiration of the original term hereof. If the Company fails to so notify
Employee, or after having timely notified Employee of its intention to extend,
fails to reach agreement with Employee on the terms of such extension, this
Agreement shall be renewable, at the option of the Employee, for one additional
period of one year from the date on which this Agreement would have expired
without such renewal (the "Renewal Term"), except (i) Employee's base salary
shall be increased l0% above the prior year, and (ii) Employee shall be entitled
to stock options equivalent to one-fourth of the options granted pursuant to
Article X hereof, on comparable terms and conditions. If the Company elects not
to seek to negotiate an extension and has so timely notified Employee, then the
Company shall pay Employee, upon the expiration of the original term of this
Agreement, or the Renewal Term, whichever is applicable, a severance benefit
equal to Employee's annual Base Salary and Bonus for the year immediately
preceding the termination of this Agreement, payable in twelve equal monthly
installments commencing on the termination date of this Agreement.
ARTICLE VIII
DISABILITY DURING TERM
In the event that the Employee becomes totally disabled so that he is
unable or prevented from performing substantially all of his usual duties
hereunder for a period of four (4) consecutive months, and the Company elects to
terminate Employee under Article IX(B) then, and in that event, the Company
shall continue to compensate Employee and Employee shall receive his Base Salary
as provided under Article III of this Agreement for a period of twelve (l2)
months commencing from the date of such termination. The obligation of the
Company to make the aforesaid payments shall be modified and reduced and the
Company shall receive a credit for all disability insurance payments which
Employee may receive or to which he may become entitled.
ARTICLE IX
TERMINATION
The Company may terminate this Agreement:
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(A) Upon the death of Employee during the term hereof, except that the
Employee's legal representatives, successors, assigns and heirs shall have those
rights and interests as otherwise provided in this Agreement, including the
right to receive accrued but unpaid Bonus compensation, if any.
(B) Subject to the terms of Article VIII herein, upon written notice
from the Company to the Employee, if Employee becomes totally disabled and as a
result of such total disability, has been prevented from and unable to perform
all of his duties hereunder for a consecutive period of four (4) months.
(C) Upon written notice from the Company to Employee, if Employee is
convicted of a felony, or has directly derived personal monetary gain from
actual fraud committed by Employee against the Company. Upon termination under
this subparagraph C, Employee shall not be entitled to any bonus, in whole or in
part, which may have accrued for the fiscal year in which the termination is
effective.
ARTICLE X
STOCK OPTIONS
As an inducement to Employee to enter into this Agreement the Company
hereby grants to Employee options to purchase shares of the Company's Common
Stock, $.00l par value, upon and subject to the following conditions:
(a) Subject to the terms and conditions of the Company's l994 Employee
Stock Option Plan (the "Plan"), a copy of which Employee acknowledges having
been received, and the terms and conditions set forth in the Stock Option
Certificate which are incorporated herein by reference, the Employee is hereby
granted options to purchase 300,000 shares of the Company's Common Stock of
which options to purchase 75,000 shares shall be vested as of the date hereof,
and the remaining options to purchase 225,000 shares shall be vested on the 1st,
2nd and 3rd anniversaries hereof in equal increments of 75,000 options. The
option shall contain such other terms and conditions as set forth in the stock
option agreement. The exercise price of the options shall be equal to the
initial public offering price of the Company's Common Stock. The foregoing
options are not qualified as incentive stock options.
(B) The Options provided for herein are not transferable by Employee,
except to members of Employee's immediate family or a trust for the benefit of
Employee's estate or beneficiaries thereof, and shall be exercised only by
Employee, or by his legal representative or executor, as provided in the Plan.
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ARTICLE XI
EXTRAORDINARY TRANSACTIONS
The Company's Board of Directors has determined that it is appropriate
to reinforce and encourage the continued attention and dedication of members of
the Company's management, including the Employee, to their assigned duties
without distraction in potentially disturbing circumstances arising from the
possibility of a change in control of the Company. A "Change in Control" of the
Company shall be deemed to have occurred if there shall be consummated (i)(x)
any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company approved any plan or proposal
for the liquidation or dissolution of the Company, or (iii) any person (as such
term is used in Sections 13(d) and l3(d)(2) of the Securities Exchange Act of
l934, as amended (the "Exchange Act"), who is not a beneficial owner (within the
meaning of Rule l3d-3 under the Exchange Act) of 20% or more of the Company's
outstanding Common Stock on the date hereof, shall become the beneficial owner
(within the meaning of Rule l3d-3 under the Exchange Act) of 20% or more of the
Company's outstanding Common Stock, or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the entire
Board of Directors shall cease for any reason to constitute a majority thereof
unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period. A Change of Control shall not include any sale of securities in the
Company's initial public offering, the conversion of outstanding convertible
securities and the exercise of any right to designate a director arising under
the underwriting agreement executed in connection with the Company's initial
public offering or the expansion of the Board of Directors with the consent of
employee.
The Company agrees that, if during the term hereof, or during such time
as the Employee is otherwise employed by the Company, a Change in Control shall
occur, all options to purchase Common Stock of the Company held by Employee,
either pursuant to this Agreement or otherwise, shall immediately vest and
become exercisable on the first day following a Change in Control. Further, the
options shall be deemed amended to provide that in the event of termination of
Employee after an event enumerated in this Article XI, the options shall remain
exercisable for the duration of their term; and
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further, at the Employee's option, an amount equal to three times the aggregate
annual compensation paid to the Employee during the calendar year preceding the
Change in Control shall be credited against the exercise price of any options
held by Employee at the time Employee elects to exercise such options, with the
balance paid directly to the Employee; provided, however, that if the lump sum
severance payment under this Article XI, either alone or together with other
payments which the Employee has the right to receive from the Company, would
constitute a "parachute payment" (as defined in Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code")), such credit shall be reduced to
the largest amount as will result in no portion of the credit under this Article
XI being subject to the excise tax imposed by Section 4999 of the Code.
ARTICLE XII
TERMINATION OF PRIOR AGREEMENTS
This Agreement sets forth the entire agreement between the parties and
supersedes all prior agreements between the parties, whether oral or written,
without prejudice to Employee's right to all accrued compensation prior to the
effective date of this Agreement; and upon the consummation of the Company's
initial public offering, the royalty agreement between the Company and the
Employee shall be deemed terminated.
ARTICLE XIII
ARBITRATION
Any dispute arising out of the interpretation, application and/or
performance of this Agreement with the sole exception of any claim, breach or
violation arising under Articles V or VI hereof shall be settled through final
and binding arbitration before a single arbitrator in the city of West
Hollywood, the State of New York in accordance with the rules of the American
Arbitration Association. The arbitrator shall be selected by the Association and
shall be an attorney at law experienced in the field of corporate law. Any
judgment upon any arbitration award may be entered in any court, federal or
state, having competent jurisdiction of the parties.
ARTICLE XIV
SEVERABILITY
If any provision of this Agreement shall be held invalid and
unenforceable, the remainder of this Agreement shall remain in full force and
effect. If any provision is held invalid or
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unenforceable with respect to particular circumstances, it shall remain in full
force and effect in all other circumstances.
ARTICLE XV
NOTICE
All notices required to be given under the terms of this Agreement
shall be in writing and shall be deemed to have been duly given only if
delivered to the addressee in person or mailed by certified mail, return receipt
requested, as follows:
IF TO THE COMPANY: Rollerball International Inc.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
IF TO THE EMPLOYEE: Xx. Xxxx Xxxxxxxxxx
Rollerball International Inc.
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
or to any such other address as the party to receive the notice shall advise by
due notice given in accordance with this paragraph. Any such written notice
shall be effective upon receipt, but not later than four (4) days after the
deposit with the U.S. Postal Service.
ARTICLE XVI
BENEFIT
This Agreement shall inure to, and shall be binding upon, the parties
hereto, the successors and assigns of the Company, and the heirs and personal
representatives of the Employee.
ARTICLE XVII
WAIVER
The waiver by either party of any breach or violation of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of construction and validity.
ARTICLE XVIII
GOVERNING LAW
This Agreement has been negotiated and executed in the State of
California, and California law shall govern its construction and validity.
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ARTICLE XIX
JURISDICTION
Any or all actions or proceedings which may be brought by the Company
or Employee under this Agreement shall be brought in courts having a situs
within the State of California and Employee hereby consents to the jurisdiction
of any local, state or federal court located within the State of California.
ARTICLE XX
ENTIRE AGREEMENT
This Agreement contains the entire agreement between the parties
hereto. No change, addition or amendment shall be made hereto, except by written
agreement signed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
affixed their hands and seals the day and year first above written.
(Corporate Seal) Rollerball International Inc.
By_________________________
Chairman - Compensation
Committee
_______________________________
(Employee)
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