EMPLOYMENT AGREEMENT
THIS AGREEMENT effective as of February 26, 1999 is made and entered
into by and between PREMIER CONCEPTS, INC., a Colorado corporation
("Company" or the "Corporation") and XXXXX X'XXXXX ("Employee"). For the
definition of certain terms used in this Agreement, see Section 8 below.
WITNESSETH
WHEREAS, the Company and Employee desire that Employee become Chief
Operating Officer of, and employed by, the Company.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinbelow set forth, the parties agree as follows:
Section 1. Employment.
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1.1 Engagement.
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The Company will employ Employee, and Employee will accept employment,
as an Employee of Company for the Term, subject to and in accordance with
the provisions of this Agreement.
1.2 Duties.
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During the Term, Employee will serve Company in the capacity of Chief
Operating Officer. Employee's duties as an Employee of Company include all
of the duties normally associated with such capacities. Without in any way
limiting the generality of the foregoing, Employee shall be responsible for
the operations of the Company's nationwide chain of faux jewelry stores
operating under the trademark "Impostors." Employee will be responsible
for store operations and profitability including budgeting and cost
control, hiring, training and development of regional managers and
development of incentive based field compensation and bonus plans.
Employee's duties will also include such other activities, responsibilities
and duties as may be reasonably assigned from time to time by the Company's
President and CEO. Employee will also perform the duties of the Chief
Operating Officer as described in the Company's By-Laws or as determined
from time to time by the Company's President and CEO.
1.3 Attention and Effort.
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During normal business hours Employee will devote Employee's best
efforts, entire productive time, ability and attention to the business of
Company. Further, during the Term, Employee will not, without Company's
prior written consent, directly or indirectly engage in any employment,
consulting or other activity which would interfere or conflict with the
performance of Employee's duties or obligations to Company or which would
directly or indirectly compete with Company.
Section 2. Compensation.
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2.1 Base Salary.
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During the Term, Company will pay Employee an annual Base Salary of
$69,000, payable no less frequently than bi-weekly.
2.2 Bonus.
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In addition to the Base Salary provided for in Section 2.1 above, the
Company shall pay to Employee during the first full fiscal year of
employment subject to and contingent upon the Company achieving a 5%
increase in comparable same store sales during fiscal year ending January
28, 2000 over the prior fiscal year, the Company shall pay Employee a cash
bonus of $5,000. During the remainder of the term of this Agreement, the
Company shall pay Employee an annual bonus if the Company achieves its
annual sales plan for retail stores, which bonus shall be equal to 5% of
the increase in comparable same store sales compared to the previous fiscal
year, up to a maximum of $25,000 per year. The bonus shall be payable
within fifteen (15) days of the completion by the Company of its audited
financial statements for each fiscal year during the Term and, if not paid
when due, shall accrue interest at the rate of 10% per annum until paid in
full.
2.3 Benefits.
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During the Term, Employee will be entitled to participate in such
health and major medical insurance programs and such other fringe benefit
programs as may be provided from time to time by the Board or any person or
committee appointed by the Board to determine fringe benefit programs, all
subject to and in accordance with the eligibility and other requirements of
such programs.
2.4 Stock Incentive Plan.
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The Company has adopted and implemented a Stock Incentive Plan
pursuant to which the Company is authorized to issue incentive stock
options qualified under Section 422 of the Internal Revenue Code of 1986,
as amended, (the "ISOP"). As additional compensation for services
hereunder, the Company agrees to grant and issue to Employee on the date of
execution of this Agreement incentive stock options pursuant to the ISOP
exercisable to purchase, in the aggregate, 60,000 shares of the $0.002 par
value common stock ("Common Stock"); 20,000 of which shall have an exercise
price of $.6875 per share and shall be granted and vest immediately upon
execution of this Agreement; 20,000 of which will be granted and vest
immediately upon the first anniversary of the date of this Agreement having
an exercise price equal to 100% of the current market price of the
Company's Common Stock on the date of grant; and 20,000 of which will be
granted and vest on the second anniversary date of this Agreement having an
exercise price equal to 100% of the current market price of the Company's
Common Stock on the date of grant. In the event Employee's employment with
the Company is terminated by the Company without cause prior to the grant
and vesting of the ISO's described in Section 2.4, then and in such event
those ISO's shall be deemed automatically granted and vested and
exercisable by Employee in accordance with their respective terms and
conditions.
2.5 Expenses.
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During the Term, Company will reimburse Employee for reasonable out-
of-pocket expenses incurred by Employee in performance of service for
Company under this Agreement (e.g., transportation, lodging and food
expenses incurred while traveling on Company business), all subject to such
policies and other requirements as Company may from time to time establish
for its Employees generally.
2.6 Withholding and Offset.
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Payment of the base salary and any other amounts to Employee will be
subject to such withholding and offset as may be provided by applicable law
(e.g., for income tax purposes) or consented to by Employee.
2.7 Indemnification.
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The Company shall indemnify Employee and shall advance expenses to the
Employee in advance of the final disposition of any matter to the full
extent permitted and/or required by applicable law, and subject to such
rights of reimbursement and restitution as may be provided by applicable
law, from and against any and all judgments, penalties, fines, amounts paid
in settlement and reasonable expenses, including, but not limited to,
attorneys' fees and court costs.
Section 3. Term and Termination.
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3.1 Commencement.
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The Term of this Employment Agreement shall begin on the 26th day of
February, 1999 (the "Commencement Date").
3.2 Termination.
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The Term will terminate upon the first of the following to occur: (a)
February 26, 2002, (b) Company's termination of Employee's Employment for
Cause pursuant to paragraph 3.3; (c) Company's termination of Employee's
employment without Cause pursuant to Paragraph 3.4; (d) Employee's
termination of Employee's employment for cause pursuant to Paragraph 3.5;
(e) the death of Employee; or (f) ninety (90) days after the disability of
Employee resulting from injury, illness or disease, whether of a mental or
physical nature, which substantially impairs or prevents the ability of
Employee to satisfactorily perform Employee's duties and obligation is
under this Agreement for a period which can reasonably be expected to be of
long, continued or indefinite duration, as determined in good faith by the
Board.
In the event of termination pursuant to Sections 3.2(a), (b),
(e), or (f), Employee shall be entitled to no further payments hereunder
after the date of termination. In the event of termination pursuant to
Sections 3.2(c) or (d), Employee shall be entitled to receive all
compensation and benefits provided for herein for the remaining balance of
the term defined in Section 3.2(a).
3.3 Termination for Cause.
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Company may at any time terminate Employee's employment for Cause
without prior notice.
3.4 Termination Without Cause.
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At any time after six (6) months from the commencement of the Term,
the Company may at any time terminate Employee's employment with or without
Cause by giving Employee notice of the same at least five (5) days prior to
the effective date of such termination. Upon such termination, the Company
shall be obligated to pay the remaining balance of Base Salary (Item 2.1)
for the remaining term of the Agreement.
3.5 Resignation.
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Employee may at any time resign from employment with Company by giving
Company notice of thirty (30) days prior to the effective date of such
termination.
3.6 Employee's Termination for Cause.
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Employee may at any time terminate Employee's employment for cause
without prior notice.
3.7 Disability.
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If in the event of a disability described in Paragraph 3.2(e) Company
decides not to terminate Employee's employment and Employee is entitled to
receive payments (i.e., in lieu of wages or other compensation for
employment) on account of such disability under any fringe benefit program
provided by Company, then the base salary described in paragraph 2.1 will
be reduced to the extent of such entitlement.
3.8 Termination Due to a Change in Control.
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Upon five (5) days' notice, Employee may terminate Employee's
employment due to a Change in Control of the Company.
3.9 Return of Company Property.
--------------------------
Upon termination of the Term, Employee will deliver to Company any and
all property of Company which is in Employee's possession or control
(including, but not limited to, any and all Materials).
3.10 Survival.
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Sections 4 and 5, together with all other provisions of this Agreement
that may reasonably be interpreted or construed to survive any termination
of the Term, will survive any termination of the Term.
3.11 Termination Payments.
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In the event of termination pursuant to Sections 3.2(a), (b), (d), (f)
or (g), Employee shall be entitled to no further payments hereunder after
the date of termination. In the event of termination pursuant to Sections
3.2(b), (e) or (h), Employee shall be entitled to receive and the Company
shall be obligated to pay to Employee Termination Payments equal to, in the
aggregate, the product of (i) the Employee's average annualized total
compensation under this Agreement, or all prior agreements with the
Company, including base salary, incentive compensation, commission,
bonuses, fringe benefits, shares of Common Stock and options to purchase
shares of Common Stock and other forms of compensation, received during the
two most recent fiscal years, multiplied by (ii) the number of years, and
fractions of years, remaining in the Term of this Agreement as defined in
Section 3.2(a) above. Such Termination Payments shall be due and payable
in full within thirty (30) days following the date of such termination.
Section 4. Confidentiality.
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4.1 Confidential Information.
------------------------
In the course of Employee's employment with Company, Employee will
have access to certain Confidential Information. 12Employee will not use
or disclose any Confidential Information (a) other than as required in the
course of Employee's employment with Company, (b) for Employee's own
personal gain, or (c) in any manner contrary to the best interests of
Company.
4.2 Work Product.
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All Work Product which Employee conceives, develops or first reduces
to practice, either alone or with others, during the Term will be the sole
and exclusive property of Company, together with any and all related
Intellectual Property Rights. The foregoing applies to all Work Product
which relates to Employee's performance of services under this Agreement,
Company's Field of Business or Company's actual or demonstrably anticipated
research or development and whether or not such Work Products are
conceived, developed or first reduced to practice during normal business
hours or with the use of any equipment, supplies, facilities, personnel,
Confidential Information or other resource of Company.
4.3 Disclosures and Protection of Work Product.
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Employee will disclose all Work Products described in paragraph 4.3 to
Company, promptly and in writing. At Company's request and at Company's
expense, Employee will assist Company or its designee in efforts to protect
such Work Products. Such assistance may include, but is not necessarily
limited to, the following: (a) making application in the United States and
in foreign countries for a patent or copyright on any Work Products
specified by Company; (b) executing documents of assignment to Company or
its designee of all Employee's right, title and interest in and to any Work
Product and related Intellectual Property Rights; and (c) taking such
additional action (including, but not limited to, the execution and
delivery of documents) to perfect, evidence or vest in Company or its
designee all rights, title and interest in and to any Work Product and any
related Intellectual Property Right.
4.4 Proprietary Information of Others.
---------------------------------
Employee will not use in the course of Employee's employment with
Company, or disclose or otherwise make available to Company any
information, documents or other items which Employee may have received from
any other person (e.g., a prior employer) and which Employee is prohibited
from so using, disclosing or making available (e.g., by reason of any
contract, court order, law or obligation by which Employee is bound).
4.5 Materials.
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All Materials and related Intellectual Property Rights will be the
sole and exclusive property of Company, whether or not such Materials are
marked with any Intellectual Property Right notice of Company or Employee.
All such Materials authored, made, conceived or developed by Employee or
made available to Employee (or any copies or extracts thereof) will be held
by Employee in trust solely for the benefit of Company. Employee will use
such Materials only as required in the course of Employee's employment with
Company or as otherwise authorized in writing by Company.
4.6 Notice.
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This Agreement does not apply to any invention for which no equipment,
supplies, facility or trade secret information of Company was used, and
which was developed entirely on Employee's own time, unless: (a) the
invention relates (i) directly to the Company or (ii) to Company's actual
or demonstrable anticipated research or development; or (b) the invention
results from any work performed by Employee for Company.
Section 5. Competition.
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5.1 Employee covenants to and with the Company, its successors and
assigns, that during the term of this Agreement and for a period of six (6)
months from the date of the termination of this Agreement for any reason,
he will not directly or indirectly, either as principal, agent, manager,
employee, owner, partner (dominant or otherwise), stockholder, director or
other officer of a corporation, creditor, consultant or otherwise, engage
or become interested financially or otherwise, in any business, agency,
trade or occupation similar to or in competition with the Company or its
affiliates; nor shall Employee, during the term of this Agreement and for a
period of six (6) months from the date of the termination of this
Agreement, consult or enter into any agreement or arrangement with any
other person, firm, corporation or entity to conduct any research or
development, nor shall Employee directly or indirectly conduct such
research or development on his own behalf, related to the discovery of
processes, improvements, developments or commercialization of any service
or product developed or reduced to practice during the period of employment
with the Company, unless Employee shall have first obtained the Company's
expressed written consent thereto. Because of the nature of the business,
the parties agree that it is reasonable for the covenant to apply to the
entire geographic area of the United States. If the geographic area is
determined by a court to be overly broad in scope, it shall be modified
only to the extent necessary to bring it within the requirements of the law
and interpreted to give the Company the broadest protection allowed by law.
5.2 In the event of a breach or threatened breach by Employee of any
provisions of this Section 5, the Company shall be entitled to an
injunction restraining Employee from the commission of such breach.
Nothing herein contained shall be construed as prohibiting the Company from
pursuing any other remedies available to it for such breach or threatened
breach, including the recovery of money damages. The covenants contained
in this Section 5 shall be construed as independent of any other provisions
in this Agreement; and the existence of any claim or cause of action of
Employee against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company
of said covenants.
5.3 The covenants contained in this Section 5 shall terminate and,
upon termination, shall be unenforceable and of no further legal force and
effect, in the event the Company, or any successor to the Company, becomes
insolvent or ceases for any reason to conduct business operations for a
continuous period of at least thirty (30) days.
5.4 The Company shall have the right to assign the aforesaid
covenants; and Employee agrees to remain bound by the terms of the
covenants to any and all subsequent purchasers and assignees of the assets
and business of the Company.
Section 6. Non-Interference.
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6.1 Non-Interference with the Employees.
-----------------------------------
The Employee covenants with the Corporation that employees of or
consultants to the Corporation and employees of and consultants to firms,
corporations or entities affiliated with the Corporation have, of
necessity, been exposed to and have acquired certain knowledge,
understandings, and know-how concerning the Corporation's business
operations which is confidential information and proprietary to the
Corporation.
6.2 In order to protect the Corporation's confidential information
and to promote and insure the continuity of the Corporation's contractual
relations with its employees and consultants, the Employee covenants and
agrees that for so long as the Employee holds any position or affiliation
with the Corporation, including service to the Corporation as an officer,
director, employee, consultant, agent or contractor, and for a period of
six (6) months from the date the Employee ceases to hold any such position
or status with the Corporation or otherwise becomes disaffiliated with the
Corporation, he will not directly, or permit or encourage others to
directly (i) interfere in any manner whatsoever with the Corporation's
contractual or other relations with any or all of its employees or
consultants, or (ii) induce or attempt to induce any employee or consultant
to the Corporation to cease performing services for or on behalf of the
Corporation, or (iii) solicit, offer to retain, or retain, or in any other
manner engage or employ the services of, or conduct any business activity
in cooperation or association with, any person or entity who at any time
was employed by the Corporation, or any subsidiary of the Corporation,
except with the consent of the Corporation.
6.3 In the event any court of competent jurisdiction determines or
holds that all or any portion of the covenants contained in this Section 6
are unlawful, invalid, or unenforceable for any reasons, then the parties
hereto agree to modify the provisions of this Section 6 if and only to the
extent necessary to render the covenants herein contained enforceable and
otherwise in conformance with all legal requirements.
Section 7. Clients and Customers.
---------------------
7.1 In order to protect the Corporation's proprietary rights and to
promote and ensure the continuity of the Corporation's contractual
relations with its customers and clients, the Employee covenants and agrees
that, for so long as the Employee holds any position or affiliation with
the Corporation, including service to the Corporation as an officer,
director, employee, consultant, agent or contractor, and for a period of
six (6) months from the date the Employee ceases to hold any such position
or status with the Corporation or otherwise becomes disaffiliated with the
Corporation, he will not directly, or permit or encourage others to
directly (i) interfere in any manner whatsoever with the Corporation's
contractual or prospective relations with any clients or customers, or
(ii) induce or attempt to induce any client or customer of the Corporation
to cease doing business with the Corporation, or (iii) solicit, offer to
retain, or retain, or in any other manner engage or enter into any business
or other arrangement with any of the Corporation's customers or clients to
provide any services or products to any of such customers or clients as
they may from time to time exist or be constituted, except and unless such
arrangement for the provision of products or services is not in any way
competitive with the products or services actually provided by the
Corporation to its clients or customers or proposed to be provided by the
Corporation to its clients or customers, or except under circumstances to
which the Corporation has consented in writing, which consent shall not be
unreasonably withheld.
7.2 In the event any court of competent jurisdiction determines or
holds that all or any portions of the covenants contained in this Section 7
are unlawful, invalid or unenforceable for any reason, then the parties
hereto agree to modify the provisions of this Section 7 if and only to the
extent necessary to render the covenants herein contained enforceable and
otherwise in conformance with all legal requirements.
Section 8. Definitions.
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Whenever used in this Agreement with initial letters capitalized, the
following terms will have the following specified meanings:
8.1 "Board" means Company's Board of Directors.
8.2 "Cause," for purposes of Paragraph 3.3, shall include the
occurrence of any of the following:
8.2.1 The Employee breaches or violates any of the material
terms of this Agreement and fails to cure such breach or violation within
thirty (30) days of receipt of written notice by Company, which notice
shall specify in detail each alleged breach and specify in detail the
actions necessary to cure; provided, further, that the specification for
cure by the Company shall not obligate the Employee to effect the cure in
the manner stated if cure is otherwise timely completed by or on behalf of
Employee;
8.2.2 The Employee is shown to have engaged in any material
act of dishonesty or fraud upon the Company, any of its affiliated
companies, or any of its customers or clients;
8.2.3 The Employee fails to devote his full time, attention
and efforts to the business and affairs of the Company or its affiliated
companies; provided that the Company shall have first provided the Employee
with thirty (30) days' prior written notice specifying in detail the
instance or instances in which Employee has failed to devote the time
required, and Employee thereafter fails to cure and correct the conduct
complained of within such thirty (30) day period; or
8.2.4 The Employee has been grossly negligent in the
performance of his employment duties or responsibilities; provided that the
Company shall have first provided the Employee with thirty (30) days' prior
written notice specifying in detail the instance or instances in which
Employee has been grossly negligent, and Employee thereafter fails to cure
and correct the conduct complained of within such thirty (30) day period.
8.3 "Cause," for purposes of Paragraph 3.6, shall include the
occurrence of any of the following:
8.3.1 The breach or violation by the Company of the any of
the material terms of this Agreement;
8.3.2 Any significant change in position, duties and
responsibilities of Employee to which the Employee does not consent,
including, without limitation, imposing the duty upon Employee to be,
directly or indirectly, subordinate (either organizationally or
functionally) to any other executive officer of the Company;
8.3.3 Any move of the Company or its principal officers
resulting in or any other requirement that the Employee, without his
consent, change his principal residence.
8.3.4 The Company has shown to have engaged in any active
material dishonesty or fraud upon the Employee.
8.3.5 There shall occur a Change in Control of the Company.
8.4 "Change in Control" means any transaction of the Company
involving (i) the merger or consolidation of the Company into or with
another entity where the Company's shareholders receive less than 50% of
the outstanding voting securities of the new or continuing entity, (ii) the
sale of all or substantially all of the Company's assets, (iii) any person
not already a stockholder of the Company becoming a beneficial owner,
directly or indirectly, of the securities of the Company representing 50%
or more of the combined voting power of the Company's then outstanding
securities, (iv) a change in the majority of the Board of Directors of the
Company, or (v) the Company terminating its business or liquidating its
assets.
8.5 "Company's Field of Business" means any of the fields of the
Company's business. On the date of the Agreement, Company's Field of
Business includes, but is not necessarily limited to, the following:
wholesale and retail sales of jewelry and accessories.
"Confidential Information" means any information that is
confidential, proprietary or trade secret information of Company or any of
its customer or clients or any other information the use of disclosure of
which by Company is prohibited or restricted (e.g., by reason of any
contract, court order, law or other obligation by which Company is not
bound). "Confidential Information" may include, but is not necessarily
limited to, technology, computer programs, business plans, marketing plans,
information as to existing or future products or services of Company,
financial projections, unpublished works of original authorship, customer
lists, financial information, and trade secrets.
Notwithstanding the foregoing, the restrictions on disclosure and
use of information and materials as set forth in Section 4 shall not apply
to the following, and the following is not confidential or proprietary
information: (1) any information or materials which were generally
available to the public at the time made available to Employee by the
Company; (2) any information or materials which become, without breach of
Section 4 and through no fault of Employee, generally available to the
public; (3) any information or materials which Employee has received from
other sources prior to the date of this Agreement, subject to no
restrictions on disclosure applicable to Employee; and (4) any information
or materials which Employee at any time lawfully obtains from a third party
who is not under any obligation of secrecy or confidentiality to the
Company, under circumstances permitting disclosure by Employee to others
without restriction.
8.7 "Intellectual Property Right" means any patent, copyright, trade
secret, trade name, trademark or other intellectual property right.
8.8 "Materials" means hardware, software, programs, manuals,
drawings, designs, articles, writings, data, notes, memorandum,
manuscripts, notebooks, proposals, work plans, interim and final reports,
project files, client contract records and other tangible manifestations of
any Confidential Information or Work Products.
8.9 "Chief Operating Officer" means the Company's Chief Operating
Officer.
8.10 "Term" means the term of Employee's employment as an Employee of
Company pursuant to this Agreement.
8.11 "Work Product" means any invention, discovery, concept or idea
(including, but not necessarily limited to, hardware, software programs, or
processes, techniques, know-how, methods, systems, improvements, analytical
reports, and other developments).
Section 9. Miscellaneous.
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9.1 Compliance with Laws. In the performance of this Agreement, each
party will comply with all applicable laws, regulations, rules, orders and
other requirements of governmental authorities having jurisdiction.
9.2 Equitable Relief. Employee acknowledges that: the provisions of
Sections 4 and 5 are essential to Company; Company would not enter into
this Agreement if it did not include such provisions; the damages sustained
by Company as a result of any breach of such provisions cannot be
adequately remedied by damages; and, in addition to any other right or
remedy that Company may have (e.g., under this Agreement, by law or
otherwise), Company will be entitled to injunctive and other equitable
relief to prevent or curtail any breach of any such provisions.
9.3 Nonwaiver. The failure of either party to insist upon or enforce
strict performance by the other of any provision of this Agreement or to
exercise any right, remedy or provision of this Agreement will not be
interpreted or construed as a waiver or relinquishment to any extent of
such party's right to consent or rely upon the same in that or any other
instance; rather, the same will be and remain in full force and effect.
9.4 Entire Agreement. This Agreement constitutes the Entire
Agreement, and supersedes any and all prior Agreements, between Company and
Employee. No amendment, modification or waiver of any of the provisions of
this Agreement will be valid unless set forth in a written instrument
signed by the party to be bound thereby.
9.5 Applicable Law. This Agreement will be interpreted, construed
and enforced in all respects in accordance with the local laws of the State
of Colorado, without reference to its choice of law rules.
9.6 Attorneys Fees. In the event that either party consults or
retains an attorney to enforce the terms of this Agreement, the prevailing
party in any such dispute or litigation shall be entitled to recover from
the other party its reasonable attorneys fees and costs incurred.
9.7 Severability. If any of the provisions of this Agreement are
held to be invalid or unenforceable, the remaining provisions shall
nevertheless continue to be valid and enforceable to the extent permitted
by law.
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
Company: PREMIER CONCEPTS, INC., a Colorado
corporation
By:
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Xxxxxx Xxxxxxxxx, President
Employee:
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XXXXX X'XXXXX
