Exhibit 10.8.5
EMPLOYMENT AGREEMENT
AGREEMENT made this 2nd day of August, 1999 between CutCo Industries,
Inc. (the "Company") and Xxx Xxxx (the "Employee").
In order to effect the foregoing, the Company and the Employee wish to
enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the promises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
1) EMPLOYMENT
The Company hereby agrees to employ the Employee and the Employee
hereby agrees to serve the Company on the terms and conditions set forth
herein.
2) TERMS
The Employment of the Employee by the Company as provided in
Paragraph 1 will commence on the date hereof and end after three years on
July 31, 2002 unless sooner terminated as hereinafter provided or unless
renewed as provided in Paragraph 8 herein.
3) POSITION AND DUTIES
The Employee shall serve as President of the Company and shall have
such responsibilities and authority as may from time to
1
time be assigned to the Employee by the Board or the Chief Executive Officer
of the Company. The Employee shall devote substantially all his working time
and efforts to the business and affairs of the Company.
4) PLACE OF PERFORMANCE
In connection with the Employee's employment by the Company, the
Employee shall be based at the principal executive offices of the Company
except for required travel on the Company's business to an extent
substantially consistent with present business travel obligations.
5) COMPENSATION AND RELATED MATTERS
(a) SALARY. During the period of the Employee's employment
hereunder, the Company shall pay to the Employee a salary at a rate of not
less than $192,000 per annum in equal installments as nearly as practicable
on the fifteenth and last days of each month in arrears. This salary may be
increased from time to time in accordance with normal business practices of
the Company and, if so increased, shall not thereafter during the term of
this Agreement be decreased. Compensation of the Employee by salary payments
shall not be deemed exclusive and shall not prevent the Employee from
participating in any other compensation or benefit plan of the Company. The
salary payments (including any increased salary payments) hereunder shall not
in any way limit or reduce any other obligation of the Company hereunder, and
no other
2
compensation, benefit or payment hereunder shall in any way limit or reduce
the obligation of the Company to pay the Employee's salary hereunder.
(b) EXPENSES. During the term of the Employee's employment
hereunder, the Employee shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Employee in performing services
hereunder, including all expenses of travel and living expenses while away
from home on business or at the request of and in the service of the Company,
provided that such expenses are incurred and accounted for in accordance with
the policies and procedures established by the Company.
(c) AUTOMOBILE ALLOWANCE. During the employment term, Employer
shall furnish to Employee an automobile owned or leased by Employer. The
terms and conditions of Employee's use of such automobile and the extent to
which Employer shall defray the costs of its operation shall be the same as
those pertaining to automobiles presently being furnished other executive and
managerial personnel of Employer.
(d) OTHER BENEFITS. The Company shall maintain in full force and
effect, and the Employee shall be entitled to continue to participate in, all
of its employee benefit plans and arrangements in effect on the date hereof
in which the Employee participates or plans or arrangements providing the
Employee with at least
3
equivalent benefits thereunder. The Company shall not make any changes in
such plans and arrangements which would adversely affect the Employee's
rights to benefits thereunder, unless such change occurs pursuant to a
program applicable to all officers of the Company and does not result in a
proportionately greater reduction in the rights of or benefits to the
Employee as compared with any other officers of the Company. The Employee
shall be entitled to participate in or receive benefits under any employee
benefit plan or arrangement made available by the Company in the future to
its officers and key management employees, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans
and arrangements. Nothing paid to the Employee under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to the Employee pursuant to Paragraph (a) of this
Section. Any payments or benefits payable to the Employee hereunder in
respect of any calendar year during which the Employee is employed by the
Company for less than the entire such year shall, unless otherwise provided
in the applicable plan or arrangement, be prorated in accordance with the
number of days in such calendar year during which he is so employed.
However, payments otherwise due the Employee pursuant to the
Company's bonus plan will not be made if the Employee's employment is
terminated, for any reason other than as described in 6(a), (b) or (d)
hereof, prior to the Company's fiscal year end.
4
If the Employee's employment is terminated pursuant to 6(a), (b) or (d), the
Employee shall receive his bonus prorated in accordance with the number of
days in the Company's fiscal year during which he is so employed. If the
Employee's employment is terminated, for any reason other than cause, as
described in 6(c), on or after the Company's fiscal year end, but before
actual payment of the Company's year end bonus in September, the Employee
shall be entitled to his bonus payment for the previous year.
(e) REPAYMENT OF COMPENSATION HELD EXCESSIVE. If any part of the
salary or other compensation paid by Employers to Employee, or of any amount
paid by Employer for travel or entertainment expenses incurred by Employee,
is finally determined not to be allowable as a federal or state income tax
deduction to Employer, the part disallowed shall be repaid to Employer by
Employee.
6) TERMINATION
The Employee's employment hereunder may be terminated without any
breach of this Agreement only under the following circumstances:
(a) DEATH. The Employee's employment hereunder shall terminate upon
his death.
(b) DISABILITY. If, as a result of the Employee's
5
incapacity due to physical or mental illness, the Employee shall have been
absent from his duties hereunder on a full time basis for the entire period
of six consecutive months, and within thirty (30) days after written notice
of termination is given (which may occur before or after the end of such six
month period) shall not have returned to the performance of his duties
hereunder on a full time basis, the Company may terminate the Employee's
employment hereunder.
(c) CAUSE. This Agreement shall immediately be terminated and
neither party shall have any obligation hereunder if the Employee's
employment is terminated for "cause". Termination for cause shall arise where
termination results from (a) theft or dishonesty in the conduct of the
Company's business, or intoxication while on duty, (b) deliberate and
continual refusal to perform employment duties on substantially a full time
basis, (c) deliberate and continual refusal to act in accordance with any
specific instructions of a majority of the Board of Directors of the Company,
or (d) deliberate misconduct which could be materially damaging to the
Company without reasonable good faith belief by the Employee that such
conduct was in the best interests of the Company.
If the Employee is advised that he is being terminated for cause
and within fifteen (15) days thereafter submits to the Chief Executive
Officer a written objection to such a
6
determination, this Section will not be applicable unless the Executive
Committee of the Board of Directors of the Company at or before its next
regularly scheduled meeting determines by majority vote that the Employee
has been terminated for cause.
(d) TERMINATION BY THE EMPLOYEE. The Employee may terminate his
employment hereunder (i) for Good Reason or (ii) if his health should become
impaired to an extent that makes his continued performance of his duties
hereunder hazardous to his physical or mental health or his life, provided
that the Employee shall have furnished the Company with a written statement
from a qualified doctor to such effect and provided further, that at the
Company's request, the Employee shall submit to an examination by a doctor
selected by the Company and such doctor shall have concurred in the
conclusion of the Employee's doctor.
For purposes of this Agreement, "Good Reason" shall mean (A) a
Change in Control of the Company (as defined below) as well as, and as a
direct result thereof, (i) a decrease in the total amount of the Employee's
base salary below its level in effect on the date hereof, or a decrease in
the bonus percentage to which the Employee is entitled, without the
Employee's consent, provided, however, nothing herein shall be construed to
guarantee the Employee's bonus award if performance is below target, or (ii)
a reduction in the importance of the Employee's job responsibilities without
the Employee's consent, with the determination of whether
7
a reduction in job responsibility has taken place to be in the sole
discretion of the Employee, or (iii) a geographical relocation of the
Employee without his consent. Absent written consent, after a Change in
Control of the Company (as defined below), no action or inaction by the
Employee within ninety (90) days following the occurrence of the events
described in 6(d)(A)(i), 6(d)(A)(ii) or 6(d)(A)(iii) hereof shall be deemed
consent to such events; (B) a failure by the Company to comply with any
material provision of this Agreement which has not been cured within ten (10)
days after notice of such noncompliance has been given by the Employee to the
Company; or (C) any purported termination of the Employee's employment which
is not effected pursuant to a Notice of Termination satisfying the
requirements of Paragraph (e) hereof (and for purposes of this Agreement no
such purported termination shall be effective).
For purposes of this Agreement, a "Change in Control of the
Company" shall be deemed to have occurred if (i) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities, or (ii) during any period of two
consecutive years during the term of this Agreement, individuals who at the
beginning of such period constitute the
8
Board cease for any reason to constitute at least a majority thereof, unless
the election of each director who was not a director at the beginning of
such period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the
beginning of the period.
(e) NOTICE OF TERMINATION. Any termination of the Employee's
employment by the Company or by the Employee (other than termination pursuant
to subsection (a) above) shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if
the Employee's employment is terminated by his death, the date of this
death, (ii) if the Employee's employment is terminated pursuant to subsection
(b) above, thirty (30) days after Notice of Termination is given (provided
that the Employee shall not have returned to the performance of his duties on
a full-time basis during such thirty (30) day period), (iii) if the
Employee's employment is terminated pursuant to subsection (c) above, the
date
9
specified in the Notice of Termination, and (iv) if the Employee's employment
is terminated for any other reason, the date on which a Notice of Termination
is given, provided that if within thirty (30) days after any Notice of
Termination is given the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date
of Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
7) COMPENSATION UPON TERMINATION OR DURING DISABILITY
(a) During any period that the Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Employee shall continue to receive his full
salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 6(b) hereof, provided that payments so made
to the Employee during the first 180 days of the disability period shall be
reduced by the sum of the amounts, if any, payable to the Employee at or
prior to the time of any such payment under disability benefit plans of the
Company and which were not previously applied to reduce any such payment.
The Employee's year end bonus shall be paid in a pro rata amount to compensate
the Employee proportionately for days worked prior to the beginning of his
disability period.
10
(b) Upon termination of his employment hereunder pursuant to Section
6(a), (b) or (d) hereof, the Employee shall be paid, in addition to all
other payments hereunder, one year's salary, such payment to be made in
a lump sum ten days after the termination of Employee's employment.
8) RENEWAL OF TERM OF AGREEMENT
At the end of each full year this Agreement is in effect, the
Agreement shall be automatically renewed for an additional three years,
unless the Company notifies the Employee of nonrenewal, such notice to be
delivered at least ninety (90) days prior to the end of the full year. Upon
notice of nonrenewal, the Employee will be entitled to the protection of this
Agreement for the remaining term of the Agreement, subject to all other
provisions of this Agreement.
9) COUNSEL FEES AND INDEMNIFICATION
(a) The Company shall pay or reimburse to Employee, the reasonable
fees and expenses of Employee's personal counsel for their professional
services rendered to Employee in connection with this Agreement and the
matters related thereto.
(b) In the event that (i) the Company terminates or seeks to
terminate this Agreement, alleging as justification for such termination a
material breach by Employee or a Cause, or Causes, as set out in Paragraph
6(c) hereof; Employee disputes such
11
termination or attempted termination; and Employee prevails, or (ii) Employee
elects to terminate his service hereunder pursuant to Paragraph 6(d) of this
Agreement; the Company disputes its obligation to pay to Employee that
portion of his base salary as provided in Paragraph 6(d); and Employee
prevails; the Company shall pay or reimburse to Employee all reasonable costs
incurred by him in such dispute, including attorneys' fees and costs.
(c) The Company shall indemnify and hold Employee harmless to the
maximum extent permitted by law against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees incurred by
Employee in connection with the defense of, or as a result of any action or
proceeding (or any appeal from any action or proceeding) in which Employee
is made or is threatened to be made a party by reason of fact that he is or
was an employee of the Company, regardless of whether such action or
proceeding is one brought by or in the right of the Company, to procure a
judgment in its favor (or other than by or in the right of the Company).
The undertaking of subparagraphs (a) and (b) above are independent
of, and shall not be limited or prejudiced by the undertaking of this
subparagraph (c).
(d) The Company further represents and warrants: (i) that Employee
is and shall continue to be covered and insured up to
12
the maximum limits provided by all insurance which the Company maintains to
indemnify its directors and officers (and to indemnify the Company for any
obligations which it incurs as a result of its undertaking to indemnify its
officers and directors); and (ii) that the Company will exert its best
efforts to maintain such insurance, in not less than its present limits, in
effect throughout the terms of Employee's employment.
(e) The Company hereby warrants and represents that the
undertakings of payment, indemnification and maintenance of insurance
covering Employee set out in (a), (b), (c) and (d) above are not in conflict
with the Articles of Incorporation or Bylaws of the Corporation or with any
validly existing agreement or other proper corporate action of the Company.
10) NON-COMPETITION REVIEW
(a) If the Employee's employment is terminated pursuant to 6(d)(A),
6(d)(B) or 6(d)(C) hereof and the Employee receives all compensation to which
he is entitled under this Agreement, for three years thereafter, Employee
will not, without the prior written approval of the Board of Directors of the
Company, become an officer, employee, agent, partner or director of any
business enterprise in substantial direct competition (as defined below) with
the Company. This same restriction shall apply if the Employee receives, for
whatever reason, such compensation as is contemplated by Section 7(d) of this
Agreement.
13
(b) For the purposes of this Paragraph 10, a business enterprise
with which Employee becomes associated as an officer, employee, agent,
partner or director shall be considered in "substantial direct competition"
with the Company if it is engaged in the hair salon business.
12) CONFIDENTIALITY
The Employee acknowledges that, in and as a result of his employment
hereunder, he will be making use of, acquiring and/or adding to
confidential information of special and unique nature and value relating to
such matters as the Company's trade secrets, systems, procedures, manuals,
confidential reports and lists of clients, as well as the nature and type of
building maintenance and/or other services rendered by the Company, and the
equipment and methods used by the Company. As a material inducement to the
Company to enter into this Agreement, and to pay to the Employee the
compensation referred to in this Agreement, Employee covenants and agrees
that he shall not, at any time during or following the term of his employment
hereunder, directly or indirectly, divulge or disclose, for any purpose
whatsoever, any of such confidential information which has been obtained by
or disclosed to him as a result of his employment by the Company. In the
event of a breach or threatened breach by the Employee of any of the
provisions of this Paragraph 11, the Company, in addition to and not in
limitation of any other rights, remedies or damages available to the Company
at law or in equity, shall be entitled to a permanent
14
injunction in order to prevent or to restrain any such breach by Employee, or
by Employee's partners, agents, representatives, servants, employers,
employees and/or any and all persons directly or indirectly acting for or
with him.
13) SUCCESSORS; BINDING AGREEMENT
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement
in form and substance satisfactory to the Employee to expressly assume and
agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had
taken place. Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Employee to compensation from the Company in the same
amount and on the same terms as he would be entitled to hereunder if he
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company: shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Paragraph 12 or which otherwise becomes bound
by all the terms and provisions of this Agreement by operation of law.
15
(b) This Agreement and all rights of the Employee hereunder shall
inure to the benefit of and be enforceable by the Employee's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while any
amounts would still be payable to him hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Employee's devisees,
legatee, or other designee or, if there by no such designee, to the
Employee's estate.
14) NOTICES
For the purposes of this Agreement, notices, demands and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or (unless otherwise specified)
mailed by United States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to Employee: Xxx Xxxx
X.X. Xxx 00000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
If to Company: Cutco Industries, Inc.
0000 Xxxxxxx Xxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
16
or to such other address as any party may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
15) EMPLOYEE'S OUTSIDE BUSINESS ACTIVITIES
During his employment, Employee shall devote his full energies,
interest, abilities, and productive time to the performance of this agreement
and shall not, without Employer's prior written consent, render to others
services of any kind for compensation or engage in any other business
activity that would materially interfere with the performance of his duties
under this agreement.
16) EMPLOYER'S OWNERSHIP OF INTANGIBLES
All processes, inventions, patents, copyrights, trademarks, and
other intangible rights that may be conceived or developed by Employee,
either alone or with others, during the term of Employee's employment,
whether or not conceived or developed during Employee's working hours, and
with respect to which the equipment, supplies, facilities, or trade secret
information of Employer was used, or that relate to the business of Employer
or to Employer's actual or demonstrably anticipated research and development,
or that result from any work performed by Employee for Employer, shall be the
sole property of Employer. Employee shall disclose to Employer all inventions
conceived during the term of employment, whether or not the property of
Employer under the terms
17
of the preceding sentence, provided that such disclosure shall be received by
Employer in confidence. Employee shall execute all documents, including
patent applications and assignments, required by Employer to establish
Employer's rights under this Section.
17) MISCELLANEOUS
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Employee and the Company's Chief Executive Officer or
such other officer as may be specifically designated by the Board. No waiver
by either party hereto at any time of any breach by the other hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws
of the State of New York.
18) DISCLOSURE OF CONFIDENTIAL INFORMATION AND TRADE SECRETS
PROHIBITED. In the course of his employment, Employee may have access to
confidential information and trade secrets relating to Employer's business.
Except as required in the course of his
18
employment by Employer, Employee will not, without Employer's prior consent,
either during his employment by Employer or for one year after termination of
that employment, directly or indirectly disclose to any third person any such
confidential information or trade secrets.
19) DISCLOSURE OF CUSTOMER INFORMATION AND SOLICITATION OF OTHER
EMPLOYEES PROHIBITED. In the course of his employment, Employee will have
access to confidential records and data pertaining to Employer's customers
and to the relationship between these customers and Employer's. Such
information is considered secret and is disclosed to Employee in confidence.
During his employment by Employer and for one year after termination of that
employment, Employee shall not directly or indirectly disclose or use any
such information, except as required in the course of his employment by
Employer. In addition, during and for one year after termination of his
employment, Employee shall not induce or attempt to induce any supplier of
Employer to discontinue representing Employer for the purpose of representing
any competitor of Employer.
20) VALIDITY
The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, which shall remain in full force and
effect.
19
21) COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
22) ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a
panel of three arbitrations in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
the Company shall be entitled to seek a restraining order or injunction in
any court of competent jurisdiction to prevent any continuation of any
violation of Paragraph 11 herein, and the Employee hereby consents that such
restraining order or injunction may be granted without the necessity of the
Company posting any bond. The expense of such arbitration shall be borne by
the Company.
23) INJUNCTION
Employee is obligated under this Agreement to render services of a
special, unique, unusual, extraordinary, and intellectual character which
give this Agreement peculiar value. The loss of these services cannot be
reasonably or adequately compensated in damages in an action at law.
Accordingly, in additional to other remedies provided by law or this Agreement,
20
Employer shall have the right during the term or any renewal term of this
Agreement to obtain injunctive relief against the breach of this contract by
Employee or the performance of services elsewhere by Employee or both.
24) FORMS: LIQUIDATED DAMAGES
Because Employer's damages resulting from any breach by Employee of
Sections 12, 18 and 19 would be impracticable and extremely difficult to fix
in an actual amount, the liquidated amount of damage presumed to be sustained
from any such breach will be $10,000. That sum is agreed on as compensation
for the injury suffered by Employer and not as a penalty.
25) INTEGRATION
This Agreement contained the entire agreement between the parties
and supersedes all prior oral and written agreements, understandings,
commitments, and practices between the parties, including all prior
employment agreements, whether or not fully performed by Employee before the
date of this Agreement. No amendments to this Agreement may be made except by
a writing signed by both parties.
26) CHOICE OF LAW
The formation, construction, and performance of this Agreement
shall be construed in accordance with the laws of California.
21
27) SEVERABILITY
If any provision of this Agreement is held invalid or
unenforceable, the remainder of this Agreement shall nevertheless remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall nevertheless remain in full
force and effect in all other circumstances.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
CUTCO INDUSTRIES, INC.
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------------
Title: Secretary
--------------------------------
EMPLOYEE
/s/ Xxx Xxxx
---------------------------------------
Xxx Xxxx
22
