Exhibit 10.41
EMPLOYMENT AGREEMENT
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AGREEMENT made as of the 7th day of June, 1999, by and among L.S.
Wholesale, Inc., a Massachusetts corporation with its main office in St. Xxxxxx,
U.S.V.I. (the "Employer"), Little Switzerland, Inc., a Delaware corporation with
its main office in St. Xxxxxx, U.S.V.I. ("Little Switzerland"), and Xxxxxxx X.
Xxxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive possesses certain unique skills, talents and
judgment as well as the experience to provide the direction and leadership
required by the Employer; and
WHEREAS, the Employer and Executive desire to provide for the Executive's
employment by the Employer.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants contained herein, the Employer and the Executive mutually agree as
follows:
1. Employment. The Employer agrees to employ the Executive and the
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Executive agrees to be employed by the Employer on the terms and conditions
hereinafter set forth.
2. Effective Date and Term. The commencement date (the "Commencement
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Date") of this Agreement shall be June 7, 1999. Subject to the provisions of
Section 5 hereof, the term (the "Term") of the Executive's employment hereunder
shall be for one (1) year from the Commencement Date and shall be renewed
automatically for periods of one (1) year commencing at the first anniversary of
the Commencement Date and on each subsequent anniversary thereafter, unless
either the Executive or the Employer gives written notice to the other not less
than thirty (30) days prior to the date of any such anniversary of such party's
election not to extend the Term.
3. Compensation and Benefits. The compensation and benefits payable to
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the Executive under this Agreement shall be as follows:
a. Salary. For all services rendered by the Executive under this
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Agreement, the Employer shall pay the Executive a total salary as follows:
(1) Base Salary. For each twelve (12) month period of the Term,
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the Employer shall pay the Executive a base salary at an annual rate
(the "Base Salary") equal to One Hundred Fifty Thousand Dollars
($150,000).
(2) Bonus. During the Term and as further set forth below, for
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each fiscal year during which the Executive is employed by the
Employer pursuant to this Agreement, in the event that certain
performance criteria (the "Performance Criteria") are met, the
Executive shall be entitled to receive a bonus (the "Annual Bonus") in
an amount of up to one-quarter (25%) of the Base Salary earned for
that fiscal year, which shall be prorated for periods shorter than a
full fiscal year. The applicable Performance Criteria for the 2000
fiscal year of Little Switzerland shall be mutually agreed upon by the
Employer and the Executive prior to September 1, 1999 and the
applicable Performance Criteria for any subsequent fiscal year of
Little Switzerland shall be established by the Compensation Committee
of Little Switzerland prior to the beginning of such fiscal year. For
any fiscal year, the determination of whether the Performance Criteria
have been met and whether any Annual Bonus shall be paid shall be made
in the sole discretion of the Compensation Committee of Little
Switzerland.
The Executive's Base Salary shall be payable in periodic installments
in accordance with the Employer's usual practice for payment of
compensation to its senior executives. The Annual Bonus, if any, shall be
payable within ten (10) calendar days after the date on which Little
Switzerland determines from its business plan, financial reports and other
relevant information the extent to which, if any, the Performance Criteria
have been achieved and in any event not more than ninety (90) days after
the end of the Employer's fiscal year. Notwithstanding the foregoing, the
Annual Bonus shall be prorated for any period of employment shorter than a
full fiscal year.
b. Stock Bonus Plan. On the Commencement Date, the Executive will be
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awarded an option (the "Option") to purchase 50,000 shares of common stock,
par value $.01 per share, of Little Switzerland (the "Common Stock") having
an exercise price equal to one hundred percent (100%) of the fair market
value of a share of Common Stock on the Commencement Date, pursuant to
Little Switzerland's 1991 Stock Option Plan.
c. Living Expenses. The Executive shall be entitled to reimbursement
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for reasonable expenses actually incurred for the purpose of maintaining a
temporary place of residence in St. Xxxxxx, U.S.V.I. (the "Living Expense")
for a period not to exceed thirty (30) days from the Commencement Date.
The Executive shall account promptly for such expenses to the Employer in
the manner reasonably prescribed from time to time by the Employer and in
compliance with the Employer's policy.
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d. Relocation and Out-of-Pocket Expenses. The Executive shall be
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entitled to receive an aggregate amount equal to Thirty Thousand Dollars
($30,000) to cover all reasonable moving, relocation and out-of-pocket
expenses incurred by the Executive in moving to St. Xxxxxx, U.S.V.I.
e. Regular Benefits. The Executive shall be entitled to four (4)
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weeks of vacation time during each year of the Term. The Executive shall
be entitled to participate in any and all employee benefit plans, medical
insurance plans, life insurance plans, disability income plans, retirement
plans and other benefit plans (including, without limitation, any 401(k)
plans) from time to time in effect for senior executives of the Employer.
Such participation shall be subject to the terms of the applicable plan
documents, generally applicable policies of the Employer, applicable law
and the discretion of the Board of Directors, the Compensation Committee or
any administrative or other committee provided for in or contemplated by
any such plan; provided, however, that the Employer, if authorized by such
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plan, shall waive the 90 day waiting period for inclusion of the Executive
in the Employer's medical insurance plan. Nothing contained in this
Agreement shall be construed to create any obligation on the part of the
Employer to establish any such plan or to maintain the effectiveness of any
such plan which may be in effect from time to time; provided, however, that
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in the event the Company terminates or otherwise decreases the benefits
provided under any such plan, the Company shall be obligated to reimburse
the Executive for the benefit lost as a result of such termination or
decrease or otherwise provide a comparable benefit as may be mutually
agreed upon by the Employer and the Executive.
The Executive also shall be entitled to reimbursement for all ordinary
and necessary business expenses incurred by the Executive in connection
with the advancement of Little Switzerland's and the Employer's interests
and the discharge of his duties and responsibilities hereunder, including
without limitation, all travel and lodging expenses; provided, however,
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that the Executive accounts promptly for such expenses to the Employer in
the manner reasonably prescribed from time to time by the Employer and in
compliance with the Employer's policy.
4. Capacity and Extent of Service.
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a. The Executive shall serve the Employer as Vice President of
Finance beginning on the Commencement Date, Vice President, Chief Financial
Officer and Treasurer beginning on July 3, 1999 and shall serve the
Employer in such other or additional offices in which he, from time to
time, may be reasonably requested to serve.
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b. During his employment hereunder, the Executive shall, subject to
the direction and supervision of the Board of Directors of the Employer,
devote his full business time, best efforts and business judgment, skill
and knowledge to the advancement of the Employer's interests and to the
discharge of his duties and responsibilities hereunder. In accordance with
the foregoing, the Executive shall not engage in any other business
activity, except as may be approved by the Board of Directors of Little
Switzerland; provided, however, that nothing herein shall be construed as
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preventing the Executive from:
(1) investing his assets in a manner not otherwise prohibited by
this Agreement, and in such form or manner as shall not require any
material services on his part in the operations or affairs of the
companies or other entities in which such investments are made;
(2) serving on the board of directors of any company, provided
that he shall not be required to render any material services with
respect to the operations or affairs of any such company; or
(3) engaging in religious, charitable or other community or non-
profit activities which do not impair his ability to fulfill his
duties and responsibilities under this Agreement.
5. Termination and Termination Benefits. Notwithstanding the provisions
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of Section 2, subject to the following provisions, the Executive's employment
hereunder shall terminate under the following circumstances without further
liability on the part of the Employer or right of the Executive to receive any
payments hereunder:
a. Death. In the event of the Executive's death during the
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Executive's employment hereunder, the Executive's employment shall
terminate on the date of his death.
b. Termination by the Employer for Cause. The Executive's employment
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hereunder may be terminated for cause (as defined below) by written notice
to the Executive setting forth in reasonable detail the nature of such
cause, effective upon delivery of such notice. The determination of
whether cause existed for terminating the Executive's employment shall be
made by a vote of at least two-thirds of the Board of Directors of Little
Switzerland. Only the following shall constitute "cause" for termination
pursuant to this Section 5.b.:
(i) Deliberate dishonesty of the Executive with respect to
the Employer or any subsidiary or affiliate thereof;
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(ii) Conviction of the Executive of (A) a felony or (B) any
crime involving moral turpitude, deceit, dishonesty or fraud;
(iii) Gross negligence or willful misconduct of the
Executive with respect to the Employer or any subsidiary or affiliate
thereof;
(iv) Failure to perform to the reasonable satisfaction of
the Board of Directors of Little Switzerland a substantial portion
of the Executive's duties and responsibilities assigned or delegated
under this Agreement, which failure continues for more than thirty
(30) days, in the reasonable judgment of the Board of Directors of
Little Switzerland, after written notice given to the Executive by
the Board of Directors of Little Switzerland; or
(v) Material breach by the Executive of any of the
Executive's obligations under this Agreement.
c. Termination by the Employer Without Cause. Subject to the payment
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of the severance benefit pursuant to Section 5.f. hereof, the Executive's
employment with the Employer may be terminated without cause by a two-
thirds vote of all of the members of the Board of Directors of Little
Switzerland on written notice to the Executive effective upon thirty (30)
days after the giving of such notice.
d. Termination by the Executive Without Cause. The Executive may
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terminate his employment with the Employer without cause on written notice
to the Employer effective upon thirty (30) days after the giving of such
notice.
e. Disability. If, due to physical or mental illness, the Executive
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shall be disabled so as to be unable to perform substantially all of his
duties and responsibilities hereunder (a "Substantial Disability"), the
Employer may designate another executive to act in his place during the
period of such disability. For a period of up to two (2) months subsequent
to the commencement of a Substantial Disability, the Employer shall
continue to pay to the Executive his salary and benefits in accordance with
Section 3 hereof. If, at the end of such two-month period the Executive
shall continue to have a Substantial Disability, the Executive's employment
may be terminated by a two-thirds vote of all of the members of the Board
of Directors of Little Switzerland. If any question shall arise as to
whether during any period the Executive suffered a Substantial Disability,
the Executive may, and at the request of the Employer will, submit to the
Employer a certification in reasonable detail by a physician selected by
the Executive or his guardian to whom the Employer has no reasonable
objection as to whether the Executive was so disabled and such
certification shall for the purposes of this Agreement be conclusive of the
issue. If such question shall arise and the Executive
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shall fail to submit such certification, the Employer's determination of
such issue shall be binding on the Executive.
x. Xxxxxxxxx Benefit. In the event the Executive's employment
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hereunder is terminated pursuant to Section 5.c. hereof, on the date of
such termination, the Executive shall be entitled to receive the following:
(i) a lump sum payment equal to (A) six (6) months of Base
Salary in the event such termination occurs on or prior to
December 7, 1999; (B) seven (7) months of Base Salary in
the event such termination occurs after December 8, 1999
but on or prior to January 7, 2000; (C) eight (8) months of
Base Salary in the event such termination occurs after
January 8, 2000 but on or prior to February 7, 2000; (D)
nine (9) months of Base Salary in the event such
termination occurs after February 8, 2000 but on or prior
to March 7, 2000; (E) ten (10) months of Base Salary in the
event such termination occurs after March 8, 2000 but on or
prior to April 7, 2000; (F) eleven (11) months of Base
Salary in the event such termination occurs after April 8,
2000 but on or prior to May 7, 2000; or (G) twelve (12)
months of Base Salary if such termination occurs after May
8, 2000;
(ii) any accrued but unpaid Annual Bonus which the Executive has
earned pursuant to Section 3.a. of this Agreement, but in
no event shall such amount be less than 50% of the amount
set forth in a bonus plan, if any, for the Executive
adopted by the Board of Directors of Little Switzerland for
the fiscal year of Little Switzerland in which such
termination occurred;
(iii) out placement assistance in an aggregate amount not to
exceed Five Thousand Dollars ($5,000);
(iv) reimbursement to cover the reasonable fee for any early
lease cancellation by the Executive on his residence in St.
Xxxxxx; and
(v) reimbursement up to an aggregate amount not to exceed Twenty
Thousand Dollars ($20,000) to cover all reasonable moving,
relocation and out-of-pocket expenses incurred by the
Executive in moving from St. Xxxxxx, U.S.V.I.
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6. Termination Subsequent to Change in Control.
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a. In the event of a Terminating Event (as defined below) within one
(1) year from the date of a Change in Control (as defined below) of Little
Switzerland, as of the date of such Terminating Event, the Executive shall
be entitled to receive a lump sum payment as determined pursuant to Section
5.f.(i) above, plus any accrued and unpaid Annual Bonus which the Executive
has earned pursuant to Section 3.a. of this Agreement.
b. For purposes of this Agreement, a "Terminating Event" shall mean
termination by the Employer or its successor entity of the Executive for
any reason other than death, cause or disability pursuant to Section 5.a.,
Section 5.b. or Section 5.e. above or termination by the Executive with
"Good Reason."
c. For purposes of this Agreement, a "Change in Control" shall be
deemed to have occurred in the following instances: (i) when any "person"
(as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")), becomes a "beneficial
owner" (as such term is defined in Rule 13d-3 promulgated under the 1934
Act), directly or indirectly, of securities of Little Switzerland
representing fifty percent (50%) or more of the combined voting power of
Little Switzerland's then outstanding securities; (ii) the sale, transfer
or other disposition of all or substantially all of the assets of Little
Switzerland to another person or entity; (iii) the stockholders of Little
Switzerland approve a plan of complete liquidation of Little Switzerland;
(iv) the merger, consolidation or other business combination of Little
Switzerland with any other corporation or entity, other than (1) a merger
or consolidation which would result in the voting securities of Little
Switzerland outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the
combined voting power of the voting securities of Little Switzerland or
such surviving entity outstanding immediately after such merger or
consolidation or (2) a merger or consolidation effected to implement a
recapitalization of Little Switzerland (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than fifty percent (50%) of
the combined voting power of Little Switzerland's then outstanding
securities; or (v) the signing of an agreement, contract or other
arrangement providing for any of the transactions described above in this
definition of Change in Control.
d. For purposes of this Agreement, "Good Reason" shall be deemed to
include the following:
(i) a reduction of the Executive's salary or benefits; or
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(ii) a significant change in the Executive's responsibilities
and/or duties which constitutes, when compared to the Executive's
responsibilities and/or duties before the Change of Control, a demotion; or
(iii) a material loss of title or office.
e. The Executive shall provide the Employer with reasonable notice
and an opportunity to cure any of the events listed in Section 6.d. above and
shall not be entitled to compensation pursuant to this Section 6 unless the
Employer fails to cure within a reasonable period of time.
7. Noncompetition and Confidential Information.
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a. Noncompetition. During the period of the Executive's employment
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by the Employer pursuant to this Agreement or otherwise, the Executive will
not, directly or indirectly, whether as owner, partner, shareholder,
consultant, agent, employee, co-venturer or otherwise, or through any
Person (as defined in Section 9 hereof), compete in Little Switzerland's or
the Employer's market area (defined as any country or other jurisdiction in
which Little Switzerland or the Employer conducts business as of the
effective date of termination) with the business conducted by Little
Switzerland or the Employer during the period of his employment hereunder,
nor will he attempt to hire any employee of Little Switzerland or the
Employer, assist in such hiring by any other Person, encourage any such
employee to terminate his or her relationship with Little Switzerland or
the Employer, or solicit or encourage any customer of Little Switzerland or
the Employer to terminate its relationship with Little Switzerland or the
Employer or to conduct with any other Person any business or activity which
such customer conducts or could conduct with Little Switzerland or the
Employer.
b. Confidential Information. The Executive will not disclose to any
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other Person (except as required by applicable law or in connection with
the performance of his duties and responsibilities hereunder), or use for
his own benefit or gain, any confidential information of Little Switzerland
or the Employer obtained by him incident to his employment with the
Employer. The term "confidential information" includes, without
limitation, financial information, business plans, prospects and
opportunities (such as lending relationships, financial product
developments, or possible acquisitions or dispositions of businesses or
facilities) of Little Switzerland or the Employer but does not include any
information which has become part of the public domain by means other than
the Executive's non-observance of his obligations hereunder.
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c. Relief; Interpretation. The Executive agrees that the Employer
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shall be entitled to injunctive relief for any breach by him of the
covenants contained in Sections 7.a. or 7.b. In the event that any
provision of this Section 7 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too
great a period of time, too large a geographic area, or too great a range
of activities, it shall be interpreted to extend only over the maximum
period of time, geographic area, or range of activities as to which it may
be enforceable. For purposes of this Section 7, the term "Employer" shall
mean L.S. Wholesale, Inc. and any of its subsidiaries, affiliates,
predecessors and successors.
8. Conflicting Agreements. The Executive hereby represents and warrants
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that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which he
is a party or is bound, and that he is not now subject to any covenants against
competition or similar covenants which would affect the performance of his
obligations hereunder.
9. Definition of "Person". For purposes of this Agreement: the term
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"Person" shall mean an individual, a corporation, an association, a partnership,
an estate, a trust and any other entity or organization.
10. Taxation of Payments. The Employer shall undertake to make
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deductions, withholdings and tax reports with respect to payments and benefits
under this Agreement to the extent that it reasonably and in good faith believes
that it is required to make such deductions, withholdings and tax reports. All
payments made by the Employer under this Agreement shall be net of any tax or
other amounts required to be withheld by the Employer under applicable law.
Nothing in this Agreement shall be construed to require the Employer to make any
payments to compensate the Executive for any adverse tax effect associated with
any payments or benefits or for any deduction or withholding from any payment or
benefit.
11. Arbitration of Disputes. Any controversy or claim arising out of or
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relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Wilmington, Delaware in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event that any
person or entity other than the Executive or the Employer may be a party with
regard to any such controversy or claim, such controversy or claim shall be
submitted to arbitration subject to such other person or entity's agreement.
Judgment upon the award rendered by the arbitrator may be entered in any court
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having jurisdiction thereof. This Section 11 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 11 shall not preclude either party
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate; provided, however, that any other relief shall be pursued
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through an arbitration proceeding pursuant to this Section 11.
12. Assignment; Successors and Assigns, etc. Neither the Employer nor the
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Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that the Employer may assign its rights under this
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Agreement without the consent of the Executive in the event that the Employer
shall hereafter effect a reorganization, consolidate with or merge into any
other Person, or transfer all or substantially all of its properties or assets
to any other Person. This Agreement shall inure to the benefit of and be
binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13. Enforceability. If any portion or provision of this Agreement shall
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to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Waiver. No waiver of any provision hereof shall be effective unless
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made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
15. Notices. All notices, requests, demands and other communications
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provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the
Board of Directors. Any such notice shall be deemed to be effective and
therefore given upon the following dates: (i) if such notice is delivered in
person the date on which such delivery is done; or (ii) if such notice is sent
by registered or certified mail, postage prepaid, the date which is three (3)
days subsequent to the date on which such notice is mailed.
16. Amendment. This Agreement may be amended or modified only by a
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written instrument signed by the Executive and by a duly authorized
representative of the Employer.
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17. Governing Law; Consent to Jurisdiction. It is the parties' intention
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that the terms of employment under this Agreement shall be construed under and
be governed in all respects by the laws of the State of Delaware. To the extent
that any court action is permitted consistent with or to enforce Section 11 of
this Agreement, the parties hereby consent to the jurisdiction of the courts of
Delaware. Accordingly, with respect to any such court action, the Executive (a)
submits to the personal jurisdiction of such courts; (b) consents to service of
process; and (c) waives any other requirement (whether imposed by statute, rule
of court, or otherwise) with respect to personal jurisdiction or service of
process.
18. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which when so executed and delivered shall be taken to be
an original, but such counterparts shall together constitute one and the same
document.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by each of the Employer and Little Switzerland, by their duly authorized
officers, and by the Executive, as of the date first above written.
L.S. WHOLESALE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
LITTLE SWITZERLAND, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Acting Chief Executive
Officer
/s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
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