EXHIBIT 10.17
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made and entered into as of the 31st day of
December, 1996 by and among Artisan Acquisition Corporation, a Delaware
corporation with an office for the transaction of business in California,
located at 0000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, XX 00000 (the "Employer"),
Decor Group, Inc., a Delaware corporation with an office for the transaction of
business at 000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000 ("Employer's Parent"
or "Decor"), and Xxxxxx X. X'Xxxxx, residing at 000 Xxxxxxxx Xxxx, Xxxxxxxxx, XX
00000 (the "Employee").
WHEREAS, Employee has substantial experience in the performance of
executive, administrative, sales, marketing, accounting, manufacturing and other
duties related to all aspects of the Employer's business, which consists
primarily of manufacturing and distribution of decorative furnishings and
accessories; and
WHEREAS, the parties hereto wish to enter into an agreement for the
employment of the Employee by the Employer upon the terms and conditions herein
set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. Employment. Employer hereby employs Employee, commencing on
or before January 6, 1997 ("Commencement") for the Employment Period,
as hereinafter defined, as its President and Chief Operating Officer,
reporting to the Employer's Board of Directors, which is presently
composed of Xxx Xxxx, Xxxxxxx Xxxxxx and Xxxxxxx Xxxxxxxx, through its
liaison, the Chairman of the Board of Directors, Xxx Xxxx. Employee
hereby accepts such employment upon the terms and conditions, and for
the compensation hereinafter set
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forth, and agrees to serve the Employer well and faithfully and to
devote his best efforts to such employment during the Employment
Period. During the Employment Period, Employee shall devote his full,
complete and entire business efforts, time, attention and energies to
the business activities of the Employer, to the exclusion of all other
commercial activity, more specifically to increase Employer's sales and
profits via internal growth, efficiency improvements and acquisitions.
2. Term; Termination. The term of this Agreement shall be from
Commencement through June 30, 2000 and the granting of relevant
Performance Options to Employee pursuant to Section 4.b. hereunder,
subject to Employer's Right to Earlier Termination ("ERET"). For the
purpose of this document, and notwithstanding any other provision of
this Agreement, ERET provides that Employer may terminate Employee's
employment, in Employer's sole and absolute discretion, prior to the
completion of Employee's sixth (6th) full month of employment. If
Employer exercises its rights to early termination under this
provision, Employee shall be entitled solely to a lump sum payment of
Twenty Five Thousand Dollars ($25,000.00) together with any unpaid
balances due Employee through the date of termination pursuant to the
Base Salary provisions of his Compensation, as hereinafter defined, and
the reimbursement of any bona fide business expenses incurred by
Employee on behalf of Employer in performing his duties hereunder and
other pro rata benefits and reimbursements such as, but not limited to,
automobile allowances due Employee through the date of termination,
which will be paid to Employee concurrent with said termination.
Employer may, at any time, terminate this Agreement immediately with
"cause" upon written notice to Employee. "Cause" shall include one or
more of the following: (i) the commission
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in the course of his employment by Employer of embezzlement, theft or other
dishonest or fraudulent acts; (ii) conviction of a felony, whether or not
committed in the course of his employment by Employer; (iii) immoral or
reprehensible conduct which would make Employee's continued employment by
Employer prejudicial to the interests of Employer or its affiliates; (iv)
willful malfeasance or
gross negligence which would tend to have a material adverse effect on Employer
or its business; (v) persistent inattention or failure by Employee to discharge
his duties and responsibilities; and (vi) the material breach by Employee of
this Agreement which breach remains uncured for ten (10) days after written
notice of such breach.
Should Employer elect to terminate employment of Employee, other than
for "cause" as herein above defined, and after ERET, Employee shall be entitled
to a lump sum payment equal to fifty percent (50%) of the unpaid value of all
Compensation for the full Term of this Agreement as defined in Section 3, but in
no event shall this lump sum amount be less than twenty five thousand dollars
($25,000). In addition Employee shall be entitled to a pro rata portion of the
Additional Compensation, as defined in Section 4. of this Agreement, for the
remainder of the then current employment year of this Agreement. Such pro rata
portion shall be calculated by multiplying thirty thousand (30,000) shares of
Decor Group, Inc.'s common stock and thirty thousand (30,000) options to
purchase shares of Decor Group, Inc.'s common stock, respectively, by the
quotient derived when the number of days expired in the then current employment
year is divided by three hundred sixty five (365). In addition the Employee
shall be entitled to reimbursement of any bona fide business expenses incurred
by Employee on behalf of Employer in performing his duties hereunder and other
pro rata benefits and reimbursements such as, but not limited to, automobile
allowances due
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Employee through the date of termination, which will be paid to Employee
concurrent with said termination. However, with respect to Annual Bonus #1 and
Annual Bonus #2 of Section 3. ("Compensation"), Employee will only be entitled
to a pro rata portion calculated based on the Fiscal year-to-date performance of
Employer.
3. Compensation. As compensation for the performance by
Employee of his obligations and duties under this Agreement, in any
capacity including, without limitation, services as an executive,
officer, director or member of any committee of Employer or any
subsidiary, parent, affiliate or division of Employer, Employer shall
pay to Employee during the Employment Period:
a. Base Salary. An amount equal to One Hundred Thousand Dollars
($100,000.00) per annum in twenty four (24) equal payments, paid
twice per month after Commencement. Employer's Board of Directors
will review Employee's Base Salary annually in order to determine
whether to increase Base Salary. Any such increase will be
effective on, and retroactive to, the respective anniversary of
Commencement.
b. Annual Bonus #1. An amount equal to ten percent (10%) of
Employee's Base Salary earned in the Base Measurement Period, which
is defined for the purpose of this Agreement as the twelve (12)
months preceding the last day of March, which is the end of
Employer's Fiscal Year, provided Employer's Net Profit Before
Taxes, excluding all costs recorded by the Employer as a result of
its issuance of the Signing Bonus pursuant to Section 4(a) hereof
("NPBT"), in the Base Measurement Period equals or exceeds the NPBT
of Employer in the twelve (12) months preceding the
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Base Measurement Period.
c. Annual Bonus #2. An amount equal to Five Percent (5%) of
Employer's increases in NPBT in the Base Measurement Period
over the twelve (12) months preceding the Base Measurement
Period. However, said Bonus #2 will in no event exceed Forty
Percent (40%) of Employee's Base Salary earned in the Base
Measurement Period.
NPBT shall be determined by Employer's regularly retained
certified public accountants, whose calculations and determination
shall be binding on the parties hereto. Bonuses #1 & 2 shall be paid to
Employee within thirty (30) days of said accountants' calculations and
determinations.
4. Additional Compensation. Provided that this Agreement has
not been terminated in accordance with ERET, Decor will issue Employee
shares of the common stock of Decor ("Common Stock") and options to
purchase shares of Common Stock as later defined herein.
a. Signing Bonus. On the date of Commencement and on each of
January 2, 1998 and January 2, 1999 (the "Grant Dates"), the
Employee shall receive, so long as Employee continues to be
employed by the Employer and NPBT in the Base Measurement Period
equals or exceeds the NPBT of the Employer in the twelve (12)
months preceding the Base Measurement Period, options (the "Initial
Options") to purchase thirty thousand (30,000) shares of Common
Stock at an exercise price equal to one hundredth of one cent
($.0001) per share for a period of six (6) years following relevant
Grant Date which Initial Options to be substantially in the form of
the Option Agreement to be delivered to Employee by no later than
January 15, 1997. The shares
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of Common Stock issuable upon exercise of the Initial Options shall
be registered by Decor with the Securities and Exchange Commission
for sale to the public and twenty percent (20%) of the Initial
Options shall vest on each annual anniversary following the
relevant Grant Date.
b. Performance Options. Employee shall be entitled to
receive a performance bonus in the form of stock options based upon
the Employer's financial performance during each of the Employer's
fiscal years ending March 31, 1998, 1999 and 2000. So long as
Employee is employed by the Employer, Employee shall receive
options to purchase thirty thousand (30,000) shares of Decor's
Common Stock under the terms of Decor's 1996 Stock Plan (the
"Performance Options"), immediately following the completion of the
calculation of the Employer's financial results for the relevant
fiscal year; provided however, Employee shall not be entitled to
receive Performance Options for the relevant fiscal year in the
event that the Employer's NPBT (as reflected on the Employer's
financial statements) do not exceed one hundred fifteen percent
(115%) of the Employer's NPBT for the preceding fiscal year. The
Performance Options shall be exercisable for a period of one (1)
year following the date of grant at an exercise price equal to the
average closing price as reported on the NASD OTC Bulletin Board or
any other public exchange which may then be the primary market for
the shares of Common Stock for the twenty (20) trading days ending
two (2) trading days prior to the date the Performance Options are
granted to Employee. In the event that an active market in the
stock does not exist, then the Board of Directors of Decor shall
set the exercise price of the Performance Options
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equal to the fair value of the shares of Common Stock as determined
in the Board's discretion.
5. Expense Reimbursement.
a. Travel & Entertainment. Employer shall reimburse
Employee for all authorized reasonable and necessary expenses
incurred by him in performing his duties for the Employer,
including without limitation, travel and entertainment expenses
within approved budgetary amounts. Travel reimbursement will
include an automobile allowance of Three Hundred Fifty Dollars
($350.00) per month, payable on the fifteenth (15th) day of each
month or the first (1st) business day following the fifteenth
(15th) of the month in the event the fifteenth (15th) day of the
month does not fall on a business day.
b. Relocation. Provided that Employer has not
exercised its rights to terminate Employee's employment pursuant to
ERET as provided herein, Employer will reimburse Employee for
moving expenses Employee may incur pursuant to Employee's
relocation of his residence closer to Employer's place of business,
in an amount not to exceed Five Thousand Dollars ($5,000.00), upon
submittal by Employee of evidence of such moving expenditures.
6. Benefits. Employee and Employee's family shall be entitled
to receive or participate in all fringe benefits which are provided or
made available by Employer, on the same terms and conditions as they
are furnished to other of Employer's senior executive personnel and
their families so long as such benefits do not result in prohibitive or
excessive costs to the Employer. By way of example, and neither
indicative nor inclusive, such benefits may
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include medical, dental, optical, life and/or long term disability
insurances, retirement plans, etc.
7. Vacation. Employee shall be entitled to two (2) weeks paid
vacation each year of the Employment Period. The vacation is to be
taken at such time or times, and for such duration, as Employee and
Employer shall determine, provided, however, that such vacation shall
not unduly interfere with the performance by Employee of his duties and
responsibilities hereunder.
8. Confidentiality. Employee will not disclose to third parties
any information or documents which are confidential and proprietary
to Employer except in furtherance of the Employer's business.
9. Covenant Not to Compete. Employee will not compete with
Employer during the term of this agreement, and in the even that
Employee is terminated for "cause" , for an additional one (1) year
period following the date of termination. Competition shall include
ownership, directly or indirectly, by Employee or any member of his
family of shares of stock or any equity or loan interest in a business
which competes directly or indirectly with Employer. The terms of this
Section (Section 9.-"Covenant Not to Compete") shall also apply to
entities which are or which may become affiliated with Employer only in
the event that Employee becomes operationally involved in any such
affiliate.
10. Enforcement. Any provision of this Agreement which is
finally determined by competent authority to be prohibited or
unenforceable in any jurisdiction shall, as to such provision and
jurisdiction only, be deemed severed to the extent of such prohibition
on unenforceability, and, subject to such severance, this Agreement
shall continue in force and
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effect in accordance with its other terms and conditions.
11. Entire Understanding. This Agreement constitutes the complete
understanding between the parties with respect to the subject matter
hereof, supersedes all prior oral or written understandings and
agreements relating thereto and shall not be modified, amended or
terminated except as provided herein or by written instrument signed by
both parties hereto. No party is acting in reliance upon any
representations or guarantee of the other, aside from those explicitly
provided for in this Agreement.
The failure by any party hereto to object to any breach of
this Agreement, or to enforce at any time or for any period any provision of
this Agreement, shall not constitute a waiver of such provision or of such
party's rights or remedies, or a consent to the modification of the Agreement.
For the purposes of this Agreement, "breach" by the Employer s
hall also be defined to include the Employer's parent corporation's (Decor
Group, Inc.) failure to comply with it's obligations under the terms of this
Agreement which relate to Additional Compensation (Section 4. hereof) and common
stock and option to purchase common stock compensation as defined in Term;
Termination (Section 2. hereof).
12. Successors and Assigns. This Agreement shall not be
assignable by the Employee but it is binding upon and shall inure to
the benefit of the parties hereto and Employee's heirs and personal
representative, and upon and to the benefit of Employer's successors
and assigns.
13. Notices. All notices hereunder must be given by certified
mail or overnight courier if to the Employer addressed to it c/o
Interiors, Inc. 000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, XX 00000,
Attention: Xxx Xxxx; and if to the Employee addressed to him at 000
Xxxxxxxx
0
Xxxx, Xxxxxxxxx, XX 00000.
14. Governing Law. Any and all disputes, controversies and
claims arising out of or relating to this Agreement or concerning the
respective rights or obligations of the parties hereto shall be settled
and determined in the State of New York before a court of competent
jurisdiction.
The validity, construction and performance of this Agreements
shall be governed by and interpreted in accordance with the laws of the State
of New York.
15. Headings. The headings herein are for convenience only and
shall not control or affect the meaning or construction of any
provision of this Agreement.
16. Counterparts. This Agreement may be signed in counterparts,
all of which when taken together as a whole shall constitute a valid
and binding agreement of the parties.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
DECOR GROUP, INC. ARTISAN ACQUISITION CORPORATION
By: /s/ Xxx Xxxx By: /s/ Xxx Xxxx
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Xxx Xxxx, President Xxx Xxxx, President
Xxxxxx X. X'Xxxxx
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XXXXXX X. X'XXXXX
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