Exhibit 10.3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT, made and entered into with an "Effective Date" of
December 10, 2001, by and between Thane International, Inc., a Delaware
corporation (the "Corporation"), and Xxxx Xxxxxx, an individual residing in Boca
Raton, FL (the "Executive").
WITNESSETH THAT:
WHEREAS, the Executive and the Corporation entered into prior employment
contracts ("Prior Contracts") pursuant to which the Executive was entitled to
certain compensation and benefits;
WHEREAS, the Corporation desires to continue to employ the Executive in the
capacity hereinafter stated, and the Executive desires to continue in the employ
of the Corporation in such capacity for the period and on the terms and
conditions set forth herein; and
WHEREAS, the execution and delivery of this Agreement is a new contract intended
to completely supersede Prior Contracts;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Corporation and the
Executive as follows:
1. Employment Period. The Corporation hereby agrees to continue to employ the
Executive as its President and COO and the Executive, in such capacity agrees to
provide services to the Corporation for the period beginning on the Effective
Date herein and ending on the third anniversary of the Effective Date plus four
months (the "Employment Period").
2. Performance of Duties. The Executive agrees that during the Employment
Period, while he is employed by the Corporation, he shall devote his full time,
energies and talents exclusively to serving in the capacity of President and COO
of the Corporation in the best interests of the Corporation, and to perform the
duties assigned to him by the CEO and the Board of Directors of the Corporation
(the "Board") to the best of his abilities; provided that, without the
Corporation's consent (which consent shall not be unreasonably withheld), the
Executive shall not:
(a) serve as or be a consultant to or employee, officer, agent or
director of any corporation, partnership or other entity other than the
Corporation and its subsidiaries (other than civic, charitable, or other public
service organizations); or
(b) have more than a three percent (3%) ownership interest in any
enterprise other than the Corporation if such ownership interest would have a
material adverse effect upon the ability of the Executive to perform his duties
hereunder.
3. Compensation. Subject to the terms and conditions of this Agreement, during
the Employment Period, the Executive shall be compensated by the Corporation for
his services as follows:
(a) He shall continue to receive his current salary from the Effective
Date through December 31, 2001. He shall receive, for each 12-consecutive month
period beginning on January 1, 2002 and each anniversary thereof, a rate of
salary that is not less than $327,500 per year, payable in substantially equal
monthly or more frequent installments and subject to normal tax withholding.
During the Employment Period the Executive's salary rate shall be reviewed by
the Board on or before each anniversary of the Effective Date to determine
whether an increase in his rate of compensation is appropriate, but shall, at a
minimum, be increased 5% per annum.
(b) He shall be eligible to receive incentive compensation payments
and stock options as determined by the Board of Directors on substantially the
same terms and conditions as other similarly situated executives of the
Corporation.
(c) He shall be a participant in any executive benefit plans
maintained by the Corporation on substantially the same terms and conditions as
other similarly situated executives of the Corporation, including but not
limited to: group life insurance, group medical, long-term disability, vacation,
sick days, educational assistance, attendance awards, and any other plans which
may be adopted by the Corporation for its senior executives, excepting that
Corporation shall pay 100% of the medical premium for Executive and his
dependents.
(d) He shall be reimbursed by the Corporation for all reasonable
business, promotional, travel and entertainment expenses incurred or paid by him
during the employment period in the performance of his services under this
Agreement provided that the Executive furnishes to the Corporation appropriate
documentation in a timely fashion required by the Internal Revenue Code in
connection with such expenses and shall furnish such other documentation and
accounting as the Corporation may from time to time reasonably request.
(e) He shall receive bonus compensation for the year ended 2002 based
on the bonus calculations as previously approved by the Board, except that
Executive's personal bonus compensation shall be reduce by $37,500. Within three
months from the close of each fiscal year, he shall receive Bonus Pool
Compensation, based on one percent of the Corporation's domestic EBITDA over
twenty-three million seven hundred thousand ($23,700,000) for the prior year,
including the income of the Corporation's Reliant and Xxxxx Products
subsidiaries, and excluding Thane Direct and its subsidiaries. The Board may
annually revise the amount of Bonus Pool Compensation for future years.
Executive automatically forfeits the receipt of any and all Bonus Pool
Compensation for any fiscal year if he terminates his employment for any reason
prior to the end of that fiscal year.
(f) The Corporation shall pay all dues owed with respect to a
membership in a country club as mutually agreed by the Corporation's CEO and
Executive.
(g) He shall be provided with a Corporation vehicle during the Term
herein of an approximate value of $75,000, including reimbursement for
Executive's reasonable and necessary costs of all automobile insurance
(liability or otherwise), fuel, lubricants and automobile maintenance and repair
in connection with Corporation's vehicle hereunder.
4. Compensation Due Upon Termination. Except as otherwise provided under the
executive benefit plans maintained by the Corporation in which the Executive
participates in accordance with subparagraph 3(c), the Executive's right to
compensation for periods after the date his employment with the Corporation
terminates shall be determined in accordance with the following:
(a) Discharge Without Cause. In the event the Corporation terminates
the Executive's employment under this Agreement without cause (as defined in
subparagraph 4(c)), the Executive shall be entitled to receive:
(i) all payment of his salary (as of the date of termination) in
accordance with the provisions of subparagraph 3(a) for the lesser of (a)
twelve months or (b) the remainder of the Employment Period; and
(ii) payment of any pro rata bonus compensation payments that
otherwise would have been payable to the Executive under subparagraph 3(b)
through the date his employment with the Corporation terminates.
(b) Voluntary Resignation. The Corporation shall have no obligation to
make payments to the Executive in accordance with the provisions of paragraph 3
for periods after the date on which the Executive's employment with the
Corporation terminates due to the Executive's voluntary resignation.
(c) Discharge for Cause. The Corporation shall have no obligation to
make payments to the Executive in accordance with the provisions of paragraph 3
for periods after the Executive's employment with the Corporation is terminated
on account of the Executive's discharge for cause. For purposes of this
subparagraph 4(c), the Executive shall be considered discharged for "cause" if
he is discharged by the Corporation on account of the occurrence of one or more
of the following events:
(i) the Executive becomes habitually addicted to drugs or
alcohol;
(ii) the Executive discloses confidential information in
violation of paragraph 5;
(iii) the Executive engages in competition in violation of
paragraph 6;
(iv) the Corporation is directed by regulatory or governmental
authorities to terminate the employment of the Executive or the Executive
engages in a grossly negligent or willful manner in activities that cause
actions to be taken by regulatory or governmental authorities that have a
material adverse effect on the Corporation;
(v) the Executive is indicted of a felony crime (other than a
felony resulting from a traffic violation);
(vi) the Executive flagrantly disregards his duties under this
Agreement after (A) notice has been given to the Executive by the Board
that it views the Executive to be flagrantly disregarding his duties under
this Agreement and (B) the Executive has
been given a period of 10 days after such notice to cure such misconduct
(provided that no such notice or cure period shall be required if
Executive's disregard of his duties is willful and has materially and
adversely affected the Corporation);
(vii) any event of egregious misconduct involving serious moral
turpitude to the extent that, in the reasonable judgment of the Board, the
Executive's credibility and reputation no longer conform to the standard of
the Corporation's executives; or
(viii) the Executive commits an act of fraud against the
Corporation or violates a duty of loyalty to the Corporation.
(d) Disability. The Corporation shall have no obligation to make
payments to the Executive in accordance with the provisions of paragraph 3 for
periods after the date the Executive's employment with the Corporation
terminates on account of disability. For purposes of this subparagraph 4(d),
determination of whether the Executive is disabled shall be determined in
accordance with the Corporation's long term disability plan and applicable law,
except payments due and owing as of such date.
(e) Death. The Corporation shall have no obligation to make payments
to the Executive's estate in accordance with the provisions of paragraph 3 for
periods after the date of the Executive's death, except payments due and owing
as of such date.
5. Confidential Information. Except as may be required by the lawful order of
a court or agency of competent jurisdiction, the Executive agrees to keep secret
and confidential indefinitely all non-public information concerning the
Corporation and its affiliates that was acquired by or disclosed to the
Executive during the course of his employment by the Corporation or any of its
affiliates, including information relating to customers (including, without
limitation, credit history, repayment history, financial information and
financial statements), costs, and operations, financial data and plans, whether
past, current or planned and not to disclose the same, either directly or
indirectly, to any other person, firm or business entity, or to use it in any
way; provided, however, that the provisions of this paragraph 5 shall not apply
to information that is in the public domain or that was disclosed to the
Executive by independent third parties who were not bound by an obligation of
confidentiality. The Executive further agrees that he shall not make any
statement or disclosure that (a) would be prohibited by applicable Federal or
state laws or (b) is intended or reasonably likely to be detrimental to, or
disparaging of, the Corporation or any of its subsidiaries or affiliates.
6. Non-competition. The Executive and the Corporation agree that reasonable
restrictions upon direct competition with the Corporation following termination
of the Executive's employment with the Corporation are necessary to protect the
business interests of the Corporation.
(a) For purposes of this paragraph 6, the "Business" of the
Corporation is defined as the design, production and distribution of television
programs that are marketing or advertisement pieces ("infomercials") targeted at
potential consumers of health, beauty, fitness and related home products, or
other products as may be identified pursuant to paragraph 6(b)
herein, with the objective of causing the television viewers to make purchases
of the products featured in the television programs.
(b) The extent of the Corporation's Business is limited to the actual
and intended business of the Corporation, as demonstrated by books, records,
contracts, advertising, strategic plans and financial and budget documents,
created or relied upon during the Employment Period and as of the date the
Executive leaves the employment of the Corporation.
(c) The Executive and Corporation agree that for the period (the
"Non-Competition Period") commencing on the Effective Date and ending on the
third anniversary of the date hereof, unless the Executive is terminated without
cause under paragraph 4(a), the Executive shall not serve as or be a consultant
to or employee, officer, agent, director or owner of more than three percent
(3%) of another corporation, partnership or other entity whose primary Business
competes with the Corporation in Business (as defined in this paragraph 6).
(d) That the nature of the television production business of the
Corporation is interstate and international in scope, that the global scope of
the business renders a global restriction reasonable and a more narrowly
tailored geographic restriction insufficient to protect the legitimate business
interests of the Corporation.
(e) The Executive may engage in the design, production and
distribution of infomercials other than those competing with the Business of the
Corporation as defined in this paragraph 6 at any time following termination of
employment with the Corporation.
(f) The Executive may engage in design, production and distribution of
infomercials competing with the Business of the Corporation as provided for in
paragraph 6(a), after the Non-Competition Period.
7. Successors. This Agreement shall be binding on, and inure to the benefit
of, the Corporation and its successors and assigns and any person
acquiring, whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Corporation's assets and
business.
8. Nonalienation. The interests of the Executive under this Agreement are not
subject to the claims of his creditors, other than the Corporation, and may
not otherwise be voluntarily or involuntarily assigned, alienated or
encumbered except to the Executive's estate upon his death.
9. Remedies. The Executive acknowledges that the Corporation would be
irreparably injured by a violation of paragraphs 5 or 6, and agrees that
the Corporation shall be entitled to an injunction restraining the
Executive from any actual or threatened breach of paragraph 5 or 6, or to
any other appropriate equitable remedy without bond or other security being
required.
10. Waiver of Breach. The waiver by either the Corporation or the Executive of
a breach of any provision of this Agreement shall not operate as or be
deemed a waiver of any subsequent breach by either the Corporation or the
Executive.
11. Notice. Any notice to be given hereunder by a party hereto shall be in
writing and shall be deemed to have been given when received or, when
deposited in the U.S. mail, certified or registered mail, postage prepaid:
(g) to the Executive addressed as follows:
Xxxx Xxxxxx
000 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
(h) to the Corporation addressed as follows:
Thane International, Inc.
Legal Department
00-000 Xxxxx Xxxxxxx, Xxx. 000
Xx Xxxxxx, XX 00000
12. Amendment. This Agreement may be amended or canceled by mutual agreement of
the parties in writing without the consent of any other person and no
person, other than the parties thereto (and the Executive's estate upon his
death), shall have any rights under or interest in this Agreement or the
subject matter hereof.
13. Applicable Law. The provisions of this Agreement shall be construed in
accordance with the internal laws of the State of California.
14. Termination. All of the provisions of this Agreement shall terminate after
the expiration of the Employment Period, except that paragraph 5 shall
survive indefinitely, and paragraph 6 shall terminate upon the expiration
of the Non-Competition Period.
IN WITNESS WHEREOF, the Executive and the Corporation have executed this
Employment Agreement as of the Effective Date herein.
Xxxx Xxxxxx:
/s/ Xxxx Xxxxxx
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Thane International, Inc.:
/s/ Xxxxxxx X. Xxx
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By: Xxxxxxx X. Xxx, CEO
