1
Exhibit 10(f)
EMPLOYMENT AGREEMENT, made this day of , 1992, between
Amscan, Inc., a New York corporation, with offices at Xxxxx Xxxx, Xxxxxxxx, Xxx
Xxxx 00000 (the "Employer" or "Company") and Xxxxxxx Xxxxxx, residing at
_____________________________________________ (the "Employee").
1. Employment of the Employee.
The Employer employs the Employee to serve as the Company's
sales and marketing manager and to perform such other duties as may be assigned
to him from time to time by the Company.
(a) The Employee shall devote his entire time and attention to
the Employer's business. During the term of this agreement, the Employee shall
not engage in any other business activity, whether or not it is pursued for gain
or profit.
(b) The Employee is designated as Vice President in charge of
Sales and Marketing. The Board of Directors may at its will change such
designation. No additional compensation shall be payable to the Employee for his
services as an officer or director of the Company.
2. Term of Employment and Effective Date Thereof.
(a) The initial term of employment of the Employee hereunder
shall start as of January 1, 1992 and except as earlier terminated, as herein
provided, shall end December 31, 1996.
(b) Notwithstanding the foregoing, the Employee's employment
hereunder shall terminate upon the occurrence of any of the following events:
(i) the mutual agreement of the parties;
(ii) the death of the Employee;
(iii) the termination of the Employee's employment
by the Employer, for "Cause" as defined hereinafter;
(iv) the unilateral cessation or discontinuance
by the Employee of his working for or employment by the Employer.
2
(c) For the purposes of this agreement, "cause" shall mean the
commission by the Employee of any crime or an intentional act of fraud against
the Employer or any flagrant act of gross negligence or gross misconduct on the
part of the Employee with respect to his duties under this agreement; or any
flagrant act on the part of the Employee in violation of specific and reasonable
directions of the Board of Directors.
(d) Upon termination of the Employee's employment hereunder,
whether at the end of the initial term hereof or any extended term or in the
event of earlier termination, the Employee shall have no further rights under
this Agreement, except as expressly herein set forth. But such termination shall
not preclude the Employer from enforcing any remedies available to it by law in
consequence of a breach by the Employee of his obligations hereunder, including
without limitation the enforcement of any restrictive covenants hereunder.
3. Base Compensation.
(a) For his services hereunder, the Employer shall pay to the
Employee during the term of this agreement, the following base annual salaries:
(i) The base annual salary for the calendar year, 1992 shall
be $150,000..
(ii) For each full calendar year of the term of this
agreement, starting with the calendar year 1993, the base
annual salary shall be increased by $7,500.00 over the base
yearly salary of the preceding year.
(b) Employee's base annual salary shall be payable in regular
intervals in accordance with the Company's payroll practices.
(c) All compensation shall be subject to such withholding of
any federal, state or local taxes as may be required by law with respect to
these payments.
(d) In the event of the termination of the Employee's
employment before the end of a calendar year, the base yearly salary for the
year of termination shall be pro-rated to the date of termination.
4. Bonuses.
In addition to the base yearly salary set forth in Paragraph 3
hereof and any other compensation payable to the Employee as herein set forth,
the Employer agrees to pay to the Employee a bonus or bonuses as and upon the
terms and conditions hereinafter set forth:
- 2 -
3
(a) For each calendar year that the Employee shall be employed
by the Employer, whether during the initial term or any extended term, the
Employer shall pay to the Employee a bonus of the following percentages of the
Aggregate Net Profits (as hereinafter defined and calculated) of Amscan (USA),
Amscan (Canada) and Deco Manufacturing, Inc. (hereinafter referred to as the
Bonus Companies) for the following calendar years:
For the year 1992, two (2%) percent;
For the year 1993, three (3%) percent;
For the year 1994, four (4%) percent; and
For the year 1995 and each calendar year thereafter, five
(5%) percent.
(b) If the Employee's employment shall be terminated before
the end of a calendar year, then the bonus for the period of time that the
Employee shall be employed during such calendar year shall be prorated for the
period from the commencement of such year to the date of termination of
employment within such year.
(c) If the Employee's employment has been terminated for
"cause" as set forth in paragraph 2.(b)(iii) hereof or by reason of the
unilateral cessation or discontinuance by the Employee of working for the
Employer as set forth in paragraph 2.(b)(iv) of this agreement, no bonus shall
be payable by the Employer to the Employee under this provision of this
agreement for the year of termination.
(e) Each Bonus Company may take such steps in the operation of
its business as its officers, directors or shareholders may, in their sole
discretion, determine, including, without limitation, modification or
discontinuance of any of its present operations or addition of new operations,
without regard to the effect on the calculation of the Aggregate Net Profits
hereunder. If any action taken by any of the Bonus Companies adversely affects
the Aggregate Net Profits as defined herein, the Employee shall not be entitled
to any claim or recourse of any kind or nature by reason thereof against any of
the Bonus Companies.
(f) The Aggregate Net Profits hereunder shall be calculated by
adding the net profits of the three Bonus Companies and deducting therefrom the
net losses of the three Bonus Companies for each calendar year or any lesser
period within a calendar year if the Employee's employment shall be terminated
before the end of a calendar year. If any of the three Bonus Companies may have
a fiscal period which does not coincide with the calendar year, in computing the
Aggregate Net
- 3 -
4
Profits, if any, for any calendar year, the net profits or losses of the three
Bonus Companies for any full calendar year shall be taken as the amounts
calculated as at the end of their respective fiscal periods occurring during the
calendar year involved.
(g) For the purposes hereof, the Net Profits, if any, of the
three Bonus Companies shall be computed before the payment of any federal, state
or local taxes by the Bonus Companies located in the United States and before
the payment of comparable taxes payable by any of the Bonus Companies located
outside of the United States.
(h) For the purpose of computing the Aggregate Net Profits
hereunder, the deduction by the Employer for the base salary of the President of
the Employer (now, Xxxx Xxxxxxxxxxx) shall not exceed the base sum of $250,000.
for the calendar year 1992 with successive increases thereafter, of 5% over the
base salary for each of the four (4) additional calendar years of the initial
term and for any extended term. Nothing contained herein shall limit the amount
of salary which may be payable by the Employer or any of the Bonus Companies or
any current or future Affiliates, (as hereinafter described and defined) to its
President; the foregoing limitation being only for the purpose of computing
Aggregate Net Profits.
(i) For the purposes hereof, the Aggregate Net Profits shall
be calculated and determined by outside accountants regularly employed by the
Employer and the respective Bonus Companies and Affiliates to prepare their
financial statements and such calculations shall be made in accordance with
generally accepted accounting principles consistently applied. The Employee and
Employer shall be bound by the calculation of the said accountants as to the
amount of the Aggregate Net Profits and Losses.
The Employee's share of the Aggregate Net Profits, if any,
shall be paid to him as follows:
The Aggregate Net Profits shall be computed by the aforesaid
accountants in a timely manner at the end of each calendar year or at the time
of termination of the Employee's employment within a calendar year, in the event
of early termination and the Employee's share of the Aggregate Net Profits shall
be paid to him as follows:
(i) One-third thereof shall be paid to the Employee
within 90 days after the end of the calendar year involved or within 90 days
after early termination of Employee's employment within a calendar year, as the
case may be.
- 4 -
5
(ii) The remaining two-thirds of the Employee's share
of said Aggregate Net Profits shall be loaned by the Employee to the Company to
be repaid to the Employee with interest at prime rate chargeable by the
Company's bank as follows: Interest only shall be paid at the end of the first
year of such loan and the remaining principal plus interest shall be paid at the
end of the second year of such loan. The loan shall be deemed to have been made
on the first day following the period covered by the accounting involved.
5. Fringe Benefits.
As additional consideration for the services of the Employee
under this Agreement, the Employer shall provide to the Employee all fringe
benefits provided by the Employer to its other executives, including automobile
allowance, paid vacation, holiday and sick leave, medical insurance for the
Employee, spouse and dependent children fully paid for by the Employer and group
life insurance, and participation in pension and/or profit-sharing plans, in the
same manner and to the same extent as such fringe benefits shall be available to
such other executives of the Employer.
6. Business Expenses.
The Employee may incur, for the benefit of the Company and in
furtherance of the Company's business, various expenses included but not limited
to travel, entertainment and promotion expenses. The Employer, at its option,
shall either pay such necessary expenses to the Employee directly, advance sums
to be used for payment of such necessary expenses or on submission by the
Employee of proper vouchers therefor, reimburse the Employee for such necessary
expenses actually incurred by him.
- 5 -
6
8. Restrictive Covenant.
In consideration of his special and unique services and his
position, which by its nature exposes him to trade secrets, proprietary
information and other confidential material and assets of the Employer, the
Employer covenants and agrees as follows with the Employer:
(a) Except as herein provided, the Employee covenants and
agrees with the Employer that for a period of three (3) years after the
termination of his employment hereunder, whether at the end of the initial or
any extended term hereunder or earlier termination the Employee will not,
directly or indirectly, as proprietor, partner, shareholder (other than as a
less than five percent shareholder in a publicly held company), officer,
director, employee or consultant, or in any other capacity, for his own benefit
or for or with any other person or entity, engage in or perform services in any
business or activity involved in or related to the business in which the
Employer or any of its Affiliates (as defined in sub-paragraph (b) of this
paragraph) are now engaged or may hereafter become engaged, in any trading area
in which the Employer or any of its Affiliates may be engaged in business or
trade.
(b) The parties acknowledge that the Employer is associated
with other companies either as an owner, shareholder, co-venturer or otherwise,
which are engaged in businesses similar to or related to the business of the
Employer. These businesses and any other businesses with which the Employer may
hereafter become associated which will conduct business similar to or related to
the business of the Employer are referred to for the purposes of this paragraph
8. and the restrictive covenant herein contained as Affiliates of the Employer.
These include at the present time Amscan U.S.A., Amscan Canada, Amscan Sweden,
Amscan England, Amscan Australia, Amscan Germany, Deco Manufacturing, Kookabura
Manufacturing, Perfect Party and Cake Tops and may hereafter include other
companies.
(c) The provisions of paragraph 8.(a) hereof relating to
restrictions on Employee's employment upon termination of the
- 6 -
7
initial term of this agreement or any extended term or earlier termination shall
have no application and shall not be binding upon the Employee in the event of a
termination of the Employee's employment, at the will of the Employer, under
paragraph 2.(b)(v) hereof.
(d) The Employee further covenants that he will not, at any
time, without the prior written consent of the Employer furnish or disclose to
any person who is not then an officer, employee or agent of the Employer, (i)
any trade secret of the Employer or of any Affiliate, or (ii) any documents,
records, plans, models, customer lists or other tangible property of the
Employer or any Affiliate, regardless of its form, which may come into his
possession, custody or control in consequence of his employment.
(e) In addition, to a right to accounting by the Employer
and/or damages and/or any other relief to which the Employer may be entitled as
a result of the Employee's breach of the provisions of this paragraph, the
Employer or the Affiliates will be entitled to injunctive relief restraining any
such breach or threatened breach, or the continuation of such breach, by the
Employee, provided, however that if a court of competent jurisdiction shall
determine that this covenant shall be enforceable only if limited to a shorter
period of time or to a smaller geographical area than is herein expressly
provided, or otherwise limited, then and in such event, this covenant shall be
deemed to be limited to the extent so determined to be enforceable, in the same
manner and to the same extent as of such limits were expressly provided herein.
(f) The rights hereunder by the Employer against the Employee
may be assigned by the Employer and may be enforced by any successors or assigns
of the Employer or any Affiliate as herein defined.
11. Option to Extend.
The Employer is granted an option to extend this agreement and
the employment of the Employee for an additional period of three (3) years
during the calendar years 1997, 1998, and 1999, upon the following terms and
conditions:
(a) The option shall be exercised by notice to the Employee by
the Employer, no later than July l, 1996.
(b) Notice of the exercise of such option shall be in
conformity with the provisions of paragraph 12. hereof.
(c) The employment of the Employee during such extended three
(3) year term shall be upon the same terms and conditions as are set forth in
this Agreement modified as follows: (i) Base yearly salary shall be increased
from year
- 7 -
8
to year in the manner provided by paragraph 3.(a)(ii) hereof; (ii) bonuses shall
be paid as provided by paragraph (4) hereof; (iii) in the event of early
termination under paragraph 2.(b)(v) hereof, the Employer shall, in addition,
pay the following amount: ______________________________________________________
________________________________________________________________________________
12. Notices.
Any notice hereunder shall be sufficient if sent by Certified
Mail, Return Receipt Requested, to the party to be notified at his or its
address set forth below or at such other address as the party to be notified may
have otherwise designated, by notice in writing, with copies to their respective
attorneys as set forth below:
To Amscan or any of its Affiliates at: Amscan, Inc., X.X. Xxx 000, Xxxxx Xxxx,
Xxxxxxxx, X.X. 00000, with a copy to: Xxxxxxx & Xxxxxxxxx, Xxx Xxxxxxxxx, Esq.
Xxx Xxxxx Xxxxxxxx, Xxxxx Xxxxxx, X.X. 00000.
To Xxxxxxx Xxxxxx at: __________________________________________________________
with a copy to: _______________________________________________________________
13. Amendments.
No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties, except as herein otherwise
provided.
14. Governing Law.
This Agreement shall be governed in all respects by the laws
of the State of New York.
15. Paragraph Headings.
The paragraph headings used in this Agreement are included
solely for convenience and shall not affect or be used in connection with the
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
AMSCAN, INC. (Employer)
By: /s/ XXXX XXXXXXXXXXX
--------------------------
Xxxx Xxxxxxxxxxx,
President
/s/ XXXXXXX XXXXXX
--------------------------
Xxxxxxx Xxxxxx, (Employee)
- 8 -
9
SUPPLEMENT TO EMPLOYMENT AGREEMENT made the 29 day of
December, 1992, between Amscan, Inc., a New York corporation (the "Employer" or
"Company") and Xxxxxxx Xxxxxx ("the Employee") (hereinafter referred to as the
"Employment Agreement").
WHEREIN, IT IS MUTUALLY AGREED AS FOLLOWS:
Paragraph 4.(f) of the Employment Agreement is amended to add the
following:
"For the purpose of calculating the Aggregate Net Profits hereunder,
all contributions by Xxxx Xxxxxxxxxxx to the capital of the Bonus
Companies or any of them, shall be treated as if such capital
contributions were loans to the Bonus Companies or any of them, and an
amount equal to the "interest", (computed as hereinafter set forth)
which would have been paid on such capital contributions had they been
loans shall be deducted as an operating expense. For the purpose of
such calculation, the amount of "interest" shall be the "prime" rate
chargeable by the Employer's primary bank as it may be determined from
time to time by said bank plus one (1%) percent."
IN WITNESS WHEREOF, the parties have executed this agreement the 29 day
of December, 1992
AMSCAN INC. (Employer)
By: /s/ XXXX XXXXXXXXXXX
---------------------------------
Xxxx Xxxxxxxxxxx, President
/s/ XXXXXXX XXXXXX
---------------------------------
XXXXXXX XXXXXX, Employee
