EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made and entered into as of the ___ day of
November, 1998 by and between CARLYLE INDUSTRIES, INC., a Delaware corporation
(the "Company"), and XXXXX XXXXXX (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of packaging and
distributing home sewing and craft products, principally buttons, to mass
merchandisers, specialty chains and independent retailers and wholesalers
throughout the United States;
WHEREAS, effective January 1, 1999, the Employee will resign as the
President of Xxxxxxxxxx/Lansing Company, a Delaware corporation and a wholly
owned subsidiary of the Company ("Xxxxxxxxxx/Lansing");
WHEREAS, the Company desires to employ the Employee, and the Employee
desires to render services to the Company, as Vice Chairman of the Company, upon
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual terms, covenants,
agreements and conditions hereinafter set forth, the Company and the Employee
hereby agree as follows:
1. EMPLOYMENT. The Company hereby employs the Employee to serve as Vice
Chairman of the Company, to perform for the Company and its subsidiaries such
duties as may be reasonably requested from time to time by the Board of
Directors or the
1
Chief Executive Officer of the Company or by the President of Xxxxxxxxxx/Lansing
or by the President of Westwater Industries, Inc., including, but not limited
to, the performance of duties in connection with special projects of the Company
and the rendering of consulting services and services relating to customer
relations. The Employee shall be required to perform his duties hereunder only
on Tuesday, Wednesday and Thursday of each week during the Employment Term
(hereinafter defined) and shall not be required to perform such duties on any
Monday or Friday during the Employment Term; provided, however, if the Company
requests or the Employee is otherwise required to attend a meeting, trade show
or other event held on a Monday or Friday, then the Employee shall be entitled
to receive one personal day for each Monday or Friday in which the Employee
attends such meeting, trade show or other event on behalf of the Company, which
personal day(s) can be taken by the Employee at any time during the Employment
Term.
2. TERM. Unless sooner terminated as provided in this Agreement, the
term of this Agreement shall be for a period of one (1) year commencing on
January 1, 1999 and ending on December 31, 1999 (the "Employment Term").
3. COMPENSATION.
(a) In consideration for the services of the Employee rendered to
the Company hereunder, the Company shall pay the Employee a base salary (the
"Base Salary") at an annual rate of One Hundred Twenty Thousand Dollars
($120,000) during the Employment Term. The Employee's Base Salary shall be
payable in accordance with the payroll practices of the Company.
2
(b) In addition, the Employee shall be eligible to participate in
the Company's Management Incentive Plan (the "MIP") based on a target award
percentage equal to fifty percent (50%) of his Base Salary (or $60,000), payable
at such time as payments are made by the Company to its employees under the MIP
(hereinafter, the "MIP Bonus"); provided, however, notwithstanding anything
contained in the MIP to the contrary, including without limitation, any
provisions relating to satisfaction of the requirements for an award payment,
the Employee shall be entitled to receive a minimum MIP Bonus of $40,000 in
respect of the Employment Term.
4. BENEFITS.
(a) The Employee shall be entitled to continue his participation in
the medical and health insurance plans of the Company, the Company's 401(k)
Plan, and such other benefits as the Employee participated in while employed by
Xxxxxxxxxx/Lansing. The Employee shall also be entitled to receive such other
benefits as may be determined by the Company's Board of Directors in its
discretion.
(b) The Company shall make all lease and maintenance payments with
respect to the automobile leased by the Company on behalf of the Employee during
the Employment Term and thereafter until July 2000, the expiration of the
automobile lease.
(c) The Employee shall be entitled to paid vacation during the
Employment Term, as follows: (i) an aggregate of four (4) weeks during the
months of January and
3
February; (ii) the week commencing December 24, 1999 and ending December 31,
1999; and (iii) a minimum of ten (10) additional days, which additional days
shall be subject to the approval of the President or Chief Executive Officer of
the Company. In addition, upon the expiration or termination of the Employee's
employment hereunder for any reason, the Employee shall be entitled to receive
payment (the "Accrued Vacation Payment") for his forty (40) days of accrued but
unused vacation time while employed by Xxxxxxxxxx/Lansing (i.e., $23,461.60 for
the forty days), which amount is based upon the Employee's 1998 base salary.
(d) The Employee shall be entitled to reimbursement for reasonable
out-of-pocket expenses incurred by the Employee pursuant to his employment
hereunder, provided that prior to incurring any expenses in excess of $1,000 the
Employee shall submit to the Company for approval an estimate of such expenses.
5. STOCK OPTIONS. The Company and the Employee acknowledge that the
Company previously issued to the Employee non-qualified stock options
(collectively, the "Options"), as follows: (i) stock options to purchase 50,000
shares of common stock, par value $.01 per share, of the Company (the "Common
Stock") pursuant to an Employee Stock Option Agreement dated as of May 16, 1997
between the Company and the Employee (the "1997 Stock Option Agreement"); (ii)
stock options to purchase 5,000 shares of Common Stock pursuant to an Employee
Stock Option Agreement dated as of December 1, 1995 between the Company and
4
the Employee (the "1995 Stock Option Agreement"); and (iii) stock options to
purchase 10,000 shares of Common Stock pursuant to an Amended and Restated
Employee Stock Option Agreement dated as of December 14, 1994 between the
Company and the Employee (the "1994 Stock Option Agreement") (the 1997 Stock
Option Agreement, the 1995 Stock Option Agreement and the 1994 Stock Option
Agreement are collectively referred to herein as the "Stock Option Agreements").
The Options shall continue to vest in accordance with the terms of the Stock
Option Agreements; provided, however, notwithstanding anything contained in the
Stock Option Agreements, upon the expiration or termination of the Employee's
employment hereunder for any reason, including death, (i) all unvested Options
shall immediately vest in full and (ii) any Options, to the extent not yet
exercised, shall not terminate until ten (10) years after their respective dates
of grant.
6. WORK PRODUCT. Any and all ideas, discoveries, processes, techniques,
inventions, patents, patent applications, technology, copyrights, derivative
works, trademarks, service marks, improvements, trade secrets and the like,
which are developed, conceived, created, discovered, learned, produced and/or
otherwise generated by the Employee, whether individually or otherwise, during
the time that the Employee is employed or retained by the Company, whether or
not during working hours, that relate to the business and/or activities of the
Company, shall be the sole and exclusive property of the Company. This Section 6
shall survive any termination of this Agreement. The Employee shall execute such
documents or other papers and take
5
such further actions as may be reasonably required or desirable to carry out the
provisions of this Section 6, including but not limited to, the execution of any
assignment documents. For purposes of this Section 6, the "Company" shall
include any subsidiary of the Company.
7. CONFIDENTIAL INFORMATION. The Employee agrees that, subject to the
exceptions set forth below, he shall not, directly or indirectly, reveal,
disclose, publish or otherwise make known any Confidential Information (as
defined below) to any other person, firm, association, corporation, partnership
or other entity (a "Third Party") and shall not at any time use, or permit any
Third Party within his control to use, any Confidential Information. For
purposes hereof, "Confidential Information" shall mean any technology, data,
know-how, concepts, ideas, plans, studies, procedures and processes in which the
Company has an interest, including such information relating to the business,
business plans, software, technology, technology development or marketing plans
or financial operations of the Company that the Employee knows, or reasonably
should know, are sufficiently unknown to third parties such that third parties
may derive economic value from the disclosure thereof. However, Confidential
Information shall not include any information that: (i) is disclosed to the
Employee by a Third Party without breach by such Third Party of any obligation
to the Company; or (ii) becomes generally known to the public. The Employee
shall not have any obligations with regard to Confidential Information to the
extent that (i) disclosure is necessary to permit the
6
Employee to discharge his duties hereunder in the best interests of the Company,
in which event the Employee shall obtain the Company's prior written consent to
disclose such Confidential Information, or (ii) disclosure is compelled by law,
in which event the Employee agrees to give the Company prior written notice of
any disclosure to be made pursuant hereto and the Employee shall cooperate fully
with the Company to obtain protective orders, confidential treatment or other
protective action as may be available to preserve the confidentiality of the
information required to be disclosed. For purposes of this Section 7, the
"Company" shall include any subsidiary of the Company.
8. RETURN OF COMPANY MATERIAL. Employee shall promptly deliver to the
Company, upon termination of the Employee's employment with the Company, or at
any time the Company may so request, all Company memoranda, notes, records,
reports, manuals, drawings, computer software, and all documents containing
Confidential Information belonging to the Company, including all copies of such
materials which the Employee may then possess or have under his control.
9. NON-COMPETITION; NON-SOLICITATION. The Employee agrees that during
the Employment Term and for a period of one (1) year thereafter, he will not,
(i) directly or indirectly, throughout the entire world: (A) own, manage,
operate, join, control or participate in or be connected with, as an officer,
director, employee, agent, consultant, shareholder, owner, partner, principal,
or any other capacity, any business venture
7
which engages in any activities that, directly or indirectly, compete with the
Company (which for purposes of this Section 9 shall include any subsidiary or
affiliate of the Company) in any respect; or (B) prepare, develop, package,
assemble or distribute any products that are functionally similar to, or that
can reasonably substitute for the products of the Company; or (ii) solicit,
induce or attempt to induce, or assist others to solicit, induce or attempt to
induce, any employee of the Company (which for purposes of this Section 9 shall
include any subsidiary or affiliate of the Company) to terminate his or her
association with the Company or in any manner, directly or indirectly, interfere
with or disrupt any relationship between the Company and such employee, or
solicit, entice, take away or employ any person employed by the Company.
Notwithstanding anything contained herein, in the event that the Employee's
employment is terminated by the Company or the Employee resigns prior to the
expiration of the Employment Term, the restrictive covenants contained in this
Section 9 shall survive such termination and continue in effect until December
31, 2000.
10. PAYMENTS AND OTHER RIGHTS ON TERMINATION, DEATH OF EMPLOYEE AND/OR
CHANGE IN CONTROL.
(a) RIGHTS ON TERMINATION. In the event that the Employee's employment
hereunder is terminated by the Company for any reason (other than a Change in
Control (hereinafter defined) as provided in Paragraph (c) below), upon such
termination the Company (i) shall pay the Employee (A) the balance of the Base
Salary that would have been paid to the Employee had his
8
employment not been terminated, (B) the MIP Bonus, (C) the Accrued Vacation
Payment and (ii) shall make all further lease payments required pursuant to
Section 4(b) hereof. In addition, the provisions of Section 5 regarding the
Employee's Options shall survive any such termination.
(b) DEATH OF EMPLOYEE. In the event of the Employee's death, the
Employee's beneficiary or estate shall be entitled to receive payment from the
Company of any sums that have accrued to the Employee as of the date of the
Employee's death, and shall be entitled to receive the MIP Bonus and the Accrued
Vacation Payment. In addition, any unvested Options on the date of the
Employee's death shall immediately vest in full as provided in Section 5 hereof
and may be exercised by the Employee's beneficiary or estate at any time prior
to the termination of such Options pursuant to Section 5 hereof.
(c) CHANGE IN CONTROL. In the event of a Change in Control (hereinafter
defined) of the Company, whether or not the Employee is terminated in connection
with such a Change in Control, the Employee shall be entitled to receive from
the Company or the successor corporation (A) a base salary at the same rate as
the Base Salary for a period of one (1) year from the effective date of the
Change in Control, (B) the MIP Bonus as provided in Section 3(b) hereof, (C) the
Accrued Vacation Payment as provided in Section 4(c) hereof, and (D) the lease
payments required pursuant to Section 4(b) hereof, and all of the foregoing
shall continue to be an obligation of the Company or any successor corporation.
In addition, any unvested Options
9
shall immediately vest in full upon a Change in Control and all Options, to the
extent not yet exercised, shall be exercisable by the Employee until ten (10)
years from their respective dates of grant. As used herein, a "Change in
Control" shall mean (i) a direct or indirect transfer of 50% or more of the
legal or beneficial ownership of the issued and outstanding Common Stock of the
Company in one transaction or a series of related transactions and as a result
of such transaction(s) one or more of the existing stockholders on the date
hereof cease to exercise control of the Company, or (ii) a sale of all or
substantially all of the assets of the Company; provided, however, the foregoing
definition shall not include any such transaction involving Levcor International
Inc. In the event of a Change in Control, nothing in the language of this
Agreement shall be construed to obligate the Employee to work for the Company or
any successor corporation beyond December 31, 1999.
11. ASSIGNMENT. The Company may assign this Agreement without the
consent of the Employee to any subsidiary or other affiliate of the Company, or
any other person or entity who in connection with such assignment acquires all
or substantially all of the assets of the Company or into or with which the
Company is merged or consolidated, subject to the provisions of Section 10(c)
hereof. Except as provided in this Agreement, the Employee may not encumber or
transfer his rights or obligations under this Agreement without the prior
written consent of the Company.
12. EMPLOYEE'S REPRESENTATION. The Employee represents that he is not a
party to, bound by or subject to any
10
indenture, mortgage, lease, agreement, instrument, charter or by-law provision,
statute, regulation, order, judgment, decree or law that would be violated,
contravened or breached by, or under which any default would occur as a result
of the execution and delivery by the Employee of this Agreement or the
performance by the Employee of any of the terms hereof.
13. NOTICE. Any notice or document required or permitted by this
Agreement to be given to a party hereto shall be in writing and is sufficiently
given if delivered personally, by facsimile (receipt confirmed), or if sent by
prepaid certified mail, return receipt requested, to such party addressed as
follows:
(i) to the Employee, at:
00 Xxxxxxxx Xxxx
Xxx Xxxxxxxx, Xxx Xxxx 00000
(ii) to the Company, at:
Carlyle Industries, Inc.
Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn.: Xxxxxx X. Xxxxx
with a copy to:
Xxxxx Xxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx
Facsimile: 212-692-1900
Notices so delivered shall be deemed to have been given two (2) days following
the date sent. Any party may from time to time notify the other in the manner
provided herein of any change of
11
address which thereafter, until changed by like notice, shall be the address of
such party for all purposes hereof.
14. SEVERABILITY. If any clause, phrase, provision or portion of this
Agreement or the application thereof to any person or circumstance shall be
invalid or unenforceable under any applicable law, such event shall not affect
or render invalid or unenforceable the remainder of this Agreement, and shall
not affect the application of any clause, provision or portion hereof to other
persons or circumstances.
15. PRIOR AGREEMENTS.Execution of this Agreement hereby revokes any and
all prior written or oral agreements between the Employee and the Company, its
officers or representatives, whether express or implied, in respect to the
employment by the Company of the Employee.
16. AMENDMENT. This Agreement may be modified or amended only by
written agreement of the parties hereto.
17. INJUNCTIVE RELIEF. The Company and the Employee hereby expressly
acknowledge that money damages might be difficult to calculate and may not
adequately compensate the Company in connection with an actual or threatened
breach by the Employee of any provision of Sections 6, 7, 8 or 9 of this
Agreement. Accordingly, the Employee hereby expressly waives any right to object
to the Company's procedural right to seek an injunction if the Company seeks to
enforce by injunction or other equitable relief the due and proper performance
and observance of any provision of Sections 6, 7, 8 or 9 of this Agreement,
provided the Employee does not waive any right to defend such
12
injunction or application for equitable relief. In addition, the Company shall
be entitled to pursue any other available remedies at law or equity, including
the recovery of money damages, in respect of the actual or threatened breach of
Sections 6, 7, 8 or 9 hereof.
18. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York, without regard to the
principles of conflict of laws.
19. COUNTERPARTS. This Agreement may be executed by the parties hereto
in one or more counterparts, each of which when so executed and delivered shall
be an original, but together such counterparts shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
CARLYLE INDUSTRIES, INC.
By: /s/ XXXXX XXXXXX
----------------------------------------
Name: Xxxxx Xxxxxx
Title:
/s/ XXXXX XXXXXX
----------------------------------------
Xxxxx Xxxxxx
13
