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EXHIBIT 10.14
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of April 30,
1996, by and between Banerjan Company Limited, a Hong Kong corporation (the
"Company"), and Xxxxx Xxxxx (the "Employee"). The Company is a wholly-owned
Subsidiary of Racing Champions, Inc., a Delaware corporation ("RCI"), which is
a wholly-owned Subsidiary of Collectible Champions, Inc., a Delaware
corporation (the "Parent").
RECITAL
The Company desires to employ the Employee and the Employee is
willing to make his services available to the Company on the terms and
conditions set forth below. Certain capitalized terms used herein are defined
in Section 10 below.
AGREEMENTS
In consideration of the premises and the mutual agreements which
follow, the parties agree as follows:
1. Employment. The Company hereby employs the Employee and the
Employee hereby accepts employment with the Company on the terms and subject to
the conditions set forth in this Agreement.
2. Term. The term of the Employee's employment hereunder shall
commence on the date hereof and shall continue until terminated as provided in
section 6 below.
3. Duties. The Employee shall serve as the President of the
Company and will, under the direction of the Company's board of directors (the
"Board of Directors"), faithfully and to the best of his ability, perform the
duties of such position. The Employee shall be one of the principal executive
officers of the Company and shall, subject to the control of the Board of
Directors, have the normal duties, responsibilities and authority associated
with such position. The Employee shall also perform such additional duties and
responsibilities which may from time to time be reasonably assigned or
delegated by the Board of Directors. The Employee agrees to devote his entire
business time, effort skill and attention to the proper discharge of such
duties while employed by the Company.
4. Compensation. The Employee shall receive a base salary of
$500,000 per year, payable in regular and equal monthly installments (the "Base
Salary"). The Employee's Base Salary shall be reviewed annually by the Board
of Directors of the Company to determine appropriate increases, if any, in such
Base Salary.
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5. Fringe Benefits.
(a) Vacation. The Employee shall be entitled to five weeks of
paid vacation annually. The Employee and the Company shall mutually determine
the time and intervals of such vacation.
(b) Medical, Health, Dental, Disability and Life Coverage. The
Employee shall be eligible to participate in any medical, health, dental,
disability and life insurance policy in effect for the other two most senior
executives of RCI and its Subsidiaries (collectively, the "Senior Management").
(c) Incentive Bonus and Stock Ownership Plans. The Employee
shall be entitled to participate in any incentive bonus or other incentive
compensation plan developed generally for the Senior Management of RCI and its
Subsidiaries (including the Racing Champions, Inc. 1996 Key Employees
Performance Compensation Plan (the "1996 Bonus Plan")), on a basis consistent
with his position and level of compensation. The Employee shall also be
entitled to participate in any incentive stock option plan or other stock
ownership plan developed generally for the Senior Management of RCI and its
Subsidiaries, on a basis consistent with his position and level of compensation
(including the Collectible Champions, Inc. 1996 Employee Stock Option Plan).
(d) Automobile. The Company agrees to reimburse the Employee
up to $2,000 per month, as such amount may be increased from time to time
consistent with the Company's reimbursement policy for Senior Management of the
Company to cover Employee's expenses in connection with his leasing of an
automobile. Additionally, the Company will pay for the gas used for business
purposes. All maintenance and insurance expense for the automobile is the
responsibility of the Employee.
(e) Reimbursement for Reasonable Business Expenses. The
Company shall pay or reimburse the Employee for reasonable expenses incurred by
him in connection with the performance of his duties pursuant to this Agreement
including, but not limited to, travel expenses, expenses in connection with
seminars, professional conventions or similar professional functions and other
reasonable business expenses.
(f) Key Man Insurance. The parties agree that RCI and the
Company have the option to purchase one or more key man life insurance policies
upon the life of the Employee. RCI and the Company shall own and shall have
the absolute right to name the beneficiary or beneficiaries of said policy.
The Employee agrees to cooperate fully with RCI and the Company in securing
said policy, including, but not limited to, submitting himself to any physical
examination which may be required at such reasonable times and places as RCI or
the Company shall specify.
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6. Termination.
(a) Termination of the Employment Period. The Employment
Period shall continue until (i) the third anniversary of the date hereof unless
the parties mutually agree to extend the term of this Agreement (such
anniversary of the date hereof or such extended date being referred to herein
as the "Expected Completion Date"), (ii) the Employee's death or Disability,
(iii) the Employee resigns or (iv) the Board of Directors determines that
termination of Employee's employment is in the best interests of the Company.
(b) Definitions.
(i) For purposes of this Agreement, "Disability" shall
mean a physical or mental sickness or any injury which renders the
Employee incapable of performing the services required of him as an
employee of the Company and which does or may be expected to continue for
more than six (6) months during any 12-month period. In the event
Employee shall be able to perform his usual and customary duties on behalf
of the Company following a period of disability, and does so perform such
duties, or such other duties as are prescribed by the Board of Directors
for a period of three continuous months, any subsequent period of
disability shall be regarded as a new period of disability for purposes of
this Agreement. The Company and the Employee shall determine the
existence of a Disability and the date upon which it occurred. In the
event of a dispute regarding whether or when a Disability occurred, the
matter shall be referred to a medical doctor selected by the Company and
the Employee. In the event of their failure to agree upon such a medical
doctor, the Company and the Employee shall each select a medical doctor
who together shall select a third medical doctor who shall make the
determination. Such determination shall be conclusive and binding upon
the parties hereto.
(ii) For purposes of this Agreement, "Cause" shall be
deemed to exist if the Employee shall have (1) violated the terms of
sections 7 or 8 of this Agreement; (2) committed a felony or a crime
involving moral turpitude; (3) engaged in serious misconduct which is
demonstrably injurious to RCI or any of its Subsidiaries; (4) engaged in
fraud or dishonesty with respect to RCI or any of its Subsidiaries or made
a material misrepresentation to the stockholders or directors of RCI or
the stockholders or directors of the Company; or (5) committed acts of
negligence in the performance of his duties which are substantially
injurious to RCI or its Subsidiaries.
(iii) For purposes of this Agreement, "Good Reason"
shall mean (1) the material diminution of the Employee's duties set forth
in Section 3 above or (2) the relocation of the offices at which the
Employee is principally employed to a location which is more than 50 miles
from the offices at which the Employee is principally employed as of the
date hereof; provided, that travel necessary for the performance of the
Employee's duties set forth in Section 3 above shall not determine the
location where the Employee is "principally employed."
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(c) Termination for Disability or Death. In the event of
termination for Disability or death, payments of the Employee's Base Salary
shall be made to the Employee, his designated beneficiary or his estate for a
period of six (6) months after the Termination Date in accordance with the
normal payroll practices of the Company. During this period, the Company shall
also reimburse the Employee for amounts paid, if any, to continue medical,
dental and health coverage pursuant to the provisions of the Consolidated
Omnibus Budget Reconciliation Act. During this period, the Company will also
continue Employee's life insurance and disability coverage, to the extent
permitted under applicable policies, and will pay to the Employee the fringe
benefits pursuant to section 5 which have accrued prior to the Termination
Date.
(d) Termination by the Company without Cause or by the Employee
for Good Reason. If (i) the Employment Period is terminated by the Company
for any reason other than for Cause, Disability or death, (ii) if the
Employment Period is terminated by the Company for what the Company believes is
Cause or Disability, and it is ultimately determined that the Employment Period
was terminated without Cause or Disability or (iii) the Employee resigns for
Good Reason, the Employee shall be entitled to receive, as damages for such a
termination, his Base Salary from the Termination Date to the later to occur of
(i) the Expected Completion Date or (ii) the first anniversary of the
Termination Date. Such payment of Base Salary shall be made in accordance with
the normal payroll practices of the Company. During this period, the Company
shall also reimburse the Employee for amounts paid, if any, to continue
medical, dental and health coverage pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act. During this period, the
Company will also continue Employee's life insurance and disability coverage,
to the extent permitted under applicable policies, and will pay to the Employee
the fringe benefits pursuant to section 5 which have accrued prior to the date
of termination.
(e) Termination by the Company for Cause or by the Employee
without Good Reason. If the Employment Period is terminated by the Company
with Cause or as a result of the Employee's resignation without Good Reason,
the Employee shall not be entitled to receive his Base Salary or any fringe
benefits or bonuses (except as specifically provided in the 1996 Bonus Plan)
for periods after the Termination Date.
(f) Effect of Termination. The termination of the Employment
Period pursuant to section 6(a) shall not affect the Employee's obligations as
described in sections 7 and 8.
7. Noncompetition and Nonsolicitation. The Employee acknowledges
and agrees that the contacts and relationships of RCI and its Subsidiaries with
its customers, suppliers, licensors and other business relations are, and have
been, established and maintained at great expense and provide RCI and its
Subsidiaries with a substantial competitive advantage in conducting their
business. The Employee acknowledges and agrees that by virtue of the
Employee's employment with the Company, the Employee will have unique and
extensive exposure to and personal contact with RCI and its Subsidiaries'
customers and licensors, and that he will be able to establish a unique
relationship with those Persons that will enable him, both during and after
employment, to unfairly compete with RCI and its Subsidiaries. Furthermore,
the parties agree that the terms and conditions of the following restrictive
covenants are reasonable and necessary for the protection of the business,
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trade secrets and Confidential Information (as defined in section 8 below) of
RCI and its Subsidiaries and to prevent great damage or loss to RCI and its
Subsidiaries as a result of action taken by the Employee. The Employee
acknowledges and agrees that the noncompete restrictions and nondisclosure of
Confidential Information restrictions contained in this Agreement are
reasonable and the consideration provided for herein is sufficient to fully and
adequately compensate the Employee for agreeing to such restrictions. The
Employee acknowledges that he could continue to actively pursue his career and
earn sufficient compensation in the same or similar business without breaching
any of the restrictions contained in this Agreement. The Employee acknowledges
that one business of RCI and its Subsidiaries is the design, production
(including, without limitation, the obtention of the licenses necessary
therefor), marketing and sale of die cast metal replicas of vehicles.
(a) Noncompetition. The Employee hereby covenants and agrees
that during the Employment Period and for two (2) years thereafter (the
"Noncompete Period"), he shall not, directly or indirectly, either individually
or as an employee, principal, agent, partner, shareholder, owner, trustee,
beneficiary, co-venturer, distributor, consultant, representative or in any
other capacity, participate in, become associated with, provide assistance to,
engage in or have a financial or other interest in any business, activity or
enterprise which is competitive with RCI or any of its Subsidiaries or any
successor or assign of RCI or any of its Subsidiaries. The ownership of less
than a one percent interest in a corporation whose shares are traded in a
recognized stock exchange or traded in the over-the-counter market, even though
that corporation may be a competitor of RCI, shall not be deemed financial
participation in a competitor. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this section is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified. The term "indirectly" as
used in this section and section 8 below is intended to include any acts
authorized or directed by or on behalf of the Employee or any Affiliate of the
Employee.
(b) Nonsolicitation. The Employee hereby covenants and agrees
that during the Noncompete Period, he shall not, directly or indirectly, either
individually or as an employee, agent, partner, shareholder, owner, trustee,
beneficiary, co-venturer, distributor, consultant or in any other capacity:
(i) canvass, solicit or accept from any Person who is a
customer or licensor of RCI or any of its Subsidiaries (any such Person is
hereinafter referred to individually as a "Customer," and collectively as
the "Customers") any business which in competition with the business of
RCI or any of its Subsidiaries or the successors or assigns of RCI or any
of its Subsidiaries, including, without limitation, the canvassing,
soliciting or accepting of business from any Person which is or was a
Customer of RCI within two years preceding the date hereof or with RCI or
any of its Subsidiaries during the Noncompete Period;
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(ii) advise, request, induce or attempt to induce any of
the Customers, suppliers, or other business contacts of RCI or any of its
Subsidiaries who currently have or have had business relationships with
RCI within two years preceding the date hereof or with RCI or any of its
Subsidiaries during the Noncompete Period, to withdraw, curtail or cancel
any of its business or relations with RCI or any of its Subsidiaries;
(iii) induce or attempt to induce any employee, sales
representative, consultant or other agent of RCI or any of its
Subsidiaries to terminate his relationship or breach any agreement with
RCI or any of its Subsidiaries; or
(iv) hire any person who was an employee, sales
representative, consultant or other agent of RCI or any of its
Subsidiaries at any time during the Noncompete Period.
8. Confidential Information. The Employee acknowledges and agrees
that the customers, business connections, customer lists, procedures,
operations, techniques, and other aspects of and information about the business
of RCI and its Subsidiaries (the "Confidential Information") are established at
great expense and protected as confidential information and provide RCI and its
Subsidiaries with a substantial competitive advantage in conducting their
business. The Employee further acknowledges and agrees that by virtue of his
past affiliation with RCI and past employment by and affiliation with Racing
Champions Limited, a Hong Kong corporation, Xxxxxxx Services, Inc., a British
Virgin Islands corporation and Hosten Investment Limited, a Hong Kong
corporation, and by virtue of his employment with the Company, he has had
access to and will have access to, and has been entrusted with and will be
entrusted with, Confidential Information, and that the Company and RCI would
suffer great loss and injury if the Employee would disclose this information or
use in a manner not specifically authorized by the Company. Therefore, the
Employee agrees that during the Employment Period and for five (5) years
thereafter, he will not, directly or indirectly, either individually or as an
employee, agent, partner, shareholder, owner, trustee, beneficiary,
co-venturer, distributor, consultant or in any other capacity, use or disclose,
or cause to be used or disclosed, any Confidential Information, unless and to
the extent that any such information become generally known to and available
for use by the public other than as a result of the Employee's acts or
omissions. The Employee shall deliver to the Company at the termination of the
Employment Period, or at any other time the Company may request, all memoranda,
notes, plans, records, reports, computer tapes, printouts and software and
other documents and data (and copies thereof) relating to the Confidential
Information, Work Product (as defined below) or the business of RCI or any of
its Subsidiaries which he may then possess or have under his control. The
Employee acknowledges and agrees that all inventions, innovations,
improvements, developments, methods, designs, analyses, drawings, reports and
all similar or related information (whether or not patentable) which relate to
RCI's or any of its Subsidiaries' actual or anticipated business, research and
development or existing or future products or services and which are conceived,
developed or made by the Employee while employed by RCI and its Subsidiaries
("Work Product") belong to RCI or such Subsidiary, as the case may be.
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9. Common Law of Torts and Trade Secrets. The parties agree that
nothing in this Agreement shall be construed to limit or negate the common law
of torts or trade secrets where it provides the Company and its Subsidiaries
with broader protection than that provided herein.
10. Definitions.
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person and any
partner of a Person which is a partnership.
"Person" means any individual, partnership, corporation, limited
liability company, association, joint stock company, trust, joint venture,
unincorporated organization and any governmental entity or any department,
agency or political subdivision thereof.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of stock entitled
(without regard to the occurrence of any contingency) to vote in the election
of directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a partnership, association
or other business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person or a
combination thereof. For purposes hereof, a Person or Persons shall be deemed
to have a majority ownership interest in a partnership, association or other
business entity if such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses or shall be
or control any managing director or general partner of such partnership,
association or other business entity.
11. Specific Performance. The Employee acknowledges and agrees that
irreparable injury to the Company may result in the event the Employee breaches
any covenant or agreement contained in sections 7 and 8 and that the remedy at
law for the breach of any such covenant will be inadequate. Therefore, if the
Employee engages in any act in violation of the provisions of sections 7 and 8,
the Employee agrees that the Company shall be entitled, in addition to such
other remedies and damages as may be available to it by law or under this
Agreement, to injunctive relief to enforce the provisions of sections 7 and 8.
12. Waiver. The failure of either party to insist in any one or
more instances, upon performance of the terms or conditions of this Agreement
shall not be construed as a waiver or a relinquishment of any right granted
hereunder or of the future performance of any such term, covenant or condition.
13. Notices. Any notice to be given hereunder shall be deemed
sufficient if addressed in writing, and delivered by registered or certified
mail or delivered personally, in the case of the Company, to its principal
business office, and in the case of the Employee, to his address appearing on
the records of the Company, or to such other address as he may designate in
writing to the Company.
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14. Severability. In the event that any provision shall be held to
be invalid or unenforceable for any reason whatsoever, it is agreed such
invalidity or unenforceability shall not affect any other provision of this
Agreement and the remaining covenants, restrictions and provisions hereof shall
remain in full force and effect and any court of competent jurisdiction may so
modify the objectionable provision as to make it valid, reasonable and
enforceable. Furthermore, the parties specifically acknowledge the above
covenant not to compete and covenant not to disclose confidential information
are separate and independent agreements.
15. Complete Agreement. Except as otherwise expressly set forth
herein, this document embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.
16. Amendment. This Agreement may only be amended by an agreement
in writing signed by each of the parties hereto.
17. Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the laws of the State of Illinois,
regardless of choice of law requirements. The parties hereby consent to the
jurisdiction of the state courts of the State of Illinois and of any federal
court in the venue of Illinois for the purpose of any suit, action or
proceeding arising out of or related to this Agreement, and expressly waive any
and all objections they may have as to venue in any of such courts.
18. Benefit. This Agreement shall be binding upon and inure to the
benefit of and shall be enforceable by and against the Company, its successors
and assigns and the Employee, his heirs, beneficiaries and legal
representatives. It is agreed that the rights and obligations of the Employee
may not be delegated or assigned.
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IN WITNESS WHEREOF, the parties have executed or caused this
Employment Agreement to be executed as of the date first above written.
BANERJAN COMPANY LIMITED
By: /s/ Avy H. Sten
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Its: Director
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/s/ Xxxxx X. X. Xxxxx
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Xxxxx Xxxxx
