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Exhibit 10(e)
EMPLOYMENT AGREEMENT
AGREEMENT dated as of October 4, 1996 (the "Employment
Agreement") by and between AMSCAN INC., a New York corporation or AMSCAN
HOLDINGS, INC., a Delaware corporation, upon a public offering being made of its
shares of stock and AMSCAN INC. becomes a subsidiary thereof, as the case may be
(the "Employer" or "Company") and XXXXXXX XXXXXX (the "Employee").
R E C I T A L S
The Employer is presently planning a public offering of its
securities and wishes to employ the Employee following the consummation of such
offering.
The parties wish to set forth the terms and conditions of such
employment:
NOW, THEREFORE, in consideration of the foregoing and of the
covenants and promises contained herein, the parties agree as follows:
1. EFFECTIVENESS OF THIS AGREEMENT AND NAME OF EMPLOYER:
This agreement shall become effective on January 1,
1997. The existing employment agreement between Employer and Employee is not
being modified hereby and continues in full force and effect until its
termination on December 31, 1996.
2. EMPLOYMENT OF THE EMPLOYEE.
The Employer employs the Employee to serve as the
Company's sales and marketing manager and as its Senior Vice President in charge
of Sales and Marketing and to perform such other duties as may be assigned to
him from time to time, by the Company.
3. EMPLOYEE'S DUTIES.
(a) During the term of this Employment Agreement,
Employee shall devote his full business time, skill and efforts to the affairs
of the Employer as reasonably
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necessary to permit the faithful and diligent performance of his duties
hereunder. Employee shall not accept other employment nor permit such personal
interests as he may have to interfere with the performance of his duties
hereunder. The parties hereto understand and agree that Employee may participate
in charitable and similar activities and may have business investments which
may, from time to time, require portions of his time, but which Employee agrees
shall not interfere with the performance of his duties hereunder and shall not
adversely reflect upon the Employer or its operations.
(b) The Employee shall serve without additional
remuneration as (i) a director of the Employer, if elected by Employer's
stockholders; (ii) a member of any committee of the Board of the Employer, as
determined by the Board; and (iii) a director and/or officer of one or more of
the Employer's subsidiaries, if appointed to such position by the Employer or
the applicable board of directors.
4. TERM.
(a) The Employee's term of employment shall commence
on the 1st day of January 1997 and shall continue for a period of five (5) years
thereafter (the "Term"), unless terminated earlier in accordance with the
provisions of this Employment Agreement. Notwithstanding the foregoing, the
Employee's employment hereunder shall terminate upon the occurrence of any of
the following events:
(i) the mutual agreement, in writing, at any
time, by the Employer and Employee to
terminate such employment;
(ii) the death of the Employee;
(iii) the unilateral cessation or discontinuance
by the Employee of his working for or
employment by the Employer;
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(iv) the termination of the Employee's employment
by the Employer, for "Cause" as defined
hereinafter.
(b) For the purposes of this Employment Agreement, "Cause"
shall mean any one of the following (i) the commission by the Employee of any
crime or an intentional act of fraud against the Employer; (ii) any act of gross
negligence or wilful misconduct on the part of the Employee with respect to his
duties under this Employment Agreement; (iii) any act of wilful disobedience on
the part of the Employee in violation of specific and reasonable directions of
the Employer; (iv) any other material breach of this Employment Agreement which
is not cured by the Employee within a reasonable time fixed by the Employer; (v)
any conduct on the part of the Employee which has a materially adverse effect
upon the performance by the Employee of his duties in connection with the
business of the Employer, or a materially adverse effect upon the relationship
of customers or potential customers or employees of the Employer with the
Employer.
(c) Upon termination of the Employee's employment hereunder,
whether at the end of the term hereof or in the event of earlier termination,
the Employee shall have no further rights under this Employment Agreement,
except as expressly herein set forth. Nothing contained herein shall be deemed
to preclude the Employer from enforcing any remedies available to it at law or
equity in consequence of a breach by the Employee of his obligations to the
Employer or available to the Employer under the provisions of this Employment
Agreement, including without limitation the enforcement of any restrictive
covenants hereunder to the extent herein provided.
5. COMPENSATION.
During the Term, the Employer agrees to pay to the
Employee the
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following base yearly salaries:
(a) The base yearly salary shall be $200,000.00 for
the calendar year 1997.
(b) For each full calendar year after the first the
base yearly salary will be increased by 5% of the base yearly salary of the
preceding calendar year.
(c) Employee's base yearly salary shall be payable in
regular intervals in accordance with the Company's customary payroll practices
in effect during the Term.
(d) 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.
(e) 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.
6. BONUS.
In addition to the base yearly salary set forth in
Paragraph 5. 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 in the
amounts and as and upon the terms and conditions herein set forth:
(a) The Employer shall pay to the Employee for each calendar
year of his employment hereunder a bonus based upon both the annual increase in
sales in the United States and Canada and the annual increase in gross profit
with respect to such sales. Annexed hereto as Schedule A is a schedule of the
sales increases and the gross profit increases necessary to be achieved to
result in the grant of an annual bonus hereunder. For the purpose of computing
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bonuses, appropriate interpolations shall be made with respect to both the Sales
Growth and the Percent Increase in Gross Profit Dollar percentages intermediate
to those shown on Schedule A: (Example: Assume Sales Growth to be 4% and Percent
Increase in Gross Profit Dollars to be 7% then the bonus shall be $145,000.
computed as follows: 4% Sales Growth shall be interpolated as $125,000. and at
7% Percent Increase in Gross Profit Dollars the bonus shall be interpolated as
$145,000.)
(b) The bonus, if any, payable hereunder shall be computed on
the aggregate gross sales and profits within the United States and Canada by
Amscan Inc. which includes Deco, Kookaburra, Trisar and Amscan Canada, after
intercompany eliminations and before warehouse expenses.
(c) All bonuses shall be computed by the Employer's
accountants and such computations shall be binding upon the parties except if
made fraudulently or in a grossly negligent manner. Employee, upon request, will
receive the documents, reports and statements necessary to review and confirm
the computations made pursuant to this provision.
(d) All bonuses shall be paid within ninety (90) days
following the year end.
7. STOCK OPTION.
As additional compensation to the Employee, if Amscan
Holdings Inc. makes an initial public offering, then the Employer grants to the
Employee a stock option to purchase one hundred thousand (100,000) shares of the
Company's common stock at the option price or prices and upon the terms and
conditions set forth in the "Stock Option Plan" adopted by the Company; a copy
of which has been delivered to the Employee.
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8. ADDITIONAL STOCK OPTIONS.
In addition to the grant referenced in paragraph 7.
above, if Amscan Holdings, Inc. makes an initial public offering, it intends to
adopt a stock option plan for the benefit of its employees (such plan, whether
adopted by Employer or any parent corporation of Employer, is referred to herein
as the "OPTION PLAN"). Following adoption of the Option Plan, Employee will be
entitled to participate on the same basis and at the same time as other
executive officers and key senior management personnel of the Employer in any
options awarded to such personnel as a group, provided, however, that the
foregoing provision shall not apply with respect to any grants of options
pursuant to the Option Plan which are made prior to or within 30 days following
the closing of the initial public offering of common stock of the Employer or
its parent corporation, if any. Such stock option plan shall include a provision
for the pro-rata vesting within no more than five (5) years.
9. FRINGE BENEFITS.
As additional consideration for the services of the
Employee under this Employment 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, with 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.
10. BUSINESS EXPENSES.
The Employer acknowledges that the Employee may
necessarily incur, for
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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
directly, advance sums to be used for payment of such necessary expenses or on
submission by the Employee of receipts and an itemized account of such
expenditures, reimburse the Employee for such necessary expenses actually
incurred by him.
11. RESTRICTIVE COVENANT.
The Employee acknowledges that his employment with
the Employer has brought and will bring him into close contact with trade
secrets, proprietary information and other confidential material and assets of
the Employer and other information not readily available to the public, the
disclosure of which to third parties would have a material adverse effect on the
Employer's business operations. In recognition of the foregoing, the Employee
covenants and agrees that:
(a) During the Term and during any extended term,
whether or not the Employee's employment is terminated before the end of the
particular term, and upon termination of the Employee's employment for a period
of three (3) years following such termination, he 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 may hereafter become engaged in the United States and Canada. The
Employee acknowledges that the Employer now carries on its
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business in many trading areas throughout the world and in particular in the
United States and Canada.
(b) Employee 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 (ii) any documents, records, plans, models, customer lists or other
tangible property of the Employer, regardless of its form, which may come into
his possession, custody or control on consequence of his employment.
(c) 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 hereof, the Employer 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, than
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 if
such limited were expressly provided herein.
(d) The rights hereunder of the Employer against the
Employee may be assigned by the Employer and may be enforced by any successors
or assigns of the Employer.
12. NOTICES.
Any notices, requests, consents and other communications,
required or permitted to be given hereunder, shall be in writing, and shall be
deemed to have been duly given if delivered personally or sent by certified
mail, return receipt requested, to the party to be notified
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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 Employer: Amscan Inc.
00 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Att: Board of Directors
with a copy to: Xxxxxxx & Xxxxxxxxx
Xxx Xxxxxxxxx, Esq.
Xxx Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
To Employee: Xx. Xxxxxxx Xxxxxx
000 Xxxxxx Xxxxx
Xxxx 000
Xxxxxxxx, XX 00000
with a copy to: The Xxxxx Law Firm P.C.
Att: Xxxx X. Xxxxx, Xx., Esq.
00 Xxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
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 Employment Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
15. PARAGRAPH HEADINGS.
The paragraph headings used in this Employment Agreement are
included solely for convenience and shall not affect or be used in connection
with the interpretation of this
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Employment Agreement.
16. ENTIRE AGREEMENT.
This Employment Agreement including any Exhibits attached
hereto sets forth the entire agreement and understanding of the parties relating
to the subject matter hereof, and supersedes all prior agreements, arrangements
and understandings, written or oral, between the parties, except as specifically
provided herein.
17. SUCCESSORS AND ASSIGNS.
This Employment Agreement, and the Employee's rights and
obligations hereunder, may not be assigned by the Employee. This Employment
Agreement shall be binding on any successor to the Employer, whether by merger,
acquisition of substantially all of the Employer's assets or otherwise, as fully
as if such successor were a signatory hereto. The term "Employer" as used in
this Employment Agreement, shall include all such successors.
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 /s/ XXXXXXX XXXXXX
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Xxxx Xxxxxxxxxxx, Xxxxxxx Xxxxxx, (Employee)
President
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SCHEDULE A
BONUS PER PARA 6.
PERCENT INCREASE IN GROSS PROFIT DOLLARS*
SALES 5% 10% 15% 20% 25% 30% 35% 40%
GROWTH
3% 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000
5% 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000
10% 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000
15% 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000
20% 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000
25% 350,000 400,000 450,000 500,000 550,000 600,000 650,000 700,000
30% 400,000 450,000 500,000 550,000 600,000 650,000 700,000 750,000
35% 450,000 500,000 550,000 600,000 650,000 700,000 750,000 800,000
40% 500,000 550,000 600,000 650,000 700,000 750,000 800,000 850,000
