CHIEF OPERATING OFFICER COMPENSATION AGREEMENT
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This Chief Operating Officer Compensation Agreement (the
"Agreement") dated as of April 1, 1997, is entered into by and
between ESB Consultants, Inc., a Canadian corporation ("ESB"),
and French Fragrances, Inc., a Florida corporation (the
"Company").
Recitals
ESB has been providing investment banking and other general
advisory services to the Company under certain monitoring
agreements with the Company and has substantial knowledge of, and
experience in, the business and affairs of the Company. The
Company desires to engage the services of ESB directly, and its
principal E. Xxxxx Xxxxxxx ("Xxxxxxx") indirectly, to perform
investment banking, management and such other services as the
Board of Directors of the Company (the "Board") shall designate,
including, without limitation, having Xxxxxxx fulfill the role of
President and Chief Operating Officer of the Company, upon the
terms and conditions contained herein, and ESB is willing to do
so.
Agreement
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
agree to the terms set out below.
1. Engagement. The Company hereby engages ESB, and ESB
accepts such engagement, to act as an advisor for, and through
Xxxxxxx an officer of, the Company during the term of this
agreement in accordance with the terms and subject to the
conditions set forth in this Agreement. The services to be
performed by ESB (the "Services") shall consist of such
activities as may be reasonably requested by the Board from time
to time, including, without limitation, investment banking and
other financial advisory services, management services and having
Xxxxxxx fulfill the role of President and Chief Operating Officer
of the Company. ESB shall use its best efforts, skills and
abilities to promote the interests of the Company and to
diligently and competently perform the Services. Nothing in this
Agreement shall restrict the right of ESB to provide financial
advisory or other services to a third party so long as the
provision of such services shall not adversely affect ESB's
ability to perform the Services or put ESB in a conflict of
interest with the Company. In the performance of the Services,
ESB shall act at all times as an independent contractor and not
as an agent, partner or employee of the Company, and ESB shall
determine and have control over the manner, means and method of
performance of the Services. ESB acknowledges and agrees that
the Company shall not be responsible for any tax, unemployment
insurance or other legal withholdings in connection with the
performance of the Services (which obligations shall be the sole
responsibility of ESB).
2. Fees. In consideration of the services to be provided
by ESB hereunder, the Company shall pay to ESB a fee of
US$300,000 (Three Hundred Thousand United States Dollars) per
year (the "Fee"), payable in monthly installments of US$25,000.00
commencing on May 1, 1997 and ending upon termination of this
Agreement, provided that the consideration due ESB for performing
the Services during the month of April 1997 shall be US$6,250.00,
and provided further that such fee for subsequent years shall be
subject to increase as determined in the reasonable discretion of
the Board. The Company shall also pay or reimburse ESB for ESB's
business and travel expenses which are incurred in accordance
with the Company's policies.
3. Term; Termination. The term of this Agreement shall be
for a period of one (1) year, commencing on the date first set
above and ending on March 31, 1998, subject to earlier
termination as set forth below. This Agreement shall be
renewable for successive one-year periods at the option of the
Company, which option must be exercised no later than 30 days
prior to the date of termination of this Agreement. This
Agreement may be terminated prior to the expiration of the term
set forth above as follows:
(a) Death of Xxxxxxx. In view of the significance to the
Company of the contribution made by Xxxxxxx in the performance of
the Services, this Agreement shall terminate upon the death of E.
Xxxxx Xxxxxxx ("Xxxxxxx"), the principal of ESB.
(b) Cause. The Company may, at its discretion terminate
this Agreement at any time for Cause, effective immediately. For
purposes of this Agreement, the Company shall have "Cause" to
terminate this Agreement upon the occurrence of any one of the
following events: (1) willful misconduct or gross negligence
in connection with the performance of the Services; and (2) any
other material breach of this Agreement.
(c) Voluntary Termination by ESB. ESB may terminate this
Agreement at any time upon giving sixty (60) days' written notice
to the Company.
(e) Effect of Termination. In the event of a termination
as set forth above, the Company shall have no further obligation
under this Agreement to make any payments to, or bestow any
benefits on, ESB or Xxxxxxx or Xxxxxxx'x beneficiary or
beneficiaries in the case of his death, from and after the date
of said termination, other than payments accrued and due and
payable to ESB prior to the date of said termination.
4. Confidentiality. ESB acknowledges that as a result of
its engagement with the Company, ESB has had and will continue to
have knowledge of, and access to, all proprietary and
confidential information of the Company, including, without
limitation, the Company's methods of operation and other trade
secrets, financial and marketing information, and the identity of
customers and suppliers (collectively, the "Confidential
Information"), and that such information constitutes valuable,
special and unique assets of the Company. Accordingly, during and
after its engagement under this Agreement, ESB shall, and shall
cause its directors, officers and employees (including, without
limitation Xxxxxxx) to, keep all such information in the
strictest confidence and shall not, to the detriment of the
Company, knowingly disclose or reveal to any unauthorized person
any confidential or proprietary information relating to the
Company, including without limitation, any operational methods,
marketing strategies, product development techniques or plans,
and customer or supplier lists, so long as the information has
not been publicly disclosed other than as a result of a violation
of this covenant. ESB acknowledges that the Company would not
enter into this Agreement without the assurance that all
Confidential Information will be used for the exclusive benefit
of the Company. Upon the termination of ESB's engagement with
the Company, ESB shall promptly deliver to the Company all notes,
reports and all other materials relating to the Company's
business, including without limitation, any materials
incorporating Confidential Information, which are in ESB's
possession or control.
5. Remedies. The restriction set forth in Section 4 is
considered by the parties to be reasonable for the purposes of
protecting the value of the business and goodwill of the Company.
ESB acknowledges that the Company would be irreparably harmed and
that monetary damages would not provide an adequate remedy in the
event of a breach of the provisions of Section 4. Accordingly,
ESB agrees that the Company shall be entitled to injunctive and
other equitable relief to secure the enforcement of these
provisions, in addition to any other remedy which may be
available to the Company, and that the Company shall be entitled
to receive reimbursement from ESB for reasonable attorneys' fees
and expenses incurred by the Company in enforcing these
provisions. It is the desire and intent of the parties that the
provisions of Sections 4 and 5 be enforced to the fullest extent
permissible under the laws and public policies of each
jurisdiction in which enforcement is sought. If any provisions of
Sections 4 or 5 is declared by a court of competent jurisdiction
to be unenforceable because it extends for too long a period of
time or over too broad a range of activities such provision shall
be interpreted to extend only over the maximum period of time or
range of activities as to which it may be enforceable. If any
provisions of Sections 4 or 5 other than those described in the
preceding sentence are adjudicated to be invalid or
unenforceable, the invalid or unenforceable provisions
shall be deemed amended in such manner as to render them
enforceable and to effectuate as nearly as possible the original
intentions and agreement of the parties. The provisions of
Sections 4 and 5 shall survive termination of the Agreement.
6. Notices. Any notice, request, demand, consent, approval
or other communication provided or permitted hereunder shall be
in writing and may be given by personal delivery, telecopy or may
be sent by registered mail, postage prepaid, addressed to the
party for which it is intended at its address as follows:
If to ESB: Scotia Plaza
00 Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attn: E. Xxxxx Xxxxxxx
Fax: (000) 000-0000
If to the Company: French Fragrances, Inc.
00000 X.X. 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Attn: Chairman of the Board
Fax: (000) 000-0000
A party may change its address for purposes of receipt of any
such communication by giving ten days' prior notice of such
change in the manner above prescribed. Any notice sent by
registered mail as aforesaid shall be deemed to have been given
on the fifth business day next following the mailing thereof.
Any notice sent by telecopy or personally delivered shall be
deemed to have been received on the date of delivery. In the
event of an actual or threatened disruption in postal service,
notice shall be sent by telecopy or personally delivered.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida,
without regard to principles of conflicts of laws.
8. Binding Effect; Assignment. This Agreement and all
documents and agreements delivered pursuant hereto shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. Neither party
may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party; provided,
that ESB shall be permitted to assign this Agreement to an
affiliate thereof which employs Xxxxxxx, and provided further
that upon the sale of all or substantially all of the assets,
business and goodwill of the Company to another company, or upon
the merger or consolidation of the Company with another company,
this Agreement shall inure to the benefit of, and be binding
upon, both ESB and the Company purchasing such assets, business
and goodwill, or surviving such merger or consolidation, as the
case may be, in the same manner and to the same extent as though
such other company were the Company.
9. Entire Agreement; Modification. This Agreement
represents the entire agreement between the parties with respect
to the subject matter hereof and shall supersede and cancel all
prior oral or written agreements, including, without limitation,
(a) that certain Monitoring Agreement dated as of July 2, 1992,
as amended as of February 14, 1995, between ESB and a
privately-held Florida corporation named French Fragrances, Inc.
("FFI") which merged with and into the Company, and (b) that
certain Monitoring Agreement dated as of February 14, 1995,
between ESB and FFI. This Agreement may be modified or amended
only by a written instrument properly executed by the parties
hereto.
10. Severability. In the event that any one or more of
the provisions of this Agreement shall be held to be invalid,
void or unenforceable for any reason, the remaining provisions of
this Agreement shall remain in full force and effect, and the
invalid, void or unenforceable provision shall be interpreted as
closely as possible to the manner in which it was written.
11. Waiver. Failure of a party to enforce one or more of
the provisions of this Agreement or to require at any time
performance of any of the obligations hereof shall not be
construed to be a waiver of such provisions by such party nor to
in any way affect the validity of this Agreement or such party's
right thereafter to enforce any provision of this Agreement. An
effective waiver must be in writing and executed by the party to
be bound thereby.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the day and year first written above.
ESB CONSULTANTS, INC.
By: /s/ E. Xxxxx Xxxxxxx
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E. Xxxxx Xxxxxxx
President
FRENCH FRAGRANCES, INC.
By: /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Chairman & Chief Executive Officer
