EMPLOYMENT AGREEMENT
AGREEMENT made and entered into as of this 18th day of August, 1998
between American Marine Recreation, Inc., a Delaware corporation (the
"Corporation") having an address at 0000 00xx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 and
Xxxxxx X. Xxxx, Xx. (the "Executive"), residing at 0000 Xxxx Xxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxx 00000.
W I T N E S S E T H:
WHEREAS, Executive is presently employed by the Corporation; and
WHEREAS, the Company and the Executive desire to set forth the terms of
Executive's employment with the Company, pursuant to the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto agree with each other as follows:
1. Term of Employment. The Corporation agrees to and does hereby employ
Executive, and Executive agrees to and does hereby accept employment by the
Corporation, as the Chairman, President and Chief Executive Officer of the
Corporation, subject to the supervision and direction of its Board of Directors,
for the three (3) year period commencing on the closing of the initial public
offering of the Corporation's securities (the "Term"). The Term shall be
automatically renewed on an annual basis (each such period, a "Renewal Period")
for an additional year (the "Renewal Term"), unless this Agreement is terminated
in writing by the Executive or the Corporation (the "Notice of Nonrenewal") not
less than one hundred and eighty (180) days prior to the expiration
of the Term or any Renewal Period, unless otherwise terminated pursuant to the
provisions of this Agreement.
2. Duties of Executive. Executive shall devote such time, attention and
energy to the affairs of Corporation as shall be reasonably required to perform
his duties hereunder, and, in pursuance of the policies and directions of the
Board of Directors, Executive shall use his best efforts to promote the business
and affairs of the Corporation.
3. Base Compensation. In consideration of the Executive's services
pursuant to this Agreement, Corporation shall pay to Executive, during the
period of Executive's employment under this Agreement (the "Base Compensation"),
(i) a salary at the rate of Two Hundred Thousand Dollars ($200,000) per year
during the first year of this Agreement; and (ii) for each year thereafter,
annual compensation shall be determined by the Board of Directors, but in no
event less than $200,000. The Base Compensation shall be payable in equal
installments, in accordance with the Corporation's customary procedures for
executive employees but in no event less frequently than semi-monthly subject to
applicable tax and payroll deductions. The Board of Directors of the Corporation
may increase Executive's Base Compensation at such time or times and in such
amount or amounts as it may in its sole discretion determine.
4. Incentive Compensation. Provided Executive has duly performed his
obligations pursuant to this Agreement, Executive shall be eligible to receive,
as additional compensation for the services to be rendered by Executive under
this Agreement, incentive compensation. The amount of such incentive
compensation, if any, shall be determined by the Board of Directors in its sole
discretion based on the Executive's performance and contributions to the
Corporation's success.
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5. Other Benefits. During the term of this Agreement the Executive
shall be entitled to participate in any benefit plans adopted by the Corporation
for the general and overall benefit of all employees and/or for key executives
of the Corporation such as health care, life insurance, disability, stock option
plans, tax, legal and financial planning services, pension, profit sharing and
savings.
6. Vacation. Executive shall be entitled to a fully paid vacation of
four (4) weeks per calendar year, which vacation shall be scheduled at such time
or times as the Corporation in consultation with Executive may reasonably
determine.
7. Expenses. (a) The Corporation shall pay or reimburse Executive for
all reasonable and necessary expenses incurred by him in connection with his
duties hereunder, upon submission by Executive to the Corporation of such
reasonable evidence of such expenses as the Corporation may require.
(b) Throughout the term of this Agreement, the Corporation
will provide Executive with the use of a vehicle of a class equivalent to that
currently utilized by the Executive for purposes within the scope of his
employment with Corporation and shall pay all expenses for fuel, maintenance,
and insurance in connection with such use of the automobile.
8. Insurance. The Corporation may from time to time apply for policies
of life, health and accident insurance or disability insurance upon the
Executive in such amounts as the Corporation deems appropriate. The Executive
agrees to aid the Corporation in procuring such insurance, including submitting
to a physical examination, if required, and completing any and all forms
required for application for any insurance policy.
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9. Disclosure of Information. The Executive shall, during his
employment under this Agreement and thereafter, keep confidential and refrain
from disclosing to any unauthorized persons all data and information relating to
the respective businesses of the Corporation or any of its subsidiaries.
10. Intellectual Property Rights. (a) The Executive shall promptly
disclose to the Corporation in writing, any and all charts, layouts, maps,
inventions, improvements, techniques, markets, sales and advertising plans,
processes, concepts and plans, whether or not copyrightable or patentable,
secret processes and "know-how," conceived by the Executive during the term of
his employment by the Corporation (the "Executive's Work Product"), whether
alone or with others and whether during regular working hours and through the
use of facilities and property of the Corporation or otherwise, which directly
relates to the present business of the Corporation. Upon the Corporation's
request at any time or from time to time during the Term of the Executive's
employment, the Executive shall (i) deliver to the Corporation copies of the
Executive's Work Product that may be in his possession or otherwise available to
him, and (ii) execute and deliver to the Corporation such applications,
assignments and other documents as it may reasonably require in order to apply
for and obtain copyrights or patents in the United States of America and other
countries with respect to any Executive's Work Product that it deems to be
copyrightable or patentable, and/or otherwise to vest in itself full title
thereto.
(b) All documents that pertain to the Corporation, including
but not limited to the Executive's Work Product, shall be the sole and exclusive
property of the Corporation. Upon the termination of the Executive's employment,
all such documents that may be in his possession
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or otherwise available to him or shall thereafter come into his possession or
control shall be promptly returned to the Corporation without the necessity of a
request therefor.
11. Non-Competition Covenant. (a) The Executive shall not, during his
employment by the Corporation, engage, directly or indirectly, in any business
competitive with the business of the Corporation without the consent of the
Board of Directors.
(b) For a period of two years after the termination of the
Executive's employment hereunder (the "Non-Competition Period"), for any reason
whatsoever, other than a termination by the Corporation without good cause, or
by Executive for good reason (as hereinafter defined) the Executive shall not
(i) engage, directly or indirectly, as an officer, director, shareholder, owner,
partner, joint venturer or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales representative in
any business of selling, renting and leasing, boating, nautical and other
lifestyle entertainment products and services, and related activities throughout
the United States (the "Territory"), without the permission of the Board of
Directors, which permission shall not be unreasonably withheld or delayed or
(ii) induce or actively attempt to influence any other employee or consultant of
the Corporation to terminate his or her employment or consultancy with the
Corporation. Nothing herein contained shall be deemed to prevent ownership by
Executive and his associates (as said term is defined in regulation 14(A)
promulgated under the Securities Exchange Act of 1934 as in effect on the date
hereof), collectively, of not more than 5% of the outstanding capital stock of a
corporation listed on a national securities exchange.
(c) (i) The parties to this Agreement consider the
restrictions contained herein reasonable as to the duration of the
Non-Competition Period and the extent of the Territory.
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However, if the duration of the Non-Competition Period or the extent of the
Territory herein specified should be judged unreasonable by any Court or
arbitration proceeding, the validity and effect of the remaining provisions of
this Agreement shall not be affected thereby and, the duration of the
Non-Competition Period shall be reduced by such number of months and/or the area
of the Territory shall be reduced such that, the Territory and the
Non-Competition Period shall be deemed reasonable so that the foregoing covenant
not to compete may be enforced .
(ii) Executive agrees and recognizes that in the event of a breach or
threatened breach by Executive of the provisions of the aforegoing covenants,
the Corporation may suffer irreparable harm, and that money damages may not be
an adequate remedy. Therefore, the Corporation shall be entitled as a matter of
right to specific performance of the covenants of Executive contained herein by
way of temporary or permanent injunctive relief in a Court of competent
jurisdiction.
12. Termination. This Agreement and Executive's employment may be
terminated in any one of the followings ways:
(a) Death. The death of Executive shall immediately terminate
this Agreement with no severance compensation due to Executive's estate.
(b) Disability. If, as a result of incapacity due to physical
or mental illness or injury, Executive shall have been absent from his full-time
duties hereunder for six (6) consecutive months, then thirty (30) days after
receiving written notice (which notice may occur before or after the end of such
six (6) month period, but which shall not be effective earlier than the last day
of such six (6) month period), the Corporation may terminate Executive's
employment hereunder provided Executive is unable to resume his full-time duties
at the conclusion of such notice period.
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Also, Executive may terminate this employment hereunder if his health should
become impaired to an extent that makes the continued performance of his duties
hereunder hazardous to his physical or mental health or his life, provided that
Executive shall have furnished the Corporation with a written statement from a
qualified doctor to such effect and provided, further, that, at the
Corporation's request made within thirty (30) days of the date of such written
statement, Executive shall submit to an examination by a doctor selected by the
Corporation who is reasonably acceptable to Executive or Executive's doctor and
such doctor shall have concurred in the conclusion of Executive's doctor. In the
event this Agreement is terminated as a result of Executive's disability,
Executive shall (i) receive from the Company, in a lump-sum payment due within
ten (10) days of the effective date of termination, the base salary at the rate
then in effect for the greater of the time period then remaining under the term
of this Agreement or for one (1) year and (ii) the Corporation shall make the
insurance premium payments contemplated by COBRA for a period of eighteen (18)
months after such termination.
(c) Good Cause. The Corporation may terminate this Agreement
ten (10) days after written notice to Executive for "Good Cause," which shall
mean any one or more of the following: (1) Executive's willful, material and
irreparable breach of this Agreement; (2) Executive's gross negligence in the
performance or intentional nonperformance (continuing for ten (10) days after
receipt of written notice of need to cure) of any of Executive's material duties
and responsibilities hereunder; (3) Executive's willful dishonesty, fraud or
misconduct with respect to the business or affairs of the Corporation which
materially and adversely affects the operations or reputation of the
Corporation; (4) Executive's conviction of a felony crime; or (5)
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confirmed positive illegal drug test result. In the event of a termination for
Good Cause, as enumerated above, Executive shall have no right to any severance
compensation but shall receive any accrued salary and benefits through the date
of termination.
(d) Without Good Cause; Good Reason. At any time after the
commencement of employment, Executive may, without cause, and without Good
Reason terminate this Agreement and Executive's employment, effective thirty
(30) days after written notice is provided to the Corporation. Executive may
only be terminated without Good Cause by the Corporation during the Term hereof
if such termination is approved by a majority of the members of the Board of
Directors of the Corporation, excluding Executive if Executive is a member of
such Board of Directors. Should Executive terminate with Good Reason or in the
event that Executive is terminated without Good Cause during the Term, Executive
shall receive from the Corporation, on such dates as would otherwise be paid by
the Corporation, the base salary at the rate then in effect for whatever time
period is remaining under the Term of this Agreement or for three (3) years,
whichever amount is greater. Further, if Executive is terminated without Good
Cause or terminates his employment hereunder with Good Reason, (a) the
Corporation shall make the insurance premium payments contemplated by COBRA for
a period of eighteen (18) months after such termination, (b) the Executive shall
be entitled to receive a prorated portion of any annual bonus and other
incentive compensation to which the Executive would have been entitled for the
year during which the termination occurred had the Executive not been
terminated, (c) all options to purchase the Corporation's Common Stock shall
vest thereupon, and (d) the Executive shall be entitled to receive all other
unpaid benefits due and owing through Executive's last day of employment.
Further, any termination without Good Cause by the Corporation or termination by
the Executive with Good Reason shall operate to shorten the period set forth in
paragraph 11
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hereof to one (1) year from the date of termination of employment. If Executive
resigns or otherwise terminates his employment without Good Reason, rather than
the Corporation terminating his employment pursuant to this paragraph 12,
Executive shall receive no severance compensation.
Executive shall have "Good Reason" to terminate this Agreement and his
employment if the Executive is demoted by means of a reduction in authority,
responsibilities or duties to a position of less stature or importance within
the Corporation than the position described in paragraph 1 hereof, unless
Executive has agreed in writing to that demotion.
(e) Change in Control of the Corporation. In the event of a
"Change in Control" (as defined below) of the Corporation during the Term,
Executive may terminate this Agreement as provided herein.
Upon termination of this Agreement for any reason provided above,
Executive shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination. Additional
compensation subsequent to termination, if any, will be due and payable to
Executive only to the extent and in the manner expressly provided above or in
paragraph 13 hereof.
If termination of Executive's employment arises out of the
Corporation's failure to pay Executive on a timely basis the amounts to which he
is entitled under this Agreement or as a result of any other breach of this
Agreement by the Corporation, the Corporation shall pay all amounts and damages
to which Executive may be entitled as a result of such breach, including
interest thereon and all reasonable legal fees and expenses and other costs
incurred by Executive to enforce
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his rights hereunder. Further, none of the provisions of paragraph 11 hereof
shall apply in the event this Agreement is terminated as a result of a breach by
the Corporation.
13. Change in Control.
(a) Unless Executive elects to terminate this Agreement
pursuant to subparagraph (c) below, Executive understands and acknowledges that
the Corporation may be merged or consolidated with or into another entity and
that such entity shall automatically succeed to the rights and obligations of
the Corporation hereunder or that the Corporation may undergo another type of
Change in Control. In the event such a merger or consolidation or other Change
in Control is initiated prior to the end of the Term, then the provisions of
this paragraph shall be applicable.
(b) In the event of a pending Change in Control wherein the
Corporation and Executive have not received written notice at least five (5)
business days prior to the anticipated closing date of the transaction giving
rise to the Change in Control from the successor to all or a substantial portion
of the Corporation's business and/or assets that such successor is willing as of
the closing to assume and agree to perform obligations under this Agreement in
the same manner and to the same extent that the Corporation is hereby required
to perform, then such Change in Control shall be deemed to be a termination of
this Agreement by the Corporation without Good Cause during the Term and the
applicable portions herein will apply; however, under such circumstances, the
amount of the lump-sum severance payment due to Executive shall be triple the
amount calculated under the terms of paragraph 12(d) hereof and the
non-competition provisions herein shall not apply whatsoever.
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(c) In any Change in Control situation, Executive may, at his
sole discretion, elect to terminate this Agreement by providing written notice
to the Corporation at least five (5) business days prior to the anticipated
closing of the transaction giving rise to the Change in Control. In such case,
the applicable provisions of paragraph 12(d) hereof will apply as though the
Corporation had terminated the Agreement without Good Cause during the Term;
however, under such circumstances, the amount of the lump-sum severance payment
due to Executive shall be double the amount calculated under the terms of
paragraph 12(d) hereof and the non-competition provisions herein shall all apply
for a period of one (1) year from the effective date of termination.
(d) For purposes of applying paragraph 12 hereof under the
circumstances described in (b) and (c) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change in Control
and all compensation, reimbursements and lump-sum payments due Executive must be
paid in full by the Corporation at or prior to such closing. Further, Executive
will be given sufficient time and opportunity to elect whether to exercise all
or any of his options to purchase shares of common stock of the Corporation,
such that he may convert the options to shares prior to the closing of the
transaction giving rise to the Change in Control, if he so desires.
(e) A "Change in Control:" shall mean a change in control of a
nature that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934, as amended, as in effect on the date of this Agreement, or if Item 6(e) is
no longer in effect, any regulations issued by the United States Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as
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amended, which serve similar purposes; provided further that, without
limitation, a Change in Control shall be deemed to have occurred if and when:
(i) the following individuals no longer constitute a majority of
the members of the Board of Directors of (A) the individuals who, as of the
closing date of the Corporation's initial public offering, constitute the Board
of Directors of the Corporation (the "Original Directors"); (B) the individuals
who thereafter are elected to the Board of Directors of the Corporation and
whose election, or nomination for election, to the Board of Directors of the
Corporation was approved by a vote of at least two-thirds (2/3) of the Original
Directors then still in office (such directors becoming "Additional Original
Directors" immediately following their election); and (c) the individuals who
are elected to the Board of Directors of the Corporation and whose election, or
nomination for election, to the Board of Directors of the Corporation was
approved by a vote of at least two-thirds (2/3) of the Original Directors and
Additional Original Directors then still in office (such directors also becoming
"Additional Original Directors" immediately following their election);
(ii) a tender offer or exchange offer is
made whereby the effect
of such offer is to take over and control the Corporation, and such offer is
consummated for the equity securities of the Corporation representing twenty
percent (20%) or more of the combined voting power of the Corporation's then
outstanding voting securities;
(iii) the stockholders of the Corporation
shall approve a merger,
consolidation, recapitalization, or reorganization of the Corporation; a reverse
stock split of outstanding voting securities, or consummation of any such
transaction if stockholder approval is not obtained, other than any such
transaction which would result in at least seventy-five percent
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(75%) of the total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
beneficially owned by at least seventy-five percent (75%) of the holders of
outstanding voting securities of the Corporation immediately prior to the
transaction, with the voting power of each such continuing holder relative to
other such continuing holders not substantially altered in the transaction; or
(iv) the stockholders of the Corporation
shall approve a plan of
complete liquidation of the Corporation or an agreement for the same or
disposition by the Corporation of all or a substantial portion of the
Corporation's assets to another person or entity which is not a wholly-owned
subsidiary of the Corporation (i.e., fifty percent (50%) or more of the total
assets of the Corporation).
(f) Sales of the Corporation's Common Stock beneficially owned
or controlled by the Corporation shall not be considered in determining whether
a Change in Control has occurred.
(g) Executive shall be notified in writing by the Corporation
at any time that the Corporation or any member of its Board anticipates that a
Change in Control may take place.
(h) In the event that a Change in Control occurs and the
aggregate amount of any payments made to Executive hereunder, or pursuant to any
plan, program or policy of the Corporation in connection with, on account of, or
as a result of, such Change in Control constitutes "excess parachute payments"
as defined in Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), subject to the excise tax imposed by Section 4999 of the Code, or any
successor sections thereof, Executive shall receive from the Company, in
addition to any other amounts payable under this Agreement, a lump sum payment
equal to the amount of (i) such
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excise tax, and (ii) the federal and state income taxes payable by the Executive
with respect to any payments made to Executive under this subparagraph (h). Such
amount will be due and payable by the Corporation or its successor within ten
(10) days after Executive delivers a written request for reimbursement
accompanied by a copy of his tax return(s) showing the excise tax actually
incurred by Executive.
14. Indemnification. In the event Executive is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by the
Corporation against Executive), by reason of the fact that he is or was
performing services under this Agreement, then the Corporation shall indemnify
Executive against all expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, as actually and reasonably incurred by Executive in
connection therewith to the maximum extent permitted by applicable law. The
advancement of expenses shall be mandatory. In the event that both Executive and
the Corporation are made a party to the same third-party action, complaint, suit
or proceeding, the Corporation agrees to engage competent legal representation,
and Executive agrees to use the same representation, provided that if counsel
selected by the Corporation shall have a conflict of interest that prevents such
counsel from representing Executive, Executive may engage separate counsel and
the Corporation shall pay all attorneys' fees of such separate counsel. Further,
while Executive is expected at all times to use his best efforts to faithfully
discharge his duties under this Agreement, Executive cannot be held liable to
the Corporation for errors or omissions made in good faith where Executive has
not exhibited gross, willful and wanton negligence and misconduct or performed
criminal and fraudulent acts which materially damage the business of the
Corporation.
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15. Effect of Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach thereof.
16. Notices. Any notice permitted, required, or given hereunder shall
be in writing and shall be personally delivered; or delivered by any prepaid
overnight courier delivery service then in general use; or mailed, registered or
certified mail, return receipt requested, to the addresses designated herein or
at such other address as may be designated by notice given hereunder:
If to : Xxxxxx X. Xxxx, Xx.
0000 Xxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
With a copy to: J. Xxxxxxx Xxxxxxxxx, Esq.
00 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
If to : American Marine Recreation, Inc.
0000 00xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
With a copy to: XxXxxxxxxx & Xxxxx, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Delivery shall be deemed made when actually delivered, or if mailed,
three days after delivery to a United States Post Office.
17. Assignment. Executive shall not be entitled to assign his rights,
duties or obligations under this Agreement.
18. Amendments. The terms and provisions of this Agreement may be amended
or modified only by a written instrument executed by the party to be charged by
such amendment or modification.
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19. Governing Law. The terms and provisions herein contained and all
the disputes or claims relating to this Agreement shall be governed by,
interpreted and construed in accordance with the internal laws of the State of
Florida, without reference to its conflict of laws principles.
20. Arbitration. (a) In the event of a dispute between the parties
arising out of or relating to this Agreement, or the breach thereof, the parties
shall make every effort to amicably resolve, reconcile, and settle such dispute
between them. Should an amicable resolution not be possible, either party may
invoke arbitration.
(b) Subject to the provisions of Section 11(c)(ii) hereof, all
claims, disputes and other matters in controversy arising out of or related to
this Agreement or the performance or breach hereof, shall be decided by binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association (the "AAA Rules"), by a panel of three (3) arbitrators,
in Orlando, Florida. One (1) such arbitrator shall be appointed by each of the
parties within three (3) weeks after being requested by the other party to make
such appointment and the third arbitrator shall be appointed by the two (2)
arbitrators appointed by the parties. In the event that a party does not appoint
its arbitrator within such three (3) week period, or the two (2) arbitrators
appointed by the parties shall fail to agree on the third arbitrator, such
appointed arbitrator or arbitrators shall be appointed by the American
Arbitration Association in accordance with the AAA Rules. The award shall state
the facts and findings and shall be rendered with reasons in writing. The
arbitrators shall have no authority or power to alter or modify any express
condition or provision of this Agreement, or to render any award which by its
terms shall have the effect of altering or modifying any express conditions or
provisions of this Agreement. The award rendered by the arbitrators shall be
final and judgement may be entered upon it in any court
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having jurisdiction thereof. The successful party to the arbitration shall be
entitled to an award for reasonable attorney's fees, as determined by the
arbitrators.
21. Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
22. Merger and Severability. This Agreement shall constitute the entire
Agreement between the Corporation and Executive with respect to the subject
matter hereof. The invalidity or unenforceability of any provision hereof shall
in no way affect the validity or enforceability of any other provision.
23. Counterparts; Facsimile. This Agreement may be executed by
facsimile and in two (2) or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have affixed their signatures
the day and year first above written.
AMERICAN MARINE RECREATION, INC.
By: /s/ Xxxxxx X. Xxxx, Xx.
--------------------------------
Name:Xxxxxx X. Xxxx, Xx.
Title:President
/s/ Xxxxxx X. Xxxx, Xx.
--------------------------------
Xxxxxx X. Xxxx, Xx.
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