Exhibit 10.29
EMPLOYMENT AGREEMENT
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AGREEMENT made as of the 1st day of September, 1998, by and among L.S.
Wholesale, Inc., a Massachusetts corporation with its main office in St. Xxxxxx,
U.S.V.I. (the "Employer"), Little Switzerland, Inc., a Delaware corporation with
its main office in St. Xxxxxx, U.S.V.I. ("Little Switzerland"), and C. Xxxxxxx
Xxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive is currently a director of the Employer;
WHEREAS, the Executive possesses certain unique skills, talents and judgment
as well as the knowledge of the Company's businesses, strategies and objectives;
and
WHEREAS, in order to provide for continuity in the executive management of
the Company, which continuity is deemed to be vital to the continued growth and
success of the Company, the Employer and Executive desire to provide for the
Executive's employment by the Employer as its interim President and Chief
Executive Officer.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants contained herein, the Employer and the Executive mutually agree as
follows:
1. Employment. The Employer agrees to employ the Executive and the
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Executive agrees to be employed by the Employer on the terms and conditions
hereinafter set forth.
2. Effective Date and Term. The commencement date (the "Commencement
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Date") of this Agreement shall be September 1, 1998. Subject to the provisions
of Section 5 hereof, the term (the "Term") of the Executive's employment
hereunder shall be the earlier of (i) one (1) year from the Commencement Date or
(ii) the date that a Chief Executive Officer and President commences employment.
The last day of such Term is herein sometimes referred to as the "Expiration
Date."
3. Compensation and Benefits. The compensation and benefits payable to the
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Executive under this Agreement shall be as follows:
a. Salary. For all services rendered by the Executive under this
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Agreement, the Employer shall pay the Executive a total salary as follows:
(1) Base Salary. For the Term, the Employer shall pay the
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Executive a base salary at an annual rate (the "Base Salary") equal
to Three Hundred Fifty Thousand Dollars ($350,000); provided,
however, (i) that the Employer shall pay the Executive a minimum of
Eighty-Seven Thousand Five Hundred Dollars ($87,500) in Base Salary
if the Expiration Date occurs
on or before December 1, 1998 or (ii) the Employer shall pay the
Executive a minimum of One Hundred Seventy-Five Thousand Dollars
($175,000) in Base Salary if the Expiration Date occurs on or after
December 2, 1998 (collectively the "Minimum Salary"). The amount of
Base Salary actually paid to the Executive hereunder prior to the
Expiration Date shall be deducted from the amount payable to the
Executive as Minimum Salary.
(2) Bonus. During the Term, the Employer shall pay to the
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Executive a quarterly bonus (the "Bonus") up to a maximum of Fifty
Thousand Dollars ($50,000) per fiscal quarter of Little Switzerland
subject to meeting the criteria set forth in clause (i) or (ii)
below, as applicable:
(i) The criteria for the Bonus for the second fiscal quarter
of Little Switzerland shall be as follows:
(a) Successful development of a business plan designed
to restructure the organization of Little Switzerland in
order to reduce costs with an aim toward future profitable
earnings by Little Switzerland;
(b) Successful renewal or extension by the end of the
second week of December 1998 of the credit facility with the
Bank of Nova Scotia, which is currently being considered for
renewal or extension, including, without limitation,
submitting an acceptable business plan to such bank;
(c) Significant progress in the negotiations with the
Chase Manhattan Bank concerning the renewal or extension of
the credit facility with such bank when the existing credit
facility is considered for renewal or extension during the
third fiscal quarter of Little Switzerland;
(d) Evidence of progress in the resolution of the
ongoing tax audit with governmental authorities in Aruba
with an aim toward resolution of issues in a timely manner;
(e) Successful production of profit and loss statements
for each of Little Switzerland's retail stores;
(f) Earnings per share for the second fiscal quarter of
Little Switzerland being equal to or less than a loss of
$.26 per share; and
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(g) Net sales for the second fiscal quarter of Little
Switzerland being equal to or greater than $15,337,000.
The criteria set forth in clauses (f) and (g) above shall each
be valued at 25% of the maximum quarterly Bonus for the second
fiscal quarter of Little Switzerland, and the remaining criteria set
forth in clauses (a) through (e) above shall each be valued at 10%
of the maximum quarterly Bonus for the second fiscal quarter of
Little Switzerland. The Board of Directors shall review and take
into account any documented extraordinary items prior to making
their determination as to whether the Executive has met the criteria
set forth in clauses (f) and (g) above.
(ii) The Bonus for any fiscal quarter of Little Switzerland,
other than the second fiscal quarter, which shall be determined
pursuant to clause (i) above, will be based upon performance and
other criteria to be mutually agreed upon by the Employer and
the Executive prior to the applicable quarter; provided,
however, that the criteria for each of the third and fourth
fiscal quarters of Little Switzerland relating to earnings per
share and net sales shall be the numbers set forth in the 1999
Operating Plan of Little Switzerland as approved by the Board of
Directors of Little Switzerland. The Board of Directors shall
review and take into account any documented extraordinary items
prior to making their determination as to whether the Executive
has met the criteria for earnings per share and net sales during
the third and fourth fiscal quarters of Little Switzerland.
The Board of Directors of Little Switzerland shall determine whether
the criteria set forth in clause (i) or (ii) above have been met. In
connection with the foregoing, the Executive shall neither vote in his
capacity as a director of Little Switzerland on any matter related to
such determination nor participate in any meeting or discussions of the
Board of Directors related to such determination. Notwithstanding the
foregoing, the Executive may make a presentation to the Board of
Directors that is solely limited to his determination whether such
criteria have been met. The Employer may pay the Executive up to one
hundred percent (100%) of the quarterly Bonus, if any, for each fiscal
quarter or part thereof that the Executive is employed by Little
Switzerland.
The Executive's Base Salary shall be payable in periodic installments in
accordance with the Employer's usual practice for payment of compensation to its
senior executives. The Bonus, if any, shall be payable within five (5) calendar
days after receipt by the Board of Directors of Little Switzerland of the status
of the non-financial criteria and the financial statements for the fiscal
quarter for which the Bonus applies certified by the Chief Financial Officer of
Little Switzerland.
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b. Stock Bonus Plan. On the Commencement Date, the Executive will be
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awarded an option (the "Option") to purchase 150,000 shares of common stock, par
value $.01 per share, of Little Switzerland upon the terms and conditions set
forth in the Non-Qualified Stock Option Agreement, dated as of the date hereof,
by and between the Executive and Little Switzerland.
c. Living Expenses. The Executive shall be entitled to reimbursement
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for reasonable expenses actually incurred for the purpose of maintaining a place
of residence in St. Xxxxxx, U.S.V.I. (the "Living Expense") up to an aggregate
amount not to exceed Fifty Thousand Dollars ($50,000). The Executive shall also
be entitled to reimbursement for reasonable expenses actually incurred in
connection with one round trip commute per month between the Executive's place
of residence in Boston, Massachusetts, U.S. and his place of residence in St.
Xxxxxx, U.S.V.I. The Executive shall account promptly for the expenses set forth
above to the Employer in the manner reasonably prescribed from time to time by
the Employer and in compliance with the Employer's policy.
The Living Expense shall be payable to the Executive in equal installments
of Twelve Thousand Five Hundred Dollars ($12,500) at the beginning of each
fiscal quarter of the Little Switzerland.
d. Professional Fees. The Executive shall be entitled to reimbursement
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for reasonable personal attorney's fees and expenses actually incurred by the
Executive in connection with the negotiation of this Agreement and the matters
contemplated hereby up to an aggregate amount not to exceed Four Thousand Five
Hundred Dollars ($4,500). The Executive shall account promptly for such expenses
to the Employer in the manner reasonably prescribed from time to time by the
Employer and in compliance with the Employer's policy.
e. Relocation Expenses. The Employer shall pay to or on behalf of the
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Executive all reasonable moving and relocation expenses actually incurred by the
Executive in moving to and from St. Xxxxxx, U.S.V.I. up to an aggregate amount
not to exceed Five Thousand Dollars ($5,000). The Executive shall account
promptly for such expenses to the Employer in the manner reasonably prescribed
from time to time by the Employer and in compliance with the Employer's policy.
f. Regular Benefits. The Executive shall be entitled to participate in
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any and all employee benefit plans, medical insurance plans, life insurance
plans, disability income plans, retirement plans and other benefit plans
(including, without limitation, any 401(k) plans) from time to time in effect
for senior executives of the Employer. Such participation shall be subject to
the terms of the applicable plan documents, generally applicable policies of the
Employer, applicable law and the discretion of the Board of Directors, the
Compensation Committee or any administrative or other committee provided for in
or contemplated by any such plan. Nothing contained in this Agreement shall be
construed to create any obligation on the part of the
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Employer to establish any such plan or to maintain the effectiveness of any such
plan which may be in effect from time to time.
The Executive also shall be entitled to reimbursement for all ordinary and
necessary business expenses incurred by the Executive in connection with the
advancement of Little Switzerland's and the Employer's interests and the
discharge of his duties and responsibilities hereunder, including without
limitation, all travel and lodging expenses; provided, however, that the
Executive accounts promptly for such expenses to the Employer in the manner
reasonably prescribed from time to time by the Employer and in compliance with
the Employer's policy.
g. Success Fee Arrangement. The Executive hereby acknowledges that
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Little Switzerland, at this time, is no longer pursuing a sale of Little
Switzerland or any other strategic business alternatives. The Executive further
hereby acknowledges that (i) the Investment Banking Committee of the Board of
Directors of Little Switzerland, of which the Executive was a member, has been
terminated, (ii) the Success Fee Agreement, dated as of February 4, 1998,
between the Executive and Little Switzerland is no longer in effect and (iii)
the Executive and Little Switzerland will enter into a new success fee
agreement, substantially in the form attached hereto as Exhibit A.
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4. Capacity and Extent of Service.
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a. The Executive shall serve the Employer as interim President and
Chief Executive Officer beginning on September 1, 1998 and shall serve the
Employer in such other or additional offices in which he may be reasonably
requested to serve.
b. During his employment hereunder, the Executive shall, subject to the
direction and supervision of the Board of Directors of the Employer, devote his
full business time, best efforts and business judgment, skill and knowledge to
the advancement of the Employer's interests and to the discharge of his duties
and responsibilities hereunder. In accordance with the foregoing, the Executive
shall not engage in any other business activity, except as may be approved by
the Board of Directors of Little Switzerland; provided, however, that nothing
herein shall be construed as preventing the Executive from:
(1) investing his assets in a manner not otherwise prohibited by
this Agreement, and in such form or manner as shall not require any
material services on his part in the operations or affairs of the companies
or other entities in which such investments are made;
(2) serving on the board of directors of any company, provided
that he shall not be required to render any material services with respect
to the operations or affairs of any such company;
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(3) continuing to perform consulting services for persons or
entities other than Little Switzerland so long as such activities do not
interfere with Executive's ability to perform his responsibilities for
Little Switzerland, are not competitive with the business conducted by
Little Switzerland in its market area, and do not consume a material amount
of his time; or
(4) engaging in religious, charitable or other community or
nonprofit activities which do not impair his ability to fulfill his duties
and responsibilities under this Agreement.
c. The Executive shall resign as Chairman of the Board of Directors of
Little Switzerland effective as of the Commencement Date. The Executive shall
continue to serve as a Director of Little Switzerland until his successor is
duly elected and qualified and subject to being elected by the Company's
stockholders at the next annual meeting, or special meeting in lieu thereof.
Pursuant to Article II of the Amended and Restated Bylaws of Little Switzerland,
as in effect on the date hereof, so long as the Executive is employed by the
Employer and remains a Director of Little Switzerland, he shall not be entitled
to receive any salary or other compensation for his services as a Director of
Little Switzerland, including, without limitation, any director or committee
member fees.
d. The Consulting Agreement, dated as of June 2, 1996, between the
Executive and Little Switzerland (the "Consulting Agreement") shall be
terminated effective as of the Commencement Date. In consideration of the
Executive waiving Section 4(c) of the Consulting Agreement, pursuant to which
the Company is required to give the Executive 90 days' prior written notice to
terminate the Consulting Agreement, Little Switzerland shall pay, simultaneously
with the execution of this Agreement, the Executive Thirty-Seven Thousand Five
Hundred Dollars ($37,500).
5. Termination. Notwithstanding the provisions of Section 2, subject to
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the following provisions, the Executive's employment hereunder shall terminate
under the following circumstances without further liability on the part of the
Employer or right of the Executive to receive any payments except as otherwise
provided in this Agreement:
a. Death. In the event of the Executive's death during the Executive's
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employment hereunder, the Executive's employment shall terminate on the date of
his death.
b. Termination by the Employer for Cause. The Executive's employment
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hereunder may be terminated for cause (as defined below) by written notice to
the Executive setting forth in reasonable detail the nature of such cause,
effective upon delivery of such notice. Only the following shall constitute
"cause" for termination pursuant to this Section 5.b.:
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(1) Deliberate dishonesty of the Executive with respect to the
Employer or any subsidiary or affiliate thereof;
(2) Conviction of the Executive of a crime involving moral
turpitude ;
(3) Material failure to perform a substantial portion of his
duties and responsibilities hereunder, which failure continues for more
than thirty (30) days after written notice given to the Executive pursuant
to a two thirds vote of all of the members of the Board of Directors of
Little Switzerland (exclusive of the Executive), each such vote to set
forth in reasonable detail the nature of such failure; or
(4) Gross or willful misconduct of the Executive with respect to
the Employer or any subsidiary or affiliate thereof.
c. Termination by the Executive for Cause. The Executive's employment
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hereunder may be terminated by the Executive by written notice to the Board of
Directors of Little Switzerland effective thirty (30) days after the giving of
such notice in the event of a material breach by the Employer of any provision
of this Agreement, which breach shall continue for more than thirty (30) days
after the date on which the Board of Directors of Little Switzerland receives
such notice.
d. Termination by the Employer Without Cause. The Executive's
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employment with the Employer may be terminated without cause by a two-thirds
vote of all of the members of the Board of Directors of Little Switzerland
(exclusive of the Executive) on written notice to the Executive effective upon
thirty (30) days after the giving of such notice.
e. Termination by the Executive Without Cause. The Executive may
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terminate his employment with the Employer without cause on written notice to
the Employer effective upon thirty (30) days after the giving such notice.
f. Disability. If, due to physical or mental illness, the Executive
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shall be disabled so as to be unable to perform substantially all of his duties
and responsibilities hereunder (a "Substantial Disability"), the Employer may
designate another executive to act in his place during the period of such
disability. For a period of up to two (2) months subsequent to the commencement
of a Substantial Disability, the Employer shall continue to pay to the Executive
his salary and benefits in accordance with Section 3 hereof. If, at the end of
such two-month period the Executive shall continue to have a Substantial
Disability, the Executive's employment may be terminated by a two-thirds vote of
all of the members of the Board of Directors of Little Switzerland (exclusive of
the Executive) without further liability to the Employer or Little Switzerland.
If any question shall arise as to whether during any period the Executive
suffered a Substantial Disability, the Executive may, and at the request of the
Employer will, submit to the Employer a certification in reasonable detail by a
physician
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selected by the Executive or his guardian to whom the Employer has no reasonable
objection as to whether the Executive was so disabled and such certification
shall for the purposes of this Agreement be conclusive of the issue. If such
question shall arise and the Executive shall fail to submit such certification,
the Employer's determination of such issue shall be binding on the Executive.
g. Employer's Termination Determination. Notwithstanding anything to
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the contrary contained herein, the Executive shall not be entitled to vote in
his capacity as a member of the Board of Directors of Little Switzerland on any
matter related to termination of the Executive by the Employer for cause,
termination of the Executive by the Employer without cause or determination of
whether a Substantial Disability existed.
6. Noncompetition and Confidential Information.
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a. Noncompetition. During the period of the Executive's employment by
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the Employer pursuant to this Agreement, the Executive will not, directly or
indirectly, whether as owner, partner, shareholder, consultant, agent, employee,
co-venturer or otherwise, or through any Person (as defined in Section 8
hereof), compete in Little Switzerland's or the Employer's market area (defined
as any country or other jurisdiction in which Little Switzerland or the Employer
conducts business as of the effective date of termination) with the business
conducted by Little Switzerland or the Employer during the period of his
employment hereunder, nor will he attempt to hire any employee of Little
Switzerland or the Employer, assist in such hiring by any other Person,
encourage any such employee to terminate his or her relationship with Little
Switzerland or the Employer, or solicit or encourage any customer of Little
Switzerland or the Employer to terminate its relationship with Little
Switzerland or the Employer or to conduct with any other Person any business or
activity which such customer conducts or could conduct with Little Switzerland
or the Employer.
b. Confidential information. The Executive will not disclose to any
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other Person (except as required by applicable law or in connection with the
performance of his duties and responsibilities hereunder), or use for his own
benefit or gain, any confidential information of Little Switzerland or the
Employer obtained by him incident to his employment with the Employer. The term
"confidential information" includes, without limitation, financial information,
business plans, prospects and opportunities (such as lending relationships,
financial product developments, or possible acquisitions or dispositions of
businesses or facilities) of Little Switzerland or the Employer but does not
include any information which has become part of the public domain by means
other than the Executive's non-observance of his obligations hereunder.
c. Relief; Interpretation. The Executive agrees that the Employer
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shall be entitled to injunctive relief for any breach by him of the covenants
contained in this Section 6. In the event that any provision of this Section 6
shall be determined by any court of competent jurisdiction to be unenforceable
by reason of its being extended over too great a period of time,
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too large a geographic area, or too great a range of activities, it shall be
interpreted to extend only over the maximum period of time, geographic area, or
range of activities as to which it may be enforceable. For purposes of this
Section 6, the term "Employer" shall mean L.S. Wholesale, Inc. and any of its
subsidiaries, affiliates, predecessors and successors.
7. Conflicting Agreements. The Executive hereby represents and warrants
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that the execution of this Agreement and the performance of his obligations
hereunder will not breach or be in conflict with any other agreement to which he
is a party or is bound, and that he is not now subject to any covenants against
competition or similar covenants which would affect the performance of his
obligations hereunder.
8. Definition of "Person". For purposes of this Agreement, the term
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"Person" shall mean an individual, a corporation, an association, a partnership,
an estate, a trust and any other entity or organization.
9. Taxation of Payments and Benefits.
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a. The Employer shall undertake to make deductions, withholdings
and tax reports with respect to payments and benefits under this Agreement to
the extent that it reasonably and in good faith believes that it is required to
make such deductions, withholdings and tax reports. All payments made by the
Employer under this Agreement shall be net of any tax or other amounts required
to be withheld by the Employer under applicable law. Nothing in this Agreement
shall be construed to require the Employer to make any payments to compensate
the Executive for any adverse tax effect associated with any payments or
benefits or for any deduction or withholding from any payment or benefit.
b. Notwithstanding the foregoing, the Employer shall pay to the
Executive an additional payment (the "Gross-up Payment") for otherwise taxable
reimbursements made to the Executive under Section 3.c. of this Agreement,
provided that the Employer shall use its standard gross-up methodology in
calculating the Gross-up Payment to be paid to the Executive. Under the
Employer's standard gross-up methodology, the Employer makes a taxable payment
equivalent to the Employer's reasonable estimate of the Executive's federal,
state and any local income taxes and the Executive's FICA taxes on the amount to
be grossed up.
10. Arbitration of Disputes. Any controversy or claim arising out of or
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relating to this Agreement or the breach thereof or otherwise arising out of the
Executive's employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration in any forum and form agreed upon by the parties or, in the absence
of such an agreement, under the auspices of the American Arbitration Association
("AAA") in Boston, Massachusetts in accordance with the Employment Dispute
Resolution Rules of the AAA, including, but not limited to, the rules and
procedures applicable
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to the selection of arbitrators. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. This Section
10 shall be specifically enforceable. Notwithstanding the foregoing, this
Section 10 shall not preclude either party from pursuing a court action for the
sole purpose of obtaining a temporary restraining order or a preliminary
injunction in circumstances in which such relief is appropriate; provided,
however, that any other relief shall be pursued through an arbitration
proceeding pursuant to this Section 10.
11. Assignment: Successors and Assigns. Neither the Employer nor the
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Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided, however, that the Employer may assign its rights under this
Agreement without the consent of the Executive in the event that the Employer
shall hereafter effect a reorganization, consolidate with or merge into any
other Person, or transfer all or substantially all of its properties or assets
to any other Person. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
12. Enforceability. If any portion or provision of this Agreement shall to
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any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
13. Waiver. No waiver of any provision hereof shall be effective unless
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made in writing and signed by the waiving party. The failure of any party to
require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.
14. Notices. All notices, requests, demands and other communications
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provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage prepaid, to the
Executive at the last address the Executive has filed in writing with the
Employer or, in the case of the Employer, at its main offices, attention of the
Board of Directors. Any such notice shall be deemed to be effective and
therefore given upon the following dates: (i) if such notice is delivered in
person the date on which such delivery is done; or (ii) if such notice is sent
by registered or certified mail, postage prepaid, the date which is three (3)
days subsequent to the date on which such notice is mailed.
15. Amendment. This Agreement may be amended or modified only by a written
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instrument signed by the Executive and by a duly authorized representative of
the Employer.
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16. Governing Law: Consent to Jurisdiction. It is the parties' intention
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that the terms of employment under this Agreement shall be construed under and
be governed in all respects by the laws of the Commonwealth of Massachusetts. To
the extent that any court action is permitted consistent with or to enforce
Section 10 of this Agreement, the parties hereby consent to the jurisdiction of
the Superior Court of the Commonwealth of Massachusetts and the United States
District Court for the District of Massachusetts. Accordingly, with respect to
any such court action, the Employer and Executive (a) submit to the personal
jurisdiction of such courts and (b) consents to service of process.
17. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which when so executed and delivered shall be taken to be
an original, but such counterparts shall together constitute one and the same
document.
[END OF TEXT]
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IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by
each of the Employer and Little Switzerland, by their duly authorized officers
and/or directors, and by the Executive, as of the date first above written.
L.S. WHOLESALE, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President
LITTLE SWITZERLAND, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Director
By: /s/ Xxxx X. Xxxxx, Xx.
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Name: Xxxx X. Xxxxx, Xx.
Title: Director
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Director
Dated: January 21,1999 By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Director
EXECUTIVE:
/s/ C. Xxxxxxx Xxxxx
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C. Xxxxxxx Xxxxx
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