AMENDED EMPLOYMENT AGREEMENT
THIS AMENDED EMPLOYMENT AGREEMENT, made as of March 23, 2001 between FAMOUS
FIXINS, INC., a New York corporation with offices at 000 Xxxx 00xx Xxxxxx, Xxxxx
0000, Xxx Xxxx, Xxx Xxxx 00000 ("Employer"), and XXXXX XXXXX, an individual
residing in New York, New York ("Employee"), amends the terms of the April 12,
1999 Employment Agreement between Employer and Employee, provided that, in the
event that this Amended Employment Agreement is not given full force and effect,
for whatever reason, the terms of the April 1999 Employment Agreement shall
govern.
WITNESSETH:
WHEREAS, Employer desires to retain the services of Employee and Employee
desires to be employed by Employer upon the terms and conditions hereinafter set
forth;
WHEREAS, Employee has at Employer's request deferred certain compensation
in the past, which shall be paid in full to Employee prior to April 30, 2001,
including deferred salary increases;
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee hereby agrees
to serve, as President and Chief Executive Officer of Employer, for the Term of
Employment (as defined in Section 2). Employee agrees to perform such services
as are customary for such office. Employee further agrees to use Employee's best
efforts to promote the interest of Employer and to devote Employee's full
business time and energies during normal business hours to the business and
affairs of Employer during the Term of Employment.
2. TERM OF EMPLOYMENT. The employment hereunder shall commence as of April
12, 2001 (and prior to April 12, 2001, the terms of the prior Employment
Agreement remain in full force and effect) and shall continue for a term of five
(5) years from April 12, 2001 (the "Term of Employment"), unless earlier
terminated: (a) upon death of Employee; (b) at the option of Employer upon 30
days' prior written notice to Employee, in the event Employee, by reason of
physical injury or illness, is unable to materially perform his duties hereunder
for a continuous period of 120 days and has no expectation of returning to work
within a reasonable time thereafter; or (c) upon the discharge of Employee by
the Board of Directors of Employer for "cause" (as defined in Section 10
hereof). The Term of Employment may be renewed for an additional five years
commencing five years after the execution of this Agreement, upon written notice
of the Board of Directors of Employer given at any time in the first eight
months of the fifth year of the Term of Employment, subject to acceptance
thereof by Employee.
3. COMPENSATION.
A. Base Salary. As compensation for the services to be provided hereunder
and in consideration of Employee's agreement not to compete as set forth in
Section 4, during the Term of Employment, Employer shall pay Employee an annual
salary of $175,000 with adjustments of the greater of $10,000 or the change in
the Consumer Price Index, or such greater annual salary as may be established by
Employer's Board of Directors, which shall be payable in appropriate
installments to conform with the regular payroll dates for salaried personnel of
Employer. Commencing in the second year of this Agreement, Employee's base
annual salary shall be increased (but not decreased), each fiscal quarter, by an
amount equal to at least one percent of the Company's earnings before interest,
taxes, depreciation and amortization ("EBITDA") in the most recent fiscal year.
Additionally, Employee is entitled to receive compensation equal to one
percent (1%) of sales effected by Employer, payable in accordance with similar
payments made to other employees.
B. Incentive Earnings Bonus. In addition to any bonus to be determined by
the Board of Directors, Employee is eligible for certain incentive bonuses
contingent upon certain corporate earnings milestones. Employee is hereby
granted five year options to purchase up to 1,500,000 shares of the Company's
common stock, par value $.001 per share. These options will vest upon the
achievement of certain corporate earnings milestones as set forth herein. The
exercise price for the options is $.03025 per share, based on 110% of the
trading price of $0.0275 of the common stock on March 23, 2001. Options to
purchase 1,000,000 shares shall vest immediately upon the first to occur of
either the Company obtaining two or more new celebrity, entity, athlete or
Company licenses or new products (since January 1, 2001) or upon the occurrence
of a fiscal year in which the Company's revenues exceed $3,000,000; and
additional options to purchase 500,000 additional shares shall vest immediately
upon the first to occur of either the Company obtaining a further two or more
new celebrity, entity, athlete or Company licenses or new products or upon the
occurrence of a fiscal year in which the Company's revenues exceed $3,500,000.
These options are cumulative and are subject to the same anti-dilution rights as
are available to some other shareholder or investor in the Company. If any
milestones are achieved in the same year, all such options shall vest at the
time such milestone is achieved.
C. Bonus. Employee shall, during the term of this Agreement, be entitled to
an annual performance bonus equal to up to fifty percent (50%) of Employee's
base salary, as defined in Section 3.A, or such other amount as the Board of
Directors may determine. Additionally, Employee shall be entitled to such other
bonuses as the Board of Directors shall determine from time to time.
D. Other Benefits. Employee shall be entitled to the following fringe
benefits, perquisites, and other benefits of employment during the Term of
Employment: (i) medical and dental insurance under such group medical and dental
insurance policies as Employer may provide to its employees; (ii) sick days in
accordance with Employer's policy regarding officers; (iii) up to six (6) weeks
vacation in each year fully worked; (iv) participation in Employer's 401(k) plan
or such other plan as Employer may adopt; (v) participation in Employer's
employee stock option plan when and if established; and (vi) Employer shall also
during the term hereof and for one year thereafter provide and pay for a fifteen
year (15-year) term life insurance policy on the life of Employee, subject to
Employee's reasonable insurability, with a face amount of benefit of $1,000,000
with the beneficiary thereof to be Employee's estate, or as otherwise directed
by Employee. Employee shall have the option to maintain such insurance at his
own expense one year after the end of the term hereof, if such term is not
renewed. In addition to the foregoing, Employee shall also be entitled to any
benefits, perquisites and other benefits to the extent that the Board of
Directors determines such benefits are to be made available to Employer's
employees in general.
E. Payment Upon Early Termination. In the event of early termination of
employment for any reason specified in Section 10 hereof, Employer shall no
longer be obligated to make any payments of compensation to Employee or
Employee's estate under this Agreement except as provided for herein. However,
any salary or bonus earned and/or vested for prior periods, but not yet paid,
shall be paid by Employer to Employee or Employee's estate.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY; CONFIDENTIALITY.
A. Covenant Not to Compete and Solicit. During the Term of Employment,
Employee will not, within any jurisdiction in which Employer or any affiliate
conducts its business operations, or in any way materially competing with
Employer, directly or indirectly, own, manage, operate, control, be employed by
or participate in the ownership, management, operation or control of, or be
connected in any manner with, any business of the type or character engaged in
and competitive with that conducted by Employer. The decision of Employer's
Board of Directors as to what constitutes a competing business shall be final
and binding upon Employee, and such decision shall be made in good faith. For
these purposes, ownership by Employee or any affiliate of Employee of securities
of a public company not in excess of one percent (1%) of any class of such
securities shall not be considered to be competition with Employer.
For a period of three (3) years after termination of Employee's employment
with Employer, Employee further agrees to refrain from interfering with the
employment relationship between Employer and its other employees by soliciting
any of such individuals to participate in independent business ventures and
agrees to refrain from soliciting business from any client or prospective client
(as disclosed in a list to be provided to Employee by Employer at the time he
ceases to be employed, which list shall be binding upon Employee) of Employer's
for Employee's benefit or for any other entity.
It is the desire and intent of the parties that if any provisions of this
Section 4(A) shall be adjudicated to be invalid or unenforceable, this Section
4(A) shall be deemed amended to delete therefrom such provisions or portion
adjudicated to be invalid or unenforceable, such amendment to apply only with
respect to the operation of this paragraph in the particular jurisdiction in
which such adjudication is made.
B. Intellectual Property. During the Term of Employment, Employee will
disclose to Employer all ideas, inventions and business plans developed by
Employee during such period which relates directly or indirectly to the business
of Employer or affiliates, including without limitation any process, operation,
product or improvement which may be patentable or copyrightable. Employee agrees
that such will be the property of Employer and that Employee will, at Employer's
request and cost, do whatever is necessary to secure the rights thereto by
patent, copyright or otherwise to Employer.
C. Confidentiality. Employee agrees to not divulge to anyone (other than
Employer or any other persons employed or designated by Employer) any knowledge
or information of any type whatsoever of a confidential nature relating to the
business of Employer or any of its subsidiaries or affiliates, including without
limitation all types of trade secrets (unless readily ascertainable from public
or published information or trade sources). Employee further agrees not to
disclose, publish or make use of any such knowledge or information of a
confidential nature without prior written consent of Employer.
5. CHANGE OF CONTROL. Employee shall have the right to terminate the
employment agreement in the event of a "change in control" of Employer. "Change
of control" is defined to be any of the following: (i) a change in the ownership
or management of Employer that would be required to be reported in response to
certain provisions of the Securities Exchange Act of 1934; (ii) an acquisition
by a person or entity (excluding Employer) or persons or entities acting as a
group of 25% or more of the Employer's common stock or the Employer's then
outstanding voting securities; (iii) a change in a majority of the current Board
of Directors (the "Incumbent Board") (excluding any persons approved by a vote
of at least a majority of the Incumbent Board other than in connection with an
actual or threatened proxy contest); (iv) consummation of a reorganization,
merger, consolidation or sale of a majority of the Company's assets
(collectively, a "Transaction") other than a Transaction in which all or
substantially all of the shareholders of Employer prior to such transaction own,
in the same proportion, more than 50% of the voting power of the entity
resulting from the Transaction, at least a majority of the board of directors of
the resulting entity were members of the Incumbent Board, and after which no
person (other than the resulting entity and certain affiliates) beneficially
owns 25% or more of the voting power of the resulting entity, except to the
extent such ownership existed prior to the Transaction; or (v) the approval by
the Employer's stockholders of a complete liquidation or dissolution of
Employer. Upon a change in control, Employee shall be entitled to a lump sum
payment, payable within one month of termination, equal to two hundred and
ninety nine percent (299%) of Employee's "base amount", as defined in Section
28OG(3) of the Code.
6. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be reimbursed
for reasonable travel and other expenses incurred in connection with Employee's
services to Employer pursuant to and during the Term of Employment upon a basis
consistent with the policies established or announced by Employer.
7. AUTOMOBILE. Employer shall continue to provide Employee with an
automobile, including related maintenance, repairs, insurance, cellular
telephone, parking and other costs, for the exclusive use of Employee.
Employer recognizes Employee's need for an automobile for business
purposes. Employer, therefore, upon the expiration of the aforementioned
automobile lease, shall provide Employee with an automobile, including related
maintenance, repairs, insurance, cellular telephone and other costs. The
automobile will be selected by Employee, and the automobile and related costs
shall be comparable to those which Employer presently provides Employee.
8. DEATH BENEFITS. If Employee dies during the Term of Employment, Employer
shall pay to Employee's estate the compensation that would otherwise be payable
to Employee for twelve months following the month in which his death occurs. In
addition, Employer shall pay $100,000, in a lump sum, to the Employee's widow,
or, if he is not then survived by his widow, to the Employee's surviving
children in equal shares, or, if there are no surviving children, to the
Employee's estate.
9. BREACH BY EMPLOYEE. Both parties recognize that the services to be
rendered under this Agreement by Employee are special, unique and extraordinary
in character, and that in the event of a breach by Employee of the terms and
conditions of this Agreement to be performed by Employee, or in the event
Employee performs services during the Term of Employment for any person, firm,
corporation or other entity engaged in a competing line of business with
Employer, or otherwise breaches this Agreement, Employer shall be entitled, if
it so elects, to institute proceedings and to prosecute them in any court of
competent jurisdiction, either in law or in equity, to obtain damages for any
breach of this Agreement, or to enforce the specific performance thereof by
Employee, or to enjoin Employee from performing services for any such other
person, firm, corporation or other entity.
10. TERMINATION FOR CAUSE. Employer may terminate Employee for cause upon
thirty days' prior written notice to Employee. For purposes of this Agreement,
an event or occurrence constituting "cause" shall mean:
A. Employee's willful failure or refusal after notice thereof, to perform
specific directives of Employer's Board of Directors, when such directives are
consistent with the scope and nature of Employee's duties and responsibilities
as set forth in Section 1 and elsewhere herein and such failure or refusal is:
(i) not corrected within a reasonable time after receipt of written notice that
is sent by Employer's Board of Directors after resolution authorizing such
notice; (ii) the direct material cause of material damages to the Employer; and
(iii) within the ability and power of Employee to materially perform such
directive as to render such failure or refusal willful;
B. Employee's conviction of a felony or of any crime involving moral
turpitude, fraud or misrepresentation and final resolution of all appeals
therefrom;
C. Any final court determination of gross or wilful conduct of Employee
resulting in substantial loss to Employer, substantial damage to Employer's
reputation or any material theft from Employer;
D. Other than by reason of physical injury or illness, a final court
determination of Employee's material failure to perform the duties and
responsibilities under this Agreement causing material damage to Employer; or
E. Any final court determination of any material breach (not covered by any
of the clauses (A) through (D)) of any of the provisions of this Agreement,
causing material damage to Employer, and such breach was not cured within ten
days after written notice thereof to Employee by Employer.
11. ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interests of Employee herein may
not be sold, transferred, assigned, pledged or hypothecated by Employee. The
rights and obligations of Employer hereunder shall be binding upon and run in
favor of the successors and assigns of Employer. In the event of any attempted
assignment or transfer of rights hereunder contrary to the provisions hereof,
Employer shall have no further liability for payments hereunder. Employee
specifically consents to assignment of this Agreement by Employer pursuant to
any reorganization or business combination that Employer may effect hereafter.
12. GOVERNING LAW; CAPTIONS. This Agreement contains the entire agreement
between the parties and shall be governed by the laws of the State of New York.
It may not be changed orally, but only by agreement in writing signed by the
party against whom enforcement of any waiver, change, modification or discharge
is sought, and consented to in writing by the Board of Directors of Employer.
Section headings are for convenience or reference only and shall not be
considered a part of this Agreement.
13. PRIOR AGREEMENTS. This Agreement supersedes and terminates all prior
agreements between Employer and Employee relating to the subject matter herein
addressed.
14. NOTICES. Any notice or other communication required or permitted
hereunder shall be sufficiently given if delivered in person to Employer by
delivery to its Chairman of the Board of Directors or sent by telex, telecopy or
by registered or certified mail, postage prepaid, addressed as follows:
if to Employee, to:
Xxxxx Xxxxx
000 Xxxx 00xx Xx., #0X
Xxx Xxxx, XX 00000
if to Employer, to:
Famous Fixins, Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Law Offices of Xxx Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement, on and as of the date and year
first above written.
FAMOUS FIXINS, INC.
By: /s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx, Director
EMPLOYEE
/s/ Xxxxx Xxxxx
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Xxxxx Xxxxx
