EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of August 30, 1996 (the
"Effective Date"), by and between X. XXXXX & SON, INC., a Florida corporation
(the "COMPANY"), and XXXXXXX XXXXXX (the "EXECUTIVE").
PRELIMINARY STATEMENTS:
A. The Company desires to retain the services of the Executive pursuant
to the terms and conditions of this Agreement.
B. The Executive is willing to make his services available to the
Company on the terms and subject to the conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 GENERAL. The Company hereby agrees to employ the Executive
as the Chairman of the Board and Chief Executive Officer of the Company, and the
Executive hereby agrees to provide services to the Company, on the terms and
subject to the conditions set forth herein.
1.2 DUTIES OF EXECUTIVE. Subject to the provisions of Section
8, during the term of this Agreement, the Executive shall be available to the
Company on a full-time basis, render services to the best of his ability, and
use his best efforts to promote the interests of the Company. The Executive
agrees to fulfill his fiduciary duties as an officer and director of the
Company. During the term of this Agreement, the Executive shall serve as the
Chairman of the Board and Chief Executive Officer of the Company. The Executive
shall be responsible for the management of the Company's day to day operations,
including, but not limited to, all hiring and firing, merchandising,
advertising, store and warehouse operations, contracts, accounting, personnel,
budgets and expenses. The Executive shall also perform such other duties
assigned to him by the Board of Directors (the "BOARD") that are consistent with
his title and position and that do not violate the terms of this Agreement. The
Executive shall also be a member of the Board.
1.3 PLACE OF PERFORMANCE. In connection with the employment of
the Executive by the Company hereunder, the Executive shall perform his duties
and obligations hereunder primarily from the Company's offices located in Miami
Lakes, Florida, except for required travel on the Company's business. The
Company shall not require the Executive to change his place of permanent
residency to a place outside of the Dade County, Florida area.
2. TERM.
2.1 INITIAL TERM. The initial term of the employment of the
Executive hereunder shall be for a period commencing on the Effective Date and
expiring on December 31, 1999 (the "INITIAL TERM"), unless sooner terminated in
accordance with the terms and conditions hereof.
2.2 RENEWAL TERM. The employment of the Executive hereunder
may be renewed and extended for such period or periods as may be mutually agreed
to by the Company and the Executive in a written supplement to this Agreement
signed by the Executive and the Company (a "WRITTEN SUPPLEMENT"). If this
Agreement is not so renewed and extended prior to the expiration of the Initial
Term, the employment of the Executive hereunder shall automatically terminate
upon the expiration of the Initial Term.
3. COMPENSATION.
3.1 BASE SALARY. As compensation for all services rendered by
the Executive to the Company hereunder, the Executive shall receive a base
salary at an annual rate of $300,000 (the "BASE SALARY") during the term of his
employment hereunder, which shall be payable in installments consistent with the
Company's normal payroll schedule, subject to applicable withholding and other
taxes. The Base Salary shall be increased annually to reflect any increase from
the previous year in the Consumer Price Index for the Dade County, Florida area.
In addition, the Base Salary may be increased from time to time in accordance
with the normal business practices of the company and, if so increased, shall
not thereafter during the term of this Agreement be decreased. If the term of
this Agreement shall be renewed and extended as provided in Section 2.2 hereof,
then during such renewal term the Executive shall be paid a base salary as set
forth in the Written Supplement.
3.2 DISCRETIONARY BONUS. At the discretion of the Board, the
Executive shall be entitled to receive discretionary bonuses pursuant to bonus
plans approved by the Board after the Effective Date.
4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 REIMBURSABLE EXPENSES. During the term of the Executive's
employment hereunder, the Company, upon the submission of proper substantiation
by the Executive, shall reimburse the Executive for all reasonable expenses
actually and necessarily paid or incurred by him in the course of and pursuant
to the business of the Company.
4.2 OTHER BENEFITS. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in all
medical and hospitalization, group life insurance, and any and all other fringe
benefit plans as are hereinafter provided by the Company to its officers on the
same terms as those of such other officers of the Company. Notwithstanding the
termination of the Executive's employment with the Company for any reason prior
to the expiration of the Initial Term, including a resignation by the Executive,
the Company shall (i) until the expiration of the Initial Term, provide the
Executive, his spouse and dependents with medical, dental and any other health
benefits and coverage in amounts and on terms no less favorable than provided
immediately prior to such termination of employment and, in all other respects,
shall use its reasonable efforts to cause the Executive to be treated in a
manner that will cause him to remain eligible for said coverage throughout such
period, at no cost to the Executive, and (ii) at the time of such termination or
resignation, transfer, at no cost to the Executive, the life insurance policies
on the Executive's life to the Executive, or his designee, including any cash
value thereon. The provisions of this Section 4.2 shall survive the termination
of this Agreement.
4.3 WORKING FACILITIES. During the term of the Executive's
employment hereunder, the Company shall furnish the Executive with an office and
secretarial help of his choice, and such other facilities adequate for the
performance of his duties hereunder at the Company's corporate headquarters
located in Miami Lakes, Florida.
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4.4 STOCK OPTIONS. Subject to the terms and conditions of the
Company's stock option plans currently in effect for the Company, as amended,
modified or replaced from time to time, or any new stock option plan adopted by
the Company with the same or similar purpose of such stock option plans
(collectively, the "Plan"), and shareholder approval, if required, the Company
grants to the Executive, effective as of the Effective Date, a non-qualified
stock option to purchase 400,000 shares of the Company's Common Stock (the
"STOCK OPTION"), at an exercise price of $4.125 (the closing price of the Common
Stock on the day immediately prior to the Effective Date). The Stock Option
shall vest on the six-month anniversary date from the date of grant; provided,
that, the Stock Option shall vest immediately if (i) a Change of Control (as
hereinafter defined) occurs, or (ii) the Executive's employment is terminated
for any reason (including a resignation by the Executive). In addition,
notwithstanding the provisions set forth in the Plan, the Stock Option will
expire in all events on the 10-year anniversary date of the date of grant,
notwithstanding the termination of the Executive's employment with the Company
for any reason, including resignation by the Executive. The terms of this
Section 4.4 shall survive the termination of this Agreement.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Executive's
employment hereunder, for cause. For purposes of this Agreement, the term
"cause" shall mean solely (a) a willful breach by the Executive of any of the
material terms or provisions of this Agreement which is not cured within ten
(10) days after receipt by the Executive of written notice of same, (b) the
Executive's conviction of a felony involving moral turpitude, or (c) commission
by the Executive of an act or acts involving fraud, embezzlement,
misappropriation or theft against the Company. Upon any termination pursuant to
this Section 5.1, the Executive shall be entitled to be paid his Base Salary to
the date of termination and, subject to the provisions of Sections 4.2 and 4.4,
the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however to the provisions of Section 4.1).
5.2 CHANGE OF CONTROL. The Executive may terminate his
employment under this Agreement upon a Change of Control. For purposes of this
Section 5.2 "Change of Control" shall mean (i) the failure of Applicable
Directors (defined below) to constitute a majority of the Board, (ii) the
shareholders of the Company shall approve a plan of merger, consolidation,
reorganization, liquidation or dissolution in which the Company does not
survive, unless such approved merger, consolidation, reorganization, liquidation
or dissolution is subsequently abandoned, or (iii) the shareholders of the
Company shall approve a plan for the sale, lease, exchange or other disposition
of all or substantially all of the property and assets of the Company, unless
such plan is subsequently abandoned; provided, that, a Change of Control shall
not be deemed to have occurred as a result of subclauses (ii) and (iii) of this
sentence if such transaction is with Xxxxxx Xxxxxxxxxx, Inc. or Perfumania,
Inc., unless, at the time of such transaction, the Executive is no longer
affiliated with these entities. As used herein, "Applicable Directors" shall
mean those individuals who were members of the Board as of the Effective Date
and appointed at the direction of Ocean Reef Management, Inc. ("Ocean Reef"),
and any new director whose election to the Board or nomination for election to
the Board was approved (prior to any vote thereon by the shareholders) by a vote
of at least a majority of the directors then still in office who either were
directors appointed by Ocean Reef as of the Effective Date or whose election or
nomination for election was previously approved as provided in this sentence. To
terminate his employment under this Agreement upon a Change of Control, the
Executive shall give the Company a written termination notice. The termination
date shall be the date specified in such notice, which date may not be earlier
than 30 days nor later than 90 days from the
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Company's receipt of such notice. If this Agreement is terminated by the
Executive pursuant to this Section 5.2, or if the Company terminates this
Agreement upon a Change of Control, or within six months from the date of a
Change of Control, then, as long as the Executive is not a member of the
"control group" (within the meaning of the rules and regulations of the
Securities and Exchange Commission) of the entity causing the Change of Control,
in addition to the provisions of Sections 4.2 and 4.4, the Executive will be
entitled to be paid a lump sum payment equal to the sum of (x) the Base Salary
that the Executive would otherwise have been entitled to receive through the end
of the Initial Term, plus (y) a severance payment equal to $300,000.
5.3 TERMINATION WITHOUT CAUSE; DEATH; OR DISABILITY. At any
time the Company shall have the right to terminate the Executive's employment
hereunder (i) by written notice to the Executive, (ii) if the Executive, as a
result of mental or physical incapacity, illness or disability, fails to perform
his duties and responsibilities provided for herein for more than 90 days in any
365-day period, or (iii) upon the death of the Executive. In the event of any
termination pursuant to this Section 5.3, then, in addition to the provisions of
Sections 4.2 and 4.4, the Executive (or his estate) shall be entitled to be paid
his Base Salary and any accrued but unpaid bonus to the date of termination and
receive reimbursements for reasonable business expenses incurred prior to such
date of termination (subject, however, to the provisions of Section 4.1), and to
be paid the following severance payments: (a) if the termination occurs on or
prior to the one-year anniversary date of the Effective Date, the Company shall
pay the Executive (or his estate) a lump sum payment equal to the Base Salary
that the Executive would otherwise have been entitled to receive through the end
of the Initial Term, and (b) if the termination occurs after the one-year
anniversary date of the Effective Date, but prior to the expiration of the
Initial Term, the Company shall pay the Executive (or his estate) a lump sum
payment equal to the sum of (x) the Base Salary that the Executive would
otherwise have been entitled to receive through the end of the Initial Term,
plus (y) $300,000.
5.4 TERMINATION BY EXECUTIVE. The Executive may terminate his
employment under this Agreement for Good Reason (defined below). "Good Reason"
shall mean (A) that the Company (through its Board or otherwise) has (i)
assigned the Executive duties other than those contemplated by Section 1.2 above
without the Executive's consent, (ii) named a new Chairman of the Board or Chief
Executive Officer of the Company, (iii) limited the powers of the Executive in
any manner, or (iv) breached any of its other covenants and obligations
hereunder; or (B) the inability of the Executive to perform his duties
hereunder. A purported termination of this Agreement by the Company pursuant to
any provision of this Section 5 which is disputed and which is finally
determined not to have been proper shall be deemed a breach by the Company of
this Agreement. To terminate his employment under this Agreement for Good
Reason, the Executive shall give the Company written notice of the Executive's
intent to terminate his employment with the Company pursuant to this Section
5.4, which notice shall specify the Executive's reasons therefor in detail. The
Company shall have 30 days from its receipt of such notice to attempt to cure
any such condition giving rise to Good Reason hereunder. If such cure is
acceptable to the Executive, the Executive may accept such cure and continue
this Agreement in full force and effect as if the initial notice of termination
under this Section 5.4 had not been given by the Executive; PROVIDED, HOWEVER,
that acceptance of such cure and the continuation of the Executive's employment
shall not act as a waiver of any rights of the Executive with respect to such
actions or inactions of the Company and/or limit the Executive's right to
terminate this Agreement for the same or similar action or inaction by the
Company following such cure. If the Executive does not accept such cure, the
termination date of this Agreement shall be the 30th day after the Company's
receipt of the Executive's termination notice. Upon any termination of this
Agreement pursuant to this Section 5.4, then, in addition to the provisions of
Sections 4.2 and 4.4, the Executive shall be entitled to receive his Base Salary
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and any accrued but unpaid bonus through the end of the Initial Term, in
installments consistent with the Company's normal payroll practices, and
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1.
5.5 NON-RENEWAL. In the event that this Agreement is not
renewed beyond the Initial Term as provided in Section 2.1 hereof, then this
Agreement shall terminate at the end of such Initial Term of this Agreement. The
last day of the Initial Term shall be the termination date for a termination
pursuant to this Section 5.5. If the Executive is employed by the Company at the
end of the Initial Term, then, upon any termination of this Agreement pursuant
to this Section 5.5, the Executive shall be entitled to receive a lump-sum
payment of $300,000.
5.6 MITIGATION. The Executive shall not be required to
mitigate the amount of any payment provided for in this Section 5 by seeking
other employment or otherwise, nor shall the amount of any payment provided for
in this Section 5 be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination date.
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. During the Non-competition Period (as
hereinafter defined), the Executive shall not, directly or indirectly, engage in
or have any interest in any sole proprietorship, partnership, corporation or
business or any other person or entity that directly or indirectly is engaged in
the jewelry or gift retail business primarily in Florida (the "Business");
PROVIDED, HOWEVER, that nothing herein shall be deemed to prevent the Executive
from (i) owning an interest in the equity or debt securities of the Company,
Xxxxxx Xxxxxxxxxx, Inc., Perfumania, Inc., or any successor (whether by merger,
acquisition, sale or otherwise) of such companies, or any direct or indirect
subsidiaries of such companies, and (ii) acquiring through market purchases and
owning, solely as an investment, less than five percent of the equity securities
of any class of any issuer whose shares are registered under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended, and are listed or
admitted for trading on any United States national securities exchange or are
quoted on the National Association of Securities Dealers Automated Quotations
System, or any similar system of automated dissemination of quotations of
securities prices in common use, so long as the Executive is not a member of any
"control group" (within the meaning of the rules and regulations of the United
States Securities and Exchange Commission) of any such issuer. For purposes of
this Section 6.1, the term "NON-COMPETITION PERIOD" shall mean (i) at all times
while the Executive is employed by the Company, and (ii) at all times while the
Executive is receiving Base Salary payments from the Company, but in no event
more than six months from the date the Executive is no longer employed by the
Company.
6.2 NONDISCLOSURE. Except as expressly permitted by the
Company or in connection with the performance of his duties hereunder, the
Executive shall not, unless otherwise required by law, divulge, communicate, use
to the detriment of the Company or for the benefit of any other person or
persons, or misuse in any way, any confidential information pertaining to the
business of the Company. Any confidential information or data heretofore or
hereafter acquired by the Executive with respect to the business of the Company
(which shall include, but not be limited to, information concerning the
Company's financial condition, prospects, customers, suppliers, sources of
leads, methods of doing business, importation, marketing and distribution of the
Company's services) shall be deemed a valuable, special and unique asset of the
Company that is received by the Executive in confidence and as a fiduciary, and
the Executive shall remain a fiduciary to the Company with respect to all of
such
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information. Notwithstanding any provision hereof which may be to the contrary,
confidential information shall not include (a) information that is or becomes
generally available to the public other than as a result of a disclosure by the
Executive, or (b) information lawfully acquired by the Executive from sources
other than the Company or its affiliates who are not bound by any agreement of
confidentiality.
6.3 NONSOLICITATION OF EMPLOYEES. While employed by the
Company and for a period of one year following the date his employment is
terminated hereunder, the Executive shall not, directly or indirectly, for
himself or for any other person, firm, corporation, partnership, association or
other entity, solicit any employee of the Company.
6.4 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the Company, whether prepared by the Executive or
otherwise coming into the Executive's possession, shall be the exclusive
property of the Company and shall be returned immediately to the Company on
termination of the Executive's employment hereunder or on the Company's request
at any time. The Executive shall not retain copies, extracts or compilations of
any such books, records or accounts.
6.5 COMPANY INCLUDES SUBSIDIARIES. For purposes of this
Section 6 and Section 7 hereof, the term "Company" shall be deemed to include
the Company and any of its direct or indirect subsidiaries.
6.6 SURVIVAL. The terms of this Section 6 shall survive the
termination of this Agreement.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. OTHER ACTIVITIES OF THE EXECUTIVE. The Company acknowledges and
agrees that the Executive and his affiliates are engaged in the business of
investing in, acquiring and/or managing businesses and other ventures for the
Executive's own account, for the account of the Executive's affiliates and
associates (as such terms are defined by the rules and regulations of the
Securities and Exchange Commission) and for the account of other unaffiliated
parties (collectively the "Investment Activities"), and the Executive plans to
continue to be engaged in such Investment Activities during the term of this
Agreement (which may include employment of the Executive by the entities
conducting such Investment Activities). No aspect or element of such present or
future Investment Activities shall be deemed to be engaged in for the benefit of
the Company or any of its subsidiaries nor to constitute a conflict of interest
or a breach of this Agreement unless such activities violate Section 6.1 of this
Agreement. The Executive shall be required to bring only such investment and/or
business opportunities to the attention of the Company and its subsidiaries that
relate to the Business. Absent the provisions of this Section 8, the
compensation required by the Executive would have been considerably higher or
the Executive would not have entered into this Agreement.
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9. INDEMNIFICATION. The Company and its present and future subsidiaries
agree to jointly and severally indemnify and hold harmless the Executive to the
fullest extent permitted by corporate law at the present time (or as may be
increased in the future). The Company and its subsidiaries, jointly and
severally, agree to reimburse the Executive on a monthly basis for any cost of
defending any action or investigation (including attorneys' fees and expenses)
subject to an undertaking from the Executive to repay the Company or its
subsidiaries if the Executive is determined not to be entitled to such
indemnity.
10. ASSIGNMENT. Subject to the provisions of Section 5.2 hereof, the
Executive agrees that any or all of the rights and interests of the Company
hereunder (i) may be assigned to any purchaser of substantially all of the
assets of the Company, and (ii) may be assigned as a matter of law to the
surviving entity in any merger of the Company. The Executive shall not delegate
his employment obligations hereunder, or any portion thereof, to any other
person.
11. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Florida.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified in any way unless by a written instrument signed
by each of the parties hereto.
13. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be given by personal delivery, facsimile
transmission, Federal Express (or other equivalent courier service) or by
registered or certified mail, postage prepaid, return receipt requested (a) if
to the Company, 0000 Xxxxx Xxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx 00000, Attention:
Board of Directors, and (b) if to the Executive, to his address as reflected on
the payroll records of the Company, or to such other addresses as either party
hereto may from time to time give notice of to the other. Notice by registered
or certified mail will be effective three days after deposit in the United
States mail. Notice by any other permitted means will be effective upon receipt.
14. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
15. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
16. WAIVERS. The waiver by either party hereto of a breach or violation
of any term or provision of this Agreement shall not operate nor be construed as
a waiver of any subsequent breach or violation.
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17. DAMAGES. Nothing contained herein shall be construed to prevent any
party hereto from seeking and recovering from the other damages sustained by
either or both of them as a result of its or his breach of any term or provision
of this Agreement. In the event that either party hereto brings suit for the
collection of any damages resulting from, or for the injunction of any action
constituting, a breach of any of the terms or provisions of this Agreement, then
the prevailing party shall pay all reasonable costs, fees (including reasonable
attorneys' fees) and expenses of the non-prevailing party.
18. SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
19. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
X. XXXXX & SON, INC.
By:/s/Xxxxxx Xxxxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxxxx
Title: Chief Financial Officer
/s/Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX
