EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of August 20
1998 between HOME RETAIL HOLDINGS, INC., a Delaware corporation (the "Company"),
and XXXXX XXXX, a resident of the State of Georgia ("Employee").
WHEREAS, the Company desires to employ Employee as the Chief Executive
Officer ("CEO") and President of the Company, and Employee desires to be
employed by the Company; and
WHEREAS, Company and Employee desire to set out in writing the terms of
Employee's employment with the Company.
NOW, THEREFORE, in consideration of the employment of Employee by the
Company, and the premises and mutual covenants and agreements herein contained,
the parties hereto agree as follows:
Definitions.
"Affiliate" shall mean an individual, any spouse,
parent, sibling, or child of such individual, or a corporation, any corporation
controlling such corporation, any corporation controlled by such corporation, or
any shareholder or shareholders, individually or collectively, in control of
such corporation.
"Aropi" means Aropi, Incorporated, an Iowa
corporation.
"Base Salary" is defined in Section 3(a).
"Board" means the Board of Directors of the Company.
"Cause" means during the Term of Employee's
employment pursuant to this Agreement one of the following has occurred: (i)
Employee has committed a felony not involving the use of a motor vehicle or has
been imprisoned following conviction of a felony involving the use of a motor
vehicle, (ii) defalcation of fraudulent conduct by Employee, (iii) Employee has
committed or engaged in willful misconduct or gross negligence in the
performance of his duties to the Company, (iv) failure by Employee to devote his
full business time and attention to his duties hereunder (other than any such
failure resulting from Employee's incapacity due to Disability), or (v) willful
breach of one or more material express obligations under this Agreement by
Employee, provided that any such act results in a material injury to the
Company. For purposes of this paragraph, no act, or failure to act, on
Employee's part shall be considered "willful" if it was done, or omitted to be
done, in good faith and with reasonable belief that such act or omission was in,
or not opposed to, the best interest of the Company. The Cause shall be stated
specifically in the notice of termination given pursuant to Paragraph 8(a).
"Change of Control" means the date on which the
Stockholders (as defined in the Tag-Along Agreement) as of the date hereof have
collectively transferred 50% or more of the Shares of the Company to persons
other than their Affiliates.
"Termination Date" shall mean the date that the
Employee ceases to be employed by the Company regardless of whether or not the
Employee's employment is terminated without Cause or for Good Reason pursuant to
Paragraph 6(1) below.
"Disability" shall exist if because of ill health,
physical, or mental disability, or any other reason beyond his control, and
notwithstanding reasonable accommodations made by the Company, the Employee
shall have been unable, unwilling or shall have failed to perform his duties
under this Agreement, as determined in good faith by the Company's Board of
Directors, for a period of 120 consecutive days, or if, in any 12-month period,
the Employee shall have been unable or unwilling or
shall have failed to perform his duties for a period of 180 days, irrespective
of whether or not such days are consecutive.
"Good Reason" means (i) any instruction or directive
of the Board of Directors of the Corporation which does not result from facts or
circumstances which would allow the termination of Employee for Cause and which
has the effect of substantially eliminating the duties, responsibilities and
authority of Employee or scope of the position, but only, however, to the extent
that (a) the Employee has notified the Company in writing of the substantial
elimination, specifying in reasonable detail the nature of the substantial
elimination and stating that the substantial elimination is grounds for Good
Reason, and (b) the Company has failed to cure the substantial elimination
within 60 days after the notice is sent or given under this Agreement, or (ii)
the occurrence of a Change of Control.
"Offering" is defined in the Stock Purchase
Agreement.
"Offering Price" is defined in the Stock Purchase
Agreement
"Option Term" means for a period of three years from
the date hereof, if the Offering occurs within six months from the date hereof.
If the Offering occurs after six months from the date hereof, then the Option
Term shall mean a period of three years from the date of the Offering.
"Shares" means any and all common and/or preferred
shares of stock of the Company issued and outstanding (including any options or
warrants in regard thereto).
"Stock Purchase Agreement" means that certain Stock
Purchase Agreement dated the date hereof by and among the Company, the Employee
and Aropi, Incorporated, an Iowa corporation.
"Tag-Along Agreement" means the Tag-along Agreement
dated as of the date hereof among the Company and certain Stockholders,
including without limitation, Employee.
Term And Duties.
For a period of three years from the date from the
date of this Agreement (the "Term"), Employee shall serve the Company as CEO and
President, and shall have such duties as set forth in the Bylaws of the Company,
and as may be assigned to Employee from time to time by the Board. Employee
shall perform his duties hereunder, and shall report directly to the Board.
For so long as Employee is employed by the Company, Employee
agrees (i) to devote substantially all of his time, energy, and skill necessary
or appropriate with respect to the performance of the duties of his employment
(vacations allowable under this Agreement and absences due to illness excepted),
and (ii) not to engage directly or indirectly in any other active employment
(other than pursuant to this Agreement) without the prior written consent of the
Board.
Compensation And Benefits.
During the Term and subject to the terms and conditions of
this Agreement:
Employee shall receive a base salary of (i) $105,000
for the first 12 months, (ii) $115,500 for the second 12 months, and (iii)
$127,050 for the third 12 months (pro rated for periods of less than 12 months)
paid in arrears in accordance with the Company's normal payroll and withholding
procedures (collectively, "Base Salary").
Employee's Base Salary shall be subject to review and
adjustment by the Board on each yearly anniversary date of this Agreement during
the Term; provided, however, that during the Term, Employee's Base Salary may be
increased (but not decreased) from the amounts set forth above at the discretion
of the Board.
Employee shall be eligible for a bonus each year
during the Term as may be determined by the Board in its sole discretion as of
the end of the Company's fiscal year, based on an evaluation of the Company's
performance during the past twelve months and Employee's contribution to that
performance.
Employee shall be entitled to all State of Georgia,
federal and Company-established holidays and 30 business days of vacation per
calendar year.
Employee and members of his immediate family shall be
entitled to participate, at the Company's expense, in the hospitalization,
health and accident, and major medical coverage plan adopted by the Company.
Employee shall also be entitled to any and all other benefit packages and plans
as are made generally available to other employees, officers or directors of the
Company, on terms not less favorable than the terms available to other
employees, except as may be limited by applicable law or regulation, and such
benefits shall be proportionate to salary to the extent such allocation method
applies among other employees, including but not limited to any officer and/or
directors liability insurance the Company may purchase.
In addition to Employee's Base Salary, Employee shall
receive, $700.00 per month for an automobile allowance ("Car Allowance"). Any
mileage incurred for the benefit of the Company will also be reimbursed by the
Company to the Employee at the mileage allowance equal to that set forth in the
Internal Revenue Code of 1986, as amended (or any successor Code) ("Mileage
Allowance"). The Car Allowance shall be paid with the Employee's Base Salary.
The Mileage Allowance shall be repaid the same as any other Company Expense
incurred and as provided for in Paragraph 4 below.
If the Offering (as defined in the Stock Purchase
Agreement) has occurred, then within 180 days of the Conversion Date, the
Company will develop a stock option plan which will grant to the Employee
options to purchase additional shares of the Company's stock of not less than 5%
of the issued and outstanding shares of the Company as of the Conversion Date on
a fully diluted basis. The terms and conditions of the options shall be on terms
and conditions customary for Chief Executive Officers similarly employed as
Employee and predicated either (i) on reasonable financial pre-tax earnings
and/or net operating income before tax or (ii) a business plan the Company is to
attain during each of the three years of the Employee's employment. The stock
option plan shall be developed in consultation with an independent third party
specializing in the development of stock option incentive programs for
executives of publicly traded companies.
Signing Bonus.
In addition to the compensation set forth in Section 3 above,
the Employee shall be:
(a) paid the amount of $125,000 in twelve (12) consecutive
equal monthly payments of $10,416.66, commencing 60 days from the date hereof in
accordance with the normal payroll practice of the Company (the "Signing Bonus
Compensation").
(b) granted during the Option Term an option by the Company to
purchase an aggregate of five thousand (5000) shares of the voting common stock
of the Company at a purchase price per share equal to the Offering Price (the
"Option").
The Employee may exercise this Option at any time
during the Option Term by delivering written notice of the exercise to the
Company, specifying the number of Shares to be purchased and the Purchase Price
to be paid therefor and accompanied by payment in full. Such exercise shall be
effective upon receipt by the Company of such written notice together with the
required payment. The Employee may purchase less than the number of Shares
subject to the Option, provided that no partial exercise of the Option may be
for any fractional Share or for less than ten (10) whole Shares.
The Option shall be in the form similar to the
Company's Common Stock Purchase Warrant attached hereto as Exhibit A" and
incorporated herein by reference.
Reimbursement of Employee Expenses.
The Company recognizes that Employee, in connection with the
services to be performed by him for the Company, will be obliged to expend
monies for travel, entertainment of customers, and similar business expenses.
The Company agrees to reimburse Employee for all reasonable travel,
entertainment, and miscellaneous expenses incurred in the conduct of the
business of the Company. In order for Employee to receive reimbursement from the
Company for the foregoing expenses he must submit receipts for said expenses to
the Company not less often than monthly. In addition thereto, Employee must
submit a written itemized statement as to the nature of the expenses or follow
such other policy or procedures that the Company may adopt from time to time.
Employee shall be reimbursed in accordance with such policy and practice
following Employee's submission of bills to the Company. In addition, the
Company may issue to Employee credit cards which employee shall use solely in
furtherance of the business of the Company pursuant to this Agreement. The
expenses shall be paid directly to the credit card companies by the Company.
Employee shall submit to the Company a detailed written statement as to the
nature of the charges and shall submit to the Company a detailed list of persons
entertained and the company or companies such persons are associated with in
connection with such entertainment expense. Should Employee fail to provide such
documentation within a reasonable time following receipt of the credit card xxxx
from the credit card issuer, the Company may deduct the amount of any
undocumented charges from any amounts due Employee by the Company. Should the
Board review and disapprove of any expenses incurred by the Employee, the
Company may deduct the amounts of any disapproved expenses from any amounts due
Employee by the Company. No expenses shall be disapproved if 1) such expenses
were reasonable in nature and amount, 2) such expenses were incurred in
compliance with any policies adopted by the Board, and 3) such expenses were
documented as provided herein.
Records; Non-Competition.
All records, notes, correspondence, files, memoranda,
reports, price lists, customer lists, drawings, plans,
sketches, documents, equipment, data, apparatus, and like
items, and all copies thereof, relating to the Company's
Business, confidential information, or trade secrets that are
prepared by Employee, are disclosed to Employee, or come into
Employee's possession, shall be and remain the sole and
exclusive property of the Company. Employee agrees, at the end
of the Term, or at any other time upon the Company's request,
to promptly deliver to the Company the originals and all
copies of any of the foregoing that are in Employee's
possession, custody, or control, and any other property
belonging to the Company.
Employee acknowledges that as the President of Aropi,
the Employee has had access to a substantial portion of the
proprietary and confidential information of the business of
Aropi, including its trade secrets and business plans; the
benefits to the Company's shareholders for their purchase of
Aropi's stock would be denied if it were not for the
protections set forth in this Paragraph 5; and during the
course of his employment with the Company pursuant to this
Agreement, the Employee will continue to receive and have
access to the proprietary and confidential information of the
Company, and he will also receive and have access to
confidential financial information and proprietary information
relating to the operations and business of the Company.
Accordingly the Employee is willing to enter into the
covenants described in Paragraph 5(c) below, in order to
provide the Company with reasonable protection for those
interests.
The Employee hereby agrees that, from the date hereof
to and until the first anniversary of the Termination Date,
the Employee shall not, directly or indirectly:
1. As a stockholder of any corporation or partner of
any partnership or as an owner, investor, principal
or agent, or in any other manner, engage in any
business which competes within ten miles of any
Company store open at the Termination Date.
2. solicit, induce, influence or attempt to
influence, or cause any business, firm, or
corporation which directly competes with the Company
to solicit, induce, influence or attempt to
influence, the employment of any key employee(s) of
the Company;
3. engage in, be employed by or participate, directly
or indirectly, in the operation or management of any
business which competes with the Company on the
Termination Date;
Notwithstanding anything contained herein to the contrary, the
ownership, in the aggregate, of less than 5% of the outstanding shares of
capital stock of any corporation with one or more classes of its capital stock
listed on a national securities exchange or publicly traded on the
over-the-counter market shall not constitute a violation of this Paragraph 5.
This Paragraph 5 is not intended to, and shall not preclude
Employee from working for any company that is not a specialty cookware store
(such as a department store that may sell similar products, but is not solely a
specialty cookware store), nor is this Paragraph 5 intended to or shall it
preclude the Employee from working for any entity which, either directly or
indirectly, owns or manages a specialty cookware store as long as Employee does
not participate in any day-to-day activities or management of the company's
subsidiaries, divisions, etc., as the case may be.
The covenants contained in Paragraph 5(c), above, are
intended to be separate and severable and enforceable as such.
The Employee hereby agrees that in the event of any
offer of employment or if any other proposal or arrangement
for employment is made to the Employee by any third party or
parties which could reasonably be anticipated to give rise to
a breach of one or more of the covenants contained in
Paragraph 5(c) above he will immediately inform the third
party or parties of the existence of the covenants contained
herein.
The Employee hereby specifically acknowledges that
the agreements contained in this Paragraph 5 are reasonable
under the circumstances and in light of the reasons enumerated
in Paragraph 5(b), above. Nevertheless, to the extent that any
obligation to refrain from competing within a geographic area,
for a period of time, or with respect to a particular scope of
commerce, is held by a court of competent jurisdiction to be
invalid or unenforceable, such obligation shall be deemed
modified to the extent necessary to render it enforceable, and
the obligations imposed by Paragraph 5 shall be fully enforced
as so modified.
Termination.
Termination for Cause. The employment of Employee
under this Agreement may be terminated prior to the end of the Term or any
renewal term hereof immediately by the Company for Cause upon notice of
termination served personally or in accordance with Paragraph 8(a) hereof, such
Cause being specified in the notice. In the event that Employee is terminated by
the Company for Cause, Employee shall only be entitled to salary accrued
hereunder and unpaid as of the date of such termination.
Termination for Disability. The employment of
Employee under this Agreement may be terminated prior to the end of the Term by
the Company in the event of Employee's Disability upon notice of termination
served personally or in accordance with Paragraph 8 hereof, such Disability
being specified in the notice. In the event that the Company delivers to
Employee a notice of termination for Disability, such notice will be effective
on the 15th day following delivery thereof. Upon the termination of this
Agreement due to the Employee's Disability during the Term, the Company shall
pay to the Employee a lump sum equal to 1 year of salary otherwise due hereunder
reduced by the amount of income that the Employee is entitled to receive for
such period pursuant to any Company sponsored disability income insurance
contract.
Termination Without Cause: Resignation for Good
Reason. The Company may terminate Employee's employment without Cause subject to
this Paragraph 6(c). At such time that a Change of Control has occurred,
Employee shall have the right at any time within six (6) months after the
occurrence of the Change of Control, to terminate and cancel this Agreement with
no liability whatsoever for his termination of this Agreement, which termination
shall constitute a Good Reason. If during the Term, (i) the Employee's
employment is terminated by the Company without Cause and not for Disability, or
(ii) the Employee voluntarily terminates his employment during the Employment
Period for Good Reason, then the Company shall pay the Employee in one lump sum,
a sum of money equal to the Base Salary he would have earned during the
succeeding 12 months from the Termination Date (plus any and all payments due
and owing in regard to the Signing Bonus Compensation) and shall reimburse the
Employee for any expenses incurred pursuant to Paragraph 4 hereof before the
Termination Date, within thirty (30) days of the date of termination.
Survival of Obligations. The obligation of the
Company to pay any amounts to Employee remaining unpaid at the Termination Date
of this Agreement shall survive the termination of this Agreement under this
Paragraph 6.
Severability. If any part of this Agreement is for any reason
found to be unenforceable, then all other parts of it nevertheless shall remain
enforceable.
Miscellaneous.
Communications. Unless otherwise specified, whenever
this Agreement requires or permits any consent, approval, notice, request, or
demand from one party to another, that communication must be in writing (which
may be by telecopy) to be effective and is deemed to have been given if by
telecopy, when transmitted to the appropriate telecopy number (and all
communications sent by telecopy must be promptly confirmed promptly by
telephone; but any requirement in this parenthetical does not affect the date
when the telecopy is deemed to have been delivered, if by certified or
registered mail, on the third business day after it is enclosed in an envelope
and properly addressed, stamped, sealed, and deposited in the appropriate
official postal service with a return receipt requested, or if by any other
means, when actually delivered. Until changed by notice pursuant to this
Agreement, the address (and fax number) for the Company and Employee are:
Employee: Xx. Xxxxx Xxxx
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to: Xxxx X. Xxxxxxx, Esq.
Arnall Golden & Xxxxxxx
2800 One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Telecopy: (000) 000-0000
Company: Home Retail Holdings, Inc.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
with a copy to: Xxxxxxx X. Xxxxx, Esq.
Xxxxx & Wood
000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
Relocation. Notwithstanding anything contained herein,
Employee shall not be required to relocate his home or be employed outside of
Metropolitan Atlanta.
Entire Agreement; Counterparts. This Agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral and written agreements between the parties.
This Agreement may not be modified, amended, or otherwise changed in any manner
except by a writing executed by the parties hereto. This Agreement may be
executed in a number of identical counterparts (including counterparts or
signature pages executed and transmitted by telecopy) with the same effect as if
all signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instruments
Binding Effect. This Agreement binds and inures to the benefit
of the Company, Employee, and their respective heirs, devisees, personal
representatives, permitted successors, and permitted assigns.
Waiver. The waiver by one party of a breach of any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any subsequent breach of the same or any other provision by the other
party. Either party hereto may waive the benefit of any provision or condition
for its benefit contained in this Agreement.
Time of Essence. TIME IS OF THE ESSENCE OF THIS AGREEMENT.
Construction. Each party hereto hereby acknowledges that all
parties hereto participated equally in the drafting of this Agreement and that,
accordingly, no court construing this Agreement shall construe it more
stringently against one party than the other.
Governing Law. This Agreement shall be governed by, and
construed under, the laws of the State of Georgia.
Assignment. This Agreement, and the rights accruing hereunder,
may not be assigned by either party without the prior written consent of the
other party.
Other References. Unless otherwise specified (a) where
appropriate, the singular includes the plural and vice versa, and words of any
gender include each other gender, (b) heading and caption references may not be
construed in interpreting provisions, (c) monetary references are to currency of
the United States of America, (d) paragraph and exhibit references are to
paragraphs in and exhibits attached to this Agreement, (e) references to
"telecopy," "facsimile," "fax," or similar terms are to facsimile or telecopy
transmissions, (f) references to "including" mean including without limiting the
generality of any description preceding that word, (g) the rule of construction
that references to general items that follow references to specific items are
limited to the same type or character of those specific items is not applicable
in this Agreement, (h) references to any person include that person's heirs,
personal representatives, successors, trustees, receivers, and permitted
assigns, (i) references to any law include every amendment or supplement to it,
rule and regulation adopted under it, and successor or
replacement for it, and (j) references to any document include every renewal and
extension of it, amendment and supplement to it, and replacement or substitution
for it.
EXECUTED as of the date first stated above.
/s/ XXXXX XXXX
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Xxxxx Xxxx
HOME RETAIL HOLDINGS, INC.
By: /S/ XXXXX XXXXXXXXX
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Name:
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Title:
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