EXHIBIT 10.9
Diplomat Ambassador, Inc.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Xxxxxxxx 00, 0000
Xx. Xxxxxx Xxxx
00 Xxxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
Dear Xx. Xxxx:
Supplementing the Employment Agreement between us dated February 27, 1997
(the "Employment Agreement"), this will confirm that we have agreed as follows:
1. If, prior to the closing of the acquisition by Diplomat Ambassador,
Inc. ("Diplomat") of the assets of Renaissance Eyewear, Inc. ("Renaissance"),
you, or any other executive of Renaissance actually knew or obtained knowledge
of any return, credit, or other adjustment that may adversely affect the
receivables of Renaissance, which is not disclosed on, or arose after the date
of, the final balance sheet of Renaissance dated January 31, 1997, and failed to
advise Xxxx Xxxxxxx or Xxxxx Xxxxxxx, in writing prior to the closing of such
acquisition, of its existence, the amount or cost of such return, credit, or
other adjustment shall be deducted, on a dollar-for-dollar basis, from the
compensation and non-compete payments that otherwise would be payable to you
under the Employment Agreement, but only to the extent that such amount or cost
exceeds $100,000.00. Annexed hereto as Schedule A is a list of such returns,
credits, and other adjustments known to you or other executives of Renaissance
as of the date of this letter.
2. You will immediately provide information and make arrangements, in
cooperation with employees of Diplomat Ambassador, Inc. ("Diplomat"), so that
Diplomat, at its option, may become the owner of a $1 million term life
insurance policy on your life currently owned by Renaissance before such policy
is canceled for nonpayment of premiums. If Diplomat is the owner of that policy
at the time of your death, it will apply the proceeds of the policy to the
payment of the unpaid balance, if any, of the $500,000.00 payable to you in
consideration of the non-competition covenants of Section 8 of the Agreement,
but any excess of policy proceeds over such unpaid balance will belong to
Diplomat. If Diplomat owns the policy at the time of your death, and the
proceeds of the policy are paid directly to your estate or your designees, such
payment shall be deemed to reduce, on a dollar-for-dollar basis, any
then-remaining obligation of Diplomat to make payments with respect to such
non-competition covenants. Notwithstanding anything to the contrary set forth in
this letter, however, Diplomat shall not be required to become the owner of this
life insurance policy, and will have the right to stop paying the premiums on
the policy and
Xx. Xxxxxx Xxxx
February 27, 1997
Page 2
to allow the policy to be terminated if Diplomat does become the owner of the
policy.
3. If, during the term of your employment by Diplomat, you introduce
Diplomat to a company as a potential merger or acquisition partner, and Diplomat
enters into a final agreement for the purchase of substantially all of the
assets of, or for a merger with, or to otherwise acquire, the business of that
company within six (6) months after you make the introduction, you will be
entitled to receive a commission, as follows:
(a) If Diplomat registers its stock under the Securities Act of 1933
and offers such stock for sale to the public under such registration statement
("goes public") after the closing of the transaction with respect to which you
earn a commission (the "Transaction") you will be entitled to receive, at the
time Diplomat goes public, options to purchase Diplomat common stock worth an
amount equal to 1% of the amount of net consideration paid by Diplomat in
connection with the Transaction, at a purchase price equal to the opening price
for such stock on the date Diplomat goes public.
(b) If Diplomat goes public before the closing of the Transaction,
you will be entitled to receive, upon the closing of the Transaction, options to
purchase Diplomat common stock worth an amount equal to 1% of the amount of net
consideration paid by Diplomat in connection with the Transaction, at a purchase
price equal to the closing price for such stock on the date of the closing.
(c) For purposes of this Agreement, the net consideration paid by
Diplomat in connection with a Transaction shall be deemed to include only the
net amount or net value paid in consideration of assets (if assets purchased) or
securities (in the event of a merger or purchase of a controlling stock
interest), and shall not be deemed to include separate payments made in
connection with employment, consulting, or similar arrangements with the
principals or other employees of the acquired business.
(d) By way of example, if, after Diplomat goes public, (i) you
introduce Diplomat to a company, (ii) Diplomat purchases its assets for
$1,000,000.00 under a final agreement executed within six (6) months after you
make the introduction, and (iii) Diplomat's common stock closes at $20.00 per
share on the date of the closing, you will be entitled to receive a commission
of options to purchase 500 shares of Diplomat common stock at a purchase price
of $20.00 per share.
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Xx. Xxxxxx Xxxx
February 27, 1997
Page 3
(e) Notwithstanding anything to the contrary set forth above, your
right to receive unpaid commissions will terminate at the time of the
termination of your employment if (i) Diplomat terminates your employment for
any of the reasons specified in Section 2(b)(ii), 2(b)(iii), or 2(b)(iv)
of the Agreement prior to the expiration of the five year term of the Agreement,
or (ii) you terminate your employment in breach of the Agreement.
4. Under our agreement, the inventory (the "Canadian Inventory") of your
Canadian company, Lunette Renaissance Eyewear, Inc. ("Renaissance Canada")
belongs to Diplomat as of the time that Diplomat acquires Renaissance's assets
(the "Closing") . Annexed hereto as Schedule B is a list of the Canadian
Inventory and its value as of February ___, 1997.
(a) If and to the extent that the Canadian Inventory is sold after
the time of the Closing, proceeds from such sale in an amount equal to the value
of the inventory sold as set forth on Schedule B hereto shall belong to, and
shall be immediately paid over to Diplomat, and the balance of such proceeds
shall belong to Renaissance Canada.
(b) Diplomat agrees that you may, and you agree to, attempt to sell
Renaissance Canada, or all of its assets, promptly after the date of this
Agreement, as a going concern. If you sell Renaissance Canada or its assets as a
going concern, proceeds from that sale in an amount equal to the value of
Canadian Inventory as set forth on Schedule B hereto, less amounts previously
paid to Diplomat with respect to such inventory, shall belong to, and shall be
immediately paid over to, Diplomat, and the balance of such proceeds shall
belong to Renaissance Canada.
Please confirm our agreement by signing this letter where indicated below.
Very truly yours,
DIPLOMAT AMBASSADOR, INC.
BY
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Confirmed and agreed to.
/s/ Xxxxxx Xxxx
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Xxxxxx Xxxx
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