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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT made as of the first day of November, 1996 by and between MIKE'S
ORIGINAL, INC., a Delaware corporation (hereinafter the "Company") and Xxxxxx
Xxxxx, residing at 00 Xxxxx Xxxx Xxxxx, Xxx Xxxxx, Xxx Xxxxxx 00000 (hereinafter
called the "Employee").
W I T N E S S E T H:
WHEREAS, the Company and the Employee desire to enter into an Employment
Agreement relating to the Company's employment of the Employee; and
WHEREAS, this Agreement is intended to supersede and replace all prior
agreements, understandings and arrangements between the Company and the Employee
relating to such employment.
NOW, THEREFORE, it is agreed as follows:
1. Retention of Services. The Company hereby retains the services of
Employee, and Employee agrees to furnish such services, upon the terms and
conditions hereinafter set forth.
2. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, and further subject to certain provisions hereof which
survive the term hereof, the term of this Agreement shall be the earlier of (i)
February 28, 1998 or (ii) one (1) year after the date on which the Company
completes an initial public offering (the "IPO") of its capital stock.
3. Duties and Extent of Services During Period of Employment. During the
term of employment, Employee shall be an officer of the Company. In such
capacity, Employee agrees that he shall serve the Company under the direction of
the Board of Directors of the Company to the best of his ability, shall perform
all duties incident to his offices on behalf of the Company and shall perform
such other duties as may from time to time be assigned to him by the Board of
Directors of the Company. Employee shall also serve in similar capacities of
such of the subsidiary corporations of the Company as may be selected by the
Board of Directors and shall be entitled to such additional compensation
therefor as may be determined by the Board of Directors of the Company.
Notwithstanding the foregoing, it is understood and agreed that during the term
hereof Employee shall be responsible for the sales and marketing operations of
the Company and that the duties of Employee during the period of active
employment shall not be inconsistent therewith or with (i) his position and
title as a Vice-President; or (ii) with those duties ordinarily performed by a
Vice-President. The Company shall not require Employee to be employed in any
location other than Nassau County, New York, unless he consents in writing to
such location.
4. Remuneration. During the period of employment, Employee shall be
entitled to receive the following compensation for his services:
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(a) The Company shall pay to Employee a salary at the rate of $100,000 per
annum, payable in equal bi-weekly installments, or in such other manner as shall
be agreeable to the Company and Employee.
(b) Not later than ninety (90) days after the end of each fiscal year of
the Company, so long as the Company has had net operating income before income
taxes and extraordinary items ("Pre-Tax Income") for such immediately preceding
fiscal year, as reported on the Company's audited annual financial statements,
the Company shall pay to Employee, as incentive compensation, an amount equal to
three percent (3%) of the Company's Pre-Tax Income for such immediately
preceding fiscal year. The Company agrees to furnish to Employee a copy of such
financial statements not later than ninety (90) days after the end of each
fiscal year of the Company during the term hereof.
5. Employee Benefits; Expenses.
(a) During the period of employment, the Company may provide at its
expense, life insurance to Employee in the face amount of up to $1,000,000 with
the Company as beneficiary.
(b) During the period of employment, Employee shall be eligible to
participate in the Company's stock option plans, stock purchase plans or other
employee incentive plans (including without limitation its 1995 Long-Term
Incentive Plan and 1996 Non-Qualified Stock Option Plan) to the extent
determined in the sole discretion of the Board of Directors of the Company or a
committee thereof.
(c) During the period of employment, Employee shall be furnished with
office space and facilities commensurate with his position and adequate for the
performance of his duties; he shall be provided with the perquisites customarily
associated with the position of Vice President of the Company; and he shall be
entitled to regular vacations during each year of three weeks in the aggregate.
(d) It is contemplated that during the period of employment, Employee may
be required to incur out-of-pocket expenses in connection with the performance
of his services hereunder, including expenses incurred for travel and business
entertainment. Accordingly, the Company shall reimburse Employee for all
reasonable out-of-pocket expenses incurred by Employee in the performance of his
duties hereunder upon submission of reasonable documentation therefore in
accordance with the Company's policies. Notwithstanding and in addition to the
foregoing, in recognition that Employee will be required during the term of this
Agreement to do a considerable amount of driving in connection with his services
hereunder, the Company shall also provide Employee with an automobile allowance
of $400 per month, and shall reimburse the Employee for all expenses relating to
gasoline and automobile insurance, throughout the term of this Agreement.
(e) All benefits to Employee specifically provided for herein shall be in
addition to, and shall not diminish, (i) such other benefits and/or compensation
as may hereafter be granted to or afforded to Employee by the Board of Directors
of the Company, or (ii) any rights which Employee may have or may acquire under
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any hospitalization, life insurance, pension, profit sharing, incentive
compensation or other present or future employee benefit plan or plans of the
Company.
6. Disability. If Employee, during the period of employment, becomes unable
for three consecutive months or more, or any 180 days in any twelve-month
period, due to ill health or other physical or mental incapacity, to perform his
services hereunder, the Company may thereafter, upon at least 45 days' written
notice to Employee, place him on disability status. After such action by the
Company, Employee shall continue to receive one-half (1/2) of the sum of the
last salary paid to Employee under Section 4(a) hereof and any increment thereto
payable under Section 4(b) hereof until the end of the period of employment or
until his disability ends.
7. Confidential Information.
(a) In the course of Employee's employment by the Company, Employee will
have access to and possession of valuable and important confidential or
proprietary data or information of the Company and its operations. Employee will
not during Employee's employment by the Company or at any time thereafter
divulge or communicate to any person nor shall Employee direct any Company
employee, representative or agent to divulge or communicate to any person or
entity (other than to a person or entity bound by confidentiality obligations
similar to those contained herein and other than as necessary in performing
Employee's duties hereunder) or use to the detriment of the Company or for the
benefit of any other person or entity, any of such confidential or proprietary
data or information or make or remove any copies thereof, whether or not marked
or otherwise identified as "confidential" or "secret." Employee shall take all
reasonable precautions in handling the confidential or proprietary data or
information within the Company to a strict need-to-know basis and shall comply
with any and all security systems and measures adopted from time to time by the
Company to protect the confidentiality of confidential or proprietary data or
information.
(b) The term "confidential or proprietary data or information" as used in
this Agreement shall mean information not generally available to the public,
including, without limitation, all database information, personnel information,
financial information, customer lists, supplier lists, trade secrets, patented
or proprietary information, forms, information regarding operations, systems,
services, know how, computer and any other processed or collated data, computer
programs, pricing, marketing and advertising data.
(c) Employee will at all times promptly disclose to the Company in such
form and manner as the Company may reasonably require, any inventions,
improvements or procedural or methodological innovations, programs, methods,
forms, systems, services, designs, marketing ideas, products or processes
(whether or not capable of being trademarked, copyrighted or patented) conceived
or developed or created by Employee during or in connection with Employee's
employment hereunder and which relate to the business of the Company
("Intellectual Property"). Employee agrees that all such Intellectual Property
(including, without limitation, "Mike's Original, Inc. ", "Gramwich ", "Xxxxxx
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Cracker Delight ", "Strawberry Fantasy " and "Chocolate Tidbits "), shall be the
sole property of the Company. Employee further agrees that Employee will execute
such instruments and perform such acts as may reasonably be requested by the
Company to transfer to and perfect in the Company all legally protectable rights
in such Intellectual Property.
(d) All written materials, records and documents made by Employee or coming
into Employee's possession during Employee's employment by the Company
concerning any products, processes or equipment manufactured, used, developed,
investigated, purchased, sold or considered by the Company or otherwise
concerning the business or affairs of the Company shall be the sole property of
the Company, and upon termination of Employee's employment by the Company, or
upon request of the Company during Employee's employment by the Company,
Employee shall promptly deliver the same to the Company. In addition, upon
termination of Employee's employment by the Company, Employee will deliver to
the Company all other Company property in Employee's possession or under
Employee's control, including, but not limited to, financial statements,
marketing and sales data, customer and supplier lists, database information and
other documents, and any Company credit cards.
(e) The provisions of this Section 7 shall survive the termination of this
Employment Agreement.
8. Non-Competition.
(a) During the term of this Agreement and for one year thereafter (subject
to clause (b) of this Section 8, the "Restricted Period"), the Employee shall
not, without the written consent of the Company, directly or indirectly,
(i) become associated with, render services to, invest in,
represent, advise or otherwise participate in as an officer, employee,
director, stockholder, partner, promoter, agent of, consultant for or otherwise,
any business which is conducted in any of the jurisdictions in which the
Company's business is conducted and which is competitive with the business in
which the Company is engaged or plans to be engaged at the time Employees'
employment by the Company ceased; provided, however, that nothing contained
herein will prevent Employee from owning less than five percent (5%) of any
class of equity or debt securities listed on a national securities exchange or
traded in any established over-the-counter securities market, so long as such
involvement with the issuer of any such securities is solely that of a passive
investor;
(ii) for your own account or for the account of any other
person or entity (A) interfere with the Company's relationship with any of its
suppliers, customers, representatives or agents or (B) transact any business
with any customer or supplier of the Company which transacts or has transacted
business with the Company at any time during the term of this Agreement; or
(iii) employ or otherwise engage, or solicit, entice or induce
on behalf of yourself or any other person or entity, the services, retention or
employment of any person who has been an employee, sales representative,
consultant to or agent of the Company within one year of the date of such offer
or solicitation.
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(b) In the event that the Employee terminates his employment hereunder
after a breach hereof by the Company, or if the Company terminates the
Employee's employment hereunder other than for cause (as defined in Section 9(a)
hereof), the covenant contained in Section 8(a) hereof shall extend for a period
of one year beyond the termination of the Employee's employment only if the
Company shall pay to the Employee with respect to such period an amount equal to
the annual compensation otherwise provided for hereunder with respect to the
immediately preceding year during the term hereof. This Section 8(b) shall be of
no effect, and the Employee shall be subject to the restrictive covenant
contained in Section 8(a) hereof without the Company being obligated to make the
payments referred to in the preceding sentence, if the Company terminates its
employment of the Employee for cause (as defined in Section 9(a) hereof) or if
the Employee terminates his employment hereunder in the absence of a breach
hereof by the Company.
(c) The parties hereto intend that the covenants contained in this Section
8 shall be deemed a series of separate covenants for each country, state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 8 because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the cities, counties, states and
countries therein which are lease populous) which if eliminated would permit the
remaining separate covenants to be enforced in such proceeding shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 8.
(d) With respect to the covenants contained in Sections 7 and 8 of this
Agreement, Employee agrees that any remedy at law for any breach or threatened
or attempted breach of such covenants may be inadequate and that the Company
shall be entitled to specific performance or any other mode of injunctive and/or
other equitable relief to enforce its rights hereunder or any other relief a
court might award without the necessity of showing any actual damage or
irreparable harm or the posting of any bond or furnishing of other security.
9. Termination.
(a) The Company and Employee agree that Employee's services hereunder may
be terminated for "cause" by the Company only (i) for an act of fraud or
embezzlement adversely affecting the financial interest of the Company, (ii) in
the event that the Company places Employee on disability status pursuant to
Section 6 hereof more than once during the term hereof, (iii) in the event of a
conviction of the Employee for any felony, (iv) in the event of material breach
without cure by the Employee of this Agreement after the expiration of any
applicable grace period, or (v) in the event of any willful breach by the
Employee of this Agreement.
(b) If the Company terminates Employee's employment hereunder for any
reason other than for "cause" as set forth in Section 9(a) hereof, Employee's
compensation shall be paid to him as provided hereunder for the greater of the
(i) remainder of the term of this Agreement or (ii) one year. If the Company
terminates Employee's employment hereunder for "cause" as set forth in Section
9(a) hereof, Employee shall not be entitled to receive any further compensation
hereunder which has not already been earned pursuant to the terms hereof.
Employee shall have no duty to mitigate the Company's damages hereunder;
provided, that there shall be deducted from the amounts payable by the Company
hereunder an amount equal to any compensation earned by Employee from other
employment subsequent to such termination of his employment hereunder. Employee
and the Company acknowledge that the foregoing provisions of this paragraph 9(b)
are reasonable and are based upon the facts and circumstances of the parties at
the time of entering into this Agreement, and with due regard to future
expectations.
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10. Consolidation or Merger. In the event of any consolidation or merger of
the Company into or with any other corporation during the term of this
Agreement, or the sale of all or substantially all of the assets of the Company
to another corporation, person or entity during the term of this Agreement, such
successor corporation shall assume this Agreement and become obligated to
perform all of the terms and provisions hereof applicable to the Company, and
Employee's obligations hereunder shall continue in favor of such successor
corporation.
11. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company in writing and delivered or mailed
by certified or registered mail to its offices at 000 Xxxxxxx Xxxxxxxx, Xxxxxxx,
Xxx Xxxx 00000, or such other address as the Company may hereafter designate,
with a copy to Xxxxx X. Xxxxxxxxx, Esq., Blau, Kramer, Wactlar & Xxxxxxxxx,
P.C., 000 Xxxxxxx Xxxxxxxxxx, Xxxxxxx, Xxx Xxxx 00000. Any notice to be given to
Employee hereunder shall be delivered or mailed by certified or registered mail
to him at: 00 Xxxxx Xxxx Xxxxx, Xxx Xxxxx, Xxx Xxxxxx 00000, or such other
address as he may hereafter designate.
12. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company, and unless clearly
inapplicable, all references herein to the Company shall be deemed to include
any such successor. In addition, this Agreement shall be binding upon and inure
to the benefit of the Employee and his heirs, executors, legal representatives
and assigns; provided, however, that the obligations of Employee hereunder may
not be delegated without the prior written approval of the Board of Directors of
the Company.
13. Amendments. This Agreement may not be altered, modified, amended or
terminated except by a written instrument signed by each of the parties hereto.
14. Prior Agreements Superseded. This Agreement supersedes any employment
or consulting agreements, oral or written, entered into between Employee and the
Company prior to the date of this Agreement.
15. Change of Control.
(a) In the event there shall be a change in the present control of the
Company, as hereinafter defined, and the Employee's working conditions as
contemplated hereby shall have been adversely affected as a result thereof,
Employee shall have the option, exercisable within six (6) months of his
becoming aware of such event, to terminate this Agreement forthwith. Upon such
termination, Employee shall have the right to immediately receive as a lump sum
payment an amount equal to three times the total compensation paid to Employee
during the immediately preceding fiscal year of the Company, less $1.00.
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(b) For purposes of this Agreement, a change in the present control of the
Company shall mean:
(i) if any "person" (as such term is used in Section 13(d) and 14(d)
of the Exchange Act) other than the Company or any "person" who on the date
of this Agreement is a director or officer of the Company, becomes the
"beneficial owner" (as defined in Rule 13(d)-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing thirty percent (30%) of
the voting power of the Company's then outstanding securities; or
(ii) if during any period of two (2) consecutive years during
the term of this Agreement, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof, unless the election of each director who is not a director at
the beginning of such period has been approved in advance by directors
representing at least two-thirds (2/3) of the directors then in office who were
directors at the beginning of the period.
16. Applicable Law. This Agreement shall be governed by, construed and
enforced in accordance with the laws of the State of New York, without regard to
conflicts of laws.
17. Acknowledgment. Employee acknowledges that he has carefully read this
Agreement and hereby represents and warrants to the Company that Employee's
entering into this Agreement, and the obligations and duties undertaken by
Employee hereunder, will not conflict with, constitute a breach of or otherwise
violate the terms of any other agreement to which Employee is a party and that
Employee is not required to obtain the consent of any person, firm, corporation
or other entity in order to enter into and perform his obligations under this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
MIKE'S ORIGINAL, INC.
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Chairman, President and
Chief Executive Officer
/s Xxxxxx Xxxxx
Xxxxxx Xxxxx
