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Exhibit 10.5
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is made as of the 23rd day of June, 1998, between Fantasma,
LLC., a Delaware limited liability company with its principal place of business
at 000 Xxxxxx Xxxxxxxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxx Xxxxxx 00000 ("Employer"),
and Xxxx Xxxxxxxx of Shoreview, Minnesota ("Employee").
WITNESSETH:
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WHEREAS, Employee possesses valuable skills, experience and knowledge in
the marketing, distribution and sale of watches and clocks and has heretofore
served as Executive Vice President of Employer; and
WHEREAS, on this date, AAi.FosterGrant, Inc. ("AAi") is acquiring a
majority of the membership interests of Employer; and
WHEREAS, Employer has a need for Employee's services and wishes to employ
Employee, and Employee wishes to accept employment on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the undertakings and the payments
provided under the covenants and agreements herein set forth, the parties hereto
mutually agree as follows:
1. EMPLOYMENT.
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Employer hereby agrees to employ Employee as Executive Vice President
of Employer and/or in such other capacity of Employer as may be mutually
satisfactory to Employer and Employee or as Employer determines is reasonably
commensurate with the Employee's education, experience and skills, and Employee
agrees to accept such employment upon the terms and conditions hereinafter set
forth.
2. TERM.
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The term of employment pursuant to this Agreement shall begin as of
the date hereof, and shall continue for the period ending three (3) years
thereafter, unless terminated prior thereto pursuant to the terms of this
Agreement.
3. DUTIES AND AUTHORITY.
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a. During the Term, Employee shall devote his full time and best
efforts to the business of Employer and shall perform the duties of his office
for the time being and exercise such powers, as may from time to time be
assigned to or vested in him, faithfully, diligently and loyally,
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devoting thereto the whole of his time, attention and skill to the due
performance of his duties hereunder, and shall follow the lawful directions of
the President of Employer.
b. During the Term, Employee shall be a full time employee of
Employer and Employee shall not engage in any other business activity; PROVIDED,
HOWEVER, that the foregoing shall not be construed as preventing Employee from
investing Employee's assets or otherwise conducting Employee's personal affairs,
unless such investment and activity interferes with the due performance of
Employee's duties to Employer hereunder.
c. Employee shall report only to the President of Employer, or in
the event of the President's absence from the country or other unavailability,
the person designated by the Chairman or the President to fulfill the duties of
the President generally. The scope of said employment as, and the duties and
responsibilities to be performed by Employee hereunder as Executive Vice
President of Employer shall consist of responsibility for handling product
development, marketing, and key accounts worldwide and for sales in the
Minneapolis, Minnesota territory.
d. Employee shall work in the Minneapolis, Minnesota, metropolitan
area out of Employer's office, and Employer shall provide office space and an
assistant at the office.
4. DEATH, DISABILITY OR INCAPACITY DURING EMPLOYMENT.
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a. If during the Term Employee dies, Employer shall provide to the
estate of Employee the items set forth at SECTION 4.c, below.
b. If during the Term Employee becomes Permanently Disabled
("Permanent Disability" meaning permanently disabled under Employer's long term
disability coverage or if no such coverage, his being disabled or incapacitated
to such an extent that he is unable to perform a material portion of his duties
as contemplated by this Agreement for a period of six (6) consecutive months
("Permanently Disabled" or "Permanent Disability"), then, at the option of
Employer, Employee's employment hereunder may be terminated upon written notice
to Employee or Employee's personal representative; PROVIDED, HOWEVER, that
Employer shall pay to Employee, as and when otherwise due, the items set forth
at SECTION 4.c below.
c. Upon the death or Permanent Disability of Employee, as set forth
in SECTION 4.a or SECTION 4.b, above, the Employer shall provide the following:
i. Basic Salary owing to Employee through and including the end
of the month in which the Employee dies or becomes disabled
or incapacitated;
ii. Incentive Compensation pro rated on a 12-month basis from
the start of the fiscal year through the date of death or
Permanent Disability, assuming that financial performance of
Employer for the balance of the year is the same as the
twelve-month period preceding his Permanent
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Disability, through and including the end of the month in
which Employee dies or becomes disabled or incapacitated;
and
iii. Any benefits due under any then current benefits program in
which Employee participates.
5. TERMINATION BY EMPLOYER.
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a. In the event that Employee shall:
i. fail to devote his full time and best efforts to the
performance of his services during the term of this
Agreement; or
ii. commit an act of gross negligence, dishonesty, fraud, gross
insubordination, gross malfeasance, disloyalty, bad faith or
breach of trust in the performance of his duties and
obligations under this Agreement or otherwise against or
materially adversely affecting the reputation, business or
business relationships of Employer; or
iii. fail to observe the agreements of nondisclosure of
information and not to compete set forth in SECTION 10,
respectively, hereof; or
iv. become the subject of a Bankruptcy as defined at EXHIBIT C,
attached hereto, or be accused of (in the filing of an
accusatory instrument) or be convicted of a felony or an act
involving moral turpitude, fraud, dishonesty or theft which,
in the reasonable judgment of the Chairman of Employer,
subjects Employee or Employer to public disrespect, scandal
or ridicule so as to materially adversely affect the utility
of the services of Employee to Employer; or
v. be accused of or commit a felony or an act which, Employer
to public disrespect, scandal or ridicule so as to
materially adversely affect the utility of the services of
Employee to Employer, and shall continue ninety (90) days
after the Employer's notifying Employee of such
circumstances; provided that in such circumstances, after
the expiration of said ninety (90) day period, the Employer
shall have the right to suspend the Employees employment
with compensation reduced to 50% of Basic Salary during such
suspension and such suspension shall continue for a
reasonable period of time before it shall constitute cause
for termination under this Paragraph 5, such reasonable
period of time to be no less than six (6) months and no more
than the earlier of the expiration of this Agreement, the
termination of this Agreement for other reasons as provided
in this Agreement, the conviction of Employee or eighteen
(18) months after the initial suspension by Employer; or
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vi. refuse to perform the duties assigned to him in good faith
in accordance with this Agreement; or
vii. violates or fail to observe in a material respect any lawful
business instruction or lawful business policy established
by the Employer that is of a material nature with respect to
the operation of its business and affairs; or
xxxx.xxxx to, or refuse to, substantially perform his duties,
responsibilities and obligations as set forth in this
Agreement after a written demand for substantial performance
is delivered by Employer, which specifically identifies the
manner in which Employee has not substantially performed his
duties, responsibilities, and obligations, if the Employee's
failure or refusal is not cured within twenty (20) days
after such written demand;
then Employer shall be deemed to have cause to terminate Employee's employment
and may (after written notice to Employee and a reasonable time (not to exceed
twenty (20) days) to cure with respect to SECTIONS 5.a.i., 0.x.xx and 5.a.vii
only) completely terminate Employee's employment and rights to receive any
future compensation or other benefits hereunder (including but not limited to
Basic Salary under SECTION 7, Incentive Compensation under SECTION 8, benefits
under SECTION 6 and reimbursement of expenses under SECTION 9 incurred after the
date of termination) and Employer shall be relieved of any further obligations
hereunder.
b. In addition to its right to terminate employment of Employee set
forth in SECTION 5.a, above, and in SECTION 2, above, Employer may at any time,
without cause, terminate its obligations to Employee hereunder if Employer does
not meet 75% of the Target EBIT set forth in EXHIBIT A for any year or 50% of
the Sales Target set forth at EXHIBIT A for any year; PROVIDED, HOWEVER, that,
in the event of such termination, so long as Employee is in compliance with his
obligations under SECTION 10, below, Employee shall be entitled to receive an
amount equal to one hundred percent (100%) the Basic Salary, as and when
otherwise provided for and payable herein, for athe balance of the unexpired
Term, but Employee shall not be entitled to Incentive Compensation under SECTION
8, benefits under SECTION 6 or reimbursement of expenses referred to in SECTION
9 hereof incurred after the date of termination.
c. Notwithstanding the foregoing, after termination, Employer shall
remain obligated to pay Employee Basic Salary, fully earned by Employee prior to
such termination and Incentive Compensation as calculated in accordance with
SECTION 4.c.ii.
d. If at the expiration of the three (3) year term, Employer
terminates the employment of Employee for reasons other than as set forth at
SECTION 5.a, Employer shall pay to Employee as severance for a period of one (1)
year after such expiration, payable at Employer's normal pay periods, an amount
equal to the Basic Salary so long as Employee is in compliance with his
obligations under Section 10, below.
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6. BENEFITS.
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During the Term:
a. Employer shall provide Employee with benefits equivalent to those
offered to middle management of AAi, as amended from time to time, which
currently includes 401(k), life insurance, health insurance and long term
disability insurance; and
b. Employee shall be entitled to participate in AAi's stock option
program.
c. Employer shall pay to Employee the sum of $267 per month as
reimbursement for additional health insurance coverage.
7. BASIC SALARY.
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Employer agrees to pay to Employee the following basic compensation
("Basic Salary"), less normal and customary payroll deductions for local, state
and federal income, employment, excise or similar taxes, fees and deductions,
for all services rendered to Employer at the following annual rate ( payable at
Employer's normal pay periods in arrears): $200,000. Basic Salary shall be
subject to annual review and adjustment by Employer, in Employer's absolute
discretion.
8. INCENTIVE COMPENSATION.
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During the Term, Employer shall pay to Employee the incentive
compensation set forth at EXHIBIT A, attached hereto, ("Incentive Compensation")
less normal and customary payroll deductions for local, state and federal
income, employment, excise or similar taxes, fees and deductions.
9. REIMBURSEMENT OF EXPENSES.
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Employee is authorized to incur reasonable expenses in connection with
and for the promotion of the business of Employer, including expenses for meals
and lodging, entertainment, and similar items as required from time to time by
Employee's duties which are beneficial to Employer. Employer shall reimburse
Employee for all such expenses, in accordance with Employer's policies in effect
from time to time, upon the presentation of an account therefor, together with
appropriate supporting documentation.
10. SPECIAL PROVISIONS.
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In consideration for the agreements set forth in this Agreement and
AAi's purchase of the membership interests in Employer, Employee agrees to the
provisions set forth at EXHIBIT B, attached hereto and incorporated herein by
reference, which are an inducement for Employer to enter into this Agreement and
AAi to purchase membership interests in Employer, and shall survive the Term
along with SECTIONS 11 THROUGH 15.
11. WAIVER.
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Failure of any party hereto to insist upon strict compliance with any
of the terms, covenants and conditions hereof shall not be deemed a waiver or
relinquishment of any similar right or power hereunder at any subsequent time.
12. NOTICES.
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Any notice required or permitted to be given under this Agreement
shall be sufficient if in writing and if sent by certified mail, return receipt
requested, or by telefacsimile, to the party to whom notice should be given at
the address set forth below:
Employer: Fantasma, LLC
000 Xxxxxx Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxx
Telefacsimile: 000-000-0000
With a
copy to: Xxxxxxxx, Xxxxx & Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Attn: Xxxxx Xxxxxxxx Xx., Esq.
Telefacsimile: 401-277-9600
Employee: Mr. Xxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Telefacsimile: 000-000-0000
13. ENTIRE AGREEMENT.
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This Agreement (including the Exhibits attached hereto) and the Member
Agreement dated this date contains the entire agreement of the parties with
respect to the subject matter hereof and supersedes and cancels all other
agreements, whether oral or written, including but not limited to any other
employment agreement or terms of employment existing on the date hereof. This
Agreement may not be amended or modified, except by an agreement in writing
signed by the Employee and an executive officer of Employer.
14. REPRESENTATIONS OF EMPLOYEE; INDEMNITY.
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In order to induce Employer to enter into this Agreement, Employee
represents and warrants to Employer that Employee is free to enter into and
perform this Agreement and that he is not a party to any oral or written
contract, understanding, agreement or restriction which inhibits or which will
be violated by Employee's performance of the duties assigned to Employee
hereunder. In the event any action or proceeding shall be wrongfully commenced
and prosecuted against Employee by reason
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of Employee's entry into this Agreement and/or the performance of Employee's
duties, Employer shall indemnify and hold Employee harmless from and against any
losses or expenses incurred by Employee, including reasonable attorneys' fees,
provided Employer shall have the sole right to designate counsel to defend
Employee and sole right to approve any settlements or other resolutions of the
matter.
15. ADEQUACY OF REMEDY.
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Employee acknowledges that he remedy at law for Employee's breach of
any of the provisions herein contained relating to non-competition or
confidentiality will be inadequate and that Employer shall be entitled to
injunctive relief, in addition to any other remedies that Employer may have.
16. SUCCESSORS AND ASSIGNS.
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This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of Employer and the heirs,
assigns, executors, administrators and legal representatives of Employee. This
Agreement may not be assigned by either party without the prior written consent
of the other; provided, however, that Employer may assign this Agreement,
without Employee's consent, to any person or entity, controlling, controlled by
or under common control with Employer, or in connection with the merger,
reorganization or consolidation of Employer or sale of all or substantially all
of its assets.
17. GOVERNING LAW.
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This Agreement shall be governed by and construed in accordance
with the laws of the State of Rhode Island, without regard to its conflict of
laws rules. Any action, suit or proceeding seeking to enforce any provision of,
or based on any right arising out of, this Agreement shall be brought against
any of the parties in the courts of the State of Rhode Island or, if it has or
can acquire jurisdiction, in the United States District Court for the District
of Rhode Island, and each of the parties consents to the jurisdiction of such
courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served by mail on any
party anywhere in the world, in accordance with court rules. Each party hereby
waives trial by jury in any such action, suit or proceeding.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: EMPLOYER:
FANTASMA, LLC
/s/ Xxxxxx Xxxxxxx By: /s/ Xxxxx XxXxxxx
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Title: Treasurer
Witness:
/s/ Xxxxxx X. Xxxxxxxx /s/ Xxxx Xxxxxxxx
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EMPLOYEE: Xxxx Xxxxxxxx
