EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
____ day of April, 1999 by and between 5TH AVENUE CHANNEL RETAIL, INC. (the
"Company"), a Florida corporation and a wholly-owned subsidiary of 5th Avenue
Channel Corp., a Florida corporation (the "Parent"), and XXXXXXX X. XXXXXXX (the
"Employee").
WITNESSETH:
WHEREAS, the Company operates the direct to retail business of the
Parent and its other subsidiaries (the "Business"); and
WHEREAS, subject to the terms and conditions hereinafter set forth, the
Company desires to employ the Employee as the Company's Chief Operating Officer,
and the Employee desires to be so employed by the Company.
NOW, THEREFORE, in consideration of the mutual promises set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. RECITALS. The foregoing recitals are true and correct and are
incorporated herein by this reference.
2. EMPLOYMENT. In exchange for the "Compensation" (as hereinafter
defined) and subject to the other terms and conditions hereinafter set forth,
the Company hereby employs the Employee to render the "Employee Duties" (as
described in Section 3 below) as an employee of the Company, and the Employee
hereby accepts such employment.
3. TERM. This Agreement shall commence on the date hereof and shall
continue to be in effect for one (1) year from the date of this Agreement
("Term"), unless terminated prior to the end of the Term in accordance with
Section 6 of this Agreement. At the end of the Term, this Agreement shall be
automatically renewed for consecutive additional one-year periods ("Renewal
Terms") unless either party provides written notice of non-renewal to the other
not less than ninety (90) days prior to the end of the Term or any such renewal
term.
4. EMPLOYEE DUTIES. For purposes of this Agreement, "Employee Duties"
shall mean serving the Company as its President and Chief Operating Officer,
responsible for overseeing all of the Company's operations and such other duties
and responsibilities consistent with the Employer's corporate offices and
positions which the company's Board of Directors or CEO, from time to time may
assign. The Employee's performance of the Employee Duties shall be subject to
the direction of the Company's CEO. The Employee shall devote full attention and
render exclusive, full-time services to the Company and shall be an employee
solely of the Company according to the terms of this Agreement.
4. The Company's executive offices shall be located Pelham, New York,
during the term of this agreement, and the Employee will not be required to
relocate or transfer his principal residence from the immediate vicinity of New
York.
5. COMPENSATION. In exchange for the Employee's performance of the
Employee Duties hereunder, the Company hereby agrees to pay the Employee the
following compensation (collectively, the "Compensation"):
(a) BASE SALARY. The Company shall pay the Employee a gross
annual base salary (the "Base Salary") of One Hundred Two Thousand Dollars
($102,000). Salary shall be paid by the Company in accordance with the Company's
regular payroll practices but not less often than every month during the Term.
The Company's Board of Directors shall review the Employee's Salary annually and
may increase it if the Employee's performance justifies such an increase, in an
amount not less than $12,240 per annum.
(b) INCENTIVE COMPENSATION. In addition to the Base Salary
described in Section 5(a), the Employee shall be entitled to receive monthly
incentive compensation equal to one percent (1%) of the Company's gross sales
receipts from sales of products and services during the then preceding month,
less freight, customary trade discounts, allowances, credits, change backs, and
adjustments for exchanges or returns. For purposes of determining incentive
compensation hereunder, sales proceeds are considered received upon actual
receipt by the Company of payment from purchasers of products and services sold
to them. Under approved circumstances, the Company may elect to exclude certain
unrelated sales from the employees monthly incentive compensation and such
excluded sales shall be consented to by the Executive.
(c) DISCRETIONARY BONUS. In addition to the Salary described in
Section 4(a), after completion of one full year of continuous employment with
the Company and expressly contingent on the Company exceeding its yearly sales
projections under its business plan for the then prior year (as set forth in the
attached schedule), the Employee shall be entitled to receive each subsequent
year options under the Company's 1995 Stock Option Plan (the "Plan") at no cost
to purchase an aggregate of 50,000 shares of the Parent's common stock, $.001
par value per share (the "Common Stock"). Said options, if granted, shall have
an exercise price equal to the fair market value of the Common Stock on the date
of grant and shall be otherwise governed by the terms of the Plan.
(d) STOCK OPTIONS. The Company agrees to grant to the Employee
options under the Plan to purchase a total of 24,000 shares of the Parent's
Common Stock at an exercise price equal to $7.25 per share, said options to
accrue at the rate of 2,000 shares per month of the Employee's employment with
the Company beginning on the date of this Agreement, but accrued options shall
not vest until the Employee has completed six (6) months of continuous
employment with the Company and to grant to the Employee options under the plan
to purchase a total of 30,000 shares of the Parent's common stock at an exercise
price equal to $7.25 per share, during the second year of this Agreement. Except
as provided in this Agreement, the options shall be governed by the terms of the
Plan.
2
(e) WITHHOLDING. The Company shall deduct or withhold from all
Compensation payable hereunder all amounts required to be deducted or withheld
from Compensation pursuant to state or federal law.
(f) Other Benefits.
(i) FRINGE BENEFITS. Employee shall be entitled to
Company-paid $1,000,000 term life insurance, Company-paid health, medical,
dental and hospitalization insurance coverage as well as any pension,
profit-sharing plan and any other fringe benefit plans or programs, whether now
existing or hereafter established for participation of comparably situated
employees, such as but not limited to the Company's 401(k) plan, and a cash
automobile allowance of $5,000 per year.
(ii) [EXPENSE REIMBURSEMENT. It is contemplated that, in
connection with his employment hereunder, the Employee may incur business,
entertainment and travel expenses. The Company agrees to promptly reimburse the
Employee in full for all preapproved reasonable, ordinary and necessary
business, entertainment and other related expenses, including travel expenses,
incurred or expended by him incident to the performance of his duties hereunder,
and incurred or expended in accordance with the Company's policies with respect
to such expenses, upon submission by the Employee to the Company of such
vouchers or expense statements satisfactorily evidencing such expenses as may be
reasonably required by the Company or its accountants.]
(iii) VACATIONS AND HOLIDAYS. Employee shall be entitled to
paid vacations and holidays in accordance with the companies politics in effect
from time to time for its senior executive officers, but not less than three (3)
weeks of vacation during each fiscal year.
6. TERMINATION.
(a) BY COMPANY - FOR CAUSE. The Company shall have the right to
terminate the employment of the Employee for cause immediately upon providing
written notice to the Employee. For purposes of this Agreement, "cause" shall
mean only the occurrence of any of the following, each of which shall be deemed
a breach of this Agreement:
(i) Employee's failure (other than as a result of illness or
mental or physical disability), within seven (7) days after written notice from
the Company, to cure any material breach of the Employee Duties or any of his
other obligations under this Agreement;
(ii) Employee's habitual and material negligence in the
performance of the Employee Duties or the Employee's negligence otherwise, which
in either event results in a material loss to the Company; In no event shall the
results of the Company's operations or any business judgment made in good faith
by the Executive constitute an independent basis for termination for cause of
the Executive's employment under this agreement.
(iii) Employee's commission of any act of corporate theft,
misappropriation of funds, breach of duty as an officer of the Company or other
willful misconduct, act of dishonesty or intentional harm against or to the
Company;
3
(iv) Employee's conviction of or pleading nolo contendere to
any felony;
(v) Employee's failure to perform his duties hereunder on
account of an incapacitating physical or mental condition for sixty (60) or more
work days in any six (6) month period ("Permanent Disability"). If there is any
dispute as to whether the Employee has suffered a permanent disability, the
Employee shall submit to an examination by a physician whose selection shall be
agreed upon by both the Employee and the Company, and whose determination shall
be binding; or
(vi) Employee's failure to abide by the Company's policies
or procedures, including, but not limited to the Company's policy against
disclosure of "Confidential Information" (as hereinafter defined), sexual
harassment and discrimination.
(vii) The Employee's employment under this shall terminate
upon his death. In such event, his estate shall be entitled to receive the
Executive's base salary and other benefits to which the Employee is entitled
under this agreement up to the effective date of such termination.
In the event the Company elects to terminate the Employee's
employment hereunder as set forth above, the Company shall give written notice
to such effect to the Employee, which notice shall describe in reasonable detail
the actions of the Employee constituting cause.
(b) BY EMPLOYEE - FOR CAUSE. The Employee shall have the right to
terminate his employment under this Agreement for cause immediately upon sending
written notice to the Company in the event the Company fails, within thirty (30)
days of written notice from the Employee, to cure any breach of its obligations
under this Agreement.
(c) SEVERANCE PAY. If this Agreement is terminated by the
Company, without cause then (without limiting any other rights or claims which
employee may have in respect of the Company's breach of contract or otherwise),
the Employee shall be entitled to receive from the Company his Base Salary and
the other benefits referred to in Par. 4, but not any Incentive Bonus under Par.
5 or other incentive bonus, from the date of such termination through the end of
the term. If the Company elects not to renew this Agreement at the end of the
First Year Term, then the Employee shall be entitled to receive from the Company
50% of his Base Salary and other benefits referred to in Par, 5 but not any
Incentive Bonus under Par. 5 or other Incentive Bonus. If the Company elects not
to renew this Agreement during the renewal term it may do so at the beginning of
month 22 on three months notice, and the Employee shall be entitled to receive
from the Company three months severance consisting of 25% of his Base Salary and
other benefits referred to in Par. 5 but not any Incentive Bonus under Par. 5 or
other Incentive Bonus. Such severance shall be paid monthly beginning at the end
of the term of this Agreement. The Employee shall be entitled to Severance Pay
in all other situations of three months severance consisting of 25% of his Base
Salary and other benefits referred to in Par. 5.
4
7. CONFIDENTIAL INFORMATION AND COMPETITION.
(a) CONFIDENTIAL INFORMATION. The Employee hereby acknowledges
that he will or may be making use of, acquiring and adding to confidential
information of a special and unique nature and value affecting and relating to
the Company and the Parent and their respective operations, including, but not
limited to, their respective businesses, the identities of their respective
customers and suppliers, their respective data base information, prices paid by
the Company and the Parent for inventory, their respective business practices,
marketing strategies, expansion plans, contracts, business records and other
records, trade secrets, inventions, techniques, know-how and technologies,
whether or not patentable, and other similar information relating to the Company
and the Parent (all the foregoing regardless of whether same was known to the
Employee prior to the date hereof is hereinafter referred to collectively as
"Confidential Information"). The Employee further recognizes and acknowledges
that all Confidential Information is the exclusive property of the Company and
the Parent, is material and confidential, and greatly affects the legitimate
business interests, goodwill and effective and successful conduct of the Company
and the Parent's respective businesses. Accordingly, the Employee hereby
covenants and agrees that he will use the Confidential Information only for the
benefit of the Company and the Parent and shall not at any time, directly or
indirectly, either during the Term of this Agreement or afterward, divulge,
reveal or communicate any Confidential Information to any person, firm,
corporation or entity whatsoever, or use any Confidential Information for his
own benefit or for the benefit of others.
8. MISCELLANEOUS.
(a) NOTICES. All notices, demands or other communications given
hereunder shall be in writing and shall be deemed to have been duly given only
upon hand delivery thereof or upon the first business day after mailing by
United States registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:
To Company: 5th Avenue Channel, Inc.
0000 X.X. 000x Xxxxxx
Xxxxx Xxxxx Xxxxx, XX 00000
Attn: Xxxxxx Xxxxx, President
To Employee: Xxxxxxx X. Xxxxxxx
000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
or to such other address or such other person as any party shall designate, in
writing, to the other for such purposes and in the manner hereinabove set forth.
(aa) ATTORNEY FEES. The Company agrees to pay the regular
hourly fees of the Employees personal attorney relating solely to the
negotiation and review of this agreement, not to exceed an aggregate fee of
$1,250.00.
(b) ENTIRE AGREEMENT. This Agreement sets forth all the promises,
covenants, agreements, conditions and understandings between the parties hereto
with respect to the subject
5
matter contained herein, and supersedes all prior and contemporaneous
agreements, understandings, inducements or conditions with respect to said
subject matter, expressed or implied, oral or written, except as herein
contained.
(c) AMENDMENT. The parties hereby irrevocably agree that no
attempted amendment, modification, termination, discharge or change
(collectively, "Amendment") of this Agreement shall be valid and effective,
unless the parties shall unanimously agree in writing to such Amendment.
(d) NO WAIVER. No waiver of any provision of this Agreement shall
be effective unless it is in writing and signed by the party against whom it is
asserted, and any such written waiver shall only be applicable to the specific
instance to which it relates and shall not be deemed to be a continuing or
future waiver.
(e) GENDER AND USE OF SINGULAR AND PLURAL. All pronouns shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the party or parties, or their personal representatives, successors
and assigns may require.
(f) COUNTERPARTS. This Agreement and any amendments may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together will constitute one and the same instrument.
(g) HEADINGS. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
(h) GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Florida and any proceeding arising
between the parties in any manner pertaining or related to this Agreement shall,
to the extent permitted by law, be held in Miami-Dade County, Florida.
(i) FURTHER ASSURANCES. The parties hereto will execute and
deliver such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
(j) THIRD PARTY BENEFICIARY. This Agreement is made solely and
specifically among and for the benefit of the parties hereto, and their
respective successors and assigns subject to the express provisions hereof
relating to successors and assigns, and no other person other than the Parent
shall have any rights, interest or claims hereunder or be entitled to any
benefits under or on account of this Agreement as a third-party beneficiary or
otherwise.
(k) PROVISIONS SEVERABLE. This Agreement is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules, and regulations of the jurisdiction in which
the parties do business. If any provision of this Agreement, or the application
thereof to any person or circumstances shall, for any reason or to any extent,
be invalid or unenforceable, the remainder of this Agreement and the application
of such provision to other persons or circumstances shall not be affected
thereby, but rather shall be enforced to the greatest extent permitted by law.
6
(l) LITIGATION. If any party hereto is required to engage in
litigation against any other party hereto, either as plaintiff or as defendant,
in order to enforce or defend any rights under this Agreement, and such
litigation results in a final judgment in favor of such party ("Prevailing
Party"), then the party or parties against whom said final judgment is obtained
shall reimburse the Prevailing Party for all direct, indirect or incidental
expenses incurred, including, but not limited to, all attorneys' fees, court
costs and other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder.
(m) REPRESENTATION BY EMPLOYEE. Employee hereby represents and
warrants that he is not a party to any agreement, contract or understanding,
whether of employment or otherwise, which would in any way restrict or prohibit
him from undertaking or performing employment with the Company in accordance
with the terms and conditions of this Agreement,
(n) MERGER, ETC. OF THE COMPANY. In the event of a future
disposition of (or including) the properties and business of the company,
substantially or in its entirety, by merger, consolidation, sale of assets, or
otherwise, then the Company may elect either:
(a) To assign this agreement and all of the Company's rights
and obligations under this agreement to the acquiring or surviving corporation,
provided, that such acquiring or surviving corporation shall assume in writing
all of the obligations of the Company under this agreement.
(b) To terminate this agreement upon at least 30 written
notice and the payment to
the Executive of the compensation provided for in Par. 6c of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
WITNESSES: COMPANY:
5TH AVENUE CHANNEL RETAIL,
INC., a Florida corporation
/S/ XXXXX XXXXXX By: /S/ XXXX XXXXXX
--------------------- -------------------------
Xxxx Xxxxxx
/S/ XXXXX XXXXXX Executive Vice President
---------------------
EMPLOYEE:
/S/ XXXXXXX XXXXX /S/ XXXXXXX X. XXXXXXX
--------------------- ------------------------
XXXXXXX XXXXX XXXXXXX X. XXXXXXX
---------------------
7
