Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of March , 1998 by and between
AMBASSADOR EYEWEAR GROUP, INC. ,a Delaware corporation, with its principal
offices located at 0000 Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxx 00000 (the
"Company"), and XXXXX XXXXXXX, having an address at 000 Xxxxxxxxxx Xxxx,
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxx 19444(the "Executive").
R E C I T A L S:
WHEREAS, the Executive has performed and will continue to perform
valuable services for the Company;
WHEREAS, the Executive is willing to serve as the Chief Executive
Officer and President of the Company; and
WHEREAS, the Company desires to retain the Executive as the Chief
Executive Officer and President of the Company on the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings set
forth below:
1.1 "Basic Salary" shall have the meaning assigned to that term in Section
5 of this Agreement.
1.2 "Board" shall mean the Board of Directors of the Company as duly
constituted from time to time.
1.3 "Business" shall mean the business of designing, sourcing, developing,
marketing and distributing prescription eyeglass frames and non-prescription
sunglasses to department and specialty stores, optical chains and eyewear
boutiques throughout the United States by the Company.
1.4 "Cause" shall mean any of the following:
(a) If the Executive engages in fraud or embezzlement; or
(b) The commission by the Executive of a material breach of any of
the provisions of this Agreement, on his part to be performed (including
material breach of the representation and warranty of Section 9); or
(c) The continuing willful failure of the Executive to perform the
Duties to the Company (other than any such failure resulting from the
Executive's incapacity due to Disability) after at least thirty (30) days
written notice thereof (specifying the particulars thereof in reasonable
detail) and a reasonable opportunity to be heard and cure such failure are
given to the Executive by the Board.
For purposes of this subparagraph, no act, or failure to act, on the
Executive's part shall be considered "willful" unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interests of the Company.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules, regulations and interpretations issued thereunder.
1.6 "Commencement Date" shall be the date that the Company's registration
statement on Form SB-2 is declared effective by the United States Securities and
Exchange Commission.
1.7 "Confidential Information" shall include, without limitation by reason
of specification, any information, including, without limitation, trade secrets,
vendor and customer lists, pricing policies, operational methods, methods of
doing business, technical processes, formulae, designs and design projects,
inventions, research projects, strategic plans, product information,
manufacturing and advertising know-how, possible acquisition information and
other business affairs of the Company, which (i) is or are designed to be used
in, or are or may be useful in connection with the Business, or which results
from any of the research or development activities of the Business, or (ii) is
private or confidential in that it is not generally known or available to the
public, except as the result of unauthorized disclosure by or information
supplied by the Executive, or (iii) gives the Company an opportunity or the
possibility of obtaining an advantage over competitors who may not know or use
such information or who are not lawfully permitted to use the same.
1.8 "Disability" shall mean the inability of the Executive to perform the
Executive's Duties for the Company pursuant to the terms of this Agreement,
because of physical or mental disability, where such disability shall have
existed for a period of more than 180 days in any 365 day period. The existence
of a Disability means that the Executive's mental and/or physical condition
substantially interferes with the Executive's performance of his Duties for the
Company as specified in this Agreement. The fact of whether or not a Disability
exists hereunder shall be determined by appropriate medical experts selected by
the Board.
1.9 "Duties" shall have the meaning assigned to that term in Section 2.1
of this Agreement.
1.10 "Employment Year" shall mean each twelve-month period, or part
thereof, during which the Executive is employed hereunder, commencing on the
Commencement Date and ending on the same day of the subsequent calendar year.
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1.11 "Term Date" shall be the date on which the Term expires if during the
period of the initial Term or the date that the Renewal Term expires if during
the period of the Renewal Term.
1.12. "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
entity or government (whether federal, state, county, city, municipal or
otherwise, including, without limitation, any instrumentality, division, agency,
body or department thereof).
1.13 "Term" shall have the meaning assigned to that term in Section 3 of
this Agreement and any renewals thereof as provided for in Section 7 of this
Agreement.
1.14 "Renewal Term" shall have the meaning assigned to that term in
Section 7 of this Agreement.
Wherever from the context it appears appropriate, each word or phrase
stated in either the singular or the plural shall include the singular and the
plural, and each pronoun stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter.
2. EMPLOYMENT AND DUTIES OF THE EXECUTIVE
The Company agrees to employ the Executive, and the Executive agrees to
be employed by the Company upon the terms and conditions hereinafter
provided. During the Term, the Executive agrees to serve as President and
Chief Executive Officer of the Company and will have such powers and duties
as are commensurate with such position and as may be conferred upon him by
the Board. The Executive shall devote substantially all of his business
time, attention, skill and efforts to his duties of Chief Executive Officer
and President of the Company and to such other executive duties as are
reasonably assigned to him from time to time by the Board except to the
extent specifically authorized by the Board.
3. TERM OF EMPLOYMENT
The employment of the Executive pursuant to this Agreement shall be for the
period of three (3) years (the "Term") commencing on the Commencement Date,
unless renewed pursuant to Section 7 or sooner terminated pursuant to Section 8.
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4. COMPENSATION AND BENEFITS
The Company shall pay the Executive, as compensation for all of the
services to be rendered by him hereunder during the Term, and in consideration
of the various restrictions imposed upon the Executive during the Term, the
Basic Salary and other benefits as provided for and determined pursuant to
Sections 5 and 6, inclusive, of this Agreement; provided, however, that no
compensation shall be paid to the Executive under this Agreement for any period
subsequent to the termination of employment of the Executive for any reason
whatsoever, except as provided in Sections 7 and 8.
5. BASIC SALARY
The Company shall pay the Executive, as compensation for all of the
services to be rendered by him hereunder during each Employment Year, a
salary of $200,000 per Employment Year (as adjusted upward by the Company
from time to time) (the "Basic Salary"), payable in substantially equal
payments no less frequently than monthly, less such deductions or amounts as
are required to be deducted or withheld by applicable laws or regulations,
deductions for the Executive contributions to welfare benefits provided by
the Company to the Executive and such other deductions or amounts, if any, as
are authorized by the Executive. The Basic Salary shall be prorated for the
month in which employment by the Company commences or terminates, and for any
Employment Year which is less than twelve (12) months in duration. The Basic
Salary may be increased from time to time by the Company and shall not be
reduced below $200,000. The Board of Directors in its discretion may pay
such bonuses to the Executive as it deems appropriate.
6. ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES
6.1 Additional Benefits. The Company shall provide the following
additional benefits to the Executive during the Term:
(i) all benefits consistent with executive's current benefits
summarized on Exhibit A hereto;
(ii) the lease by the Company for use by the Executive (or the Company
shall reimburse the Executive for these payments if the lease is in
his name) of an automobile such lease payments not to exceed $1,000 a
month (in addition to the payment by the Company of insurance and
other expenses relating thereto) and
(iii)such other benefits as the Board shall lawfully adopt and approve for
the Executive.
6.2 Reimbursement for Expenses. The Company shall pay or reimburse the
Executive for all reasonable business expenses actually incurred or paid by him
during the Term in the performance of his services under this Agreement, upon
presentation of such bills, expense statements, vouchers or such other
supporting information as the Board may reasonably require. In the event the
Company requires the Executive to travel on business during the Term, the
Executive shall be reimbursed for any travel expenses in accordance with this
Section 6.2.
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7. RENEWAL OF TERM
If the Executive's employment hereunder has not previously been
terminated in accordance with Section 8 hereof, then the Term shall be
extended for additional periods of six (6) months (the "Renewal Term"),
unless either the Board or the Executive provides written notice ninety (90)
days or more prior to the end of the Term that this Agreement will not be
extended. The rights of termination set forth in Section 8 shall be
applicable during any such extended term. In the event that the Board
provides notice that the Term of the Agreement will not be extended, Executive
shall be entitled to payment equal to his then current "Basic Salary" for a
period of six (6) months, payable in installments as set forth in Section
5, plus payment or reimbursement of all additional benefits as set forth in
Section 6.1.
8. TERMINATION OF EMPLOYMENT
8.1 Death. If the Executive dies during the Term, his employment under
this Agreement shall automatically terminate on the date of his death and no
further compensation shall be due hereunder to the Executive or the Executive's
estate.
8.2 Disability. If, during the Term, the Executive has a Disability, the
Company may, at any time after the Executive has a Disability, terminate the
Executive's employment by written notice to him. In the event that the
Executive's employment is terminated as a result of a Disability, the Executive
shall cease to receive any further compensation hereunder, except to the extent
provided under the benefit plans of the Company.
8.3 Voluntary Termination. If the Executive terminates his employment with
the Company at any time during the term of this Agreement other than for
Good Reason (as such term is defined in Section 8.6), he shall be deemed to
have been terminated by the Company for Cause and shall be subject to the
provisions of Section 8.4 hereof.
8.4 Termination for Cause. The Company may terminate the Executive's
employment hereunder for Cause at any time by written notice given to the
Executive by the Board. If the Executive's employment is terminated for Cause,
he shall be entitled to receive only the portion of his Basic Salary accrued and
not theretofore paid to him and reimbursement for any expenses properly incurred
by the Executive and supported by appropriate vouchers, which expenses have been
incurred prior to the date of such termination and not theretofore reimbursed.
Except as set forth in the immediately preceding sentence, all of the
Executive's rights to compensation hereunder shall be terminated.
8.5 Termination without Cause. The Company may terminate the Executive's
employment hereunder without Cause only upon written notice to the Executive
within ninety (90) days of the Term Date. The Executive shall be entitled to
receive, in lieu of any other compensation hereunder, any cash bonus which had
been awarded to the Executive by the Board but had not yet been paid. If the
Company terminates the Executive's employment hereunder without Cause at any
time prior to the Term Date, the Executive shall be entitled to receive the
Basic Salary unpaid through the greater of the Term Date or a period of 6
months, payable in such installments as set forth in Section 5, plus continued
payment or reimbursement of all additional benefits as set forth in Section 6.1
for the same period. In addition, the Company shall reimburse the Executive
for any expenses properly incurred bythe Executive and supported by proper
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vouchers, which expenses have been incurred prior to the date of such
termination and not theretofore reimbursed.
Upon termination for any reason, Executive shall not be deprived of
vested rights to long-term incentive compensation or stock options or any
rights to indemnification under the Company's By-laws for conduct within the
scope of Executive's employment.
8.6 Resignation for Good Reason. Executive shall be entitled to
terminate this Agreement at any time upon prior written notice to the Company
for "Good Reason." For purposes of this Agreement, "Good Reason" shall mean
(1) the relocation of the Company to a place outside of the Philadelphia
metropolitan area; (2) any material breach by the Company of the terms of
this Agreement, or (3) any Change of Control in the Company. In the event
of the Executive's resignation for Good Reason, Executive shall be entitled
to payment of his compensation and accrued benefits through the date of
termination of employment plus severance pay and benefits as if Executive
had been terminated without Cause in accordance with Section 8.5 above. For
purposes of this Agreement, a Change in Control of the Company shall be
deemed to have occurred upon the earliest of the following events:
(i) any "person," as such term is defined under Sections 3(a)(9) and
13(d) of the Securities Exchange Act of 1934 (the "Exchange Act", who is
not an Affiliate of Company on the date hereof, becomes a "beneficial
owner," as such term is used in Rule 13d-3 under the Exchange Act, of a
majority of the Company's Voting Stock;
(ii) the Company adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets; or
(iii) the Company is party to a merger, consolidation, other form of
business combination or a sale of all or substantially all of its assets,
unless the business of Company is continued following any such
transaction by a resulting entity (which may be, but need not be,
Company) and the shareholders of Company immediately prior to such
transaction hold, directly or indirectly, a majority of the voting power
of the resulting entity.
9. REPRESENTATION AND WARRANTY BY THE EXECUTIVE
The Executive hereby represents and warrants to the Company, the same being
part of the essence of this Agreement, that, as of the Commencement Date, he is
not a party to any agreement, contract or understanding, and that no facts or
circumstances exist, which would in any way restrict or prohibit him in any
material way from undertaking or performing any of his obligations under this
Agreement. The foregoing representation and warranty shall remain in effect
throughout the Term.
10. CONFIDENTIAL INFORMATION AND PROPRIETARY INTERESTS
10.1 Acknowledgment of Confidentiality. The Executive understands and
acknowledges that he may obtain Confidential Information during the course of
his employment by the Company. The Executive further acknowledges that the
services to be rendered by him are of a special, unique and extraordinary
character and that, in connection with such services, he will have access to
Confidential Information vital to the Company. Accordingly, the Executive
agrees that he shall not, during the Term or for one year thereafter, (i) use or
disclose any such Confidential Information outside the Company, (ii) publish
any works, speeches or articles with respect thereto; or (iii) except as
required in the proper performance of his services hereunder, remove or aid in
the removal of any Confidential Information or any property or material relating
thereto from the premises of the Company.
The foregoing confidentiality provisions shall cease to be applicable
to any Confidential Information which becomes generally available to the public
(except by reason of or as a consequence of a breach by the Executive of his
obligations under this Section 10).
In the event the Executive is required by law or a court order to
disclose any such Confidential Information, he shall promptly notify the Company
of such requirement and provide the Company with a copy of any court order or of
any law which in his opinion requires such disclosure and, if the Company so
elects, to the extent that he is legally able, permit the Company an adequate
opportunity, at its own expense, to contest such law or court order.
10.2 Delivery of Material. The Executive shall promptly, and without
charge, deliver to the Company on the termination of his employment hereunder,
or at any other time the Company may so request, all memoranda, notes, records,
reports, manuals, computer disks, videotapes, drawings, blueprints and other
documents (and all copies thereof) relating to the Business, and all property
associated therewith, which he may then possess or have under his control.
10.3 Customer and Vendor Lists. The Executive acknowledges that (i) all
lists of customers and vendors of the Company developed during the course of the
Executive's employment and/or by the Company are and shall be the sole and
exclusive property of the Company and the Executive further acknowledges and
agrees that he neither has nor shall have
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any personal right, title or interest therein; (ii) such lists are and must
continue to be confidential; and (iii) such lists are not readily accessible to
competitors of the Company.
10.4 Ideas, Programs, Etc. If, during the Term, the Executive invents or
develops any ideas, vendor lists or the like, relating to or useful in
connection with the Business, the same are and shall remain the property of the
Company, and the Executive shall promptly deliver all copies of the same to the
Company, assign his interest therein to the Company and execute such documents
as the Company's counsel may request to convey title thereof to the Company.
The Executive shall not be entitled to any compensation, other than as provided
in this Agreement, for carrying out his obligations to the Company under this
Section 10.4 or any other subsection of this Section 10.
10.5 Extension of Section 10. All of the provisions of Section 10 shall
be deemed to be applicable to all Confidential Information and to all ideas,
programs, etc., as referred to in Section 10.4, to which the Executive may have
obtained access or which he may have invented or developed during his employment
by the Company.
11. COMPETITIVE ACTIVITY
The Executive shall not engage, directly or indirectly in any
Competitive Activity for a period of six (6) months after the termination of
Executive's employment with the Company, provided however, that if the
Executive is terminated without cause as defined in Section 8.5 hereof, he
will not be subject to the provisions of this Section 11. For purposes of
this Agreement, Executive shall be considered to have engaged in a
"Competitive Activity" if Executive:
(i) directly or indirectly, takes any action or engages, or participates
in or within or becomes interested in or associated with any Person
that is engaged or becomes engaged in a business which is similar to
the Business; PROVIDED, HOWEVER, Executive shall not be prohibited
from making an investment in less than 1% of the equity of a public
company;
(ii) retains as an employee, consultant or otherwise, or hires or offers
employment to, any person whom the Company engages as an employee,
consultant or otherwise, where such engagement by the Company
relates to the Business.
(iii)otherwise interferes with the relationships between the Company and
its employees, customers or suppliers.
12. DISPUTES AND REMEDIES
12.1 Reimbursement of Legal Fees. Executive shall have the right to
reimbursement of legal fees and costs in any action to enforce the Agreement.
12.2 Injunctive Relief. If the Executive commits a breach, or threatens
to commit a breach, of any of the provisions of Sections 8.4 or 10, the Company
shall have the following rights and remedies (each of which shall be independent
of the other, and shall be severally
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enforceable, and all of which shall be in addition to, and not in lieu of, any
other rights and remedies available to the Company at law or in equity):
(i) the right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it
being acknowledged by the Executive that any such breach or threatened
breach will or may cause irreparable injury to the Company and that
money damages will or may not provide an adequate remedy to the
Company; and
(ii) the right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, increments,
things of value or other benefits, derived or received by the
Executive as the result of any acts or transactions constituting a
breach of any of the provisions of Sections 8.4 or 10 of this
Agreement, and the Executive hereby agrees to account for and pay over
all such compensation, profits, monies, increments, things of value or
other benefits to the Company.
12.3 Partial Enforceability. If any provision contained in Sections 8.4
or 10, or any part thereof, is construed to be invalid or unenforceable, the
same shall not affect the remainder of the Executive's agreements, covenants and
undertakings, or the other restrictions which he has accepted, in Sections 8.4
or 10, and the remaining such agreements, covenants, undertakings and
restrictions shall be given the fullest possible effect, without regard to the
invalid parts.
12.4 Intention of Parties. It is distinctly understood and agreed that
the confidentiality, proprietary right and restrictive covenant provisions of
this Agreement have been accepted and agreed to by the Executive in
contemplation of this Agreement. It is therefore the specific intention of the
parties, any general considerations of public policy to the contrary
notwithstanding, that the provisions of Sections 8.4 or 10 of this Agreement
shall be enforced as written and to the fullest extent possible.
12.5 Adjustment of Restrictions. Despite the prior provisions of this
Section 11, if any covenant or agreement contained in Sections 8.4 or 10, or any
part thereof, is held by any court of competent jurisdiction to be unenforceable
because of the duration of such provision or the geographic area covered
thereby, the court making such determination shall have the power to reduce the
duration or geographic area of such provision and, in its reduced form, such
provision shall be enforceable.
13. SURVIVAL
The provisions of Sections 8, 9, 10, 11, 12 and this Section 13 shall
survive termination of this Agreement and remain enforceable according to their
terms.
14. SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement shall
in no way affect the validity or enforceability of any other provisions hereof.
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15. NOTICES
All notices, demands and requests required or permitted to be given under
the provisions of this Agreement shall be deemed duly given if made in writing
and delivered personally or mailed by postage prepaid certified or registered
mail, return receipt requested, accompanied by a second copy sent by ordinary
mail, which notices shall be addressed as follows:
If to the Company:
Ambassador Eyewear Group, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
If to the Executive:
Xxxxx Xxxxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxxxx 00000
By notifying the other parties in writing, given as aforesaid, any party
may from time to time change his or its address or the name of any person to
whose attention notice is to be given, or may add another person to whose
attention notice is to be given, in connection with notice to any party.
16. ASSIGNMENT AND SUCCESSORS
Neither this Agreement nor any of his rights or Duties hereunder may be
assigned or delegated by the Executive. This Agreement may not be assigned by
the Company without the consent of the Executive except to any successor in
interest which takes over all or substantially all of the business of the
Company as it is conducted at the time of such assignment. Any corporation into
or with which the Company is merged or consolidated or which takes over all or
substantially all of the business of the Company shall be deemed to be a
successor of the Company for purposes hereof. This Agreement shall be binding
upon and, except as aforesaid, shall inure to the benefit of the parties and
their respective successors and permitted assigns.
17. ENTIRE AGREEMENT, WAIVER AND OTHER
17.1. Integration. This Agreement contains the entire agreement of the
parties hereto on its subject matter and supersedes all previous agreements
between the parties hereto, written or oral, express or implied, covering the
subject matter hereof. No representations, inducements, promises or agreements,
oral or otherwise, not embodied herein, shall be of any force or effect.
17.2. No Waiver. No waiver or modification of any of the provisions of
this Agreement shall be valid unless in writing and signed by or on behalf of
the party granting such waiver or modification. No waiver by any party of any
breach or default hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed
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a waiver of any other breach or default, nor shall it in any way affect any of
the other terms or conditions of this Agreement or the enforceability thereof.
No failure of the Company to exercise any power given it hereunder or to insist
upon strict compliance by the Executive with any obligation hereunder, and no
custom or practice at variance with the terms hereof, shall constitute a waiver
of the right of the Company to demand strict compliance with the terms hereof.
The Executive shall not have the right to sign any waiver or
modification of any provisions of this Agreement on behalf of the Company, nor
shall any action taken by the Executive reduce his obligations under this
Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by the parties hereto after the date hereof.
Neither this Agreement nor any of the rights of any of the parties hereunder may
be terminated except as provided herein. No waiver of any provision of this
Agreement or any amendment of this Agreement shall be binding upon the Company
unless approved by the Board.
18. GOVERNING LAW
This Agreement shall be governed by and construed, and the rights and
obligations of the parties hereto enforced, in accordance with the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of laws principles.
19. HEADINGS
The Section and subsection headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above, to be effective as of the Commencement Date.
AMBASSADOR EYEWEAR GROUP, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman
/s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
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EXHIBIT A
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Schedule of Benefits
1. MEDICAL BENEFITS: Monthly premium payments for Comprehensive
Medical, Dental, I care, Cancer and ACC coverages.
2. LIFE INSURANCE: Payment for Premiums on First Colony, Equitable,
Valley Forge policies.
3. DISABILITY: Payment for Premiums on Equitable and Xxxxxx Xxxx
policies.
4. AUTOMOBILE LEASES: Monthly Lease Payments totaling $1,425.51 per
month, plus insurance, operating and repair expenses associated with leased
vehicles.
5. PHONE: Monthly reimbursement for Executive's phone bills.
