Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement") is being made as of the 15th day of January,
1999 between MARKETING SERVICES GROUP, INC., ("MSGI"), a Nevada corporation,
having its principal office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and
XXXXX XXXXXXX ("Employee"), an individual residing at 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000.
W I T N E S S E T H:
WHEREAS, Xxxxxxx-Xxxx & Associates, Inc., a New York corporation ("SK
Associates"), Xxxxxxx-Xxxx List Brokerage, Inc., a New York corporation ("SK
Brokerage"), and Xxxxxxx-Xxxx International, Inc., a Delaware corporation ("SK
International", together with SK Associates and SK International, the
"Companies") contemporaneously herewith will become wholly-owned subsidiaries of
MSGI, and MSGI desires to have Employee continue as President and Chief
Executive Officer of SK Associates and SK International and Chief Executive
Officer of SK Brokerage and Employee desires to be so employed, upon the terms
and conditions contained herein; and
WHEREAS, MSGI and the Employee have simultaneously entered into a Stock Purchase
Agreement dated as of January 15, 1999 (the "Stock Purchase Agreement") for the
purchase of all of the Employee's shares of common stock of the Companies (the
"Shares") by MSGI.
NOW, THEREFORE, in consideration of the mutual premises and agreements contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Nature of Employment; Term of Employment. MSGI and each Company hereby
employs Employee and Employee agrees to serve SK Associates and SK International
as their President and Chief Executive Officer and SK Brokerage as its Chief
Executive Officer, upon the terms and conditions contained herein, for a term
commencing as of the date hereof and continuing until January 31, 2002 unless
such dated is extended at the option of MSGI for one year if Employee makes an
election to extend the term of the earnout pursuant to Section 1.2(c)(iii) of
the Stock Purchase Agreement (the "Initial Term"). This Agreement shall
automatically be renewed for one (1) additional year period after the Initial
Term (the "Renewal Term" and the Initial Term collectively, the "Employment
Term") upon terms no less favorable than the terms existing in the latest year
of the Employment Term, unless MSGI or Employee gives written notice to the
other party of its intention not to renew this Agreement at least sixty (60)
days prior to the expiration of the Initial Term or the Renewal Term.
2. Duties and Powers as Employee. During the Employment Term, Employee agrees to
devote all of his full working time, energy, and efforts to the business of the
Companies. Employee understands that the principal offices of the Companies are
currently held at 000 Xxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and agrees to
perform his duties at such location or at such other location as the offices may
be located. In performance of his duties, Employee shall be subject to the
reasonable direction of the Chief Executive Officer of MSGI or his designee.
Subject to the foregoing, Employee shall have sole authority over the business
and operations of the Companies. Employee shall be available to travel as the
needs of the Companies' business reasonably requires. Employee agrees that the
Companies or MSGI may obtain a life insurance policy on the life of Employee
naming the Companies or MSGI as the beneficiary thereof. Employee shall consult
with and obtain the approval from the Chief Executive Officer of MSGI on any
single expenditure by the Companies other than a payment made to a list manager
or list broker in the ordinary course of business, either individually or in the
aggregate, in excess of ten thousand dollars ($10,000) or compensation payments
by any of the Companies to an employee or a consultant that alone or in the
aggregate exceeds seventy-five thousand dollars ($75,000) per annum.
3. Compensation. As compensation for his services hereunder, MSGI and the
Companies shall pay Employee a salary (the "Base Salary"), payable in equal
semi-monthly installments, in the aggregate at the annual rate of two hundred
fifty thousand dollars ($250,000) for each year of the Employment Term.
Additionally, Employee shall participate in all present or future employee
benefit plans offered to senior executives of the Companies or subsidiaries of
MSGI; provided, that he meets the eligibility requirements of any such plans.
During the Employment Term, Employee shall be eligible for consideration for
stock options and bonuses to the same extent as are other heads of subsidiaries
of MSGI.
4. Expenses; Vacations. Employee shall be entitled to reimbursement for
reasonable travel and other out-of-pocket expenses necessarily incurred in the
performance of his duties hereunder, upon submission and approval of written
statements and bills in accordance with the then regular procedures of MSGI.
Employee shall be entitled to four (4) weeks paid vacation time in accordance
with the then regular procedures of MSGI governing executives as determined from
time to time by the MSGI's Board of Directors and communicated, in writing to
Employee. Employee shall be entitled to sick and personal days as provided by
the Companies' employee handbook.
5. Representations and Warranties of Employee. Employee represents and warrants
to MSGI and the Companies that: (i) Employee is under no contractual or other
restriction or obligation which is inconsistent with the execution of this
Agreement, the performance of his duties hereunder, or the other rights of the
Companies and MSGI hereunder; and (ii) Employee is under no physical or mental
disability that would hinder the performance of his duties under this Agreement.
6. Non-Competition. (a) Employee agrees that during the Employment Term he will
not engage in, or otherwise directly or indirectly be employed by, or act as a
consultant, or be a director, officer, employee, owner, agent, member, or
partner of, any other business or organization that is or shall then be
competing with the Companies or MSGI, except that in each case the provisions of
this Section 6 will not be deemed breached merely because Employee owns not more
than five percent (5.0%) of the outstanding common stock of a corporation, if,
at the time of its acquisition by Employee, such stock is listed on a national
securities exchange, is reported on NASDAQ, or is regularly traded in the
over-the-counter market by a member of a national securities exchange.
(b) If this Agreement is terminated "For Cause" (as defined in Section 9 hereof,
Employee, for a period of three (3) years from the date of termination, shall
not, directly or indirectly, solicit or encourage any person who was a customer
of the Companies or MSGI during the three (3) years prior to the date of such
termination to cease doing business with the Companies or MSGI or to do business
with any other enterprise that is engaged in the same or similar business to
that of the Companies or MSGI. If this Agreement is terminated other than
pursuant to Section 9(a) or (b) hereof, and if MSGI pays Employee the Earnout
Payment pursuant to Section 1.2(h) of the Stock Purchase Agreement, the
restrictions in the preceding sentence shall be applicable to Employee for a
period of one (1) year from the date of termination.
(c) Employee acknowledges that: (i) the consideration for this Agreement not to
compete includes the consideration he received in the sale of his Shares; (ii)
monetary damages are not sufficient to compensate MSGI and the Companies for a
breach of this Agreement; (iii) MSGI and the Companies shall be irreparably
harmed if Employee breaches this covenant not to compete; and (iv) the issuance
of injunctive relief on behalf of MSGI and the Companies is appropriate to
remedy any such breach.
7. Inventions; Patents; Copyrights. Any interest in patents, patent
applications, inventions, copyrights, developments, and processes ("Inventions")
which Employee now or hereafter during the period he is employed by the
Companies under this Agreement may, directly or indirectly, own or develop
relating to the fields in which the Companies or MSGI may then be engaged shall
belong to the Companies or MSGI; and forthwith upon request of the Companies or
MSGI, Employee shall execute all such assignments and other documents and take
all such other action as the Companies or MSGI may reasonably request in order
to vest in the Companies or MSGI all of his right, title, and interest in and to
such Inventions, free and clear of all liens, charges, and encumbrances.
8. Confidential Information. Except in the course of performing his duties
hereunder, all confidential information which Employee may now possess, may
obtain during the Employment Term, or may create prior to the end of the period
he is employed by the Companies under this Agreement, relating to the business
of the Companies or MSGI or of any customer or supplier of the Companies or
MSGI, shall not be published, disclosed, or made accessible by him to any other
person, firm, or corporation during the Employment Term or any time thereafter
without the prior written consent of the Companies and MSGI. Employee shall
return all tangible evidence of such confidential information to the Companies
or MSGI prior to or at the termination of his employment.
9. Termination. (a) Notwithstanding anything herein contained, if on or after
the date hereof and prior to the end of the Employment Term, Employee is
terminated "For Cause" then the Companies shall have the right to give notice of
termination of Employee's services hereunder as of a date to be specified in
such notice, and this Agreement shall terminate on the date so specified.
Termination "For Cause" shall mean Employee shall: (i) be charged with a felony
crime, (ii) commit any act or omit to take any action in bad faith and to the
material detriment of the Companies or MSGI, (iii) commit an act of moral
turpitude, (iv) commit an act of fraud against the Companies or MSGI, or (v)
materially breach any term of this Agreement or the Stock Purchase Agreement and
fail to correct such breach within ten (10) days after written notice thereof.
In the event this Agreement is terminated "For Cause" pursuant to Section 9(a),
then Employee shall be entitled to receive only the Base Salary at the rate
provided in Section 3 to the date on which termination shall take effect plus
any compensation which is accrued but unpaid on the date of termination.
(b) In the event that Employee shall be physically or mentally incapacitated or
disabled such that he is unable to fully discharge his duties hereunder for a
period of six (6) months, then this Agreement shall terminate upon ninety (90)
days written notice to Employee, and no further compensation (other than accrued
but unpaid Base Salary or bonus through the date of termination) shall be
payable to Employee, except as may otherwise be provided under any disability
insurance policy.
(c) In the event that Employee shall die, then this Agreement shall terminate on
the date of Employee's death, and no further compensation (other than accrued
but unpaid Base Salary or bonus through the date of death) shall be payable to
Employee, except as may otherwise be provided under any insurance policy or
similar instrument.
(d) Nothing contained in this Section 9 shall be deemed to limit any other right
MSGI may have to terminate Employee's employment hereunder upon any ground
permitted by law.
10. Merger. In the event of a future disposition of the properties and business
of MSGI, substantially as an entirety, by merger, consolidation, sale of assets,
sale of stock, or otherwise where fifty-one percent (51%) or more of MSGI Common
Stock is acquired by a party which is not an affiliate of MSGI ("Change of
Control"), then the Company may elect to assign this Agreement and all of its
rights and obligations hereunder to the acquiring or surviving corporation.
11. Survival. The covenants, agreements, representations, and warranties
contained in or made pursuant to this Agreement shall survive Employee's
termination of employment, irrespective of any investigation made by or on
behalf of any party.
12. Modification. This Agreement sets forth the entire understanding of the
parties with respect to the subject matter hereof, supersedes all existing
agreements between them concerning such subject matter, and may be modified only
by a written instrument duly executed by each party.
13. Notices. Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be sent by telecopier, by overnight
courier, certified mail, return receipt requested, or delivered against receipt
to the party to whom it is to be given at the address of such party set forth in
the preamble to this Agreement (or to such other address as the party shall have
furnished in writing in accordance with the provisions of this Section 13). In
the case of a notice to the Companies or MSGI, a copy of such notice (which copy
shall not constitute notice) shall be delivered to Camhy Xxxxxxxxx & Xxxxx LLP,
0000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Xxxx X. Annex, Esq.
In the case of a notice to Employee, a copy of such notice (which copy shall not
constitute notice) shall be delivered to Xxxx Xxxxxxxxxx Xxxxx Xxxxxx Xxxxxx &
Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: X. Xxxxx Rand,
Esq. Notice to the estate of Employee shall be sufficient if addressed to
Employee as provided in this Section 13. Any notice or other communication given
by certified mail shall be deemed given three (3) business days after
certification thereof (or comparable act), all other notices shall be deemed
given three (3) business days after the time of mailing, except for a notice
changing a party's address which shall be deemed given at the time of receipt
thereof.
14a Waiver. Any waiver by either party of a breach of any provision of this
Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing and
signed by the party against who the waiver is asserted.
15a Binding Effect. Employee's rights and obligations under this Agreement shall
not be transferable by assignment or otherwise, such rights shall not be subject
to encumbrance or the claims of Employee's creditors, and any attempt to do any
of the foregoing shall be void. The provisions of this Agreement shall be
binding upon and inure to the benefit of Employee and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Companies and its successors and those who are its assigns.
16a Headings. The headings in this Agreement are solely for the convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
17a Counterparts; Governing Law. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall be governed by,
and construed in accordance with, the laws of the State of New York, without
given effect to the rules governing the conflicts of laws. Each of the parties
hereto agrees that such court may award reasonable legal fees and expenses to
the prevailing party.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
MARKETING SERVICES GROUP, INC.
By: /s/ J. Xxxxxx Xxxxxxx
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Name: J. Xxxxxx Xxxxxxx
Title:Chairman and Chief Executive
Officer
XXXXX XXXXXXX
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
