EMPLOYMENT AGREEMENT
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
AGREEMENT, dated this 27th day of July, 1998, but effective as of August 1,
1998, by and between IMPERIAL WORLD, INC., an Illinois corporation ("Company"),
and XXXXXX X. XXX ("Employee").
Recitals
WHEREAS, the Company and its affiliates are engaged in the design,
assembly, merchandising and wholesale distribution of jewelry.
WHEREAS, the Company desires to retain the ongoing services of the
Employee, and the Employee desires to serve, as the President and Chief
Executive Officer of the Company and in such capacities as the Company's Board
of Directors shall from time to time determine.
WHEREAS, the Employee is, and will be, employed by the Company in a
confidential relationship wherein Employee, in the course of his employment with
the Company, has, and will, become familiar with and aware of information as to
the specific manner of doing business and the customers of the Company and its
affiliates and future plans with respect thereto, all of which has been
established and maintained, and will be established and maintained, at great
expense to the Company.
WHEREAS, Employee recognizes that the Company's business is dependent upon
a number of trade secrets, the protection of which is of critical importance to
the Company.
WHEREAS, the Company will sustain great loss and economic damage if during
the term of this Agreement or Employee's employment with the Company, or for a
period of one (1) year immediately following the termination of the Agreement or
Employee's employment, for any reason, Employee should violate the provisions of
Paragraphs 3 or 4 of this Agreement.
WHEREAS, monetary damages for such losses would be extremely difficult to
measure.
WHEREAS, the Company and Employee desire to formally evidence their
relationship and the terms of employment.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants
and conditions set forth herein and the performance of each, it is hereby agreed
as follows:
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ARTICLE I
Employment and Duties
1.01 Employment. The Company hereby employs Employee as its President and
Chief Executive Officer ("CEO"). Additional duties or titles may be assigned to
or assumed by Employee at the discretion of the Board of Directors ("Board") of
the Company. However, if the duties and title of the Employee do not include
"President and Chief Executive Officer", this agreement is immediately
terminable at the discretion of Employee and Employee is entitled to the
compensation for the remaining term of this agreement from the date of
termination payable in a lump sum within 10 days from the date Employee notifies
the Company of his termination. Employee hereby accepts this employment upon the
terms and conditions herein contained and agrees to devote his time to promote
and further the business and services of the company. Employee shall faithfully
adhere to, execute and fulfill all policies established by the Company. The
company shall also nominate Employee for the company's Board of Directors.
1.02 Duties. Employee shall perform such duties, assume such
responsibilities and devote such time, attention and energy to the business of
the Company as the Board shall from time to time require and shall not, during
the term of his employment hereunder, be engaged in any other business activity
pursued for gain, profit or other pecuniary advantage if such activity
interferes with Employee's duties and responsibilities hereunder. However, the
foregoing limitations shall not be construed as prohibiting Employee from making
personal investments in such form or manner as will neither require his services
in the operation or affairs of the companies or enterprises in which such
investments are made nor violate the terms of Paragraphs 3 or 4 hereof.
1.03 Custody of Company Funds. All funds received by Employee on behalf of
the Company, if any, shall be held in trust for the Company and shall be
delivered to the Company as soon as practicable.
ARTICLE II
Compensation
2.01 Base Salary. From and after the execution of this Agreement, the
Company shall pay a base salary to Employee in the amount of $200,000 per year
from August 1, 1998 to July 31, 1999, $225,000 per year from August 1, 1999 to
July 31, 2000 and $250,000 per year from August 1, 12000 to July 31, 2001,
payable in equal installments on a bi-weekly basis. The base salary shall be
adjusted automatically on each anniversary during the term of this Agreement to
reflect the change unless the Board notifies the Employee at least 2 weeks ahead
of the change and determines not to honor the increase with reason and support
for Employee's non-performance. In such event, the then current base salary will
carry on for that term year.
2.02 Expense Reimbursement. The Company shall reimburse Employee for all
reasonable travel, entertainment and other expenses related to his employment
by, or promotion of, the Company. Employee shall provide a written accounting
and explanation of all expenses for which reimbursement is sought on a monthly
basis and the Company shall reimburse all such expenses within ten (10) days
following receipt of each written accounting.
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2.03 Bonuses. The Employee shall be entitled to receive a bonus equal to 5%
of the Company's pre-tax profits determined from the audited financial statement
in accordance with generally accepted accounting principles, before the
deduction of any bonus, payable within 60 days after completion of audit, at the
end of each fiscal year, commencing from the first fiscal year ending December
31, 1999.
2.04 Plan Participation. The Employee shall be entitled to participate in
any and all stock option, stock bonus, pension, profit sharing, retirement or
other similar plans adopted by the Company.
2.05 Fringe Benefits. The Employee shall be entitled to such fringe
benefits as the Company shall establish for its employees generally which shall
include with respect to the Employee three weeks paid vacation annually, group
life insurance, disability pay and such other benefits as the Company shall
adopt, subject to the discretion of the Company to add or delete such standard
benefits as the Board deems appropriate, from time to time.
ARTICLE III
Non-Competition Agreement
3.01 Non-Competition Agreement.Employee will not, during either the period
of this Agreement or of his employment by or with the Company, whichever period
is longer, and for a period of one (1) year immediately following the
termination of this Agreement, or his employment, whichever is longer, for any
reason whatsoever, directly or indirectly, for himself or on behalf of or in
conjunction with any other person, persons, company, partnership, corporation or
business of whatever nature (i) call upon any customer of the Company
(including, but not limited to, any customer obtained for the Company by
Employee) for the purpose of soliciting or selling any products or services in
competition with those of the Company or its affiliates; (ii) call upon any
employee of the Company or any of its affiliates for the purpose or with the
intent of enticing them away from or out of the employ of the Company or any
reason whatever; (iii) establish, enter it, be employed by or, advise, consult
with or become a part of, any company, partnership, corporation or other
business entity or venture, or in any way engage in business for himself or for
others, within the city limits of Chicago, Illinois or within 30 miles of such
city limits, in competition with the Company or its affiliates; or (iv) during
or after the term of his employment with the Company, disclose the Company's
customers or any other trade secrets of the Company whether in existence or
proposed, to any person, firm, partnership, corporation or business for any
reason or purpose whatsoever.
3.02 Equitable Relief. Because of the difficulty of measuring economic
losses to the Company and its affiliates as a result of the Employee's breach of
the foregoing covenant, and because of the immediate and irreparable damage that
would be caused to the Company and its affiliates for which it would have no
other adequate remedy, Employee agrees that the covenant specified in Paragraph
3.01 may be enforced by the Company and its affiliates in the event of breach by
him by injunctions, restraining orders or similar equitable relief.
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3.03 Reasonableness of the Covenant Not to Compete. It is agreed by the
parties that the covenants in Paragraph 3.01 are necessary to protect the
goodwill and business interests of the Company and its affiliates and impose a
reasonable restraint on Employee in light of the activities and business of the
Company and its affiliates on the date of the execution of this Agreement and
the future plans of the Company; but it is also the intent of the Company and
Employee that such covenants be construed and enforced in accordance with the
activities and business of the Company and its affiliates on the date of the
termination of the employment of Employee.
3.04 Severability of the Covenant Not to Compete. The covenants in
Paragraph 3.01 shall be construed as an agreement independent of any other
provision in this Agreement and the existence of any claim or cause of action of
Employee against the Company or its affiliates, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of such covenants. It is specifically agreed that the period of one (1)
year stated at the beginning of this Paragraph 3, during which the agreements
and covenants of Employee made in Paragraph 3.01 shall be effective, shall be
computed by excluding from such computation any time during which Employee is in
violation of any provision of this Paragraph 3 and any time during which there
is pending in any court of competent jurisdiction any action (including any
appeal from any final judgment) brought by any person, whether or not a party to
this Agreement, in which action the Company or its affiliates seeks to enforce
the agreements and covenants of Employee or in which any person contents the
validity of such agreements and covenants or their unenforceability or seeks to
avoid their performance or enforcement.
ARTICLE IV
Non-Disclosure Agreement and Proprietary Information
4.01 Proprietary-Information. The Employee recognizes and acknowledges that
the information, techniques, processes, developments, work in progress,
business, list of the Company's customers and any other trade secret or other
secret or confidential information relating to Company's business as they may
exist from time to time, are valuable, special and unique assets of Company's
business. In addition, Employee recognizes that Company is continually engaged
in research, design and development of new products and innovations and
improvements to the information, techniques, processes, developments, trade
secrets, and other secrets and confidential matters relating to Company's
business. Therefore, Employee agrees as follows:
A. That Employee will hold in strictest confidence and not disclose,
reproduce, publish or use in any manner, whether during or subsequent
to his employment, without the express authorization of the Board of
Directors of the Company, any information, design, manufacturing
technique, process, business customer lists, trade secrets or any
other secrets or confidential matter relating to any aspect of the
Company's business as designated from time to time by the Board of
Directors of Company, except as such disclosure or use may be required
in connection with Employee's work for the Company.
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B. That upon request or at the time of leaving the employ of the Company
the Employee will deliver to the Company, and not keep or deliver to
anyone else, any and all notes, memoranda, documents and, in general,
any and all material relating to the Company's business.
C. That the Board of Directors of the Company may from time to time
designate other subject matters requiring confidentiality and secrecy
which shall be deemed to be covered by the terms of this Agreement.
However, any such matters must be mutually agreed upon by both the
Board and Employee.
4.02 Breach. In the event of a breach or threatened breach by the Employee
of the provisions of this Paragraph 4, the Company shall be entitled to an
injunction:
A. Restraining the Employee from disclosing, in whole or in part, any
information described in Paragraph 4.01 or from rendering any services
to any person, firm, corporation association or other entity to whom
such information, in whole or in part, has been disclosed or is
threatened to be disclosed; and/or
B. Requiring that Employee deliver to Company all information, documents,
notes, memoranda and any and all discoveries or other material as
described above upon Employee's leave of the employ of the Company.
Nothing herein shall be construed as prohibiting the Company from
pursuing other remedies available to the Company for such breach or
threatened breach, including the recovery of damages from the
Employee.
ARTICLE V
Term; Terminations
5.01 Term. The term os this Agreement shall begin on the effective date of
this Agreement and continue for a term of three (3) years, unless terminated as
herein provided.
5.02 Termination. This Agreement and Employee's employment may be
terminated in any one of the following ways:
A. The death of Employee shall terminate the Agreement.
B. The Company may terminate the Agreement after thirty (30) days written
notice to Employee for good cause, including, but without limitation
(i) Employee's material breach of this Agreement, (ii) the material
default of the Company or its affiliates in performing their
obligations under contracts with other persons or business entities if
directly caused by Employee; (iii) if, because of illness or physical
or mental disability or other incapacity which continues for a period
in excess of six (6) months, Employee is unable to perform his duties
under this agreement; (iv) Employee's fraud with respect to the
business affairs of the Company or its affiliates or if Employee is
convicted of a felony; or (v) alcohol or drug abuse by Employee.
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C. This Agreement will terminate upon (i) the sale by the Company of all
or substantially all of its assets to a bona fide third party
purchaser(s); (ii) the sale, exchange or disposition in one
transaction of fifty percent (50%) or more of the outstanding voting
securities of the Company to a bona fide third party purchaser; (iii)
a bona fide decision by the Company to terminate its business and
liquidate its assets; or (iv) the merger or consolidation of the
Company in a transaction wherein the shareholders of the Company hold
less than fifty percent (50%) of the post-transaction shares of the
surviving entity.
5.03 Rights of Termination; Severance Payments. Upon termination of this
Agreement and Employee's employment, Employee shall be entitled to receive one
half (1/2) of the compensation earned under this Agreement for the remaining
term of this Agreement from the date of termination, or severance pay in an
amount equal to one year's base salary, whichever is greater, in one lump sum
within 10 day of termination.
In the event of termination of this Agreement for any reason provided in
this Article 5, other than Paragraph 5.02C or if Employee resigns prior to
expiration of the term of this Agreement, except as provided above, all rights
and obligations under Paragraph 3.01 and 4.01 herein shall survive such
termination and thereafter Employee shall have no right to receive any
compensation hereunder except as set forth in this Paragraph, or to the extent
employee is prohibited from competing under 3.01, compensation shall continue
for the non-compete period.
ARTICLE VI
Representations of Employee
6.01 Representations of Employee. Employee has represented and hereby
represents and warrants to the Company that he is not subject to any restriction
or non-competition covenant in favor of a former employer or any other person or
entity and that the execution of this Agreement by Employee and his employment
by the Company or its affiliates and the performance of his duties hereunder
will not violate or be a breach of any agreement with a former employer or any
other person or entity. Further, Employee agrees to indemnity the Company and
its affiliates for any claim, including, but not limited to, attorney's fees and
expenses of investigation, by any such third party that such third party may now
have or may hereafter come to have against the Company or its affiliates based
upon or arising out of any non-competition agreement or invention and secrecy
agreement between Employee and such third party.
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ARTICLE VII
Miscellaneous
7.01 Complete Agreement. This Agreement is not a promise of future
employment. There are no oral representations, understandings or agreements with
the Company or any of its officers, directors or representatives covering the
same subject matter at this Agreement. This written Agreement is the final,
complete and exclusive statement and expressions of the agreement between the
Company and Employee and of all the terms of this Agreement and it cannot be
varied, contradicted or supplemented by evidence of any prior or contemporaneous
oral or written agreement may not be later modified except by a further writing
signed by the Company and Employee, and no term of this Agreement may be waived
except by writing signed by the party waiving the benefit of such terms.
7.02 No Waiver. No waiver by the parties hereto of any default or breach of
any term, condition or covenant of this Agreement shall be deemed to be a waiver
of any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
7.03 Assignment; Binding Effect. Employee understands that he has been
selected for employment by the Company on the basis of his personal
qualifications, experience and skills. Employee agrees, therefore, that this
Agreement and the rights to his services may be assigned by the Company to
another member of the Company's affiliated group at any time without notice to
him, but that he cannot assign all or any portion of this Agreement. Subject to
the Preceding two sentences, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns. It is further understood and agreed that the Company may be merged or
consolidated with another entity and that any such entity shall automatically
succeed to the rights, powers and duties of the Company hereunder.
7.04 Notice. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:
To the Company: IMPERIAL WORLD, INC.
Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxx
` Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
To Employee: XXXXXX X. XXX
0000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit
in the United States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 7.04.
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7.05 Severability; Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof.
7.06 Arbitration. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof shall be settled by arbitration in the City
of Chicago, Illinois in accordance with the rules then existing of the American
Arbitration and judgment upon the award may be entered in any Court having
jurisdiction thereof.
7.07 Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Illinois.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and date herein first set forth.
ATTEST: IMPERIAL WORLD, INC.
By:
------------------- ---------------------------
Title:
-----------------------
For and on behalf of the Board of
Directors
EMPLOYEE:
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Xxxxxx X. Xxx
