EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is made as of this 15th day of
April, 1997 by and among Xxxx Xxxxxxxxxx ("Employee") and Rayco Group, Inc., a
Delaware corporation ("Buyer") and Leap Group, Inc., a Delaware corporation
("Parent").
WHEREAS, on the date of this Agreement, Buyer is purchasing substantially
all of the assets of Y.A.R. Communications, Inc., a New York corporation
("Y.A.R.") pursuant to the terms of an Asset Purchase Agreement dated of even
date herewith, entered into by and among Buyer, Parent, Xxxx Xxxxxxxxxx, Xxxx
Xxxxxxxxxx and Y.A.R. (the "Purchase Agreement"). Capitalized terms not
otherwise defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.
WHEREAS, Employee is currently the President and Chief Executive Officer of
YAR.
WHEREAS, Buyer now desires to employ Employee, and Employee desires to be
employed by Buyer, on the terms and conditions set forth in this Agreement.
WHEREAS, upon purchase of Y.A.R.'s assets, Buyer and Parent will be engaged
in the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, Buyer and Employee agree as follows:
1. Employment. Buyer hereby employs Employee as a Chairman of the Board,
President and Chief Executive Officer of Buyer, and Employee hereby accepts such
employment and agrees to act in such capacities, all in accordance with the
terms and conditions of this Agreement.
2. Term of Employment. Employee's employment under this Agreement will
begin on the date of this Agreement and will continue until the third (3rd)
anniversary of the date of this Agreement (the "Initial Employment Period" and
together with all Renewal Periods (as defined below), if any, the "Employment
Period"). The terms and conditions of this Agreement may be renewed by Buyer, in
its sole discretion, for two subsequent terms of one (1) year each (each, a
"Renewal Period") upon the terms set forth herein. Buyer or Parent shall notify
Employee prior to the end of the Initial Employment Period or Renewal Period, as
the case may be, of its desire to renew. Any such renewal shall be under the
same terms and conditions set forth herein unless otherwise agreed to, in
writing, by Buyer, Parent and Employee. Notwithstanding anything to the contrary
contained herein, the Employment Period is subject to termination at any time
pursuant to Section 6 below.
3. Offices and Duties. In his positions as Chairman of the Board,
President and Chief Executive Officer of Buyer, Employee shall have all of the
powers, duties and responsibilities customary to such offices, as are reasonably
necessary to the operations of Buyer and as may be assigned to him, from time to
time, by the Board of Directors of Buyer and/or the Chief Executive Officer of
Parent ("Parent CEO") consistent with his positions as designated above. During
the Employment Period, Employee shall report on a regular basis only to the
Board of Directors of Buyer and Parent CEO. The Employee's services hereunder
shall be performed at the primary offices of Buyer in New York, New York, or
somewhere located in the New York Metropolitan Area subject to necessary travel
requirements of his positions and duties hereunder, consistent with past
practices. Employee agrees that during the Employment Period, he will devote
substantially all of his business time and attention, on a full-time basis, and
use his best efforts to fulfill his duties and responsibilities under this
Agreement. Employee agrees to cooperate with the Buyer and Parent in connection
with obtaining Key Man life insurance, including, without limitation, agreeing
to a physical examination and providing any health records.
4. Compensation.
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(a) Base Salary. During the Employment Period, Buyer will pay Employee
an annual base salary of $300,000 (the "Base Salary"), to be paid in
accordance with Buyer's normal payroll practices.
(b) Spouse's Disability. If, and only if, Xxxx Xxxxxxxxxx is unable to
perform her duties as an employee of Buyer, then Employee shall receive
$150,000 per year in addition to the Base Salary as compensation for the
increased responsibilities, if any, which may be required of Employee (the
"Extra Salary").
(c) Benefits. Employee, and to the extent eligible under the terms of
any plans or programs, his dependents, will be entitled to participate in
group life and medical insurance and dental plans, profit-sharing and
similar plans, and other "fringe benefits" made available by Buyer and
Parent, from time to time, to other senior executive officers of Parent, in
accordance with the terms of such plans and programs. In addition, Employee
shall be entitled to participate in all retirement plans and programs
(including without limitation, any profit sharing/401(k) plan) made
available by Buyer and/or Parent to their senior executive officers
generally, in accordance with the terms of such plans and programs.
Employee shall also be entitled to receive "fringe benefits" and
perquisites in accordance with the plans, practices, programs and policies
from time to time in effect and available generally to the senior executive
officers of Buyer or Parent. In furtherance of the foregoing and not in
limitation thereof, the following benefits shall be provided to Employee:
(i) Employee shall be entitled to four weeks paid vacation during
each calendar year, to be taken at such time(s) as shall not, in the
reasonable judgment of the Board of Directors of Buyer, materially
interfere with Employees fulfillment of his duties thereunder, and shall be
entitled to holidays, sick days and personal days consistent with the
policies of Parent.
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(ii) Buyer shall provide Employee with the exclusive use of a
Buyer-owned or leased automobile. The model and year of such automobile
shall be consistent with prior practices of Y.A.R. Buyer shall also pay all
expenses of operating, garaging, maintaining and insuring such automobile .
(iii) Employee shall be covered by directors' and officers'
liability insurance to the extent that such insurance is maintained by
Parent for the directors and officers of Parent and its subsidiaries.
The entitlements available to Employee pursuant to the provisions of this
Section 4(c) are collectively call "Benefits."
(d) Withholding. All compensation payable to Employee under this
Agreement is stated in gross amount and will be subject to all applicable
withholding taxes, other normal payroll deductions, and any other amounts
required by law to be withheld.
(e) Expenses. Buyer, in accordance with the policies in effect,
from time to time, will pay or reimburse Employee for all expenses
(including travel and entertainment expenses) reasonably incurred by
Employee during the Employment Period in connection with the performance of
Employee's duties under this Agreement, provided that Employee shall
provide to Buyer documentation or evidence of expenses for which Employee
seeks reimbursement in accordance with the policies and procedures
established by Buyer.
5. Covenant Not to Compete. Employee agrees and acknowledges that in
order to assure Buyer and Parent that Buyer will retain its value as a going
concern, it is necessary that Employee undertake not to utilize his special
knowledge of the Business and his relationships with customers and suppliers to
compete with Buyer. Accordingly, Employee acknowledges the necessity, and
agrees, to abide by all of the terms of that certain Noncompetition Agreement,
dated of even date herewith, between the parties hereto pursuant to the terms
thereof (the "Noncompetition Agreement").
6. Termination and Severance.
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(a) Buyer may terminate Employee's employment hereunder at any time
for Cause by providing to Employee written notice of termination stating
the grounds for termination for "Cause" (defined below). Upon notice of
termination of employment for Cause, the Employment Period will immediately
end, Employee will not be entitled to receive any further compensation
(whether in the form of Base Salary, bonuses, Extra Salary, Benefits or
otherwise) other than (i) accrued but unpaid Base Salary, if any (ii)
accrued by unpaid Extra Salary, if any and (iii) unpaid reimbursable
expenses outstanding on the date of termination, and neither Buyer nor
Parent shall have any further obligations whatsoever to Employee. Any
Benefits to which the Employee or his beneficiaries may be entitled under
the plans and programs described in Section 4(c), or any other applicable
plans and programs (including rights under any stock options granted to
Employee), shall be determined as of the date of such termination by the
Board of
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Directors of Buyer unless the terms of such plans and programs specifically
address termination of employment.
(b) In the event that Employee voluntarily terminates his employment
(other than as set forth in Section 6(c) below), or his employment is
terminated as a consequence of his death or disability, the Employment
Period will end on the effective date of such termination, provided that
(other than for death or disability) Employee shall provide Buyer with
thirty (30) days prior written notice of the effective date of any such
termination. Following a voluntary termination by Employee for any reason
(including death or disability), Employee shall not be entitled to receive
any further compensation (whether in the form of Base Salary, bonuses,
Extra Salary, Benefits or otherwise) other than (i) accrued but unpaid Base
Salary, if any (ii) accrued by unpaid Extra Salary, if any and (iii) unpaid
reimbursable expenses outstanding on the date of termination, and neither
Buyer nor Parent shall have any further obligations whatsoever to Employee.
Any Benefits to which the Employee or his beneficiaries may be entitled
under the plans and programs described in Section 4(d), or any other
applicable plans and programs (including rights under any stock options
granted to Employee), shall be determined as of the date of such
termination by the Board of Directors of Buyer unless the terms of such
plans and programs specifically address termination of employment.
(c) Employee shall be entitled to terminate this Agreement and the
Employment Term hereunder in the event that (i) Buyer is in default of a
material term of this Agreement (including, without limitation, the
assignment to Employee of general duties which are materially inconsistent
with the duties set forth in Section 3 or the failure of Buyer or Parent to
pay the Employee any Base or Extra Salary when due or to provide any
Benefits as required under this Agreement) or (ii) Buyer or Parent fail to
make an undisputed Earn-Out payment when due under the provisions of
Sections 1.7 and 1.8 of the Purchase Agreement, in any case under (i) or
(ii) above, which default or nonpayment remains uncured for a period of 30
days after written notice of such default from Employee to the Board of
Directors of Buyer and Parent (such notice to specify the specific nature
of the claimed default and the manner in which Employee reasonably suggests
such default can be cured).
(d) In the event Buyer terminates Employee's employment without "Cause"
or Employee terminates his employment pursuant to the provision of Section
6(c) above, Employee shall be entitled to continue to receive from Buyer,
(i) his then applicable Base Salary and Extra Salary (if applicable) when
otherwise payable and Benefits through the end of the Initial Employment
Period or the then current Renewal Period, as the case may be, and (ii) any
unpaid reimbursable expenses outstanding as of the date of termination. If
Employee is precluded from continuing his participation in any Benefits
provided under any employee benefit plan or program, he shall be provided
the after-tax equivalent of the Benefits provided under such plan or
program in which he is unable to participate for the remainder of the
Initial Employment Period or the then current Renewal Period, as the case
may be. The economic equivalent of any Benefit under such plan or program
foregone shall be deemed to be the lowest cost that would be incurred by
Employee in obtaining such Benefit himself on an individual basis. In
connection with a termination without Cause or a termination by Employee
under Section 6(c),
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except as provided in this Section 6(d), neither Buyer nor Parent shall
have any further obligations whatsoever to Employee. In the event Buyer or
Parent fails to pay Employee pursuant to the terms of this Section 6(d)
(within 30 days after Employee has delivered written notice to Buyer and
Parent of such payment default), the covenants set forth in Section 1 of
the Noncompetition Agreement shall cease to have any further force and
effect and shall be deemed null and void ab initio. Notwithstanding the
foregoing or anything to the contrary contained herein, in any other
document or agreement or otherwise, (A) if a termination of Employee's
employment occurs pursuant to Sections 6(a) or 6(c) and (B) a dispute
arises in connection with such termination which dispute could result in a
termination of any provisions of the Noncompetition Agreement pursuant to
the terms hereunder, then such dispute will be submitted to and resolved
within 60 days of such submission by a panel of three independent
arbitrators chosen pursuant to the rules and regulations of the American
Arbitration Association (the "AAA") and the matter will be resolved in
accordance with the rules promulgated under the AAA; provided, however the
Federal Rules of Evidence will govern such proceeding. The decision
rendered by such arbitration panel shall be final and binding on the
parties and enforceable in a court. In the event such decision is against
Buyer or Parent and otherwise would cause any of the provisions of the
Noncompetition Agreement to terminate, Buyer and Parent shall, have the
right to require the provisions set forth in the Noncompetition Agreement
to remain intact and in full force and effect by paying Employee all
amounts (as determined by such arbitration panel) due to Employee, pursuant
to the terms hereunder, in connection with such termination.
(e) "Cause" means and shall be limited to (i) an act of fraud,
dishonesty or disloyalty by Employee with respect to Buyer, (ii) Employee's
commission of acts constituting a felony, (iii) any breach by Employee of
any material provision of this Agreement or the Noncompetition Agreement,
(iv) Employee's willful engagement in gross misconduct materially injurious
to Buyer or its affiliates, or (v) any intentional act or gross negligence
by Employee that has a material, detrimental effect on the reputation or
Business of Buyer or its affiliates. The determination as to whether
"Cause" exists shall be made by the directors of Buyer in the exercise of
their reasonable, good faith business judgment, which judgment shall not
limit Employee's rights or remedies to challenge such judgment under this
Agreement or under any applicable laws; provided, however, prior to
effective date of any such termination, the Employee shall be given (A) a
written notice by the Board of Directors of Buyer (the "Board") stating in
detail the grounds on which the proposed termination for Cause is based,
(B) a reasonable opportunity (as determined by the Board) to cure the
conduct for such termination, to the extent curable and (C) if requested by
the Employee, in writing, a reasonable opportunity to be heard by the
Board.
(f) The Employee hereby agrees that Buyer may dismiss him for Cause or
without Cause without any liability except for the payments required to be
made pursuant to the terms of this Section 6 above, and without regard to
any general or specific policies (whether written or oral) of Buyer
relating to the employment or termination of its employees. In return for
tendering the payments provided under this Section 6, regardless of whether
after tender of such payment Employee accepts it, Employee for itself and
his heirs, executors, administrators and assigns ("Releasors") does hereby
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remise, release, forever discharge and covenant not to xxx Buyer, Parent or
any of their affiliated entities or respective agents, officers, directors
and employees, and any of their respective heirs, successors and assigns of
and from all manners of action, cause and causes of action, suits, debts,
dues, accounts, liabilities, covenants, contracts, agreements, claims,
obligations, damages, injuries and demands whatsoever of any kind and
nature, whether foreseen or unforeseen, contingent or actual, liquidated or
unliquidated in law or in equity which any Releasor has or may have against
any of the aforementioned parties except for claims for breaches by Buyer
of express provisions of the Purchase Agreement pursuant to which Buyer
purchased all of the assets of Y.A.R.
7. Obligations On Termination.
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(a) Upon the expiration or termination of the Employment Period for
any reason, Employee shall be deemed to have resigned from all offices,
directorships, trusteeships, or other positions he may then hold with
Buyer, Parent or an affiliated entity. Such resignation shall be deemed
effective immediately thereupon, without the requirement that a written
resignation be delivered.
(b) Employee agrees that for a period of thirty days following the
expiration or termination of the Employment Period pursuant to Section 6(b)
(other than in cases of death or disability) to use his best efforts to
complete any engagement for a client of Buyer or Parent with which he was
involved; and (ii) to provide any services which Buyer may reasonably
require to discharge its continuing obligations to its clients with respect
to services performed by Employee, and in such events Employee will be
entitled to his full compensation on a per diem basis at his then customary
rate for such services.
(c) Employee understands, acknowledges and agrees that all client
receivables and work in process attributable to clients secured or work
performed by Employee during the Employment Period shall be and remain
property of Buyer after termination of Employee's employment hereunder. For
a period of thirty days following termination of the Employment Period,
pursuant to Section 6(b) (other than in cases of death or disability),
Employee shall use his best efforts to assist Buyer in collecting all fees,
expenses and other charges owed to Buyer by any client of Buyer and billing
such client for services rendered prior to the termination of the
Employment Period.
(d) The Employee hereby acknowledges and agrees that all "Personal
Property" (defined below) and equipment furnished to or prepared by the
Employee in the course of or incident to his employment, belong to Buyer
and shall be promptly returned to Buyer upon termination of the Employment
Period. "Personal Property" includes, without limitation, all books,
manuals, records, reports, notes, contracts, lists, blueprints, and other
documents, or materials, or copies thereof, and all other proprietary
information relating to the business of Buyer; provided, however, that
nothing shall preclude the Employee from retaining or removing (i) his
personal rolodex; or (ii) information not containing Confidential
Information (as defined in Section 6) or a trade secret, obtained while in
the employ of Buyer. The Employee cannot retain or remove personal property
that is or contains Confidential Information or a trade secret, obtained
while in the employ of Buyer. Prior to retaining or removing any personal
property
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other than his personal rolodex, the Employee will inform Buyer of what
personal property he intends to retain or remove. If a dispute arises
between Buyer and the Employee, the parties shall arbitrate such dispute in
a manner mutually agreeable to them. Following termination, the Employee
will not retain any written or other tangible material containing any
Confidential Information or trade secrets, except as described above.
8. Miscellaneous.
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(a) Notices. All notices and other communication between the parties
pursuant to this Agreement must be in writing and will be deemed given when
delivered in person, one (1) business day after being dispatched by a
nationally recognized overnight courier service, three (3) business days
after being deposited in the U.S. Mail, registered or certified mail,
return receipt requested, or one (1) business day after being sent by
facsimile (with receipt acknowledged), to Buyer at the address of Parent's
principal office (attention to the Chief Financial Officer) in the Chicago,
Illinois metropolitan area and to Employee (or his representatives) at 00
Xxxxxxxxx Xxxxx, Xxx. 00X, Xxx Xxxx, Xxx Xxxx 00000. Employee (or his
representatives) may change his address for notice purposes by delivering
notice to Buyer in accordance with this Section 8(a). All notices sent to
Buyer shall also be delivered to:
Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
All notices sent to Employee shall also be delivered to:
Xxxxx & Xxxxxxx
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) Governing Law. This Agreement will be subject to and governed by
the laws of the State of New York, without regard to principles of
conflicts of laws.
(c) Binding Effect; Guaranty. This Agreement will be binding upon and
inure to the benefit of the parties and their respective heirs, legal
representatives, executors, administrators, successors, and assigns,
subject to the limitations on assignment in Section 8(h). The Parent
guarantees the due and punctual payment of Base Salary and Extra Salary, if
any, and such guarantee shall not be affected by the failure of the
Employee to avert any claim or demand or to enforce any right or remedy
against the Buyer. The Parent agrees that this Section B (c) constitutes a
guarantee of payment when due and not of collection.
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(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement
and supersedes any other agreements, whether oral or written, between the
parties with respect to the subject matter of this Agreement.
(e) Modification. No change or modification of this Agreement will be
valid unless (i) it is in writing and signed by both of the parties hereto
and (ii) approved, in writing, by a duly authorized officer of Parent. No
waiver or change of any provision of this Agreement will be valid unless in
writing and signed by the person or party to be charged.
(f) Severability. If any provision of this Agreement is, for any
reason, invalid or unenforceable, the remaining provisions of this
Agreement will nevertheless be valid and enforceable and will remain in
full force and effect. Any provision of this Agreement that is held invalid
or unenforceable by a court of competent jurisdiction will be deemed
modified to the extent necessary to make it valid and enforceable and as so
modified will remain in full force and effect.
(g) Headings. The headings in this Agreement are inserted for
convenience only and are not to be considered in the interpretation of
construction of the provisions of this Agreement.
(h) Assignability. This Agreement may not be assigned by either party
without the prior written consent of the other party.
(i) No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by Employee and Buyer to express their
mutual intent, and no rule of strict construction will be applied against
Employee or Buyer.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BUYER:
RAYCO GROUP, INC.
By: /s/ Xxxxx Xxxxxx
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Its: Secretary
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PARENT:
LEAP GROUP, INC.
By: /s/ R. Xxxxxx Xxxxxxxxxx
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Its: Chief Executive Officer
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EMPLOYEE:
/s/ Xxxx Xxxxxxxxxx
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Xxxx Xxxxxxxxxx
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