EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT
(this
“Agreement”)
dated
October 1, 2004, (“Effective
Date”)
between Petals Decorative Accents LLC (including, as the context may require,
its subsidiaries, the “Company”),
a
Delaware limited liability company located at 00 Xxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxxx XX 00000, and Xxxxx Xxxxx, (“Xxxxx”), currently residing at 0 Xxxxxx
Xxxx Xxxxxxx, XX 00000.
WHEREAS,
the
Company wishes to employ Xxxxx to
render
services for the Company as its Chief Financial Officer and Chief Operating
Officer on the terms and conditions set forth in this Agreement, and Xxxxx
wishes to be retained and employed by the Company on such terms and conditions;
and
NOW,
THEREFORE,
in
consideration of the promises, the mutual agreements set forth below and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Engagement
- The Company hereby employs Xxxxx, and Xxxxx accepts such engagement and agrees
to perform services for the Company, for the period and upon the other terms
and
conditions set forth in this Agreement.
2. Term
- Unless terminated at an earlier date in accordance with Section 8 of this
Agreement or otherwise extended by agreement of the parties, the term of Xxxxx’x
engagement hereunder shall be for a period of two (2) years, commencing on
or
about October 1, 2004 (the “Initial Term”). The period of engagement may be
extended by written agreement between the parties for successive one-year terms,
provided that certain provisions including without limitation those relating
to
compensation may change upon commencement of any extension hereto. In the event
that the Company does not intend to extend Xxxxx’x employment after the end of
the Initial Term or any successive one-year term, the Company shall give Xxxxx
notice of such intent at least three (3) months in advance of the termination
date.
3. Position
and Duties
(a) Service
With Company - During the term of Xxxxx’x engagement by the Company, Xxxxx
agrees to perform such reasonable services as the Board of Directors of the
Company (the “Board”)
shall
assign to Xxxxx from time to time. Xxxxx’x title as of the Effective Date shall
be Chief Financial Officer and Chief Operating Officer.
(b) Performance
of Duties; Duty of Loyalty and Non-Compete - Xxxxx shall
devote his attention and energies on a full-time basis to the business of the
Company and to the discharge of his duties as Chief Financial Officer and Chief
Operating Officer. During the term of Xxxxx’x employment with the Company and
for a period of twelve (12) months thereafter, without prior written consent
of
the Company Xxxxx will not consult with, work as an employee or other service
provider (whether as an individual or as a partner, shareholder, director,
officer, agent, consultant, or in any other relationship or capacity) directly
or indirectly for any third party person or entity (“Third Party”) which Third
Party is in the primary business of assembly, sale or marketing of artificial
flowers (including without limitation silk flowers), artificial flower
arrangements (including without limitation silk flower arrangements) or
permanent botanicals in the catalog industry, in retail stores, or through
the
Internet. Primary business means 50% or more of gross revenues are derived
from
the business activities described in the sub-paragraph above. Such restriction
shall be operative in any state of the United States or in any country outside
of the United States in which the Company shall then be doing business, directly
or indirectly.
4.
Compensation
(a) Base
Salary - As compensation for services to be rendered by Xxxxx under this
Agreement, the Company shall pay to Xxxxx a “Base Salary.” The Base Salary from
the Effective Date through December 31, 2004 shall be calculated at the annual
rate of one hundred and seventy five thousand dollars ($175,000), paid in equal
semi-monthly installments in arrears or otherwise in accordance with the
standard procedures and policies of the Company. For the calendar year beginning
January 1, 2005, the Base Salary shall increase to two hundred thousand dollars
($200,000) annually. From January 1, 2006 until the end of the Initial Term,
the
Base Salary shall be agreed between the Company and Xxxxx, but in no event
be
less than two hundred ten thousand dollars ($210,000) annually.
(b) Incentive
Compensation - The Company shall establish a cash bonus pool (“Earnings
Bonus”) for Xxxxx equal to three percent (3%) of the Company’s earnings before
income tax, depreciation and amortization (“EBITDA”) calculated in accordance
with generally accepted accounting principles (“GAAP”). Earnings Bonus payments
shall be made annually at the end of January following an audit of the Company’s
books after closure of the applicable calendar year (fiscal year end). Such
payments shall not exceed one hundred percent (100%) of Xxxxx’x Base Salary. The
Earnings Bonus for calendar year 2005 shall not exceed fifty thousand dollars
($50,000). In addition to the Base Salary and above Earnings Bonus incentive,
Xxxxx shall be eligible to participate in any bonus or incentive compensation
plans that may be established by the Board from time to time applicable to
Xxxxx’x services.
(c) Expenses -
The
Company will pay or reimburse Xxxxx for all reasonable and necessary
out-of-pocket expenses incurred by Xxxxx in the performance of Xxxxx’x duties
under this Agreement, subject to the Company’s normal policies for expense
verification and travel guidelines.
(d) Health,
Retirement Benefit Plans and Vacation - Xxxxx shall be entitled to
participate in all incentive, savings and retirement plans, practices, policies
and programs applicable generally to other officers or employees of the Company.
Additionally during the term of this Agreement Xxxxx and Hersh’s family, as the
case may be, shall be eligible for participation in and shall receive all
benefits under Welfare Benefit Plans. “Welfare Benefit Plans” are medical,
dental, disability of other health maintenance or similar plans made generally
available to officers or employees of the Company. Should Xxxxx choose a health
insurance program different than that provided by the Company, the Company
shall
reimburse Xxxxx the dollar amount that the Company otherwise would contribute
to
health insurance for Xxxxx and dependants under the Company plan. In addition,
Xxxxx shall be entitled to up to 4 weeks paid vacation time during each calendar
year (non-accruing), as well as time off for normal federal holidays applicable
to other officers or employees of the Company throughout the term of this
Agreement.
5. Confidential
Information - Except as permitted or directed by the Company’s Board of
Directors, during the term of Xxxxx’x engagement or at any time thereafter,
Xxxxx shall not divulge, furnish or make accessible to anyone or use in any
way
(other than in the ordinary course of the business of the Company) any
confidential or secret knowledge or information of the Company that Xxxxx has
acquired or become acquainted with or will acquire or become acquainted with
prior to the termination of the period of Xxxxx’x engagement by the Company
(including engagement by the Company or any affiliated companies prior to the
date of this Agreement) whether developed by Xxxxx himself or by others,
concerning any trade secrets, confidential or secret designs, processes,
formulae, plans, devices or material (whether or not patented or patentable)
directly or indirectly useful in any aspect of the business of the Company,
any
customer or supplier lists of the Company, any confidential or secret
development or research work of the Company, or any other confidential
information or secret aspects of the business of the Company. Xxxxx acknowledges
that the above-described knowledge or information constitutes a unique and
valuable asset of the Company and represents a substantial investment of time
and expense by the Company, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of the Company would
be
wrongful and would cause irreparable harm to the Company. Both during and after
the term of Xxxxx’x engagement, Xxxxx will refrain from any acts or omissions
that would reduce the value of such knowledge or information to the Company.
The
foregoing obligations of confidentiality shall not apply to any knowledge or
information that is now published and publicly available or which subsequently
becomes generally publicly known in the form in which it was obtained from
the
Company, other than as a direct or indirect result of the breach of this
Agreement by Xxxxx.
6. Ventures
- If, during the term of Xxxxx’x engagement Xxxxx is engaged in or associated
with the planning or implementing of any project, program or venture involving
the Company and a third party or parties, all rights in such project, program
or
venture shall belong to the Company, unless prior written consent from the
Company is obtained. Except as approved by the Company’s Board of Directors,
Xxxxx shall not be entitled to any interest in such project, program or venture
or to any commission, finder’s fee or other compensation in connection therewith
other than the compensation to be paid to Xxxxx as provided in this Agreement.
Xxxxx shall not enter into any arrangement through which Xxxxx acquires or
may
acquire any interest, direct or indirect, in any vendor or customer of the
Company.
7. Patent
and Related Matters; Disclosure and Assignment - Xxxxx will promptly
disclose in writing to the Company complete information concerning each and
every invention, discovery, improvement, device, design, apparatus, practice,
process, method or product, whether patentable or not, made, developed,
perfected, devised, conceived or first reduced to practice by Xxxxx, either
solely or in collaboration with others, during the term of this Agreement,
whether or not during regular working hours, relating either directly or
significantly and indirectly to the business, products, practices or techniques
of the Company (“Developments”). Xxxxx, to the extent that Xxxxx has the legal
right to do so, hereby acknowledges that any and all of the Developments are
the
property of the Company and agrees to assign and hereby assigns to the Company
any and all of Xxxxx’x right, title and interest in and to any and all of the
Developments (“Assignment”). During the period commencing upon the day after
Xxxxx’x last day performing services for the Company and ending one year after
termination of Xxxxx’x engagement with the Company, at the reasonable request of
the Company, Xxxxx will xxxxxx with the Company and its representatives for
the
purpose of disclosing all Developments to the Company, provided that such
conference is at the Company’s expense and Xxxxx is compensated at no greater
than a rate of $250 per hour for Xxxxx’x time plus reasonable and necessary
expenses.
(a) Limitation
on Section 7(a) - The provisions of Section 7 shall not apply to any
Development meeting the following conditions: (i) such Development was developed
entirely on Xxxxx’x own time without the use of any Company equipment, supplies,
facility or trade secret information; and (ii) such Development does not relate
directly or significantly to the business of the Company to the Company’s actual
or demonstrably anticipated research or development; or result from any work
performed by Xxxxx for the Company.
(b) Copyrightable
Material - All right, title and interest in all copyrightable material that
Xxxxx shall conceive or originate, either individually or jointly with others,
and which arise out of the performance of this Agreement, will be the property
of the Company and are by this Agreement assigned to the Company along with
ownership of any and all copyrights in the copyrightable material. Upon request
and without further compensation therefor, but at no expense to Xxxxx, Xxxxx
shall execute all papers and perform all other acts necessary to assist the
Company to obtain and register copyrights on such materials in any and all
countries, except that Xxxxx shall be compensated at no greater than a rate
of
$250 per hour plus reasonable and necessary expenses for Xxxxx’x time for
compliance with this provision following termination or expiration of this
Agreement. Where applicable, works of authorship created by Xxxxx for the
Company in performing Xxxxx’x responsibilities under this Agreement shall be
considered “works
made for hire,”
as
defined in the U.S. Copyright Act. To the extent not considered as work made
for
hire, such works will be considered assigned to the Company under the Assignment
provision of this Section 7.
(c) Know-How
and Trade Secrets - All know-how and trade secret information conceived or
originated by Xxxxx that arises out of the performance of Xxxxx’x obligations or
responsibilities under this Agreement or any related material or information
shall be the property of the Company, and all rights therein are by this
Agreement assigned to the Company.
8.
Termination
of Engagement; Grounds
for Termination - (a) Xxxxx’x engagement shall terminate prior to the
expiration of the Initial Term set forth in Section 2 or any extension
thereof
in the event that at any time: (i) Xxxxx dies or is permanently disabled
(substantially unable to perform his duties due to physical or mental incapacity
for a period of ninety (90) consecutive days or one-hundred and twenty
(120) out
of one hundred and fifty (150) consecutive days), (ii) The Board elects
to
terminate this Agreement for “cause” and notifies Xxxxx in writing of such
election, (iii) The Board elects to terminate this Agreement without “cause” and
notifies Xxxxx in writing of such election, (iv) Xxxxx elects to terminate
this
Agreement and notifies the Company in writing of such election, or (v)
Xxxxx
elects to terminate this Agreement for “good reason” (as defined below) and
notifies the Company in writing of such election or (vi) the Company undergoes
a
change of control by which the majority of the beneficial and voting ownership
interest in the Company changes hands.
If
this
Agreement is terminated pursuant to clause (i), (ii) or (iv) of this Section
8(a), such termination shall be effective immediately. If this Agreement is
terminated pursuant to clause (iii), (v) or (vi) of this Section 8(a), such
termination shall be effective 15 days after delivery of the notice of
termination.
(b) “Cause”
Defined - “Cause” means: (i) Xxxxx has breached the provisions of Section 5,
6 or 7 of this Agreement in any material respect, (ii) Xxxxx has engaged in
willful and material misconduct, including willful and material failure to
perform Xxxxx’x duties as an officer of the Company and has failed to cure such
default within 10 days after receipt of written notice of default from the
Company, (iii) Xxxxx has committed fraud, misappropriation or embezzlement
in
connection with the Company’s business, or (iv) Xxxxx has been convicted or has
pleaded nolo
contendere
to
criminal misconduct (except for parking violations, occasional minor traffic
violations and other similar minor violations).
(c) Effect
of Termination - Notwithstanding any termination of this Agreement, Xxxxx,
in consideration of Xxxxx’x engagement hereunder to the date of such
termination, shall remain bound by the provisions of this Agreement which
specifically relate to periods, activities or obligations upon or subsequent
to
the termination of Xxxxx’x engagement.
(d) Surrender
of Records and Property -
Upon
termination of Xxxxx’x engagement with the Company, Xxxxx shall deliver promptly
to the Company all records, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, data, tables, calculations or copies
thereof that relate in any way to the business, products, practices or
techniques of the Company, and all other property, trade secrets and
confidential information of the Company, including, but not limited to, all
documents that in whole or in part contain any trade secrets or confidential
information of the Company, which in any of these cases are in Xxxxx’x
possession or under Xxxxx’x control.
(e) Payment
Continuation - If Xxxxx’x engagement by the Company is terminated by the
Company pursuant to clause (iii) of Section 8(a) or by Xxxxx for Good Reason
pursuant to clause (v) of Section 8(a), or by a change in control pursuant
to
clause (vi) of Section 8(a), the Company shall continue to pay to Xxxxx his
Base
Salary (less any payments received by Xxxxx from any disability income insurance
policy provided to Xxxxx) plus the pro-rata portion of the Earnings Bonus
calculated through the date of termination through the earlier of (a) the date
that Xxxxx has obtained other professional engagement with a total compensation
package (i.e. Salary plus benefits) equivalent to at least 80% of his total
compensation under the terms of this agreement as of the date of termination,
or
(b) twelve (12) months from the date of termination of engagement. Any payment
made pursuant to this section shall be payable over the 12 month period
following termination pursuant to the normal semi-monthly pay cycle and not
as a
lump sum. Notwithstanding the foregoing, in the event that Xxxxx obtains
employment pursuant to clause (a) of this Section (e), the Company will continue
to pay Xxxxx the amount of any deficiency in total compensation from the new
employment date through the end of the 12-month period following termination.
If
this Agreement is terminated pursuant to clauses (i), (ii) or (iv) of Section
8(a), Xxxxx’x right to Base salary and benefits shall immediately terminate,
except as may otherwise be required by applicable law.
(f) “Good
Reason” defined - Good Reason shall mean: (i) the assignment of Xxxxx to any
duties inconsistent in any respect with Xxxxx'x position (including status,
offices, titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 3(a) or any other action by the
Company which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by Xxxxx; (ii) any termination
or
reduction of a material benefit under any benefits plan in which Xxxxx
participates unless (1) there is substituted a comparable benefit that is
economically substantially equivalent to the terminated or reduced benefit
prior
to such termination or reduction or (2) benefits under such plan are terminated
or reduced with respect to all employees previously granted benefits thereunder.
9. Indemnification
- In the event that Xxxxx is made, or threatened to be made, a party to any
action or proceeding, whether civil or criminal, by reason of the fact that
Xxxxx, at the request of the Company, is or was a director, officer, or member
of a committee of the Board or serves or served any other corporation,
partnership, joint venture, trust, benefit plan or other enterprise in any
capacity, or resulting from any of Xxxxx’x actions in any of the foregoing
roles, Xxxxx shall be indemnified and held harmless by the Company and the
Company shall advance Xxxxx’x related expenses to the fullest extent permitted
by law (including without limitation, damages, costs and reasonable attorney
fees), as may otherwise be provided in the Company’s Certificate of
Incorporation and ByLaws or its Operating Agreement. The
Company further covenants not to amend or repeal any provisions of such
documents which would adversely affect the indemnification or exculpatory
provisions contained therein as they pertain to Xxxxx. The provisions of this
Section are
intended to be for the benefit of, and shall be enforceable by Xxxxx and his
heirs and representatives. If
the
Company or any of its successors or assigns (i) shall consolidate with or merge
into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (ii) shall
transfer all or substantially all of its properties and assets, then and in
each
such case, proper provisions shall be made so that the successors and assigns
of
the Company shall assume all of the obligations set forth in this Section
9.
10.
Miscellaneous
(a) Counterparts
- This Agreement may be executed in separate counterparts, each of which will
be
an original and all of which taken together shall constitute one and the same
agreement, and any party hereto may execute this Agreement by signing any such
counterpart.
(b) Severability
- Whenever possible, each provision of this Agreement shall be interpreted
in
such a manner as to be effective and valid under applicable law but if any
provision of this Agreement is held to be invalid, illegal or unenforceable
under any applicable law or rule, the validity, legality and enforceability
of
the other provisions of this Agreement will not be affected or impaired thereby.
In furtherance and not in limitation of the foregoing, should the duration
or
geographical extent of, or business activities covered by, any provision of
this
Agreement be in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only that duration, extent
or activities which may validly and enforceably be covered.
(c) Successors
and Assigns - This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, personal representatives
and,
to the extent permitted by subsection (d), successors and assigns.
(d) Assignability
- Neither this Agreement nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable (including by operation of
law) by either party without the prior written consent of the other party to
this Agreement or as specifically provided herein, except that the Company
may,
without the consent of Xxxxx, assign its rights and obligations under this
Agreement to any corporation, firm or other business entity with or into which
the Company may merge or consolidate, or to which the Company may sell or
transfer all or substantially all of its assets, or of which 50% or more of
the
equity investment and of the voting control is owned, directly or indirectly,
by, or is under common ownership with, the Company. Provided such assignee
explicitly assumes such responsibilities, after any such assignment by the
Company, the Company shall be discharged from all further liability hereunder
and such assignee shall thereafter be deemed to be the Company for the purposes
of all provisions of this Agreement including this Section 10.
(e) Modification,
Amendment, Waiver or Termination - No provision of this Agreement may be
modified, amended, waived or terminated except by an instrument in writing
signed by the parties to this Agreement. No course of dealing between the
parties will modify, amend, waive or terminate any provision of this Agreement
or any rights or obligations of any party under or by reason of this Agreement.
No delay on the part of the Company or Xxxxx in exercising any right hereunder
shall operate as a waiver of such right. No waiver, express or implied, by
the
Company of any right or any breach by Xxxxx shall constitute a waiver of any
other right or breach by Xxxxx.
(f) Notices
- All notices, consents, requests, instructions, approvals or other
communications provided for herein shall be in writing and delivered by personal
delivery, overnight courier, certified mail, electronic facsimile or e-mail
addressed to the receiving party at the address set forth herein. All such
communications shall be effective when received.
If
to the
Company:
Xxxxxxx
Xxxxx or Xxxxx Xxxxxxx
Executive
Pavilion
00
Xxxxx
Xxxxxx
Xxxxxxxxxx,
XX 00000
If
to
Xxxxx:
Xxxxx
Xxxxx
0
Xxxxxx
Xxxx
Xxxxxxx,
XX 00000
Any
party
may change the address set forth above by notice to the other party given as
provided herein.
(g) Headings
- The headings and any table of contents contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
(h) Governing
Law - ALL
MATTERS RELATING TO THE INTERPRETATION, CONSTRUCTION, VALIDITY AND ENFORCEMENT
OF THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
CONNECTICUT, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW PROVISIONS THEREOF,
EXCEPT AS TO CORPORATE MATTERS WHICH SHALL BE GOVERNED BY THE CORPORATION LAWS
OF THE STATE OF DELAWARE. CHOICE OF LAW PROVISIONS WHICH WOULD OTHERWISE RESULT
IN THE APPLICATION OF LAWS OF SATES OTHER THAN THOSE CONTEMPLATED BY THIS
PROVISION SHALL NOT APPLY.
(i) Venue;
Fees and Expenses - ANY
ACTION AT LAW, SUIT IN EQUITY OR JUDICIAL PROCEEDING ARISING DIRECTLY,
INDIRECTLY, OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS
AGREEMENT, OR ANY PROVISION HEREOF, SHALL BE LITIGATED ONLY IN THE STATE COURTS
LOCATED IN THE STATE OF CONNECTICUT, COUNTY OF FAIRFIELD OR THE FEDERAL COURTS
IN THE DISTRICT WHICH COVERS SUCH COUNTY. XXXXX AND THE COMPANY CONSENT TO
THE
JURISDICTION OF SUCH COURTS. THE PREVAILING PARTY SHALL BE ENTITLED TO RECOVER
ITS REASONABLE ATTORNEYS’ FEES AND COSTS IN ANY SUCH
ACTION.
(j) Waiver
of Right to Jury Trial - EACH
PARTY HERETO HEREBY WAIVES, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY
APPLICABLE LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
BETWEEN THE PARTIES HERETO ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(k) Third-Party
Benefit - Nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights, remedies, obligations or liabilities
of
any nature whatsoever.
(l) Withholding
Taxes - The Company may withhold from any benefits payable under this
Agreement all federal, state, city or other taxes as shall be required pursuant
to any law or governmental regulation or ruling.
THE
PARTIES ACKNOWLEDGE THAT EACH HAS READ THIS AGREEMENT, UNDERSTANDS IT, AND
AGREES TO BE BOUND BY ITS TERMS AND CONDITIONS. FURTHER, THE PARTIES AGREE
THAT
THIS AGREEMENT AND ANY EXHIBITS HERETO ARE THE COMPLETE AND EXCLUSIVE STATEMENT
OF THE AGREEMENT BETWEEN THE PARTIES, WHICH SUPERSEDES ALL PROPOSALS OR ALL
PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF.
ACCEPTED
AND AGREED:
|
Petals
Decorative Accents LLC
|
Xxxxx
Xxxxx
|
|
By:
Xxxxxxx Xxxxx
Managing
Member
|
|
|
/s/
Xxxxx Xxxxxxx, Authorized
Signatory
|
/s/_James
Xxxxx
|
|
Date:
October
1,
2004
|
Date:
October
1,
2004
|
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