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XXXXXXXX XXXXXXXXX ENTERPRISES, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
March 28, 1998
Xx. Xxxxxxx Xxxxxxx
000 Xxxx Xxx Xxxxxx
Xxxxxxxxx 0X
Xxx Xxxx, XX 00000
Dear Xx. Xxxxxxx:
This letter confirms our mutual agreement as to your employment by
Xxxxxxxx Xxxxxxxxx Enterprises, Inc. (the "Company") in the position of
President and Chief Executive Officer commencing as of your acceptance of this
letter and terminating on December 31, 1999.
As President and Chief Executive Officer, you shall have the duties,
responsibilities and authorities normally associated with that office and agree
that you will devote all of your business time and efforts in the performance of
the duties associated with this position. Your services shall be rendered
primarily at the Company's principal Manhattan premises, and your office shall
be located there. You shall not be required to perform duties other than of a
senior executive nature, commensurate with your title. Your duties will not
require that your principal residence be outside of the New York City
metropolitan area.
During the term of your employment as hereinafter set forth, you shall
receive a salary in the amount of Five Hundred Thousand ($500,000) Dollars per
annum. You shall also be entitled to receive a bonus for services performed by
you during the term of your employment. The terms and conditions of such bonus
are as follows:
for the year 1998, a bonus, if any, shall be at the sole discretion
of the Company;
for the year 1999, a bonus, if any, shall be at the sole discretion
of the Company; however, in the event that the earnings before
interest and taxes ("EBITDA") of the Company is equal to or greater
than a "break even" then you will be entitled to a bonus equal to
twenty-five (25%) percent of your annual salary, or One Hundred
Twenty-Five Thousand ($125,000) Dollars.
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EBITDA of the Company shall be determined by the independent accounting
firm regularly engaged by Marisa Xxxxxxxxx, Inc. ("MRSA") to audit MRSA, in
accordance with generally accepted accounting principles, except that in making
such determination the following shall be excluded:
(i) any bonus paid or payable to you;
(ii) any gain or loss on the sale of assets (other than
inventory in the ordinary course of business);
(iii) any inter-company payments made by the Company in the
nature of management or royalty fees, or in the nature of
overhead allocation;
(iv) any charges to earnings resulting from the purchase of
another business by the Company subsequent to the date hereof;
(v) any payments to the prior owners of the Company in the
nature of contingent purchase price payments; and
(vi) depreciation and amortization of good will relating to
the acquisition of certain assets from Xxxxxxxx Xxxxxxxxx,
Inc. (any other depreciation and/or amortization shall be
included).
Bonus payments shall be made as promptly as practical, but in any event by the
date on which bonus payments are made to other executives of the Company.
During your term of employment, MRSA shall nominate, or cause its Board of
Directors to nominate, you for election to the Board of Directors of MRSA, and,
if elected, you agree to serve as a director of MRSA without additional
consideration. You shall be entitled to the benefits of any and all
indemnification provisions afforded to other members of the Board of Directors
of MRSA, whether by insurance, contract or otherwise.
As additional consideration, you shall be entitled to receive stock
options to purchase One Hundred Thousand Shares (100,000) of MRSA at Five
Dollars ($5.00) per share (the "Options"). The Options shall begin to vest on
the day of commencement of your employment with the Company, and for purposes of
the vesting of the Options, you shall be deemed to have completed a year's
service on every December 31st of each year thereafter
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during which you are employed by the Company. The Options shall be subject to
MRSA's Incentive Stock Option Agreement, a copy of which is annexed hereto.
During the term of your employment, you shall be entitled to receive all
benefits offered by the Company in the nature of health, disability and travel
insurance. Such benefits offered to you shall be commensurate with such benefits
traditionally offered to an executive in your position. You shall be entitled to
reimbursement of all reasonable business travel, entertainment and similar
expenses incurred during your employment.
This agreement can be terminated by the Company at any time for Cause and
in such event you shall not be entitled to any further benefits under this
agreement other than what has already been paid and granted you as provided
herein. "Cause" shall be defined as:
(a) an action or failure to act by you constituting willful
malfeasance or nonfeasance which has a material adverse effect
on the Company; or
(b) your being convicted of, or pleading nolo contendere to, a
felony.
Prior to the Company's termination of your employment for Cause, it shall:
(a) provide you with written notice, specifying in reasonable
detail the act(s) or failure(s) to act complained of; and
(b) afford you the opportunity (together with counsel, if you so
desire) to meet personally with the Board of Directors of MRSA
to discuss same.
In the event that this agreement is terminated by the Company other than
for Cause hereunder (as opposed to the agreement expiring on its own terms on
December 31, 1999, in which event there shall be no severance), you shall be
entitled to the following severance:
(a) if terminated before December 31, 1998, you shall be entitled
to the remainder of your full salary through December 31,
1999; and
(b) if terminated subsequent to December 31, 1998, you shall be
entitled to Five Hundred Thousand ($500,000) Dollars (one
year's salary).
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In the event that the Company notifies you, in writing, on or before
October 1, 1999 that it does not intend to renew this agreement, your employment
with the Company shall cease on December 31, 1999, and you shall not be entitled
to any further salary as of December 31, 1999.
In the event of your termination other than for Cause, the Company will,
at your option upon written notice, pay you the aggregate of all such amounts in
a lump sum. In addition, in such event, the Company shall immediately pay to you
any previously unpaid salary, bonus or other compensation, and shall reimburse
you for any un-reimbursed expenses. You shall not be required to seek or accept
other employment or otherwise mitigate the Company's damages in order to be
entitled the severance specified herein.
Any dispute arising out of or relating to this agreement shall be resolved
by arbitration before the American Arbitration Association in the City of New
York before a panel of three arbitrators. The arbitrators shall award reasonable
attorneys' fees to the prevailing party.
This contract calls for the provision of personal services by you and the
Company may not assign this contract or any of its obligations hereunder, in
whole or in any part, by operation of law or otherwise, to any person or entity
without your prior express written consent; and any change in control of the
Company shall constitute such an assignment.
Any amendments or changes to this contract must be in writing, signed by
all parties, to be effective.
This contract shall be governed by, and interpreted in accordance within
the internal laws of the State of New York applicable to contracts to be wholly
performed within such State, without reference to conflict of laws provisions.
By its signature below, MRSA is guaranteeing all obligations of the
Company under this Agreement; such guaranty is a guaranty of performance and not
of payment, and you may proceed directly against MRSA without having to make any
claim against the Company; the parties confirm that such guaranty is a material
inducement to you to enter into this contract, and may not be revoked or
modified by MRSA.
If this letter correctly reflects our agreement, please sign this letter
and return it to me.
Very truly yours,
XXXXXXXX XXXXXXXXX ENTERPRISES, INC.
By:_________________________________
Xxxxxxxx Xxxxxxxxx
Chairman of the Board
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ACCEPTED AND AGREED TO:
___________________________
Xxxxxxx Xxxxxxx
AGREEMENT GUARANTEED BY
MARISA XXXXXXXXX, INC.
By:________________________
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