Exhibit 10.48
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into
effective as of June 4, 2001 by and between Xxxxxxx & Xxxxxxx, Ltd., a North
Carolina company with its principal office at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxx Xxxxxxxx, 00000 (the "Company), and Xxxxx X. Xxxxx, an
individual currently residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxxxx, XX 00000
("Employee").
Statement of Purpose
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The Company wishes to obtain the services of Employee on the terms and
conditions and with the benefits set forth in this Agreement. Employee desires
to be employed by the Company on such terms and conditions and to receive such
additional consideration as set out herein.
Therefore, in consideration of the mutual covenants contained in this
Agreement, the grant of certain options to purchase common stock of the Company
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Employee agree as follows:
1. Employment. The Company hereby agrees to employ Employee, and Employee
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hereby accepts such employment, on the terms and conditions set forth in this
Agreement.
2. Term of Employment. The term of Employee's employment under this
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Agreement shall commence as of the date of this Agreement and shall continue for
one year. Termination of employment shall be governed by Paragraph 7 of this
Agreement, and unless terminated by either party as provided in Paragraph 7,
this Agreement shall automatically, at the expiration of each then existing
term, renew for successive additional one year terms (such annual period being
hereinafter referred to as the "Term").
3. Position and Duties. The Employee shall serve as Chief Financial
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Officer of the Company. Employee will, under the direction of the President and
CEO of the Company, faithfully and to the best of his ability perform the duties
as set out on Exhibit A hereto and such additional duties as may be reasonably
assigned by the President and Board of Directors. Employee agrees to devote his
entire working time, energy and skills to the Company while so employed.
4. Compensation and Benefits. Employee shall receive compensation and
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benefits for the services performed for the Company under this Agreement as
follows:
(a) Base Salary. Employee shall receive a base salary of $150,000.00,
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payable in regular and equal semi-monthly installments ("Base Salary").
(b) Employee Benefits. Employee shall receive such benefits as are
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made available to the other employees of the Company, including, but not
limited to, life,
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medical and disability insurance, retirement benefits and such vacation as
is provided to the other employees of the Company (the "Employee
Benefits"). Employer reserves the right to reduce, eliminate or change such
Employee Benefits, in its sole discretion, subject to any applicable legal
and regulatory requirements.
(c) Incentive Compensation. Employee may participate in such
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incentive plans as may be approved by the Board of Directors from time-to-
time. The specific incentive compensation plans for 2001 are as set out on
Exhibit B hereto.
(d) Initial Option Grant. Employee shall be granted 30,000 incentive
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stock options (the "ISO's)" exercisable for shares of Xxxxxxx & Xxxxxxx'x
common stock . Such ISO's shall vest over a three year period in accordance
with the 1997 Omnibus Stock Plan of Xxxxxxx & Xxxxxxx (the "Plan") and the
Stock Option Agreement set out as Exhibit C hereto (the "Option
Agreement"). All terms pertaining in the ISO's, their execution and
termination, shall be governed by the Plan and the Option Agreement.
(e) Moving Expenses. The Company will reimburse the Employee's actual
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moving related expenses, include but not limited to the cost of house
hunting visits to North Carolina, temporary living expenses, costs of
moving personal property and real estate commissions on the sale of your
current house, up to a maximum reimbursement of $30,000. Any savings
effectuated by Employee resulting in the aggregate of moving related
expenses not reaching $30,000 will be shared with Employee with one half of
the difference between actual moving related expenses and $30,000 being
paid as a one time bonus to Employee. Such bonus will be payroll earnings,
subject to all applicable taxes and withholding requirements and will be
paid within 30 days of the completion of the move and submission of a final
reimbursement request.
5. Reimbursement of Expenses. The Company shall reimburse Employee for
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all reasonable out-of-pocket expenses incurred by Employee specifically and
directly related to the performance by Employee of the services under this
Agreement
6. Withholding. The Company may withhold from any payments or benefits
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under this Agreement all federal, state or local taxes or other amounts as may
be required pursuant to applicable law, government regulation or ruling.
7. Termination of Employment.
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(a) Death of Employee. If the Employee shall die during the Term,
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this Agreement and the employment relationship hereunder will automatically
terminate on the date of death.
(b) Termination for Just Cause. The Company shall have the right to
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terminate the Employee's employment under this Agreement at any time for
Just Cause, which termination shall be effective immediately. Termination
for "Just Cause" shall include termination for the Employee's personal
dishonesty, gross incompetence, willful
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misconduct, breach of a fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, regulation (other than traffic violations or similar offenses),
written Company policy or final cease-and-desist order, conviction of a
felony or of a misdemeanor involving moral turpitude, unethical business
practices in connection with the Company's business, misappropriation of
the Company's assets (determined on a reasonable basis), disability or
material breach of any other provision of this Agreement. The determination
of whether "Just Cause" exists for termination shall be made by the Board
of Directors of the Company in its sole discretion. For purposes of this
subsection, the term "disability" means the inability of Employee, due to
the condition of his physical, mental or emotional health, to
satisfactorily perform the duties of his employment hereunder for a
continuous three month period; provided further that if the Company
furnishes long term disability insurance for the Employee, the term
"disability" shall mean that continuous period sufficient to allow for the
long term disability payments to commence pursuant to the Company's long
term disability insurance policy. In the event the Employee's employment
under this Agreement is terminated for Just Cause, the Employee shall have
no right to receive compensation or other benefits under this Agreement for
any period after such termination.
(c) Termination Without Cause. The Company may terminate the
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Employee's employment other than for "Just Cause," as described in
Subsection (b) above, at any time upon written notice to the Employee,
which termination shall be effective immediately. In the event the Company
terminates Employee pursuant to this Subsection (c), the Employee will
continue to receive the compensation due him hereunder ("Termination
Compensation") until the end of the Term, so long as the Employee complies
with Sections 8, 9 and 10 of the Agreement. Such amounts shall be payable
at the times such amounts would have been paid in accordance with Section
4. In addition, Employee shall continue to participate in the same group
hospitalization plan, health care plan, dental care plan, life or other
insurance or death benefit plan, and any other present or future similar
group employee benefit plan or program for which officers of the Company
generally are eligible, on the same terms as were in effect prior to
Employee's termination, either under the Company's plans or comparable
coverage, for all periods Employee receives Termination Compensation.
Notwithstanding anything in this Agreement to the contrary, if Employee
breaches Sections 8, 9 or 10 of this Agreement, the Employee will not be
entitled to receive any further compensation or benefits pursuant to this
Section 7(c).
(d) Change of Control Situations. In the event of a Change of Control
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of the Company at any time after the date hereof, Employee may voluntarily
terminate employment with Company up until six (6) weeks after the Change
of Control for "Good Reason" and, subject to Section 7(f), (y) be entitled
to receive in a lump sum (i) any compensation due but not yet paid through
the date of termination and (ii) in lieu of any further salary payments
from the date of termination to the end of the then existing term, an
amount equal to the Termination Compensation times 2.99, and (z) shall
continue to participate in the same group hospitalization plan, health care
plan, dental care plan, life
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or other insurance or death benefit plan, and any other present or future
similar group employee benefit plan or program for which officers of the
Company generally are eligible, or comparable plans or coverage, for a
period of two years following termination of employment by the Employee, on
the same terms as were in effect either (A) at the date of such
termination, or (B) if such plans and programs in effect prior to the
Change of Control of Company are, considered together as a whole,
materially more generous to the officers of Company, then at the date of
the Change of Control. Any equity based incentive compensation (including
but not limited to stock options, SARs, etc.) shall fully vest and be
immediately exercisable in full upon a Change in Control, not withstanding
any provision in any applicable plan. Any such benefits shall be paid by
the Company to the same extent as they were so paid prior to the
termination or the Change of Control of Company.
"Good Reason" shall mean the occurrence of any of the following events
without the Employee's express written consent:
(i) the assignment to the Employee of duties inconsistent with
the position and status of the Employee with the Company immediately
prior to the Change of Control;
(ii) a reduction by the Company in the Employee's pay grade or
base salary as then in effect, or the exclusion of Employee from
participation in Company's benefit plans in which he previously
participated as in effect at the date hereof or as the same may be
increased from time to time during the Term;
(iii) an involuntary relocation of the Employee more than 50
miles from the location where the Employee worked immediately prior to
the Change in Control or the breach by the Company of any material
provision of this Agreement; or
(iv) any purported termination of the employment of Employee by
Company which is not effected in accordance with this Agreement.
A "Change of Control" shall be deemed to have occurred if (i) any
person or group of persons (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934) together with its affiliates, excluding
employee benefit plans of Company, becomes, directly or indirectly, the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934) of securities of Company representing 20%
or more of the combined voting power of Company's then outstanding
securities; or (ii) during the then existing term of the Agreement, as a
result of a tender offer or exchange offer for the purchase of securities
of Company (other than such an offer by the Company for its own
securities), or as a result of a proxy contest, merger, consolidation or
sale of assets, or as a result of any combination of the foregoing,
individuals who at the beginning of any year period during such term
constitute the Company's Board of Directors, plus new directors whose
election by Company's
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shareholders is approved by a vote of at least two-thirds of the
outstanding voting shares of the Company, cease for any reason during such
year period to constitute at least two-thirds of the members of such Board
of Directors; or (iii) the shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity
regardless of which entity is the survivor, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or being converted into voting securities of the
surviving entity) at least 60% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation; or (iv) the shareholders of the Company
approve a plan of complete liquidation or winding-up of the Company or an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets; or (v) any event which the
Company's Board of Directors determines should constitute a Change of
Control.
(e) Employee's Right to Payments. In receiving any payments pursuant
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to this Section 7, Employee shall not be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to the
Employee hereunder, and such amounts shall not be reduced or terminated
whether or not the Employee obtains other employment.
(f) Reduction in Agreement Payments. Notwithstanding anything in this
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Agreement to the contrary, if any of the payments provided for under this
Agreement (the "Agreement Payments"), together with any other payments that
the Employee has the right to receive (such other payments together with
the Agreement Payments are referred to as the "Total Payments"), would
constitute a "parachute payment" as defined in Section 280G(b)(2) of the
Internal Revenue Code of 1986, as amended (the "Code") (a "Parachute
Payment"), the Agreement Payments shall be reduced by the smallest amount
necessary so that no portion of such Total Payments would be Parachute
Payments. In the event the Company shall make an Agreement Payment to the
Employee that would constitute a Parachute Payment, the Employee shall
return such payment to the Company (together with interest at the rate set
forth in Section 1274(b)(2)(B) of the Code). For purposes of determining
whether and the extent to which the Total Payments constitute Parachute
Payments, no portion of the Total Payments the receipt of which Employee
has effectively waived in writing shall be taken into account.
8. Covenant Not to Compete. Employee agrees that during his employment
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with the Company and for a period of one (1) year following the termination of
his employment with the Company, for whatever reason:
(a) Employee shall not, directly or indirectly, own any interest in,
manage, operate, control, be employed by, render advisory services to, or
participate in the management or control of any business that operates in
the same business as the Company, which Employee and the Company
specifically agree as the business of fabricating (wafering, preforming and
faceting), marketing and distributing moissanite
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gemstones or other diamond simulants to the gem and jewelry industry (the
"Business"), unless Employee's duties, responsibilities and activities for
and on behalf of such other business are not related in any way to such
other business's products which are in competition with the Company's
products. For purposes of this section, "competition with the Company"
shall mean competition for customers in the United States and in any
country in which the Company is selling the Company's products at the time
of termination. Employee's ownership of less than one percent of the issued
and outstanding stock of a corporation engaged in the Business shall not by
itself be deemed to be a violation of this Agreement. Employee recognizes
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that the possible restriction on his activities which may occur as a result
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of his performance of his obligations under Paragraph 8(a) are substantial,
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but that such restriction is required for the reasonable protection of the
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Company.
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(b) Employee shall not, directly or indirectly, influence or attempt
to influence any customer of the Company to discontinue its purchase of any
product of the Company which is manufactured or sold by the Company at the
time of termination of Employee's employment or to divert such purchases to
any other person, firm or employer.
(c) Employee shall not, directly or indirectly, interfere with,
disrupt or attempt to disrupt the relationship, contractual or otherwise,
between the Company and any of its suppliers.
(d) Employee shall not, directly or indirectly, solicit any employee
of the Company to work for any other person, firm or employer.
9. Confidentiality. In the course of his employment with the Company,
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Employee will have access to confidential information, records, data, customer
lists, lists of product sources, specifications, trade secrets and other
information which is not generally available to the public and which the Company
and Employee hereby agree is proprietary information of the Company
("Confidential Information"). During and after his employment by the Company,
Employee shall not, directly or indirectly, disclose the Confidential
Information to any person or use any Confidential Information, except as is
required in the course of his employment under this Agreement. All Confidential
Information as well as records, files, memoranda, reports, plans, drawings,
documents, models, equipment and the like, including copies thereof, relating to
the Company's business, which Employee shall prepare or use or come into contact
with during the course of his employment, shall be and remain the Company's sole
property, and upon termination of Employee's employment with the Company,
Employee shall return all such materials to the Company.
10. Proprietary Information. Employee shall assign to the Company, its
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successors or assigns, all of Employee's rights to copyrightable works and
inventions which, during the period of Employee's employment by the Company or
its successors in business, Employee makes or conceives, either solely or
jointly with others, relating to any subject matter with which Employee's work
for the Company is or may be concerned ("Proprietary Information"). Employee
shall promptly disclose in writing to the Company such copyrightable works and
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inventions and, without charge to the Company, to execute, acknowledge and
deliver all such further papers, including applications for copyrights and
patents for such copyrightable works and inventions, if any, in all countries
and to vest title thereto in the Company, its successors, assigns or nominees.
Upon termination of Employee's employment hereunder, Employee shall return to
the Company or its successors or assigns, as the case may be, any Proprietary
Information. The obligation of Employee to assign the rights to such
copyrightable works and inventions shall survive the discontinuance or
termination of this Agreement for any reason.
11. Entire Agreement. This Agreement contains the entire agreement of the
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parties with respect to Employee's employment by the Company and supersedes any
prior agreements between them, whether written or oral.
12. Waiver. The failure of either party to insist in any one or more
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instance, upon performance of the terms and conditions of this Agreement, shall
not be construed as a waiver or a relinquishment of any right granted hereunder
or of the future performance of any such term or condition.
13. Notices. Any notice to be given under this Agreement shall be deemed
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sufficient if addressed in writing and delivered personally, by telefax with
receipt acknowledged, or by registered or certified U.S. mail to the address
first above appearing, or to such other address as a party may designate by
notice from time to time.
14. Severability. In the event that any provision of any paragraph of
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this Agreement shall be deemed to be invalid or unenforceable for any reason
whatsoever, it is agreed such invalidity or unenforceability shall not affect
any other provision of such paragraph or of this Agreement, and the remaining
terms, covenants, restrictions or provisions in such paragraph and in this
Agreement shall remain in full force and effect and any court of competent
jurisdiction may so modify the objectionable provision as to make it valid,
reasonable and enforceable.
15. Amendment. This Agreement may be amended only by an agreement in
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writing signed by each of the parties hereto.
16. Arbitration. Any controversy or claim arising out of or relating to
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this Agreement, or breach thereof, shall be settled by arbitration in Raleigh,
North Carolina in accordance with the expedited procedures of the Rules of the
American Arbitration Association, and judgment upon the award may be rendered by
the arbitrator and may be entered in any court having jurisdiction thereof.
17. Governing Law. This Agreement shall be governed and construed in
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accordance with the laws of the State of North Carolina. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of the courts located
in North Carolina for the purposes of any suit, action or other proceeding
contemplated hereby or any transaction contemplated hereby.
18. Benefit. This Agreement shall be binding upon and inure to the
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benefit of and shall be enforceable by and against the Company, its successors
and assigns, and Employee, his
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heirs, beneficiaries and legal representatives. It is agreed that the rights and
obligations of Employee may not be delegated or assigned except as may be
specifically agreed to by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Xxxxxxx & Xxxxxxx, Ltd.
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
EMPLOYEE
/s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
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Position Description Exhibit A
Chief Financial Officer
Purpose
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The Chief Financial Officer is responsible for the management of all financial
and administrative operations of the company. This position will report to the
Chief Executive Officer.
Responsibilities:
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Lead all aspects of business development and finance activities for the Company
including managing both financial reporting and investor relations.
Direct all aspects of the financial operations of the Company including
accounting, budgeting, investment management, cash management and presentations
of financial information at Board of Directors' meetings.
Manage the human resource activities and information systems for the Company.
Serve on company-wide project teams and perform such other responsibilities as
may be assigned by the Chief Executing Officer or Board of Directors from time
to time.
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