EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of April 1, 1996, by and between Diva
Acquisition Corp., a Delaware corporation (the "Company"), and Xxxx Xxxxxxxx, an
individual residing at 0000 X. 00xx Xxxxxx, Xxxxxxxx, XX 00000 (the
"Executive").
W I T N E S E T H :
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WHEREAS, the Company desires to secure the services of the Executive
upon the terms and conditions hereinafter set forth; and
WHEREAS, the Executive desires to render services to the Company upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties mutually agree as follows:
Section 1. Employment. The Company hereby employs Executive and the
Executive hereby accepts such employment, as the President of the Company,
subject to the terms and conditions set forth in this Agreement.
Section 2. Duties. The Executive shall serve as President and shall
properly perform such duties as may be lawfully assigned to his from time to
time by the Chief Executive Officer and the Board of Directors of the Company.
If requested
by the Company, the Executive shall serve on the Board of Directors or any
committee thereof without additional compensation. During the term of this
Agreement, the Executive shall devote all of his business time to the
performance of his duties hereunder unless otherwise authorized by the Board of
Directors.
Section 3. Term of Employment; Vacation.
The term of the Executive's employment shall be for a period of
thirty six (36) months commencing on the date hereof (the "Term"), subject to
earlier termination by the parties pursuant to Sections 5 and 6 hereof. The
Executive shall be entitled to four (4) weeks vacation during each year of the
Term.
Section 4. Compensation of Executive.
4.1 Salary. The Company shall pay to Executive a base salary
of One Hundred Thirty Thousand ($130,000) Dollars per annum (the "Base Salary"),
less such deductions as shall be required to be withheld by applicable law and
regulations. All salaries payable to Employee shall be paid at such regular
weekly, biweekly or semi-monthly time or times as the Company makes payment of
its regular payroll in the regular course of business. Commencing on January 1,
1997, and on each January 1 thereafter during the term of this Agreement, the
Base Salary
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shall increase by 10% in the event that the Company reports a net profit on its
annual financial statements.
4.2 Annual Profit Sharing Bonus. During the term of this Agreement,
the Executive shall be entitled to receive an annual profit sharing bonus equal
to two percent (2%) of the Company's annual net pre-tax profit (the "Profit
Sharing Bonus"). The Profit Sharing Bonus shall be calculated based upon the
financial statements prepared by the Company's independent auditors and paid to
the Executive within 90 days following the end of the Company's fiscal year end.
At the Executive's option, the Company shall pay the Profit Sharing Bonus in
cash, or in shares of Common Stock of Xxxxxx Xxxxxx, Ltd. ("Common Stock")
having a Fair Market Value (as hereinafter defined) equal to the Profit Sharing
Bonus.
4.3 Annual Performance Bonus. In the event that the Company achieves
certain sales targets, the Executive will be entitled to receive a certain
number of shares of Common Stock of Xxxxxx Xxxxxx, Ltd., the parent corporation
of the Company (the "Bonus Shares"). The annual sales targets are set forth
below and set forth opposite such targets is the Market Value (as hereinafter
defined) of the Bonus Shares:
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Market Value
of
Annual Sales Target Bonus Shares
------------------- -------------
7,000,000 $66,666
9,000,000 $133,332
11,000,000 $199,998
"Market Value" shall mean the average closing bid price for the shares
of Common Stock of Xxxxxx Xxxxxx, Ltd. for the five trading days ending on
December 31 during the year for which the Bonus Shares are earned, as reported
on The Nasdaq Stock Market. The Bonus Shares shall be issued within 90 days
following the end of the Company's fiscal year for which the Bonus Shares were
earned. In no event shall the Executive be entitled to receive pursuant to this
Section 4.3 more than a number of shares of Common Stock having a Fair Market
Value of $199,998. Should the Executive's employment terminate prior to the end
of the Term, the Company and SML agree to the terms and conditions contained in
that certain letter agreement dated as of the date hereof and attached hereto as
Exhibit A (the "Letter Agreement"). Up to two thirds (2/3) of the annual
performance bonus payable pursuant to this Section 4.3 shall, at the Executive's
option, be paid in cash.
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4.4 Expenses. During the Term, the Company shall reimburse the
Executive for all reasonable and necessary travel expenses and other
disbursements incurred by the Executive on behalf of the Company, in performance
of the Executive's duties hereunder, assuming Executive has received prior
approval for such travel expenses and disbursements by the Company's President
to the extent possible. With the respect to Executive's use of an automobile in
connection with the performance of his duties hereunder, the Company shall, at
the direction of the Executive, either reimburse Executive for, or directly pay
the costs of, the use of an automobile during the term of this Agreement and all
usual expenditures in connection therewith, i.e., fuel, insurance, parking,
customary maintenance and repairs, etc. in an amount not to exceed $500 per
month.
4.5 Benefits. The Executive shall be permitted during the Term
to participate in any hospitalization or disability insurance plans, health
programs, pension plans, bonus plans or similar benefits that may be available
to other executives of the Company or SML to the extent the Executive is
eligible under the terms of such plans or programs. The Company agrees to
provide the Executive with a paid health insurance plan comparable to insurance
courage granted to Executives of SML.
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5. Disability of the Executive. If the Executive is incapacitated or
disabled by accident, sickness or otherwise so as to render the Executive
mentally or physically incapable of performing the services required to be
performed under this Agreement for a period of 180 days in any period of 360
consecutive days (a "Disability"), the Company may, at the time or any time
thereafter, at its option, terminate the employment of the Executive under this
Agreement immediately upon giving the Executive written notice to that effect.
6. Termination.
(a) The Company may terminate the employment of the Executive and all
of the Company's obligations under this Agreement at any time for Cause (as
hereinafter defined) by giving the Executive written notice of such termination,
with reasonable specificity of the details thereof. "Cause" shall mean (i) the
Executive's misconduct could reasonably be expected to have a material adverse
effect on the business and affairs of the Company, (ii) the Executive's
disregard of lawful instructions of the Company's Board of Directors or
President
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consistent with the Executive's position relating to the business of the Company
or neglect of duties or failure to act, which, in each case, could reasonably be
expected to have a material adverse effect on the business and affairs of the
Company, (iii) the commission by the Executive of an act constituting common law
fraud, or a felony, or criminal act against the Company or any affiliate thereof
or any of the assets of any of them, (iv) the Executive's continued abuse of
alcohol or other drugs or controlled substances, or conviction of a crime
involving moral turpitude that is determined by the Company's Board of Directors
to likely have a material adverse effect on the business or prospects of the
Company, (v) the Executive's material breach of any of the agreements contained
herein or (vi) the Executive's resignation hereunder. A termination pursuant to
Section 6(a)(i), (ii), (iv) (other than as a result of a conviction of a crime
involving moral turpitude) or (v) shall take effect 30 days after the giving of
the notice contemplated hereby unless the Executive shall, during such 30-day
period, remedy to the reasonable satisfaction of the Board of Directors of the
Company the misconduct, disregard, abuse or breach specified in such notice;
provided, however, that such termination shall take effect immediately upon the
giving of such notice if the Board of
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Directors of the Company shall, in its sole discretion, have determined that
such misconduct, disregard, abuse or breach is not remediable (which
determination shall be stated in such notice). A termination pursuant to Section
6(a)(iii), (iv) (as a result of a conviction of a crime involving moral
turpitude) or (vi) shall take effect immediately upon the giving of the notice
contemplated hereby.
(b) The Company may terminate the employment of the Executive and all
of the Company's obligations under this Agreement (except as hereinafter
provided) at any time during the Employment Period without Cause by giving the
Executive written notice of such termination, to be effective 15 days following
the giving of such written notice. For convenience of reference, the date upon
which any termination of the employment of the Executive pursuant to Sections 5
or 6 shall be effective shall be hereinafter referred to as the "Termination
Date".
7. Effect of Termination of Employment.
(a) Upon the termination of the Executive's employment (i) for Cause
or (ii) a Disability, neither the Executive nor the Executive's beneficiaries or
estate shall have any further rights under this Agreement or any claims against
the Company arising out of this Agreement, except the right to receive (i) the
unpaid
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portion of the Base Salary provided for in Section 4.1, computed on a pro rata
basis to the Termination Date (the "Unpaid Salary Amount"), (ii) reimbursement
for any expenses for which the Executive shall not have theretofore been
reimbursed, as provided in Section 4.4 (the "Expense Reimbursement Amount") and
(iii) accrued and unpaid amounts owed to the Executive under Sections 4.2 and
4.3 hereof through the Termination Date.
(b) Upon the termination of the Executive's employment for
other than Cause or a Disability, neither the Executive nor the Executive's
beneficiaries or estate shall have any further rights under this Agreement or
any claims against the Company arising out of this Agreement, except the right
to receive (i) the Unpaid Salary Amount, (ii) the Expense Reimbursement Amount,
(iii) severance compensation equal to the Base Salary for the term of this
Agreement (as if this Agreement was not terminated), 50% of which is payable on
the Termination Date and 50% of which is payable in equal monthly installments
during the period commencing on the first day of January following the
Termination Date and ending on the following December 1, and (iv) accrued and
unpaid amounts owed to the Executive under Sections 4.2 and 4.3 hereof through
the Term of this Agreement (the "Bonus Amounts"). In the event that this
Agreement is terminated as a result of he
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death of the Executive, the Executive's estate shall be entitled to (i) the
Unpaid Salary Amount and (ii) the Expense Reimbursement Amount, and the Bonus
Amounts shall be paid in accordance with the terms of the Letter Agreement.
Section 8. Disclosure of Confidential Information. Executive recognizes
that he has had and will continue to have access to secret and confidential
information regarding the Company, including but not limited to its customer
list, products, know-how, and business plans. Executive acknowledges that such
information is of great value to the Company, is the sole property of the
Company, and has been and will be acquired by his in confidence. In
consideration of the obligations undertaken by the Company herein, Executive
will not, at any time, during or after his employment hereunder, reveal, divulge
or make known to any person, any information acquired by Executive during the
course of his employment, which is treated as confidential by the Company,
including but not limited to its customer list, not otherwise in the public
domain. The provisions of this Section 8 shall survive Executive's employment
hereunder.
Section 9. Covenant Not To Compete.
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(a) Executive recognizes that the services to be performed by his
hereunder are special, unique and extraordinary. The parties confirm that it is
reasonably necessary for the protection of Company that Executive agree, and
accordingly, Executive does hereby agree, that he shall not, directly or
indirectly, at any time during the term of the Agreement and the "Restricted
Period" (as defined in Section 9(e) below):
(i) except as provided in Subsection (c) below, be
engaged in the footwear industry or provide
technical assistance, advice or counseling
regarding the footwear industry in any state in
the United States in which the Company or any
affiliate thereof is engaged in business, either
on his own behalf or as an officer, director,
stockholder, partner, consultant, associate,
employee, owner, agent, creditor, independent
contractor, or co-venturer of any third party; or
(ii) employ or engage, or cause or authorize, directly or
indirectly, to be employed or engaged, for or on behalf
of himself or any third party, any employee or agent of
Company or any affiliate thereof.
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(b) Executive hereby agrees that he will not, directly or indirectly,
for or on behalf of himself or any third party, at any time during the term of
the Agreement and during the Restricted Period solicit any customers of the
Company or any affiliate thereof.
(c) If any of the restrictions contained in this Section 9 shall be
deemed to be unenforceable by reason of the extent, duration or geographical
scope thereof, or otherwise, then the court making such determination shall have
the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form this Section shall then be
enforceable in the manner contemplated hereby.
(d) This Section 9 shall not be construed to prevent Executive from
owning, directly or indirectly, in the aggregate, an amount not exceeding five
percent (5%) of the issued and outstanding voting securities of any class of any
company whose voting capital stock is traded on a national securities exchange
or on the over-the-counter market other than securities of the Company.
(e) The term "Restricted Period," as used in this Section 9, shall mean
the period of Executive's actual employment hereunder plus: (i) in the event
that the Executive is terminated
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for Cause, the twelve (12) months after the Termination Date or (ii) in the
event that the Executive is terminated without Cause or for a Disability, the
shorter of (a) the remainder of the Term of the Agreement or (b) six (6) months
after the Termination Date.
(f) The provisions of this Section 9 shall survive the end of the
Restricted Period as provided in Section 9(e) hereof.
Section 10. Miscellaneous.
10.1 Injunctive Relief. Executive acknowledges that the services to be
rendered under the provisions of this Agreement are of a special, unique and
extraordinary character and that it would be difficult or impossible to replace
such services. Accordingly, Executive agrees that any breach or threatened
breach by his of Sections 8 or 9 of this Agreement shall entitle Company, in
addition to all other legal remedies available to it, to apply to any court of
competent jurisdiction to seek to enjoin such breach or threatened breach. The
parties understand and intend that each restriction agreed to by Executive
hereinabove shall be construed as separable and divisible from every other
restriction, that the unenforceability of any restriction shall not limit the
enforceability, in whole or in part, of any other restriction, and that one or
more or all
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of such restrictions may be enforced in whole or in part as the circumstances
warrant. In the event that any restriction in this Agreement is more restrictive
than permitted by law in the jurisdiction in which Company seeks enforcement
thereof, such restriction shall be limited to the extent permitted by law.
10.2 Assignments. Neither Executive nor the Company may assign
or delegate any of their rights or duties under this Agreement without the
express written consent of the other.
10.3 Entire Agreement. This Agreement and the Letter Agreement
constitutes and embody the full and complete understanding and agreement of the
parties with respect to Executive's employment by Company, supersedes all prior
understandings and agreements, whether oral or written, between Executive and
Company, and shall not be amended, modified or changed except by an instrument
in writing executed by the party to be charged. The invalidity or partial
invalidity of one or more provisions of this Agreement shall not invalidate any
other provision of this Agreement. No waiver by either party of any provision or
condition to be performed shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same time or any prior or subsequent time.
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10.4 Binding Effect. This Agreement shall inure to the benefit of, be
binding upon and enforceable against, the parties hereto and their respective
successors, heirs, beneficiaries and permitted assigns.
10.5 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.6 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered, sent by registered or
certified mail, return receipt requested, postage prepaid, or by private
overnight mail service (e.g. Federal Express) to the party at the address set
forth above or to such other address as either party may hereafter give notice
of in accordance with the provisions hereof. Notices shall be deemed given on
the sooner of the date actually received or the third business day after
sending.
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions and each of the parties
hereto irrevocably consents to
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the jurisdiction and venue of the federal and state courts located in the State
of New York, County of New York.
10.8 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one of the same instrument.
10.9 Letter Agreement. Should the Executive's employment terminate
prior to the end of the Term, the Company and SML agree to the terms and
conditions contained in that certain letter agreement dated as of the date
hereof and attached hereto as Exhibit A.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
DIVA ACQUISITION CORP.
By:
------------------------------
Name:
Title:
------------------------------
Xxxx Xxxxxxxx
The undersigned guarantees the
Company's performance with respect
to Sections 4.1, 4.2, 4.3 and 10.9 only:
XXXXXX XXXXXX, LTD.
By:
--------------------------
Name:
Title:
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