SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT ("Agreement") is made and entered into this __
day of March 1999, by and between XXXX X. XXXXXXX [XXXXXXXXXXX XXXXXXX] (the
"Employee") and PETALS, INC., a Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Employee has been employed as a senior executive officer of
the Company pursuant to the terms and conditions of an employment agreement,
dated June 22, 1993, as amended (the "Employment Agreement"); and
WHEREAS, in connection with the terms and conditions of a settlement
agreement, dated March __, 1999 (the "Settlement Agreement") by and among
Interiors, Inc., a Delaware corporation ("Interiors"), DMB Property Ventures
Limited Partnership, a Delaware limited partnership, Xxxx X. Xxxxx, Xxxx X.
Xxxxx, the Xxxxxxx Xxxxxxxx Trust, the Xxxxxxx Xxxxxxxx Jr. Trust, the Xxxxxx
Xxxxxxxx Trust, and the Xxxxxxxx 1995 Issue Trust, Xxxx X. Xxxxxxx, Xxxxxxxxxxx
Xxxxxxx and the Company and the related Interiors Purchase Agreement, Interiors
has purchased on the date hereof, 100% of the shares of capital stock of the
Company from the Majority Stockholders and the Minority Stockholders; and
WHEREAS, as part of the transactions contemplated by the Settlement
Agreement, the Employee has (a) executed and delivered to the Company a
non-competition, non-disclosure and non-solicitation agreement, dated of even
date herewith (the "Non-Competition Agreement"), and (b) tendered his
resignation as an officer, employee and member of the board of directors of the
Company; and
WHEREAS, in partial consideration of such Non-Competition Agreement and
resignation, the Company has agreed to enter into this Agreement with the
Employee.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties contained herein and in the Settlement Agreement, the parties hereto
intending to be legally bound hereby and thereby, it is mutually agreed as
follows:
1. RESIGNATION AND TERMINATION OF EMPLOYMENT AGREEMENT.
(a) The Employee does hereby tender his resignation as an employee,
officer and director of the Company, such resignation to take effect
immediately.
(b) The Employment Agreement is hereby terminated, effective
immediately, and shall be of no further force or effect.
(c) The Employee hereby releases and discharges the Company from any and
all obligations to make any further payments to the Employee
pursuant to the Employment Agreement, whether by way of salary,
bonus or other compensation or remuneration of any kind.
2. SEVERANCE PAYMENT.
(a) The Company does hereby covenant and agree to pay to the Employee
the aggregate sum equal to one hundred (100%) percent of the balance
of the Employee's current annual base salary for the period
commencing from the date of this Agreement through and including
December 31, 1999 [as to Xxxx X. Xxxxxxxx, approximately One Hundred
and Fifty ($150,000) Dollars] [as to Xxxxxxxxxxx Xxxxxxx,
approximately One Hundred and Twelve Thousand Five
1
Hundred ($112,500) Dollars (the "Severance Payment"). The Severance
Payment shall be paid to the Employee in three (3) equal quarterly
installments of [as to Xxxx X. Xxxxxxx, approximately Fifty Thousand
($50,000) Dollars] [as to Xxxxxxxxxxx Xxxxxxx approximately Thirty
Seven Thousand Five Hundred ($37,500) Dollars] each, with the first
such installment payable on the date of this Agreement, the second
installment payable on June 15, 1999 and the third and final
installment payable on September 15, 1999.
(b) Each Severance Payment shall be made by the Company's forwarding (by
federal express or regular mail, postage prepaid) of its check,
payable to the order of the Employee to the following address:
Xxxx X. Xxxxxxx Xxxxxxxxxxx Xxxxxxx
_______________________ ___________________________
_______________________ ___________________________
(c) It is expressly understood and agreed that the Employee shall not be
required to render any service or perform any duty or obligation for
or on behalf of the Company in order to receive the full amount of
the aforesaid Severance Payment, save and except only the Employee's
obligation to comply with his covenants contained in the
Non-Competition Agreement. Accordingly, the Company shall
unconditionally continue to pay each of the four (4) installments
comprising the Severance Payment to the Employee or his estate,
notwithstanding the death or disability of the Employee.
(d) In the event that the Company or Interiors shall allege that the
Employee shall have breached or otherwise violated any of his
covenants and agreements contained in the Non-Competition Agreement
(a "Non-Competition Breach"), the Company shall nonetheless continue
to make each Severance Payment, as and when due hereunder; provided,
that until the issue of whether or not the Employee shall have
committed a Non-Competition Breach shall have either been (i)
settled among the parties pursuant to a written settlement
agreement, or (ii) finally determined by the arbitrator selected
pursuant to section 4(e) or if such arbitration award shall be
appealed, a final determination by a court of competent jurisdiction
from which no appeal has or can be taken (in either event, a "Final
Resolution"), the Severance Payments installments shall be delivered
in escrow to the law firm of Folkenflik & McGerity, Esqs., who shall
retain such amounts in a special interest bearing attorneys' escrow
account pending a Final Resolution and receipt of written
instructions from the parties or such court as to the disposition of
such funds, provided further that unless a demand for arbitration is
filed with JAMS Endispute or the American Arbitration Association
within seven (7) business days of the first delivery of any
Severance Payment in escrow, all such severance payments shall
immediately be released to the Employees. Any such arbitration that
is commenced shall proceed on an expedited basis.
3. GUARANTY. By its execution of this Agreement, Interiors does hereby
unconditionally and irrevocably guaranty all of the Severance Payment
obligations of the Company, when due, hereunder.
4. MISCELLANEOUS.
(a) This Agreement and all covenants, agreements, representations and
warranties made herein and therein shall survive the date hereof.
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the successors and
permitted assigns of such party; and all covenants, promises and
agreements in this Agreement contained, by or on behalf of any one
party hereto shall inure to the benefit of and be binding upon the
successors and assigns of such party.
2
(b) This Agreement and the Exhibits shall (irrespective of where same
are executed and delivered) be governed by and construed in
accordance with the laws of the State of New York (without giving
effect to principles of conflicts of laws).
(c) No amendment or modification of this Agreement or any Exhibit hereto
shall be deemed to be effective unless contained in a writing
executed by all relevant parties hereto or thereto.
(d) All notices, requests, demands and other communications under or in
respect of this Agreement or any transactions hereunder shall be in
writing (which may include telegraphic or telecopied communication)
and shall be personally delivered or mailed (by prepaid registered
or certified mail, return receipt requested), sent by prepaid
recognized overnight courier service, or telegraphed or telecopied
by facsimile transmission to the applicable party at its address or
telecopier number indicated in Exhibit A annexed hereto and made a
part hereof. Such addresses may be changed at any time by written
notice given by a party hereto in the manner provided in this
Section 4(d). All such notices, requests, demands and other
communications shall be deemed given when personally delivered or
when deposited in the mails with postage prepaid (by registered or
certified mail, return receipt requested) or delivered to the
telegraph company or overnight courier service, addressed as
aforesaid, or when submitted by facsimile transmission to a
telecopier number designated by such addressee. No other method of
written notice is precluded.
(e) All disputes relating to or arising out of this Agreement or the
interpretation or application of this Agreement shall be resolved by
final and binding arbitration before an arbitrator selected by the
Company from among the list of arbitrators set forth on Exhibit A.
Any arbitration before the selected arbitrator shall be
administrated by JAMS Endispute or the American Arbitration
Association in New York. If such arbitration shall be commenced by
The Company it shall, with its demand for arbitration, select the
arbitrator and two alternatives in its demand. If such arbitration
shall be commenced by either Employee, then the Company shall select
an arbitrator and two alternatives within 5 days of being served
with a copy of the demand for arbitration. Each of the parties
hereto do hereby consent to the jurisdiction of the courts of the
State of New York and the United States District Court for the
Southern District of New York, as well as to the jurisdiction of all
courts from which an appeal may be taken from such courts, for the
purpose of enforcing the award of the arbitrator, or any suit,
action or other proceeding arising out of or with respect to this
Agreement, or any of the transactions contemplated hereby or
thereby. The parties hereto hereby expressly waive any and all
objections which any of them may have as to venue in any of such
courts, and also waives trial by jury in any such suit, action or
proceeding.
(f) If any provision of this Agreement is held invalid or unenforceable,
either in its entirety or by virtue of its scope or application to
given circumstances, such provision shall thereupon be deemed
modified only to the extent necessary to render same valid, or not
applicable to given circumstances, or excised from this Agreement,
as the situation may require, and this Agreement shall be construed
and enforced as if such provision had been included herein as so
modified in scope or application, or had not been included herein,
as the case may be.
(g) The Article and Section headings in this Agreement are included
herein for convenience of reference only, and shall not affect the
construction or interpretation of any provision of this Agreement.
(h) This Agreement, the Exhibits hereto and the Interiors Purchase
Agreement constitute the sole and entire agreement and understanding
between the parties hereto as to the subject matter hereof, and
supersede all prior discussions, agreements and understandings of
every kind and nature between the parties as to such subject matter.
3
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers on the date set forth below, but
all as of the day and year first above written.
PETALS, INC.
By:
------------------------------------
Xxx Xxxx, President
INTERIORS, INC.
By:
------------------------------------
Xxx Xxxx, President
----------------------------------------
___________ CORELLI
4
