EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT made as of March 16, 1998 between THE PRIMA GROUP
INTERNATIONAL, INC. ("Employer") and XXXXX X. XXXXXXX, XX. ("Employee").
WITNESSETH:
WHEREAS, the parties hereto desire to provide for the Employee's
employment by Employer.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. Employment.
Employer agrees to employ the Employee and the Employee agrees to enter
into the employ of Employer on the terms and conditions hereafter set forth.
2. Capacity and Duties.
The Employee shall be employed as President and Chief Executive Officer
of Employer and shall perform such duties and have such responsibilities as
normally attributed to a president and chief executive officer of a Delaware
corporation. The Employee shall perform his responsibilities in accordance with
the direction and supervision of the Board of Directors of Employer, and he
shall devote such time, skill, energies, business judgment, knowledge and best
efforts to the business of Employer and the performance of such executive,
administrative and operational duties on behalf of Employer and its affiliates,
appropriate to the offices he holds or shall hold hereunder, as the Board of
Directors of Employer may request. The requirement that the Employee devote his
time to the business of Employer shall not preclude him from undertaking other
business and personal activities that do not, singly or in the aggregate,
materially impair his ability to fulfill his responsibilities under this
Agreement. Employer specifically acknowledges that Employee will continue to
provide consulting services on a part-time basis and that, from time to time,
this may create a conflict of interest. Employee agrees to offer Employer the
opportunity to take advantage of any business opportunities which arise from
Employee's consulting services.
3. Term.
The term of the Employee's employment hereunder shall be for the a
period of three (3) years, commencing on April 1, 1998. The term of employment
shall be automatically renewed for successive one-year terms, unless written
notice of non-renewal is given by either party not less than ninety (90) days
prior to the end of the initial three-year, or the then current one-year, term.
4. Compensation.
(a) Salary. Employer shall pay or cause to be paid to the Employee a
salary of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000) per year, payable in
equal semi-monthly installments (the "Base Salary"). The Base Salary shall be
increased each year on the anniversary of the effective date of this Agreement
in line with increases in the cost of living for the immediately preceding
twelve (12) months. However, in no event shall such increase be less than the
percentage increase in the "Consumer Price Index - United States Average for the
Urban Wage Earners and Clerical Workers - All Items," as published by the United
States Department of Labor (Bureau of Labor Statistics) for the immediately
preceding twelve (12) months. In addition, Base Salary shall be reviewed prior
to each anniversary date of this Agreement by the Board of Directors of
Employer.
(b) Bonus. For each fiscal year during the term of this Agreement,
beginning with the fiscal year ending December 31, 1998, Employee shall receive
a bonus payable at the discretion of the Board of Directors, or any committee
thereof, based upon operational, financial and stock market performance of
Employer, but not less than the amount necessary to pay interest and applicable
taxes under Employee's note in the principal amount of $600,000 to Employer.
(c) Non-Competition Payment. As consideration for the covenants
of Employee in section 9 for the period of the initial
term of this Agreement, Employer shall pay to Employee
within five (5) business days of the consummation of
Employer's initial public offering ("IPO"), the sum of THREE
HUNDRED THOUSAND DOLLARS ($300,000). The non-vested portions
of this payment shall be subject to forfeiture if Employee
voluntarily terminates this Agreement prior to the
expiration of the initial term. One-third of the payment
will vest on the effectiveness of the term of this Agreement.
The remaining one-third portions of the payment will vest on
the first and second anniversaries of the effectiveness of
this Agreement, respectively.
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5. Expenses. Employer shall reimburse Employee, to the extent not otherwise paid
for by Employer or one of its affiliates, for reasonable and necessary
out-of-pocket expenses, including, without limitation, entertainment, travel and
similar expenses incurred by him in performing the duties set forth in Section 2
hereof. Employee shall present an itemized account of such expenses, supported
by such documentation as is required under the Internal Revenue Code of 1986, as
amended, to support the deductibility of such expenses for federal income tax
purposes.
6. Benefits and Vacations.
(a) Stock Option Plan. Employer shall establish a Stock Incentive Plan
for key employees and directors of Employer and its subsidiaries in the form of
Exhibit "A". Upon the effective date of the IPO, Employee shall receive options
to acquire TWO HUNDRED THOUSAND (200,000) shares of Employer's Common Stock.
Options to purchase 100,000 shares of Employer's Common Stock shall be
exercisable on the first anniversary date of the IPO and shall have an exercise
price of 115% of the public offering price of the IPO. The options to purchase
the remaining 100,000 shares of Employer's Common Stock shall be exercisable in
three (3) installments of 30,000, 30,000 and 40,000 shares on the first, second
and third anniversaries of the effective date of the IPO, respectively. The
exercise price for the installments shall be 120%, 130%, and 140%, respectively
of the public offering price of the IPO. The options shall have a term of ten
years (five years if Employee is a ten percent (10%) shareholder and the option
is an incentive stock option as defined under Section 422 of the Internal
Revenue Code) and shall survive termination or expiration of this Agreement. If
this Agreement is terminated for cause as defined herein, then the options will
be exercisable for a period of six months after termination. If Employee leaves
the employment by Employer for reasons other than termination for cause, then
the options shall remain exercisable during their full term.
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(b) Insurance.
(i) Major Medical, Health and Dental. Employer shall
provide group coverage for Employee, and such dependents as
Employee shall select, with respect to major medical, health
and dental expenses. Employer shall pay one hundred percent
(100%) of premiums with respect to such coverage.
(ii) Disability. Employer shall provide group
disability, accidental death and dismemberment, and life
insurance coverage for Employee, with Employer paying one
hundred percent (100%) of the related premiums.
(iii) Additional Term Insurance. Employee shall be
provided additional term life insurance in the principal
amount of $1,000,000, payable to such beneficiaries as
selected by Employee. At the termination of this Agreement,
Employee shall be given the right to assume the policy and pay
the premiums due thereunder.
(c) Automobile Allowance. Employee shall receive an automobile
allowance of $1,500 per month during the term of this Agreement.
(d) Vacation. The Employee shall be entitled to six (6) weeks annual
paid vacation during each year of this Agreement. Employee shall also be
entitled to the same paid holidays, sick and personal time as are available to
all other employees in accordance with the policies of Employer.
(e) Withholding. The Employee acknowledges that certain payments
provided for herein are subject to withholding and other taxes.
7. Indemnification.
(a) Notwithstanding the termination of Employee's employment under
Section 8 of this Agreement, it is confirmed that, with respect to all periods
during which Employee shall be employed by Employer, (i) Employer shall
indemnify Employee in whatever capacity Employee is serving, including as a
director of Employer, and reimburse expenses to the fullest extent permitted by
the indemnification and reimbursement provisions of Employer's Certificate of
Incorporation and By-Laws in effect as of the date of this Agreement, provided
that such coverage is not prohibited under the provisions of the applicable
General Corporation Law; and (ii) Employer shall use its best efforts to
maintain in effect its Directors' and Officers' Indemnification Insurance
policies (under which Employee shall be deemed an "insured" to the fullest
extent provided in such policy) and to purchase substitute policies in form and
content substantially similar to those presently in force during all periods
under which Employee may remain liable under any applicable statute of
limitations. Upon request, Employer shall promptly provide Employee with copies
of all such policies and any notice of cancellation of them.
(b) In addition to the foregoing, as authorized by the Employer's
Certificate of Incorporation and By-Laws in effect as of the date of this
Agreement, the Employer further agrees,
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to the extent not prohibited by the applicable General Corporation Law, to
defend Employee by legal counsel reasonably acceptable to Employee in any
threatened or pending action, suit or proceeding as to which Employee may be
entitled to indemnification under this Agreement. In this regard, payment
in advance by the Employer of all expenses incurred or to be incurred by
Employee in defending or investigating each and every such action, suit or
proceeding which has been instituted and is pending on the date of this
Agreement or which shall subsequently be instituted is authorized by the
Board of Directors of the Employer, and Employee agrees to repay such
advanced amounts in the event it is ultimately determined that Employee is
not entitled to be indemnified by the Employer as authorized under its
Certificate of Incorporation and By-Laws, and the applicable General
Corporation Law. As regards any decision to advance expenses as to any action,
suit or proceeding not already referred to in this subparagraph, Employee will
be given the same consideration in the reaching of any such decision as shall be
given to any person who is a director or officer of Employer at the time of such
decision.
(c) Employer further agrees to notify Employee of all threatened or
pending actions, suits, or other proceedings by or against Employer to which
Employee is named a party, and to filed in connection with it, and shall
otherwise keep Employee reasonably informed of the status of such actions and
any offers of settlement.
(d) Employee agrees to notify Employer of all threatened or pending
actions, suits, or other proceedings against Employee in any capacity as an
employee of Employer.
8. Termination.
Notwithstanding Section 3, the term of the Employee's employment
hereunder shall terminate on the earliest of the (i) termination date provided
for under Section 3 or (ii) under any of the paragraphs of this Section 8.
(a) Death. In the event of the Employee's death, the Employee's
employment shall terminate automatically, effective as of the date of death, and
Employer shall pay to his estate the Base Salary amount in effect for that year
for a period of one year after his death. In addition, Employer shall pay to
Employee's estate any other amounts that otherwise would have been paid to the
Employee pursuant to Section 4 for the year after his death.
(b) Disability. If the Employee, due to physical or mental illness,
shall be disabled to perform the essential functions of his employment
hereunder, with or without reasonable accommodation, (a "disability"), then
either the Employee or Employer may by notice terminate the Employee's
employment under this Agreement effective as of a date 30 days after the date
such notice is given. Employee shall continue to receive all compensation
payable under Section 4 for a period of six (6) months after the date such
notice is given; provided, however, that it shall be reduced by the amount of
any disability or similar benefits to which he is entitled, notwithstanding
anything contained elsewhere in this Agreement to the contrary.
(c) By Employer for Cause. The Employee's employment may be terminated
effective immediately by Employer for "cause" by notice of termination to the
Employee. "Cause" for such termination shall be limited to convictions of a
felony, malfeasance in office or a material breach by
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the Employee of the covenants contained in this Agreement (as determined by
a majority vote of the Employers Board of Directors), which breach continues
for 30 days following receipt of written notice given by Employer's Board of
Directors specifying the breach and requesting that the Employee correct the
same.
(d) Compensation Upon Termination. Except as provided in Sections 8(a)
and 8(b), Employee shall receive compensation upon termination as follows: in
the event that Employer terminates Employee's Employment under this Agreement
other than for cause as provided in Section 8(c), Employee shall be entitled to
receive the full amount of his salary and benefits provided for in Section 6 for
the remaining term of this Agreement, and any stock options or shares under
stock bonus programs held by Employee shall become and remain exercisable or
vested for the period as set forth in the agreement governing such options or
bonus programs.
(e) Termination by Employee.
(i) If Employee shall voluntarily resign from
employment by Employer prior to the expiration of this
Agreement, any compensation payable to Employee under Section
4 shall be prorated through the date of termination.
(ii) If the Board of Directors or any designee
thereof prohibits Employee from issuing press releases, making
public filings, or prosecuting the business plan outlined in
the registration statement on Form S-1 for Employer's IPO that
Employee reasonably believes to be required under federal or
state law and if Employee has received advice of counsel
engaged by him confirming his belief, then Employee shall have
the right to terminate this Agreement. Upon such termination,
Employer shall pay to Employee the compensation payable to
Employee under Section 4 and shall provide the Employee the
benefits required under Section 6, for a period one year from
the date of termination. Employer shall pay the amount
prescribed in this sub-paragraph (ii) in cash on the date of
termination.
9. Exclusivity. Employee shall devote his best efforts to the performance of his
duties under this Agreement. Employee agrees that all information which he
obtains in the course of his employment is the property of Employer and agrees
that he will not discuss any such information or use any such information for
the benefit of himself or any person or entity other than Employer at any time
during or after his employment. During the period of five (5) years after
termination of employment of Employee hereunder, Employee agrees that he will
not engage in employment or business activities which are reasonably deemed to
be competitive to Employer and its business. The foregoing restriction shall not
apply if Employer elects to terminate this Agreement without cause and Employee
elects not to receive any further cash compensation as provided under the terms
of this Agreement. The parties hereto, recognizing that irreparable injury will
result to Employer, its business and property in the event of a breach of this
Agreement by Employee, and that employment is based primarily upon this
Agreement, it is agreed that in such event Employer shall be entitled, in
addition to any other remedies and damages available, to an injunction to
restrain the violation thereof by Employee, his partners, agents, servants,
employers, and Employees, and all persons acting for or with him. The Employee
represents and admits that in the
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event of the termination of his employment for any cause whatsoever, his
experiences and capabilities are such that he can obtain employment in
business engaged in other lines and/or of a different nature, and that the
enforcement of a remedy by way of injunction will not prevent him from
earning a livelihood.
10. Representation by the Employee.
The Employee hereby represents and warrants to Employer that the
execution of this Agreement and the performance of his duties and obligations
hereunder will not breach or be in conflict with any other agreement to which he
is a party or by which he is bound and that he is not now subject to any
covenant against competition or similar covenant that would affect the
performance of his duties hereunder.
11. No Assignment.
This Agreement is personal and shall in no way be subject to
assignment, except by Employer incident to the sale of all or substantially all
of its business (whether by asset sale, stock sale or merger). Any attempt by
one party to assign this Agreement in any other circumstances without the prior
written consent of the other party shall be null and void.
12. Loan.
Concurrent with the consummation of the IPO, Employer shall loan to
Employee Six Hundred Thousand Dollars ($600,000) with interest accruing at
the annual rate of six percent (6%). Interest on the loan shall be payable and
the entire principal and any unpaid interest shall be payable on the eighth
anniversary of the loan. The loan shall be secured by a pledge of sixty
thousand (60,000) shares of Employer's Common Stock held by Employee.
Employer shall have the right to set-off any payments otherwise due Employee
against due but not yet made payments of Employee under the loan. The loan may
be prepaid by Employee at any time and in any amount without penalty.
13. Enforceability.
If any portion or provision of this Agreement shall to any extent be
declared illegal or unenforceable by a duly authorized court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
14. Notices.
All notices and other communications required or permitted to be given
hereunder shall be given by delivering the same in hand or by mailing the same
by certified or registered mail, return receipt requested, postage prepaid, as
follows:
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if to Employer, to: The PRIMA Group International, Inc. 000 X.
Xxxxxx Xxxxx Xxxx, Xxx. 000 Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000
if to the Employee, to: Xx. Xxxxx X. Xxxxxxx, Xx. 0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(or to such other address as either party shall have furnished to the other by
like notice).
A notice shall be effective as of the date of such delivery or mailing, as the
case may be.
15. Entire Agreement.
This Agreement constitutes the only agreement and understanding between
Employer and the Employee in relation to the subject of the Employee's
employment by Employer; and there are no promises, representations, conditions,
provisions or terms related thereto other than those set forth herein. This
Agreement supersedes all previous understandings, agreements and
representations, written or oral, between Employer and the Employee regarding
the Employee's employment by Employer.
16. Governing Law.
This contract shall be construed under and be governed in all respects
by the internal laws, and not the laws pertaining to choice or conflicts of
laws, of the State of North Carolina.
17. Waiver; Amendment.
No waiver in any instance by either party of any provision of this
Agreement shall be deemed a waiver by such party of such provision in any other
instance or a waiver of any other provision hereunder in any instance. This
Agreement cannot be amended, supplemented or otherwise modified except in a
writing signed by Employer, and by the Employee (so long as he shall be employed
by Employer).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
The PRIMA Group International, Inc.
By:
Name:
Title:
(SEAL) _____________________________________
Xxxxx X. Xxxxxxx, Xx.
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