EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May , 1996, by and between ▇▇▇▇▇▇
▇▇▇▇▇▇, Ltd., a New York corporation (the "Company"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, an
individual residing at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (the
"Executive").
W I T N E S E T H :
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 Vice President/National
Director of Sales of the Company's wholly owned subsidiary, Diva Acquisition
Corp., including the business formerly carried on by Diva International, Inc.
("Diva"), and the National Director of Catalog Sales for the Company and its
subsidiaries, subject to the terms and conditions set forth in this Agreement.
For purposes of this Agreement, Catalog Sales means sales through catalogs
produced or published by persons other than the Company or its subsidiaries.
Section 2. Duties. The Executive shall serve as the Vice
President/National Director of Sales for Diva and as National Director of
Catalog Sales for the Company and its subsidiaries and shall(i) be responsible
for supervising the national sales of Diva and national catalog sales for the
Company and its subsidiaries and developing a catalog for the Company and its
subsidiaries; and (ii) properly perform such duties as may be lawfully assigned
to her from time to time by the President 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 her business time to
the performance of her duties hereunder unless otherwise authorized by the Board
of Directors; provided, however, that the Executive may devote reasonable
amounts of time, to the pursuit of Executive's personal business activities
which are wholly unrelated to the footwear industry, provided such activities
are not conducted during normal business hours or at such times as the Company
may require Executive's services.
Section 3. Term of Employment; Preliminary Period; Vacation.
(a) The term (the "Term") of the Executive's employment
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shall be for a period of thirty six (36) months commencing on May 6, 1996 (the
"Start Date"), subject to earlier termination by the parties pursuant to
Sections 5 and 6 hereof. Unless otherwise specifically provided herein, all
compensation obligations commence as of the Start Date.
(b) Notwithstanding any other provisions in this Agreement,
during the ninety (90) day period following the Start Date, the Company or the
Executive may terminate this Agreement by delivering to the other party five
(5) days prior written notice of termination. Upon such termination, neither
party shall have any obligation to the other party, except that the Company
shall pay to the Executive (i) the Expense Reimbursement Amount (as hereinafter
defined), (ii) the Unpaid Salary Amount (as hereinafter defined) through the
termination date and (iii) the Initial Options (as hereinafter defined) which
shall remain exercisable for a period of one (1) year following the termination
date.
(c) 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
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annum (the "Base Salary"), less such deductions as shall be required to be
withheld by applicable law and regulations. All salaries payable to Executive
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 the first anniversary of the Start Date hereof, and on
each anniversary thereafter during the term of this Agreement, the Base Salary
shall be increased by 10%.
Prior to October 1, 1996, the Company and the Executive agree to
negotiate, in good faith, appropriate compensation to be paid to Executive in
consideration for Executive's services in the development of the Company's mail
order catalog which shall be developed for purposes of selling products of the
Company or its subsidiaries directly to the consumer.
4.2 Performance Bonus. During the term of this Agreement, the
Executive shall be entitled to receive a performance bonus (the "Performance
Bonus") based upon the Net Sales of Diva (including Diva Catalog Sales). For
purposes of this Agreement "Net Sales" shall be defined as gross sales less
returns, damaged goods and goods not delivered, all as determined in accordance
with the generally accepted accounting principles and as reflected on the
Company's quarterly financial statements.
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Within 45 days following the end of each fiscal quarter beginning with the
quarter ending June 30, 1996, the Executive shall be entitled to receive a
Performance Bonus for that fiscal quarter equal to one percent (1%) of the
amount by which quarterly Net Sales exceed $750,000 and one half of one percent
(.5%) of the amount by which quarterly Net Sales exceed $2,500,000. An
adjustment shall be made at the end of the relevant fiscal year so that the
Performance Bonus paid to the Executive for the fourth fiscal quarter shall
result in the Executive receiving an annual Performance Bonus for that entire
fiscal year equal to one percent (1%) of the amount by which annual Net Sales
exceeds $3,000,000 and one half of one percent (.5%) of the amount by which
annual Net Sales exceeds $10,000,000. The Company shall pay the Performance
Bonus in cash. For purposes of this Agreement the term "fiscal year" shall mean
the calendar year.
4.3 Stock Options. (a) Upon the execution of this Agreement,
the Executive shall receive options to purchase 30,000 shares of Common Stock of
the Company at a price equal to $5.50 per share, which shall be immediately
exercisable and subject to the terms and conditions of an Option Agreement,
substantially in the form of Exhibit A attached hereto (the "Initial Options").
(b) In addition, the Executive shall be entitled to receive
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options to purchase 30,000 shares of Common Stock of the Company for each
$2,000,000 by which Net Sales of Diva (including Diva Catalog Sales) for any
fiscal year exceed $3,000,000 (i.e. upon the achievement of annual Net Sales of
$5,000,000, $7,000,000, $9,000,000 and $11,000,000 (the "Net Sales Targets")),
up to a maximum aggregate grant of 120,000 options (the "Performance Options").
The Performance Options shall be issued as soon as possible, but no later than
within ninety (90) days following the end of the relevant fiscal year and shall
be exercisable at a price equal to the closing bid price of the Company's shares
of Common Stock on such date; provided however, that should one of the Net Sales
Targets be achieved prior to the fourth fiscal quarter, the appropriate number
of Performance Options shall be issued as soon as possible but no later than
forty five (45) days following the end of the fiscal quarter during which the
Net Sales Target was achieved at a price equal to the closing bid price of the
Company's shares of Common Stock on such date. Upon the issuance of all of the
Performance Options prior to the end of the Term, the Company and the Executive
shall negotiate in good faith towards the issuance of options or other
additional compensation for the Executive. The Performance Options will be
substantially in the form of Exhibit B and shall be registered by
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the Company for sale to the public.
4.4 Sales Commission. Within forty-five (45) days following the
end of each fiscal quarter, the Executive shall be entitled to receive a sales
commission, in cash, equal to two percent (2%) of the total Gross Catalog Sales,
meaning gross orders booked or invoiced, without reduction for returns,
allowances or other items of the Company and any subsidiary during such fiscal
quarter (the "Sales Commission"). The Company shall advance to the Executive an
amount equal to $1,500 per month (the "Advance Amount"), such amounts to reduce
the Sales Commissions payable during the Term pursuant to the preceding
sentence. In the event that the aggregate amount of the Sales Commission earned
during the Term is not equal to or greater than the Advance Amount paid, then
the Executive shall not be required to repay the Advance Amount to the Company.
4.5 Expenses. During the Term, the Company shall promptly
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 to the
extent possible.
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4.6 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 Diva subject to such eligibility rules as
are applied to senior managers generally. In the event that the Executive
elects not to be covered the benefit plans provided by the Company to its other
executives, the Company shall pay to the Executive an amount equal to the amount
the Company would have paid on the Executive's behalf for such benefits, less
any amount which each participating executive is required to contribute for such
plan coverage.
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.
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(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 notice of such termination,
with reasonable specificity of the details thereof. "Cause" shall mean (i) the
Executive's misconduct which 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 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 Executive engages in conduct which is publicly
abusive to the Company's Chief Executive Officer or members of the Board of
Directors, (iv) 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, (v) the Executive's abuse of
alcohol or other drugs or controlled substances, or conviction of a crime
involving moral turpitude, (vi) the Executive's material breach of any of the
agreements contained herein or (vii) the Executive's death or resignation
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hereunder; provided however, that if the Executive resigned as a result of a
material breach by the Company of this Agreement, such resignation shall not be
considered "Cause" hereunder. A termination pursuant to Section 6(a)(i), (ii),
(iv), (v) (other than as a result of a conviction of a crime involving moral
turpitude) or (vi) shall take effect 60 days after the giving of the notice
contemplated hereby unless the Executive shall, during such 60-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 Directors of the Company shall, in its reasonable
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), (v) (as a result of a conviction of a
crime involving moral turpitude) or (vii) shall take effect immediately upon the
giving of the notice contemplated hereby.
(b) The Company or the Executive 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
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Executive or the Company, as appropriate, 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". In the event the Executive
resigns as a result of a material breach of the Agreement by the Company, such
resignation shall be treated as a termination by the Company other than for
Cause, as described in Section 7(c) provided the Executive shall have given the
Company thirty (30) days written notice, and the Company shall not have cured
the breach within such thirty (30) day period.
7. Effect of Termination of Employment.
(a) Upon the termination of the Executive's employment for
Cause, neither the Executive nor the Executive's beneficiaries or estate shall
have any further rights to compensation under this Agreement or any claims
against the Company arising out of this Agreement, except the right to receive
(i) the unpaid portion of the Base Salary provided for in Section 4.1, earned
through the Termination Date (the "Unpaid Salary Amount"), (ii) reimbursement
for any expenses for which the Executive shall not have theretofore been
reimbursed, as
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provided in Section 4.6 (the "Expense Reimbursement Amount") and (iii) accrued
and unpaid amounts owed to the Executive under Sections 4.2 and 4.4 hereof
computed on a pro rata basis through the Termination Date.
(b) Upon the termination of the Executive's employment for a
Disability, neither the Executive nor the Executive's beneficiaries or estate
shall have any further rights to compensation 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 and (iii)
accrued and unpaid amounts owed to the Executive under Section 4.2, 4.3 and 4.4
hereof through the Termination Date, including a pro-rata entitlement to such
amounts equal to the award to which the Executive would have been entitled at
the end of the applicable fiscal period pro-rated for the period of the
Executive's employment during such fiscal period (collectively, the "Additional
Payments").
(c) 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 to compensation under this
Agreement or any claims against the Company arising out of this Agreement,
except the Executive
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shall have 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 thirty (30) days following the
Termination Date and continuing for a period of twelve months thereafter, and
(iv) the Additional Payments.
Section 8. Disclosure of Confidential Information. Executive recognizes
that she 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 her in confidence. In
consideration of the obligations undertaken by the Company herein, Executive
will not, at any time, during or after her employment hereunder, reveal, divulge
or make known to any person, any information acquired by Executive during the
course of her employment, which is treated as confidential by the Company,
including but not limited to its
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customer list, not otherwise in the public domain, other than in the ordinary of
business during her employment hereunder. The provisions of this Section 8
shall survive Executive's employment hereunder.
Section 9. Covenant Not To Compete.
(a) Executive recognizes that the services to be performed by her
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 she 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 sale, marketing or distribution of
footwear products 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 her own behalf or
as an officer, director, stockholder, partner,
consultant, associate, employee, owner, agent,
creditor, independent contractor, or co-venturer
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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 herself or any third party, any
employee or agent of Company or any affiliate
thereof.
(b) Executive hereby agrees that she will not, directly or indirectly,
for or on behalf of herself 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
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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 (A) in the
event the Executive voluntarily terminates her employment after the Preliminary
Period other than a resignation as a result of a material breach of the
Agreement by the Company, six months, and (B) in the event the Executive's
employment is terminated without Cause or a Disability as described in Section
7(c) above, the period during which the Company is required to make continued
payments to the Executive pursuant to this Agreement; provided, however, that,
in the event the Executive waives, in writing, her right to receive such
continued payments, the Executive shall not be subject to this Section 9.
(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
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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 her 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 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 constitutes and
embodies the full and complete understanding and agreement of the
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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.
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,
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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 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 Separability. If any of the restrictions contained in this
Agreement 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 Agreement shall
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then be enforceable in the manner contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
▇▇▇▇▇▇ ▇▇▇▇▇▇, LTD.
By:______________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Executive Officer
______________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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