EMPLOYMENT & NON-COMPETITION AGREEMENT
THIS AGREEMENT is entered into as of the 18th day of October 1995, by
and between Innovative Accessories, Inc., an Oklahoma corporation, (the
"Company"), and ▇▇▇▇▇ ▇. ▇▇▇▇ (the "Executive").
W I T N E S E T H:
WHEREAS, the Executive and ▇▇▇▇ International Holdings Inc., a Delaware
corporation ("▇▇▇▇"), are parties to that certain Exclusive Purchase Option
Agreement, dated October 18, 1995, by and among ▇▇▇▇, the Executive and ▇▇▇▇▇▇
▇. ▇▇▇▇▇ (the "Option Agreement"), pursuant to which the Executive and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ agreed to sell to ▇▇▇▇, and ▇▇▇▇ agreed to acquire from the Executive and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, all of the issued and outstanding shares of the capital stock
of the Company; and
WHEREAS, it is a condition precedent to the closing of the transactions
contemplated under the Option Agreement that the Executive and the Company enter
into this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
1. Employment and Duties.
(a) The Company hereby employs the Executive as its
President, and the Executive hereby accepts such employment,
on the terms and subject to the conditions contained in this
Agreement, for a term (the "Term") commencing on the date
the Option Agreement is executed and continuing for a period
of six (6) years thereafter, unless terminated earlier in
accordance with the provisions of Section 4 hereof.
(b) The Executive shall, subject to the direction and
control of the President and Board of Directors, be
responsible for and carry out the executive administration,
management and operation of the Company's business. It is
contemplated by the parties that under the management of the
Executive and with his day to day involvement in its
operations and affairs, the Company shall continue to
actively engage in the manufacture and sale of the Luxxus
line of automotive after-market accessories. The Executive
shall devote an average of at least thirty (30) hours per
week of his time and attention during normal business hours
to the performance of services on behalf of the Company.
2. Compensation and Benefits. During the Term, the Executive shall
receive the following compensation and benefits:
(a) Salary. The Company shall pay to the Executive,
during the Term, an annual salary in an amount hereinafter
specified (less withholding taxes and other proper payroll
taxes and deductions), payable in monthly or such other more
frequent periodic installments as is consistent with the
Company's payroll practices. The initial amount of the
annual salary payable to the Executive pursuant to this
Agreement shall be One Hundred and Twenty Thousand Dollars
($120,000). This salary shall not be increased during the
Term without the written consent of the Company.
(b) In addition to annual salary, the Executive shall
receive an amount not to exceed three and one-half percent
(3.5%) of the net sales price of all products manufactured
by the Company at its Oklahoma City, OK facility at the date
of the execution of this Agreement. The foregoing payments
are hereinafter referred to as the "Royalty Interest."
3. Vacation and Sick Leave. The Executive shall be entitled to three
(3) weeks of paid vacation leave each year, and the Executive shall be entitled
to accumulate such vacation leave from year to year and receive payment therefor
to the extent permitted under the vacation leave policy of the Company. The
Executive shall also be entitled to such periods of leave for illness and
disability (without loss of pay) as are reasonably required (subject to Section
4 hereof).
3. Expense Reimbursement. The Company shall reimburse the Executive for
all expenses reasonably and properly incurred by him in the performance of his
duties hereunder or otherwise on behalf of the Company, provided that proper
documentation is submitted to the Board of Directors.
4. Termination Provisions. The Term of this Agreement and the
Executive's employment hereunder shall not be terminated by either the Company
or the Executive prior to the expiration thereof pursuant to Section 1 of this
Agreement except as provided in Section 1(a) and this Section 4.
(a) Termination by Company. The Company may terminate
the Term of this Agreement and the Executive's employment
hereunder at any time upon sixty (60) days prior written
notice to the Executive in the event of (i) the Executive's
Disability (as hereinafter defined), (ii) the Executive's
engagement in misconduct materially and demonstrably
injurious to the Company, (iii) the Executive's breach of a
material provision of this Agreement, unless such breach is
cured within 30 days following written notice thereof by the
Company to the Executive, (iv) the Executive's conviction of
a felony, (v) the Executive's perpetration of a fraudulent
act against the Company, or (vi) the determination by the
Board of Directors in its reasonable judgment that the
Executive's performance is unsatisfactory.
(b) Termination by the Executive. The Executive may
terminate his employment hereunder upon sixty (60) days
prior written notice to the Company at any time in the event
of (i) the Disability of the Executive, or (ii) a breach by
the Company of any material provision of this Agreement
unless such breach is cured within 30 days following notice
thereof by the Executive to the Company.
(c) Termination upon Death. The Term of this Agreement
and the Executive's employment hereunder shall be terminated
automatically and immediately upon the Executive's death.
▇▇▇▇ shall carry a life insurance policy on the life of the
Executive worth not less than One Million Dollars
($1,000,000) on behalf of the Executive, to be paid to the
Executive's estate at his death.
(d) Disability Defined. As used in this Agreement, the
term "Disability" means the failure of the Executive to
perform substantially his duties under this Agreement by
reason of a medically determined physical or mental
impairment for a period of 3 consecutive months or for
shorter periods aggregating 6 months over any consecutive 2
year period.
(e) Compensation Upon Termination. In the event of a
termination pursuant to the provisions of this Section 4,
the Company shall only be obligated to pay the Executive his
accrued compensation to the date of termination pursuant to
Sections 2(a)-(b). So long as the Executive has been
employed for at least two years hereunder prior to the
Executive's termination of employment with the Company, the
Company may in its sole discretion pay the Executive one
hundred and fifty percent (150%) of the Royalty Interest
figure earned by the Executive for each fiscal year
remaining in the original six (6) year term hereof, payable
at the end of each such fiscal year with respect to the
Royalty Interest for that year, or the Executive's salary
figure earned during the final year of his employment with
the Company, whichever is greater.
5. Business Conduct Guidelines. It is the intent of the parties that no
payments or transfers of value shall be made that have the purpose or effect of
public or commercial bribery, acceptance of or acquiescence in extortion,
kickbacks or other unlawful or improper means of obtaining business. This
provision shall not, however, prohibit normal and customary business
entertainment or the giving of business mementos of nominal value.
6. Confidentiality. The Executive acknowledges that in and as a result
of his employment hereunder he will be making use of, acquiring, and/or adding
to confidential information of a special and unique nature deriving independent
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by property means by, other persons who can obtain
economic value from its disclosure or use. Such information is hereinafter
referred to as "Confidential Information" and includes, without limitation, the
Company's products, designs, systems, software, data files, techniques, manuals,
confidential reports, the fees and other amounts paid by or to the Company's
customers and Vendors, the amounts the Company pays or has paid for products and
services, and other trade secrets and information the Executive knows or has
reason to know, or will know or have reason to know, the Company intends or
expects to remain confidential. As a material inducement to the Company to enter
into this Agreement and to pay to the Executive the compensation provided for in
Section 2 hereof, the Executive covenants and agrees that he shall not, at any
time during or following the Term, directly or indirectly, divulge or disclose
for any purpose whatsoever (except as required in the performance of his duties
hereunder), nor appropriate for his own use, any Confidential Information.
Provided, however, that nothing in this Section 6 shall be construed to prohibit
the Executive from disclosing or using for his own benefit following the Term
(i) any information that is generally known to, or readily ascertainable by
proper means by, other persons who can obtain economic value from its disclosure
or use, including, without limitation, the identities of the Company's customers
and vendors (but not amounts paid by or to such customers or vendors or the fact
that such customers and vendors are customers and vendors of the Company), (ii)
any information that becomes available to the Executive on a non-confidential
basis from a source independent of the Company, which source is entitled to
disclose such information on a non-confidential basis, or (iii) any information
that is or has been made public other than by acts or omissions of the
Executive. The parties acknowledge that the Company's software, data files and
compilations of data are proprietary to the Company and confidential, even if
some or all of the information contained therein is not "Confidential
Information" as defined in this Section 6. The Executive shall not at any time
divulge, disclose, appropriate, use for his own purposes or transfer any of such
software, data files, or compilations of data, directly or indirectly,
regardless of whether the Executive is entitled to divulge, disclose,
appropriate, use for his own purposes or transfer any or all of the information
contained therein in accordance with the terms of this Section 6.
7. Competition. During the Term and for a period of 2 years following
the expiration of the Term, the Executive shall not, directly or indirectly own,
manage, invest or acquire any economic stake or interest in, or otherwise engage
or participate in any manner whatsoever (whether as a proprietor, partner,
independent contractor, consultant, lender, borrower, guarantor, lessor, lessee,
adviser or other participant) in any individual, corporation, association or
other business enterprise in any form, other than the Company, that is engaged
in the design or manufacture of all products made by the Company, its parent and
affiliates now or ever produced during the Term.
8. Inventions.
(a) The Company and the Executive acknowledge that
during the Term hereunder, and for a period of one year
thereafter, the Executive may create inventions. Any
inventions created by the Executive for use by the Company
in its business shall be the sole and exclusive property of
the Company. The Executive hereby irrevocably assigns to the
Company all of his right, title and interest in and to any
such inventions and agrees to execute and assign any and all
applications, assignments, and other documents, and render
all assistance, reasonably necessary for the Company to
obtain patent, copyright or trademark protection for such
inventions in any country.
9. Reduction Of Restrictions By Court Action. Each provision hereof,
including, without limitation, the periods of time, types and scopes of duties
of, and restrictions on the activities of, the Executive specified herein are
and are intended to be divisible, and if any portion thereof (including any
sentence, clause or part) shall be held contrary to law or invalid or
unenforceable in any respect in any jurisdiction, or as to one or more periods
of time, areas or business activities or any part thereof, the remaining
provisions shall not be affected but shall remain in full force and effect as to
the other remaining parts, and any such invalid or unenforceable provision shall
be deemed, without further action on the part of any person, modified, amended
and limited to the extent necessary to render the same valid and enforceable in
such jurisdiction.
10. Notices. Any notice, request, consent, demand, offer, acceptance or
other communications required or permitted under this Agreement shall be made in
writing and shall be given (i) by personal delivery; (ii) by first class
registered or certified mail, postage prepaid, return receipt requested (and
shall be deemed given three days after the date of delivery to the Postal
Service); (iii) by telefax, telecopier or similar transmission if the
appropriate telefax, telecopier or transmission number is included in the
address (and shall be deemed given on the date sent), or by Federal Express or
similar overnight delivery service, charges prepaid (and shall be deemed given,
addressed to the parties hereto at their respective addresses.
11. Waiver. The waiver by the Company or the Executive of a breach by
the other of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent such breach.
12. Governing Law. This Agreement shall be governed, construed and
enforced in accordance with the laws of Minnesota.
13. Entire Agreement. This Agreement contains the entire Agreement
between the parties hereto with respect to the subject matter hereof and
supersedes any and all prior oral or written understandings and agreements
between them with respect thereto.
14. Representation and Warranties. In order to induce the Company to
enter into this Agreement, the representations, warranties and covenants set
forth in Section 5 of the Option Agreement are hereby reaffirmed by the
Executive.
15. Arbitration. The Company and the Executive shall submit to binding
arbitration for all disputes regarding the rights and obligations of the parties
under this Agreement. The arbitration shall be conducted according to the
Commercial Arbitration Rules ("the Rules") of the American Arbitration
Association. The Rules are incorporated by reference into this Agreement to the
extent that they are not inconsistent with the provisions of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
INNOVATIVE ACCESSORIES, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
Its President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇