Exhibit 10.1
EMPLOYMENT AGREEMENT
--------------------
EMPLOYMENT AGREEMENT dated as of the ___ day of August, 2003 between
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("FragranceNet") and TELESCENTS,
INC., a New York corporation which is a wholly owned subsidiary, (collectively,
the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (the "Executive").
W I T N E S S E T H :
--------------------
WHEREAS, the Company desires to employ the Executive in an executive
capacity and to be assured of his services in such capacity, on the terms and
conditions hereinafter set forth; and
WHEREAS, the Executive is willing to accept such employment on such
terms and conditions.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the Company and the Executive hereby agree as
follows:
1. Employment, Term.
----------------
1.1 Employment. The Company agrees to employ the Executive, and the
Executive agrees to serve in the employ of the Company, for the term set forth
in Section 1.2, in the positions and with the responsibilities, duties and
authority set forth in Section 2 and on the other terms and conditions set forth
in this Agreement.
1.2 Term. The term of the Executive's employment under this Agreement
shall commence on the date hereof and shall continue until terminated in
accordance with Section 6 of this Agreement.
2. Position, Duties.
-----------------
The Executive shall serve as Chairman of the Board of Directors, Chief
Executive Officer and Chief Financial Officer of the Company. The Executive
shall have such responsibilities and duties consistent with such executive
positions as shall be assigned to him from time to time by the Board of
Directors of the Company. The Executive shall devote up to forty (40) hours per
month of his business time and attention to the performance of his
responsibilities and duties hereunder.
3. Salary, Incentive Bonus.
------------------------
3.1 Salary. The Company shall pay to the Executive a base salary,
initially at the rate of $175,000 per annum, payable in accordance with the
standard payroll practices of the Company. In addition the Executive shall be
entitled to full medical and dental coverage in accordance with past practice.
The Executive's base salary shall be increased annually by an
2
amount equal to the incentive bonus earned by the Executive in the prior fiscal
year pursuant to Section 3.2, such increase to take effect on the date of
payment of such incentive bonus.
3.2 Incentive Bonus. (a) In addition to the base salary provided for
in Section 3.1, the Company shall pay to the Executive an incentive bonus with
respect to each fiscal year of the Company ending during the term of this
Agreement in an amount equal to one percent (1%) of Sales in excess of Target
Sales. For purposes of this Agreement: "Sales" shall mean sales of the Company
as shown in the audited financial statements of the Company for the applicable
fiscal year; and "Target Sales" shall mean (a) for the fiscal year of the
Company ending March 31, 2003, $10,000,000 and (b) for the fiscal year of the
Company ending March 31, 2004 and each subsequent fiscal year, Sales for the
fiscal year of the Company immediately preceding such year.
(b) In the event of the termination of employment of the
Executive by the Company without Cause or the Executive's voluntary withdrawal
(as defined in Section 6), or by reason of the death or Disability (as defined
in Section 6) of the Executive, the Executive (or his estate or other legal
representative) shall be entitled to a bonus for the fiscal year in which such
termination takes place in an amount equal to the product of (i) the bonus for
such fiscal year determined pursuant to Section 3.2(a), multiplied by (ii) a
fraction, the numerator of which is the number of days from the beginning of
such fiscal year to the date of termination, and the denominator of which is
365.
(c) The bonus payable to the Executive (or his estate or other
legal representative) for any fiscal year of the Company pursuant to this
Section 3.2, shall be paid by the Company within thirty (30) days of receipt by
the Company of the audited financial statements of the Company for such fiscal
year.
4. Expense Reimbursement.
----------------------
During the term of this Agreement, the Company shall reimburse the
Executive for all reasonable and necessary out-of-pocket expenses incurred by
him in connection with the performance of his duties hereunder, upon the
presentation of proper accounts therefor in accordance with the Company's
policies.
5. Benefits.
---------
During the term of this Agreement, the Executive will be eligible to
participate in all employee benefit plans and programs offered by the Company
from time to time to its employees, subject to the provisions of such plans and
programs as in effect from time to time.
6. Termination of Employment.
--------------------------
6.1 General. Either the Company or the Executive may terminate the
employment of the Executive on thirty (30) days' advance written notice to the
other. In the event that the Executive's employment with the Company shall be
terminated by the Company without Cause (as hereinafter defined), or as a result
of the Executive's Disability (as hereinafter defined) or by the Executive's
voluntary termination, the Company shall engage the Executive as
3
a consultant in accordance with Section 7 of this Agreement. The Company shall
also pay to the Executive any unpaid incentive bonus payable with respect to the
year of termination or any prior year pursuant to Section 3 of this Agreement,
at the time prescribed by such Section. In addition, the Company shall repay to
the Executive within seven (7) days of the date of termination any outstanding
loans, including all principal and all interest accruing to the date of payment,
made by the Executive to the Company. The Executive's rights under the other
benefit plans and programs of the Company shall be determined in accordance with
the terms of such plans and programs as then in effect. In the event of such
termination neither the Executive nor the Company shall have any further rights
or obligations under this Agreement, except as set forth in Sections 8, 9, 10
and 11 of this Agreement.
6.2 Death. In the event that the Executive's employment with the
Company shall terminate as a result of the Executive's death, the Company shall
pay a death benefit to the beneficiary designated by the Executive during the
Applicable Period (as hereinafter defined). The death benefit shall be an annual
amount equal to the sum of (a) 75% of the Executive's highest rate of salary
with the Company in effect during the one-year period ending on the date of
termination plus (b) 50% of the Executive's average incentive bonus with respect
to the last five completed fiscal years of the Company preceding the date of
termination, payable in equal monthly installments in advance on the first day
of each month during the Applicable Period. As used herein, "Applicable Period"
shall mean the 10 year period commencing on the date of the Executive's death.
The Company shall also pay to the Executive's estate any unpaid incentive bonus
payable with respect to the year of termination or any prior year pursuant to
Section 3 of this Agreement, at the time prescribed by such Section. In
addition, the Company shall pay to the Executive's estate within seven (7) days
of the date of termination any outstanding loans, including all principal and
all interest accruing to the date of payment, made by the Executive to the
Company. The rights of the Executive's estate under the other benefit plans and
programs of the Company shall be determined in accordance with the terms of such
plans and programs as then in effect.
6.3 Definitions. For purposes of this Agreement: "Cause" shall mean
(a) any act of willful misappropriation by the Executive against the Company or
(b) the Executive's indictment, conviction or plea of guilty or nolo contendere
with respect to any crime involving moral turpitude or a felony which was
involving the Company; and "Disability" shall mean the Executive's failure by
reason of sickness, accident or physical or mental disability to substantially
perform the duties and responsibilities of the Executive's employment with the
Company for a cumulative period of three (3) months in any period of twelve (12)
consecutive months.
6.4 Resignation of all Positions. Upon termination of the employment
of the Executive with the Company, the Executive shall be deemed to have
resigned all of his positions as an officer, director and trustee of any benefit
plan of the Company or any subsidiary of the Company.
7. Consulting Services.
--------------------
7.1 For a period of 10 years commencing on the date of termination of
employment of the Executive (the "Consulting Period"), the Executive shall serve
as a consultant
4
to the Company. The Executive shall make himself available on a standby basis to
provide, and shall provide the Company with, such consulting services in the
areas of finance, sales, marketing and operations as shall be requested by the
Board of Directors of the Company. The Executive shall report to the Board or to
such executive officer of the Company as shall be designated by the Board.
7.2 In consideration of the Executive's agreement to provide
consulting services hereunder, the Company shall pay the Executive a consulting
fee in an annual amount equal to the sum of (a) 75% of the Executive's highest
rate of salary with the Company in effect during the one-year period ending on
the date of termination plus (b) 50% of the Executive's average incentive bonus
with respect to the last five completed fiscal years of the Company preceding
the date of termination, payable in equal monthly installments in advance on the
first day of each month during the Consulting Period. The consulting fee shall
be payable without regard to whether the Company actually requests the Executive
to provide services in such month. The Company shall, during the Consulting
Period, continue to provide the Executive with medical and dental coverage (at
least equivalent to the benefits provided to the Executive in the last year
preceding the date of termination of employment).
7.3 The Executive shall provide the consulting services from such
place or places as shall be reasonably determined by the Executive. The
Executive shall not be required to travel more than twenty-five (25) miles from
his home in providing the consulting services. The Company shall reimburse the
Executive for expenses incurred in providing the consulting services. The
Executive shall not be required to expend more than 15 hours per month in
providing the consulting services.
7.4 It is expressly understood and agreed by the Executive and the
Company that the inability of the Executive to render the consulting services to
the Company by reason of absences, illness, disability or incapacity, or for any
other cause shall not constitute a failure to perform his obligations hereunder
and shall not be deemed a breach or default by him hereunder. The consulting
arrangements set forth in this Section 7 may not be terminated by the Company
other than for Cause (as defined in Section 6).
7.5 The provisions of Sections 8 through 11 of this Agreement shall
apply to the Executive during the Consulting Period.
8. Confidential Information.
-------------------------
8.1 Nondisclosure. The Executive shall, during the term of this
Agreement and at all times thereafter, treat as confidential and, except as
required in the performance of his duties and responsibilities under this
Agreement, not disclose, publish or otherwise make available to the public or to
any individual, firm or corporation any confidential information (as hereinafter
defined).
8.2 Confidential Information Defined. For the purposes hereof, the
term "confidential information" shall mean all information acquired by the
Executive in the course of the Executive's employment with the Company in any
way concerning the products, projects,
5
activities, business or affairs of the Company and its Parent or subsidiaries or
its or their customers, including, without limitation, all information
concerning trade secrets and the products or projects of the Company and its
subsidiaries and/or any improvements therein, all sales and financial
information concerning the Company and its subsidiaries, all customer and
supplier lists, all information concerning projects in research and development
or marketing plans for any such products or projects, and all information in any
way concerning the products, projects, activities, business or affairs of
customers of the Company or its subsidiaries which is furnished to the Executive
by the Company or its subsidiaries or any of their agents or customers, as such;
provided, however, that the term "confidential information" shall not include
information which (a) becomes generally available to the public other than as a
result of a disclosure by the Executive, (b) was available to the Executive on a
non-confidential basis prior to his employment with the Company or (c) becomes
available to the Executive on a non-confidential basis from a source other than
the Company or its subsidiaries or any of their agents or customers provided
that such source is not bound by a confidentiality agreement with the Company or
its subsidiaries or any of such agents or customers.
9. Intellectual Property.
----------------------
The Executive agrees that all inventions and copyrightable or
patentable material, and all trade secrets, processes, know-how, practices,
designs, technologies and methods which the Executive may make or develop during
the period of the Executive's employment with the Company relating to the
business of the Company shall belong to and shall be owned by the Company,
whether the Executive shall make or develop them individually or jointly with
others or on the Executive's own time or on the time of the Company. The
Executive agrees that, upon the request of the Company and without further
consideration, the Executive shall expressly assign to the Company all of the
Executive's right, title and interest in and to each such invention, material,
trade secret, process, know-how, practice, design, technology and method and
shall sign all papers and do all other acts necessary, at the Company's expense,
to assist the Company to obtain patents or copyrights on or otherwise to perfect
the Company's right, title and interest in and to each such invention, material,
trade secret, process, know-how, practice, design, technology and method in any
and all countries.
10. Post-Employment Restriction.
----------------------------
In order to induce the Company to enter into this Agreement, and in
consideration of his employment hereunder and the severance provisions of this
Agreement, the Executive agrees, for the benefit of the Company, that he will
not, during the period of his employment with the Company and thereafter, employ
or entice or endeavor to solicit the employment of any person who was an
employee of the Company at any time, either for his own account or for any
individual, firm or corporation.
11. Equitable Relief.
-----------------
In the event of a breach or threatened breach by the Executive of any
of the provisions of Section 8, 9 or 10 of this Agreement, the Executive hereby
consents and agrees that the Company shall be entitled to an injunction or
similar equitable relief from any court of competent jurisdiction restraining
the Executive from committing or continuing any such breach
6
or threatened breach or granting specific performance of any act required to be
performed by the Executive under any of such provisions, without the necessity
of showing any actual damage or that money damages would not afford an adequate
remedy and without the necessity of posting any bond or other security. Nothing
herein shall be construed as prohibiting the Company from pursuing any other
remedies at law or in equity which it may have.
12. Successors and Assigns.
-----------------------
12.1 Of the Company. The Company shall require any successors (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession had taken place.
As used in this Section, the "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
otherwise becomes bound by all the terms and provisions of this Agreement by
operation of law and this Agreement shall be binding upon, and inure to the
benefit of, the Company, as so defined.
12.2 Of the Executive. The Executive may not assign this Agreement or
any part thereof; provided, however, that nothing herein shall preclude one or
more beneficiaries of the Executive from receiving any amount that may be
payable following the occurrence of his legal incompetency or his death and
shall not preclude the legal representative of his estate from receiving such
amount or from assigning any right hereunder to the person or persons entitled
thereto under his will or, in the case of intestacy, to the person or persons
entitled thereto under the laws of intestacy applicable to his estate. The term
"beneficiaries", as used in this Agreement, shall mean a beneficiary or
beneficiaries so designated to receive any such amount or, if no beneficiary has
been so designated, the legal representative of the Executive (in the event of
his incompetency) or the Executive's estate.
13. Governing Law.
--------------
This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of New
York applicable to contracts to be performed entirely within such state. In the
event that a court of any jurisdiction shall hold any of the provisions of this
Agreement to be wholly or partially unenforceable for any reason, such
determination shall not bar or in any way affect the Company's right to relief
as provided for herein in the courts of any other jurisdiction. Such provisions,
as they relate to each jurisdiction, are, for this purpose, severable into
diverse and independent covenants.
14. Entire Agreement.
-----------------
This Agreement contains all the understandings and representations
between the parties hereto pertaining to the subject matter hereof and
supersedes all undertakings and agreements, whether oral or in writing, if any
there be, previously entered into by them with respect thereto.
7
15. Amendment, Modification, Waiver.
--------------------------------
No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing and signed by the Executive
and by a duly authorized representative of the Company other than the Executive.
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar provision or condition at the same or any
prior or subsequent time, nor shall the failure of or delay by either party
hereto in exercising any right, power or privilege hereunder operate as a waiver
thereof to preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.
16. Arbitration.
-----------
Any controversy or claim arising out of or relating to this Agreement,
or any breach thereof, shall, except as provided in Section 10, be settled by
arbitration in accordance with the rules of the American Arbitration Association
then in effect and judgment upon such award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration shall be held
in New York, New York. The arbitration award shall include attorneys' fees and
costs to the prevailing party.
17. Notices.
--------
Any notice to be given hereunder shall be in writing and delivered
personally or sent by certified mail, postage prepaid, return receipt requested,
addressed to the party concerned at the address indicated below or at such other
address as such party may subsequently designate by like notice:
To the Company:
President
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Executive:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
18. Severability.
------------
Should any provision of this Agreement be held by a court or
arbitration panel of competent jurisdiction to be enforceable only if modified,
such holding shall not affect the validity of the remainder of this Agreement,
the balance of which shall continue to be binding upon the parties hereto with
any such modification to become a part hereof and treated as though originally
set forth in this Agreement. The parties further agree that any such court or
arbitration
8
panel is expressly authorized to modify any such unenforceable provision of this
Agreement in lieu of severing such unenforceable provision from this Agreement
in its entirety, whether by rewriting the offending provision, deleting any or
all of the offending provision, adding additional language to this Agreement, or
by making such other modifications as it deems warranted to carry out the intent
and agreement of the parties as embodied herein to the maximum extent permitted
by law. The parties expressly agree that this Agreement as so modified by the
court or arbitration panel shall be binding upon and enforceable against each of
them. In any event, should one or more of the provisions of this Agreement be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions hereof, and
if such provision or provisions are not modified as provided above, this
Agreement shall be construed as if such invalid, illegal or unenforceable
provisions had never been set forth herein.
19. Withholding.
------------
Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or his beneficiaries, including
his estate, shall be subject to withholding of such amounts relating to taxes as
the Company may reasonably determine it should withhold pursuant to any
applicable law or regulation. In lieu of withholding such amounts, in whole or
in part, the Company, may, in its sole discretion, accept other provision for
payment of taxes as permitted by law, provided it is satisfied in its sole
discretion that all requirements of law affecting its responsibilities to
withhold such taxes have been satisfied.
20. Survivorship.
-------------
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
21. Titles.
-------
Titles of the sections and paragraphs of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section or paragraph.
* * *
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By
-----------------------------
President
TELESCENTS, INC.
By
-----------------------------
President
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇