EMPLOYMENT AGREEMENT
By and Between
DANIELSON HOLDINGS CORPORATION
and
MICHAEL CARNEY
April 14, 1999
TABLE OF CONTENTS
Page
1. Employment..................................................1
2. Duties and Responsibilities of Employee.....................1
3. Non-Exclusivity of Service ................................2
4. Compensation; Bonus.........................................2
5. Benefits....................................................2
6. Term of Employment..........................................3
7. Confidentiality............................ ................3
8. Non-Competition; Non-Solicitation...........................4
9. Termination.................................................5
(a) Cause. ............................................5
(b) Incapacity. ......................................5
(c) Death. ............................................6
(d) Termination Without Cause. ........................6
(e) Release; Sole Remedy...............................6
10. ............................................................7
11. Specific Performance; Damages...............................7
12. Notices.....................................................7
13. Waivers.....................................................8
14. Preservation of Intent......................................8
15. Entire Agreement............................................8
16. Inurement; Assignment.......................................8
17. Amendment...................................................9
18. Headings....................................................9
i
19. Counterparts................................................9
20. Governing Law...............................................9
ii
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of April 14th, 1999,
by and between DANIELSON HOLDINGS CORPORATION, a Delaware corporation having an
office at 767 Third Avenue, New York, New York 10017 ("Employer" or the
"Company"), and MICHAEL CARNEY an individual residing at 401 East 34th Street,
Apt. 34E, New York, NY 10016 ("Employee").
W I T N E S S E T H:
WHEREAS, Employer desires to engage Employee as an employee and
Employee desires to provide his non-exclusive services to Employer in connection
with Employer's business; and
WHEREAS, both parties desire to clarify and specify the rights and
obligations which each have with respect to the other in connection with
Employee's employment.
NOW, THEREFORE, in consideration of the agreements and covenants herein
set forth, the parties hereby agree as follows:
1. Employment
Employer hereby employs Employee as the Chief Financial
Officer of Employer, and Employee hereby accepts such employment and agrees to
render his non-exclusive services as an employee of Employer, for the term of
this Agreement (as set forth in Section 6 hereof), all subject to and on the
terms and conditions herein set forth.
2. Duties and Responsibilities of Employee
(a) Employee shall be employed as the Chief Financial Officer of
Employer, subject to the other provisions of this Section 2 and Section 3 below.
(b) Employee shall be employed in the business of Employer and
his duties and responsibilities shall be commensurate with those of a Chief
Financial Officer of a company engaged in the business engaged in by Employer.
As such, Employee shall be primarily responsible for the oversight of all
financial matters relative to the Company. In the performance of his duties and
responsibilities, Employee shall report to David Barse, in his capacity as
President of the Company, and the Board of Directors of the Employer (the
"Board"). Employee shall use his best efforts to maintain and enhance the
business and reputation of Employer and shall perform such other duties
commensurate with his position as may, from time to time, be designated to
Employee by the Board or its designees.
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3. Non-Exclusivity of Service
Employee agrees to devote his business time, effort and
attention as needed to the business and affairs of the Company on an
non-exclusive basis. Employee shall be entitled to render his services from any
location and shall not be required to be located at the Company's offices
wherever located, although Employee shall be required to travel from time to
time in connection with the performance of his duties hereunder.
4. Compensation; Bonus
(a) In consideration for his services to be performed under this
Agreement and as compensation therefor, Employee shall receive, in addition to
all other benefits provided for in this Agreement, a base salary (the "Base
Salary") at the rate of Seventy-Five Thousand ($75,000) Dollars per annum. All
payments of Base Salary shall be payable in semi-monthly installments or
otherwise in accordance with Employer's policies. Increases in Base Salary shall
be reviewed annually by the Board in its sole discretion.
(b) In addition to the Base Salary that Employee is to receive,
Employee may also receive an annual discretionary performance bonus, payable at
the end of each fiscal year, at the discretion of the Compensation Committee of
the Board (the "Discretionary Bonus").
(c) In addition to the Base Salary that Employee is to receive
and the Discretionary Bonus that Employee may receive, Employee may also be
granted stock options, at the discretion of the Compensation Committee of the
Board (the "Discretionary Options").
5. Benefits
In addition to the Base Salary, Discretionary Bonus and
Discretionary Options provided for in Section 4 hereof, Employee shall be
entitled to the following benefits during and in respect of the term of this
Agreement:
(a) Employer shall reimburse an affiliated entity of Employer an
appropriate, pro rata share of Employee's hospitalization, medical and dental
insurance coverage and all other benefits in accordance with past practices,
which is approximately, at present, $6,000 per calendar year.
(b) Employee shall be entitled to four (4) weeks paid vacation to
be taken by Employee at times mutually and reasonably agreed upon by Employer
and Employee in addition to all other holidays established as part of Employer's
standard practices.
(c) Employee shall be entitled to reimbursement for all
reasonable travel, entertainment and other reasonable expenses incurred in
connection with Employer's business, provided that such expenses are adequately
documented and vouchered in accordance with Employer's policies.
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(d) All other benefits afforded similarly situated executive
employees of Employer.
6. Term of Employment
The term of Employee's employment hereunder shall be from the
date hereof for a period of two years (the "Term") or terminated prior thereto
in accordance with Section 9 hereof.
7. Confidentiality
(a) Employee agrees and covenants that, at any time during
employment by Employer (which, for purposes of this Section 7 shall include
Employer's subsidiaries and affiliates) or thereafter, he will not (without
first obtaining the express permission of Employer) (i) at any time during
employment by Employer and for a period of two (2) years thereafter, divulge to
any person or entity, nor use (either himself or in connection with any
business) any "Confidential Information" (as hereinafter defined in Section 7(c)
hereof) and (ii) at any time during employment by Employer and for a period of
two (2) years thereafter, divulge to any person or entity, nor use (either
himself or in connection with any business) any "Trade Secrets" (as hereinafter
defined in Section 7(c) hereof) to which he may have had access or which had
been revealed to him during the course of his employment unless such disclosure
is pursuant to a court order, disclosure in litigation involving the Employer or
in any reports or applications required by law to be filed with any governmental
agency after prior consultation with Employer, if practicable.
(b) Any interest in patents, patent applications, inventions,
copyrights, developments, innovations, methods, processes, analyses, drawings,
and reports ("Inventions") which Employee now or hereafter during the period he
is employed under this Agreement or otherwise may own or develop relating to the
fields in which the Employer may then be engaged shall belong to the Employer;
and Employee shall disclose the inventions to Employer and forthwith upon
request of the Employer, Employee shall execute all such assignments and other
documents and take all such other action as the Employer may reasonably request
in order to vest in the Employer all right, title, and interest in and to the
Inventions free and clear of all liens, charges, and encumbrances.
(c) As used in this Agreement, the term "Confidential
Information" shall mean and include all information and data in respect of
Employer's operations, financial condition, products, customers and business
(including, without limitation, artwork, photographs, specifications,
facsimiles, samples, business, marketing or promotional plans, creative written
material and information relating to characters, concepts, names, trademarks and
copyrights) which may be communicated to Employee or to which Employee may have
access in the course of Employee's employment by Employer. Notwithstanding the
foregoing, the term "Confidential Information" shall not include information
which
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(i) is, at the time of the disclosure, a part of the public
domain through no act or omission by Employee; or
(ii) is hereafter lawfully disclosed to Employee by a
third party who or which did not acquire the
information under an obligation of confidentiality to
or through Employer.
As used in this Agreement, the term "Trade Secrets" shall mean and
include information, without regard to form, including, but not limited to,
technical or non-technical data, a formula, a pattern, a compilation, a
program, a device, a method, a technique, a drawing, a process, financial data,
financial plans, product plans, or a list of actual or potential customers or
suppliers which is not commonly known by or available to the public and which
information (i) derives economic value, actual or potential, from not being
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use; and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy. In addition, the term "trade secrets" includes all information
protectible as "trade secrets" under applicable law.
Nothing in this Section 7 shall limit any protection,
definition or remedy provided to Employer under any law, statute or legal
principle relating to Confidential Information or Trade Secrets.
8. Non-Competition; Non-Solicitation
(a) Employee hereby agrees and covenants that for a period of one
year following his employment with Employer that he will not directly or
indirectly engage in or become interested (whether as an owner, principal,
agent, stockholder, member, partner, trustee, venturer, lender or other
investor, director, officer, employee, consultant or through the agency of any
corporation, limited liability company, partnership, association or agent or
otherwise) in any business or enterprise that shall, at the time, be in whole or
in substantial part competitive with any part of the business conducted by
Employer during the period of Employee's employment with Employer (except that
ownership of not more than 5% of the outstanding securities of any class of any
entity that are listed on a national securities exchange or traded in the
over-the-counter market shall not be considered a breach of this Section 8(a)).
(b) Employee agrees and covenants that for a period of one year
following his employment with Employer he will not (without first obtaining the
written permission of Employer) directly or indirectly participate in the
solicitation of any business of any type conducted by Employer during the period
of Employee's employment with Employer from any person or entity which was a
client or customer of Employer during the period of Employee's employment with
Employer, or was a prospective customer of Employer from which Employee
solicited business or for which a proposal for submission was prepared during
the period of Employee's employment with Employer.
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(c). Employee agrees and covenants that for a period of one year
following his employment with Employer he will not (without first obtaining the
written permission of Employer) directly or indirectly, hire, recruit for
employment, or induce or seek to cause such person to terminate his or his
employment with Employer, any person who then is an employee of Employer or was
an employee of Employer within six months prior to such hiring or solicitation.
9. Termination
(a) Cause. Notwithstanding the terms of this Agreement, Employer
may, upon the unanimous vote of the Board of Directors, discharge Employee and
terminate this Agreement for cause ("Cause") in the event (i) of Employee's
willful refusal to materially perform his duties hereunder with reasonable
diligence or to follow, after written notice and an opportunity to cure, a
lawful directive of the Board, (ii) Employee's commission of an act involving
fraud, embezzlement, or theft against the property or personnel of the
Company, (iii) Employee's engagement in gross reckless conduct that the
Board in good faith determines will have a material adverse affect on the
business, assets, properties, results of operations or financial condition of
Employer, or (iv) Employee shall be convicted of a felony or (v) Employee
engages in other criminal conduct that substantially jeopardizes the
Employer's business. In the event Employee is discharged pursuant to this
Section 9(a), (i) Employee's Base Salary and Discretionary Bonus and all
benefits under Section 5 hereof shall terminate immediately upon such
discharge (subject to applicable law such as COBRA), (ii) all unvested
options, including but not limited to unvested Discretionary Options,
shall immediately expire, and all vested options, including but not limited
to vested Discretionary Options, may be exercised by Employee until six (6)
months after the date of termination under this Section 9(a), or for the
remainder of their term, whichever is sooner, and (iii) Employer shall have no
further obligations to Employee except for payment and reimbursement to Employee
for any monies due to Employee which right to payment or reimbursement accrued
prior to such discharge. Notwithstanding anything set forth herein, prior to
Employer having the right to discharge Employee pursuant to clauses (i) or (iii)
above, Employer shall first be required to give Employee at least thirty (30)
days' prior written notice of any alleged breach under Section 9(a)(i) or
9(a)(iii) above (the "Notice"), and for such Notice to be effective it must
specify in reasonable detail the nature of, and facts and circumstances relative
to, such alleged Cause, and Employee shall have a reasonable opportunity to cure
any such alleged improper actions within such thirty (30) day period (and in the
event Employee actually cures any such alleged improper actions within such
thirty (30) day period, the Notice shall automatically be deemed withdrawn).
(b) Incapacity. Should Employee, in the reasonable judgment of a
physician chosen by the Board, become incapacitated to the extent he is
unable to perform his material duties pursuant to this Agreement for a
period of six (6) consecutive months by reason of illness, disability or
other incapacity, Employer may terminate this Agreement upon one month's
notice after said six (6) month period. Employer shall have no further
obligations to Employee or his
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legal representatives except to pay to Employee the balance of his Base Salary
for the remainder of the Term of the Agreement and to pay to Employee the
Discretionary Bonus, if any, for the year prior to Employee's incapacity.
Upon Employee's termination under this Section 9(b) all unvested options,
including but not limited to unvested Discretionary Options, shall
automatically vest, and all of Employee's options, including but not limited to
Discretionary Options, may be exercised by Employee, or Employee's legal
guardian or representative, until one (1) year after the date of Employee's
termination under this Section 9(b), or for the remainder of their term,
whichever is sooner.
(c) This Agreement shall terminate immediately upon the death of
Employee, in which case Employer shall have no further obligations to
Employee or his legal representatives; provided, however, that in the event
that Employee's death occurs in connection with Employee's performance of his
duties hereunder, Employer shall pay to Employee's legal representatives the
balance of Employee's Base Salary for the remainder of the Term of the
Agreement and to pay to Employee's legal representatives, within sixty (60)
days of Employee's death, the Discretionary Bonus, if any, for the year prior
to Employee's death. Upon Employee's death, all unvested options, including
but not limited to unvested Discretionary Options, shall vest and all of
Employee's options, including but not limited to Discretionary Options, may
be exercised by Employee's estate until one (1) year from the date of
Employee's death, or for the remainder of their term, whichever is sooner.
(d) Termination Without Cause. In the event that Employee is
discharged and this Agreement is terminated without Cause (Cause being defined
as a reason for termination as set forth in Section 9(a) above) or for reason
other than as set forth in Sections 9(b) or 9(c) hereof, Employee shall
receive upon such termination or resignation: (A) the balance of his Base
Salary for the remainder of the Term of the Agreement; (B) in the event that
any bonus was actually paid to Employee under Section 4 above for the
immediately preceding fiscal year, including but not limited to the
Discretionary Bonus, Employee shall receive an identical bonus (or
pro-rated portion thereof) with respect to the fiscal year of termination;
and (C) all benefits under Section 5 hereof for the remaining Term, as
applicable. In addition, upon Employee's termination under this Section 9(d)
any unvested options, including but not limited to unvested Discretionary
Options, shall automatically vest and all of Employee's options, including
but not limited to Discretionary Options, may be exercised by Employee until
one (1) year after the date of Employee's termination under this Section 9(d),
or for the remainder of their term, whichever is sooner. All amounts due
Employee under this Section 9(d) shall be paid to Employee without
offset for any amounts earned by Employee in any other employment or from any
other source.
(e) Release; Sole Remedy. Notwithstanding anything to the contrary
in this Agreement, the amounts, if any, payable, and the provision of benefits,
if any, to Employee, required under the applicable provisions of this Section
9 in connection with the termination of Employee's employment, voluntarily or
involuntarily, for any or no reason, shall be: (i) the only remedy, legal or
equitable, available to Employee in connection with such termination, and the
payment of such amounts and the provision of such benefits shall constitute
liquidated damages;
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and (ii) as a condition precedent to Employer's obligations to pay any such
amounts or provide any such benefits, Employee shall have first executed and
delivered to Employer the form of Release attached hereto as Exhibit A, and
the seven day revocation period provided in said Release shall have expired
without revocation of said Release by Employee.
10. Violation of Other Agreements
Employee represents and warrants to Employer that he is legally
able to enter into this Agreement and accept employment with Employer; that
Employee is not prohibited by the terms of any agreement, understanding or
policy from entering into this Agreement; that the terms hereof will not and do
not violate or contravene the terms of any agreement, understanding or policy to
which Employee is or may be a party, or by which Employee may be bound; and that
Employee is under no physical or mental disability that would hinder the
performance of his duties under this Agreement. Employee agrees that, as it is a
material inducement to Employer that Employee make the foregoing representations
and warranties and that they be true in all respects, Employee shall forever
indemnify and hold Employer harmless from and against all liability, costs or
expenses (including attorney's fees and disbursements) on account of the
foregoing representations being untrue.
11. Specific Performance; Damages
In the event of a breach or threatened breach of the
provisions of Sections 7 and 8 hereof, Employee agrees that the injury which
could be suffered by Employer would be of a character which could not be fully
compensated for solely by a recovery of monetary damages. Accordingly, Employee
agrees that in the event of a breach or threatened breach of Sections 7 and 8
hereof, in addition to and not in lieu of any damages sustained by Employer and
any other remedies which Employer may pursue hereunder or under any applicable
law, Employer shall have the right to seek equitable relief, including issuance
of a temporary or permanent injunction, by any court of competent jurisdiction
against the commission or continuance of any such breach or threatened breach,
without the necessity of proving any actual damages or posting of any bond or
other surety therefor. In addition to, and not in limitation of the foregoing,
Employee understands and confirms that, in the event of a breach or threatened
breach of Sections 7 and 8 hereof, Employee may be held financially liable to
Employer for any loss suffered by Employer as a result.
12. Notices
Any and all notices, demands or requests required or
permitted to be given under this Agreement shall be given in writing and sent,
by registered or certified U.S. mail, return receipt requested, by hand, or by
overnight courier, addressed to the parties hereto at their addresses set forth
above or such other addresses as they may from time-to-time designate by written
notice, given in accordance with the terms of this Section, together with copies
thereof as follows:
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In the case of Employer, with a copy to:
Zukerman Gore & Brandeis, LLP
900 Third Avenue
New York, New York 10022-4728
Attention: Andrew M. Chonoles, Esq.
Notice given as provided in this Section shall be deemed effective: (i) on the
date hand delivered, (ii) on the first business day following the sending
thereof by overnight courier, and (iii) on the seventh calendar day (or, if it
is not a business day, then the next succeeding business day thereafter) after
the depositing thereof into the exclusive custody of the U.S. Postal
Service.
13. Waivers
No waiver by any party of any default with respect to any
provision, condition or requirement hereof shall be deemed to be a waiver of any
other provision, condition or requirement hereof; nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
14. Preservation of Intent
Should any provision of this Agreement be determined by a court
having jurisdiction in the premises to be illegal or in conflict with any laws
of any state or jurisdiction or otherwise unenforceable, Employer and
Employee agree that such provision shall be modified to the extent legally
possible so that the intent of this Agreement may be legally carried out.
15. Entire Agreement
This Agreement sets forth the entire and only agreement or
understanding between the parties relating to the subject matter hereof and
supersedes and cancels all previous agreements, negotiations, letters of intent,
correspondence, commitments and representations in respect thereof among them,
and no party shall be bound by any conditions, definitions, warranties or
representations with respect to the subject matter of this Agreement except as
provided in this Agreement.
16. Inurement; Assignment
The rights and obligations of Employer under this Agreement
shall inure to the benefit of and shall be binding upon any successor of
Employer or to the business of Employer, subject to the provisions hereof.
Employer may assign this Agreement to any person, firm or corporation
controlling, controlled by, or under common control with Employer. Neither this
Agreement nor any rights or obligations of Employee hereunder shall be
transferable or assignable by Employee.
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17. Amendment
This Agreement may not be amended in any respect except by an
instrument in writing signed by the parties hereto.
18. Headings
The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
19. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument.
20. Governing Law
This Agreement shall be governed by, construed and enforced in
accordance with the internal laws of the State of New York, without giving
reference to principles of conflict of laws. Each of the parties hereto
irrevocably consents to the venue and jurisdiction of the federal and state
courts located in the State of New York, County of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
EMPLOYEE:
/s/ Michael Carney
_______________________________
MICHAEL CARNEY
EMPLOYER:
DANIELSON HOLDINGS CORPORATION
By: /s/ David Barse
___________________________
Name: David Barse
Title: President
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Exhibit A
RELEASE
1. Pursuant to the terms of the Employment Agreement made as of ___ ,
1999, between Danielson Holdings Corporation, a Delaware corporation (the
"Company"), and the undersigned (the "Agreement"), and in consideration of the
payments made to me and other benefits to be received by me pursuant thereto, I,
____________ , being of lawful age, do hereby release, and forever discharge,
the Company, its subsidiaries and affiliates and their respective directors,
officers, shareholders, subsidiaries, agents, employees and affiliates, from any
and all actions, causes of action, claims, or demands for general, special or
punitive damages, attorney's fees, expenses, or other compensation, which in any
way relate to or arise out of my employment with the Company or any of its
subsidiaries or the termination of such employment (but not for actions, causes
of action, claims or demands not directly related to such employment or
termination of employment, even if arising at the time of termination), which I
may now or hereafter have under any federal, state or local law, regulation or
order, including without limitation, under the Age Discrimination in Employment
Act, as amended, through and including the date of this Release; provided,
however, that this Release shall not release the Company's obligations with
respect to (a) payment of the severance payments and compliance with the other
provisions of Section 9 of the Agreement, and (b) paragraph 2 of this Release.
2. The Company agrees that, from and after the date hereof, if asked
about the undersigned's separation from the Company, except as otherwise
required by applicable law, the Company will not make any public statement
regarding such separation other than that the undersigned has left the Company
to pursue other interests. From and after the date hereof, the Company will not
intentionally make any defamatory or disparaging statements about the
undersigned or the undersigned's performance for the Company. For purposes of
this paragraph 2 only, the Company shall mean only the directors and executive
officers of the Company (as long as the foregoing persons are still directly or
indirectly affiliated with the Company), and shall specifically include David
Barse, Harold Drachman, Michael Carney and Ian Kirschner (as long as the
foregoing persons are still directly or indirectly affiliated with the Company).
3. I agree that, from and after the date hereof, if asked about my
separation from the Company, except as otherwise required by applicable law, I
will not make any public statement regarding such separation other than that I
have left the Company to pursue other interests. From and after the date hereof,
I will not intentionally make any defamatory or disparaging statements about the
Company, its subsidiaries or affiliates or their products, services, directors,
officers, shareholders, employees, agents, customers or business relationships.
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4. I further state that I have read this Release and the Agreement
referred to herein, that I know the contents of both and that I have executed
the same as my own free act.
WITNESS my hand this ___ day of _______________________ , ____.
__________________________
[Employee]
AGREED AND ACKNOWLEDGED
THIS ______ DAY OF ___________ , ______
DANIELSON HOLDINGS CORPORATION
By: _________________________
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