ARTISAN AQUISITION CO.
EMPLOYMENT AGREEMENT
(with HENRY GOLDMAN)
This Employment Agreement ("Agreement") is entered into as of ____________,
1996, between Artisan Acquisition Co., a Delaware corporation ("Company") and
Henry Goldman ("Employee").
RECITALS
A. Company is engaged in the business of producing and distributing
wall-hanging sculptures and other art products (the "Business").
B. Concurrently herewith, the Company has acquired the Business pursuant
to that certain Asset Purchase Agreement (the "Purchase Agreement"), dated as of
March 25, 1996 and amended as of September 10, 1996, among Company, Decor Group,
Inc., a Delaware corporation ("Decor"), Artisan House, Inc., a California
corporation ("Seller"), and Employee. Unless otherwise defined herein, all terms
used herein with initial capital letters shall have the respective meanings
assigned them in the Purchase Agreement.
C. Company desires to employ Employee, and Employee desires to accept
such employment, on the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual convenants
hereinafter set forth, the parties agree as follows:
1. Employment.
1.1 Hiring of Employee; Title. Company hereby hires and employs
Employee, to perform the duties set forth in Section 1.2 hereof. Employee hereby
accepts such employment. During the term hereof, Employee shall be entitled to
use the titles "President" and "Chief Executive Officer," and shall have the
right to use those titles in all negotiations on behalf of Company.
1.2 Duties and Powers. In consideration of his Base Salary and Bonus
payable hereunder, Employee agrees to provide to Company 250 hours per year of
services as Company's President and Chief Executive Officer. Employee's duties
will include all the usual duties associated with the aforesaid titles, as well
as
soliciting orders from customers, developing and furthering customer and
vendor relations, and assisting and advising the officers of the Company in
connection with product development, the management, administration and
operation of the Business, seeking new major accounts, and export marketing.
Employee will also continue to be involved in associations of which Seller is
currently a member, in the same capacities as he has heretofore held (i.e. he
shall continue to be involved in ART as Treasurer).
1.3 Supervision. Employee shall report directly to Company's board
of directors, and shall accept supervision from them.
1.4 Location. Employee shall perform his duties hereunder at
Company's principal office in Los Angeles, California; provided, however, that
Employee also may perform such services at home and travel (and recover his
reasonable expenses in connection therewith as provided in Section 3.5 hereof),
to the extent that he reasonably seems it necessary or appropriate in the
performance of his duties hereunder; and further provided, that Employee
acknowledges that Company may move its principal office to any location it
chooses, but it may not require Employee to relocate (and will make reasonable
arrangements for Employee to continue to perform his duties in Los Angeles); and
further provided that Employee acknowledges that his duties may from time to
time require travel to other locations. Travel time (excluding travel to and
from Employee's home to the Company's present offices) shall be included in
computing the hours that Employee is required to work hereunder.
1.5 Office Facilities. Employee shall be entitled to the use, at
the Company's principal offices, of an office appropriate to his position and
secretarial support for work related to his services on an "as needed" basis at
the Company's sole cost.
2. Term of Agreement. Subject to extension as provided below and to
earlier termination as provided in Section 5 hereof, Employee shall be employeed
for a term begining on the date hereof and ending on the last day of the
calendar quarter in which the third anniversary of the date hereof falls. The
term can be extended by mutual agreement of the parties.
3. Compensation. In consideration for the performance of Employee's
duties and the rendition by Employee of the services to be provided under this
Agreement, Company shall compensate Employee as follows:
3.1 Signing Bonus. In consideration for Employee's entering into
this Agreement, Company shall pay Employee a signing bonus of $70,000, payable
$30,000 concurrently with the execution of this Agreement, and the balance in 12
equal monthly installments of $3,333.33 each. The first such installment shall
be paid on the date one month after the execution of this
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Agreement, and subsequent payments shall be made on the same date in
each month as the date in the month of execution hereof on which the
execution hereof took place.
3.2 Base Salary. Company shall pay Employee an annual base salary
("Base Salary") at the rate of $75,000 per year, payable in accordance
with the Company's regular payroll practices, but no less often than
monthly. For any partial period during the term of Employee's
employment, Employee's Base Salary shall be prorated.
3.3 Additional Salary. For each additional hour of services
performed by Employee during any year of the term hereof, Company shall
pay Employee additional salary ("Additional Salary") in the amount equal
to $300 per hour, provided that no such additional services shall be
provided without the Company's approval. Payment of additional salary
shall be made at the end of the year during which the additional hours
of service were performed.
3.4 Bonus Compensation.
3.4.1 Annual Bonus. Company shall pay Employee, within 60 days
after the end of each fiscal year of Company during the term hereof, and
within 60 days after the end of the term hereof, a bonus (the "Annual
Bonus") in an amount equal to the sum of:
3.4.1.1. 1% of the excess, if any, of Company's net
sales for such period over Seller's net sales for the 12-month period ended
June 30, 1996; plus
3.4.1.2 5% of the excess, if any, of Company's net
export sales for such period over Seller's net export sales for the 12-month
period ended June 30, 1996.
The first Annual Bonus, which shall relate to sales from the date
of execution of this Agreement through the Company's first fiscal year
end during the term hereof, and the last Annual Bonus, which shall
relate to sales from the Company's last fiscal year end during the term
hereof through the expiration of the term hereof, shall be calculated
based on pro-rated sales figures. For purposes of calculating Employee's
Annual Bonus under this Section 3.4.1, at the expiration or earlier
termination of the term hereof, the Company's net sales or net export
sales shall be adjusted to include all sales for which the Company
received orders before such expiration or termination, irrespective of
when the merchandise is scheduled to be shipped. Company shall adopt a
general ledger accounting procedure to segregate export sales. Employee
shall have the right from time to time (but no more often than once per
year) to engage an auditor to audit Company's books and records to
determine its net sales or net export sales. An Annual Bonus will be
payable to Employee
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hereunder only if Employee is employed by Company on the date such Bonus
is earned.
3.4.2 Acquisition Bonuses.
3.4.2.1 In addition to the sums described above,
Company shall also pay Employee an amount equal to 2.5% of the total
consideration paid by Company, Decor, Interiors, Inc., a Delaware corporation,
or any affiliate of them (the "Group"), in connection with an acquisition by
the group of an unrelated third party introduced to the Group by Employee.
The compensation payable under this Section 3.4.2.1 shall be paid
concurrently with the consummation of the acquisition to which such
compensation relates.
3.4.2.2 In addition to the sums described above,
Company shall also pay Employee an amount equal to 1% of the total
consideration paid by the Group in connection with an acquisition by the Group
of an unrelated third party (other than a party introduced to the Group by
Employee), where the Group has asked Employee to take a material and substantial
part in analyzing, negotiating, documenting or closing the acquisition.
The compensation payable under this Section 3.4.2.2 shall be paid
concurrently with the consummation of the acquisition to which such
compensation relates.
3.5 Reimbursement of Expenses. Company agrees to pay, or promptly
to reimburse Employee for, all reasonable out-of-pocket expenses
incurred by Employee in connection with the performance of his duties
hereunder, including lease and insurance payments on Employee's 1996
Jeep Grand Cherokee automobile, home telephone, fax, office supplies and
other expenses necessary to enable Employee to work from his home,
business-related entertainment expenses, travel expenses, food and
lodging while away from home, all subject to such reasonable policies as
Company's board of directors may from time to time adopt. Employer
acknowledges and agrees that Employee is authorized to stay at major
hotel chains such as Hilton, Sheraton, Marriott, or the like, which
hotels shall be deemed reasonable for purposes of reimbursing Employee
for his travel expenses. When flying internationally or for more than
five hours at any one time, Employees may fly business class or, if
business class is not available, first class. Within 30 days after the
date hereof, and annually thereafter, Employee shall prepare, and submit
to Company for its approval, a budget for Employee's anticipated
expenses during the following year. Expenses in excess of $100 that are
not provided for in the approved budget will be reimbursed only if
approved by Company in advance.
3.6 Benefits. Employee shall be entitled to participate in all
pension or retirement plans, profit-sharing plans, disability insurance,
life insurance, medical insurance, dental insurance and any other plans
or benefits that Company provides from time to time to its employees.
Employee may, however, at
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his election, continue the current coverage of Employee and his wife
under Employee's existing medical insurance plan, and Company shall pay
all premiums associated therewith, provided, however, that Company shall
not be obligated under this sentence for premiums in excess of the
premiums currently being paid for the current coverage of Employee and
his wife under Employee's existing medical insurance plan, plus an
inflation factor of 10% per year.
Employee's compensation hereunder is in consideration of services
to be provided by him to Company, and Company shall have no right to set
off against such compensation any claim asserted against Employee or
Seller in connection with the transactions described in the Purchase
Agreement.
4. Non-Exclusive Services.
4.1 Outside Business Activities. Company acknowledges that,
except as set forth in Section 4.2 hereof, Employee will be free, during
the term hereof, to engage in business activities and to pursue business
opportunities other than on behalf of the Company, and Employee shall
in no way be obligated to share the revenues or profits from any such
activities or to present any such opportunities to Company.
4.2 Restrictions on Activities
4.2.1 Covenant Not to Compete. As noted in Recital B, Employee
has caused Seller to sell all or substantially all of the its operating
assets, together with its goodwill to the Company pursuant to the
Purchase Agreement and, as a condition of his employment hereunder and
in connection with the sale described in the Purchase Agreement,
Employee agrees to refrain from carrying on a business similar to that
of the Company within each city and county of each state of the United
States of America in which the Business has been carried on, for as long
as the Company, or any successor in interest of the Company, carries on
a like business therein.
4.2.2 Proprietary Information. During the term of this
Agreement, Employee will have access to and become acquainted with the
Company's confidential and proprietary information (collectively, the
"Proprietary Information"), including information or plans regarding the
Company's customer relationships, personnel, or sales, marketing and
financial operations and methods, trade secrets, formulas, devices,
inventions, processes, client lists and other compilations of
information, records and specifications. Employee shall not, directly or
indirectly, disclose any of the Proprietary Information, or use it in
any way, either during the term of this Agreement or at any time
thereafter, except as required in the course of his employment or as
authorized by the Company. All files, records, documents,
computer-recorded information, drawings, specifications, equipment and
similar items relating to the business of
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the Company, whether prepared by Employee or otherwise coming into his
possession, shall remain the exclusive property of the Company and shall
not be removed from the Company's premises without the Company's
consent, except when (and only for the period) necessary to carry out
Employee's duties hereunder, and if removed shall be immediately
returned to the Company upon termination of his employment, and Employee
shall keep no copies thereof.
4.2.3 Non-solicitation and Unfair Competition. In
consideration of the Company's employment of Employee hereunder,
Employee agrees as follows, and acknowledges and agrees that a breach of
any of the following would constitute an act of unfair competition
against the Company. During the term of Employee's employment hereunder
and for a period of 12 months thereafter (the "Covenant Period"),
Employee shall not:
4.2.3.1 Directly or indirectly induce or attempt to
induce any person engaged or employed (whether full-time or part-time)
by the Company, or any successor in interest of the Company, whether as
an officer, employee, consultant, adviser or independent contractor, to
leave the employ of the Company or such successor, or to cease providing
the services to the Company or such successor, then provided by such
person, or in any other manner seek to engage or employ any such person
(whether or not for compensation) as an officer, employee, consultant,
adviser or independent contractor, such that such person would
thereafter be unable to continue his employment or other engagement with
the Company or such successor; or
4.2.3.2 Engage or employ (whether or not for
compensation) as an officer, employee, consultant, adviser or
independent contractor, any person who, during the two years before such
date, served as an officer, employee, consultant, adviser or independent
contractor, of the Company, or any successor in interest of the Company.
5. Termination of Employment by Company. Company may terminate
Employee's employment only:
5.1 Death. Upon the death of the Employee.
5.2 Disability. During the duration of any Disability
that shall have persisted for more than three months. As used herein,
the term "Disability" means an illness, injury or similar incapacity of
Employee, including without limitation physical or mental incompetence,
by reason of which Employee is rendered substantially unable to perform
his essential duties hereunder.
5.3 Cause. For Cause (as hereinafter defined). As used
herein, the term "Cause" shall mean: (a) (i) Employee's conviction of,
or plea of nolo contendere (or its equivalent) to, any misdemeanor
involving moral turpitude or any felony; (ii) Employee's commission of
any act of embezzlement, theft or mis-
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appropriation of Company's funds; (iii) Employee's acceptance of
kickbacks, bribery or any other "off the books" payment relating
directly or indirectly to the Company's business; (iv) Employee's
conviction of, or plea of nolo contendere (or its equivalent) to, any
crime related to Employee's employment hereunder; (v) Employee's
material breach of, or fraud or misrepresentation in connection with,
the Purchase Agreement; or (vi) drug, alcohol or other substance abuse
affecting Employee's performance of his duties hereunder; or (b) any of
the following that is not cured within 30 days after Employee's receipt
of notice thereof from Company: (i) Employee's material breach of this
Agreement; (ii) Employee's gross negligence or malfeasance in the
performance of his duties hereunder; or (iii) any other willful breach
of duty in the course of employment, habitual neglect of employment
duties or continued incapacity to perform employment duties.
6. Effect of Termination. If Employee's employment is terminated
pursuant to Section 5.1 or 5.2 hereof, Employee shall be entitled to his
Base Salary, Additional Salary and Bonus through the date 90 days after
the date of termination. If Employee's employment is terminated pursuant
to Section 5.3 hereof, Employee shall be entitled to his Base Salary,
Additional Salary and Bonus only through the effective date of
termination. All compensation payable pursuant to this Section 6 shall
be paid immediately upon termination of Employee's employment or after
such time as is specified herein or is reasonably necessary to complete
the calculation of the amount of such compensation.
7. Effect of Merger etc.
7.1 This Agreement shall not be terminated by any voluntary
or involuntary dissolution of Company resulting from either a merger or
consolidation in which Company is not the consolidated or surviving
corporation, or a transfer of all or substantially all of the assets of
Company.
7.2 In the event of any such merger or consolidation or
transfer of assets, Company's rights, benefits and obligations hereunder
shall be assigned to the surviving or resulting corporation or the
transferee of Company's assets.
8. Indemnification. Company shall, to the maximum extent
permitted by law, indemnify, defend and hold harmless Employee from and
against expenses, including reasonable attorney's fees, judgments,
fines, settlements, and other amounts incurred by Employee in connection
with any proceeding arising out of any action taken by Company or by
Employee (within the course and scope of Employee's employment with
Company). Company shall advance to Employee any expense incurred in
defending any such proceeding.
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9. Miscellaneous.
9.1 Availability of Injunctive Relief. Employee's
obligations and duties hereunder are of a unique and extraordinary
character, which give this Agreement peculiar value. A breach by
Employee of any provision of Section 4.2 hereof cannot be reasonably or
adequately compensated in damages in an action at law. Accordingly, in
addition to other remedies provided by law or this Agreement, Company
shall have the right to obtain injunctive relief against any breach of
the provisions of the aforementioned section by Employee.
9.2 Captions. The captions of the sections hereof are
included for convenience only and shall not affect the construction or
interpretation of any provision hereof.
9.3 Notices. All notices, requests, demands, consents,
approvals, authorizations and other communications required or permitted
under this Agreement ("Notices") shall be in writing and shall be
delivered in person, telegraphed or sent by fax or courier or by
certified, registered or express mail, postage prepaid. A Notice shall
be deemed given: (a) the succeeding business day after receipt, if
telegraphed or sent by fax and confirmed by regular mail within three
business days thereafter or if delivered in person or by courier; or (b)
ten business days following the mailing thereof, if mailed by certified,
registered or express mail, postage prepaid, return receipt requested,
to the party to whom the same is so delivered or mailed, as follows:
9.3.1 If the Company:
Artisan Acquisition Co.
320 Washington St.
Mt. Vernon, NY 10533
Attention: Max Munn
fax: 914-665-5469
with a copy to:
Hartley T. Bernstein
Bernstein & Wasserman
950 Third Ave.
New York, NY 10022
fax: 212-371-4730
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9.3.2 If to Employee:
Henry Goldman
P.O. Box 7645
Van Nuys, CA 91409
fax: 805-984-7262
with a copy to:
Philip S. Magaram
Valensi, Rose & Magaram
1800 Ave. of the Stars, Ste. 1000
Los Angeles, CA 90067-4212
fax: 310-277-1706
or to such other address or fax number as any of the above shall have specified
by notice duly given hereunder.
9.4 Severability. Should any provisions or portion of this Agreement
be held unenforceable or invalid for any reason, the remaining provisions and
portions of this Agreement shall be unaffected by such holding.
9.5 Arbitration of Disputes. Any controversy or claim arising out of
or related to this Agreement, or the breach thereof, including both contract and
tort claims, shall be settled by arbitration at Los Angeles, California, in
accordance with the then current rules of the Judicial Arbitration and Mediation
Service ("JAMS"), the award from which arbitration shall be binding upon both
parties and their successors, regardless of whether one of said parties fails or
refuses to participate therein, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. In addition
to the rules governing such arbitration, the parties shall have at their
disposal the broadest pretrial discovery rights as are then available under the
laws and judicial rules of the jurisdiction in which the arbitration is to be
held (including but not limited to those set forth in Section 1283.05 of the
California Code of Civil Procedure); provided, that any dispute between the
parties relating to discovery shall be submitted to the arbitration panel for
resolution. Disputes regarding interim or ancillary relief pending final
decision of the arbitration panel in a matter hereunder shall also be
submitted to the arbitration panel for resolution. The arbitrators shall have
the power to award fees and costs to the prevailing party.
9.6 Entire Agreement; Amendment. This Agreement, together with the
other instruments and documents delivered in connection herewith, embodies the
entire agreement and understanding of the parties hereto with respect to the
subject matter hereof. This Agreement cannot be amended or terminated orally,
but only by a writing duly executed by the parties hereto.
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9.7 Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
California. The parties irrevocably submit to the jurisdiction of, and waive
objection to the laying of venue in, any state or federal court sitting in the
County of Los Angeles, State of California, for the confirmation of any
arbitration award rendered under Section 9.5 hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY: ARTISAN ACQUISITION CO.,
a Delaware corporation
By: _________________________________
_________________________________
EMPLOYEE:
_____________________________________
Henry Goldman