DIPLOMAT CORPORATION
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT made as of this 2nd day of February, 1998 by and
between DIPLOMAT CORPORATION, a Delaware corporation (hereinafter referred to as
"Employer") and LEW MAGRAM LTD., a New York corporation and wholly owned
subsidiary of Employer (hereinafter referred to as "Magram"), and WARREN GOLDEN,
(hereinafter referred to as "Employee");
W I T N E S S E T H:
WHEREAS, Employer desires to employ Employee as its Executive Vice
President and Chief Operating Officer and Magram wishes to employ Employee as
its Executive Vice President; and
WHEREAS, Employee is willing to be employed in the manner provided for
herein, and to perform the duties provided for herein upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein set forth it is agreed as follows:
1. Employment of Employee. Employer hereby employs Employee as Executive
Vice President and Chief Operating Officer and Magram hereby employs Employee as
Executive Vice President.
2. Term. The term of this Agreement shall commence on the execution hereof
(the "Commencement Date") and expire three (3) years from such date (which, with
renewals, if any, the "Term"). Each 12 month period from the Commencement Date
forward during the Term shall be referred to as an "Annual Period." After three
years from the Commencement Date, this Agreement shall automatically renew
annually unless either Employer or Employee gives notice not to renew at least
one hundred eighty (180) days prior to the end of the applicable Annual Period.
During the Term, Employee shall devote substantially all of his business time
and efforts to Employer and its subsidiaries and affiliates.
3. Duties. Employee hereby agrees that, throughout the period of his
employment hereunder, he shall devote his business time, attention, knowledge
and skills, diligently in furtherance of the business of Employer and Magram,
shall perform the duties assigned to him by the President and Board of Directors
of Employer and Magram consistent with his executive positions with Employer and
Magram, respectively, and shall observe and carry out such rules and
regulations, policies and directions as Employer and Magram may from time to
time establish to the extent consistent herewith. During the term of this
Agreement, Employee shall do such traveling as may be reasonably required of him
in the performance of his duties on behalf of Employer consistent with travel
during periods prior to the date hereof. Employee shall be available to confer
and consult with and advise the officers and directors of Employer and Magram at
such times during
business hours that may be reasonably required by Employer and Magram. Employee,
in his capacity as an employee of Employer shall report directly and solely to
the President of Employer, and, in his capacity as an employee of Magram shall
report directly and solely to the President of Magram.
4. Compensation.
(a) Employee shall be paid a minimum of $200,000 for each Annual Period
such amount to be increased, if Employer is profitable for the fiscal year
ending September 30, 1998, in an amount determined by the majority of the
noninterested members of the Board of Employer excluding Employee at the Board's
discretion. Employee shall be paid periodically in accordance with the policies
of the Employer during the term of this Agreement, but not less frequently than
monthly. As an executive officer of Employer, Employee is eligible for an annual
bonus, if any, which will be determined and paid in accordance with policies set
from time to time by the Board of Employer. As an executive officer of Magram,
Employee is eligible for an annual bonus, if any, which will be determined and
paid in accordance with policies set from time to time by the majority of the
non interested members of the Board of Magram, excluding Employee. Such bonuses
are in addition to amounts received from the Total Bonus Pool pursuant to
Section 10 hereof.
(b) Employee shall be entitled to participate in and receive the benefits
of all pension, profit-sharing, deferred compensation, retirement,
hospitalization, insurance, medical or dental or other benefit plan or
arrangement generally available to executive employees of Employer as may now or
hereafter exist; provided that Employer shall provide Employee medical benefits
consistent with Lew Magram Ltd.'s former practices. Employee shall also be
entitled to participate in or receive all other benefits and perquisites
generally available to senior executives of Employer that may be in effect from
time to time during the Employee's employment hereunder. Employer shall be under
no obligation to institute or continue the existence of any such employee plan,
benefit or perquisite. Employer shall consider adopting a deferred
compensation/retirement benefits plan, in which, upon adoption, Employee will be
permitted to participate.
5. Expenses. Employer shall reimburse Employee, promptly upon presentation
of receipts or vouchers thereof, for all expenses reasonably incurred by him in
connection with the performance of his duties hereunder and the business of
Employer, in accordance with policies of Employer from time to time in effect.
Until expiration of the current automobile lease, Employer shall furnish
Employee a luxury automobile for so long as Employee shall remain in the employ
of Employer for his exclusive use in connection with the business of Employer by
paying the existing lease payments, insurance and all costs incident to the
maintenance and operation of such automobile. After the current lease expires,
Employee will be entitled to a similar automobile procedurally consistent with
Parent's policies. Employer shall pay all expenses incident to the maintenance
and operation of such automobile, including, without limitation, insurance,
gasoline, oil, and repairs, the costs of furnishing such automobile and of such
maintenance and operation not to exceed $20,000 per Annual Period. Employer
shall also pay the cost of a
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parking space for Employee's automobile in a facility as proximate to Employer's
New York office as is practicable, where needed. Employer shall also provide
Employee with a cellular phone.
6. Vacation. Employee shall be entitled to receive three (3) weeks paid
vacation time after each year of employment upon dates agreed upon by Employer.
Upon separation of employment, for any reason, vacation time accrued and not
used shall be paid at the salary rate of Employee in effect at the time of
employment separation.
7. Employee's Representations. Employee is free to enter into this
Employment Agreement and to perform each of the provisions contained herein.
Employee represents and warrants that Employee is not restricted or prohibited,
contractually or otherwise, from entering into and performing this Employment
Agreement, and that Employee's execution and performance of this Employment
Agreement is not a violation or breach of any agreement between Employee and any
other person or entity.
8. Nondisclosure of Confidential Information; Ownership of Intellectual
Property Rights; Non Competition; Covenant Not to Compete.
(a) Nondisclosure of Confidential Information. During the term of this
Employment Agreement and at all times thereafter, Employee will keep
confidential and will not directly or indirectly divulge to anyone nor use
or otherwise appropriate for Employee's own benefit, or on behalf of any
other person, firm, partnership or corporation by whom Employee might
subsequently be employed or otherwise associated or affiliated with, any
Confidential Information (as defined herein). For this purpose,
"Confidential Information" means any and all trade secrets or other
confidential information of any kind, nature or description relating to the
business of Employer provided that such information is not and does not in
the future become known or available to third parties or general economic
trade information known to the industry, both of which does not arise as a
result of a disclosure by Employee or his agents.
(b) Employer Materials. All reports and analysis, designs, drawings,
contracts, contractual arrangements, specifications, computer software,
computer hardware and other equipment, computer printouts, computer disks,
documents, memoranda, notebooks, correspondence, files, lists and other
records, and the like, and all photocopies or other reproductions thereof,
relating to the business of Employer which Employee shall prepare, use,
construct, observe, possess or control, except Employee copies of all such
documents which pertain to Employee ("Employee Materials"), shall be and
remain the sole property of Employer. Upon termination of this Employment
Agreement, Employee shall deliver promptly to Employer all such Employer
Materials.
(c) Certain Restrictions on Business Activities. During the term of
this Employment Agreement, Employee agrees that:
(i) Business Activities. He will not, directly or indirectly, own
an interest in, operate, join, control or participate in, or be
connected as an officer, employee, agent,
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independent contractor, partner, shareholder or principal of any
corporation, partnership, proprietorship, firm, association, person or
other entity providing services and/or products or a combination
thereof which directly or indirectly compete with Employer's business,
and he will not undertake planning for or organization of any business
activity directly competitive with Employer's business, except for the
period after notice of non-renewal of Employee's employment, or
combine or conspire with other employees or representatives of
Employer's business for the purpose of organizing any such competitive
business activity, except the purchase of less than four percent (4%)
of the stock of a publicly traded company which is not affiliated with
Employer.
(ii) Solicitation of Employees, Etc. During the term of this
Agreement and six (6) months thereafter, he will not, directly or
indirectly or by action in concert with others, induce or influence
(or seek to induce or influence) any person who is engaged (as an
employee, agent, independent contractor or otherwise) by Employer to
terminate his or her employment or engagement.
(d) Covenant Not to Compete. Employee covenants and agrees that, if
Employee's employment with Employer is terminated other than by Employer
without Cause (as defined herein) at any time, for a period of six (6)
months after the date of such termination, Employee will not engage or be
engaged, in any capacity, directly or indirectly, including but not limited
as employee, agent, consultant, manager, executive, owner or stockholder
(except as a passive investor holding less than a four percent (4%) equity
interest in any enterprise the securities of which are publicly traded) in
any business entity doing business in the United States engaged in direct
competition with the business conducted by Employer on the date of
termination. This Covenant Not to Compete shall survive the termination or
expiration of the other provisions of this Employment Agreement. If any
court determines that this Covenant Not to Compete, or any part thereof, is
unenforceable because of the duration or geographic scope of such
provision, such court shall have the power to reduce the duration or scope
of such provision, as the case may be, and, in its reduced form, such
provision shall then be enforceable.
(e) Severability. Employee agrees, in the event that any provision of
this Section 8 or any word, phrase, clause, sentence or other portion
thereof shall be held to be unenforceable or invalid for any reason, such
provision or portion thereof shall be modified or deleted in such a manner
so as to make this Section 8 as modified legal and enforceable to the
fullest extent permitted under applicable laws. The validity and
enforceability of the remaining provisions or portions thereof shall not be
affected thereby and shall remain valid and enforceable to the fullest
extent permitted under applicable laws. A waiver of any breach of the
provisions of this Section 8 shall not be construed as a waiver of any
subsequent breach of the same or any other provision.
9. Termination.
(a) Termination by Employer.
(i) Employer may terminate this Agreement upon written notice for
Cause. For purposes hereof, "Cause" shall mean (A) engaging by the
Employee in conduct that
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constitutes activity in direct competition with Employer's businesses;
(B) the conviction of Employee for the commission of a felony; (C) the
habitual abuse of alcohol or controlled substances; (D) deliberate
actions taken by Employee to the material detriment of Employer;
and/or (E) material breach of this Agreement. Notwithstanding anything
to the contrary in this Section 9(a)(i), Employer may not terminate
Employee's employment under this Agreement for Cause unless Employee
shall have first received notice from the Board advising Employee of
the specific acts or omissions alleged to constitute Cause, and such
acts or omissions continue after Employee shall have had a reasonable
opportunity (at least 20 days from the date Employee receives the
notice from the Board) to correct the acts or omissions so complained
of.
(ii) In the event that during the term of his employment with
Employer, Employee shall become Disabled (as that term is defined
herein), Employer may terminate this Agreement and Employee's
employment hereunder at any time upon 10 days' written notice to
Employee and Employee shall be entitled to receive disability payments
during the succeeding 12-month period at a rate equal to one-half of
the rate of the base salary as provided in Section 4(a) to which he
was theretofore entitled, payable in equal installments no less
frequently than monthly. For the purposes of this Agreement, Employee
shall be deemed to have become Disabled when by reason of his physical
or mental incapacity, Employee shall not perform his duties hereunder
for a period of four consecutive months or for an aggregate of 120
days in any consecutive period of six months. Any proceeds of
disability insurance policies or plans maintained by Employer, in
addition to the contributory state mandated minimum coverage policy,
for the benefit of Employee shall be paid to Employee and shall reduce
on a dollar for dollar basis the obligations of Employer under this
Section 9.
(iii) This Employment Agreement and Employer's obligations
hereunder shall terminate upon Employee's death. Upon termination for
death, Employer shall continue to pay the compensation payments
pursuant to Section 4(a) to the surviving spouse of Employee (or if
there is none to Employee's estate) for the succeeding six (6) months.
(b) Termination by Employee. Employee shall have the right to
terminate his employment under this Agreement upon 30 days' notice to
Employer given within 90 days following the occurrence of any of the
following events:
(A) Employer acts to materially reduce Employee's duties and
responsibilities hereunder.
(B) A reduction in Employee's rate of base compensation, the
failure to pay Employee a bonus due under Section 10 hereof, or
material reduction in Employee's other benefits; or
(C) A material breach of this Agreement by Employer, which is not
cured within thirty (30) days of written notice of such breach by
Employer.
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If Employer shall terminate Employee's employment other than due to his death or
disability or for Cause (as defined in Section 9(a)(i) of this Agreement), or if
Employee shall terminate this Agreement under Section 9(b), Employee shall
continue to be entitled to receive all amounts provided for by Section 4 and all
additional employee benefits under Section 4 regardless of the amount of
compensation he may earn with respect to any other employment he may obtain for
the remainder of the Term as it may be extended from time to time.
10. Bonus. Each of Employee, Irving Magram and Stephanie Sobel
(collectively the "Total Bonus Pool Participants") shall be entitled to a
portion of an amount equal to ten percent (10%) of Magram's earnings before
income taxes up to a maximum of $150,000 per Annual Period ("Total Bonus Pool").
The allocation of the Total Bonus Pool to each Total Bonus Pool Participant
shall be as follows: Employee - 40%; Irving Magram - 40%; Stephanie Sobel - 20%.
The Total Bonus Pool shall be payable within 90 days after the end of Magram's
fiscal year commencing with the fiscal year ended September 30, 1998. So long as
any Total Bonus Pool Participant is an employee of Magram, the full amount of
the Total Bonus Pool shall be dispersed to the Total Bonus Pool Participants
annually.
11. Excise Tax. In the event that any payment or benefit received or to be
received by Employee in connection with a termination of his employment with
Employer would constitute a "parachute payment" within the meaning of Code
Section 280G or any similar or successor provision to 280G and/or would be
subject to any excise tax imposed by Code Section 4999 or any similar or
successor provision then Employer shall assume all liability for the payment of
any such tax and Employer shall immediately reimburse Employee on a "grossed-up"
basis for any income taxes attributable to Employee by reason of such Employer
payment and reimbursements.
12. Arbitration. Any controversies between Employer and Employee involving
the construction or application of any of the terms, provisions or conditions of
this Agreement, save and except for any breaches arising out of Sections 7 and 8
hereof, shall on the written request of either party served on the other be
submitted to arbitration. Such arbitration shall comply with and be governed by
the rules of the American Arbitration Association. An arbitration demand must be
made within one (1) year of the date on which the party demanding arbitration
first had notice of the existence of the claim to be arbitrated, or the right to
arbitration along with such claim shall be considered to have been waived. An
arbitrator shall be selected according to the procedures of the American
Arbitration Association. The cost of arbitration shall be born by the losing
party or in such proportions as the arbitrator shall decide. The arbitrator
shall have no authority to add to, subtract from or otherwise modify the
provisions of this Agreement, or to award punitive damages to either party.
13. Attorneys' Fees and Costs. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which he may be entitled.
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14. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the transactions contemplated herein and supersedes,
effective as of the date hereof any prior agreement or understanding between
Employer and Employee with respect to Employee's employment by Employer. The
unenforceability of any provision of this Agreement shall not effect the
enforceability of any other provision. This Agreement may not be amended except
by an agreement in writing signed by the Employee and the Employer, or any
waiver, change, discharge or modification as sought. Waiver of or failure to
exercise any rights provided by this Agreement and in any respect shall not be
deemed a waiver of any further or future rights.
15. Assignment. This Agreement shall not be assigned to other parties.
16. Governing Law. This Agreement and all the amendments hereof, and
waivers and consents with respect thereto shall be governed by the internal laws
of the State of New York.
17. Notices. All notices, responses, demands or other communications under
this Agreement shall be in writing and shall be deemed to have been given when
(a) delivered by hand; (b) sent be telex or telefax, (with receipt confirmed),
provided that a copy is mailed by registered or certified mail, return receipt
requested; or (c) received by the addressee as sent be express delivery service
(receipt requested) in each case to the appropriate addresses, telex numbers and
telefax numbers as the party may designate to itself by notice to the other
parties:
(i) if to the Employer:
Diplomat Corporation
25 Kay Fries Drive
Stony Point, New York 10980
Attention: Jonathan Rosenberg
Telefax: (914) 786-8727
Telephone: (914) 786-5552
With a copy to:
Gersten, Savage, Kaplowitz & Fredericks, LLP
101 East 52nd Street
New York, New York 10022
Attention: Jay M. Kaplowitz, Esq.
Telefax: (212) 980-5192
Telephone: (212) 752-9700
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(ii) if to the Employee:
Warren Golden
703 Hollywood Avenue
Bronx, New York 10465
Telefax: (718) 792-2423
Telephone: (718) 828-6991
With a copy to:
Rosenman & Colin LLP
575 Madison Avenue
New York, New York 10022
Attention: Joel Yunis
Telefax: (212) 940-8776
Telephone: (212) 940-8800
18. Severability of Agreement. Should any part of this Agreement for any
reason be declared invalid by a court of competent jurisdiction, such decision
shall not affect the validity of any remaining portion, which remaining
provisions shall remain in full force and effect as if this Agreement had been
executed with the invalid portion thereof eliminated, and it is hereby declared
the intention of the parties that they would have executed the remaining
portions of this Agreement without including any such part, parts or portions
which may, for any reason, be hereafter declared invalid.
[Signatures on following page]
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IN WITNESS WHEREOF, the undersigned have executed this agreement as of the
day and year first above written.
DIPLOMAT CORPORATION
By: /s/ JONATHAN ROSENBERG
---------------------------------------
Jonathan Rosenberg, President
LEW MAGRAM LTD.
By: /s/ JONATHAN ROSENBERG
---------------------------------------
Jonathan Rosenberg, Vice President
/s/ WARREN GOLDEN
---------------------------------------
Warren Golden
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February 18, 1998
Magram Acquisition Corporation Diplomat Corporation
25 Kay Fries Drive 25 Kay Fries Drive
Stony Point, New York 10980 Stony Point, New York 10980
Lew Magram, Ltd. Warren Golden
414 Alfred Avenue 703 Hollywood Avenue
Teaneck, New Jersey 07666 Bronx, New York 10465
Irving Magram Stephanie Sobel
56 Huyler Landing 21 Alice Avenue
Cresskill, New Jersey 07262 Merrick, New York 11566
1. Reference is made to that certain Agreement and Plan of Merger (the "Merger
Agreement"), dated as of December 23, 1997 among Lew Magram Ltd. ("Lew Magram"),
Diplomat Corporation ("Diplomat") and Magram Acquisition Corporation ("Magram
Acquisitions"), and to the Employment Agreements (collectively, the "Employment
Agreements"), dated as of February 2, 1998 and executed in connection with the
Merger Agreement, among Lew Magram Ltd. and Diplomat Corporation on the one hand
and Irving Magram, Warren Golden and Stephanie Sobel, respectively, on the other
hand. Terms used but not otherwise defined herein shall have those meanings set
forth in the Merger Agreement.
2. In addition to any salary, bonuses or incentive compensation provided for or
contemplated in the Employment Agreements, the undersigned agree to amend the
Employment Agreements to reflect the following terms:
(a) During the fiscal year ending September 30, 1998, Irving Magram,
Warren Golden and Stephanie Sobel shall receive additional base salary
payments over and above those amounts set forth in their respective
Employment Agreements of $35,000, $35,000 and $15,000, respectively.
If, for the fiscal year ending September 30, 1998, Lew Magram Ltd.
shall have net income determined in accordance with generally accepted
accounting principles ("GAAP") consistently applied, then Irving
Magram, Warren Golden and Stephanie Sobel shall, immediately after the
end of such fiscal year and completion of financial statements,
receive further lump-sum salary payments of $15,000, $15,000 and
$5,000, respectively.
(b) During the fiscal year ending September 30, 1999, Irving Magram,
Warren Golden and Stephanie Sobel shall receive additional base salary
payments, over and above those amounts set forth in their respective
Employment Agreements of $35,000, $35,000 and $15,000, respectively.
If for the fiscal year ending September 30, 1999 Lew Magram Ltd. shall
have net income determined in accordance with GAAP consistently
applied, then Irving Magram, Warren Golden and Stephanie Sobel shall,
immediately after the end of such fiscal year and completion of
financial statements, receive further lump-sum salary payments of
$15,000, $15,000 and $5,000, respectively, and during the fiscal year
ending September 30, 2000, additional base salary payments of $50,000,
$50,000 and
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$20,000, respectively, over and above those amounts set forth in their
respective Employment Agreements with respect to the fiscal year
ending September 30, 2000.
(c) If for the fiscal year ending September 30, 1999 Lew Magram Ltd.
does not have net income, determined in accordance with GAAP
consistently applied, then the lump-sum payments provided for in the
second sentence of paragraph (b) hereof shall not be made and the
respective salaries of Irving Magram, Warren Golden and Stephanie
Sobel for the fiscal year ending September 30, 2000 shall revert to
those amounts set forth in their respective Employment Agreements with
respect the fiscal year ending September 30, 2000.
3. The Employment Agreements, as hereby amended, shall remain in full force and
effect in accordance with their respective provisions. The salary increases
provided for in paragraph 2 hereof shall not diminish or reduce any other salary
increases, bonuses or benefits to which Irving Magram, Warren Golden or
Stephanie Sobel may be entitled pursuant to their respective Employment
Agreements.
4. The undersigned further agree that the terms and provisions of the
Certificate of Designations for the Series D Preferred Stock of Diplomat shall
be amended to provide that no dividends shall be payable thereon, except and to
the extent of dividends payable on the Diplomat Common Stock, in which event
dividends on the Series D Preferred Stock shall be paid in the same amounts as
paid on the Diplomat Common Stock equivalent of the Series D Preferred Stock.
This agreement may be executed multiple counterparts, each of which shall
be deemed an original.
Agreed:
Diplomat Corporation Magram Acquisition Corporation
By_/s/_________________ By_/s/_________________________
Lew Magram, Ltd. /s/__________________________
By:/s/_____________________ Irving Magram
/s/________________________ /s/__________________________
Warren Golden Stephanie Sobel
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