EMPLOYMENT AGREEMENT
AGREEMENT dated as of July 1, 1996 between U.S. HOME & GARDEN, INC., a
Delaware corporation (the "Employer" or the "Company"), and LYNDA GUSTAFSON (the
"Employee").
W I T N E S S E T H :
WHEREAS, the Employer desires to employ the Employee as Corporate
Controller of the Company, and to be assured of her services as such on the
terms and conditions hereinafter set forth; and
WHEREAS, the Employee is willing to accept such employment on such terms
and conditions;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, and intending to be legally bound hereby, the Employer
and the Employee hereby agree as follows:
1. Term. Employer hereby agrees to employ Employee, and Employee hereby
agrees to serve Employer as herein provided, commencing effective as of the date
of this Agreement (the "Effective Date") and terminating on the third
anniversary of the Effective Date (the "Term").
2. Employee Duties.
(a) During the term of this Agreement, the Employee shall have the
duties and responsibilities of the Corporate Controller of the Company,
reporting to the President and the Board of Directors of the Employer (the
"Board"). It is understood that such duties and responsibilities shall be
reasonably related to the Employee's position. The Employee shall also act
as corporate controller, chief financial officer or in such other capacity,
as may be requested from time to time by Employer, for any of the Company's
subsidiaries.
(b) The Employee shall devote substantially all of her business time,
attention, knowledge and skills faithfully, diligently and to the best of
her ability, in furtherance of the business and activities of the Company.
The principal place of performance by the Employee of her duties hereunder
shall be the Company's principal executive offices in San Francisco,
California.
3. Compensation.
(a) During the term of this Agreement, the Employer shall pay the
Employee a salary (the "Salary") at a rate of $101,040 per annum, payable
in equal installments bi-weekly,
or at such other times as may mutually be agreed upon between the Employer
and the Employee. Such Salary may be increased from time to time at the
discretion of the Board.
(b) In addition to the foregoing, the Employee shall be entitled to
such other cash bonuses as may from time to time be awarded to her by the
Board during or in respect of her employment hereunder.
4. Benefits.
(a) During the term of this Agreement, the Employee shall have the
right to receive or participate in all benefits and plans which the Company
may from time to time institute during such period for its employees of
like position, tenure and standing and for which the Employee is eligible,
including, but not limited to, pension plans, profit-sharing plans,
disability or sick-pay plan, medical reimbursement plans, group life
insurance plans, thrift and/or savings plans, disability insurance plans,
hospitalization insurance plans, major medical insurance plans, or other
employee benefit plans. Nothing paid to the Employee under any plan or
arrangement presently in effect or made available in the future shall be
deemed to be in lieu of the salary or any other obligation payable to the
Employee pursuant to this Agreement.
(b) During the term of this Agreement, the Employee shall be granted
the number of paid holidays, personal days off, vacation days and sick
leave days as are determined by the Company from time to time. Such
vacation may be taken in the Employee's discretion with the prior approval
of the Employer, and at such time or times as are not inconsistent with the
reasonable business needs of the Company.
(c) The Company shall reimburse Employee or all expenses incurred by
Employee in connection with (i) continuing professional education
obligations, including all travel, meals and other costs associated
therewith, (ii) the payment of professional dues, and (iii) the maintenance
of necessary licenses.
5. Travel Expenses. All travel and other expenses incident to the rendering
of services reasonably incurred on behalf of the Company by the Employee during
the term of this Agreement shall be paid by the Employer. If any such expenses
are paid in the first instance by the Employee, the Employer shall reimburse her
therefor on presentation of appropriate receipts for any such expenses.
6. Termination By Employer. Employee's employment under this Agreement may
be terminated, effective as of the Date
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of Termination pursuant to Section 8 of this Agreement, without any breach of
this Agreement only on the following circumstances:
6.1. Death. The Employee's employment under this Agreement shall terminate
upon her death.
6.2. Disability. If, as a result of the Employee's incapacity due to
physical or mental illness, the Employee shall have been absent from her duties
under this Agreement for 90 calendar days during any calendar year, the Employer
may terminate the Employee's employment under this Agreement by giving the
Notice of Termination (as defined in Section 7 below) anytime after the 90th
calendar day.
6.3. Cause. The Employer may terminate the Employee's employment under this
Agreement for Cause. For purposes of this Agreement, the Employer shall have
"Cause" to terminate the Employee's employment under this Agreement upon (a) the
willful and continued failure by the Employee to substantially perform her
duties under this Agreement (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness) after demand for
substantial performance is delivered by the Employer, in writing, specifically
identifying the manner in which the Employer believes the Employee has not
substantially performed her duties and the Employee fails to perform as required
within 15 business days after such demand is made, (b) the willful engaging by
the Employee in criminal misconduct (including embezzlement and criminal fraud)
which is materially injurious to the Company, monetarily or otherwise, or (c)
the conviction of the Employee of a felony. For purposes of this paragraph, no
act, or failure to act, on the Employee's part shall be considered "willful"
unless done, or omitted to be done, by her not in good faith and without
reasonable belief that her action or omission was in the best interest of the
Employer.
Notwithstanding anything contained in this Agreement to the contrary, the
Employee shall not be deemed to have been terminated for Cause unless and until
there shall have been delivered to the Employee a Notice of Termination (as
defined in Section 7 below).
6.4. Termination by the Employee. The Employee may terminate her employment
under this Agreement (a) for Good Reason (as hereinafter defined), (b) at any
time within six months after a Change of Control, or (c) if her health should
become impaired to any extent that makes the continued performance of her duties
under this Agreement hazardous to her physical or mental health or her life,
provided that, in the latter case, the Employee shall have furnished the
Employer with a written statement from a qualified doctor to such effect and
provided, further, that at the Employer's request and expense the Employee shall
submit to an examination by a doctor selected by
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the Employer and such doctor shall have concurred in the conclusion of the
Employee's doctor.
6.4.1. Good Reason. For purposes of this Agreement, "Good Reason" shall
mean (a) any assignment to the Employee of any duties or reporting obligations
other than those contemplated by, or any limitation of the powers of the
Employee in any respect not contemplated by, this Agreement, (b) failure by the
Employer to comply with its material obligations and agreements contained in
this Agreement, or (c) failure of the Employer to obtain the assumption of the
agreement to perform this Agreement by any successor as contemplated in Section
9(f) of this Agreement. With respect to the matters set forth in clauses (a),
(b) and (c) of this paragraph, the Employee must give the Employer thirty (30)
days prior written notice of her intent to terminate this Agreement as a result
of any breach or alleged breach of the applicable provision and the Employer
shall have the right to cure any such breach or alleged breach within such
thirty (30) day period.
6.4.2. Change of Control. For purposes of this Agreement, a "Change of
Control" shall be deemed to occur, unless previously consented to in writing by
the Employee, upon (a) the actual acquisition or the execution of an agreement
to acquire 20% or more of the voting securities of the Employer by any person or
entity not affiliated with the Employee (other than pursuant to a bona fide
underwriting agreement relating to a public distribution of securities of the
Employer), (b) the commencement of a tender or exchange offer for more than 20%
of the voting securities of the Employer by any person or entity not affiliated
with the Employee, (c) the commencement of a proxy contest against the
management for the election of a majority of the Board of the Employer if the
group conducting the proxy contest owns, has or gains the power to vote at least
20% of the voting securities of the Employer, (d) a vote by the Board to merge,
consolidate, sell all or substantially all of the assets of the Employer to any
person or entity not affiliated with the Employee, or (e) the election of
directors constituting a majority of the Board of Directors who have not been
nominated or approved by the Employee.
7. Notice of Termination.
Any termination of the Employee's employment by the Employer or by the
Employee (other than termination by reason of the Employee's death) shall be
communicated by written Notice of Termination to the other party of this
Agreement. For purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated.
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8. Date of Termination.
The "Date of Termination" shall mean (a) if the Employee's employment is
terminated by her death, the date of her death, (b) if the Employee's employment
is terminated pursuant to Section 6.2 above, the date on which the Notice of
Termination is given, (c) if the Employee's employment is terminated pursuant to
Section 6.3 above, the date specified on the Notice of Termination after the
expiration of any cure periods, and (e) if the Employee's employment is
terminated for any other reason, the date on which a Notice of Termination is
given after the expiration of any relevant cure periods.
9. Compensation Upon Termination or During Disability.
(a) If the Employee's employment shall be terminated by reason of her
death, the Employer shall pay to such person as she shall designate in a
notice filed with the Employer, or if no such person shall be designated,
to her estate as a lump sum benefit, her full Salary to the date of her
death in addition to any payments the Employee's spouse, beneficiaries or
estate may be entitled to receive pursuant to any pension or employee
benefit plan or life insurance policy or similar plan or policy then
maintained by the Employer, and such payments shall, assuming the Employer
is in compliance with the provisions of this Agreement, fully discharge the
Employer's obligations with respect to Section 3 of this Agreement, but all
other obligations of the Employer under this Agreement, including the
obligations to indemnify, defend and hold harmless the Employee, shall
remain in effect.
(b) During any period that the Employee fails to perform her duties
hereunder as a result of incapacity due to physical or mental illness, the
Employee shall continue to receive her Salary and other compensation until
the Employee's employment is terminated pursuant to Sections 6.2 of this
Agreement, or until the Employee terminates her employment pursuant to
Section 6.4(a) of this Agreement, whichever first occurs.
(c) After termination by Employer without Cause or pursuant to Section
6.2 of this Agreement or termination by Employee pursuant to Section 6.4 of
this Agreement, the Employee shall be paid, in one lump sum, 100% of her
Salary and other compensation and the benefits set forth in Sections 4(a)
and (c), at the rate in effect at the time Notice of Termination is given,
for one year.
(d) If the Employee's employment shall be terminated for Cause, the
Employer shall pay the Employee her full Salary and other compensation
through the Date of Termination, at the rate in effect at the time Notice
of Termination is given, and the Employer shall, assuming the Employer is
in compliance with
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the provisions of this Agreement, have no further obligations with respect
to Section 3 of this Agreement, but all other obligations of the Employer
under this Agreement, including the obligations to indemnify, defend and
hold harmless the Employee, shall remain in effect.
(e) The Employee shall not be required to mitigate the amount of any
payment provided for in this Section 9 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section
9 be reduced by any compensation earned by the Employee as the result of
employment by another employer or business or by profits earned by the
Employee from any other source at any time before and after the Date of
Termination. The amounts payable to Employee under this Agreement shall not
be treated as damages but as severance compensation to which Employee is
entitled by reason of her employment in the circumstances contemplated by
this Agreement.
(f) The Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Employer, by
agreement, in form and reasonably substance satisfactory to the Employee,
to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Employer would be required to perform it if
no such succession had taken place. Failure of the Employer to obtain such
Agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle the Employee to compensation
from the Employer in the same amount and on the same terms as she would be
entitled to hereunder if she terminated her employment within six months
after a Change in Control, except for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Employer" shall
mean the Employer and any successor to its business and/or assets which
executes the Agreement or which otherwise becomes bound by the terms and
conditions of this Agreement by operation of law.
10. Confidentiality; Noncompetition.
(a) The Employer and the Employee acknowledge that the services to be
performed by the Employee under this Agreement are unique and extraordinary
and, as a result of such employment, the Employee will be in possession of
confidential information relating to the business practices of the Company.
The term "confidential information" shall mean any and all information
(verbal and written) relating to the Company or any of its affiliates, or
any of their respective activities, other than such information which can
be shown by the Employee to be in the public domain (such information not
being deemed to be in the public domain merely because it is embraced by
more general information which is in the public domain) other than as the
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result of breach of the provisions of this Section 10(a), including, but
not limited to, information relating to: trade secrets, personnel lists,
financial information, research projects, services used, pricing,
customers, customer lists and prospects, product sourcing, marketing and
selling and servicing. The Employee agrees that she will not, during or for
a period of two years after the termination of employment, except as may be
required in the course of the performance of her duties hereunder, directly
or indirectly, use, communicate, disclose or disseminate to any person,
firm or corporation any confidential information regarding the clients,
customers or business practices of the Company acquired by the Employee,
without the prior written consent of Employer; provided, however, that the
Employee understands that Employee will be prohibited from misappropriating
any trade secret at any time during or after the termination of employment.
(b) The Employee hereby agrees that she shall not, during the period
of her employment and for a period of two (2) years following such
employment, directly or indirectly, within any county (or adjacent county)
in any State within the United States or territory outside the United
States in which the Company is engaged in business during the period of the
Employee's employment or on the date of termination of the Employee's
employment, engage, have an interest in or render any services to any
business (whether as owner, manager, operator, licensor, licensee, lender,
partner, stockholder, joint venturer, employee, consultant or otherwise)
competitive with the Company's business activities. Notwithstanding the
foregoing, nothing herein shall prevent the Employee from owning stock in a
publicly traded corporation whose activities compete with those of the
Company's, provided that such stock holdings are not greater than 5% of
such corporation. The Employee agrees, during the term of this Agreement,
to disclose to the Company all investments which the Employee has, directly
or indirectly, in an entity which competes with the Company, or an entity
which does business with the Company.
(c) The Employee hereby agrees that she shall not, during the period
of her employment and for a period of two (2) years following such
employment, directly or indirectly, take any action which constitutes an
interference with or a disruption of any of the Company's business
activities including, without limitation, the solicitations of the
Company's customers, or persons listed on the personnel lists of the
Company. At no time during the term of this Agreement, or thereafter shall
the Employee directly or indirectly, disparage the commercial, business or
financial reputation of the Company.
(d) For purposes of clarification, but not of limitation, the Employee
hereby acknowledges and agrees that the provisions of subparagraphs 10(b)
and (c) above shall serve as a prohibition against her, during the period
referred to therein,
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directly or indirectly, hiring, offering to hire, enticing, soliciting or
in any other manner persuading or attempting to persuade any officer,
employee, agent, lessor, lessee, licensor, licensee or customer who has
been previously contacted by either a representative of the Company,
including the Employee, (but only those suppliers existing during the time
of the Employee's employment by the Company, or at the termination of her
employment), to discontinue or alter her, her or its relationship with the
Company.
(e) Upon the termination of the Employee's employment for any reason
whatsoever, all documents, records, notebooks, equipment, price lists,
specifications, programs, customer and prospective customer lists and other
materials which refer or relate to any aspect of the business of the
Company which are in the possession of the Employee including all copies
thereof, shall be promptly returned to the Company.
(f) (i) The Employee agrees that all processes, technologies and
inventions ("Inventions"), including new contributions, improvements, ideas
and discoveries, whether patentable or not, conceived, developed, invented
or made by her during her employment by Employer shall belong to the
Company, provided that such Inventions grew out of the Employee's work with
the Company are related in any manner to the business (commercial or
experimental) of the Company or are conceived or made on the Company's time
or with the use of the Company's facilities or materials. The Employee
shall further: (a) promptly disclose such Inventions to the Company; (b)
assign to the Company, without additional compensation, all patent and
other rights to such Inventions for the United States and foreign
countries; (c) sign all papers necessary to carry out the foregoing; and
(d) give testimony in support of her inventorship;
(ii) If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Employee
within two years after the termination of her employment by the
Company, it is to be presumed that the Invention was conceived or made
during the period of the Employee's employment by the Company; and
(iii) The Employee agrees that she will not assert any rights to
any Invention as having been made or acquired by her prior to the date
of this Agreement, except for Inventions, if any, disclosed to the
Company in writing prior to the date hereof.
(g) The Company shall be the sole owner of all products and proceeds
of the Employee's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments,
arrangements, packages, programs and other intellectual properties that the
Employee may acquire, obtain, develop or create in connection with and
during
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the term of the Employee's employment hereunder, free and clear of any
claims by the Employee (or anyone claiming under the Employee) of any kind
or character whatsoever (other than the Employee's right to receive
payments hereunder). The Employee shall, at the request of the Company,
execute such assignments, certificates or other instruments as the Company
may from time to time deem necessary or desirable to evidence, establish,
maintain, perfect, protect, enforce or defend its right, or title and
interest in or to any such properties.
(h) The parties hereto hereby acknowledge and agree that (i) the
Company would be irreparably injured in the event of a breach by the
Employee of any of her obligations under this Section 10, (ii) monetary
damages would not be an adequate remedy for any such breach, and (iii) the
Company shall be entitled to injunctive relief, in addition to any other
remedy which it may have, in the event of any such breach.
(i) The parties hereto hereby acknowledge that, in addition to any
other remedies the Company may have under Section 10(h) hereof, the Company
shall have the right and remedy to require the Employee to account for and
pay over to the Company all compensation, profits, monies, accruals,
increments or other benefits (collectively, "Benefits") derived or received
by the Employee as the result of any transactions constituting a breach of
any of the provisions of Section 10, and the Employee hereby agrees to
account for any pay over such Benefits to the Company.
(j) Each of the rights and remedies enumerated in Section 10(h) and
10(i) shall be independent of the other, and shall be severally
enforceable, and all of such rights and remedies shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company
under law or in equity.
(k) If any provision contained in this Section 10 is hereafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portions.
(l) If any provision contained in this Section 10 is found to be
unenforceable by reason of the extent, duration or scope thereof, or
otherwise, then the court making such determination shall have the right to
reduce such extent, duration, scope or other provision and in its reduced
form any such restriction shall thereafter be enforceable as contemplated
hereby.
(m) It is the intent of the parties hereto that the covenants
contained in this Section 10 shall be enforced to the fullest extent
permissible under the laws and public policies
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of each jurisdiction in which enforcement is sought (the Employee hereby
acknowledging that said restrictions are reasonably necessary for the
protection of the Company). Accordingly, it is hereby agreed that if any of
the provisions of this Section 10 shall be adjudicated to be invalid or
unenforceable for any reason whatsoever, said provision shall be (only with
respect to the operation thereof in the particular jurisdiction in which
such adjudication is made) construed by limiting and reducing it so as to
be enforceable to the extent permissible, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of said provision in any other jurisdiction.
11. Indemnification. The Employer shall indemnify and hold harmless the
Employee against any and all expenses reasonably incurred by her in connection
with or arising out of (a) the defense of any action, suit or proceeding in
which she is a party, or (b) any claim asserted or threatened against her, in
either case by reason of or relating to her being or having been an employee,
officer or director of the Company, whether or not she continues to be such an
employee, officer or director at the time of incurring such expenses, except
insofar as such indemnification is prohibited by law. Such expenses shall
include, without limitation, the fees and disbursements of attorneys, amounts of
judgments and amounts of any settlements, provided that such expenses are agreed
to in advance by the Employer. The foregoing indemnification obligation is
independent of any similar obligation provided in the Employer's Certificate of
Incorporation or Bylaws, and shall apply with respect to any matters
attributable to periods prior to the Effective Date, and to matters attributable
to her employment hereunder, without regard to when asserted.
12. General. This Agreement is further governed by the following
provisions:
(a) Notices. All notices relating to this Agreement shall be in
writing and shall be either personally delivered, sent by telecopy (receipt
confirmed) or mailed by certified mail, return receipt requested, to be
delivered at such address as is indicated below, or at such other address
or to the attention of such other person as the recipient has specified by
prior written notice to the sending party. Notice shall be effective when
so personally delivered, one business day after being sent by telecopy or
five days after being mailed.
To the Employer:
U.S. Home & Garden Inc.
655 Montgomery Street
Suite 830
San Francisco, CA 94111
Attention: Robert L. Kassel, President
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To the Employee:
Lynda Gustafson
1688 Sacramento Street
San Francisco, California 94109
With, in either case, a copy in the same manner to:
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Attention: Barry S. Rutcofsky, Esq.
(b) Parties in Interest. Employee may not delegate her duties or
assign her rights hereunder. This Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.
(c) Entire Agreement. This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with
respect to the employment of the Employee by the Employer and contains all
of the covenants and agreements between the parties with respect to such
employment in any manner whatsoever. Any modification or termination of
this Agreement will be effective only if it is in writing signed by the
party to be charged.
(d) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
(e) Warranty. Employee hereby warrants and represents as follows:
(i) That the execution of this Agreement and the discharge of
Employee's obligations hereunder will not breach or conflict with any
other contract, agreement, or understanding between Employee and any
other party or parties.
(ii) Employee has ideas, information and know-how relating to the
type of business conducted by Employer, and Employee's disclosure of
such ideas, information and know-how to Employer will not conflict
with or violate the rights of any third party or parties.
(f) Severability. In the event that any term or condition in this
Agreement shall for any reason be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other term or condition
of this Agreement, but this Agreement shall be construed as if such
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invalid or illegal or unenforceable term or condition had never 1been
contained herein.
(g) Execution in Counterparts. This Agreement may be executed by the
parties in one or more counterparts, each of which shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has
been signed by each of the parties hereto and delivered to each of the
other parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
U.S. HOME & GARDEN, INC.
By: /s/ Robert L. Kassel
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Robert L. Kassel, President
/s/ Lynda Gustafson
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LYNDA GUSTAFSON
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