Exhibit 10
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made and entered
into as of this 14th day of September, 2004, by and between Enesco Group, Inc.
(the "Company"), and CYNTHIA PASSMORE-MCLAUGHLIN, an individual residing at the
address set forth below her name on the signature page of this Agreement
("Executive").
RECITALS
WHEREAS, the Company is engaged in a business which, among other
things, produces fine gifts, collectibles, and home decor accessories; and
WHEREAS, the parties acknowledge that the Executive's abilities and
services are unique and essential to the prospects of the Company; and
WHEREAS, the Company desires to employ the Executive as President of
the Company and the Executive desires to be so employed, pursuant to the terms
and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto acknowledge
and agree as follows:
PART ONE
NATURE AND TERM OF EMPLOYMENT
1.01 Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment, as the President of the Company.
1.02 Term. Unless earlier terminated or unless extended pursuant to the
provisions hereof, the term of this Agreement shall begin on October 1, 2004
(the "Start Date") and shall continue until December 31, 2005. The term of this
Agreement shall be automatically extended for additional one (1) year periods,
unless at least 60 days prior to the end of any Term either party gives notice
of its election to terminate this Agreement. The period during which this
Agreement remains in effect is hereinafter referred to as the "Term".
1.03 Duties and Authority. The duties and authority of the Executive
shall be as determined by the Board of Directors of the Company (the "Board")
and shall be comparable with the executive duties and authority of presidents of
similar businesses of similar size in the United States. Executive will devote
substantially all of her business time to the Company. Executive may participate
in civic, charitable, industry organizations which do not materially interfere
with her duties. Executive shall be elected to the Board of Directors when
appointed CEO. After the first anniversary of the Start Date executive may serve
on board of directors of up to two non-competing for-profit businesses which do
not materially interfere with her duties with the approval of the Chairman of
the Board and the Chair of the Governance Committee.
1.04 Place of Performance. Executive shall be located at, and shall
perform her duties from, the Company's Chicago, Illinois area corporate offices,
subject to reasonable travel necessary to perform Executive's duties.
PART TWO
COMPENSATION AND BENEFITS
2.01 Base Annual Salary. For the services rendered by Executive while
employed by the Company, the Company shall pay the Executive at an initial
annual base salary rate of $400,000 (as the same may be increased from time to
time, the "Base Annual Salary"). Executive's Base Annual Salary shall continue
when named CEO at the foregoing amount and until January 1, 2006. Following such
date and thereafter at least annually, Executive's Base Annual Salary shall be
reviewed and shall be subject to increase by the Board of Directors in its
discretion at the time executive officer compensation is reviewed, normally
March of each year. Any increase shall be paid retroactively to January of such
year. The Base Annual Salary shall be payable to Executive in substantially
equal installments in accordance with the Company's regular payroll practices.
2.02 Bonus. Executive shall be entitled to receive an annual cash bonus
for the achievement of performance goals previously approved by the Board of
Directors. Such performance goals will be mutually developed in advance by the
Board and Executive. The target bonus opportunity payable to Executive in the
event of achievement of the applicable performance goals shall be 60% of Base
Annual Salary (the "Target Bonus"), with a maximum of 100% of Base Annual Salary
for extraordinary performance. Notwithstanding the foregoing, Executive will
receive a bonus for performance through December 2005 at the larger of the
actual earned bonus for 2005 or a minimum of 40% of Base Annual Salary even if
the performance goals are not met. Payment of any such bonus to Executive will
occur when bonuses are normally paid by the Company.
2.03 Sign-On Bonus. Executive shall be granted a cash sign-on bonus in
the amount of $35,400 payable within thirty (30) days of the Start Date. This
amount will be grossed up for tax purposes.
2.04 Equity Grants. Executive shall be granted stock options to
purchase 100,000 shares of Company common stock, with an exercise strike price
determined by the market price at close of the Company's shares on the Start
Date. Such stock options shall vest in accordance with the terms of the Enesco
Stock Option Plan (25% per year beginning on the first anniversary of grant) and
shall have a ten (10) year exercise period. In addition, on the Start Date,
Executive shall be granted 25,000 restricted shares vesting at one third (1/3)
per year beginning on anniversary date. Each year, the Board shall consider the
issuance of additional option and restricted share grants to Executive.
2.05 General Employee Benefits. Executive shall be entitled to begin
immediate participation in Company's current and future general benefits
plans/programs/policies, including without limitation health insurance for
Executive and Executive's immediate family, to the extent maintained by the
Company for salaried employees generally, provided that the Executive (or, as
applicable, Executive's immediate family member) is eligible for participation
under the terms of such plans, programs and arrangements.
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2.06 Relocation. The Company shall pay or provide Executive level
relocation benefits under the Company's Relocation Plan.
2.07 Other Executive Benefits. Executive also shall be entitled to:
(a) immediate participation in all current and future
executive benefits plans, programs, policies and perquisites on a basis
no less favorable than any other senior executive of the Company;
(b) four (4) weeks paid vacation;
(c) an automobile allowance of $1,200.00 per month;
(d) payment by the Company for legal fees incurred in the
development, preparation and negotiation of this Agreement;
(e) all costs associated with an executive annual physical at
a medical facility mutually agreed upon;
(f) term life insurance in the amount of two (2) times Base
Annual Salary up to a maximum of $500,000 and the ability to purchase
additional coverage up to another $500,000; and
(g) expense reimbursement in accordance with the Company's
expense reimbursement policy.
PART Three
NONCOMPETITION AND CONFIDENTIALITY
3.01 Noncompetition. In consideration of Executive's employment
hereunder, Executive hereby agrees that during the initial or any renewal term
of the Agreement and for a period of one year thereafter, she will not, singly,
jointly, or as a member, employee, or agent of any partnership or as an officer,
agent, employee, director or stockholder, or inventor of any other corporation
or entity, or in any other capacity, directly or indirectly:
(i) own, manage, operate, participate in, perform services
for or otherwise carry on, assist or be connected with
a Competing Business doing business anywhere within the
respective territories in which the Company's business
is then carried on (provided that the foregoing shall
not apply to any corporation, partnership or other
entity in which Executive (and/or her spouse and/or
children) only owns an ownership interest of one
percent (1%) or less and exercises not more than one
percent (1%) of the voting control);
(ii) solicit or contact (or assist in any solicitation or
contact of) any customer of the Company with a view
toward inducing the purchase of a Competing Product or
otherwise diverting business from the Company;
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(iii) induce or attempt to persuade any employee or agent of
the Company to terminate such employment or agency
relationship or violate the terms of any agreement with
the Company; or
(iv) induce or attempt to persuade any customer or supplier
of the Company to terminate or materially change such
relationship;
For purposes of this Agreement.
"Competing Products" means products, processes or services of any
person or organization other than the Company, in existence or under
development, which are substantially the same as or which perform the same
function or otherwise compete with any products, processes, or services
developed, manufactured or sold by the Company during the time of the
Executive's employment with the Company or about which Executive acquires
Confidential Information through her relationship with the Company, including,
but not limited to, the creation, manufacturing, marketing and distribution of
giftware, collectibles and home decor product.
"Competing Business" means any person or organization engaged in, or
planning to become engaged in, research, development, production, distribution,
marketing, providing or selling of a Competing Product.
3.02 Confidentiality. Executive acknowledges that preservation of a
continuing business relationship between the Company and its subsidiaries and
its respective customers, representatives and employees is of critical
importance to the continued business success of the Company, that it is the
policy of the Company and its subsidiaries to guard as confidential the
Confidential Information defined below, and that as Chief Executive Officer
Executive will acquire Confidential Information and personal relationships with
customers and prospective customers, which relationships may constitute the
Company's primary relationships with such customers and prospective customers.
In view of the foregoing, Executive agrees that, except as required or the
performance of her duties under this Agreement, she will not during the initial
or any renewal term of the Agreement and thereafter, without the prior written,
consent of the Company, use for the benefit of herself or any third party or
disclose to any third party any Confidential Information. Executive further
agrees that if her employment by the Company is terminated for any reason, she
will not take with her but will leave with the Company all records and papers
and all matter of whatever nature which contains Confidential Information. For
purposes of this Agreement, "Confidential Information" means any information,
including any plan, drawing, specification, pattern, procedure, design, device,
list or compilation, which relates to the present or planned business of the
Company which has not been disclosed publicly by authorized representatives of
the Company. Confidential Information may include, for example, inventions,
marketing and sales plans or programs; customer and supplier information and
lists; financial data; purchasing and pricing information; product engineering
information; technological know-how; designs, plans or specifications regarding
products and materials; manufacturing processes and techniques; regulatory
approval strategies; computer programs, data, formulae and compositions; service
techniques and protocols; and new product strategies, plans and designs.
Confidential information also includes all information received by Company under
an obligation to a third party.
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PART FOUR
TERMINATION
4.01 Death or Disability. Upon the death or Disability of the Executive
this Agreement shall automatically terminate. For the purposes of this
Agreement, "Disability" is defined as the inability of the Executive to perform
her material duties for the eligibility waiting period under the terms of
Company's long term disability insurance policy.
4.02 Termination by Company For Cause. Company may terminate this
Agreement for "cause" immediately upon written notice to the Executive. For the
purposes of this Agreement, "cause" shall be deemed to exist if Executive: (i)
is convicted of, or pleads guilty or no contest to, a felony; (ii) engages in
conduct that constitutes fraud, gross negligence or gross misconduct that
results in material harm to the Company; (iii) materially breaches the terms of
this Agreement, which breach is not cured within thirty (30) days after written
notice to Executive; (iv) engages in intentional and willful misconduct that
could subject the Company to criminal or civil liability; (v) disregards Company
policies and procedures.
4.03 Termination by Executive. Executive may terminate her employment
under this Agreement by giving the Company sixty (60) days advance written
notice. Executive may terminate this Agreement for "good reason" within 30 days
upon written notice to the Company. For purposes of this Agreement, "good
reason" shall be deemed to exist if the Company: (i) materially breaches the
terms of this Agreement, which breach is not cured within thirty (30) days after
written notice to the Company; (ii) without Executive's consent, diminishes
Executive's title, reporting relationship, material duties or authority, assigns
duties that are materially inconsistent with Executive's duties as of the Start
Date, requires that Executive relocate her principal residence after relocating
to Chicago, Illinois area, fails to retain Executive as a member of the Board
after election, reduces Executive's salary, fails to elect Executive as Chief
Executive Officer of the Company within six (6) months of the Start Date, or
fails to renew this Agreement on substantially similar terms.
4.04 Payments on Termination.
(a) General. Upon any termination of this Agreement in accordance
with this Part Four, Executive shall receive: (i) Base Annual Salary through the
termination date; (ii) the balance of any earned but as yet unpaid annual cash
bonus or other incentive award for a prior year; (iii) accrued but unused
vacation; (iv) vested benefits under Company benefit plans; and (v) benefit
continuation/conversion rights as provided under Company benefit plans.
(b) Death or Disability. In the event that termination of this
Agreement results from Executive's death or Disability, in addition to the
foregoing general payments, Executive shall receive an amount equal to the
Target Bonus.
(c) Termination by Company Without Cause or Resignation by
Executive For Good Reason. In the event that termination of this Agreement is by
the Company without "cause" or by Executive for "good reason," in addition to
the foregoing general payments, Executive shall receive (i) an amount determined
by prorating the Target Bonus for the year in which termination occurs through
the date of termination, which amount shall be payable when executive bonuses
are normally paid; (ii) an additional amount equal to the Base Annual Salary
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plus the Target Bonus for twelve (12) months following termination at the rate
in effect prior to termination, payable in substantially monthly installments,
which amount will increase after the first anniversary of the Start Date by one
(1) month for each additional quarter worked, to a maximum of 18 months; (iii)
medical and life insurance benefits for Executive and her eligible dependents
for twelve (12) months concurrently at active employee contribution rates, which
shall increase after the first anniversary of Start Date by one month for each
additional quarter worked to a maximum of 18 months.; (iv) executive level
career transition assistance services by a firm mutually agreed upon; and (v)
full relocation back to Connecticut or comparable destination under the same
relocation terms and conditions in effect for relocation to Illinois if
Executive is not named Chief Executive Officer of the Company within six (6)
months of the Start Date.
PART FIVE
MISCELLANEOUS
5.01 Assignment. The Executive and Company acknowledge and agree that
the covenants, terms and provisions contained in this Agreement constitute a
personal employment contract and the rights and duties of the parties hereunder
cannot be transferred, sold, assigned, pledged or hypothecated.
5.02 Entire Agreement. This Agreement contains the entire agreement
between the parties relating to the subject matter hereof and shall not be
modified except in writing by the parties hereto. Furthermore, the parties
hereto specifically agree that all prior agreements, whether written or oral,
relating to the Executive's employment by the Company shall be of no further
force or effect from and after the date hereof.
5.03 Severability. If any phrase, clause or provision of this Agreement
is declared invalid or unenforceable by a court or arbitrator of competent
jurisdiction, such phrase, clause or provision shall be deemed severed from this
Agreement, but will not affect any other provisions of this Agreement, which
shall otherwise remain in full force and effect. If any restriction or
limitation in this Agreement is deemed to be unreasonable, onerous and unduly
restrictive by a court or arbitrator of competent jurisdiction, it shall not be
stricken in its entirety and held totally void and unenforceable, but shall
remain effective to the maximum extent permissible within reasonable bounds.
5.04 Notices. Any notice, request or other communication required to be
given pursuant to the provisions hereof shall be in writing and shall be deemed
to have been given when delivered in person or three (3) days after being
deposited in the United States mail, certified or registered, postage prepaid,
return receipt requested and addressed to the party at its or her last known
address. The address of any party may be changed by written notice to the other
party duly served in accordance herewith.
5.05 Amendment or Waiver. No amendment, modification or waiver of any
term, condition, right or remedy hereunder shall be effective for any purpose
unless specifically set forth in a writing signed by the party to be bound
thereby. The waiver by the Company or the Executive of any breach of any term or
condition of this Agreement shall not be deemed to constitute the waiver of any
other breach of the same or any other term or condition hereof.
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5.06 Indemnification. For such purposes, the Company shall maintain a
commercially reasonable amount of directors and officers liability insurance
coverage which shall be effective during Executive's employment and thereafter.
5.07 Governing Law. This Agreement and the enforcement thereof shall be
governed and controlled in all respects by the internal laws of the State of
Illinois, without application of conflicts of law principles.
5.08 Arbitration. Any controversy or claim arising out of, or relating
to, this Agreement or the breach thereof shall be settled by binding arbitration
in accordance with the American Arbitration Association National Rules for
Resolution of Employment Disputes then in effect in the State of Illinois and
judgment upon any arbitration award may be entered into in any court having
jurisdiction thereof. The arbitration shall be held in Chicago, Illinois. The
cost of the arbitration and the related costs and expenses (including reasonable
attorneys' fees and expenses) of the party that prevails, as determined by the
arbitrator, shall be paid or reimbursed by the other party.
5.09 Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their heirs, legatees, personal
representatives, successors, and permitted assigns.
5.10 Headings/Counterparts. The headings of the parts and sections of
this Agreement are inserted for convenience of reference only and shall not be
deemed a part of, or affect the construction or interpretation of, any provision
hereof. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and all such counterparts together
shall constitute one and the same instrument.
SIGNATURES FOLLOW
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first herein above written.
EXECUTIVE:
/s/ Cynthia Passmore-McLaughlin
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Cynthia Passmore-McLaughlin
COMPANY:
ENESCO GROUP, INC.
/s/ Anne-Lee Verville
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Anne-Lee Verville
Chairman of the Board