EXHIBIT 10.33
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EMPLOYMENT AGREEMENT
Michael Anthony Jewelers, Inc, a Delaware Corporation with its
principal place of business in Mount Vernon, New York ("Corporation"), and
Claudia Hollingsworth, an individual and resident of California ("Employee"),
have, as of this 2nd day of FEBRUARY, 2002 entered into the following:
AGREEMENT
In consideration of the mutual promises and covenants of the
parties, together with other valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, Corporation and Employee agree as
follows:
1. EMPLOYMENT. Corporation hereby employs Employee, and
Employee accepts employment by Corporation, upon the terms and conditions of
this Agreement. Employee represents that, at the Effective Date (as defined
below), she will not be a party to any other employment agreement, nor will she
be restricted in any way from being employed by Corporation or from completely
performing her duties hereunder.
2. DUTIES. Employee shall serve as Corporation's President,
reporting to Michael W. Paolercio, Chief Executive Officer, and shall perform
such duties as the Corporation may require from time to time, consistent with
such position as an executive officer of the Corporation. Shelly Light,
Executive Vice President and Mark Hanna, Vice-President, Marketing and Sales,
and any successors thereto, shall report directly to Employee. Employee will be
required to maintain her office at the Corporation's corporate headquarters in
Mount Vernon, New York. Changes in or additions to Employee's duties, consistent
with the provisions of this Agreement, are not to be accompanied by additional
compensation unless expressly agreed to by Corporation. Employee agrees to serve
Corporation faithfully and to the best of her ability and to devote
substantially her entire business and professional time, attention, and energies
to the business of Corporation, and to the proper and timely discharge of her
duties. Employee shall comply with all applicable laws and prevalent commercial
and industry customs and practices.
3. COMPENSATION AND BENEFITS. For and in consideration of the
covenants and promises of Employee herein, including, without limitation, the
restrictive covenants contained in Section 5, and as full and complete
remuneration for all services rendered by Employee hereunder, Employee shall
receive the following compensation and benefits:
3.1 BASE SALARY. Employee shall be entitled to a base
salary equal to Two Hundred and Seventy Five Thousand Dollars ($275,000.00) per
annum for the first two years and Three Hundred Thousand Dollars ($300,000.00)
for the third year, earned and payable in periodic weekly installments ("Base
Salary"). All applicable deductions shall be withheld from Employee's
compensation as required by law.
3.2 SIGNING BONUS. In addition to the Base Salary, Employee
shall be entitled to a signing bonus equal to Fifty Thousand (50,000) shares of
the Corporation's common stock upon execution and return of this Agreement to be
issued as of the Effective Date and delivered to Employee within six weeks of
the Corporation's receipt of the executed Agreement. Such shares to be
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restricted for resale during the first year under federal law and the safe
harbor provisions of Rule 144. To the extent the shares are eligible to be
registered for resale under Form S-8, the Corporation shall register such shares
within six (6) months following the Effective Date. In the event that such
shares are no so registered and Employee desires to sell such shares during the
first year following the Effective Date to cover any tax liability imposed as a
result of the original issuance of such shares, the shareholders identified on
the signature page of this Agreement, upon request of Employee, will purchase at
fair market value, such number of shares as are necessary for Employee to meet
her tax liability with respect to the original grant of the shares. The
Corporation, with Employee's assistance and cooperation, will file all necessary
documentation with the Securities and Exchange Commission relating to such
issuance and resale.
3.3 BENEFITS. Employee shall be entitled to the following
benefits at Corporation's expense:
(i) twenty (20) business days' paid vacation each year.
(ii) comprehensive medical and dental care, selected by the Corporation
for Employee and dependents. Employee will also participate in the
Medical Executive Reimbursement Plan, whereby Employee will be
reimbursed up to $5,000.00 for medical expenses not covered by the
Corporation's comprehensive medical and dental care plans. Corporation
to pay COBRA expenses until Employee is eligible for coverage under
Corporation's plan.
(iii) disability insurance in accordance with the Corporation's group
disability plan;
(iii) term life insurance with death benefit equal to at least
$50,000.;
(iv) reimbursement for all documented ordinary, necessary, and
reasonable business expenses, including without limitation travel
expenses incurred by Employee in accordance with Corporation's policy.
(v) participation in the Corporation's 401K Plan pursuant to the terms
of the Plan.
(vi) participation in the Corporation's Deferred Compensation Plan
pursuant to the terms of such Plan.
(vii) a living allowance and car service (to and from the Corporation's
corporate headquarters) for the term of this Agreement. The living
allowance for the first year of the Agreement shall be Seven Thousand
Dollars ($7,000) per month and increase each year thereafter by Five
Hundred Dollars ($500.00) per month unless otherwise mutually agreed
upon by the parties.
3.4 OTHER COMPENSATION. Employee shall also be eligible to
earn up to 100% of Employee's base salary as a bonus each year based upon
meeting specific performance goals (to be mutually agreed upon by the parties
and set forth in writing) and Corporation profitability thresholds as set forth
in Exhibit A attached hereto. In the event Employee resigns employment with the
Corporation, is terminated pursuant to Section 4.2 or otherwise ceases
employment with the Corporation, Employee shall only be entitled to a pro-rata
bonus based on the number of months Employee worked during the Initial Term or
any Renewal Term hereof.
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3.5 STOCK OPTIONS On the Effective Date, Employee will
receive Stock Options for 300,000 shares which vest over 3 years and which shall
be exercisable over the longest period permitted under the Corporation's Stock
Option Program, which shall, in no event be less than 5 years. Employee will
receive additional Stock Option Awards for 100,000 shares for each year of the
Initial Renewal Term, if applicable, in years 4, 5, and 6. The exercise price of
any such option shall be determined in accordance with the terms of the Employee
Stock Options Program but in no case shall be greater than the fair market value
of a share of the Corporation's common stock on the grant date. The Corporation
with Employee's assistance and cooperation will file all necessary documentation
with the Securities and Exchange Commission.
3.6 CHANGE OF CONTROL As a member of Management, Employee
would be covered by the Corporation's Change of Control Plan whereby, if there
is a change of control at the Corporation, subject to the terms and conditions
of the Plan, Employee would be eligible to receive the greater of (i) the
compensation and benefits that would otherwise be payable to Employee through
the end of the term of the Agreement or (ii) one year's salary and benefits. All
issued stock options would automatically vest upon a change of control.
4. TERM AND TERMINATION
4.1 TERM. The initial term of this Agreement and Employee's
employment hereunder shall commence on the 4th day of March, 2002 (the
"Effective Date"), and, unless sooner terminated as provided for herein, expire
on March 3, 2005 (the "Initial Term"); provided, however, that this Agreement
shall be automatically renewed for successive renewal periods of three (3) years
each (each a "Renewal Term") unless Corporation or Employee notifies the other
in writing at least thirty (30) days prior to the expiration of the Initial Term
or any Renewal Term that the Corporation or Employee, as the case may be, elects
not to renew this Agreement, in which case this Agreement and Employee's
employment hereunder shall terminate upon expiration of such term. Unless
otherwise provided by prior written agreement between Corporation and Employee,
any Renewal Term shall be on the same terms and conditions as those contained in
this Agreement. Either Corporation or Employee may terminate this Agreement at
the expiration of the Initial Term or any Renewal Term thereof, as provided in
this Section 4.1, for any reason or for no reason, in its sole discretion.
4.2 TERMINATION FOR CAUSE. Corporation may terminate this
Agreement, without notice to Employee and with immediate effect, for cause. The
term "Cause" shall be defined as:
(i) willful failure of Employee to comply with reasonable directives
of the CEO and/or COO of Corporation or his designee; provided, however, that no
such termination shall be effective unless and until Employee shall have had an
opportunity to discuss such termination with the Board of Directors and the
Board of Directors shall have reviewed and ratified such termination.
(ii) chronic absenteeism of Employee not related to a physical
illness; Employee's inability to perform her duties because of Employee's
physical or mental illness or disability for a period of ninety (90) days in any
twelve month period.
(iii) Employee's conviction of a crime involving moral turpitude or
other serious criminal offense; or
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(iv) Employee's material breach of this Agreement, which breach
remains uncured or continues for a period of thirty (30) days after the
Corporation provides written notice to Employee of such breach.
4.3 EFFECT OF TERMINATION. In the event of (i) a
termination for reasons other than "Cause" (as defined in Section 4.2 above) or
(ii) a resignation for "Good Reason" which shall be defined as (A) a demotion or
material change in duties or responsibilities without consent of Employee, or
(B) a change of location at which Employee is required to provide services
Employee shall receive the greater of (1) the compensation and other benefits
that would otherwise be payable to Employee through the end of the term of the
Agreement (payable in accordance with the Corporation's normal payroll
practices) or (2) severance pursuant to the Corporation's policy which provides
for one month's salary for every year of service up to a maximum of six months.
4.4 DISCLOSURE OF PROBLEM OR DISAGREEMENTS. Employee agrees
to promptly bring to the attention of Corporation any problems or disagreements
as to Corporation's policies, or any other matters which might cause Employee to
seek to terminate or fail to renew this Agreement. Employee agrees to bring such
matters to the attention of Corporation's management prior to giving notice of
termination or non-renewal of this Agreement for reasons other than Good
Reason.. The purpose and intent of the parties in including this provision is to
ensure that Corporation is made aware of any employment related problems and,
where possible, to resolve them to the parties' mutual satisfaction.
5. RESTRICTIVE COVENANTS. For and in consideration of the
covenants and promises of Corporation herein, including without limitation,
those contained in Section 3 concerning compensation and benefits, Employee
covenants and agrees that:
5.1 CORPORATION'S SHOP RIGHT . Employee shall make prompt
and complete disclosure to Corporation of any (i) invention, discovery, or
improvement whether patentable or not ("Invention"); (ii) copyrightable or
trademark material; or (iii) trade secrets, which relate to the business of
Corporation and which are made, conceived, or authorized by Employee, alone or
with others, during the term of this Agreement. To the maximum extent provided
by law, Employee shall assign, and she does hereby assign, to Corporation all of
her right, title, and interest in any such invention(s), copyrightable or
trademark material(s) and trade secrets, and agrees to execute, acknowledge, and
deliver any and all documents and instruments necessary or useful to confirm
complete ownership thereof by Corporation. At the request and expense of
Corporation, Employee shall promptly render whatever assistance may be
reasonable and necessary for Corporation to secure a patent, copyright, or
trademark for such Invention(s) or material(s).
5.2 PROPERTY. All data, reports, manuals, listings,
customer lists (but exclusive of Employee's Contacts, as defined below) and any
other documents, equipment or data furnished to or prepared or obtained by
Employee during the course of or in connection with her employment shall be the
sole and exclusive property of Corporation; and Employee shall promptly turn
over to Corporation all such items upon the request of Corporation's Board of
Directors or upon the expiration or termination of this Agreement for any
reason.
5.3 CORPORATE OPPORTUNITIES. During the term of this
Agreement, Employee shall promptly and fully disclose to Corporation any
business opportunities involving any existing or prospective line of business or
activity of Corporation, and shall not divert to her own use or benefit, or the
use or benefit of others, such opportunities without the prior written consent
of Corporation.
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Employee agrees that she shall not accept from any third party,
directly or indirectly, any material benefits, advantages, or remuneration (cash
or otherwise) related to or arising out of Corporation's business or Employee's
employment by Corporation, without the prior written consent of Corporation.
5 4. CONFIDENTIALITY. Employee hereby agrees and
acknowledges that, as a result of her employment by Corporation, she will have
access to, among other things, certain confidential techniques, data and
information such as know-how, trade secrets, products, customer lists, catalogs,
and price lists, computer records, policies, other confidential procedures and
techniques, and other data and information relating to the business of
Corporation or its products ("Proprietary Information"). Employee stipulates and
agrees that such Proprietary Information is the sole and exclusive property of
Corporation, and that such Proprietary Information is confidential and
proprietary, and that the unauthorized use or disclosure thereof would seriously
and irreparably damage Corporation's business. As a material inducement to
Corporation to enter into this Agreement, Employee hereby agrees that she will
not, for any purpose whatsoever, at any time during or after employment by
Corporation, directly or indirectly use, divulge, communicate, or disclose to
any person, firm, or organization, any such Proprietary Information obtained by
or disclosed to Employee during or as a result of her employment by Corporation.
Notwithstanding anything to the contrary set forth in this Agreement,
Proprietary Information shall not include Employee's relationships or knowledge
of customers, suppliers or other industry participants or Employee's Rolodex or
similar database, whether or not in written form, of customers, suppliers or
other industry contracts (collectively, "Employee's Contacts").
5.5 NON-COMPETITION. As a material inducement to
Corporation to enter into this Agreement, Employee agrees that:
5.5.1 During her employment by Corporation and, if
Employee resigns for reasons other than Good Reason, retires, or is terminated
by the Corporation for Cause pursuant to Section 4.2, and for a period of one
(1) year thereafter, Employee shall not engage in Competitive Conduct (defined
below).
5.5.2 For purposes of this Section 5.5, "Competitive
Conduct" means:
(i) Competing, directly or indirectly, with Corporation (A)
while employed by the Corporation or receiving severance payments from the
Corporation, by working for or providing services to any business that competes
with the Corporation, or (B) subsequent to the termination of her employment
with the Corporation, by working for or providing services to Aurafin or any
Affiliates of Aurafin in the Territory (defined below);
(ii) Soliciting or diverting, directly or indirectly, the
business of any of Corporation's clients, customers, accounts, principals,
agents, distributors, or suppliers with whom Employee conducted business during
the term of her employment (A) while employed by the Corporation or while
receiving severance payments from the Corporation, to or for the benefit of any
business that competes with the Corporation, or (B) subsequent to the
termination of her employment with the Corporation, to or for the benefit of
Aurafin or its Affiliates;
(iii) Soliciting or diverting, directly or indirectly, the
business of any of Corporation's clients, customers, accounts, principals,
agents, distributors, or suppliers with whom Corporation conducts business at
the time Employee ceases employment with Corporation, or conducted business
within the twelve (12) month period prior to such cessation of employment (A)
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while employed by the Corporation or while receiving severance payments from the
Corporation, on behalf of or for the benefit of any business that competes with
the Corporation, or (B) subsequent to the termination of her employment with the
Corporation, on behalf or for the benefit of Aurafin or its Affiliates;
(iv) Employing or soliciting, directly or indirectly, for
employment any person (A) employed by Corporation at the time Employee ceases
employment with Corporation, or (B) employed by Corporation within the twelve
(12) month period prior to the cessation of employment; and
(v) Participating or acting, within the Territory (defined
below), directly or indirectly, as an employee, agent, consultant, director,
principal, owner, shareholder, or partner (A) while employed by the Corporation
or receiving severance payments from the Corporaiton, in any business that
competes with the Corporation, or (B) subsequent to the termination of her
employment with the Corporation, in Aurafin or its Affiliates.
5.5.3 Notwithstanding anything to the contrary
contained in Section 5.5.2 above, Employee may, at any time after termination of
her employment but while she is receiving severance payments pursuant to this
Agreement, elect to forego any remaining severance payments owed to her, in
which case the definition of Competitive Conduct under this Agreement shall be
limited to Section 5.5.2(iv) and ONLY clause (B) of Sections 5.5.2(i), (ii),
(iii), and (v).
5.5.4 For purposes of this Section 5.5 "Territory"
means all states in the United States.
5.6 SURVIVAL OF PROVISIONS. THE PROVISIONS OF THIS SECTION
5 AND EACH OF THE SUBSECTIONS HEREOF SHALL SURVIVE EXPIRATION OR TERMINATION OF
THIS AGREEMENT OR EMPLOYMENT HEREUNDER FOR ANY REASON.
6. REASONABLENESS OF RESTRICTION. Employee has carefully read
and considered the provisions of Section 5 of this Agreement and each of the
subsections thereof, and, having done so, expressly agrees and acknowledges that
the covenants and agreements set forth therein are based upon valuable and
sufficient consideration, the receipt of which as of the date of this Agreement
is hereby acknowledged, that such covenants and agreements are fair and
reasonable in all respects, and are reasonably required and necessary for the
protection of the legitimate business and competitive interests of Corporation;
and that each of the covenants and agreements contained in Section 5 of this
Agreement and each of the subsections thereof is separately and independently
given, and each such covenant and agreement is intended to be enforceable
separately and independently of the other such covenants and agreements,
including, without limitation of remedy, enforcement by injunction or other
equitable relief.
7. ENFORCEMENT REMEDIES. Employee acknowledges and agrees that
any breach by Employee of any of the provisions of Section 5 will cause
immediate and irreparable damage to Corporation. In the event of a breach or
threatened breach by Employee of any of such provisions, Corporation shall be
entitled to temporary, preliminary, and/or permanent injunctive relief in
addition to, and not in lieu of, any other remedies available to Corporation at
law or in equity. Corporation shall also be entitled to recover from Employee
its legal costs and expenses, including reasonable attorneys' fees, in
connection with proceedings arising from any actual or threatened breach by
Employee of any
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of the provisions of Section 5. The Restricted Period shall be extended in an
amount which equals the time period during which Employee is in violation of any
of the provisions of Section 5.
8. SEVERABILITY. If any part of provision of this Agreement
shall be invalid, illegal, or unenforceable for any reason, the remaining
provisions hereof shall remain effective and fully enforceable to the maximum
extent permitted by law.
9. NOTICES. Any notice contemplated, required, or permitted
under this Agreement shall be sufficient if in writing and shall be deemed given
when delivered personally or when sent by prepaid certified or registered mail,
return receipt requested to the addresses listed below or to such other
addresses as either party hereto may hereafter designate in writing-from time to
time:
if to Corporation: Michael Anthony Jewelers, Inc.
115 So. MacQuesten Parkway
Mt. Vernon, New York 10550-1724
Attention: Chief Executive Officer
if to Employee: Claudia Hollingsworth
10520 Wilshire Boulevard #205
Los Angeles, California 90024
With a copy to: Robert Steinberg, Esq.
Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, CA 90067
10. GENERAL PROVISIONS. This Agreement shall inure to the
benefit of and be binding upon the parties and their respective successors,
heirs, and assigns; provided that, inasmuch as the services to be rendered by
Employee are personal in nature, Employee may not assign, in whole or part, this
Agreement or her rights or obligations hereunder. This Agreement may not be
altered, modified, or amended, in whole or in part, except in writing signed by
Employee and Corporation. Waiver by either party of any breach of any provision
of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
11. CHOICE OF LAW. This Agreement shall in all respects be
governed by and construed according to the laws of the state of New York. With
respect to any dispute or controversy arising out of or relating to this
Agreement, the laws of the state of New York shall likewise govern and apply.
12. EXCLUSIVE FORUM, VENUE, AND CONSENT TO JURISDICTION. The
parties agree that the Supreme Court, Westchester County of the State of New
York shall constitute the exclusive judicial forum for the adjudication of all
disputes arising out of or relating to this Agreement, that Westchester County
shall be the sole proper venue for any such adjudication, and that those Courts
may exercise personal jurisdiction over them in any such adjudication.
13. ENTIRE AGREEMENT. This Agreement reflects the complete
understanding of the parties and constitutes their entire agreement, all prior
negotiations, representations, agreements, and statements having merged herein.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement under
seal, as is their intention, as of the date and year first above written.
CORPORATION:
MICHAEL ANTHONY JEWELERS, INC.
ATTEST:
By: /s/: Michael W. Paolercio
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Michael W. Paolercio, CEO
EMPLOYEE:
/s/: Claudia Hollingsworth
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Claudia Hollingsworth
PRIMARY SHAREHOLDERS (solely for purposes of Section 3.2 of this Agreement):
/s/: Michael W. Paolercio
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MICHAEL W. PAOLERICO
/s/: Anthony Paolercio, Jr.
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Anthony Paolercio, Jr.
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EXHIBIT A
CORPORATION PROFITABILITY THRESHOLDS & EMPLOYEE BONUS LEVEL
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Corporation pre-tax income must exceed 5% of net worth for Bonus to be payable:
For the initial term of the Agreement the Net Worth shall be determined as of
FY2002 Year End (February 2, 2002) and recalculated for successive renewal
periods.
Above
Threshold Salary % Bonus Calculation
1st million 7.5%
2nd million 15%
3rd million 20%
4th million 30%
5th million 40%
6th million 50%
7th million 75%
8th million and above 100%
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