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EXHIBIT 10.22
EXECUTION COPY
EMPLOYMENT AGREEMENT
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THIS AGREEMENT is entered into as of the 11th day of August, 1997, by
and between Signature Brands USA, Inc., a Delaware corporation, with a principal
business address at 7005 Cochran Road, Glenwillow, Ohio 44139 (the "Company"),
and Meeta Vyas, an individual residing at 246 Milbank Avenue, Greenwich,
Connecticut 06830 (the "Executive"). This Agreement is binding immediately and
will be honored in its entirety in the event of a Change of Control as specified
in Section 4(e).
WHEREAS, the Company desires the benefit of the experience, supervision
and services of the Executive and desires to employ the Executive upon the terms
and conditions hereinafter set forth; and
WHEREAS, the Executive is willing and able to accept such employment on
such terms and conditions.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:
l. EMPLOYMENT DUTIES AND ACCEPTANCE. The Company hereby employs the
Executive, and the Executive agrees to serve and accept employment, as the
Vice-Chairman and Chief Executive Officer of the Company, reporting directly to
the Board of Directors of the Company (the "Board"). In addition, the Executive
will replace the outgoing Chief Executive Officer as a member of the Board. In
connection therewith, as Chief Executive Officer, the Executive will oversee and
direct the operations, strategic direction and leadership of the Company, with
complete responsibility for operating and financial results, and will perform
such other duties consistent with the responsibilities of Chief Executive
Officer, all subject to the direction and control of the Board. The Executive
and the Company shall, within one year from the date hereof, discuss the
elevation of the Executive from Vice-Chairman to Chairman of the Board, which
elevation would be subject to mutual agreement between the Executive and the
Company and approval by the Board. In addition, after consultation with the
Executive, the Company will consider making changes to the composition of the
Board as suggested by the Executive. During the term of the Executive's
employment with the Company hereunder (the "Term"), the Executive shall devote
all of her working time to such employment and appointment, shall devote her
best efforts to advance the interests of the Company and shall not engage in any
other business activities, as an employee, director, consultant or in any other
capacity, whether or not she receives any compensation therefor, without the
prior written consent of the Board.
2. TERM OF EMPLOYMENT. The Executive's employment and appointment
hereunder shall commence on September 2, 1997 and shall continue, unless earlier
terminated in
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accordance with Section 4 hereof, until September 30, 1999 (the "Term"). The
Company and the Executive agree that the Term of employment may be extended for
a third year if such an extension is agreed to by the Company and the Executive
prior to September 30, 1999.
3. COMPENSATION. In consideration of the performance by the Executive
of her duties hereunder, the Company shall pay or provide to the Executive the
following compensation which the Executive agrees to accept in full satisfaction
for her services provided pursuant hereto (necessary withholding taxes, FICA
contributions and the like shall be deducted from such compensation):
(a) BASE SALARY. A base salary, payable in accordance with the
Company's payroll practices, at the rate of Five Hundred Thousand Dollars
($500,000) per annum during the Term ("Base Salary"). The Board of Directors of
the Company will review from time to time the Base Salary payable to the
Executive hereunder and may, in its discretion, increase but not decrease, the
Executive's rate of compensation. Any such increased Base Salary shall be and
become the "Base Salary" for purposes of this Agreement.
(b) BONUS. A bonus (the "Bonus"), payable annually in arrears
not later than 120 days after the end of the Company's fiscal year, which is
based, as set forth on SCHEDULE A hereto, on the Company achieving certain
annual performance goals established by the Board from time to time; provided,
that in no event, shall the Bonus be less than 50% of the Executive's Base
Salary.
(c) INSURANCE COVERAGES AND PENSION PLANS. Such medical,
dental, life insurance and pension benefits as are generally made available by
the Company to its executive officers ("Management") from time to time shall be
made available to the Executive.
(d) STOCK OPTIONS. The Company shall grant to the Executive an
option (the "Option") to purchase 500,000 shares of the Company's Common Stock,
$.01 par value per share (the "Common Stock"), at a per share exercise price
equal to the closing price of the Company's Common Stock on August ll, 1997,
which Option shall vest 50% as of September 30, 1998 and 50% as of September 30,
1999. The Option shall be granted pursuant to a stock option agreement which
will be similar in form and content to the Company's standard stock option
agreement, except as otherwise specifically set forth herein. The stock option
agreement shall provide that upon the occurrence of any Change of Control (as
defined in Section 4(e)) prior to September 30, 1999, the Option shall be fully
accelerated and vested. The Company hereby agrees to take whatever steps are
required to authorize a new stock option plan, or an amendment to the current
stock option plan, or to take such other action as is necessary in order to
permit the Company to grant the Option to the Executive as soon as possible. If
additional action by the Company is required in order to permit the Option to be
granted to the Executive and a Change of Control occurs prior to the taking of
such action, the Company agrees to use its best efforts to authorize the grant
of the Option or to take such alternative action as to give the Executive value
exactly equivalent to that represented by the Option had it been granted prior
to the Change of Control.
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(e) VACATION. The Executive shall be entitled to four (4)
weeks of vacation each year.
(f) EXPENSES. The Executive shall be entitled to reimbursement
of all reasonable and documented expenses actually incurred or paid by the
Executive in the performance of the Executive's duties under this Agreement,
upon presentation of expense statements, vouchers or other supporting
information in accordance with Company policy. In addition, the Company will
reimburse the Executive for reasonable and documented house-hunting and moving
expenses associated with moving to the Cleveland, Ohio area.
(g) AUTOMOBILE. The Company, at its expense, shall provide the
Executive with a luxury automobile suitable for the Chief Executive Officer of
the Company. The Company shall pay all expenses in connection with such
automobile, including without limitation, insurance, gasoline, repairs and
maintenance.
(h) INDEMNIFICATION. The Executive shall be entitled to
indemnification from the Company to the extent provided in its charter and
by-laws and shall be covered by the terms of the Company's policy of insurance
for directors and officers in effect from time to time (the "D&O Insurance").
Copies of the Company's charter, by-laws and D&O Insurance will be made
available to the Executive upon request.
(I) STOCK PURCHASE OPTION. The Company hereby grants to the
Executive, or to those members of the Executive's immediate family designated by
the Executive and approved by the Company, the right and option to purchase up
to 91,727 shares of the Company's Common Stock at a per share price equal to 50%
of the closing price of the Company's Common Stock on August 11, 1997, which
option shall only be exercisable from September 2, 1997 until the close of
business on November 1, 1997. The sale of such stock will be made pursuant to
the terms of a stock subscription agreement reasonably acceptable to the Company
and the Executive which will contain certain provisions restricting transfer of
such stock prior to the end of the Term.
4. TERMINATION.
(a) TERMINATION BY THE COMPANY FOR CAUSE. The Company shall
have the right at any time to terminate the Executive's employment hereunder
without prior notice upon the occurrence of any of the following (any such
termination being referred to as a termination for "Cause"):
(i) the Executive has been convicted of, or pleads
NOLO CONTENDERE with respect to, any felony, or of any
lesser crime or offense having as its predicate element
fraud, dishonesty or misappropriation of the property of the
Company;
(ii) the habitual drug addiction or intoxication of
the Executive which negatively impacts her job performance;
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(iii) the willful failure or refusal of the Executive
to perform her duties as set forth herein or the willful
failure or refusal to follow the direction of the Board;
provided such failure or refusal continues after 10 days of
the receipt of notice in writing from the Board of such
failure or refusal; or
(iv) the Executive breaches any of the terms of this
Agreement or any other agreement between the Executive and the
Company which breach is not cured within 10 days subsequent to
notice from the Company to the Executive of such breach.
(b) TERMINATION BY COMPANY FOR DEATH OR DISABILITY. The
Company shall have the right at any time, subject to the provisions of Section
5(b), to terminate the Executive's employment hereunder without prior notice
upon the Executive's inability to perform her duties hereunder by reason of any
mental, physical or other disability for a period of at least three consecutive
months (for purposes hereof, "disability" has the same meaning as is defined for
such term in the Company's disability policy). The Company's obligations
hereunder shall, subject to the provisions of Section 5(b), also terminate upon
the death of the Executive.
(c) TERMINATION BY COMPANY WITHOUT CAUSE. The Company shall
have the right at any time, subject to the provisions of Section 5(c), to
terminate the Executive's employment for any other reason without Cause upon
thirty (30) days prior written notice to the Executive.
(d) VOLUNTARY TERMINATION BY EXECUTIVE. The Executive shall be
entitled to terminate her employment and appointment hereunder upon thirty (30)
days prior written notice to the Company. Except as set forth under Section 4(e)
below, any such termination shall be treated as a termination by the Company for
Cause under Section 5(a).
(e) TERMINATION BY EXECUTIVE UPON CHANGE OF CONTROL.
(i) If a Change of Control (as defined below) shall
occur on or prior to December 31, 1997, the Executive may
elect to terminate her employment hereunder as of the closing
of such Change of Control, by giving the Company five (5)
days' written notice, which notice shall specify that it is
being given pursuant to this Section 4(e). Any voluntary
termination by the Executive pursuant to this Section 4(e)
shall be treated as a Termination upon Change in Control under
Section 5(d).
(ii) For purposes hereof, the term "Change of
Control" shall mean (A) the sale of all or substantially all
of the assets of the Company, (B) the sale, in a single
transaction or series of related transactions, of all of the
shares of the Company's Common Stock owned by Thomas H. Lee
Company and its affiliates (collectively, the "Lee Group") as
of August 11, 1997 (including any shares issued as a dividend
on or otherwise in respect of such stock), (C) the
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consummation of a merger, consolidation or similar transaction
involving the Company in which the holders of the Company's
capital stock immediately prior to the transaction do not
retain at least a majority of the voting power of the
corporation surviving the merger or its parent corporation,
(D) the percentage of the Company's outstanding Common Stock
owned by the Lee Group at any time becomes less than 50% of
the percentage of the Company's outstanding Common Stock owned
by the Lee Group as of August 11, 1997 or (E) the complete
liquidation or dissolution of the Company.
(f) NOTICE OF TERMINATION. Any termination by the Company or
the Executive shall be communicated by Notice of Termination to the other party
hereto given in accordance with Section 9. For purposes of this Agreement, a
"Notice of Termination" means a written notice given prior to the termination
which (i) indicates the specific termination provision in this Agreement relied
upon, (ii) sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's employment under the
provision so indicated, and (iii) if the termination date is other than the date
of receipt of such notice, specifies the termination date of this Agreement
(which date shall be not more than thirty (30) days after the giving of such
notice). The failure by the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Cause shall not waive
the Company's rights hereunder or preclude the Company from asserting such fact
or circumstance in enforcing its rights hereunder.
5. EFFECT OF TERMINATION OF EMPLOYMENT.
(a) FOR CAUSE. If the Executive's employment is terminated for
Cause, the Executive's salary and other benefits specified in Section 3 shall
cease at the time of such termination, and the Executive shall not be entitled
to any compensation specified in Section 3 which has not been paid prior to such
termination; provided, however, that the Executive shall be entitled to continue
to participate in the Company's medical benefit plans to the extent required by
law.
(b) DEATH OR DISABILITY. If the Executive's employment is
terminated by the death or disability of the Executive (pursuant to Section
4(b)), the Executive's compensation provided in Section 3 shall be paid to the
Executive or, in the event of the death of the Executive, the Executive's
estate, as follows:
(i) the Executive's Base Salary specified in Section
3(a) shall continue to be paid in monthly installments until
the first to occur of (i) twelve (12) months following such
termination and (ii) such time as the Executive breaches the
provisions of Sections 6 or 7 of this Agreement; and
(ii) the Executive's additional benefits specified in
Section 3(c) shall continue to be available to the Executive
until the first to occur of (i) twelve (12) months following
such termination and (ii) such time as the Executive breaches
the provisions of Sections 6 or 7 of this Agreement.
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(c) WITHOUT CAUSE. If the Executive's employment is terminated
by the Company without Cause (pursuant to Section 4(c)), the Executive's
compensation provided in Section 3 shall be paid as follows:
(i) the Executive shall be entitled to receive, in
equal monthly installments pursuant to the Company's standard
payroll practices, the Base Salary specified in Section 3(a)
until the later of (i) twelve (12) months following such
termination and (ii) September 30, 1999;
(ii) the Executive shall be entitled to receive a
bonus equal to 50% of the amounts to be paid pursuant to
Section 5(c)(i) above, which amounts shall be paid in equal
monthly installments pursuant to the Company's standard
payroll practices; and
(iii) the Executive's additional benefits specified
in Section 3(c) shall continue to be available to the
Executive until the later of (i) twelve (12) months following
such termination and (ii) September 30, 1999.
Nothing in this Section 5(c) is intended to affect in any
manner the acceleration of the Executive's Option in the event of a Change of
Control as provided in Section 3(d).
(d) TERMINATION UPON CHANGE OF CONTROL. If the Executive
elects to terminate her employment hereunder as a result of a Change of Control
as provided in Section 4(e), the Executive shall be guaranteed the following:
(i) all payments provided for in the event of a
Termination Without Cause under Section 5(c) above; and
(ii) the full acceleration and vesting of the Option
specified in Section 3(d).
6. AGREEMENT NOT TO COMPETE. The Executive agrees that during the
Non-Competition Period (defined below) she will not in any capacity, either
separately, jointly, or in association with others, as an officer, director,
consultant, agent, employee, owner, partner or stockholder, engage or have a
financial interest in any business which is involved in the business of
manufacturing, assembling, marketing or sales of coffeemakers, teamakers,
filters, scales, massagers or any other business which competes with the
Company's current or currently planned products as of the date of the employee's
termination of employment with the Company (excepting only the ownership of not
more than 5 % of the outstanding securities of any class listed on an exchange
or regularly traded in the over-the-counter market). The "Non-Competition
Period" shall mean the longer of (a) the remaining Term or (b) one (1) year. The
Executive further agrees that during the Non-Competition Period she will not in
any capacity, either separately, jointly or in association with others, solicit
or otherwise contact any of the Company's customers or prospects, as shown by
the Company's records, that were customers or
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prospects of the Company at any time during the Non-Competition Period if such
solicitation or contact is for the general purpose of selling products or
services that satisfy the same general needs as any products or services that
the Company had available for sale to its customers or prospects during the
Non-Competition Period. If a court determines that the foregoing restrictions
are too broad or otherwise unreasonable under applicable law, including with
respect to time or space, the court is hereby requested and authorized by the
parties hereto to revise the foregoing restrictions to include the maximum
restrictions allowed under the applicable law. The Executive expressly agrees
that breach of the foregoing would result in irreparable injuries to the
Company, that the remedy at law for any such breach will be inadequate and that
upon breach of this provision, the Company, in addition to all other available
remedies, shall be entitled as a matter of right to injunctive relief in any
court of competent jurisdiction without the necessity of proving the actual
damage to the Company. For purposes of this Section 6 and Section 7, the
"Company" refers to the Company and any incorporated or unincorporated
affiliates of the Company.
7. SECRET PROCESSES AND CONFIDENTIAL INFORMATION.
(a) For the Term and thereafter, (i) the Executive will not
divulge, directly or indirectly, other than in the regular and proper course of
business of the Company, any confidential knowledge or information with respect
to the operation or finances of the Company or with respect to confidential or
secret processes, techniques, machinery, customers, plans and products
manufactured or sold by the Company and (ii) the Executive will not use,
directly or indirectly, any confidential information for the benefit of anyone
other than the Company; provided, however, that the Executive has no obligation,
express or implied, to refrain from using or disclosing to others any such
knowledge or information which is or hereafter shall become available to the
public other than through disclosure by the Executive.
(b) The Executive will promptly disclose to the Company and to
no other person, firm or entity all inventions, discoveries, improvements, trade
secrets, formulas, techniques, processes, know-how and similar matters, whether
or not patentable and whether or not reduced to practice, which are conceived or
learned by the Executive during the period of the Executive's employment with
the Company, either alone or with others, which relate to or result from the
actual or anticipated business or research of the Company or which result, to
any extent, from the Executive's use of the Company's premises or property
(collectively called the "Inventions"). The Executive acknowledges and agrees
that all the Inventions shall be the sole property of the Company, and the
Executive hereby assigns to the Company all of the Executive's rights and
interests in and to all of the Inventions, it being acknowledged and agreed by
the Executive that all the Inventions are works made for hire. The Company shall
be the sole owner of all domestic and foreign rights and interests in the
Inventions. The Executive agrees to assist the Company at its expense to obtain
and from time to time enforce patents and copyrights on the Inventions.
(c) Upon the request of, and, in any event, upon termination
of the Executive's employment with the Company, the Executive shall promptly
deliver to the Company all documents, data, records, notes, drawings, manuals
and all other tangible
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information in whatever form which pertains to the Company, and the Executive
will not retain any such information or any reproduction or excerpt thereof.
8. NOTICES. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given (a) when delivered
personally, (b) upon confirmation of receipt when such notice or other
communication is sent by facsimile or telex, (c) one day after delivery to an
overnight delivery courier, or (d) on the fifth day following the date of
deposit in the United States mail if sent first class, postage prepaid, by
registered or certified mail. The addresses for such notices shall be as
follows:
(a) For notices and communications to the Company:
Signature Brands, Inc.
7005 Cochran Road
Glenwillow, Ohio 44139
Facsimile: (440) 542-4055
Attention: Chairman of the Board
with a copy to:
Thomas H. Lee Company
75 State Street
Boston, MA 02109
Facsimile: (617) 227-3514
Attention: Scott A. Schoen
and a copy to:
Calfee, Halter & Griswold, LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, OH 44114
Facsimile: (216) 241-0816
Attention: Thomas F. McKee, Esq.
(b) For notices and communications to the Executive:
Ms. Meeta Vyas
246 Milbank Avenue
Greenwich, CT 06830
Facsimile: (203) 661-2493
Any party hereto may, by notice to the other, change its
address for receipt of notices hereunder.
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9. GENERAL.
9.1 EXECUTIVE'S ABILITY TO PERFORM. The Executive hereby
represents and warrants that she is not subject to any agreement, restriction,
lien or encumbrance of any type limiting in any way her ability to perform her
obligations hereunder. The Executive shall not disclose to the Company, use in
the Company's business, or cause the Company to use, any information or material
which is confidential to any third party unless the Company has a written
agreement with such third party allowing the Company to receive and use such
information or materials. The Executive will not incorporate into her work any
material which is subject to proprietary rights of any third party, unless the
Company has the right to incorporate such material. The Executive has no
obligations, by reason of prior employment relationships or otherwise, which
might in any way affect her ability to give her best efforts to the business of
the Company or to carry out the provisions of this Agreement.
9.2 GOVERNING LAW. This Agreement shall be governed by, and
enforced in accordance with, the laws of the State of Ohio applicable to
agreements made and to be performed entirely within such state.
9.3 AMENDMENT; WAIVER. This Agreement may be amended,
modified, superseded, canceled, renewed or extended, and the terms hereof may be
waived, only by a written instrument executed by all of the parties hereto or,
in the case of a waiver, by the party waiving compliance. The failure of any
party at any time or times to require performance of any provision hereof shall
in no manner affect the right at a later time to enforce the same. No waiver by
any party of the breach of any term or covenant contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
9.4 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Executive, without regard to the duration of her employment by the
Company or reasons for the cessation of such employment, and inure to the
benefit of his administrators, executors, heirs and assigns, although the
obligations of the Executive are personal and may be performed only by her. This
Agreement shall also be binding upon and inure to the benefit of the Company and
its subsidiaries, successors and assigns, including, in connection with a Change
of Control or otherwise, any corporation with which or into which the Company or
its successors may be merged or which may succeed to their assets or business.
9.5 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be considered to have the force and effect of
an original.
9.6 ENTIRE AGREEMENT. This Agreement, the stock option
agreement referred to in Section 3(d) hereof and the stock subscription
agreement referred to in Section 3(i) hereof constitute the entire understanding
of the parties hereto with respect to the subject matter hereof and supersede
all prior negotiations, discussions, writings and agreements between them
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including, without limitation, that certain letter dated August 1, 1997 sent by
Scott A. Schoen to the Executive.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as an instrument
under seal as of the date first above written.
SIGNATURE BRANDS USA, INC.
By /s/ Thomas R. Shepherd
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Name: Thomas R. Shepherd
Title: Chairman
EXECUTIVE:
/s/ Meeta Vyas
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Meeta Vyas, individually
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SCHEDULE A
Executive Bonus Schedule
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The Bonus provided for in Section 3(b) shall be based on the percentage
of budgeted EBITDA achieved by the Company during each fiscal year. The budgeted
EBITDA figure shall be the amount approved by the Board in the Company's annual
operating budget. Such EBITDA amount shall be as reasonably adjusted by the
Board to take into account any acquisitions or dispositions.
Percentage of Bonus Available as
Plan EBITDA Achieved Percentage of Base Salary
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100 % 100 %
99 95
98 90
97 85
96 80
95 75
94 70
93 65
92 60
91 55
90 or less 50
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