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Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made as of July 1, 1998, by and between
ERIC I. GLASSMAN ("Executive") and D.I.Y. HOME WAREHOUSE, INC., an Ohio
corporation (the "Company").
RECITALS:
A. The Company operates warehouse-format home improvement centers that
sell products primarily to do-it-yourself home repair and remodeling customers.
B. Executive is presently employed by the Company as its Vice President
and Chief Financial Officer.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the parties
agree as follows:
1. EMPLOYMENT. From the date of this Agreement (the "Effective Date")
until December 31, 1999, unless sooner terminated as provided below or extended
upon mutual agreement of the parties, the Company will employ Executive as Vice
President and Chief Financial Officer of the Company, to perform such services
for and on behalf of the Company as the Company's Board of Directors may from
time to time direct consistent with Executive's title and position, and
Executive hereby accepts such employment, upon the terms and conditions set
forth in this Agreement. Executive's principal place of business will be located
within a fifty (50) mile radius of downtown Cleveland, Ohio.
2. COMPENSATION. As full compensation and consideration for
the services to be rendered by him under this Agreement, the Company
shall compensate Executive as follows:
(a) The Company shall pay Executive a base salary at the
annual rate of One Hundred Thousand and 00/100 Dollars
($100,000.00), payable in installments not less often than
bi-monthly. The foregoing notwithstanding, the Company's
Board of Directors, or its Compensation Committee, shall
review the performance of Executive annually and may, in its
sole discretion, increase Executive's base salary for any
period during the term of this Agreement.
(b) The Company's Board of Directors or its Compensation
Committee may, in its sole discretion, award Executive a
bonus in an amount to be determined by the Board of Directors
or such Compensation Committee for each fiscal year
throughout the term of this Agreement; provided that
Executive must be employed by the Company on the last day of
its fiscal year to be entitled to any such bonus.
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(c) The Company shall provide Executive with such other
benefits as it now provides him and as it may from time to
time provide other employees of Executive's rank. Executive
acknowledges and agrees that the Company, in its sole and
absolute discretion and without any liability whatsoever to
Executive, may change, modify or delete any benefits it
provides employees of Executive's rank, including Executive,
so long as such changes, modifications or deletions are
uniform in respect of all, or substantially all, employees of
such rank.
3. REIMBURSEMENT OF EXPENSES. The Company shall reimburse Executive for
all necessary and reasonable business expenses incurred by him in the
performance of his duties under this Agreement in accordance with practices
established from time to time by the Company, upon presentation by Executive of
vouchers, receipts or other evidence of such expenditures, satisfactory to the
Company.
4. SERVICES.
(a) Executive shall perform his duties under this Agreement
faithfully, diligently and to the best of his ability. He shall serve
subject to the policies and instruction of the Company 5 Board of
Directors, and shall devote his full business time, attention, energies
and loyalty to the Company.
(b) During the term of this Agreement, Executive will not engage
in any activities in conflict with the best interests of the Company or
of any Affiliate. As used in this Agreement, the term "Affiliate" shall
mean at any time (a) each corporation or other business entity directly
or indirectly controlling, controlled by, or under common control with
the Company, including all corporations and other business entities now
or hereafter owned or acquired by the controlling shareholders of the
Company, and (b) each corporation or other business entity in which at
least fifty percent (50%) of the voting or non-voting stock or other
interest therein is owned beneficially and/or of record directly or
indirectly by the Company or its controlling shareholders.
5. TERMINATION.
(a) Executive's employment under this Agreement may be terminated:
(i) by Executive at any time for any reason or for no
reason whatsoever, upon not less than thirty (30) days
written notice;
(ii) by the Company at any time "for cause" (as
defined below), without prior notice;
(iii) by the Company at any time for any reason or for
no reason whatsoever, without prior notice;
(iv) by the Company if Executive is unable to perform
his duties under this Agreement by reason of illness or
physical or mental incapacity for an aggregate period of
sixty (60) days within any period of 365 consecutive days,
upon thirty (30) days prior written notice;
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(v) upon Executive's death; or
(vi) by the Company or the Executive at any time upon
a "change of control" (as defined below) of the Company.
(b) As used in this Agreement, the term "for cause" shall mean any
of the following:
(i) any action of Executive (or any failure to act
by Executive), which, in the reasonable determination of
the Company's Board of Directors, involves malfeasance,
fraud, embezzlement, dishonesty or moral turpitude, or
which, if generally known, would or might have a material
adverse effect on the Company and/or its reputation; or
(ii) the impairment of Executive's ability, in the
reasonable belief of the Company, to carry out the duties
and responsibilities set forth in this Agreement by reason
of his use of alcohol and/or legal or illegal drugs or
substances.
(c) As used in this Agreement, the term "change of control" shall
mean either of the following:
(i) an event or series of events by which any person or other
entity or group (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended the "Securities
Exchange Act") of persons or other entities acting in concert as a
partnership or other group (a "Group of Persons") shall, as a result
of a tender or exchange offer or offers, an open market purchase or
purchases, a privately negotiated purchase or purchases or
otherwise, become the beneficial owner (within the meaning of Rule 1
3d-3 under the Securities Exchange Act), directly or indirectly, of
50% or more of the then outstanding voting stock of the Company; or
(ii) the Company consolidates with, or merges with or into,
another person or entity or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its
assets to any person or entity, or any person or entity consolidates
with, or merges with or into the Company, in any such event pursuant
to a transaction in which 50% or more of the outstanding voting
stock of the Company is converted into or exchanged for cash,
securities or other property.
6. COMPENSATION PAYABLE UPON TERMINATION.
(a) If Executive's employment is terminated pursuant to the
provisions of subsections 5(a)(i), (ii), (iv) or (v) above, the
Company shall pay Executive all sums due Executive hereunder through
the date of such termination ("Earned Compensation").
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(b) If the Company terminates Executive's employment pursuant to the
provisions of subsection 5(a)(iii) above, then, in addition to paying
Executive his month, as severance pay, equal to one-twelfth (1/12th) of
the Executive's current base salary for each month of the next
succeeding six (6) months following termination (the "Severance
Period"). In addition, during the Severance Period, the Company shall
provide Executive with the same medical and insurance benefits, but no
other fringe benefits, which it provided to Executive under this
Agreement immediately prior to the actual termination date. The
foregoing notwithstanding, Executive shall use his good faith efforts
to obtain reasonable replacement employment from and after such
termination and any compensation and medical and insurance benefits
received by Executive from any such replacement employment during the
Severance Period shall reduce the amount of severance pay and medical
and insurance benefits due to Executive from the Company hereunder.
(c) If Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi) above, and Executive was not offered
employment after the change of control of the Company at substantially
the same compensation and contract terms for the performance of
substantially the same responsibilities as is set forth in this
Agreement (other than corporate title), in addition to paying Executive
his Earned Compensation, the Company shall pay the Executive an
additional amount per month, as severance pay, equal to one-twelfth
(1/12th) of the Executive's current base salary per month for each
month of the next succeeding twelve (12) months following termination
(the "Termination Severance Period"). In addition, during the
Termination Severance Period, the Company shall provide Executive with
the same medical and insurance benefits, but no other fringe benefits,
which it provided to Executive immediately prior to the actual
termination date of this Agreement. The foregoing notwithstanding,
Executive shall use his good faith efforts to obtain reasonable
replacement employment from and after such termination and any
compensation and medical and insurance benefits received by the
Executive from such replacement employment during the Termination
Severance Period shall reduce the amount of severance pay and medical
and insurance benefits due to Executive from the Company hereunder.
7. RESTRICTIVE COVENANTS.
(a) Executive acknowledges that the services to be performed by him
are unique, and, by reason of such employment, Executive will acquire
confidential information and trade secrets concerning the operations of
the Company and of one or more Affiliates concerning their respective
methods of doing business and future plans. Accordingly, Executive
agrees that:
(i) During the Restricted Period (as defined in subsection 7(b)
below), Executive will not, directly or indirectly, engage in, or
have an interest in or be associated with (whether as an officer,
director, stockholder, partner, associate, employee, consultant,
owner or otherwise) any corporation, firm or enterprise which is
engaged in any business which is competitive with the business
conducted or, to the knowledge of Executive, planned to be conducted
at any time during the term of this Agreement or the Restricted
Period by the Company, anywhere in the
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continental United States; except that Executive may invest in
any publicly held corporation engaged in such business, if such
investment does not exceed I % in value of the issued and
outstanding capital stock of such corporation;
(ii) For so long as any Confidential Information (as defined
below) shall remain confidential or otherwise remain wholly or
partially protectable, either during the course of the Executive's
employment or thereafter, Executive will not use or disclose,
directly or indirectly, to any person outside of the Company any
Confidential Information;
(iii) Promptly upon the termination of Executive's employment
for any reason, Executive (or if Executive has died, his personal
representative) shall return to the Company any and all copies
(whether prepared or copied by, or at the direction of, the Company
or Executive) of all records, drawings, materials, memoranda and
other data constituting or pertaining to Confidential Information;
(iv) During the Restricted Period, Executive shall not directly
or indirectly divert, or by aid to others do anything which would
tend to divert, from the Company any trade or business with any
customer with whom Executive had any contact or association during
the term of Executive's employment with the Company or with any
party whose identity or potential - as a customer was confidential
or learned by Executive during his employment by the Company; and
(v) During the course of Executive's employment hereunder or at
any time thereafter, Executive shall not, either directly or
indirectly, induce or attempt to induce any person to leave the
employment of the Company or any Affiliate.
(b) As used in this Agreement, the term "Confidential Information"
shall mean all business information of any nature and in any form which
at the time or times concerned is not generally known to those persons
engaged in business similar to that conducted or contemplated by the
Company (other than by the act or acts of an employee not authorized by
the Company to disclose such information) and which relates to any one
or more of the aspects of the present or past business of the Company
or any Affiliate or any of their respective predecessors, including,
without limitation, patents and patent applications, inventions and
improvements (whether or not patentable), development projects,
policies, processes, formulas, techniques, know-how, and other facts
relating to sales, advertising, promotions, financial matters,
customers, customer lists, customer purchases or requirements, and
other trade secrets. As used in this Agreement, the term "Restricted
Period" shall mean:
(i) if Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(i) or subsection 5(a)(ii), the period
commencing on the Effective Date and ending upon the expiration of
three (3) years from the date of such termination;
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(ii) if Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(iii) or subsection 5(a)(iv), and the
Company, in its sole and absolute discretion, continues to pay
Executive his base salary in the amount and manner set forth in
subsection 2(a) above and provide Executive with the same medical
and insurance benefits, but no other fringe benefits, which it
provided to Executive under this Agreement immediately prior to the
actual termination date, the period commencing on the Effective Date
and ending on the first to occur of (1) the date the Company ceases
to pay Executive such base salary or provide Executive such medical
and insurance benefits, or (2) December 31, 1999;
(iii) if Executive's employment is terminated pursuant to the
provisions of subsection 5(a)(vi), the period commencing on the
Effective Date and ending upon the expiration of twelve (12) months
from the date of such termination.
(c) Executive understands that the Company would not have an
adequate remedy at law for the breach or threatened breach by Executive
of any one or more of the covenants set forth above, and agrees that if
there is any such breach or threatened breach the Company may, in
addItion to the other legal or equitable remedies which may be
available to it, obtain an injunction or restraining order to enjoin or
restrain Executive from the breach or threatened breach of such
covenants.
(d) Executive acknowledges and agrees that the covenants set forth
above are reasonable and valid in geographical and temporal scope and
in all other respects. If any court determines that any of the
covenants, or any part of any covenant, is invalid or unenforceable,
the remainder of the covenants shall not be affected and shall be given
full effect, without regard to the invalid portion. If any court
determines that any of the covenants, or any part of any covenant, is
unenforceable because of its duration or geographic scope, such court
shall have the power to reduce the duration or scope, as the case may
be, and, enforce such provision in such reduced form. Executive and the
Company intend to and hereby confer jurisdiction to enforce the
covenants upon the courts of any jurisdiction within the geographical
scope of such covenants. If the courts of any one or more of such
jurisdictions hold the covenants, or any part of the covenants,
unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of Executive and the Company that such determination
not bar or in any way affect the right of the Company to the relief
provided above in the courts of any other jurisdiction within the
geographical scope of such covenants as to breaches of such covenants
in. such other respective jurisdictions. For this purpose, such
covenants as they relate to each jurisdiction shall be severable into
diverse and independent covenants.
8. NOTICES. Any notice, demand or request which is permitted, required
or desired to be given in connection with this Agreement or Executive's
employment by the Company shall be deemed given if personally delivered, or
delivered by telegram or facsimile, or mailed, by first class mail, postage
prepaid, certified, return receipt
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requested, to the parties at the following addresses, or at such other address
as they may hereafter indicate by written notice given as herein provided:
If to Executive:
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Eric I. Glassman
25276 Cardington Drive
Beachwood, Ohio 44122
If to the Company: With a Required Copy to:
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D.I.Y. Home Warehouse, Inc. Jaffe, Raitt, Heuer & Weiss
c/o Edgemere Enterprises Professional Corporation
P.O. Box 458 One Woodward Ave., Suite 2400
Bloomfield Hills, Michigan 48305 Detroit, Michigan 48226
Attn: Fred A. Erb, Chairman Attn: Ira J. Jaffe, Esq.
9. MISCELLANEOUS.
(a) The terms and conditions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective heirs,
successors and personal representatives.
(b) This Agreement shall be governed by, and be construed and
enforced in accordance with, the laws of the State of Ohio.
(c) This Agreement may not be modified except by written instrument
executed by each of the parties.
(d) This Agreement sets forth the entire understanding and agreement
of the parties with respect to its subject matter and supersede all
prior understandings and agreements, whether written or oral, in
respect thereof.
(e) This Agreement is personal to Executive and may not be assigned
by him in any manner whatsoever.
(f) The headings and captions used herein are for convenience of
reference only and shall not be considered in construing this
Agreement.
(g) If any provision of this Agreement shall be held by a court of
competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be modified so as to be enforceable to the fullest
extent permitted by applicable law, and the validity, legality and
enforceability of the remaining provisions hereof shall not in any way
be affected or impaired thereby.
(h) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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(i) The Company and Executive acknowledge and agree that there may
be a constitutional right to a jury trial in connection with any claim,
dispute or lawsuit arising between them, but that such right may be
waived. Accordingly, the parties agree that notwithstanding such
constitutional right, in this matter, the parties believe and agree
that it shall be in their best interest to waive such right, and
accordingly, hereby waive such right to a jury trial, and further agree
that the best forum for hearing any claim, dispute or lawsuit, if any,
arising in connection with this Agreement or the relationship between
Executive and the Company, shall be a court of competent jurisdiction
sitting without a jury.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
/s/ Eric I. Glassman
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ERIC I. GLASSMAN
D.I.Y. HOME WAREHOUSE, INC.
By: /s/ Fred A. Erb
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Fred A. Erb, Chairman of the Board
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