EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of January 2, 1996 (the
"EFFECTIVE Date"), by and between L. LURIA & SON, INC., a Florida corporation
(the "COMPANY"), and GERALD NATHANSON (the "EXECUTIVE").
PRELIMINARY STATEMENTS:
A. The Company desires to retain the services of the Executive
pursuant to the terms and conditions of this Agreement.
B. The Executive is willing to make his services available to
the Company on the terms and subject to the conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. EMPLOYMENT.
1.1 GENERAL. The Company hereby agrees to employ the Executive
as the Chief Executive Officer of the Company, and the Executive hereby agrees
to provide services to the Company, on the terms and subject to the conditions
set forth herein.
1.2 DUTIES OF EXECUTIVE. The Executive shall devote his full
business time and attention to the affairs of the Company, render services to
the best of his ability, and use his best efforts to promote the interests of
the Company. Executive agrees to fulfill his fiduciary duties as an officer and
director of the Company. During the term of this Agreement, the Executive shall
serve as the Chief Executive Officer of the Company and perform all of the
duties generally recognized as being required of the Chief Executive Officer.
Subject to the authority of the Board of Directors, the Executive shall be
responsible for the management of the Company's day to day operations including,
but not limited to, all hiring and firing, merchandising, advertising, store and
warehouse operations, contracts, accounting, personnel, budgets and expenses;
provided, that decisions relating to the compensation, hiring and firing of the
officers of the Company shall require the approval of the Board of Directors.
The Executive shall also perform any other duties assigned to him by the Board
of Directors that are consistent with his title and position. All employees of
the Company will report directly or indirectly to Executive.
The Executive shall also be a member of the Board of Directors.
The Executive will report to the Board of Directors or the
Executive Committee of the Board of Directors. The Executive will seek and
require Board of Directors approval for major "out of the ordinary course of
business transactions" including
but not limited to: buying or selling Company real estate, leasing stores, bank
loans, financings, lease transactions, pledging of assets and expenditures of
capital expenses in excess of budget. Beginning with the third quarter of 1996
all quarterly and annual Company budgets will require prior Board of Directors
approval. As part of his duties, the Executive will provide reports to or meet
with the Board or the Executive Committee of the Board as requested.
1.3 PLACE OF PERFORMANCE. In connection with the employment of
the Executive by the Company hereunder, the Executive shall perform his duties
and obligations hereunder primarily from the Company's offices located in Miami
Lakes, Florida, except for required travel on the Company's business.
2. TERM.
2.1 INITIAL TERM. The initial term of the employment of the
Executive hereunder shall be for a period commencing on the Effective Date and
expiring on April 30, 1998 (the "INITIAL TERM"), unless sooner terminated in
accordance with the terms and conditions hereof.
2.2 RENEWAL TERM. The employment of the Executive hereunder
may be renewed and extended for such period or periods as may be mutually agreed
to by the Company and the Executive in a written supplement to this Agreement
signed by the Executive and the Company (a "WRITTEN SUPPLEMENT"). If this
Agreement is not so renewed and extended prior to the expiration of the Initial
Term, the employment of the Executive hereunder shall automatically terminate
upon the expiration of the Initial Term.
3. COMPENSATION.
3.1 BASE SALARY. As compensation for all services rendered by
the Executive to the Company hereunder, the Executive shall receive a base
salary at an annual rate of $300,000 (the "BASE SALARY") during the term of his
employment hereunder, which shall be payable in installments consistent with the
Company's normal payroll schedule, subject to applicable withholding and other
taxes. If the term of this Agreement shall be renewed and extended as provided
in Section 2.2 hereof, then during such renewal term the Executive shall be
paid a base salary as set forth in the Written Supplement.
3.2 SIGNING BONUS. On the Effective Date, the Executive
shall be paid a cash bonus of $200,000, less applicable withholding and other
taxes.
3.3 DISCRETIONARY BONUS. At the sole discretion of the Board,
the Executive shall be entitled to receive a discretionary annual bonus as
provided to other officers of the Company pursuant to bonus plans approved by
the Board after the Effective Date.
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4. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
4.1 REIMBURSABLE EXPENSES. During the term of the Executive's
employment hereunder, the Company, upon the submission of proper substantiation
by the Executive, shall reimburse the Executive for all reasonable expenses
actually and necessarily paid or incurred by him in the course of and pursuant
to the business of the Company, excluding moving expenses incurred by Executive
in relocating to Florida.
4.2 OTHER BENEFITS. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in all
medical and hospitalization, group life insurance, and any and all other fringe
benefit plans as are hereinafter provided by the Company to all of its officers
on the same terms as those of such other officers of the Company.
4.3 WORKING FACILITIES. During the term of the Executive's
employment hereunder, the Company shall furnish the Executive with an office and
secretarial help of his choice, and such other facilities adequate for the
performance of his duties hereunder at the Company's corporate headquarters
located in Miami Lakes, Florida.
4.4 STOCK OPTIONS. Subject to shareholder approval and the
terms and conditions of the Company's 1996 Stock Option Plan (the "Plan"), the
Company grants to the Executive, effective as of the Effective Date, a 10 year
option (the "Option") to purchase 400,000 shares of the Company's common stock,
$.01 par value, at an exercise price equal to the closing price of the common
stock on December 29, 1995. The Plan will be substantially similar to the
existing option plan of the Company. The Option shall vest immediately; provided
that, the Executive agrees not to sell any shares of common stock issued upon
exercise of the Option until the later to occur of (x) obtaining shareholder
approval of the Plan, or (y) April 30, 1998; provided, that, such April 30, 1998
date shall be accelerated in the event (i) an earlier date is agreed to by the
Board of Directors in its sole discretion, (ii) a Trigger Event (as hereinafter
defined) occurs, (iii) an underwritten public offering of the Company's common
stock for cash, pursuant to a registration statement filed under the Securities
Act of 1933, as amended, which results in net proceeds to the Company of at
least $15 million is consummated; or (iv) the Executive is terminated without
cause. The terms of this Section 4.4 shall survive the termination of this
Agreement.
5. TERMINATION.
5.1 TERMINATION FOR CAUSE. The Company shall at all times have
the right, upon written notice to the Executive, to terminate the Executive's
employment hereunder, for cause. For purposes of this Agreement, the term
"cause" shall mean solely (a) a willful breach by the Executive of any of the
material terms or provisions of this Agreement which is not cured within ten
(10) days after receipt by the Executive of written notice of same, (b) the
Executive's conviction of a felony involving moral turpitude, or (c) commission
by the Executive of an act or acts involving fraud, embezzlement,
misappropriation or theft against the Company. Upon any termination pursuant to
this Section 5.1, the Executive shall be entitled to be paid his Base Salary
to the date of termination and the Company
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shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the date of termination, subject,
however to the provisions of Section 4.1).
5.2 DISABILITY. The Company shall at all times have the right,
upon written notice to the Executive, to terminate the Executive's employment
hereunder, if the Executive shall, as the result of mental or physical
incapacity, illness or disability, fail to perform his duties and
responsibilities provided for herein for a period of more than 60 consecutive
days in any 365-day period. In the event of any termination pursuant to this
Section 5.4, (b) the Executive shall be entitled to be paid his Base Salary to
the date of termination and the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however to the provisions of
Section 4.1).
5.3 DEATH. In the event of the death of the Executive during
the term of his employment hereunder, (a) the Company shall pay the estate of
the Executive (i) unpaid amounts of his Base Salary to the date of his death,
(ii) life insurance payments pursuant to the group life insurance plan then in
place for the Executive, and (iii) if the date of death occurs within six months
prior to a Trigger Event (as defined in Section 5.4) but before the delivery of
the bonus payment due to the Executive under Section 5.4, the bonus payment that
would otherwise have been made to the Executive under Section 5.4, subject to
the offsets set forth in Section 5.4, (b) the Executive's estate shall have the
right to exercise stock options during the 90-day period after the date of death
pursuant to Section 4.4, and (c) the Company shall have no further liability
hereunder (other than for reimbursement for reasonable business expenses
incurred prior to the date of termination, subject, however to the provisions of
Section 4.1).
5.4 BONUS UPON OCCURRENCE OF TRIGGER EVENT. For purposes of
this Section 5.4, a "TRIGGER EVENT" shall mean any event (other than an event in
which the Executive is deemed a member of the control group (within the meaning
of the rules and regulations of the United States Securities and Exchange
Commission) of the entity making an offer of the type referred to in (a) and (b)
below), which results in:
(a) the shareholders of the Company approving
a plan of merger or consolidation in which the Company does not survive, unless
such approved merger or consolidation is subsequently abandoned; or
(b) the shareholders of the Company approving
a plan for the sale, lease, exchange or other disposition of all or
substantially all of the property and assets of the Company (unless such plan is
subsequently abandoned).
In the event a Trigger Event occurs during the terms of the Executive's
employment hereunder, the Executive will be entitled to a bonus (the "Bonus"),
determined as follows: (i) if such Trigger Event occurs prior to January 1,
1997, the Executive shall be entitled to be paid $1,000,000 within 60 days
following the date of the Trigger Event, and (ii) if such Trigger Event occurs
after December 31, 1996 but prior to January 1, 1998, the Executive
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shall be entitled to be paid $2,000,000 within 60 days following the date of the
Trigger Event; provided, that, the Bonus shall be offset by the sum of (x) any
gains (but not losses) realized by the Executive prior to such payment date with
respect to shares sold pursuant to the Options, plus (y) any gains (but not
losses) that could be realized by such Executive if shares subject to the
Options were sold in the open market, calculated assuming a sales price equal to
the higher of the closing price of the Company's common stock on (I) the date
immediately prior to the payment to the Executive and (II) the date of the
Trigger Event. The parties to this Agreement understand and agree that the Bonus
will be paid to the Executive because of his efforts and abilities in
repositioning and improving the condition of the Company.
6. RESTRICTIVE COVENANTS.
6.1 NON-COMPETITION. During the Non-competition Period
(as hereinafter defined), the Executive shall not, directly or indirectly,
engage in or have any interest in any sole proprietorship, partnership,
corporation or business or any other person or entity (whether as an employee,
officer, director, partner, agent, security holder, creditor, consultant or
otherwise) that directly or indirectly is engaged in the jewelry or gift retail
business primarily in Florida; PROVIDED, HOWEVER, that (i) nothing herein shall
be deemed to prevent the Executive from owning an interest in the equity or debt
securities of the Company or any of its direct or indirect subsidiaries, and
(ii) nothing herein shall be deemed to prevent the Executive from acquiring
through market purchases and owning, solely as an investment, less than one
percent of the equity securities of any class of any issuer whose shares are
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and are listed or admitted for trading on any United States national
securities exchange or are quoted on the National Association of Securities
Dealers Automated Quotations System, or any similar system of automated
dissemination of quotations of securities prices in common use, so long as the
Executive is not a member of any "control group" (within the meaning of the
rules and regulations of the United States Securities and Exchange Commission)
of any such issuer. For purposes of this Section 6.1, the term "NON-COMPETITION
PERIOD" shall mean (a) at all times while the Executive is employed by the
Company, and (b) in the event the Executive's employment is terminated pursuant
to Section 5.4, the period commencing on the effective date of such termination
and ending on the date on which all severance payments payable thereunder have
been paid in full.
6.2 NONDISCLOSURE. Except as expressly permitted by the
Company or in connection with the performance of his duties hereunder, the
Executive shall not divulge, communicate, use to the detriment of the Company or
for the benefit of any other person or persons, or misuse in any way, any
confidential information pertaining to the business of the Company. Any
confidential information or data heretofore or hereafter acquired by the
Executive with respect to the business of the Company (which shall include, but
not be limited to, information concerning the Company's financial condition,
prospects, customers, suppliers, sources of leads, methods of doing business,
importation, marketing and distribution of the Company's services) shall be
deemed a valuable, special and unique asset of the Company that is received by
the Executive in confidence and as a fiduciary, and the
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Executive shall remain a fiduciary to the Company with respect to all of such
information. Notwithstanding any provision hereof which may be to the contrary,
confidential information shall not include (a) information that is or becomes
generally available to the public other than as a result of a disclosure by the
Executive, or (b) information lawfully acquired by the Executive from sources
other than the Company or its affiliates who are not bound by any agreement of
confidentiality.
6.3 NONSOLICITATION OF EMPLOYEES. While employed by the
Company and for a period of two years following the date his employment is
terminated hereunder or not renewed, the Executive shall not, directly or
indirectly, for himself or for any other person, firm, corporation, partnership,
association or other entity, attempt to employ or enter into any contractual
arrangement with any employee or former employee of the Company, unless such
employee or former employee has not been employed by the Company (or its
predecessors) for a period in excess of six months.
6.4 BOOKS AND RECORDS. All books, records, and accounts
relating in any manner to the Company, whether prepared by the Executive or
otherwise coming into the Executive's possession, shall be the exclusive
property of the Company and shall be returned immediately to the Company on
termination of the Executive's employment hereunder or on the Company's request
at any time. The Executive shall not retain copies, extracts or compilations of
any such books, records or accounts.
6.5 COMPANY INCLUDES SUBSIDIARIES. For purposes of this
Section 6 and Section 7 hereof, the term "Company" shall be deemed to include
the Company and any of its direct or indirect subsidiaries.
6.6 SURVIVAL. The terms of this Section 6 shall survive
the termination of this Agreement.
7. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Section 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Section 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. INDEMNIFICATION. The Executive shall be entitled to be
indemnified and defended as provided to other directors of the Company in
accordance with the Company's charter documents and Florida law.
9. ASSIGNMENT. Subject to the provisions of Section 5.5 hereof, the
Executive agrees that any or all of the rights and interests of the Company
hereunder (i) may be assigned to any purchaser of substantially all of the
assets of the Company, and (ii) may be
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assigned as a matter of law to the surviving entity in any merger of the
Company. The Executive shall not delegate his employment obligations hereunder,
or any portion thereof, to any other person.
10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.
11. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements, understandings and arrangements, both oral and
written, between the parties hereto with respect to such subject matter. This
Agreement may not be modified in any way unless by a written instrument signed
by each of the parties hereto.
12. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be given by personal delivery, facsimile
transmission, Federal Express (or other equivalent courier service) or by
registered or certified mail, postage prepaid, return receipt requested (a) if
to the Company, 5770 Miami Lakes Drive, Miami Lakes, Florida 33014, Attention:
General Counsel, and (b) if to the Executive, to his address as reflected on the
payroll records of the Company, or to such other addresses as either party
hereto may from time to time give notice of to the other. Notice by registered
or certified mail will be effective three days after deposit in the United
States mail. Notice by any other permitted means will be effective upon receipt.
13. BENEFITS; BINDING EFFECT. This Agreement shall be for the benefit
of and binding upon the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and, where applicable,
assigns, including, without limitation, any successor to the Company, whether by
merger, consolidation, sale of stock, sale of assets or otherwise.
14. SEVERABILITY. The invalidity of any one or more of the words,
phrases, sentences, clauses or sections contained in this Agreement shall not
affect the enforceability of the remaining portions of this Agreement or any
part thereof, all of which are inserted conditionally on their being valid in
law, and, in the event that any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall be declared invalid, this
Agreement shall be construed as if such invalid word or words, phrase or
phrases, sentence or sentences, clause or clauses, or section or sections had
not been inserted. If such invalidity is caused by length of time or size of
area, or both, the otherwise invalid provision will be considered to be reduced
to a period or area which would cure such invalidity.
15. WAIVERS. The waiver by either party hereto of a breach or
violation of any term or provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation.
16. DAMAGES. Nothing contained herein shall be construed to prevent any
party hereto from seeking and recovering from the other damages sustained by
either or both of
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them as a result of its or his breach of any term or provision of this
Agreement. In the event that either party hereto brings suit for the collection
of any damages resulting from, or for the injunction of any action constituting,
a breach of any of the terms or provisions of this Agreement, then the
prevailing party shall pay all reasonable costs, fees (including reasonable
attorneys' fees) and expenses of the non-prevailing party.
17. SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
18. NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto and their respective heirs, personal
representatives, legal representatives, successors and assigns, any rights or
remedies under or by reason of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
L. LURIA & SON, INC.
By:/S/ LEONARD LURIA
-----------------------------
LEONARD LURIA, Chairman of
the Board
/S/ GERALD NATHANSON
--------------------------------
GERALD NATHANSON
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