SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB/A
[X] Annual Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended October 31, 1998
OR
[ ] Transition Report under Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File No.: 0-19000
JLM COUTURE, INC.
(Name of Small Business Issuer in its charter)
Delaware 13-3337553
(State or other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification Number)
225 West 37th Street, 5th Floor, New York, New York 10018
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 921-7058
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.0002 per share
(Title of class)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is contained herein, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB [X].
The issuer's revenues for its most recent fiscal year were
$15,704,889.
The aggregate market value of the shares of Common Stock held by
non-affiliates as reported by NASDAQ on July 7, 1999 was approximately
$3,081,470.
As of July 7, 1999, the registrant had outstanding 2,059,905 shares
of Common Stock, par value $.0002 per share.
Transitional Small Business Disclosure Format: Yes No X
The Annual Report on Form 10-KSB for the fiscal year ended
October 31, 1998 as filed on February 17, 1999 (the "Form 10-KSB")
of JLM Couture, Inc. ("JLM" or the "Company"), is hereby amended,
due to the fact the Company has postponed its annual meeting, to
include the following items:
PART III.
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
ACT.
The following table sets forth certain information as to the
directors of the Company:
Position with Director
Name Age the Company Since
Joseph L. Murphy 45 Chief Executive April 1986
and Financial Officer,
Director
Daniel M. Sullivan 73 Chairman of the September 1986
Board of Directors
Joseph E. O'Grady 76 Secretary and Director February 1991
Joseph L. Murphy, a founder of the Company, has been a
director of the Company since its inception. During Fiscal 1992,
Mr. Murphy was appointed President. In February 1993, Mr. Murphy
was appointed Chief Executive Officer. Mr. Murphy is the brother
of Mark Murphy, the Company's Vice President - Operations.
Daniel M. Sullivan became a director in September 1986 and was
elected Chairman of the Board in 1989. In 1989, Mr. Sullivan
retired as President and Chief Executive Officer of Frost &
Sullivan, Inc., a publicly-traded publisher of market research
studies, a position he had held for more than five years prior to
his retirement.
Joseph E. O'Grady was appointed to the Board of Directors in
February 1991. In December 1992, Mr. O'Grady was appointed
Secretary of the Company. For more than the past five years, Mr.
O'Grady has been the President of JOG Associates, Inc., a
privately-held financial consulting firm based in Hicksville, New
York. JOG Associates, Inc. arranges business financing and
provides financial consulting services for closely-held companies.
Directors serve until the next annual meeting of stockholders
and until their respective successors are elected and qualify.
During Fiscal 1998, the Board of Directors met informally. It
acted four times by unanimous written consent.
OTHER EXECUTIVE OFFICERS
Position with Position
Name Age the Company Held Since
Mark Murphy 34 Vice President- May 1993
Operations
Mark Murphy, 34, was appointed Vice President - Operations in
May 1993. Mr. Mark Murphy joined the Company in January 1993.
Prior to his joining the Company, Mr. Mark Murphy was employed as
a manager by Accurate Testing Co., a metals testing company based
in California, a position he had held since 1988. Mr. Mark Murphy
is the brother of Joseph L. Murphy, the Company's President.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and directors, and persons who own
more than ten percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Based solely on its
review of the copies of such forms received by it, the Company
believes that during Fiscal 1998 all executive officers and
directors of the Company complied with all applicable filing
requirements.
AUDIT AND COMPENSATION COMMITTEE
During Fiscal 1998, the Audit and Compensation Committee (the
"Audit Committee") consisting of Messrs. O'Grady and Sullivan did
not meet or act by unanimous written consent.
Item 10. EXECUTIVE COMPENSATION.
The following table sets forth information relating to the
cash compensation received during the Company's last three fiscal
years by the Company's President. None of the Company's other
officers had cash compensation in Fiscal 1998 of more than $100,000
per year:
SUMMARY COMPENSATION TABLE
Name and Annual Com- Other Long Term Other
Principal Fiscal pensation Annual Com- Compensation Compen-
Position Year Salary ($) pensation ($) Options sation($)
Joseph L. 1998 178,833 45,703 200,000 10,132
Murphy, 1997 150,000 76,102 100,000 10,639
President 1996 150,000 47,262 50,000 14,708
EMPLOYMENT AGREEMENT
On May 19, 1998, Mr. Joseph L. Murphy entered into an amended
employment agreement (the "Agreement") with the Company. The Agreement
terminates May 19, 2003, unless terminated earlier. The base salary
commences at $200,000 per annum. As additional compensation, Mr. Murphy
receives five percent (5%) of the Company's annual pre-tax profits. As
additional compensation, Mr. Murphy was granted a five year option to
purchase 200,000 shares of Common Stock of the Company exercisable at a
rate of 50,000 shares immediately and 50,000 shares on each yearly
anniversary date thereof at an exercise price of $2.5625 per share, that
being the fair market value of a share of Common Stock on the date of
grant.
STOCK OPTION PLANS
On November 17, 1986, the Company adopted an Incentive Stock
Option Plan (the "Plan") pursuant to which options to purchase up
to an aggregate of 100,000 shares of Common Stock could be granted.
Such options are intended to qualify as "incentive stock options"
within the meaning of Section 422A of the Code ("Incentive
Options").
In November 1994, the Board adopted and a majority of the
Company's shareholders approved a 1 for 3 reverse stock split,
which automatically decreased the authorized shares of Common Stock
under the Plan to 33,333. The Plan was amended in February 1996 to
increase the number of shares for which options could be granted to
100,000. A majority of the Company's stockholders approved the
Plan, as amended, in March 1996. During Fiscal 1996, options to
purchase an aggregate of 100,000 shares of Common Stock were
granted to 10 employees of the Company. These options expire four
and three years from the date of issuance and are exercisable at
prices ranging from $.87 and $2.125 per share.
The Plan is administered by the Board of Directors which has
the authority to determine the persons to whom Incentive Options
may be granted, the number of shares of Common Stock to be covered
by each Incentive Option, the time or times at which the Incentive
Options may be granted or exercised and, for the most part, the
terms and provisions of the Incentive Options. The exercise price
of Incentive Options granted under the Plan may not be less than
the fair market value of the shares of Common Stock on the date of
grant.
On August 26, 1996, the Company adopted a second stock option
plan (the "1996 Plan"). The 1996 Plan provides for the issuance of
incentive and non statutory stock options to employees, consultants
advisors and/or directors for a total of up to 100,000 shares of
Common Stock. The 1996 Plan was amended by the Board of Directors
(subject to stockholder approval) in September 1998 to increase the
authorized number of shares thereunder from 100,000 to 250,000
shares. A majority of the Company's stockholders approved the
amendment to the 1996 Plan in October 1998, at the Company's last
Annual Meeting of Shareholders. The exercise price of options
granted may not be less than the fair market of the shares on the
date of grant (110% of such fair market value for a holder of more
than 10% of the Company's Common Stock). The 1996 Plan will
terminate on August 26, 2006.
During Fiscal 1998, Mr. Joseph L. Murphy, received a non-
incentive stock option for 200,000 shares of Common Stock,
exercisable at $2.5625 per share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END (FYE) OPTION VALUES
Value of
Unexercised
Number In-the-Money
Of Unexercised Options
Options At FYE End
Shares At FYE Acquired ($)
Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized(1) Unexercisable Unexercisable (1)
Joseph L.
Murphy - - 150,000/150,000 0/0
Mark
Murphy 38,333 41,687 0/0 0/0
Joseph E.
O'Grady - - 3,334/6,666 0/0
Daniel M.
Sullivan - - 10,334/6,666 575/0
________________
(1) Represents fair market value of Common Stock at October 31,
1998 of $2.4375 as reported by NASDAQ, less the exercise
price.
COMPENSATION OF DIRECTORS
Directors not employed by the Company are compensated as
consultants for the time spent on Company matters, including
attendance at directors' and other meetings. During Fiscal 1998,
Mr. Sullivan received $30,000 and Mr. O'Grady received $47,265 as
consultant fees. Mr. O'Grady's remuneration is also reported in
the Summary Compensation Table above. See "Stock Option Plans"
above.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth as of July 7, 1999, the
number of shares of Common Stock held of record or beneficially (i)
by each person who held of record, or was known by the Company to
own beneficially, more than five percent of the outstanding shares
of Common Stock, (ii) by each director and (iii) by all officers
and directors as a group:
Number of Percent of
Names and Address Shares Owned (1) Outstanding Shares
Joseph L. Murphy 598,097(2)(5) 26.5%
225 West 37th Street
New York, NY 10123
Daniel M. Sullivan 174,673(2)(5) 8.4%
225 West 37th Street
New York, NY 10123
Harvest Capital 78,740 3.8%
Corporation
225 West 37th Street
New York, NY 10123
Joseph E. O'Grady 8,000(2) (6)
FMR Corp. 181,500(3) 8.8%
82 Devonshire Street
Boston, MA 02109
Carl Seaman 281,666(4) 13.6%
12 The Poplars
Roslyn, NY 11576
All Directors and
officers as a
group (4 persons) 711,811(2)(5) 31.3%
_________________
(1) Unless otherwise indicated, all shares of Common Stock are
owned directly.
(2) Includes 200,000, 13,334, 3,334 and 213,668 shares for Messrs.
J. L. Murphy, Sullivan, O'Grady and all officers and directors
as a group, respectively, that are issuable upon exercise of
presently exercisable options at an average exercise price of
approximately $4.32 per share.
(3) Based on information on Schedule 13G/A dated February 1, 1999.
(4) Based on information on Schedule 13D dated June 1, 1995 filed
with the Company on behalf of Mr. Seaman.
(5) Pursuant to the Securities Exchange Act of 1934, in addition
to the ownership of Common Stock set forth above, Mr. Joseph
L. Murphy, by virtue of his position with (President and a
director) and ownership of 22.1% of the outstanding Common
Stock of Harvest Capital Corporation ("Harvest") and Mr.
Sullivan, by virtue of his position with Harvest (Secretary
and a director), are considered to be the beneficial owners of
the shares of Common Stock owned by Harvest. Messrs. Murphy
and Sullivan disclaim beneficial ownership of these shares.
(6) Less than one percent.
The Company is unaware of any arrangement, the operation of
which, at a subsequent date, may result in a change of control of
the Company.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 22, 1998, Mr. Joseph L. Murphy purchased from the
Company 200,000 shares of Common Stock at a price of $2.25 per
share, the market value of such shares on such date. The purchase
was financed by Mr. Murphy executing a ten year promissory note due
to the Company in the principal amount of $450,000. The promissory
note bears interest at 5% per annum and requires annual principal
payments of $45,000 with accrued interest. The purchase was
approved by the unanimous consent of the Board of Directors of the
Company. The Company sold these shares to Mr. Murphy because it
was deemed to be in the best interests of the Company for him to
increase his equity ownership in the Company to better align his
interest with that of the other shareholders of the Company.
N:\RSKLAW\HJELM\10KSB.J99
<PAGE>
PART IV
ITEM 13. Exhibits
10.2 Amendment No. 1 dated November 1, 1998 to Employment
Agreement dated January 1, 1996 between the Company and
Mr. Lazaro Perez.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
JLM COUTURE, INC.,
Registrant
Dated: July 9, 1999 By:s/Joseph L. Murphy
Joseph L. Murphy
President (Authorized officer
and Principal Financial Officer)
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
AGREEMENT dated as of this 1st day of November, 1998 between
JLM COUTURE, INC., a Delaware corporation (hereinafter called the
"Company") with offices at 225 West 37th Street, Fifth Floor, New
York, New York 10018, and LAZARO PEREZ residing at
(hereinafter called the "Employee"). The Agreement shall control
and supersede all previous agreements entered into between the
Company and the Employee.
W I T N E S S E T H
WHEREAS, Employee is a designer of bridal gowns and related
apparel; and
WHEREAS, the Company desires to obtain the services of
Employee to design a line of bridal gowns and related apparel, upon
the terms and conditions stated herein; and
WHEREAS, Employee desires to be employed by the Company to
design a line of bridal gowns and related apparel, upon the terms
and conditions stated herein.
WHEREAS, the Company and the Employee entered into an
agreement dated as of January 1, 1996 for the employment of the
Employee (the "Prior Employment Agreement"); and
WHEREAS, the Company and the Employee desire to extend the
term of the employment of the Employee and to modify the terms of
the Prior Employment Agreement; and
WHEREAS, the Company and the Employee desire to enter into an
agreement to memorialize their understandings with regard to the
employment of the Employee by the Company.
NOW, THEREFORE, in consideration of the mutual covenants,
conditions and promises contained herein, the parties hereby agree
as follows:
1. The Prior Employment Agreement. Subject to the
provisions hereof, the Company and the Employee agree to terminate
in all respects the Prior Employment Agreement.
2. Employment Term. The Company hereby agrees to employ
Employee and Employee agrees to enter the employ of the Company on
the terms and conditions set forth below for a term commencing on
the date hereof (the "Commencement Date"), and terminating ten
years from the date hereof, unless sooner terminated as herein
provided (such initial term of this Agreement is herein referred to
as the "Term").
3. Duties. Subject to the authority of the Board of
Directors of the Company and the control and direction of the
President and Board of Directors of the Company, Employee shall be
employed as a designer of a line of bridal gowns and related
apparel for the Company, which line shall be under the Lazaro name
or an alternative name acceptable to both the Company and Employee
(the "Products"). Employee shall have direct responsibility for
the design of the Products. In addition to designing the Products,
Employee will perform such other duties and services commensurate
with his position as a designer for the Company, as may from time
to time be assigned to him by such persons, including, but not
limited to, attendance at trunk shows, assisting with advertising
programs, making first patterns and designing traditional style
bridal gowns and related apparel to be sold under the JLM COUTURE,
INC. label.
4. Full Time. Employee agrees that he will devote his
full time and attention during regular business hours to the
business affairs of the Company and that during the period of such
employment Employee will not, without the prior permission of the
President or Board of Directors of the Company, engage in any other
business enterprise which requires the personal time or attention
of Employee. It is understood that the Employee will perform
certain of the services contemplated in this Agreement outside of
the Company's offices. The foregoing shall not prevent the
purchase, ownership or sale by Employee of investments or
securities of publicly-held companies and any other business which
is not competitive and does not have any business relations with
the Company or any subsidiary of the Company, provided the time or
attention devoted by Employee to such activities does not interfere
with the performance of his duties hereunder.
5. Compensation. For the full, prompt and faithful
performance of all of the duties and services to be performed by
Employee hereunder, the Company agrees to pay, and Employee agrees
to accept, the amounts set forth below.
(a) As a base compensation, Employee shall be paid at a
rate set forth on Schedule A attached hereto per annum during the
Term (the "Base Compensation"), payable weekly. Effective on each
anniversary date of this Agreement, the Board of Directors of
Company agrees to review the Employee's performance hereunder and,
based on such review, to increase the Base Compensation at least in
an amount equal to the Consumer Price Index.
(b) As additional compensation Employee shall receive
for each fiscal year of the Company completed during the Term an
amount set forth on Schedule B attached hereto. Notwithstanding
anything else contained in this paragraph 5(b), the maximum amount
payable to Employee under this paragraph 5(b) for each fiscal year
of the Company during the Term shall not be greater than the Base
Compensation.
(c) Net sales of the Products for the purposes of
paragraph 5(b) shall be computed separately for each fiscal year of
the Company (or part thereof, if Employee's employment shall
terminate other than at the end of a fiscal year or if Employee's
employment shall commence other than at the beginning of a fiscal
year). Such computations shall be made as soon as practicable
after the end of each such period.
(d) For the purposes of this Agreement, net sales shall
mean the Company's gross receipts for the Products less the usual
discounts and allowances to customers, refunds for returned goods,
taxes, cost of transportation and non-collectable receivables.
(e) The additional compensation to be paid pursuant to
paragraph 5(b) shall be payable not later than 120 days after the
end of the fiscal year of the Company.
(f) In connection with this agreement, the Company has
previously granted to Employee a four year plan option to purchase
10,000 shares of Common Stock of the Company exercisable at the
fair market value on date of grant ($2.75 per share of Common
Stock) (the" Option"). The Option shall be exercisable at the rate
of 3,334 shares immediately and 3,333 shares on each of the next
two yearly anniversary dates thereof.
Additionally, the Company has previously granted to Employee
a four year non-plan option to purchase 20,000 shares of Common
Stock of the Company exercisable at the fair market value on the
date of grant ($2.75 per share of Common Stock) exercisable as to
6,666 shares immediately and as to 6,667 shares on each of the next
two yearly anniversary dates thereof.
(g) The Company shall provide the Employee with health
benefits on the same terms as provided to other employees of the
Company.
(h) The Company shall provide the Employee a clothing
allowance of $5,000 per year.
(i) If the Employee is employed by the Company on
January 1, 1999, then the Company shall issue the Employee, as a
bonus for no additional compensation, the consideration set forth
on Schedule C attached hereto.
(j) The compensation provided for herein shall be in
additional to any retirement, profit sharing, insurance (including
medical) or similar benefit which may at any time be payable to
Employee pursuant to any plan or policy of the Company relating to
such benefits, which benefits shall be made available to Employee
on the same basis as they are made available to other similarly
situated employees of the Company. Such compensation shall be in
addition to any options which may be granted under any Company
stock option plan.
6. Vacation. Employee shall be entitled to three weeks of
vacation per year, which shall be taken at such time or times as
shall be mutually determined by the Company and him.
7. Death. In the event of the death of Employee during
the Term or any extension thereof, the employment of Employee
hereunder shall terminate and come to an end on the last day of the
month of the death of the Employee. The estate of Employee (or
such persons as Employee shall designate in writing) shall be
entitled to receive, and the Company agrees to pay, the Base
Compensation of the Employee and the additional compensation
provided by paragraph 5(b) computed up to the end of the month in
which death occurs. Notwithstanding the death of Employee, the
provisions of Section 11 hereof shall continue in full force and
effect.
8. Disability. In the event that Employee shall, because
of illness or incapacity, physical or mental, be unable to perform
the duties and services to be performed by him hereunder for a
consecutive period of six (6) months, or nine (9) months during any
twelve (12) month period, the Company may terminate the employment
of Employee hereunder after the expiration of such period.
Employee shall be entitled to receive his base salary and the
additional compensation provided by paragraph 5(b) computed up to
the date of such termination. In the event of the termination of
Employee's employment due to the disability of Employee, the
provisions of paragraph 12 hereof shall continue in full force and
effect.
9. Covenant Not To Compete; Nondisclosure.
(a) The Employee covenants and agrees that for a period
of two years following the termination of his employment with the
Company other than as a result of a breach by the Company, he shall
not directly or indirectly compete with the Company in the bridal
marketplace in those areas in which the Company sells the Products,
nor induce any person associated with or employed by the Company or
any subsidiary of the Company, to leave the employ of or terminate
his association with the Company, or any subsidiary of the Company,
or solicit the employment of any such person on his own behalf or
on behalf of any other business enterprise. In the event of
termination of this Agreement by virtue of a breach by the Company,
termination without cause or expiration of the Term then the
aforesaid covenant will be applicable for a period of six months
from such event.
The Employee covenants and agrees that (i) following the
termination of his employment with the Company, other than if such
termination is without cause, Employee shall be restricted from
employment by Richard Glasgow, Inc. or an affiliate thereof for a
period of 12 years, and (ii) following the termination of his
employment with the Company without cause, Employee shall be
restricted from employment by Richard Glasgow, Inc. or an affiliate
thereof for a period of six years.
(b) The Employee covenants and agrees for a period of two
years following the termination of his employment with the Company
other than as a result of a breach by the Company, he will not,
directly or indirectly, during or after the term of employment
disclose to any person not authorized by Employer to receive or
use such information, except for the sole benefit of Employer, any
of Employer's confidential or proprietary data, information,
designs, styles, or techniques, including customer lists, or give
to any person not authorized by Employer to receive it.
Notwithstanding the foregoing, this applies solely to information
that is not generally known to anyone other than Employer.
(c) If any term of this paragraph 9 is found by any court
having jurisdiction to be too broad, then and in that case, such
term shall nevertheless remain effective, but shall be considered
amended (as to the time or area or otherwise, as the case may be)
to a point considered by said court as reasonable, and as so
amended shall be fully enforceable.
(d) In the event that Employee shall violate any
provision of this Agreement (including but not limited to the
provisions of this paragraph 9), the Employee hereby consents to
the granting of a temporary or permanent injunction against him by
any court of competent jurisdiction prohibiting him from violating
any provision of this Agreement. In any proceeding for an
injunction, Employee agrees that his ability to answer in damages
shall not be a bar or interposed as a defense to the granting of
such temporary or permanent injunction against Employee. Employee
further agrees that the Company will not have an adequate remedy at
law in the event of any breach by Employee hereunder and that the
Company will suffer irreparable damage and injury if Employee
breaches any of the provisions of this Agreement.
10. Trademark. Employer shall register the name Lazaro,
Lazaro Perez or a derivation thereof (the "Trademark"), with the
United States Patent and Trademark office ("USPTO"). Except as
otherwise provided herein, the permission of the Employee to the
Employer to so register the Trademark shall be perpetual and fully-
paid. The Trademark is the exclusive property of Employer, the
Employee having consented to it being filed by the Employer with
the USPTO and the Employee shall have no right to the use thereof
as a mark used in trade or commerce except as otherwise provided
herein, without the express written consent of the Company. The
Company shall be solely permitted to license the Trademark to a
third party.
11. Use of Designs. Employee hereby grants to the Company
a perpetual, royalty-free exclusive right and license to use his
designs for bridal gowns and related apparel (the "Designs") or any
variation thereof developed during the Term (or any extension
thereof). The Company shall be solely permitted to license the
Designs to a third party.
12. Use of Designs and Trademark After Term. Except as
set forth herein, Employee: (i) after such time as he is no longer
employed by the Company, grants to the Company a perpetual,
royalty-free exclusive right and license to use the Designs or any
variation thereof designed by the Employee during the Term (or any
extension thereof), (ii) upon expiration of the Term (or the
expiration of any extension thereof) or if his employment hereunder
is terminated for cause, grants to the Company, commencing on the
date he is no longer employed by the Company, a 12 year, royalty-
free exclusive right and license to use the Trademark, and (iii)
upon termination of his employment hereunder without cause, grants
to the Company, commencing on the date he is no longer employed by
the Company, a six year, royalty-free exclusive right and license
to use the Trademark. The provisions of this paragraph 12 shall
survive any termination of employment "for cause" as provided in
paragraph 13 hereof.
13. Termination.
13.1 Termination for Cause. The Company may terminate
Employee's employment without liability (other than for payments
accrued to the date of termination and as otherwise provided in
paragraph 12) if Employee's employment is terminated "for cause".
The term "for cause" shall, for the purposes of this Agreement,
mean (i) a material breach by Employee of the provisions of this
Agreement, (ii) the commission by Employee of a fraud against the
Company or the conviction of Employee for aiding or abetting, or
the commission of, a felony or of a fraud or a crime involving
moral turpitude or a business crime, (iii) the knowing possession
or use of illegal drugs or prohibited substances, the excessive
drinking of alcoholic beverages which impairs Employee's ability to
perform his duties hereunder, (iv) being under the influence of
such drugs, substances or alcohol during Employee's hours of
employment, or (v) any violation of the Company's corporate
policies described in the Company's employee handbook, which
handbook may supplemented or amended by the Company from time to
time, a copy of which has been provided to the Employee. In the
event of such termination for cause, Employee shall be entitled to
receive his base salary and the additional compensation provided by
paragraph 5(b) computed up to the date of such termination and the
provisions of paragraph 12 hereof shall continue in full force and
effect.
13.2 Termination Without Cause. The Company shall have
the right to terminate Employee's employment hereunder at any time,
without cause, on six months written notice to the Employee. In
the event the Employee's employment hereunder is terminated by the
Employer without cause, Employee shall be entitled to receive the
Base Compensation provided in paragraph 5(a) for a period of 90
days from the date such termination becomes effective and the
additional compensation provided by paragraph 5(b) for a period of
1 year from the date such termination becomes effective and the
provisions of paragraph 12 hereof shall continue in full force and
effect.
14. No Impediments. Employee warrants and represents that
he is free to enter into this Agreement and to perform the services
contemplated thereby and that such actions will not constitute a
breach of, or default under, any existing agreement.
15. No Waiver. The failure of any of the parties hereto
to enforce any provision hereof on any occasion shall not be deemed
to be a waiver of any preceding or succeeding breach of such
provision or of any other provision.
16. Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto and no amendment,
modification or waiver of any provision herein shall be effective
unless in writing, executed by the party charged therewith.
17. Governing Law. This Agreement shall be construed,
interpreted and enforced in accordance with and shall be governed
by the laws of the State of New York applicable to agreements to be
wholly performed therein.
18. Binding Effect. This Agreement shall bind and inure
to the benefit of the parties, their successors and assigns.
19. Assignment and Delegation of Duties. This Agreement
may not be assigned by the parties hereto except that the Company
shall have the right to assign this Agreement in connection with a
sale or transfer of all or substantially all of its assets, a merge
or consolidation. This Agreement is in the nature of a personal
services contract and the duties imposed hereby are non-delegable.
20. Paragraph Headings. The paragraph headings herein have
been inserted for convenience of reference only and shall in no way
modify or restrict any of the terms or provisions hereof.
21. Notices. Any notice under the provisions of this
Agreement shall be given by registered or certified mail, return
receipt requested, directed to the addresses set forth above,
unless notice of a new address has been sent pursuant to the terms
of this paragraph.
22. Unenforceability; Severability. If any provision of
this Agreement is found to be void or unenforceable by a court of
competent jurisdiction, the remaining provisions of this Agreement,
shall, nevertheless, be binding upon the parties with the same
force and effect as though the unenforceable part has been severed
and deleted.
23. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be deemed to be duplicate
originals.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
JLM COUTURE, INC.
By:
Joseph L. Murphy, President
Lazaro Perez
