Employment Agreement 10-26-2001 Isaac Arguetty

EX-10.3 5 g73356ex10-3.txt EMPLOYMENT AGREEMENT 10-26-2001 ISAAC ARGUETTY EXHIBIT 10.3 EMPLOYMENT AGREEMENT (AS AMENDED AND RESTATED AS OF OCTOBER 26, 2001) This Agreement shall be effective as of October 26, 2001 (the "Effective Date") by and between Isaac Arguetty (the "Executive") and Mayor's Jewelers, Inc., a Delaware corporation (the "Company"). WHEREAS, the Company and the Executive are parties to an existing employment agreement dated June 2, 1997; and WHEREAS, the parties desire to amend and restate such employment agreement as set forth herein; NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements, the parties agree as follows: 1. Position, Responsibilities and Term of Employment. 1.01 Employment and Duties. Subject to the terms and conditions of this Agreement, the Company employs the Executive to serve as the Chief Executive Officer and President and the Executive accepts such employment and agrees to perform in a diligent, careful and proper manner such reasonable responsibilities and duties commensurate with such position as may be assigned to Executive by the Board of Directors of the Company. Such duties may be changed in a manner deemed appropriate from time to time by the Board of Directors so long as such duties are consistent with Executive's employment as CEO and President; provided, however, this sentence shall not be operative after an Early Trigger or Change of Control as defined in Section 3.01. Executive agrees to devote substantially all business time and efforts to and give undivided loyalty to the Company. 1.02 Term. This Agreement shall have a term of three years, commencing as of the date hereof and ending on the third anniversary of the date hereof (the "Initial Period"), provided that on October 26, 2002, and each October 26 thereafter, the term shall automatically be extended for an additional one-year period (the "Renewal Period") unless prior to any such October 26, either party notifies the other in writing that the term will not be further extended. The Initial Period plus any Renewal Period is referred to herein as the "Term". 2. Compensation. 2.01 Base Salary. During the term of this Agreement, the Company shall pay Executive a minimum base annual salary, before deducting all applicable withholdings, of $360,000 per year, payable at all times and in the manner dictated by the Company's standard payroll policies. The Executive shall be eligible to receive such additional annual base salary increases as determined from time to time at the Compensation Committee's discretion based upon Executive's performance. 2.02 Incentive Compensation. (a) Annual Cash Bonus. In addition to a base salary, the Executive shall be entitled to receive an annual cash bonus for each fiscal year of the Company that ends during the Term (the "Bonus Award") based upon the achievement of performance goals. A target level (or levels) shall be established, which, if achieved, shall entitle the Executive to 100% of base salary. Minimum and maximum levels shall also be established, which, if achieved, shall entitle the Executive to 50% and 200% of base salary, respectively. Achievement levels that fall between the established levels shall entitle the Executive to an interpolated percentage of Base Salary. Performance goals may be based on more than one factor. To the extent more than one factor is established, each factor shall be assigned a weighted percentage to determine what portion of the total bonus percentage shall be attributable to such factor. The entitlement to a Bonus Award for a fiscal year shall be 36 determined based on the Company's audited consolidated financial statements, and any Bonus Award payable for such year shall be paid as soon as practicable after release of such statements. The criteria for achieving the Bonus Award shall be set annually by the Compensation Committee after consultation with the Executive within the first quarter of each fiscal year, except for the first fiscal year. (b) Long-term Incentive Awards. Each year, the Compensation Committee shall consider the Executive for an award of stock options or other long-term incentive award. In determining whether and to what extent the Executive will be granted an award, the Compensation Committee may, in its discretion, consider the Executive's employment level, the achievement of the targets set forth in Section 2.02(a) for the prior year, benchmarking with comparable companies by outside compensation consultants, and such other factors as it deems relevant. 2.03 Participation in Benefit Plans. The Executive shall be eligible to participate in, and receive benefits under, all the Company's Executive benefit plans and arrangements in effect on the Effective Date for as long as such plans and arrangements may remain in effect (including, but not limited to, participation in any other pension, financial planning, profit sharing, stock bonus plan or stock option plan adopted by the Company, and all group life, health, disability plans and other insurance) or any substitute or additional plans, policies or arrangements made available in the future to similarly situated Executives of the Company, subject to, and on a basis consistent with, the terms, conditions and overall administration of such plans, policies and arrangements. Family medical and dental coverage under the standard Company plans will be paid by the Company. Nothing paid to the Executive under any plan, policy or arrangement presently in effect or made available in the future shall be deemed to be in lieu of other compensation to the Executive hereunder as described in this Section 2. The stock options granted to Executive in Section 3(c) of the June 2, 1997 Employment Agreement remain outstanding in accordance with their terms. 2.04 Vacation Days. The Executive shall be entitled to six weeks of vacation each year consistent with Company policy for senior Executive officers. Unused vacation days may not be carried over from year to year. 2.05 Expenses. During the term of employment hereunder, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in accordance with the policies and procedures established by the Company or the Board for Executives of the Company in performing services hereunder. The Executive shall be entitled to use of the Company-provided or leased vehicle provided to the Executive as of the date hereof, or a comparable vehicle, on the same basis on which such vehicle was provided prior to the date hereof. The Company shall pay life insurance premiums on the term life insurance policy maintained on the life of the Executive on the same basis as such premiums were paid prior to the date hereof. 3. Termination. 3.01 Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated: (a) "Cause" shall mean: (i) a material breach by the Executive of any material provision of this Agreement, and such breach is not cured by the Executive within fifteen (15) days from the date the Company notifies the Executive thereof, (ii) the willful commission of an act of fraud or dishonesty by the Executive that adversely effects the business of the Company, or (iii) the conviction of the Executive, or a pleading of guilty or nolo contendere by the Executive, with respect to the commission of a felony. Solely for purposes of Section 3.04, other than in the case of the Executive's conviction of a felony, the Agreement shall not be deemed to have been terminated for Cause by the Company hereunder without (i) notice to the Executive setting forth the reasons for the Company's intention to terminate the Executive for Cause, (ii) an opportunity for the Executive, together with his counsel, to be heard before the Board, and (iii) delivery to the Executive of written notice from the Board finding that in the reasonable good faith opinion of the Board, the Executive was guilty of conduct set forth in the preceding sentence, and specifying the particulars thereof in detail. (b) "Change in Control" shall be deemed to have occurred upon: 37 (i) the date of the acquisition by any "person" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding the Company or any of its subsidiaries or affiliates or any Executive benefit plan sponsored by any of the foregoing, of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more of either (x) the then outstanding shares of common stock of the Company or (y) the then outstanding voting securities entitled to vote generally in the election of directors; or (ii) the date the individuals who constitute the Board as of the date of this Agreement (the "Incumbent Board") cease for any reason to constitute at least a majority of the members of the Board, provided that any individual becoming a director subsequent to the effective date of this Agreement whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than any individual whose nomination for election to Board membership was not endorsed by the Company's management prior to, or at the time of, such individual's initial nomination for election) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board; or (iii) the consummation of a merger, consolidation, recapitalization, reorganization, sale or disposition of all or a substantial portion of the Company's assets, a reverse stock split of outstanding voting securities, the issuance of shares of stock of the Company in connection with the acquisition of the stock or assets of another entity, provided, however, that a Change in Control shall not occur under this clause (iii) if consummation of the transaction would result in at least 80% of the total voting power represented by the voting securities of the Company (or, if not the Company, the entity that succeeds to all or substantially all of the Company's business) outstanding immediately after such transaction being beneficially owned (within the meaning of Rule 13d-3 promulgated pursuant to the Exchange Act) by at least 75% of the holders of outstanding voting securities of the Company immediately prior to the transaction, with the voting power of each such continuing holder relative to other such continuing holders not substantially altered in the transaction. (c) "Code" shall mean the Internal Revenue Code of 1986, as amended. (d) "Disability" shall mean the Executive's inability to perform his duties by reason of mental or physical disability for at least one-hundred eighty (180) days in any three-hundred sixty-five (365) day period. In the event of a dispute as to whether the Executive is disabled within the meaning hereof, either party may from time to time request a medical examination of the Executive by a doctor appointed by the Chief of Staff of a hospital selected by mutual agreement of the parties, or as the parties may otherwise agree, and the written medical opinion of such doctor shall be conclusive and binding upon the parties as to whether the Executive has become disabled and the date when such disability arose. The cost of any such medical examination shall be borne by the Company. (e) "Early Trigger" shall mean: (i) commencement (within the meaning of Rule 14d-2 as promulgated under the Exchange Act) of a "tender offer" for stock of the Company subject to Section 14(d)(2) of the Exchange Act; or (ii) the execution by the Company of an agreement the consummation of which would constitute a Change in Control; or (iii) the solicitation of proxies for the election of directors by anyone other than the Company; or (iv) the approval by the Company's stockholders of any transaction described in Section 3.01 (b)(iii). 38 (f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include rules thereunder and successor provisions and rules thereto. (g) "Good Reason" shall mean (i) the Company changes the Executive's status, title or position as an officer of the Company and such change represents a material reduction in such status, title or position conferred hereunder, and/or (ii) the Company materially breaches any material provision of this Agreement (including, without limitation, a reduction in the Executive's base salary),and/or (iii) any attempted relocation of the Executive's place of employment to a location more than 50 miles from the location of such employment on the date of such attempted relocation, and/or (iv) within the two-year period following a Change in Control, there is a reduction in the Executive's target bonus, or a reduction in the aggregate of the level of benefits available to the Executive pursuant to Section 2.03, in each case as compared to the Executive's entitlements immediately prior to the Change in Control, and such change, breach or reduction is not cured by the Company within fifteen (15) days from the date the Executive delivers a Notice of Termination for Good Reason. Such "Notice of Termination for Good Reason" shall include the specific section of this Agreement which was relied upon and the reason that the Company's act or failure to act has given rise to his termination for Good Reason. 3.02 Termination Without Cause, Non-Renewal, or Resignation with Good Reason. (a) In the event at any time of (i) the termination of the employment of the Executive without Cause (for any reason other than by death or Disability) or (ii) the non-renewal of this Agreement by the Company or (iii) the resignation of the Executive from the Company within 30 days of an event constituting Good Reason, the Company shall pay or provide to the Executive only the following: (i) any earned and accrued but unpaid installment of base salary through the date of the Executive's resignation or termination at the rate in effect immediately prior to such resignation or termination (or, if greater, immediately prior to the occurrence of an event that constitutes Good Reason) and all other unpaid amounts to which the Executive is entitled as of such date under any compensation plan or program of the Company (including payment for any vacation time not taken during the year in which termination occurs), such payments to be made in a lump sum within 15 days following the date of resignation or termination; and (ii) the amount the Executive would have been entitled to pursuant to Section 2.02(a), had Executive remained employed through the end of the fiscal year in which termination occurs, multiplied by a fraction, the numerator of which is the number of days from the beginning of such fiscal year to the date of termination, and the denominator of which is 365, such amount to be paid no later than the time annual bonuses are paid to other executives of the Company; and (iii) in lieu of any further salary payments to the Executive for periods subsequent to his date of resignation or termination, an amount equal to the Executive's annual base salary in effect immediately prior to the Executive's resignation or termination (or, if greater, immediately prior to the occurrence of an event that constitutes Good Reason), such payment to be made in a lump sum within 15 days following the date of the Executive's resignation or termination; and (iv) a lump sum payment equal to Base Salary multiplied by the Bonus Percentage, payable within 15 days of the Executive's resignation or termination where the Bonus Percentage is calculated pursuant to (i) below, and no later than the time annual bonuses are paid to other executives of the Company where the Bonus Percentage is calculated pursuant to (ii) below. For purposes of the foregoing, Bonus Percentage shall mean (i) if termination of employment occurs prior to October 1 of any fiscal year, the Bonus Award earned for the immediately preceding fiscal year, expressed as a percentage of the Executive's Base Salary in effect as of the end of such preceding fiscal year, or (ii) if such termination occurs on or after October 1 of any fiscal year, the Bonus Award that would have been earned for the fiscal year in which termination occurs had such termination not occurred, 39 expressed as a percentage of the Executive's Base Salary in effect as of the date of termination; and (v) the Company shall maintain in full force and effect for one year following the date of the Executive's resignation or termination, health and dental programs (not disability programs) in which the Executive was entitled to participate either immediately prior to the Executive's resignation or termination or immediately prior to the occurrence of an event that constitutes Good Reason, provided that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. To the extent Cobra is available, the Company's obligations are satisfied by paying the Executive's monthly premiums. If continued participation in the Company health and dental plans is not permissible, the Company shall pay Executive the monthly premiums previously paid for such plans during such one year period. The Company shall continue to pay premiums during such one year period on the term life insurance policy on the life of the Executive; and (vi) continued payment of the automobile allowance, or continued provision of the Company-owned or leased vehicle, as the case may be, as well as payment of expenses of operation, maintenance, insurance, excess mileage fees and tax gross ups that were paid or provided to the Executive immediately prior to his resignation or termination (or, if more valuable to the Executive, immediately prior to the occurrence of an event that constitutes Good Reason) on the same basis that it was then paid or provided until the end of the one year period following the date of resignation or termination; and (vii) vesting of the installment of each outstanding stock option held by the Executive that would have next vested following such termination of employment, multiplied by a fraction, the numerator of which is the number of days from the beginning of the vesting year to the date of termination, and the denominator of which is 365. 3.03 Termination for Cause, Disability, Death or Resignation without Good Reason. In the event of the Executive's termination of employment for Cause, death or Disability or his resignation without Good Reason, only the amounts set forth in clause (i) of Section 3.02(a) shall be payable to the Executive, provided that in the event of death, the amount set forth in clause (ii) of Section 3.02(a) shall be payable as well. 3.04 Termination, Non-Renewal or Resignation in connection with a Change in Control. (a) Notwithstanding the provisions of Section 3.02, in the event of the resignation, termination or non-renewal of the employment of the Executive for any reason specified in Section 3.02(a), and such resignation or termination or non-renewal occurs within the two year period following a Change in Control, or, the Executive's employment terminates for any reason or no reason during the 3 month period following the 3 month anniversary of a Change in Control, then the Executive shall be entitled to receive the following payments and benefits: (i) the amounts and benefits specified in Sections 3.02(a)(i) and (vii); and (ii) a lump sum payment payable within 15 days equal to Base Salary (determined immediately prior to the Change in Control, or at the time of termination of employment, whichever is greater) multiplied by the number of years and fractions thereof equal to the remaining Term; and (iii) a lump sum payment payable within 15 days equal to (x) the greater of Base Salary (determined immediately prior to the Change in Control, or at the time of termination of employment, whichever is greater) or the Bonus Award for the immediately preceding fiscal year (or, if greater, for the fiscal year ended immediately preceding the Change in Control), multiplied by (y) the number of years and fractions thereof from the first day of the fiscal year in which termination of employment occurs to the expiration of the Term; and (iv) the benefits specified in clauses (v) and (vi) of Section 3.02(a), except that, in lieu of one year, the period for which such benefits are to be provided shall be for the remainder of the Term; and 40 (v) an amount that, on an after-tax basis (including federal income and excise taxes, and state and local income taxes) equals the excise tax imposed by Section 4999 of the Code upon which the Executive by reason of amounts payable under this Section 3.04(a) (including this clause (v)), as well as amounts payable outside of this Agreement by the Company that are described in Section 280G(b)(2)(A)(i) of the Code. For purposes of this clause, the Executive shall be deemed to pay federal, state and local income taxes at the highest marginal rate of taxation. (b) In the case of a resignation or termination for a reason specified in Section 3.02 which follows an Early Trigger, the Executive shall be entitled to the payments and benefits specified in Section 3.02 at the times specified therein, and if such Early Trigger ultimately results in a Change in Control, the Executive shall be entitled to the payments and benefits specified in Section 3.04(a) to be paid or commence upon the Change in Control, offset by any payments previously made or benefits previously provided pursuant to Section 3.02. (c) Solely for purposes of this Section 3.04, (x) other than in the case of the Executive's conviction of a felony, the Executive shall not be deemed to have been terminated for Cause by the Company hereunder without (i) notice to the Executive setting forth the reasons for the Company's intention to terminate the Executive for Cause, (ii) an opportunity for the Executive, together with his counsel, to be heard before the Board, and (iii) delivery to the Executive of written notice from the Board finding that in the reasonable good faith opinion of the Board, the Executive was guilty of conduct set forth in the definition of Cause in Section 3.01 hereof, and specifying the particulars thereof in detail and (y) Good Reason shall include a change in the Executive's status, title or position as an officer of the Company and such change represents a material reduction in such status, title or position as in effect immediately prior to a change in control. 3.05 Withholding. The Company shall have the right to deduct from any amounts payable under this Agreement an amount necessary to satisfy its obligation, under applicable laws, to withhold income or other taxes of the Executive attributable to payments made hereunder. 3.06 No Obligation to Mitigate Damages; No Effect on Other Contractual Rights. The Executive shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment provided for under this Agreement be reduced by any compensation earned by the Executive as the result of employment by another employer after the date of resignation or termination, or, with respect to amounts payable pursuant to Section 3.04, by any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive. The provisions of this Agreement, and any payment provided for hereunder, shall not reduce any amounts otherwise payable, or in any way diminish the Executive's existing rights, or rights the Executive may acquire in the future, under any Executive benefit plan, incentive plan, employment agreement or other contract, plan or arrangement. 4. Noncompetition/Confidentiality (a) The Executive agrees that during the Non-Competition Period (and, as to clauses (iii) and (iv) of this Section 4(a), at any time thereafter) he will not, directly or indirectly, do or suffer any of the following: (i) Own, manage, control or participate in the ownership, management or control of, or be employed or engaged by or otherwise affiliated or associated (collectively, "Employed") as a consultant, independent contractor or otherwise with, any other corporation, partnership, proprietorship, firm, association, or other business entity, or otherwise engage in any business, which is engaged in any manner in, or otherwise competes with, the business of the Company or any of its affiliates (as conducted on the date the Executive ceases to be employed by the Company in any capacity, including as a consultant) (a "Prohibited Business") in the United States of America or any of the foreign countries in which the Company or any of its affiliates is doing business (a "Competing Business") for so long as this Section 4(a)(i) shall remain in effect, nor solicit any person or business that was at the time of the Executive's termination of employment, or within one year prior thereto, a customer or supplier of the Company or any of its affiliates; provided, however, that, notwithstanding the foregoing, the Executive shall not be deemed to be Employed by a Competing 41 Business if the Board or a committee of the Board determines that the Executive has established by clear and convincing evidence all of the following: (A) such entity (including its affiliates in aggregate) does not derive Material Revenues (as defined below) from the aggregate of all Prohibited Businesses, (B) such entity (including its affiliates in aggregate) is not a Competitor (as defined below) of the Company and its affiliates and (C) Executive has no direct responsibility for or otherwise with respect to any Prohibited Business; for purposes of this clause (i), Material Revenues shall mean that 5% or more of the revenues of the entity (including its affiliates in aggregate) are derived from the aggregate of all Prohibited Businesses; an entity shall be deemed a Competitor of the Company and its affiliates if the combined gross receipts of the entity (including its affiliates in aggregate) from any Prohibited Business is more than 25% of the gross receipts of the Company and its affiliates in such Prohibited Business; and an "affiliate" of an entity is any entity controlled by, controlling or under common control with the entity; (ii) Employ, assist in employing, or otherwise associate in business with any present Executive, officer or agent of the Company or its affiliates; (iii) Induce any person who is an Executive, officer or agent of the Company, or any member of the Company or its affiliates, to terminate said relationship; and (iv) Disclose, divulge, discuss, copy or otherwise use or suffer to be used in any manner, in competition with, or contrary to the interests of, the Company, or any member of the Company or its affiliates, the customer lists, manufacturing and marketing methods, product research or engineering data, vendors, contractors, financial information, business plans and methods or other trade secrets of the Company, or any member of the Company or its affiliates, it being acknowledged by the Executive that all such information regarding the business of the Company or its affiliates compiled or obtained by, or furnished to, the Executive while the Executive shall have been employed by or associated with the Company is confidential information and the Company's exclusive property (it being understood, however, that information publicly disclosed by the Company shall not be subject to this Section 4(a)(iv), provided that such information may not be used in connection with any of the activities prohibited under clauses (i) and (ii) of this Section 4(a) for so long as such clauses remain in effect). For purposes hereof, the Non-Competition Period shall mean the Term and the period thereafter during which any termination payments are being made, provided, however, if this Agreement is terminated following a Change in Control under circumstances described in Section 3.04, then the Non-Competition Period shall end immediately upon such termination. (b) The Executive expressly agrees and understands that the remedy at law for any breach by him of any of the provisions of this Section 4 will be inadequate and that damages flowing from such breach are not readily susceptible to being measured in monetary terms. Accordingly, it is acknowledged that upon adequate proof of the Executive's violation of any legally enforceable provision of this Section 4, the Company shall be entitled to immediate injunctive relief and may obtain a temporary order restraining any threatened or further breach. Nothing in this Section 4 shall be deemed to limit the Company's remedies at law or in equity for any breach by the Executive of any of the provisions of this Section 4 which may be pursued or availed of by the Company. (c) In the event the Executive shall violate any legally enforceable provision of this Section 4 as to which there is a specific time period during which he is prohibited from taking certain actions or from engaging in certain activities, as set forth in such provision, then, such violation shall toll the running of such time period from the date of such violation until such violation shall cease; provided, however, the Company shall seek appropriate remedies in a reasonably prompt manner after discovery of a violation by the Executive. (d) The Executive has carefully considered the nature and extent of the restrictions upon him and the rights and remedies conferred upon the Company under this Section 4, and hereby acknowledges and agrees that the same are reasonable in time and territory, are designed to eliminate competition which otherwise would be unfair to the Company, are designed to not stifle the inherent skill and experience of the Executive, would not operate as a bar to 42 the Executive's sole means of support, are fully required to protect the legitimate interests of the Company and do not confer a benefit upon the Company disproportionate to the detriment to the Executive. (e) If any decision maker determines that any of the covenants contained in this Section 4 (the "Restrictive Covenants"), or any part thereof, is unenforceable because of the duration or geographical scope of such provision, the duration or scope of such provision, as the case may be, shall be reduced so that such provision becomes enforceable and, in its reduced form, such provision shall then be enforceable and shall be enforced. (f) The Company and the Executive intend to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction within the geographical scope of the Restrictive Covenants. If the courts of any one or more or such jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of breadth of scope or otherwise, it is the intention of the Company and the Executive that such determination not bar or in any way affect the Company's right to the relief provided above in the courts of any other jurisdiction within the geographical scope of such Restrictive Covenants as to breaches of such Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as they relate to each jurisdiction being, for this purpose, severable, diverse and independent covenants, subject, where appropriate, to the doctrine of res judicata. 7. Assignment. The rights and obligations of the parties under this Agreement shall not be assignable by either the Company or the Executive, provided that this Agreement is assignable by the Company to any affiliate of the Company, to any successor in interest to the business of any of the Company, or to a purchaser of all or substantially all of the assets of any of the Company. The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place. For purposes of clarity, any failure of the Company to obtain such agreement prior to the effectiveness of any such succession or assignment shall be a material breach of this Agreement and shall entitle the Executive to terminate this Agreement for good reason. As used in this Agreement, the term "Company" shall mean the Company as hereinbefore defined and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 5 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. 6. Miscellaneous. 6.01 Governing Law. This Agreement shall be construed in accordance with and governed for all purposes by the laws of the State of Florida. 6.02 Notices. Any notice, request, or instruction to be given hereunder shall be in writing and shall be deemed given when personally delivered or three days after being sent by United States certified mail, postage prepaid, with return receipt requested to, the parties at their respective addresses set forth below: (a) To the Company: Mayor's Jewelers, Inc. 14051 Northwest 14th Street Sunrise, Florida 33323 Attention: General Counsel (d) To the Executive: Isaac Arguetty 13801 40th Street South West Palm Beach, FL 33414 43 6.03 Severability. If any paragraph, subparagraph or provision hereof is found for any reason whatsoever to be invalid or inoperative, that paragraph, subparagraph or provision shall be deemed severable and shall not affect the force and validity of any other provision of this Agreement. If any covenant herein is determined by a court to be overly broad thereby making the covenant unenforceable, the parties agree and it is their desire that such court shall substitute a reasonable judicially enforceable limitation in place of the offensive part of the covenant and that as so modified the covenant shall be as fully enforceable as if set forth herein by the parties themselves in the modified form. The covenants of Executive in this Agreement shall each be construed as an agreement independent of any other provision in this Agreement, and the existence of any claim or cause of action of Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants in this Agreement. 6.04 Entire Agreement, Amendment and Waiver. This Agreement constitutes the entire agreement and supersedes all prior agreements of the parties hereto relating to the subject matter hereof, and there are no oral terms or representations made by either party other than those herein. This Agreement may not be amended, supplemented or waived except by a writing signed by the party against which such amendment or waiver is to be enforced. The waiver by any party of a breach of any provision of this Agreement shall not operate to, or be construed as a waiver of, any other breach of that provision nor as a waiver of any breach of another provision. 6.05 Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement, or breach thereof (other than those arising under Section 4, to the extent necessary for the Company to avail itself of the rights and remedies provided under Section 4), shall be submitted to arbitration in Broward County, Florida in accordance with the Rules of the American Arbitration Association, and judgment upon the award may be entered in any court having jurisdiction thereof, provided, however, that the parties agree that (i) the panel of arbitrators shall be prohibited from disregarding, adding to or modifying the terms of this Agreement; (ii) the panel of arbitrators shall be required to follow established principles of substantive law and the law governing burdens of proof; (iii) only legally protected rights may be enforced in arbitration; (iv) the panel of arbitrators shall be without authority to award punitive or exemplary damages; (v) the chairperson of the arbitration panel shall be an attorney licensed to practice law in Florida who has experience in similar matters; and (vii) any demand for arbitration made by the executive must be filed and served, if at all, within 365 days of the occurrence of the act or omission complained of. Any claim or controversy not submitted to arbitration in accordance with this Section shall be considered waived and, thereafter, no arbitration panel or tribunal or court shall have the power to rule or make any award on any such claim or controversy. The award rendered in any arbitration proceeding held under this Section shall be final and binding, and judgment upon the award may be entered in any court having jurisdiction thereof, provided that the judgment conforms to established principles of law and is supported by substantial record evidence. 6.06 Enforcement. (a) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts are still payable to him hereunder, all such amounts shall be paid in accordance with the terms of this Agreement to the Executive's estate or beneficiary. (b) In the event that the Company shall fail or refuse to make payment of any amounts due the Executive hereunder within the appropriate time period, the Company shall pay to the Executive, in addition to the payment of any other sums provided in this Agreement, interest, compounded daily, on any amount remaining unpaid from the date payment is required until paid to the Executive, at the rate from time to time announced by Chase Manhattan Bank as its "prime rate" plus 2%, each change in such rate to take effect on the effective date of the change in such prime rate. (c) The Company shall pay promptly as incurred (and in any event within 10 days of its receipt of proper documentation of) all reasonable fees and expenses (including attorneys' fees) that the Executive may incur following a Change in Control as a result of the Company's contesting the validity, enforceability, or the Executive's interpretation of, the provisions of this Agreement relating to the Executive's entitlements pursuant to Section 3.04 (regardless of the outcome of any litigation to enforce this Agreement). 44 (d) In the event proceedings are initiated by either party to enforce the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable costs, expenses, and attorney's fees from the other party, except to the extent such costs, fees and expenses are covered by Section 6.06(c), in which case Section 6.06(c) shall control. 6.07 Survival of Rights and Obligations. All rights and obligations of the Executive or the Company arising during the term of this Agreement shall continue to have full force and effect after the date that this Agreement terminates or expires. 6.08 Counterparts. This Agreement may be executed in two counterparts, each of which is an original but which shall together constitute one and the same instrument. 6.09 Release/Covenants. As a condition to his entitlement to receive termination payments, Executive shall (i) have executed and delivered to the Company a waiver and release satisfactory to the Company waiving and releasing all claims against the Company and its direct or indirect subsidiaries and their respective officers, agents, directors and Executives, and such waiver and release shall have become irrevocable, and (ii) comply with Sections 4 and 6.11. 6.10 Written Resignation. In the event this Agreement is terminated for any reason (except by death), the Executive agrees that if at the time Executive is a director or officer of the Company or any of its direct or indirect subsidiaries, Executive will immediately deliver a written resignation as such director or officer, such resignation to become effective immediately. 6.11 Return of Documents and Property. Upon the termination of the Executive's employment with the Company, or at any time upon the request of the Company, the Executive (or Executive's heirs or personal representatives) shall deliver to the Company (a) all documents and materials (including, without limitation, computer files) containing confidential information relating to the business and affairs of the Company and its direct and indirect subsidiaries, and (b) all documents, materials and other property (including, without limitation, computer files) belonging to the Company or its direct or indirect subsidiaries, which in either case are in the possession or under the control of the Executive (or Executive's heirs or personal representatives). 6.12 Executive's Representations. The Executive represents and warrants to the Company that (i) he is able to perform fully his duties and responsibilities contemplated by this Agreement and (ii) there are no restrictions, covenants, agreements or limitations of any kind on his right or ability to enter into and fully perform the terms of this Agreement. Execution Upon execution below by both parties, this Agreement will enter into full force and effect as of October 26, 2001. MAYOR'S JEWELERS, INC. By its Compensation Committee: By: /s/ Margaret Gilliam By: /s/ Peter Offermann EXECUTIVE /s/ Isaac Arguetty 45