EMPLOYMENT, CONSULTING AND NON-COMPETITION AGREEMENT dated June 4, 1997
among Sassco Fashions, Ltd., a Delaware corporation ("Sassco"), ASL/K Licensing
Corp., a Delaware corporation ("License Co.") and together with Sassco, the
"Companies") and Xxxxxxx Xxxxxx ("Xxxxxx").
Xxxxxx is a designer with a long-established and internationally
recognized reputation. Sassco is today acquiring the business of the Sassco
Fashions Division ("Old Sassco"), of The Xxxxxx Xxx Companies Inc. ("Xxxxxx
Xxx"), which, under the "Xxxxxx for ASL" label, is the market leader in women's
suits, and whose sales of Xxxxxx branded products represent a substantial
majority of the sales of all Xxxxxx branded products. Sassco is today acquiring
the rights to the "Xxxxxx" trademark and granting License Co. rights to license
it. The Companies desire to provide for the continuing affiliation of Xxxxxx
with the Companies on a substantially exclusive basis.
1.(a) The Companies hereby retain Xxxxxx and he accepts such retention
with the title of President of License Co., reporting to its Board of Directors
and to Xxxxxx X. Xxxxxx, Chairman of the Companies (or his successor). Xxxxxx
will devote his business time to the licensing activities of License Co. (And to
any such other activities as he and Xx. Xxxxxx (or his successor) shall agree
upon), except that he will be permitted substantial time to devote to promoting
the operations of sublicensees of Forecast Designs, Inc. under the license being
granted it by Sassco. It is expressly acknowledged that the Companies are
seeking the affiliation of Xxxxxx and identification of his name as President in
connection with licensing the "Xxxxxx" trademark but that Xxxxxx will not be
required to perform any particular service hereunder and will not be liable for
failure to achieve any results or other activity.
(b) The term of Xxxxxx'x affiliation under paragraph (a) (the "Initial
Term") shall commence on the date hereof and shall terminate ten years
thereafter (or on such later date as Xxxxxx and the Companies may hereafter
agree upon), subject to earlier termination only in the event of his death or
the commission by him of an act of gross dishonesty having a material adverse
impact on the Companies.
(c) Upon the termination of the Initial Term, Xxxxxx shall be retained
by the Companies as a consultant, in which capacity he shall provide such
consulting services as he and Xx. Xxxxxx (or his successor) shall agree upon, it
being understood that Xxxxxx will not be required to spend any specific amount
of time or to render services in any particular place except as he agrees. The
term of Xxxxxx'x retention as consultant (the "Consulting Period") shall
terminate only upon Xxxxxx'x death.
2. Xxxxxx shall not, during either the Initial Term or the Consulting
Period:
(a) directly or indirectly, engaged or be interested in (as owner,
partner, shareholder, employee, director, officer, agent, consultant or
otherwise), with or without compensation, any business then being conducted by
either of the Companies, except that his interest or activities in
connection with the license referred to at the end of paragraph 1(a) above shall
not be deemed in violation of this paragraph.
(b) disparage in any manner and in any respect the Companies, their
financial soundness and responsibility, their personnel, products or practices
or their soundness, integrity and quality.
(c) Xxxxxx acknowledges that the provisions of this Section 2 are
reasonable and necessary for the protection of the Companies and that the
companies will be irrevocably damaged if such covenants are not specifically
enforced. Accordingly, he agrees that the Companies shall be entitled to seek
and obtain injunctive relief from a court of competent jurisdiction for the
purposes of restraining Xxxxxx from any actual or threatened breach of such
covenants.
3. Xxxxxx shall receive from the Companies:
(a) During the Initial Term:
(i) salary of $300,000 annually (in equal monthly
installments).
(ii) $7,500 for each 1% by which the gross profit from
Sassco's sales of Covered Products (as defined below) products in each of the
six years 1998-2003 exceeds the total gross profit derived by Old Sassco sales
of such products in the year 1995 (the term total gross profit means total net
sales of such products, less the cost of goods sold thereof determined in the
same manner as by Old Sassco). Amounts payable to Xxxxxx under this subparagraph
for any single year shall not, however, exceed a maximum of $375,000 (i.e.,
$375,000 would be paid if a year's total gross profit is at least 50% higher
than that of Old Sassco for sales of such products in 1995, but not more than
$375,000 would be paid if the total gross profit is more than 50% higher). As
used herein, Covered Products means women's apparel, namely suits, dresses and
sportswear in all female sizes (other than for girls or children) but does not
include jeans, coats, activen wear, underwear, rainwear, lingerie, robes,
pajamas, scarves, gloves, hats, bags, shoes, jewelry or perfumes.
(iii) Xxxxxx will always be entitled to participate at the
Companies' expense in all health, stock option, profit sharing, insurance or
other employee benefit plans as a senior executive of Sassco; provided that if
there is a primary public offering ("PPO") of Sassco's stock within three years,
(i.e., a public offering other than the issuance of shares to Xxxxxx Xxx or its
creditors or a secondary offering by then existing shareholders):
(A) if any employees are given the right to buy stock
in the PPO, Xxxxxx will have that right; and
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(B) if in connection with or after the PPO a stock
option plan is adopted by Sassco, Xxxxxx will participate on a basis appropriate
to his position (he will not be entitled to participate in any stock option plan
theretofore adopted by Sassco).
(iv) Notwithstanding paragraph 1(b) above, in the event of
Xxxxxx'x death during the Initial Term, monthly payments equal to those provided
for under paragraph 3(a)(i) shall be made to his legal representatives, heirs or
assigns until the date ten years from the date hereof as a death benefit.
(v) Xxxxxx will also have an annual promotional expense
allowance of $25,000 to be used as he sees fit (including home entertainment but
expenditure must be documented or otherwise verified to be reimbursed.
(b) During the Consulting Period, he will receive an annual fee of
$200,000 (payable in equal monthly installments) and, to the extent the services
requested of and performed by him require the incurring of any expenses
(including travel related expenses as applicable), he will receive an advance to
cover such expenses.
4.(a) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed in that state.
(b) Any notice or other communication under this Agreement shall be
in writing and shall be considered given when delivered personally or by
telecopier or three business days after mailing by U.S. registered mail, return
receipt requested, to the parties at the following address or at such other
address as a party may specify by notice to the other.
If to Xxxxxx:
Xx. Xxxxxxx Xxxxxx
c/o Xxxxxxx Xxxxx, Esq.
Camhy Karlinsky & Xxxxx LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
If to the Companies:
Xx. Xxxxxx Xxxxxxxxx
Sassco Fashions Ltd.
00 Xxxxx Xxx
Xxxxxxxx, XX 00000
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with copies to:
Xxxxx x. X. Xxxx, Esq.
Bachner, Tally, Xxxxxxx & Xxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
and
Xxxx X. Xxxxxxxx, Esq.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
(c) This Agreement shall supercede any existing agreement between
Xxxxxx and the Companies relating to the subject matter hereof. It may not be
amended except by a written agreement signed by all parties.
(d) The failure of a party to insist upon strict adherence to any term
of this Agreement on any occasion shall not be considered a waiver thereof or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.
(e) Subject to the limitations below, this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective heirs,
representatives, successors and assigns. Except as otherwise provided herein,
this Agreement shall not be assignable by Xxxxxx, and shall be assignable by
Companies only to a corporation resulting from the reorganization, merger or
consolidation of such Companies with any other corporation or any corporation to
which the Companies may sell all or substantially all of its assets, and it must
be so assigned by the Companies to, and accepted as binding upon it by such
other corporation, in connection with any such reorganization, merger,
consolidation or sale.
SASSCO FASHIONS, LTD.
By /S/ XXXXXX X. XXXXXX
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ASL/K LICENSING CORP.
By /S/ XXXXXX X. XXXXXX
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/S/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
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