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Exhibit 10.2
Exhibit B-1
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the ____ day of _____, 1998 by and between JJ
ACQUISITION CORP., a Delaware corporation (the "Company"), and Xxxxx Xxxxxxxxx
(the "Employee").
W I T N E S S E T H:
WHEREAS, the Company, a wholly owned subsidiary of Norton
XxXxxxxxxx, Inc., a Delaware corporation ("Norton"), and certain other parties
(which parties include the Employee) have entered into an Agreement of Purchase
and Sale dated as of April 15, 1998 (the "Purchase Agreement"), providing, inter
alia, for the purchase by the Company of substantially all of the assets of
Xxxx-Xx Knitwear Inc., a New York corporation ("J-J Knitwear") and Xxxxx Xxxxx,
Inc., a New York corporation ("Xxxxx Xxxxx"; and together with J-J Knitwear and
Xxxxx Xxxxx, the "Xxxx-Xx Group"); and
WHEREAS, the Company desires to secure the employment of the
Employee with the Company and the Employee desires to be employed by the
Company.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment, Term.
1.1 The Company agrees to employ the Employee, and the Employee
agrees to serve in the employ of the Company, for the term set forth in Section
1.2, in the positions and with the responsibilities, duties and authority set
forth in Section 2 and on the other terms and conditions set forth in this
Agreement.
1.2 The term of the Employee's employment under this Agreement (the
"Term") shall commence on the date hereof and shall terminate on the second
anniversary of the Closing Date (as defined in the Purchase Agreement) (the
"Expiration Date"), unless sooner terminated in accordance with this Agreement.
2. Positions, Duties. The Employee shall serve in the position of
President of the Company. The Employee shall perform, faithfully and diligently,
such duties and shall have such other responsibilities, appropriate to said
position, as shall be assigned to her from time to time by the Vice Chairman
(the "Vice Chairman") (currently, Xxxxx Xxxxxxxxx); provided, however, that in
any event said duties and responsibilities shall be consistent with the terms
and
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provisions of Section 7.12 of the Purchase Agreement. The Employee shall report
solely to the Vice Chairman (currently, Xxxxx Xxxxxxxxx), but if Xx. Xxxxxxxxx
changes titles with the Purchaser, then to Xx. Xxxxxxxxx in such capacity. The
Employee shall devote her complete and undivided attention to the performance of
her duties and responsibilities hereunder during the normal working hours of
executive employees of the Company. The Employee's services under this Agreement
shall be performed principally at the executive offices and warehouses of the
Company to be located, during the Term, in New York City and New Jersey,
respectively (unless otherwise agreed between the Vice Chairman and the
Employee).
3. Compensation.
3.1 Salary. During the Term, in consideration of the performance by
the Employee of the services set forth in Section 2 and her observance of the
other covenants set forth herein, the Company shall pay the Employee, and the
Employee shall accept, a base salary at a rate of $400,000 per annum (which may
be increased, but not decreased), payable in accordance with the standard
payroll practices of the Company.
3.2 Bonus. During the Term, in addition to the salary provided for
in Section 3.1 and the Bonus Plan described in Section 3.4, the Employee shall
be eligible to participate, subject to the terms thereof, in any bonus plan for
executives of Norton or the Company in effect during the Term.
3.3 Stock Options.
(a) Grant. On the date hereof, Norton shall grant to the
Employee, an option to purchase an aggregate number of shares of common stock,
par value $.01 per share (the "Common Stock"), of Norton, at an exercise price
per share equal to the Closing Market Value (as defined in the Purchase
Agreement) (the "Option"), which number shall equal the sum of (i) 180,000 (the
"Base Option Number") and (ii) a number (the "Additional Option Number") equal
to the Base Option Number multiplied by a fraction, the numerator of which shall
be the positive excess, if any, of the Closing Market Value over the Signing
Market Value (as such terms defined in the Purchase Agreement) and the
denominator of which shall be the Signing Market Value. The Option shall be
vested and exercisable on and after (i) the date hereof, as to 40,000 shares of
Common Stock and (ii) the date which is nine years and six months from the
Closing Date, as to the remainder of the number of shares of Common Stock
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subject to the Option (the "Remainder"), but shall be sooner exercisable as to
the Remainder (i)(A) with respect to a number of shares of Common Stock equal to
140,000 shares of Common Stock, on the Earn Out Payment Date (as defined in the
Purchase Agreement) if and only if the 1998/1999 EBITDA (as defined in the
definition of 1998/1999 EBITDA in the Purchase Agreement) shall equal or exceed
$11,000,000 but be less than $15,000,000, (B) in full, on the Earn Out Payment
Date, if and only if the 1998/1999 EBITDA shall equal or exceed $15,000,000;
(ii) in full, on the date, if any, that the Employee's employment terminates
hereunder by reason of death or Disability or by the Employee for Good Reason or
by the Company without Due Cause (as said terms are hereinafter defined); and
(iii) in full, upon the occurrence of any Acceleration Event (as defined in the
Purchase Agreement).
(b) Term of Option. Except as provided below, the term of the
Option shall be ten years.
(i) In the event of a termination of employment of the
Employee with the Company pursuant to Section 6.1, Section 6.2 or Section 6.4,
the Option may be exercised by the Employee or, in the event of the Employee's
death, her estate or legal representative during the remainder of the term of
the Option; and
(ii) In the event of termination of the employment of the
Employee with the Company (a) by the Company pursuant to Section 6.3 or (b) by
the Employee during the Term, other than pursuant to Sections 6.1, 6.2 or 6.4,
the Option shall not thereafter be exercisable.
(c) Adjustments. In the event of any dividend or other
distribution (whether in the form of cash, Common Stock, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of Norton, issuance
of warrants or other rights to purchase Common Stock, the Board of Directors
shall, in good faith, adjust the number of shares of Common Stock (or other
securities or property) subject to the Option, the exercise price with respect
to any Option, or all of the foregoing.
(d) Stock Option Certificate. The Options shall be represented
by a stock option certificate in the form of Exhibit A hereto and shall
otherwise be subject to the terms and conditions of such stock option
certificate.
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(e) Registration of Shares. Norton shall, as promptly as
practicable following the commencement of the Employee's employment hereunder,
file a registration statement on Form S-8, or any successor to such Form, with
respect to the shares of Common Stock covered by the Option.
3.4 Bonus Options. During the Term, the Employee shall be eligible
to receive Bonus Options (as defined in the Norton XxXxxxxxxx, Inc. Bonus Option
Plan for Senior Executives of JJ Acquisition Corp. (the "Executive Option Bonus
Plan")) in accordance with the terms set forth in the Executive Option Bonus
Plan, a copy of which is attached hereto as Exhibit B.
4. Expense Reimbursement. During the Term, (i) the Company shall
reimburse the Employee for all reasonable and necessary out-of-pocket expenses
incurred by her in connection with the performance of her duties hereunder, upon
the presentation of proper accounts therefor in accordance with Norton's
policies and (ii) the Company shall pay for the benefit of the Employee all
reasonable and necessary expenses incurred by her in the ordinary and usual
course of business and in accordance with Norton's policies (in any case, as
such policies are adopted from time to time by the Compensation Committee of
Norton).
5. Benefits.
5.1 Benefit Plans. In addition to the benefits under Section 7.07 of
the Purchase Agreement, during the Term, the Employee shall be entitled to
participate in all employee benefit plans and programs offered by Norton or the
Company for similarly situated executives and shall be entitled to equitable
treatment in respect of new benefits, if any, to be received under such employee
benefit plans and programs by similarly situated executives.
5.2 Vacation. During the Term, the Employee shall be entitled to
paid vacation in accordance with Norton's policy for its executive employees,
but not less than five weeks.
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6. Termination of Employment.
6.1 Death. In the event of the death of the Employee during the
Term, the Company shall pay to the estate or other legal representative of the
Employee (1) the base salary provided for in Section 3.1 accrued to the date of
the Employee's death and not theretofore paid to the Employee, (2) a pro rata
bonus in an amount equal to the product of (i) the Employee's most recent bonus,
if any, paid under Section 3.2, and (ii)(A) the number of months (including
partial months) worked during the year in which the Employee's date of death
occurs, divided by (b) 12, and (3) Bonus Options in accordance with Section 4 of
the Executive Option Bonus Plan. Rights and benefits of the estate or other
legal representative of the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the provisions of such plans and
programs. Neither the estate or other legal representative of the Employee nor
the Company shall have any further rights or obligations under this Agreement
except as provided in Section 3.3(b)(i).
6.2 Disability. If during the Term the Employee shall become
incapacitated by reason of physical or mental disability and shall be unable to
perform her normal duties hereunder for a cumulative period of six (6) months in
any period of twelve (12) consecutive months, the employment of the Employee
hereunder may be terminated by the Company or the Employee upon notice to the
other (a "Disability"). In the event of such termination, the Company shall pay
to the Employee (1) the salary provided for in Section 3.1 accrued to the date
of such termination and not theretofore paid to the Employee, (2) a pro rata
bonus in an amount equal to the product of (i) the Employee's most recent bonus,
if any, paid under Section 3.2, and (ii)(A) the number of months (including
partial months) employed during the year in which the Employee's termination
occurs, divided by (b) 12, and (3) Bonus Options in accordance with Section 4 of
the Executive Option Bonus Plan. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs. Neither the Employee nor the Company
shall have any further rights or obligations under this Agreement, except as
provided in Sections 3.3(b)(i), 7, 8, 9 and 10.
6.3 Due Cause. The employment of the Employee hereunder may be
terminated by the Company at any time during the Term for Due Cause (as
hereinafter defined). In
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the event of such termination, the Company shall pay to the Employee the salary
provided for in Section 3.1 accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs. After the satisfaction of any claim
of the Company against the Employee incidental to such Due Cause, neither the
Employee nor the Company shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10. For purposes hereof,
"Due Cause" shall mean the Employee's conviction or other adjudication of a
felony or any crime or offense involving fraud that is materially injurious to
the Company or Norton; provided, however, that the Employee shall be given
written notice by a majority of the Board of Directors of the Company that it
intends to terminate the Employee's employment for Due Cause under this Section,
which written notice shall specify the act or acts upon the basis of which the
majority of the Board of Directors of the Company intends so to terminate the
Employee's employment, and the Employee shall then be given the opportunity,
within fifteen (15) days of her receipt of such notice, to have a meeting with
the Board of Directors of the Company to discuss such act or acts.
6.4 Termination by the Employee with Good Reason or by the Company
not for Due Cause. The Employee may at any time terminate her employment with
the Company with Good Reason (as hereinafter defined). For purposes hereof, Good
Reason shall mean (i) the breach by the Company of any material provision of
this Agreement or of Section 7.12 of the Purchase Agreement, in any case, for a
period of 30 days after written notice of such breach by the Employee to the
Company; (ii) the failure of the Company to pay the Earn Out Payment (as defined
in the Purchase Agreement) as and when such is due and payable in accordance
with the terms of the Purchase Agreement, including any amounts payable under
the Earn Out Letter of Credit (as defined in the Purchase Agreement); and (iii)
the occurrence of an Acceleration Event (as defined in the Purchase Agreement).
If the Company terminates the Employee's employment other than for disability
pursuant to Section 6.2 or Due Cause pursuant to Section 6.3, or if the Employee
terminates her employment for Good Reason pursuant to Section 6.4, the Employee
shall be entitled (a) to continue to receive from the Company her base salary
for the remainder of the Term and (b) to continue to participate for the
remainder of the Term in all employee benefit plans and programs (including any
bonus plan) in which the Employee participated on the date of termination.
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7. Confidential Information.
7.1 The Employee shall, during the Term and for the two-year period
thereafter (unless the Term terminates in accordance with Section 6.4, in which
case the limits imposed on the Employee under this Section 7.1 shall expire on
the date of such termination), treat as confidential and, except as required in
the performance of her duties and responsibilities under this Agreement, not
disclose, publish or otherwise make available to the public or to any
individual, firm or corporation any confidential material (as hereinafter
defined), except, on a need to know basis, to the Employee's attorney,
accountant or personal advisor. The Employee agrees that all confidential
material, together with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of the Employee, are the
exclusive property of the Company and the Employee agrees to return such
material to the Company promptly upon the termination of the Employee's
employment with the Company.
7.2 Subject to Section 7.12 of the Purchase Agreement, for the
purposes hereof, the term "confidential material" shall mean all information
acquired by the Employee in the course of the Employee's prior employment with
any member of the Xxxx-Xx Group and in the course of the Employee's employment
with the Company in any way concerning the products, projects, activities,
business or affairs of the Company, the Xxxx-Xx Group, or Norton or and other
subsidiary, direct or indirect, of Norton (the "Norton Group"), or the
customers, suppliers or agents of the Company, the Xxxx-Xx Group or any member
of the Norton Group, including, without limitation, all information concerning
trade secrets and the preparation of raw material for, manufacture of, or
finishing processes utilized in the production of, the products or projects of
the Company, any member of the Xxxx-Xx Group or any member of the Norton Group
or any improvements therein, all sales and financial information concerning the
Company, any member of the Xxxx-Xx Group or any member of the Norton Group, all
customer and supplier lists, all information concerning projects in research and
development or marketing plans for any such products or projects, and all
information in any way concerning the products, projects, activities, business
or affairs of customers of the Company, the Xxxx-Xx Group or any member of the
Norton Group which is furnished to the Employee by the Company or any of its
employees (current or former), agents, customers or suppliers, as such;
provided, however, that the term "confidential material" shall not include
information which (a) becomes generally available to the public or the apparel
industry in general other than as
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a result of a disclosure by the Employee, (b) was available to the Employee on a
non-confidential basis prior to her employment with the Company, (c) becomes
available to the Employee on a non-confidential basis from a source other than
the Company or any of its agents, suppliers or customers, provided that the
Employee has no knowledge that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers or suppliers, or (d)
if disclosed by the Employee would not have a significant detrimental effect on
the business of the Company.
8. Inventions. Subject to Section 7.12 of the Purchase Agreement and
subject to the Employee's right to the registered trademark Xxxxxx Max(R) (but
subject to Section 7.15 of the Purchase Agreement) any and all material
inventions, material innovations or material improvements ("inventions") made,
developed or created by the Employee (whether at the request or suggestion of
the Company or otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) during the period of her
employment with the Company which may be directly useful in, or relate to, the
Business (as defined in the Purchase Agreement), shall be promptly and fully
disclosed by the Employee to the Board of Directors of the Company and shall be
the Company's exclusive property as against the Employee, and the Employee shall
promptly deliver to an appropriate representative of the Company as designated
by the Board of Directors all papers, drawings, models, data and other material
relating to any inventions made, developed or created by her as aforesaid. The
Employee shall, at the request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion of the Company's
counsel to direct issuance of patents, trademarks or copyrights to the Company
with respect to such inventions as are to be the Company's exclusive property as
against the Employee or to vest in the Company title to such inventions as
against the Employee. The expense of securing any such patent, trademark or
copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges that the services to
be rendered by her to the Company are of a special and unique character. In
consideration of her employment hereunder, the Employee agrees, for the benefit
of the Company, that she will not, during the period of her employment with the
Company and thereafter for a period (the "Period") of two (2) years commencing
on the date of termination of her employment with the Company (other than a
termination by the Employee for Good Reason or by the Company not for Due Cause,
in which case, the Period shall
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be the remainder of the Term following the date of such termination), (a)
engage, directly or indirectly, whether as principal, agent, distributor,
representative, consultant, employee, partner, stockholder, limited partner or
other investor (other than an investment of not more than (i) five percent (5%)
of the stock or equity of any corporation the capital stock of which is publicly
traded or (ii) five percent (5%) of the ownership interest of any limited
partnership or other entity) or otherwise, anywhere in the United States, in any
business activity or business venture which is in competition with the Business
(as defined in the Purchase Agreement), it being understood and agreed that
ownership or operation of the business presently conducted by Creative
Retailers, Inc. shall not be prohibited by this Section 9, (b) solicit or entice
or endeavor to solicit or entice away from the Company or any member of the
Norton Group any person who was an officer, employee or consultant of the
Company, either for her own account or for any individual, firm or corporation,
whether or not such person would commit any breach of his contract of employment
by reason of leaving the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an officer or employee of the
Company, or (c) solicit or entice or endeavor to solicit or entice away from the
Company any supplier or customer of the Company, either for her own account or
for any individual, firm or corporation, which, in any case would have a
significant detrimental effect on the business of the Company.
10. Equitable Relief, Etc.
In the event of a breach or threatened breach by the Employee of any
of the provisions of Sections 7, 8 or 9, the Employee hereby consents and agrees
that the Company shall be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the Employee from
committing or continuing any such breach or threatened breach or granting
specific performance of any act required to be performed by the Employee under
any of such provisions, without the necessity of showing any actual damage or
that money damages would not afford an adequate remedy and without the necessity
of posting any bond or other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
which it may have with respect to any such breach or threatened breach.
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11. Successors and Assigns.
11.1 Assignment by the Company. The Company may not assign this
Agreement or any part thereof without the prior written consent of the Employee.
11.2 Assignment by the Employee. The Employee may not assign this
Agreement or any part thereof without the prior written consent of a majority of
the Board of Directors of the Company (other than the Employee if she is a
member of such Board at the time); provided, however, that nothing herein shall
preclude one or more beneficiaries of the Employee from receiving any amount
that may be payable following the occurrence of her legal incompetency or her
death and shall not preclude the legal representative of her estate from
receiving such amount or from assigning any right hereunder to the person or
persons entitled thereto under her will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to her
estate. The term "beneficiaries", as used in this Agreement, shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Employee (in
the event of her incompetency) or the Employee's estate.
12. Governing Law. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of New York applicable to contracts to be performed entirely within
such State.
13. Entire Agreement. This Agreement contains all the understandings
and representations between the parties hereto pertaining to the subject matter
hereof. This Agreement supersedes all understandings and agreements, whether
oral or in writing, if any, previously entered into by the Company or any member
of Xxxx-Xx Group with the Employee in any way relating to the employment of the
Employee by the Company or by any member of the Xxxx-Xx Group, all of which
agreements and understandings are hereby terminated and all rights and
entitlements thereunder are hereby waived and released.
14. Amendment, Modification, Waiver. No provision of this Agreement
may be amended or modified unless such amendment or modification is agreed to in
writing and signed by the Employee and by a representative of the Company (other
than the Employee) who have been duly authorized by the Board of Directors of
the Company to do so (other than the Employee if she is a member of such Board
at
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the time). Except as otherwise specifically provided in this Agreement, no
waiver by either party hereto of any breach by the other party hereto of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar provision or condition at
the same or any prior or subsequent time, nor shall the failure of or delay by
either party hereto in exercising any right, power or privilege hereunder
operate as a waiver thereof to preclude any other or further exercise thereof or
the exercise of any other such right, power or privilege.
15. Notices. All notices, requests or instructions hereunder shall
be in writing and delivered personally, sent by telecopy, sent by registered or
certified mail, postage prepaid, or sent by Federal Express or any other
nationally recognized overnight courier service, as follows:
If to the Company:
x/x Xxxxxx XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy: (000) 000-0000
If to the Employee:
Xxxxx Xxxxxxxxx
c/x Xxxxxxxx Alpren & Green LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, CPA
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
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Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied, or sent by Federal Express or any other
recognized overnight courier service, and three (3) business days after the date
of mailing, if mailed by registered or certified mail, return receipt requested.
16. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall, except as provided in Section
10, be settled by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in New York, New York.
17. Severability. Should any provision of this Agreement be held by
a court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. In any event, should one or more of the
provisions of this Agreement be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or provisions are not
modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
18. Authority. The Company and Norton represent and warrant to the
Employee that the execution and delivery of this Agreement by the Company and
the performance by the Company of its covenants and agreements hereunder have
been duly authorized by all necessary corporate action and that this Agreement
has been duly executed and delivered on behalf of the Company.
19. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Employee or her
beneficiaries, including her estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law
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or regulation. In lieu of withholding such amounts, in whole or in part, the
Company, may, in its sole discretion, accept other provision for payment of
taxes as permitted by law, provided it is satisfied in its sole discretion that
all requirements of law affecting its responsibilities to withhold such taxes
have been satisfied.
20. Subsidiaries, etc. The Employee shall be deemed to resign as an
officer and, if applicable, director of the Company and of any parent,
subsidiary or affiliate of the Company upon termination of her employment with
the Company.
21. Survivorship. The respective rights and obligations of the
Employee and the Company hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
22. Titles. Titles of the sections of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
23. Counterparts. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed to be an original and all of
which taken together shall be deemed one document.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
JJ ACQUISITION CORP.
By______________________________
Name: Xxxxx Xxxxxxxxx
Title: Vice Chairman
EMPLOYEE
________________________________
Name: Xxxxx Xxxxxxxxx
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EXHIBIT A
NORTON XXXXXXXXXX, INC.
Stock Option Certificate
Date of Grant: _____ __, 1998
Name of Optionee: Xxxxx Xxxxxxxxx
Number of Shares:
Price Per Share:
This is to certify that, effective on the date of grant specified
above, the Board of Directors of Norton XxXxxxxxxx, Inc. (the "Company") has
granted to the above-named optionee (the "Optionee") an option to purchase from
the Company, for the price per share set forth above, the number of shares of
Common Stock, $.01 par value (the "Stock"), of the Company set forth above
pursuant and subject to the terms of Section 3.3 of that certain Employment
Agreement dated as of _____ __, 1998 by and between JJ Acquisition Corp. (now
known as Xxxx-Xx Knitwear, Inc.), a Delaware corporation and wholly owned
subsidiary of the Company ("JJ"), and the Optionee (the "Plan"). This option is
not intended to be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The terms and conditions of the option granted hereby, in addition
to the terms and conditions contained in the Plan, are as follows:
1. The price at which each share of Stock subject to this option may
be purchased shall be the price set forth above, subject to any adjustments
which may be made pursuant to Section 8 hereof.
2. Subject to the terms and conditions set forth herein and in
Section 3.3 of the Plan, this option shall be exercisable (x) as to 40,000
shares of Stock, on the date hereof and (y) as to the remaining shares of Stock
subject to this Option (the "Remainder"), beginning on the date which is nine
years and six months from the date of grant, provided that this option shall be
sooner exercisable as to the Remainder (i)(A) with respect to a number of shares
of Stock equal to 140,000 shares of Stock, on the Earn Out Payment Date (as
defined in the Purchase Agreement referred to in the Plan) if and only if the
1998/1999 EBITDA (as
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defined in the Purchase Agreement referred to in the Plan) shall equal or exceed
$11,000,000 but be less than $15,000,000 and (B) in full, on the Earn Out
Payment Date if and only if the 1998/1999 EBITDA shall equal or exceed
$15,000,000; (ii) in full, on the date, if any, that the Employee's employment
under the Plan terminates by reason of death or Disability or by the Optionee
for Good Reason or by JJ without Due Cause (as said terms are defined in the
Plan) and (iii) in full, upon the occurrence of an Acceleration Event (as
defined in the Purchase Agreement referred to in the Plan).
3. Subject to the terms and conditions set forth herein, the
Optionee may exercise this option at any time as to all or any of the shares of
Stock purchasable in accordance with Section 2 hereof by delivering to the
Company written notice specifying:
(i) the number of whole shares of Stock to be purchased together
with payment in full of the aggregate option price of such shares, provided
that this option may not be exercised for less than ten (10) shares of
Stock or the number of shares of Stock remaining subject to option,
whichever is smaller;
(ii) the name or names in which the stock certificate or
certificates are to be registered;
(iii) the address to which dividends, notices, reports, etc. are
to be sent; and
(iv) the Optionee's social security number.
Only one stock certificate will be issued unless the Optionee otherwise requests
in writing. Payment shall be in cash, or by certified or bank cashier's check
payable to the order of the Company, free from all collection charges (including
by means of a broker assisted simultaneous exercise and sale); provided,
however, that payment may be made in shares of Stock owned by the Optionee
having a market value on the date of exercise equal to the aggregate purchase
price, or in a combination of cash and Stock. For purposes of this option and
the Plan, the market value per share of Stock shall be the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the closing high bid and low asked prices regular way, in
either case on the principal national securities exchange on which the Stock is
listed or admitted to trading, or if the Stock is not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National
17
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Association of Securities Dealers Automated Quotation System ("NASDAQ") on such
date, or the average of the closing high bid and low asked prices of the Stock
in the over-the-counter market reported on NASDAQ on such date, whichever is
applicable, or if there are no such prices reported on NASDAQ on such date, as
furnished to the Stock Option Committee of the Board of Directors (the
"Committee") by any New York Stock Exchange member selected from time to time by
the Committee for such purpose. If there is no bid or asked price reported on
any such date, the market value shall be determined by the Committee in
accordance with the regulations promulgated under Section 2031 of the Code, or
by any other appropriate method selected by the Committee. If the Optionee so
requests, shares of Stock purchased upon exercise of an option may be issued in
the name of the Optionee or, provided that the Optionee pays any applicable
taxes, another person. No Optionee shall be entitled to any rights as a
stockholder of the Company in respect of any shares of Stock covered by this
option until such shares of Stock shall have been paid for in full and issued to
the Optionee.
4. As soon as practicable after the Company receives payment for
shares of Stock covered by this option, it shall deliver a certificate or
certificates representing the shares of Stock so purchased to the Optionee. Such
certificate shall be registered in the name of the Optionee, or, subject to
Section 3 hereof, in such other name or names as the Optionee shall request.
5. This option is personal to the Optionee and during the Optionee's
lifetime may be exercised only by the Optionee. This option shall not be
transferable other than by will or the laws of descent and distribution.
6. In the event that the Optionee's employment as an employee of the
Company or of any Subsidiary or Parent (within the meaning of Sections 424(e)
and 424(f) of the Code) (hereinafter the "Optionee's employment") is terminated
for any reason prior to the time that this option has been fully exercised, this
option shall be exercisable, if at all, as to any remaining vested shares of
Stock subject hereto, only in accordance with the terms (x) hereof (including
without limitation, Section 2 hereof) and (y) of Sections 3.3(a) and 3.3(b) of
the Plan. Notwithstanding the foregoing, this option shall in no event be
exercisable after the date of termination of such option specified in Section 2
hereof.
7. This option does not confer on the Optionee any right to continue
in the employ of the Company, any
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Subsidiary or Parent, or interfere in any way with the right of the Company, any
Subsidiary or Parent to determine the terms of the Optionee's employment.
8. In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
or any other change in the corporate structure or shares of the Company, the
Committee shall in good faith, adjust the number of shares of Stock (or other
securities or property) subject to this option, the exercise price with respect
to this option, or all of the foregoing.
9. This option and the terms and conditions herein set forth are
subject in all respects to the terms and conditions of the Plan, which shall be
controlling.
10. It shall be a condition to the obligation of the Company to issue
shares of Stock upon exercise of this option, that the Optionee (or any
beneficiary or person entitled to act) pay to the Company, upon its demand, such
amount as may be requested by the Company for the purpose of satisfying any
liability to withhold federal, state or local income or other taxes.
11. All notices hereunder to the Company shall be delivered or mailed
to the following address:
Norton XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Such address for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the Optionee.
NORTON XXXXXXXXXX, INC.
By______________________________________
Name: Xxxxx Xxxxxxxxx
Title: President and Chief
Operating Officer
19
EXHIBIT B
NORTON XXXXXXXXXX, INC. OPTION BONUS PLAN
FOR SENIOR EXECUTIVES OF JJ ACQUISITION CORP.
1. Establishment. This Plan, which shall be known as the Norton
XxXxxxxxxx, Inc. Option Bonus Plan for Senior Executives of JJ Acquisition Corp.
(the "Bonus Plan"), is hereby established by JJ Acquisition Corp. (the
"Company") to provide incentives for senior executives providing services to the
Company and to aid the Company in retaining such senior executives upon whose
efforts the Company's success and future growth depends.
2. Administration. The Bonus Plan shall be administered by the Board
of Directors of the Company (the "Board"). For purposes of administration, the
Board, subject to the terms of the Bonus Plan, shall have authority, acting in
good faith, to establish such rules and regulations, to make such determinations
and interpretations, and to take such other administrative actions as it deems
necessary or advisable.
3. Participants. The participants in the Plan shall be Xxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx, in each case for so long as
such individual is employed by the Company pursuant to an Employment Agreement
to which this Bonus Plan is an Exhibit (each, a "Participant" and collectively,
the "Participants"); provided, however, that nothing contained herein shall be
construed as creating a guarantee of employment for any Participant.
4. Bonus Options.
4.1 Grant. In the event that EBITDA (as defined in the Agreement of
Purchase and Sale by and among Xxxx-Xx Knitwear Inc., Xxxxx Xxxxx, Inc., the
Stockholders of Xxxxx Xxxxx, Inc., JJ Acquisition Corp. and Norton XxXxxxxxxx,
Inc. (the "Purchase Agreement")) attained by the Company in Year 1 or Year 2 (as
defined in the Purchase Agreement, and each, a "Year") is equal to or in excess
of $17,000,000, the Company shall cause to be granted to the Participants by the
Board of Directors of Norton XxXxxxxxxx, Inc. a Delaware corporation ("Norton"),
options to purchase an aggregate of 50,000 (or such lesser number as shall be
necessary to allocate such options in accordance with Section 4.2 below) shares
of common stock, par value $.01 per share of Norton (the "Common Stock") in each
Year that EBITDA in excess of $17,000,000 is so attained. In addition, for each
$1,000,000 of EBITDA in excess of $17,000,000 attained by
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the Company in each of the Years, the Company shall cause to be granted to the
Participants by the Board of Directors of Norton, options to purchase an
aggregate of 30,000 (or such lesser number as shall be necessary to allocated
such options in accordance with Section 4.2 below) shares of Common Stock. Any
options granted as aforesaid shall be hereinafter referred to as "Bonus
Options". The Bonus Options shall be granted, if at all, on the dates of
delivery to the Company and Norton of the EBITDA Notice and EBITDA Statement
(pursuant to Section 2.02(b)(i) of the Purchase Agreement) for the applicable
Year and shall have an exercise price per share equal to the fair market value
of the Common Stock on the date of grant.
4.2 Allocation of Bonus Options. The Bonus Options shall be allocated
40% to Xxxxx Xxxxxxxxx, 40% to Xxxxxx Xxxxxxxxx and 20% to Xxxxx Xxxxxxxxx, or
in the case of the death of any such Participant during a Year, the estate of
such Participant.
4.3 Exercise. The Bonus Options shall be fully vested and exercisable
on and after the date of grant.
4.4 Term of Options. Except as provided below, the term of the Bonus
Options shall be ten years.
(i) If a Participant's employment with the Company terminates
pursuant to Section 6.1 of his or her Employment Agreement or is terminated by
the Company or by the Participant pursuant to Section 6.2 of his or her
Employment Agreement, is terminated by the Employee pursuant to Section 6.4 of
his or her Employment Agreement, or terminated for any other reason (except as
provided in clause (ii) below), the Bonus Options may be exercised by the
Participant (or his or her estate or legal representative) within one (1) year
after such termination; and
(ii) In the event of termination of the employment of a
Participant (a) by the Company pursuant to Section 6.3 of his or her Employment
Agreement or (b) by the Participant other than pursuant to Sections 6.1, 6.2 or
6.4 of his or her Employment Agreement, no Bonus Options shall be exercisable.
4.5 Adjustments. In the event of any dividend or other distribution
(whether in the form of cash, Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other
21
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securities of Norton, issuance of warrants or other rights to purchase Common
Stock, the Board of Directors shall, in good faith adjust the number of shares
of Common Stock (or other securities or property) subject to the Bonus Options,
the exercise price with respect to any Bonus Options, or both.
4.6 No Participant shall be entitled to Bonus Options for any Year of
the Company subsequent to the Year in which his or her termination of employment
(for any or no reason) occurs.
4.7 In the event of termination of the employment of a Participant
prior to the end of a Year, pursuant to his or her Employment Agreement, such
Participant (or his or her estate or other legal representative) shall be
granted such Bonus Options for such Year only as provided in this Section 4.7.
The number of Bonus Options to which the Participant (or his or her estate or
legal representative) shall be entitled for such Year (which shall be granted at
the time that the Bonus Options are granted to the other Participants) shall be
equal to the product of (x) the number of Bonus Options, if any, which would
have been granted to the Participant pursuant to Sections 4.1 and 4.2 of this
Bonus Plan for such Year if the employment of the Participant had not so
terminated, multiplied by (y) a fraction, the numerator of which is the number
of days from the beginning of such Year to the date of termination, and the
denominator of which is 365. The terms and conditions of any such Bonus Options
shall be as otherwise provided in this Section 4.
4.8 If any portion of the Bonus Options shall not be allocated or
granted by reason of this Section 4, such Bonus Options shall be retained by the
Company or granted to other Participants or to new participants, all as
determined by the Board, after good faith consideration of any recommended
course of action submitted to the Board by the remaining Participants.
4.9 Change of Control. In the event that there shall occur a Change
of Control (as defined in the Purchase Agreement) during either of the Years,
the Participants in this Bonus Plan shall be entitled to receive, in lieu of
Bonus Options contemplated by Section 4.1 of this Bonus Plan (unless such Bonus
Options have heretofore been granted, in which case such granted Bonus Options
shall be retained), a number of Bonus Options (allocated as set forth in Section
4.2 above) equal to (i) in the event that the Change of Control occurs during
Year 1, 100,000 Bonus Options or (ii) in the event that the Change of Control
occurs during Year
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2, 50,000 Bonus Options. The terms and conditions of any such Bonus Options
shall be as otherwise provided in this Section 4.
23
Exhibit B-2
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the ____ day of _____, 1998 by and between JJ
ACQUISITION CORP., a Delaware corporation (the "Company"), and Xxxxxx Xxxxxxxxx
(the "Employee").
W I T N E S S E T H:
WHEREAS, the Company, a wholly owned subsidiary of Norton XxXxxxxxxx,
Inc., a Delaware corporation ("Norton"), and certain other parties (which
parties include the Employee) have entered into an Agreement of Purchase and
Sale dated as of April 15, 1998 (the "Purchase Agreement"), providing, inter
alia, for the purchase by the Company of substantially all of the assets of
Xxxx-Xx Knitwear Inc., a New York corporation ("J-J Knitwear") and Xxxxx Xxxxx,
Inc., a New York corporation ("Xxxxx Xxxxx"; and together with J-J Knitwear and
Xxxxx Xxxxx, the "Xxxx-Xx Group"); and
WHEREAS, the Company desires to secure the employment of the Employee
with the Company and the Employee desires to be employed by the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment, Term.
1.1 The Company agrees to employ the Employee, and the Employee
agrees to serve in the employ of the Company, for the term set forth in Section
1.2, in the positions and with the responsibilities, duties and authority set
forth in Section 2 and on the other terms and conditions set forth in this
Agreement.
1.2 The term of the Employee's employment under this Agreement (the
"Term") shall commence on the date hereof and shall terminate on the second
anniversary of the Closing Date (as defined in the Purchase Agreement) (the
"Expiration Date"), unless sooner terminated in accordance with this Agreement.
2. Positions, Duties. The Employee shall serve in the position of
Vice President of the Company. The Employee shall perform, faithfully and
diligently, such duties and shall have such other responsibilities, appropriate
to said position, as shall be assigned to her from time to time by the Vice
Chairman (the "Vice Chairman") (currently, Xxxxx Xxxxxxxxx); provided, however,
that in any event said duties and responsibilities shall be consistent
24
2
with the terms and provisions of Section 7.12 of the Purchase Agreement. The
Employee shall report solely to the Vice Chairman (currently, Xxxxx Xxxxxxxxx),
but if Xx. Xxxxxxxxx changes titles with the Purchaser, then to Xx. Xxxxxxxxx in
such capacity. The Employee shall devote her complete and undivided attention to
the performance of her duties and responsibilities hereunder during the normal
working hours of executive employees of the Company. The Employee's services
under this Agreement shall be performed principally at the executive offices and
warehouses of the Company to be located, during the Term, in New York City and
New Jersey, respectively (unless otherwise agreed between the Vice Chairman and
the Employee).
3. Compensation.
3.1 Salary. During the Term, in consideration of the performance by
the Employee of the services set forth in Section 2 and her observance of the
other covenants set forth herein, the Company shall pay the Employee, and the
Employee shall accept, a base salary at a rate of $400,000 per annum (which may
be increased, but not decreased), payable in accordance with the standard
payroll practices of the Company.
3.2 Bonus. During the Term, in addition to the salary provided for in
Section 3.1 and the Bonus Plan described in Section 3.4, the Employee shall be
eligible to participate, subject to the terms thereof, in any bonus plan for
executives of Norton or the Company in effect during the Term.
3.3 Stock Options.
(a) Grant. On the date hereof, Norton shall grant to the
Employee, an option to purchase an aggregate number of shares of common stock,
par value $.01 per share (the "Common Stock"), of Norton, at an exercise price
per share equal to the Closing Market Value (as defined in the Purchase
Agreement) (the "Option"), which number shall equal the sum of (i) 180,000 (the
"Base Option Number") and (ii) a number (the "Additional Option Number") equal
to the Base Option Number multiplied by a fraction, the numerator of which shall
be the positive excess, if any, of the Closing Market Value over the Signing
Market Value (as such terms defined in the Purchase Agreement) and the
denominator of which shall be the Signing Market Value. The Option shall be
vested and exercisable on and after (i) the date hereof, as to 40,000 shares of
Common Stock and (ii) the date which is nine years and six months from the
Closing Date, as to the remainder of the number of shares of Common Stock
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subject to the Option (the "Remainder"), but shall be sooner exercisable as to
the Remainder (i)(A) with respect to a number of shares of Common Stock equal to
140,000 shares of Common Stock, on the Earn Out Payment Date (as defined in the
Purchase Agreement) if and only if the 1998/1999 EBITDA (as defined in the
definition of 1998/1999 EBITDA in the Purchase Agreement) shall equal or exceed
$11,000,000 but be less than $15,000,000, (B) in full, on the Earn Out Payment
Date, if and only if the 1998/1999 EBITDA shall equal or exceed $15,000,000;
(ii) in full, on the date, if any, that the Employee's employment terminates
hereunder by reason of death or Disability or by the Employee for Good Reason or
by the Company without Due Cause (as said terms are hereinafter defined); and
(iii) in full, upon the occurrence of any Acceleration Event (as defined in the
Purchase Agreement).
(b) Term of Option. Except as provided below, the term of the
Option shall be ten years.
(i) In the event of a termination of employment of the Employee
with the Company pursuant to Section 6.1, Section 6.2 or Section 6.4, the Option
may be exercised by the Employee or, in the event of the Employee's death, her
estate or legal representative during the remainder of the term of the Option;
and
(ii) In the event of termination of the employment of the
Employee with the Company (a) by the Company pursuant to Section 6.3 or (b) by
the Employee during the Term, other than pursuant to Sections 6.1, 6.2 or 6.4,
the Option shall not thereafter be exercisable.
(c) Adjustments. In the event of any dividend or other
distribution (whether in the form of cash, Common Stock, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of Norton, issuance
of warrants or other rights to purchase Common Stock, the Board of Directors
shall, in good faith, adjust the number of shares of Common Stock (or other
securities or property) subject to the Option, the exercise price with respect
to any Option, or all of the foregoing.
(d) Stock Option Certificate. The Options shall be represented
by a stock option certificate in the form of Exhibit A hereto and shall
otherwise be subject to the terms and conditions of such stock option
certificate.
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(e) Registration of Shares. Norton shall, as promptly as
practicable following the commencement of the Employee's employment hereunder,
file a registration statement on Form S-8, or any successor to such Form, with
respect to the shares of Common Stock covered by the Option.
3.4 Bonus Options. During the Term, the Employee shall be eligible to
receive Bonus Options (as defined in the Norton XxXxxxxxxx, Inc. Bonus Option
Plan for Senior Executives of JJ Acquisition Corp. (the "Executive Option Bonus
Plan")) in accordance with the terms set forth in the Executive Option Bonus
Plan, a copy of which is attached hereto as Exhibit B.
4. Expense Reimbursement. During the Term, (i) the Company shall
reimburse the Employee for all reasonable and necessary out-of-pocket expenses
incurred by her in connection with the performance of her duties hereunder, upon
the presentation of proper accounts therefor in accordance with Norton's
policies and (ii) the Company shall pay for the benefit of the Employee all
reasonable and necessary expenses incurred by her in the ordinary and usual
course of business and in accordance with Norton's policies (in any case, as
such policies are adopted from time to time by the Compensation Committee of
Norton).
5. Benefits.
5.1 Benefit Plans. In addition to the benefits under Section 7.07 of
the Purchase Agreement, during the Term, the Employee shall be entitled to
participate in all employee benefit plans and programs offered by Norton or the
Company for similarly situated executives and shall be entitled to equitable
treatment in respect of new benefits, if any, to be received under such employee
benefit plans and programs by similarly situated executives.
5.2 Vacation. During the Term, the Employee shall be entitled to paid
vacation in accordance with Norton's policy for its executive employees, but not
less than five weeks.
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6. Termination of Employment.
6.1 Death. In the event of the death of the Employee during the Term,
the Company shall pay to the estate or other legal representative of the
Employee (1) the base salary provided for in Section 3.1 accrued to the date of
the Employee's death and not theretofore paid to the Employee, (2) a pro rata
bonus in an amount equal to the product of (i) the Employee's most recent bonus,
if any, paid under Section 3.2, and (ii)(A) the number of months (including
partial months) worked during the year in which the Employee's date of death
occurs, divided by (b) 12, and (3) Bonus Options in accordance with Section 4 of
the Executive Option Bonus Plan. Rights and benefits of the estate or other
legal representative of the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the provisions of such plans and
programs. Neither the estate or other legal representative of the Employee nor
the Company shall have any further rights or obligations under this Agreement
except as provided in Section 3.3(b)(i).
6.2 Disability. If during the Term the Employee shall become
incapacitated by reason of physical or mental disability and shall be unable to
perform her normal duties hereunder for a cumulative period of six (6) months in
any period of twelve (12) consecutive months, the employment of the Employee
hereunder may be terminated by the Company or the Employee upon notice to the
other (a "Disability"). In the event of such termination, the Company shall pay
to the Employee (1) the salary provided for in Section 3.1 accrued to the date
of such termination and not theretofore paid to the Employee, (2) a pro rata
bonus in an amount equal to the product of (i) the Employee's most recent bonus,
if any, paid under Section 3.2, and (ii)(A) the number of months (including
partial months) employed during the year in which the Employee's termination
occurs, divided by (b) 12, and (3) Bonus Options in accordance with Section 4 of
the Executive Option Bonus Plan. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs. Neither the Employee nor the Company
shall have any further rights or obligations under this Agreement, except as
provided in Sections 3.3(b)(i), 7, 8, 9 and 10.
6.3 Due Cause. The employment of the Employee hereunder may be
terminated by the Company at any time during the Term for Due Cause (as
hereinafter defined). In
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the event of such termination, the Company shall pay to the Employee the salary
provided for in Section 3.1 accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs. After the satisfaction of any claim
of the Company against the Employee incidental to such Due Cause, neither the
Employee nor the Company shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10. For purposes hereof,
"Due Cause" shall mean the Employee's conviction or other adjudication of a
felony or any crime or offense involving fraud that is materially injurious to
the Company or Norton; provided, however, that the Employee shall be given
written notice by a majority of the Board of Directors of the Company that it
intends to terminate the Employee's employment for Due Cause under this Section,
which written notice shall specify the act or acts upon the basis of which the
majority of the Board of Directors of the Company intends so to terminate the
Employee's employment, and the Employee shall then be given the opportunity,
within fifteen (15) days of her receipt of such notice, to have a meeting with
the Board of Directors of the Company to discuss such act or acts.
6.4 Termination by the Employee with Good Reason or by the Company
not for Due Cause. The Employee may at any time terminate her employment with
the Company with Good Reason (as hereinafter defined). For purposes hereof, Good
Reason shall mean (i) the breach by the Company of any material provision of
this Agreement or of Section 7.12 of the Purchase Agreement, in any case, for a
period of 30 days after written notice of such breach by the Employee to the
Company; (ii) the failure of the Company to pay the Earn Out Payment (as defined
in the Purchase Agreement) as and when such is due and payable in accordance
with the terms of the Purchase Agreement, including any amounts payable under
the Earn Out Letter of Credit (as defined in the Purchase Agreement); and (iii)
the occurrence of an Acceleration Event (as defined in the Purchase Agreement).
If the Company terminates the Employee's employment other than for disability
pursuant to Section 6.2 or Due Cause pursuant to Section 6.3, or if the Employee
terminates her employment for Good Reason pursuant to Section 6.4, the Employee
shall be entitled (a) to continue to receive from the Company her base salary
for the remainder of the Term and (b) to continue to participate for the
remainder of the Term in all employee benefit plans and programs (including any
bonus plan) in which the Employee participated on the date of termination.
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7. Confidential Information.
7.1 The Employee shall, during the Term and for the two-year period
thereafter (unless the Term terminates in accordance with Section 6.4, in which
case the limits imposed on the Employee under this Section 7.1 shall expire on
the date of such termination), treat as confidential and, except as required in
the performance of her duties and responsibilities under this Agreement, not
disclose, publish or otherwise make available to the public or to any
individual, firm or corporation any confidential material (as hereinafter
defined), except, on a need to know basis, to the Employee's attorney,
accountant or personal advisor. The Employee agrees that all confidential
material, together with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of the Employee, are the
exclusive property of the Company and the Employee agrees to return such
material to the Company promptly upon the termination of the Employee's
employment with the Company.
7.2 Subject to Section 7.12 of the Purchase Agreement, for the
purposes hereof, the term "confidential material" shall mean all information
acquired by the Employee in the course of the Employee's prior employment with
any member of the Xxxx-Xx Group and in the course of the Employee's employment
with the Company in any way concerning the products, projects, activities,
business or affairs of the Company, the Xxxx-Xx Group, or Norton or and other
subsidiary, direct or indirect, of Norton (the "Norton Group"), or the
customers, suppliers or agents of the Company, the Xxxx-Xx Group or any member
of the Norton Group, including, without limitation, all information concerning
trade secrets and the preparation of raw material for, manufacture of, or
finishing processes utilized in the production of, the products or projects of
the Company, any member of the Xxxx-Xx Group or any member of the Norton Group
or any improvements therein, all sales and financial information concerning the
Company, any member of the Xxxx-Xx Group or any member of the Norton Group, all
customer and supplier lists, all information concerning projects in research and
development or marketing plans for any such products or projects, and all
information in any way concerning the products, projects, activities, business
or affairs of customers of the Company, the Xxxx-Xx Group or any member of the
Norton Group which is furnished to the Employee by the Company or any of its
employees (current or former), agents, customers or suppliers, as such;
provided, however, that the term "confidential material" shall not include
information which (a) becomes generally available to the public or the apparel
industry in general other than as
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a result of a disclosure by the Employee, (b) was available to the Employee on a
non-confidential basis prior to her employment with the Company, (c) becomes
available to the Employee on a non-confidential basis from a source other than
the Company or any of its agents, suppliers or customers, provided that the
Employee has no knowledge that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers or suppliers, or (d)
if disclosed by the Employee would not have a significant detrimental effect on
the business of the Company.
8. Inventions. Subject to Section 7.12 of the Purchase Agreement and
subject to the Employee's right to the registered trademark Xxxxxx Max(R) (but
subject to Section 7.15 of the Purchase Agreement) any and all material
inventions, material innovations or material improvements ("inventions") made,
developed or created by the Employee (whether at the request or suggestion of
the Company or otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) during the period of her
employment with the Company which may be directly useful in, or relate to, the
Business (as defined in the Purchase Agreement), shall be promptly and fully
disclosed by the Employee to the Board of Directors of the Company and shall be
the Company's exclusive property as against the Employee, and the Employee shall
promptly deliver to an appropriate representative of the Company as designated
by the Board of Directors all papers, drawings, models, data and other material
relating to any inventions made, developed or created by her as aforesaid. The
Employee shall, at the request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion of the Company's
counsel to direct issuance of patents, trademarks or copyrights to the Company
with respect to such inventions as are to be the Company's exclusive property as
against the Employee or to vest in the Company title to such inventions as
against the Employee. The expense of securing any such patent, trademark or
copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges that the services to be
rendered by her to the Company are of a special and unique character. In
consideration of her employment hereunder, the Employee agrees, for the benefit
of the Company, that she will not, during the period of her employment with the
Company and thereafter for a period (the "Period") of two (2) years commencing
on the date of termination of her employment with the Company (other than a
termination by the Employee for Good Reason or by the Company not for Due Cause,
in which case, the Period shall
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be the remainder of the Term following the date of such termination), (a)
engage, directly or indirectly, whether as principal, agent, distributor,
representative, consultant, employee, partner, stockholder, limited partner or
other investor (other than an investment of not more than (i) five percent (5%)
of the stock or equity of any corporation the capital stock of which is publicly
traded or (ii) five percent (5%) of the ownership interest of any limited
partnership or other entity) or otherwise, anywhere in the United States, in any
business activity or business venture which is in competition with the Business
(as defined in the Purchase Agreement), it being understood and agreed that
ownership or operation of the business presently conducted by Creative
Retailers, Inc. shall not be prohibited by this Section 9, (b) solicit or entice
or endeavor to solicit or entice away from the Company or any member of the
Norton Group any person who was an officer, employee or consultant of the
Company, either for her own account or for any individual, firm or corporation,
whether or not such person would commit any breach of his contract of employment
by reason of leaving the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an officer or employee of the
Company, or (c) solicit or entice or endeavor to solicit or entice away from the
Company any supplier or customer of the Company, either for her own account or
for any individual, firm or corporation, which, in any case would have a
significant detrimental effect on the business of the Company.
10. Equitable Relief, Etc.
In the event of a breach or threatened breach by the Employee of any
of the provisions of Sections 7, 8 or 9, the Employee hereby consents and agrees
that the Company shall be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the Employee from
committing or continuing any such breach or threatened breach or granting
specific performance of any act required to be performed by the Employee under
any of such provisions, without the necessity of showing any actual damage or
that money damages would not afford an adequate remedy and without the necessity
of posting any bond or other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
which it may have with respect to any such breach or threatened breach.
32
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11. Successors and Assigns.
11.1 Assignment by the Company. The Company may not assign this
Agreement or any part thereof without the prior written consent of the Employee.
11.2 Assignment by the Employee. The Employee may not assign this
Agreement or any part thereof without the prior written consent of a majority of
the Board of Directors of the Company (other than the Employee if she is a
member of such Board at the time); provided, however, that nothing herein shall
preclude one or more beneficiaries of the Employee from receiving any amount
that may be payable following the occurrence of her legal incompetency or her
death and shall not preclude the legal representative of her estate from
receiving such amount or from assigning any right hereunder to the person or
persons entitled thereto under her will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to her
estate. The term "beneficiaries", as used in this Agreement, shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Employee (in
the event of her incompetency) or the Employee's estate.
12. Governing Law. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of New York applicable to contracts to be performed entirely within
such State.
13. Entire Agreement. This Agreement contains all the understandings
and representations between the parties hereto pertaining to the subject matter
hereof. This Agreement supersedes all understandings and agreements, whether
oral or in writing, if any, previously entered into by the Company or any member
of Xxxx-Xx Group with the Employee in any way relating to the employment of the
Employee by the Company or by any member of the Xxxx-Xx Group, all of which
agreements and understandings are hereby terminated and all rights and
entitlements thereunder are hereby waived and released.
14. Amendment, Modification, Waiver. No provision of this Agreement
may be amended or modified unless such amendment or modification is agreed to in
writing and signed by the Employee and by a representative of the Company (other
than the Employee) who have been duly authorized by the Board of Directors of
the Company to do so (other than the Employee if she is a member of such Board
at the time).
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11
Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar provision or condition at the same or any
prior or subsequent time, nor shall the failure of or delay by either party
hereto in exercising any right, power or privilege hereunder operate as a waiver
thereof to preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.
15. Notices. All notices, requests or instructions hereunder shall be
in writing and delivered personally, sent by telecopy, sent by registered or
certified mail, postage prepaid, or sent by Federal Express or any other
nationally recognized overnight courier service, as follows:
If to the Company:
x/x Xxxxxx XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy: (000) 000-0000
If to the Employee:
Xxxxxx Xxxxxxxxx
c/x Xxxxxxxx Alpren & Green LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, CPA
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
34
12
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied, or sent by Federal Express or any other
recognized overnight courier service, and three (3) business days after the date
of mailing, if mailed by registered or certified mail, return receipt requested.
16. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall, except as provided in Section
10, be settled by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in New York, New York.
17. Severability. Should any provision of this Agreement be held by a
court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. In any event, should one or more of the
provisions of this Agreement be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or provisions are not
modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
18. Authority. The Company and Norton represent and warrant to the
Employee that the execution and delivery of this Agreement by the Company and
the performance by the Company of its covenants and agreements hereunder have
been duly authorized by all necessary corporate action and that this Agreement
has been duly executed and delivered on behalf of the Company.
19. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Employee or her
beneficiaries, including her estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, in
35
13
whole or in part, the Company, may, in its sole discretion, accept other
provision for payment of taxes as permitted by law, provided it is satisfied in
its sole discretion that all requirements of law affecting its responsibilities
to withhold such taxes have been satisfied.
20. Subsidiaries, etc. The Employee shall be deemed to resign as an
officer and, if applicable, director of the Company and of any parent,
subsidiary or affiliate of the Company upon termination of her employment with
the Company.
21. Survivorship. The respective rights and obligations of the
Employee and the Company hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
22. Titles. Titles of the sections of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
23. Counterparts. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed to be an original and all of
which taken together shall be deemed one document.
* * *
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14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
JJ ACQUISITION CORP.
By____________________________________
Name: Xxxxx Xxxxxxxxx
Title: Vice Chairman
EMPLOYEE
______________________________________
Name: Xxxxxx Xxxxxxxxx
37
EXHIBIT A
NORTON XXXXXXXXXX, INC.
Stock Option Certificate
Date of Grant: _____ __, 1998
Name of Optionee: Xxxxxx Xxxxxxxxx
Number of Shares:
Price Per Share:
This is to certify that, effective on the date of grant specified
above, the Board of Directors of Norton XxXxxxxxxx, Inc. (the "Company") has
granted to the above-named optionee (the "Optionee") an option to purchase from
the Company, for the price per share set forth above, the number of shares of
Common Stock, $.01 par value (the "Stock"), of the Company set forth above
pursuant and subject to the terms of Section 3.3 of that certain Employment
Agreement dated as of _____ __, 1998 by and between JJ Acquisition Corp. (now
known as Xxxx-Xx Knitwear, Inc.), a Delaware corporation and wholly owned
subsidiary of the Company ("JJ"), and the Optionee (the "Plan"). This option is
not intended to be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The terms and conditions of the option granted hereby, in addition to
the terms and conditions contained in the Plan, are as follows:
1. The price at which each share of Stock subject to this option may
be purchased shall be the price set forth above, subject to any adjustments
which may be made pursuant to Section 8 hereof.
2. Subject to the terms and conditions set forth herein and in
Section 3.3 of the Plan, this option shall be exercisable (x) as to 40,000
shares of Stock, on the date hereof and (y) as to the remaining shares of Stock
subject to this Option (the "Remainder"), beginning on the date which is nine
years and six months from the date of grant, provided that this option shall be
sooner exercisable as to the Remainder (i)(A) with respect to a number of shares
of Stock equal to 140,000 shares of Stock, on the Earn Out Payment Date (as
defined in the Purchase Agreement referred to in the Plan) if and only if the
1998/1999 EBITDA (as
38
2
defined in the Purchase Agreement referred to in the Plan) shall equal or exceed
$11,000,000 but be less than $15,000,000 and (B) in full, on the Earn Out
Payment Date if and only if the 1998/1999 EBITDA shall equal or exceed
$15,000,000; (ii) in full, on the date, if any, that the Employee's employment
under the Plan terminates by reason of death or Disability or by the Optionee
for Good Reason or by JJ without Due Cause (as said terms are defined in the
Plan) and (iii) in full, upon the occurrence of an Acceleration Event (as
defined in the Purchase Agreement referred to in the Plan).
3. Subject to the terms and conditions set forth herein, the Optionee
may exercise this option at any time as to all or any of the shares of Stock
purchasable in accordance with Section 2 hereof by delivering to the Company
written notice specifying:
(i) the number of whole shares of Stock to be purchased together
with payment in full of the aggregate option price of such shares, provided
that this option may not be exercised for less than ten (10) shares of
Stock or the number of shares of Stock remaining subject to option,
whichever is smaller;
(ii) the name or names in which the stock certificate or
certificates are to be registered;
(iii) the address to which dividends, notices, reports, etc. are
to be sent; and
(iv) the Optionee's social security number.
Only one stock certificate will be issued unless the Optionee otherwise requests
in writing. Payment shall be in cash, or by certified or bank cashier's check
payable to the order of the Company, free from all collection charges (including
by means of a broker assisted simultaneous exercise and sale); provided,
however, that payment may be made in shares of Stock owned by the Optionee
having a market value on the date of exercise equal to the aggregate purchase
price, or in a combination of cash and Stock. For purposes of this option and
the Plan, the market value per share of Stock shall be the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the closing high bid and low asked prices regular way, in
either case on the principal national securities exchange on which the Stock is
listed or admitted to trading, or if the Stock is not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National
39
3
Association of Securities Dealers Automated Quotation System ("NASDAQ") on such
date, or the average of the closing high bid and low asked prices of the Stock
in the over-the-counter market reported on NASDAQ on such date, whichever is
applicable, or if there are no such prices reported on NASDAQ on such date, as
furnished to the Stock Option Committee of the Board of Directors (the
"Committee") by any New York Stock Exchange member selected from time to time by
the Committee for such purpose. If there is no bid or asked price reported on
any such date, the market value shall be determined by the Committee in
accordance with the regulations promulgated under Section 2031 of the Code, or
by any other appropriate method selected by the Committee. If the Optionee so
requests, shares of Stock purchased upon exercise of an option may be issued in
the name of the Optionee or, provided that the Optionee pays any applicable
taxes, another person. No Optionee shall be entitled to any rights as a
stockholder of the Company in respect of any shares of Stock covered by this
option until such shares of Stock shall have been paid for in full and issued to
the Optionee.
4. As soon as practicable after the Company receives payment for
shares of Stock covered by this option, it shall deliver a certificate or
certificates representing the shares of Stock so purchased to the Optionee. Such
certificate shall be registered in the name of the Optionee, or, subject to
Section 3 hereof, in such other name or names as the Optionee shall request.
5. This option is personal to the Optionee and during the Optionee's
lifetime may be exercised only by the Optionee. This option shall not be
transferable other than by will or the laws of descent and distribution.
6. In the event that the Optionee's employment as an employee of the
Company or of any Subsidiary or Parent (within the meaning of Sections 424(e)
and 424(f) of the Code) (hereinafter the "Optionee's employment") is terminated
for any reason prior to the time that this option has been fully exercised, this
option shall be exercisable, if at all, as to any remaining vested shares of
Stock subject hereto, only in accordance with the terms (x) hereof (including
without limitation, Section 2 hereof) and (y) of Sections 3.3(a) and 3.3(b) of
the Plan. Notwithstanding the foregoing, this option shall in no event be
exercisable after the date of termination of such option specified in Section 2
hereof.
7. This option does not confer on the Optionee any right to continue
in the employ of the Company, any
40
4
Subsidiary or Parent, or interfere in any way with the right of the Company, any
Subsidiary or Parent to determine the terms of the Optionee's employment.
8. In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
or any other change in the corporate structure or shares of the Company, the
Committee shall in good faith, adjust the number of shares of Stock (or other
securities or property) subject to this option, the exercise price with respect
to this option, or all of the foregoing.
9. This option and the terms and conditions herein set forth are
subject in all respects to the terms and conditions of the Plan, which shall be
controlling.
10. It shall be a condition to the obligation of the Company to issue
shares of Stock upon exercise of this option, that the Optionee (or any
beneficiary or person entitled to act) pay to the Company, upon its demand, such
amount as may be requested by the Company for the purpose of satisfying any
liability to withhold federal, state or local income or other taxes.
11. All notices hereunder to the Company shall be delivered or mailed
to the following address:
Norton XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Such address for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the Optionee.
NORTON XXXXXXXXXX, INC.
By__________________________________
Name: Xxxxx Xxxxxxxxx
Title: President and Chief
Operating Officer
41
EXHIBIT B
NORTON XXXXXXXXXX, INC. OPTION BONUS PLAN
FOR SENIOR EXECUTIVES OF JJ ACQUISITION CORP.
1. Establishment. This Plan, which shall be known as the Norton
XxXxxxxxxx, Inc. Option Bonus Plan for Senior Executives of JJ Acquisition Corp.
(the "Bonus Plan"), is hereby established by JJ Acquisition Corp. (the
"Company") to provide incentives for senior executives providing services to the
Company and to aid the Company in retaining such senior executives upon whose
efforts the Company's success and future growth depends.
2. Administration. The Bonus Plan shall be administered by the Board
of Directors of the Company (the "Board"). For purposes of administration, the
Board, subject to the terms of the Bonus Plan, shall have authority, acting in
good faith, to establish such rules and regulations, to make such determinations
and interpretations, and to take such other administrative actions as it deems
necessary or advisable.
3. Participants. The participants in the Plan shall be Xxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx, in each case for so long as
such individual is employed by the Company pursuant to an Employment Agreement
to which this Bonus Plan is an Exhibit (each, a "Participant" and collectively,
the "Participants"); provided, however, that nothing contained herein shall be
construed as creating a guarantee of employment for any Participant.
4. Bonus Options.
4.1 Grant. In the event that EBITDA (as defined in the Agreement of
Purchase and Sale by and among Xxxx-Xx Knitwear Inc., Xxxxx Xxxxx, Inc., the
Stockholders of Xxxxx Xxxxx, Inc., JJ Acquisition Corp. and Norton XxXxxxxxxx,
Inc. (the "Purchase Agreement")) attained by the Company in Year 1 or Year 2 (as
defined in the Purchase Agreement, and each, a "Year") is equal to or in excess
of $17,000,000, the Company shall cause to be granted to the Participants by the
Board of Directors of Norton XxXxxxxxxx, Inc. a Delaware corporation ("Norton"),
options to purchase an aggregate of 50,000 (or such lesser number as shall be
necessary to allocate such options in accordance with Section 4.2 below) shares
of common stock, par value $.01 per share of Norton (the "Common Stock") in each
Year that EBITDA in excess of $17,000,000 is so attained. In addition, for each
$1,000,000 of EBITDA in excess of $17,000,000 attained by
42
2
the Company in each of the Years, the Company shall cause to be granted to the
Participants by the Board of Directors of Norton, options to purchase an
aggregate of 30,000 (or such lesser number as shall be necessary to allocated
such options in accordance with Section 4.2 below) shares of Common Stock. Any
options granted as aforesaid shall be hereinafter referred to as "Bonus
Options". The Bonus Options shall be granted, if at all, on the dates of
delivery to the Company and Norton of the EBITDA Notice and EBITDA Statement
(pursuant to Section 2.02(b)(i) of the Purchase Agreement) for the applicable
Year and shall have an exercise price per share equal to the fair market value
of the Common Stock on the date of grant.
4.2 Allocation of Bonus Options. The Bonus Options shall be allocated
40% to Xxxxx Xxxxxxxxx, 40% to Xxxxxx Xxxxxxxxx and 20% to Xxxxx Xxxxxxxxx, or
in the case of the death of any such Participant during a Year, the estate of
such Participant.
4.3 Exercise. The Bonus Options shall be fully vested and exercisable
on and after the date of grant.
4.4 Term of Options. Except as provided below, the term of the Bonus
Options shall be ten years.
(i) If a Participant's employment with the Company terminates
pursuant to Section 6.1 of his or her Employment Agreement or is terminated by
the Company or by the Participant pursuant to Section 6.2 of his or her
Employment Agreement, is terminated by the Employee pursuant to Section 6.4 of
his or her Employment Agreement, or terminated for any other reason (except as
provided in clause (ii) below), the Bonus Options may be exercised by the
Participant (or his or her estate or legal representative) within one (1) year
after such termination; and
(ii) In the event of termination of the employment of a
Participant (a) by the Company pursuant to Section 6.3 of his or her Employment
Agreement or (b) by the Participant other than pursuant to Sections 6.1, 6.2 or
6.4 of his or her Employment Agreement, no Bonus Options shall be exercisable.
4.5 Adjustments. In the event of any dividend or other distribution
(whether in the form of cash, Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other
43
3
securities of Norton, issuance of warrants or other rights to purchase Common
Stock, the Board of Directors shall, in good faith adjust the number of shares
of Common Stock (or other securities or property) subject to the Bonus Options,
the exercise price with respect to any Bonus Options, or both.
4.6 No Participant shall be entitled to Bonus Options for any Year of
the Company subsequent to the Year in which his or her termination of employment
(for any or no reason) occurs.
4.7 In the event of termination of the employment of a Participant
prior to the end of a Year, pursuant to his or her Employment Agreement, such
Participant (or his or her estate or other legal representative) shall be
granted such Bonus Options for such Year only as provided in this Section 4.7.
The number of Bonus Options to which the Participant (or his or her estate or
legal representative) shall be entitled for such Year (which shall be granted at
the time that the Bonus Options are granted to the other Participants) shall be
equal to the product of (x) the number of Bonus Options, if any, which would
have been granted to the Participant pursuant to Sections 4.1 and 4.2 of this
Bonus Plan for such Year if the employment of the Participant had not so
terminated, multiplied by (y) a fraction, the numerator of which is the number
of days from the beginning of such Year to the date of termination, and the
denominator of which is 365. The terms and conditions of any such Bonus Options
shall be as otherwise provided in this Section 4.
4.8 If any portion of the Bonus Options shall not be allocated or
granted by reason of this Section 4, such Bonus Options shall be retained by the
Company or granted to other Participants or to new participants, all as
determined by the Board, after good faith consideration of any recommended
course of action submitted to the Board by the remaining Participants.
4.9 Change of Control. In the event that there shall occur a Change
of Control (as defined in the Purchase Agreement) during either of the Years,
the Participants in this Bonus Plan shall be entitled to receive, in lieu of
Bonus Options contemplated by Section 4.1 of this Bonus Plan (unless such Bonus
Options have heretofore been granted, in which case such granted Bonus Options
shall be retained), a number of Bonus Options (allocated as set forth in Section
4.2 above) equal to (i) in the event that the Change of Control occurs during
Year 1, 100,000 Bonus Options or (ii) in the event that the Change of Control
occurs during Year
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2, 50,000 Bonus Options. The terms and conditions of any such Bonus Options
shall be as otherwise provided in this Section 4.
45
Exhibit B-3
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the ____ day of _____, 1998 by and between JJ
ACQUISITION CORP., a Delaware corporation (the "Company"), and Xxxxx Xxxxxxxxx
(the "Employee").
W I T N E S S E T H:
WHEREAS, the Company, a wholly owned subsidiary of Norton XxXxxxxxxx,
Inc., a Delaware corporation ("Norton"), and certain other parties (which
parties include the Employee) have entered into an Agreement of Purchase and
Sale dated as of April 15, 1998 (the "Purchase Agreement"), providing, inter
alia, for the purchase by the Company of substantially all of the assets of
Xxxx-Xx Knitwear Inc., a New York corporation ("J-J Knitwear") and Xxxxx Xxxxx,
Inc., a New York corporation ("Xxxxx Xxxxx"; and together with J-J Knitwear and
Xxxxx Xxxxx, the "Xxxx-Xx Group"); and
WHEREAS, the Company desires to secure the employment of the Employee
with the Company and the Employee desires to be employed by the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto hereby agree as follows:
1. Employment, Term.
1.1 The Company agrees to employ the Employee, and the Employee
agrees to serve in the employ of the Company, for the term set forth in Section
1.2, in the positions and with the responsibilities, duties and authority set
forth in Section 2 and on the other terms and conditions set forth in this
Agreement.
1.2 The term of the Employee's employment under this Agreement (the
"Term") shall commence on the date hereof and shall terminate on the second
anniversary of the Closing Date (as defined in the Purchase Agreement) (the
"Expiration Date"), unless sooner terminated in accordance with this Agreement.
2. Positions, Duties. The Employee shall serve in the position of
Vice President of the Company. The Employee shall perform, faithfully and
diligently, such duties and shall have such other responsibilities, appropriate
to said position, as shall be assigned to him from time to time by the Vice
Chairman (the "Vice Chairman") (currently, Xxxxx Xxxxxxxxx); provided, however,
that in any event said duties and responsibilities shall be consistent
46
2
with the terms and provisions of Section 7.12 of the Purchase Agreement. The
Employee shall report solely to the Vice Chairman (currently, Xxxxx Xxxxxxxxx),
but if Xx. Xxxxxxxxx changes titles with the Purchaser, then to Xx. Xxxxxxxxx in
such capacity. The Employee shall devote his complete and undivided attention to
the performance of his duties and responsibilities hereunder during the normal
working hours of executive employees of the Company. The Employee's services
under this Agreement shall be performed principally at the executive offices and
warehouses of the Company to be located, during the Term, in New York City and
New Jersey, respectively (unless otherwise agreed between the Vice Chairman and
the Employee).
3. Compensation.
3.1 Salary. During the Term, in consideration of the performance by
the Employee of the services set forth in Section 2 and his observance of the
other covenants set forth herein, the Company shall pay the Employee, and the
Employee shall accept, a base salary at a rate of $250,000 per annum (which may
be increased, but not decreased), payable in accordance with the standard
payroll practices of the Company.
3.2 Bonus. During the Term, in addition to the salary provided for in
Section 3.1 and the Bonus Plan described in Section 3.4, the Employee shall be
eligible to participate, subject to the terms thereof, in any bonus plan for
executives of Norton or the Company in effect during the Term.
3.3 Stock Options.
(a) Grant. On the date hereof, Norton shall grant to the
Employee, an option to purchase an aggregate number of shares of common stock,
par value $.01 per share (the "Common Stock"), of Norton, at an exercise price
per share equal to the Closing Market Value (as defined in the Purchase
Agreement) (the "Option"), which number shall equal the sum of (i) 90,000 (the
"Base Option Number") and (ii) a number (the "Additional Option Number") equal
to the Base Option Number multiplied by a fraction, the numerator of which shall
be the positive excess, if any, of the Closing Market Value over the Signing
Market Value (as such terms defined in the Purchase Agreement) and the
denominator of which shall be the Signing Market Value. The Option shall be
vested and exercisable on and after (i) the date hereof, as to 20,000 shares of
Common Stock and (ii) the date which is nine years and six months from the
Closing Date, as to the remainder of the number of shares of Common Stock
47
3
subject to the Option (the "Remainder"), but shall be sooner exercisable as to
the Remainder (i)(A) with respect to a number of shares of Common Stock equal to
70,000 shares of Common Stock, on the Earn Out Payment Date (as defined in the
Purchase Agreement) if and only if the 1998/1999 EBITDA (as defined in the
definition of 1998/1999 EBITDA in the Purchase Agreement) shall equal or exceed
$11,000,000 but be less than $15,000,000, (B) in full, on the Earn Out Payment
Date, if and only if the 1998/1999 EBITDA shall equal or exceed $15,000,000;
(ii) in full, on the date, if any, that the Employee's employment terminates
hereunder by reason of death or Disability or by the Employee for Good Reason or
by the Company without Due Cause (as said terms are hereinafter defined); and
(iii) in full, upon the occurrence of any Acceleration Event (as defined in the
Purchase Agreement).
(b) Term of Option. Except as provided below, the term of the
Option shall be ten years.
(i) In the event of a termination of employment of the Employee
with the Company pursuant to Section 6.1, Section 6.2 or Section 6.4, the Option
may be exercised by the Employee or, in the event of the Employee's death, his
estate or legal representative during the remainder of the term of the Option;
and
(ii) In the event of termination of the employment of the
Employee with the Company (a) by the Company pursuant to Section 6.3 or (b) by
the Employee during the Term, other than pursuant to Sections 6.1, 6.2 or 6.4,
the Option shall not thereafter be exercisable.
(c) Adjustments. In the event of any dividend or other
distribution (whether in the form of cash, Common Stock, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Stock or other securities of Norton, issuance
of warrants or other rights to purchase Common Stock, the Board of Directors
shall, in good faith, adjust the number of shares of Common Stock (or other
securities or property) subject to the Option, the exercise price with respect
to any Option, or all of the foregoing.
(d) Stock Option Certificate. The Options shall be represented
by a stock option certificate in the form of Exhibit A hereto and shall
otherwise be subject to the terms and conditions of such stock option
certificate.
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(e) Registration of Shares. Norton shall, as promptly as
practicable following the commencement of the Employee's employment hereunder,
file a registration statement on Form S-8, or any successor to such Form, with
respect to the shares of Common Stock covered by the Option.
3.4 Bonus Options. During the Term, the Employee shall be eligible to
receive Bonus Options (as defined in the Norton XxXxxxxxxx, Inc. Bonus Option
Plan for Senior Executives of JJ Acquisition Corp. (the "Executive Option Bonus
Plan")) in accordance with the terms set forth in the Executive Option Bonus
Plan, a copy of which is attached hereto as Exhibit B.
4. Expense Reimbursement. During the Term, (i) the Company shall
reimburse the Employee for all reasonable and necessary out-of-pocket expenses
incurred by him in connection with the performance of his duties hereunder, upon
the presentation of proper accounts therefor in accordance with Norton's
policies and (ii) the Company shall pay for the benefit of the Employee all
reasonable and necessary expenses incurred by him in the ordinary and usual
course of business and in accordance with Norton's policies (in any case, as
such policies are adopted from time to time by the Compensation Committee of
Norton).
5. Benefits.
5.1 Benefit Plans. In addition to the benefits under Section 7.07 of
the Purchase Agreement, during the Term, the Employee shall be entitled to
participate in all employee benefit plans and programs offered by Norton or the
Company for similarly situated executives and shall be entitled to equitable
treatment in respect of new benefits, if any, to be received under such employee
benefit plans and programs by similarly situated executives.
5.2 Vacation. During the Term, the Employee shall be entitled to paid
vacation in accordance with Norton's policy for its executive employees, but not
less than five weeks.
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6. Termination of Employment.
6.1 Death. In the event of the death of the Employee during the Term,
the Company shall pay to the estate or other legal representative of the
Employee (1) the base salary provided for in Section 3.1 accrued to the date of
the Employee's death and not theretofore paid to the Employee, (2) a pro rata
bonus in an amount equal to the product of (i) the Employee's most recent bonus,
if any, paid under Section 3.2, and (ii)(A) the number of months (including
partial months) worked during the year in which the Employee's date of death
occurs, divided by (b) 12, and (3) Bonus Options in accordance with Section 4 of
the Executive Option Bonus Plan. Rights and benefits of the estate or other
legal representative of the Employee under the benefit plans and programs of the
Company shall be determined in accordance with the provisions of such plans and
programs. Neither the estate or other legal representative of the Employee nor
the Company shall have any further rights or obligations under this Agreement
except as provided in Section 3.3(b)(i).
6.2 Disability. If during the Term the Employee shall become
incapacitated by reason of physical or mental disability and shall be unable to
perform his normal duties hereunder for a cumulative period of six (6) months in
any period of twelve (12) consecutive months, the employment of the Employee
hereunder may be terminated by the Company or the Employee upon notice to the
other (a "Disability"). In the event of such termination, the Company shall pay
to the Employee (1) the salary provided for in Section 3.1 accrued to the date
of such termination and not theretofore paid to the Employee, (2) a pro rata
bonus in an amount equal to the product of (i) the Employee's most recent bonus,
if any, paid under Section 3.2, and (ii)(A) the number of months (including
partial months) employed during the year in which the Employee's termination
occurs, divided by (b) 12, and (3) Bonus Options in accordance with Section 4 of
the Executive Option Bonus Plan. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs. Neither the Employee nor the Company
shall have any further rights or obligations under this Agreement, except as
provided in Sections 3.3(b)(i), 7, 8, 9 and 10.
6.3 Due Cause. The employment of the Employee hereunder may be
terminated by the Company at any time during the Term for Due Cause (as
hereinafter defined). In
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the event of such termination, the Company shall pay to the Employee the salary
provided for in Section 3.1 accrued to the date of such termination and not
theretofore paid to the Employee. Rights and benefits of the Employee under the
benefit plans and programs of the Company shall be determined in accordance with
the provisions of such plans and programs. After the satisfaction of any claim
of the Company against the Employee incidental to such Due Cause, neither the
Employee nor the Company shall have any further rights or obligations under this
Agreement, except as provided in Sections 7, 8, 9 and 10. For purposes hereof,
"Due Cause" shall mean the Employee's conviction or other adjudication of a
felony or any crime or offense involving fraud that is materially injurious to
the Company or Norton; provided, however, that the Employee shall be given
written notice by a majority of the Board of Directors of the Company that it
intends to terminate the Employee's employment for Due Cause under this Section,
which written notice shall specify the act or acts upon the basis of which the
majority of the Board of Directors of the Company intends so to terminate the
Employee's employment, and the Employee shall then be given the opportunity,
within fifteen (15) days of his receipt of such notice, to have a meeting with
the Board of Directors of the Company to discuss such act or acts.
6.4 Termination by the Employee with Good Reason or by the Company
not for Due Cause. The Employee may at any time terminate his employment with
the Company with Good Reason (as hereinafter defined). For purposes hereof, Good
Reason shall mean (i) the breach by the Company of any material provision of
this Agreement or of Section 7.12 of the Purchase Agreement, in any case, for a
period of 30 days after written notice of such breach by the Employee to the
Company; (ii) the failure of the Company to pay the Earn Out Payment (as defined
in the Purchase Agreement) as and when such is due and payable in accordance
with the terms of the Purchase Agreement, including any amounts payable under
the Earn Out Letter of Credit (as defined in the Purchase Agreement); and (iii)
the occurrence of an Acceleration Event (as defined in the Purchase Agreement).
If the Company terminates the Employee's employment other than for disability
pursuant to Section 6.2 or Due Cause pursuant to Section 6.3, or if the Employee
terminates his employment for Good Reason pursuant to Section 6.4, the Employee
shall be entitled (a) to continue to receive from the Company his base salary
for the remainder of the Term and (b) to continue to participate for the
remainder of the Term in all employee benefit plans and programs (including any
bonus plan) in which the Employee participated on the date of termination.
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7. Confidential Information.
7.1 The Employee shall, during the Term and for the two-year period
thereafter (unless the Term terminates in accordance with Section 6.4, in which
case the limits imposed on the Employee under this Section 7.1 shall expire on
the date of such termination), treat as confidential and, except as required in
the performance of his duties and responsibilities under this Agreement, not
disclose, publish or otherwise make available to the public or to any
individual, firm or corporation any confidential material (as hereinafter
defined), except, on a need to know basis, to the Employee's attorney,
accountant or personal advisor. The Employee agrees that all confidential
material, together with all notes and records of the Employee relating thereto,
and all copies or facsimiles thereof in the possession of the Employee, are the
exclusive property of the Company and the Employee agrees to return such
material to the Company promptly upon the termination of the Employee's
employment with the Company.
7.2 Subject to Section 7.12 of the Purchase Agreement, for the
purposes hereof, the term "confidential material" shall mean all information
acquired by the Employee in the course of the Employee's prior employment with
any member of the Xxxx-Xx Group and in the course of the Employee's employment
with the Company in any way concerning the products, projects, activities,
business or affairs of the Company, the Xxxx-Xx Group, or Norton or and other
subsidiary, direct or indirect, of Norton (the "Norton Group"), or the
customers, suppliers or agents of the Company, the Xxxx-Xx Group or any member
of the Norton Group, including, without limitation, all information concerning
trade secrets and the preparation of raw material for, manufacture of, or
finishing processes utilized in the production of, the products or projects of
the Company, any member of the Xxxx-Xx Group or any member of the Norton Group
or any improvements therein, all sales and financial information concerning the
Company, any member of the Xxxx-Xx Group or any member of the Norton Group, all
customer and supplier lists, all information concerning projects in research and
development or marketing plans for any such products or projects, and all
information in any way concerning the products, projects, activities, business
or affairs of customers of the Company, the Xxxx-Xx Group or any member of the
Norton Group which is furnished to the Employee by the Company or any of its
employees (current or former), agents, customers or suppliers, as such;
provided, however, that the term "confidential material" shall not include
information which (a) becomes generally available to the public or the apparel
industry in general other than as
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a result of a disclosure by the Employee, (b) was available to the Employee on a
non-confidential basis prior to his employment with the Company, (c) becomes
available to the Employee on a non-confidential basis from a source other than
the Company or any of its agents, suppliers or customers, provided that the
Employee has no knowledge that such source is not bound by a confidentiality
agreement with the Company or any of such agents, customers or suppliers, or (d)
if disclosed by the Employee would not have a significant detrimental effect on
the business of the Company.
8. Inventions. Subject to Section 7.12 of the Purchase Agreement and
subject to the Employee's right to the registered trademark Xxxxxx Max(R) (but
subject to Section 7.15 of the Purchase Agreement) any and all material
inventions, material innovations or material improvements ("inventions") made,
developed or created by the Employee (whether at the request or suggestion of
the Company or otherwise, whether alone or in conjunction with others, and
whether during regular hours of work or otherwise) during the period of his
employment with the Company which may be directly useful in, or relate to, the
Business (as defined in the Purchase Agreement), shall be promptly and fully
disclosed by the Employee to the Board of Directors of the Company and shall be
the Company's exclusive property as against the Employee, and the Employee shall
promptly deliver to an appropriate representative of the Company as designated
by the Board of Directors all papers, drawings, models, data and other material
relating to any inventions made, developed or created by him as aforesaid. The
Employee shall, at the request of the Company and without any payment therefor,
execute any documents necessary or advisable in the opinion of the Company's
counsel to direct issuance of patents, trademarks or copyrights to the Company
with respect to such inventions as are to be the Company's exclusive property as
against the Employee or to vest in the Company title to such inventions as
against the Employee. The expense of securing any such patent, trademark or
copyright shall be borne by the Company.
9. Non-Competition. The Employee acknowledges that the services to be
rendered by him to the Company are of a special and unique character. In
consideration of his employment hereunder, the Employee agrees, for the benefit
of the Company, that he will not, during the period of his employment with the
Company and thereafter for a period (the "Period") of two (2) years commencing
on the date of termination of his employment with the Company (other than a
termination by the Employee for Good Reason or by the Company not for Due Cause,
in which case, the Period shall
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9
be the remainder of the Term following the date of such termination), (a)
engage, directly or indirectly, whether as principal, agent, distributor,
representative, consultant, employee, partner, stockholder, limited partner or
other investor (other than an investment of not more than (i) five percent (5%)
of the stock or equity of any corporation the capital stock of which is publicly
traded or (ii) five percent (5%) of the ownership interest of any limited
partnership or other entity) or otherwise, anywhere in the United States, in any
business activity or business venture which is in competition with the Business
(as defined in the Purchase Agreement), it being understood and agreed that
ownership or operation of the business presently conducted by Creative
Retailers, Inc. shall not be prohibited by this Section 9, (b) solicit or entice
or endeavor to solicit or entice away from the Company or any member of the
Norton Group any person who was an officer, employee or consultant of the
Company, either for his own account or for any individual, firm or corporation,
whether or not such person would commit any breach of his contract of employment
by reason of leaving the service of the Company, and the Employee agrees not to
employ, directly or indirectly, any person who was an officer or employee of the
Company, or (c) solicit or entice or endeavor to solicit or entice away from the
Company any supplier or customer of the Company, either for his own account or
for any individual, firm or corporation, which, in any case would have a
significant detrimental effect on the business of the Company.
10. Equitable Relief, Etc.
In the event of a breach or threatened breach by the Employee of any
of the provisions of Sections 7, 8 or 9, the Employee hereby consents and agrees
that the Company shall be entitled to an injunction or similar equitable relief
from any court of competent jurisdiction restraining the Employee from
committing or continuing any such breach or threatened breach or granting
specific performance of any act required to be performed by the Employee under
any of such provisions, without the necessity of showing any actual damage or
that money damages would not afford an adequate remedy and without the necessity
of posting any bond or other security. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedies at law or in equity
which it may have with respect to any such breach or threatened breach.
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11. Successors and Assigns.
11.1 Assignment by the Company. The Company may not assign this
Agreement or any part thereof without the prior written consent of the Employee.
11.2 Assignment by the Employee. The Employee may not assign this
Agreement or any part thereof without the prior written consent of a majority of
the Board of Directors of the Company (other than the Employee if he is a member
of such Board at the time); provided, however, that nothing herein shall
preclude one or more beneficiaries of the Employee from receiving any amount
that may be payable following the occurrence of his legal incompetency or his
death and shall not preclude the legal representative of his estate from
receiving such amount or from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of intestacy, to the
person or persons entitled thereto under the laws of intestacy applicable to his
estate. The term "beneficiaries", as used in this Agreement, shall mean a
beneficiary or beneficiaries so designated to receive any such amount or, if no
beneficiary has been so designated, the legal representative of the Employee (in
the event of his incompetency) or the Employee's estate.
12. Governing Law. This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of New York applicable to contracts to be performed entirely within
such State.
13. Entire Agreement. This Agreement contains all the understandings
and representations between the parties hereto pertaining to the subject matter
hereof. This Agreement supersedes all understandings and agreements, whether
oral or in writing, if any, previously entered into by the Company or any member
of Xxxx-Xx Group with the Employee in any way relating to the employment of the
Employee by the Company or by any member of the Xxxx-Xx Group, all of which
agreements and understandings are hereby terminated and all rights and
entitlements thereunder are hereby waived and released.
14. Amendment, Modification, Waiver. No provision of this Agreement
may be amended or modified unless such amendment or modification is agreed to in
writing and signed by the Employee and by a representative of the Company (other
than the Employee) who have been duly authorized by the Board of Directors of
the Company to do so (other than the Employee if he is a member of such Board at
the time).
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Except as otherwise specifically provided in this Agreement, no waiver by either
party hereto of any breach by the other party hereto of any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of a similar or dissimilar provision or condition at the same or any
prior or subsequent time, nor shall the failure of or delay by either party
hereto in exercising any right, power or privilege hereunder operate as a waiver
thereof to preclude any other or further exercise thereof or the exercise of any
other such right, power or privilege.
15. Notices. All notices, requests or instructions hereunder shall be
in writing and delivered personally, sent by telecopy, sent by registered or
certified mail, postage prepaid, or sent by Federal Express or any other
nationally recognized overnight courier service, as follows:
If to the Company:
x/x Xxxxxx XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx & Xxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Cost, Esq.
Telecopy: (000) 000-0000
If to the Employee:
Xxxxx Xxxxxxxxx
c/x Xxxxxxxx Alpren & Green LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx, CPA
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Flattau & Klimpl, LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
56
12
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, telecopied, or sent by Federal Express or any other
recognized overnight courier service, and three (3) business days after the date
of mailing, if mailed by registered or certified mail, return receipt requested.
16. Arbitration. Any controversy or claim arising out of or relating
to this Agreement, or any breach thereof, shall, except as provided in Section
10, be settled by binding arbitration in accordance with the rules of the
American Arbitration Association then in effect and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in New York, New York.
17. Severability. Should any provision of this Agreement be held by a
court or arbitration panel of competent jurisdiction to be enforceable only if
modified, such holding shall not affect the validity of the remainder of this
Agreement, the balance of which shall continue to be binding upon the parties
hereto with any such modification to become a part hereof and treated as though
originally set forth in this Agreement. In any event, should one or more of the
provisions of this Agreement be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions hereof, and if such provision or provisions are not
modified as provided above, this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been set forth herein.
18. Authority. The Company and Norton represent and warrant to the
Employee that the execution and delivery of this Agreement by the Company and
the performance by the Company of its covenants and agreements hereunder have
been duly authorized by all necessary corporate action and that this Agreement
has been duly executed and delivered on behalf of the Company.
19. Withholding. Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the Employee or his
beneficiaries, including his estate, shall be subject to withholding of such
amounts relating to taxes as the Company may reasonably determine it should
withhold pursuant to any applicable law or regulation. In lieu of withholding
such amounts, in
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whole or in part, the Company, may, in its sole discretion, accept other
provision for payment of taxes as permitted by law, provided it is satisfied in
its sole discretion that all requirements of law affecting its responsibilities
to withhold such taxes have been satisfied.
20. Subsidiaries, etc. The Employee shall be deemed to resign as an
officer and, if applicable, director of the Company and of any parent,
subsidiary or affiliate of the Company upon termination of his employment with
the Company.
21. Survivorship. The respective rights and obligations of the
Employee and the Company hereunder shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights
and obligations.
22. Titles. Titles of the sections of this Agreement are intended
solely for convenience and no provision of this Agreement is to be construed by
reference to the title of any section.
23. Counterparts. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed to be an original and all of
which taken together shall be deemed one document.
* * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
JJ ACQUISITION CORP.
By__________________________________
Name: Xxxxx Xxxxxxxxx
Title: Vice Chairman
EMPLOYEE
____________________________________
Name: Xxxxx Xxxxxxxxx
59
EXHIBIT A
NORTON XXXXXXXXXX, INC.
Stock Option Certificate
Date of Grant: _____ __, 1998
Name of Optionee: Xxxxx Xxxxxxxxx
Number of Shares:
Price Per Share:
This is to certify that, effective on the date of grant specified
above, the Board of Directors of Norton XxXxxxxxxx, Inc. (the "Company") has
granted to the above-named optionee (the "Optionee") an option to purchase from
the Company, for the price per share set forth above, the number of shares of
Common Stock, $.01 par value (the "Stock"), of the Company set forth above
pursuant and subject to the terms of Section 3.3 of that certain Employment
Agreement dated as of _____ __, 1998 by and between JJ Acquisition Corp. (now
known as Xxxx-Xx Knitwear, Inc.), a Delaware corporation and wholly owned
subsidiary of the Company ("JJ"), and the Optionee (the "Plan"). This option is
not intended to be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The terms and conditions of the option granted hereby, in addition to
the terms and conditions contained in the Plan, are as follows:
1. The price at which each share of Stock subject to this option may
be purchased shall be the price set forth above, subject to any adjustments
which may be made pursuant to Section 8 hereof.
2. Subject to the terms and conditions set forth herein and in
Section 3.3 of the Plan, this option shall be exercisable (x) as to 20,000
shares of Stock, on the date hereof and (y) as to the remaining shares of Stock
subject to this Option (the "Remainder"), beginning on the date which is nine
years and six months from the date of grant, provided that this option shall be
sooner exercisable as to the Remainder (i)(A) with respect to a number of shares
of Stock equal to 70,000 shares of Stock, on the Earn Out Payment Date (as
defined in the Purchase Agreement referred to in the Plan) if and only if the
1998/1999 EBITDA (as
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defined in the Purchase Agreement referred to in the Plan) shall equal or exceed
$11,000,000 but be less than $15,000,000 and (B) in full, on the Earn Out
Payment Date if and only if the 1998/1999 EBITDA shall equal or exceed
$15,000,000; (ii) in full, on the date, if any, that the Employee's employment
under the Plan terminates by reason of death or Disability or by the Optionee
for Good Reason or by JJ without Due Cause (as said terms are defined in the
Plan) and (iii) in full, upon the occurrence of an Acceleration Event (as
defined in the Purchase Agreement referred to in the Plan).
3. Subject to the terms and conditions set forth herein, the Optionee
may exercise this option at any time as to all or any of the shares of Stock
purchasable in accordance with Section 2 hereof by delivering to the Company
written notice specifying:
(i) the number of whole shares of Stock to be purchased together
with payment in full of the aggregate option price of such shares, provided
that this option may not be exercised for less than ten (10) shares of
Stock or the number of shares of Stock remaining subject to option,
whichever is smaller;
(ii) the name or names in which the stock certificate or
certificates are to be registered;
(iii) the address to which dividends, notices, reports, etc. are
to be sent; and
(iv) the Optionee's social security number.
Only one stock certificate will be issued unless the Optionee otherwise requests
in writing. Payment shall be in cash, or by certified or bank cashier's check
payable to the order of the Company, free from all collection charges (including
by means of a broker assisted simultaneous exercise and sale); provided,
however, that payment may be made in shares of Stock owned by the Optionee
having a market value on the date of exercise equal to the aggregate purchase
price, or in a combination of cash and Stock. For purposes of this option and
the Plan, the market value per share of Stock shall be the last sale price
regular way on the date of reference, or, in case no sale takes place on such
date, the average of the closing high bid and low asked prices regular way, in
either case on the principal national securities exchange on which the Stock is
listed or admitted to trading, or if the Stock is not listed or admitted to
trading on any national securities exchange, the last sale price reported on the
National Market System of the National
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Association of Securities Dealers Automated Quotation System ("NASDAQ") on such
date, or the average of the closing high bid and low asked prices of the Stock
in the over-the-counter market reported on NASDAQ on such date, whichever is
applicable, or if there are no such prices reported on NASDAQ on such date, as
furnished to the Stock Option Committee of the Board of Directors (the
"Committee") by any New York Stock Exchange member selected from time to time by
the Committee for such purpose. If there is no bid or asked price reported on
any such date, the market value shall be determined by the Committee in
accordance with the regulations promulgated under Section 2031 of the Code, or
by any other appropriate method selected by the Committee. If the Optionee so
requests, shares of Stock purchased upon exercise of an option may be issued in
the name of the Optionee or, provided that the Optionee pays any applicable
taxes, another person. No Optionee shall be entitled to any rights as a
stockholder of the Company in respect of any shares of Stock covered by this
option until such shares of Stock shall have been paid for in full and issued to
the Optionee.
4. As soon as practicable after the Company receives payment for
shares of Stock covered by this option, it shall deliver a certificate or
certificates representing the shares of Stock so purchased to the Optionee. Such
certificate shall be registered in the name of the Optionee, or, subject to
Section 3 hereof, in such other name or names as the Optionee shall request.
5. This option is personal to the Optionee and during the Optionee's
lifetime may be exercised only by the Optionee. This option shall not be
transferable other than by will or the laws of descent and distribution.
6. In the event that the Optionee's employment as an employee of the
Company or of any Subsidiary or Parent (within the meaning of Sections 424(e)
and 424(f) of the Code) (hereinafter the "Optionee's employment") is terminated
for any reason prior to the time that this option has been fully exercised, this
option shall be exercisable, if at all, as to any remaining vested shares of
Stock subject hereto, only in accordance with the terms (x) hereof (including
without limitation, Section 2 hereof) and (y) of Sections 3.3(a) and 3.3(b) of
the Plan. Notwithstanding the foregoing, this option shall in no event be
exercisable after the date of termination of such option specified in Section 2
hereof.
7. This option does not confer on the Optionee any right to continue
in the employ of the Company, any
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Subsidiary or Parent, or interfere in any way with the right of the Company, any
Subsidiary or Parent to determine the terms of the Optionee's employment.
8. In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights offering,
or any other change in the corporate structure or shares of the Company, the
Committee shall in good faith, adjust the number of shares of Stock (or other
securities or property) subject to this option, the exercise price with respect
to this option, or all of the foregoing.
9. This option and the terms and conditions herein set forth are
subject in all respects to the terms and conditions of the Plan, which shall be
controlling.
10. It shall be a condition to the obligation of the Company to issue
shares of Stock upon exercise of this option, that the Optionee (or any
beneficiary or person entitled to act) pay to the Company, upon its demand, such
amount as may be requested by the Company for the purpose of satisfying any
liability to withhold federal, state or local income or other taxes.
11. All notices hereunder to the Company shall be delivered or mailed
to the following address:
Norton XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Financial Officer
Such address for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the Optionee.
NORTON XXXXXXXXXX, INC.
By_________________________________
Name: Xxxxx Xxxxxxxxx
Title: President and Chief
Operating Officer
63
EXHIBIT B
NORTON XXXXXXXXXX, INC. OPTION BONUS PLAN
FOR SENIOR EXECUTIVES OF JJ ACQUISITION CORP.
1. Establishment. This Plan, which shall be known as the Norton
XxXxxxxxxx, Inc. Option Bonus Plan for Senior Executives of JJ Acquisition Corp.
(the "Bonus Plan"), is hereby established by JJ Acquisition Corp. (the
"Company") to provide incentives for senior executives providing services to the
Company and to aid the Company in retaining such senior executives upon whose
efforts the Company's success and future growth depends.
2. Administration. The Bonus Plan shall be administered by the Board
of Directors of the Company (the "Board"). For purposes of administration, the
Board, subject to the terms of the Bonus Plan, shall have authority, acting in
good faith, to establish such rules and regulations, to make such determinations
and interpretations, and to take such other administrative actions as it deems
necessary or advisable.
3. Participants. The participants in the Plan shall be Xxxxx
Xxxxxxxxx, Xxxxxx Xxxxxxxxx and Xxxxx Xxxxxxxxx, in each case for so long as
such individual is employed by the Company pursuant to an Employment Agreement
to which this Bonus Plan is an Exhibit (each, a "Participant" and collectively,
the "Participants"); provided, however, that nothing contained herein shall be
construed as creating a guarantee of employment for any Participant.
4. Bonus Options.
4.1 Grant. In the event that EBITDA (as defined in the Agreement of
Purchase and Sale by and among Xxxx-Xx Knitwear Inc., Xxxxx Xxxxx, Inc., the
Stockholders of Xxxxx Xxxxx, Inc., JJ Acquisition Corp. and Norton XxXxxxxxxx,
Inc. (the "Purchase Agreement")) attained by the Company in Year 1 or Year 2 (as
defined in the Purchase Agreement, and each, a "Year") is equal to or in excess
of $17,000,000, the Company shall cause to be granted to the Participants by the
Board of Directors of Norton XxXxxxxxxx, Inc. a Delaware corporation ("Norton"),
options to purchase an aggregate of 50,000 (or such lesser number as shall be
necessary to allocate such options in accordance with Section 4.2 below) shares
of common stock, par value $.01 per share of Norton (the "Common Stock") in each
Year that EBITDA in excess of $17,000,000 is so attained. In addition, for each
$1,000,000 of EBITDA in excess of $17,000,000 attained by
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the Company in each of the Years, the Company shall cause to be granted to the
Participants by the Board of Directors of Norton, options to purchase an
aggregate of 30,000 (or such lesser number as shall be necessary to allocated
such options in accordance with Section 4.2 below) shares of Common Stock. Any
options granted as aforesaid shall be hereinafter referred to as "Bonus
Options". The Bonus Options shall be granted, if at all, on the dates of
delivery to the Company and Norton of the EBITDA Notice and EBITDA Statement
(pursuant to Section 2.02(b)(i) of the Purchase Agreement) for the applicable
Year and shall have an exercise price per share equal to the fair market value
of the Common Stock on the date of grant.
4.2 Allocation of Bonus Options. The Bonus Options shall be allocated
40% to Xxxxx Xxxxxxxxx, 40% to Xxxxxx Xxxxxxxxx and 20% to Xxxxx Xxxxxxxxx, or
in the case of the death of any such Participant during a Year, the estate of
such Participant.
4.3 Exercise. The Bonus Options shall be fully vested and exercisable
on and after the date of grant.
4.4 Term of Options. Except as provided below, the term of the Bonus
Options shall be ten years.
(i) If a Participant's employment with the Company terminates
pursuant to Section 6.1 of his or her Employment Agreement or is terminated by
the Company or by the Participant pursuant to Section 6.2 of his or her
Employment Agreement, is terminated by the Employee pursuant to Section 6.4 of
his or her Employment Agreement, or terminated for any other reason (except as
provided in clause (ii) below), the Bonus Options may be exercised by the
Participant (or his or her estate or legal representative) within one (1) year
after such termination; and
(ii) In the event of termination of the employment of a
Participant (a) by the Company pursuant to Section 6.3 of his or her Employment
Agreement or (b) by the Participant other than pursuant to Sections 6.1, 6.2 or
6.4 of his or her Employment Agreement, no Bonus Options shall be exercisable.
4.5 Adjustments. In the event of any dividend or other distribution
(whether in the form of cash, Common Stock, other securities or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Common
Stock or other
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securities of Norton, issuance of warrants or other rights to purchase Common
Stock, the Board of Directors shall, in good faith adjust the number of shares
of Common Stock (or other securities or property) subject to the Bonus Options,
the exercise price with respect to any Bonus Options, or both.
4.6 No Participant shall be entitled to Bonus Options for any Year of
the Company subsequent to the Year in which his or her termination of employment
(for any or no reason) occurs.
4.7 In the event of termination of the employment of a Participant
prior to the end of a Year, pursuant to his or her Employment Agreement, such
Participant (or his or her estate or other legal representative) shall be
granted such Bonus Options for such Year only as provided in this Section 4.7.
The number of Bonus Options to which the Participant (or his or her estate or
legal representative) shall be entitled for such Year (which shall be granted at
the time that the Bonus Options are granted to the other Participants) shall be
equal to the product of (x) the number of Bonus Options, if any, which would
have been granted to the Participant pursuant to Sections 4.1 and 4.2 of this
Bonus Plan for such Year if the employment of the Participant had not so
terminated, multiplied by (y) a fraction, the numerator of which is the number
of days from the beginning of such Year to the date of termination, and the
denominator of which is 365. The terms and conditions of any such Bonus Options
shall be as otherwise provided in this Section 4.
4.8 If any portion of the Bonus Options shall not be allocated or
granted by reason of this Section 4, such Bonus Options shall be retained by the
Company or granted to other Participants or to new participants, all as
determined by the Board, after good faith consideration of any recommended
course of action submitted to the Board by the remaining Participants.
4.9 Change of Control. In the event that there shall occur a Change
of Control (as defined in the Purchase Agreement) during either of the Years,
the Participants in this Bonus Plan shall be entitled to receive, in lieu of
Bonus Options contemplated by Section 4.1 of this Bonus Plan (unless such Bonus
Options have heretofore been granted, in which case such granted Bonus Options
shall be retained), a number of Bonus Options (allocated as set forth in Section
4.2 above) equal to (i) in the event that the Change of Control occurs during
Year 1, 100,000 Bonus Options or (ii) in the event that the Change of Control
occurs during Year
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2, 50,000 Bonus Options. The terms and conditions of any such Bonus Options
shall be as otherwise provided in this Section 4.
