EXHIBIT 10.3
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 1, 1998 between XXXXX XXXXXX (the
"Executive") and PERISCOPE SPORTSWEAR, INC., a Delaware corporation (the
"Company").
1. Term of Agreement. Subject to the terms and conditions hereof, the
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term of employment of the Executive under this Employment Agreement shall be for
the period commencing on July 1, 1998 (the "Commencement Date") and terminating
on June 30, 2001, unless sooner terminated as provided in accordance with the
provisions of Section 6 hereof or extended in accordance with the provisions of
Section 6 hereof. (Such term of employment is herein sometimes called the
"Employment Term".
2. Employment. As of the Commencement Date, the Company hereby agrees to
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employ the Executive as Vice President and Chief Operating Officer and the
Executive hereby accepts such employment and agrees to perform his duties and
responsibilities hereunder in accordance with the terms and conditions
hereinafter set forth.
3. Duties and Responsibilities. Executive shall be Executive Vice
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President and Chief Operating Officer during the Employment Term. Executive
shall report to and be subject to the direction of the President and shall
perform such duties consistent with his title and position as may be assigned to
him from time to time by the President. During the Employment Term, Executive
shall devote his full time, skill, energy and attention to the business of the
Company and shall perform his duties in a diligent, trustworthy, loyal and
businesslike manner.
4. Compensation.
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(a) Base Compensation. The Company shall pay to Executive a salary at
the rate of $184,000 per year payable in such manner as it shall determine, but
in no event any less often than monthly, less withholding required by law and
other deductions agreed to by Executive.
(b) Incentive Compensation. The Company shall pay to Executive, as
additional compensation during each year of the Employment Term ("Incentive
Compensation"), the following amounts:
(i) One percent (1%) of the annual net sales of the Company up
to the sum of Five Million ($5,000,000.00) Dollars;
(ii) Two and one half percent (2 1/2%) of the annual net sales of
the Company in excess of Five Million ($5,000,000.00) Dollars; and
(iii) An additional one percent (1%) of annual net sales in excess
of $15,566,022. Should Executive's annual net sales exceed Nineteen Million
($19,000,000.00) Dollars, then the amount described in this paragraph 4(b)(iii)
shall be retroactively adjusted to reflect a two percent (2%) Incentive
Compensation rate for those annual net sales in excess of $15,566,022.
The percentage Incentive Compensation referenced herein shall not be
cumulative and shall apply only to Net Sales made to those accounts listed on
Schedule "A" annexed hereto as such schedule may be amended from time to time to
reflect additional customers of the Company secured and serviced by Executive.
Incentive Compensation shall be paid monthly. "Net Sales" as used herein
shall mean the gross invoice price of products actually sold and shipped by the
Company to its customers
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less any discounts, credits, return and chargebacks actually granted. In the
event goods are not shipped for any reason whatsoever, said goods shall not be
included within the term "net sales." All sales must be authorized by Xxxxx
Xxxxx, in writing, prior to the accepting thereof. Any authorization of Xxxxx
Xxxxx which is not granted or denied within seven (7) days shall be deemed
approved. In the event that goods are shipped subsequent to the expiration or
termination of this agreement for any reason whatsoever including a termination
for cause or death, Executive shall be entitled to receive any and all
compensations thereon as if this Agreement was in full force and effect for
orders received prior to said termination. In the absence of any agreement to
the contrary, any and all obligation to pay Incentive Compensation hereunder on
sales made by Executive subsequent to the expiration or termination of this
Agreement shall otherwise cease as of the date of termination.
There shall be no variance from the Incentive Compensation structure
provided by this Agreement without the express written agreement of the parties
hereto.
The Incentive Compensation rates listed herein do not apply to sales made
by the Company or its affiliates pursuant to various buying agent agreements
entered into between the Company (and/or its subsidiaries or affiliates) and its
clients. For purposes hereunder, the term "buying agent" shall reference those
situations wherein the Company in the ordinary course of business bills its
client only for a sales commission rather than for the actual goods sold. In
situations where the Company is acting as a buying agent and receiving solely a
commission, Executive shall receive a flat amount of Incentive Compensation at
the rate of one percent (1%) of the sales price of the goods sold. Such
Incentive Compensation is due and payable only when the Company itself receives
payment from the client. Incentive
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Compensation shall be limited solely to sales to those clients set forth in
Schedule "A" annexed hereto as such schedule may be amended from time to time as
set forth above.
With respect to Incentive Compensation earned under this Agreement during
1998, amounts earned and paid pursuant to Sections 6(a)(ii) and 6(c) of the
Consulting Agreement dated as of November 1, 1996 between Periscope I
Sportswear, Inc., a New York corporation, and S.R.P. Sales, Inc., a New York
corporation, shall be subtracted from amounts earned under this Section 4(b).
5. Expenses and Benefits.
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(a) The Company shall, consistent with its policy of reporting and
reimbursement of business expenses, reimburse Executive for such ordinary and
necessary business related expenses as shall be incurred by Executive in the
course of the performance of his duties under this Agreement.
(b) Executive shall be eligible to participate to the extent that he
qualifies in all benefit plans, including without limitation, pension, term life
insurance, hospitalization, medical insurance and disability plans as are made
available from time-to time to executives of the Company.
(c) Executive shall be entitled to four weeks of paid vacation
annually, which shall be taken in accordance with the procedures of the Company
in effect from time-to-time.
6. Termination.
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(a) The Company shall have the right to terminate the employment of
the Executive under this Agreement for disability in the event Executive suffers
an injury, illness or incapacity of such character as to substantially disable
him from performing his duties
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hereunder for a period of more one hundred eighty (180) consecutive days upon
the Company giving at least thirty (30) days written notice of termination;
provided, however, that if the Executive is eligible to receive disability
payments pursuant to a disability insurance policy paid for by the Company, the
Executive shall assign such benefits to the Company for all periods as to which
he is receiving full payment under this Agreement.
(b) This Agreement shall terminate upon the death of Executive.
(c) The Company may terminate this Agreement at any time because of
(i) Executive's material breach of any term of this Agreement or (ii) the
willful engaging by the Executive in misconduct which is materially injurious to
the Company, monetarily or otherwise.
7. Revealing of Trade Secrets, etc. Executive acknowledges the interest
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of the Company in maintaining the confidentiality of information related to its
business and shall not at any time during the Employment Term or thereafter,
directly or indirectly, reveal or cause to be revealed to any person or entity
the supplier lists, customer lists or other confidential business information of
the Company; provided, however, that the parties acknowledge that it is not the
intention of this paragraph to include within its subject matter (a) information
not proprietary to the Company, (b) information which is then in the public
domain, or (c) information required to be disclosed by law.
8. Covenants Not to Compete. During the Employment Term the Executive
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shall not, directly or indirectly in any manner, engage in any business which
competes with any business conduced by the Company and will not directly or
indirectly own, manage, operate, join, control or participate in the ownership,
management, operation or control of, or be employed by or connected in any
manner with any corporation, firm or business that is so
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engaged, (provided, however, that nothing herein shall prohibit the Executive
from owning not more than three (3%) percent of the outstanding stock of any
publicly held corporation). In addition, during the Employment Term and for a
period of one year thereafter, the Executive shall not, directly or indirectly,
in any manner (i) persuade or attempt to persuade any employee of the Company to
leave the employ of the Company or to become employed by any other entity or
(ii) persuade or attempt to persuade any current or former customer or
contractor to reduce the amount of business it does or intends or anticipates
doing with the Company.
9. Opportunities. During his employment with the Company, and for one
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year thereafter, Executive shall not take any action which might divert from the
Company any opportunity learned about by him during his employment with the
Company (including without limitation during the Employment Term) which would be
within the scope of any of the businesses then engaged in or planned to be
engaged in by the Company.
10. Survival. In the event that this Agreement shall be terminated, then
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notwithstanding such termination, the obligations of Executive pursuant to
Sections 7 and 8 of this Agreement shall survive such termination.
11. Contents of Agreement, Parties in Interest, Assignment, etc. This
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Agreement sets forth the entire understanding of the parties hereto with respect
to the subject matter hereof. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective heirs, representatives, successors and assigns of the parties hereto,
except that the duties and responsibilities of Executive hereunder which are of
a personal nature shall neither be assigned nor transferred in whole or in part
by
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Executive. This Agreement shall not be amended except by a written instrument
duly executed by the parties.
12. Severability. If any term or provision of this Agreement shall be
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held to be invalid or unenforceable for any reason, such term or provision shall
be ineffective to the extent of such invalidity or unenforceabiltiy without
invalidating the remaining terms and provisions hereof, and this Agreement shall
be construed as if such invalid or unenforcable term or provision had not been
contained herein.
13. Notices. Any notice, request, instruction or other document to be
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given hereunder by any party to the other party shall be in writing and shall be
deemed to have been duly given when delivered personally or five (5) days after
dispatch by registered or certified mail, postage prepaid, return receipt
requested, to the party to whom the same is so given or made:
If to the Company
addressed to: Periscope Sportswear, Inc.
0000 Xxxxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
with a copy to: Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx, Esq.
If to Executive
addressed to: Xxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
or to such other address as the one party shall specify to the other party in
writing.
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14. Counterparts and Headings. This Agreement may be executed in one or
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more counterparts, each of which shall be deemed an original and all which
together shall constitute one and the same instrument. All headings are
inserted for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
PERISCOPE SPORTSWEAR, INC.
By: /s/ Xxxxx Xxxxx
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XXXXX XXXXX
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
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