1
EXHIBIT 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
this 9th day of June, 1998 by and between Farah Incorporated, a Texas
corporation (hereinafter, the "Company" which term shall include the Company's
other subsidiaries, affiliates and successors), and Xxxx X. Xxxxxxxxx
(hereinafter, "Executive"), to be effective as of the Effective Date, as defined
in Section 1.
BACKGROUND
Executive is the President, Branded Division, of the Farah U.S.A., Inc.,
an affiliate of the Company. Pursuant to an Agreement and Plan of Merger, dated
as of May 1, 1998 (the "Merger Agreement"), the Company will be acquired by
Tropical Sportswear Int'l Corporation (the "Merger").
The Company desires to retain Executive from and after the Merger as an
executive of the Company, and Executive is willing to serve as such, all in
accordance with the terms and conditions of this Agreement.
Executive and the Company are parties to that certain Amended and
Restated Employment Agreement, dated as of August 25, 1994, as amended, which
provides certain benefits to Executive in the event of his termination of
employment following a change of control of the Company (the "Prior Employment
Agreement"). The Prior Employment Agreement will be superseded in its entirety
by this Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Effective Date. The effective date of this Agreement (the "Effective
Date") will be the date on which the effective time of the Merger occurs.
2. Employment. As of the Effective Date, Executive will be employed in
the capacity of Senior Vice President, Branded Merchandising and Marketing, of
the Company. Executive's responsibilities under this Agreement shall be in
accordance with the policies and objectives established by the Company.
3. Employment Period. Unless earlier terminated herein in accordance
with Section 7 hereof, Executive's employment shall be for a two-year term (the
"Employment Period"), beginning on the Effective Date.
4. Extent of Service. During the Employment Period, and excluding any
periods of vacation and sick leave to which Executive is entitled, Executive
agrees to devote his business time, attention, skill and efforts exclusively to
the faithful performance of his
2
duties hereunder; provided, however, that it shall not be a violation of this
Agreement for Executive to (i) devote reasonable periods of time to charitable
and community activities and, with the approval of the Company, industry or
professional activities, and/or (ii) manage personal business interests and
investments, so long as such activities do not materially interfere with the
performance of Executive's responsibilities under this Agreement.
5. Compensation and Benefits.
(a) Signing Bonus. On the Effective Date, the Company will pay to
Employee a signing bonus in the amount of $25,000.
(b) Retention Bonus. In addition to the Signing Bonus and any annual
bonus payable under subsection (b) below, the Company shall pay to Executive on
the second anniversary of the Effective Date, unless prior to such date the
Company has terminated Executive's employment for Cause (as hereinafter defined)
or Executive has resigned without Good Reason (as hereinafter defined), a
retention bonus in the amount of $25,000 (the "Retention Bonus");
(c) Base Salary. During the Employment Period, the Company will pay
to Executive a base salary in the amount of $180,000 per year ("Base Salary"),
less normal withholdings, payable in equal monthly or more frequent installments
as are customary under the Company's payroll practices from time to time. The
Compensation Committee of the Board of Directors of the Company shall review
Executive's Base Salary annually and in its sole discretion, subject to approval
of the Board of Directors of the Company, may increase Executive's Base Salary
from year to year. The annual review of Executive's salary by the Board will
consider, among other things, Executive's own performance and the Company's
performance.
(d) Incentive, Savings and Retirement Plans. During the Employment
Period, Executive shall be entitled to participate in all incentive, savings and
retirement plans (including without limitation, the Company's 401(k) plan),
practices, policies and programs applicable generally to peer executives of the
Company and its affiliated companies ("Peer Executives"), and on the same basis
as such Peer Executives.
(e) Stock Options. On the Effective Date, Executive shall be granted
under the Company's Employee Stock Option Plan options to acquire 6,000 shares
of the Company's common stock (the "Options"), which Options will have a
per-share exercise price equal to the fair market value of Company common stock
on the date of grant and terms and conditions that are no less favorable than
those applicable to grants made to Peer Executives.
(f) Welfare Benefit Plans. During the Employment Period, Executive
and Executive's family shall be eligible for participation in and shall receive
all benefits under welfare benefit plans, practices, policies and programs
provided by the Company and its
-2-
3
affiliated companies (including, without limitation, medical, disability,
employee life, group life, and accidental death insurance plans and programs) to
the extent applicable generally to Peer Executives. Without limiting the
foregoing, during each of the two years of the Employment Period, the Company
shall pay up to $20,000 per year of the cost of premiums for that certain
split-dollar life insurance policy, if any, referred to in the Prior Employment
Agreement (the "Split-Dollar Insurance Premium Commitment").
(g) Expenses. During the Employment Period, Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
Executive in accordance with the policies, practices and procedures of the
Company and its affiliated companies to the extent applicable generally to Peer
Executives.
(h) Fringe Benefits. During the Employment Period, Executive shall be
entitled to fringe benefits in accordance with the plans, practices, programs
and policies of the Company and its affiliated companies in effect for Peer
Executives. Without limiting the foregoing, during the Employment Period, the
Company shall pay up to $350 per month for membership dues at a country club of
Executive's choosing.
6. Termination of Employment.
(a) Death, Retirement or Disability. Executive's employment shall
terminate automatically upon Executive's death or Retirement during the
Employment Period. For purposes of this Agreement, "Retirement" shall mean
normal retirement as defined in the Company's then-current retirement plan, or
there is no such retirement plan, "Retirement" shall mean voluntary termination
after age 65 with at least ten years of service. If the Company determines in
good faith that the Disability of Executive has occurred during the Employment
Period (pursuant to the definition of Disability set forth below), it may give
to Executive written notice in accordance with Section 14(f) of this Agreement
of its intention to terminate Executive's employment. In such event, Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such written notice by Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, Executive shall not have
returned to full-time performance of Executive's duties. For purposes of this
Agreement, "Disability" shall mean a mental or physical disability as determined
by the Board of Directors of the Company in accordance with standards and
procedures similar to those under the Company's employee long-term disability
plan, if any. At any time that the Company does not maintain such a long-term
disability plan, Disability shall mean the inability of Executive, as determined
by the Board, to substantially perform the essential functions of his regular
duties and responsibilities due to a medically determinable physical or mental
illness which has lasted (or can reasonably be expected to last) for a period of
six consecutive months.
(b) Termination by the Company. The Company may terminate Executive's
employment during the Employment Period with or without Cause. For purposes of
this Agreement, "Cause" shall mean:
4
(i) the willful and continued failure of Executive to perform
substantially Executive's duties with the Company (other than any such failure
resulting from incapacity due to physical or mental illness, and specifically
excluding any failure by Executive, after reasonable efforts, to meet
performance expectations), for more than thirty (30) days after a written demand
for substantial performance is delivered to Executive that specifically
identifies the manner in which Executive has not substantially performed
Executive's duties, or
(ii) the willful engaging by Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company, or
(iii) Executive engages in any misconduct involving moral
turpitude whether occurring in
the performance of his duties or otherwise.
(c) Termination by Executive. Executive's employment may be
terminated by Executive for Good Reason or no reason. For purposes of this
Agreement, "Good Reason" shall mean a material reduction by the Company in
Executive's Base Salary and benefits as in effect on the Effective Date or as
the same may be increased from time to time.
(d) Notice of Termination. Any termination by the Company for Cause,
or by Executive for Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 14(f) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 30 days after
the giving of such notice). The failure by Executive or the Company to set forth
in the Notice of Termination any fact or circumstance which contributes to a
showing of Good Reason or Cause shall not waive any right of Executive or the
Company, respectively, hereunder or preclude Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing Executive's
or the Company's rights hereunder.
(e) Date of Termination. "Date of Termination" has the following
meaning: (i) if Executive's employment is terminated by the Company or by
Executive other than by reason of death, Retirement or Disability, the Date of
Termination will be the date specified in the Notice of termination, and (ii) if
Executive's employment is terminated by reason of death, Retirement or
Disability, the Date of Termination will be the date of death or Retirement of
Executive or the Disability Effective Date, as the case may be.
-4-
5
7. Obligations of the Company upon Termination.
(a) Termination by Executive for Good Reason; Termination by the
Company Other Than for Cause, Death or Disability. If, during the Employment
Period, the Company shall terminate Executive's employment other than for Cause,
death or Disability, or Executive shall terminate employment for Good Reason,
then in consideration of Executive's services rendered prior to such termination
and as reasonable compensation for his compliance with the Restrictive Covenants
in Section 12 hereof:
(i) the Company shall pay to Executive the aggregate of the
following amounts:
A. the sum of (1) Executive's Base Salary through the Date
of Termination to the extent not theretofore paid, (2) the product of
(x) Executive's target annual bonus that would have been payable with
respect to the fiscal year in which the Date of Termination occurs, and
(y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination (or in the case of
1998, the number of days between the Effective Date and the Date of
Termination), and the denominator of which is 365, (3) any compensation
previously deferred by Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the
extent not theretofore paid and (4) any other payment or obligation due
from the Company to Executive and not yet paid (the sum of the amounts
described in clauses (1), (2), (3) and (4) shall be hereinafter
referred to as the "Accrued Obligations"); and
B. the Retention Bonus, to the extent not theretofore
paid; and
(ii) The Company shall continue to pay to Executive his
Base Salary (subject to withholding of all applicable taxes) for the
remainder of the Employment Period then in effect (without regard to
the termination of the Employment Period pursuant to Section 6) in the
same manner as the same was being paid as of the Date of Termination;
and
(iii) for the remainder of the Employment Period then in effect
(without regard to the termination of the Employment Period pursuant to
Section 6), or such longer period as may be provided by the terms of
the appropriate plan, program, practice or policy, the Company shall
continue benefits to Executive and/or Executive's family in accordance
with the plans, programs, practices and policies described in Section
5(f) of this Agreement if Executive's employment had not been
terminated; and
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to Executive any other amounts or
benefits required to be paid or provided or which Executive is eligible
to receive under any plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies (such other
amounts and benefits shall be hereinafter referred to as the "Other
Benefits").
-5-
6
(b) Death. If Executive's employment is terminated by reason
of Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to Executive's legal representatives under
this Agreement, other than for payment of Accrued Obligations, the Retention
Bonus (to the extent not theretofore paid), and the timely payment or provision
of Other Benefits. The term Other Benefits as utilized in this Section 7(b)
shall include, without limitation, and Executive's estate and/or beneficiaries
shall be entitled to receive, any death benefits applicable to Executive at the
date of his death, regardless of when payable.
(c) Disability. If Executive's employment is terminated by
reason of Executive's Disability during the Employment Period, this Agreement
shall terminate without further obligations to Executive, other than for payment
of Accrued Obligations, the Retention Bonus (to the extent not theretofore
paid), and the timely payment or provision of Other Benefits. The term Other
Benefits as utilized in this Section 7(c) shall include, without limitation, and
Executive's estate and/or beneficiaries shall be entitled to receive, any
disability benefits applicable to Executive at the Date of Termination,
regardless of when payable.
(d) Retirement. If Executive's employment is terminated by
reason of Executive's Retirement during the Employment Period, this Agreement
shall terminate without further obligations to Executive, other than for payment
of Accrued Obligations, the Retention Bonus (to the extent not theretofore
paid), and the timely payment or provision of Other Benefits. The term Other
Benefits as utilized in this Section 7(d) shall include, without limitation, and
Executive's estate and/or beneficiaries shall be entitled to receive, any
retirement benefits applicable to Executive at the Date of Termination,
regardless of when payable.
(e) Cause or Voluntary Termination without Good Reason. If
Executive's employment shall be terminated for Cause during the Employment
Period, or if Executive voluntarily terminates employment during the Employment
Period without Good Reason, this Agreement shall terminate without further
obligations to Executive, other than for payment of Accrued Obligations (other
than the prorata bonus described in Section 7(a)(i)(A)(2)) and the timely
payment or provision of Other Benefits.
8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which Executive may qualify, nor, subject to Section 14(d), shall
anything herein limit or otherwise affect such rights as Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
-6-
7
9. Limitation of Benefits.
(a) Notwithstanding anything in this Agreement to the contrary,
in the event it shall be determined that any benefit, payment or distribution by
the Company to or for the benefit of Executive (whether payable or distributable
pursuant to the terms of this Agreement or otherwise) (such benefits, payments
or distributions are hereinafter referred to as "Payments") would, if paid, be
subject to the excise tax (the "Excise Tax") imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), then the aggregate
present value of the Payments shall be reduced (but not below zero) to an amount
expressed in present value that maximizes the aggregate present value of the
Payments without causing the Payments or any part thereof to be subject to the
Excise Tax and therefore nondeductible by the Company because of Section 280G of
the Code (the "Reduced Amount"). For purposes of this Section 9, present value
shall be determined in accordance with Section 280G(d)(4) of the Code. In the
event, after the exhaustion of all remedies, it is necessary to reduce the
Payments, the difference between the Payments and the Reduced Amount shall be
treated for all purposes as a loan to Executive, which Executive shall repay to
the Company together with interest at the applicable Federal rate provided for
in Section 7872(f)(2) of the Code.
(b) All determinations required to be made under this Section 9,
including whether an Excise Tax would otherwise be imposed, whether the Payments
shall be reduced, the amount of the Reduced Amount, and the assumptions to be
utilized in arriving at such determinations, shall be made by the Company's
regular independent accounting firm at the expense of the Company or, at the
election and expense of Executive, another nationally recognized independent
accounting firm (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and Executive within 15 business days of the
receipt of notice from Executive that a Payment is due to be made, or such
earlier time as is requested by the Company. Any determination by the Accounting
Firm shall be binding upon the Company and Executive. As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Payments hereunder will have been unnecessarily limited by this Section 9
("Underpayment"), consistent with the calculations required to be made
hereunder. The Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of Executive together with interest at the
applicable Federal rate provided for in Section 7872(f)(2) of the Code.
10. Costs of Enforcement. Each party to the Agreement shall pay its own
costs and expenses in any contest of the validity or enforceability of, or
liability under, any provision of this Agreement (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement).
-7-
8
11. Representations and Warranties. Executive hereby represents and
warrants to the Company that Executive is not a party to, or otherwise subject
to, any covenant not to compete (other than as contained herein) with any person
or entity, and Executive's execution of this Agreement and performance of his
obligations hereunder will not violate the terms or conditions of any contract
or obligation, written or oral, between Executive and any other person or
entity.
12. Restrictions on Conduct of Executive.
(a) General. Executive and the Company understand and agree that
the purpose of the provisions of this Section 12 is to protect legitimate
business interests of the Company, as more fully described below, and is not
intended to eliminate Executive's post-employment competition with the Company
per se, nor is it intended to impair or infringe upon Executive's right to work,
earn a living, or acquire and possess property from the fruits of his labor.
Executive hereby acknowledges that the post-employment restrictions set forth in
this Section 12 are reasonable and that they do not, and will not, unduly impair
his ability to earn a living after the termination of this Agreement. Therefore,
subject to the limitations of reasonableness imposed by law upon the
restrictions set forth herein by the time and geographical area described below,
Executive shall be subject to the restrictions set forth in this Section 12.
(b) Definitions. The following capitalized terms used in this
Section 12 shall have the meanings assigned to them below, which definitions
shall apply to both the singular and the plural forms of such terms:
"Competitive Position" means any employment with a Competitor in
which Executive will use or is likely to use any Confidential Information or
Trade Secrets, or in which Executive has duties for such Competitor that relate
to Competitive Services and that are the same or similar to those services
actually performed by Executive for the Company;
"Competitive Services" means the merchandising, manufacturing,
distribution, selling or marketing of men's, women's, boys' or girls' sportswear
(tops and bottoms), each of which activities is engaged in by the Company and
its subsidiaries on the date of this Agreement.
"Competitor" means any Person engaged, wholly or in part, in
Competitive Services.
"Confidential Information" means all information regarding the
Company, its activities, business or clients that is the subject of reasonable
efforts by the Company to maintain its confidentiality and that is not generally
disclosed by practice or authority to persons not employed by the Company, but
that does not rise to the level of a Trade Secret. "Confidential Information"
shall include, but is not limited to, sales and marketing techniques and plans,
lists of contact data, technical data relating to the
-8-
9
Company's products or production techniques, purchase and supply information,
details of client or consultant contracts, current and anticipated customer
requirements, pricing policies, client billing information, price lists, market
studies, business plans, operational methods, marketing plans or strategies,
product development techniques or plans, financial plans and data concerning the
Company, and management planning information). "Confidential Information" shall
not include information that has become generally available to the public by the
act of one who has the right to disclose such information without violating any
right or privilege of the Company. This definition shall not limit any
definition of "confidential information" or any equivalent term under state or
federal law.
"Determination Date" means the date of termination of
Executive's employment with the Company for any reason whatsoever or any earlier
date (during the Employment Period) of an alleged breach of the Restrictive
Covenants by Executive.
"Person" means any individual or any corporation, partnership,
joint venture, limited liability company, association or other entity or
enterprise.
"Principal or Representative" means a principal, owner, partner,
shareholder, joint venturer, investor, member, trustee, director, officer,
manager, employee, agent, representative or consultant.
"Protected Customers" means any Person to whom the Company has
sold its products or services or solicited to sell its products or services
during the twelve (12) months prior to the Determination Date.
"Protected Employees" means employees of the Company who were
employed by the Company at any time within six (6) months prior to the
Determination Date.
"Protected Suppliers" means any person from whom the Company has
purchased products or services or solicited to purchase products or services
during the twelve (12) months prior to the Determination Date.
"Restricted Period" means the Period of Employment and a period
extending two (2) years from the termination of Executive's employment with the
Company for any reason whatsoever.
"Restricted Territory" means the United States and North,
Central and South America, the United Kingdom, Western Europe, Australia, New
Zealand, and Fiji. The Company and Executive acknowledge and agree that the
Company and its subsidiaries do business and sell men's, women's, boys' and
girls' sportswear (tops and bottoms) in all 50 states of the United States and
in each other country in the Restricted Territory.
-9-
10
"Restrictive Covenants" means the restrictive covenants
contained in Section 12(c) hereof.
"Trade Secret" means all information regarding the Company,
without regard to form, including, but not limited to, technical or nontechnical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing, a process, financial data, financial plans, product plans,
distribution lists or a list of actual or potential customers, advertisers or
suppliers which is not commonly known by or available to the public and which
information: (A) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use; and (B)
is the subject of efforts that are reasonable under the circumstances to
maintain its secrecy. Without limiting the foregoing, Trade Secret means any
item of Confidential Information that constitutes a "trade secret(s)" under the
common law or statutory law of the State of Texas.
(c) Restrictive Covenants.
(i) Restriction on Disclosure and Use of Confidential
Information and Trade Secrets. Executive understands and agrees that the
Confidential Information and Trade Secrets constitute valuable assets of the
Company and its affiliated entities, and may not be converted to Executive's own
use. Accordingly, Executive hereby agrees that Executive shall not, directly or
indirectly, at any time during the Restricted Period reveal, divulge, or
disclose to any Person not expressly authorized by the Company any Confidential
Information, and Executive shall not, directly or indirectly, at any time during
the Restricted Period use or make use of any Confidential Information in
connection with any business activity other than that of the Company. Throughout
the term of this Agreement and at all times after the date that this Agreement
terminates for any reason, Executive shall not directly or indirectly transmit
or disclose any Trade Secret of the Company to any Person, and shall not make
use of any such Trade Secret, directly or indirectly, for himself or for others,
without the prior written consent of the Company. The parties acknowledge and
agree that this Agreement is not intended to, and does not, alter either the
Company's rights or Executive's obligations under any state or federal statutory
or common law regarding trade secrets and unfair trade practices.
Anything herein to the contrary notwithstanding, Executive shall not be
restricted from disclosing or using Confidential Information that is required to
be disclosed by law, court order or other legal process; provided, however, that
in the event disclosure is required by law, Executive shall provide the Company
with prompt notice of such requirement so that the Company may seek an
appropriate protective order prior to any such required disclosure by Executive.
(ii) Nonsolicitation of Protected Employees. Executive
understands and agrees that the relationship between the Company and each of its
Protected Employees constitutes a valuable asset of the Company and may not be
converted to
-10-
11
Executive's own use. Accordingly, Executive hereby agrees that
during the Restricted Period Executive shall not directly or indirectly on
Executive's own behalf or as a Principal or Representative of any Person or
otherwise solicit or induce any Protected Employee to terminate his or her
employment relationship with the Company or to enter into employment with any
other Person.
(iii) Restriction on Relationships with Protected
Customers and Protected Suppliers. Executive understands and agrees that the
relationship between the Company and each of its Protected Customers and between
the Company and each of its Protected Suppliers constitutes valuable assets of
the Company and may not be converted to Executive's own use. Accordingly,
Executive hereby agrees that, during (i) the period of time that Executive
receives compensation from the Company in the event Executive's employment is
terminated by the Company other than for Cause, death or Disability or by
Executive for Good Reason or (ii) a period of seven (7) weeks in the event that
Executive's employment is terminated by the Company for Cause or by Executive
without Good Reason, Executive shall not, without the prior written consent of
the Company, directly or indirectly, on Executive's own behalf or as a Principal
or Representative of any Person, solicit, divert, take away or attempt to
solicit, divert or take away (i) a Protected Customer for the purpose of
providing or selling Competitive Services or (ii) a Protected Supplier for the
purpose of acquiring or purchasing goods or services in connection with
providing or selling Competitive Services; provided, however, that the
prohibition of this covenant shall apply only to Protected Customers and
Protected Suppliers with whom Executive had Material Contact on the Company's
behalf during the twelve (12) months immediately preceding the termination of
his employment hereunder. For purposes of this Agreement, Executive had
"Material Contact" with a Protected Customer or a Protected Customer if (a) he
had business dealings with the Protected Customer or Protected Customer, as the
case may be, on the Company's behalf; (b) he was responsible for supervising or
coordinating the dealings between the Company and the Protected Customer or
Protected Customer, as the case may be; or (c) he obtained Trade Secrets or
Confidential Information about the Protected Customer, as the case may be, as a
result of his association with the Company.
(iv) Noncompetition with the Company. The parties
acknowledge: (A) that Executive's services under this Agreement require special
expertise and talent in the provision of Competitive Services and that Executive
will have substantial contacts with customers, suppliers, advertisers and
vendors of the Company; (B) that pursuant to this Agreement, Executive will be
placed in a position of trust and responsibility and he will have access to a
substantial amount of Confidential Information and Trade Secrets and that the
Company is placing him in such position and giving him access to such
information in reliance upon his agreement not to compete with the Company
during (i) the period of time that Executive receives compensation from the
Company in the event Executive's employment is terminated by the Company other
than for Cause, death or Disability or by Executive for Good Reason or (ii) a
period of seven (7) weeks in the event that Executive's employment is terminated
by the Company for Cause or by Executive without Good Reason; (C) that due to
his management duties, Executive will be
-11-
12
the repository of a substantial portion of the goodwill of the Company and would
have an unfair advantage in competing with the Company; (D) that due to
Executive's special experience and talent, the loss of Executive's services to
the Company under this Agreement cannot reasonably or adequately be compensated
solely by damages in an action at law; (E) that Executive is capable of
competing with the Company; and (F) that Executive is capable of obtaining
gainful, lucrative and desirable employment that does not violate the
restrictions contained in this Agreement. In consideration of the compensation
and benefits being paid and to be paid by the Company to Executive hereunder,
Executive hereby agrees that, during (i) the period of time that Executive
receives compensation from the Company in the event Executive's employment is
terminated by the Company other than for Cause, death or Disability or by
Executive for Good Reason or (ii) a period of seven (7) weeks in the event that
Executive's employment is terminated by the Company for Cause or by Executive
without Good Reason, Executive will not, without prior written consent of the
Company, directly or indirectly seek or obtain a Competitive Position in the
Restricted Territory with a Competitor; provided, however, that the provisions
of this Agreement shall not be deemed to prohibit the ownership by Executive of
any securities of the Company or its affiliated entities or not more than five
percent (5%) of any class of securities of any corporation having a class of
securities registered pursuant to the Securities Exchange Act of 1934, as
amended.
(d) Enforcement of Restrictive Covenants.
(i) Rights and Remedies Upon Breach. In the event
Executive breaches, or threatens to commit a breach of, any of the provisions of
the Restrictive Covenants, the Company shall have the following rights and
remedies, which shall be independent of any others and severally enforceable,
and shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company at law or in equity:
(A) the right and remedy to enjoin, preliminarily
and permanently, Executive from violating or threatening to violate the
Restrictive Covenants and to have the Restrictive Covenants specifically
enforced by any court of competent jurisdiction, it being agreed that any breach
or threatened breach of the Restrictive Covenants would cause irreparable injury
to the Company and that money damages would not provide an adequate remedy to
the Company; and
(B) the right and remedy to require Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by Executive as the
result of any transactions constituting a breach of the Restrictive Covenants.
(ii) Severability of Covenants. Executive acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in time and
scope and in all other respects. The covenants set forth in this Agreement shall
be considered and construed as separate and independent covenants. Should any
part or provision of any covenant be held invalid, void or unenforceable in any
court of competent jurisdiction, such invalidity,
-12-
13
voidness or unenforceability shall not render invalid, void or unenforceable any
other part or provision of this Agreement. If any portion of the foregoing
provisions is found to be invalid or unenforceable by a court of competent
jurisdiction because its duration, the territory, the definition of activities
or the definition of information covered is considered to be invalid or
unreasonable in scope, the invalid or unreasonable term shall be redefined, or a
new enforceable term provided, such that the intent of the Company and Executive
in agreeing to the provisions of this Agreement will not be impaired and the
provision in question shall be enforceable to the fullest extent of the
applicable laws.
13. Assignment and Successors.
(a) Executive. This Agreement is personal to Executive and
without the prior written consent of the Company shall not be assignable by
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive's legal
representatives.
(b) The Company. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The Company will
require any successor to all or substantially all of the business and/or assets
of the Company (whether direct or indirect, by purchase, merger, consolidation
or otherwise) to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to perform
it if no such succession had taken place. As used in this Agreement, "the
Company" shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law or otherwise.
14. Miscellaneous.
(a) Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
(b) Severability. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
(c) Other Agents. Nothing in this Agreement is to be
interpreted as limiting the Company from employing other personnel on such terms
and conditions as may be satisfactory to it.
-13-
14
(d) Entire Agreement. Except as provided herein, this
Agreement contains the entire agreement between the Company and Executive with
respect to the subject matter hereof, and it supersedes and invalidates any
previous agreements or contracts between them which relate to the subject matter
hereof, including without limitation the Prior Employment Agreement. No
representations, inducements, promises or agreements, oral or otherwise, which
are not embodied herein shall be of any force or effect.
(e) Governing Law. Except to the extent preempted by federal
law, and without regard to conflict of laws principles, the laws of the State of
Texas shall govern this Agreement in all respects, whether as to its validity,
construction, capacity, performance or otherwise.
(f) Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given if delivered or three days after mailing if
mailed, first class, certified mail, postage prepaid:
To Company: Farah Incorporated
Attention: Xxxxxxx X. Xxxxxxx
Tropical Sportswear Int'l Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000-0000
Facsimile No. (000) 000-0000
To Executive: Xxxx X. Xxxxxxxxx
000 Xxxxx Xxxxxxxx, Xx. 000
Xx Xxxx, Xxxxx 00000
Any party may change the address to which notices, requests, demands and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
(g) Amendments and Modifications. This Agreement may be
amended or modified only by a writing signed by both parties hereto, which makes
specific reference to this Agreement.
[Remainder of Page Intentionally Left Blank]
-14-
15
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Employment Agreement as of the date first above written.
FARAH INCORPORATED
By: /s/ Xxxxxxx Xxxxx
--------------------------------
Xxxxxxx Xxxxx
Chief Financial Officer
EXECUTIVE:
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------
Xxxx X. Xxxxxxxxx
-15-
