Exhibit 10.14
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Second Amended and Restated Employment Agreement ("Agreement"),
dated as of August 6, 1999, is by and between St. Xxxx Knits, Inc., a California
corporation ("Company"), and Xxxxxx X. Xxxx, an individual ("Executive"), and
amends and restates the terms of that certain Amended and Restated Employment
Agreement, dated as of July 13, 1998, between the Company and Executive (the
"1998 Agreement"). In consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as follows.
ARTICLE I
EMPLOYMENT
The Company hereby employs Executive and Executive accepts employment
with the Company upon the terms and conditions herein set forth.
1.1 EMPLOYMENT. The Company hereby employs Executive, and Executive
agrees to serve as the Company's Chairman of the Board and Chief Executive
Officer during the term of this Agreement, and as such shall assume, subject to
the powers of the Company's Board of Directors, general and active supervision
and management over the business of the Company and over its several officers,
assistants, agents and employees. Executive agrees to devote substantially his
full business time and attention and best efforts to the affairs of the Company
during the term of this Agreement.
1.2 TERM. The Employment of Executive by the Company under the terms
and conditions of this Agreement commenced on June 1, 1995 and will continue for
a period of five (5) years unless renewed or terminated sooner in accordance
with the provisions hereof.
1.3 TERMINATION OF PRIOR AGREEMENT. As of the date of this Agreement,
the 1998 Agreement shall terminate and shall be of no further force or effect.
ARTICLE II
COMPENSATION
2.1 ANNUAL SALARY. During the employment of Executive, the Company
shall pay to Executive a base salary at the annual rate of $1,475,000 (the "Base
Salary"). The Base Salary shall be payable in substantially equal monthly
installments.
2.2 NO DEFERRED COMPENSATION. Under the 1998 Agreement, the Company had
deposited on the first day of each month $41,667 of deferred compensation
payable to the Executive into an irrevocable "rabbi" trust (the "Trust"). On or
about August 6, 1999, the Trust's assets, including the Company's contributions
and any earnings thereon, were distributed to the Employee. From and after such
date, no portion of the annual compensation payable to the Employee hereunder
will be deferred.
2.3 REIMBURSEMENT OF EXPENSES. Executive shall be entitled to receive
prompt reimbursement of all reasonable expenses incurred by Executive in
performing services hereunder, including all expenses of travel, entertainment
and living expenses while away form
home on business at the request of, or in the service of, the Company, provided
that such expenses are incurred and accounted for in accordance with the
policies and procedures established by the Company.
2.4 AUTOMOBILE ALLOWANCE. The Company shall pay directly, or reimburse
Executive for, all reasonable costs and expenses incurred by Executive in
connection with the operation and maintenance of an automobile (i.e. car
insurance, car license and general upkeep).
2.5 BENEFITS. Executive shall be entitled to participate in and be
covered by all health, insurance, pension and other employee plans and benefits
currently established for the employees of the Company (collectively referred to
as the "Company Benefit Plans") on at least the same terms as other employees of
the Company, subject to meeting applicable eligibility requirements.
2.6 VACATIONS AND HOLIDAYS. During Executive's employment with the
Company, Executive shall be entitled to an annual vacation leave of six (6)
weeks at full pay, or such greater vacation benefits as may be provided for by
the Company's vacation policies applicable to senior executives. Executive shall
be entitled to such holidays as are established by the Company for all
employees.
2.7 SECRETARIAL SERVICES AND OFFICE. During the period from June 1,
1995 through May 31, 2002, the Company shall provide Executive with his existing
office space at 00000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxx, or, if the lease for
such office space terminates and is not renewed, with equivalent office space
acceptable to Executive. In addition, during the period from June 1, 1995
through May 31, 2002, the Company shall also provide Executive with the
full-time executive secretarial services of Xxxxxxxx Xxxxxxxxxx, or such other
individual as Executive shall approve in his sole discretion.
2.8 AIRCRAFT. During Executive's employment with the Company, Executive
shall be entitled to use the Company's leased aircraft as he shall reasonably
determine is necessary in fulfilling his duties hereunder. In addition,
Executive shall be entitled to charter the aircraft for his personal use, but
shall reimburse the Company for the actual cost of such charter.
ARTICLE III
CONFIDENTIALITY AND NONDISCLOSURE
3.1 CONFIDENTIALITY. Executive will not during Executive's employment
by the Company or thereafter at any time disclose, directly or indirectly, to
any person or entity or use for Executive's own benefit any trade secrets or
confidential information relating to the Company's business operations,
marketing data, business plans, strategies, employees, negotiations and
contracts with other companies, or any other subject matter pertaining to the
business of the Company or any of its clients, customers, consultants, or
licensees, known, learned, or acquired by Executive during the period of
Executive's employment by the Company (collectively "Confidential Information"),
except as may be necessary in the ordinary course of performing Executive's
particular duties as an employee of the Company.
3.2 RETURN OF CONFIDENTIAL MATERIAL. Executive shall promptly deliver
to the Company on termination of Executive's employment with the Company,
whether or not for
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Cause and whatever the reason, or at any time the Company may so request, all
memoranda, notes, records, reports, manuals, drawings, blueprints, Confidential
Information and any other documents of a confidential nature belonging to the
Company, including all copies of such materials which Executive may then possess
or have under Executive's control. Upon termination of Executive's employment by
the Company, Executive shall not take any document, data, or other material of
any nature containing or pertaining to the proprietary information of the
Company.
3.3 Prohibition on Solicitation of Customers. During the term of
Executive's employment with the Company and for a period of one (1) year
thereafter Executive shall not, directly or indirectly, either for Executive or
for any other person or entity, solicit any person or entity to terminate such
person's or entity's contractual and/or business relationship with the Company,
nor shall Executive interfere with or disrupt or attempt to interfere with or
disrupt any such relationship. None of the foregoing shall be deemed a waiver of
any and all rights and remedies the Company may have under applicable law.
3.4 PROHIBITION ON SOLICITATION OF EMPLOYEES, AGENTS OR INDEPENDENT
CONTRACTORS AFTER TERMINATION. During the term of Executive's employment with
the Company and for a period of one (1) year following the termination of
Executive's employment with the Company, Executive will not solicit any of the
employees, agents, or independent contractors of the Company to leave the employ
of the Company for a competitive company or business. However, Executive may
solicit any employee, agent or independent contractor who voluntarily terminates
his or her employment with the Company after a period of 120 days have elapsed
since the termination date of such employee, agent or independent contractor.
None of the foregoing shall be deemed a waiver of any and all rights and
remedies the Company may have under applicable law.
3.5 RIGHT TO INJUNCTIVE AND EQUITABLE RELIEF. Executive's obligations
not to disclose or use Confidential Information and to refrain from the
solicitations described in this Article III are of a special and unique
character which gives them a peculiar value. The Company cannot be reasonably or
adequately compensated for damages in an action at law in the event Executive
breaches such obligations. Therefore, Executive expressly agrees that the
Company shall be entitled to injunctive and other equitable relief without bond
or other security in the event of such breach in addition to any other rights or
remedies which the Company may possess or be entitled to pursue. Furthermore,
the obligations of Executive and the rights and remedies of the Company under
this Article III are cumulative and in addition to, and not in lieu of, any
obligations, rights, or remedies created by applicable law relating to
misappropriation of theft of trade secrets or Confidential Information.
3.6 SURVIVAL OF OBLIGATIONS. Executive agrees that the terms of this
Article III shall survive the term of this Agreement and the termination of
Executive's employment by the Company.
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ARTICLE IV
TERMINATION
4.1 For purposes of this Article IV, the following definitions shall
apply to the terms set forth below:
(a) CAUSE. "Cause" shall include the following:
(i) personal dishonesty or willful misconduct by Executive;
(ii) a breach of Executive's fiduciary duties to the Company
which involves personal profit or benefit to Executive;
(iii) willful violation and conviction of any law, rule or
regulation (other than traffic violations or similar offenses) or of
any final cease and desist order issued by any financial institution
regulatory authority against the Company; or
(iv) a material breach of this Agreement by Executive.
(b) GOOD REASON. "Good Reason" shall mean voluntary termination as a
result of:
(i) the assignment to Executive of duties inconsistent with
the position and status of Executive as set forth in this Agreement
without Executive's prior written consent;
(ii) a substantial alteration in the nature, status or
prestige of Executive's responsibilities or a change in Executive's
title or reporting level from that set forth in this Agreement;
(iii) the relocation of the Company's executive offices or
principal business location to a point more than fifty (50) miles from
the location of such offices or businesses as of the date of this
Agreement;
(iv) a reduction by the Company of Executive's Base Salary;
(v) a failure by the Company to obtain from any successor,
before the succession takes place, an agreement to assume and perform
this Agreement; or
(vi) an occurrence of a Change of Control Event. A "Change of
Control Event" shall mean and shall be deemed to have taken place if
any person or entity or group of affiliated persons or entities,
including a group which is deemed a "person" by Section 13(d)(3) of the
Securities Exchange Act of 1934, after the effective date of this
Agreement, acquires in one or more transactions ownership of 25% or
more of the outstanding shares of equity entitled to vote in the
election of directors of the Company without first receiving the
approval of the Company's then existing Board of Directors. As used
herein, "Ownership" means beneficial or record ownership, directly or
indirectly, other than (a) by a person owning such shares merely of
record (such as a
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member of a securities exchange, a nominee, or a securities depository
system, (b) by a person as a bona fide pledgee of shares prior to a
default and determination to exercise powers as an owner of the shares,
or (c) by a person who is not required to file statements on Schedule
13D by virtue of Rule 13d-1(b) of the Securities and Exchange
Commission under the Securities Exchange Act of 1934. Without
limitation, the right to acquire beneficial or record ownership shall
not of itself constitute ownership of shares.
(c) DISABILITY. "Disability" shall mean a physical or mental incapacity
as a result of which Executive becomes unable to continue the proper performance
of his duties hereunder (reasonable absences because of sickness for up to two
(2) consecutive months excepted; provided, however, that any new period of
incapacity or absences shall be deemed to be part of a prior period of
incapacity or absences if the prior period terminated within ninety (90) days of
the beginning of the new period of incapacity or absence and the incapacity or
absence is determined by the Company's Board of Directors, in good faith, to be
related to the prior incapacity or absence.) A determination of Disability shall
be subject to the certification of a qualified medical doctor agreed to by the
Company and Executive or in the event of Executive's incapacity to designate a
doctor, Executive's legal representative. In the absence of agreement between
the Company and Executive, each party shall nominate a qualified medical doctor
and the two (2) doctors so nominated shall select a third doctor, who shall make
the determination as to Disability.
4.2 TERMINATION BY COMPANY. The Company may terminate Executive's
employment hereunder immediately for Cause. Subject to the other provisions
contained in this Agreement, the Company may terminate this Agreement for any
reason other than Cause upon thirty (30) days' written notice to Executive. The
effective date of termination ("Effective Date") shall be considered to be
thirty (30) days subsequent to written notice of termination; however, the
Company may elect to have Executive leave the Company immediately.
4.3 TERMINATION BY EXECUTIVE. Executive may terminate his employment
hereunder upon thirty (30) days' written notice to the Company. The effective
date of termination ("Effective Date") shall be considered to be thirty (30)
days subsequent to written notice of termination; however, the Company may elect
to have Executive leave the Company immediately.
4.4 DEATH OR DISABILITY OF EXECUTIVE. Executive's employment hereunder
shall terminate immediately upon the death or Disability of Executive.
4.5 SEVERANCE BENEFITS RECEIVED UPON TERMINATION.
(a) If Executive's employment is terminated by the Company for Cause,
or Executive terminates this Agreement pursuant to Section 4.3 other than for
Good Reason, then the Company shall pay Executive his Base Salary through the
Effective Date of such termination plus credit for any vacation earned but not
taken. The Company shall thereafter have no further obligations to Executive
under this Agreement.
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(b) If Executive's employment is terminated by the Company without
Cause, or Executive terminates this Agreement for Good Reason, then the Company
shall provide Executive:
(i) a lump sum payment within thirty (30) days of the
Effective Date equal to Executive's then Base Salary through May 31,
2000; and
(ii) health insurance coverage as then in effect for
Executive, his spouse and dependent children for a period of eighteen
(18) months, subject to any employee contribution provisions as defined
in the Company Benefit Plans. Subsequent health insurance benefits will
be in accordance with COBRA.
(c) If Executive's employment is terminated by the Company as a result
of Disability, then the Company shall provide Executive:
(i) salary continuation in an amount equal to Executive's then
Base Salary for a period of eighteen (18) months, said sum to be paid
monthly in equal installments at the times salary payments are usually
made; and
(ii) health insurance coverage as then in effect for
Executive, his spouse and dependent children for a period of one month
for each full year Executive has been employed by the Company up to a
maximum of eighteen (18) months, subject to any employee contribution
provisions as defined in the Company Benefit Plans. Subsequent health
insurance benefits will be in accordance with COBRA.
(d) If Executive's employment is terminated by the Company as a result
of death, then the Company shall provide Executive's spouse or estate health
insurance coverage as then in effect for Executive, his spouse and dependent
children for a period of six (6) months, subject to any employee contribution
provisions as defined in the Company Benefit Plans. Health insurance benefits
subsequent to the salary continuation period will be in accordance with COBRA.
(e) In the event Executive's employment is terminated for Good Reason
pursuant to either Sections 4.1(b)(v) or 4.1(b)(vi), then in addition to those
payments required by Section 4.5(b) above, the Company shall also provide to
Executive a lump sum payment within thirty (30) days of the Effective Date equal
to twice Executive's Base Salary, or $1,950,000.
(f) This Section 4.5(f) is intended to put Executive in the same
economic position as Executive would have had no Section 4999 Taxes and Expenses
(as defined below) been imposed upon or incurred as a result of any payment,
distribution, benefit or transfer (each a "Payment" and collectively the
"Payments") made pursuant to the terms of this Agreement or otherwise. In the
event it is determined that any Payments to or for the benefit of Executive is
or was subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, any successor provision, or any comparable provision
of state or local income tax law, or any interest, penalties, additions to tax,
or costs are or were incurred by Executive with respect to any such excise taxes
(such taxes, penalties, interest, additions to tax and costs (including
professional fees) are hereinafter referred to as "Section 4999 Taxes and
Expenses"), then within ten (10) days after such determination, the Company
shall pay to Executive an additional cash
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payment, which after payment of or withholding for any taxes (including, without
limitation, any excise and income taxes), interest, penalties, additions to tax
or costs imposed or incurred with respect to such additional cash payment, is
equal to the Section 4999 Taxes and Expenses. The determination that a Payment
is subject to Section 4999 Taxes and Expenses shall be made in writing by a
certified public accounting firm selected by Executive.
ARTICLE V
GENERAL PROVISIONS
5.1 NOTICE. For purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, as follows:
If to the Company: St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: President
With a copy to: Xxxxx X. Xxxxxxx, Esq.
O'Melveny & Xxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000
If to Executive: Xxxxxx X. Xxxx
c/o St. Xxxx Knits, Inc.
00000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
With a copy to: Xxxx X. Xxxx, Esq.
Xxxxxx & XxXxxxx
00000 XxxXxxxxx Xxxx.
Xxxxx 0000
Xxxxxx, XX 00000
or such other address as either party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.
5.2 NO WAIVERS. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by Executive and the Company. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
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5.3 BENEFICIAL INTERESTS. This Agreement shall inure to the benefit of
and be enforceable by Executive's personal and legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If
Executive should die while any amounts are still payable to him hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to Executive's devisee, legatee, or other designee
or, if there be no such designee, to Executive's estate.
5.4 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
5.5 SEVERABILITY OR PARTIAL INVALIDITY. The invalidity or
unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
5.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
5.7 LEGAL FEES AND EXPENSES. Should any party institute any action or
proceeding to enforce this Agreement or any provision hereof, or for damages by
reason of any alleged breach of this Agreement or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in any such action
or proceeding shall be entitled to receive from the other party all costs and
expenses, including reasonable attorneys' fees, incurred by the prevailing party
in connection with such action or proceeding.
5.8 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
of the parties and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings, and negotiations between the parties with
respect to the subject matter hereof. This Agreement is intended by the parties
as the final expression of their agreement with respect to such terms as are
included in this Agreement and may not be contradicted by evidence of any prior
or contemporaneous agreement. The parties further intend that this Agreement
constitutes the complete and exclusive statement of its terms and that no
extrinsic evidence may be introduced in any judicial proceeding involving this
Agreement.
5.9 ASSIGNMENT. This Agreement and the rights, duties, and obligations
hereunder may not be assigned or delegated by any party without the prior
written consent of the other party and any attempted assignment or delegation
without such prior written consent shall be void and be of no effect.
Notwithstanding the foregoing provisions of this Section 5.9, the Company may
assign or delegate its rights, duties, and obligations hereunder to any
Affiliate or to any person or entity which succeeds to all or substantially all
of the business of the Company through merger, consolidation, reorganization, or
other business combination or by acquisition of all or substantially all of the
assets of the Company.
5.10 ARBITRATION. Any controversy, dispute, claim or other matter in
question arising out of or relating to this Agreement shall be settled, at the
request of either party, by binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association ("AAA"),
and judgment upon the award rendered by the arbitrators may
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be entered in any court having jurisdiction thereof, subject to the following
terms, conditions and exceptions:
(a) Notice of the demand for arbitration shall be filed in writing with
the other party and with the AAA. There shall be a panel of three (3)
arbitrators whose selection shall be made in accordance with the procedures then
existing for the selection of such arbitrators by the AAA.
(b) Reasonable discovery shall be allowed in arbitration.
(c) Except as otherwise provided in Section 5.7 hereof, the costs and
fees of the arbitration shall be allocated by the arbitrators.
[Signature page follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"Company"
St. Xxxx Knits, Inc.,
a California corporation
By:
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Xxxxx Xxxxxxx
Chief Financial Officer
"Executive"
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Xxx Xxxx
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