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EXHIBIT 10.5
EMPLOYMENT AGREEMENT
AGREEMENT dated as of the 29th day of August 1997 by and between
ME ACQUISITION CORP., a Delaware corporation (the "Company"), and Xxxxxx
Xxxxxxxx (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) simultaneously herewith are entering into
an Agreement of Purchase and Sale dated as of August 29, 1997 (the "Purchase
Agreement"), providing, inter alia, for the purchase by the Company of
substantially all of the assets of Miss Xxxxx, Inc., a Delaware corporation
("Miss Xxxxx"); and
WHEREAS, the Employee desires to continue in the employ of the
Company subsequent to the consummation of the transactions contemplated by the
Purchase Agreement; and
WHEREAS, in order to induce the Company to enter into, and to
consummate the transactions contemplated by, the Purchase Agreement, the
Employee desires to enter into this Agreement; and
WHEREAS, the Company desires to secure the employment of the
Employee with the Company subsequent to the consummation of the transactions
contemplated by the Purchase Agreement, and to enter into this Agreement.
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 Closing Date (as defined in the Purchase
Agreement) and, unless sooner terminated in accordance with this Agreement,
shall expire (a) if the Company does not attain EBITDA (as defined in the
Executive Bonus Plan, as defined in Section 3.2 below, except that EBITDA for
purposes of this Section 1.2 shall be determined after reduction for the Bonus
Pool (as defined in the Executive Bonus Plan) for the applicable fiscal year)
averaged for the fiscal years ending October 31, 1998 and November 6, 1999 of
$5,500,000 or more (the "EBITDA 2-Year Target"), on such date (the "Notice
Date"), not earlier than November 6, 1999, on which the Chairman of the Board,
the President or the Chief Financial Officer of Norton delivers to the Employee
a written statement that the EBITDA 2-Year Target has not been achieved (the
Closing Date through the Notice Date, hereinafter the "Initial Term"); or (b) if
the Company attains the EBITDA 2- Year Target, on October 31, 2001 (November 7,
1999 through October 31, 2001, hereinafter the "Extended Term").
2. Positions, Duties. The Employee shall serve in the position of
President and Chief Operating Officer of the Company. As such, subject to the
ultimate control of the Chairman of the Board of the Company, the Vice Chairman
of the Board of the Company, and the Board of Directors of the Company, the
Employee, together with the Chief Executive Officer of the Company, shall have
day-to-day management control over the Company's business and operations,
including without limitation, sales practices, price of merchandise, inventory
matters, xxxx-down allowances, customer discounts, and the hiring, firing and
compensation (including levels of participation by employees of the Company in
any profit sharing plan established by the Company) of other employees of the
Company, all with authority and discretion consistent with past practices of
Miss Xxxxx. The Employee shall perform, faithfully and
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diligently, such duties, and, subject to the prior sentence, shall have such
other responsibilities, appropriate to said position, as shall be assigned to
him from time to time by the Chairman, the Vice Chairman or the Board of
Directors of the Company. The Employee shall report to the Chairman and the Vice
Chairman of the Company. 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 Norton.
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 salary at a rate of $425,000 per annum, payable in
accordance with the standard payroll practices of the Company. If the Company
attains EBITDA for any full fiscal year ending during the Term of $6,000,000 or
more (the "EBITDA Target"), the salary beginning on the first day of the
immediately succeeding fiscal year during the Term, if any, shall be increased
to $460,000 per annum, and if the Company attains an average EBITDA for any two
consecutive full fiscal years ending during the Term of $6,000,000 or more, the
salary beginning on the first day of the immediately succeeding fiscal year
during the Term, if any, shall be increased to $500,000 per annum.
3.2 Bonus. During the Term, in addition to the salary provided for
in Section 3.1, (i) the Employee shall be eligible to participate in the ME
Acquisition Corp. Bonus Plan for Senior Executives (the "Executive Bonus Plan"),
a copy of which is attached hereto as Exhibit A and the terms of which are
incorporated herein by reference, (ii) the Employee shall be allocated a
percentage of the Bonus Pool (as defined in the Executive Bonus Plan), which
percentage shall be not less than 33.335% of the Bonus Pool, subject to the
terms and conditions of the Executive Bonus Plan and this Agreement; provided,
however, that the Employee may, upon written notice to the Company, elect to
transfer all or a portion of his allocation of the Bonus Pool to the other
participants in the Executive Bonus Plan, and the Company agrees to pay such
transferred allocation to the other participants in the Executive Bonus Plan in
accordance with the written direction of the Employee and otherwise in
accordance with terms and conditions of the Executive Bonus Plan, and (iii)
either (a) the Employee shall receive a cash bonus in an amount which, net of
taxes payable by the Employee in respect of such amount, shall be equal to the
amount which would have been contributed on behalf of the Employee with respect
to the Miss Xxxxx, Inc. Profit Sharing Plan (the "Miss Xxxxx Plan"), as in
effect on the date hereof and as administered in accordance with the past
practices of Miss Xxxxx, which cash bonus shall be payable within 120 days
following the close of each full fiscal year of the Company ending during the
Term or (b) the Employee shall be eligible to participate in a tax-advantaged
profit sharing plan of the Company established on substantially similar terms
and conditions (including levels of contributions) as the Miss Xxxxx Plan. It is
understood and agreed by the parties that, during the Term, the percentage
referred to in Sections 4.1 and 4.2 of the Executive Bonus Plan shall be fifteen
percent (15%).
3.3 Stock Options.
(a) Grant. On the Closing Date, the Company shall cause to be
granted to the Employee by the Board of Directors of Norton as of the Closing
Date, options to purchase an aggregate of 50,000 shares of common stock, par
value $.01 per share (the "Common Stock"), of Norton, at an exercise price per
share equal to the fair market value of the Common Stock on the Closing Date
(the "Options"). The Options shall be fully vested and exercisable on and after
the Closing Date.
(b) Term of Options. Except as provided below, the term of the
Options shall be ten years.
(I) If the Employee's employment with the Company terminates
pursuant to Section 6.1, is terminated by the Company or the Employee pursuant
to Section 6.2, is terminated by the Company pursuant to Section 6.4, is
terminated by the Employee pursuant to Section 6.6, or terminates for any other
reason (except as provided in clause (ii) below) the Options may be exercised by
the Employee (or his estate or legal representative) within one year after such
termination; and
(ii) In the event of termination of the employment of the
Employee with the Company (a) by the
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Company pursuant to Section 6.3 or (b) by the Employee other than pursuant to
Sections 6.1, 6.2 or 6.6, no Options shall 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 such manner as it may deem equitable, adjust the number of shares of
Common Stock (or other securities or property) subject to the Options, the
exercise price with respect to any Options, or all of the foregoing.
(d) 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 Options.
3.4 Bonus Options. During the Term, in addition to the salary
provided for in Section 3.1, the Employee shall be eligible to receive Bonus
Options (as defined in the Executive Bonus Plan) in accordance with the terms
set forth in the Executive Bonus Plan.
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. During the Term, the Employee shall be entitled
to participate in all employee benefit plans and programs offered by Norton,
subject to the provisions of such plans and programs as in effect from time to
time.
5.2 Life Insurance. During the Term, provided that such is
available on commercially reasonable terms, the Company will provide the
Employee with $1 million term life insurance coverage. The beneficiary of such
coverage shall be the Employee's estate or other beneficiary designated by the
Employee.
5.3 Disability Insurance. During the Term, the Company shall
provide the Employee with disability insurance providing the same monthly
disability benefit as provided to the Chief Executive Officer of Norton;
notwithstanding the foregoing, the annual expenditure by the Company for
disability insurance premiums for the Employee shall not exceed the annual
expenditure by Norton for disability insurance premiums for the Chief Executive
Officer of Norton.
5.4 Medical Insurance. For the period commencing on the
termination of the Term (other than as a result of the termination of the Term
by the Company pursuant to Section 6.3 and other than as a result of the
termination of the Term by the Employee other than pursuant to Sections 6.1, 6.2
or 6.6) until the death of the Employee, the Company agrees to provide the
Employee and the Employee's wife with coverage under the medical plan of the
Company on the same terms and conditions that coverage is generally available to
employees of the Company.
5.5 Vacation. During the Term, the Employee shall be entitled to
paid vacation in accordance with Norton's policy for its executive employees.
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 (a) the salary provided for in Section 3.1 accrued to the date of the
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Employee's death and not theretofore paid to the Employee and (b) any bonus
payable in accordance with the terms of the Executive Bonus Plan. Rights and
benefits of the estate or other legal representative of the Employee (a) with
respect to the Options or the Bonus Options shall be determined in accordance
with Section 3.3(b) or the Executive Bonus Plan, as applicable and (b) 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.
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. In the event of such termination, the Company shall pay to the Employee
(a) the salary provided for in Section 3.1 accrued to the date of such
termination and not theretofore paid to the Employee and (b) any bonus payable
in accordance with the terms of the Executive Bonus Plan. Rights and benefits of
the Employee (a) with respect to the Options or the Bonus Options shall be
determined in accordance with Section 3.3(b) or the Executive Bonus Plan, as
applicable and (b) 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 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 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 and no bonus. Rights and
benefits of the Employee (a) with respect to the Options or the Bonus Options
shall be determined in accordance with Section 3.3(b) or the Executive Bonus
Plan, as applicable and (b) 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
(a) the Employee's gross negligence or willful misconduct in bad faith in the
discharge of his duties and responsibilities to Norton, the Company and any of
their respective parent, subsidiary or affiliate corporations (collectively, the
"Norton Group"), as determined by the Board of Directors of the Company, (b) the
Employee's material and repeated failure to obey appropriate directions from the
Chairman, Vice Chairman or Board of Directors of the Company, (c) any willful or
purposeful act or omission of the Employee taken or omitted in bad faith and
intended to materially injure, and which had the effect of materially injuring,
the business or business relationships of any member of the Norton Group or (d)
the Employee's conviction or other adjudication of (1) a felony or (2) any crime
or offense involving fraud; 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 Other Termination by the Company. The Company may terminate
the Employee's employment at any time during the Term for whatever reason it
deems appropriate or without reason; provided, however, that in the event that
such termination is not pursuant to Section 6.1, 6.2, 6.3 or 6.5, the Company
shall, except as provided in Section 9(c), (a) pay to the Employee the Severance
Amount (as hereinafter defined) in equal installments on a monthly basis over
the Severance Term (as hereinafter defined), (b) pay to the Employee any bonus
payable in accordance with the terms of the Executive Bonus Plan and (c) provide
the Employee for the Severance Term with the same benefits then in effect under
Section 5. The Employee shall not be required to seek subsequent employment.
Rights and benefits of the Employee with respect to the Options or the Bonus
Options shall be determined in accordance with Section 3.3(b) or the Executive
Bonus Plan, as applicable. 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. Any termination of this Agreement by the Company after
the date hereof and prior to the Closing Date shall be treated as a termination
of employment pursuant to this Section 6.4 as of the day following the Closing
Date, provided that the Closing (as defined in the Purchase Agreement) shall
have occurred.
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For purposes hereof, Severance Amount shall mean an amount equal
to the sum of (i) the annual salary then in effect under Section 3.1 and (ii)
the Average Bonus (as hereinafter defined), multiplied by the Severance Factor.
Average Bonus shall mean the average of the bonuses, if any, paid to the
Employee by the Company and/or Miss Xxxxx in the two (2) full fiscal years of
the Company and/or Miss Xxxxx, as applicable, prior to the date of termination
of employment of the Employee. Severance Factor shall mean a fraction, the
numerator of which is the number of days remaining in the then-current Term plus
365, and the denominator of which is 365. Severance Term shall mean the number
of days remaining in the then-current Term plus 365 days. For purposes of the
foregoing, in determining the number of days remaining in the then-current Term,
if termination under this Section 6.4 occurs during (i) the Initial Term, the
then-current Term shall be determined without regard to the Extended Term;
provided, however, that if following such termination the Company attains the
EBITDA 2-Year Target for the fiscal years ending October 31, 1998 and November
6, 1999, the then-current Term shall be determined with regard to the Extended
Term and appropriate adjustments shall be made in the then remaining monthly
installments of the Severance Amount to be paid over the extended Severance Term
to take into account such determination or (ii) the Extended Term, the
then-current Term shall be the remaining number of days in the Extended Term.
6.5 Non-Extension. If (A) the Initial Term is not extended for the
Extended Term as a result of the failure to achieve the EBITDA 2-Year Target or
if (B) the Initial Term is extended for the Extended Term pursuant to Section
1.2 and, upon the expiration of such Extended Term, the Company shall fail to
offer employment to the Employee in the same position and with the same salary
then in effect under Section 3.1 and participation in the Executive Bonus Plan
on the same terms then in effect for an additional period of one year, in either
case, the Company shall, except as provided in Section 9(c), (a) continue to pay
to the Employee the salary then in effect under Section 3.1 for one year from
the date of expiration of the Extended Term, (b) pay to the Employee the Average
Bonus in equal monthly installments over such one year period (the amounts set
forth in clauses (a) and (b), the "Section 6.5 Amount") and (c) provide the
Employee with the same Benefits then in effect under Section 5 for such one year
period. The Employee shall not be required to seek subsequent employment. Rights
and benefits of the Employee (a) with respect to the Options or the Bonus
Options shall be determined in accordance with Section 3.3(b) or the Executive
Bonus Plan, as applicable and (b) subject to this Section 6.5, 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 7, 8, 9 and 10.
6.6 Termination by the Employee with Good Reason. The Employee may
at any time terminate his employment with the Company with Good Reason (as
hereinafter defined) and may treat such as a termination of employment pursuant
to and with the effects set forth in Section 6.4. For purposes hereof, Good
Reason shall mean (i) the continued breach by the Company of a material
provision of this Agreement for a period of 30 days after written notice of such
breach by the Employee to the Company or (ii) a material and adverse diminution
in the Employee's title or scope of duties as set forth in Section 2, which
diminution shall continue for a period of 30 days after written notice thereof
by the Employee to the Company.
6.7 Termination by the Employee without Good Reason. The Employee
may at any time upon at least 120 days prior written notice to the Company
terminate his employment with the Company without Good Reason. Such termination
shall be treated as a termination of employment pursuant to, including with the
effects set forth in, Section 6.3; provided, however, that the Company hereby
waives any claim it may have against the Employee incidental to the Employee's
termination of his employment pursuant to this Section 6.7.
7. Confidential Information.
7.1 The Employee shall, during the Term and at all times
thereafter, 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.
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7.2 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 Miss Xxxxx 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 or any member of the Norton Group
or the customers, suppliers or agents of the Company or any member of the Norton
Group, including, without limitation, all information concerning trade secrets
and the preparation of raw material for, manufacture of, and/or finishing
processes utilized in the production of, the products or projects of the Company
or any member of the Norton Group and/or any improvements therein, all sales and
financial information concerning the Company 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 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 or customers, 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 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 or (c)
becomes available to the Employee on a non-confidential basis from a source
other than the Company or any of its agents, franchisees, creditors, suppliers,
lessors, lessees 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 or customers.
8. Inventions. Any and all inventions, innovations or 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 or
indirectly useful in, or relate to, the business of the Company, 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 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 or
copyright shall be borne by the Company.
9. Non-Competition. (a) The Employee acknowledges that the
services to be rendered by him to the Company are of a special and unique
character.
(b) 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 (A) of one (1) year
commencing on the date of termination of his employment with the Company
pursuant to Section 6.2 or 6.3, (B) of the greater of one (1) year commencing on
the date of termination of his employment with the Company pursuant to Section
6.7 or the remainder of the then-current Term (without regard to the Extended
Term if such termination occurs during the Initial Term), (C) during which the
Employee receives payments of the Severance Amount pursuant to Section 9(c)(i)
(in the case of a termination under Section 6.4 or 6.6) or (D) during which the
Employee receives payments of the Section 6.5 Amount pursuant to Section
9(c)(ii) or 9(c)(iii) (in the case of a termination under Section 6.5), (1)
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) one percent (1%)
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
activity or business venture which is in competition with the business then
conducted by the Company and any of its subsidiaries, (2) solicit or entice or
endeavor to solicit or entice away from any member of the Norton Group any
person who was an officer, employee, agent or consultant of any member of the
Norton Group, either for his own account or for any individual, firm or
corporation, and, if applicable, whether or not such person would commit any
breach of his contract of employment by reason of leaving the service of a
member of the Norton Group, and the Employee agrees not to employ, directly or
indirectly, any person who was an officer or employee of any member of the
Norton Group or who by reason of such position at any time is or may be likely
to be in possession of any confidential information or
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trade secrets relating to the businesses or products of any member of the Norton
Group, or (3) solicit or entice or endeavor to solicit or entice away from any
member of the Norton Group any customer or prospective customer of any member of
the Norton Group, either for his own account or for any individual, firm or
corporation (the activities set forth in clauses (1), (2) and (3) above, the
"Non-Competition Activities").
(c) In the event of termination of the employment of the Employee,
(i) pursuant to Section 6.4 or 6.6, the Company shall pay to
the Employee the Severance Amount and other benefits set forth in Section 6.4 or
6.6 in which event the Employee shall not engage in the Non-Competition
Activities for the Severance Term; provided, however, if the Employee engages in
the Non-Competition Activities during the Severance Term, the Employee shall
immediately notify the Company that he is engaging in the Non-Competition
Activities, and the Company's obligation to pay the Severance Amount shall
immediately cease. From and after the date on which the Employee engages in the
Non-Competition Activities, the Company shall continue to pay to the Employee
the salary in effect on the date of termination of the employment of the
Employee under Section 3.1 for the remainder of the Severance Term and shall
offset any amounts earned as a result of the Employee's engaging in the
Non-Competition Activities (whether as an employee, consultant or otherwise)
against such salary continuation by the Company which becomes payable after the
first date on which the Employee engages in the Non-Competition Activities.
(ii) pursuant to clause (A) of the first sentence of Section
6.5, the Company shall pay to the Employee the Section 6.5 Amount and other
benefits set forth in Section 6.5 in which event the Employee shall not engage
in the Non-Competition Activities for one year; provided, however, if the
Employee engages in the Non-Competition Activities during such one year period,
the Employee shall immediately notify the Company that he is engaging in the
Non-Competition Activities, and the Company's obligation to pay the Section 6.5
Amount shall immediately cease.
(iii) pursuant to clause (B) of the first sentence of Section
6.5, the Company shall pay to the Employee or the Section 6.5 Amount and other
benefits set forth in Section 6.5 in which event the Employee shall not engage
in the Non-Competition Activities for one year; provided, however, if the
Employee engages in the Non-Competition Activities during such one year period,
the Employee shall immediately notify the Company that he is engaging in the
Non-Competition Activities, and the Company's obligation to pay the Section 6.5
Amount shall immediately cease. From and after the date on which the Employee
engages in the Non-Competition Activities, the Company shall continue to pay to
the Employee the salary in effect on the date of termination of the employment
of the Employee under Section 3.1 for the remainder of such one year period and
shall offset any amounts earned as a result of the Employee's engaging in the
Non-Competition Activities (whether as an employee, consultant or otherwise)
against such salary continuation by the Company which becomes payable after the
first date on which the Employee engages in the Non-Competition Activities.
10. Equitable Relief, Etc.
10.1 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.
10.2 The Company and the Employee understand and agree that in any
lawsuit or other proceeding between any of them with respect to Sections 7, 8 or
9 hereof, the prevailing party in such lawsuit or proceeding shall be entitled
to recover from the other party in such lawsuit or proceeding, and such other
party hereby agrees to pay such prevailing party, for all costs and expenses,
including attorneys' fees, incurred by such prevailing party in the defense,
prosecution or investigation of the matters which are the subject of such
lawsuit or proceeding.
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11. Successors and Assigns.
11.1 Assignment by the Company. The Company shall require any
successors (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform if no such
succession had taken place. As used in this Section, the "Company" shall mean
the Company as hereinbefore defined and any successor to its business and/or
assets as aforesaid which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law and this Agreement shall be
binding upon, and inure to the benefit of, the Company, as so defined.
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 with the Employee in any way relating to the employment of the Employee
by the Company, including without limitation, the Purchase Agreement, 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). 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. Any notice to be given hereunder shall be in writing
and delivered personally or sent by certified mail, postage prepaid, return
receipt requested, addressed to the party concerned at the address indicated
below or at such other address as such party may subsequently designate by like
notice:
If to the Company:
x/x Xxxxxx XxXxxxxxxx, Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
If to the Employee:
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Xxxxxx Xxxxxxxx
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
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. The arbitration
award shall include an award of attorneys' fees and costs to the prevailing
party as determined by the arbitrator.
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. The parties further agree that any such
court or arbitration panel is expressly authorized to modify any such
unenforceable provision of this Agreement in lieu of severing such unenforceable
provision from this Agreement in its entirety, whether by rewriting the
offending provision, deleting any or all of the offending provision, adding
additional language to this Agreement, or by making such other modifications as
it deems warranted to carry out the intent and agreement of the parties as
embodied herein to the maximum extent permitted by law. The parties expressly
agree that this Agreement as so modified by the court or arbitration panel shall
be binding upon and enforceable against each of them. 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 represents and warrants 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 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 director of the Company or of any parent, subsidiary or affiliate
of the Company upon termination of his employment with the Company for any or no
reason.
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.
ME ACQUISITION CORP.
By: /s/ Xxxxxxx Xxxxxxxxx
------------------------
Title: Chairman of the Board
EMPLOYEE:
/s/ Xxxxxx Xxxxxxxx
--------------------
Xxxxxx Xxxxxxxx
