EXHIBIT 10.2
EMPLOYMENT AND NON-INTERFERENCE AGREEMENT
This Employment and Non-Interference Agreement, dated as of April 13, 1999
(this "Agreement"), is by and between Xxxxxx Xxxxxxx (the "Executive") and
Allied Fashion, Inc., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Company wishes to obtain the future services of the Executive
for the Company;
WHEREAS, the Executive is willing, upon the terms and conditions herein
set forth, to provide services hereunder;
WHEREAS, the Company wishes to secure the Executive's non-interference,
upon the terms and conditions herein set forth; and
WHEREAS, defined terms not defined herein shall have the respective
meanings set forth on Schedule 1 attached hereto;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Nature of Employment
The Company hereby employs Executive, and Executive agrees to accept such
employment, as Chief Executive Officer and President of the Company.
2. Extent of Employment
The Executive shall perform his obligations hereunder faithfully and to
the best of his ability under the direction of the Board of Directors of the
Company (the "Board of Directors"). The Executive shall devote all of his
business time, energy and skill as may be reasonably necessary for the
performance of his duties, responsibilities and obligations hereunder,
consistent with past practices and norms in similar positions and shall abide by
the rules, customs and usages from time to time established by the Company.
Nothing contained herein shall require Executive to follow any directive or to
perform any act which would violate any laws, ordinances, regulations or rules
of any governmental, regulatory or administrative body, agent or authority, any
court or judicial authority, or any public, private or industry regulatory
authority (collectively, "Regulations").
3. Compensation During the Term of Employment, the Company shall pay
compensation to Executive as follows:
(a) As base compensation for his services hereunder, in [bi-monthly]
installments, an annual base salary of $190,000. The Board of Directors shall
annually, and in its sole discretion, determine whether the base salary should
be increased and, if so, the amount of such increase.
(b) The Executive is eligible to participate in the Company's Cash
Incentive Plan, and to earn a bonus, subject to further deliberation by the
Board of Directors, as set forth on Exhibit A hereto, and to be paid at the time
of the first meeting of the Board of Directors following receipt of audited
annual financial statements of the Company. Payment of the bonus is conditioned
upon the Executive being employed by the Company during the relevant performance
period and on the date which the bonus is paid.
(c) The Company shall provide the Executive with an appropriate Company
car in accordance with its current and future usual and customary policies and
practices. The Company shall lease the car under the same terms and conditions
currently in place, and bear all expenses associated with it, except any
associated personal income tax liability of the Executive, and the cost of fuel
for the Executive's personal use of the car. The Company shall maintain adequate
liability insurance coverage related to the use and operation of the vehicle and
the Executive shall be named as additional insured on such policy.
4. Term of Employment
The "Term of Employment" shall commence on the date hereof and shall
continue for a term of two years; provided that, (i) such term shall continue
for the twelve month period following such two year period, and for each twelve
month period thereafter, unless at least 90 days prior to the scheduled
expiration date, either the Executive or the Company notifies the other of its
decision not to continue such term and (ii) should the Executive's employment by
the Company be earlier terminated pursuant to Section 5, or by the Executive
pursuant to Section 5, the Term of Employment shall end on the date of such
earlier termination.
5. Termination
(a) Subject to the Company's obligations to make the payments contemplated
by Section 5(b)(i), the Term of Employment may be terminated at any time:
(i) upon the death of Executive ("Death");
(ii) in the event that because of physical or mental disability the
Executive is unable to perform, and does not perform, as certified by a
mutually agreeable
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competent medical physician, his material duties hereunder for 180 days in
any continuous 210 day period ("Disability");
(iii) by the Company for Cause;
(iv) by the Company for any other reason or no reason ("No Reason")
and the Company shall not be required to specify a reason for the
termination, such that this Agreement shall be construed as terminable at
will by the Company;
(v) by the Executive voluntarily or for any reason or no reason,
in each case, after 90 days' prior written notice to the Company and the
Board of Directors ("Resignation"); or
(vi) by the Executive for Reason
Executive acknowledges that no representations or promises have been made
in connection with this Agreement or any other arrangement, plan or agreement
between the Executive and the Company concerning the grounds for termination or
the future operation of the Company's business, and that nothing contained
herein or otherwise stated by or on behalf of the Company modifies or amends the
right of the Company to terminate Executive at any time, with or without Cause.
(b) If Executive's employment is terminated for any reason whatsoever,
then Executive shall be entitled to (1) accrued and unpaid base salary and
benefits (including sick pay, vacation pay and benefits under Section 7 with
respect to the period prior to termination, (2) reimbursement for expenses under
Section 6 with respect to such period, and (3) any other benefits (including
COBRA) required by law to be provided after termination of employment under the
circumstances. Except as may otherwise be expressly provided to the contrary in
this Agreement, nothing in this Agreement shall be construed as requiring the
Executive to be treated as employed by the Company for purposes of any employee
benefit plan following the date of the termination of the Term of Employment. In
the event Executive's employment is terminated:
(i) for Death, Disability, by the Company for No Reason or by
Executive for Reason, the Company will also pay to Executive (or his
estate or representative) termination benefits equal to twelve (12) months
of his base salary in effect immediately prior to the event that gave rise
to such termination. Such payment shall be made over a period of twelve
(12) months, provided, however, that to the extent the Executive shall
receive compensation or benefits from any other employment during the
twelve (12) months following such termination, the payments to be made by
the Company under the provisions of this Section 5(b)(i) shall be
correspondingly reduced; and
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(ii) for Cause or Resignation, there will be no additional amounts
owing by the Company to Executive under this Agreement from and after such
termination.
(c) In the Event of termination of employment by Executive, such
termination shall be for "Reason" if it is due to a failure by the Company to
satisfy any of its obligations under this Agreement, or due to a material
reduction in Executive's duties or change in Executive's Title by the Company
without Executive's consent, which shall not be unreasonably withheld. In no
event shall the foregoing provisions be deemed to restrict, limit or prevent the
Company from recruiting, retaining or employing any person to hold any executive
office of the Company or any other position with the Company.
(d) Termination of the Term of Employment will not terminate any
provisions not associated specifically with the Term of Employment.
(e) In the event of termination, the Company shall have no further
obligations to the Executive under any option plan, long-term incentive plan,
share subscription or similar plan or arrangement, except to the extent
specifically provided in the documentation governing such plan or arrangement;
provided, however, that for a period of twelve (12) months following the
termination of the Term of Employment for any of the reasons set forth in
Section 5(b)(i), the Executive may continue to participate in the Company's
retirement plan and other benefit plans in which the Executive was a participant
immediately prior to termination.
6. Reimbursement of Expenses
During the Term of Employment, the Company shall reimburse Executive for
reasonably documented travel, entertainment and other expenses reasonably
incurred by Executive in connection with the performance of his duties hereunder
and, in each case, in accordance with the rules, customs and usages promulgated
by the Company from time to time in effect. In addition, the Company shall
reimburse Executive for reasonable attorney's fees incurred by Executive in
connection with the negotiation and execution of this Agreement, and all other
documents contemplated hereby or in connection herewith up to a maximum of
$5,000.
7. Benefits
The Executive shall be entitled to participate in and be covered by any
insurance plan (including but not limited to medical, dental, health, accident,
hospitalization and disability), vacation policy, 401(k), plan and pension plan
of the Company, each as determined, from time to time, by the Board of
Directors. The Executive shall be entitled to four weeks paid vacation in each
twelve month period subject to the reasonable requirements of the Company as to
the timing of the taking of such vacation.
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8. Confidential Information
During and after the Term of Employment, Executive will not, directly or
indirectly in one or a series of transactions, disclose to any person, or use or
otherwise exploit for the Executive's own benefit or for the benefit of anyone
other than the Company, any Confidential Information, whether prepared by
Executive or not; provided, however, that any Confidential Information may be
disclosed (i) to officers, representatives, employees and agents of the Company
who need to know such Confidential Information in order to perform the services
or conduct the operations required or expected of them in the Business and (ii)
in good faith by the Executive in connection with the performance of his duties
hereunder. Executive shall use his best efforts to prevent the removal of any
Confidential Information from the premises of the Company, except as required in
the Executive's normal course of employment by the Company. Executive shall have
no obligation hereunder to keep confidential any Confidential Information if and
to the extent disclosure of any thereof is specifically required by law;
provided, however, that in the event disclosure is required by applicable law,
the Executive shall provide the Company with prompt notice of such requirement,
prior to making any disclosure, so that the Company may seek an appropriate
protective order. At the request of the Company, Executive agrees to deliver to
the Company, at any time during the Term of Employment, or thereafter, all
Confidential Information which he may possess or control. Executive agrees that
all Confidential Information of the Company (whether now or hereafter existing)
conceived, discovered or made by him during the Term of Employment exclusively
belongs to the Company (and not to Executive). Executive will promptly disclose
such Confidential Information to the Company and perform all actions reasonably
requested by the Company to establish and confirm such exclusive ownership.
9. Non-interference
Executive acknowledges that services to be provided give him the
opportunity to have special knowledge of the Company and its Confidential
Information and the capabilities of individuals employed by or affiliated with
the Company and that interference in these relationships would cause irreparable
injury to the Company. In consideration of this Agreement, Executive covenants
and agrees that during the Term of Employment and for a period of twelve (12)
months thereafter, Executive will not, without the express written approval of
the Board of Directors, anywhere in the Market, directly or indirectly, in one
or a series of transactions, or enter into any agreement to, own, manage,
operate, control, invest or acquire an interest in, or otherwise engage or
participate in, whether as a proprietor, partner, stockholder, lender, director,
officer, employee, joint venturer, investor, lessor, agent, representative or
other participant, in any business which competes with the Business in the
Market; provided, however, that Executive may, anywhere in the Market, in one or
a series of transactions, own, invest or acquire an interest in up to five
percent (5%) of the capital stock of a corporation whose capital stock is traded
publicly. The scope and term of this Section 9 would not preclude Executive from
earning a living with an entity that does not compete with the Business in the
Market. Notwithstanding the foregoing
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provisions, this Section 9 shall be of no force or effect in the event that
Executive's employment is terminated under Section 5(a)(iv) or Section 5(a)(vi).
10. Non-Solicitation
During the Term of Employment and for a period of twelve (12) months
thereafter, Executive will not, and will not cause another commercial or
business enterprise to, without the express prior written approval of the Board
of Directors, in one or a series of transactions, recruit, solicit or otherwise
induce or influence any proprietor, partner, stockholder, lender, director,
officer, employee, sales agent, joint venturer, investor, lessor, customer,
agent, representative or any other person which has a business relationship with
the Company Group or had a business relationship with the Company Group to
discontinue, reduce or modify such employment, agency or business relationship.
11. Non-Disparagement
During and after the Term of Employment, the Executive agrees that he
shall not make any false, defamatory or disparaging statements about the
Company, its subsidiaries and affiliates, or the officers or directors of the
Company and its subsidiaries and affiliates. During and after the Term of
Employment, neither the Company nor any of its subsidiaries or affiliates shall
make any false, defamatory or disparaging statements about the Executive.
12. Defense of Claims
The Executive agrees that, from the date hereof, and continuing for a
reasonable period after termination of the Term of Employment, the Executive
will cooperate with the Company in defense of any claims that may be made
against the Company provided same does not interfere with the Executive's then
current employment. The Company agrees to reimburse the Executive for all of the
Executive's reasonable out-of-pocket expenses associated with such cooperation,
including travel expenses and the fees and expenses of the Executive's legal
counsel.
13. Definitions
"Business" means any business conducted, or engaged in, by the Company
prior to the date hereof or at any time during the Term of Employment.
"Cause" means any of the following:
(i) Executive's conviction of, or plea of guilty or nolo contendere
to, a serious felony or a crime involving embezzlement, conversion of
property or moral turpitude;
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(ii) Executive's commission of fraud, embezzlement or conversion of
property, as reasonably determined by the Board of Directors based upon
credible evidence;
(iii) Executive's conviction of, or plea of guilty or nolo
contendere to, or an administrative or judicial determination that the
Executive committed a crime, fraud or any other material violation of law
involving the acquisition, use or expenditure of federal, state or local
government funds;
(iv) a finding by majority of the Board of Directors of Executive's
knowing breach of any of his fiduciary duties to the Company or the
Company's stockholders or making of a misrepresentation or omission which
breach, misrepresentation or omission would reasonably be expected to
materially adversely affect the business, properties, assets, condition
(financial or other) or prospects of the Company; provided, that the
Executive has been given notice and 30 days from such notice fails to cure
the breach, misrepresentation or omission;
(v) Executive's willful and continual neglect or failure (other than
by reason of death or Disability) to discharge his material duties,
responsibilities or obligations prescribed by this Agreement or any other
agreement between the Executive and any company in the Company Group;
provided, that the Executive has been given notice and 30 days from such
notice fails to cure the neglect or failure;
(vi) Executive's alcohol or substance abuse, which materially
interferes with Executive's ability to discharge his duties,
responsibilities and obligations prescribed by this Agreement; provided,
that Executive has been given notice and 30 days from such notice fails to
cure such abuse;
(vii) Executive's material violation, with the actual knowledge of
Executive, of any non-competition, confidentiality or similar agreement
with the Company, including without limitation, those set forth in
Sections 8 through 12 of this Agreement, or any other similar agreements
with the Company;
(viii) any material violation, with the actual knowledge of
Executive, of any obligations imposed upon Executive, personally, as
opposed to upon the Company, whether as a stockholder or otherwise, under
this Agreement, the Certificate of Incorporation of the Company provided,
that Executive has been given notice and 30 days from such notice fails to
cure such violation; or
(ix) Executive's personal (as opposed to the Company's) material and
knowing failure, to observe or comply with Regulations whether as an
officer, stockholder or otherwise, in any material respect or in any
manner which would reasonably be expected to have a material adverse
effect in respect of the Company's ongoing business, operations,
conditions, other business relationships or properties;
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provided, that Executive has been given notice and 30 days from such
notice fails to cure the failure.
"Confidential Information" means any confidential information including,
without limitation, any study, data, calculations, software storage media or
other compilation of information, patent, patent application, copyright,
"know-how", trade secrets, customer lists, details of client or consultant
contracts, pricing policies, operational methods, marketing plans or strategies,
product development techniques or plans, business acquisition plans or any
portion or phase of any scientific or technical information, ideas, discoveries,
designs, inventions, creative works, computer programs (including source of
object codes), processes, procedures, formulae, improvements or other
proprietary or intellectual property of the Company Group, whether or not in
written or tangible form, and whether or not registered, and including all
files, records, manuals, books, catalogues, memoranda, notes, summaries, plans,
reports, records, documents and other evidence thereof. Notwithstanding the
foregoing, the term "Confidential Information" does not include, and there shall
be no obligation hereunder with respect to, information that is or becomes
generally available to the public other than as a result of a disclosure by the
Executive not permissible hereunder.
"knowing" and "knowledge" means actual knowledge without any duty of
investigation.
"Market" means any State where the Business was conducted by or engaged in
by the Company prior to the date hereof or is conducted or engaged in by the
Company at any time during the Term of Employment.
14. Notice
Any notice, request, demand or other communication required or permitted
to be given under this Agreement shall be given in writing and if delivered
personally, sent by certified or registered mail, return receipt requested, sent
by overnight courier or sent by facsimile transmission (with confirmation and a
copy sent by mail within one day) as follows (or to such other addressee or
address as shall be set forth in a notice given in the same manner):
If to Executive: Xxxxxx Xxxxxxx
__________________________
__________________________
If to the Company: __________________________
__________________________
__________________________
Attention:________________
Facsimile No.:____________
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with a copy to: Hampshire Equity Partners
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
Any such notices shall be deemed to be given on the date personally delivered or
sent by facsimile transmission or such return receipt is issued or the day after
if sent by overnight courier.
15. Executive's Representations
Executive hereby warrants and represents to the Company that Executive has
carefully reviewed this Agreement and has consulted with such advisors as
Executive considers appropriate in connection with this Agreement, and is not
subject to any covenants, agreements or restrictions, including without
limitation any covenants, agreements or restrictions arising out of Executive's
prior employment which would be breached or violated by Executive's execution of
this Agreement or by Executive's performance of his duties hereunder.
16. Company's Obligation: Taxes
Executive agrees and acknowledges that the obligations owed to Executive
under this Agreement are solely the obligations of the Company, and that none of
the Company's members, stockholders, directors, officers or lenders will have
any obligations or liabilities in respect of this Agreement and the subject
matter hereof. Any amounts payable to the Executive pursuant to this Agreement
shall be subject to withholding and any other applicable taxes
17. Severability
Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein. If any court determines that any
provision of this Agreement is unenforceable and therefore acts to reduce the
scope or duration of such provision, the provision in its reduced form, shall
then be enforceable.
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18. Right to Withhold Payments
Upon the determination of a majority of the Board of Directors that the
Executive has breached his obligations in any material respect under Sections 8
through 12, the Company, in addition to pursuing all available remedies under
this Agreement, at law or otherwise, and without limiting its right to pursue
the same, shall cease all payments to the Executive under this Agreement. In the
event a court of competent jurisdiction described in Section 21 shall ultimately
determine that the Executive did not in any material respect commit a breach of
any such sections, such withheld amounts shall thereupon be payable to
Executive.
19. Breach: Waiver of Breach: Specific Performance
If either party breaches its obligations in connection with this
Agreement, the non-breaching party shall be entitled to pursue all remedies
available at law or in equity for such breach. The waiver by the Company or
Executive of a breach of any provision of this Agreement by the other party
shall not operate or be construed as a waiver of any other breach of such other
party. Each of the parties (and third party beneficiaries) to this Agreement
will be entitled to enforce its rights under this breach of any provision of
this Agreement and to exercise all other rights existing in its favor. The
parties hereto agree and acknowledge that the Company would be irreparably
injured by a violation of Sections 8 through 12 of this Agreement, that the
provisions of such sections are reasonable and that the Company could not
adequately be compensated in monetary damages, in light of the sensitivity of
the non-public information of the Company to which the Executive will be exposed
and that the Company may apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions
in order to enforce or prevent any violations of the provisions of such sections
of this Agreement.
20. Assignment: Third Parties
Neither the Executive nor the Company may assign, transfer, pledge,
hypothecate, encumber or otherwise dispose of this Agreement or any of his or
its respective rights or obligations hereunder, without the prior written
consent of the other.
21. Amendment: Entire Agreement
This Agreement may not be changed orally but only by an agreement in
writing agreed to by the party against whom enforcement of any waiver, change,
modification, extension or discharge is sought. This Agreement constitutes the
entire agreement between the parties concerning the subject matter hereof and
supersedes all prior and contemporaneous agreements, if any, between the parties
relating to employment, compensation, incentive payments, termination or
severance. The enforceability of this Agreement shall not cease or otherwise be
adversely affected by the termination of the Executive's employment with the
Company. The Executive and the Company agree that the
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language used in this Agreement is the language chosen by the parties to express
their mutual intent, and that no rule of strict construction is to be applied
against any party hereto.
22. Choice of Law: Litigation
THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED, APPLIED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF GEORGIA. IN THE EVENT ANY
PARTY TO THIS AGREEMENT COMMENCES ANY LITIGATION, PROCEEDING OR OTHER LEGAL
ACTION IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY RELATED AGREEMENT
OR ANY MATTERS DESCRIBED OR CONTEMPLATED HEREIN OR THEREIN, THE PARTIES TO THIS
AGREEMENT HEREBY (1) AGREE, AFTER CONSULTATION WITH COUNSEL, TO WAIVE ANY RIGHTS
TO A JURY TRIAL TO RESOLVE ANY DISPUTES OR CLAIMS RELATING TO THIS AGREEMENT;
AND (2) AGREE THAT NOTHING HEREIN SHALL AFFECT THE RIGHTS OF ANY PARTY TO EFFECT
SERVICE OF PROCESS IN ANY MANNER PERMITTED BY LAW.
23. Headings
The headings contained in this Agreement are for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
24. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have set their hands as of the day
and year first written above.
EXECUTIVE:
/s/ Xxxxxx Xxxxxxx
-----------------------
Name: Xxxxxx Xxxxxxx
ALLIED FASHION, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Executive Vice President
PERFORMANCE MEASURES:
Annual bonus will be based on achieving the following two objectives:
- 50% of the bonus will be based on achievement of threshold or higher
levels of corporate financial performance, the measure of which will be
EBITDA.
- 50% of the bonus will be based on achievement of financial goals specific
to the executive's area of responsibility plus certain non-financial goals
to be defined by the CEO and the Compensation Committee. In the case of
the CEO, the non-financial goals will include objectives such as sales per
square foot, store remodels and new store openings and other objectives to
be mutually agreed upon.
TARGET BONUS LEVELS:
TARGET BONUS AS A PERCENT OF BASE
______________________________________
X. Xxxxxxx 35%
The Board will consider increasing the target percentages above over time based
on performance.
FINANCIAL PERFORMANCE SCALE:
PERFORMANCE PERCENT FINANCIAL FINANCIAL PERCENT TARGET BONUS
LEVEL GOAL ATTAINED GOAL EARNED
------------ ----------------------------------- --------- --------------------
Outstanding 120% TBD 200%
Target 100% TBD 100%
Threshold Greater of 80% or prior year actual TBD 50%
Below Threshold Lesser of 80% or prior year actual TBD 0%
- Bonus payouts for achievement between these results will be calculated by
linear interpolation.
- For performance above 120% of plan, bonuses are capped at 200% of target.
- Bonuses will be paid upon receipt of annual audited financial statements.
INDIVIDUAL FUNCTIONAL GOALS
For each of the executives, individual functional goals will be developed, both
financial and non-financial. These goals must be objective and measurable, must
relate to company goals, must deal with strategic issues within a department or
division, and may be related to the accomplishment of milestones on a long-term
project.
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