EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of [November 1], 1994 between E. Acquisition
Corporation, a Delaware corporation (the "Company") and Xxxx Xxxxxxx (the
"Executive").
The Company wishes to employ the Executive, and the Executive wishes to
accept such employment, on the terms and conditions set forth in this Agreement.
Accordingly, the Company and the Executive hereby agree as follows:
EMPLOYMENT, DUTIES AND ACCEPTANCE.
1.1 EMPLOYMENT, DUTIES. The Company hereby employs the Executive for
the Term (as defined in Section 2.1), to render exclusive and full-time services
to the Company as President and Chief Operating Officer or in such other
executive position as may be mutually agreed upon by the Company and the
Executive, and to perform such other duties consistent with such position as may
be assigned to the Executive by the Board of Directors or any officer of the
Company senior to the Executive.
1.2 ACCEPTANCE. The Executive hereby accepts such employment and
agrees to render the services described above. During the Term, the Executive
agrees to serve the Company faithfully and to the best of the Executive's
ability, to devote the Executive's entire business time, energy and skill to
such employment, and to use the Executive's best efforts, skill and ability to
promote the Company's interests. The Executive further agrees to accept
election, and to serve during all or any part of the Term, as an officer or
director of the Company and of any subsidiary or affiliate of the Company,
without any compensation therefor other than that specified in this Agreement,
if elected to any such position by the shareholders or by the Board of Directors
of the Company or of any subsidiary or affiliate, as the case may be.
1.3 LOCATION. The duties to be performed by the Executive hereunder
shall be performed primarily at the office of the Company in Massachusetts or
Puerto Rico, subject to reasonable travel requirements on behalf of the Company.
2. TERM OF EMPLOYMENT;-CERTAIN POST-TERM BENEFITS.
2.1 THE TERM. The term of the Executive's employment under this
Agreement (the "Term") shall commence on November 1, 1994 and shall end on
December 31, 1997.
2.2 SPECIAL CURTAILMENT. The Term shall end earlier than the
original December 31, 1997 termination date provided in Section 2.1 if sooner
terminated pursuant to Section 4. Non-extension of the Term shall not be deemed
to be a wrongful termination of the Term or this Agreement by the Company
pursuant to Section 4.4.
3. COMPENSATION; BENEFITS.
3.1 SALARY. As compensation for all services to be rendered pursuant
to this Agreement, the Company agrees to pay the Executive during the Term a
base salary, payable semi-monthly in arrears, at the annual rate of not less
than $50,000, less such deductions or amounts to be withheld as required by
applicable law and regulations (the "Base Salary"). In the event that the
Company, in its sole discretion, from time to time determines to increase the
Base Salary, such increased amount shall, from and after the effective date of
the increase, constitute "Base Salary" for purposes of this Agreement.
3.2 DISCRETIONARY BONUS. In addition to the amounts to be paid to
the Executive pursuant to Section 3.1, the Executive will be eligible upon the
decision of the Board of Directors and in the Board's sole discretion, to
receive a discretionary bonus with respect to each year of the Term in such
amount as the Board in its sole discretion may determine.
3.3 BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the Executive's services under
this Agreement, upon presentation of expense statements or vouchers or such
other supporting information as the Company customarily may require of its
officers PROVIDED, HOWEVER, that the maximum amount available for such
expenses during any period may be fixed in advance by the Chairman or Vice
Chairman of the Board of Directors, the President of the Company, or the Board
of Directors.
3.4 VACATION. During the Term, the Executive shall be entitled to a
vacation period or periods of four weeks taken in accordance with the vacation
policy of the Company during each year of the Term. Vacation time
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not used by the end of a year shall be forfeited.
3.5 FRINGE BENEFITS. During the Term, the Executive shall be
entitled to all benefits for which the Executive shall be eligible under any
qualified pension plan, 401(k) plan, group insurance or other so-called "fringe"
benefit plan which the Company provides to its employees generally, together
with executive medical benefits for the Executive, the Executive's spouse and
the Executive's children as from time to time in effect for officers of the
Company generally.
4. TERMINATION.
4.1 DEATH. If the Executive shall die during the Term, the Term
shall terminate and no further amounts or benefits shall be payable hereunder,
except that the Executive's legal representatives shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to the Executive's death).
4.2 DISABILITY. If during the Term the Executive shall become
physically or mentally disabled, whether totally or partially, such that the
Executive is unable to perform the Executive's services hereunder for (i) a
period of six consecutive months or (ii) for shorter periods aggregating six
months during any twelve month period, the Company may at any time after the
last day of the six consecutive months of disability or the day on which the
shorter periods of disability shall have equaled an aggregate of six months,
by written notice to the Executive (but before the Executive has recovered from
such disability), terminate the Term and no further amounts or benefits shall
be payable hereunder, except that the Executive shall be entitled to receive
continued payments in an amount equal to 60% of the Base Salary, in the manner
specified in Section 3.1, until the end of the Term (as in effect immediately
prior to such termination), such payments to be offset by the amount, if any,
received by the Executive from any long-term disability plan maintained by the
Company. If the Executive shall die before receiving all payments to be made
by the Company in accordance with the foregoing, such payments shall be made to
a beneficiary designated by the Executive on a form prescribed for such purpose
by the Company, or in the absence of such designation to the Executive's legal
representative.
4.3 CAUSE. In the event of gross neglect by the Executive of the
Executive's duties hereunder, conviction of the Executive of any serious felony
committed
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intentionally by the Executive (including any crime or offense involving the
property of the Company or any of its subsidiaries or affiliates), the
Company may at any time by written notice to the Executive terminate the Term
and, upon such termination, this Agreement shall terminate and the Executive
shall be entitled to receive no further amounts or benefits hereunder, except
any as shall have been earned to the date of such termination; PROVIDED,
HOWEVER, that in the event of gross neglect by the Executive of the
Executive's duties hereunder, the Company shall provide the Executive with
prior notice (the "Company Notice") of its intent to terminate the Executive
including its reasons for such termination and the Executive shall have 45
days or such other amount of time as determined by the Board of Directors of
the Company to correct all such matters set forth in the Company Notice.
Notwithstanding the foregoing, prior to any termination of the Term pursuant
to the provisions of this Section 4.3, the Company shall deliver to Executive
a copy of a resolution duly adopted by the affirmative vote of three-quarters
or more of the Board of Directors of The Xxxxxxx Company, Inc. then in office
at a meeting of the Board called and held for such purpose (after reasonable
notice to Executive and an opportunity for Executive, together with his
counsel, to be heard before the Board), finding that in the good faith
opinion of the Board, Executive was guilty of the conduct set forth in this
Section 4.3 and specifying the particulars thereof in detail.
4.4 COMPANY BREACH. In the event of the breach of any material
provision of this Agreement by the Company, the Executive shall be entitled
to terminate the Term upon 60 days' prior written notice to the Company.
Upon such termination, or in the event the Company terminates the Term or
this Agreement other than pursuant to the provisions of Section 4.2 or 4.3,
the Company shall continue to provide the Executive (i) payments of Base
Salary, in the manner and amount specified in Section 3.1 and (ii) fringe
benefits and additional benefits in the manner and amounts specified in
Sections 3.S and 3.6 until the end of the Term (as in effect immediately
prior to such termination) (the "Damage Period"). The Company's obligations
pursuant to this Section 4.4 are subject to the Executive's duty to mitigate
damages by seeking other employment PROVIDED, HOWEVER, that the Executive
shall not be required to accept a position of lesser importance or of
substantially different character than the position held with the Company
immediately prior to the effective date of termination or in a location
outside of Puerto Rico. To the extent that the Executive shall earn
compensation during the Damage Period (without regard to when such
compensation is paid), the Base Salary payments to be made by the Company
pursuant to this Section 4.4 shall be correspondingly reduced.
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4.5 LITIGATION EXPENSES. Except as provided for in Section 5.7,
if the Company and the Executive become involved in any action, suit or
proceeding relating to the alleged breach of this Agreement by the Company or
the Executive, and if a judgment in such action, suit or proceeding is
rendered in favor of the Executive, the Company shall reimburse the Executive
for all expenses (including reasonable attorneys' fees) incurred by the
Executive in connection with such action, suit or proceeding. Such costs
shall be paid to the Executive promptly upon presentation of expense
statements or other supporting information evidencing the incurrence of such
expenses.
5. PROTECTION OF CONFIDENTIAL INFORMATION; NON-COMPETITION.
5.1 In view of the fact that the Executive's work for the Company
will bring the Executive into close contact with many confidential affairs of
the Company not readily available to the public, and plans for future
developments, the Executive agrees:
5.1.1 To keep and retain in the strictest confidence all
confidential matters of the Company, including, without limitation, "know
how", trade secrets, customer lists, pricing policies, operational methods,
technical processes, formulae, inventions and research projects, and other
business affairs of the Company, learned by the Executive hereafter, and not
to disclose them to anyone outside of the Company, either during or after the
Executive's employment with the Company, except in the course of performing
the Executive's duties hereunder or with the Company's express written
consent; and
5.1.2 To deliver promptly to the Company on termination of
the Executive's employment by the Company, or at any time the Company may so
request, all memoranda, notes, records, reports, manuals, drawings,
blueprints and other documents (and all copies thereof) relating to the
Company's business and all property associated therewith, which the Executive
may then possess or have under the Executive's control.
5.2 During the Term, the Executive shall not, directly or
indirectly, enter the employ of, or render any services to, any person, firm
or corporation engaged in any business competitive with the business of the
Company or of any of its subsidiaries or affiliates; the Executive shall not
engage in such business on the Executive's own account; and the Executive
shall not become interested in any such business, directly or indirectly, as
an individual, partner, shareholder, director, officer, principal,
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agent, employee, trustee, consultant, or in any other relationship or
capacity PROVIDED, HOWEVER, that nothing contained in this Section 5.2 shall
be deemed to prohibit the Executive from acquiring, solely as an investment,
up to five percent (5%) of the outstanding shares of capital stock of any
public corporation.
5.3 If the Executive commits a breach, or threatens to commit a
breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company
shall have the following rights and remedies:
5.3.1 The right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not
provide an adequate remedy to the Company; and
5.3.2 The right and remedy to require the Executive to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively "Benefits") derived or
received by the Executive as the result of any transactions constituting a
breach of any of the provisions of the preceding paragraph, and the Executive
hereby agrees to account for and pay over such Benefits to the Company.
Each of the rights and remedies enumerated above shall be independent of the
other, and shall be severally enforceable, and all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity.
5.4 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, hereafter are construed to be invalid or unenforceable, the
same shall not affect the remainder of the covenant or covenants, which shall
be given full effect, without regard to the invalid portions.
5.5 If any of the covenants contained in Sections 5.1 or 5.2, or
any part thereof, are held to be unenforceable because of the duration of
such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, said provision shall then be
enforceable.
5.6 The parties hereto intend to and hereby confer jurisdiction to
enforce the covenants contained in Sections 5.1 and 5.2 upon the courts of
any state within
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the geographical scope of such covenants. In the event that the courts of
any one or more of such states shall hold such covenants wholly unenforceable
by reason of the breadth of such covenants or otherwise, it is the intention
of the parties hereto that such determination not bar or in any way affect
the Company's right to the relief provided above in the courts of any other
states within the geographical scope of such covenants as to breaches of such
covenants in such other respective jurisdictions, the above covenants as they
relate to each state being for this purpose severable into diverse and
independent covenants.
5.7 In the event that any action, suit or other proceeding in law
or in equity is brought to enforce the covenants contained in Sections 5.1
and 5.2 or to obtain money damages for the breach thereof, and such action
results in the award of a judgment for money damages or in the granting of
any injunction in favor of the Company, all expenses (including reasonable
attorneys, fees) of the Company in such action, suit or other proceeding
shall (on demand of the Company) be paid by the Executive. In the event the
Company fails to obtain a judgment for money damages or an injunction in
favor of the Company, all expenses (including reasonable attorneys, fees) of
the Executive in such action, suit or other proceeding shall (on demand of
the Executive) be paid by the Company.
6. INVENTIONS AND PATENTS.
6.1 The Executive agrees that all processes, technologies and
Inventions (collectively, "Inventions"), including new contributions,
improvements, ideas and discoveries, whether patentable or not, conceived,
developed, invented or made by him during the Term shall belong to the
Company, provided that such Inventions grew out of the Executive's work with
the Company or any of its subsidiaries or affiliates, are related in any
manner to the business (commercial or experimental) of the Company or any of
its subsidiaries or affiliates or are conceived or made on the Company's time
or with the use of the Company's facilities or materials. The Executive
shall further: (a) promptly disclose such Inventions to the Company; (b)
assign to the Company, without additional compensation, all patent and other
rights to such Inventions for the United States and foreign countries; (c) sign
all papers necessary to carry out the foregoing; and (d) give testimony in
support of the Executive's inventorship.
6.2 If any Invention is described in a patent application or is
disclosed to third parties, directly or indirectly, by the Executive within
two years after the termination of the Executive's employment by the
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Company, it is to be presumed that the Invention was conceived or made during
the Term.
6.3 The Executive agrees that the Executive will not assert any
rights to any Invention as having been made or acquired by the Executive
prior to the date of this Agreement, except for Inventions, if any, disclosed
to the Company in writing prior to the date hereof.
7. INTELLECTUAL PROPERTY.
The Company shall be the sole owner of all the products and proceeds of
the Executive's services hereunder, including, but not limited to, all
materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may
acquire, obtain, develop or create in connection with and during the Term,
free and clear of any claims by the Executive (or anyone claiming under the
Executive) of any kind or character whatsoever (other than the Executive's
right to receive payments hereunder). The Executive shall, at the request of
the Company, execute such assignments, certificates or other instruments as
the Company may from time to time deem necessary or desirable to evidence,
establish, maintain, perfect, protect, enforce or defend its right, title or
interest in or to any such properties.
8. INDEMNIFICATION.
The Company will indemnify the Executive, to the maximum extent permitted
by applicable law, against all costs, charges and expenses incurred or sustained
by the Executive in connection with any action, suit or proceeding to which the
Executive may be made a party by reason of the Executive being an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company. This indemnity shall not, however, extend to any action, suit or
proceeding relating to or arising under the Stock Purchase Agreement by and
among E. Acquisition Corporation, The Xxxxxxx Company, Inc. and Xxxx Xxxxxxx,
and the Asset Purchase Agreement by and among E. Acquisition Corporation, The
Xxxxxxx Company, Inc., Eastpak, Inc. and Xxxx Xxxxxxx, and the Contingent
Payment Agreement by and among E. Acquisition Corporation, E. Acquisition
Corporation, The Xxxxxxx Company, Inc. and Xxxx Xxxxxxx.
9. NOTICES.
All notices, requests, consents and other communications required or
permitted to be given hereunder shall be in writing and shall be deemed to
have been duly given
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if delivered personally, sent by overnight courier or mailed first class,
postage prepaid, by registered or certified mail (notices mailed shall be
deemed to have been given on the date mailed), or by facsimile transmission,
as follows (or to such other address as either party shall designate by
notice in writing to the other in accordance herewith):
If to the Company, to:
E. Acquisition Corporation
c/o The Xxxxxxx Company, Inc.
000 Xxxxx Xx. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
Attention: General Counsel
If to the Executive, to:
Xxxx Xxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxx. 00
Xxxxxxxx, Xxxxxx Xxxx 00000
10. GENERAL.
10.1 This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in New York.
10.2 The section headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation
of this Agreement.
10.3 This Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this
Agreement, and neither party shall be bound by or liable for any alleged
representation, promise or inducement not so set forth.
10.4 This Agreement, and the Executive's rights and obligations
hereunder, may not be assigned by the Executive. The Company may assign its
rights, together with its obligations, hereunder (i) to any affiliate or
(ii) to third parties in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in any
event the obligations of the
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Company hereunder shall be binding on its successors or assigns, whether by
merger, consolidation or acquisition of all or substantially all of its
business or assets.
10.5 This Agreement may be amended, modified, superseded,
canceled, renewed or extended and the terms or covenants hereof may be
waived, only by a written instrument executed by both of the parties hereto,
or in the case of a waiver, by the party waiving compliance. The failure of
either party at any time or times to require performance of any provision
hereof shall in no manner affect the right at a later time to enforce the
same. No waiver by either party of the breach of any term or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be, or construed as, a further or
continuing waiver of any such breach, or a waiver of the breach of any other
term or covenant contained in this Agreement.
11. SUBSIDIARIES AND AFFILIATES.
11.1 As used herein, the term "subsidiary" shall mean any
corporation or other business entity controlled directly or indirectly by
the corporation or other business entity in question, and the term
"affiliate" shall mean and include any corporation or other business entity
directly or indirectly controlling, controlled by or under common control
with the corporation or other business entity in question.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
E. ACQUISITION CORPORATION
By: /s/ XXXXX X. XXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
/s/ XXXX XXXXXXX
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Xxxx Xxxxxxx
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