Exhibit 10.19
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT entered into as of March 1, 1997, by and between
Pivot Rules, Inc., a New York corporation (the "Company") and Xxxxx Xxxxx
("Xxxxx").
RECITALS
1. The Company desires to retain the services of Xxxxx as the Vice
President of Operations of the Company in accordance with the terms and
conditions of this Agreement.
2. Xxxxx will serve the Company as its Vice President of Operations
in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and Xxxxx agree as
follows:
1. TERM
The Company hereby agrees to employ Xxxxx as the Vice President of
Operations of the Company and Xxxxx hereby agrees to serve in such capacity,
for a term commencing as of the date hereof, and ending February 28, 2001,
upon the terms and subject to the conditions contained in this Agreement. The
terms of this Agreement may, at the option of the Company and with the
approval of Xxxxx, be extended from time to time in a written memorandum
signed by the Company and Xxxxx, after approval by the Board of Directors.
2. DUTIES
During the term of this Agreement, Xxxxx shall serve as the Vice
President of Operations of the Company, and shall be responsible for the
duties attendant to such office, which duties will be generally consistent
with his position as an executive officer of the Company and such other
managerial duties and responsibilities with the Company as may be assigned by
the President and/or the Board of Directors of the Company.
The principal location of Xxxxx' employment shall be in the New York
City vicinity, although Xxxxx understands and agrees that he will be required
to travel frequently for business reasons. Xxxxx shall devote his full
professional and business time and best efforts to the performance of his
duties as the Vice President of Operations of the Company during the term of
this Agreement. Xxxxx shall not, directly or indirectly, render services to
any other person or entity, without the consent of the Board of Directors.
3. COMPENSATION
For services rendered by Xxxxx to the Company during the
term of this Agreement, the Company shall pay him a base salary of $100,000
per year, payable in accordance with the standard payroll practices of the
Company, subject to annual increases in the sole discretion of the Company's
Board of Directors, taking into account merit, corporate and individual
performance and general business conditions, including changes in the "cost of
living index," but in no event shall his salary, after giving effect to such
increase, be less than the amounts set forth below:
Year Amount
---- ------
March 1, 1998, commencing $110,000
March 1, 1999, commencing $121,000
March 1, 2000, commencing $133,100
4. BONUS/OPTIONS
a. For each fiscal year during the term of this Agreement,
Xxxxx shall be eligible to receive a bonus set by the Board of Directors in
its sole discretion, based on such factors as the Board deems appropriate;
provided that such bonus shall not exceed 25% of Xxxxx' base salary for such
fiscal year. Bonuses to be paid to Xxxxx pursuant to this paragraph 4 shall be
paid within 30 days following completion of the audit of the annual financial
statements of the Company for the fiscal year in question.
b. The Company hereby agrees to cause the issuance to Xxxxx
of stock options ("Options") to purchase shares of the Company's common stock,
$.01 par value ("Common Stock") in accordance with the following schedule: (i)
Options to purchase 15,000 shares of Common Stock to be issued subject to and
effective upon the closing date (the "Closing Date") of the Company's initial
public offering ("IPO Options"); and (ii) Options to purchase up to 5,000,
5,000 and 8,000 shares of Common Stock to be issued on the first, second and
third anniversary dates of the Closing Date, unless Xxxxx is not, for any
reason, an employee of the Company on such date. All Options (other than the
IPO Options) are contingent upon Xxxxx satisfying and maintaining the
performance standards set forth on Schedule A attached hereto and all Options
shall not be issued if the initial public offering is not consummated. All
Options shall be issued pursuant to, and in accordance with, the Company's
1997 Stock Option Plan (the "Plan"). The Options shall be Incentive Stock
Options (as defined in the Plan) and shall be exercisable at a price equal to
the Fair Market Value (as defined in the Plan) of the Common Stock on the date
of issuance of such Option, except with respect to the IPO Options, which
shall be exercisable at a price equal to the initial public offering price of
the Company's Common Stock. Each Option shall vest over a four year period
from the date of grant at a rate of 25% per year, commencing with the first
anniversary of the date of grant. In the event of the termination
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of Xxxxx' employment for any reason, he shall have 30 days within which to
exercise any vested Options and any unvested or unissued Options shall be
forfeited.
5. EXPENSE REIMBURSEMENT AND PERQUISITES
a. During the term of this Agreement, Xxxxx shall be
entitled to reimbursement of all reasonable and actual out-of-pocket expenses
incurred by him in the performance of his services to the Company consistent
with corporate policies, provided that the expenses are properly accounted
for.
b. During each calendar year of the term of this Agreement,
Xxxxx shall be entitled to reasonable vacation with full pay; provided,
however, that Xxxxx shall schedule such vacations at times convenient to the
Company.
c. During the term of this Agreement, the Company shall
provide a life insurance term policy on the life of Xxxxx, for the benefit of
Xxxxx' beneficiaries, in the amount of at least $250,000. All premiums on such
policy shall be paid by the Company, subject to availability on commercially
reasonable terms.
d. During the term of this Agreement, the Company shall
provide Xxxxx with family major medical insurance coverage as determined by
the Company in its sole discretion, and Xxxxx shall be entitled to participate
in all dental insurance and disability plans and other employee benefit plans
instituted by the Company from time to time on the same terms and conditions
as other employees of the Company, to the extent permitted by law.
6. NON-COMPETITION; NON-SOLICITATION
a. In consideration of the offer of employment, severance
benefits and Options to be granted to Xxxxx hereunder, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, during the term of this Agreement and for a period equal to two
years thereafter, Xxxxx shall not, without the prior written consent of the
Company, anywhere in the United States where the Company conducts business or
sells its products, directly or indirectly, (i) enter into the employ of or
render any services to any person, firm or corporation engaged in any business
which now or at the time, has material operations which are engaged in any
business activity competitive (directly or indirectly) with the business of
the Company (currently the design, sourcing and marketing of golf lifestyle
sportswear and/or moderate collections for men) including, for these purposes,
any business in which, at the time of termination of his employment, there is
a bonafide intention on the part of the Company to engage in the future (in
each case, a "Competitive Business"); (ii) engage in any Competitive Business
for his own account; (iii) become associated with or interested in any
Competitive Business as an individual, partner, shareholder, creditor,
director, officer, principal, agent, employee, trustee, consultant, advisor or
in any other relationship or capacity; (iv) employ or retain, or have or cause
any other person or entity to employ or retain, any person who was
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employed or retained by the Company while Xxxxx was employed by the Company;
or (v) solicit, interfere with, or endeavor to entice away from the Company,
for the benefit of a Competitive Business, any of its customers or other
persons with whom the Company has a contractual relationship. However, nothing
in this Agreement shall preclude Xxxxx from investing his personal assets in
the securities of any corporation or other business entity which is engaged in
a Competitive Business if such securities are traded on a national stock
exchange or in the over-the-counter market and if such investment does not
result in his beneficially owning, at any time, more than three percent (3%)
of the publicly-traded equity securities of such Competitive Business.
x. Xxxxx and the Company agree that the covenants of
non-competition and non-solicitation contained in this paragraph 6 are
reasonable covenants under the circumstances, and further agree that if, in
the opinion of any court of competent jurisdiction, such covenants are not
reasonable in any respect, such court shall have the right, power and
authority to excise or modify such provision or provisions of these covenants
as to the court shall appear not reasonable and to enforce the remainder of
these covenants as so amended. Xxxxx agrees that any breach of the covenants
contained in this paragraph 6 would irreparably injure the Company.
Accordingly, Xxxxx agrees that the Company, in addition to pursuing any other
remedies it may have in law or in equity, may obtain an injunction against
Xxxxx from any court having jurisdiction over the matter, restraining any
further violation of this paragraph 6.
7. TERMINATION
a. This Agreement, the employment of Xxxxx, and Xxxxx'
position as Vice President of Operations of the Company shall terminate upon
the first to occur of:
(i) his death;
(ii) his "permanent disability," due to injury or
sickness for a continuous period of four (4)
months, or a total of eight months in a twenty-four
month period (vacation time excluded), during which
time Xxxxx is unable to attend to his ordinary and
regular duties;
(iii) a "Constructive Termination" by the Company, which,
for purposes of this Agreement, shall be deemed to
have occurred upon (A) the removal of Xxxxx from
his position as Vice President of Operations of the
Company, or (B) the material breach by the Company
of this Agreement; provided that no such breach
shall be considered a Constructive Termination
unless Xxxxx has provided the Company with at least
sixty (60) days' prior written notice of such
breach and the Company has failed to cure such
breach within such sixty (60) day period;
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(iv) the termination of this Agreement at any time
without cause by the Company;
(v) non-renewal of this Agreement by the Company and/or
the Board of Directors;
(vi) the termination of this Agreement for cause, which,
for purposes of this Agreement, shall mean that (1)
Xxxxx has been convicted of a felony or any serious
crime involving moral turpitude, or engaged in
materially fraudulent or materially dishonest
actions in connection with the performance of his
duties hereunder, or (2) Xxxxx has willfully and
materially failed to perform his duties hereunder,
or (3) Xxxxx has breached the terms and provisions
of this Agreement in any material respect, or (4)
Xxxxx has failed to comply in any material respect
with the Company's policies of conduct including
with respect to trading in securities; or
(vii) the termination of this Agreement by Xxxxx, which
shall occur on not less than 60 days prior written
notice from Xxxxx.
b. In the event that this Agreement is terminated, other
than as a result of a Constructive Termination or by the Company without
cause, the Company shall pay Xxxxx his base salary only through the date of
termination. In the event that this Agreement is terminated without cause by
the Company pursuant to paragraph 7(a)(iv) or through a Constructive
Termination pursuant to paragraph 7(a)(iii), the Company shall pay Xxxxx, in
lieu of all salary, compensation payments and perquisites set forth in
paragraphs 3, 4 and 5 (including bonus payments and option grants), severance
payments (the "Severance Payments") as follows:
(i) the then-current base salary for a period of ninety
(90) days, if Xxxxx is terminated during the first
year of the term of this Agreement;
(ii) the then-current base salary for a period of
one-hundred twenty (120) days, if Xxxxx is
terminated during the second year of the term of
this Agreement; or
(iii) the then-current base salary for a period of
one-hundred fifty (150) days, if Xxxxx is
terminated during the third year of the term of
this Agreement or any time thereafter. The
Severance Payments shall be payable in periodic
installments in accordance with the Company's
standard payroll practices.
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8. CONFIDENTIALITY
x. Xxxxx recognizes that the services to be performed by him
are special, unique and extraordinary in that, by reason of his employment
under this Agreement, he may acquire or has acquired confidential information
and trade secrets concerning the operation of the Company, its predecessors,
and/or its affiliates, the use or disclosure of which could cause the Company,
or its affiliates substantial loss and damages which could not be readily
calculated and for which no remedy at law would be adequate. Accordingly,
Xxxxx covenants and agrees with the Company that he will not at any time
during the term of this Agreement or thereafter, except in the performance of
his obligations to the Company or with the prior written consent of the Board
of Directors or as otherwise required by court order, subpoena or other
government process, directly or indirectly, disclose any secret or
confidential information that he may learn or has learned by reason of his
association with the Company, or any predecessor. If Xxxxx shall be required
to make such disclosure pursuant to court order, subpoena or other government
process, he shall notify the Company of the same, by personal delivery or
electronic means, confirmed by mail, within twenty-four (24) hours of learning
of such court order, subpoena or other government process and, at the
Company's expense, shall (i) take all reasonably necessary and lawful steps
required by the Company to defend against the enforcement of such subpoena,
court order or government process, and (ii) permit the Company to intervene
and participate with counsel of its choice in any proceeding relating to the
enforcement thereof. The term "confidential information" includes, without
limitation, information not in the public domain and not previously disclosed
to the public or to the trade by the Company's management with respect to the
Company's or its affiliates' facilities and methods, trade secrets and other
intellectual property, designs, manuals, confidential reports, supplier names
and pricing, customer names and prices paid, financial information or business
plans. Xxxxx understands and agrees that the rights and obligations set forth
in this paragraph 8(a) shall survive the termination or expiration of this
Agreement.
x. Xxxxx confirms that all confidential information is and
shall remain the exclusive property of the Company. All business records,
papers and documents kept or made by Xxxxx relating to the business of the
Company shall be and will remain the property of the Company. Upon the
termination of his employment with the Company, Xxxxx shall promptly deliver
to the Company, and shall not, without the consent of the Company, retain
copies of any written materials prepared by or for the Company not previously
made available to the public or records and documents made by Xxxxx or coming
into his possession and not in the public domain concerning the business or
affairs of the Company or any predecessors to its business, or any of its
affiliates or subsidiaries. Xxxxx understands and agrees that the rights and
obligations set forth in this paragraph 8(b) shall survive the termination or
expiration of this Agreement.
9. IDL INTERNATIONAL, LLC
Xxxxx hereby acknowledges receipt by IDL International, LLC
("IDL") of the amounts (i) listed on invoice #15 billed by IDL to the Company,
and (ii) of $5,000 for work in
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progress. Xxxxx, as the principal owner and president of IDL, further
acknowledges that the Company shall not be responsible for any payments or
charges otherwise due IDL. Simultaneously with the execution of this
Agreement, Xxxxx shall execute, and cause IDL to execute, a general release in
the form of Schedule B attached hereto, reflecting such understanding.
10. REPRESENTATIONS AND WARRANTIES
x. Xxxxx represents and warrants to the Company that he was
advised to consult with an attorney of Xxxxx' own choosing concerning this
Agreement and that Xxxxx has done so.
x. Xxxxx represents and warrants to the Company that the
execution, delivery and performance of this Agreement by Xxxxx complies with
all laws applicable to Xxxxx or to which his properties are subject and does
not violate, breach or conflict with any agreement by which he or his assets
are bound or affected.
11. 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, without giving effect to its conflict of law provisions.
12. ENTIRE AGREEMENT
This Agreement contains all of the understandings between Xxxxx and
the Company pertaining to Xxxxx' employment with the Company, and it
supersedes all undertakings and agreements, whether oral or in writing,
previously entered into between them. The parties hereto acknowledge that the
Agreement dated May 1996 by and between the Company and IDL, as amended by
Addendum dated July 1996, is terminated in all respects and shall be of no
further force or effect.
13. AMENDMENT OR MODIFICATION; WAIVER
No provision of this Agreement may be amended or modified unless such
amendment or modification is agreed to in writing, signed by Xxxxx and by an
officer of the Company duly authorized to do so. Except as otherwise
specifically provided in this Agreement, no waiver by either party of any
breach by the other party 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.
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14. 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
to such other address as such party may subsequently designate by like notice:
If to the Company, to:
Pivot Rules, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx
With a copy to:
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
If to Xxxxx, to:
Xxxxx Xxxxx
0 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
15. SEVERABILITY
In the event that any provision or portion of this Agreement
shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
16. TITLES
Titles of the Sections of this Agreement are intended solely
for convenience of reference and no provision of this Agreement is to be
construed by reference to the title of any Section.
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17. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
be deemed an original, and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
PIVOT RULES, INC.
By: /s/ E. Xxxxxxx Xxxxx
-------------------------
E. Xxxxxxx Xxxxx
President
/s/ Xxxxx Xxxxx
-----------------------------
XXXXX XXXXX
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Schedule A
Performance Standards
(1) Achieve gross margin of 30%.
(2) Integrate warehouse, international freight coordination,
sales, production and finance departments.
(3) Design and implement systems in design department to, among
other things, ensure the timely delivery of quality salesmen
samples as well as the systemization of all design records.
(4) Develop and maintain an organized and systematic production
recordkeeping system.
(5) Oversee the quality control and timely delivery of all
production.
(6) Manage relationships with factories and agents including
regular and frequent visits to most factories.
(7) Develop and implement a time/action calendar from line
conception to receipt of orders by the customer.
Schedule B
RELEASE
KNOW ALL MEN BY THESE PRESENTS:
In consideration of the sum of $1.00, receipt of which is hereby
acknowledged, and other good and valuable consideration, Xxxxx Xxxxx and IDL
International, LLC (individually, a "Releasor," and collectively, as
"Releasors"), hereby release and forever discharge to the fullest extent
permitted by law, Pivot Rules, Inc. (the "Company"), any of its parents,
subsidiaries, partnerships or affiliates thereof, and each of its predecessors
and successors in interest, and each of its past, present or future
principals, officers, directors, employees, agents, representatives, advisors,
shareholders, partners, members, successors and assigns (collectively, the
"Released Parties"), from any and all actions, causes of action, suits,
disputes, debts, dues, sums of money, accounts, costs, expenses, reckonings,
bonds, bills, specialties, covenants, charges, complaints, contracts,
agreements, controversies, promises, variances, trespasses, damages,
judgments, extents, executions, claims, liabilities, obligations, promises and
demands whatsoever, of every nature and any kind, in law, admiralty, or equity
in any way relating to any of the Released Parties (collectively, "Actions"),
which the Releasors, the Releasors' heirs, executors, administrators,
directors, officers, agents, successors and assigns (collectively, the
"Releasing Parties") ever had, now have or hereafter can, shall or may have
against the Released Parties (or any of them), for, upon, or by reason of any
matter, cause or thing whatsoever, whether known or unknown, suspected or
unsuspected, from the beginning of the world to the day of the date of this
RELEASE including, without limitation, any and all claims arising out of, or
matters relating to, the Agreement dated May 1996 by and between the Company
and IDL International, LLC, as amended by Addendum dated July 1996, and the
services performed thereunder.
To the extent that any applicable law provides in substance that a
general release does not extend to claims which a releasor does not know or
suspect to exist in his favor at the time of executing the release, which if
known would have materially affected such releasor's settlement with the
releasee, each Releasor, on behalf of himself, itself and each of the
Releasing Parties, hereby agrees that the provisions of such applicable law
are hereby knowingly and voluntarily waived and relinquished by such Releasor,
on behalf of himself, itself and each of the Releasing Parties, to the full
extent that such rights and benefits pertaining to the matters released herein
may be waived, and each Releasor, on behalf of himself, itself and each of the
Releasing Parties, hereby agrees and acknowledges that this waiver is an
essential term of this RELEASE.
In connection with such waiver and relinquishment, each Releasor, on
behalf of himself, itself and each of the Releasing Parties, hereby
acknowledges that such Releasor is aware that such Releasor, or any of the
Releasing Parties, may hereafter discover claims
presently unknown or unsuspected, or facts in addition to or different from
those which such Releasor, or any of the Releasing Parties, now knows or
believes to be true, with respect to the matters released herein.
Nevertheless, it is the intention of each Releasor, on behalf of himself,
itself and each of the Releasing Parties, in executing this RELEASE fully,
finally and forever to settle and release all such matters, and all claims
relative thereto, which exist, hereafter may exist or might have existed
(whether or not previously or currently asserted in any Action) and each
Releasor, on behalf of himself, itself and each of the Releasing Parties,
hereby acknowledges that each Releasor and any of the Releasing Parties shall
not be entitled to any additional payments in connection therewith.
This RELEASE may not be changed orally.
This RELEASE shall be construed and enforced in accordance with, and
the rights of the Releasing Parties and the Released Parties shall be governed
by, the laws of the State of New York, without giving effect to the principles
of conflicts of laws thereof.
IN WITNESS WHEREOF, the undersigned (on behalf of themselves and the
Releasing Parties) have caused this RELEASE to be duly executed on the ____
day of April, 1997.
--------------------------------
Xxxxx Xxxxx
IDL INTERNATIONAL, LLC
By:
-----------------------------
Name:
Title:
0
XXXXX XX XXX XXXX )
: ss.
COUNTY OF )
On April ___, 1997 before me _______________________ personally came
Xxxxx Xxxxx, to me known, and known to me to be the individual described in
and who executed the foregoing Release, and duly acknowledged to me that he
executed the same.
[Seal] ---------------------------
Notary Public
STATE OF NEW YORK )
: ss.
COUNTY OF )
On April __, 1997 before me personally came Xxxxx Xxxxx to
me known, who, by me duly sworn, did depose and say that he is the President
of IDL International, LLC, the company described in and which executed the
foregoing Release, and that deponent is duly authorized to sign the foregoing
Release on behalf of that company.
[Seal] ---------------------------
Notary Public
