1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
, October 1997, to become effective as of the Effective Date (as herein defined)
by and between TROPICAL SPORTSWEAR INTERNATIONAL CORPORATION, a Florida
corporation (the "Company"), and XXXXXXX XXXXX (the "Employee").
RECITALS:
In entering into this Agreement, the Company desires to provide the
Employee with substantial incentives to serve the Company without distraction or
concern over minimum compensation, benefits or tenure, to develop and implement
the Company's business plan and to manage the Company's future growth and
development and to maximize the returns to the Company's stockholders.
NOW, THEREFORE, in consideration of the foregoing and the mutual
provisions contained herein, and for other good and valuable consideration, the
parties hereto agree with each other as follows:
1. CERTAIN DEFINITIONS
A. Certain Definitions. As used herein, the following terms have the
meanings assigned to them below:
"Acquiring Person(Type A)" means any Person who or which,
together with all Affiliates and Associates of such Person, is or are the
Beneficial Owner(s) of a minimum of twenty five (25%) or more of the shares of
Common Stock then outstanding, but does not include any Exempt Person; provided,
however, that a Person shall not be or become an Acquiring Person if such
Person, together with its Affiliates and Associates, shall become the Beneficial
Owner of a minimum of twenty five percent (25%) or more of the shares of Common
Stock then outstanding solely as a result of a reduction in the number of shares
of Common Stock outstanding due to the repurchase of Common Stock by the
Company, unless and until such time as such Person or any Affiliate or Associate
of such Person shall purchase or otherwise become the Beneficial Owner of
additional shares of Common Stock constituting one percent (1%) or more of the
then outstanding shares of Common Stock or any other Person (or Persons) who is
(or collectively are) the Beneficial Owner of shares of Common Stock
constituting one percent (1%) or more of the then outstanding shares of Common
Stock shall become an Affiliate or Associate of such Person, unless, in either
such case, such Person, together with all Affiliates and Associates of such
Person, is not then the Beneficial Owner of a minimum of twenty five percent
(25%) or more of the shares of Common Stock then outstanding.
"Acquiring Person (Type B)" means any Person who or which,
together with all Affiliates and Associates of such Person, is or are the
Beneficial Owner(s) of a minimum of thirty three and one half percent (33.5%) or
more of the shares of Common Stock then outstanding, but does not include any
Exempt Person; provided, however, that a Person shall not be or become an
Acquiring Person if such Person, together with its Affiliates and Associates,
shall become the Beneficial Owner of a minimum of thirty
-1-
2
three and one half percent (33.5%) or more of the shares of Common Stock then
outstanding solely as a result of a reduction in the number of shares of Common
Stock outstanding due to the repurchase of Common Stock by the Company, unless
and until such time as such Person or any Affiliate or Associate of such Person
shall purchase or otherwise become the Beneficial Owner of additional shares of
Common Stock constituting one percent (1%) or more of the then outstanding
shares of Common Stock or any other Person (or Persons) who is (or collectively
are) the Beneficial Owner of shares of Common Stock constituting one percent
(1%) or more of the then outstanding shares of Common Stock shall become an
Affiliate or Associate of such Person, unless, in either such case, such Person,
together with all Affiliates and Associates of such Person, is not then the
Beneficial Owner of a minimum of thirty three and one half percent (33.5%) or
more of the shares of Common Stock then outstanding. If a Person becomes an
Acquiring Person (Type B) he shall not also be considered an Acquiring Person
(Type A).
"Active Status" means the Employee's Employment status from
the Effective Date to the Termination Date.
"Affiliate" has the meaning ascribed to that term in Exchange
Act Rule 12b-2.
"Annual Cash Bonus" is the cash bonus calculated pursuant to
the methodology set forth in paragraph 4.B. and paid to Employee annually during
the term of this Agreement.
"Annual Cash Compensation" of the Employee for any
Compensation Year means the sum of the Base Salary and Annual Cash Bonus earned
by the Employee during that Compensation Year, including all amounts deferred at
the election of the Employee pursuant to a Compensation Plan intended to qualify
as a plan under Section 401(k) of the Code or otherwise. If salary or bonus is
paid in whole or in part in property other than cash (such as Common Stock) the
amount so paid shall be the fair market value thereof on the date of payment.
"Average Annual Bonus" is the average (mean) of the annual
bonuses earned by Employee during the three year period ending on or preceding
the Termination Date (including any Compensation Years that end on or precede
the Effective Date). If, for purposes of a termination payment, the annual bonus
for the most recent year cannot be calculated because necessary information is
not yet available, the annual bonus for the preceding year will be counted twice
instead. If any annual bonus was to be paid in whole or in part in property
other than cash (such as Common Stock) the amount so earned and included for
purposes of this calculation shall be the fair market value thereof on the date
for the determination of such fair market value that is specified in the
agreement that such payment be so paid, and if no such date is therein specified
for such determination, then on the date of such agreement, and , if there is no
such agreement, then on the date of payment.
"Average Annual Compensation" means the sum of the Employee's
Average Base Salary and the Average Annual Bonus.
-2-
3
"Average Base Salary" is the average (mean) of the base
salaries earned by the Employee during the three year period ending on or
preceding the Termination Date (including any Compensation Years that precede or
end on the Effective Date). If any base salary was to be paid in whole or in
part in property other than cash (such as Common Stock) the amount so earned and
included for purpose of this calculation shall be the fair market value thereof
on the date for determination of such fair market value that is specified in the
agreement that such payment be so paid, and if no such date is therein specified
for such determination then on the date of such agreement, and if there is no
such agreement, then on the date of payment.
"Associate" means, with reference to any Person,
(a) any corporation, firm, partnership, association,
unincorporated organization or other entity (other than the Company or a
subsidiary of the Company) of which that Person is an officer or general partner
(or officer or general partner of a general partner) or is, directly or
indirectly, the Beneficial Owner of 15% or more of any class of its equity
securities,
(b) any trust or other estate in which that Person
has a substantial beneficial interest or for or of which that Person serves as
trustee or in a similar fiduciary capacity and
(c) any relative or spouse of that Person, or any
relative of that spouse, who has the same home as that Person.
"Base Salary" means the guaranteed minimum annual salary
payable by the Company to the Employee pursuant to Section 4(A).
"Beneficial Owner" a specified Person is deemed the
"Beneficial Owner" of, and is deemed to "beneficially own," any securities.
(a) of which that Person or any of that Person's
Associates or controlled Affiliates, directly or indirectly, is the "beneficial
owner" (as determined pursuant to Exchange Act Rule 13d-3) or otherwise has the
right to vote or dispose of, including pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
shall not be deemed the "Beneficial Owner" of, or to "beneficially own," any
security under this subparagraph (a) as a result of an agreement, arrangement or
understanding to vote that security if that agreement, arrangement or
understanding: 1) arises solely from a revocable proxy or consent given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the Exchange Act (that is, the
exclusions in these subparagraphs (a) and (b) give effect to the exemption for a
proxy or consent solicitation in Exchange Act rule 14a-2(b) (2); and (2) is not
then reportable by such Person on Exchange Act Schedule 13D (or any comparable
or successor report);
(b) which that Person or any of that Person's
Affiliates or Associates, directly or indirectly, has the right or obligation to
acquire (provided that right or obligation is exercisable or effective
immediately or only after the passage of time or the occurrence of an event)
pursuant to any agreement, arrangement or
-3-
4
understanding (whether or not in writing) or on the exercise of conversion
rights, exchange rights, other rights, warrants or options, with an exercise
price equal to or below the public trading price at the time of calculation;
provided, however, that a Person shall not be deemed the "Beneficial Owner" of,
or to "beneficially own," securities tendered pursuant to a tender or exchange
offer made by that Person or any of that Person's Affiliates or Associates until
those tendered securities are accepted for purchase or exchange; or
(c) which are beneficially owned, directly or
indirectly, by (1) any other Person (or any Affiliate or Associate thereof) with
which the specified Person or any of the specified Person's Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing) for the purpose of acquiring, or holding with the right to vote or of
voting (except pursuant to a revocable proxy or consent as described in the
provision to subparagraph (a) of this definition) or disposing of any voting
securities of the Company or (2) any group (as that term is used in Exchange Act
Rule 13d-5(b)) of which that specified Person is a member; provided, however,
that nothing in this definition shall cause a Person engaged in business as an
underwriter of securities to be the "Beneficial Owner" of, or to "beneficially
own," any securities acquired through such a Person's participation in good
faith in a firm commitment underwriting until the expiration of forty (40) days
after the date of that acquisition and the security has been placed in an
investment account. For purposes of this Agreement, "voting" a security shall
include voting, granting a proxy, acting by consent, making a request or demand
relating to corporate action (including, without limitation, calling a
stockholder meeting) or otherwise giving an authorization (within the meaning of
Section 14(a) of the Exchange Act) in respect of such security.
"Board" means herein the entire Board of Directors of the
Company, except when less than the entire Board is specified herein.
"Business Reason" for the Company's termination of the
Employee's Employment means any reason other than Cause.
"Business Reason Termination Payment During Initial Term"
means at any time during the Initial Term (which begins on the Effective Date
and ends on the fifth anniversary thereof) an amount equal to the Employee's
Average Annual Compensation calculated as of the Termination Date multiplied by
the greater of 2 or the remaining number of years (rounded to the nearest 1/12th
of a year) in such five year Initial Term. For example, if the Company were to
terminate the Employee for a Business Reason two and seven-twelfths (2 7/12)
years from the Effective Date, the Employee would be entitled to an amount equal
to two and five twelfths (2 5/12) times the Employee's Average Annual
Compensation on such Termination Date. If the Company were to terminate the
Employee for a Business Reason four and six-twelfths (4 6/12) years from the
Effective Date, the Employee would be entitled to an amount equal to two times
the Employee's Average Annual Compensation on such Termination Date.
"Business Reason Termination Payment During Renewal Term"
means at any time after the Initial Term and during any Renewal Term an amount
equal to two (2) times the Employee's then Average Annual Compensation
calculated as of the
-4-
5
Termination Date.
"Cause" for the Company's termination of the Employee's
Employment means:
(a) the Employee's final conviction of a felony, as
evidenced by a binding and final judgment, order or decree of a court of
competent jurisdiction, which in the opinion of the Required Board Majority
(excluding Employee) substantially impairs the Employee's ability to perform his
duties and obligations to the Company; or
(b) a determination by the Required Board Majority
(excluding Employee) that the Employee has continued to engage in conduct which
has caused or is reasonably likely to cause, demonstrable and serious injury to
the Company after having been given written notice of such determination by the
Required Board Majority and a reasonable opportunity to cure, which curative
period shall not be less than ninety (90) days: or
( c) the Required Board Majority's determination
(excluding Employee) of Employee's continuing failure to substantially perform
his duties and responsibilities in accordance with the provisions of this
Agreement (except by reason of the Employee's incapacity due to physical or
mental illness or injury) for a period of ninety (90) days (the "Grace Period")
after the Required Board Majority (excluding Employee) has delivered to the
Employee a written demand for substantial performance hereunder which
specifically identifies the provision of this Agreement which the Required Board
Majority contends that Employee has continually failed to substantially perform,
the bases for the Required Board Majority's determination that the Employee has
continually failed to substantially perform his duties and responsibilities
under such provision and the specific nature of the corrective action that the
Required Board Majority proposes that Employee take during the Grace Period;
provided, that for purposes of this clause (c), the Company shall not have Cause
to give such notice or thereafter terminate the Employee's Employment if such
act or omission was taken or omitted to be taken by an officer or employee of
the Company other than Employee or the act or omission was taken or omitted by
Employee with the concurrence of a majority of the Board or the act or omission
was taken or omitted by the Employee in good faith with a reasonable belief that
the act or omission was authorized by a majority of the Board or otherwise in
the interest of the Company. If, during such Grace Period, Employee takes the
corrective action specified by the Required Board Majority Termination for cause
under this provision shall require the approval of the Required Board Majority
(excluding Employee).
"Change of Control (Type A)" means the occurrence of any of
the following events that occurs after the Closing Date:
(a) any Person becomes an Acquiring Person (Type A);
(b) a merger of the Company with or into, or a sale
by the Company of its properties and assets substantially as an entirety to,
another Person occurs and, immediately after that occurrence, any Person, other
than any Exempt Person, together with all Affiliates and Associates of such
Person, shall be the
-5-
6
Beneficial Owner of twenty five percent (25%), but no more than thirty three and
one half percent (33.5%) or more of the total voting power of the then
outstanding Voting Shares of the Person surviving that transaction (in the case
of a merger or consolidation) or the Person acquiring those properties and
assets substantially as an entirety.
"Change of Control (Type B)" means the occurrence of any of
the following events that occurs after the Closing Date:
(a) any Person becomes an Acquiring Person (Type B);
(b) a merger of the Company with or into, or a sale
by the Company of its properties and assets substantially as an entirety to,
another Person occurs and, immediately after that occurrence, any Person, other
than any Exempt Person, together with all Affiliates and Associates of such
Person, other than Exempt Persons, shall be the Beneficial Owner of more than
thirty three and one half percent (33.5%) or more of the total voting power of
the then outstanding Voting Shares of the Person surviving that transaction (in
the case of a merger or consolidation) or the Person acquiring those properties
and assets substantially as an entirety.
"Change of Control (Type A) Payment Upon Voluntary Termination
By Employee" means that if within 365 days after a Change of Control (Type A)
the Employee gives Notice of Termination of this Agreement, the Employee shall
be paid an amount equal to the Employee's Average Base Salary calculated as of
the Termination Date multiplied by two (2.0).
"Change of Control (Type B) Payment Upon Voluntary Termination
By Employee" means that if within 365 days after a Change of Control (Type B)
the Employee terminates this Agreement, the Employee shall be paid an amount
equal to the sum of the Employee's Average Base Salary calculated as of the
Termination Date multiplied by two (2.0) plus the Employee's Average Annual
Bonus calculated as of the Termination Date multiplied by two (2.0).
"Closing Date" means the completion of the closing of the sale
of shares of the Common Stock to the underwriters in the Company's initial
public offering.
"Code" means the Internal Revenue Code of 1986.
"Common Stock" means the common stock or any other voting
securities of the Company.
"Company" means
(a) Tropical Sportswear International Corporation, a
Florida corporation, and any successor thereto;
(b) any Person that assumes the obligations of "the
Company" hereunder, by operation of law, pursuant to Section 7(I) or otherwise,
including but not limited to Tropical Sportswear International Corporation, a
Florida corporation.
-6-
7
"Compensation Plan" means any compensation arrangement, plan,
policy, practice or program established, maintained or sponsored by the Company
or any subsidiary of the Company, or to which the Company or any subsidiary of
the Company contributes, on behalf of any Executive Officer or any member of the
family of any Executive Officer,
(a) including
(i) any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) or other "employee benefit plan" (as defined
in Section 3(3) of ERISA),
(ii) any other retirement and savings plan,
including any supplemental benefit arrangement relating to any plan intended to
be qualified under Section 401 (a) of the Code or whose benefits are limited by
the Code or ERISA,
(iii) any "employee welfare plan" (as
defined in Section 3(l) of ERISA),
(iv) any arrangement, plan, policy, practice
or program providing for severance pay, deferred compensation or insurance
benefit,
(v) any Incentive Plan and
(vi) any arrangement, plan, policy, practice
or program
(A) authorizing and providing for
the payment or reimbursement of expenses attributable to first-class air travel
and first-class hotel occupancy while on travel or
(B) providing for the payment of
business luncheon and country club dues, long-distance charges, mobile phone
monthly air time or other recurring monthly charges or any other fringe benefit,
allowance or accommodation of employment, but
(b) excluding any compensation arrangement, plan,
policy, practice or program to the extent it provides for annual Base Salary or
Annual Cash Bonus.
"Compensation Year" means the fiscal year of the Company.
"Confidential Information" means, with respect to the Company
or any subsidiary of the Company, all trade secrets and other confidential,
non-public/proprietary information of that Person, including information derived
from reports, investigations, research, work in progress, codes, marketing and
sale programs, customer lists, records of customer service requirements, capital
expenditure projects, cost summaries, pricing formulae, contract analyses,
financial information, projections, confidential filings with any governmental
authority and all other confidential, nonpublic concepts, methods of doing
business, materials or information prepared or performed for, by or on behalf of
that Person.
-7-
8
"CPI" means for any period the Consumer Price Index for All
Urban Consumers--All Items Index for Tampa, Florida (or any substantially
similar index published for the same area), as published by the United States
Department of Labor, Bureau of Labor Statistics (or its successor) for that
period.
"Disability" of the Employee means the Employee has been
determined (which determination shall be final and binding on all Persons,
absent manifest error), as a result of a physical or mental illness or personal
injury he has incurred (including illness or injury resulting from any substance
abuse), by a Qualified Physician (who may be the doctor treating or otherwise
acting as the Employee's doctor in connection with the illness or injury in
question) selected by the Employee with the consent of the Company, or by the
Company at its expense and with the consent of the Employee (which consent shall
not be unreasonably withheld in either case), to be unable to perform, at the
time of that determination and, in all reasonable medical likelihood,
indefinitely thereafter, the normal duties then most recently assigned, under
and in accordance with the terms hereof, to the Employee while on Active Status;
provided that, the determination whether the Employee has incurred a Disability
shall be made by a majority of three (3) Qualified Physicians,
(a) one (1) of whom shall be selected by the
Employee,
(b) one (1) of whom shall be selected by the Company
and
(c) the remaining one (1) of whom shall be selected
by the Qualified Physicians selected by the Employee and the Company pursuant to
clauses (a) and (b) of this proviso and the fees and expenses of whom will be
shared and paid in equal amounts by the Employee and the Company if:
(1) (A) the Company has reasonably withheld
its consent to the Qualified Physician, if any, selected by the Employee or
(B) the Employee has reasonably withheld
his consent to the Qualified Physician, if any, selected by the Company and
(2) the Qualified Physicians selected by the
Employee and the Company disagree as to whether the Employee has incurred a
Disability. For purposes of this definition, if the Employee is unable by reason
of illness or injury to give an informed consent to the performance of the
treatment of that illness or injury, a Qualified Physician selected by any
Person who is authorized by applicable law to give that consent will be deemed
to have been selected by the Employee.
"Effective Date" means the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of
1974.
"Employment" means the employment of the Employee by the
Company or a subsidiary of the Company hereunder.
"Exchange Act" means the Securities Exchange Act of 1934.
-8-
9
"Executive Officer" means any of the chairman of the board,
the chief executive officer, the chief operating officer, the chief financial
officer, the president, any executive or senior vice president or the general
counsel of the Company.
"Exempt Person" means
(a) (1) the Company, any subsidiary of the Company,
any employee benefit plan of the Company or of any subsidiary of the Company,
and
(2) any Person organized, appointed or
established by the Company for or pursuant to the terms of any such plan or for
the purpose of funding any such plan or funding other employee benefits for
employees of the Company or any subsidiary of the Company and
(b) the Employee, any Affiliate or Associate of the
Employee or any group (as that term is used in Exchange Act Rule 1 3d-5(b)) of
which the Employee or any Affiliate or Associate of the Employee is a member.
(c) Xxxxxxx X. Xxxxxxx, any Affiliate or Associate of
Xxxxxxx X. Xxxxxxx or any group (as that term is used in Exchange Act Rule 1
3d-5(b)) of which Xxxxxxx X. Xxxxxxx or any Affiliate or Associate of Xxxxxxx X.
Xxxxxxx is a member.
(d) Accel, S.A. de C.V., any Affiliate or Associate
of said Accel or any group (as that term is used in said rule) of which said
Accel or any Affiliate or Associate of said Accel is a member.
(e) Shakale Internacional S.A., any Affiliate of
Associate of said Shakale or any group (as that term is used in said rule) of
which said Shakale or any Affiliate or Associate of said Shakale is a member.
"Good Reason" for the Employee's termination of his Employment
means any of the following that occurs before the Employee gives a Notice of
Termination for Good Reason and which has not been cured by the Company
reasonably promptly after receipt of such notice of Good Reason from the
Employee; provided that any such cure that occurs after ninety (90) days of such
notice shall not be considered reasonably prompt and any such cure that occurs
within 90 days of such notice shall be considered reasonably prompt and provided
further that if such cure occurs Employee shall not be required to give a
subsequent notice if the same or a substantially similar Good Reason again
occurs within one year of the occurrence giving rise to such cure:
(a) any violation or breach of any provision hereof
in any material respect by the Company including but not limited to failure of
the Company to comply with the provisions of paragraphs 4,5, and 6 of this
Agreement in any material respect
(b) either
(1) a failure of the Company to continue in
effect for Employee any Compensation Plan in which the Employee was
participating as of the Termination Date or
-9-
10
(2) the taking of any action by the Company
which would materially and adversely affect the Employee's participation in or
materially reduce the Employee's benefits under, any such Compensation Plan in
effect as of the date of such action,
without, in each such case, providing a substantially equivalent substitute
reasonably acceptable to Employee; or
(c) the assignment to the Employee of duties
inconsistent in any material respect with the Employee's then current positions
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities or any other action by the Company which results in a
material diminution in those positions, authority, duties or responsibilities or
the taking of any action that is the equivalent of a constructive discharge.
(d) the failure of the shareholders to elect Employee as a
member of the board of directors at any time during the Initial Term or any
Renewal Term of this Agreement.
(e) the failure of the Board to elect the Employee as Vice
Chairman of the Board, Chief Financial Officer, Executive Vice President and
Secretary, without his express consent, at any time during the Initial Term or
any Renewal Term of this Agreement.
"Good Reason Payment During Initial Term" means the amount
calculated as of the Termination Date by multiplying the greater of 2 or the
number of years (rounded to the nearest 1/12th of a year) remaining in the
Initial Term (which begins on the Effective Date and ends on the fifth
anniversary thereof) by the Employee's Average Annual Compensation calculated as
of the Termination Date. For example, if the Employee terminates for Good Reason
two and seven -twelfths (2 7/12) years from the Effective Date, the Employee
would be entitled to an amount equal to two and five-twelfths (2-5/12) years
times the Employee's then Average Annual Compensation. If the Employee
terminates for Good Reason four and seven-twelfths (4-7/12) years from the
Effective Date, the Employee would be entitled to an amount equal to two times
the Employee's then Average Annual Compensation.
"Good Reason Payment During Renewal Term" means at any time
after the Initial Term during the Renewal Term an amount equal to two (2) times
the Employee's then Average Annual Compensation, calculated as of the
Termination Date, whether the termination is during the last two years of the
Initial Term or during any Renewal Term.
"Incentive Plan" means any compensation arrangement, plan,
policy, practice or program, other than the Annual Cash Bonus provision of this
agreement set forth in paragraph 4 B, established, maintained or sponsored by
the Company or any subsidiary of the Company, or to which the Company or any
subsidiary of the Company contributes, on behalf of any Executive Officer and
which provides for awards of securities or the phantom equivalent of securities,
including any stock option, stock appreciation right and restricted stock plan,
but excluding any plan intended to qualify
-10-
11
as a plan under any one or more of
Sections 401 (a), 401(k) or 423 of the Code.
"Initial Term" means the first full five year term of this
Agreement commencing with the Effective Date and ending five (5) years from the
Effective Date (notwithstanding the fact that the Renewal Term commences three
years from the Effective Date).
"Nonterminating Party" means the Employee or the Company, as
the case may be, to which the Terminating Party delivers a Notice of
Termination.
"Notice of Termination" to or from the Employee means a
written notice that:
(a) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's Employment, and if the Termination Date is other
than the date of receipt of the notice,
(b) sets forth that Termination Date.
"Person" means any natural person, sole proprietorship,
corporation, partnership of any kind having a separate legal status, limited
liability company, business trust, unincorporated organization or association,
mutual company, joint stock company, joint venture, estate, trust, union or
employee organization or governmental authority.
"Publicly Traded" with respect to shares of stock of a company
means traded on a national securities exchange or listed for quotation on
NASDAQ.
"Qualified Physician" means, in the case of any determination
whether the Employee has sustained a Disability, a physician
(a) holding an M.D. degree from a medical school
located in the United States,
(b) specializing and board certified in the treatment
of the injury or illness that has or may have caused that Disability and
(c) having admission privileges to one or more
hospitals located in Florida or in the state in which the Employee then is
domiciled.
"Renewal Term" means the automatic and continually renewing
term of two (2) years, commencing three (3) years from the Effective Date
(during the Initial Term) and renewing each day thereafter for an additional day
without any further action by the Company or the Employee, it being the
intention of the parties that from the Effective Date there shall be a five (5)
year duration of the Initial Term and from the third anniversary of the
Effective Date there shall be a continuously remaining Renewal Term of two (2)
years duration of the Employee's Employment, subject to the termination
provisions hereof.
"Required Board Majority" means at any time at least a
sixty-six percent
-11-
12
(66%) majority of the members of the Board voting at that
time.
"Securities Act" means the Securities Act of 1933.
"Terminating Party" means the Employee or the Company, as the
may be, who or which terminates the Employee's Employment by means of a Notice
of Termination.
"Termination Date" means:
(a) if the Employee's Employment is terminated by
reason of the Employee's death during the term of this Agreement or retirement
at the age of 65, the date of that death or retirement;
(b) if the 'Employee's Employment is terminated by
reason of the Employee's giving a Notice of Termination following a Change of
Control pursuant to Section 5(B)(i)(b) or (c), sixty (60) days from the Notice
of Termination; provided that the Termination Date shall be no earlier than 275
days after the Change of Control and further provided that the Notice of
Termination shall be no later than 365 days after the Change of Control.
(c) if the Employee's Employment is terminated by
reason of the Employee's giving a Notice of Termination without Good Reason
pursuant to Section 5(B)(i)(d), the Termination Date shall be a date, designated
by the Company, not sooner than the third business day after the Company
receives the applicable Notice of Termination nor later than sixtieth (60th)
day.
(d) if the Employee's Employment is terminated by
reason of the Employee's disability the Termination Date shall be as specified
in Section 5(c).
(e) if the Employee's Employment is terminated by
Employee for any other reason, the elapse of the sixtieth (60th) day after the
Company receives the Notice of Termination;
(f) If the Employee's Employment is terminated by the
Company for Cause, three business days from the date the Employee receives the
Company's Notice of Termination for Cause;
(g) if the Employee's Employment is terminated by the
Company for any other reason, the Termination Date shall be a date designated by
the Company, not sooner than the third business day after the Employee received
the applicable Notice of Termination nor later than the sixtieth (60th) day.
"Type I Cause" means Cause of the type referred to in clause
(a) of the definition of Cause herein.
"Type II Cause" means Cause of the type referred to in clause
(b) or (c) of the definition of Cause herein.
"Voting" shall include, in respect of a security, voting,
granting a proxy,
-12-
13
acting by consent, making a request or demand relating to corporate action
(including calling a stockholder meeting) or otherwise giving an authorization
(within the meaning of Section 14 (a) of the Exchange Act) in respect of such
security.
"Voting Shares" means:
(a) in the case of any corporation, stock of that
corporation of the class or classes having general voting power under ordinary
circumstances to elect a majority of that corporation's board of directors; and
(b) in the case of any other entity, equity interests
of the class or classes having general voting power under ordinary circumstances
equivalent to the Voting Shares of a corporation.
B. Other Definitional Provisions.
(i) Except as otherwise specified herein, all references
herein to any statute defined or referred to herein, including the Code, ERISA
and the Exchange Act, shall be deemed references to that statute or any
successor statute, as the same may have been or may be amended or supplemented
from time to time, and any rules or regulations promulgated thereunder.
(ii) When used in this Agreement, the words "herein," "hereof"
and "hereunder" and words of similar import shall refer to this Agreement as a
whole and not to any provision of this Agreement, and the word "Section" refers
to a Section of this Agreement unless otherwise specified.
(iii) Whenever the context so requires, the singular number
includes the plural and vice versa, and a reference to one gender includes each
other gender and the neuter.
(iv) The word "including" (and, with correlative meaning, the
word "include") means including, without limiting the generality of any
description preceding such word, and the words "shall" and "will" are used
interchangeably and have the same meaning.
2. EMPLOYMENT
A. On the terms and subject to the conditions hereinafter set forth,
and beginning as of the Effective Date, the Company will employ the Employee as
Vice Chairman of the Board, Chief Financial Officer, Executive Vice President
and Secretary of Company and the Employee will serve in the Company's employ in
that position. The Employee shall perform such duties, and have such powers,
authority, functions, duties and responsibilities for the Company and
corporations Affiliated with the Company as are commensurate and consistent with
the employment as Vice Chairman of the Board, Chief Financial Officer, Executive
Vice President and Secretary of the Company. The Employee also shall have such
additional powers, authority, functions, duties and responsibilities as may be
assigned to him by the Board (excluding the voting participation of Employee);
provided that, without the Employee's written consent, such additional powers,
authority, functions, duties and responsibilities shall
-13-
14
not be inconsistent or interfere with, or detract from, those herein vested in,
or otherwise then being performed for the Company by, the Employee.
B. The Employee shall not, at any time during the Employment, engage in
any other activities unless these activities do not interfere materially with
the Employee's duties and responsibilities for the Company at that time, except
that the Employee shall be entitled, subject to the provisions of Section 7,
(a) to continue with such activities as the Employee has
carried on prior to the Effective Date, including making and managing his
personal investments and participating in other business, church or civic
activities provided that such activities do not include a Beneficial Ownership
interest in a competitor, supplier or customer of the Company other than an
investment in a Publicly Traded company of which Employee is not an employee,
officer, director or partner that does not exceed 5% of the outstanding voting
shares of voting stock.
(b) to serve on civic boards, non-profit boards, charitable
boards or committees and trade associations or similar boards of committees.
(c) to serve on for-profit business boards of directors if
Employer's consent shall have been obtained, which consent shall not
unreasonably be withheld.
3. TERM OF EMPLOYMENT
Subject to the provisions of Section 5, the Initial Term of the
Employee's Employment shall be for a period of five (5) years commencing on the
Effective Date. The Renewal Term shall commence three (3) years from the
Effective Date and renew each day thereafter for an additional day without any
further action by the Company or the Employee, it being the intention of the
parties that from the Effective Date there shall be a five (5) year duration and
from the third anniversary of the Effective Date there shall be a continuously
remaining term of two (2) years duration of the Employee's Employment. Subject
to the provisions of Section 5, Employee shall be employed hereunder for the
Initial Term and the Renewal Term. In the event that Employee's Employment
hereunder shall not have otherwise been terminated, such Employment shall
terminate at the end of the Compensation Year in which Employee reaches age 65.
4. COMPENSATION
A. Base Salary. A Base Salary shall be payable to the Employee by the
Company as a guaranteed minimum annual amount hereunder for each Compensation
Year during the period from the Effective Date to the Termination Date. That
Base Salary shall be payable in the intervals consistent with the Company's
normal payroll schedules (but in no event less frequently than semi-monthly),
shall be payable initially at the annual rate of $215,000 and shall be increased
(but not decreased or adjusted other than as provided in Section 5) as follows:
(i) on the first and each subsequent anniversary of the
Effective Date, by the greater of the same percentage increase (if any) in the
CPI for the twelve (12)
-14-
15
month period immediately preceding such anniversary or such amount that the
majority of the Board (for this purpose excluding Employee) shall determine.
(ii) if the Employee is required by reason of his Employment
to relocate from a state without a personal income tax at the time of his
relocation to a state having a personal income tax, the Base Salary and Annual
Cash Bonus in effect at the time of such relocation, shall immediately be
increased by the amount equal to the Base Salary and Annual Cash Bonus
immediately prior to this increase multiplied by seventy percent (70%) of the
highest personal income tax rate of such state; for example, if the Employee
relocates from a state without a personal income tax to a state having a
personal income tax and the highest rate of that tax is six percent (6%) when
the Base Salary is $400,000 and the Annual Cash Bonus is $440,000, then the Base
Salary will be increased by $16,400 (computed at 70% x 6% x $400,000) and the
Annual Cash Bonus will be increased by $18,480 (computed at 70% x 6% x$440,000).
B. Annual Cash Bonus. The Annual Cash Bonus shall be calculated as of
the end of the Compensation Year. (The first such calculation will be made as of
September 30, 1997, the first fiscal year end of the Company after the Effective
Date.) The Annual Cash Bonus shall be paid to the Employee within one hundred
and eighty (180) days of the beginning of each Compensation Year. The Employee's
target Annual Cash Bonus shall be forty percent (40%) of Base Salary. However,
Employee may earn an actual Annual Cash Bonus of between fifty percent (50%) and
two hundred percent (200%) of the target Annual Cash Bonus. If the Company does
not meet the threshold level of performance, the Annual Cash Bonus will be zero
percent (O%) of Base Salary. At the minimum performance threshold, the Annual
Cash Bonus will be fifty percent (50%) of the target Annual Cash Bonus. If the
Company reaches or exceeds the maximum level of performance, Employee's Annual
Cash Bonus will be two-hundred percent (200%) of the target Annual Cash Bonus
(said 200% times the aforesaid 40% resulting in a capping of the Annual Cash
Bonus at 80% of Base Salary.
For purposes of determining the Employee's Annual Cash Bonus, the Company's
average Return on Total Capital Employed (ROCE), as determined over a four year
period, will be calculated and then compared against an average target ROCE as
calculated for a select group of companies over the same period. The select
group of companies shall be those listed on Exhibit B; provided, however that
if the parties agree that one or more of the selected companies becomes
unrepresentative or otherwise unsuitable or unavailable for comparison, the
parties shall select a reasonable substitute. If the parties are unable to agree
upon a reasonable substitute they shall agree on a third party such as a
disinterested and nationally recognized accounting firm that shall make the
recommendation which shall be binding. The average target ROCE for the select
group of twenty (20) publicly traded apparel companies, excluding the Company,
for which financial data are readily available will be calculated by determining
the ROCE each year for each company in the select group and then determining the
average ROCE for each company over the four year period. Next, the companies are
ranked based upon the four year average ROCE for each company. The seventy-fifth
percentile of the four year average ROCE of the select group is the average ROCE
for a company on the list which, excluding the Company, results in five
companies from the select group being above and fifteen
-15-
16
companies for the select group being below the Company's average ROCE. That
average ROCE (i.e. the seventy-fifth percentile) then becomes the target ROCE
("TROCE") for purposes of comparing the Company's average ROCE.
A four year average ROCE for the Company is then calculated in the same fashion
that the average ROCE is calculated for the select group of companies. If the
four year average ROCE for the Company is equal to or greater than eighty-five
percent (85%) of the TROCE, Employee's Annual Cash Bonus is fifty percent (50%)
of the target Annual Cash Bonus. If the four year average ROCE for the Company
is at least one-hundred and thirty percent (130%) of the TROCE, Employee's
Annual Cash Bonus is two-hundred percent (200%) of the target Annual Cash Bonus.
If the four year average ROCE for the Company is between eighty-five percent
(85%) of the TROCE and one-hundred and thirty percent (130%) of the TROCE, the
Annual Cash Bonus will be determined by straight line interpolation (as more
particularly described in the formula attached as Exhibit A and incorporated
herein by reference. Exhibit B attached hereto and incorporated by reference is
an example of the foregoing methodology, correctly applied. The seventy-fifth
percentile of the average ROCE's is 16.58. This is the TROCE. The Company's
average ROCE is 20.16% or 122% of the TROCE. Accordingly, the Employee's Annual
Cash Bonus is 94.66% of Base Salary.
ROCE is defined as net income plus tax adjusted interest expense divided by
beginning shareholder equity plus average total debt. The average total debt
will be calculated on an annual basis and will reflect all interest bearing
liabilities, including off balance sheet items. Net income will be final net
income as reported under GAAP and will not exclude any unusual or extraordinary
items such as gains or losses recognized from the sale of assets, write downs,
etc. The interest expense will include all interest paid by the Company and will
be adjusted to reflect the Company's tax rate for the performance year.
C. Other Compensation. To the extent authorized by a majority of the
Board (excluding Employee) the Employee shall also be entitled to participate in
any additional Compensation Plans from time to time in effect during the term of
this Agreement, regardless of whether the Employee is an Executive Officer. All
awards to the Employee under all Incentive Plans shall take into account the
Employee's positions with and duties and responsibilities to the Company and its
subsidiaries.
D. Limitations on Payments . Notwithstanding any other provision of
this Agreement, if any portion of any payment under this Agreement, or under any
other agreement with or plan of the Company or its affiliates (in the aggregate
"Total Payments"), would constitute an "excess parachute payment," then the
Total Payments to be made to the Employee shall be reduced such that the value
of the aggregate Total Payments that the Employee is entitled to receive shall
be One Dollar ($1) less than the maximum amount which the Employee may receive
without becoming subject to the tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or which the Company may pay
without loss of deduction under Section 280G(a) of the Code. For purposes of
this Agreement, the terms "excess parachute payment" and "parachute payments"
shall have the meaning assigned to them in Section 280G of the Code, and such
"parachute payments" shall be valued as provided therein. Present value for
purposes of this Agreement shall be calculated in
-16-
17
accordance with Section 1274(b) (2) of the Code. Within fifteen (15) days
following the Date of Termination or notice by the Company to the Employee of
its belief that there is a payment or benefit due the Employee which will result
in an excess parachute payment as defined in Section 280G of the Code, the
Employee and the Company, at the Company's expense, shall obtain the opinion
(which need not be unqualified) of nationally recognized tax counsel selected by
the Company's independent auditors and acceptable to the Employee in his sole
discretion (which may be regular outside counsel to the Company), which opinion
sets forth (i) the amount of the Base Period Income, (ii) the amount and present
value of Total Payments and (iii) the amount and present value of any excess
parachute payments determined without regard to the limitations of this
paragraph. As used in this Agreement, the term "Base Period Income" means an
amount equal to the Employee's "annualized includible compensation for the base
period" as defined in Section 280G(d) (1) of the Code. For purposes of such
opinion, the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Company's independent auditors in accordance with the
principles of Sections 280G(d) (3) and (4) of the Code, which determination
shall be evidenced in a certificate of such auditors addressed to the Company
and the Employee. If such opinion determines that there would be an excess
parachute payment, any payment or benefit determined by such counsel to be
includible in Total Payments shall be reduced or eliminated as specified by the
Employee in writing delivered to the Company within five (5) days of his receipt
of such opinion or, if the Employee fails to so notify the Company, then as the
Company shall reasonably determine, so that under the bases of calculations set
forth in such opinion there will be excess parachute payment. If such legal
counsel so requests in connection with the opinion required by this paragraph,
the Employee and the Company shall obtain at the Company's expense, and the
legal counsel may rely on in providing the opinion, the advice of a firm of
recognized executive compensation to be received by the Employee. If the
provisions of Sections 280G and 4999 of the Code are repealed without
succession, then this paragraph shall be of no further force or effect.
5. TERMINATION, DISABILITY AND DEATH
A. Termination of Employment by the Company.
(i) The Company shall be entitled, if acting at the direction
of the Required Board Majority, to terminate the Employee's Employment
(a) at any time for Type I or Type II Cause, or
(b) at any time after December 31,1998 for any
Business Reason.
The Company's termination of the Employee's Employment for Cause will be
effective on the date the Company delivers a Notice of Termination for Cause to
the Employee pursuant to this Section, while the Company's termination of the
Employee's Employment for a Business Reason will be effective not less than
three (3) business days and not more than sixty (60) days from the date the
Company delivers a Notice of Termination for a Business Reason to the Employee
pursuant to this Section 5(A)(i).
-17-
18
Between the time that the Company delivers a Notice of Termination for a
Business Reason and the effective date of such termination, Employee shall
continue to receive all of the payments and consideration provided for in the
Agreement.
(ii) If the Company terminates the Employee's Employment for
Cause, the Company promptly thereafter, and in any event within five (5)
business days thereafter, shall pay the Employee, without right of set off,
except for liquidated sums, or counterclaim, his Base Salary to and including
the Termination Date and the amount of all compensation previously deferred by
the Employee (together with any accrued interest or earnings thereon), in each
case to the extent not theretofore paid, and, when that payment is made, the
Company shall, notwithstanding Section 3, have no further or other obligations
hereunder to the Employee.
(iii) If the Company terminates the Employee's Employment for
a Business Reason at any time during the first three years of the Initial Term
(which commences on the Effective Date and ends five years from the Effective
Date), the Company shall promptly thereafter, and in any event within five (5)
business days of the Termination Date, pay the Employee, without right of set
off, except for liquidated sums, or counterclaim, his Base Salary to and
including the Termination Date and the amount of all compensation previously
deferred by the Employee, if any, (together with any accrued interest or
earnings thereon) together with the Business Reason Termination Payment During
Initial Term, in each case to the extent not theretofore paid, and when all such
payments are made, the Company shall, notwithstanding Section 3, have no further
or other obligations hereunder to the Employee.
(iv) If the Company terminates the Employee's Employment for a
Business Reason after the Initial Term and during the Renewal Term, including
during the portion of the Initial Term that is after the first three years of
such Initial Term, the Company shall promptly thereafter, and in any event
within five (5) business days of the Termination Date, pay the Employee, without
right of set off, except for liquidated sums, or counterclaim, his Base Salary
to and including the Termination Date and the amount of all compensation
previously deferred by the Employee, if any, (together with any accrued interest
or earnings thereon) together with the Business Reason Termination Payment
During Renewal Term, in each case to the extent not theretofore paid, and, when
all such payments are made, the Company shall, notwithstanding Section 3, have
no further or other obligations hereunder to the Employee.
B. Termination of Employment by the Employee.
(i) The Employee shall be entitled to terminate the Employment
(a) For Good Reason. Subject to the provision for
cure described in the definition of the term "Good Reason", the Employee shall
be entitled to terminate his Employment for a Good Reason at any time within one
hundred eighty (180) days after the facts or circumstances constituting that
Good Reason first exist and are known to the Employee, provided that at least
ninety (90) days prior to such Termination the Employee has notified Employer
that Employee believes that Good Reason exists and sets forth in reasonable
detail the basis therefor and, at the time of any Notice of Termination therefor
Good Reason continues to exist. Such termination for Good
-18-
19
Reason shall be effective on the applicable Termination Date. In the event that
the Employee terminates his Employment for Good Reason during the Initial Term,
the Employee, without right of set off, except for liquidated sums, or
counterclaim, upon the Date of Termination. In the event that the Employee
terminates his Employment for Good Reason during any Renewal Term, including any
portion of the Initial Term that is after the first three years of such term,
the Good Reason Payment During Renewal Term shall become due and payable to the
Employee, without right of set off, except for liquidated sums, or counterclaim,
upon the Date of Termination.
(b) Change of Control (Type A). The Employee shall be entitled
to terminate the Employment as a result of Change of Control (Type A), by reason
of the Employee's giving a Notice of Termination following a Change of Control
(Type A) at any time within three hundred sixty-five (365) days after that
Change of Control (Type A) occurs. Such termination shall be effective on the
applicable Termination Date. If the Employee terminates his Employment by reason
of a Change of Control (Type A), except as provided in subparagraph (iv), the
Company shall pay to the Employee in a cash lump sum within five (5) business
days after the Termination Date the amount equal to the sum of
(i) the portion of the Base Salary to and including
the Termination Date which has not yet been paid,
(ii) all compensation previously deferred by the
Employee, if any, (together with any accrued interest and earnings thereon),
(iii) any accrued but unpaid vacation pay,
(iv) any Annual Cash Bonus earned but not yet paid
for fiscal years ending prior to the Termination Date (such Annual Bonus to be
paid as soon as practicable after the information required to calculate such
Annual Bonus is available to the Company in no event later than sixty (60) days
after the required information is available to the Company) and
(v) the Change of Control Payment (Type A) Upon
Voluntary Termination By Employee calculated as of the Termination Date.
(c) Change of Control (Type B). The Employee shall be entitled
to terminate the Employment as a result of Change of Control (Type B), by reason
of the Employee's giving a Notice of Termination following a Change of Control
(Type B) at any time within three hundred sixty-five (365) days after that
Change of Control (Type B) occurs. Such termination shall be effective on the
applicable Termination Date. If the Employee terminates his Employment by reason
of a Change of Control (Type B), except as provided in subparagraph (iv), the
Company shall pay to the Employee in a cash lump sum within five (5) business
days after the Termination Date the amount equal to the sum of
(i) the portion of the Base Salary to and including
the Termination Date which has not yet been paid,
-19-
20
(ii) all compensation previously deferred by the
Employee, if any, (together with any accrued interest and earnings thereon),
(iii) any accrued but unpaid vacation pay;
(iv) any Annual Cash Bonus earned but not yet paid
for fiscal years ending prior to the Termination Date (such Annual Bonus to be
paid as soon as practicable after the information required to calculate such
Annual Bonus is available to the Company in no event later than nine (9) months
after the Termination Date) and
(v) the Change of Control Payment (Type B) Upon
Voluntary Termination By Employee calculated as of the Termination Date.
(d) Without Good Reason. The Employee's termination of his
Employment without Good Reason and other than for Disability will be effective
on the applicable Termination Date. If the Employee terminates his Employment
Without Good Reason and other than for Disability, the Company shall pay to the
Employee, in a cash lump sum within five (5) business days after the Termination
Date, the amount equal to the sum of
(i) the portion of the Base Salary to and including
the Termination Date which has not yet been paid,
(ii) all compensation previously deferred by the
Employee, if any, (together with any accrued interest and earnings thereon)
which has not yet been paid, and
(iii) any accrued but unpaid vacation pay.
C. Termination by Reason of Disability. During the term of this Agreement and
the period following Termination of this Agreement (for any cause whatsoever
other than Type I cause), (the "policy period") the Company shall maintain, at
its expense and at the current expense level, the individual, long-term
non-cancelable guaranteed renewal individual disability plan now in place, until
such time, not to exceed three (3) years, as Employee has commenced to have
earned annual income in excess of 50% of his most recent Base Salary. In the
event the Employee retires while in the employ of the Company, the Company shall
maintain at its expense but at the current level of premium payments, the
individual, long-term non-cancelable guaranteed renewal individual disability
plan more particularly described in Exhibit D for a period of three (3) years
from the date of retirement. If after retirement, the policy premium exceeds the
level of the premium on the retirement date the Employee shall pay the
difference. If the Employee incurs any Disability during the policy period,
either the Employee or the Company may terminate the Employee's Employment. If
the Employee's Employment is terminated by reason of the Employee's disability
and Notice of Termination of such, the Termination Date shall be the date set in
such notice. If the Employee's Employment is terminated by reason of the
Employee's disability, the Employee shall not be subject to the Non-Compete
paragraph 7(b), but shall be remain subject to the
-20-
21
paragraph 7(a) and 7(c).
D. Termination of Employment by Death. Upon the death of the Employee,
the Employment will be terminated on the applicable Termination Date. If the
Employee's Employment is terminated by reason of the Employee's death, the
Company shall pay to the Person the Employee has designated in a written notice
delivered to the Company as his beneficiary entitled to such payment, if any, or
to the Employee's estate, as applicable, in a cash lump sum within thirty (30)
days after the Termination Date, the amount equal to the sum of
(i) the portion of the Base Salary through the end of the
month in which the Termination Date occurs which has not yet been paid,
(ii) all compensation previously deferred by the Employee, if
any, (together with any accrued interest or earnings thereon) which has not yet
been paid, and
(iii) any accrued but unpaid vacation pay.
E. Return of Property. On termination of the Employee's Employment,
however brought about, the Employee (or his representatives) shall promptly
deliver and return to the Company all the Company's property that is in the
possession or under the control of the Employee.
F. Stock Options. Notwithstanding any provision of this Agreement to
the contrary:
(i) except in the case of a termination of the Employee's
Employment for Cause, as described in sub paragraphs (a) and (b) of the Cause
definition, all stock options previously granted to the Employee under Incentive
Plans that have not been exercised and are outstanding as of the time
immediately prior to the Termination Date shall, notwithstanding any contrary
provision of any applicable Incentive Plan, remain outstanding (and continue to
become exercisable pursuant to their respective terms) until exercised or the
expiration of their term, whichever is earlier; and
(ii) in the case of a termination of the Employee's Employment
for Cause, as described in sub paragraphs (a) and (b) of the Cause definition,
all stock options previously granted to Employee under Incentive Plans that have
not been exercised and are outstanding as of the time immediately prior to the
Termination Date shall, notwithstanding any contrary provision of any applicable
Incentive Plan, remain outstanding and continue to be exercisable until
exercised or the date that is ten (10) days after the Termination Date,
whichever is earlier.
Notwithstanding any provision of this Agreement to the contrary, for the
purposes of all Incentive Plans, the term "Cause" shall mean cause (subparagraph
(a) and (b)) as defined herein.
6. OTHER EMPLOYEE RIGHTS
A. Paid Vacation; Holidays. The Employee shall be entitled to not less
than
-21-
22
six (6) weeks of annual vacation and all legal holidays during which times his
applicable compensation shall be paid in full.
B. Fringe Benefits. During the term of this agreement, the Employee is
entitled to the same level of fringe benefits previously and currently provided
to Employee by the Company including but not limited to a company car for
business and personal use, health insurance, dental insurance, disability
insurance, and life insurance; provided further that the Company shall increase
the life insurance benefit to Employee's specified beneficiary to $2.5 million.
C. Business Expenses. The Employee is authorized to incur, and will be
entitled to receive prompt reimbursement for, all reasonable expenses incurred
by the Employee in performing his duties and carrying out his responsibilities
hereunder, including first class air fare and hotels, business meal,
entertainment and travel expenses, provided that the Employee complies with the
applicable policies, practices and procedures of the Company relating to the
submission of expense reports, receipts or similar documentation of those
expenses. The Company shall either pay directly or promptly reimburse the
Employee for such expenses not more than twenty (20) days after the submission
to the Company by the Employee from time to time of an itemized accounting of
such expenditures for which direct payment or reimbursement is sought. Unpaid
reimbursements after such 20-day period shall accrue interest in accordance with
Section 7(K).
D. Support. During the Employment, the Employee shall be provided by
the Company with office space, furnishings, and facilities, reserved parking,
secretarial and administrative assistance, supplies and other support equipment
(including a computer, facsimile machine and photocopier).
E. No Forced Relocation. The Employee shall not be required to move
Employee's principal place of residence from the central Florida area or to
perform regular duties that could reasonably be expected to require either such
move against his wish or to spend amounts of time each week outside the central
Florida area which are unreasonable in relation to the duties and
responsibilities of the Employee hereunder, and the Company agrees that, if it
requests the Employee to make such a move and the Employee declines that
request,
(i) that declination shall not constitute any basis for a
determination that Type II Cause exists unless the business of Employer is
materially put at risk by such refusal as determined by the Required Majority
Board and
(ii) no animosity or prejudice will be held against Employee.
7. GENERAL PROVISIONS
A. Confidentiality. The Employee shall not divulge or communicate to
any person (except in performing his duties under this agreement) or use for his
own purpose Confidential Information which is not generally known to the public
and shall use his best efforts to prevent the publication or disclosure by and
other person of any such Confidential Information. Information shall be deemed
not to be Confidential
-22-
23
Information if it has become known to the public generally through no act or
fault of the Employee. All documents and objects made, complied, received or
held or used by Employee in connection with the business of the Company during
the employment shall be and remain the Company's property.
B. Non-Competition. The Employee agrees that, except as otherwise
provided herein, during the Employment and for a period of two years after the
applicable Termination Date Employee will not directly or indirectly, whether or
not for compensation and whether or not as an employee, be engaged in or have
any impermissible financial interest in any business that is engaged in the
merchandising, manufacturing, distribution or marketing of men's casual pants,
shorts and jeans (a "competing business"). For purpose of this Agreement, the
Employee shall not be deemed to be engaged in a competing business if Employee
is employed by a division or subsidiary or similar business unit of a company or
other business entity that would otherwise be deemed a competing business so
long as the division, subsidiary or similar business unit by which the Employee
is employed is accounted for as a separate profit center and does not engage in
a competing business, and Employee's ownership interest, if any, is not an
impermissible financial interest. For purposes of this Agreement, the Employee
shall be deemed to be engaged in a competing business if Employee is an
employee, officer, director, partner or consultant of such competing business or
has an impermissible financial interest therein. For purposes of this Agreement,
the Employee shall be deemed to have an impermissible financial interest in
competing business if Employee is a partner or shareholder directly or
indirectly, therein, except as provided hereafter. Employee shall not be deemed
to have an impermissible financial interest in any competing publicly traded or
privately held business so long as Employee owns less than five percent (5%) of
any class of securities of such publicly traded or privately held company and is
not an officer, director, partner, employee or consultant thereto, except as to
holding an office or being an employee, as otherwise provided in the "employed
by a division . . ." sentence above.
C. Non-Solicitation. The Employee agrees that during the Employment and
for a period of two (2) years after the Date of Termination, Employee shall not
employ any person who was employed by the Company or any of its controlled
Affiliates on the Termination Date, or induce such Person to accept employment
other than with the Company or its subsidiaries.
D. The Employee recognizes that a breach of his obligations under this
paragraphs (A) through (C) above would cause irreparable harm to the Company
and, provided that as a pre-condition the Company has previously tendered all
sums that are due and payable to the Employee under the terms of this Agreement,
the Company shall be entitled to preliminary and permanent injunctions enjoining
violations as a non-exclusive remedy.
E. Severability. If any one or more of the provisions of this Agreement
shall, for any reason, be held or found by final judgment of a court of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
(i) such invalidity, illegality or unenforceability shall not
affect any other
-23-
24
provisions of this Agreement,
(ii) this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein (except that
this clause (ii) shall not prohibit any modification allowed under Section 7(B))
and
(iii) if the effect of a holding or finding that any such
provision is invalid, illegal or unenforceable is to modify to the Employee's
detriment, reduce or eliminate any compensation, reimbursement, payment,
allowance or other benefit to the Employee intended by the Company and Employee
in entering into this Agreement, the Company shall, within thirty (30) days
after the date of such finding or holding, negotiate and expeditiously enter
into an agreement with the Employee which contains alternative provisions
(reasonably acceptable to the Employee and the Company) that will restore to the
Employee (to the extent lawfully permissible) substantially the same economic,
substantive and income tax benefits and legal rights the Employee would have
enjoyed had such provision been upheld as legal, valid and enforceable; and
(iv) if any provision of this Agreement or portion hereof is
so broad, in scope or duration, as to be unenforceable, such provision or
portions thereof shall be interpreted to be only so broad as to be legal, valid
and enforceable.
F. Nonexclusivity of Rights. Nothing herein shall prevent or limit the
Employee's continuing or future participation in any Compensation Plan or,
subject to Section 9(N), limit or otherwise affect such rights as the Employee
may have under any other contract or agreement with the Company. Vested benefits
and other amounts to which the Employee is or becomes entitled to receive under
any Compensation Plan on or after the Termination Date shall be payable in
accordance with that Compensation Plan, except as expressly modified hereby.
G. Full Settlement. The Company's obligations to make the payments
provided for in, and otherwise to perform its undertakings in, this Agreement
shall not be affected by any right of set-off (other than as to liquidated
amounts), counterclaim, recoupment, defense or other action, claim or right the
Company may have against the Employee or others. Except as stated in Section
5(c), in no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Employee under any provision hereof, and those amounts shall not be reduced,
regardless of whether the Employee obtains other employment or becomes
self-employed.
H. Judicial Review. Any determination as to the existence of Cause by
the Board or Required Board Majority is reviewable by the trier of fact to
determine whether such determination was made in good faith versus bad faith and
whether such determination was reasonable versus arbitrary or capricious.
I. Successors.
(i) This Agreement is personal to the Employee and, without
the prior written consent of the Company, is not assignable or delegable by the
Employee otherwise than by transfer of rights by will or the laws of descent and
distribution.
-24-
25
(ii) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and this Agreement shall
inure to the benefit and be enforceable by the Employee's legal representatives
acting in their capacities as such pursuant to applicable law.
(iii) The Company shall require any successor (direct or
indirect and whether by purchase, merger, consolidation, share exchange or
otherwise) to the business, properties and assets of the Company substantially
as an entirety expressly to assume and agree to perform this Agreement in the
same manner and to the same extent the Company would have been required to
perform it had no such succession taken place.
J. Amendments; Waivers. This Agreement may not be amended or modified
except by a written agreement executed and delivered by the parties hereto or
their respective successors or legal representatives acting in their capacities
as such pursuant to applicable law.
K. Notices. All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery or by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
appropriate Person at the address of such Person get forth below (or at such
other address as such Person may designate by written notice to each other party
in accordance herewith):
(i) if to the Employee, addressed as follows:
Xxxxxxx Xxxxx
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
; and
(ii) if to the Company, addressed as follows:
Tropical Sportswear Int'l Corporation
0000 Xxxx Xxxxxx Xxxxxx
Xxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
In the case of any Notice of Termination or of Good
Reason, with copies to each member of the Board
L. No Waiver. The failure of the Company or the Employee to insist on
strict compliance with any provision of, or to assert any right under, this
Agreement (including the right of the Employee or the right of the Company to
terminate the Employment for Good Reason or by reason of a Change of Control
pursuant to Section, 5(B) (i)) shall not be deemed a waiver of that provision or
of any other provision of or right under this Agreement.
M. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida, without reference to any
principles of
-25-
26
conflicts of laws.
N. Jurisdiction and Venue. The Company and the Employee irrevocably
consents with respect to any action, suit or other legal proceeding pertaining
directly to this Agreement or to the interpretation or enforcement of any of the
Company's or the Employee's right hereunder to service of process in the State
of Florida and hereby waives any right to contest or oppose receipt of such
service of process in Florida provided such Person actually received such
process by mail or electronic communication. The Company and the Employee
irrevocably
(i) agrees that any such action, suit or other legal
proceeding may be brought in Hillsborough County, Florida; and
(ii) consents to the jurisdiction of any appropriate court in
such county in any such action, suit or other legal proceeding and
(iii) waives any objection it may have to the laying of venue
of any such action, suit or other legal proceeding in any of such courts and
(iv) WAIVES ANY RIGHT TO TRIAL BY JURY.
O. Headings. The headings of Sections and subsections hereof are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
P. Interest. If any amounts required to be paid or reimbursed to the
Employee hereunder are not so paid or reimbursed at the times provided herein
(including amounts required to be paid by the Company pursuant to Sections 6 and
10, those amounts shall accrue interest compounded daily at the annual
percentage rate which is one and one half percentage points (1.5%) above the
interest rate announced by NationsBank, Tampa, Florida (or its successor) from
time to time, as its Base Rate (or prime lending rate), from the date those
amounts were required to have been paid or reimbursed to the Employee until
those amounts are finally and fully paid or reimbursed; provided, however, that
in no event shall the amount of interest contracted for, charged or received
hereunder exceed the maximum non-usurious amount of interest allowed by
applicable law.
Q. Publicity. The Company agrees with the Employee that, except to the
extent required by law or legal process (including reporting and public
disclosure contemplated under the Exchange Act and the Securities Act) and any
other law giving any Person a private right of action or suit, neither the
Company nor the Employee will not make or publish, without the prior written
consent of the other, any written or oral statement concerning the terms of the
Employee's employment relationship with the Company and will not, if a Notice of
Termination is given by either the Company or the Employee for any reason,
publish or cause to be published any statement concerning the Company's
relationship with the Employee or the Employee's relationship with the Company,
including Employee's work-related performance or the reasons or basis for the
giving of that Notice of Termination.
-26-
27
R. Tax Withholding. Notwithstanding any other provision hereof, the
Company may withhold from amounts payable hereunder all Federal, state, local
and foreign taxes that are required to be withheld by applicable laws or
regulations.
S. Entire Agreement. The Company and the Employee agree that this
Agreement supersedes all prior written and oral agreements between them with
respect to the employment of the Employee by the Company, but has no effect on
any Compensation Plan in which the Employee was participate prior to the
Effective Date.
T. Effective Date. This Agreement shall be effective on the Closing
Date.
8. LITIGATION COSTS In the event of litigation over the terms or breach of this
Agreement, the prevailing party shall be entitled to recover litigation costs
and attorneys fees from the non-prevailing party.
9. INDEMNIFICATION
The Employee shall be indemnified by the Company to the maximum extent
permitted by the law of Florida, the state of the Company's incorporation, and
the law of the state of incorporation of any subsidiary of the Company of which
the Employee is a director or an officer or employee, as the same may be in
effect from time to time.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year indicated above.
TROPICAL SPORTSWEAR
INTERNATIONAL CORPORATION
By:/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Its: Chief Executive Officer
------------------------------------
EMPLOYEE
/s/ Xxxxxxx Xxxxx
----------------------------------------
Xxxxxxx Xxxxx
Employee's Permanent Address:
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxx, XX 00000
-27-
28
EXHIBIT A
INCENTIVES
Incentive Calculation for Xxxx Xxxxx 2/4/97
for the FYE 9/95
Target
Award
ROCE ROCE Incentive Bonus
Value Performance Opportunity Percentage
----- ----------- ----------- ----------
130% 21.55% 200.00% 80.00%
129% 21.39% 196.67% 78.67%
128% 21.22% 193.33% 77.33%
127% 21.06% 190.00% 76.00%
126% 20.89% 186.67% 74.67%
125% 20.73% 183.33% 73.33%
124% 20.56% 180.00% 72.00%
123% 20.39% 176.67% 70.67%
122% 20.23% 173.33% 69.33%
------------------------------------------------------------------------------------------------------------
121.59% 20.16% 171.97% 68.79%
------------------------------------------------------------------------------------------------------------
121% 20.06% 170.00% 68.00%
120% 19.90% 166.67% 66.67%
119% 19.73% 163.33% 65.33%
118% 19.56% 160.00% 64.00%
117% 19.40% 156.67% 62.67%
116% 19.23% 153.33% 61.33%
115% 19.07% 150.00% 60.00%
114% 18.90% 146.67% 58.67%
113% 18.74% 143.33% 57.33%
112% 18.57% 140.00% 56.00%
111% 18.40% 136.67% 54.67%
110% 18.24% 133.33% 53.33%
109% 18.07% 130.00% 52.00%
108% 17.91% 126.67% 50.67%
107% 17.74% 123.33% 49.33%
106% 17.57% 120.00% 48.00%
105% 17.41% 116.67% 46.67%
104% 17.24% 113.33% 45.33%
103% 17.08% 110.00% 44.00%
102% 16.91% 106.67% 42.67%
101% 16.75% 103.33% 41.33%
100% 16.58% 100.00% 40.00%
Note: 100% = 75th percentile
Xxxx Xxxxx bonus is $192,000 X 68.79% = $132,076
Page 1
29
EXHIBIT B
RETURN ON CAPITAL EMPLOYED
(1992-
1995)
FYE AVERAGE
PERCENTILE COMPANY MONTH 1992 1993 1994 1995 ROCE
-----------------------------------------------------------------------------------------------------------------------------
1 100 Marisa Xxxxxxxxx Inc 3 Dec 218.29% 95.69% 70.07% 29.34% 103.35%
-----------------------------------------------------------------------------------------------------------------------------
2 95 Xxxxx Xxxxxxxx Mar 46.64% 63.30% 32.30% 23.23% 41.37%
-----------------------------------------------------------------------------------------------------------------------------
3 90 Nautica Feb 17.84% 20.94% 28.58% 20.96% 22.08%
-----------------------------------------------------------------------------------------------------------------------------
4 85 Supreme International Jan N/A 25.13% 25.51% 12.92% 21.19%
-----------------------------------------------------------------------------------------------------------------------------
TSI SEPT 34.20% 11.86% 21.87% 12.71% 20.16%
-----------------------------------------------------------------------------------------------------------------------------
5 80 Donnkenny Inc 1 Nov 28.04% 21.13% 15.32% 7.35% 17.96%
-----------------------------------------------------------------------------------------------------------------------------
6 75 Xxxxxxxx Inc Oct 27.42% 17.72% 16.53% 4.65% 16.58%
-----------------------------------------------------------------------------------------------------------------------------
7 70 Tandy Brands June 20.32% 19.70% 16.63% 3.28% 14.98%
-----------------------------------------------------------------------------------------------------------------------------
8 65 Haggar Corp Sept 12.34% 16.40% 18.29% 6.25% 13.32%
-----------------------------------------------------------------------------------------------------------------------------
9 60 Garan Inc Sept 18.95% 18.73% 9.65% 5.72% 13.26%
-----------------------------------------------------------------------------------------------------------------------------
10 55 First Years Dec 10.56% 4.10% 14.91% 14.90% 11.12%
-----------------------------------------------------------------------------------------------------------------------------
11 50 Hampshire Group Dec 13.79% 10.77% 25.87% 18.76% 11.91%
-----------------------------------------------------------------------------------------------------------------------------
12 45 Xxxxxxxx'x Inc Nov 4.14% 8.39% 16.05% 14.92% 10.88%
-----------------------------------------------------------------------------------------------------------------------------
13 40 Quiksilver Oct 1.15% 10.45% 15.37% 15.92% 10.72%
-----------------------------------------------------------------------------------------------------------------------------
14 35 Chic by HIS inc Nov 4.60% 10.31% 8.67% 1.95% 6.38%
-----------------------------------------------------------------------------------------------------------------------------
15 30 Osh Kosh B'Gosh Dec 8.98% 2.68% 4.39% 7.48% 5.88%
-----------------------------------------------------------------------------------------------------------------------------
16 25 Biscayne Apparel Inc Dec -1.10% 17.86% 8.77% -6.66% 4.72%
-----------------------------------------------------------------------------------------------------------------------------
17 20 Danskin Inc 1 Mar 24.87% 9.47% -8.82% -9.27% 4.06%
-----------------------------------------------------------------------------------------------------------------------------
18 15 Hampton Industries Dec 3.58% -0.86% 3.68% 0.72% 1.78%
-----------------------------------------------------------------------------------------------------------------------------
19 10 Farah Inc Oct -12.21% 2.39% 16.68% -7.54% -0.17%
-----------------------------------------------------------------------------------------------------------------------------
20 5 Jalate Ltd 2 Dec N/A N/A N/A -28.01% -28.01%
-----------------------------------------------------------------------------------------------------------------------------
Footnote 1. Danskin & Donnkenny 1992 results based on ending debt only -
beginning debt not available
2. Jalate: IPO 1994. 1992 and 1993 not available
3. Marisa Xxxxxxxxx able to obtain all information - company went
public in 1994
Page 1
