CONSULTING AGREEMENT
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Consulting Agreement (this "Agreement"), dated this 31st day of December,
1996, by and between Xxxxxxx Chaus, Inc. (the "Company"), a New York
corporation and Xxxxxxx Xxxxxx (the "Consultant").
W I T N E S S E T H
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WHEREAS, the Consultant is currently a party to an Employment Agreement
with the Company, dated December 14, 1995 (the "Employment Agreement"); and
WHEREAS, the Consultant intends to resign as an employee under the
Employment Agreement and the Company desires to retain the Consultant as a
consultant to the Company as provided in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the Company and the Consultant
hereby agree as follows:
1. RESIGNATION FROM EMPLOYMENT; TERMINATION OF EMPLOYMENT AGREEMENT.
Effective as of January 1, 1997, the Consultant resigns from his position
as President - Nautica Division and shall cease to be an employee of the
Company as of that date and the Employment Agreement is hereby terminated as of
such date. No covenants shall survive the termination of the Employment
Agreement, including without limitation non-compete, non-solicitation and
confidentiality covenants. The termination shall be deemed by mutual consent.
From and after the date of commencement of the Term hereof, the rights and
obligations of the parties shall be governed by this Agreement.
2. TERM. This Agreement shall commence on January 1, 1997 and shall
terminate on September 30, 1997 (the "Term").
3. SERVICES.
(a) The Consultant agrees that during the Term, he will serve as a
consultant to the Company and in such capacity, perform such services as
the Chief Executive Officer or the Board of Directors of the Company may,
from time to time, reasonably request in connection with the marketing,
merchandising and sales of the Nautica Division of the Company and such
other projects as are mutually agreed to by the Consultant and the
Company. The Consultant shall report to the Chief Executive Officer of
the Company. The Consultant shall be available at such times and places
as are reasonably requested by the Company.
(b) The Consultant shall devote as much time to the performance of
his obligations hereunder as reasonably required, in the judgement of the
Chief Executive Officer in consultation with the Consultant, to the
business and commercial success of the Company; provided, however, that
nothing contained herein shall prevent the Consultant from accepting
another engagement or full-time position and the Consultant shall be permitted
to perform the services required hereunder in a manner which does not
interfere with his ability to fulfill the commitments of such other engagement
or position.
(c) The Consultant shall not be required to travel in connection
with his services to be performed hereunder.
4. COMPENSATION AND BENEFITS.
In consideration of the services provided by the Consultant
hereunder, the Company shall pay the Consultant compensation of $41,666
per calendar month, payable on the fifteenth day of each calendar month,
if such day is a business day in the State of New York, otherwise on the
next business day thereafter, during the Term of this Agreement. It is
hereby agreed that, notwithstanding anything herein to the contrary, each
monthly payment to be made by the Company to the Consultant shall be
decreased by $656.48 to reimburse the Company for certain personal
expenses of the Consultant which were previously advanced by the Company,
less all monies owed by the Company to the Consultant, the net aggregate
sum of which is $5908.32. Each monthly payment to be made hereunder shall
be in the amount of $41,009.52.
5. OTHER EMPLOYMENT.
(a) The Consultant shall be free to render full-time or part-time
advisory, consultant or any other professional services to other
employers, whether as an employee, consultant or otherwise.
(b) Any compensation the Consultant receives from such other
employment or consultancy services shall not be offset against the
payments to be made to the Consultant by the Company hereunder.
6. BENEFITS.
(a) Pursuant to the requirements of COBRA, the Consultant's covered
dependents, if any, are eligible to continue health insurance coverage
for eighteen (18) months from the date of the Consultant's resignation of
employment from the Company. The Company shall bear the Consultant's
COBRA expense during the Term hereof. After the Term hereof, the
Consultant, at his sole expense, which is currently approximately $469.70
per month, shall be eligible to continue COBRA coverage for the remaining
nine (9) months. The Consultant hereby acknowledges that he has received
the requisite COBRA information and is hereby electing to continue his
health coverage with the Company until he revokes such election by
providing the Company with reasonable prior written notice of such
revocation.
(b) The Consultant shall have thirty (30) days from the termination
of this Agreement (i.e., until October 31, 1997) to exercise his 125,000
vested stock options ("Options") granted to him pursuant to the Company's
1986 Stock Option Plan, as amended (the "Option Plan") and his Employment
Agreement. The exercise price is in the agreement(s) evidencing the grant
of such Options. Should the Consultant wish to exercise such Options, the
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Consultant should contact Xxxxx X. Xxxxxx.
(c) The remaining 375,000 of the Consultant's Options which will not
have vested in accordance with the Option Plan on or before September 30,
1997, shall be forfeited on such date.
7. CERTAIN COVENANTS
(a) Confidentiality
The Consultant agrees not to use, disclose or make accessible to any
other person, firm, partnership, corporation or any other entity any
Confidential Information (as herein defined) pertaining to the business
of the Company except when required to do so by a court of competent
jurisdiction, by any governmental agency having supervisory authority
over the business of the Company, or by any administrative body or
legislative body (including a committee thereof) with jurisdiction to
order the Company to divulge, disclose or make accessible such
information. For purposes of the Agreement, "Confidential Information"
shall mean non-public information concerning the Company's financial
data, statistical data, strategic business plans, product development (or
other proprietary product data), customer and supplier information,
information relating to governmental relations, discoveries, practices,
processes, methods, trade secrets, marketing plans and other non-public,
proprietary and confidential information of the Company, that, in any
case, is not otherwise generally available to the public and has not been
disclosed by the Company to others not subject to confidentiality
agreements.
(b) Non-Solicitation.
The Consultant agrees that during the Term and for a period of nine
(9) months thereafter, without the prior written consent of the Company,
he shall not, on his own behalf or on behalf of any person or entity,
directly or indirectly, hire or solicit the employment of any employee
who was employed by the Company at any time during the one (1) year
period immediately preceding such date of hiring or solicitation by the
Consultant.
(c) Nondisparagement
The Consultant and the Company each agree that, except as may be
required by law, neither will at any time in the future, either directly
or indirectly, engage in, any Disparaging Conduct. For purposes of this
Agreement, "Disparaging Conduct" shall mean the publication by the
Consultant or the Company, orally or in writing, of any negative or
disparaging statements, comments, or remarks regarding the other or in
the case of the Company, any of its respective subsidiaries, affiliates,
directors, officers, or employees, as the case may be.
The Company shall issue a press release (the "Press Release"),
substantially in the form of Exhibit A hereto, in connection with the
Consultant's resignation. The Company shall provide a letter of reference
(the "Letter of Reference") for the Consultant, substantially in the form
of Exhibit B hereto. In responding to inquiries regarding Mr. Winter's
employment, the
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Company shall make statements consistent with the Press Release and the
Letter of Reference.
(d) Confidentiality of Agreement
The Consultant and the Company (other than as required as a matter
of public disclosure under the securities laws) each agree not to
disclose the terms of this Agreement or to otherwise provide a copy of
this Agreement to anyone (other than to professional advisors and as may
be required by applicable law and the Consultant's new employer should
such employer request a copy hereof.)
(e) Acknowledgments Respecting Confidentiality, Nondisparagement and
Nonsolicitation Covenants
With respect to the covenants made by the Consultant and the Company
and set forth in this Section (individually a "Covenant" or collectively
the "Covenants"), the Consultant and the Company each acknowledge and
agree that:
(i) the Covenants are in addition to any rights they may have
at law or at equity; and
(ii) the Covenants are reasonable Covenants under the
circumstances, and if, in the opinion of any court of competent
jurisdiction, any Covenant is not reasonable in any respect, such
court shall have the right, power and authority to excise or modify
such provision or provisions of such Covenant as to the court shall
appear not reasonable and to enforce (A) the remainder of the
Covenant as so amended and (B) the other Covenants. Each agrees that
any breach of any Covenant contained in this Section 7 would
irreparably injure the non-breaching party. Accordingly, each agrees
that the non-breaching party, in addition to pursuing any other
remedies it may have in law or in equity, may obtain an injunction
against the breaching party from any court having jurisdiction over
the matter, restraining any further violation of this Section 7.
8. INDEPENDENT CONTRACTOR. The relationship of the Consultant to the
Company established by this Agreement is that of an independent contractor,
and nothing contained in this Agreement shall be construed to: (a) give the
Consultant the power to (i) direct or control any activities of the
Company, or (ii) create or assume any obligation on behalf of the Company
for any purpose whatsoever; (b) constitute the Consultant as an employee
of the Company or entitle the Consultant to participate in any employee
benefit plans or fringe benefit plans made available to the Company's
employees; or (c) constitute the Consultant as an agent of the Company.
9. RETURN OF DOCUMENTS.
(a) Promptly following execution of this Agreement, the Consultant
shall immediately deliver to the Company all plans, designs, drawings,
specifications, listings, manuals, memoranda, projections, minutes,
records, notebooks, computer programs and similar repositories of or
containing Confidential Information, including all copies, then in the
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Consultant's possession or control or available from persons outside the
Company receiving such documents from the Consultant, whether prepared by
the Consultant or others. At such time, the Consultant shall not retain
any copies or abstracts of any such documents.
(b) Promptly upon termination of this Agreement, the Consultant
shall immediately deliver to the Company all plans, designs, drawings,
specifications, listings, manuals, memoranda, projections, minutes,
records, notebooks, computer programs and similar repositories of or
containing Confidential Information, including all copies, then in the
Consultant's possession or control or available from persons outside the
Company receiving such documents from the Consultant, whether prepared by
the Consultant or others. Upon such termination, the Consultant shall not
retain any copies or abstracts of any such documents.
10. NOTICES. For the purposes of this Agreement, notices and other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses last given by each party to the other, provided that all
notices to the Company shall be directed to the attention of the Chief
Executive Officer of the Company. All notices and communications shall be
deemed to have been received on the date of delivery thereof or on the
third business day after the mailing thereof, except that notice of
change of address shall be effective only upon receipt.
11. SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns, and the term the
"Company" as used herein shall include its successors and assigns. The
terms "successors and assigns" as used herein shall mean a corporation or
other entity acquiring all or substantially all the assets and business
of the Company (including this Agreement) whether by operation of law or
otherwise.
(b) Neither this Agreement nor any right or interest
hereunder shall be assignable or transferable by the Consultant, his heirs,
beneficiaries or legal representatives, except by will or by the laws of
descent and distribution. This Agreement shall be binding upon and inure to
the benefit of the Consultant, his heirs, beneficiaries and legal personal
representatives.
12. MISCELLANEOUS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed
to in writing and signed by the Consultant and the Company. No waiver by any
party hereto at any time of any breach by any other party hereto or compliance
with any condition or provision of this Agreement to be performed by such
other party, shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. No
agreement or representation, oral or otherwise, express or implied, with
respect to the subject matter hereof has been made by any party which is
not expressly set forth in this Agreement.
13. GOVERNING LAW. This Agreement shall be governed by and
construed and
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enforced in accordance with the laws of the state of New York without
giving effect to the conflict of law principles thereof.
14. SEVERABILITY. The provision of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
15. ENTIRE AGREEMENT AND EFFECT ON OTHER AGREEMENTS. This Agreement
constitutes the entirety of the agreement between the parties, and supersedes
all prior agreements, understandings and arrangements, oral or written
(including the Employment Agreement), between the parties on the subject
matter hereof. The payments and benefits provided to the Consultant under this
Agreement are in lieu of all other salary or benefit continuation benefits to
which the Consultant may otherwise be entitled under all other agreements,
plans, policies, practices and arrangements (including the Employment
Agreement).
16. SURVIVAL. The provisions of Sections 7, 9, 10, 11, 12 13, 14,
15 and 16, shall survive the termination of this Agreement.
17. NO ADMISSION. The execution of this Agreement shall not be
construed as an admission of a violation of any statute or law or breach of
any duty or
18. TAXES. The parties acknowledge and agree that the Company will
not and shall not be obligated to make, and that it is the sole responsibility
of the Consultant to make, all periodic filings and payments required to be
made in connection with withholding taxes, estimated taxes or any other
federal, state or local taxes, payments or filings required to be made or
paid in connection with the monthly payments made to the Consultant
hereunder.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer and the Consultant has executed this Agreement
as of the date set forth above.
XXXXXXX CHAUS, INC.
By:/s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: Chief Executive Officer and Office
of the Chairman
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
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EXHIBIT A
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PRESS RELEASE
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The Company announced that Mr. Winter has resigned from his position as
President of the Nautica division, effective as of December 31, in order to
form a consulting firm. Xx. Xxxxxxxx will be assuming the day-to-day
operations of the Nautica division. During the transition period, Mr. Winter
will be acting as a consultant to the Company.
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EXHIBIT B
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FORM OF LETTER OF REFERENCE
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Xxxxxxx Chaus, Inc.
0000 Xxxxxxxx
Xxx Xxxx, X.X. 00000
[Date]
[Name of Prospective Employer]
[Address of Prospective Employer]
Re: Xxxxxxx Xxxxxx
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Dear [Name of Contact at Prospective Employer]:
It is our understanding that Xxxxxxx Xxxxxx is being considered for a
position with your company. He has asked that we provide you with a letter of
reference. Mr. Winter is an experienced and dedicated executive. He worked
very hard for our organization and brought his talents and energy to bear in
participating in launching the Nautica women's wear division and in the
overall operation of the business of Xxxxxxx Chaus, Inc. During his tenure,
Mr. Winter hired and helped to build a strong support staff and developed and
cultivated important industry relationships. Mr. Winter left our organization
voluntarily to form a consulting firm. His departure was amicable. We wish him
well in his future endeavors.
XXXXXXX CHAUS, INC.
By:____________________
Name:
Title:
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