EMPLOYMENT AGREEMENT
Exhibit 10.10
AGREEMENT (this “Agreement”) made as of July 11, 2005, between G-III Apparel Group,
Ltd., a Delaware corporation, with an office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
“Company”), and Xxxxx Xxxxx, an individual residing at 00 Xxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxx
Xxxx 00000 (the “Executive”). Capitalized terms used herein and not otherwise defined
shall have the meanings given them in that certain Stock Purchase Agreement of even date herewith
among the Company, Executive, and the other owners of X. Xxxxx for Xxxxxx Xxxxxxxx, Ltd. and
related companies (the “Purchase Agreement”).
WITNESSETH:
WHEREAS, the Company desires that Executive be employed to serve with the Division that will
be created by the Company to operate the Acquired Companies and the membership interests in Fabio,
and Executive desires to be so employed by the Company, upon the terms and subject to the
conditions herein set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual promises, representations
and covenants herein contained, the parties hereto agree as follows:
1. EMPLOYMENT.
The Company hereby employs Executive as the President of the Division and Vice Chairman of the
Company, and Executive hereby accepts such employment, subject to the terms and conditions herein
set forth. Executive hereby agrees to accept such employment, to diligently, faithfully and
competently perform such services consistent with such position as shall from time to time be
reasonably assigned to him by the Company’s Board of Directors or its Chief Executive Officer, and
to diligently, faithfully and competently devote his entire business time, skill and attention to
the performance of his duties and responsibilities to the Company. Executive shall report directly
to the Company’s Chief Executive Officer. The Company shall, subject to the procedures and
requirements of the Nominating Committee of its Board of Directors, recommend Executive for
election as a director of the Company.
2. TERM.
The term of employment under this Agreement shall begin on the date hereof and shall continue
until January 31, 2009, subject to prior termination in accordance with the terms hereof (the
“Initial Term”). The Initial Term of this Agreement shall be automatically extended for
successive one (1) year periods (each a “Renewal Period”) unless the Company or the
Executive gives written notice to the other at least ninety (90) days prior to the expiration of
the Initial Term, or ninety (90) days prior to the expiration of a Renewal Period, of such party’s
election not to extend this Agreement. References herein to the “Term” shall mean the
Initial Term as it may be so extended by one or more Renewal Periods.
3. COMPENSATION.
As compensation for the employment services to be rendered by Executive hereunder, the Company
agrees to pay, or cause to be paid, to Executive, and Executive agrees to accept, payable in
accordance with Company normal payroll policy at the time in effect, a salary at the rate of Five
Hundred Thousand Dollars ($500,000) per year. Executive shall not be entitled to any additional
compensation for any service as a director of the Company, unless and to the extent that any other
employee of the Company who serves as a director is compensated for such service.
4. EXPENSES.
The Company shall pay or reimburse Executive, upon presentment of suitable vouchers, for all
reasonable business and travel expenses which may be incurred or paid by Executive in connection
with his employment hereunder in accordance with Company policy. Executive shall comply with such
requirements and shall keep such records as the Company may deem necessary to meet the requirements
of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), and
regulations promulgated thereunder.
5. OTHER BENEFITS.
Executive shall be entitled to four (4) weeks paid vacation per year, and to participate in
the benefit plans and arrangements and receive any other benefits customarily provided by the
Company to its senior executive personnel (including any profit sharing, pension, disability
insurance, hospital, major medical insurance and group life insurance plans in accordance with the
terms of such plans) (the “Benefit Plans”), provided, however, that the employee share of
major medical premiums for Executive shall be paid by the Company from the date hereof through
December 31, 2005. If requested by the Company, Executive agrees to undergo a physical examination
at the Company’s expense in connection with the Company obtaining “key man” life insurance with
respect to Executive. The Company agrees to provide to Executive $2.0 million of term life
insurance while employed by the Company. When traveling on business, Executive shall be entitled
to air travel on the same basis as other senior executives of the Company. To the fullest extent
permitted by Delaware law, the Company shall indemnify the Executive and hold him harmless from any
and all claims, losses, liabilities and expenses, including reasonable fees and disbursements of
counsel selected by the Company, arising out of the acts and omissions of Executive as an officer
or director of the Company.
6. TERMINATION OF EMPLOYMENT; EFFECT OF TERMINATION.
(a) Executive’s employment hereunder shall terminate upon the first to occur of the
following:
(i) upon thirty (30) days’ prior written notice to Executive upon the determination
by the Board of Directors of the Company that Executive’s employment shall be terminated for any
reason which would not constitute “justifiable cause” (as hereinafter defined);
(ii) upon written notice to Executive upon the determination by the Board of
Directors of the Company that there is justifiable cause for such termination;
2
(iii) automatically upon the death of Executive;
(iv) in accordance with the terms of subsection (e) hereof upon the “disability” (as
hereinafter defined) of Executive;
(v) upon thirty (30) days’ prior written notice by Executive to the Company of the
Executive’s voluntary termination of employment; or
(vi) upon thirty (30) days’ prior written notice by Executive to the Company of the
Executive’s termination of his employment for “good reason” (as hereinafter defined).
(b) For the purposes of this Agreement:
(i) the term “disability” shall mean the inability of Executive, due to
illness, accident or any other physical or mental incapacity, substantially to perform the material
functions of his duties for a period of three (3) consecutive months or for a total of four (4)
months (whether or not consecutive) in any twelve (12) month period during the term of this
Agreement, as reasonably determined by the Company in good faith; provided that the Company may not
terminate Executive’s employment for disability unless it has first given Executive written notice
of such termination and, within fifteen (15) days after receipt of such notice, Executive has not
returned to the performance of his duties.
(ii) the term “justifiable cause” shall mean: (1) Executive’s repeated
failure or refusal to perform his duties pursuant to, or Executive’s material breach of, this
Agreement where such conduct or material breach shall not have ceased or been remedied within ten
(10) days following written warning from the Company; (2) Executive’s conviction of, or plea of
guilty or no contest to, a felony, whether or not involving money or property of the Company or any
of its affiliates (collectively, the “G-III Group”); (3) Executive’s material dishonesty in
the course of his employment or performance of any act or his failure to act which constitutes
fraud upon the Company or a breach of a fiduciary trust towards the Company, including without
limitation, misappropriation of funds or a misrepresentation of the Company’s or the Division’s
operating results or financial condition; (4) any intentional unauthorized disclosure by Executive
to any person, firm or corporation other than the members of the G-III Group and their respective
directors, managers, officers and employees, of any confidential information or trade secret of the
G-III Group; (5) any action by Executive to secure any personal profit (other than (A) de minimis
amounts or (B) through his ownership of equity in the Company or payments due to him under the
Purchase Agreement) in connection with the business of the G-III Group (for example, without
limitation, using G-III Group assets to pursue other interests, diverting any business opportunity
belonging to the G-III Group to himself or to a third party, xxxxxxx xxxxxxx or taking bribes or
kickbacks); (6) Executive’s engagement in misconduct materially damaging to the property, business
or reputation of the G-III Group; (7) Executive’s illegal use of controlled substances; (8) any act
or omission by Executive involving willful malfeasance or gross negligence in the performance of
Executive’s duties to the material detriment of the G-III Group; or (9) the entry of any order of a
court that remains in effect and is not discharged for a period of at least sixty (60) days, which
enjoins or otherwise limits or restricts the performance by Executive under this Agreement,
relating to any contract, agreement
3
or commitment made by or applicable to Executive in favor of any former employer or any other
person; and
(iii) the term “good reason” shall mean any of the following events that
occur, after expiration of any remedy or cure period, (A) a material diminution of Executive’s
duties and responsibilities that result in a material adverse effect on Executive’s status and
authority, which continues unremedied for a period of thirty (30) days after Executive has given
written notice to the Company specifying in detail the material diminution and material adverse
effect, (B) a change in the Executive’s office location to a location more than fifty (50) miles
outside of New York City, except for such travel as the Company may reasonably require, (C) failure
to timely pay Executive any component of compensation provided for in this Agreement and the
Company’s failure to cure such failure within a period of ten (10) days after written notice of
such failure has been given by the Executive to the Company; or (D) failure by the Buyer to pay any
amount due to Executive under Section 2.3 of the Purchase Agreement within 30 days of the due date
specified therein, and any failure by the Buyer to pay any adjusted amount due to Executive under
Section 2.4 of the Purchase Agreement within thirty (30) days of the determination of such adjusted
amount by the Independent Firm.
(c) Upon termination of Executive’s employment by the Company for justifiable cause
or voluntarily by Executive, Executive shall not be entitled to any amounts or benefits hereunder
other than such portion of Executive’s annual salary, accrued leave, reimbursement of expenses
pursuant to Section 4 hereof and any amounts payable to Executive under the terms of the Benefit
Plans, each as have been accrued through the date of his termination of employment.
(d) If Executive should die during the term of his employment hereunder, this
Agreement shall terminate immediately. In such event, the estate of Executive shall thereupon be
entitled to receive such portion of Executive’s annual salary, accrued leave and reimbursement of
expenses pursuant to Section 4 as has been accrued through the date of his death. Executive’s
estate also shall be entitled to any amounts or benefits payable to Executive under the terms of
the Benefit Plans.
(e) Upon Executive’s disability, the Company shall have the right to terminate
Executive’s employment. Any termination pursuant to this subsection (e) shall be effective on the
date thirty (30) days after which Executive shall have received written notice of the Company’s
election to terminate. In such event, Executive shall thereupon be entitled to receive such
portion of Executive’s annual salary, accrued leave and reimbursement of expenses pursuant to
Section 4 as has been accrued through the date on which Executive’s employment is terminated by
reason of his disability. Executive shall also be entitled to any amounts or benefits payable
under the terms of the Benefit Plans.
(f) In the event that Executive’s employment is terminated during the Term by the
Company without justifiable cause or by the Executive for good reason, the Company shall continue
to pay compensation to Executive under Section 3 and to provide benefits under Section 5 for the
Term. The Company’s obligation to continue to pay such compensation and provide such benefits
shall be conditional upon (1) Executive executing a general release in the form of Exhibit
A attached hereto in favor of the Company waiving claims pertaining to the
4
termination of his employment and other customary employment-related claims and (2)
Executive’s compliance with his obligations under Sections 8, 9, 10 and 11 hereof.
(g) Upon Executive’s termination of his employment hereunder, this Agreement (other
than Sections 4, 6(g), 8, 9, 10, 11 and 14, which shall survive in accordance with their terms)
shall terminate. In such event, except as provided in Section 6(f), Executive shall be entitled to
receive such portion of Executive’s annual salary and vacation as has been accrued to date and
shall be entitled to reimbursement of expenses pursuant to Section 4 hereof and to continue to
participate in the Benefit Plans to the extent participation by former employees is required by law
or permitted by such plans, with the expense of such participation to be as specified in such plans
for former employees. Executive shall also be entitled to any amounts or benefits payable under
the terms of the Benefit Plans. For the avoidance of doubt, if the Executive’s employment is
terminated by the Executive for good reason, the first sentence of this Section 6(g) and the
provisions of Section 6(f) shall be applicable thereto.
(h) Upon the Company giving notice of termination pursuant to Section 6(a)(i) or
(ii) or Executive giving notice of termination pursuant to Section 6(a)(v) or (vi), the Company may
require that Executive immediately leave the Company’s premises, but such requirement shall not
affect the effective date of termination of employment.
7. REPRESENTATIONS AND AGREEMENTS OF EXECUTIVE.
Executive represents and warrants that he is free to enter into this Agreement and to perform
the duties required hereunder, and that there are no employment contracts or understandings,
restrictive covenants or other restrictions, whether written or oral, preventing the performance of
his duties hereunder.
8. NON-COMPETITION.
(a) In view of the unique and valuable services expected to be rendered by Executive
to the Company, Executive’s knowledge of the trade secrets and other proprietary information
relating to the business of the Company and the Division and in consideration of the compensation
to be received hereunder, Executive agrees that until the later of (i) January 31, 2009 and (ii) a
period of one (1) year following the termination of Executive’s employment hereunder (the
“Non-Competition Period”), Executive shall not, whether for compensation or without
compensation, directly or indirectly, as an owner, principal, partner, member, shareholder,
independent contractor, consultant, joint venturer, investor, licensor, lender or in any other
capacity whatsoever, alone, or in association with any other Person, carry on, be engaged or take
part in, or render services (other than services which are generally offered to third parties) or
advice to, own, share in the earnings of, invest in the stocks, bonds or other securities of, or
otherwise become financially interested in, any Person engaged in the manufacture, distribution,
sale, design, production or promotion of men’s outerwear, women’s outerwear or women’s suits;
provided, however, that if Executive voluntarily terminates his employment, the Non-Competition
Period under this Agreement shall end one (1) year following such voluntary termination of
employment. The record or beneficial ownership by Executive of up to the lesser of (i) $400,000 or
(ii) 1.0% of the shares of any corporation whose shares are publicly traded on a national
securities exchange or in the over-the-counter market shall not of
5
itself constitute a breach hereunder. In addition, Executive shall not, directly or
indirectly, during the Non-Competition Period, request or cause any customers with whom the G-III
Group has a business relationship to cancel or terminate any such business relationship with any
member of the G-III Group or solicit, interfere with, entice from or hire from any member of the
G-III Group any employee (or former employee) of any member of the G-III Group.
(b) If any portion of the restrictions set forth in this Section 8 should, for any
reason whatsoever, be declared invalid by a court of competent jurisdiction, the validity or
enforceability of the remainder of such restrictions shall not thereby be adversely affected.
(c) Executive acknowledges that the provisions of this Section 8 were a material
inducement to the Company to enter into this Agreement, and that the Company would not enter into
this Agreement but for the agreements and covenants contained herein. Executive further
acknowledges that the limitations set forth in this Section 8 are reasonable and properly required
for the adequate protection of the business of the G-III Group. Executive hereby waives, to the
extent permitted by law, any and all right to contest the validity of this Section 8 on the grounds
of breadth of its geographic or product or service coverage or length of term. In the event any
such limitation hereunder is deemed to be unreasonable by a court of competent jurisdiction,
Executive agrees to the reduction of the territorial or time limitation to the area or time period
which such court shall deem reasonable.
(d) Nothing contained in this Agreement shall require the Company to utilize
Executive’s services under this Agreement, the Company’s only obligation to Executive being payment
of his compensation, benefits and expenses under this Agreement during the Initial Term.
9. INVENTIONS AND DISCOVERIES.
(a) Executive shall promptly and fully disclose to the Company, with all necessary
detail for a complete understanding of the same, all developments, know-how, improvements,
concepts, ideas, designs, sketches, writings, processes and methods (whether copyrightable,
patentable or otherwise) made, received, conceived, developed, acquired or written during working
hours, or otherwise, by Executive (whether or not at the request or upon the suggestion of the
Company) during the Employment Term, solely or jointly with others, using the G-III Group’s
resources, or relating to any current or proposed business or activities of the G-III Group known
to him as a consequence of his employment or the rendering of services hereunder (collectively, the
“Subject Matter”).
(b) Executive hereby assigns and transfers, and agrees to assign and transfer, to
the Company all his rights, title and interest in and to the Subject Matter, and Executive further
agrees to deliver to the Company any and all drawings, notes, specifications and data relating to
the Subject Matter, and to execute, acknowledge and deliver all such further papers, including
applications for trademarks, copyrights or patents, as may be necessary to obtain trademarks,
copyrights and patents for the Subject Matter in any and all countries and to vest title thereto in
the Company. Executive shall assist the Company in obtaining such trademarks, copyrights or
patents during the term of this Agreement, and any time thereafter on reasonable notice and at
mutually convenient times, and Executive agrees to testify in any prosecution or
6
litigation involving any of the Subject Matter; provided, however, that following termination
of employment Executive shall be reasonably compensated for his time and reimbursed his reasonable
out-of-pocket expenses incurred in rendering such assistance or giving or preparing to give such
testimony if it is required after the Non-Competition Period.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive shall not, during the term of this Agreement, or at any time following
expiration or termination of this Agreement, directly or indirectly, disclose or permit to be known
(other than as is required in the regular course of his duties (including without limitation
disclosures to the Company’s advisors and consultants) or as is required by law (in which case
Executive shall give the Company prior written notice of such required disclosure) or with the
prior written consent of the Company, to any person, firm or corporation, any Confidential
Information (as hereinafter defined) acquired by him during the course of, or as an incident to,
his employment hereunder, relating to the G-III Group, any client of the G-III Group, or any
corporation, partnership or other entity owned or controlled, directly or indirectly, by any of the
foregoing, or in which any of the foregoing has a beneficial interest, including, but not limited
to, the business affairs of each of the foregoing (“G-III Confidential Information”). As
used herein, the term “Confidential Information” shall mean proprietary technology, trade
secrets, designs, sketches, know-how, market studies and forecasts, competitive analyses, pricing
policies, employee lists, personnel policies, manufacturing sources, the substance of agreements
with customers, suppliers and others, marketing arrangements, licensing agreements, servicing and
training programs and arrangements, customer lists and any other documents embodying such
confidential information. This confidentiality obligation shall not apply to any G-III
Confidential Information which becomes publicly available other than in violation of this Section
10.
(b) All information and documents relating to the G-III Group as hereinabove
described shall be the exclusive property of the G-III Group, and Executive shall use his
reasonable best efforts to prevent any publication or disclosure thereof. Upon termination of
Executive’s employment with the Company, all documents, records, reports, writings and other
similar documents containing confidential information, including copies thereof, then in
Executive’s possession or control shall be returned and left with the Company.
11. SPECIFIC PERFORMANCE.
Executive agrees that if he breaches, or threatens to commit a breach of, any of the
provisions of Sections 8, 9 or 10 (the “Restrictive Covenants”), the Company shall have, in
addition to, and not in lieu of, any other rights and remedies available to the Company under law
and in equity, the right to injunctive relief and/or to have the Restrictive Covenants specifically
enforced by a court of competent jurisdiction, without the posting of any bond or other security,
it being agreed that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the G-III Group and that money damages would not provide an adequate remedy
to the Company. Notwithstanding the foregoing, nothing herein shall constitute a waiver by
Executive of his right to contest whether a breach or threatened breach of any Restrictive Covenant
has occurred.
7
12. AMENDMENT OR ALTERATION.
No amendment or alteration of the terms of this Agreement shall be valid unless made in
writing and signed by both of the parties hereto.
13. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of the State of
New York applicable to agreements made and to be performed therein.
14. SEVERABILITY.
The holding of any provision of this Agreement to be invalid or unenforceable by a court of
competent jurisdiction shall not affect any other provision of this Agreement, which shall remain
in full force and effect.
15. WITHHOLDING.
The Company may deduct and withhold from the payments to be made to Executive hereunder any
amounts required to be deducted and withheld by the Company under the provisions of any applicable
statute, law, regulation or ordinance now or hereafter enacted.
16. NOTICES.
Any notices required or permitted to be given hereunder shall be sufficient if in writing, and
if delivered by hand or overnight courier, or sent by certified mail, return receipt requested, to
the addresses set forth above or such other address as either party may from time to time designate
in writing to the other, and shall be deemed given as of the date of the delivery or at the
expiration of three days in the event of a mailing.
17. COUNTERPARTS AND FACSIMILE SIGNATURES.
This Agreement may be signed in counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such counterparts together shall be deemed an
original of this Agreement. For purposes of this Agreement, a facsimile copy of a party’s
signature shall be sufficient to bind such party.
18. WAIVER OR BREACH.
It is agreed that a waiver by either party of a breach of any provision of this Agreement
shall not operate, or be construed, as a waiver of any subsequent breach by that same party.
19. ENTIRE AGREEMENT AND BINDING EFFECT.
This Agreement contains the entire agreement of the parties with respect to the subject matter
hereof, supersedes all prior and contemporaneous agreements, both written and oral, between the
parties with respect to the subject matter hereof, other than provisions of the Purchase Agreement,
and may be modified only by a written instrument signed by each of the
8
parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective legal representatives, heirs, distributors, successors and assigns;
provided, however, that Executive shall not be entitled to assign or delegate any of his rights or
obligations hereunder without the prior written consent of the Company. It is intended that
Sections 8, 9, 10 and 11 benefit each of the Company and each other member of the G-III Group, each
of which is entitled to enforce the provisions of Sections 8, 9, 10 and 11.
20. SURVIVAL.
The termination of Executive’s employment hereunder or the expiration of this Agreement shall
not affect the enforceability of Sections 8, 9, 10 and 11 hereof.
21. FURTHER ASSURANCES.
The parties agree to execute and deliver all such further documents, agreements and
instruments and take such other and further action as may be necessary or appropriate to carry out
the purposes and intent of this Agreement.
22. CONSTRUCTION OF AGREEMENT.
No provision of this Agreement or any related document shall be construed against or
interpreted to the disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or drafted such
provision.
23. HEADINGS.
The Section headings appearing in this Agreement are for the purposes of easy reference and
shall not be considered a part of this Agreement or in any way modify, demand or affect its
provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and
year first above written.
| G-III APPAREL GROUP, LTD. |
||||
| By: | /s/ Xxxxx X. Xxxxxx | |||
| Name: | Xxxxx X. Xxxxxx | |||
| Title: | Senior Vice President | |||
| /s/ Xxxxx Xxxxx | ||||
| Xxxxx Xxxxx | ||||
9
EXHIBIT A
[Letterhead of G-III Apparel Group, Ltd.]
[Date]
[Executive]
[Address]
[Address]
Dear [Executive]:
This will confirm that your employment with G-III Apparel Group, Ltd.. (the “Company”)
has been terminated as of [date]. In exchange for your general release and fulfillment of all of
your commitments in this Agreement, which are set forth below, the Company will pay you the amounts
(the “Severance Payments”) set forth in Section 6(f) of your employment agreement with the
Company (the “Employment Agreement”). In addition, you agree (i) to comply with the terms
of Sections 8, 9 and 10 of the Employment Agreement, (ii) not to disparage the Company or any of
its subsidiaries (collectively, the “G-III Group”) or make or cause to be made any
statement that is critical of or otherwise maligns the business reputation of the G-III Group and
(iii) not to tortiously interfere in any manner with the present or future business activities of
the G-III Group. The Company agrees not to disparage you or make or cause to be made any statement
that is critical of or otherwise maligns your business reputation and not to tortiously interfere
in any manner with your future business activities.
The foregoing voluntary payment is given in return for your discharge and release of all
claims, obligations, and demands which you have, ever had, or in the future may have, against the
Company, any affiliated entities and any of its or their stockholders, officers, directors,
employees, or agents, arising out of or relating to your employment and the termination thereof up
to the date of this Release, including, but not limited to, claims under Title VII of the Civil
Rights Act of 1964, the Fair Labor Standards Act, applicable New York State law, the Civil Rights
Act of 1991, the Age Discrimination in Employment Act, the Older Workers Benefits Protection Act,
the Employee Retirement Income Security Act of 1974, the Americans With Disabilities Act, and all
other federal, state, and local discrimination laws, and claims for wrongful discharge. You
further waive and release any claimed right to reemployment, or employment in the future with the
Company or any other member of the G-III Group. You do not, however, waive or release any claims
which arise after the date that you execute this agreement or any claims to enforce your rights to
the Severance Payments under the Employment Agreement.
The Company has advised you to consult with an attorney and/or governmental agencies prior to
executing this agreement. By executing this agreement you acknowledge that you have been provided
an opportunity to consult with an attorney or other advisor of your choice regarding the terms of
this agreement, that you have been given a minimum of twenty-one days in which to consider whether
you wish to enter into this agreement, and that you have elected to enter into this agreement
knowingly and voluntarily. You may revoke your assent to this
10
agreement within seven days of its execution by you (the “Revocation Period”), and the
agreement will not become effective or enforceable until the Revocation Period has expired.
If this is in accordance with our agreement, please sign and return to us the enclosed copy of
this letter, which shall then be a binding agreement between us.
| G-III APPAREL GROUP, LTD. |
||||
| By: | ||||
| Title: | ||||
Agreed and Accepted:
11
