EXHIBIT 10.58
SEVERANCE AND REDEMPTION AGREEMENT
This Severance and Redemption Agreement (the "Agreement") dated June
__, 1999 by and between Xxxxxx X. Xxxx ("Xx. Xxxx") and I.C. Xxxxxx & Company,
Inc., a Delaware corporation (the "Company") is effective as of June __, 1999
(the "Effective Date").
WHEREAS, Xx. Xxxx and the Company are parties to an Executive
Employment Agreement dated May 15, 1997, as amended by an Amendment No. 1 to
Employment Agreement dated August 27, 1998 and as further amended by an
Amendment No. 2 to Employment Agreement dated February 11, 1999 (collectively,
the "Employment Agreement"), pursuant to which Xx. Xxxx is employed as President
and Chief Operating Officer of the Company; and
WHEREAS, Xx. Xxxx is the beneficial owner of 447,792 shares of the
common stock of the Company; and
WHEREAS, the Company, Xx. Xxxx and certain other shareholders of the
Company are parties to an Amended and Restated Shareholders' Agreement dated May
15, 1997, as amended by Amendment No. 1 to the Shareholders' Agreement dated
December 20, 1997, and as being further amended and restated effective as of the
Closing Date (as hereinafter defined) (collectively, the "Stockholders'
Agreement"); and
WHEREAS, the Company and Xx. Xxxx are parties to a Nonstatutory Stock
Option Grant Agreement dated February 11, 1999 and a Nonstatutory Stock Option
Grant Agreement dated June 3, 1999, as being amended effective as of the Closing
Date (collectively, the "Stock Option Agreements"), pursuant to which Xx. Xxxx
has been granted options to acquire an aggregate of 55,000 shares of the common
stock of the Company.
NOW, THEREFORE, in consideration of the representations and warranties
contained herein and for other good and valuable consideration, the Company and
Xx. Xxxx agree as follows:
SECTION 1. RESIGNATION AND SEVERANCE.
1.01. RESIGNATION OF EMPLOYMENT. Xx. Xxxx'x employment with the Company
and any of its affiliates shall be terminated, effective as of the Closing Date.
His termination shall be in the form of a voluntary resignation.
1.02. SEVERANCE. During the period beginning on the Closing Date and
ending on May 15, 2001 (the "Severance Period"), the Company shall pay Xx. Xxxx
xxxxxxxxx payments of $350,000 per annum, less appropriate statutory
withholdings and deductions and Xx. Xxxx'x contributions for medical insurance
coverage in excess of the portion of medical insurance coverage that is normally
paid by the Company (the "Severance Payments"). Such Severance Payments shall be
paid weekly in accordance with the Company's normal payroll practices.
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1.03. MEDICAL AND LIFE INSURANCE COVERAGE. During the Severance Period,
the Company will offer to provide Xx. Xxxx with the same medical and life
insurance coverage that the Company provides to its other senior executives and
Xx. Xxxx will continue to pay any portion of the premiums for such coverages
that is in excess of the amount normally paid by the Company. Thereafter, Xx.
Xxxx will be provided with the appropriate COBRA notice. Once a year during the
Severance Period, Xx. Xxxx may elect to have a physical examination, and the
Company shall reimburse Xx. Xxxx for the reasonable cost of such physical
examination. Any such physical examination shall be comparable to physical
examinations Xx. Xxxx has had at the Company's expense in prior years.
1.04. PENSION. On or before the Closing Date, the Company shall have
taken all actions required to be taken by the Company in order to cause a lump
sum distribution to Xx. Xxxx of his pension benefit, as accrued as of July 1,
1999 (the "Lump Sum Distribution"), such Lump Sum Distribution to be made as
soon as practicable. The Company shall use its best efforts to cause the Lump
Sum Distribution to be made on or prior to July 1, 1999.
1.05. KEY MAN LIFE INSURANCE. Effective as of the Closing Date, the
Company shall cause the assignment to Xx. Xxxx of the Key Man Life Insurance
Policy issued by New York Life to the Company on the life of Xx. Xxxx (the "Key
Man Life Insurance Policy"). The parties acknowledge and agree that the Company
has taken (and, to the extent that any premiums become due between the date
hereof and the Closing Date, will continue to take) loans against the Key Man
Life Insurance Policy to pay the premiums thereon. Upon Closing (as hereinafter
defined), the Company shall have no further obligations with respect to the Key
Man Life Insurance Policy. All premiums for the period beginning on the Closing
Date and for all periods thereafter shall be the sole responsibility of Xx.
Xxxx.
1.06. STOCK OPTIONS. All unvested stock options granted to Xx. Xxxx
pursuant to the Stock Option Agreements shall vest immediately upon Closing,
shall not terminate upon termination of Xx. Xxxx'x employment, and shall be
exercisable at any time and from time to time until the tenth anniversary of the
date that such options were granted. The parties hereby agree that, effective as
of the Closing Date, Section 4.2 of each of the Stock Option Agreements shall
not apply. All other provisions of the Stock Option Agreements shall remain
unchanged and in full force and effect.
1.07. LEGAL FEES. Within a reasonable period after Closing, the Company
shall pay reasonable legal fees, not to exceed $600, incurred by Xx. Xxxx in
connection with the review of this Agreement.
1.08 EFFECT OF RESIGNATION. Upon Closing, the Company shall have no
further obligations to Xx. Xxxx except as specifically set forth in this
Agreement, the Stock Option Agreements and the Shareholders' Agreement. Upon
termination of the Severance Period, the Company shall have no further
obligations to the Executive under the terms of this Agreement. Upon Closing,
Xx. Xxxx shall have no further obligations to the Company except as set forth
herein, in the Shareholders' Agreement and in the Stock Option Agreements.
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SECTION 2. REDEMPTION OF SHARES.
2.01 REDEMPTION OF SHARES. At Closing, Xx. Xxxx shall sell, assign,
transfer and deliver to the Company, and the Company hereby agrees to purchase
and accept from Xx. Xxxx at the Closing, 84,211 shares of common stock of the
Company owned by Xx. Xxxx (the "Redemption Shares") free and clear of all liens,
encumbrances, security interests, options and adverse claims of any kind or
character whatsoever.
2.02. PURCHASE PRICE. The purchase price for the Redemption Shares
shall be $1.1875 per share, for an aggregate purchase price of $100,000 to be
paid to Xx. Xxxx by check issued by the Company at Closing.
SECTION 3. CLOSING.
Unless otherwise mutually agreed to in writing by the Company and Xx.
Xxxx, the closing of the transactions contemplated herein (the "Closing") shall
occur on June __, 1999 at 10:00 a.m. The time and date of the Closing are herein
referred to as the "Closing Date." The parties shall use their best efforts to
have the Closing occur promptly. The Closing shall take place by telephone,
telefax and hand or overnight delivery.
SECTION 4. CLOSING DELIVERIES.
4.01 DELIVERIES OF XX. XXXX. On or prior to the Closing, Xx. Xxxx shall
deliver, or cause to be delivered, to the Company the following:
(i) a written resignation of any and all directorships,
offices and positions of any kind held by Xx. Xxxx with the Company and any of
its affiliates (other than his position as a shareholder and option holder of
the Company), effective as of the Closing Date and reasonably acceptable to the
Company, and any other documents necessary to effect the resignation by Xx. Xxxx
of such offices and positions.
(ii) stock certificates representing the Redemption Shares
duly endorsed in blank or accompanied by stock powers duly executed in blank and
such other documents and instruments as may be reasonably required to consummate
the transactions contemplated hereby.
(iii) a duly executed copy of the Second Amended and Restated
Shareholders' Agreement substantially in the form attached hereto as EXHIBIT A
(the "Second Amended and Restated Shareholders' Agreement").
(iv) duly executed copies of the Stock Purchase Agreements
substantially in the form attached hereto as EXHIBIT B.
(v) Any Company property Xx. Xxxx may have in his possession,
whether located in or outside the office; provided, however, that Xx. Xxxx may
retain possession of the desk chair and personal computer located in his office
at the Company's Bank Street
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location.
4.02. DELIVERIES OF THE COMPANY. On or prior to the Closing, the
Company shall deliver or cause to be delivered to Xx. Xxxx the Redemption Price.
4.03. XX. XXXX'X CONDITIONS TO CLOSING. The obligation of Xx. Xxxx to
proceed with the Closing is subject to the satisfaction at or prior to Closing
of each of the following conditions:
(i) The representations of the Company made in Section 5.02
hereof shall have been true and correct when made, and shall be true and correct
on the Closing Date as though such representations and warranties were made on
and as of the Closing Date and the Company shall have complied with all
covenants and agreements required by this Agreement to be performed or complied
with by the Company at or prior to the Closing.
(ii) The Company shall have delivered to Xx. Xxxx at Closing
the Redemption Price.
(iii) Each of Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxx shall have
delivered to Xx. Xxxx a duly executed Stock Purchase Agreement substantially in
the form attached hereto as EXHIBIT B.
4.04 THE COMPANY'S CONDITIONS TO CLOSING. The obligation of the Company
to proceed with the Closing is subject to the satisfaction at or prior to
Closing of each of the following conditions:
(i) The representations of Xx. Xxxx made in Section 5.01
hereof shall have been true and correct when made, and shall be true and correct
on the Closing Date as though such representations and warranties were made on
and as of the Closing Date and Xx. Xxxx shall have complied with all covenants
and agreements required by this Agreement to be performed or complied with by
Xx. Xxxx prior to the Closing.
(ii) Xx. Xxxx shall have delivered to the Company on or at
Closing the documents described in Section 4.01 hereof.
(iii) Each of Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxxxx shall have
delivered to Xx. Xxxx a duly executed Stock Purchase Agreement substantially in
the form attached hereto as EXHIBIT B.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
5.01. REPRESENTATIONS AND WARRANTIES OF XX. XXXX. Xx. Xxxx hereby
represents and warrants to the Company that the following representations and
warranties are, as of the date hereof, and will be, as of the Closing Date, true
and correct:
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(i) POWER; AUTHORITY. Xx. Xxxx has full power, capacity and
authority to enter into and perform his obligations under this Agreement and
under any other agreements, instruments or documents to be entered into by Xx.
Xxxx pursuant to or in connection with this Agreement.
(ii) TITLE; AGREEMENTS. The Redemption Shares were fully paid,
and Xx. Xxxx shall, from and after the Closing have no claims against the
Company with respect to or relating to the Redemption Shares. Xx. Xxxx is the
sole legal and beneficial owner of, and has good title to, such Redemption
Shares, and has not sold, transferred or encumbered any or all of such
Redemption Shares, and has the full and sufficient right at law and in equity to
assign and transfer such Redemption Shares to the Company in accordance with the
provisions of this Agreement, free and clear of any and all right, title,
interest or claim therein of any other person whatsoever. There are outstanding
no options or rights to acquire any or all of such Redemption Shares. Any
consent, waiver or approval by any third party required in connection with the
execution by Xx. Xxxx of this Agreement or the performance by Xx. Xxxx of the
obligations to be performed by Xx. Xxxx under this Agreement has been obtained.
(iii) BINDING AGREEMENT. This Agreement is a valid and legally
binding obligation of Xx. Xxxx enforceable in accordance with its terms.
5.02 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
warrants to Xx. Xxxx that the following representations and warranties are, as
of the date hereof, and will be, as the Closing Date, true and correct:
(i) ORGANIZATION; AUTHORITY. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite power and authority to enter into and perform the
terms of this Agreement and the transactions contemplated by it thereby. The
execution, delivery and performance of this Agreement and of the agreements and
instruments called for hereunder, and the consummation of the transactions
contemplated by this Agreement and such agreements and instruments hereunder
have been duly and validly authorized by all necessary corporate action of the
Company.
(ii) BINDING AGREEMENT. This Agreement is a valid and legally
binding obligation of the Company enforceable in accordance with its terms.
(iii) CONSENTS. Any consent, waiver or approval by any third
party required in connection with the execution by the Company of this Agreement
or the performance by the Company of the obligations to be performed by the
Company under this Agreement has been obtained.
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SECTION 6. TERMINATION.
This Agreement may be terminated by the Company if the Closing
deliveries of Xx. Xxxx as set forth in Section 4.01 hereto have not been made on
or at Closing or the conditions set forth in Sections 4.04 hereof are not
satisfied, and may be terminated by Xx. Xxxx if the Closing Deliveries of the
Company as set forth in Section 4.02 have not been made on or at Closing or the
conditions set forth in Sections 4.03 hereof are not satisfied.
SECTION 7. RELEASE AND WAIVER.
(i) Effective as of the Closing Date, Xx. Xxxx forever waives
and releases any and all claims that he has or may have against the Company, its
predecessors, successors or assigns, its affiliated entities, and current and
former officers, directors, employees and agents of the Company, its affiliates
and its predecessors, successors and assigns except (a) claims arising from
breaches of this Agreement and (b) claims arising after the Closing Date under
the Shareholders' Agreement and the Stock Option Agreements that are not related
to the termination of Xx. Xxxx'x employment or any other transactions
contemplated under this Agreement. The claims released hereby include, but are
not limited to the following, (a) claims under the Age Discrimination in
Employment Act; (b) claims under the Employment Agreement; (c) claims under the
Shareholders' Agreement or the Stock Option Agreements that (i) arise on or
before the Closing Date or (ii) arise out of or relate to The termination of Xx.
Xxxx'x employment or any other transaction contemplated under this Agreement;
(d) claims arising under any other form of contract; (e) claims in tort or
sounding in tort; (f) claims for attorney's fees and expenses; and (g) claims
under any federal, state, or local statute or ordinance, including those
relating to compensation, employment and separation from employment.
(ii) Effective as of the Closing Date, the Company (which term
shall include, for purposes of this Section 7(ii), the Company, its
predecessors, successors and assigns, and its affiliated entities) forever
waives and releases any and all claims that it has or may have against Xx. Xxxx
except (a) claims arising from breaches of this Agreement and (b) claims arising
after the Closing Date under the Shareholders' Agreement and the Stock Option
Agreements that are not related to the termination of Xx. Xxxx'x employment or
any other transactions contemplated under this Agreement. The claims released
hereby include, but are not limited to the following, (a) claims under the
Shareholders' Agreement or the Stock Option Agreements that (i) arise on or
before the Closing Date or (ii) arise out of or relate to the termination of Xx.
Xxxx'x employment or any other transaction contemplated under this Agreement;
(b) claims arising under any other form of contract; (c) claims in tort or
sounding in tort; (d) claims for attorney's fees and expenses; and (e) claims
under any federal, state, or local statute or ordinance, including those
relating to compensation, employment and separation from employment.
SECTION 8. CERTAIN COVENANTS.
8.01. UNEMPLOYMENT CLAIMS. The Company will not contest Xx. Xxxx'x
claim for unemployment compensation.
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8.02. NON-COMPETE. Xx. Xxxx and the Company recognize that due to the
nature of Xx. Xxxx'x employment, and his relationship with the Company, Xx. Xxxx
has had access to, and has acquired, and has assisted in developing,
confidential and proprietary information relating to the business and operations
of the Company and its predecessors and affiliates, including, without
limitation, information with respect to their present and prospective services,
systems, products, clients, customers, agents, and sales and marketing methods.
Xx. Xxxx acknowledges that such information has been and will be of central
importance to the Company's business and that disclosure of it to others or its
use by others could cause substantial loss to the Company. Xx. Xxxx and the
Company also recognize that an important part of the Xx. Xxxx'x duties was to
develop good will for the Company through his personal contact with the
Company's clients, and that there is a danger that this good will, a proprietary
asset of the Company, may follow Xx. Xxxx when his relationship with the Company
is terminated.
(i) Xx. Xxxx agrees that for a period of three (3) months
after the Closing Date:
A. Xx. Xxxx will not directly or indirectly, within the
United States, whether as a partner, proprietor, employee, consultant, agent or
otherwise, participate or engage in any business that competes with, restricts,
or interferes with the business of the Company, including, without limitation,
any business in the young men's and women's contemporary sportswear industry.
B. Xx. Xxxx will not directly or indirectly (for his own
account, or for the account of others) interfere with, solicit, or accept for
himself, his benefit, or for anyone other than the Company, any of the clients
or customers of the Company or any potential clients or customers solicited or
being solicited by the Company at the time of the Closing Date or perform any
services of any competitive nature in connection with said clients or customers
for anyone other than the Company.
C. Xx. Xxxx further agrees that he shall not directly or
indirectly, urge any client (or customer) or potential client (or potential
customer) of the Company to discontinue business, in whole or in part, or not to
do business, with the Company.
D. Xx. Xxxx further agrees that he shall not directly or
indirectly, solicit, hire or arrange to hire any person who at the time of such
hire was an employee of the Company and was not involuntarily terminated by the
Company, for himself or for any business entity with which he may be, or may be
planning to be, affiliated or associated, or otherwise interfere with the
retention of employees that the Company desires to retain as such.
(ii) Xx. Xxxx expressly acknowledges and agrees (x) that the
restrictions set forth herein are reasonable, in terms of scope, duration,
geographic area, and otherwise, (y) that the protections afforded to the Company
hereunder are necessary to protect its legitimate business interests, and (z)
that the agreement to observe such restrictions forms a material part of the
consideration for this Agreement and Xx. Xxxx'x employment by the
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Company.
8.03. CONFIDENTIALITY. The parties hereby agree to use their best
efforts to keep this Agreement and its terms in confidence until such time as it
us publicly announced by the Company.
8.04. COOPERATION. During the Severance Period, Xx. Xxxx shall comply
with reasonable requests by the Company that Xx. Xxxx cooperate with the Company
and provide the Company or, at the request of the Company, third parties with
information he shall have acquired as a result of his employment with the
Company.
SECTION 9. MISCELLANEOUS PROVISIONS.
9.01. CONSIDERATION PERIOD. Consistent with the provisions of the Older
Workers Benefit Protection Act, Xx. Xxxx acknowledges that he has had at least
twenty-one (21) days within which to consider executing this document, although
he is free to execute this Agreement earlier. If this Agreement is not signed
within twenty-five (25) days, this Agreement is considered null and void. Xx.
Xxxx has been advised that he should consult legal counsel concerning the terms
of this Agreement.
9.02. NO ADMISSION. Neither this Agreement nor the fact that the
Company has entered into this Agreement shall be construed in any way as an
admission by the Company, its predecessors, its affiliates or current and former
officers, directors, employees or agents of the Company, its predecessors or
affiliates of any improper or wrongful conduct in their dealings with Xx. Xxxx.
9.03. REVOCATION. Xx. Xxxx shall have seven (7) days following his
signing of this Agreement to revoke it, and the Agreement shall not become
effective until the seven (7) day revocation period has expired. Such revocation
must be in writing, and received prior to the Effective Date at the following
address: I.C. Xxxxxx & Company, Inc., 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Xx. Xxxxxx X. Xxxxx.
9.04. SURVIVAL. The representations, warranties, covenants and
agreements made by the parties in this Agreement shall survive the Closing and
shall continue in full force and effect without limitation after the Closing.
9.05. AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended, supplemented or modified, only with the written consent of each of the
parties hereto, and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the party against whom the
waiver is sought to be enforced. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
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9.06. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement and all rights and
obligations hereunder may not be assigned or transferred without the prior
written consent of the other parties hereto. Nothing in this Agreement, express
or implied, is intended to confer upon any person or entity other than the
parties hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
9.07. CHOICE OF LAW. This Agreement shall be governed by and construed
under and the rights of the parties determined in accordance with the laws of
the State of Maryland (without reference to the choice of law provisions of the
State of Maryland) except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
9.08. SEVERABILITY. If one or more provisions of this Agreement shall
be held invalid, illegal or unenforceable, such provision shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement. In either
case, the balance of this Agreement shall be interpreted as if such provision
were so modified or excluded, as the case may be, and shall be enforceable in
accordance with its terms.
9.09. ENTIRE AGREEMENT. This Agreement, together with the exhibits
hereto, constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior understandings and agreements,
whether written or oral, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein. The Employment Agreement is terminated in its
entirety, the parties shall have no further obligations thereunder, and the
terms of this Agreement supercede anything contained in therein.
9.10 HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and do not form a part or affect the meaning,
construction or scope thereof.
9.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ATTEST: I.C. XXXXXX & COMPANY, INC.
---------------------------- By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx, Chairman and
Chief Executive Officer
WITNESS:
---------------------------- /s/ XXXXXX X. XXXX
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Xxxxxx X. Xxxx
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EXHIBIT A
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EXHIBIT B
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