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EXHIBIT 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
(Restated as of July 1, 1998)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and effective as
of July 1, 1998, by and between THE SIRENA APPAREL GROUP, INC., a Delaware
corporation (the "Company"), and XXXXXXX XXXXXXXX (the "Employee"), with respect
to the following facts:
A. The Company desires to be assured of the continued association and
services of the Employee in order to take advantage of his experience, knowledge
and abilities in the Company's business, and is willing to employ the Employee,
and the Employee desires to be so employed, on the terms and conditions set
forth in the Agreement.
B. The Employee from time to time in the course of his employment may
learn trade secrets and other confidential information concerning the Company,
and the Company desires to safeguard such trade secrets and confidential
information against unauthorized use and disclosure.
C. The Company and the Employee intend this Agreement to be a complete
amendment and restatement of all previous agreements and understandings between
them as to the subject matter hereof and to wholly supersede any and all such
prior agreements and/or understandings.
ACCORDINGLY, on the basis of the representations, warranties and
covenants contained herein, the parties hereto agree as follows:
1. EMPLOYMENT
1.1 Employment. The Company hereby employs the Employee as
President and Vice Chairman of the Company's Board of Directors, and the
Employee hereby accepts such employment, on the terms and conditions set forth
below, to perform during the term of the Agreement such services as are required
hereunder.
1.2 Duties. The Employee shall report to the Company's Chief
Executive Officer and shall render such services to the Company, and shall
perform such duties and acts, as reasonably may be required by the Chief
Executive Officer and by the Company's Board of Directors in connection with any
aspect of the Company's business. Employee's duties shall generally relate to
corporate merchandising, marketing and sales.
1.3 Service to Others. The Employee shall devote his entire
productive time, ability and attention to, and shall diligently and
conscientiously use his best efforts to further, the Company's business, and
shall not, without the prior written consent of the Company's Board of Directors
in each instance, perform services of any kind, whether or not for compensation,
for any person other than the Company, which services, in the sole opinion of
the Company's Board of Directors, might materially interfere with the
performance of his duties hereunder.
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1.4 Effective Date. The Agreement shall be made and effective
July 1, 1998 and, on said date, shall wholly supersede and replace all prior
agreements or understandings relating to Employee's employment with the Company.
2. COMPENSATION
2.1 Compensation. As the total consideration for the services
which the Employee renders hereunder, the Employee shall be entitled to the
following:
(a) an annual base salary of $350,000, subject to such
periodic increases, if any, as the Company's Board of Directors may deem to be
appropriate in its sole discretion, less income tax and other applicable
withholdings, payable in weekly installments consistent with the payments
practices generally applicable to employees of the Company;
(b) an annual bonus of up to one hundred percent (100%) of
the Employee's annual base salary based upon achievement by the Company of the
performance criteria set forth in Exhibit A, less income tax and other
applicable withholdings; provided, however, that, upon execution of this
Agreement by Employee and the Company, Employee's bonus in respect of the
Company's fiscal year ended June 30, 1998 shall be fixed at $365,000;
(c) participation in all benefit plans or programs sponsored
by the Company for executive officers in general, including, without limitation,
participation in any group health plan, medical reimbursement plan, dental plan,
disability insurance plan (the costs, including premiums, for each of the
foregoing plans shall be paid exclusively by the Company), life insurance plan
(on terms at least as beneficial to the Employee as terms offered Employee on
the date of this Agreement) and pension and profit sharing plan;
(d) reimbursement of any and all reasonable and documented
expenses incurred by the Employee from time to time in the performance of his
duties hereunder;
(e) four (4) weeks paid vacation per year, at such time or
times as the Company's Board of Directors may authorize, and all paid holidays
observed by the Company; provided, however, that such vacation shall be taken
annually and shall not cumulate from year to year (it being understood and
agreed that the Employee's accrued vacation at the inception of this Agreement,
in respect of past service, is four (4) weeks and that Employee is entitled to
time off in respect of accrued vacations earned under the previous terms of
Employee's employment aggregating $55,000 which shall be paid to Employee
without interest upon request by Employee);
(f) an automobile allowance in the amount of $850 per month,
together with reimbursement of all expenses for insurance, fuel and maintenance;
(g) term life insurance in the amount of $500,000 payable as
directed by the Employee; and
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(h) options to purchase up to 100,000 shares of Common Stock
of the Company of which options to purchase up to 33,333 shares of such stock
shall, upon the terms and subject to the conditions set forth in Exhibit A, be
awarded in respect of each of the first three years of employment under this
Agreement.
2.2 Illness. Subject to the limitations contained in Section
3.2(c) and 3.3(i) of the Agreement, if the Employee shall be unable to render
the services required hereunder on account of personal injuries or physical or
mental illness, he shall continue to receive all payments provided in the
Agreement; provided, however, that any such payments may, at the sole option of
the Company, be reduced by any amount that the Employee receives for the period
covered by such payments as disability compensation under insurance policies, if
any, maintained by the Company or under government programs.
3. TERM OF EMPLOYMENT AND TERMINATION
3.1 Term. Unless sooner terminated pursuant to Section 3.2 of the
Agreement, the term of employment under the Agreement shall be for a period
commencing on July 1, 1998 and ending on June 30, 2001; provided, however, that
such term of employment shall automatically be renewed from year to year for
successive one (1) year terms unless written notice of intent not to renew is
given by either the Company or the Employee on or before December 31 of any year
prior to the June 30 scheduled expiration of the term hereof.
3.2 Termination. Employment under the Agreement shall terminate
prior to the expiration of its term upon the happening of any of the following
events:
(a) the mutual agreement of the Company and the Employee;
(b) the death of the Employee;
(c) at the Company's option if, in the reasonable judgment
of the Company's Board of Directors, the Employee has become so physically or
mentally disabled as to be incapable of substantially performing his duties
hereunder for a period of six (6) consecutive months or an aggregate of 180 days
in any twelve (12) month period;
(d) at the Company's option, for "cause" in the event of (i)
a material breach of the Agreement by reason of the Employee's repeated and
willful failure or refusal to perform his duties in accordance with the
Agreement or (ii) the conviction of the Employee of a felony or of a misdemeanor
involving financial impropriety or (iii) the material breach of the Employee's
fiduciary duty to the Company; provided, however, that no termination shall
occur under clause (i) unless the Employee first shall have received notice
specifying the acts or omissions alleged to constitute such breach and, if such
breach can be corrected, it continues after the Employee shall have had
reasonable opportunity to correct it;
(e) at the Employee's option, in the event of (i) a material
breach of the Agreement by the Company or (ii) the assignment to the Employee of
duties inconsistent with his duties as described in Sections 1.1 and 1.2 above
or (iii) a substantial alteration in the
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Employee's reporting responsibility, title or office or (iv) a move of the
Company's principal executive offices outside the County of Los Angeles or (v)
within two (2) years from and after the date hereof, there shall occur a "change
of control" of the Company as defined in Exhibit B hereto; provided, however,
that no termination shall occur under clause (i) unless the Company first shall
have received notice specifying the acts or omissions alleged to constitute such
breach and, if such breach can be corrected, it continues after the Company
shall have had reasonable opportunity to correct it; or
(f) at the Company's option by resolution of the Board of
Directors for any reason whatsoever without cause.
3.3 Duties Upon Termination. In the event that employment under
the Agreement is terminated by the Company other than for "cause," as defined
herein, or by the Employee in any circumstance described in Section 3.2(e),
neither the Company nor the Employee shall have any remaining duties or
obligations hereunder, except that (i) the Company shall continue to pay to the
Employee, or his estate, the compensation to which Employee would otherwise be
entitled pursuant to Sections 2.1(a) and (c) during the period commencing on the
effective date of such termination and ending on the date occurring twenty-four
(24) calendar months after such effective date, (ii) the Employee shall continue
to be bound by Section 4 of the Agreement, and (iii) the Employee shall resign
as a director of the Company, if he then be such, immediately upon the request
of a majority of the Board of Directors (other than the Employee). Employee
shall have the right, by giving the Company written notice of his election
within 60 days following termination of employment, to require the Company to
pay any amounts payable pursuant to clause 3.3(i) of this Agreement, in a single
lump sum.
4. TRADE SECRETS
4.1 Trade Secrets. The Employee shall not, without the prior
written consent of the Company's Board of Directors in each instance, disclose
or use in any way, during the term of his employment by the Company or
thereafter, except as required in the course of such employment, any
confidential business or technical information or trade secret of the Company
acquired in the course of such employment, whether or not patentable,
copyrightable or otherwise protected by law, and whether or not conceived of or
prepared by him (collectively, the "Trade Secrets") including, without
limitation, any information concerning designs, patterns, customer lists,
products, procedures, operations, investments, financing, costs, employees,
purchasing, accounting, marketing, merchandising, sales, salaries, pricing,
profits and plans for future development, the identity, requirements,
preferences, practices and methods of doing business of specific parties with
whom the Company transacts business, and all other information which is related
to any product, service or business of the Company, other than information which
is generally known in the industry in which the Company transacts business or is
acquired from public sources; all of which Trade Secrets are the exclusive and
valuable property of the Company.
4.2 Tangible Items. All files, accounts, records, documents,
books, forms, notes, reports, memoranda, studies, compilations of information,
correspondence and all copies, abstracts and summaries of the foregoing, and all
other physical items related to the Company,
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other than a merely personal item, whether of a public nature or not, and
whether prepared by the Employee or not, are and shall remain the exclusive
property of the Company and shall not be removed from the premises of the
Company, except as required in the course of employment by the Company, without
the prior written consent of the Company's Board of Directors in each instance,
and the same shall be promptly returned to the Company by the Employee on the
expiration or termination of his employment by the Company or at any time prior
thereto upon the request of the Company.
4.3 Solicitation of Employees. During the term of his employment
by the Company and for one (1) year thereafter (such period not to include any
period of violation hereof by the Employee or period which is required for
litigation to enforce this paragraph and during which the Employee is in
violation hereof), the Employee shall not, directly or indirectly, either for
his own benefit or purposes or the benefit of purposes of any other person,
employ or offer to employ, call on, solicit, interfere with or attempt to divert
or entice away any employee of the Company in any capacity if that person
possesses or has knowledge of any Trade Secrets of the Company.
4.4 Injunctive Relief. The Employee hereby acknowledges and
agrees that it would be difficult to fully compensate the Company for damages
resulting from the breach or threatened breach of this Section 4 and,
accordingly, that the Company shall be entitled to seek temporary and injunctive
relief, including temporary restraining orders, preliminary injunctions and
permanent injunctions, to enforce such provisions without the necessity of
posting any bond or other undertaking in connection therewith. This provision
with respect to injunctive relief shall not, however, diminish the Company's
right to claim and recover damages.
4.5 "Company". For the purposes of this Section 4 of the
Agreement only, the term "Company" shall mean collectively The Sirena Apparel
Group, Inc., a Delaware corporation, and its successors, assigns and nominees,
and all individuals, corporations and other entities that directly, or
indirectly through one or more intermediaries, control or are controlled by or
are under common control with any of the foregoing.
5. RELEASE
5.1 Termination of Prior Agreements. The rights and obligations
of the Company and the Employee, if any, under any and all prior agreements,
understandings and arrangements in respect of the Employee's employment by the
Company ("Prior Agreements") hereby are terminated effective as of the date
hereof. From and after the date hereof, neither the Company nor the Employee
shall have any further rights or obligations whatsoever under the Prior
Agreements, except that such termination shall not affect the stock purchase
options granted to the Employee thereunder. Employee acknowledges that he has
been paid and has received all sums and benefits payable under Prior Agreements.
5.2 General Release.
(a) Except as expressly set forth in the Agreement, each
party hereto fully, forever and unconditionally releases, exonerates, waives,
relinquishes, discharges, acquits,
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relieves and covenants not to xxx or charge each other party hereto and its
agents, employees, representatives, attorneys, stockholders, officers,
directors, successors and assigns (collectively, "all related persons"), and all
affiliated, parent and subsidiary corporations, and each of them, and all
related persons connected therewith, from any and all rights, claims, demands,
debts, obligations, liabilities, promises, acts, agreements, costs, expenses
(including but not limited to attorneys' fees), damages, disputes,
controversies, actions and causes of action, of whatever kind or nature, in law
or equity, whether known or unknown, suspected or unsuspected, potential or
actual, based on, arising out of, or in any way connected with or related to the
Prior Agreements.
(b) Except as expressly set forth in the Agreement, each
party hereto acknowledges that no statement, representation, promise or
inducement has been made by any other party hereto in connection with the
Agreement, and each party hereto specifically acknowledges that it has not
relied upon any statement, representation, promise or inducement of any other
party hereto in executing the Agreement. The Agreement supersedes all prior
negotiations and understandings of any kind with respect to the subject matter
hereof and contains all of the agreement of the parties hereto. There are no
oral understandings not incorporated herein. The Agreement shall not be amended,
modified, supplemented or abrogated other than by a written instrument duly
executed by all parties hereto.
(c) Each party hereto understands and agrees that this
Section 5 extends to all claims of whatever kind and nature, known or unknown,
suspected or unsuspected, and they each expressly waive any and all rights under
Section 1542 of the Civil Code of the State of California, which provides as
follows:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have
materially affected his settlement with the debtor.
Each party hereto expressly waives and releases any right or benefit which it
has or may have under Section 1542 of the Civil Code of the State of California,
as well as under the provisions of all comparable or similar statutes,
provisions of common law or other decisional law of any and all states of the
United States. In connection with such waiver and relinquishment, each party
hereto acknowledges that it may hereafter discover claims presently unknown or
unsuspected, or facts in addition to or different from those which it now knows
or believes to be true, with respect to the matters released herein.
Nevertheless, it is the intention of each party hereto through the Agreement, to
fully, finally and forever settle and release all such matters, and all claims
relative thereto, which now exist, may exist or heretofore have existed between
them. In furtherance of such intention, the release herein given shall be and
remain in effect as a full and complete release notwithstanding the discovery or
existence of any such additional or different claims or facts relative thereto,
and each party expressly assumes the risk of any injury, loss or damage which
may arise from this waiver.
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6. MISCELLANEOUS
6.1 Severable Provisions. The provisions of the Agreement are
severable, and if any one or more provisions may be determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions, and any
partially unenforceable provisions to the extent enforceable, shall nevertheless
be binding and enforceable.
6.2 Successors and Assigns. All of the terms, provisions and
obligations of the Agreement shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, representatives, successors
and assigns. Notwithstanding the foregoing, neither the Agreement nor any rights
hereunder shall be assigned, pledged, hypothecated or otherwise transferred by
the Employee without the prior written consent of the Company's Board of
Directors in each instance.
6.3 Governing Law. The validity, construction and interpretation
of the Agreement shall be governed by the laws of the State of California
applicable to contracts made and to be performed within that state.
6.4 Arbitration. At the demand of either party any dispute except
under Section 4 arising out of this Agreement shall be resolved through binding
arbitration. The Company shall pay all arbitration costs. Unless the parties
agree on a different arbitration procedure, arbitration shall take place under
the Expedited Labor Arbitration Rules of the American Arbitration Association of
Los Angeles, California. The decision of the arbitrator shall be final and
binding on both parties.
6.5 Headings. Section and subsection headings are not to be
considered part of the Agreement and are included solely for convenience and
reference and in no way define, limit or describe the scope of the Agreement or
the intent of any provision hereof.
6.6 Entire Agreement. The Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, relating to the subject matter of the
Agreement. No supplement, modification, waiver or termination of the Agreement
shall be valid unless executed by the party to be bound thereby. No waiver of
any of the provisions of the Agreement shall be deemed to or shall constitute a
waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
6.7 Notice. Any notice or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been given
(i) if personally delivered, when so delivered, (ii) if mailed, one (1) week
after having been placed in the United States mail, registered or certified,
postage prepaid, addressed to the party to whom it is directed at the address
set forth below or (iii) if given by telex or telecopier, when such notice of
other communication is transmitted to the telex or telecopier number specified
below and the appropriate answerback or telephonic confirmation is received.
Either party may change the address to
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which such notices are to be addressed by giving the other party notice in the
manner herein set forth.
6.8 Attorneys' Fees. In the event any party takes legal action to
enforce any of the terms of the Agreement, the unsuccessful party to such action
shall pay the successful party's expenses, including attorneys' fees, incurred
in such action.
6.9 Third Parties. Nothing in the Agreement, expressed or
implied, is intended to confer upon any person other than the Company or the
Employee any rights or remedies under or by reason of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused the Agreement to be
executed as of the date and year first set forth above.
THE SIRENA APPAREL GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Authorized Representative
00000 Xxxxx Xxxxxx
Xxxxx Xx Xxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
/s/ Xxxxxxx Arbetmen
------------------------------------
XXXXXXX XXXXXXXX
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
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EXHIBIT A TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
1. Criteria for Determining Percentage of Maximum Annual Bonus Payable
Employee's entitlement to payment of the maximum annual bonus payable
shall be determined through application of the following weighting criteria,
based upon the Company's financial condition and results of operations during
the fiscal year of the Company with respect to which the bonus shall be
determined, as follows:
PERCENTAGE OF
CRITERION MAXIMUM BONUS
COMPANY CONSOLIDATED PRETAX EARNINGS
* 100% or more of budget 25.0 %
* 90% - 99.9% of budget 20.0 %
* 80% - 89.9% of budget 15.0 %
* 75% - 79.9% of budget 10.0 %
* Below 75% of budget 0.0 %
COMPANY NET SALES
* 100% or more of budget 25.0 %
* 95% - 99.9% of budget 20.0 %
* 90% - 94.9% of budget 15.0 %
* 85% - 89.9% of budget 10.0 %
* Less than 85% of budget 0.0 %
COMPANY INVENTORY LEVELS AT OR BELOW LEVELS
ESTABLISHED IN BUDGET AT FISCAL YEAR END
20.0 %
COMPANY GROSS MARGIN ON SALES EQUAL TO OR GREATER THAN
BUDGET 25.0 %
SOLE DISCRETION OF BOARD OF DIRECTORS 5.0 %
2. Eligibility for, and Award of, Stock Options
Employee shall be eligible to receive an award of nonqualified options
to purchase up to 33,333 shares of the Company's Common Stock in respect of each
of the first three years of employment pursuant to the Agreement. Awards shall
be made within 90 days following the end of the Company's fiscal year in which
earned. The exercise price shall be 100 percent of the fair
EXHIBIT A
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market value of the shares on the date of the award. Vesting and other terms of
the options shall be the same as with respect to other options under the
Company's Stock Incentive Plan. The actual number of shares which shall be the
subject of options in respect of any single year shall be determined by applying
the criteria set forth in paragraph 1 above to the maximum number of shares
which the employee is eligible to receive, viz. 33,333. In no event shall this
Agreement be interpreted to entitle Employee to receive awards of options to
purchase in excess of 100,000 shares. Any of the options which Employee shall be
eligible to earn under paragraph 2.1(h) of the Agreement which shall not be
earned in the first three years of employment under the Agreement shall lapse.
EXHIBIT A
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EXHIBIT B TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Definition of "Change of Control"
For purposes of this Agreement, a "CHANGE OF CONTROL" of the Company
shall mean the occurrence of any of the following:
1. The acquisition by any person [as such term is defined in Section
13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act")] in one or more transfers of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the 1934 Act of 50 percent or more of the stock of
any class or classes having by the terms thereof ordinary voting power to elect
a majority of the directors of the Company (irrespective of whether at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency).
2. The individuals who, as of the date of this Agreement, are
directors of the Company, cease for any reason to constitute a majority of the
Board of Directors, unless the election or appointment, or nomination for
election or appointment, of any new member of the Board of Directors was
approved by a vote of a majority of the Board of Directors, and such new member
shall, for purposes of this Agreement, be considered as a member of the Board of
Directors.
3. A merger or consolidation involving the Company if the stockholders
of the Company immediately before such merger or consolidation, do not, as a
result of such merger or consolidation, own, directly or indirectly, more than
50 percent of the combined voting power of the entity resulting from such merger
or consolidation in substantially the same proportion as their ownership of the
combined voting power outstanding immediately before such merger or
consolidation.
4. The Company ceases to be directly, or indirectly through one or
more intermediaries, controlled by the same person or persons controlling the
Company as of the date of this Agreement.
EXHIBIT B
